united statesd18rn0p25nwr6d.cloudfront.net/cik-0000002809/b0e3231a-a4... · 2017. 3. 27. ·...

QuickLinks -- Click here to rapidly navigate through this document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-FooREGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR ýýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016 Commission file number: 1-13422

AGNICO EAGLE MINES LIMITED (ExactnameofRegistrantasspecifiedinitscharter)

Ontario, Canada 1040 98-0357066(Provinceofotherjurisdictionofincorporationor

organization) (PrimaryStandardIndustrialClassificationCodeNumber) (I.R.S.EmployerIdentificationNumber)

145 King Street East, Suite 400 Toronto, Ontario, Canada M5C 2Y7

(416) 947-1212 (AddressandtelephonenumberofRegistrant'sprincipalexecutiveoffices)

Davies Ward Phillips & Vineberg LLP 900 Third Avenue, 24th Floor, New York, New York 10022

Attention: Scott D. Fisher (212) 588-5500

(Name,address(includingzipcode)andtelephonenumber(includingareacode)ofagentforserviceintheUnitedStates)

SecuritiesregisteredortoberegisteredpursuanttoSection12(b)oftheAct:

Common Shares, without parvalue

New York Stock Exchange

(TitleofClass) (Nameofexchangeonwhichregistered)

SecuritiesregisteredortoberegisteredpursuanttoSection12(g)oftheAct:None

(TitleofClass)

SecuritiesforwhichthereisareportingobligationpursuanttoSection15(d)oftheAct:None

(TitleofClass)

Forannualreports,indicatebycheckmarktheinformationfiledwiththisForm:

ýAnnualinformationformýAuditedannualfinancialstatements

Indicatethenumberofoutstandingsharesofeachoftheissuer'sclassesofcapitalorcommonstockasofthecloseoftheperiodcoveredbytheannualreport.

225,465,654CommonSharesasofDecember31,2016

Indicateby check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtofilesuchreports)and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.

YesýNoo

IndicatebycheckmarkwhethertheRegistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedand posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theRegistrantwasrequiredtosubmitandpostsuchfiles).

YesoNoo

EXPLANATORY NOTE

AgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")isaCanadianissuereligibletofileitsannualreportpursuanttoSection13oftheSecuritiesExchangeActof1934,asamended(the"ExchangeAct"),onForm40-Fpursuanttothemulti-jurisdictionaldisclosuresystemoftheExchangeAct.TheCompanyisa"foreignprivateissuer"asdefinedinRule405undertheSecuritiesActof1933,asamended.EquitysecuritiesoftheCompanyareaccordinglyexemptfromSections14(a),14(b),14(c),14(f)and16oftheExchangeActpursuanttoRule3a12-3.

FORWARD-LOOKING INFORMATION

This Annual Report on Form 40-F and the exhibits attached hereto (the "Form 40-F") contain "forward-looking statements" within the meaning of theUnited States Private Securities Litigation ReformAct of 1995. These statements relate to, among other things, the Company's plans, objectives, expectations,estimates, beliefs, strategies and intentions and can generally be identified by the use of words such as "anticipate", "believe", "budget", "could", "estimate","expect","forecast","intend","likely","may","plan","project","schedule","should","target","will","would"orothervariationsofthesetermsorsimilarwords.Forward-lookingstatementsinthisForm40-Finclude,butarenotlimitedto,thefollowing:

• theCompany'soutlookfor2017andfutureperiods;

• statementsregardingfutureearnings,andthesensitivityofearningstogoldandothermetalprices;

• anticipated levels or trends for prices of gold and by-product metals mined by the Companyor for exchange rates betweencurrenciesinwhichcapitalisraised,revenueisgeneratedorexpensesareincurredbytheCompany;

• estimatesoffuturemineralproductionandsales;

• estimates of future costs, including mining costs, total cash costs per ounce, all-in sustaining costs per ounce, minesite costs per tonne andothercosts;

• estimatesoffuturecapitalexpenditures,explorationexpendituresandothercashneeds,andexpectationsastothefundingthereof;

• statementsregardingtheprojectedexploration,developmentandexploitationoforedeposits,includingestimatesofexploration,developmentandproductionandothercapitalcostsandestimatesofthetimingofsuchexploration,developmentandproductionordecisionswithrespectthereto;

• estimatesofmineralreserves,mineralresources,oregradesandmineralrecoveriesandstatementsregardinganticipatedfutureexplorationresults;

• estimatesofcashflow;

• estimatesofminelife;

• anticipatedtimingofeventsattheCompany'smines,minedevelopmentprojectsandexplorationprojects;

• estimatesoffuturecostsandotherliabilitiesforenvironmentalremediation;

• statements regarding anticipated legislation and regulations, including with respect to climate change, and estimates of the impact on theCompany;and

• otheranticipatedtrendswithrespecttotheCompany'scapitalresourcesandresultsofoperations.

Forward-lookingstatementsarenecessarilybaseduponanumberoffactorsandassumptionsthat,whileconsideredreasonablebyAgnicoEagleasofthedateofsuchstatements,areinherentlysubjecttosignificantbusiness,economicandcompetitiveuncertaintiesandcontingencies.ThefactorsandassumptionsofAgnicoEagleuponwhichtheforward-lookingstatementsinthisForm40-Farebased,andwhichmayprovetobeincorrect,include,butarenotlimitedto,theassumptionsset out elsewhere in this Form40-Fas well as: that there are nosignificantdisruptions affecting AgnicoEagle's operations, whether dueto labour disruptions,supplydisruptions,damagetoequipment,naturalorman-madeoccurrences,miningormillingissues,politicalchanges,titleissuesorotherwise;thatpermitting,developmentandexpansionateachofAgnicoEagle'smines,minedevelopmentprojectsandexplorationprojectsproceedonabasisconsistentwithexpectations,andthat

AgnicoEagledoesnotchangeitsexplorationordevelopmentplansrelatingtosuchprojects;thattheexchangeratesbetweentheCanadiandollar,Euro,MexicanpesoandtheU.S.dollarwillbeapproximatelyconsistentwithcurrentlevelsorassetoutinthisForm40-F;thatpricesforgold,silver,zincandcopperwillbeconsistentwithAgnicoEagle'sexpectations;thatpricesforkeyminingandconstructionsupplies,includinglabourcosts,remainconsistentwithAgnicoEagle'sexpectations; that production meets expectations; that Agnico Eagle's current estimates of mineral reserves, mineral resources, mineral grades and mineralrecoveries are accurate; that there are no material delays in the timing for completion of development projects; and that there are no materialvariationsinthecurrenttaxandregulatoryenvironmentsthataffectAgnicoEagle.

Theforward-lookingstatementsintheForm40-FreflecttheCompany'sviewsasatthedatehereofandinvolveknownandunknownrisks,uncertaintiesandother factors which could cause the actual results, performance or achievements of the Company or industry results to be materially different fromany futureresults,performanceorachievementsexpressedorimpliedbysuchforward-lookingstatements.Suchfactorsinclude,amongothers,theriskfactorssetoutunder"RiskFactors" onpage89of the Company's annual information formfor the year endedDecember 31, 2016, whichis filed as Exhibit 99.1 to this Form40-Fandincorporatedbyreferenceherein(the"AIF").Giventheseuncertainties,readersarecautionednottoplaceunduerelianceontheseforward-lookingstatements,whichspeakonlyasofthedatemade.Exceptasotherwiserequiredbylaw,theCompanyexpresslydisclaimsanyobligationorundertakingtoreleasepubliclyanyupdatesorrevisionstoanysuchstatementstoreflectanychangeintheCompany'sexpectationsoranychangeinevents,conditionsorcircumstancesonwhichanysuchstatementisbased.ThisForm40-Fcontainsinformationregardinganticipatedtotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonneinrespectoftheCompanyoratcertainoftheCompany'sminesandminedevelopmentprojects. TheCompanybelievesthatthesegenerallyacceptedindustry measures are realistic indicators of operating performance and are useful in allowing year over year comparisons. Investors are cautioned that thisinformationmaynotbesuitableforotherpurposes.

CURRENCY

AgnicoEaglepresentsitsconsolidatedfinancialstatementsinUnitedStatesdollars.AlldollaramountsinthisForm40-FarestatedinUnitedStatesdollars("U.S.dollars","$"or"US$"),exceptwhereotherwiseindicated.OnMarch22,2017,thenoonexchangerate(asreportedbytheBankofCanada)ofUnitedStatesdollarsintoCanadiandollars("C$")wasUS$1.00equalsC$1.3347.

NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESERVES AND MINERAL RESOURCES

ThemineralreserveandmineralresourceestimatescontainedinthisForm40-FhavebeenpreparedinaccordancewiththeCanadiansecuritiesregulatoryauthorities'(the"CSA")NationalInstrument43-101StandardsofDisclosureforMineralProjects("NI43-101").ThesestandardsaresimilartothoseusedbytheUnitedStatesSecuritiesandExchangeCommission's(the"SEC")IndustryGuideNo.7,asinterpretedbyStaffattheSEC("Guide7").However,thedefinitionsinNI43-101differincertainrespectsfromthoseunderGuide7.Accordingly,mineralreserveinformationcontainedorincorporatedbyreferencehereinmaynotbecomparabletosimilarinformationdisclosedbyU.S.companies.UndertherequirementsoftheSEC,mineralizationmaynotbeclassifiedasa"reserve"unlessthedeterminationhasbeenmadethatthemineralizationcouldbeeconomicallyandlegallyproducedorextractedatthetimethereservedeterminationismade.TheSECdoesnotrecognizemeasuresof"mineralresource".

Themineralreservefigurespresentedhereinareestimates,andnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicated level of recovery will be realized. The Company does not include equivalent gold ounces for byproduct metals contained in mineral reserves in itscalculationofcontainedounces.

Cautionary Note to Investors Concerning Estimates of Measured and Indicated Mineral Resources

TheForm40-Fusestheterms"measuredmineralresources"and"indicatedmineralresources".Investorsareadvisedthatwhile thosetermsarerecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizethem.Investors are cautioned not to assume that any part or all of mineral deposits in thesecategories will ever be converted into mineral reserves .

Cautionary Note to Investors Concerning Estimates of Inferred Mineral Resources

TheForm40-Fusestheterm"inferredmineralresources".InvestorsareadvisedthatwhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit."Inferredmineralresources"haveagreatamountofuncertaintyastotheirexistenceandastotheireconomicandlegalfeasibility.Itcannotbe assumedthat any part or all of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferredmineralresourcesmaynotformthebasisoffeasibilityorpre-feasibilitystudies,exceptinrarecases.Investors are cautioned not to assume that any part or allof an inferred mineral resource exists, or is economically or legally mineable .

NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE

TheForm40-Fpresentscertainmeasures,including"totalcashcostsperounce","all-insustainingcostsperounce""minesitecostspertonne"and"netdebt",thatarenotrecognizedmeasuresunderInternationalFinancialReportingStandards("IFRS").Thesemeasuresmaynotbecomparabletomeasurespresentedbyother gold producers. For a reconciliation of these measures to the most directly comparable financial information presented in the consolidated financialstatementspreparedinaccordancewithIFRS,andforanexplanationofhowmanagementusesthesemeasures,pleaseseetheCompany'smanagement'sdiscussionandanalysisfortheyearendedDecember31,2016,whichisfiledasExhibit99.3tothisForm40-Fandincorporatedbyreferenceherein(the"AnnualMD&A").TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresarerealisticindicatorsofoperatingperformanceandareusefulinallowingyearoveryearcomparisons.However,thesenon-IFRSmeasuresshouldbeconsideredtogetherwithotherdatapreparedinaccordancewithIFRS,andthesemeasures,takenbythemselves,arenotnecessarilyindicativeofoperatingcostsorcashflowmeasurespreparedinaccordancewithIFRS.ThisForm40-Falsocontainsinformationasto estimatedfuture total cashcosts per ounce, all-in sustainingcosts per ounceandminesite costs per tonne. Theestimates of total cashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnearebaseduponthetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnethat theCompany expects to incur to mine gold at its projects and, consistent with the reconciliation provided, do not include production costs attributable toaccretionexpenseandotherassetretirementcosts,whichwillvaryovertimeaseachprojectisdevelopedandmined.Itisthereforenotpracticabletoreconciletheseforward-lookingnon-IFRSfinancialmeasurestothemostcomparableIFRSmeasure.

DISCLOSURE CONTROLS AND PROCEDURES

TheCompany'smanagement,withtheparticipationoftheCompany'sChiefExecutiveOfficerandChiefFinancialOfficer,evaluatedtheeffectivenessoftheCompany's disclosure controls and procedures as of December 31, 2016 pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating thedisclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide onlyreasonableassuranceofachievingthedesiredcontrolobjectives.Inaddition,thedesignofdisclosurecontrolsandproceduresmustreflectthefactthatthereareresourceconstraintsandthatmanagementisrequiredtoapplyitsjudgmentinevaluatingthebenefitsofpossiblecontrolsandproceduresrelativetotheircosts.

Basedonsuchevaluation, theCompany's Chief Executive Officer andChief Financial Officer concludedthat, as of December 31, 2016, the Company'sdisclosurecontrolsandproceduresweredesignedatareasonableassurancelevelandwereeffectivetoprovidereasonableassurancethatinformationtheCompanyis required to disclose in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the timeperiodsspecifiedinSECrulesandforms,andthatsuchinformationisaccumulatedandcommunicatedtotheCompany'smanagement,includingtheCompany'sChiefExecutiveOfficerandChiefFinancialOfficer,asappropriate,toallowtimelydecisionsregardingrequireddisclosure.

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

ManagementoftheCompanyisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.Internalcontroloverfinancialreportingisaprocessdesignedby,orunderthesupervisionof,theCompany'sChiefExecutiveOfficerandChiefFinancialOfficerandeffectedbytheCompany'sboard of directors (the "Board"), management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and thepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Becauseofitsinherentlimitations,internalcontroloverfinancial

reportingmay not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls maybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

TheCompany'smanagement, includingtheCompany'sChiefExecutiveOfficerandChiefFinancial Officer, assessedtheeffectiveness oftheCompany'sinternal control over financial reporting as of December 31, 2016. In making this assessment, the Company's management used the criteria set out by theCommittee of Sponsoring Organizations of the Treadway Commission in InternalControl —IntegratedFramework . Based uponits assessment, managementconcludedthat,asofDecember31,2016,theCompany'sinternalcontroloverfinancialreportingwaseffective.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2016 has been audited by Ernst & Young LLP, anindependentregisteredpublicaccountingfirm,asstatedinitsattestationreportonpage2oftheCompany'sAnnualAuditedConsolidatedFinancialStatements,whicharefiledasExhibit99.2tothisForm40-Fandincorporatedbyreferenceherein(the"AnnualFinancialStatements").

The Company will continue to periodically review its disclosure controls and procedures and internal control over financial reporting and may makemodificationsfromtimetotimeasconsiderednecessaryordesirable.

ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

Ernst&YoungLLP'sattestationreportonmanagement's assessmentoftheCompany'sinternalcontroloverfinancial reportingisfoundonpage2oftheAnnualFinancialStatements.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

ManagementregularlyreviewsitssystemofinternalcontroloverfinancialreportingandmakeschangestotheCompany'sprocessesandsystemstoimprovecontrols and increase efficiency, while ensuring that the Company maintains an effective internal control environment. Changes may include such activities asimplementingnew,moreefficientsystems,consolidatingactivities,andmigratingprocesses.

ForadiscussionofchangesintheCompany'sinternalcontroloverfinancialreportingthatoccurredduringtheperiodcoveredbythisForm40-Fthathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theCompany'sinternalcontroloverfinancialreportingpleaseseepage30oftheAnnualMD&Aundertheheading"ControlsEvaluation".

IDENTIFICATION OF THE AUDIT COMMITTEE

The Board has a separately-designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act. The AuditCommittee is composed of Dr. Leanne Baker (Chair), Mr. Mel Leiderman, Dr. Sean Riley and Mr. Jamie Sokalsky, as described under "AuditCommittee—CompositionoftheAuditCommittee"onpage107oftheAIF.

AUDIT COMMITTEE FINANCIAL EXPERT

TheBoardhasdeterminedthattheCompanyshallhaveatleastone"auditcommitteefinancialexpert"(asdefinedinparagraph(8)ofGeneralInstructionBtoForm40-F)andthatMr.LeidermanandMr.SokalskyaretheCompany's"auditcommitteefinancialexperts"servingontheAuditCommitteeoftheBoard.EachoftheAuditCommitteefinancialexpertsis"independent"underapplicablelistingstandards.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Ernst&YoungLLPservedastheCompany'sindependentpublicaccountantforeachofthefiscalyearsinthetwo-yearperiodendedDecember31,2016.ForadescriptionofthetotalamountbilledtotheCompanybyErnst&YoungLLPforservicesperformedinthelasttwofiscalyearsbycategoryofservice(auditfees,audit-relatedfees,taxfeesandallotherfees),see"AuditCommittee—ExternalAuditorServiceFees"onpage108oftheAIF.Noaudit-relatedfees,taxfeesorothernon-auditfeeswereapprovedbytheAuditCommitteepursuanttoparagraph(c)(7)(i)(C)ofRule2-01ofRegulationS-X.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

For a description of the pre-approval policies and procedures of the Company's Audit Committee, see "Audit Committee —Pre-Approval Policies andProcedures"onpage107oftheAIF.

CODE OF ETHICS

TheCompanyhasa"codeofethics"(asdefinedinparagraph(9)ofGeneralInstructionBtoForm40-F)that appliestoitsChiefExecutiveOfficer,ChiefFinancialOfficer,principalaccountingofficer,controllerandpersonsperformingsimilarfunctions.TheCompany'scodeofethicsisavailableontheCompany'swebsiteatwww.agnicoeagle.comor,withoutcharge,uponrequestfromtheCorporateSecretary,AgnicoEagleMinesLimited,Suite400,145KingStreetEast,Toronto,OntarioM5C2Y7(telephone416-947-1212).

OFF-BALANCE SHEET ARRANGEMENTS

Notapplicable.

CONTRACTUAL OBLIGATIONS

For tabular disclosure of the Company's contractual obligations, see page 15 of the Annual MD&A under the heading "Liquidity and CapitalResources—ContractualObligations".

MINE SAFETY DISCLOSURE

Notapplicable.

CORPORATE GOVERNANCE

TheCompanyissubjecttoavarietyofcorporategovernanceguidelinesandrequirementsenactedbytheTorontoStockExchange(the"TSX"),theCanadiansecuritiesregulatoryauthorities,theNewYorkStockExchange(the"NYSE")andtheSEC.TheCompanyislistedontheNYSEand,althoughtheCompanyisnotrequired to comply with most of the NYSE corporate governance requirements to which the Company would be subject if it were a U.S. corporation, theCompany's governancepractices differ fromthose required of U.S. domestic issuers in only the following respects. The NYSErules for U.S. domestic issuersrequireshareholderapprovalofallequitycompensationplans(asdefinedintheNYSErules)regardlessofwhethernewissuances,treasurysharesorsharesthattheCompanyhaspurchasedintheopenmarketareused.TheTSXrulesrequireshareholderapprovalofsharecompensationarrangementsinvolvingnewissuancesofshares,andofcertainamendmentstosucharrangements,butdonotrequiresuchapprovalifthecompensationarrangementsinvolveonlysharespurchasedintheopenmarket.TheNYSErulesforU.S.domesticissuersalsorequireshareholderapprovalofcertaintransactionsorseriesofrelatedtransactionsthatresultintheissuanceofcommonshares, or securities convertible intoor exercisable for commonshares, that have, or will haveuponissuance, votingpowerequal toor inexcessof20%ofthevotingpoweroutstandingpriortothetransactionoriftheissuanceofcommonshares,orsecuritiesconvertibleintoorexercisableforcommonshares,are,orwillbeuponissuance,equaltoorinexcessof20%ofthenumberofcommonsharesoutstandingpriortothetransaction.TheTSXrulesrequireshareholderapprovalofacquisitiontransactionsresultingindilutioninexcessof25%.TheTSXalsohasbroadgeneraldiscretiontorequireshareholderapprovalinconnectionwithanyissuancesoflistedsecurities.TheCompanycomplieswiththeTSXrulesdescribedinthisparagraph.

UNDERTAKING

AgnicoEagleundertakestomakeavailable,inpersonorbytelephone,representativestorespondtoinquiriesmadebytheSECstaff,andtofurnishpromptly,whenrequestedtodosobytheSECstaff,informationrelatingto:thesecuritiesinrelationtowhichtheobligationtofileanannualreportonForm40-Farises;ortransactionsinsaidsecurities.

CONSENT TO SERVICE OF PROCESS

Any change to the name or address of the Company's agent for service shall be communicated promptly to the SEC by amendment to the FormF-XreferencingthefilenumberoftheCompany.

INCORPORATION BY REFERENCE

This Form40-F, which includes the exhibits filed herewith (other than the section of the AIF entitled "Ratings"), is incorporated by reference into theCompany'sRegistrationStatementsonFormF-3D(registrationno.333-215096)andFormS-8(registrationnos.333-130339and333-152004).EachoftheAIF(otherthanthesectionentitled"Ratings"),theAnnualFinancialStatementsandtheAnnualMD&AisincorporatedbyreferenceasanexhibittotheCompany'sRegistrationStatementonFormF-10(registrationno.333-206498).

EXHIBIT INDEX

Exhibit Description99.1

AnnualInformationFormoftheCompanyfortheyearendedDecember31,2016.

99.2

AnnualAuditedConsolidatedFinancialStatementsoftheCompany,includingthenotesthereto,asatDecember31,2016and2015andforeachoftheyearsinthethree-yearperiodendedDecember31,2016,togetherwiththeauditors'reportthereonandtheauditors'reportoninternalcontroloverfinancialreporting.

99.3

Management'sDiscussionandAnalysisfortheyearendedDecember31,2016.

99.4

CertificationoftheChiefExecutiveOfficerrequiredbyRule13a-14(a)orRule15d-14(a),pursuanttoSection302oftheSarbanes-OxleyActof2002.

99.5

CertificationoftheChiefFinancialOfficerrequiredbyRule13a-14(a)orRule15d-14(a),pursuanttoSection302oftheSarbanes-OxleyActof2002.

99.6

CertificationoftheChiefExecutiveOfficerpursuanttoTitle18,UnitedStatesCode,Section1350asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002.

99.7

CertificationoftheChiefFinancialOfficerpursuanttoTitle18,UnitedStatesCode,Section1350asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002.

99.8

ConsentofIndependentRegisteredPublicAccountingFirm.

99.9

ConsentofDanielDoucet.

99.10

ConsentofDonaldGervais.

99.11

ConsentofSylvieLampron.

99.12

ConsentofGuyGosselin.

99.13

ConsentofLouiseGrondin.

99.14

ConsentofCarolPlummer.

99.15

ConsentofPaulCousin.

99.16

ConsentofFrancisBrunet.

99.17

ConsentofDominiqueGirard.

99.18

ConsentofChristianProvencher.

SIGNATURES

PursuanttotherequirementsoftheExchangeAct,theCompanycertifiesthatitmeetsalloftherequirementsforfilingonForm40-Fandhasdulycausedthisannualreporttobesignedonitsbehalfbytheundersigned,theretodulyauthorized.

Toronto,CanadaMarch27,2017

AGNICO EAGLE MINES LIMITED

by /s/DAVIDSMITH

DavidSmithSeniorVice-President,FinanceandChiefFinancialOfficer

QuickLinks

EXPLANATORYNOTEFORWARD-LOOKINGINFORMATIONCURRENCYNOTETOINVESTORSCONCERNINGESTIMATESOFMINERALRESERVESANDMINERALRESOURCESNOTETOINVESTORSCONCERNINGCERTAINMEASURESOFPERFORMANCEDISCLOSURECONTROLSANDPROCEDURESMANAGEMENT'SANNUALREPORTONINTERNALCONTROLOVERFINANCIALREPORTINGATTESTATIONREPORTOFTHEREGISTEREDPUBLICACCOUNTINGFIRMCHANGESININTERNALCONTROLOVERFINANCIALREPORTINGIDENTIFICATIONOFTHEAUDITCOMMITTEEAUDITCOMMITTEEFINANCIALEXPERTPRINCIPALACCOUNTANTFEESANDSERVICESAUDITCOMMITTEEPRE-APPROVALPOLICIESANDPROCEDURESCODEOFETHICSOFF-BALANCESHEETARRANGEMENTSCONTRACTUALOBLIGATIONSMINESAFETYDISCLOSURECORPORATEGOVERNANCEUNDERTAKINGCONSENTTOSERVICEOFPROCESSINCORPORATIONBYREFERENCEEXHIBITINDEXSIGNATURES


Exhibit 99.1

Annual Information Form for the year ended December 31, 2016

Dated as of March 27, 2017


ANNUAL INFORMATION FORM

Table of Contents

Page INTRODUCTORYNOTES ii

CurrencyandExchangeRates ii

Forward-LookingStatements ii

PresentationofFinancialInformation iv

NotetoInvestorsConcerningEstimatesofMineralReservesandMineralResources iv

NotetoInvestorsConcerningCertainMeasuresofPerformance iv

SELECTEDFINANCIALDATA 1

GLOSSARYOFSELECTEDMININGTERMS 2

CORPORATESTRUCTURE 9

DESCRIPTIONOFTHEBUSINESS 11

GENERALDEVELOPMENTOFTHEBUSINESS 12

OPERATIONSANDPRODUCTION 17

BusinessUnitsandForeignOperations 17

NorthernBusiness 17

SouthernBusiness 59

RegionalExplorationActivities 71

MineralReservesandMineralResources 71

PrincipalProductsandDistribution 85

Employees 86

CompetitiveConditions 86

SustainableDevelopment 86

EmployeeHealthandSafety 87

Community 87

EnvironmentalProtection 88

RISKFACTORS 89

DIVIDENDS 101

DESCRIPTIONOFCAPITALSTRUCTURE 101

RATINGS 101

MARKETFORSECURITIES 102

DIRECTORSANDOFFICERSOFTHECOMPANY 103

Directors 103

Committees 104

Officers 105

ShareholdingsofDirectorsandOfficers 106

CeaseTradeOrders,Bankruptcies,PenaltiesorSanctions 106

ConflictsofInterest 107

AUDITCOMMITTEE 107

CompositionoftheAuditCommittee 107

RelevantEducationandExperience 107

Pre-ApprovalPoliciesandProcedures 107

ExternalAuditorServiceFees 108

LEGALPROCEEDINGSANDREGULATORYACTIONS 108

INTERESTOFMANAGEMENTANDOTHERSINMATERIALTRANSACTIONS 109

TRANSFERAGENTANDREGISTRAR 109

MATERIALCONTRACTS 109

INTERESTSOFEXPERTS 112

ADDITIONALINFORMATION 113

SCHEDULE"A"AUDITCOMMITTEECHARTEROFTHECOMPANY A-1

i

INTRODUCTORY NOTES Currency and Exchange Rates

Currencies:AgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")presentsitsconsolidatedfinancialstatementsinUnitedStatesdollars.AlldollaramountsinthisAnnualInformationForm("AIF")arestatedinUnitedStatesdollars("U.S.dollars","$"or"US$"),exceptwhereotherwiseindicated.CertaininformationinthisAIFispresentedinCanadiandollars("C$")orEuropeanUnioneuros("Euro"or"€").

ExchangeRates:Thefollowingtablessetout,inCanadiandollars,theexchangeratesfortheU.S.dollar,basedonthenoonbuyingrateasreportedbytheBankofCanada(the"NoonBuyingRate").OnMarch22,2017,theNoonBuyingRatewasUS$1.00equalsC$1.3347.

Year Ended December 31, 2016 2015 2014 2013 2012

High 1.4589 1.3990 1.1643 1.0697 1.0418

Low 1.2544 1.1728 1.0614 0.9839 0.9710

EndofPeriod 1.3427 1.3840 1.1601 1.0636 0.9949

Average 1.3248 1.2787 1.1045 1.0299 0.9996

2017 2016

March

(to March 22) February January December November October September

High 1.3505 1.3248 1.3438 1.3556 1.3582 1.3403 1.3248

Low 1.3316 1.3004 1.3030 1.3120 1.3337 1.3104 1.2843

EndofPeriod 1.3347 1.3248 1.3030 1.3427 1.3426 1.3403 1.3117

Average 1.3406 1.3110 1.3191 1.3329 1.3438 1.3251 1.3109

OnDecember30,2016andMarch22,2017,US$1.00equaled€1.0541and€1.0807,respectively,asreportedbytheEuropeanCentralBank.

Forward-Looking Statements

Forward-LookingStatements:CertainstatementsinthisAIF,referredtohereinas"forward-lookingstatements",constitute"forward-lookinginformation"undertheprovisionsofCanadianprovincialsecuritieslawsandconstitute"forward-lookingstatements"withinthemeaningoftheUnitedStatesPrivateSecuritiesLitigationReformActof1995.Thesestatementsrelateto,amongotherthings,theCompany'splans,objectives,expectations,estimates,beliefs,strategiesandintentionsandcangenerallybeidentifiedbytheuseofwordssuchas"anticipate","believe","budget","could","estimate","expect","forecast","likely","may","plan","project","schedule","should","target","will","would"orothervariationsofthesetermsorsimilarwords.Forward-lookingstatementsinthisAIFinclude,butarenotlimitedto,thefollowing:



• anticipatedlevelsortrendsforpricesofgoldandby-productmetalsminedbytheCompanyorforexchangeratesbetweencurrenciesinwhichcapitalisraised,revenueisgeneratedorexpensesareincurredbytheCompany;


ii

• estimatesoffuturecosts,includingminingcosts,totalcashcostsperounce,all-insustainingcostsperounce,minesitecostspertonneandothercosts;



• estimatesofmineralreservesandmineralresourcesandtheirsensitivitiestogoldpricesandotherfactors,oregradesandmineralrecoveriesandstatementsregardinganticipatedfutureexplorationresults;



• anticipatedtimingofeventsattheCompany'smines,minedevelopmentprojectsandexplorationprojects;


• statementsregardinganticipatedlegislationandregulations,includingwithrespecttoclimatechange,andestimatesoftheimpactontheCompany;and


Forward-lookingstatementsarenecessarilybaseduponanumberoffactorsandassumptionsthat,whileconsideredreasonablebyAgnicoEagleasofthedateofsuchstatements,areinherentlysubjecttosignificantbusiness,economicandcompetitiveuncertaintiesandcontingencies.ThefactorsandassumptionsofAgnicoEagleuponwhichtheforward-lookingstatementsinthisAIFarebased,andwhichmayprovetobeincorrect,includetheassumptionssetoutelsewhereinthisAIFaswellas:thattherearenosignificantdisruptionsaffectingAgnicoEagle'soperations,whetherduetolabourdisruptions,supplydisruptions,damagetoequipment,naturalorman-madeoccurrences,miningormillingissues,politicalchanges,titleissuesorotherwise;thatpermitting,developmentandexpansionateachofAgnicoEagle'smines,minedevelopmentprojectsandexplorationprojectsproceedonabasisconsistentwithexpectations,andthatAgnicoEagledoesnotchangeitsexplorationordevelopmentplansrelatingtosuchprojects;thattheexchangeratesbetweentheCanadiandollar,Euro,MexicanpesoandtheU.S.dollarwillbeapproximatelyconsistentwithcurrentlevelsorassetoutinthisAIF;thatpricesforgold,silver,zincandcopperwillbeconsistentwithAgnicoEagle'sexpectations;thatpricesforkeyminingandconstructionsupplies,includinglabourcosts,remainconsistentwithAgnicoEagle'sexpectations;thatproductionmeetsexpectations;thatAgnicoEagle'scurrentestimatesofmineralreserves,mineralresources,mineralgradesandmineralrecoveriesareaccurate;thattherearenomaterialdelaysinthetimingforcompletionofdevelopmentprojects;andthattherearenomaterialvariationsinthecurrenttaxandregulatoryenvironmentsthataffectAgnicoEagle.

Theforward-lookingstatementsinthisAIFreflecttheCompany'sviewsasatthedateofthisAIFandinvolveknownandunknownrisks,uncertaintiesandotherfactorswhichcouldcausetheactualresults,performanceorachievementsoftheCompanyorindustryresultstobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedorimpliedbysuchforward-lookingstatements.Suchfactorsinclude,amongothers,theriskfactorssetoutin"RiskFactors"below.Giventheseuncertainties,readersarecautionednottoplaceunduerelianceontheseforward-lookingstatements,whichspeakonlyasofthedatemade.Exceptasotherwiserequiredbylaw,theCompanyexpresslydisclaimsanyobligationorundertakingtoreleasepubliclyanyupdatesorrevisionstoanysuchstatementstoreflectanychangeintheCompany'sexpectationsoranychangeinevents,conditionsorcircumstancesonwhichanysuchstatementisbased.ThisAIFcontainsinformationregardingestimatedtotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonneinrespectoftheCompanyoratcertainoftheCompany'sminesandminedevelopmentprojects.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresarerealisticindicatorsofoperatingperformanceandareusefulinallowingyearoveryearcomparisons.Investorsarecautionedthatthisinformationmaynotbesuitableforotherpurposes.

Meaningof"including"and"suchas":WhenusedinthisAIF,theterms"including"and"suchas"meanincludingandsuchas,withoutlimitation.

iii

Presentation of Financial Information

InternationalFinancialReportingStandards:TheCompanyreportsitsfinancialresultsusingInternationalFinancialReportingStandards("IFRS").TheCompanyadoptedIFRSasitsbasisofaccounting,replacingUnitedStatesgenerallyacceptedaccountingprinciples("USGAAP")effectiveJuly1,2014.Asaresult,AgnicoEagle'sconsolidatedfinancialstatementsfor2015and2016arereportedinaccordancewithIFRS,withcomparativeinformationforpriorperiodsrestatedunderIFRSandatransitiondateofJanuary1,2013.TheCompany'stransitiontoIFRSreportinghadnosignificantimpactonthedesignoreffectivenessoftheCompany'sinternalcontrolsoverfinancialreporting.TheCompanyadoptedIFRSasitsbasisofaccountingtomaintaincomparabilitywithothergoldminingcompanies.Unlessotherwisespecified,allreferencestofinancialresultshereinaretothosecalculatedunderIFRS.

Note to Investors Concerning Estimates of Mineral Reserves and Mineral Resources ThemineralreserveandmineralresourceestimatescontainedinthisAIFhavebeenpreparedinaccordancewiththeCanadiansecuritiesregulatoryauthorities'(the"CSA")NationalInstrument43-101Standards of Disclosure for Mineral Projects ("NI43-101").ThesestandardsaresimilartothoseusedbytheUnitedStatesSecuritiesandExchangeCommission's(the"SEC")IndustryGuideNo.7,asinterpretedbyStaffattheSEC("Guide7").However,thedefinitionsinNI43-101differincertainrespectsfromthoseunderGuide7.Accordingly,mineralreserveinformationcontainedorincorporatedbyreferencehereinmaynotbecomparabletosimilarinformationdisclosedbyU.S.companies.UndertherequirementsoftheSEC,mineralizationmaynotbeclassifiedasa"reserve"unlessthedeterminationhasbeenmadethatthemineralizationcouldbeeconomicallyandlegallyproducedorextractedatthetimethereservedeterminationismade.TheSECdoesnotrecognizemeasuresof"mineralresource".

Themineralreserveandmineralresourcedatapresentedhereinareestimates,andnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoverywillberealized.TheCompanydoesnotincludeequivalentgoldouncesforby-productmetalscontainedinmineralreservesinitscalculationofcontainedounces.


Thisdocumentusestheterms"measuredmineralresources"and"indicatedmineralresources".InvestorsareadvisedthatwhilethosetermsarerecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizethem.Investors are cautioned not to assume that any part or allof mineral deposits in these categories will ever be converted into mineral reserves.


Thisdocumentusestheterm"inferredmineralresources".InvestorsareadvisedthatwhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit."Inferredmineralresources"haveagreatamountofuncertaintyastotheirexistenceandastotheireconomicandlegalfeasibility.Itcannotbeassumedthatanypartorallofaninferredmineralresourcewilleverbeupgradedtoahighercategory.UnderCanadianregulations,estimatesofinferredmineralresourcesmaynotformthebasisoffeasibilityorpre-feasibilitystudies,exceptinrarecases.Investors are cautioned not to assume that any part or all of an inferred mineral resource exists, or is economically or legallymineable.

Note to Investors Concerning Certain Measures of Performance ThisAIFdisclosescertainmeasures,including"totalcashcostsperounce","all-insustainingcostsperounce"and"minesitecostspertonne"thatarenotrecognizedmeasuresunderIFRS.Thesemeasuresmaynotbecomparabletosimilarmeasuresreportedbyothergoldproducers.ForareconciliationofthesemeasurestothemostdirectlycomparablefinancialinformationpresentedintheAnnualFinancialStatements(asdefinedbelow)preparedinaccordancewithIFRS,andforanexplanationofhowmanagementusesthesemeasures,pleaseseetheCompany'smanagementdiscussionandanalysisfortheperiodendedDecember31,2016(the"AnnualMD&A").

Thetotalcashcostsperounceofgoldproducedisreportedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).Thetotalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincome(loss)forby-productrevenues,unsoldconcentrateinventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgold

iv

produced.Thetotalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerasthetotalcashcostsperounceofgoldproducedonaby-productbasis,exceptthatnoadjustmentismadeforby-productmetalrevenues.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.Thetotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecash-generatingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scash-generatingcapabilitiesatvariousgoldprices.

All-insustainingcostsperounceisusedtoshowthefullcostofgoldproductionfromcurrentoperations.TheCompanycalculatesall-insustainingcostsperounceofgoldproducedonaby-productbasisastheaggregateoftotalcashcostsperounceonaby-productbasis,sustainingcapitalexpenditures(includingcapitalizedexploration),generalandadministrativeexpenses(includingstockoptions)andreclamationexpenses,andthendividingbythenumberofouncesofgoldproduced.Theall-insustainingcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastheall-insustainingcostsperounceofgoldproducedonaby-productbasis,exceptthatthetotalcashcostsperounceonaco-productbasisisused,meaningnoadjustmentismadeforby-productmetalrevenues.TheCompany'smethodologyforcalculatingall-insustainingcostsperouncemaydifferfromthemethodologyusedbyotherproducersthatdiscloseall-insustainingcostsperounce.TheCompanymaychangethemethodologyitusestocalculateall-insustainingcostsperounceinthefuture,includinginresponsetotheadoptionofformalindustryguidanceregardingthismeasurebytheWorldGoldCouncil.

Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsperounceofgoldproducedonaby-productbasis,by-productmetalprices.ManagementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonneaswellasotherdatapreparedinaccordancewithIFRS.

Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingexchangeratesandmetalprices.ThisAIFalsocontainsinformationastoestimatedfuturetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonne.Theestimatesarebaseduponthetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnethattheCompanyexpectstoincurtominegoldatitsminesandprojectsand,consistentwiththereconciliationoftheseactualcostsreferredtoabove,donotincludeproductioncostsattributabletoaccretionexpenseandotherassetretirementcosts,whichwillvaryovertimeaseachprojectisdevelopedandmined.Itisthereforenotpracticabletoreconciletheseforward-lookingnon-GAAPfinancialmeasurestothemostcomparableIFRSmeasure.

v

SELECTED FINANCIAL DATA Thefollowingselectedfinancialdataforeachoftheyearsinthefive-yearperiodendedDecember31,2016arederivedfromtheconsolidatedfinancialstatementsofAgnicoEagleauditedbyErnst&YoungLLP.TheselectedfinancialdatashouldbereadinconjunctionwiththeCompany'soperatingandfinancialreviewandprospectssetoutinAgnicoEagle'sannualauditedconsolidatedfinancialstatementsasofandfortheperiodendedDecember31,2016,includingthenotesthereto(the"AnnualFinancialStatements")andtheAnnualMD&A.

Year Ended December 31,

2016 (1) 2015 (1) 2014 (1)(2) 2013 (1) 2012 (3) (in thousands of U.S. dollars, other than share and per share information) Income Statement Data Revenuesfromminingoperations 2,138,232 1,985,432 1,896,766 1,638,406 1,917,714

Production 1,031,892 995,295 1,004,559 866,082 897,712

Explorationandcorporatedevelopment 146,978 110,353 56,002 44,236 109,500

Amortizationofproperty,plantandminedevelopment 613,160 608,609 433,628 313,890 271,861

Generalandadministrative 102,781 96,973 118,771 113,809 119,085

Impairmentlossonavailable-for-salesecurities – 12,035 15,763 32,476 12,732

Loss(gain)onderivativefinancialinstruments (9,468) 19,608 6,156 268 819

Provincialcapitaltax – – – – 4,001

Financecosts 74,641 75,228 73,393 62,455 57,887

Otherexpenses(income) 16,233 12,028 (7,004) 3,396 2,389

Environmentalremediation 4,058 2,003 8,214 3,698 –

Impairment(reversal)loss (120,161) – – 1,014,688 –

Gainonsaleofavailable-for-salesecurities (3,500) (24,600) (5,635) (74) (9,733)

Foreigncurrencytranslation(gain)loss 13,157 (4,728) 3,781 1,769 16,320

Income(loss)beforeincomeandminingtaxes 268,461 82,628 189,138 (818,287) 435,141

Incomeandminingtaxesexpense(recovery) 109,637 58,045 106,168 (131,582) 124,225

Netincome(loss)fortheyear 158,824 24,583 82,970 (686,705) 310,916

Netincome(loss)pershare–basic 0.71 0.11 0.43 (3.97) 1.82

Netincome(loss)pershare–diluted 0.70 0.11 0.39 (3.97) 1.81

Weightedaveragenumberofcommonsharesoutstanding–basic 223,736,595 216,167,950 195,222,905 172,892,654 171,250,179

Weightedaveragenumberofcommonsharesoutstanding–diluted 225,753,589 217,101,431 196,201,626 172,892,654 171,485,615

Cashdividendsdeclaredpercommonshare 0.36 0.32 0.32 0.66 1.02

Balance Sheet Data (at end of period) Property,plantandminedevelopment 5,106,036 5,088,967 5,155,865 3,694,461 4,067,456

Totalassets 7,107,951 6,683,180 6,809,255 4,580,081 5,256,119

Long-termdebt 1,072,790 1,118,187 1,322,461 987,356 830,000

Reclamationprovision 265,308 276,299 249,917 184,009 101,753

Netassets 4,492,474 4,141,020 4,068,490 2,717,406 3,410,212

Commonshares 4,987,694 4,707,940 4,599,788 3,294,007 3,241,922

Shareholders'equity 4,492,474 4,140,020 4,068,490 2,717,406 3,410,212

Totalcommonsharesoutstanding 224,965,140 217,650,795 214,236,234 173,953,975 172,102,870

(1) Figuresreportedfor2016,2015,2014and2013arepresentedinaccordancewithIFRS.

(2) Assetoutinnote5oftheannualauditedconsolidatedfinancialstatementsasofandfortheperiodendedDecember31,2015,certainpreviouslyreportedDecember31,2014consolidatedbalancesheetlineitemswereupdatedtoreflectadjustedfinalestimatesoffairvaluerelatedtotheJune16,2014jointacquisitionofOsiskoMiningCorporation("Osisko")bytheCompanyandYamanaGoldInc.("Yamana").

(3) Figuresreportedfor2012havenotbeenrestatedtoconformtoIFRSandarepresentedinaccordancewithUSGAAP.

AGNICO EAGLE 1 ANNUAL INFORMATION FORM

GLOSSARY OF SELECTED MINING TERMS

"alteration" Anyphysicalorchemicalchangeinthemineralcompositionofarocksubsequenttoitsformation,generallyproducedbyweatheringorhydrothermalsolutions.Milderandmorelocalizedthanmetamorphism.

"anastomosing" Anetworkofbranchingandrejoiningfaultorveinsurfacesorsurfacetraces.

"andesite" Adark-coloured,fine-grainedcalc-alkalinevolcanicrockofintermediatecomposition.

"assay" Toanalyzetheproportionsofmetalsinanore;totestanoreormineralforcomposition,purity,weightorotherpropertiesofcommercialinterest.

"banded iron formation" Anironformationthatshowsmarkedbanding,generallyofiron-richmineralsandchertorfine-grainedquartz.

"bedrock" SolidrockexposedatthesurfaceoftheEarthoroverlainbyunconsolidatedmaterial,weatheredrockorsoil.

"bench" Aledgeinanopenpitminethatformsasinglelevelofoperationabovewhichmineralsorwasterockareexcavated.Theoreorwasteisremovedinsuccessivelayers(benches),severalofwhichmaybeinoperationsimultaneously.

"breccia" Arockinwhichangularrockfragmentsaresurroundedbyamassoffine-grainedminerals.

"brittle" Ofminerals,pronenesstofractureunderlowstress.Aqualityaffectingbehaviourduringcomminutionofore,wherebyonespeciesfracturesmorereadilythanothersinthematerialbeingcrushed.

"bulk emulsion" Waterresistantexplosivematerialpumpedintoadrilledblastholeandignitedremotelyinordertofracturerockintheminingcycle.Emulsionproductsareparticularlywellsuitedtowetconditions.

"by-product" Asecondarymetalormineralproductrecoveredfromtheprocessingofrock.

"carbon-in-leach" or "CIL" Apreciousmetalsrecoverystepinthemill.Goldandsilverareleachedfromthegroundoreandatthesametimeadsorbedontogranulesofactivatedcarbon,whichisthenseparatedbyscreeningandprocessedtoremovethepreciousmetals.

"carbon-in-pulp" or "CIP" Apreciousmetalsrecoverystepinthemill.Aftergoldandsilverhavebeenleachedfromgroundore,theyareadsorbedontogranulesofactivatedcarbon,whichisthenseparatedbyscreeningandprocessedtoremovethepreciousmetals.ACIPcircuitcomprisesaseriesoftanksthroughwhichleachedslurryflows.Goldiscapturedontocaptiveactivatedcarbonthatwillperiodicallybemovedcounter-currentlyfromtanktotank.Headtankcarbonisextractedperiodicallytofurtherrecoveradsorbedgoldbeforebeingreturnedtothecircuittailstank.

"chalcopyrite" Asulphidemineralofcopperandiron.

"concentrate" Thecleanproductrecoveredbyfrothflotationintheplant.

"conglomerate" Acoarse-grainedsedimentaryrockcomposedofroundedfragmentssetinafine-grainedcementedmatrix.

"contact" Aplaneorirregularsurfacebetweentwotypesoragesofrock.

"counter-current decantation" Theclarificationofwasherywaterandtheconcentrationoftailingsbytheuseofseveralthickenersinseries.Thewaterflowsintheoppositedirectionfromthesolids.Thefinalproductsareslurrythatisremovedandclearwaterthatisreusedinthecircuit.

2 AGNICO EAGLE ANNUAL INFORMATION FORM

"crosscut" Anundergroundpassagedrivenfromashafttowardstheore,at(ornear)rightanglestothestrikeofaveinorotherorebody.

"cut-off grade" Theminimummetalgradeinanorethatcanbeminedeconomically.

"cyanidation" Amethodofextractingexposedgoldorsilvergrainsfromcrushedorgroundorebydissolving(leaching)itinaweakcyanidesolution.Maybecarriedoutintanksinsideamillorinheapsoforeoutofdoors(heapleach).

"deposit" Anaturaloccurrenceofmineralormineralaggregate,insuchquantityandqualitytoinviteexploitation.

"development" Thepreparationofaminingpropertyorareasothatanorebodycanbeanalyzedanditstonnageandqualityestimated.Developmentisanintermediatestagebetweenexplorationandmining.

"diamond drill" Adrillingmachinewitharotating,hollow,diamond-studdedbitthatcutsacircularchannelaroundacore,whichcanberecoveredtoprovideamore-or-lesscontinuousandcompletecolumnarsampleoftherockpenetrated.

"dilution" Thecontaminationoforewithbarrenwallrockinstoping,increasingtonnageminedandloweringtheoveralloregrade.

"dip" Theangleatwhichavein,structureorrockbedisinclinedfromthehorizontalasmeasuredatrightanglestothestrike.

"disseminated" Saidofamineraldeposit(especiallyofmetals)inwhichthedesiredmineralsoccurasscatteredparticlesintherock,butinsufficientquantitytomakethedepositanore.Somedisseminateddepositsareverylarge.

"dore" Unrefinedgoldandsilverbullionbars,whichwillbefurtherrefinedtoalmostpuremetal.

"drift" Ahorizontalopeninginornearanorebodyandparalleltothelongdimensionoftheorebody,asopposedtoacrosscutthatcrossestheorebody.

"ductile" Ofrock,abletosustain,underagivensetofconditions,5%to10%deformationbeforefracturingorfaulting.

"dyke" Anearthenembankment,asaroundadrillsumportank,ortoimpoundabodyofwaterormilltailings.Also,atabularbodyofigneousrockthatcutsacrossthestructureofadjacentrocks.

"electrowinning" Anelectrochemicalprocessinwhichametaldissolvedwithinanelectrolyteisplatedontoanelectrode.Usedtorecovermetalssuchascopperandgoldfromsolutionintheleachingofconcentrates.

"envelope" 1.Theouterorcoveringpartofafold,especiallyofafoldedstructurethatincludessomesortofstructuralbreak.

2.Ametamorphicrocksurroundinganigneousintrusion.

3.Inamineral,anouterpartdifferentinoriginfromaninnerpart.

"epigenetic" Orebodiesformedbyhydrothermalfluidsandgasesthatwereintroducedintothehostrocksfromelsewhere,fillingcavitiesinthehostrock.

"epithermal" Referringtoamineraldepositthatformedlaterthantheenclosingrocksconsistingofveinsandreplacementbodies,containingpreciousmetalsor,morerarely,basemetals.

"extensional-shear vein" Aveinputinplaceinanextensionfracturecausedbythedeformationofarock.

"fault" Afractureorafracturezoneincrustalrocksalongwhichtherehasbeendisplacementofthetwosidesrelativetooneanotherparalleltothefracture.Thedisplacementmaybeafewinchesormanykilometreslong.


"feasibility study" Acomprehensivetechnicalandeconomicstudyoftheselecteddevelopmentoptionforamineralprojectthatincludesappropriatelydetailedassessmentsofrealisticallyassumedmining,processing,metallurgical,economic,marketing,legal,environmental,socialandgovernmentalconsiderations,togetherwithanyotherrelevantoperationalfactorsandadetailedfinancialanalysis,thatarenecessarytodemonstrateatthetimeofreportingthatextractionisreasonablyjustified(economicallymineable).Theresultsofthestudymayreasonablyserveasthebasisforafinaldecisionbyaproponentorfinancialinstitutiontoproceedwith,orfinance,thedevelopmentoftheproject.Theconfidencelevelofthestudywillbehigherthanthatofapre-feasibilitystudy.

"felsic" Atermusedtodescribelight-colouredrockscontainingfeldspar,feldspathoidsandsilica.

"flotation" Themethodofmineralseparationinwhichafrothcreatedbyavarietyofreagentsfloatssomefinelycrushedminerals,whereasothermineralssink.Themetal-richflotationconcentrateisthenskimmedoffthesurface.

"flowsheet" Adiagramshowingtheprogressofmaterialthroughatreatmentplant.

"foliation" Ageneraltermforaplanararrangementoffeaturesinanytypeofrock,especiallytheplanarstructurethatresultsinametamorphicrock.

"footwall" Therockbeneathaninclinedveinororedeposit(oppositeofahangingwall).

"fracture" Anybreakinarock,whetherornotitcausesdisplacement,duetomechanicalfailurebystress;includescracks,jointsandfaults.

"free gold" Goldnotcombinedwithothersubstances.

"glacial till" Dominantlyunsortedandunstratified,unconsolidatedrockdebris,depositeddirectlybyandunderneathaglacier.

"grade" Therelativequantityorthepercentageofmetalcontentofanorebody(e.g. ,gramsofgoldpertonneofrockorpercentcopper).

"greenstone belt" Anareaunderlainbymetamorphosedvolcanicandsedimentaryrocks,usuallyinacontinentalshield.

"grouting" Theprocessofsealingoffawaterflowinrocksbyforcingathinslurryofcementorotherchemicalsintothecrevices,usuallydonethroughadiamonddrillhole.

"hanging wall" Therockontheuppersideofaveinororedeposit.

"head grade" Theaveragegradeoforefedintoamill.

"horst" Anup-faultedblockofrock.

"hydrothermal alteration" Alterationofrocksormineralsbyreactionwithhydrothermal(magmatic)fluids.

"igneous rock" RockformedbythesolidificationofmoltenmaterialthatoriginatedwithintheEarth.

"indicated mineral resource" Thatpartofamineralresourceforwhichquantity,gradeorquality,densities,shapeandphysicalcharacteristicscanbeestimatedwithalevelofconfidencesufficienttoallowtheappropriateapplicationoftechnicalandeconomicparameterstosupportmineplanningandevaluationoftheeconomicviabilityofthedeposit.Theestimateisbasedondetailedandreliableexplorationandtestinginformationgatheredthroughappropriatetechniquesfromlocationssuchasoutcrops,trenches,pits,workingsanddrillholesthatarespacedcloselyenoughforgeologicalandgradecontinuitytobereasonablyassumed.

WhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit.Investorsarecautionednottoassumethatanypartorallofthemineraldepositsinthiscategorywilleverbeconvertedintomineralreserves.


"inferred mineral resource" Thatpartofamineralresourceforwhichquantityandgradeorqualitycanbeestimatedonthebasisofgeologicalevidenceandlimitedsamplingandreasonablyassumed,butnotverified,geologicalandgradecontinuity.Theestimateisbasedonlimitedinformationandsamplinggatheredthroughappropriatetechniquesfromlocationssuchasoutcrops,trenches,pits,workingsanddrillholes.

WhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit.Investorsarecautionednottoassumethatanypartorallofthemineraldepositsinthiscategorywilleverbeupgradedtoahighercategory.Investorsarecautionednottoassumethatpartoforallofaninferredmineralresourceexists,oriseconomicallyorlegallymineable.

"infill drilling" Drillingwithinadefinedmineralizedareatoimprovethedefinitionofknownmineralization.

"intrusive" Abodyofigneousrockformedbytheconsolidationofmagmaintrudedbelowsurfaceintootherrocks,incontrasttolavas,whichareextrudedupontheEarth'ssurface.

"iron formation" Achemicalsedimentaryrock,typicallythin-beddedorfinelylaminated,containingatleast15%ironofsedimentaryoriginandcommonlycontaininglayersofchert.

"ITH drill" Atypeofrockdrillinwhichahammerismountedinthehole,applyingpercussiveforcedirectlytothedrillbit.

"leaching" Achemicalprocessfortheextractionofvaluablemineralsfromore;also,anaturalprocessbywhichgroundwatersdissolveminerals.

"lens" Ageologicaldepositthatisthickinthemiddleandtaperstowardstheends,resemblingaconvexlens.

"lithologic groups" Groupsofrockformations.

"lode" Amineraldepositconsistingofazoneofveins,veinletsordisseminations.

"longitudinal retreat" Anundergroundminingmethodwheretheoreisexcavatedinhorizontalslicesalongtheorebodyandthestopingstartsbelowandadvancesupwards.Theoreisrecoveredunderneathinthestope.

"mafic" Igneousrockscomposedmostlyofdark,iron-andmagnesium-richsilicateminerals.

"massive" Saidofamineraldeposit,especiallyofsulphides,characterizedbyagreatconcentrationoforeinoneplace,asopposedtoadisseminatedorvein-likedeposit.Saidofanyrockthathasahomogeneoustextureorfabricoveralargearea,withanabsenceoflayeringoranysimilardirectionalstructure.

"matrix" Thefine-grainedrockmaterialinwhichalargermineralisembedded.

"measured mineral resource" Thatpartofamineralresourceforwhichquantity,gradeorquality,densities,shapeandphysicalcharacteristicsaresowellestablishedthattheycanbeestimatedwithconfidencesufficienttoallowtheappropriateapplicationoftechnicalandeconomicparameterstosupportproductionplanningandevaluationoftheeconomicviabilityofthedeposit.Theestimateisbasedondetailedandreliableexploration,samplingandtestinginformationgatheredthroughappropriatetechniquesfromlocationssuchasoutcrops,trenches,pits,workingsanddrillholesthatarespacedcloselyenoughtoconfirmbothgeologicalandgradecontinuity.

WhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit.Investorsarecautionednottoassumethatanypartorallofthemineraldepositsinthiscategorywilleverbeconvertedintomineralreserves.


"Merrill-Crowe process" Aseparationtechniqueforremovinggoldfromacyanidesolution.Thesolutionisseparatedfromtheorebymethodssuchasfiltrationandcounter-currentdecantation,andthenthegoldisprecipitatedontozincdust.Silverandcoppermayalsoprecipitate.Theprecipitateisfilteredtocapturethegoldslimes,whicharefurtherrefined(e.g. ,bysmelting,toremovethezincandbytreatingwithnitricacidtodissolvethesilver).

"metamorphism" Theprocessbywhichtheformorstructureofsedimentaryorigneousrocksischangedbyheatandpressure.

"mill" Amineraltreatmentplantinwhichcrushing,wetgrindingandfurthertreatmentoforeisconducted;alsoarevolvingdrumusedforthegrindingoforeinpreparationfortreatment.

"mineral reserve" Theeconomicallymineablepartofameasuredorindicatedmineralresourcedemonstratedbyatleastapreliminaryfeasibilitystudy.Thisstudymustincludeadequateinformationonmining,processing,metallurgical,economicandotherrelevantfactorsthatdemonstrate,atthetimeofreporting,thateconomicextractioncanbejustified.Amineralreserveincludesdilutingmaterialsandallowancesforlossesthatmayoccurwhenthematerialismined.

"mineral resource" Aconcentrationoroccurrenceofdiamonds,naturalsolidinorganicmaterialornaturalsolidfossilizedorganicmaterialincludingbaseandpreciousmetals,coalandindustrialmineralsinorontheEarth'scrustinsuchformandquantityandofsuchagradeorqualitythatithasreasonableprospectsforeconomicextraction.Thelocation,quantity,grade,geologicalcharacteristicsandcontinuityofamineralresourceareknown,estimatedorinterpretedfromspecificgeologicalevidenceandknowledge.Investorsarecautionednottoassumethatanypartorallofthemineraldepositsinanycategoryofresourceswilleverbeconvertedintomineralreserves.

"muck" Finelyblastedrock(oreorwaste)underground.

"net smelter return royalty" Aroyaltypaymentmadebyaproducerofmetalsbasedontheproceedsfromthesaleofmineralproductsafterdeductingoff-siteprocessinganddistributioncostsincludingsmelting,refining,transportationandinsurancecosts.

"ounce" Ameasurementofweight,especiallyusedforgold,silverandplatinumgroupmetals.1troyounce=31.1035grams.

"outcrop" ThepartofarockformationthatappearsatthesurfaceoftheEarth.

"oxidation" Achemicalreactioncausedbyexposuretooxygen,whichresultsinachangeinthechemicalcompositionofamineral.

"pillar" Ablockoforeorotherrockentirelysurroundedbystoping,leftintentionallyforpurposesofgroundcontroloronaccountoflowvalue.

"plunge" Theinclinationofafoldaxisorotherlinearstructurefromahorizontalplane,measuredintheverticalplane.

"polydeformed" Arockthathasbeensubjectedtomorethanoneinstanceoffolding,faulting,shearing,compressionorextensionasaresultofvarioustectonicforces.

"porphyritic" Rocktextureinwhichoneormoremineralshasalargergrainsizethantheaccompanyingminerals.

"porphyry" Anyigneousrockinwhichrelativelylargecrystalsaresetinafine-grainedgroundmass.


"preliminary feasibility study"or "pre-feasibility study"

Acomprehensivestudyofarangeofoptionsforthetechnicalandeconomicviabilityofamineralprojectthathasadvancedtoastagewhereapreferredminingmethod(inthecaseofundergroundmining)orthepitconfiguration(inthecaseofanopenpit)isestablished,andaneffectivemethodofmineralprocessingisdetermined.Itincludesafinancialanalysisbasedonreasonableassumptionsonmining,processing,metallurgical,economic,marketing,legal,environmental,socialandgovernmentalconsiderationsandtheevaluationofanyotherrelevantfactorswhicharesufficientforaqualifiedperson,actingreasonably,todetermineifallorpartofthemineralresourcemaybeclassifiedasamineralreserve.

"pressure oxidation" Aprocessbywhichsulphidemineralsareoxidizedinordertoexposegoldthatisencapsulatedintheminerallattice.Themaincomponentofapressureoxidationcircuitconsistsofapressurizedvessel(autoclave)wheretheoxygenlevel,processtemperatureandacidityaretheprimarycontrolparameters.

"probable mineral reserve" Theeconomicallymineablepartofanindicatedand,insomecircumstances,ameasuredmineralresourcedemonstratedbyatleastapreliminaryfeasibilitystudy.

"proven mineral reserve" Theeconomicallymineablepartofameasuredmineralresourcedemonstratedbyatleastapreliminaryfeasibilitystudy.

"pyrite" Ayellowironsulphidemineral,FeS2,normallyoflittlevalue.Itissometimesreferredtoas"fool'sgold".

"pyroclastic" Rocksproducedbyexplosiveoraerialejectionofash,fragmentsandglassymaterialfromavolcanicvent.

"recovery" Thepercentageofvaluablemetalintheorethatisrecoveredbymetallurgicaltreatment.

"rock burst" Asuddenandoftenviolentbreakingofamassofrockfromthewallsofamine,causedbyfailureofhighlystressedrockandtherapidreleaseofaccumulatedstrainenergy.

"run-of-mine ore" Theraw,minedmaterialasitisdelivered,priortosorting,stockpilingortreatment.

"sandstone" Asedimentaryrockconsistingofgrainsofsandcementedtogether.

"schist" Astronglyfoliatedcrystallinerockthatcanbereadilysplitintothinflakesorslabsduetothewell-developedparallelismofmorethan50%ofthemineralspresentinit,suchasmicaorhornblende.

"sedimentary rocks" Rocksresultingfromtheconsolidationofloosesedimentthathasaccumulatedinlayers.Examplesarelimestone,shaleandsandstone.

"semi-autogenous grinding"or "SAG"

Amethodofgrindingrockwherebylargerchunksoftherockitselfandsteelballsformthegrindingmedia.

"shear" or "shearing" Thedeformationofrocksbylateralmovementalonginnumerableparallelplanes,generallyresultingfrompressureandproducingmetamorphicstructuressuchascleavageandschistosity.

"shear zone" Atabularzoneofrockthathasbeencrushedandbrecciatedbymanyparallelfracturesduetoshearstress.Suchanareaisoftenmineralizedbyore-formingsolutions.

"sill" Anintrusivesheetofigneousrockofroughlyuniformthicknessthathasbeenforcedbetweenthebeddingplanesofexistingrock.

"slurry" Finerockparticlesincirculatingwaterinatreatmentplant.

"stope" 1.Anyexcavationinamine,otherthandevelopmentworkings,madeforthepurposeofextractingore.

2.Toexcavateoreinanundergroundmine.


"strike" Thedirection,orbearingfromtruenorth,ofahorizontallineonaveinorrockformationatrightanglestothedip.

"stringers" Mineralveinletsorfilamentsoccurringinadiscontinuoussubparallelpatterninahostrock.

"sulphide" Amineralcharacterizedbythelinkageofsulphurwithametal,suchaspyrite,FeS2.

"tabular" Saidofafeaturehavingtwodimensionsthataremuchlargerorlongerthanthethird,suchasadyke.

"tailings" Materialdischargedfromamillaftertheeconomicallyandtechnicallyrecoverablevaluablemineralshavebeenextracted.

"tailings dam" or "tailingsimpoundment" or "tailingspond"

Areaclosedatthelowerendbyaconstrainingwallordamtowhichmilleffluentsaresent,theprimefunctionofwhichistoallowenoughtimeformetalstosettleoutorforcyanidetobenaturallydestroyedbeforethewaterisreturnedtothemillordischargedintothelocalwatershed.

"tenement" Therighttoenter,developandworkamineraldeposit.Includesaminingclaimoramininglease.Asynonymofmineraltitle.

"thickener" Avesselforreducingtheproportionofwaterinapulpbymeansofsedimentation.

"thickness" Thedistanceatrightanglesbetweenthehangingwallandthefootwallofalodeorlens.

"tonne" Ametricmeasurementofmass.1tonne=1,000kilograms=2,204.6pounds=1.1tons.

"transfer fault" Astructurethatcanaccommodatelateralvariationsofdeformationandstrain.

"transverse open stoping" Anundergroundminingmethodinwhichtheoreisexcavatedinhorizontalslicesperpendiculartotheorebodylengthandthestopingstartsbelowandadvancesupwards.Theoreisrecoveredunderneaththestopethroughadrawpointsystem.

"trench" Anarrowexcavationdugthroughoverburden,orblastedoutofrock,toexposeaveinororestructureforsamplingorobservation.

"vein" Amineralfillingofafaultorotherfractureinahostrock.

"wacke" A"dirty"sandstonethatconsistsofamixtureofpoorlysortedmineralandrockfragmentsinanabundantmatrixofclayandfinesilt.

"winze" Aninternalmineshaft.

"Zadra elution circuit" Theprocessinthispartofagoldmillstripsgoldandsilverfromcarbongranulesandputsthemintosolution.

"zone" Anareaofdistinctmineralization(i.e. ,adeposit).


CORPORATE STRUCTURE AgnicoEagleMinesLimitedisacorporationorganizedundertheBusiness Corporations Act (Ontario).TheCompanywasformedbyarticlesofamalgamationunderthelawsoftheProvinceofOntarioonJune1,1972,asaresultoftheamalgamationofAgnicoMinesLimited("AgnicoMines")andEagleGoldMinesLimited("Eagle").AgnicoMineswasincorporatedunderthelawsoftheProvinceofOntarioonJanuary21,1953underthename"CobaltConsolidatedMiningCorporationLimited"andchangeditsnametoAgnicoMinesLimitedonOctober25,1957.EaglewasincorporatedunderthelawsoftheProvinceofOntarioonAugust14,1945.

Since1972,severalcorporatealterationshavetakenplace.OnAugust22,1972,theCompany'sarticleswereamendedtopermittheCompanyto:(i)borrowmoneyonthecreditoftheCompany,(ii)issue,sellorpledgedebtobligationsand(iii)charge,mortgageorpledgetheCompany'sproperty.OnJune27,1980,ArticlesofAmendmentwerefiledtoallowtheCompanytousethename"MinesAgnico-EagleLimitée".OnJuly5,1984,theCompany'sarticleswereamendedtodeletealloftheobjectsoftheCompanylistedandspecifythatnorestrictionsapplytothebusinessorpowersthattheCompanymayexercise.OnJuly3,1986,ArticlesofAmendmentwerefiledtosettheminimumnumberofdirectorsoftheCompanyatfiveandthemaximumatnine.OnJuly29,1988,theCompany'sarticleswereamendedtoprovidethattheCompanyisauthorizedtoissueanunlimitednumberofshares.

OnDecember31,1992,theCompanyamalgamatedwithLuckyEagleMinesLimited.OnJune30,1993,themaximumnumberofdirectorsoftheCompanywasincreasedfromnineto12.OnJanuary1,1996,theCompanyamalgamatedwithGoldexMinesLimitedand1159885OntarioLimited.OnOctober17,2001,theCompanyfiledArticlesofArrangementwhichprovidedfortheamalgamationoftheCompanyandMentorExplorationandDevelopmentCo.OnJuly12,2002,thenameoftheCompanywaschangedto"Agnico-EagleMinesLimited/MinesAgnico-EagleLimitee".OnAugust1,2007,theCompanyamalgamatedwithCumberlandResourcesLtd.,Agnico-EagleAcquisitionCorporationandMeadowbankMiningCorporation.OnMay4,2010,themaximumnumberofdirectorsoftheCompanywasincreasedfrom12to15.

OnJanuary1,2011,theCompanyamalgamatedwith1816276OntarioInc.(theultimatesuccessorentitytoComaplexMineralsCorp.).OnJanuary1,2013,theCompanyamalgamatedwith1886120OntarioInc.(thesuccessorcorporationto9237-4925QuébecInc.).OnApril26,2013,ArticlesofAmendmentwerefiledtoeliminatethehyphenbetween"Agnico"and"Eagle"andtheofficialnameoftheCompanybecame"AgnicoEagleMinesLimited/MinesAgnicoEagleLimitée".

TheCompany'sheadandregisteredofficeislocatedatSuite400,145KingStreetEast,Toronto,Ontario,CanadaM5C2Y7;telephonenumber(416)947-1212;website:www.agnicoeagle.com .TheinformationcontainedontheCompany'swebsiteisnotpartofthisAIF.TheCompany'sprincipalplaceofbusinessintheUnitedStatesislocatedat1675E.PraterWay,Suite102,Sparks,Nevada89434.


ThefollowingchartsetsoutthecorporatestructureoftheCompany,eachofitssignificantsubsidiariesandcertainotherentities,togetherwiththejurisdictionoforganizationoftheCompanyandeachsuchsubsidiaryorentityasatMarch22,2017(allofwhicharedirectlyorindirectlywholly-ownedbytheCompany,unlessotherwiseindicated).


DESCRIPTION OF THE BUSINESS TheCompanyisanestablishedCanadian-basedinternationalgoldproducerwithminingoperationsinnorthwesternQuebec,northernMexico,northernFinlandandNunavutandexplorationactivitiesinCanada,Europe,LatinAmericaandtheUnitedStates.TheCompany'soperatinghistoryincludesoverthreedecadesofcontinuousgoldproduction,primarilyfromundergroundoperations.SinceitsformationonJune1,1972,theCompanyhasproducedapproximately14.4millionouncesofgold.

TheCompany'sstrategyistodeliverhighqualitygrowthwhilemaintaininghighperformancestandardsinhealth,safety,environmentalmattersandsocialacceptability;buildastrongpipelineofprojectstodrivefutureproduction;andemploythebestpeopleandmotivatethemtoreachtheirpotential.Overthepasteightyears,theCompanytransformeditselffromaregionallyfocused,singlemineproducertoamulti-mineinternationalgoldproducerwithsevenoperating,100%ownedmines,oneoperating50%ownedmine,andtheMeliadineadvanceddevelopmentproject.

TheCompanyannouncedonFebruary15,2017thatitintendstobuildminingoperationsattheAmaruqsatellitedepositatMeadowbankandtheMeliadineproject,bothofwhichareexpectedtocommenceminingoperationsinthethirdquarterof2019.

Thefollowingtablesetsoutthedateofacquisition,thedateofcommencementofconstruction,thedateofachievingcommercialproductionandtheestimatedminelifefortheCompany'smines.

Date of Acquisition (1)Date of Commencement

of ConstructionDate of achieving

Commercial ProductionEstimated

Mine Life (2)

LaRonde mine 1992 1985 1988 2024

Lapa mine June2003 June2006 May2009 2017

Goldex mine (3) December1993 July2012 October2013 2025

Canadian Malartic mine June2014 n/a May2011 2026

Kittila mine November2005 June2006 May2009 2034

Meadowbank mine April2007 Pre-April2007 March2010 2025

Pinos Altos mine March2006 August2007 November2009 2023

La India mine November2011 September2012 February2014 2022

Notes:

(1) Datewhen100%ownershipwasacquired,otherthantheCanadianMalarticmine,whichisthedatewhen50%ownershipwasacquired.

(2) EstimatedenddateforgoldproductionbasedontheCompany'scurrentlifeofmineplans.TheestimatedminelifeatMeadowbankincludesproductionfromtheAmaruqsatellitedepositatMeadowbank.

(3) ConstructionofinfrastructureforpurposesofminingtheGoldexExtensionZone(the"GEZ")commencedinJuly2005andtheGEZachievedcommercialproductioninAugust2008.MiningoperationsontheGEZhavebeensuspendedsinceOctober2011.Inlate2013,miningandproductionbeganfromtheMandEZonesoftheGoldexmine.

Since1988,theLaRondemine,intheAbitibiregionofQuebec,hasbeentheCompany'sflagshipoperation,producingapproximately5.3millionouncesofgoldaswellasvaluableby-products.TheLapamineis11kilometreseastoftheLaRondemine,andtheGoldexmine,whichachievedcommercialproductionfromtheMandEZonesinOctober2013,is60kilometreseastoftheLaRondemine.ThesynergiesbetweenthesesitescontributetotheCompany'seffortstoreducecosts.TheCompany's50%ownedCanadianMalarticmine,alsointheAbitibiregionofQuebec,wasacquiredinJune2014.TheKittilamineinFinland,hasalongreservelifeandhassignificantproductionexpansionpotential.TheCompany'sMeadowbankmine,inNunavut,isexpectedtoproducethemostgold(approximately320,000ounces)ofanyoftheCompany'sminesin2017.ThePinosAltosmine,inMexico,hassignificantproductionexpansionpotential.Inaddition,theCompanyplanstopursueopportunitiesforgrowthingoldproductionandgoldreservesthroughtheprudentacquisitionordevelopmentofexplorationproperties,developmentproperties,producingpropertiesandotherminingbusinessesintheAmericasandEurope.

In2016,theCompanyproduced1,662,888ouncesofgoldatproductioncostsperounceofgoldof$621andtotalcashcostsperounceofgoldonaby-productbasisof$573andatall-insustainingcostsperounceof$824onaby-productbasis.For2017,theCompanyexpectstoproduceapproximately1,555,000ouncesofgoldattotalcashcostsperounce


ofgoldonaby-productbasisbetween$595and$625andatall-insustainingcostsperouncebetween$850and$900onaby-productbasis.See"IntroductoryNotes–NotetoInvestorsConcerningCertainMeasuresofPerformance"foradiscussionoftheuseofthenon-GAAPmeasurestotalcashcostsperounceandall-insustainingcostsperounce.TheCompanyhastraditionallysoldallofitsproductionatthespotpriceofgoldduetoitsgeneralpolicynottosellforwarditsfuturegoldproduction.

GENERAL DEVELOPMENT OF THE BUSINESS Three-Year History

2014

AsofFebruary1,2014,commercialproductionwasachievedattheLaIndiamine.

OnJune16,2014,theCompanyandYamanajointlyacquired100%oftheoutstandingsharesofOsiskopursuanttoacourt-approvedplanofarrangementundertheCanada Business Corporations Act (the"OsiskoArrangement")forconsiderationofapproximatelyC$3.9billion,consistingofapproximatelyC$1.0billionincashandacombinationofcommonsharesoftheCompany,commonsharesofYamanaandsharesofanewcompanythatwasspun-offundertheOsiskoArrangement.OsiskowasaCanadianbasedproducinggoldminingcompanythatwas,atthetime,listedontheTorontoStockExchange(the"TSX").Osiskowas100%owneroftheCanadianMalarticmineintheAbitibiregionofQuebec.UndertheOsiskoArrangement,eachOsiskosharewasexchangedfor:(i)C$2.09incash(C$1.045persharefromeachoftheCompanyandYamana);(ii)0.07264ofacommonshareoftheCompany;(iii)0.26471ofacommonshareofYamana;and(iv)0.1ofonecommonshareofOsiskoGoldRoyaltiesLtd("NewOsisko"),thenewlyformedspun-offcompanythatcommencedtradingontheTSXimmediatelyfollowingtheOsiskoArrangement.

InconnectionwiththeOsiskoArrangement,substantiallyalloftheassetsandobligationsrelatingtotheCanadianMalarticmineinQuebecweretransferredtoCanadianMalarticGP(the"Partnership"),anewlyformedgeneralpartnershipinwhichtheCompanyandYamanaeachownanindirect50%interest.TheCompanyandYamanaformedajointmanagementcommitteetooperatetheCanadianMalarticmine.OnJune17,2014,OsiskoandtheacquisitioncorporationformedbytheCompanyandYamanatoacquireOsiskoamalgamatedtoform"CanadianMalarticCorporation"inwhichAgnicoandYamanaeachholdanindirect50%interest.CanadianMalarticCorporationcontinuestohold,amongotherthings,Osisko'sKirklandLake,HammondReef,PandoraandWood-Pandora(50%interest)assetsandproperties.TheCompanyandYamanaarejointlyexploringandmaypotentiallydeveloptheKirklandLakeassets,andcontinueexplorationattheHammondReefprojectandthePandoraandWood-Pandoraproperties,ineachcasethroughCanadianMalarticCorporation.

PursuanttotheOsiskoArrangement,thefollowingassetsofOsiskoweretransferredtoNewOsisko:(i)a5.0%netsmelterroyaltyontheCanadianMalarticmine;(ii)C$157.0millionincash;(iii)a2.0%netsmelterroyaltyontheKirklandLakeassets,theHammondReefproject,andcertainotherexplorationpropertiesretainedbyCanadianMalarticCorporation;(iv)allassetsandliabilitiesofOsiskorelatingtotheGuerrerocampinMexico;and(v)certainotherinvestmentsandassets.

TheCompany'sandYamana'srelationshipwithrespecttotheCanadianMalarticmineisgovernedbyaunanimousshareholdersagreementwithrespecttoCanadianMalarticCorporationandageneralpartnershipagreementwithrespecttothePartnership.

DirecttransactioncoststotalingC$16.7millionwereincludedinthecostoftheinvestmentinOsisko.TheCompany'sshareofOsisko'sJune16,2014purchasepricewascomprisedof33,923,212oftheCompany'scommonsharesissuedtoformerholdersofOsiskoshares,C$502,059,784.01incashand871,680oftheCompany'scommonsharesissuedandheldbythedepositaryinrespectofunsecuredconvertibledebenturespreviouslyissuedbyOsiskothatremainedoutstandingfollowingtheOsiskoArrangement.OnJune30,2015,thenegotiatedearlysettlementofalloftheoutstandingunsecuredconvertibledebentureswascompleted.Asaresultofthissettlement,871,680commonsharesoftheCompanywithafairvalueofapproximately$24.8millionwerereleasedbythedepositarytothedebentureholders,alongwithacashpaymentofapproximately$10.1million.Additionalcashconsiderationof$3.2millionwaspaidtotheholdersoftheconvertibledebenturesuponsettlement.

AbusinessacquisitionreportinrespectoftheOsiskoArrangementwasfiledbytheCompanyontheSystemforElectronicDocumentAnalysisandRetrieval("SEDAR")onAugust22,2014.

OnNovember28,2014,theCompanycompleteditsacquisitionofalloftheissuedandoutstandingcommonsharesofCaydenResourcesInc.("Cayden"),aCanadianbasedgoldexplorationcompanythatwas,atthetime,listedontheTSX


VentureExchange(the"TSX-V"),pursuanttoacourt-approvedplanofarrangementundertheBusiness Corporations Act (BritishColumbia).Caydenindirectlyhelda100%interest,oranoptiontoearna100%interest,incertainminingpropertiesinJaliscoandGuerrero,Mexico,includingtheElBarquenoproperty.Underthetermsofthearrangement,eachshareholderofCaydenreceived0.09ofacommonshareoftheCompanyandC$0.01incash.

CapitalexpendituresbytheCompanyin2014were$475.4million.Thisincluded$76.6millionattheLaRondemine,$20.2millionattheLapamine,$34.3millionattheGoldexmine,$36.1millionattheCanadianMalarticmine,$106.2millionattheKittilamine,$48.4millionatthePinosAltosmine,$10.9millionattheCrestonMascotadepositatPinosAltos,$22.7millionattheLaIndiamine,$65.9millionattheMeadowbankmine,$48.3millionattheMeliadineprojectand$5.9millionatotherproperties.Inaddition,theCompanyincurred$25.9millionofexpendituresonminesiteexplorationand$56.0milliononexplorationactivitiesattheCompany'sexplorationpropertiesandoncorporatedevelopmentactivities.

2015

OnFebruary23,2015,AgnicoEagleenteredintoabindingletterofintent(the"LOI")withCanadianMalarticGP,YamanaandAbitibiRoyaltiesInc.("AbitibiRoyalties")regardingtheMalarticCHLprospectwhichabutstheCanadianMalarticmineandinwhichCanadianMalarticCorporationhelda70%interest,withtheremaining30%interestheldbyAbitibiRoyalties.OnMarch19,2015,AbitibiRoyaltiessoldits30%interestintheMalarticCHLprospecttoCanadianMalarticGP(the"CHLTransaction")inexchangefor459,197commonsharesoftheCompanyand3,549,685Yamanacommonshares,withavalueofapproximatelyC$35million(basedontherespectiveclosingpricesofsuchsharesontheTSXonFebruary20,2015,thedateimmediatelypriortothepublicannouncementbyAbitibiRoyaltiesofenteringintotheLOI),and3%netsmelterreturnroyaltiestoAbitibiRoyaltiesandNewOsiskoontheprospect.Inaddition,aspartoftheCHLTransactionallprioragreements,claimsandproceedingsrelatingtotheMalarticCHLprospect,includingthosepreviouslyinstitutedbyAbitibiRoyaltiesagainstOsiskopriortotheCompanyandYamanacompletingtheOsiskoArrangement,wereterminated,settledandreleased.

PriortocompletionoftheOsiskoArrangementonJune6,2014,CliftonStarResourcesInc.("Clifton")institutedproceedingsagainstOsisko(nowCanadianMalarticCorporation)seeking,amongotherthings,anorderthatOsiskopayCliftonC$22.5millionindamages.Intheproceedings,Cliftonalleged,amongotherthings,thatOsiskowasobligatedtolendCliftonC$22.5milliononoraroundDecember1,2012pursuanttoaDecember10,2009commitmentletterandaDecember10,2009optionandjointventureagreement,eachbetweenCliftonandOsisko,andthatOsisko'sfailuretoadvancesuchloanresultedindamagestoClifton.CliftonfurtherallegedthatsuchloanwasintendedtobeusedtomakepaymentsundercertainoptionagreementsbetweenCliftonandthirdpartieswhichentitledCliftontoacquiresharesofsuchthirdpartiesthatownedinterestsintheconcessionscomprisingthe"DuparquetProject".FollowingthejointacquisitionofOsiskobytheCompanyandYamanaonJune16,2014,theCompanyandYamanaengagedindiscussionswithCliftontoadvancethesettlementofsuchclaims.EffectiveMarch2,2015,CanadianMalarticCorporation(asthesuccessortoOsisko)enteredintoasettlementagreementwithClifton,pursuanttowhichCanadianMalarticCorporationpaidCliftonapproximatelyC$5.27millioninconsiderationforafullandfinalreleaseofallclaimsarisingfromthefactsdescribedintheCliftonproceedings.Concurrently,undertwoseparatenon-brokeredprivateplacements,eachoftheCompanyandYamanasubscribedfor4,772,786commonsharesofCliftonatapriceofC$0.60pershare,fortotalproceedstoCliftonofapproximatelyC$5.73million.

OnJune9,2015,theCompanycompleteditsacquisitionofalloftheissuedandoutstandingcommonsharesofSoltoroLtd.("Soltoro"),aCanadianbasedgoldexplorationcompanythatwas,atthetime,listedontheTSX-V,pursuanttoacourt-approvedplanofarrangementundertheCanadaBusiness Corporations Act .Soltoroindirectlyhelda100%interest,oranoptiontoearna100%interest,incertainminingpropertiesinJalisco,Mexico,includingtheElRayopropertywhichiscontiguouswiththeCompany'sElBarquenoproperty.Underthetermsofthearrangement,eachshareholderofSoltororeceived0.00793ofacommonshareoftheCompany,C$0.01incashandonecommonshareofanewlyformedOntariocompanynamedPalaminaCorp.valuedatC$0.02pershare.

OnJune11,2015,theCompanyacquiredfromOrexMineralsInc.("Orex")55.0%oftheissuedandoutstandingcommonsharesofGunnarnMiningAB("Gunnarn"),whichholdstheBarseleprojectinnorthernSweden.Considerationfortheacquisitionwascomprisedof$6millionpaidtoOrexatclosingandadditionalpaymentsof$2millionincashorAgnicoEaglecommonshares(attheCompany'ssolediscretion)duetoOrexoneachofthefirstandsecondanniversariesoftheclosing.TheCompanyhasalsocommittedtoincurring$7.0millioninexplorationexpendituresassociatedwiththeBarseleprojectbyJune11,2018,andmayearnanadditional15.0%interestinGunnarniftheCompanycompletesapre-feasibilitystudyrelatedtotheBarseleproject.TheCompanyholdsamajorityoftheseatsontheboardofdirectorsofGunnarnandisthesoleoperatoroftheBarseleproject.


OnSeptember30,2015,theCompanyenteredintoanotepurchaseagreementwithRessourcesQuébecInc.,asubsidiaryofInvestissementQuébec,providingfortheissuanceof$50millionprincipalamountof4.15%seniorunsecurednotesdue2025(the"2015NotePurchaseAgreement").TheCompanyagreedtoapplyanamountequaltoorgreaterthanthenetproceedsfromtheissuanceofthenotestowardstheexpansion,development,upgradeormaintenanceofminingprojectsintheProvinceofQuébec.Foradditionaldetailssee"MaterialContracts–NotePurchaseAgreements"below.

CapitalexpendituresbytheCompanyin2015were$449.8million.Thisincluded$67.3millionattheLaRondemine,$6.5millionattheLapamine,$48.8millionattheGoldexmine,$43.4millionattheCanadianMalarticmine,$56.4millionattheKittilamine,$61.8millionatthePinosAltosmine,$4.2millionattheCrestonMascotadepositatPinosAltos,$23.4millionattheLaIndiamine,$65.2millionattheMeadowbankmine,$66.7millionattheMeliadineprojectand$6.0millionatotherproperties.Inaddition,theCompanyincurred$10.2millionofexpendituresonminesiteexplorationand$100.2milliononexplorationactivitiesattheCompany'sexplorationpropertiesandoncorporatedevelopmentactivities.

2016

OnJune30,2016,theCompanyenteredintoanotepurchaseagreementwithcertaininstitutionalinvestors,providingfortheissuanceofnotesconsistingof$100million4.54%SeriesAseniornotesdue2023,$200million4.84%SeriesBseniornotesdue2026and$50million4.94%SeriesCseniornotesdue2028.Foradditionaldetailssee"MaterialContracts–NotePurchaseAgreements"below.

ThefollowingtablesetsouttheCompany'scapitalexpendituresin2016.

2016 Capital Expenditures

(thousands of $)

Sustaining Development

LaRonde 64,288 –CanadianMalartic 58,174 2,260Meadowbank 38,248 503Kittila 62,008 13,896Goldex 22,030 59,237Lapa – –PinosAltos 47,410 12,162CrestonMascotadepositPinosAltos 9,287 –LaIndia 10,021 486Meliadine – 130,942Other – 4,361Total Expenditures 311,466 223,847

2017

TheCompanyannouncedonFebruary15,2017thatitintendstobuildminingoperationsattheAmaruqsatellitedepositatMeadowbankandtheMeliadineproject,bothofwhichareexpectedtocommenceminingoperationsinthethirdquarterof2019.

TheCompanyiscurrentlymarketingnotestoinstitutionalinvestorsonaprivateplacementbasisandexpectstoreceivebidsfromprospectivepurchaserspriortotheendofMarch2017.Atthistime,theprincipalamountoftheoffering,interestratesandtenorofthenoteshavenotbeendetermined,thoughtheCompanycurrentlyanticipatesthatthenoteswillbeissuedintrancheswithmaturitiesofapproximately8,10and12yearsfromissuance.AllothertermsofthenotesareexpectedtobesubstantiallythesameasthetermsoftheexistingnotesoftheCompanyissuedundernotepurchaseagreementsin2010,2012,2015and2016.See"MaterialContracts—NotePurchaseAgreements"below.TheCompanyexpectsthattheissuanceofthenoteswouldclosewithinthenextsixmonthsandtheproceedswouldbeusedforworkingcapitalandgeneralcorporatepurposes.However,untiltheCompanyreceivesbidsfrom,andentersintoadefinitiveagreementwith,investors,therecanbenoassurancethattheofferingwillbecompleted.


ThefollowingtablesetsouttheCompany'sexpectedcapitalexpendituresfor2017.

Estimated 2017 Capital Expenditures

(thousands of $)

Sustaining DevelopmentCapitalized Exploration

LaRonde 67,700 – 1,700LaRondeZone5 – 35,000 400CanadianMalartic 65,900 1,700 2,300Meadowbank 20,300 – –Amaruq – 73,100 5,100Kittila 52,700 24,100 3,200Goldex 17,000 55,800 3,800Lapa – – –PinosAltos 48,400 5,800 500CrestonMascotadepositPinosAltos 5,500 – –LaIndia 6,900 – 800Meliadine – 355,800 3,900Other – 2,000 – Total Expenditures 284,400 553,300 21,700

Pre-2014

Inthesecondquarterof2004,theCompanyacquiredanapproximate14%ownershipinterestinRiddarhyttanResourcesAB("Riddarhyttan"),aSwedishpreciousandbasemetalsexplorationanddevelopmentcompanythatwasatthetimelistedontheStockholmStockExchange.InNovember2005,theCompanycompletedatenderoffer(the"RiddarhyttanOffer")foralloftheissuedandoutstandingsharesofRiddarhyttanthatitdidnotown.TheCompanyissued10,023,882ofitscommonsharesandpaidandcommittedanaggregateof$5.1millioncashasconsiderationtoRiddarhyttanshareholdersinconnectionwiththeRiddarhyttanOffer.OnMarch28,2011,RiddarhyttanwasmergedwithAgnicoEagleABandAgnicoEagleSwedenAB,withAgnicoEagleSwedenABasthecontinuingentity.TheKittilamineiscurrently100%ownedbyAgnicoEagleFinlandOy,whichiswholly-ownedbyAgnicoEagleSwedenAB,anindirectsubsidiaryoftheCompany.

Inthefirstquarterof2005,theCompanyenteredintoanexplorationandoptionagreementwithIndustriasPenolesS.A.deC.V.("Penoles")toacquirethePinosAltospropertyinnorthernMexico.ThePinosAltospropertyiscomprisedofapproximately11,000hectaresintheSierraMadregoldbelt,approximately225kilometreswestofthecityofChihuahuainthestateofChihuahuainnorthernMexico.InFebruary2006,theCompanyexerciseditsoptionandacquiredthePinosAltospropertyonMarch15,2006.Underthetermsoftheexplorationandoptionagreement,thepurchasepriceof$66.8millionwascomprisedof$32.5millionincashand2,063,635commonsharesoftheCompany.

InFebruary2007,theCompanymadeanexchangeofferforalloftheoutstandingsharesofCumberlandResourcesLtd.("Cumberland")notalreadyownedbytheCompany.Atthetime,Cumberlandwasapre-productiondevelopmentstagecompanylistedontheTSXandAmericanStockExchangewhoseprimaryassetwastheMeadowbankproperty.InMay2007,theCompanyacquiredapproximately92%oftheissuedandoutstandingsharesofCumberlandthatitdidnotpreviouslyownand,inJuly2007,theCompanycompletedtheacquisitionofallCumberlandsharesbywayofacompulsoryacquisition.TheCompanyissued13,768,510ofitscommonsharesandpaid$9.6millionincashasconsiderationtoCumberlandshareholdersinconnectionwithitsacquisitionofCumberland.

InApril2010,theCompanyenteredintoanagreementinprinciplewithComaplexMineralsCorp.("Comaplex")toacquirealloftheoutstandingsharesofComaplexthatitdidnotalreadyown.Atthetime,Comaplexowneda100%interestintheadvancedstageMeliadinegoldproperty,whichislocatedapproximately300kilometressoutheastoftheCompany'sMeadowbankmine.InMay2010,theCompanyexecutedthedefinitiveagreementswithComaplexand,inJuly2010byplanofarrangement,theCompanyacquired100%oftheMeliadinegoldpropertythroughtheacquisitionofComaplex,whichwasrenamedMeliadineHoldingsInc.Pursuanttothearrangement,ComaplextransferredtoGeomark


ExplorationLtd.allassetsandrelatedliabilitiesotherthanthoserelatingtotheMeliadineproject.Inconnectionwiththearrangement,theCompanyissued10,210,848ofitscommonsharesasconsiderationtoComaplexshareholders.

InSeptember2011,theCompanyenteredintoanacquisitionagreementwithGraydResourceCorporation("Grayd"),aCanadian-basednaturalresourcecompanythatwas,atthetime,listedontheTSX-V,pursuanttowhichtheCompanyagreedtomakeanoffertoacquirealloftheissuedandoutstandingcommonsharesofGrayd.Atthetime,Graydhelda100%interestintheLaIndiapropertylocatedintheMulatosGoldBeltofSonora,MexicoandhadrecentlydiscoveredtheTarachigoldporphyryprospectlocatedapproximatelytenkilometresnorthoftheLaIndiaproperty.InOctober2011,theCompanymadetheofferbywayofatake-overbidcircular,asamendedandsupplemented,and,inNovember2011,acquiredapproximately95%oftheoutstandingcommonsharesofGrayd.InJanuary2012,theCompanycompletedacompulsoryacquisitionoftheremainingoutstandingcommonsharesofGraydandGraydbecameawholly-ownedsubsidiaryoftheCompany.Inaggregate,theCompanyissued1,319,418ofitscommonsharesandpaidC$179.7millionincashasconsiderationtoGraydshareholdersinconnectionwiththetransaction.

InMay2013,theCompanycompleteditsacquisitionofalloftheissuedandoutstandingcommonsharesofUrastarGoldCorp.("Urastar"),aCanadian-basedgoldexplorationcompanythatwas,atthetime,listedontheTSX-V,pursuanttoacourt-approvedplanofarrangementundertheBusiness Corporations Act (BritishColumbia).Urastarhelda100%interestincertainminingpropertiesinSonora,Mexico.Underthetermsofthearrangement,eachshareholderofUrastarreceivedC$0.25percommonshareandholdersofunexercisedin-the-moneywarrantsofUrastarreceivedC$0.15perwarrant.Inaggregate,theCompanypaid$10.1millionincashtoUrastarshareholdersandwarrantholdersinconnectionwiththetransaction.


OPERATIONS AND PRODUCTION Business Units and Foreign Operations

TheCompanyoperatesthroughthreebusinessunits:NorthernBusiness,SouthernBusinessandExploration.

TheCompany'sNorthernBusinessiscomprisedoftheCompany'soperationsinCanadaandFinland.TheCompany'sCanadianpropertiesincludetheLaRondemine,theLapamine,theGoldexmine,theMeadowbankmine(includingtheAmaruqsatellitedeposit)andtheMeliadineproject,eachofwhichisa100%interesthelddirectlybytheCompany,anda50%interestintheCanadianMalarticMine,whichisheldindirectlythroughawholly-ownedsubsidiaryoftheCompanyandCanadianMalarticCorporation.TheCompany'soperationsinFinlandareconductedthroughitsindirectsubsidiary,AgnicoEagleFinlandOy,whichownstheKittilamine.In2016,theNorthernBusinessaccountedforapproximately79%oftheCompany'sgoldproduction.In2017,theCompanyanticipatesthattheNorthernBusinesswillaccountforapproximately80%oftheCompany'sgoldproduction.

TheCompany'sSouthernBusinessiscomprisedoftheCompany'soperationsinMexico.TheCompany'sPinosAltosmine,includingtheCrestonMascotadeposit,isheldthroughitsindirectsubsidiary,AgnicoEagleMexico,S.A.deC.V.TheLaIndiamineisownedbytheCompany'sindirectsubsidiary,AgnicoSonora,S.A.deC.V.In2016,theSouthernBusinessaccountedforapproximately21%oftheCompany'sgoldproduction.In2017,theCompanyanticipatesthattheSouthernBusinesswillaccountforapproximately20%oftheCompany'sgoldproduction.

TheCompany'sExplorationgroupfocusesprimarilyontheidentificationofnewmineralreservesandmineralresourcesandnewdevelopmentopportunitiesinpoliticallystableandprovengoldproducingregions.CurrentexplorationactivitiesareconcentratedinCanada,Europe,LatinAmericaandtheUnitedStates.Severalprojectswereevaluatedduring2016intheseregionswheretheCompanybelievesthepotentialforgoldoccurrencesisexcellentandwhichtheCompanybelievestobepoliticallystableandsupportiveoftheminingindustry.TheCompanycurrentlymanages79propertiesinCanada,fourpropertiesintheUnitedStates,fourgroupsofpropertiesinFinland,twopropertiesinSwedenand18propertiesinMexico.Explorationactivitiesaremanagedfromofficesin:Vald'Or,Quebec;Reno,Nevada;Chihuahua,HermosilloandJalisco,Mexico;Kittila,Finland;Storuman,Sweden;andVancouver,BritishColumbia.

Northern Business

LaRondeMine

TheLaRondemineissituatedapproximatelyhalfwaybetweenRouyn-NorandaandVald'OrinnorthwesternQuebec(approximately470kilometresnorthwestofMontreal,Quebec)inthemunicipalitiesofPreissacandCadillac.AtDecember31,2016,theLaRondeminewasestimatedtohaveprovenandprobablemineralreservescontainingapproximately3.05millionouncesofgoldcomprisedof17.6milliontonnesoforegrading5.40gramspertonne.TheLaRondemineconsistsoftheLaRondepropertyandtheadjacentElCocoandTerrexproperties,eachofwhichis100%ownedandoperatedbytheCompany.TheLaRondeminecanbeaccessedeitherfromVald'OrintheeastorfromRouyn-Norandainthewest,eachofwhicharelocatedapproximately60kilometresfromtheLaRondemineviaQuebecprovincialhighwayNo.117.TheLaRondemineissituatedapproximatelytwokilometresnorthofhighwayNo.117onQuebecregionalhighwayNo.395.TheCompanyhasaccesstotheCanadianNationalRailwayatCadillac,Quebec,approximatelysixkilometresfromtheLaRondemine.

TheCompanyfirstacquiredaninterestintheLaRondepropertyin1974throughanindirectinvestmentinDumagamiMinesLimited("Dumagami").TheCompanyacquired100%oftheoutstandingsharesofDumagamionDecember19,1989and,onDecember29,1992,Dumagamitransferredallofitspropertyandassets,includingtheLaRondemine,totheCompanyandsubsequentlydissolved.

TheLaRondemineoperatesunderminingleasesobtainedfromtheMinistryofEnergyandNaturalResources(Quebec)andundercertificatesofapprovalgrantedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).TheLaRondepropertyconsistsof36contiguousminingclaimsandoneprovincialmininglease.TheElCocopropertyconsistsof22contiguousminingclaimsandoneprovincialmininglease.TheTerrexpropertyconsistsof21miningclaimsandoneprovincialminingleasethatwasacquiredinJuly2014.TheminingleasesontheLaRonde,ElCocoandTerrexpropertiesexpirein2018,2021and2034,respectively,andareautomaticallyrenewableforthreefurtherten-yeartermsuponpaymentofasmallfee.TheCompanyalsohasthreesurfacerightsleasesthatrelatetothewaterpipelinerightofwayfromLakePreissacandtheeasternextensionoftheLaRondetailingspond#7ontheElCocoproperty.Thesurfacerightsleasesarerenewableannually.


LocationMapoftheLaRondeMine(asatDecember31,2016)

TheLaRondemineincludesundergroundoperationsattheLaRondeandElCocopropertiesthatcanbothbeaccessedfromthePennaShaft,amill,atreatmentplant,asecondarycrusherbuildingandrelatedfacilities.In2003,explorationworkstartedtoextendoutsideoftheLaRondepropertyontotheTerrexpropertywhereadown-plungeextensionofZone20Northwasdiscovered.TheTerrexpropertyissubjecttoa5%netprofitsroyaltyinfavourofDelferGoldMinesInc.TheCompanydoesnotexpecttopayroyaltiesinrespectofthispartofthepropertyin2017.Inaddition,theCompanyowns100%oftheSphinxpropertyimmediatelytotheeastoftheElCocoproperty.In2016,86%oftheoreprocessedfromtheLaRondeminewasextractedfromthedeeperportionoftheLaRondemine(thatis,belowLevel245)orthe"LaRondemineextension".In2017,theCompanyanticipatesthatapproximately87%oftheoreprocessedwillbefromthisdeeperpartofthemine.

TheCompanyexpectsfutureby-productmetalproductionattheLaRondeminetodeclineasoperationscontinuetoshifttowardsdeepersectionsoftheminewheregoldgradesarehigherandby-productmetalsarelessprevalent.Theassociateddecreaseinby-productrevenuesisexpectedtoresultinhighertotalcashcostsperounceonaby-productbasisattributabletooreextractedfromthesepartsofthemine.


MapoftheAbitibiregionshowingthelocationoftheLaRonde,Lapa,GoldexandCanadianMalarticMines


Mining and Milling Facilities

SurfacePlanoftheLaRondeMine(asatDecember31,2016)

TheLaRondeminewasoriginallydevelopedwitha1,207-metreshaft(Shaft#1)andanundergroundrampaccesssystem.TherampaccesssystemisavailabledowntoLevel25ofShaft#1andcontinuesdowntoLevel299atthePennaShaft.ThemineralreserveaccessiblefromShaft#1wasdepletedinSeptember2000andShaft#1isnolongerinuse.Asecondproductionshaft(Shaft#2),locatedapproximately1.2kilometrestotheeastofShaft#1,wascompletedin1994toadepthof525metresandwasusedtomineZones6and7.BothorezonesweredepletedinMarch2000andtheworkingswereallowedtoflooduptoLevel6(approximately280metres).Athirdshaft(thePennaShaft),locatedapproximately800metrestotheeastofShaft#1,wascompleteddowntoadepthof2,250metresinMarch2000.ThePennaShaftisusedtomineZones20North,20South,6and7.

In2006,theCompanyinitiatedconstructionoftheLaRondemineextension.HoistingfromthisdeeperpartoftheLaRondeminebeganinthefourthquarterof2011andcommercialproductionwasachievedinNovember2011.AccesstothedeeperpartoftheLaRondemineisprovidedthrougha823-metreinternalshaft(Shaft#4)startingfromLevel203,foratotaldepthof2,858metresbelowthesurfacewhichwascompletedinNovember2009.Arampisusedtoaccessthelowerpartoftheorebodydownto3,110metresbelowthesurface.AninternalwinzesystemisusedtohoistorefromdepthtofacilitiesonLevel215,approximately2,150metresbelowthesurface,whereitistransferredtothePennaShafthoist.

ProductionfromtheLaRondemineextensioncontinuestomovetowardsanticipatedsteady-statelevels.Mostofthedelaysencounteredduring2016wererelatedtoseismicity,assomeareasoftheminewereunderperiodicclosuretomitigateseismicityrisk.TheCompanyexpectsthelevelsofseismicitytocontinuetoevolveandtheCompanyadjuststheminingmethods,groundsupport,protocolsandmonitoringtoadapttotheevolvinglevels.


In2016,thedevelopmentofthewesternportionoftheminecontinuedtoadvanceandtwosilos(excavationandconstruction)weredeliveredandarecurrentlyincommissioning.ThesesilosareexpectedtoincreasetheflexibilitysurroundingthecoarseoreconveyorsystemthatextendsfromLevel292tothecrusheronLevel280.In2017,theCompanyexpectstoreachLevel311intheeasternpartofthemine.TheCompanyexpectstominethefirststopesinthewesternportionoftheminein2017,followingthecommissioningofthecoarseoreconveyor.

Mining Methods

TheprimarysourceoforeattheLaRondeminecontinuestobefromundergroundminingmethods.During2016,twominingmethodswereused:longitudinalretreatwithpastebackfillandtransverseopenstopingwithpasteorunconsolidatedbackfill.Inaddition,toaddressconcernsregardingthefrequencyandintensityofseismiceventsencounteredatthelowerlevelsoftheLaRondemine,ahybridofthesetwomethodshasbeenused.Intheundergroundmine,sublevelsaredrivenatbetween30-metreand40-metreverticalintervals,dependingonthedepth.Stopesareundercutin15-metrewidepanels.Inthelongitudinalmethod,panelsareminedin15-metresectionsandbackfilledwith100%cementedrockbackfillorcementedpastebackfill.Thepastebackfillplantwascompletedin2000andislocatedonthesurfaceattheprocessingfacility.Inthetransverseopenstopingmethod,approximately50%oftheoreisminedinthefirstpassandfilledwithcementedpastebackfill.Onthesecondpass,theremainderoftheoreisminedandfilledwithunconsolidatedwasterockbackfillorcementedpastebackfill.

ThethroughputatLaRondein2016averaged6,171tonnesperday,comparedwith6,141tonnesperdayin2015.Theincreasedthroughputin2016wasduetothematurityofthenewmininghorizoninthedeepestportionofthemine.

TheCompany'soperationsattheLaRondeminereachmorethanthreekilometresbelowthesurface.Thereareveryfewresourcesavailabletomodelthegeomechanicalconditionsatthisdepth,whereoperationsaresubjecttohighstresslevels.TheCompanyconductsperiodictechnicalreviewsofitsoperationsattheselevelsusingconsultantswithexperienceindeepmining.TheCompanyusestheresultsofthesetechnicalreviewstoadaptbestminingpracticesandadjusttheminingsequenceforitsoperationsattheselevels.TheCompanybelievesthattheexperienceithasgainedminingatthoselevelshasprovidedasuccessfulmodelforfutureminingatdepth.

Surface Facilities

SurfacefacilitiesattheLaRondemineincludeaprocessingplantwithadailycapacityof7,200tonnesofore,whichhasbeenexpandedfourtimessince1987fromtheoriginalrateof1,630tonnesperday.Beginningin1999,transitiontotheLaRondemine'spolymetallicmassivesulphideorebodyrequiredseveralmodificationstotheprocessingplant.In2008,theinstallationofalimitedcopper/leadseparationflotationcircuit,followingthecopperflotationcircuit,wascompleted.Alsoin2008,acyanidationplantbeganoperationforthetreatmentofsulphideconcentratefromtheGoldexmine.ACILcircuitwascompletedandbeganoperationinApril2013toreplacetheexistingLaRondepreciousmetalMerrill-Crowecircuit.TheLaRondemineisalsothesitefortheLapamineoreprocessingplant(1,500tonnesperday),whichwascommissionedinthesecondquarterof2009.

Theorerequiresaseriesofgrinding,copper/leadflotationandseparation,zincflotationandzinctailspreciousmetalsleachingcircuits,nowfollowedbyCIPrecovery.Pastebackfillandcyanidedestructionplantsoperateintermittently.Thetailingsareahasadedicatedcyanidedestructionandmetalsprecipitationplantthatwaterpassesthroughpriortorecirculatingtothemill.AbiologicalwatertreatmentplantaddressesthepresenceofthiocyanateinthetailingspondsattheLaRondemine.Theplantusesbacteriatooxidizeanddestroythiocyanateinthewaterandremovesphosphatepriortoitsreleasetotheenvironment.

TheGoldexconcentratecircuitconsistsofpulpreceivedfromtheGoldexmillviatruck.ThematerialissenttotheLaRondeleaching/CIPcircuitforgoldrecoveryalongwithLaRonderesidualpulp.

TheLapamineoreprocessingplantconsistsofatwo-stagegrindingcircuittoreducethegranularityoftheore.Agravityrecoverycircuitthatisincorporatedintothegrindingcircuitrecoversupto45%oftheavailablegold,dependingonfeedgrades.TheresidualpulpisleachedinaconventionalCILcircuittodissolvethebalanceofthepreciousmetal.Acarbonstripcircuitrecoversthegoldfromthecarbonwhichisrecycledtotheleachcircuit.

Production and Mineral Recoveries

During2016,theLaRondeminehadpayableproductionof305,788ouncesofgold,987,918ouncesofsilver,4,687tonnesofzincand4,416tonnesofcopperfrom2.24milliontonnesoforegrading4.44gramsofgoldpertonneand17.75gramsofsilverpertonne,0.37%zincand0.24%copper.Theproductioncostsperounceofgoldproducedat


LaRondein2016were$587.ThetotalcashcostsperounceofgoldproducedatLaRondein2016were$501onaby-productbasisandwere$668onaco-productbasis.TheLaRondeprocessingfacilityaveraged6,137tonnesoforeperdayandoperated92%ofavailabletime.Goldandsilverrecoveryaveraged95.60%and85.39%,respectively.Zincrecoveryaveraged66.85%withaconcentratequalityof53.61%zinc.Copperrecoveryaveraged86.50%withaconcentratequalityof20.01%copper.TheproductioncostspertonneatLaRondewereC$106andtheminesitecostspertonnewereC$106in2016.

ThefollowingtablesetsoutthemetalrecoveriesandconcentrategradesattheLaRondeminein2016.

Copper Concentrate (23,350 tonnes

produced)

Zinc Concentrate (10,303 tonnes

produced)

Head

Grades Grade Recovery Grade Recovery

Overall Metal

RecoveriesPayable

Production

Gold 4.44g/t 297.90g/t 69.91% 12.40g/t 1.29% 95.60% 305,788oz

Silver 17.75g/t 816.55g/t 47.95% 243.37g/t 6.40% 85.39% 987,918oz

Copper 0.24% 20.01% 86.50% –% –% 86.50% 4,687t

Zinc 0.37% 0.98% 5.53% 53.61% 66.85% 66.85% 4,416t

AnnualproductionattheLaRondeminein2017isexpectedtobeapproximately315,000ouncesofgold,1,072,000ouncesofsilver,4,482tonnesofcopperand7,286tonnesofzincfrom2.2milliontonnesoforegrading4.77gramspertonneofgold,20.03gramspertonneofsilver,0.25%copperand0.51%zinc.Thetotalcashcostsperounceofgoldproducedin2017onaby-productbasisareexpectedtobe$510,withestimatedgoldrecoveryat95.6%,silverrecoveryof77.5%,copperrecoveryof82.0%andzincrecoveryof66.9%.GoldrecoveryattheLaRondemineisdistributedapproximatelyasfollows:72%inthecopperconcentrate,2%inthezincconcentrateand22%vialeaching.MinesitecostspertonneofC$115areexpectedin2017.

Environmental, Permitting and Social Matters

Currently,wateristreatedatvariousfacilitiesattheLaRondemine.Watercontainedinthetailingsthatistobeusedasundergroundbackfillistreatedtodegradecyanideusingasulphurdioxideandairprocess.Thetailingsenteringthetailingspondarefirstdecantedandtheclearwatersubjectedtonaturalcyanidedegradation.Thiswateristhentransferredtopolishingpond#1toundergoasecondarytreatmentataplantlocatedbetweenpolishingponds#1and#2thatusesaperoxysilicateprocesstodestroycyanide,andlimeandcoagulant(ferricsulfate)areusedtoprecipitatemetals.Thetailingspondoccupiesanareaofapproximately175hectares.Wasterockthatisnotusedundergroundforbackfillisbroughtuptothesurfaceandstoredincloseproximitytothetailingspondtobeusedtobuildcofferdamsandbermsinsidethepondtoincreasestoragecapacity.Awasterockpilecontaininglessthan100,000tonnesofwasteandoccupyingapproximatelyninehectaresislocatednorthofthemill.

DuetothehighsulphurcontentoftheLaRondemineore,theCompanyhastoaddresstoxicityissuesinthetailingsponds.Thisproblemwasresolvedbythecommissioningofabiologicaltreatmentplantin2004,andtheeffluenthasremainednon-toxicsince2006.In2006,theCompanycommencedanammoniastrippingoperationinvolvinganeffluentpartiallytreatedbythebiologicaltreatmentplantwhichallowedanincreaseintreatmentflowrate,whilekeepingthefinaleffluentfreeoftoxicity.Anincreaseinbiologicaltreatmentefficiencyallowedtheammoniatreatmentplanttobeplacedoutofservicein2015.In2016,finaleffluentwasfullycompliantandtreatmentofthebacklogofwaterinthetailingspondthathadbeenaccumulatingbetween2000and2004,whentheeffluentwasshutdownwhiledeterminingatreatmentsolution,wascompleted.In2017,theCompanyexpectstomaintaininthetailingspondtheminimumquantityofwaterrequiredtofeedthemillwithrecirculationwater.Inaddition,waterfromacidrockdrainagearoundthemillsandthewastestockpilearetreatedtoremovemetalspriortodischargeatahighdensitysludgelimetreatmentplantlocatedattheLaRondemill.


Capital Expenditures

CapitalexpendituresattheLaRondemineduring2016wereapproximately$64.3million,whichincludedsustainingcapitalexpenditures,deferredexpenseandincludedcapitalizeddrilling.Budgeted2017capitalexpendituresattheLaRondemineare$102.7million,excludingcapitalizeddrilling.

Development

In2016,atotalof13.9kilometresoflateraldevelopmentwascompleted.Developmentwasfocusedonthepreparationofthelowermineproductionhorizon.Morethan90%ofthedevelopmentworkhasbeencompletedfortheLaRondemineextensioninfrastructureandtheramptoaccesstheLaRondemineextension.

Followingthecompletionofapositiveinternaltechnicalstudy,LaRondeZone5(formerlyreferredtoasBousquetZone5)hasbeenapprovedfordevelopment(subjecttopermittingapproval).TheminingmethodwillbesimilartothatcurrentlyemployedattheGoldexandLaRondemines(long-holestoping,withcementedpastebackfill),andprocessingwilluseexcesscapacityfromtheLapacircuitatLaRonde.Permitsareexpectedtobereceivedbymid-2018,withminingexpectedtocommenceshortlythereafter.

Atotalof12.4kilometresoflateraldevelopmentisplannedfor2017.Themainfocusofdevelopmentremainsthelowermine(LaRondeextensionarea),thedevelopmenttowardthelowestlevelsandtheWestmineportion.

Geology, Mineralization, Exploration and Drilling

Geology

TheLaRondepropertyislocatednearthesouthernboundaryoftheArchean-age(2.7billionyearsold)AbitibiSubprovinceandthePontiacSubprovincewithintheSuperiorGeologicalProvinceoftheCanadianShield.ThemostimportantregionalstructureistheCadillac-LarderLake("CLL")faultzone,markingthecontactbetweentheAbitibiandPontiacSubprovinces,locatedapproximatelytwokilometrestothesouthoftheLaRondeproperty.

ThegeologythatunderliestheLaRondemineconsistsofthreeeast-west-trending,steeplysouth-dippingandgenerallysouth-facingregionalgroupsofrockformations.Fromnorthtosouth,theyare:(i)400metres(approximatetruethickness)oftheKewagamaGroup,whichismadeupofathickbandofinterbeddedwacke;(ii)1,500metresoftheBlakeRiverGroup,avolcanicassemblagethathostsalltheknowneconomicmineralizationontheproperty;and(iii)500metresoftheCadillacGroup,madeupofathickbandofwackeinterbeddedwithpeliticschistandminorironformation.

Zonesofstrongsericiteandchloritealterationthatenclosemassivetodisseminatedsulphidemineralization(includingtheorethatisminedforgold,silver,zincandcopperattheLaRondemine)followsteeplydipping,east-west-trending,anastomosingshearzonestructureswithintheBlakeRiverGroupvolcanicunitsacrosstheproperty.TheseshearzonesarepartofthelargerDoyon-DumagamiStructuralZonethathostsseveralimportantgoldoccurrences(includingtheDoyongoldmine,theWestwoodprojectandtheformerBousquetmines)andhasbeentracedforovertenkilometreswithintheBlakeRiverGroup,fromtheLaRondeminewestwardtotheMouskagoldmine.

Mineralization

TheLaRondedepositisagold-richvolcanogenicmassivesulphide(VMS)deposit.LaRondelenseswereformedmainlybysulphideprecipitationfromhydrothermalfluidsontheseafloorandbyreplacementbelowlenses.ThestackingoftheLaRondelensesistheresultofsuccessivevolcanicevents,intercalatedbycyclesofhydrothermatactivityassociatedwithreactivationofsynvolcanicfaults.

Thegold-bearingzonesattheLaRondeminearelensesofdisseminatedstringersthroughtomassiveaggregatesofcoarsepyritewithzinc,copperandsilvercontent.Tenzonesthatvaryinsizefrom50,000to40,000,000tonneshavebeenidentified,ofwhichfourare(orarebelievedtobe)economic.Goldcontentisnotproportionaltothetotalsulphidecontentbutdoesincreasewithcoppercontent.Goldvaluesarealsohigherinareaswherethepyritelensesarecrosscutbytightlyspacednorth-southfractures.

Thesehistoricalrelationships,whichwerenotedatLaRondeShaft#1'sMainZone,aremaintainedatthePennaShaftzones.Thezinc-silver(i.e.Zone20North)mineralizationwithlowergoldvalues,commonintheuppermine,gradesintogold-coppermineralizationwithinthelowermine.ThepredominantbasemetalsulphideswithintheLaRondeminearechalcopyrite(copper)andsphalerite(zinc).


TheCompanybelievesthatZone20Northisoneofthelargestgold-bearingmassivesulphidemineralizedzonesintheworldandoneofthelargestknownmineralizedzonesintheAbitibiregionofOntarioandQuebec.Zone20NorthcontainsthemajorityofthemineralreservesandmineralresourcesattheLaRondemine,including17.3milliontonnesofprovenandprobablemineralreservesgrading5.44gramsofgoldpertonne,representing98%ofthetotalprovenandprobablemineralreservesattheLaRondemine,5.1milliontonnesofindicatedmineralresourcesgrading3.32gramsofgoldpertonne,representing90%ofthetotalmeasuredandindicatedmineralresourcesattheLaRondemine,and6.5milliontonnesofinferredmineralresourcesgrading7.4gramsofgoldpertonne,representing84%ofthetotalinferredmineralresourcesattheLaRondemine.

Zone20Northextendsbetween700metresbelowthesurfaceandatleast3,700metresbelowthesurface,andremainsopenatdepth.Withincreasedaccessonthelowerlevelsofthemine(i.e. ,belowLevel215andfromtheinternalshaftonlevels257and278),thetransformationfromazinc/silverorebodytoagold/copperdepositisexpectedtocontinueduring2017.Thedevelopmentofthewesternpartofthemine,betweenLevels278and314,isexpectedtogiveaccesstoanewzinc/silverrichsector.

Zone20Northcanbedividedintoanupperzinc/silverenrichedgoldpoorzoneandalowergold/copperenrichedzone.Thezinc/silverzonehasbeentracedoveraverticaldistanceof1,700metresandahorizontaldistanceof570metres,withthicknessesapproaching40metres.Thegold/copperzonehasbeentracedoveraverticaldistanceofover2,200metresandahorizontaldistanceof900metres,withthicknessesvaryingfromthreeto40metres.Thezinc/silverzoneconsistsofmassivezinc/silvermineralizationcontaining50%to90%massivepyriteand10%to50%massivelightbrownsphalerite.Thegold/copperzonemineralizationconsistsof30%to70%finelydisseminatedtomassivepyritecontaining1%to10%chalcopyriteveinlets,minordisseminatedsphaleriteandrarespecksofvisiblegold.Goldgradesaregenerallyrelatedtothechalcopyriteorcoppercontent.Atdepth,themassivesulphidelensbecomesricheringoldandcopper.

Exploration and Drilling

ThecombinedamountofgoldinprovenandprobablemineralreservesattheLaRondemineattheendof2016was3.05millionounces(17.6milliontonnesoforegrading5.40gramsofgoldpertonne,19.14gramsofsilverpertonne,0.24%copperand0.87%zinc),whichrepresentsareductionof55,759containedouncesofgoldfromtheendof2015,afterproducing305,788ouncesofgold(319,887ouncesinsitugoldminedin2016).Thereductioninmineralreservesisprincipallyassociatedwithoreminedduring2016anddelineationanddefinitiondrillingdoneattheedgesandinthedeepestpartoftheorebody,butwaspartlyoffsetbytheconversionofmineralresourcesintomineralreserveslocatedonthreelevelsbelow3.1kmdepthintheeasternpartofthemine,referredtoasLaRonde3.UndergroundindicatedmineralresourcesattheLaRondeminedecreasedby1.2milliontonnesoforetoatotalof5.7milliontonnesoforegrading3.27gramsofgoldpertonne,20.51gramsofsilverpertonne,0.21%copperand0.93%zinc,primarilyduetotheconversionofmineralresourcesintomineralreservesintheeasternportionofthemine,asdescribedabove.UndergroundinferredmineralresourcesattheLaRondeminedecreasedby1.4milliontonnesoforetoatotalof7.7milliontonnesoforegrading6.68gramsofgoldpertonne,14.48gramsofsilverpertonne,0.25%copperand0.60%zinc.

DiamonddrillingisusedforexplorationontheLaRondeproperty.In2016,35holes(13,327metres)weredrilledfordefinition(conversion)drillingand15holes(10,011metres)wereforexploration.ExpendituresondiamonddrillingattheLaRondemineduring2016wereapproximatelyC$4.9million,includingC$1.7millionindrillingexpenseschargedtocapitalcostsattheLaRondemine,andC$3.2millionexpensedasexplorationdrilling.

Themainfocusofthe2016explorationprogramwascontinuingtheinvestigationandconversionofZone20NorthatdepthandexplorationoftheZone6and7horizonsatdepthfromthenewaccessesdevelopedtowardthewestonLevels290and293.The2016conversionprogramonZone20NorthwasfocusedonconversionfrominferredtoindicatedmineralresourcesbelowLevel311atdepth,inthecentreandwesternportionsofthedeposit(belowtheactuallimitofmineralreserves).Thepositiveresultsobtainedinthisprogramallowedtheadditionofindicatedmineralresourcesbelow3.1kilometresontheeasternportionandcontinuedtoconfirmtheextensionoftheorebodyto3.4kilometresbelowthesurface,or300metresbelowthecurrentmaximumdepthofmineralreserves,inthewesternportion,andalsoconfirmedsomehighgradeintersectionsandtheextensionofamassivelensthathadbeenpreviouslyidentified.Theconversionprogramwillcontinuein2017through2018,andwillinvestigatethecontinuityoftheorebodyto3.7kilometresbelowthesurfaceandtothewest.AnotherdrillingaccessiscurrentlybeingdevelopedtoprovidebetterpositioningforanextensivediamonddrillingprogramonZone6toadepthof3.7kilometres.

In2017,theCompanyexpectstospendC$2.1millionon15,200metresofdefinition(conversion)drillingandC$2.4millionon12,850metresofexplorationdrilling,foratotalofC$4.5millionattheLaRondemine.


LapaMine

AtDecember31,2016,theLapaminewasestimatedtocontainprovenandprobablemineralreservesof38,000ouncesofgoldcomprisedof259,000tonnesoforegrading4.58gramspertonne.TheLapapropertyismadeupoftheTonawandaproperty,whichconsistsof44contiguousminingclaimsandoneprovincialmininglease,andtheZulapaproperty,whichconsistsofoneminingconcession.TheminingleaseatLapaexpiresin2029.Basedonthelifeofmineplan,productionisexpectedtoceasein2017.

LocationMapoftheLapaMine(asatDecember31,2016)

During2016,theLapaminehadpayableproductionof73,930ouncesofgoldfrom0.59milliontonnesoforegrading4.64gramsofgoldpertonne.TheproductioncostsperounceofgoldproducedatLapain2016were$717.ThetotalcashcostsperounceofgoldproducedatLapain2016were$732onaby-productbasisandonaco-productbasis.TheLapaprocessingfacilityaveraged1,619tonnesperdayandoperatedapproximately89.5%ofavailabletime.Goldrecoveryaveraged83.82%.TheproductioncostspertonneatLapawereC$118andtheminesitecostspertonnewereC$121in2016.In2016,theCompanyincurrednocapitalexpendituresattheLapamine.NocapitalexpendituresattheLapamineareexpectedin2017.

ThefollowingtablesetsoutthemetalrecoveriesattheLapaminein2016.

Head Grade

Overall Metal

RecoveryPayable

Production

Gold 4.64g/t 83.82% 73,930oz

Goldproductionduring2017attheLapamineisexpectedtobeapproximately15,000ouncesfrom0.14milliontonnesoforegrading4.0gramsofgoldpertonneatestimatedtotalcashcostsperounceofapproximately$1,002onaby-productbasis,andestimatedgoldrecoveryof82.5%.MinesitecostspertonneofapproximatelyC$134areexpectedin2017.


GoldexMine

TheGoldexmineislocatedintheCityofVald'Or,Quebec,approximately60kilometreseastoftheLaRondemine,andisaccessiblebyQuebecprovincialhighwayNo.117.TheprovenandprobablemineralreservesatGoldexasatDecember31,2016wereestimatedatapproximately0.89millionouncesofgoldcomprisedof16.8milliontonnesoforegrading1.64gramspertonne.

TheGoldexmineoperatesunderaminingleaseobtainedfromtheMinistryofEnergyandNaturalResources(Quebec)andundercertificatesofapprovalgrantedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).TheGoldexpropertyconsistsof22contiguousminingclaimsand,sinceApril2008,oneprovincialmininglease.Thepropertyismadeupofthreeblocks:theProbeblock;theDaltonblock;andtheGoldexExtensionblock.Theclaimsarerenewableeverysecondyearuponpaymentofasmallfee.Theminingleaseexpiresin2028andisautomaticallyrenewableforthreefurtherten-yeartermsuponpaymentofasmallfee.TheCompanyalsohasonesurfaceleasethatisusedfortheauxiliarytailingspond.Thisleaseisrenewableannuallyuponpaymentofafee.

LocationMapoftheGoldexMine(asatDecember31,2016)

AgnicoEaglehashelda100%interestintheGoldexpropertysinceDecember1993,whentheCompanyacquiredtheremaining46.3%interestinGoldexMinesLimitedthatitdidnotalreadyown.InFebruary2005,amineralreserveandmineralresourceestimatewascompletedfortheGEZ(whichwasthedepositonwhichtheCompanywasfocusingitsproductioneffortsbeforeproductionwassuspendedonOctober19,2011)which,coupledwithafeasibilitystudy,ledtoaprobablemineralreserveestimateof1.6millionouncesofgoldcontainedin20.1milliontonnesoforegrading2.54gramsofgoldpertonne.TheGEZresourcemodelwasrevisedand,inMarch2005,theCompanyapprovedafeasibilitystudyandtheconstructionoftheGoldexmine.ThemineachievedcommercialproductiononAugust1,2008.

BasedontheresultsofascopingstudycompletedinJuly2009,theCompanydecidedtoexpandthemineandmilloperationsatGoldexto8,000tonnesperday.Thisprojectwascompletedin2010.Capitalcostsinconnectionwiththeexpansiontotaled$10million.Thecrusherfortheexpansionwascommissionedattheendofthefirstquarterof2010atarateof7,811tonnesperday.

OnOctober19,2011,theCompanysuspendedminingoperationsandgoldproductionfromtheGEZ,followingthereceiptofrecommendationsfromindependentconsultantstohaltundergroundminingoperationsduringtheinvestigationinto


geotechnicalconcernswiththerockabovethemininghorizon.TheCompanydoesnotexpecttoproducemoregoldfromtheGEZuntilthegeotechnicalconcernswiththerockabovethemininghorizonareresolved,whichmayneveroccur.

InJuly2012,theCompanyapprovedthedevelopmentoftheMandEZonesoftheGoldexmine.Productionfromthesezonesbeganinthefourthquarterof2013andcommercialproductionwasachievedinOctober2013.DevelopmentworkiscontinuingundergroundontheMandEZones.

In2015,followingthecompletionofapositiveinternaltechnicalstudy,theGoldexDeep1projectwasapprovedforproductionbyAgnicoEagle'sboardofdirectors(the"Board"or"BoardofDirectors")andisonscheduleforcommissioninginearly2018.ThestudyfocusedonminingthelowerpartoftheDxZoneandthetoppartoftheDZone,fromadepthof850metresto1,200metres.TheCompanyplanstoundertakedevelopmentfromthecurrentGoldexinfrastructure,withexistingequipmentandpersonnel.Theplannedminingmethodislong-holestopingwithcementedpastebackfill,whichisthesamemethodascurrentlyusedattheMandEZones.


SurfacePlanoftheGoldexMine(asatDecember31,2016)

ThesurfacefacilitiesatGoldexincludeaheadframe,ahoistroom,anorestoragefacility,aprocessingplant,apastebackfillplantandasurfacebuildingcontainingamechanicalshop,awarehouseandanoffice.Inaddition,theGoldexpropertyhasa790-metredeepshaft(Shaft#1),whichhistoricallywasusedtoprovideaccesstoundergroundworkings.Shaft#1isnowpredominantlyusedforgettingmaterialintothemineandservesasanemergencyexitfromthemine.


Thesinkingofanewproductionshaftwascompletedin2007.Thisshaft(Shaft#2)isa5.5-metrediametershaftwitha50-centimetrethickconcreteliningandisusedforventilationaswellashoistingpurposes.Shaft#2is865metresdeepandincludesfivestations.Arefurbishedfrictionhoistwasinstalledforproductionandserviceduties,andanauxiliaryhoistwasinstalledforemergencyandpersonnelservice.

RehabilitationoftheoldrampnearShaft#1wascompletedin2015toaccesstheupperportionoftheMZone.Therampwillbeusedforgettingmaterialintothemineandasanemergencyexit.Inaddition,anewheatingsystematsurfacewasinstalledinearly2015.

Mining Method

TheCompanyminestheMandEZonesusingprimaryandsecondarystopemethods.DrillingiscarriedoutwithITHdrills.Productionholesareeither4.5or6.5inchesindiameter.Bulkemulsionisusedastheprimaryexplosiveforstopeblasting.Forbothzones,stopesareapproximately55metreshigh.Thewidthandlengthofindividualstopesvarybasedonlocalrockmassquality,butanaveragestopeisexpectedtorangebetween60,000and120,000tonnes.OrehandlingintheMZoneisdonewith15yardload-haul-dumpmachines.Thisequipmentunloadsintoanorepassaccessiblefromeachlevel.IntheEZone,locatedbelowthebottomofShaft#2,orehandlingisdonewith15yardload-haul-dumpmachinesand45tonnetrucks.

Allstopesaresupportedwith10-15metrecablebolts.Inaddition,thestabilityofcertainstopesisremotelymonitoredinrealtime.TheCompanyalsousespastebackfilltoallowforahighextractionratioandtoincreaselongtermstability.

ThesameminingmethodwillbeusedintheDeep1ZoneasisusedintheMandEZones,exceptthataRail-VeyorsystemwillbeusedfororehandlingbetweenthelowermostlevelofDeep1(Level120)andthecurrentorehandlingfacilities(Level76).TheRail-VeyorloadingsystemonLevel120willbefedviaarockbreakerroomatLevel115.ForLevels85to115,15yardloadhauldumpmachineswillunloadintoanorepassreportingtotherockbreakerroomonLevel115.ForthestopesonLevel120,45tonnetruckswillbeusedfororehandlingtoLevel115.

Surface Facilities

PlantconstructionatGoldexcommencedinthesecondquarterof2006andwascompletedinthefirstquarterof2008.Theplantreacheddesigncapacityinthesecondquarterof2009.GrindingattheGoldexmillwasinitiallydonethroughatwo-stagecircuitcomprisedofaSAGmillandaballmill.In2009,asurfacecrusherwasaddedtoreducethesizeoforetransferredtothesurfacefrom150millimetresto50millimetres.Alamellardecanterwasalsoaddedtorecoversmallparticlespresentinthewateroverflowoftheconcentratethickener.Theunderflowpumpforthisthickenerwasupgradedfollowingflotationcircuitmodificationtoincreasethepullrateofthesmallparticles.Approximatelytwo-thirdsofthegoldisrecoveredthroughagravitycircuit,passedovershakingtablesandsmeltedonsite.Theremainderofthegoldandpyriteisrecoveredthroughaflotationprocess.TheconcentrateisthenthickenedandtruckedtothemillattheLaRondeminewhereitisfurthertreatedbycyanidation.GoldrecoveredisconsolidatedwithpreciousmetalsfromtheLaRondeandLapamines.

In2013,anewbackfillplantwasbuiltonthesite.Thetailingthickenerunderflowfeedsthebackfillplantandtwodiskfiltersincreasethedensitybeforethecontinuousmixerwherebinderisaddedataratioofapproximately3.6%beforebeingsenttotheundergroundminewithapositivedisplacementpump.Currently,thecapacityofthebackfillplantisapproximately6,200tonnesperday.

In2013,metallurgicaltestingonorefromtheMandEZonesshowedthatthecementinthebackfillwouldhaveanegativeimpactontheefficiencyoftheflotationcircuit.Asaresult,apHcontrol(usingcarbondioxide),areservoirandcontrolvalveswereaddedtothemill.


During2016,theGoldexminehadpayableproductionof120,704ouncesofgoldfrom2.55milliontonnesoforegrading1.60gramsofgoldpertonne.TheproductioncostsperounceofgoldproducedatGoldexin2016were$525.ThetotalcashcostsperounceofgoldproducedatGoldexin2016were$532onaby-productbasisandonaco-productbasisandtheprocessingfacilityaveraged6,954tonnesoforeperdayandoperated95.8%ofavailabletime.During2016,goldrecoveryaveraged92.36%.TheproductioncostspertonneatGoldexwereC$33andtheminesitecostspertonnewereC$33in2016.


ThefollowingtablesetsoutthemetalrecoveriesattheGoldexminein2016.

Head Grade

Overall Metal

RecoveryPayable

Production

Gold 1.60g/t 92.36% 120,704oz

Goldproductionduring2017attheGoldexmineisexpectedtobeapproximately105,000ouncesfrom2.36milliontonnesoforegrading1.51gramsofgoldpertonneatestimatedtotalcashcostsperounceofapproximately$667onaby-productbasis,withestimatedgoldrecoveryof92.0%.MinesitecostspertonneofapproximatelyC$38areexpectedin2017.


EnvironmentalpermitsfortheconstructionandoperationoftheGoldexminewerereceivedfromtheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec)inOctober2005.Thepermitsalsocoveredtheconstructionandoperationofasedimentationpondforminewatertreatmentandsewagefacilities.InJune2011,thepermitswererevisedtoallowfortheexpansionofthemineandmilloperationsto9,500tonnesperday.InJune2012,environmentalpermitswerereceivedfortheconstructionandoperationofapastebackfillplantinconnectionwiththedevelopmentoftheMandEZones.

InNovember2006,theCompanyandtheQuebecgovernmentsignedanagreementpermittingtheCompanytodisposeGoldextailingsattheManitousite,atailingssiteformerlyusedbyanunrelatedthirdpartyandabandonedtotheQuebecgovernment.TheManitoutailingssitehasissuesrelatingtoaciddrainage,andtheconstructionoftailingsfacilitiesbytheCompanyandthedepositionoftailingsfromGoldexontheManitoutailingssitewasacceptedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec)asavalidrehabilitationmethodtoaddresstheacidgenerationproblematManitou.Undertheagreement,theCompanymanagestheconstructionandoperationofthetailingsfacilitiesandcontributesanamountequivalenttotheCompany'sbudgetfortailingsfacilitiessetoutintheGoldexfeasibilitystudy.TheQuebecgovernmentpaysforallcostsinexcessofthisamountandretainsresponsibilityforallenvironmentalcontaminationattheManitoutailingssiteandforfinalclosureofthefacilities.TheCompanyhasalsobuiltaseparatetailingsdepositarea(auxiliarytailingspond)neartheGoldexminetobeusedduringtailingspipelinework.EnvironmentalpermitsfortheconstructionandoperationoftheauxiliarytailingspondwerereceivedinMarch2007.TherehabilitationoftheManitoutailingssiteisexpectedtocontinueduringtheminingoftheMandEZonesandadditionalminingzones,includingtheDeep1Zone.

InternaldykesareusedattheManitoutailingssitetomakeoptimaluseoftheavailabletailingsforrehabilitationoftheManitousite.

AsatDecember31,2016,theestimatedremainingreclamationcostsrelatingtotheGoldexmineareapproximately$6.1million.


CapitalexpendituresattheGoldexmineduring2016wereapproximately$81.3million,whichincludedsustainingcapitalexpenditures,expansionconstructionanddeferredexpenses,butexcludedcapitalizeddrilling.Totalestimatedcapitalexpendituresfor2017are$72.8million,excludingcapitalizeddrilling.

Development

During2016,approximately12,421metresoflateraldevelopmentwerecompletedattheGoldexmine.Atotalof806metresofverticaldevelopmentwasalsocompletedinordertoestablishboththeorepasssystemservicingtheMZoneandtheventilationnetworkservicingtheMandDeep1Zones.

Atotalof8,660metresoflateraldevelopmentisplannedforallzonesin2017,while555metresofverticaldevelopmentwillbenecessarytoextendtheorepasssystemandtoensureproperventilationoftheDeep1Zone.In2017,2,500metresofadditionaldrillingisplannedfortheDeep1Zone.



Geology

TheGoldexpropertyislocatednearthesouthernboundaryoftheArchean-age(2.7billionyearsold)AbitibiSubprovince,atypicalgranite-greenstoneterranelocatedwithintheSuperiorProvinceoftheCanadianShield.ThesoutherncontactoftheAbitibiSubprovincewiththePontiacSubprovinceismarkedbytheeast-southeasttrendingCLLfaultzone,themostimportantregionalstructuralfeature.TheGoldexdepositishostedwithinaquartzdioritesill,the"GoldexGranodiorite",locatedinasuccessionofmafictoultramaficvolcanicrocksthatareallgenerallyorientedwest-northwest.

TheMZonehasanapproximatelengthof440metres,aheightof350metresandathicknessof130metres.TheEZone,adjacenttotheeasternendoftheGEZ,hasanapproximatelengthof250metres,aheightof290metresandathicknessof130metres.TheDeep1Zoneisapproximately90metresbelowtheGEZandextendsto1,500metresbelowthesurface.Itappearstohaveanapproximatestrikelengthof350metres,aheightof600metresandthicknessof120metres.

Mineralization

GoldmineralizationatGoldexcorrespondstotheclassicalquartz-tourmalineveinlode-golddeposittype.Thegold-bearingquartz-tourmalinepyriteveinsandveinstockwork,hostedwithinaquartz-dioritedyke,aretheresultofastrongstructuralcontrol,relatedtoductileshearingandbrittlefaulting.Themostsignificantstructuredirectlyrelatedtomineralizationisadiscreteshearzone,theGoldexMylonite,whichisuptofivemetreswideandoccurswithintheGoldexGranodiorite,justsouthoftheDeep1ZoneandnorthoftheMZone.

AcoupleofveinsetsexistwithintheM,E,Deep1andPZones,ofwhichthemainsetconsistsofextensional-shearveinsdippingapproximately30degreessouth.Theveinsetsandassociatedalterationhaloscombinetoformstackedenvelopesupto30metresthick.

Moderatetostrongalbite-carbonatealterationofthehost-rockquartzdioritesurroundsthequartz-tourmaline-pyriteveinsandcoversalmost80%ofthemineralizedzone;outsideoftheenvelopes,priorchloritealterationaffectsthequartzdioriteandgivesitadarkergrey-greencolour.Occasionally,enclavesofrelativelyunalteredmediumgrey-green-colouredquartzdiorite(withnoveiningorgold)arefoundwithintheM,EandDeep1Zones.Theyareremovedwiththerestofthestope'soretoallowforasmoothstopeshape,requiredforminingpurposes.

Mostofthegoldoccursasmicroscopicparticlesthatarealmostalwaysassociatedwithpyrite,generallyadjacenttograinsandcrystalsbutalso20%includedwithinthepyrite.Thegold-bearingpyriteoccursinthequartz-tourmalineveinsandinnarrowfracturesinthealbite-carbonate-alteredquartzdiorite(generallyimmediatelyadjacenttotheveins).


ExplorationontheGoldexpropertywasconcentratedinthreeperiodsfrom1963to1996.Duringtheperiodfrom1985to1996,Shaft#1wassunkto457metres,followedby3,810metresoflateraldevelopmentand520metresofslashing,abulksampleofroughly55,886tonnesandapproximately32,000metresofdiamonddrillingintheMainZone.Concurrently,widelyspaceddrilling,comprisedofapproximately50diamonddrillholes,ledtothediscoveryandbeginningofthedevelopmentoftheGEZ.In1996,Shaft#1wasdeepenedto790metres,followedby853metresoflateraldevelopment,cross-cutsandslashing,twobulksamplesfor136,200tonnesand23,000metresofundergrounddrillinginGEZ.

ThecombinedamountofgoldinprovenandprobablemineralreservesattheGoldexmineattheendof2016was0.89millionounces(16.8milliontonnesoforegrading1.64gramsofgoldpertonne),whichrepresentsanincreaseofapproximately0.2millionouncesofgoldinreservesfromtheendof2015,afterproducing120,704ouncesofgold(130,687ouncesinsitugoldmined).Theincreaseislargelyduetothesuccessfulconversionofmineralresourcestomineralreserves,mainlyintheDZoneaswellasintheMandEZones.Themineralreservegradeincreasedfrom1.61gramsofgoldpertonneattheendof2015to1.64gramsofgoldpertonneattheendof2016.UndergroundmeasuredandindicatedmineralresourcesattheGoldexminedecreasedby4.12milliontonnesoforeto30.3milliontonnesoforegrading1.82gramsofgoldpertonne,primarilyduetoconversionofindicatedtomeasuredmineralresources,positivedrillingresultsintheDeep1Zoneandtheremovalofnon-recoverableresourcesintheMandEZones,primarilyduetominingsequencing.In2016,therewasadecreaseininferredmineralresourcesofapproximately2.75milliontonnesoforeto21.88milliontonnesoforegrading1.60gramsofgoldpertonne.Thisdecreaseintheinferredmineralresourceswasprimarilyduetotheconversionofinferredtoindicatedmineralresourcesandpositive


drillingresultsintheE,M,DxandDeep1Zonesandtheremovalofnon-recoverableresourcesintheMandEZonesprimarilyduetominingsequencing.

DiamonddrillingatGoldexin2016totaled373holesforatotallengthof62,210metres.Ofthistotal,84holes(17,438metres)wereforexplorationoftheM,Deep1andSouthZonesatacostof$0.83million,248holes(41,254metres)wereforconversiondrilling,principallyintheDeep1andMZones,atacostof$2.33million,24holes(1,596metres)weredelineationdrillingintheMandEZonesatacostof$0.07millionand17holes(1,922metres)weredrilledfortheengineeringandminingdepartmentsatacostof$0.15million.

In2017,theCompanyexpectstospend$1.26millionon18,150metresofexplorationdrilling,$2.54millionon33,350metresofconversiondrilling,$0.77millionon10,000metresofdelineationdrillingand$0.3millionon3,000metresofexpenseddrilling.

CanadianMalarticMine

TheCanadianMalarticmineislocatedapproximately25kilometreswestoftheCityofVal-d'Orand80kilometreseastofCityofRouyn-Noranda.TheminelieswithinthetownofMalartic.ItstraddlesthetownshipsofFournière,MalarticandSurimau.AtDecember31,2016,theCanadianMalarticminewasestimatedtohaveprovenandprobablemineralreservescontainingapproximately3.55millionouncesofgoldcomprisedof101.8milliontonnesoforegrading1.08gramspertonne(representingtheCompany's50%interest).

TheCompanyacquiredits50%interestintheCanadianMalarticmineonJune16,2014throughitsjointacquisitionofOsiskowithYamana.See"GeneralDevelopmentoftheBusiness–Three-YearHistory–2014"forfurtherdetailsoftheCompany'sacquisitionofits50%interestintheCanadianMalarticmine.

TheCanadianMalarticmineoperatesunderminingleasesobtainedfromtheMinistryofEnergyandNaturalResources(Quebec)andundercertificatesofapprovalgrantedbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).TheCanadianMalarticpropertyiscomprisedoftheEastAmphiproperty,theCHLMalarticprospect,theCanadianMalarticmineandtheFourniere,MidwayandPiche-Harveyproperties.TheCanadianMalarticpropertyconsistsofacontiguousblockcomprisingoneminingconcession,fiveminingleasesand199miningclaims.

ExpirationdatesfortheminingleasesontheCanadianMalarticpropertyvarybetweenMarch23,2019andFebruary17,2034,andareautomaticallyrenewableforthreefurtherten-yeartermsuponpaymentofasmallfee.

TheCanadianMalarticminecanbeaccessedeitherfromVald'OrintheeastorfromRouyn-NorandainthewestviaQuebecprovincialhighwayNo.117.Apavedroadrunningnorth-southfromthetownofMalartictowardsMourierLakecutsthroughthecentralareaoftheCanadianMalarticproperty.TheCanadianMalarticpropertyisfurtheraccessiblebyaseriesofloggingroadsandtrails.TheCanadianMalarticmineisalsoservicedbyarail-linewhichcutsthroughthemiddleofthetownofMalartic.ThenearestairportislocatedinVal-d'Or.

Abufferzone135metreswidehasbeendevelopedalongthenorthernlimitoftheopenpittomitigatetheimpactsofminingactivitiesonthecitizensofMalartic.Insidethisbufferzone,alandscapedridgewasbuiltprimarilyusingrockandtopsoilproducedduringpre-strippingwork.Theheightofthislandscapedridgeis15metreswheretheconcentrationofresidentsishigherandfivetosixmetresnearlesspopulatedareas.


LocationMapoftheCanadianMalarticMine(asatDecember31,2016)

TheCanadianMalarticmineincludesopenpitoperations,anadministration/warehousebuilding,amineoffice/truckshopbuilding,aprocessplantandthecrushingplant.

FollowingthejointacquisitionoftheCanadianMalarticminebytheCompanyandYamana,mostoftheminingclaimsaresubjecttoa5%netsmelterreturnroyaltypayabletoNewOsisko.TheminingclaimscomprisingtheCHLMalarticprospectaresubjectto3%netsmelterreturnroyaltiespayabletoeachofNewOsiskoandAbitibiRoyaltiesInc.Inaddition,oftheminingclaimsconstitutingtheCanadianMalarticproperty,101arealsosubjecttoothernetsmelterreturnroyaltiesthatvarybetween1%and2%,payableundervaryingcircumstances.In2016thePartnership,whichistheoperatoroftheCanadianMalarticmine,paidC$61.1millionintheaggregatewithrespecttothesenetsmelterreturnroyalties,andexpectstopayapproximatelyC$60.6millionin2017.

GoldwasfirstdiscoveredintheMalarticareain1923.GoldproductionontheCanadianMalarticpropertybeganin1935andcontinueduninterrupteduntil1965.Followingvariousownershipchangesovertheensuingyears,OsiskoacquiredownershipoftheCanadianMalarticpropertyin2004.BasedonafeasibilitystudycompletedinDecember2008,Osiskocompletedconstructionofa55,000tonneperdaymillcomplex,tailingsimpoundmentarea,fivemillioncubicmetrepolishingpondandroadnetworkbyFebruary2011,andthemillwascommissionedinMarch2011.

AsofDecember31,2010,theCanadianMalarticminehadreceivedallformalgovernmentpermitsrequiredforitsconstructionandrelatedactivities,withtheexceptionoftheauthorizationforthemillandmineoperations.TheofficialcertificateofauthorizationforthemillandoperationswasgrantedonMarch31,2011,atwhichpointtheCanadianMalarticminewasfullypermitted.TheCanadianMalarticmineachievedcommercialproductiononMay19,2011.



SurfacePlanoftheCanadianMalarticMine(asatDecember31,2016)

TheCanadianMalarticmineisalargeopenpitoperationcomprisedoftheCanadianMalarticpit.ThePartnershipcontinuestoworkwiththeQuebecMinistryofTransportandthetownofMalarticonthedeviationofQuebecprovincialhighwayNo.117togainaccesstothehighergradeBarnatandJeffreydeposits.ThefinallayoutandanenvironmentalimpactassessmentwerecompletedattheendofJanuary2015.TheenvironmentalimpactassessmentisunderreviewbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).TheQuebecBureaud'audiencespubliquessurl'environment("BAPE")issueditsreportontheCanadianMalarticpitextensiononOctober5,2016.TheBAPEreportconcludedthattheprojectisacceptableandprovidesseveralrecommendationsintendedtoenhancesocialacceptability.

Mining Methods

MiningattheCanadianMalarticmineisdonebyopenpitmethodusingexcavatorsandtrucks.Inordertomaximizeproductivityandlimitthenumberofunitsoperatinginthepit,largescaleequipmentwasselectedforthemineoperation.Theprimaryloadingtoolsarehydraulicexcavators,withwheelloadersusedasasecondaryloadingtool.Themineproductionschedulewasdevelopedtofeedthemillatanominalrateof55,000tonnesperday.Thecontinuityandconsistencyofthemineralization,coupledwithtightdefinitiondrilling,andconfirmedbysevenyearsofminingoperations,demonstratetheamenabilityofthemineralreservesandmineralresourcestotheselectedminingmethod.

ThethroughputattheCanadianMalarticminein2016averaged53,665tonnesperdaycomparedwith52,300tonnesperdayin2015.Theincreasedthroughputin2016waslargelyduetomilloptimization,additionalcrushedorefromtheportablecrusherandmillstability.

Surface Facilities

SurfacefacilitiesattheCanadianMalarticmineincludetheadministration/warehousebuilding,themineoffice/truckshopbuilding,theprocessplantandthecrushingplant.Theprocessingplanthasadailycapacityof55,000tonnesofore.


Oreisprocessedthroughconventionalcyanidation.Oreblastedfromthepitisfirstcrushedbyagyratorycrusherfollowedbysecondarycrushingpriortogrinding.GroundorefeedssuccessivelyintoleachandCIPcircuits.AZadraelutioncircuitisusedtoextractthegoldfromtheloadedcarbon.Pregnantsolutionisprocessedviaelectrowinningandtheresultingprecipitateissmeltedintogold/silverdorebars.MilltailsarethickenedanddetoxifiedusingaCaroacidprocess,reducingcyanidelevelsbelow20partspermillion.Detoxifiedslurryissubsequentlypumpedtoaconventionaltailingsfacility.


SincetheJune16,2014acquisitionofOsisko,AgnicoEagleandYamanahaveeachhelda50%interestintheCanadianMalarticmine.During2016,AgnicoEagle'sshareoftheCanadianMalarticmine'spayableproductionwas292,514ouncesofgoldand339,974ouncesofsilverfrom9,620,697tonnesoforegrading1.038gramsofgoldpertonneand1.35gramsofsilverpertonne.TheproductioncostsperounceofgoldproducedatCanadianMalarticin2016were$628.ThetotalcashcostsperounceofgoldproducedatCanadianMalarticin2016were$606onaby-productbasisandwere$626onaco-productbasis.TheCanadianMalarticprocessingfacilityaveraged53,665tonnesperdayandoperatedapproximately95.0%ofavailabletime.Goldandsilverrecoveryaveraged89.3%and79.6%,respectively.TheproductioncostspertonneatCanadianMalarticwereC$25andtheminesitecostspertonnewereC$25in2016.

ThefollowingtablesetsoutthemetalrecoveriesattheCanadianMalarticmineona100%basisin2016.

Head Grade

Overall Metal

RecoveryPayable

Production

Gold 1.038g/t 89.3% 585,027oz

Silver 1.352g/t 79.6% 679,948oz

TheCompany's50%shareofannualproductionattheCanadianMalarticminein2017isexpectedtoconsistofapproximately300,000ouncesofgoldand324,000ouncesofsilverfrom9.4milliontonnesoforegrading1.11gramsofgoldpertonneand1.34gramsofsilverpertonne.Thetotalcashcostsperouncein2017areexpectedtobeapproximately$578perounceonaby-productbasis,withestimatedgoldrecoveryof89.3%andsilverrecoveryof80.0%.MinesitecostspertonneofapproximatelyC$24areexpectedin2017.


In2015,anactionplanwasdevelopedandimplementedbythePartnershiptomitigatenoise,vibrations,atmosphericemissionsandancillaryissues.Mitigationmeasureswereputinplacetoimprovetheprocessandavoidanyenvironmentalnon-compliance.Asaresult,in2016,thePartnershipimproveditsenvironmentalperformancecomparedtopreviousyears.Withrespecttoactivitiesin2016,thePartnershipreceivedonenon-complianceblastnoticeandtennon-compliancenoisenotices(whichincludednoticesreceivedininstanceswherenoiselevelswereotherwisewithinthemunicipalnoiselimits).Themine'steamofon-siteenvironmentalexpertscontinuetomonitorregulatorycomplianceintermsofapprovals,permitsandobservanceofdirectivesandrequirementsandcontinuetoimplementimprovementmeasures.

OnAugust2,2016,thePartnershipwasservedwithaclassactionlawsuitwithrespecttoallegationsinvolvingtheCanadianMalarticmine.See"LegalProceedingsandRegulatoryActions"forfurtherdetailsontheclassactionlawsuit.

Beginninginthespringof2015,thePartnershiphasbeenworkingcollaborativelywiththecommunityofMalarticanditscitizenstodevelopa"GoodNeighbourGuide"thataddressestheallegationscontainedinthelawsuit.ImplementationoftherecommendationsintheGoodNeighbourGuidebeganonSeptember1,2016.

Theoriginaldesignofthewasterockpilewasdevelopedtoaccommodateapproximately326milliontonnesofmechanicallyplacedwasterockrequiringatotalstoragevolumeofapproximately161millioncubicmetres.

InDecember2015,thePartnershipcompletedtheconstructionofanewpolishingpondeastofdykeA,whichhasbeenoperationalsinceMay2016.Theexistingpolishingpond,withacapacityofapproximately48milliontonnes,hasbeenconvertedintotheeighthcellofthetailingsmanagementfacility,adding2.5yearsofoperationtothetailingsmanagementfacilitycapacityforatotalof148milliontonnesand7.5yearsofoperation.Thetotalcapacityofthecurrenttailingsmanagementfacilityisestimatedat198milliontonnes.Theexpansionoftheopenpit,withtheproductionfromthe


CanadianMalarticpitextension(Barnatdeposit),willincreasethetotalamountoftailingsto342milliontonnes,requiringanadditional144milliontonnesintailingsstoragecapacity.ThePartnershipplanstostoretailingsinanextendedtailingsfacilityandintheCanadianMalarticpitattheendofitsoperations.Accordingtothemineplan,attheendofminelife,50to100milliontonnesoftailingswillbedepositedinthepit.Therestofthetailings,comprisingaminimumof59andamaximumof109milliontonnes,willbedepositedintheextendedtailingsfacility.

RegulatoryapprovalfortheproposedtailingsdepositionintheCanadianMalarticpitandtheexpansionofthecurrentlyauthorizedtailingsareaarepartoftheapprovalprocessfortheCanadianMalarticpitextension(Barnatdeposit)subjecttotheenvironmentalimpactassessmentprocessoftheQuebecEnvironment Quality Act .TheenvironmentalimpactassessmenthasbeencompletedandisunderreviewbytheMinistryofSustainableDevelopment,EnvironmentandtheFightAgainstClimateChange(Quebec).GolderAssociatesLtd.isdesigningthetailingsextensioncomponentandispreparingahydrogeologicalstudytodemonstratethattheCanadianMalarticpitwouldprovideahydraulictrapandcontainthetailingswithminimumenvironmentalrisk.DelayintheexpectedtimingofthepermitsrequiredfortheCanadianMalarticpitextensioncouldhaveanegativeimpactontheminingsequenceatCanadianMalartic.

Thepublichearings(BAPEprocess)tookplaceinJuneandJuly2016fortheCanadianMalarticpitextensionandtheBAPEissuedtheirreportinOctober2016,witharecommendationtotheMinisterthattheprojectbeacceptedwithcertainconditions.AdecisionbytheMinisterisexpectedinthefirsthalfof2017.

AnannualhydrologicalsitebalanceismaintainedtoprovideayearlyestimateofwatervolumesthatmustbemanagedinthedifferentstructuresofthewatermanagementsystemoftheCanadianMalarticmineduringanaverageclimaticyear(intermsofprecipitation).Resultsofthishydrologicalbalanceindicatethatexcesswaterfromthesoutheastpondwilleventuallyneedtobereleasedintotheenvironment.Awatertreatmentplantwascommissionedin2015toensurethatthewatertobereleasedtotheenvironmentmeetswaterqualityrequirements.Thiswatertreatmentplantreducestherisksassociatedwithsurfacewatermanagementandaddsflexibilitytothesystem.In2016,modificationsonwatermanagementweremadeinordertoimprovewaterqualitysegregationandreducethevolumesofwaterpotentiallyrequiringtreatment.

Reclamationandclosurecostshavebeenestimatedforrehabilitatingthetailingsfacilityandwastedump,vegetatingthesurroundingarea,dismantlingtheplantandassociatedinfrastructure,andperformingenvironmentalinspectionandmonitoringforaperiodoftenyears.ThereclamationandclosurecostisestimatedtobeC$65.5million.Financialassurancehasbeenprovidedbasedontheclosureplan.


TheCompany'sportionofcapitalexpendituresattheCanadianMalarticmineduring2016wereapproximately$60.4million,whichincludedsustainingcapitalexpendituresanddeferredexpense,butexcludedcapitalizeddrilling.Budgeted2017capitalexpendituresattheCanadianMalarticmineare$67.6million,excludingcapitalizeddrilling.

Development

DevelopmentactivitiesattheCanadianMalarticminein2016primarilyconsistedofminorstrippingactivities.Developmentactivitiesin2017areexpectedtoincludeadditionalstrippingactivities.Permittingactivitiesareongoing.


Geology

TheCanadianMalarticpropertystraddlesthesouthernmarginoftheeasternportionoftheAbitibiSubprovince,anArcheangreenstonebeltsituatedinthesoutheasternpartoftheSuperiorProvinceoftheCanadianShield.TheAbitibiSubprovinceislimitedtothenorthbygneissesandplutonsoftheOpaticaSubprovince,andtothesouthbymetasedimentsandintrusiverocksofthePontiacSubprovince.ThecontactbetweenthePontiacSubprovinceandtherocksoftheAbitibigreenstonebeltischaracterizedbyamajorfaultcorridor,theeast-westtrendingLarderLake–CadillacFaultZone("LLCFZ").ThisstructurerunsfromLarderLake,OntariothroughRouyn-Noranda,Cadillac,Malartic,Val-d'OrandLouvicourt,Québec,atwhichpointitistruncatedbytheGrenvilleFront.

TheregionalstratigraphyofthesoutheasternAbitibiareaisdividedintogroupsofalternatingvolcanicandsedimentaryrocks,generallyorientedatN280–N330andseparatedbyfaultzones.Themainlithostratigraphicdivisionsinthisregionare,fromsouthtonorth,thePontiacGroupofthePontiacSubprovinceandthePiché,Cadillac,BlakeRiver,KewagamaandMalarticgroupsoftheAbitibiSubprovince.ThevariouslithologicalgroupswithintheAbitibiSubprovincearemetamorphosedtogreenschistfacies.MetamorphicgradeincreasestowardthesouthernlimitoftheAbitibibelt,where


rocksofthePichéGroupandthenorthernpartofthePontiacGrouphavebeenmetamorphosedtouppergreenschistfacies.

ThemajorityoftheCanadianMalarticpropertyisunderlainbymetasedimentaryunitsofthePontiacGroup,lyingimmediatelysouthoftheLLCFZ.Thenorth-centralportionofthepropertycoversanapproximately9.5kilometresectionoftheLLCFZcorridorandisunderlainbymafic-ultramaficmetavolcanicrocksofthePichéGroupcutbyintermediateporphyriticandmaficintrusions.TheCadillacGroupcoversthenorthernpartoftheproperty(northoftheLLCFZ).Itconsistsofgreywackecontaininglensesofconglomerate.

Mineralization

SurfacedrillingbyLacMineralsLtd.inthe1980sdefinedseveralnear-surfacemineralizedzonesnowincludedintheCanadianMalarticdeposit(theF,P,A,WolfeandGilbertzones),allexpressionsofalarger,continuousmineralizedsystemlocatedatdeptharoundthehistoricalundergroundworkingsoftheCanadianMalarticandSladenmines.Inadditiontothese,theWesternPorphyryZoneoccursonekilometrenortheastofthemainCanadianMalarticdepositandtheGouldiemineralizedzoneoccursapproximately1.2kilometressoutheastofthemainCanadianMalarticdeposit,althoughtherelationshipbetweenthesezonesandthemaindepositispresentlyunknown.

MineralizationintheCanadianMalarticdepositoccursasacontinuousshellof1%to5%disseminatedpyriteassociatedwithfinenativegoldandtracesofchalcopyrite,sphaleriteandtellurides.ThegoldresourceismostlyhostedbyalteredclasticsedimentsofthePontiacGroup(70%)overlyinganepizonaldioriticporphyryintrusion.Aportionofthedepositalsooccursintheupperportionsoftheporphyrybody(30%).

TheSouthBarnatdepositislocatedtothenorthandsouthoftheoldSouthBarnatandEastMalarticmineworkings,largelyalongthesouthernedgeoftheLLCFZ.Thedisseminated/stockworkgoldmineralizationatSouthBarnatishostedbothinpotassic-altered,silicifiedgreywackesofthePontiacGroup(southofthefaultcontact)andinpotassic-alteredporphyrydykesandschistose,carbonatizedandbiotiticultramaficrocks(northofthefaultcontact).

SeveralmineralizedzoneshavebeendocumentedwithintheLLCFZ(SouthBarnat,Buckshot,EastMalartic,Jeffrey,Odyssey,EastAmphi,Fourax),mostofwhicharegenerallyspatiallyassociatedwithstockworksanddisseminationswithinmaficorintermediateporphyriticintrusions.


GoldwasfirstdiscoveredintheMalarticareain1923bytheGouldieBrothersatwhatisnowdesignatedtheGouldieZone.Duringtheperiodfrom1935to1983,theCanadianMalartic,Barnat/SladenandEastMalarticminesproducedapproximately5.5millionouncesofgoldand1.9millionouncesofsilver,mostlyfromundergroundoperations.

ThecombinedamountofgoldinprovenandprobablemineralreservesattheCanadianMalarticmineattheendof2016was3.55millionounces(101.8milliontonnesoforegrading1.08gramspertonneofgold),whichrepresentsadecreaseofapproximately314,000ouncesofgoldascomparedtotheendof2015,afterproducing292,514ouncesofgold(335,665ouncesinsitugoldmined).Thereductioninmineralreserveswasprincipallyassociatedwithoreminedduring2016.MeasuredandindicatedmineralresourcesattheCanadianMalarticmineincreasedby0.35milliontonnesoforein2016to13.1milliontonnesgrading1.53gramsofgoldpertonne,duetoareductioninthecut-offgraderelatedtogoldpriceandexchangeratemovements.InferredmineralresourcesattheCanadianMalarticmineincreasedby10.5milliontonnesin2016to14.9milliontonnesgrading1.93gramsofgoldpertonne,duetotheinitialinferredmineralresourcesattheOdysseyzone.AllnumbersshownforCanadianMalarticreflectAgnicoEagle'sindirect50%ownershipinthemine.

DiamonddrillingisusedforexplorationontheCanadianMalarticproperty.In2016,155holes(119,393metres)weredrilledfordefinition(conversion)drillingand39holes(24,496metres)wereforexploration.ExplorationexpendituresattheCanadianMalarticmineduring2016wereapproximatelyC$10.9million(50%basis),whichincludesthepurchaseoftheMidwaypropertylocated6kilometresfromtheCanadianMalarticmine.Themainfocusofthe2016explorationprogramconcentratedondrilldefinitionoftheOdysseydepositlocated1.5kilometreseastofthecurrentlimitoftheCanadianMalarticpit.

In2017,thePartnershipexpectstospendapproximatelyC$4.7milliononexplorationdrillingatCanadianMalartic.Explorationprogramsareplannedtoidentifyandextendalreadyknownmineralizedzonesbelowthepit.


KittilaMine

TheKittilamine,whichcommencedcommercialproductioninMay2009,islocatedinnorthernFinlandapproximately900kilometresnorthofHelsinkiand50kilometresnortheastofthetownofKittila.AtDecember31,2016,theKittilaminewasestimatedtocontainprovenandprobablemineralreservesof4.48millionouncesofgoldcomprisedof30.1milliontonnesoforegrading4.64gramsofgoldpertonne.TheKittilamineisaccessiblebypavedroadfromthevillageofKiistala,whichislocatedonthesouthernportionofthemainclaimblock.ThegolddepositislocatednearthesmallvillageofRouravaara,approximatelytenkilometresnorthofthevillageofKiistala.

ThetotallandholdingssurroundingandincludingtheKittilaminecomprisetwomininglicencesand172tenements.ThetenementsformacontinuousblockaroundtheKittilaandKuotkomininglicences.TheblockhasbeendividedintotheSuurikuusikkoarea(whichincludestheRouravaaraarea),theSuurikuusikkoWestarea,theSuurikuusikkoEastarea,andtheKittilaandKuotkomininglicences.TheKuotkomininglicenceislocatedapproximately15kilometresnorthoftheKittilamine.TheKuotkomininglicenceiscurrentlyintheenvironmentalreviewprocess.

Theboundaryofthemininglicenceisdeterminedbyground-surveyedpoints,whereastheboundariesofthetenementsarenotrequiredtobesurveyed.AllofthetenementsattheKittilamineareregisteredinthenameofAgnicoEagleFinlandOy,anindirect,wholly-ownedsubsidiaryoftheCompany.Theexpirydatesofthetenementsvary,withtheearliestexpirydatebeingApril2017.Tenementsareinitiallyvalidforfouryears,providedexplorationworkintheareaisreportedannuallyandasmallannualfeeispaidtomaintaintitle.Extensionsoftitlescanbegrantedfor11additionalyearsuponpaymentofaslightlyhigherfeeandactiveexplorationinthearea.AgnicoEagleFinlandOyalsoholdsthemininglicenceinrespectoftheKittilamine.Themineissubjecttoa2.0%netsmelterreturnroyaltypayabletotheRepublicofFinland.

ThemineislocatedwithintheArcticCircle,buttheclimateismoderatedbytheGulfStreamoffthecoastofNorway,suchthatnorthernFinland'sclimateiscomparabletothatofeasternCanada.Wintertemperaturesrangefromminustentominus30degreesCelsius,whereassummertemperaturesrangefromtendegreesCelsiustothemid-20s.Explorationandminingworkcanbecarriedoutyear-round.Becauseofitsnorthernlatitude,winterdaysareextremelyshortwithabriefperiodof24-hourdarknessaroundthewintersolstice.Conversely,summerdaysareverylongwithabriefperiodof24-hourdaylightaroundthesummersolstice.


LocationMapoftheKittilaMine(asatDecember31,2016)

TheCompanyacquiredits100%,indirectinterestintheKittilaminethroughtheacquisitionoftheSwedishcompanyRiddarhyttanResourcesABinNovember2005.InJune2006,onthebasisofanindependentlyreviewedfeasibilitystudy,theCompanyapprovedconstructionoftheKittilamine.MiningatKittilastartedinitiallyasopenpitmining.OpenpitminingendedinNovember2012andallminingiscurrentlycarriedoutfromtheundergroundviarampaccess.Theinitialundergroundstopewasminedinearly2010.Oreisprocessedina3,750-tonneperdaysurfaceprocessingplantthatwascommissionedinlate2008,andexpandedfrom3,000to3,750tonnesperdayin2014.LimitedgoldconcentrateproductionstartedinSeptember2008andgolddorebarproductioncommencedinJanuary2009.



SurfacePlanoftheKittilaMine(asatDecember31,2016)

TheorebodiesatKittilawereinitiallyminedfromtwoopenpits,followedbyundergroundoperationstominethedepositsfurtherbeneaththesurface.Smalleradditionalopenpitsmaybeusedtomineanyremainingmineralreservesclosetothesurfaceinthefuture.OpenpitminingstartedinMay2008andtheextractedorewasstockpiled.AsofDecember31,2016,atotalof9.86milliontonnesoforehavebeenprocessed,includingorefromtheopenpitsandunderground,


0.44milliontonnesoforearecurrentlystockpiledand39.9milliontonnesofwasterockhavebeenexcavated,includingbothopenpitandundergroundexcavation.Workcontinuedthroughout2016todeveloptheexplorationandRimpiramps,aswellasotherworktoaccesstheundergroundmineralreserves,includingdevelopmentofaramptowardstheSisarZone.Totalunderground(lateralandvertical)developmentattheendof2016wasapproximately85kilometres.Undergroundminingcommencedinthefourthquarterof2010and,attheendof2016,atotalof6.5milliontonnesoforehasbeenminedfromtheundergroundportionofthemine.

Mining Methods

AttheKittilamine,theSuurikuusikkoandtheRouravaaraorebodiesarecurrentlyminedbyundergroundminingmethodsandaccesstotheundergroundmineisviaramp.Approximately5,000tonnesoforeperdayarefedtotheconcentrator,exceedingthenominalcapacityof3,750tonnesperday.Theundergroundminingmethodisopenstopingwithdelayedbackfill.Stopesarebetween25and40metreshighandyieldbetween8,000and40,000tonnesoforeperstope.Toensuresufficientoreproductionisavailableinthefuturetosupplythemill,over15,000metresoftunnelswillbedevelopedeachyear.Afterextraction,stopesarefilledwithpastebackfillorcementedbackfilltoenablethesafeextractionoforeinadjacentstopes.Oreistruckedtothesurfacecrusherviatherampaccesssystem.

Surface Facilities

Constructionoftheprocessingplantandassociatedequipmentwascompletedin2008.FacilitiesattheKittilamineincludeofficebuildings,amaintenancefacilityforminingequipment,awarehouse,asecondmaintenanceshop,anoxygenplant,aprocessingplant,apastebackfillplant,atankfarm,acrusher,conveyorhousings,anorebinandasulfateremovalplantattheNP3tailingsarea.Inaddition,therearesometemporarystructuresforcontractorofficesandworkareas.

TheoreattheKittilamineistreatedbygrinding,flotation,pressureoxidationandCILcircuits.Aftergrinding,oreprocessingconsistsoftwostages.Inthefirststage,oreisenrichedbyflotationand,inthesecondstage,thegoldisextractedbypressureoxidationandCILprocesses.Attheendofthesecondstage,goldisrecoveredfromthecarboninaZadraelutioncircuitandrecoveredfromthesolutionusingelectrowinningandfinallypouredintodorebarsusinganelectricinductionfurnace.


In2016,theKittilaminehadpayableproductionof202,508ouncesofgoldfrom1.67milliontonnesoforegrading4.41gramsofgoldpertonne.TheproductioncostsperounceofgoldproducedatKittilain2016were$701.ThetotalcashcostsperounceofgoldproducedatKittilain2016were$699onaby-productbasisandwere$701onaco-productbasisandtheprocessingfacilityaveraged5,251tonnesoforeperdayandoperated86.7%ofavailabletime.During2016,flotationrecoveriesaveraged93.0%.Recoveriesinthesecondstageoftheprocessin2016averaged92.1%andglobalrecoverieswere85.7%.TheproductioncostspertonneatKittilawere€77andtheminesitecostspertonnewere€77in2016.

ThefollowingtablesetsoutthemetalrecoveriesattheKittilaminein2016.

Head Grade

Overall Metal

RecoveryPayable

Production

Gold 4.41g/t 85.7% 202,508oz

In2017,theKittilamineisexpectedtoproduceapproximately190,000ouncesofgoldfrom1.6milliontonnesoforegrading4.30gramsofgoldpertonneatestimatedtotalcashcostsperounceofapproximately$728onaby-productbasis,withestimatedgoldrecoveryof86.0%.Minesitecostspertonneofapproximately€78areexpectedin2017.


AgnicoEagleFinlandOycurrentlyholdsamininglicence,anenvironmentalpermitandoperationalpermitsinrespectoftheKittilamine.


Theconstructionofthefirstphaseofthetailingsdamwascompletedinthefallof2008.Workonthesecondphasewascompletedin2010andincludedtheexpansionofthetailingsarea.Workonthethirdphasebeganin2013andincludesworktoheightenthedam.Workonthethirdphaseisexpectedtocontinueforseveralyears.

OnSeptember14,2015,duringroutineinspectionsofthedam,waterseepagewasdiscoveredfromaholdingpond(NP3).Adetailedactionplanforapermanentsolutionwasdevelopedbyateamofinternalandexternalexpertsandthisplanandhasbeenimplemented.Theactionplanconsistedoffillingtheentireareawherethewaterseepagehadoccurredwithtailings.Inthebeginningof2016,allseepagebeneaththedamhadstoppedandtheCompanyexpectsnofurtherriskofseepageoccurringthroughtheliner.

Waterfromdewateringthemineandwaterusedinthemineandmilliscollectedandtreatedbysedimentation.EmissionsandenvironmentalimpactaremonitoredinaccordancewiththecomprehensivemonitoringprogramthathasbeenapprovedbytheFinnishenvironmentalauthorities.Workonenhancingthescrubbingofmillgaseshasresultedinadesigntorecoverheatlossanduseittoheatbuildings,andthisworkiscontinuing.Financialassuranceisprovidedtotheenvironmentalauthoritiesonanannualbasisintheamountprescribedbytheenvironmentalpermit.

TheenvironmentalpermitrenewalwasreceivedinJuly2013.ThisrenewalcontainsadditionaleffluentcriteriaandtheCompanyhasappealedthetimingofcompliancewithsuchcriteriatoallowforstudiesanddesigntotakeplacefornewwatertreatmentasrequired.AdecisionbytheAdministrativeCourtreviewingtheappealwasreceivedinthefirstquarterof2015,grantingtheCompany'sappealinpart.TheCompanyhasalsorespondedtoanotherappeallodgedbyathirdparty.ThefinaldecisionfromtheSupremeAdministrativeCourtwasreceivedinMay2016,andtocomplywiththerequirementsofthenewpermit,awatertreatmentplantforsulfatewasbuiltandcommissionedinthefourthquarterof2016.


CapitalexpendituresattheKittilamineduring2016totaledapproximately$75.9million,whichincludedmillmodification,minesiteexploration,RimpiandSisarareadevelopment,undergrounddevelopmentandsustainingcapitalcosts,butexcludescapitalizeddrilling.

TheCompanyexpectscapitalexpendituresduring2017attheKittilaminetobeapproximately$76.8million,excludingcapitalizeddrilling.

Development

In2016,undergrounddevelopmentcontinuedinboththeSuurikuusikkoandRouravaaraminingareas.Atotalof14,415metresoframpandsublevelaccessdevelopmentwerecompletedduringtheyear.Atotalof187,790tonnesoforefromdevelopmentand1,465,184tonnesofstopeorewereminedin2016.TheCompanyexpectstocompleteapproximately17,084metresoflateraldevelopment(excludingtheRimpiarea)and1,258metresofverticaldevelopmentduring2017.


Geology

TheKittilamineissituatedwithintheKittilaGreenstonebelt,partoftheLaplandGreenstonebeltintheProterozoic-ageSvecofenniangeologicprovince.TheappearanceandgeologyoftheareaissimilartothatoftheAbitibiregionoftheCanadianShield.InnorthernFinland,thebedrockistypicallycoveredbyathinbutuniformblanketofunconsolidatedglacialtill.Bedrockexposuresarescarceandirregularlydistributed.

ThemineareaisunderlainbymaficvolcanicandsedimentaryrocksmetamorphosedtogreenschistassemblagesandassignedtotheKittilagroup.Themajorrockunitstrendnorthtonorth-northeastandarenear-vertical.Thevolcanicsarefurthersub-dividedintoiron-richtholeiiticbasaltslocatedtothewestandmagnesium-richtholeiiticbasalt,coarsevolcaniclasticunits,graphiticschistandminorchemicalsedimentaryrockslocatedtotheeast.Thecontactbetweenthesetworockunitsconsistsofatransitionalzone(the"PorkonenFormation")varyingbetween50and200metresinthickness.Thiszoneisstronglysheared,brecciatedandcharacterizedbyintensehydrothermalalterationandgoldmineralization,featuresconsistentwithmajorbrittle-ductiledeformationzones.Thezoneispartofamajornorth-northeast-orientedshearzone(the"SuurikuusikkoTrend").


Mineralization

ThePorkonenFormationhoststheKittilagolddeposit,whichcontainsmultiplemineralizedzonesstretchingoverastrikelengthofmorethan25kilometres.MostoftheworkattheKittilaminehasbeenfocusedonthe4.5-kilometrestretchthathoststheknowngoldinmineralreservesandmineralresources.Fromnorthtosouth,thezonesareRimminvuoma("Rimpi-S"),thedeepextensionofRimminvuoma("RimpiDeep"),NorthRouravaara("Roura-N"),CentralRouravaara("Roura-C"),depthextensionofRouravaaraandSuurikuusikko("Suuri/RouraDeep"),Suurikuusikko("Suuri"),EtelaandKetola.TheSuuriandSuuri/RouraDeepzonesincludeseveralparallelsub-zonesthathavepreviouslybeenreferredtoasMainEast,MainCentralandMainWest.TheSuurizonehostsapproximately15%ofthecurrentprobablegoldreserveestimateonacontained-goldbasis,whileSuuriDeephasapproximately21%,Roura-Capproximately4%,RouraDeepapproximately27%,RimpiDeepapproximately28%andRimpi-Sapproximately5%.

Goldmineralizationinthesezonesisassociatedwithintensehydrothermalalteration(carbonate-albite-sulphide),andisalmostexclusivelyrefractory,lockedinsidefine-grainedsulphideminerals:arsenopyrite(approximately73%)orpyrite(approximately23%).Therestisfreegold,whichismanifestedasextremelysmallgrainsofgoldinpyrite.


In2016,provenandprobablegoldreservesincreasedbyapproximately125,915ouncesto4.48millionouncesofgold(30.06milliontonnesoforegrading4.64gramspertonne),afterproducing202,508ouncesofgold(236,317ouncesinsitugoldmined).ThisincreasewasprimarilyduetosuccessfulconversionofmineralresourcestomineralreservesintheSisarZone.MeasuredandindicatedmineralresourcesatDecember31,2016increasedby4.8milliontonnesfrom2015to20.7milliontonnesoforegrading2.92gramsofgoldpertonneduetosuccessfulexplorationandconversiondrillingintheRouraandRimpideepzones.Inferredmineralresourcesdecreasedby0.77milliontonnesfrom2015to11.06milliontonnesoforegrading4.05gramsofgoldpertonne.

DiamonddrillingisusedforexplorationontheKittilaproperty.In2016,alloftheworkonthemininglicenceareafocusedontheRoura,RimpiandSisarareas.From1987throughtheendof2016,atotalof4,520drillholes,totaling895,000metres,havebeencompletedontheproperty.Atotalof486drillholeswerecompletedin2016foralengthof59,900metres.Ofthesedrillholes,399holes(26,585metres)werefordelineationdrilling,26holes(6,922metres)wereforconversiondrillingand55holes(24,930metres)wererelatedtomineexploration.Totalexpendituresfordiamonddrillingin2016were€8.3million,including€0.73millionforconversiondrillingand€5.52millionforexploration.

In2016,atotalof19explorationdrillholes,totaling4,634metres,weredrilledontheKuotkomininglicencearea.TotalexpendituresfortheexplorationdrillingcarriedoutintheKuotkoareain2016were$€0.67million.Attheendof2016,theKuotkodepositcontainedinferredmineralresourcesof0.4milliontonnesoforegrading2.88gramsofgoldpertonne.

OutsideoftheKittilaandKuotkomininglicenceareas,systematicdiamonddrillingandtarget-focusedgroundgeophysicscontinuedalongtheSuurikuusikkoTrend,andanumberofnewtargetsweretestedbydiamonddrillingin2016.Atotalof19diamonddrillholes,totaling4,479metres,weredrilledonexplorationtargetsoutsideofthemininglicenceareain2016,atacostof$2.2million.

The2017explorationbudgetfortheKittilamineisapproximately€8.38million(for40,000metresofminesiteexplorationdrillingand8,000metresofresourceconversiondrilling).ThisdrillingisplannedtofurtherexploretheKittilamineralreserveandmineralresourcepotentialandtoevaluatethepotentialtodeveloptheSisarZoneasanewmininghorizonatKittila.Inaddition,€0.62millionofexplorationexpenditures,including6,000metresofdiamonddrilling,isplannedin2017forfurtherexplorationontheKuotkoarea.Outsideofthemininglicenceareas,$3.7millionofexplorationexpenditures,including7,000metresofdiamonddrilling,isplannedin2017forexplorationalongtheSuurikuusikko,KapsaandHanhimaaTrends.

MeadowbankMine

TheMeadowbankmine,whichachievedcommercialproductioninMarch2010,islocatedintheThirdPortageLakeareaintheKivalliqDistrictofNunavutinnorthernCanada,approximately70kilometresnorthofBakerLake.AtDecember31,2016,theMeadowbankminewasestimatedtocontainprovenandprobablemineralreservesof0.71millionouncesofgoldcomprisedof8.2milliontonnesoforegradinganaverageof2.69gramsofgoldpertonne.TheCompanyacquiredits100%interestintheMeadowbankminein2007astheresultoftheacquisitionofCumberlandResourcesLtd.

In2016,theCompanycompletedaninternaltechnicalstudyontheAmaruqsatellitedepositatMeadowbank,whichislocated50kilometresnortheastoftheMeadowbankmine.Basedonthisstudy,theCompanyhasapprovedtheprojectfor


developmentpendingthereceiptoftherequiredpermits,whicharecurrentlyexpectedtobereceivedbythesecondquarterof2018.

LocationMapoftheMeadowbankMine,IncludingAmaruq(asatDecember31,2016)

TheMeadowbankmineisheldundertenCrownminingleases,fourexplorationconcessionsand40Crownmineralclaims.TheCrownminingleases,whichcoverthePortage,GooseandGooseSouthdeposits,areadministeredunderfederallegislation.TheCrownminingleases,whichhaverenewableten-yearterms,havenoannualworkcommitmentsbutaresubjecttoannualrentfeesthatvaryaccordingtotheirrenewaldate.TheproductionleasewiththeKivalliqInuitAssociation("KIA")isasurfaceleaseandrequiresthepaymentofC$158,865annually.Productionfromsubsurfaceleaseareasissubjecttoaroyaltyofupto14%oftheadjustednetprofits,asdefinedintheNorthwest Territories and Nunavut MiningRegulations .InordertoconductexplorationontheInuit-ownedlandsatMeadowbank,theCompanymustreceiveapprovalforanannualworkproposalfromtheKIA,thebodythatholdsthesurfacerightsintheKivalliqDistrictandadministerslanduseintheregionthroughvariousboards.TheNunavutWaterBoard(the"NWB"),onesuchboard,providedtherecommendationtotheDepartmentofAboriginalAffairsandNorthernDevelopmentCanadatogranttheMeadowbankmine'sconstructionandoperatinglicencesinJuly2008.TheCompanyhasobtainedalloftheapprovalsandlicencesrequiredtobuildandoperatetheMeadowbankmine.

MeadowbankholdstwomineralexplorationagreementsgrantedbyNunavutTunngavikInc.("NTI"),thecorporationresponsibleforadministeringsubsurfacemineralrightsonInuitownedlandsinNunavut.In2017,explorationconcessionscoveringtheVaultandAmaruqdepositswillrequireannualrentalfeesofC$113,442andC$81,678,


respectively.Duringtheexplorationphase,theconcessionscanbeheldforupto20yearsandtheconcessionscanbeconvertedintoproductionleaseswithannualfeesofC$1perhectare,withnoannualworkcommitments.

In2012,theCompanysignedaproductionleasewithNTIcoveringtheextractionandprocessingofgoldfromtheVaultdeposit.ThisleaseauthorizestheCompanytomineandprocessgoldfromtheVaultdepositandsetsinplaceroyaltypaymentsthatareequivalenttothosebeingpaidbytheCompanyatthePortageandGoosepits.Productionfromtheconcessionsissubjecttoa12%netprofitsinterestroyaltyfromwhichannualdeductionsarelimitedto85%ofthegrossrevenue.ThisproductionleaseisintheprocessofbeingamendedtoincludeapartofthePhaserLakeandBBPhaserpits.

The40Crownmineralclaimsaresubjecttolandfeesandworkcommitments.Landfeesarepayableonlywhenworkisfiled.Themostrecentfilingwasin2012,whenapproximately$7,254inlandfeeswerepaidand$4,426,941inassessmentworkwassubmitted.

InDecember2016,theAmaruqprojectreceivedanamendedtypeBwaterlicenseauthorizingthedevelopmentandconstructionofaportal/rampandassociatedinfrastructure.AcommercialleasewiththeKIAauthorizestheconstructionandoperationoftheexplorationcampandexplorationactivitiesinadefinedarea.AnexplorationpermitwiththeKIAauthorizestheexplorationactivitiesthatarelocatedoutsidethecommercialleasearea.

TheMeadowbankareaisconsideredtohaveanaridarcticclimatewithtemperaturesrangingfromfivetominus40degreesCelsiusinthewinter(fromOctobertoMay)andfromminusfiveto25degreesCelsiusthroughoutthesummer(fromJunetoSeptember).Surfacegeologicalworkcanbecarriedoutfrommid-Maytomid-October,whilemining,millingandexplorationdrillingcantakeplacethroughouttheyear,thoughoutdoorworkcanbehamperedinDecemberandJanuarybythecoldanddarkness.

TheMeadowbankmineisaccessiblefromBakerLake,located70kilometrestothesouth,overa110-kilometreall-weatherroadcompletedinMarch2008.BakerLakeprovides2.5monthsofsummershippingaccessviaHudsonBayandyear-roundairportfacilities.TheMeadowbankminealsohasa1,752-metrelonggravelairstrip,permittingaccessbyair.Fuel,equipment,bulkmaterialsandsuppliesareshippedbybargeandshipfromMontreal,Quebec(orHudsonBayportfacilities)intoBakerLakeduringthesummerportaccessperiodthatstartsattheendofJulyeachyear.Fuelandsuppliesaretransportedyear-roundtothesitefromBakerLakebyconventionaltractortrailerunits.Scheduledandcharteredflightsprovidetransportationforpersonnelandaircargo.

TheCompanyiscurrentlybuildinga64-kilometreroadfromtheMeadowbanksitetotheAmaruqdeposit.Thisroadisexpectedtobecompletedasanexplorationroadbythefourthquarterof2017,withexpansiontoaproductionroadonceallofthenecessarypermitsarereceived.TheCompanyexpectsthattheorefromtheAmaruqdepositwillbehauledtotheMeadowbankmillusingoff-roadtypetrucks,andthemillisexpectedtooperateat9,000tonnesperday.Themillwillrequireminormodifications,specificallytheadditionofacontinuousgravityandregrindcircuit,inordertoprocesstheorefromtheAmaruqdeposit.



SurfacePlanoftheMeadowbankMine(asatDecember31,2016)


SurfacePlanoftheVaultDeposit(asatDecember31,2016)

AllrequiredaggregatesusedintheminingprocessareproducedfromwastematerialtakenfromthePortageandVaultpits.In2008,adewateringdykewasconstructedinordertoaccessthenorthhalfofthePortagepitinpreparationforproductionin2010.ConstructionoftheBay-Goosedyke,amajordewateringdykerequiredtoaccessthesouthernportionofthePortageandtheGoosepits,commencedin2009andwascompletedin2011.Threetailingsimpoundmentdykes:SaddleDam1,SaddleDam2andStormwaterDyke,werebuiltin2009and2010.ThefinalelevationofStormwaterdykewascompletedin2014.Constructionofthemaintailingsimpoundmentdyke,CentralDyke,beganin2012.AdditionalphasesofconstructionontheCentralDykeareexpectedtocontinuethroughouttheminelife.Constructionoftheeight-kilometrelongaccessroadtotheVaultpitbeganin2012andwascompletedin2013.

Mining Methods

MiningattheMeadowbankmineisdonebyopenpitmethodusingexcavatorsandtrucks.Theoreisextractedconventionallyusingdrillingandblasting,thenhauledbytruckstoaprimarygyratorycrusheradjacenttothemill.Themarginal-gradematerial(materialgradingunderthecut-offgradeatagoldpriceof$1,100perounce,butwhichhasthepotentialtoincreasethemineralreservesattheendoftheminelifeifthethencurrentmetalpricesmakesitsprocessingeconomical)isstockpiledseparately.Also,stockpilesoflow-gradematerialcurrentlylowerthanthemillfeedgradehavebeencreated.Themajorityofthislow-gradematerialwasprocessedin2014.Theremainderwillbeprocessedattheendoftheminelife.Wasterockishauledtooneofthreewastestoragesareasontheproperty,usedfordykeconstructionmaterialorbackfilledintotheminedoutarea.


MiningfirstcommencedinthePortagepitin2010andintheGoosepitinMarch2012,andcommercialproductionattheVaultpitwasachievedinApril2014.TheareasurroundingtheVaultpithastwosmallerareasthatarebeingdevelopedasfuturepits:thePhaserandBBPhaserpits.Thesepitsareexpectedtobeginoperationinthethirdquarterof2017.MiningoperationsattheGoosepitceasedin2015.MiningoperationsattheVaultpitareexpectedtoceasein2018andatthePortagepit(includingthePortageextension)areexpectedtoceasein2019.

MiningattheAmaruqsatellitedepositatMeadowbankwillbedonebyopenpitmethodusingexcavatorsandtrucksandorewillbehauledbytrucktothemillatMeadowbankforprocessing.Commercialproductionisexpectedtobeachievedinthethirdquarterof2019atAmaruqfortheWhaleTailpit.

Surface Facilities

Sitefacilitiesincludeamillbuilding,amechanicalshop,apowerhousebuilding,anassaylabandaheavyvehiclemaintenanceshop.Astructurecomprisedoftwoseparatecrushersflankthemainprocesscomplex.Powerissuppliedbya26.4-megawattdieselelectricpowergenerationplantwithheatrecoveryandanonsitefuelstorage(5.6millionlitres)anddistributionsystem.Themill-service-powercomplexisconnectedtotheaccommodationscomplexbyenclosedcorridors.

TheaccommodationscomplexattheMeadowbankmineconsistsofapermanentcampandatemporarycamptoaccommodateadditionalworkers.Thecampissupportedbyasewagetreatment,solidwastedisposalandapotablewaterplant.

FacilitiesconstructedatBakerLakeincludeabargelandingsitelocatedthreekilometreseastofthecommunityandastoragecompound.Afuelstorageanddistributioncomplexwithcapacityfor60-millionlitresofdieselfueland2-millionlitresofjetfuelislocatednexttothebargelandingfacility.

In2013,newfacilitieswerebuiltneartheVaultdeposit,whichislocatedapproximatelyeightkilometresfromtheminecomplex.Thesefacilitiesincludeaheatedshelterforemployees,astoragearea,afuelfarm,anelectricalpowergenerationplantandawatertreatmentplant.

In2015,theexplorationgroupwasrelocatedtotheAmaruqsatellitedeposittoaseparatecampwitha125-personcapacity.Thecampissupportedbysewagetreatment,solidwastedisposalandapotablewaterplant.Inaddition,threetemporarybuildingsactasawarehouse,amaintenanceshopandacoreshack.

TheprocessdesignatMeadowbankisbasedonaconventionalgoldplantflowsheetconsistingoftwo-stagecrushing,grinding,gravityconcentration,cyanideleachingandgoldrecoveryinaCIPcircuit.Themillwasdesignedtooperateyear-round,withanannualdesigncapacityof3.1milliontonnes(8,500tonnesperday).Theadditionofasecondarycrusherinearlysummer2011increasedtheoverallprocessedtonnescapacityinthemillto3.6milliontonnesperyear(9,840tonnesperday).SincetheinstallationofthepermanentsecondarycrusherinJune2011,theplanthasconsistentlyexceeded8,500tonnesperday.Basedonprojectionsfrommetallurgicaltestswork,theoverallgoldrecoveryisprojectedtobeapproximately91.2%forthelife-of-mine,withapproximately18%goldrecoveredfromthegravitycircuit.

Therun-of-mineoreistransportedtothecrusherusingoff-roadtrucks.Theoreisdumpedintothegyratorycrusherorintostockpilesdesignatedbyore-type.Thefeedfromtheprimarycrusherisconveyedtotheconecrusherinclosedcircuitwithavibratingscreen.Thecrushedoreisdeliveredtothecoarseorestockpileandorefromthestockpileisconveyedtothemill.ThegrindingcircuitiscomprisedofaprimarySAGmilloperatedinopencircuitandasecondaryballmilloperatedinclosedcircuitwithcyclones.Aportionofthecycloneunderflowstreamissenttotheconcentrator,whichseparatestheheavymineralsfromtheore.Thegrindingcircuitincorporatesagravityprocesstorecoverfreegoldandthefreegoldconcentrateisleachedinanintensivecyanideleach-directelectrowinningrecoveryprocess.

Thecycloneoverflowissenttothegrindingthickener.Theclarifiedoverflowisrecycledtothegrindingcircuitandthickenedunderflowispumpedtoapre-aerationandleachcircuit.Thecyanidecircuitconsistsofseventanks,providingapproximately42hoursofretentiontime.TheleachedslurryflowstoatrainofsixCIPtanks.Goldinthesolutionflowingfromtheleachingcircuitisadsorbedintotheactivatedcarbon.GoldisrecoveredfromthecarboninaZadraelutioncircuitandisrecoveredfromthesolutionusinganelectrowinningrecoveryprocess.Thegoldsludgeisthenpouredintodorebarsusinganelectricinductionfurnace.

TheCIPtailingsaretreatedforthedestructionofcyanideusingthestandardsulphur-dioxide-airprocess.Thedetoxifiedtailingsarethenpumpedtothepermanenttailingsfacility.Thetailingsstorageisdesignedforzerodischarge,withallprocesswaterbeingreclaimedforre-useinthemilltominimizewaterrequirements.



During2016,theMeadowbankminehadpayableproductionof312,214ouncesofgoldfrom3.92milliontonnesoforegrading2.70gramsofgoldpertonne.TheproductioncostsperounceofgoldproducedatMeadowbankin2016were$701.ThetotalcashcostsperounceofgoldproducedatMeadowbankin2016were$715onaby-productbasisandwere$727onaco-productbasis.TheMeadowbankprocessingfacilityaveraged10,697tonnesperdayandoperatedapproximately94.9%ofavailabletime.Goldrecoveryaveraged91.93%.TheproductioncostspertonneatMeadowbankwereC$73andtheminesitecostspertonnewereC$74in2016.

ThefollowingtablesetsoutthemetalrecoveriesattheMeadowbankminein2016.Millprocessingexceededextractionfromtheminein2016as0.23milliontonnescamefromthemarginalstockpile.

Head Grade

Overall Metal

RecoveryPayable

Production

Gold 2.70g/t 91.93% 312,214oz

Goldproductionduring2017atMeadowbankisexpectedtobeapproximately320,000ouncesfrom3.9milliontonnesoforegrading2.85gramsofgoldpertonneatestimatedtotalcashcostsperounceofapproximately$683onaby-productbasis,withestimatedgoldrecoveryof90.0%.MinesitecostspertonneofapproximatelyC$73areexpectedin2017.

Environmental Matters (including Inuit Impact and Benefit Agreement), Permitting and Social Matters

ThedevelopmentoftheMeadowbankminewassubjecttoanextensiveenvironmentalreviewprocessundertheNunavutLandClaimsAgreement(the"NLCA")administeredbytheNunavutImpactReviewBoard(the"NIRB").OnDecember30,2006,apredecessortotheCompanyreceivedtheProjectCertificatefromtheNIRB,whichincludedthetermsandconditionstoensuretheenvironmentalintegrityofthedevelopmentprocess.InJuly2008,theCompanyreceivedawaterlicencefromtheNWBforconstructionandoperationoftheminesubjecttoadditionaltermsandconditions.BothauthorizationswereapprovedbythethenMinisterofAboriginalAffairsandNorthernDevelopmentCanada.Thiswaterlicencewasrenewedin2015foraperiodoftenyears.

InFebruary2007,apredecessortotheCompanyandtheNunavutgovernmentsignedaDevelopmentPartnershipAgreement(the"DPA")withrespecttotheMeadowbankmine.TheDPAprovidesaframeworkforstakeholders,includingthefederalandmunicipalgovernmentsandtheKIA,tomaximizethelong-termsocio-economicbenefitsoftheMeadowbankminetoNunavut.

AnInuitImpactandBenefitAgreementfortheMeadowbankmine(the"MeadowbankIIBA")wassignedwiththeKIAinMarch2006.ThisagreementwasrenegotiatedandanamendedMeadowbankIIBAwassignedonOctober18,2011.TheMeadowbankIIBAensuresthatlocalemployment,trainingandbusinessopportunitiesarisingfromallphasesoftheprojectareaccessibletotheKivalliqInuit.TheMeadowbankIIBAalsooutlinesthespecialconsiderationsandcompensationthatmustbeprovidedtotheInuitregardingtraditional,socialandculturalmatters.

InJuly2008,theCompanysignedaproductionleasefortheconstructionandtheoperationofthemine,themillandallrelatedactivities.ThisproductionleasewasamendedonMay2,2013toexpandthesurfaceareagrantedunderthelease.InApril2008,theCompanyandtheKIAsignedawatercompensationagreementfortheMeadowbankmineaddressingInuitrightsundertheLandClaimsAgreementrespectingcompensationforwateruseandwaterimpactsassociatedwiththemine.

PermittingfortheoperationoftheAmaruqsatellitedepositatMeadowbankisongoingwiththeNIRBandtheNWB.Publichearingsareexpectedtobeheldinthethirdquarterof2017andtheprojectcertificateandwaterlicenceareexpectedtobeapprovedbythethirdquarterof2017.

AseriesoffourdykeshavebeenbuilttoisolatetheminingactivitiesatthePortageandGoosedepositsfromneighbouringlakes.Anadditionaldykewasbuiltin2013toisolatetheminingactivitiesattheVaultdeposit.WasterockfromthePortage,GooseandVaultpitsisprimarilystoredinthePortageandVaultrockstoragefacilities,andaportionofthewasteisplacedinthePortagePit.Thecontrolstrategyforwasterockstorageincludesfreezecontrolofthewasterockthroughpermafrostencapsulationandcappingwithaninsulatingconvectivelayerofneutralizingrock(ultramaficandnon-acidgeneratingvolcanicrocks).TheVaultrockstoragefacilitydoesnotrequireaninsulatingconvectivelayerduetothenon-acid


generatingnatureoftherockinthatarea.WasterockdepositedinthePortagepitwillbecoveredwithwaterduringtheclosurephaseofthepit,whichwillpreventanyacidgeneration.Becausethesiteisunderlainbygreaterthan400metresofpermafrost,thewasterockbelowthecappinglayerisexpectedtofreeze,resultinginlow(ifany)ratesofacidrockdrainagegenerationinthelongterm.

TailingsarestoredinthedewateredportionoftheSecondPortageLake.Thetailingsaredepositedontailingsbeacheswithinatwo-celltailingsstoragefacilityisolatedbythecentraldykeandaseriesoffivesaddledams.Areclamationpondislocatedwithinthetailingsstoragefacility.Depositionoftailingsbeganinthesouthcellinthefourthquarterof2014.Tailingsdepositionwascompletedinthenorthcellin2015andreclamationcappinghascommenced.Thecontrolstrategytominimizewaterinfiltrationintothetailingsstoragefacilityandthemigrationofconstituentsoutofthefacilityincludesfreezecontrolofthetailingsthroughpermafrostencapsulationandthroughcomprehensive,engineereddykeliners.Aminimumtwo-metrethickdrycoverofacidneutralizingultramaficrockbackfillwillbeplacedoverthetailingsasaninsulatingconvectivelayertoconfinethepermafrostactivelayerwithinrelativelyinerttailingsmaterials.

Thewatermanagementobjectivefortheprojectistominimizethepotentialimpactonthequalityofsurfacewaterandgroundwaterresourcesatthesite.Diversionditcheswereconstructedin2012todivertcleanrunoffwaterawayfromareasaffectedbythemineorminingactivities.Followingafieldinvestigationin2014,acontactwaterinterceptiontrenchwasconstructedtocollectseepagewaterdowngradientfromthemillpriortoenteringintothenearbylake.Allcontactwateroriginatingfromtheminesiteormillisintercepted,collectedandconveyedtothetailingsstoragefacilityforreuseinprocess.ThereisnodischargeofcontactwaterfromtheminesiteorthePortagepitareatooffsitereceivingwaterbodies.AllcontactwatergeneratedattheVaultpitarea,includingtheVaultWasteRockStorageFacility,isconveyedtotheVaultAttenuationPondanddischargedtonearbyWallyLake.Thereistreatmentforremovalofsolids(ifneeded)priortoreleasetoWallyLake.

InJanuary2012,theCompanyidentifiednaturallyoccurringasbestosfibresindustsamplestakenfromthesecondarycrusherbuildingattheMeadowbankmineandsubsequentlyfoundsmallconcentrationsoffibresintheorecomingfromcertainareasoftheopenpitmines.TheCompanyhasinstitutedadditionalmonitoringandanasbestosmanagementprogramatthesite.

Aninterimclosureandreclamationplanwassubmittedin2014asarequirementofpartoftheNWBTypeAwaterlicenceandfinancialassurancewasprovidedandupdatedinJuly2015aspartofthewaterlicencerenewalprocess.In2013,theCompanyappliedtotheNWBforanincreaseinfreshwaterconsumptionandreceivedtheamendmenttotheTypeAlicenceonJuly23,2014.

In2015,anamendmenttotheprojectcertificatewasrequestedfortheminingofthePhaserpit,asatellitepitintheVaultpitareaandtheapprovalwasreceivedinthethirdquarterof2016.

In2015,EnvironmentCanadachargedtheCompanywithtwoinfractionsundertheFisheries Act inrelationtoaseepageincidentattheMeadowbankminethatwasidentifiedduringaJuly2013on-siteinspection.Monitoringdataindicatedthatthe2013seepageeventdidnotaffectthewaterqualityofthedownstreamSecondPortageLake.Discussionsareunderwaytoattempttoresolvethematterbut,ifunsuccessful,atrialwouldnotlikelyoccuruntil2018.

Capital Expenditures/Development

In2016,theCompanyincurredapproximately$38.8millionincapitalexpendituresattheMeadowbankmineexcludingcapitalizeddrilling.Inaddition,approximately$40millionwasspentonexplorationstudies,roadconstructionandpermittingattheAmaruqsatellitedepositatMeadowbank.


In2016,theCompanycompletedaninternaltechnicalstudyontheAmaruqsatellitedepositatMeadowbank.ThefollowingtablesetsoutasummaryofkeyestimatesandparametersoftheAmaruqsatellitedepositatMeadowbank.

Indicated mineral resources (Open Pit) 16.9milliontonnesoforegrading3.88g/tgold(2.1millionoz)

Inferred mineral resources (Open Pit) 4.9milliontonnesoforegrading4.81g/tgold(763,000oz)

Inferred mineral resources (Underground) 6.8milliontonnesoforegrading6.22g/tgold(1.4millionoz)

Estimated production over mine life 1,980,000oz

Estimated average metallurgical recovery Approximately93%

Estimated average annual gold production Approximately135,000ouncesbasedon4to5monthsofproduction(year1)

Approximately255,000ounces(year2)


Approximately430,000ounces(years4–6)

Estimated average annual mill throughput Approximately1,279,000tonnesbasedon4to5monthsofproduction(year1)

Approximately2,987,000tonnes(year2)


Approximately3,285,000tonnes(years4–6)

Estimated mine life Approximately6years

Estimated initial capital costs to the first ounceproduced

Approximately$330million

Estimated sustaining capital costs Approximately$25millionperyear

Estimated reclamation costs Approximately$16million

Economic Analysis:

$1,200perouncegold

US$/C$exchangerateof$1.25

Statutoryincometaxrate:Approximately26%

In2017,atotalof$93.4millionhasbeenbudgetedtobespentattheMeadowbankmine,excludingcapitalizeddrilling,whichincludes$73.1millionattheAmaruqdeposit.


Geology

TheMeadowbankminecomprisesanumberofArchean-agegolddepositshostedwithinpolydeformedvolcanicandsedimentaryrocksoftheWoodburnLakeGroup,partoftheWesternChurchillsupergroupinnorthernCanada.

Threemineablegolddeposits,Goose,PortageandVault,havebeendiscoveredalongthe25-kilometrelongMeadowbankgoldtrend,andthePDF

deposit(afourthdeposit)hasbeenoutlinedonthenortheastgoldtrend.Theseknowngoldresourcesarewithin225metresofthesurface,makingthedepositsattractiveforopenpitmining.Inaddition,theAmaruqpropertywillbedevelopedasasatelliteoperationtotheMeadowbankmine.


Mineralization

ThepredominantgoldmineralizationfoundinthePortageandGoosedepositsisassociatedwithironsulphides,mainlypyriteandpyrrhotite,whichoccurasareplacementofmagnetiteintheoxidefaciesironformationhostrock.Toalesserextent,pyriteandchalcopyritemaybefoundand,onrareoccasions,arsenopyritemaybeassociatedwiththeothersulphides.Goldismainlyobservedinnativeform(electrum),occurringinisolatedspecksorasplatingaroundsulphidegrains.Theorezonesaretypicallysixtosevenmetreswide,followingthecontactsbetweentheironformationunitsandthesurroundinghostrock.Zonesextenduptoseveralhundredmetresalongstrikeandatdepth.Thesulphidesprimarilyoccurasreplacementoftheprimarymagnetitelayers,aswellasnarrowstringersorbandsofdisseminatedsulphidesthatalmostalwayscrosscutthemainfoliationand/orbeddingwhichwouldimplyanepigeneticmodeofemplacement.Thepercentageofsulphidesisquitevariableandmayrangefromtracetosemi-massiveamountsoverseveralcentimetrestoseveralmetresinlength.Thehighergoldgradesandtheoccasionaloccurrenceofvisiblegoldarealmostalwaysassociatedwithgreaterthan20%sulphidecontent.

Themainmineralizedbandedironformationunitisboundedbyanultramaficunittothewestwhichlocallyoccursinterlayeredwiththebandedironformationandtotheeastbyanintermediatetofelsicmetavolcaniclasticunit.

IntheVaultdeposit,pyriteistheprincipalore-bearingsulphide.Thedisseminatedsulphidesoccuralongshearedhorizonsthathavebeensericitizedandsilicified.Thesezonesareseveralmetreswideandmaycontinueforhundredsofmetresalongstrikeanddowndip.

TheGooseandPortagedepositsarehostedwithinhighlydeformed,magnetite-richironformationrocks,whileintermediatevolcanicrockassemblageshostthemajorityofthemineralizationatthemorenortherlyVaultdeposit.Anadditionaldeposit,PDF,showsthesamecharacteristicsasVault,thoughitisnotcurrentlyanticipatedtobeamineabledeposit.

Definedovera1.85-kilometrestrikelengthandacrosslateralextentsrangingfrom100to230metres,thegeometryofthePortagedepositconsistsofgeneralnorth-northweststrikingorezonesthatarehighlyfolded.Themineralizationinthelowerlimbofthefoldistypicallysixtoeightmetresintruethickness,reachingupto20metresinthehingearea.

TheGoosedepositislocatedjustsouthofthePortagedepositandisalsoassociatedwithironformationbutexhibitsdifferentgeometry,withanorth-southtrendandasteepwesterlydip.Mineralizedzonestypicallyoccurasasingleunitnearsurface,splayingintoseverallimbsatdepth.Thedepositiscurrentlydefinedovera750-metrestrikelengthanddownto500metresatdepth(mainlyinthesouthernend),withtruethicknessesofthreeto12metres(reachingupto20metreslocally).TheGooseundergroundresource(100to500metresatdepth)extends700metrestothesouthoftheGoosepit.TheorezonesshowthesamecharacteristicsastheGoosepit,whichistwotofivemainzonessub-parallelandundulating.Theaveragethicknessrarelyexceedsthreetofivemetres.

TheVaultdepositislocatedsevenkilometresnortheastofthePortageandGoosedeposits.Itisplanarandshallow-dippingwithadefinedstrikeof1,100metres.Thedeposithasbeendisturbedbytwosetsofnormalfaultsstrikingeast-westandnorth-southanddippingmoderatelytothesoutheastandsteeplytotheeast,respectively.Themainlenshasanaveragetruethicknessofeightto12metres,reachingashighas18metreslocally.Thehangingwalllensesaretypicallythreetofivemetres,anduptosevenmetres,intruethickness.

TheAmaruqdepositislocated50kilometresnorthwestoftheMeadowbankcomplex.Itisafoldeddepositwithadefinedstrikeof1.6kilometres.ThreecontrastingstylesofmineralizationcoexistontheAmaruqproperty.Inallthreestyles,goldisfoundassociatedwithpyrrhotiteand/orarsenopyriteas25-to50-microninclusionsorgrainsalongfractures,orsimplyasfreegrainsinaquartz-richgangue.

Thefirstmineralizationstylecorrespondstooccurrencesofpyrrhotite-quartz-amphibole-carbonateaslayers,lensesand/ordisseminations,mostlyrestrictedtothesilicate-sulphideironformationsofWhaleTail'snorthdomain.Thesecondmineralizationstylecomprisessilicafloodingwithsignificantpyrrhotite,arsenopyrite,andlocalpyritestockworkanddisseminations,withinagangueofamphibole-carbonate.Thethirdmineralizationstyleisbetweendecimetersandseveralmetersthick,quartz-sulphide-nativegoldveinscuttingthroughthewholeMammoth-WhaleTail-IVRrocksequence.Theseveinsarebestdevelopedinthemaficandultramaficvolcanics,wheretheyarehostedinbiotite-alteredandmoderately-to-stronglyschistosezones.Theoverallsulphidecontentoftheseveinsisgenerallylow(1-5%maximum)andmostcommonlycomprisesarsenopyrite,galena,sphalerite,and/orchalcopyrite.Theseveinsseemmoreabundantandbestdevelopedinthehingezoneoftheregionalfoldandseemtoberestrictedtoshallowsoutheast-dipping,high-straincorridorstherein.



ExplorationeffortsontheMeadowbankpropertyhavebeenextensivesince1985,includinggeophysics,prospecting,tillsamplinganddrilling,mainlybydiamonddrillbutalsoreversecirculation.From1985untilAgnicoEagleacquiredthepropertyin2007,126,796metresweredrilledin916diamondandreversecirculationdrillholesontheproperty.In2005,Cumberland(thepreviousowner)estimatedmineralresourcesinthePortage,GooseandVaultdepositscombinedasfollows:measuredandindicatedmineralresourcesof23.3milliontonnesoforegrading4.40gramspertonneofgold(containing3.3millionouncesofgold)andinferredmineralresourcesof3.5milliontonnesoforegrading4.20gramspertonneofgold(containing0.5millionouncesofgold).

In2016,theamountofgoldinprovenandprobablemineralreservesdecreasedbyapproximately215,000ouncesto0.71millionouncesofgold(8.2milliontonnesoforegrading2.69gramspertonne)afterproducing312,214ouncesofgold(304,000ouncesofinsitugoldmined).Thenetdecreasewasprimarilyduetotheminedepletion,partiallyoffsetbytheconversionofmineralresourcestomineralreservesintheextensionsofPortagePitE3andVaultSouthPit.MeasuredandindicatedmineralresourcesattheMeadowbankminedecreasedby3.3milliontonnesto3.7milliontonnesgrading2.07gramsofgoldpertonne.Inferredmineralresourcesdecreasedby2.3milliontonnesto1.1milliontonnesgrading3.13gramsofgoldpertonne.

In2016,diamonddrillingatMeadowbankwasconductedinboththeVaultandthePortagepits.AtVault,20holesweredrilledforatotallengthof975metresinordertocomplete25×25metredrillspacinginthePhaserandBBPhaserpits.Thisdrillingconfirmedthepreviousmineralresourceestimate.AtPortage,14holesweredrilledinPitE3foratotallengthof981metrestoconvertindicatedmineralresourcestoprobablemineralreservesintheE4pushbackofthepitand11holesweredrilledinPitAforatotalof501metrestoconfirmhighgradeintersectionsinpreviousdrillholes.Thetotalcostofdrillingin2016amountedto$0.43million.In2017,1,500metresofinfilldrillingisplannedintheVault,PhaserandBBPhaserpits.

Alsoin2016,diamonddrillingwasconductedattheAmaruqsatellitedepositatMeadowbank.520holesweredrilledforatotallengthof127,751metres.WithintheIVRarea,267holeswerecompleted(65,797metres)onextensionandconversionofVzonesandexplorationtargets.DrillingalongtheMammothtrendsincluded125holes(25,235metres).DrillingatWhaleTailincluded128holes(36,720metres)forconversion,extensionandexplorationdrilling.Inaddition,11engineeringdrillholeswerecompleted(2,222metres).In2017,75,000metresofdiamonddrillingareplannedforexploration,conversionandengineeringpurposes.

MeliadineProject

TheMeliadineprojectisanadvancedexploration/developmentpropertylocatednearthewesternshoreofHudsonBayintheKivalliqregionofNunavut,approximately25kilometresnorthofthehamletofRankinInletand290kilometressoutheastoftheMeadowbankmine.TheclosestmajorcityisWinnipeg,Manitoba,approximately1,500kilometrestothesouth.InFebruary2017,theCompany'sBoardofDirectorsapprovedtheconstructionofamineattheMeliadineproject.CommercialproductionatMeliadineisexpectedinthethirdquarterof2019.

TheCompanyacquiredits100%interestintheMeliadineprojectthroughitsacquisitionofComaplexinJuly2010.

ThemineralreservesandmineralresourcesoftheMeliadineprojectareestimatedatDecember31,2016tocontainprovenandprobablemineralreservesof3.4millionouncesofgoldcomprisedof14.5milliontonnesoforegrading7.32gramsofgoldpertonne.Inaddition,theprojecthas20.8milliontonnesofindicatedmineralresourcesgrading4.95gramsofgoldpertonneand14.7milliontonnesofinferredmineralresourcesgrading7.51gramsofgoldpertonne.

TheMeliadinepropertyisalargelandpackagethatisnearly80kilometreslong.Itconsistsofmineralrights,aportionofwhichareheldundertheNorthwest Territories and Nunavut Mining Regulations andadministeredbyAboriginalAffairsandNorthernDevelopmentCanadaandreferredtoasCrownLand.TheCrownLandismadeupofminingclaimsandmineralleases.TherearealsosubsurfaceNTIconcessionsadministeredbyadivisionoftheNunavutterritorialgovernment.In2016,approximatelyC$125,000waspaidtoIndigenousandNorthernAffairsCanadaforthemininglease.NTIrequiresannualrentalfeesofapproximatelyC$75,000andexplorationexpendituresofapproximatelyC$250,000.

TheKivalliqregionhasanaridarcticclimate.Surfacegeologicalworkcanbecarriedoutfrommid-Maytomid-October,whileexplorationdrillingcantakeplacethroughouttheyear,thoughisreducedinDecemberandJanuaryduetocoldanddarkness.


Equipment,fuelanddrygoodsaretransportedontheannualsealiftbybargetoRankinInletviaHudsonBay.Ocean-goingbargesfromChurchill,ManitobaoreasternCanadianportscanaccessthecommunityfromlateJunetoearlyOctober.Churchill,whichisapproximately470kilometressouthofRankinInlet,hasadeep-waterportfacilityandayear-roundraillinktolocationstothesouth.

InOctober2013,theCompanycompletedconstructionofa23.8-kilometre-longall-weathergravelroadlinkingRankinInletwiththeprojectsite.ThisroadwasconstructedtosupportongoingexplorationactivitiesattheMeliadinepropertyandsignificantlyreducesthetransportationandlogisticalcostsforexplorationanddevelopmentwork.

LocationMapoftheMeliadineProject(asatDecember31,2016)


Facilities

SurfacePlanoftheMeliadineProject(asatDecember31,2016)

Theplannedsurfaceinfrastructureisindicatedonthesurfaceplanmapaboveandconsistsofmodularstructuresforthedormitory,kitchen,assaylaboratoriesandelectricalrooms/mechanicalmodules.Theadministrationoffice,maintenanceshopandwarehousearecombinedinapre-engineeredbuilding.Theprocessplant,aswellasthepowerplant,areacombinationofstandardstructurebuildingswithprefabricatedmodules.Thesitemapalsoindicatestheplannedmineportals,ventilationraises,openpits,wastedumps,orepads,watermanagementstructures,attenuationpondandtailingsdrystacks.

Mining Methods

TheCompanyanticipatesthatminingatMeliadinewillbecarriedoutthroughtwelveopenpitsandundergroundminingoperations.Itisestimatedthatapproximately5.5milliontonnesoforewillbeextractedfromsurfaceminingand17.4milliontonnesoforewillbeextractedbyundergroundminingovera14-yearminelife.Itisexpectedthatanadditional2.8milliontonnesoflowergradematerialfromundergrounddevelopmentandopenpitmining(marginalore)willbestockpiledforprocessingattheendoftheminelife.Undergroundaccessisexpectedtobebydecline,withlong-holeminingexpected.Eachstopewillbebackfilled,withcementedpastefillusedinprimarystopesanddryrockfillforthesecondarystopes.Aconventionaltruck/shoveloperationisanticipatedfortheopenpits.


Surface Facilities

FacilitiesattheMeliadineprojectincludetheexplorationcamplocatedontheshoreofMeliadineLake,approximately2.3kilometreseastoftheTiriganiaqdeposit.Theself-containedcampconsistsoffivewingsofmodulartrailersthatcanaccommodateupto250personnelandincludesakitchenfacility,completewithdieselgenerators.

Powerfortheexplorationcampiscurrentlyprovidedbydieselgenerators.PotablewaterfortheexplorationandoperationcampsispumpedfromMeliadineLake.WaterfortheundergroundoperationsandsurfacedrillprogramsispumpedfromPumpLake.

Theexplorationcamphasanincineratoronsitetoburnallflammablematerials,suchascampandfoodwastes.Incineratorashes,plasticsandmetalobjects,alongwithallhazardoussolidandliquidwastesarecollectedattheMeliadineprojectsiteandthentransportedtoawastemanagementcompanyinsouthernCanada.

SewagehasbeentreatedthroughaBiodisktreatmentsystemsincethesummerof2010.Routinewatersamplingisconductedandreportedonamonthlybasistotheauthorities.TheCompanyisexaminingsalinewatertreatmentstrategies.

AnundergroundportalallowingaccesstoanexplorationrampwasbuiltattheTiriganiaqdepositin2007and2008inordertoextractabulksampleforstudypurposes.Awasterockandorestoragepadwasbuiltduringexcavationoftherampandasamplingtowerwasinstalledforprocessingthebulksample.Thereisatwo-kilometre-longroadbetweentheMeliadineprojectexplorationcampandtheportalsite.Anotherundergroundbulksampleof4,600tonnesoforewastakenfromtheTiriganiaqdepositviathisportalin2011.

Pre-constructionactivitiesbeganinthesummerof2016,pilinginstallationandcampconstructionbeganinAugust2016anddykeconstructionandinstallationofasemi-mobilebatchplantcommencedinNovember2016.


Morethan39metallurgicaltestprogramshavebeenconductedattheMeliadineproject.Basedontheresultsofthesetestprograms,aconventionalgoldcircuithasbeenrecommended,comprisingcrushing,grinding,gravityseparationandcyanideleaching,withacarbon-in-leachcircuit(CIL),followedbycyanidedestructionandfiltrationofthetailingsfordrystacking.

GlobalgoldrecoveryattheMeliadineprojectisestimatedtobe96%overthecurrent14-yearlifeofmine.Themineplanenvisionsprocessinganaveragerateof3,365tonnesoforeperdayforthefirstthreefullyearsofproduction,and5,600tonnesoforeperdayfortheremainderofthelifeofmine,withanestimatedplantavailabilityof92%.

Environmental Matters (including Inuit Impact and Benefit Agreement), Permitting and Social Matters

LandandenvironmentalmanagementintheregionoftheMeliadineprojectisgovernedbytheprovisionsoftheNLCA.TheMeliadineprojectislocatedonInuit-ownedland,whereInuitownboththesub-surfacemineralrights(managedbyNTI)andthesurfacelandrights(managedbytheKIAonbehalfofInuitbeneficiariesundertheprovisionsoftheNLCA).Consequently,toexploreanddeveloptheproject,theCompanymustobtainlanduseleasesfromtheKIA.TheCompanyhasbeengrantedacommercialleasebytheKIAforexplorationandundergrounddevelopmentactivity,aprospectingandlanduseleaseforexplorationanddevelopmentactivities,anexplorationlanduseleaseforexplorationanddrillingontheInuit-ownedlandsofMeliadineEastandaparceldrillingpermitfordrillingactivityonInuit-ownedlands.Anumberofright-of-wayleasescoveringroadaccesstotheMeliadineprojectpropertyandeskerquarryingontheInuit-ownedlandswerealsograntedbytheKIA.

PursuanttotheNLCAandtheNunavut Waters and Nunavut Surface Rights Tribunal Act requirements,theCompanyobtainedseveralwateruselicencesfromtheNWB,coveringongoingwateruseforitsMeliadineprojectexplorationcamp,theundergroundbulksamplingprogramandforongoingexplorationdrillingactivities.

In2011,theCompanyinitiatedtheenvironmentalassessmentprocessfortheMeliadineprojectwiththeobjectiveofobtainingaprojectcertificatefromtheGovernmentofCanadafortheconstruction,operationandultimatedecommissioningofthefullproject.Theprojectcertificateisrequiredbeforeobtainingthepermitsrequiredtoconstruct,operateanddecommissionagoldmineatMeliadine.InMay2011,theKIAreferredtheMeliadineprojecttotheNIRBforscreeningundertheNLCA.OnMay4,2011,theNIRBreceivedtheMeliadineprojectproposalfromtheCompany.OnJune8,2011,theNIRBreceivedapositiveconformitydeterminationfromtheNunavutPlanningCommissionfortheMeliadineprojectinrelationtotheKeewatinRegionalLandUsePlan.


TheCompanyreceivedaprojectcertificate,whichsetsoutthetermsandconditionsfortheconstructionoftheMeliadinemine,fromtheNIRBonFebruary26,2015.AnapplicationforaTypeAwaterlicencefromtheNWBwassubmittedin2015andthelicencewasreceivedinApril2016.AcommercialproductionlanduseleasefromtheKIAisexpectedin2017.

AnInuitImpactandBenefitAgreementfortheMeliadineproject(the"MeliadineIIBA")wassignedwiththeKIAinJuly2015.TheMeliadineIIBAaddressesprotectionofInuitvalues,cultureandlanguage,protectionoftheland,waterandwildlife,providesfinancialcompensationtoInuitovertheminelifeandcontainsprovisionfortraining,employmentandcontracting.InorderfortheCompanytomaintainasociallicensetodevelopandoperatetheMeliadineproject,thecommitmentsincludedintheMeliadineIIBAareimplementedandcloselymonitoredbytheCompany.Moreover,theimplementationoftheMeliadineIIBAismanagedbyworkinggroupswithrepresentativesfromtheCompanyandtheKIA,andreviewedbyanImplementationCommitteerepresentedbyeachparty'sseniorrepresentatives.Thesegroupsmeetregularlythroughouttheyeartomonitorimplementationprocessesandissues.


TotalcapitalexpendituresattheMeliadineprojectin2016were$130.9million,includingcapitalizedsurfaceandundergrounddrilling,rampdevelopment,permitting,campoperation,technicalstudiesandsurfaceearthworks.

Capitalexpendituresof$355.8millionhavebeenbudgetedfortheMeliadineprojectin2017,focusedondetailedengineeringandprocurement,constructionofsurfaceinfrastructure,rampdevelopment,undergrounddrillingandcampoperations.


In2016,internalstudieswerecarriedouttooptimizethepreviousMeliadinemineplanthathadbeenoutlinedinaNI43-101technicalreportdatedFebruary11,2015.Theseinternalstudiesassessedvariousopportunitiestoimprovetheprojecteconomics.ThefollowingtablesetsoutasummaryofthekeyestimatesandparametersoftheMeliadineproject.

Proven and probable mineral reserves 14.5milliontonnesoforegrading7.32g/tgold(3.4millionoz)

Measured and indicated mineral resources 20.8milliontonnesgrading4.95g/tgold(3.3millionoz)

Inferred mineral resource 14.7milliontonnesgrading7.51g/tgold(3.6millionoz)

Estimated production over life of mine 5,315,000oz

Estimated average metallurgical recovery Approximately96%

Estimated average annual gold production Approximately125,000ouncesbasedon4monthsofproduction(year1)*



Approximately405,000ounces(years4–14)

Estimated average annual mill throughput Approximately377,000tonnesbasedon4monthsofproduction(year1)



Approximately2,049,000tonnes(years4–14)

Estimated mine life Approximately14years

Estimated initial capital costs to the first ounceproduced

Approximately$900million

Estimated sustaining capital costs Approximately$48millionperyear

Estimated reclamation costs Approximately$49million

Economic Assumptions:

$1,200perouncegold

US$/C$exchangerateof$1.25

Statutoryincometaxrate:Approximately26%

TheMeliadineprojectissubjecttoanetprofitsroyaltypayableinaccordancewiththeNorthwest Territories andNunavut Mining Regulations .Theroyaltiesarecalculatedusingagraduatedratetoamaximumof13%

* Includesapproximately60,000pre-productionounces

Development

In2016,3,795metresofhorizontaldevelopmentand198metresofverticaldevelopmentwerecompletedattheMeliadineproject.For2017,theCompanyexpectsapproximately5,590metresofhorizontaldevelopment(including


approximately1,060metresoftotalrampdevelopment)andapproximately760metresofverticaldevelopmenttobecompleted.


Geology and Mineralization

ArcheanvolcanicandsedimentaryrocksoftheMeliadinegreenstonebeltunderlietheproperty,whichismainlycoveredbyglacialoverburdenwithdeep-seatedpermafrostandispartoftheWesternChurchillsupergroupinnorthernCanada.Therocklayershavebeenfolded,shearedandmetamorphosed,andhavebeentruncatedbythePykeFault,aregionalstructurethatextendstheentire80-kilometrelengthoftheproperty.

ThePykeFaultappearstocontrolgoldmineralizationontheMeliadineproperty.AtthesouthernedgeofthefaultisaseriesofoxideironformationsthathostthesevenMeliadineprojectdepositscurrentlyknown.Thedepositsconsistofmultiplelodesofmesothermalquartz-veinstockworks,laminatedveinsandsulphidizedironformationmineralizationwithstrikelengthsofuptothreekilometres.TheUpperOxideironformationhoststheTiriganiaqandWolfNorthzones.ThetwoLowerLeanironformationscontaintheFZone,Pump,WolfMainandWesmegdeposits.TheNormegzonewasdiscoveredin2011ontheeasternendoftheWesmegzone,nearTiriganiaq.TheWolf(NorthandMain),FZone,PumpandWesmeg/NormegdepositsareallwithinfivekilometresofTiriganiaq.TheDiscoverydepositis17kilometreseastsoutheastofTiriganiaqandishostedbytheUpperOxideironformation.Eachofthesedepositshasmineralizationwithin120metresofsurface,makingthempotentiallymineablebyopenpitmethods.Theyalsohavedeeperorethatcouldpotentiallybeminedwithundergroundmethods,whicharecurrentlybeingconsideredinvariousstudies.

Twobulksampleshavebeenextractedfromtheexplorationramp.Theresultsconfirmedtheresourceestimationmodelthathasbeendevelopedforthetwoprincipalzones(Zones1000and1100)atTiriganiaq,andindicatedapproximately6%moregoldthanhadbeenpredictedbytheblockmodelfortheseareas.The2011bulksampleprogramalsoconfirmedthepreviousassessmentoftheCompany'sblockmodelintermsofgradecontinuity,consistencyanddistribution,andtheevaluationofrelatedminingpropertiesthroughgeologicalmapping,undergroundchip,channelandmucksampling,andgeotechnicalobservations.


ThefirstmineralresourcesestimateatMeliadinewasmadebyStrathconaMineralServicesin2005forthen-ownerComaplex,andcomprisedindicatedmineralresourcesof2.5milliontonnesgrading10.8gramsofgoldpertonne(containing853,000ouncesofgold)andinferredmineralresourcesof1.1milliontonnesgrading13.2gramspertonneofgold(containing486,000ouncesofgold),withallresourcesintheTiriganiaqdeposit.Followingthis,therewereannualestimatesgraduallyincludingnewdeposits,suchasDiscovery,FZone,PumpandWolf.ThefinalmineralresourcesestimatemadebeforetheCompanyacquiredthepropertywasmadebySnowdenMiningIndustryConsultantsforComaplexinJanuary2010anditcomprisedmeasuredandindicatedmineralresourcesof12.9milliontonnesgrading7.9gramsofgoldpertonne(containing3.3millionouncesofgold)andinferredmineralresourcesof8.4milliontonnesgrading6.4gramsofgoldpertonne(containing1.7millionouncesofgold).

ProvenandprobablegoldreservesatMeliadinein2016remained3.42millionouncesofgold(14.5milliontonnesoforegrading7.32gramspertonne).IndicatedmineralresourcesatMeliadinein2016remained20.8milliontonnesoforegrading4.95gramsofgoldpertonne.Inferredmineralresourcesin2016remained14.7milliontonnesoforegrading7.51gramsofgoldpertonne.

In2016,theCompanyspent$0.5millionon1,200metresofexplorationdrillingatMeliadine.The2017planincludesspending$3.9milliononconversiondrilling(25,900metres)and$0.8milliononexplorationdrilling(5,000metres)atMeliadine.


Southern Business

PinosAltosMine

ThePinosAltosmineachievedcommercialproductioninNovember2009.ItislocatedintheSierraMadregoldbelt,285kilometreswestoftheCityofChihuahuaintheStateofChihuahuainnorthernMexico.AtDecember31,2016,thePinosAltosminewasestimatedtocontainprovenandprobablemineralreservesof1.4millionouncesofgoldand38.1millionouncesofsilvercomprisedof17.4milliontonnesoforegrading2.55gramsofgoldpertonneand68.2gramsofsilverpertonne.TheCrestonMascotadepositatPinosAltosachievedcommercialproductioninthefirstquarterof2011.AtDecember31,2016,theCrestonMascotadepositwasestimatedtocontainadditionalprovenandprobablemineralreservesof0.1millionouncesofgoldand0.9millionouncesofsilvercomprisedof2.5milliontonnesoforegrading1.28gramsofgoldpertonneand11.4gramsofsilverpertonne.ThePinosAltospropertyismadeupoftwoblocks:theAgnicoEagleMexicoConcessions(25concessions)andthePinosAltosConcessions(19concessions).

LocationMapofthePinosAltosMine(asatDecember31,2016)

Approximately47%ofthecurrentPinosAltosmineralreserves,including3%fortheCrestonMascotadeposit,aresubjecttoanetsmelterreturnroyaltyof3.5%payabletoPinosAltosExplotaciónyExploraciónS.A.deC.V.("PAEyE")andtheremaining53%ofthecurrentmineralreservesandmineralresourcesatPinosAltosaresubjecttoa2.5%netsmelterreturnroyaltypayabletotheServicioGeológicoMexicano,aMexicanFederalGovernmentagency.After2029,thisportionofthepropertywillalsobesubjecttoa3.5%netsmelterreturnroyaltypayabletoPAEyE.

TheassetsacquiredbytheCompanyfromPAEyEandtheAsociacióndePequeñosPropietariosForestalesdePinosAltosSdeR.L.in2008includedtherighttouseupto400hectaresoflandformininginstallationsforaperiodof20yearsafterformalminingoperationshavebeeninitiated.TheCompanyalsoobtainedsoleownershipoftheAgnicoEagleMexicoConcessionspreviouslyownedbyCompaniaMineraLaParreñaS.A.deC.V.During2008,theCompanyandPAEyEenteredintoanagreementunderwhichtheCompanyacquiredfurthersurfacerightsforopenpitminingoperationsandadditionalfacilities.Infrastructurepayments,surfacerightspaymentsandadvanceroyaltypaymentstotaling$35.5millionweremadetoPAEyEandtheAsociacióndePequeñosPropietariosForestalesdePinosAltosSdeR.L.in2008asaresultofthisagreement.


Beginningin2006,theCompanyhasnegotiatedwithvariouslandownersfromtheregionfortheacquisitionof7,670hectaresoflandcontainedwithintheAgnicoEagleMexicoandPinosAltosConcessions.Theagreements,otherthantheagreementwithrespecttotheBravoZone,expireineither2028or2036.TheagreementwithrespecttotheBravoZoneexpiresin2017.Theagreements,includingtheagreementwithrespecttotheBravoZone,alsoprovideforfurtherrenewalattheCompany'soption.TheacquisitionofthesesurfacerightsforthegeologicallyprospectivelandswithinthedistrictsurroundingthePinosAltospropertywillfacilitatefutureexplorationandminingdevelopmentintheseareas.ThePinosAltosmineisdirectlyaccessiblebyapavedinterstatehighwaythatlinksthecitiesofChihuahuaandHermosillo.

InAugust2007,theCompanyapprovedconstructionofamineatPinosAltos.ThemineachievedcommercialproductioninNovember2009.In2009,theCompanydecidedtobuildastand-aloneheapleachoperationattheCrestonMascotadepositatPinosAltos.ThefirstgoldpourfromtheCrestonMascotadepositoccurredonDecember28,2010andcommercialproductionfromtheCrestonMascotadepositwasachievedinthefirstquarterof2011.

TheCompanycontinuestoevaluateopportunitiestodevelopothermineralresourcesthathavebeenidentifiedinthePinosAltosareaassatelliteoperations.


SurfacePlanofthePinosAltosMine(asatDecember31,2016)


SurfacePlanoftheCrestonMascotaDepositatPinosAltos(asatDecember31,2016)

Millingoperationsduring2016atPinosAltosprocessedanaverageof5,415tonnesoforeperdayascomparedtothedesignedrateof4,000tonnesperday.TheundergroundmineatPinosAltosproducedanaverageof3,074tonnesoforeperdayascomparedtoitsdesignedrateof3,000tonnesperday.TheopenpitminesatPinosAltosandtheCrestonMascotadepositproduced15.3milliontonnesofore,overburdenandwastein2016.

Mining Methods

ThesurfaceoperationsatthePinosAltosmineusetraditionalopenpitminingtechniqueswithbenchheightsofsevenmetresanddoublebenchesonthefootwallandsinglebenchingonthehangingwall.Miningisaccomplishedwithfrontendloaders,trucks,trackdrillsandvarioussupportequipment.Basedupongeotechnicalevaluations,thefinalpitslopesvarybetween45degreesand50degrees.PerformanceattheopenpitminingoperationatPinosAltosduring2016continuestoindicatethattheequipment,miningmethodsandpersonnelselectedfortheprojectaresatisfactoryforfutureproductionphases.5.2milliontonnesofore,overburdenandwastewereminedduring2016.

Theundergroundmine,whichcommencedoperationsinthesecondquarterof2010,usesthelongholesublevelstopingmethodtoextractore.Thestopeheightis30metresandthenominalstopewidthis15metres.Oreistransportedtothesurfacebyshafthoistingaswellasbytrucksviaarampsystem.Thepastebackfillsystemandventilationsystemwerecommissionedinthefourthquarterof2010.During2016,approximately1.2milliontonnesoforewereproducedfromthe


undergroundportionofthemine,averaging3,164tonnesperday.Theplannedcapacityoftheundergroundmineisincreasingfromtheoriginalplannedcapacityof3,000tonnesoforeperdaytowards4,500tonnesoforeperdaywiththecommissioningofashaftin2016andthedevelopmentofadditionalundergroundmineralreserves.Theshafthoistingcapacityisexpectedtoreducetheneedforadditionalundergroundtrucksrequiredastheminedepthincreasesandisexpectedtocontinuetomaintainmillfeedratesat4,500tonnesoforeperdayinfutureyearsastheopenpitminesatPinosAltosbecomedepleted.Approximately57kilometresoftotallateraldevelopmenthavebeencompletedasofDecember31,2016.

Surface Facilities

TheprincipalmineralprocessingfacilitiesatthePinosAltosmineweredesignedtoprocess4,000tonnesoforeperdayinaconventionalprocessplantcircuitwhichincludessinglestagecrushing,grindinginaSAGandballmillinclosedloop,gravityseparationfollowedbyagitatedleaching,counter-currentdecantationandmetalsrecoveryintheMerrill-Croweprocess.Tailingsaredetoxifiedandfilteredandthenusedforpastebackfillintheundergroundmineordepositedasdrytailingsinanengineeredtailingsimpoundmentarea.ThePinosAltosmillprocessedanaverageof5,415tonnesoforeperdayduring2016.LowgradeoreatPinosAltosisprocessedinaheapleachsystemdesignedtoaccommodateapproximatelyfivemilliontonnesofmineralizedmaterialoverthelifeofthemine.Theproductionfromheapleachoperationsisexpectedtoberelativelyminor,contributingapproximately1%oftotalmetalproductionplannedfortheremaininglifeofthemine(notincludingproductionfromtheCrestonMascotaheapleachoperation).Inaddition,during2016,theCompanyapprovedtheconstructionofasilverflotationplant,whichisexpectedtoincreasesilverrecovery.

OthersurfacefacilitiesatthePinosAltosmineinclude:aheadframeandhoistroom,aheapleachpad,pond,linerandpumpingsystem;administrativesupportoffices;campfacilities;alaboratory;aprocessplantshop;amaintenanceshop;apowergeneratingstation;surfacepowertransmissionlinesandsubstations;anengineeredtailingsmanagementsystem;andawarehouse.

AseparateheapleachoperationandancillarysupportfacilitieswerebuiltattheCrestonMascotadeposit,whichisdesignedtoprocessapproximately4,000tonnesoforeperdayinathreestagecrushing,agglomerationandheapleachcircuitwithcarbonadsorption.Thisprojectwascommissionedinthelatterpartof2010,withcommercialproductionachievedinthefirstquarterof2011.During2016,atotalof2.0milliontonnesoforewasminedfromtheCrestonMascotadeposit,averaging5,520tonnesperday.Inthefourthquarterof2016,workonthePhaseIVleachpadexpansionwascompletedwithstackingofmaterialexpectedtobegininthefirstquarterof2017.BasedonperformanceofthemineandprocessfacilitiesattheCrestonMascotadeposittodate,theequipment,miningmethodsandpersonnelaresatisfactoryforcompletionoftheplannedproductionphases.

Overtheremaininglifeofthemine,recoveriesofgoldandsilverinthemillingcircuitatPinosAltos(otherthanfromtheCrestonMascotadeposit)areexpectedtoaverageapproximately93%and43%,respectively.TheCompanyanticipatespreciousmetalsrecoveryfromlowgradeoreprocessedinthePinosAltosheapleachfacilitywillaverage68%forgoldand12%forsilver.HeapleachrecoveriesfororefromtheCrestonMascotadepositareexpectedtoaverage63%forgoldand8%forsilver.


During2016,thePinosAltosmine,includingtheCrestonMascotadeposit,hadtotalpayableproductionof240,068ouncesofgoldandapproximately2.7millionouncesofsilverfromthePinosAltosmillandtheheapleachpadsatthePinosAltosmineandtheCrestonMascotadeposit.

Ofthetotalin2016,thePinosAltosmillhadpayableproductionof183,576ouncesofgoldand2.4millionouncesofsilverfrom2.0milliontonnesoforegrading3.0gramsofgoldpertonneand80.0gramsofsilverpertonne.TheproductioncostsperounceofgoldproducedatPinosAltosin2016were$594.ThetotalcashcostsperounceofgoldproducedatPinosAltosin2016were$356onaby-productbasisandwere$585onaco-productbasisandtheprocessingfacilityaveraged5,415tonnesoforeperdayandoperated92.6%ofavailabletime.Inthemill,goldrecoveryaveraged94.9%andsilverrecoveryaveraged50%.TheproductioncostspertonneatPinosAltoswere$51andtheminesitecostspertonnewere$49in2016.


ThefollowingtablesetsoutthemetalrecoveriesatthePinosAltosmillin2016.

Head Grade

Overall Metal

RecoveryPayable

Production

Gold 3.0g/t 94.9% 183,576oz

Silver 80.0g/t 50% 2.4millionoz

Ofthe2016total,thePinosAltosheapleachoperationshadpayableproductionof9,196ouncesofgoldand89,425ouncesofsilverfrom278,000tonnesoforegrading0.9gramsofgoldpertonneand28.0gramsofsilverpertonne.

ThecumulativerecoveryforgoldandsilverontheheapleachpadatPinosAltosareapproximately75%and16%,respectively.Heapleachrecoveryisfollowingtheexpectedcumulativerecoverycurveanditisanticipatedthattheultimaterecoveryof68%forgoldand12%forsilverwillbeachievedwhenleachingiscompleted.

Ofthe2016total,theheapleachoperationsattheCrestonMascotadeposithadpayableproductionof47,296ouncesofgoldand201,243ouncesofsilverfrom2.1milliontonnesoforegrading1.10gramsofgoldpertonneand12.0gramsofsilverpertonne.TheproductioncostsperounceofgoldproducedattheCrestonMascotadepositin2016were$578.ThetotalcashcostsperounceofgoldproducedattheCrestonMascotadepositin2016were$516onaby-productbasisandwere$588onaco-productbasis.TheproductioncostspertonneattheCrestonMascotadepositwere$13andtheminesitecostspertonnewere$13in2016.

ThecumulativemetalsrecoveryforgoldandsilverontheheapleachpadattheCrestonMascotadepositareapproximately60%and14%,respectively.Heapleachrecoveryisfollowingtheexpectedcumulativerecoverycurveanditisanticipatedthattheultimaterecoveryof62%forgoldand11%forsilverwillbeachievedwhenleachingiscompleted.

Productionduring2017atthePinosAltosmine(excludingCrestonMascota)isexpectedtobeapproximately170,000ouncesofgoldand2.6millionouncesofsilverfrom2.2milliontonnesoforegrading2.52gramsofgoldpertonneand71.0gramsofsilverpertonne,atestimatedtotalcashcostsperounceofgoldofapproximately$474onaby-productbasis,withestimatedgoldrecoveryof95.0%andsilverrecoveryof52.9%.Minesitecostspertonneofapproximately$55formilledoreareexpectedin2017.TheheapleachattheCrestonMascotadepositisexpectedtoproduceapproximately40,000ouncesofgoldand0.1millionouncesofsilverfrom2.0milliontonnesoforegrading1.01gramsofgoldpertonneand11.5gramsofsilverpertonne,atestimatedtotalcashcostsperounceofgoldofapproximately$812onaby-productbasis,withestimatedgoldrecoveryof61.8%andsilverrecoveryof13.8%.Minesitecostspertonneofapproximately$17forCrestonMascotaheapleachoreareexpectedin2017.


ThePinosAltosminehasreceivedthenecessarypermitauthorizationsforconstructionandoperationofamine,includingaChangeofLandUsepermitandanEnvironmentalImpactStudyapprovalfromtheapplicableMexicanenvironmentalagency.PinosAltosusesthedrystacktailingstechnologytominimizethegeotechnicalandenvironmentalriskthatcanbeassociatedwiththerainfallintensitiesandtopographicreliefintheSierraMadreregionofMexico.Since2015,tailingshavebeendepositedinatailingsfacilitythatwasconstructedintheminedoutOberonduWeberpit.

Followinganauditprocessbyanindependentthirdparty,theoperationsatboththePinosAltosmineandtheCrestonMascotadepositreceivedthe"IndustriaLimpia"certificationfromtheMexicanenvironmentalauthorities.Thiscertificationisbasedoncompliancewithenvironmentalrequirements.ThePinosAltosminehasalsoreceivedcertificationundertheInternationalCyanideManagementCode(the"CyanideCode").

TheCompanyhasengagedthelocalcommunitiesintheareawithhiring,localcontracts,educationsupport,infrastructureprojectsandmedicalsupportprogramstoensurethatthemineprovideslong-termbenefitstotheresidentslivingandworkingintheregion.Approximately70%oftheoperatingworkforceatPinosAltosarelocallyhiredand100%ofthepermanentworkforceattheCompanyoperationsinMexicoareMexicannationals.



CombinedcapitalexpendituresatthePinosAltosmineandCrestonMascotadepositduring2016wereapproximately$68.9million,excludingcapitalizeddrilling.Combinedcapitalexpendituresincludedsustainingcapitalforshaftconstructionandcommissioning,undergroundequipmentmajorcomponents,silverflotationplant,CrestonMascotaphase4leachpadandpondandOberondeWebertailingsdam.

In2017,theCompanyexpectscapitalexpendituresatPinosAltos,includingtheCrestonMascotadeposit,tobeapproximately$59.7million,excludingcapitalizeddrilling.Capitalexpendituresin2017willprimarilybeusedforundergroundminedevelopment,equipmentpurchases,constructionofthesilverflotationplant,pastebackfillplantexpansionandgeneralsustainingactivities.

Development

AsofDecember31,2016,fortheminelifetodate,morethan132milliontonnesofore,overburdenandwastehadbeenremovedfromtheopenpitmineatPinosAltosandapproximately57kilometresoflateraldevelopmenthadbeencompletedintheundergroundmine.AttheCrestonMascotadeposit,approximately54milliontonnesofore,overburden,andwastehadbeenremovedfromtheopenpitmineasofDecember31,2016.

Theshaftsinkingprojectthatwasinitiatedin2012,withanoriginalbudgetof$106million,wascompletedinmid-2016withafinalcostof$96million.Thisnewshaftwillfacilitateimprovedmatchingofminingandmillcapacityfor4,500tonnesoforeand1,500tonnesofwasteperdayastheopenpitminingoperationwindsdown.


Geology

ThePinosAltosmineisinthenorthernpartoftheSierraMadregeologicprovince,onthenortheastmarginoftheOcampoCaldera,whichhostsmanyepithermalgoldandsilveroccurrences,includingthenearbyOcampoandMorismines.

ThepropertyisunderlainbyTertiary-age(lessthan45millionyearsold)volcanicandintrusiverocksthathavebeendisturbedbyfaulting.Thevolcanicrocksbelongtothelowervolcaniccomplexandthediscordantoverlyinguppervolcanicsupergroup.ThelowervolcaniccomplexisrepresentedonthepropertybytheNavosaigameconglomerates(includingthinly-beddedsandstoneandsiltstone)andtheElMadronovolcanics(felsictuffsandlavasintercalatedwithrhyolitictuffs,sandyvolcanoclasticsandsediments).TheuppervolcanicgroupismadeupoftheVictoriaignimbrites(explosivefelsicvolcanics),theFrijolarandesites(massivetoflow-banded,porphyriticflows)andtheBuenavistaignimbrites(dacitictorhyoliticpyroclastics).

Intermediateandfelsicdykesaswellasrhyoliticdomesintrudealloftheseunits.TheSantoNinoandesiteisadykethatintrudesalongtheSantoNinofaultzone.

Structureonthepropertyisdominatedbyaten-kilometrebythree-kilometrehorst,afault-upliftedblockstructureorientedwest-northwest,thatisboundedonthesouthbythesouth-dippingSantoNinofaultandonthenorthbythenorth-dippingReynadePlatafault.Quartz-goldveindepositsareemplacedalongthesefaultsandalongtransferfaultsthatsplayoutwardsfromtheSantoNinofault.

Mineralization

GoldandsilvermineralizationatthePinosAltosmineconsistsoflowsulphidationtypeepithermal-typehydrothermalveins,brecciasandbodies.TheSantoNinostructureoutcropsoveradistanceofroughlysixkilometres.Itstrikesat60degreesazimuthonitseasternportionandturnstostrikeroughly90degreesazimuthonitswesternfringe.Thestructuredipsat70degreestowardsthesouth.ThefourmineralizedsectorshostedbytheSantoNinostructureconsistofdiscontinuousquartzrichlensesnamedfromeasttowest:ElApache,OberondeWeber,SantoNinoandCerroColorado.

TheElApachelensisthemostweaklymineralized.Theareahostsaweaklydevelopedwhitequartzdominatedbreccia.Goldvaluesarelowanderraticoveritsroughly750metrestrikelength.Pastdrillingsuggeststhatthiszoneisoflimitedextentatdepth.

TheOberondeWeberlenshasbeenfollowedonsurfaceandbydiamonddrillingoveranextentofroughly500metres.ShallowholesdrilledbytheCompanyshowgoodcontinuitybothintermsofgradeandthicknessoverroughly550metres.FromthepreviousdrillingdonebyPenoles,continuityatdepthappearstobeerraticwithaweaklydefinedwesternrake.


TheSantoNinolensisthemostverticallyextensiveoftheselenses.Ithasbeentracedtoadepthofapproximately750metresbelowthesurface.Theveinisfollowedcontinuouslyonsurfaceoveradistanceof550metresanddiscontinuouslyupto650metres.Beyonditswesternandeasternextents,theSantoNinoandesiteismassiveandonlyweaklyaltered.Goldgradesfoundaresystematicallyassociatedwithgreenquartzbrecciatedandesite.

TheCerroColoradolensisstructurallymorecomplexthanthethreedescribedabove.Nearthesurface,itismarkedbyacomplexsuperpositionofbrittlefaultswithmineralizedzoneswhicharedifficulttocorrelatefromholetohole.ItsrelationtotheSantoNinofaultzoneisnotclearlydefined.TwodeeperholesdrilledbytheCompanysuggestbettergradecontinuityispossibleatdepth.

TheSanEligiozoneislocatedapproximately250metresnorthofSantoNino.ThehostrockisbrecciatedVictoriaIgnimbrite,occasionallywithastockworkstyleofmineralization.Thereisnoandesiteinthissector.Unliketheotherlenses,theSanEligiolensdipstowardsthenorth.Thelateralextentofthezoneseemstobecontinuousfor950metres.Itsaveragewidthisfivemetresandneverexceeds15metres.Surfacemappingandprospectinghassuggestedthatthereisgoodpotentialforadditionalmineralizationonstrikeandatdepthsbelow150metres.Visiblegoldhasbeenseeninthedrillcore.

TheCrestonMascotadepositissevenkilometresnorthwestoftheSantoNinodeposit,andissimilar,butdipsshallowlytothewest.TheCrestonMascotadepositisapproximately1,000metreslongandfourto40metreswide,andextendsfromsurfacetomorethan200metresdepth.

Severalotherpromisingzonesareassociatedwiththehorstfeatureinthenorthwestpartoftheproperty.TheCubirodepositisanear-surfacedepositlocatedtwokilometreswestoftheCrestonMascotadeposit.Cubirostrikesnorthwest,hasasteepdipandhasbeenfollowedalongstrikeforapproximately850metres.Drillinghasintersectedsignificantgoldandsilvermineralizationupto30metresinwidth.TheCubirodepositissplitbyafaultthatresultedin200metresofdisplacementtothewest,asdefinedbydrillingtodate.Thezoneisstillopentothesoutheastandpossiblyatdepth.

TheSinterzoneis1,500metresnorth-northeastoftheSantoNinozoneandispartoftheReynadePlatagoldstructure.Thesteeplydippingmineralizationrangesfromfourto35metresinwidthandalmost900metreslong,withover350metresofverticaldepth.Sinterisbeingevaluatedforitsopenpitandundergroundminingpotential.

OtheridentifiedmineralresourcesinthePinosAltosregionincludetheBravoandCarolazonesadjacenttotheCrestonMascotadepositandtheReynadelaPlataprospectfurthertotheeast.ExplorationeffortswillbeallocatedtothesezonesasdevelopmentcontinuesatPinosAltosandtheCrestonMascotadeposit.


In2016,provenandprobablemineralreservesatPinosAltos(excludingCrestonMascota)decreasedbyapproximately35,000ouncesofgoldandincreasedby600,000ouncesofsilverto1.4millionouncesofgoldand38.1millionouncesofsilver(17.4milliontonnesoforegrading2.55gramsofgoldpertonneand68.15gramsofsilverpertonne)afterproducing183,576ouncesofgold(187thousandouncesofinsitugoldmined)and2.4millionouncesofsilver.ThenetdecreasewasaresultofminedepletionaswellasachangetotheSantoNiñopitdesign.IndicatedmineralresourcesatPinosAltosincreasedby2.8milliontonnesin2016to14milliontonnesgrading1.62gramsofgoldpertonneand40.22gramsofsilverpertonneduetonewinterpretationsattheCerroColoradoandSantoNiñodeposits.Inferredmineralresourcesdecreasedby3.4milliontonnesin2016to9.2milliontonnesgrading1.28gramsofgoldpertonneand28.30gramsofsilverpertonne.

In2016,provenandprobablemineralreservesattheCrestonMascotaandBravodepositsdecreasedbyapproximately74,000ouncesofgoldand719,000ouncesofsilverto102,000ouncesofgoldand909,000ouncesofsilver(2.5milliontonnesoforegrading1.28gramsofgoldpertonneand11.35gramsofsilverpertonne)afterproducing47,296ouncesofgold(76,000ouncesofinsitugoldmined)and201,243ouncesofsilver.Thenetdecreasewasaresultofminedepletion.IndicatedmineralresourcesattheCrestonMascotadepositincreasedby28,000tonnesin2016to4.3milliontonnesgrading1.01gramsofgoldpertonneand16.98gramsofsilverpertonneduetoconversionofinferredmineralresourcestoindicatedmineralresourcesattheBravodeposit.TheinferredmineralresourcesattheCrestonMascotadepositdecreasedby2.9milliontonnesin2016to1.3milliontonnesgrading0.72gramsofgoldpertonneand11.54gramsofsilverpertonne.Drillingandevaluationwillcontinuein2017.


In2016,minesiteexplorationactivitieswereprimarilyfocusedonconversion,infillandexplorationofthemineralresourcesattheCrestonMascota,BravoandMadroñodeposits.Atotalof31,263metresofminesiteexplorationdrilling,including8,690metresofinfilldrillingatCrestonMascota,22,573ofexplorationandstepoutdrillingattheMadroñoandBravodepositsand4,960metresofdefinition(conversion)drilling,werecompleted.

In2017,theCompanyexpectstospendapproximately$6.6milliononexplorationatthePinosAltosmineandtheCrestonMascotadeposit,including$0.5millionon2,000metresofconversiondrillingand$6.1millionon34,000metresofexplorationdrilling.

LaIndiaMine

ConstructionbeganatLaIndiainSeptember2012andcommercialproductionwasachievedonFebruary1,2014.AtDecember31,2016,theLaIndiaminewasestimatedtocontainprovenandprobablemineralreservesof1.0millionouncesofgoldand3.7millionouncesofsilvercomprisedof44.0milliontonnesoforegrading0.72gramsofgoldpertonneand2.6gramsofsilverpertonne.

TheLaIndiapropertyconsistsof52wholly-ownedand13optionedminingconcessionsintheMulatosGoldBeltinSonora,Mexico.TheLaIndiapropertyincludestheTarachidepositandseveralotherprospectivetargetsintheMulatosGoldBelt.AttheTarachideposit,indicatedmineralresourcesare47.2milliontonnesgrading0.39gramsofgoldpertonneandinferredmineralresourcesare81.7milliontonnesgrading0.36gramsofgoldpertonne.ApreliminarymetallurgicaltestingprogramonTarachicompositesampleshasbeencompletedandnegotiationsforlandaccessareongoing.

LocationMapoftheLaIndiaMine(asatDecember31,2016)


TheMulatosGoldBeltispartoftheSierraMadregoldandsilverbeltthatalsohoststheoperatingMulatosgoldmineimmediatelysoutheastoftheLaIndiapropertyandthePinosAltosmineandtheCrestonMascotadeposit70kilometrestothesoutheast.

TheLaIndiamineislocatedinthemunicipalityofSahuaripa,southeasternSonoraState,betweenthesmallruraltownsofTarachiandMatarachi.TheclosestmajorcitywithaninternationalairportisHermosillo,thecapitalofSonora,located210kilometreswest-northwestoftheLaIndiamine.RoadtravelfromHermosillotothesitetakesapproximatelysevenhours.Alternatively,theminecanbeaccessedbysmallaircraft.ThepowersupplyattheLaIndiamineisprovidedbydieselgenerators.

TheCompanyacquiredtheLaIndiapropertyinNovember2011aspartofitsacquisitionofGrayd,whichhadexploredthepropertysince2004andhadpreparedapreliminaryeconomicassessmentoftheprojectinDecember2010basedonaJune2010NI43-101-compliantmineralresourceestimate.

InfilldrillingatLaIndiafromNovember2011toMay2012allowedtheCompanytoconfirmandexpandthemineralresourcesreportedintheDecember2010preliminaryeconomicassessment.InSeptember2012,followingthecompletionofafeasibilitystudy,theCompanyapprovedtheconstructionofamineatLaIndia.ThemineachievedcommercialproductioninFebruary2014.TheCompanycontinuestoevaluateopportunitiestodevelopothermineralresourcesthathavebeenidentifiedintheLaIndiaarea.

AttheTarachideposit,thesurfacerightsintheprojectareaareownedbytheTarachiEjido(agrariancommunity)andprivateparties.Allmeasured,indicatedandinferredmineralresourcesliewithinprivatelyownedorejidopossessedland.Surfaceaccessleaseagreementshavebeenexecutedwiththepropertyownersorpossessorsforapproximately50%oftheidentifiedtargetareas.Theexistingagreementspermitexplorationanddrillingactivities;ifminingactivityiscontemplatedfollowingexplorationinthearea,thentheCompanywillberequiredtonegotiatefurthertoacquirethesurfacerightsnecessaryforprojectdevelopment.


Mining Methods

OperationsattheLaIndiamineusetraditionalopenpitminingtechniqueswithbenchheightsofsixmetresandutilizefrontendloaders,trucks,trackdrillsandvarioussupportequipment.Basedupongeotechnicalevaluations,thefinalpitslopesvarybetween46degreesand50degrees.

Surface Facilities

Thefollowingsurfaceplandetailstheminelayoutshowingpitsandwasterockdumplocations,roads,theleachpadandotherinfrastructure.


SurfacePlanoftheLaIndiaMine(asatDecember31,2016)


SurfacefacilitiesattheLaIndiamineincludeathree-stageorecrushingfacility,a35milliontonnecapacitylinedheapleachpadwithprocesspondsandpumpingsystem,acarbonadsorptionplant,alaboratory,aprocessplantshop,aminingequipmentmaintenanceshop,ageneratedpowerstation,surfacepowertransmissionlinesandsubstations,awarehouse,administrativesupportofficesandcampfacilities.Thepowerforthefacilitiesissuppliedbydieselgeneratorsandwaterissuppliedbyasystemofwellsandcatchmentfacilities.Septicdischargesaremanagedintheirrespectiveleachfields.


During2016,theLaIndiaminehadpayableproductionof115,162ouncesofgoldfromapproximately5.8milliontonnesoforestackedontheheapleachpadgrading0.81gramsofgoldpertonne.TheproductioncostsperounceofgoldproducedatLaIndiain2016were$432.ThetotalcashcostsperounceofgoldproducedatLaIndiain2016were$395onaby-productbasisandwere$468onaco-productbasis.TheproductioncostspertonneatLaIndiawere$9andtheminesitecostspertonnewere$9in2016.Stackingratesaveraged15,949tonnesoforeperday.

ThecumulativerecoveryforgoldontheheapleachpadatLaIndiaisapproximately61%.Heapleachrecoveryisfollowingtheexpectedcumulativerecoverycurveanditisanticipatedthattheultimategoldrecoveryof68%willbeachievedwhenleachingiscompleted.Thisprojectedultimaterecoveryislowerthantherecoveryoriginallyestimatedinthefeasibilityreportbecauseoftheadditionofsignificantvolumesoftransitionalmaterial.Thisoregradematerialwasnotincludedinthestudybut,followingthecompletionofmetallurgicaltestworkwhichproveditseconomicbenefitdespitealowerrecoveryrate,hassincebeenaddedtothemineralreserves.

ThefollowingtablesetsoutthemetalrecoveriesatLaIndiain2016.

Head Grade

Cumulative Metal

RecoveryPayable

Production

Gold(includingpriortocommercialproduction) 0.81g/t 61% 115,162oz

Goldproductionduring2017attheLaIndiamineisexpectedtobeapproximately100,000ouncesfrom5.3milliontonnesoforegrading0.89gramsofgoldpertonne,atestimatedtotalcashcostsperounceofapproximately$583onaby-productbasis,withestimatedcumulativegoldrecoveryof66%.Minesitecostspertonneofapproximately$11areexpectedin2017.


TheLaIndiamineisnotlocatedinanareawithaspecialfederalenvironmentalprotectiondesignation.AsofDecember31,2016,allpermitsnecessaryfortheoperationoftheLaIndiaminehadbeenreceived.

TheCompanyhasengagedthelocalcommunitiesintheareawithlocalhiring,contractswithlocalbusinesses,educationsupportandmedicalsupportprogramstoensurethattheLaIndiamineprovideslongtermbenefitstotheresidentslivingandworkingintheregion.Approximately50%oftheoperatingworkforceatLaIndiaislocallyhiredand100%ofthepermanentworkforceareMexicannationals.


CapitalexpendituresattheLaIndiamineduring2016wereapproximately$10.5million,excludingcapitalizeddrilling,whichwasspentonheapleachexpansionandgeneralsustainingactivities.TheCompanyexpectscapitalexpenditurestobeapproximately$7millionin2017,excludingcapitalizeddrilling.Thecapitalexpendituresin2017aretobeusedforheapleachexpansionandgeneralsustainingactivities.

Development

AsofDecember31,2016,fortheminelifetodate,morethan33milliontonnesofore,overburdenandwastehadbeenremovedfromtheopenpitmineatLaIndia.


Agreements & Licences

TheminingconcessionsfortheLaIndiamineandTarachidepositarecontrolledbyanindirect,wholly-ownedsubsidiaryoftheCompanybymeansofdirectownershipandbyfiveseparateagreementswherebytheCompanycanearna100%interestincertainconcessionsbymakingcashandsharepayments.Paymenthasbeenmadeinfullfortheclaimsthathostallofthemeasured,indicatedandinferredmineralresources.Certainconcessionsaresubjecttounderlyingnetsmelterreturnroyaltiesofbetween1%and3%,certainofwhichmaybepurchasedbytheCompanyandcouldresultinnetsmelterreturnroyaltiesremainingofupto2%.

FortheTarachideposit,paymentstotaling$0.75millionhavebeenmadebytheCompanytoearna100%interestintherelevantconcessions.Certainconcessionsaresubjecttoanunderlyingnetsmelterreturnroyaltyofbetween1%and3%,whichmaybepartiallypurchasedbytheCompany,andcouldresultinnetsmelterreturnroyaltiesremainingofupto2%.Inaddition,in2016theCompanyacquiredtheLaChipriona,LosPinosandSantaClaraclaims.

ThedefinedmineralreserveandmineralresourceandalllandsrequiredforinfrastructurefortheLaIndiaminearewholly-containedwithinthreeprivately-heldpropertieswhichtheCompanyhasacquiredinordertopermitexploration,constructionandminedevelopmentactivities.


Geology and Mineralization

TheLaIndiaminelieswithintheSierraMadreOccidental("SMO")province,anextensiveEocenetoMiocenevolcanicfieldextendingfromtheUnitedStates-MexicobordertocentralMexico.TheLaIndiaminelieswithinthewesternlimitsoftheSMOinanareadominatedbyoutcropsofandesiteanddacitictuffs,overlainbyrhyolitesandrhyolitictuffsthatwereaffectedbylarge-scalenorth-northwest-strikingnormalfaultsandintrudedbygranodioriteanddioritestocks.IncisedfluvialcanyonscuttheuppermoststrataandexposetheLowerSeriesvolcanicstrata.

Themineareaispredominantlyunderlainbyavolcanicsequencecomprisedofandesiticandfelsicextrusivevolcanicstratawithinterbeddedepiclasticstrataofsimilarcomposition.Themineraloccurrencespresentintheminearea,andthedeposittypebeingsought,arevolcanic-hostedhigh-sulphidationepithermalhydrothermalgold,silverandporphyry-relatedgolddeposits.Suchdepositsmaybepresentasveinsand/ordisseminateddepositsand/orbreccias.TheLaIndiaminedepositareaisoneofseveralhigh-sulphidationepithermalmineralizationcentresrecognizedintheregion.

Epithermalhigh-sulphidationmineralizationattheLaIndiaminedevelopedasaclusterofgoldzones(MainandNorth)alignednorth-southwithinaspatiallyrelatedzoneofhydrothermalalterationinexcessof20squarekilometresinarea.GoldmineralizationisconfinedtotheLateEocenerockswithinzonesofintermediateandadvancedargilliticalterationoriginallycontainingsulphides,andsubsequentlyoxidizedbysupergeneprocesses.TheNorthandMainzonesarewithintwokilometresofeachother.

Surfaceoutcropmappinganddrill-holedatasofarindicatethatthegoldsystemattheTarachidepositislikelybestclassifiedasagoldporphyrydeposit.


In2016,provenandprobablemineralreservesatLaIndiaincreasedbyapproximately153,000ouncesofgoldto1.02millionouncesofgold(44milliontonnesoforegrading0.72gramsofgoldpertonne)afterproducing115,162ouncesofgold(153,000ouncesofinsitugoldmined).ThenetincreasewasaresultoftheadditionofnewoxidereservesandtherecognitionofanewstyleoflowgrademineralizationintheMainpitthatisamenabletoheapleaching,whichmorethanoffsettheminedepletion.MeasuredandindicatedmineralresourcesattheLaIndiamineincreasedby3.9milliontonnesin2016to74.2milliontonnesgrading0.36gramsofgoldpertonne,largelyduetorelogging,reinterpretationandnewestimationdomains.Inferredmineralresourcesincreasedby1.8milliontonnesin2016to92.6milliontonnesgrading0.38gramsofgoldpertonneduetonewestimationdomains.

In2016,theCompanycompleted35,760metresofdrillingthrough326diamonddrillholesattheLaIndiamine.Thisincluded12,025metresofminesiteexplorationdrillingatacostof$2.3millionattheElRealito,ElCochiandIndiaEstezonesand23,735metresofinfilldrillingattheMainandNorthzonesatacostof$3.7million.Inaddition,5,710metresofdefinition(conversion)drillingwascompletedattheNorthandMainzones.

TheCompanyexpectstospendapproximately$0.8millionon5,000metresofconversiondrillingand$6.9millionon31,000metresofexplorationdrillingattheLaIndiaminein2017.


Regional Exploration Activities

During2016,theCompanycontinuedtoactivelyexploreinQuebec,Nunavut,Nevada,Finland,SwedenandMexico.TheCanadianregionalexplorationactivitieswerefocusedontheAmaruqandMeliadinepropertiesinNunavut.IntheUnitedStates,explorationactivitiesduring2016wereconcentratedontheWestPequopandSummitprojectslocatedinnortheastNevada.InMexico,regionalexplorationwasfocusedontheElBarqueno,LaIndiaandPinosAltosproperties.InFinland,regionalexplorationwasfocusedtothenorthoftheKittilaminealongtheKiistalafault,includingtheKuotkodeposit.InSweden,theCompanyexploredtheBarseleandSolvikprojects.CanadianMalarticCorporationfocusedexplorationontheAmalgamatedKirklandandUpperBeaverprojectsnearKirklandLake,OntarioandthePandorapropertyadjacenttotheLapamineinQuebec,andthePartnershipfocusedexplorationontheOdysseyprojectnexttotheCanadianMalarticmine.AttheLaRonde,Goldex,Lapa,CanadianMalartic,Meadowbank,Kittila,PinosAltos(includingtheCrestonMascotadeposit)andLaIndiamines,theCompany(orthePartnership,inthecaseoftheCanadianMalarticmine)continuedexplorationprogramsaroundthemines.Mostoftheexplorationbudgetwasspentondrillingprogramsnearmineinfrastructurealongpreviouslyrecognizedgoldtrends.

Attheendof2016,theCompany'slandholdingsinCanadaconsistedof79projectscomprisedof4,057mineraltitlescoveringanaggregateof574,079hectares(ofthistotalinCanada,11projectscomprisedof1,867mineraltitlescoveringanaggregateof72,497hectaresareheldasa50%interestwithYamana,includingtheCanadianMalarticmine).LandholdingsintheUnitedStatesconsistedoffourpropertiescomprisedof2,695mineraltitlescoveringanaggregateof37,723hectares.LandholdingsinFinlandconsistedoffourgroupsofpropertiescomprisedof218mineraltitlescoveringanaggregateof31,889hectares.LandholdingsinSwedenconsistedoftwoprojectscomprisedof32mineraltitlescoveringanaggregateof37,921hectares.LandholdingsinMexicoconsistedof18projectscomprisedof163miningconcessiontitlescoveringanaggregateof210,865hectares.

ThetotalamountofexpendituresincurredonregionalexplorationactivitiesattheCompany'sexplorationpropertiesplusheadofficeoverheadandcorporatedevelopmentactivitiesin2016was$147.0million.Thisincludeddrilling1,022holesforanaggregateofapproximately335kilometreson100%-ownedproperties.ItalsoincludedtheCompany's50%portionofthecostofdrilling192holesforanaggregateofapproximately144kilometresonCanadianMalarticCorporationexplorationproperties.

ThebudgetforexpendituresonregionalexplorationactivitiesattheCompany'sexplorationpropertiesplusheadofficeoverhead,projectevaluationandcorporatedevelopmentactivitiesin2017isapproximately$143.4million,includingapproximately437kilometresofdrillingon100%-ownedproperties,and50%ofthecostofdrilling137kilometresonCanadianMalarticCorporationexplorationpropertiesandattheCanadianMalarticmine.Forfurtherdetailsofthecomponentsofthe2017explorationbudget,seetheCompany'snewsreleasedatedFebruary15,2017.

Mineral Reserves and Mineral Resources

InformationonMineralReservesandMineralResourcesoftheCompany

ThescientificandtechnicalinformationsetoutinthisAIFhasbeenapprovedbythefollowing"qualifiedpersons"asdefinedbyNI43-101:mineralreservesandmineralresources(otherthanfortheCanadianMalarticmine)–DanielDoucet,Eng.,SeniorCorporateDirector,ReserveDevelopment;mineralreservesandmineralresources(fortheCanadianMalarticmine)–DonaldGervais,P.Geo.,DirectorofTechnicalServicesatCanadianMalarticCorporationandSylvieLampron,P.Eng.,PrincipalEngineeratCanadianMalarticCorporation;exploration–GuyGosselinEng.,Vice-President,Exploration;environmental–LouiseGrondinP.Eng.,SeniorVice-President,Environment,SustainableDevelopmentandPeople;miningoperations,SouthernBusiness–CarolPlummer,Eng.,VicePresident,ProjectDevelopment,SouthernBusiness;metallurgy–PaulCousin,P.Eng.,Vice-President,Metallurgy;miningoperations,Kittilamine–FrancisBrunet,P.Eng.,CorporateDirectorMining;miningoperations,Nunavut–DominiqueGirard,Eng.,Vice-President,NunavutOperations;andminingoperations,Quebecmines–ChristianProvencher,P.Eng.,Vice-President,Canada.TheCompany'smineralreservesestimatewasderivedfrominternallygenerateddataorgeologyreports.

Historically,mineralreservesandmineralresourcesforallpropertiesweretypicallyestimatedusinghistoricthree-yearaveragemetalspricesandforeignexchangeratesinaccordancewithSECguidelines.Theseguidelinesrequiretheuseofpricesthatreflectcurrenteconomicconditionsatthetimeofmineralreservedetermination,whichtheStaffoftheSEChasinterpretedtomeanhistoricthree-yearaverageprices.Giventhecurrentcommoditypriceenvironment,theCompanydecidedtousepriceassumptionsthatarebelowthethree-yearaveragesforits2014,2015and2016mineralreserveandmineralresourceestimates.


Theassumptionsusedforthe2016mineralreservesandmineralresourcesestimateatallminesandadvancedprojectsreportedbytheCompany(otherthantheMeliadineproject,theCanadianMalarticmineandtheUpperBeaverproject)were$1,150perouncegold,$16.50perouncesilver,$0.95perpoundzinc,$2.15perpoundcopperandexchangeratesofC$1.20per$1.00,16.00Mexicanpesosper$1.00and$1.15per€1.00;provided,however,thatduetotheshorterremainingminelifefortheLapaandMeadowbankminesinCanada,andtheCrestonMascotadepositandSantoNinopitatthePinosAltosmineinMexico,theexchangeratesusedforthemineralreserveandmineralresourceestimatesatthesepropertieswereC$1.30per$1.00and16.00Mexicanpesosper$1.00(otherassumptionsunchanged).AttheMeliadineproject,theassumptionsremainedthesameasatDecember2015,whichwere$1,100perouncegoldandanexchangerateofC$1.16per$1.00.Theassumptionsusedforthe2016mineralreservesandmineralresourcesestimateattheCanadianMalarticmineandtheUpperBeaverprojectwere$1,200perouncegoldand$2.75perpoundcopper;acut-offgradeattheCanadianMalarticminebetween0.33g/tand0.37g/tgold(dependingonthedeposit);aC$125/tonnenetsmelterreturnfortheUpperBeaverproject;andanexchangerateofC$1.25per$1.00.

Theassumptionsusedforthe2015mineralreservesandmineralresourcesestimateatallminesandadvancedprojectsreportedbytheCompany(otherthantheCanadianMalarticmine)were$1,100perouncegold,$16.00perouncesilver,$0.90perpoundzinc,$2.50perpoundcopper,andexchangeratesofC$1.16per$1.00,$1.20per€1.00and14.00Mexicanpesosper$1.00forallminesandprojects(otherthantheLapaandMeadowbankminesandtheCrestonMascotadepositandSantoNiñoopenpitatPinosAltos).Duetoshorterminelife,theassumptionsusedforthemineralreserveestimatesattheshort-lifemines(theLapaandMeadowbankminesandtheCrestonMascotadepositandSantoNiñoopenpit)asofDecember31,2015,includethesamemetalpriceassumptions,andexchangeratesofC$1.30per$1.00and16.00Mexicanpesosper$1.00,respectively.Theassumptionsusedforthe2015mineralreservesandmineralresourcesestimateattheCanadianMalarticminewere$1,150perouncegold,acut-offgradebetween0.34gramspertonneand0.40gramspertonneofgold(dependingonthedeposit)andanexchangerateofC$1.24per$1.00.

Theassumptionsusedforthe2014mineralreservesandmineralresourcesestimateatallminesandadvancedprojectsreportedbytheCompany(otherthantheCanadianMalarticmine)were$1,150perouncegold,$18perouncesilver,$1.00perpoundzinc,$3.00perpoundcopperandexchangeratesofC$1.08per$1.00,13.00Mexicanpesosper$1.00and$1.30per€1.00.Theassumptionsusedforthe2014mineralreservesandmineralresourcesestimateattheCanadianMalarticminewere$1,300perouncegold,acut-offgradebetween0.28gramspertonneand0.35gramspertonneofgold(dependingonthedeposit)andanexchangerateofC$1.10per$1.00.Otherassumptionsusedforestimating2015and2014mineralreserveandmineralresourceinformationmaybefoundintheCompany'sannualfilingsinrespectoftheyearsendedDecember31,2015andDecember31,2014,respectively.


SetoutbelowarethemineralreserveestimatesasofDecember31,2016,asestimatedinaccordancewithNI43-101(tonnagesandcontainedgoldquantitiesareroundedtothenearestthousand):

MINERAL RESERVES

OPERATIONS

PROVEN PROBABLE PROVEN & PROBABLE

GOLD OWNERSHIP 000tonnes g/t 000ozAu

000tonnes g/t 000ozAu 000tonnes g/t 000ozAu

LaRonde(underground) 100% 5,833 4.91 921 11,758 5.64 2,132 17,591 5.40 3,053 LaRondeZone5(underground) 100% 2,836 2.12 194 3,429 2.08 230 6,265 2.10 423 CanadianMalartic(openpit) 50% 25,560 0.95 785 76,274 1.13 2,764 101,834 1.08 3,548 Goldex(underground) 100% 294 1.47 14 16,507 1.64 872 16,801 1.64 886 AkasabaWest(openpit) 100% — — — 4,942 0.89 142 4,942 0.89 142 Lapa(underground) 100% 259 4.58 38 — — — 259 4.58 38 Meadowbank(openpit) 100% 1,704 1.75 96 6,515 2.94 615 8,219 2.69 711 Meliadine(openpit) 34 7.31 8 4,001 5.00 644 4,035 5.02 652 Meliadine(underground) — — — 10,494 8.20 2,766 10,494 8.20 2,766 Meliadine Total 100% 34 7.31 8 14,495 7.32 3,410 14,529 7.32 3,417 UpperBeaver(underground) 50% — — — 3,996 5.43 698 3,996 5.43 698 Kittila(underground) 100% 1,148 4.19 155 28,907 4.65 4,325 30,055 4.64 4,479 PinosAltos(openpit) 180 0.85 5 2,525 2.07 168 2,705 1.99 173 PinosAltos(underground) 3,331 2.79 299 11,364 2.61 953 14,696 2.65 1,251 Pinos Altos Total 100% 3,512 2.69 304 13,889 2.51 1,120 17,401 2.55 1,424 CrestonMascota(openpit) 100% 65 0.94 2 2,426 1.29 100 2,491 1.28 102 LaIndia(openpit) 100% 213 0.61 4 43,756 0.72 1,016 43,969 0.72 1,020 Total 41,458 1.89 2,520 226,895 2.39 17,423 268,353 2.31 19,943 SILVER OWNERSHIP 000tonnes g/t 000oz

Ag 000tonnes g/t 000ozAg 000tonnes g/t 000ozAg

LaRonde(underground) 100% 5,833 18.31 3,434 11,758 19.56 7,393 17,591 19.14 10,827 PinosAltos(openpit) 180 67.77 393 2,525 59.81 4,856 2,705 60.34 5,249 PinosAltos(underground) 3,331 75.26 8,061 11,364 67.92 24,817 14,696 69.59 32,878 Pinos Altos Total 100% 3,512 74.88 8,454 13,889 66.45 29,673 17,401 68.15 38,127 CrestonMascota(openpit) 100% 65 8.07 17 2,426 11.44 892 2,491 11.35 909 LaIndia(openpit) 100% 213 14.67 100 43,756 2.57 3,615 43,969 2.63 3,716 Total — — 12,006 — — 41,573 — — 53,579 COPPER OWNERSHIP 000tonnes % tonnes

Cu 000tonnes % tonnesCu 000tonnes % tonnesCu

LaRonde(underground) 100% 5,833 0.24 13,736 11,758 0.24 28,589 17,591 0.24 42,325 AkasabaWest(openpit) 100% — — — 4,942 0.50 24,851 4,942 0.50 24,851 UpperBeaver(underground) 50% — — — 3,996 0.25 9,990 Total — — 13,736 — — 63,430 — — 77,166 ZINC OWNERSHIP 000tonnes % tonnes

Zn 000tonnes % tonnesZn 000tonnes % tonnesZn

LaRonde(underground) 100% 5,833 0.41 23,706 11,758 1.10 128,864 17,591 0.87 152,569 Total — — 23,706 — — 128,864 — — 152,569


MINERAL RESOURCES

OPERATIONS

MEASURED INDICATED MEASURED ANDINDICATED

INFERRED

GOLD OWNERSHIP 000tonnes g/t 000ozAu

000tonnes g/t 000ozAu



LaRonde(underground) 100% — — — 5,688 3.27 598 5,688 3.27 598 7,701 6.68 1,655LaRondeZone5(underground) 100% — — — 8,897 2.49 712 8,897 2.49 712 2,873 5.28 488Ellison(underground) 100% — — — 653 3.25 68 653 3.25 68 2,346 3.41 257CanadianMalartic(openpit) 50% 2,001 1.34 86 11,121 1.56 559 13,122 1.53 644 4,599 1.46 216Odyssey(underground) 50% — — — — — — — — — 10,343 2.15 714Goldex(underground) 100% 12,360 1.86 739 17,949 1.80 1,038 30,309 1.82 1,777 21,882 1.60 1,129AkasabaWest(openpit) 100% — — — 2,484 0.66 53 2,484 0.66 53 — — —Lapa(underground) 100% 85 5.29 14 693 4.09 91 778 4.22 105 652 7.55 158Zulapa(openpit) 100% — — — — — — — — — 391 3.14 39Swanson(openpit) 100% — — — 504 1.93 31 504 1.93 31 — — —Meadowbank(openpit) 100% 587 1.00 19 3,099 2.28 227 3,686 2.07 246 1,142 3.13 115 Amaruq(openpit) — — — 16,925 3.88 2,109 16,925 3.88 2,109 4,931 4.81 763 Amaruq(underground) — — — — — — — — — 6,814 6.22 1,362Amaruq Total 100% — — — 16,925 3.88 2,109 16,925 3.88 2,109 11,745 5.63 2,125 Meliadine(openpit) — — — 7,867 4.24 1,072 7,867 4.24 1,072 1,054 5.35 181 Meliadine(underground) — — — 12,911 5.38 2,234 12,911 5.38 2,234 13,656 7.68 3,371Meliadine Total 100% — — — 20,778 4.95 3,306 20,778 4.95 3,306 14,710 7.51 3,552HammondReef(openpit) 50% 82,831 0.70 1,862 21,377 0.57 389 104,208 0.67 2,251 251 0.74 6UpperBeaver(underground) 50% — — — 1,818 3.45 202 1,818 3.45 202 4,344 5.07 708AK(underground) 50% — — — 634 6.51 133 634 6.51 133 1,187 5.32 203Anoki/McBean(underground) 50% — — — 934 5.33 160 934 5.33 160 1,263 4.70 191 Kittila(openpit) — — — 229 3.41 25 229 3.41 25 373 3.89 47 Kittila(underground) 1,607 2.45 127 18,885 2.95 1,794 20,492 2.91 1,920 10,686 4.06 1,395Kittila Total 100% 1,607 2.45 127 19,114 2.96 1,819 20,721 2.92 1,946 11,059 4.05 1,442Kuotko,Finland(openpit) 100% — — — — — — — — — 396 2.88 37Kylmäkangas,Finland(underground)

100% — — — — — — — — — 1,896 4.11 250

Barsele,Sweden(openpit) 4,057 1.02 133

Barsele,Sweden(underground)

7,887 2.08 528

Barsele Total 55% 11,944 1.72 661 PinosAltos(openpit) — — — 236 1.07 8 236 1.07 8 5,984 0.61 117 PinosAltos(underground) — — — 13,751 1.63 721 13,751 1.63 721 3,241 2.52 262Pinos Altos Total 100% — — — 13,988 1.62 730 13,988 1.62 730 9,225 1.28 380CrestonMascota(openpit) 100% — — — 4,292 1.01 139 4,292 1.01 139 1,332 0.72 31LaIndia(openpit) 100% 11,127 0.24 85 63,081 0.39 783 74,208 0.36 869 92,631 0.38 1,132ElBarqueno(openpit) 100% — — — 8,469 1.11 301 8,469 1.11 301 7,210 1.56 362Total 110,598 0.82 2,933 222,497 1.88 13,446 333,095 1.53 16,378 221,119 2.23 15,850 SILVER OWNERSHIP 000tonnes g/t 000oz

Ag 000tonnes g/t 000oz



Ag

LaRonde(underground) 100% — — — 5,688 20.51 3,751 5,688 20.51 3,751 7,701 14.48 3,584Kylmäkangas,Finland(underground)

100% — — — — — — — — — 1,896 31.11 1,896

PinosAltos(openpit) — — — 236 20.40 155 236 20.40 155 5,984 20.94 4,029 PinosAltos(underground) — — — 13,751 40.57 17,935 13,751 40.57 17,935 3,241 41.87 4,363Pinos Altos Total 100% — — — 13,988 40.22 18,090 13,988 40.22 18,090 9,225 28.30 8,392CrestonMascota(openpit) 100% — — — 4,292 16.98 2,343 4,292 16.98 2,343 1,332 11.54 494LaIndia(openpit) 100% 11,127 2.37 847 63,081 0.70 1,421 74,208 0.95 2,267 92,631 0.39 1,153ElBarqueno(openpit) 100% — — — 8,469 4.35 1,183 8,469 4.35 1,183 7,210 4.50 1,043Total — — 847 — — 26,787 — — 27,634 — — 16,561 COPPER OWNERSHIP 000tonnes % tonnes

Cu 000tonnes % tonnes



Cu

LaRonde(underground) 100% — — — 5,688 0.21 11,676 5,688 0.21 11,676 7,701 0.25 19,589AkasabaWest(openpit) 100% — — — 2,484 0.40 9,941 2,484 0.40 9,941 — — —UpperBeaver(underground) 50% — — — 1,818 0.14 2,567 1,818 0.14 2,567 4,344 0.20 8,642Total — — — — — 24,184 — — 24,184 — — 28,231 ZINC OWNERSHIP 000tonnes % tonnes

Zn 000tonnes % tonnes



Zn

LaRonde(underground) 100% — — — 5,688 0.93 52,850 5,688 0.93 52,850 7,701 0.60 46,358Total — — — — — 52,850 — — 52,850 — — 46,358

InthetablesaboveandbelowsettingoutmineralreserveinformationabouttheCompany'smineralprojects,andelsewhereinthisAIF,thetotalcontainedgoldouncesstateddonotincludeequivalentgoldouncesforby-productmetalscontainedinthemineralreserve.Mineralreservesarenotasubsetofmineralresources.Tonnageamountsandcontainedmetalamountspresentedinthesetableshavebeenroundedtothenearestthousand,soaggregateamountsmaydifferfromcolumntotals.TheCanadianMalarticmineandUpperBeaverprojectmineralreserveandmineralresourceestimatesrepresentAgnicoEagle's50%interestintheproperties.ForallmineralreservesandmineralresourcesotherthaninferredmineralresourcesandmineralreservesandmineralresourcesheldbyCanadianMalarticCorporationandthePartnership,thereportedmetalgradesintheestimatesreflectdilutionafterminingrecovery.ForthemineralreservesandmineralresourcesattheCanadianMalarticmineandthe

UpperBeaverproject,thereportedmetalgradesinthe


estimatesofthemeasuredandindicatedmineralresourcesdonotreflectdilutionafterminingrecovery.ThemineralreserveandmineralresourcefigurespresentedinthisAIFareestimates,andnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoverywillberealized.

TheintegrityandvalidityofthescientificandtechnicalinformationinthisAIFhasbeenverifiedbyQualifiedPersonsasdefinedbyNI43-101.Thisincludesthesamplingmethods,qualitycontrolmeasures,securitymeasurestakentoensurethevalidityandintegrityofsamplestaken,assayingandanalyticalproceduresandqualitycontrolmeasuresanddataverificationprocedures.ThemethodsusedbytheCompanyfollowtheCanadianInstituteofMining,MetallurgyandPetroleum("CIM")BestPracticeGuidelinesforExplorationandforEstimationofMineralResourcesandMineralReservesandindustrypractices.SamplepreparationandanalysesareconductedbyexternallaboratoriesthatareindependentoftheCompany.

TheCompanycarriesoutmineralprocessingandmetallurgicaltestingateachofitsminesandexplorationprojectswithmineralreservesandindicatedmineralresources.ThetestingisdoneinaccordancewithinternalCompanyprotocolsandgoodmineralprocessingpractices.Therearenoknownprocessingfactorsordeleteriouselementsthatareexpectedtohaveasignificanteffectontheeconomicextraction,orpotentialeconomicextraction,ofgoldattheCompany'sminesoradvancedexplorationprojects.


MineralReservesandMineralResources

NorthernBusiness

LaRonde Mine Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

LaRonde Extension Orebody (below Level 245)

Provenmineralreserves–tonnes 5,354,000 2,845,000 3,600,000

Averagegrade–goldgramspertonne 5.16 4.43 4.03

Probablemineralreserves–tonnes 11,686,000 14,706,000 16,000,000


LaRonde Orebody (above Level 245)

Provenmineralreserves–tonnes 479,000 610,000 900,000


Probablemineralreserves–tonnes 71,000 59,000 100,000


Total proven and probable mineral reserves – tonnes 17,591,000 18,220,000 20,532,000

Average grade – gold grams per tonne 5.40 5.31 5.20

Total contained gold ounces 3,053,000 3,109,000 3,432,000

Notes:

(1) The2016provenandprobablemineralreserveestimatessetoutinthetableabovearebasedonanetsmelterreturncut-offvalueoftheorethatvariesbetweenC$106pertonneandC$118pertonnedependingonthedeposit.TheCompany'shistoricalmetallurgicalrecoveryratesattheLaRondeminefromJanuary1,2011toDecember31,2016averaged92.7%forgold,86.2%forsilver,77.8%forzincand81.7%forcopper.SinceMay2013,whenthepreciousmetalscircuitwasupgradedtocarbon-in-pulptechnology,themetallurgicalrecoveryratestoDecember31,2016haveaveraged94.8%forgold,85.8%forsilver,71.5%forzinc,84.7%forcopperand0%forlead(leadhasnotbeenrecoveredsinceMay2013).ThehistoricalmetallurgicalrecoveryrateforleadfromJanuary1,2011toMay31,2013was18.7%.TheCompanyestimatesthata$100(9%)changeinthegoldpricewouldresultinanapproximate1%changeinmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theLaRondeminecontainedindicatedmineralresourcesof5,688,000tonnesgrading3.27gramsofgoldpertonneandinferredmineralresourcesof7,701,000tonnesgrading6.68gramsofgoldpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgrade.

(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheLaRondeminebycategoryatDecember31,2016withthoseatDecember31,2015.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2016.

Proven Probable Total

December31,2015 3,455 14,765 18,220

Processedin2016 2,240 – 2,240

Revision 4,618 (3,007) 1,611

December 31, 2016 5,833 11,758 17,591

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheLaRondeminemaybefoundintheTechnicalReportonthe2005LaRondeMineralResource&MineralReserveEstimatefiledwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch23,2005andauthoredbyGuyGosselin,Eng.


Lapa Mine Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

Gold



Probablemineralreserves–tonnes – – 74,000

Averagegrade–goldgramspertonne – – 5.50

Total proven and probable mineral reserves – tonnes 259,000 444,000 907,000


Total contained gold ounces 38,000 78,000 170,000

Notes:

(1) The2016provenandprobablemineralreserveestimatessetoutinthetableabovewereestimatedusinganassumedmetallurgicalgoldrecoveryof84.8%andacut-offgradeof3.3gramsofgoldpertonne,and.TheoperatingcostpertonneestimatefortheLapaminein2016wasC$134.13.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate235%increaseor76%decrease,respectively,inmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theLapaminecontainedmeasuredmineralresourcesof85,000tonnesgrading5.29gramsofgoldpertonne,indicatedmineralresourcesof693,000tonnesgrading4.09gramsofgoldpertonneandinferredmineralresourcesof652,000tonnesgrading7.55gramsofgoldpertonne.Themineralresourceswereestimatedusinganassumedmetallurgicalgoldrecoveryof73.9%andacut-offgradeof2.8gramsofgoldpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgrade.

(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheLapaminebycategoryatDecember31,2016withthoseatDecember31,2015.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2016.


December31,2015 444 – 444

Processedin2016 593 – 593

Revision 408 – 408

December 31, 2016 259 – 259

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheLapaminemaybefoundintheTechnicalReportontheLapaGoldProject,CadillacTownship,Quebec,CanadafiledwithCanadiansecuritiesregulatoryauthoritiesonSEDARonJune8,2006.


Goldex Mine Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

Gold








Notes:

(1) The2016provenandprobablemineralreserveestimatessetoutinthetableabovewereestimatedusinganassumedmetallurgicalgoldrecoveryof88%.AsofDecember31,2016,theoperatingcostspertonnewereestimatedtobeC$38.18fortheEZoneandC$36.68fortheMZone.Thecut-offgradeusedformineralreserveswas1.0gramsofgoldpertonne.TheCompanyestimatesthata$100(9%)changeinthegoldpricewouldresultinanapproximate1%changeinmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theGoldexminecontainedmeasuredmineralresourcesof12,360,000tonnesgrading1.86gramsofgoldpertonne,indicatedmineralresourcesof17,949,000tonnesgrading1.80gramsofgoldpertonneandinferredmineralresourcesof21,882,000tonnesgrading1.60gramsofgoldpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgrade.

(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheGoldexminebycategoryatDecember31,2016withthoseatDecember31,2015.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2016.


December31,2015 300 12,644 12,944

Processedin2016 2,545 – 2,545

Revision 2,539 3,863 6,402

December 31, 2016 294 16,507 16,801

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheGoldexminemaybefoundintheTechnicalReportonProductionoftheMandEZonesatGoldexMinedatedOctober14,2012filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonNovember1,2012,authoredbyRichardGenest,P.Geo.,Eng.,Jean-FrançoisLagueux,Eng.,FrançoisRobichaud,Eng.andSylvainBoily,Eng.


Canadian Malartic Mineral Reserves and Mineral Resources (Agnico Eagle's 50% Interest)

As at December 31, 2016 2015 2014

Gold








Notes:

(1) TheCanadianMalarticpropertyisownedbythePartnership,inwhichtheCompanyholdsanindirect50%interest,withtheremaining50%interestheldindirectlybyYamana.The2016provenandprobablemineralreservessetoutinthetableabovewereestimatedusinganassumedmetallurgicalgoldrecoveryofbetween89%and96.5%andacut-offgradefrom0.33to0.37gramsofgoldpertonne,dependingonthedeposit.TheoperatingcostpertonneestimatefortheCanadianMalarticmineasofDecember31,2016wasC$9.67pertonneforCanadianMalarticandtheBarnatdepositandC$10.29pertonnefortheJeffreydeposit.TheCompanyestimatesthata$120(10%)increaseinthegoldpricewouldresultinanapproximate3%increaseinmineralreserves,whilea$120(10%)decreaseinthegoldpricewouldresultinanapproximate4%decreaseinmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theCanadianMalarticmine(AgnicoEagle's50%interest)containedmeasuredmineralresourcesof2,001,000tonnesgrading1.34gramsofgoldpertonne,indicatedmineralresourcesof11,121,000tonnesgrading1.56gramsofgoldpertonneandinferredmineralresourcesof14,941,000tonnesgrading1.93gramsofgoldpertonne(includingtheOdysseyZoneinferredmineralresources).Goldcut-offgradesusedformineralresourceestimateswerefixedat100%oftheapplicablemineralreservecut-offgradeinpitand1.0gramsofgoldpertonneformineralresourcesbelowpit.

(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(innearestthousandtonnes)attheCanadianMalarticminebycategoryatDecember31,2016withthoseatDecember31,2015,statingAgnicoEagle's50%interest.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesduring2016.


December31,2015 27,446 83,320 110,766

Processedin2016 9,821 – 9,821

Revision 7,935 (7,046) 889

December 31, 2016 25,560 76,274 101,834

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheCanadianMalarticminemaybefoundintheTechnicalReportontheMineralResourceandMineralReserveEstimatesfortheCanadianMalarticPropertydatedJune16,2014,filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonAugust13,2014,authoredbyDonaldGervais,P.Geo.,ChristianRoy,Eng.,AlainThibault,Eng.,CarlPednault,Eng.andDanielDoucet,Eng.


Kittila Mine Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

Gold

Provenmineralreserves–tonnes 1,148,000 1,059,000 921,000







Notes:

(1) The2016provenandprobablemineralreservessetoutinthetableabovewereestimatedusingametallurgicalgoldrecoveryof86.1%.Goldcut-offgradesusedwerebetween2.7gramspertonneand2.9gramspertonne,diluted),dependingonthedeposit,forundergroundmineralreserves.Theopenpitoperatingcostwasestimatedtobe€49.55pertonneatDecember31,2016,whiletheundergroundoperatingcostwasestimatedbetween€71.96to€79.64pertonneatDecember31,2016.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate11%increaseor6%decrease,respectively,inmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theKittilaminecontainedmeasuredmineralresourcesof1,607,000tonnesgrading2.45gramsofgoldpertonne,indicatedmineralresourcesof19,114,000tonnesgrading2.96gramsofgoldpertonneandinferredmineralresourcesof11,059,000tonnesgrading4.05gramsofgoldpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgrade.

(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(innearestthousandtonnes)attheKittilaminebycategoryatDecember31,2016withthoseatDecember31,2015.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2016.


December31,2015 1,059 27,136 28,195

Processedin2016 1,667 – 1,667

Revision 1,756 1,771 3,527

December 31, 2016 1,148 28,907 30,055

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheKittilaminemaybefoundintheTechnicalReportontheDecember31,2009,MineralResourceandMineralReserveEstimateandtheSuuriExtensionProject,KittilaMine,Finland,filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch4,2010,authoredbyDanielDoucet,Eng.,DominiqueGirard,Eng.,LouiseGrondin,P.Eng.,andPierreMatte,Eng.


Meadowbank Mine Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

Gold







Total contained gold ounces 711,000 943,000 1,168,000

Notes:

(1) The2016provenandprobablemineralreserveestimatessetoutinthetableabovewereestimatedusingacut-offgradethatusedametallurgicalgoldrecoveryof90.5%or95.5%,dependingonthedeposit.Thecut-offgradeusedformineralreservesvariedfrom1.2gramsofgoldpertonneto1.3gramsofgoldpertonne,dependingonthedeposit,andis1.26to1.15gramsofgoldpertonneasamarginalcut-offgrade,dependingonthedeposit.TheoperatingcostsusedforthemineralreserveestimateasofDecember31,2016variedbetweenC$54.67pertonneandC$55.58pertonne,dependingonthedeposit,includinganadditionalhaulagecostofC$0.91pertonneforVaultdepositmineralreserves.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate1%increaseor2%decrease,respectively,inmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theMeadowbankmine(notincludingtheAmaruqdeposit)containedmeasuredmineralresourcesof587,000tonnesgrading1.00gramsofgoldpertonne,indicatedmineralresourcesof3,099,000tonnesgrading2.28gramsofgoldpertonneandinferredmineralresourcesof1,142,000tonnesgrading3.13gramsofgoldpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgrade.

(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheMeadowbankminebycategoryatDecember31,2016withthoseatDecember31,2015.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreserves,anupdatetomineralreservesbasedonchangedmineplans,andmineralreservesaddedfromexplorationactivitiesduring2016.


December31,2015 1,203 9,586 10,789

Processedin2016 3,915 – 3,915

Revision 4,416 (3,071) 1,345

December 31, 2016 1,704 6,515 8,219

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheMeadowbankminemaybefoundintheTechnicalReportontheMineralResourcesandMineralReservesatMeadowbankGoldMine,Nunavut,CanadaasatDecember31,2011filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch23,2012,authoredbyMarcRuel,P.Geo.,AlexProulx,Eng.,PathiesNawejMuteb,Eng.andLarryConnell,P.Eng.


Meliadine Project Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

Gold








Notes:

(1) The2016provenandprobablemineralreservessetoutinthetableabovewereestimatedusingmetallurgicalgoldrecoverycurvesfortheTiriganiaqandWesmegdeposits.Thecurvesgiveamaximumrecoveryof96.5%forTiriganiaqandWesmeg.FortheTiriganiaqandWesmegdeposits,thecut-offgradeusedfortheopenpitmineralreserveswas2.50gramsofgoldpertonne,undiluted(1.76gramsofgoldpertonne,diluted),andthecut-offgradeusedtodeterminetheundergroundmineralreserveswas6.07gramsofgoldpertonne,undiluted(4.67gramsofgoldpertonne,diluted).TheestimatedoperatingcostusedforthemineralreserveestimateasofDecember31,2016wasC$81.97pertonneforopenpitandC$176.44pertonneforunderground.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate5%increaseor7%decrease,respectively,inmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theMeliadineprojectcontainedindicatedmineralresourcesof20,778,000tonnesgrading4.95gramsofgoldpertonneandinferredmineralresourcesof14,710,000tonnesgrading7.51gramsofgoldpertonne.The2016mineralresourcesattheTiriganiaq-Normeg-Wesmeg,FZone,Pump,DiscoveryandWolfdepositswereestimatedusingafixedmetallurgicalgoldrecoveryof91.1%,91.0%,86.9%,93.5%and94.3%,respectively,foropenpitmineralresources,and93.4%,91.7%,90.0%,95.5%and95.7%,respectively,forundergroundmineralresources.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgradeforundergroundresourceestimatesandat100%oftheapplicablereservemarginalcut-offgradeforopenpitmineralresourceestimates.

(3) ThebreakdownofopenpitandundergroundmineralreservesattheMeliadineproject(withtonnageandcontainedouncesroundedtothenearestthousand)atDecember31,2016is:

Category Mining Method Tonnes

Gold Grade

(g/t)

Contained Gold (oz)

Provenmineralreserves Openpitstockpile 34,000 7.31 8,000

Probablemineralreserves Openpit 4,001,000 5.00 644,000

Probablemineralreserves Underground 10,494,000 8.20 2,766,000

Total probable mineral reserves 14,495,000 7.32 3,410,000

Total proven and probable mineral reserves 14,529,000 7.32 3,417,000

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheMeliadineprojectmaybefoundintheUpdatedTechnicalReportontheMeliadineGoldProject,Nunavut,CanadadatedFebruary11,2015,filedwithCanadiansecuritiesregulatoryauthoritiesonMarch12,2015,authoredbyJulieLarouche,P.Geo.,DenisCaron,Eng.,LarryConnell,P.Eng.,DanyLaflamme,Eng.,FrançoisRobichaud,Eng.,FrançoisPetrucci,P.Eng.andAlexandreProulx,Eng.


SouthernBusiness

Pinos Altos Mine Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

Gold and Silver Provenmineralreserves–tonnes 3,512,000 2,769,000 2,441,000

Averagegoldgrade–gramspertonne 2.69 3.08 3.27

Averagesilvergrade–gramspertonne 74.88 82.51 86.27





Average gold grade – grams per tonne 2.55 2.88 3.01

Average silver grade – grams per tonne 68.15 74.18 79.65


Total contained silver ounces 38,127,000 37,531,000 46,682,000

Notes:

(1) The2016provenandprobablemineralreserveestimatessetoutinthetableaboveatthePinosAltosmine(excludingtheCrestonMascotadeposit)areestimatedbasedonanetsmelterreturncut-offvalueoftheopenpitorebetween$8.22pertonneand$26.03pertonne,dependingontheprocessingmethod,andanetsmelterreturncut-offvalueoftheundergroundoreof$57.21pertonne.Themetallurgicalgoldrecoveryusedinthereserveestimatesvariedbetween74%and96%,dependingonthedepositandtheprocessingmethod.Themetallurgicalsilverrecoveryusedinthereserveestimatesvariedbetween16%and90%,dependingonthedepositandtheprocessingmethod.TheCompanyestimatesthata$100(9%)changeinthegoldpricewouldresultinanapproximate0.2%changeinmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,thePinosAltosminecontainedindicatedmineralresourcesof13,988,000tonnesgrading1.62gramsofgoldpertonneand40.22gramsofsilverpertonneandinferredmineralresourcesof9,225,000tonnesgrading1.28gramsofgoldpertonneand28.30gramsofsilverpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgrade.

(3) ThebreakdownofopenpitandundergroundmineralreservesatthePinosAltosmine(withtonnageandcontainedouncesroundedtothenearestthousand)atDecember31,2016is:

Category Mining Method Tonnes

Gold Grade

(g/t)

Silver Grade

(g/t)

Contained Gold (oz)

Contained Silver

(oz)

Provenmineralreserves Openpitstockpile 180,000 0.85 67.77 5,000 393,000

Provenmineralreserves Underground 3,331,000 2.79 75.26 299,000 8,061,000

Total proven mineral reserves 3,512,000 2.69 74.88 304,000 8,454,000

Probablemineralreserves Openpit 2,525,000 2.07 59.81 168,000 4,856,000

Probablemineralreserves Underground 11,364,000 2.61 67.92 953,000 24,817,000

Total probable mineral reserves 13,889,000 2.51 66.45 1,120,000 29,673,000

Total proven and probable mineral reserves 17,401,000 2.55 68.15 1,424,000 38,127,000


(4) Thefollowingtablesetsoutthereconciliationofmineralreserves(innearestthousandtonnes)atthePinosAltosmine(excludingtheCrestonMascotadeposit)bycategoryatDecember31,2016withthoseatDecember31,2015.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2016.


December31,2015 2,769 12,967 15,736

Processedin2016 2,260 – 2,260

Revision 3,003 922 3,925

December 31, 2016 3,512 13,889 17,401

(5) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtothePinosAltosminemaybefoundinthePinosAltosGold-SilverMiningProject,ChihuahuaState,Mexico,TechnicalReportontheMineralResourcesandReservesasofDecember31,2008filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch25,2009,authoredbyDyaneDuquette,P.Geo.,LouiseGrondin,P.Eng.,PierreMatte,Eng.andCamilPrince,Eng.

Creston Mascota Deposit at Pinos Altos Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

Gold and Silver Provenmineralreserves–tonnes 65,000 187,000 187,000










Total contained silver ounces 909,000 1,628,000 2,530,000

Notes:

(1) The2016provenandprobablemineralreserveestimatessetoutinthetableaboveattheCrestonMascotadepositatPinosAltosareestimatedbasedonanetsmelterreturncut-offvalueoftheopenpitoreof$10.22pertonne.Themetallurgicalgoldrecoveryusedinthereserveestimateswas63%.Themetallurgicalsilverrecoveryusedinthereserveestimateswas15%.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate1%increaseor4%decrease,respectively,inmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theCrestonMascotadepositatPinosAltoscontainedindicatedmineralresourcesof4,292,000tonnesgrading1.01gramsofgoldpertonneand16.98gramsofsilverpertonneandinferredmineralresourcesof1,332,000tonnesgrading0.72gramsofgoldpertonneand11.54gramsofsilverpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgrade.

(3) Thefollowingtablesetsoutthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheCrestonMascotadepositbycategoryatDecember31,2016withthoseatDecember31,2015.Revisionindicatesadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesduring2016.


December31,2015 187 4,026 4,213

Processedin2016 2,119 – 2,119

Revision 1,997 (1,600) 397

December 31, 2016 65 2,426 2,491

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheCrestonMascotadepositatPinosAltosmaybefoundinthePinosAltosGold-SilverMiningProject,ChihuahuaState,Mexico,TechnicalReportontheMineralResourcesandReservesasofDecember31,2008filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch25,2009,authoredbyDyaneDuquette,P.Geo.,LouiseGrondin,P.Eng.,PierreMatte,Eng.andCamilPrince,Eng.


La India Mine Mineral Reserves and Mineral Resources

As at December 31, 2016 2015 2014

Gold










Total contained gold ounces 1,020,000 867,000 679,000

Total contained silver ounces 3,716,000 4,081,000 4,859,000

Notes:

(1) The2016provenandprobablemineralreserveestimatessetoutinthetableabovefortheLaIndiaminewereestimatedusinganaveragemetallurgicalgoldrecoveryof40%to89%dependingonthezone.Thecut-offgradeusedformineralreservesvarieddependingonthedepositfrom0.20gramsofgoldpertonneto0.40gramsofgoldpertonne.Marginalcut-offgradesvarieddependingondomainfrom0.13gramsofgoldpertonneto0.27gramsofgoldpertonne.TheestimatedoperatingcostusedforthemineralreserveestimateasofDecember31,2016was$6.15pertonne.TheCompanyestimatesthata$100(9%)increaseordecreaseinthegoldpricewouldresultinanapproximate6%increaseor14%decrease,respectively,inmineralreserves.

(2) Inadditiontothemineralreservessetoutabove,atDecember31,2016,theLaIndiamine(includingtheTarachideposit)containedmeasuredmineralresourcesof11,127,000tonnesgrading0.24gramsofgoldpertonneand2.37gramsofsilverpertonne,indicatedmineralresourcesof63,081,000tonnesgrading0.39gramsofgoldpertonneand0.70gramsofsilverpertonneandinferredmineralresourcesof92,631,000tonnesgrading0.38gramsofgoldpertonneand0.39gramsofsilverpertonne.Goldcut-offgradesusedformineralresourceestimateswerefixedat75%oftheapplicablemineralreservecut-offgrade.

(3) Thefollowingtableshowsthereconciliationofmineralreserves(roundedtothenearestthousandtonnes)attheLaIndiaminebycategoryatDecember31,2016withthoseatDecember31,2015.Revisionmeansadditionalmineralreservesconvertedfrommineralresourcesorothercategoriesofmineralreservesandmineralreservesaddedfromexplorationactivitiesandmetallurgicaltestingduring2016.


December31,2015 244 29,743 29,987

Processedin2016 5,837 – 5,837

Revision 5,806 14,013 19,819

December 31, 2016 213 43,756 43,969

(4) Completeinformationontheverificationprocedures,thequalityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisAIFrelatingtotheLaIndiamineprojectmaybefoundintheTechnicalReportontheJune30,2012UpdateoftheMineralResourcesandMineralReserves,LaIndiaGoldProject,MunicipalityofSahuaripa,Sonora,Mexico,datedAugust31,2012,filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonOctober12,2012,authoredbyDanielDoucet,Eng.,TimHaldane,P.Eng.andMichelJulien,P.Eng.

Principal Products and Distribution

TheCompanyearnssubstantiallyallofitsrevenueandcashflowfromtheproductionandsaleofgoldinbothdorebarandconcentrateform.Theremainderofrevenueandcashflowisgeneratedfromtheproductionandsaleofby-productmetals,namelysilver,zincandcopper.ThegoldproducedbytheCompanyissoldinrefinedform,primarilyintheLondonspotmarket.TheCompanyisnotdependentonanyparticularpurchaserof

itsprincipalproduct.


Employees

AsofDecember31,2016,theCompanyhad8,377employeescomprisedof5,223permanentemployees,2,550contractors,506temporaryemployeesand98students.Ofthepermanentemployees,819wereemployedattheLaRondemine,134attheLapamine,316attheGoldexmine,694attheCanadianMalarticmine(withanadditional24intheCanadianMalarticofficeandanadditional16attheKirklandLakeandHammondReefproperties)409attheKittilamine(withanadditional11attheFinnishexplorationgroup),718attheMeadowbankmine(includingoneattheBakerLakeofficeand29inQuebec),33attheMeliadineproject,1,007atthePinosAltosmine,256attheCrestonMascotadepositatPinosAltos,382attheLaIndiamine,90intheexplorationgroupinMexico,18attheregionalofficeinMexico,38intheexplorationgroupinCanadaandtheUnitedStates,135attheregionaltechnicalofficeinAbitibi,fourattheregionalofficeinTucson,fiveattheregionalofficeinSwedenand114atthecorporateheadofficeinToronto.ThenumberofpermanentemployeesoftheCompanyattheendof2016,2015and2014was5,223,5,093and5,187,respectively.

Competitive Conditions

Thepreciousmetalexplorationandminingbusinessisahighlycompetitivebusiness.TheCompanycompeteswithotherminingandexplorationcompaniesinconnectionwiththeacquisitionofminingclaimsandleases,thesourcingofrawmaterialsandsuppliesusedinconnectionwithminingoperationsandtherecruitmentandretentionofqualifiedemployees.

TheabilityoftheCompanytocontinueitsminingbusinessinthefuturewilldependnotonlyonitsabilitytodevelopitscurrentproperties,butalsoonitsabilitytoselectandacquiresuitableproducingpropertiesorprospectsforpreciousmetaldevelopmentorexploration.See"RiskFactors"foradescriptionofadditionalcompetitiveriskstheCompanyfaces.

Sustainable Development

In2016,theCompanycontinuedtheprocessofincorporatinghealth,safetyandenvironmentalsustainabilityintoallaspectsandstagesofitsbusiness,fromthecorporateobjectivesandexecutiveresponsibilityof'maintaininghighstandardsinsustainability'toexplorationandacquisitionactivities,daytodayoperatingandsiteclosure.Thisintegrationbeganin2012withtheadoptionofanintegratedHealth,Safety,EnvironmentandSocialAcceptabilityPolicy(the"SustainableDevelopmentPolicy")thatreflectstheCompany'scommitmenttoresponsibleminingpractices.TheCompanybelievesthattheSustainableDevelopmentPolicywillleadtotheachievementofmoresustainablepracticesthroughoversightandaccountability.

TheSustainableDevelopmentPolicyoperatesthroughthedevelopmentandimplementationofaformalandintegratedHealth,SafetyandEnvironmentalManagementSystem,termedtheResponsibleMiningManagementSystem(the"RMMS"),acrossalldivisionsoftheCompany.ThePartnershiphascommittedtoimplementingtheRMMSatCanadianMalarticinthefuture.TheaimoftheRMMSistopromoteacultureofaccountabilityandleadershipinmanaginghealth,safety,environmentalandsocialacceptabilitymatters.RMMSimplementationissupportedbysoftwarewidelyusedintheCanadianminingindustrythatisconsistentwiththeISO14001EnvironmentalManagementSystemandtheOHSAS18001HealthandSafetyManagementSystem.

TheRMMSincorporatestheCompany'scommitmentsasasignatorytotheCyanideCode,avoluntaryprogramthataddressesthesafeproduction,transport,storage,handlinganddisposalofcyanide.TheCompanybecameasignatorytotheCyanideCodeinSeptember2011.

TheRMMSalsointegratestherequirementsoftheMiningAssociationofCanada'sindustry-leadingTowardsSustainableMiningInitiative(the"TSMInitiative"),aswellastheGlobalReportingInitiative'ssustainabilityreportingguidelinesfortheminingindustry.InDecember2010,theCompanybecameamemberoftheMiningAssociationofCanadaandendorsedtheTSMInitiative.TheTSMInitiativewasdevelopedtohelpminingcompaniesevaluatethequality,comprehensivenessandrobustnessoftheirmanagementsystemsundersixperformanceelements:crisismanagement;energyandgreenhousegasemissionsmanagement;tailingsmanagement;biodiversityconservationmanagement;healthandsafety;andaboriginalrelationsandcommunityoutreach.

TheCompanyhasadoptedandimplementedtheWorldGoldCouncil'sConflict-FreeGoldStandard.ThisimplementationwasinitiatedonJanuary1,2013.

TheCompany'sSustainableDevelopmentPolicyisavailableontheCompany'swebsiteatwww.agnicoeagle.com. TheCanadianMalarticmine'ssustainabledevelopmentreportisavailableatitswebsite,www.canadianmalartic.com .


Employee Health and Safety

TheCompany'soverallhealthandsafetyperformance,asmeasuredbyaccidentfrequency,improvedduring2016.Acombinedlost-timeandrestrictedworkaccidentfrequencyrate(excludingtheCanadianMalarticmine)of1.04wasachieved,a15%reductionfromthe2015rateof1.23andsubstantiallybelowthetargetrateof1.40.ThisisthebestcombinedaccidentfrequencyrateeverrecordedbytheCompany.Extensivehealthandsafetytrainingwasalsoprovidedtoemployeesduring2016.

OneofthemeasuresimplementedbytheCompanytoimprovesafetyperformanceistheworkplacesafetycardsystem.ThissystemwasimplementedacrossalloftheCompany'soperations,inCanadaandabroad,tostrengthentherisk-basedtrainingprogram.DevelopedbytheQuebecMiningAssociation(the"AMQ"),thesafetycardsystemteachesworkersandsupervisorstouserisk-basedthinkingintheirduties.Workersandtheirsupervisorsmustmeeteverydaytodiscusson-the-jobhealthandsafetymatters.ThesafetycardsystemalsoallowstheCompany'sworkersandsupervisorstodocumentdailyinspectionsandrecordobservationsonconditionsintheworkplace,aswellasthenatureofrisks,issuesandotherrelevantinformation.Inaddition,itallowssupervisorstoexchangeandanalyzeallrelevantinformationbetweenshiftsandvarioustechnicalservicestoimproveefficiencyandsafety.

In2016,theAMQacknowledgedtheCompany'sstrongperformanceintheareaofhealthandsafety,recognizing28oftheCompany'ssupervisorsfromtheLaRonde,LapaandGoldexminesforkeepingtheirworkerssafe.ThesupervisorsreceivedAMQsecuritytrophyawardsfor50,000ormorehourssupervisedwithoutalost-timeaccident.Together,thisgroupof28supervisorsachievedmorethan2,000,000hourssupervisedwithoutalost-timeaccidentforamemberoftheircrew.

EachoftheCompany'sminingoperationshasitsownEmergencyResponsePlanandhaspersonneltrainedtorespondtosafety,fireandenvironmentalemergencies.Eachminealsomaintainstheappropriateresponseequipment.In2014,thecorporatecrisismanagementplanwasupdatedtoalignwithindustrybestpracticesandtheTSMInitiativerequirements.Emergencyresponsesimulationswerealsoperformedatalldivisions.TheTSMInitiativealsocontainsaHealthandSafetyprotocol.

TheCanadianMalarticmine'scombinedaccidentfrequencyratein2016was1.4,comparedtoanobjectiveof1.2andthe2015rateof1.28.

Community

TheCompany'sgoal,ateachofitsoperationsworldwide,istohireasmuchofitsworkforceaspossible,includingmanagementteams,directlyfromthelocalregioninwhichtheoperationislocated.In2016,theoverallcompanyaverageforlocalhiringwas76%.TheCompanybelievesthatprovidingemploymentisoneofthemostsignificantcontributionsitcanmaketothecommunitiesinwhichitoperates.

TheCompanycontinueditseffortsincommunitydevelopmentagreementsinNunavut.In2015,theMeadowbankIIBAwasrenewedandtheMeliadineIIBAwassigned.In2016,theCompanycontinueditsdialoguewithFirstNationsintheAbitibiregion.ThePartnershiphasenteredintonegotiationswithFirstNationsaroundtheKirklandLakeprojectandhasalsoinitiatedadialoguewithFirstNationsintheAbitibiregion.

TheCanadianMalarticminecontinueditscontributiontotheeconomicdevelopmentfund(FEMO)whichwasestablishedpriortominedevelopmenttodiversifythelocaleconomythroughouttheminelifesothatthetownofMalarticiswellequippedtofacetheeventualmineclosure.TheCanadianMalarticminehasalsoparticipatedinforumsinitiatedbythetowncouncilonthefutureofthetownofMalartic.Approximately98%ofthehiringin2016attheCanadianMalarticminewasfromthelocalarea.

In2016,theCompanycontinueditssupportoftheKivalliqMineTrainingSocietyandfortheuniqueupwardmobilitytrainingprogramforInuitemployeesdevelopedatMeadowbank.ThisprogramprovidestrainingandcareerpathopportunitiesforInuitwithlimitededucationandworkexperienceintheareaofheavyequipmentoperations,milloperationsandsiteservices.SkillsacquiredthroughtheprogramareeasilytransferabletoothersectorsoftheNunavuteconomy.

Fortheeighthyearinarow,thePinosAltosminewascertifiedasaSociallyResponsibleCompanybytheMexicanCentreforPhilanthropy(CentroMexicanoparalaFilantropía)andtheAllianceforSocialResponsibilityofEnterprises(AlianzaporlaResponsabilidadSocialEmpresarialenMéxico).ThiscertificationrecognizestheexcellenceofthesocialresponsibilitypracticesatthePinosAltosmine.


TheCompanycontinuestosupportanumberofcommunityhealthandeducationalinitiativesintheregionsurroundingthePinosAltosmine,includingtheestablishmentofalocalsewingcooperativeanddonatingmaterialfortheconstructionofnewclassroomsorfortherepairofexistingclassrooms.

TheCompany'sCodeofBusinessConductandEthicsPolicyisavailableontheCompany'swebsiteatwww.agnicoeagle.com .

Environmental Protection

TheCompany'sexplorationactivitiesandminingandprocessingoperationsaresubjecttothefederal,state,provincial,territorial,regionalandlocalenvironmentallawsandregulationsinthejurisdictionsinwhichtheCompany'sactivitiesandfacilitiesarelocated.Theseincluderequirementsforplanningandimplementingtheclosureandreclamationofminingpropertiesandrelatedfinancialassurance.Eachmineissubjecttoenvironmentalassessmentandpermittingprocessesduringdevelopmentand,inoperation,hasanenvironmentalmanagementsystemconsistentwithISO140001aswellasaninternalauditprogram.TheCompanyworkscloselywithregulatoryauthoritiesineachjurisdictionwhereitoperatestoensureongoingcompliance.

TheCompanyhasreportedgreenhousegasemissionsandclimatechangeriskfactorsannuallytotheCarbonDisclosureProjectsince2007.


Withrespecttoactivitiesin2016,theCanadianMalarticminereceivedonenon-complianceblastnoticeandtennon-compliancenoisenotices(whichincludesnoticesreceivedininstanceswherenoiselevelswereotherwisewithinthemunicipalnoiselimits),adecreasefromthe25infractionsreceivedwithrespecttoactivitiesin2015.Themine'steamofon-siteenvironmentalexpertscontinuetomonitorregulatorycomplianceintermsofapprovals,permitsandobservanceofdirectivesandrequirementsandcontinuetoimplementimprovementmeasures.

TheCompany'stotalliabilityforreclamationandclosurecostobligationsatDecember31,2016was$296million(includingtheCompany'sshareoftheCanadianMalarticreclamationcosts)andtheCompany'sreclamationexpensesfortheyearendedDecember31,2016were$0.6million.Formoreinformationpleaseseenote13totheAnnualFinancialStatements.

TheCompany'sEnvironmentalPolicyisavailableontheCompany'swebsiteatwww.agnicoeagle.com .


RISK FACTORS TheoperationsoftheCompanyarespeculativeduetothehigh-risknatureofitsbusiness,whichistheacquisition,financing,exploration,developmentandoperationofminingproperties.TheseriskfactorscouldmateriallyaffecttheCompany'sfinancialconditionand/orfutureoperatingresultsandcouldcauseactualeventstodiffermateriallyfromthosedescribedinforward-lookingstatementsrelatingtotheCompany.ThesearenottheonlyrisksanduncertaintiesthattheCompanyfaces.AdditionalrisksanduncertaintiesnotpresentlyknowntotheCompanyorthattheCompanycurrentlyconsidersimmaterialmayalsoimpairitsbusinessoperations.

TheCompany'sfinancialperformanceandresultsmayfluctuatewidelyduetovolatileandunpredictablecommodityprices.

TheCompany'searningsaredirectlyrelatedtocommodityprices,asrevenuesarederivedfromthesaleofgold,silver,zincandcopper.Goldprices,whichhavethegreatestimpactontheCompany'sfinancialperformance,fluctuatewidelyandareaffectedbynumerousfactors,includingcentralbankpurchasesandsales,producerhedgingandde-hedgingactivities,expectationsofinflation,investmentdemand,therelativeexchangerateoftheU.S.dollarwithothermajorcurrencies,interestrates,globalandregionaldemand,politicalandeconomicconditions,productioncostsinmajorgold-producingregions,speculativepositionstakenbyinvestorsortradersingoldandchangesinsupply,includingworldwideproductionlevels,allofwhicharebeyondtheCompany'scontrol.Theaggregateeffectofthesefactorsisimpossibletopredictwithaccuracy.Inaddition,thepriceofgoldhasonoccasionbeensubjecttoveryrapidshort-termchangesbecauseofspeculativeactivitiesorworldevents.FluctuationsingoldpricesmaymateriallyadverselyaffecttheCompany'sfinancialperformanceorresultsofoperations.IfthemarketpriceofgoldfallsbelowtheCompany'sall-insustainingcostsperounceofproductionatoneormoreofitsminesorprojectsatthattimeandremainssoforanysustainedperiod,theCompanymayexperiencelossesand/ormaycurtailorsuspendsomeorallofitsexploration,developmentandminingactivitiesatsuchminesorprojectsoratotherminesorprojects.Inaddition,suchfluctuationsmayrequirechangestothemineplans.TheCompany'scurrentmineplansandmineralreserveandmineralresourceestimatesarebasedonagoldpriceof$1,150perounce,otherthantheCanadianMalarticmine,theMeliadineprojectandtheUpperBeaverproject,wheremineralreservesandmineralresourcesarebasedongoldpricesof$1,200perounce,$1,100perounceand$1,200perounce,respectively(see"OperationsandProduction–MineralReservesandMineralResources–InformationonMineralReservesandMineralResourcesoftheCompany");ifthepriceofgoldfallsbelowsuchlevels,theminesmayberendereduneconomicandproductionmaybesuspended.Inaddition,lowergoldpricesmayrequirethemineplanstobechanged,whichmayresultinreducedproduction,highercoststhananticipated,orboth,andestimatesofmineralreservesandmineralresourcesmaybereduced.Further,thepricesreceivedfromthesaleoftheCompany'sby-productmetalsproducedatitsLaRondemine(silver,zincandcopper)anditsPinosAltos,LaIndiaandCanadianMalarticmines(silver)affecttheCompany'sabilitytomeetitstargetsfortotalcashcostsperounceorall-insustainingcostsperounceofgoldproducedwhensuchmeasuresarecalculatedonaby-productbasis.Theseby-productmetalpricesfluctuatewidelyandarealsoaffectedbynumerousfactorsbeyondtheCompany'scontrol.TheCompany'spolicyandpracticeisnottosellforwarditsfuturegoldproduction;however,undertheCompany'sBoard-approvedpriceriskmanagementpolicy,theCompanymayreviewthispracticeonaprojectbyprojectbasis.See"RiskProfile–CommodityPricesandForeignCurrencies"and"RiskProfile–FinancialInstruments"intheAnnualMD&AformoredetailsontheCompany'suseofderivativeinstruments.TheCompanyoccasionallyusesderivativeinstrumentstomitigatetheeffectsoffluctuatingby-productmetalprices;however,thesemeasuresmaynotbesuccessful.

Thevolatilityofgoldpricesisillustratedinthefollowingtablewhichsetsout,fortheperiodsindicated,thehigh,lowandaverageafternoonfixingpricesforgoldontheLondonBullionMarket(the"LondonP.M.Fix").

2017

(to March 22) 2016 2015 2014 2013 2012

Highprice($perounce) 1,257 1,366 1,296 1,385 1,694 1,792

Lowprice($perounce) 1,151 1,077 1,049 1,142 1,192 1,540

Averageprice($perounce) 1,216 1,251 1,160 1,266 1,411 1,669

OnMarch22,2017,theLondonP.M.Fixwas$1,249perounceofgold.


Theassumptionsthatunderlietheestimatesoffutureoperatingresultsandthestrategiesusedtomitigatetheeffectsofrisksofmetalpricesaresetoutin"OperationsandProduction–MineralReservesandMineralResources–InformationonMineralReservesandMineralResourcesoftheCompany"inthisAIFandundertheheading"RiskProfile"intheAnnualMD&A.

Basedon2017productionestimates,theapproximatesensitivitiesoftheCompany'safter-taxincometoa10%changeincertainmetalpricesfrom2016marketaveragepricesareasfollows:

Income

per share

Gold $0.13

Silver $0.01

Zinc $0.01

Copper $0.01

SensitivitiesoftheCompany'safter-taxincometochangesinmetalpriceswillincreasewithincreasedproduction.

TheCompanyislargelydependentuponitsminingandmillingoperationsatitsMeadowbankmineinNunavutanditsLaRondemineandCanadianMalarticminesinQuebec,andanyadverseconditionaffectingthoseoperationsmayhaveamaterialadverseeffectontheCompany.

TheCompany'soperationsattheMeadowbankmineinNunavutandattheLaRondemineandCanadianMalarticminesinQuebecaccountedforapproximately19%,18%and18%,respectively,oftheCompany'sgoldproductionin2016andareexpectedtoaccountforapproximately21%,20%and19%,respectively,oftheCompany'sgoldproductionin2017.Also,in2016theMeadowbank,LaRondeandCanadianMalarticminesaccountedforapproximately15%,19%and17%,respectively,oftheCompany'soperatingmargin.AnyadverseconditionaffectingminingormillingconditionsattheseminescouldbeexpectedtohaveamaterialadverseeffectontheCompany'sfinancialperformanceandresultsofoperations(see"–IftheCompanyexperiencesminingaccidentsorotheradverseconditions,theCompany'sminingoperationsmayyieldlessgoldthanindicatedbyitsestimatedgoldproduction"below).GoldproductionattheMeadowbankmineisalsosubjecttorisksrelatingtooperatinginaremotelocation(see"–TheCompanymayexperiencedifficultiesoperatingitsMeadowbankmineanddevelopingtheMeliadineprojectandtheAmaruqsatellitedepositatMeadowbankasaresultoftheirremotelocation"below).

UnlesstheCompanyacquiresordevelopsothersignificantgold-producingassets,theCompanywillcontinuetobedependentonitsoperationsattheMeadowbank,LaRondeandCanadianMalarticminesforasubstantialportionofitsgoldproductionandcashflowprovidedbyoperatingactivities.TherecanbenoassurancethattheCompany'scurrentexplorationanddevelopmentprogramswillresultinanyneweconomicallyviableminingoperationsoryieldnewmineralreservestoreplaceandexpandcurrentproductionandmineralreserves.

TheCompanymayexperiencedifficultiesoperatingitsMeadowbankmineanddevelopingtheMeliadineprojectandtheAmaruqsatellitedepositatMeadowbankasaresultoftheirremotelocation.

TheMeadowbankmine,whichistheCompany'slargestmineintermsofproduction,islocatedintheKivalliqDistrictofNunavutinnorthernCanada,approximately70kilometresnorthofBakerLake.Inaddition,theAmaruqdeposit,located50kilometresnorthwestoftheMeadowbankmine,hasreceivedBoardapproval(pendingreceiptoftherequiredpermits)tobedevelopedasasatelliteoperationtotheMeadowbankmine(productionatAmaruqiscurrentlyforecasttobegininthethirdquarterof2019).TheclosestmajorcitytotheMeadowbankmineisWinnipeg,Manitoba,approximately1,500kilometrestothesouth.TheCompanybuilta110-kilometreall-weatherroadfromBakerLake,whichprovidessummershippingaccessviaHudsonBaytotheMeadowbankmineandtheCompanyisbuildinganall-weatherroadbetweenMeadowbankandtheAmaruqproperty.However,theCompany'soperationsareconstrainedbytheremotenessofthemine,particularlyastheportofBakerLakeisonlyaccessibleapproximatelytenweeksperyear.MostofthematerialsthattheCompanyrequiresfortheoperationoftheMeadowbankmineandthedevelopmentoftheAmaruqdepositmustbetransportedthroughtheportofBakerLakeduringthisshippingseason,whichmaybefurthertruncatedduetoweatherconditions.IftheCompanyisunabletoacquireandtransportnecessarysuppliesduringthistime,oriforetransportationfromAmaruqtoMeadowbankisnegativelyaffected,itmayresultinaslowdownorstoppageofoperationsat


theMeadowbankmineorthedevelopmentoftheAmaruqdeposit.Furthermore,ifmajorequipmentfails,itemsnecessarytoreplaceorrepairsuchequipmentmayhavetobeshippedthroughBakerLakeduringthiswindow.FailuretohaveavailablethenecessarymaterialsrequiredforoperationsortorepairorreplacemalfunctioningequipmentattheMeadowbankmine(includingattheAmaruqdeposit)mayrequiretheslowdownorstoppageofoperations.Forexample,aMarch2011fireatthekitchenfacilitiesoftheMeadowbankminerequiredoperationstobereducedatthemine,whichresultedingoldproductionattheminebeingbelowexpectedlevelsin2011.

TheCompany'sMeliadinemineproject,290kilometressoutheastoftheMeadowbankmine,hasreceivedBoardapprovalforconstruction(productionatMeliadineiscurrentlyforecasttobegininthethirdquarterof2019),isalsolocatedintheKivalliqDistrictofNunavut,approximately25kilometresnorthwestofthehamletofRankinInletonthewestcoastofHudsonBay.MostofthematerialsthattheCompanyrequirestodevelopandoperatetheMeliadinemineprojectmustbetransportedthroughtheportofRankinInletduringitsapproximately14-weekshippingseason.IftheCompanycannotidentifyandprocuresuitableequipmentandmaterialswithinatimeframethatpermitstransportingthemtotheprojectwithinthisshippingseason,itcouldresultindelaysand/orcostincreasesintheexplorationprogram,construction,developmentandexplorationoftheproperty.

TheremotenessoftheMeadowbankmine,theAmaruqdepositandMeliadinemineprojectalsonecessitatestheuseoffly-in/fly-outcampsfortheaccommodationofsiteemployeesandcontractors,whichmayhaveanimpactontheCompany'sabilitytoattractandretainqualifiedmining,explorationandconstructionpersonnel.IftheCompanyisunabletoattractandretainsufficientpersonnelorcontractorsonatimelybasis,theCompany'soperationsattheMeadowbankmine(includingthedevelopmentoftheAmaruqdeposit)andconstructionofamineattheMeliadinemineprojectmaybeadverselyaffected.

IftheCompanyexperiencesminingaccidentsorotheradverseconditions,theCompany'sminingoperationsmayyieldlessgoldthanindicatedbyitsestimatedgoldproduction.

TheCompany'sgoldproductionmayfallbelowestimatedlevelsasaresultofminingaccidentssuchascave-ins,rockfalls,rockbursts,pitwallfailures,firesorfloodingorasaresultofotheroperationalproblemssuchasafailureofaproductionhoist,autoclave,filterpressorsemi-autogenousgrindingmill.Inaddition,productionmaybereducedif,amongotherthings,duringthecourseofminingorprocessing,unfavourableweatherconditions,groundconditions,highgeomechanicalstressareasorseismicactivityareencountered,oregradesarelowerthanexpected,thephysicalormetallurgicalcharacteristicsoftheorearelessamenablethanexpectedtominingortreatment,dilutionincreases,electricalpowerisinterruptedorheapleachprocessingresultsincontainmentdischarge.

WhiletheCompanyhasmetorexceededgoldproductionforecastssince2012,itfailedtodosoinfiveoftheprevioustenyearsprimarilydueto:mininglowergradegoldzonesin2007;delaysinthecommissioningoftheGoldexproductionhoistandtheKittilaautoclavein2008;autoclaveissuesatKittila,filteringissuesatPinosAltosanddilutionissuesatLapain2009;lowerthroughputattheMeadowbankmillduetoabottleneckinthecrushingcircuitandcontinuedautoclaveissuesattheKittilamineinthefirsthalfoftheyearin2010;andsuspensionofminingoperationsattheGoldexmineduetogeotechnicalconcernswiththerockabovethemininghorizon,afireintheMeadowbankminekitchencomplexthatnegativelyimpactedproductionandlowerthanexpectedgradesattheMeadowbankandLaRondeminesin2011.

Despitemeetingorexceedingproductionforecastssince2012,goldproductionwasnegativelyaffectedby:thetemporarysuspensionofheapleachoperationsattheCrestonMascotadepositatPinosAltosasaresultofissueswiththephaseoneleachpadlinerin2012;anextendedmaintenanceshutdownatKittiladuringthesecondquarter,duringwhichthemineonlyoperatedfor14days,anda16-dayunplannedshutdownrelatedtotheLaRondehoistdrivein2013;tendaysofdowntimeresultingfromaproductionhoistdrivefailureatLaRondein2014;andlowerthanexpectedgradesatKittilaandadecisionduringtheyeartoextendtheVaultpitatMeadowbankresultinginlowerthanexpectedproductionin2015.

Occurrencesofthisnatureandotheraccidents,adverseconditionsoroperationalproblemsinfutureyearsmayresultintheCompany'sfailuretoachievecurrentorfutureproductionestimates.

FluctuationsinforeigncurrencyexchangeratesinrelationtotheU.S.dollarmayadverselyaffecttheCompany'sresultsofoperations.

TheCompany'soperatingresultsandcashflowaresignificantlyaffectedbychangesintheU.S.dollar/Canadiandollarexchangerate.AlloftheCompany'srevenuesareearnedinU.S.dollarsbutthemajorityofitsoperatingcostsattheLaRonde,Lapa,Goldex,CanadianMalarticandMeadowbankmines,aswellastheCompany'sdevelopmentcostsattheMeliadinemineproject,andtheAmaruqdepositareincurredinCanadiandollars.TheU.S.dollar/Canadiandollarexchangeratehasfluctuatedsignificantlyoverthelastseveralyears.FromJanuary1,2012toJanuary1,2017,theNoon


BuyingRatefluctuatedfromahighofC$1.0299per$1.00toalowofC$0.6854per$1.00.HistoricalfluctuationsintheU.S.dollar/Canadiandollarexchangeratearenotnecessarilyindicativeoffutureexchangeratefluctuations.BasedontheCompany'santicipated2017after-taxoperatingresults,a10%changeintheU.S.dollar/Canadiandollarexchangeratefromthe2016marketaverageexchangeratewouldaffectnetincomebyapproximately$0.11pershare.Toattempttomitigateitsforeignexchangeriskandminimizetheimpactofexchangeratemovementsonoperatingresultsandcashflow,theCompanyhasperiodicallyusedforeigncurrencyoptionsandforwardforeignexchangecontractstopurchaseCanadiandollars;however,therecanbenoassurancethatthesestrategieswillbeeffective.See"RiskProfile–CommodityPricesandForeignCurrencies"intheAnnualMD&Aforadescriptionoftheassumptionsunderlyingthesensitivitycalculations.Inaddition,themajorityoftheCompany'soperatingcostsattheKittilamineareincurredinEurosandasignificantportionofoperatingcostsatthePinosAltosandLaIndiaminesareincurredinMexicanpesos.EachofthesecurrencieshasalsofluctuatedsignificantlyagainsttheU.S.dollaroverthepastseveralyears.TherecanbenoassurancethattheCompany'sforeignexchangederivativesstrategieswillbesuccessfulorthatforeignexchangefluctuationswillnotmateriallyadverselyaffecttheCompany'sfinancialperformanceandresultsofoperations.

TheCompany'smineconstructionprojectsandexpansionprojectsaresubjecttorisksassociatedwithminedevelopment,whichmayresultindelaysintheoptimizationofminingoperations,delaysinexistingoperationsandunanticipatedcosts.

TheCompany'sproductionforecastsarebasedonfullproductionbeingachievedatallofitsmines,andtheCompany'sabilitytoachieveandmaintainfullproductionratesattheseminesissubjecttoanumberofrisksanduncertainties.Productionfromtheseminesin2017maybelowerthananticipatediftheanticipatedfullproductionratecannotbeachieved.

TheCompanybelievesthattheLaRondemineextension,whichcommencedoperationinlate2011,isthedeepestoperationintheWesternHemispherewithacurrentlyexpectedmaximumdepthof3,110metresbelowthesurfaceand,in2017,87%oftheLaRondemine'sproductionisanticipatedtobefromtheLaRondemineextension.TheLaRondemineextensioncontinuestomovetowardsoperatingatanticipatedsteadystatelevels.TheCompany'soperationsattheLaRondemineextensionrelyoninfrastructureinstalledinconnectionwiththeextensionforhaulingoreandmaterialstothesurface,includingawinzeandaseriesoframpslinkingminingdepositstothePennaShaftthatserviceshistoricoperationsattheLaRondemine.ThedepthoftheoperationsposessignificantchallengestotheCompany,suchasgeomechanicalandseismicrisksandventilationandairconditioningrequirements,whichmayresultindifficultiesanddelaysinachievinggoldproductionobjectives.OperationsatthelowerleveloftheLaRondeminearesubjecttohighlevelsofgeomechanicalstressandtherearefewresourcesavailabletoassisttheCompanyinmodellingthegeomechanicalconditionsatthesedepths,whichmayresultintheCompanynotbeingabletoextracttheoreattheselevelsascurrentlycontemplated.In2012,challengesassociatedwithexcessheatandcongestionatthelowerpartsoftheminedelayedtherampupofproductionand,in2013,throughputattheLaRondeminewasreducedasaresultof16daysofunplannedshutdowntothehoistdrive.In2014,tendaysofdowntimeresultingfromaproductionhoistdrivefailureresultedinannualproductionatLaRondebeingapproximately10,000ouncesbelowtheCompany'sexpectations.Inaddition,theCompanyisevaluatingthepotentialtominebelowthecurrentlyplanned3.1kilometredepthatLaRonde,ortheLaRonde3deposit.

ThefurtherdevelopmentoftheKittilaandPinosAltosmines,aswellasthedevelopmentofthenewminingzonesattheGoldexmine,requirestheconstructionandoperationofnewundergroundmininginfrastructureand,atKittila,millingoperationswererequiredtobeexpanded.Theconstructionandoperationofundergroundminingfacilitiesandtheexpansionofmillingfacilitiesaresubjecttoanumberofrisks,includingunforeseengeologicalformations,implementationofnewminingormillingprocesses,delaysinobtainingrequiredconstruction,environmentaloroperatingpermitsandengineeringandmineormilldesignadjustments.

TheAmaruqsatellitedepositatMeadowbankandtheMeliadineproject,bothofwhichareexpectedtocommenceminingoperationsinthethirdquarterof2019,arebothlocatedintheKivalliqDistrictofNunavut.TheCompanymayexperiencedifficultiesdevelopingtheMeliadineprojectandtheAmaruqsatellitedepositatMeadowbankasaresultoftheirremotelocation(see"–TheCompanymayexperiencedifficultiesoperatingitsMeadowbankmineanddevelopingtheMeliadineprojectandtheAmaruqsatellitedepositatMeadowbankasaresultoftheirremotelocation."above).Inaddition,theextremelyharshweatherconditionsthatareexperiencedintheKivalliqDistrictofNunavutmayresultinconstructiondelaysthatcouldresultindelaystothecommencementofminingoperationsateitherorbothoftheAmaruqsatellitedepositatMeadowbankandtheMeliadineprojectorincreasedcostsindevelopingtheprojects.


TheCompany'stotalcashcostsperounceandall-insustainingcostsperounceofgoldproduceddepend,inpart,onexternalfactorsthataresubjecttofluctuationand,ifsuchcostsincrease,someoralloftheCompany'sactivitiesmaybecomeunprofitable.

TheCompany'stotalcashcostsperounceandall-insustainingcostsperounceofgoldaredependentonanumberoffactors,includingtheexchangeratebetweentheU.S.dollarandtheCanadiandollar,EuroandMexicanpeso,smeltingandrefiningcharges,productionroyalties,thepriceofgoldandby-productmetals(whencalculatedonaby-productbasis)andthecostofinputsusedinminingoperations.AttheLaRondemine,theCompany'stotalcashcostsperounceandall-insustainingcostsperounceofproduction(whencalculatedonaby-productbasis)areaffectedbythepricesandproductionlevelsofby-productzinc,silverandcopper,therevenuefromwhichisoffsetagainstthecostofgoldproduction.AttheCanadianMalartic,PinosAltosandLaIndiamines,theCompany'stotalcashcostsperounceandall-insustainingcostsperounceofproduction(whencalculatedonaby-productbasis)areaffectedbythepricesandproductionlevelsofby-productsilver,therevenuefromwhichisoffsetagainstthecostofgoldproduction.Totalcashcostsperounceandall-insustainingcostsperouncefromtheCompany'soperationsatitsminesinCanada,MexicoandtheKittilamineinFinlandareaffectedbychangesintheexchangeratesbetweentheU.S.dollarandtheCanadiandollar,MexicanpesoandtheEuro,respectively.Totalcashcostsperounceandall-insustainingcostsperounceatalloftheCompany'sminesarealsoaffectedbythecostsofinputsusedinminingoperations,includinglabour(includingcontractors),steel,chemicalreagentsandenergy.AllofthesefactorsarebeyondtheCompany'scontrol.IftheCompany'stotalcashcostsperounceorall-insustainingcostsperounceofgoldriseabovethemarketpriceofgoldandremainsoforanysustainedperiod,theCompanymayexperiencelossesandmaycurtailorsuspendsomeorallofitsexploration,developmentand/orminingactivities.

Totalcashcostsperounceandall-insustainingcostsperouncearenotrecognizedmeasuresunderUSGAAPorIFRS,andthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.SeetheAnnualMD&Aforreconciliationoftotalcashcostsperounceandall-insustainingcostsperouncetotheirclosestIFRSmeasureand"IntroductoryNotes–NotetoInvestorsConcerningCertainMeasuresofPerformance"inthisAIFforadiscussionofnon-GAAPmeasures.

Mineralreserveandmineralresourceestimatesareonlyestimatesandsuchestimatesmaynotaccuratelyreflectfuturemineralrecovery.

ThefiguresformineralreservesandmineralresourcespublishedbytheCompanyareestimatesandnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoveryofgoldwillberealized.MineralreserveandmineralresourceestimatesarebasedongoldrecoveriesinsmallscalelaboratorytestsandmaynotbeindicativeofthemineralizationintheentireorebodyandtheCompanymaynotbeabletoachievesimilarresultsinlargerscaletestsunderon-siteconditionsorduringproduction.TheoregradeactuallyrecoveredbytheCompanymaydifferfromtheestimatedgradesofthemineralreservesandmineralresources.Theestimatesofmineralreservesandmineralresourceshavebeendeterminedbasedonassumedmetalprices,foreignexchangeratesandoperatingcosts.Forexample,theCompanyhasestimatedprovenandprobablemineralreservesbasedon,amongotherthings,a$1,150perouncegoldprice($1,200forCanadianMalarticandtheUpperBeaverprojectand$1,100forMeliadine).Theyearlyaveragegoldpricehasbeenabove$1,150perouncesince2010;however,priortothattime,yearlyaveragegoldpriceswerebelow$1,150perounce.Prolongeddeclinesinthemarketpriceofgold(orapplicableby-productmetalprices)mayrendermineralreservescontainingrelativelylowergradesofmineralizationuneconomicaltorecoverandcouldmateriallyreducetheCompany'smineralreserves.Shouldsuchreductionsoccur,theCompanymayberequiredtotakeamaterialwrite-downofitsinvestmentinminingproperties,reducethecarryingvalueofoneormoreofitsassetsordelayordiscontinueproductionorthedevelopmentofnewprojects,resultinginincreasednetlossesandreducedcashflow.TheCompanyusedanassumed$1,250long-termgoldpricetotestforimpairmentofitsminesandconcludednoimpairmentsexistedasatDecember31,2016.Marketpricefluctuationsofgold(orapplicableby-productmetalprices),aswellasincreasedproductioncostsorreducedrecoveryrates,mayrendermineralreservescontainingrelativelylowergradesofmineralizationuneconomicaltorecoverandmayultimatelyresultinarestatementofmineralresources.Short-termfactorsrelatingtothemineralreserve,suchastheneedfororderlydevelopmentoforebodiesortheprocessingofnewordifferentgrades,mayimpairtheprofitabilityofamineinanyparticularaccountingperiod.

Mineralresourceestimatesforpropertiesthathavenotcommencedproductionoratdepositsthathavenotyetbeenexploitedarebased,inmostinstances,onverylimitedandwidelyspaceddrillholeinformation,whichisnotnecessarilyindicativeofconditionsbetweenandaroundthedrillholes.Accordingly,suchmineralresourceestimatesmayrequirerevisionasmoredrillinginformationbecomesavailableorasproductionexperienceisgained.


TheCompanymayexperienceproblemsinexecutingacquisitionsormanagingandintegratinganycompletedacquisitionswithitsexistingoperations.

TheCompanyregularlyevaluatesopportunitiestoacquiresecuritiesorassetsofotherminingbusinesses.Suchacquisitionsmaybesignificantinsize,maychangethescaleoftheCompany'sbusinessandmayexposetheCompanytonewgeographic,political,operating,financialorgeologicalrisks.TheCompany'ssuccessinitsacquisitionactivitiesdependsonitsabilitytoidentifysuitableacquisitioncandidates,acquirethemonacceptabletermsandintegratetheiroperationssuccessfullywiththoseoftheCompany.Anyacquisitionwouldbeaccompaniedbyrisks,suchas:duediligencefailures;thedifficultyofassimilatingtheoperationsandpersonnelofanyacquiredbusinesses;thepotentialdisruptionoftheCompany'songoingbusiness;theinabilityofmanagementtomaximizethefinancialandstrategicpositionoftheCompanythroughthesuccessfulintegrationofacquiredassetsandbusinesses;themaintenanceofuniformstandards,controls,proceduresandpolicies;theimpairmentofrelationshipswithemployees,suppliersandcontractorsasaresultofanyintegrationofnewmanagementpersonnel;andthepotentialunknownliabilities(includingpotentialenvironmentalliabilitiesoranypriorbriberyorcorruptionactivities)associatedwithacquiredassetsandbusinesses.PotentialacquisitiontargetsmayoperateinjurisdictionsinwhichtheCompanydoesnotoperateandthatmayhaveadifferentriskprofilethanthejurisdictionsinwhichtheCompanycurrentlyoperates(see"–TheCompanymayexperienceoperationaldifficultiesatitsforeignoperations").Inaddition,theCompanymayneedadditionalcapitaltofinanceanacquisition.DebtfinancingrelatedtoanyacquisitionmayexposetheCompanytotherisksrelatedtoincreasedleverage,whileequityfinancingmaycauseexistingshareholderstosufferdilution.TheCompanyispermittedunderthetermsofitsunsecuredrevolvingbankcreditfacilityanditsguaranteedseniorunsecurednotesreferredtounder"MaterialContracts"belowtoincuradditionalunsecuredindebtedness,providedthatitmaintainscertainfinancialratiosandmeetsfinancialconditioncovenantsand,inthecaseofthebankcreditfacility,thatnoeventofdefaultunderthebankcreditfacilityhasoccurredandiscontinuing,orwouldoccurasaresultoftheincurrenceorassumptionofsuchindebtedness.TherecanbenoassurancethattheCompanywouldbesuccessfulinovercomingtheseoranyotherproblemsencounteredinconnectionwithsuchacquisitions.

TheCompanymayexperienceoperationaldifficultiesatitsforeignoperations.

TheCompany'soperationsincludeamineinFinlandandtwominesinnorthernMexico.Collectively,theseminesaccountedforapproximately34%oftheCompany'sgoldproductionin2016andareexpectedtoaccountforapproximately32%oftheCompany'sgoldproductionin2017.Theseoperationsaresubjecttovariouslevelsofpolitical,economicandotherrisksanduncertaintiesthataredifferentfromthoseencounteredattheCompany'sCanadianproperties.Theserisksanduncertaintiesvaryfromcountrytocountryandmayinclude:extremefluctuationsincurrencyexchangerates;highratesofinflation;labourunrest;risksofwarorcivilunrest;expropriationandnationalization;renegotiationornullificationofexistingconcessions,licences,permitsandcontracts;illegalmining;corruption;restrictionsonforeignexchangeandrepatriation;hostagetaking;securityissues(includingtheftsofgoldfromamine);changingpoliticalconditions;andcurrencycontrols.Inaddition,theCompanymustcomplywithmultipleandpotentiallyconflictingregulationsinCanada,theUnitedStates,FinlandandMexico,includingexportrequirements,taxes,tariffs,importdutiesandothertradebarriers,aswellashealth,safetyandenvironmentalrequirements.

Changes,ifany,inminingorinvestmentpoliciesorshiftsinpoliticalattitudeinFinlandorMexicomayadverselyaffecttheCompany'soperationsorprofitability.Operationsmaybeaffectedinvaryingdegreesbygovernmentregulationswithrespecttomattersincludingrestrictionsonproduction,pricecontrols,exportcontrols,currencycontrolsorrestrictions,currencyremittance,incomeandothertaxes,expropriationofproperty,foreigninvestment,maintenanceofclaims,environmentallegislation,landuse,landclaimsoflocalpeople,wateruseandminesafety.Failuretocomplystrictlywithapplicablelaws,regulationsandlocalpracticesrelatingtomineralrightsapplicationsandtenurecouldresultinloss,reductionorexpropriationofentitlementsortheimpositionofadditionallocalorforeignpartiesasjointventurepartnerswithcarriedorotherinterests.

Inaddition,FinlandandMexicohavesignificantlydifferentlawsandregulationsthanCanadaandthereareculturalandlanguagedifferencesbetweenthesecountriesandCanada.Also,theCompanyfaceschallengesinherentinefficientlymanagingemployeesoverlargegeographicaldistances,includingthechallengesofstaffingandmanagingoperationsinseveralinternationallocationsandimplementingappropriatesystems,policies,benefitsandcomplianceprograms.Thesechallengesmaydivertmanagement'sattentiontothedetrimentoftheCompany'sotheroperations.TherecanbenoassurancethatdifficultiesassociatedwiththeCompany'sforeignoperationscanbesuccessfullymanaged.

Inthefuture,theCompanymaychoosetooperateinforeignjurisdictionsotherthanFinlandandMexico.Forexample,theCompanycurrentlyhasexplorationpropertiesineachoftheUnitedStatesandSweden,aswellasstrategicinvestmentsincompaniesholdingpropertiesinBrazil,theDominicanRepublicandPanama.Suchoperationswouldinherentlybe


subjecttovariouslevelsofpolitical,economicandotherrisksanduncertaintiesthataredifferentfromthoseencounteredattheCompany'sCanadian,FinnishandMexicanproperties.

TheCompanyissubjecttotherisksnormallyassociatedwiththeconductofjointoperations.

TheCompanyholdsanindirect50%interestintheCanadianMalarticminethroughthePartnership,withtheremaininginterestinthispropertybeingheldindirectlybyYamana.TheCompany'sinterestintheCanadianMalarticmineissubjecttotherisksnormallyassociatedwiththeconductofpartnershipsandotherjointoperations.TheexistenceoroccurrenceofoneormoreofthefollowingcircumstancesandeventscouldhaveamaterialadverseeffectonCompany'sprofitabilityortheviabilityofitsinterestsheldthroughjointoperations,whichcouldhaveamaterialadverseeffectontheCompany'sfinancialperformanceandresultsofoperations:(i)lackofcontroloverthejointoperationsanddisagreementwithpartnersonhowtoexplore,developoroperateminesefficiently;(ii)inabilitytoexertinfluenceovercertainstrategicdecisionsmadeinrespectofjointlyheldproperties;(iii)inabilityofpartnerstomeettheirobligationstothejointoperationorthirdparties;(iv)litigationbetweenjointventurepartnersregardingjointoperationmatters;and(v)liabilitythatmightaccruetopartnersasaresultofthefailureofthejointventureorgeneralpartnershiptosatisfytheirobligations.In2015,theCompanyenteredintoajointventurewithOrexMineralsInc.withrespecttotheBarseleprojectinSweden.TheCompanymayenterintoadditionaljointventuresorpartnershipsinthefuture.

TotheextentthattheCompanyisnottheoperatorofitsjointventureproperties,theCompanywillbedependentontheoperatorsforthetimingofactivitiesrelatedtothesepropertiesandtheCompanywillbelargelyunabletodirectorcontroltheactivitiesoftheoperators.TheCompanyalsowillbesubjecttothedecisionsmadebytheoperatorsregardingactivitiesattheproperties,andwillhavetorelyontheoperatorsforaccurateinformationabouttheproperties.AlthoughtheCompanyexpectsthattheoperatorsofthepropertiesinwhichitownsajointventureinterestwilloperatethesepropertiesinaccordancewithindustrystandardsandinaccordancewithanyapplicableoperatingagreements,therecanbenoassurancethatalldecisionsoftheoperatorswillachievetheexpectedgoals.

TheCompanyestimatestherecoverableamountoflong-livedassetsandgoodwillusingassumptionsandifthecarryingvalueofanassetorgoodwillisthendeterminedtobegreaterthanitsactualrecoverableamount,animpairmentisrecognizedreducingtheCompany'searnings.

TheCompanyconductsannualimpairmentassessmentsofgoodwillandattheendofeachreportingperiodtheCompanyassesseswhetherthereisanyindicationthatlong-livedassets(suchasminingpropertiesandplantandequipment)maybeimpaired.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Testingforimpairmentinvolvesacomparisonoftherecoverableamountofthecashgeneratingunittoitscarryingvalue.Animpairmentchargeisrecognizedforanyexcessofthecarryingamountoftheassetgrouporreportingunitoveritsrecoverableamount.AsatDecember31,2016,theCompanytestedforimpairmentofitsminesandprojectsandconcludednoimpairmentsexisted.

Theassessmentforimpairmentissubjectiveandrequiresmanagementtomakeestimatesandassumptionsforanumberoffactorsincludingestimatesofproductionlevels,mineralreservesandmineralresources,operatingcostsandcapitalexpendituresreflectedintheCompany'slife-of-mineplans,aswellaseconomicfactorsbeyondmanagement'scontrol,suchasgoldprices,discountratesandobservablenetassetvaluemultiples.Shouldmanagement'sestimatesandassumptionsregardingthesefactorsbeincorrect,theCompanymayberequiredtorealizeimpairmentcharges,whichwillreducetheCompany'searnings.Thetimingandamountofsuchimpairmentchargesisdifficulttopredict.

TheCompany'stransitiontoreportingitsfinancialresultsunderIFRSmayalsohaveaneffectonthefrequencyandamountofimpairmentcharges.UnderUSGAAP,atwo-stepapproachisusedforlong-livedassetimpairmenttestingwherebylong-livedassetsarefirsttestedforrecoverabilitybasedontheirexpectedundiscountedcashflows.Ifalong-livedasset'sexpectedundiscountedcashflowexceedstherecordedcarryingamount,noimpairmentchargeisrequired.Iftheexpectedundiscountedcashflowislowerthantherecordedcarryingamount,thelong-livedassetsarewrittendowntotheirestimatedfairvalue.IFRSprescribesaone-stepapproachforassetimpairmenttestingandmeasurementwherebyanasset'srecoverableamountiscompareddirectlyagainstitsrecordedcarryingamount.UnderIFRS,anasset'srecoverableamountisdeterminedasthehigheroftheestimatedfairvaluelesscoststosellorvalueinuse(whichismeasuredusingdiscountedcashflows).Ifanasset'srecoverableamountislessthantherecordedcarryingamount,animpairmentchargeisrequired.ThedifferenceintheapproachtoassetimpairmenttestingandmeasurementmayresultinmorefrequentimpairmentchargesunderIFRS,whereassetcarryingvaluespreviouslysupportedunderUSGAAPonanundiscountedcashflowbasiscannotbesupportedonadiscountedcashflowbasis.Inaddition,underIFRS,theremaybeinstanceswheretheremaybeanimpairmentreversalofthevalueofanasset(whereanimpairmentchargehadpreviouslybeenrecorded)whichmayleadtovolatilityintheCompany'searnings.


IftheCompanyfailstocomplywithrestrictivecovenantsinitsdebtinstruments,theCompany'sabilitytoborrowunderitsunsecuredrevolvingbankcreditfacilitycouldbelimitedandtheCompanymaythendefaultunderotherdebtagreements,whichcouldharmtheCompany'sbusiness.

TheCompany'sunsecuredrevolvingbankcreditfacilitylimits,amongotherthings,theCompany'sabilitytopermitthecreationofcertainliens,makeinvestmentsotherthaninvestmentsinbusinessesrelatedtominingorabusinessancillaryorcomplementarytomining,disposeoftheCompany'smaterialassetsor,incertaincircumstances,paydividends.Inaddition,theCompany'sguaranteedseniorunsecurednoteslimit,amongotherthings,theCompany'sabilitytopermitthecreationofcertainliens,carryonbusinessunrelatedtominingordisposeoftheCompany'smaterialassets.ThebankcreditfacilityandtheguaranteedseniorunsecurednotesalsorequiretheCompanytomaintainspecifiedfinancialratiosandmeetfinancialconditioncovenants.EventsbeyondtheCompany'scontrol,includingchangesingeneraleconomicandbusinessconditions,mayaffecttheCompany'sabilitytosatisfythesecovenants,whichcouldresultinadefaultunderthebankcreditfacilityortheguaranteedseniorunsecurednotesand,byextension,theBNSLetterofCreditFacility(asdefinedbelow).AtMarch22,2017,therewas$0.8milliondrawnunderthebankcreditfacility(includingunderlettersofcredit)andapproximatelyC$333milliondrawnundertheCompany'sotherletterofcreditfacilities.Ifaneventofdefaultundertheunsecuredrevolvingbankcreditfacilityortheguaranteedseniorunsecurednotesoccurs,theCompanywouldbeunabletodrawdownfurtheronthebankcreditfacilityandthelenderscouldelecttodeclareallprincipalamountsoutstandingthereunderatsuchtime,togetherwithaccruedinterest,tobeimmediatelydueanditcouldcauseaneventofdefaultundertheCompany'sguaranteedseniorunsecurednotesandotherletterofcreditfacilities.Aneventofdefaultundertheunsecuredrevolvingbankcreditfacility,theguaranteedseniorunsecurednotesortheuncommittedletterofcreditfacilitiesmayalsogiverisetoaneventofdefaultunderotherexistingandfuturedebtagreementsand,insuchevent,theCompanymaynothavesufficientfundstorepayamountsowingundersuchagreements.

Theexplorationofmineralpropertiesishighlyspeculative,involvessubstantialexpendituresandisfrequentlyunsuccessful.

TheCompany'sfinancialperformanceissignificantlyaffectedbythecostsandresultsofitsexplorationanddevelopmentprograms.Asmineshavelimitedlivesbasedonprovenandprobablemineralreserves,theCompanyactivelyseekstoreplaceandexpanditsmineralreserves,primarilythroughexplorationanddevelopmentaswellasthroughstrategicacquisitions.Explorationformineralsishighlyspeculativeinnature,involvesmanyrisksandisfrequentlyunsuccessful.Amongthemanyuncertaintiesinherentinanygoldexplorationanddevelopmentprogramarethelocationofeconomicorebodies,thedevelopmentofappropriatemetallurgicalprocesses,thereceiptofnecessarygovernmentalpermits,theacceptanceorsupportoflocalstakeholdersandtheconstructionofminingandprocessingfacilities.Substantialexpendituresarerequiredtopursuesuchexplorationanddevelopmentactivities.Assumingdiscoveryofaneconomicorebody,dependingonthetypeofminingoperationinvolved,severalyearsmayelapsefromtheinitialphasesofdrillinguntilcommercialoperationsarecommencedandduringsuchtimetheeconomicfeasibilityofproductionmaychange.Accordingly,therecanbenoassurancethattheCompany'scurrentorfutureexplorationanddevelopmentprogramswillresultinanyneweconomicallyviableminingoperationsoryieldnewmineralreservestoreplaceandexpandcurrentmineralreserves.

Theminingindustryishighlycompetitive,andtheCompanymaynotbesuccessfulincompetingfornewminingproperties.

Thereisalimitedsupplyofdesirablemineralpropertiesavailableforclaimstaking,leasing,explorationoracquisitionintheareaswheretheCompanycontemplatesconductingactivities.Manycompaniesandindividualsareengagedintheminingbusiness,includinglarge,establishedminingcompanieswithsubstantialcapabilitiesandlongearningsrecords.TheCompanymaybeatacompetitivedisadvantageinacquiringminingproperties,asitmustcompetewiththesecompaniesandindividuals,someofwhichhavegreaterfinancialresourcesandlargertechnicalstaffthantheCompany.Accordingly,therecanbenoassurancethattheCompanywillbeabletocompetesuccessfullyfornewminingproperties.

ThesuccessoftheCompanyisdependentongoodrelationswithitsemployeesandonitsabilitytoattractandretainemployeesandkeypersonnel.

SuccessattheCompany'smines,developmentprojectsandexplorationprojectsisdependentontheeffortsoftheCompany'semployeesandcontractors.TheCompanycompeteswithminingandothercompaniesonaglobalbasistoattractandretainemployeesatalllevelswithappropriatetechnicalskillsandoperatingexperiencenecessarytooperateitsmines.RelationshipsbetweentheCompanyanditsemployeesmaybeaffectedbychangesintheschemeoflabourrelationsthatmaybeintroducedbyrelevantgovernmentauthoritiesinthejurisdictionsthattheCompanyoperates.


ChangesinapplicablelegislationorintherelationshipbetweentheCompanyanditsemployeesorcontractorsmayhaveamaterialadverseeffectontheCompany'sbusiness,resultsofoperationsandfinancialcondition.

TheCompanyisalsodependentonanumberofkeymanagementpersonnel.ThelossoftheservicesofoneormoreofsuchkeymanagementpersonnelcouldhaveamaterialadverseeffectontheCompany.TheCompany'sabilitytomanageitsoperating,development,explorationandfinancingactivitieswilldependinlargepartontheeffortsoftheseindividuals.

TheCompanyfacessignificantcompetitiontoattractandretainqualifiedpersonnelandtherecanbenoassurancethattheCompanywillbeabletoattractandretainsuchpersonnel.

TheCompany'spropertiesandminingoperationsmaybesubjecttorightsorclaimsofindigenousgroupsandtheassertionofsuchrightsorclaimsmayimpacttheCompany'sabilitytodeveloporoperateitsminingproperties.

TheCompanyoperatesin,andinthefuturemayoperateinorexploreadditional,areascurrentlyortraditionallyinhabitedorusedbyindigenouspeoplesandsubjecttoindigenousrightsorclaims.Accordingly,theCompanyissubjecttotheriskthatoneormoregroupsmayopposethecontinuedoperation,furtherdevelopmentornewdevelopmentoftheCompany'scurrentorfutureproperties.Suchoppositionmaybedirectedthroughlegaloradministrativeproceedings,orthoughprotestsorothercampaignsagainsttheCompany'sactivities.AnysuchactionsmayhaveanadverseimpactontheCompany'soperations.AlthoughtheCompanyattemptstodevelopandmaintaingoodworkingrelationshipswithallstakeholders,therecanbenoassurancethattheserelationshipscanbesuccessfullymanaged.

TheCompanymayhavedifficultyfinancingitsadditionalcapitalrequirementsforitsplannedmineconstruction,explorationanddevelopment.

Thecapitalrequiredforoperations(includingpotentialexpansions)andthedevelopmentoftheAmaruqdepositandtheconstructionattheMeliadinemineprojectandtheexplorationanddevelopmentoftheCompany'sproperties,includingcontinuingexplorationanddevelopmentprojectsinQuebec,Nunavut,Finland,Sweden,MexicoandNevada,willrequiresubstantialexpenditures.TheCompanyexpectsthatcapitalexpenditureswillbeapproximately$859millionin2017.AsatMarch22,2017,theCompanyhadapproximately$1.2billionavailabletobedrawndownunderitsbankcreditfacility.BasedoncurrentfundingavailabletotheCompanyandexpectedcashfromoperations,theCompanybelievesithassufficientfundsavailabletofunditsprojected2017capitalexpendituresforallofitscurrentproperties.However,ifcashfromoperationsislowerthanexpectedorcapitalcostsattheCompany'sminesorprojectsexceedcurrentestimates,iftheCompanyincursmajorunanticipatedexpensesrelatedtoexploration,developmentormaintenanceofitspropertiesorforotherpurposes,orifadvancesfromthebankcreditfacilityareunavailable,theCompanymayberequiredtoseek,ormaydeemitadvantageoustoseek,additionalfinancingtomaintainitscapitalexpendituresatplannedlevels.Inaddition,theCompanywillhaveadditionalcapitalrequirementstotheextentthatitdecidestoexpanditspresentoperationsandexplorationactivities,constructadditionalminingandprocessingoperationsatanyofitspropertiesortakeadvantageofopportunitiesforacquisitions,jointventuresorotherbusinessopportunitiesthatmayarise.

Additionalfinancingmaynotbeavailablewhenneededor,ifavailable,thetermsofsuchfinancingmaynotbefavourabletotheCompanyand,ifraisedbyofferingequitysecurities,orsecuritiesconvertibleintoequitysecurities,anyadditionalfinancingmayinvolvesubstantialdilutiontoexistingshareholders.FailuretoobtainanyfinancingnecessaryfortheCompany'scapitalexpenditureplansmayresultinadelayorindefinitepostponementofexploration,developmentorproductiononanyoralloftheCompany'sproperties,whichmayhaveamaterialadverseeffectontheCompany'sbusiness,financialconditionandresultsofoperations.

Ifthecreditandcapitalmarketsdeteriorate,orifanysuddenorrapiddestabilizationofglobaleconomicconditionsoccurs,itcouldhaveamaterialadverseeffectontheCompany'sliquidity,abilitytoraisecapitalandcostsofcapital.IftheCompanyexperiencesdifficultyaccessingthecreditand/orcapitalmarkets,theCompanymayseekalternativefinancingoptions,including,butnotlimitedto,streamingtransactions,royaltytransactionsorthesaleofnon-coreassets.FailuretoraisecapitalwhenneededoronreasonabletermsmayhaveamaterialadverseeffectontheCompany'sbusiness,financialconditionandresultsofoperations.

Additionally,anysuddenorrapiddestabilizationofglobaleconomicconditionscouldcausedecreasesinassetvaluesthataredeemedtobeotherthantemporary,whichmayresultinimpairmentandotherlossesfortheCompany.


TheCompany'soperationsaresubjecttonumerouslawsandextensivegovernmentregulationswhichmayrequiresignificantexpendituresorcauseareductioninlevelsofproduction,delaysinproductionorthepreventionofthedevelopmentofnewminingpropertiesorotherwisecausetheCompanytoincurcoststhatadverselyaffecttheCompany'sresultsofoperations.

TheCompany'sminingandmineralprocessingoperations,explorationactivitiesandpropertiesaresubjecttothelawsandregulationsoffederal,provincial,territorial,stateandlocalgovernmentsinthejurisdictionsinwhichtheCompanyoperates.Theselawsandregulationsareextensiveandgovernprospecting,exploration,development,production,exports,taxes,labourstandards,occupationalhealthandsafety,wastedisposalandtailingsmanagement,toxicsubstances,environmentalprotection,minesafety,reportingofpaymentstogovernmentsandothermatters.Compliancewithsuchlawsandregulationsincreasesthecostsofplanning,designing,drilling,developing,constructing,operating,managing,closing,reclaimingandrehabilitatingminesandotherfacilities.Newlawsorregulations,amendmentstocurrentlawsandregulationsgoverningoperationsandactivitiesonminingpropertiesormorestringentimplementationorinterpretationthereofcouldhaveamaterialadverseeffectontheCompany,increasecosts,causeareductioninlevelsofproductionanddelayorpreventthedevelopmentofnewminingproperties.Regulatoryenforcement,intheformofinfractionorcompliancenotices,hasoccurredatsomeoftheCompany'sminesand,whilethecurrentrisksrelatedtosuchenforcementarenotexpectedtobematerial,theriskofmaterialfinesorcorrectiveactioncannotberuledoutinthefuture.

TheCompanyissubjecttoanti-corruptionandanti-briberylaws.

TheCompany'soperationsaregovernedby,andinvolveinteractionswith,variouslevelsofgovernmentinnumerouscountries.TheCompanyisrequiredtocomplywithanti-corruptionandanti-briberylaws,includingtheCorruption of Foreign Public Officials Act (Canada)andtheU.S.ForeignCorruptPracticesAct,aswellassimilarlawsinthecountriesinwhichtheCorporationconductsitsbusiness.Therehasbeenageneralincreaseinthefrequencyofenforcementandtheseverityofpenaltiesundersuchlaws,resultingingreaterscrutinyandpunishmenttocompaniesconvictedofviolatinganti-corruptionandanti-briberylaws.TheCompanymaybefoundliableforviolationsbynotonlyitsemployees,butalsobyitsthirdpartyagents.AlthoughtheCompanyhasadoptedarisk-basedapproachtomitigatesuchrisks,includingtheimplementationofpoliciesandprogramstoensurecompliancewithsuchlaws,suchmeasuresarenotalwayseffectiveinensuringthattheCompany,itsemployeesorthirdpartyagentswillcomplystrictlywithsuchlaws.IftheCompanyfindsitselfsubjecttoanenforcementactionorisfoundtobeinviolationofsuchlaws,thismayresultinsignificantpenalties,finesand/orsanctionsimposedontheCompanywhichcouldresultinamaterialadverseeffectontheCompany'sreputation,financialperformanceandresultsofoperations.IftheCompanychoosestooperateinadditionalforeignjurisdictionsinthefutureitmaybecomesubjecttoadditionalanti-corruptionandanti-briberylawsinsuchjurisdictions.See"TheCompanymayexperienceoperationaldifficultiesatitsforeignoperations".

IncreasedregulationofgreenhousegasemissionsandclimatechangeissuesmayadverselyaffecttheCompany'soperations.

TheCompanyoperatesinjurisdictionswhereregulatoryrequirementshavetakeneffect,orareproposed,tomonitor,reportand/orreducegreenhousegasemissions.IncreasedregulationofgreenhousegasemissionsandclimatechangeissuesmayadverselyaffecttheCompany'soperations.In2015,Canadaestablishedagreenhousegasesreductiontargetof30%from2005levelsby2030.InDecember2015,CanadasignedtheParisAgreementtolimittheglobalaveragetemperaturerisebelow2oCandpursueeffortstolimittheincreaseto1.5oC.Bythefallof2016,theprovincesandthefederalgovernmenthavecommittedtoagreeonapan-Canadianframeworkoncleangrowthandclimatechange.Canada'sfederalandprovincialregulationsalsoimposemandatorygreenhousegasemissionsreportingrequirementsandtheCompany'sQuebecminesaresubjecttocapandtraderegulation.Similarly,FinlandwasasignatorytotheParisAgreementandparticipatesintheEuropeanUnion'scapandtradesystem.MexicoisalsoapartytotheParisAgreementandhasenactedclimatechangelegislationwithagreenhousegasemissionreductiontargetof25%(unconditional)to40%(conditional)from2013businessasusuallevelsby2030.

TheCompanymonitorsandreportsannuallyitsdirectandindirectgreenhousegasemissionstotheinternationalCarbonDisclosureProject.InQuebec,theCompanyprimarilyuseshydroelectricpowerandisnotalargeproducerofgreenhousegases.Asaresult,Quebec'sregulatoryrequirementsarenotexpectedtohaveamaterialadverseeffectontheCompany.In2016,theCompany'stotalgreenhousegasesemissions(directandindirect)wereapproximately400,000tonnesequivalentCO2.In2016,theMeadowbankmineproducedapproximately186,000tonnesofgreenhousegases(directandindirect)mostlyfromtheproductionofelectricityfromdieselpowergeneration,whichisapproximately46%oftheCompany'stotalgreenhousegasemissions(withoutaccountingfortheCanadianMalarticmine).ItisexpectedthatminingoperationsattheMeliadineprojectandAmaruqdepositatMeadowbankwillalsoprimarilyusedieselpowergeneration.


ThePinosAltosminepurchaseselectricitythatislargelyfossil-fuelgeneratedand,asaresult,itistheCompany'ssecondhighestgreenhousegasproducer(approximately103,000tonnesofgreenhousegasesin2016),whichisapproximately26%oftheCompany'stotaldirectandindirectgreenhousegasemissions(withoutaccountingfortheCanadianMalarticmine).WhiletheevolvingregulatoryrequirementsinrespectofgreenhousegasesandtheadditionalcostsrequiredtocomplyarenotexpectedtohaveamaterialadverseeffectontheCompany'soperations,suchrequirementsmaynotbeadoptedascurrentlyproposed,maybeamendedormayhaveunexpectedeffectsontheCompanyand,asaresult,mayhaveamaterialadverseeffectontheCompany'sfinancialperformanceanditsresultsofoperations.

DuetothenatureoftheCompany'sminingoperations,theCompanymayfaceliability,delaysandincreasedproductioncostsfromenvironmentalandindustrialaccidentsandpollution,andtheCompany'sinsurancecoveragemayproveinadequatetosatisfyfutureclaimsagainsttheCompany.

Thebusinessofgoldminingisgenerallysubjecttorisksandhazards,includingenvironmentalhazards(includinghazardoussubstances,suchascyanide),industrialaccidents,unusualorunexpectedrockformations,changesintheregulatoryenvironment,cave-ins,rockbursts,rockfalls,pitwallfailuresandfloodingandgoldbullionlosses(fromtheftorotherwise).Suchoccurrencescouldresultin,amongotherthings,damageto,ordestructionof,mineralpropertiesorproductionfacilities,personalinjuryordeath,environmentaldamage,delaysinmining,monetarylossesandpossiblelegalliability.Aswell,risksmayarisewithrespecttothemanagementoftailings,wasterock,mineclosureandmanagementofclosedminesites(whethertheCompanyoperatedtheminesiteoracquireditafteroperationswereconductedbyothers).TheCompanycarriesinsurancetoprotectitselfagainstcertainrisksofminingandprocessinginamountsthatitconsiderstobeadequatebutwhichmaynotprovideadequatecoverageincertainunforeseencircumstances.TheCompanymayalsobecomesubjecttoliabilityfor,amongotherthings,pollution,cave-insorotherhazardsagainstwhichitcannotinsureoragainstwhichithaselectednottoinsurebecauseofhighpremiumcostsorotherreasons,ortheCompanymaybecomesubjecttoliabilitieswhichexceedpolicylimits.Inthesecircumstances,theCompanymayincursignificantcoststhatcouldhaveamaterialadverseeffectonitsfinancialperformanceandresultsofoperations.Financialassurancesmayalsoberequiredwithrespecttoclosureandrehabilitationcosts.

TheCompanyissubjecttotheriskoflitigation,thecausesandcostsofwhichcannotbeknown.

TheCompanyissubjecttolitigationarisinginthenormalcourseofbusinessandmaybeinvolvedindisputeswithotherpartiesinthefuturewhichmayresultinlitigation.Thecausesofpotentialfuturelitigationcannotbeknownandmayarisefrom,amongotherthings,businessactivities,environmentallaws,volatilityinstockpriceorfailureorallegedfailuretocomplywithdisclosureobligations.Theresultsoflitigationcannotbepredictedwithcertainty.IftheCompanyisunabletoresolvelitigationfavourably,eitherbyjudicialdeterminationorsettlement,itmayhaveamaterialadverseeffectontheCompany'sfinancialperformanceandresultsofoperations.Forinstance,see"LegalProceedingsandRegulatoryActions–CanadianMalartic"foradiscussionofongoinglitigationinvolvingtheCanadianMalarticmine.

IntheeventofadisputeinvolvingtheforeignoperationsoftheCompany,theCompanymaybesubjecttotheexclusivejurisdictionofforeigncourtsormaynotbesuccessfulinsubjectingforeignpersonstothejurisdictionofcourtsinCanada.TheCompany'sabilitytoenforceitsrightscouldhaveanadverseeffectonitsfuturecashflows,earnings,resultsofoperationsandfinancialcondition.

TitletotheCompany'spropertiesmaybeuncertainandsubjecttorisks.

Theacquisitionoftitletomineralpropertiesisaverydetailedandtime-consumingprocess.Titleto,andtheareaof,mineralconcessionsmaybedisputed.AlthoughtheCompanybelievesithastakenreasonablemeasurestoensurepropertitletoitsproperties,thereisnoguaranteethattitletoanyofitspropertieswillnotbechallengedorimpaired.ThirdpartiesmayhavevalidclaimsonunderlyingportionsoftheCompany'sinterests,includingpriorunregisteredliens,agreements,transfersorclaims,includinglandclaimsbyindigenousgroups,andtitlemaybeaffectedby,amongotherthings,undetecteddefects.Inaddition,althoughtheCompanybelievesthatithassufficientsurfacerightsforitsoperations,theCompanymaybeunabletooperateitspropertiesaspermittedortoenforceitsrightsinrespectofitsproperties.

TheuseofderivativeinstrumentsfortheCompany'sby-productmetalproductionmaypreventgainsfrombeingrealizedfromsubsequentby-productmetalpriceincreases.

WhiletheCompany'sgeneralpolicyisnottosellforwarditsfuturegoldproduction,theCompanyhasused,andmayinthefutureuse,variousby-productmetalderivativestrategies,suchassellingfuturecontractsorpurchasingputoptions.TheCompanycontinuallyevaluatesthepotentialshortandlongtermbenefitsofengaginginsuchderivativestrategiesbaseduponcurrentmarketconditions.Noassurancecanbegiven,however,thattheuseofby-productmetalderivative


strategieswillbenefittheCompanyinthefuture.ThereisapossibilitythattheCompanycouldlockinforwarddeliveriesatpriceslowerthanthemarketpriceatthetimeofdelivery.Inaddition,theCompanycouldfailtoproduceenoughby-productmetalstooffsetitsforwarddeliveryobligations,requiringtheCompanytopurchasethemetalinthespotmarketathigherpricestofulfillitsdeliveryobligationsor,forcashsettledcontracts,makecashpaymentstocounterpartiesinexcessofby-productrevenue.IftheCompanyislockedintoalowerthanmarketpriceforwardcontractorhastobuyadditionalquantitiesathigherprices,itsnetincomecouldbeadverselyaffected.Noneofthecurrentcontractsestablishingtheby-productmetalderivativespositionsqualifyforhedgeaccountingtreatmentunderIFRSandthereforeanyyear-endmark-to-marketadjustmentsarerecognizedinthe"(Gain)lossonderivativefinancialinstruments"lineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.See"RiskProfile–FinancialInstruments"intheAnnualMD&Aforadditionalinformation.

ThetradingpricefortheCompany'ssecuritiesisvolatile.

ThetradingpriceoftheCompany'scommonshareshasbeenandmaycontinuetobesubjecttolargefluctuationswhichmayresultinlossestoinvestors.ThetradingpriceoftheCompany'scommonsharesmayincreaseordecreaseinresponsetoanumberofeventsandfactors,including:

• changesinthemarketpriceofgoldorotherby-productmetalstheCompanysells;

• eventsaffectingeconomiccircumstancesinCanada,theUnitedStatesandelsewhere;

• trendsintheminingindustryandthemarketsinwhichtheCompanyoperates;

• changesinfinancialestimatesandrecommendationsbysecuritiesanalysts;

• acquisitions,divestituresandfinancings;

• quarterlyvariationsinoperatingresults;

• compliancewithnewandexistingregulations,includingwithrespecttowaterandtailingsmanagementandgreenhousegasemissions;

• theoperatingandsharepriceperformanceofothercompaniesthatinvestorsmaydeemcomparable;and

• purchasesorsalesoflargeblocksoftheCompany'scommonsharesorsecuritiesconvertibleintoorexchangeablefortheCompany'scommonshares.

WidepriceswingsarecurrentlycommoninthemarketsonwhichtheCompany'ssecuritiestrade.ThisvolatilitymayadverselyaffectthepricesoftheCompany'scommonsharesregardlessoftheCompany'soperatingperformance.

TheCompanyisdependentoninformationtechnologysystems.

TheCompany'soperationsdepend,inpart,uponinformationtechnologysystems.TheCompany`sinformationtechnologysystemsaresubjecttodisruption,damageorfailurefromanumberofsources,including,butnotlimitedto,computerviruses,securitybreaches,naturaldisasters,powerlossanddefectsindesign.AlthoughtodatetheCompanyhasnotexperiencedanymateriallossesrelatingtoinformationtechnologysystemdisruptions,damageorfailure,therecanbenoassurancethatitwillnotincursuchlossesinthefuture.Anyoftheseandothereventscouldresultininformationtechnologysystemsfailures,operationaldelays,productiondowntimes,destructionorcorruptionofdata,securitybreachesorothermanipulationorimproperuseoftheCompany'ssystemsandnetworks,anyofwhichcouldhaveadverseeffectsontheCompany`sreputation,resultsofoperationsandfinancialperformance.

TheCompanymaynotbeabletocomplywiththerequirementsofSection404oftheSarbanes-OxleyAct.

Section404oftheSarbanes-OxleyActof2002("SOX")requiresanannualassessmentbymanagementoftheeffectivenessoftheCompany'sinternalcontroloverfinancialreporting.Section404ofSOXalsorequiresanannualattestationreportbytheCompany'sindependentauditorsaddressingtheeffectivenessoftheCompany'sinternalcontroloverfinancialreporting.TheCompanyhascompleteditsSection404assessmentandreceivedtheauditors'attestationasofDecember31,2016.

IftheCompanyfailstomaintaintheadequacyofitsinternalcontroloverfinancialreporting,assuchstandardsaremodified,supplementedoramendedfromtimetotime,theCompanymaynotbeabletoconcludethatithaseffectiveinternalcontroloverfinancialreportinginaccordancewithSection404ofSOX.TheCompany'sfailuretosatisfytherequirementsofSection404ofSOXonanongoing,timelybasiscouldresultinthelossofinvestorconfidenceinthereliabilityofitsfinancialstatements,whichinturncouldharmtheCompany'sbusinessandnegativelyimpactthetrading


priceofitscommonsharesormarketvalueofitsothersecurities.Inaddition,anyfailuretoimplementrequiredneworimprovedcontrols,ordifficultiesencounteredintheirimplementation,couldharmtheCompany'soperatingresultsorcauseittofailtomeetitsreportingobligations.FutureacquisitionsofcompaniesmayprovidetheCompanywithchallengesinimplementingtherequiredprocesses,proceduresandcontrolsinitsacquiredoperations.AcquiredcompaniesmaynothavedisclosurecontrolsandproceduresorinternalcontroloverfinancialreportingthatareasthoroughoreffectiveasthoserequiredbysecuritieslawscurrentlyapplicabletotheCompany.

NoevaluationcanprovidecompleteassurancethattheCompany'sinternalcontroloverfinancialreportingwillpreventmisstatementduetoerrororfraudorwilldetectoruncoverallcontrolissuesorinstancesoffraud,ifany.TheeffectivenessoftheCompany'scontrolsandprocedurescouldalsobelimitedbysimpleerrorsorfaultyjudgments.Inaddition,astheCompanycontinuestoexpand,thechallengesinvolvedinmaintainingadequateinternalcontroloverfinancialreportingwillincreaseandwillrequirethattheCompanycontinuetoimproveitsinternalcontroloverfinancialreporting.TheCompanycannotbecertainthatitwillbesuccessfulincontinuingtocomplywithSection404ofSOX.

DIVIDENDS TheCompany'scurrentpolicyistopayquarterlydividendsonitscommonsharesand,onFebruary15,2017,theCompanydeclaredaquarterlydividendof$0.10percommonshare,payableonMarch15,2017.In2016,thedividendpaidwas$0.36percommonshare(quarterlypaymentsof$0.08percommonshareinquartersoneandtwoand$0.10percommonshareinquartersthreeandfour).In2015and2014,thedividendpaidwas$0.32percommonshare(quarterlypaymentsof$0.08percommonshare).AlthoughtheCompanyexpectstocontinuepayingacashdividend,futuredividendswillbeatthediscretionoftheBoardandwillbesubjecttofactorssuchastheCompany'searnings,financialconditionandcapitalrequirements.TheCompany'sbankcreditfacilitycontainsacovenantthatrestrictstheCompany'sabilitytodeclareorpaydividendsifcertaineventsofdefaultunderthebankcreditfacilityhaveoccurredandarecontinuing.

DESCRIPTION OF CAPITAL STRUCTURE TheCompany'sauthorizedcapitalconsistsofanunlimitednumberofsharesofoneclassdesignatedascommonshares.AlloutstandingcommonsharesoftheCompanyarefullypaidandnon-assessable.Theholdersofthecommonsharesareentitledtoonevotepershareatmeetingsofshareholdersandtoreceivedividendsif,asandwhendeclaredbytheBoard.Intheeventofvoluntaryorinvoluntaryliquidation,dissolutionorwinding-upoftheCompany,afterpaymentofalloutstandingdebts,theremainingassetsoftheCompanyavailablefordistributionwouldbedistributedrateablytotheholdersofthecommonshares.HoldersofthecommonsharesoftheCompanyhavenopre-emptive,redemption,exchangeorconversionrights.TheCompanymaynotcreateanyclassorseriesofsharesormakeanymodificationtotheprovisionsattachingtotheCompany'scommonshareswithouttheaffirmativevoteoftwo-thirdsofthevotescastbytheholdersofthecommonshares.

RATINGS TheratingoftheCompany'snotes(the"Notes")issuedundertheNotePurchaseAgreements(asdefinedunder"MaterialContracts–NotePurchaseAgreements")bytheratingagencyDominionBondRatingService("DBRS")asatDecember31,2016isBBB(low)withastableoutlook.

DBRS'slong-termcreditratingsareonaratingscalethatrangesfromAAAtoD,whichrepresentstherangefromhighesttolowestqualityofsecuritiesrated.DBRS'sBBBratingassignedtotheCompany'sNotesisthefourthhighestofthetenratingcategoriesforlong-termdebt.Debtsecuritiesrated"BBB"areofadequatecreditquality,andthecapacityforthepaymentoffinancialobligationsisconsideredacceptable.However,theobligorisfairlysusceptibletoadversechangesinfinancialandeconomicconditions,ortheremaybeotheradverseconditionspresentwhichreducethestrengthoftheobligor.Areferenceto"high"or"low"reflectstherelativestrengthwithintheratingcategory.DBRShasalsoassignedastableoutlooktotherating,whichindicatesthedirectionDBRSconsiderstheratingisheadedshouldpresenttrendscontinue.

TheCompanyunderstandsthattheratingisbasedon,amongotherthings,informationfurnishedtoDBRSbytheCompanyandinformationobtainedbyDBRSfrompubliclyavailablesources.ThecreditratinggiventotheCompany'sNotesbyDBRSisnotarecommendationtobuy,holdorselldebtinstrumentssincesuchratingdoesnotcommentastomarketpriceorsuitabilityforaparticularinvestor.Thereisnoassurancethatanyratingwillremainineffectforanygivenperiodoftimeorthatanyratingwillnotberevisedorwithdrawnentirelybyaratingagencyinthefutureif,initsjudgment,


circumstancessowarrant.Creditratingsareintendedtoprovideinvestorswith:(i)anindependentmeasureofthecreditqualityofanissueofsecurities;(ii)anindicationofthelikelihoodofrepaymentforanissueofsecurities;and(iii)anindicationofthecapacityandwillingnessoftheissuertomeetitsfinancialobligationsinaccordancewiththetermsofthosesecurities.ThecreditratingaccordedtotheNotesmaynotreflectthepotentialimpactofallrisksonthevalueofdebtinstruments,includingrisksrelatedtomarketorotherfactorsdiscussedinthisAIF.IfDBRSlowersthecreditratingontheNotes,particularlyadowngradebelowinvestmentgrade,itcouldadverselyaffecttheCompany'scostoffinancingandaccesstoliquidityandcapital.Seealso"RiskFactors".TheCompanypaysDBRSanannualfeeinconnectionwiththeratingoftheNotesandanadditionalfeeifandwhenadditionalNotesareissued.NootherpaymentshavebeenmadetoDBRSinrespectofotherservicesduringthelasttwoyears.

MARKET FOR SECURITIES Common Shares

TheCompany'scommonsharesarelistedandtradedontheTSXandontheNewYorkStockExchange(the"NYSE")underthesymbol"AEM".OnMarch22,2017,theclosingpriceofthecommonshareswasC$59.12ontheTSXand$44.37ontheNYSE.

ThefollowingtablesetsforththehighandlowsalepricesandtheaveragedailytradingvolumeforcompositetradingoftheCompany'scommonsharesontheTSXandtheNYSEsinceJanuary1,2016.

TSX NYSE

High (C$)

Low (C$)

Average Daily

Volume

High ($)

Low ($)

Average Daily Volume

2016 January 42.67 37.07 1,766,650 30.29 26.10 2,994,987

February 51.50 40.68 1,914,714 37.24 28.95 3,523,566

March 51.27 44.07 1,604,522 39.49 32.87 2,935,672

April 59.37 45.97 1,249,110 47.33 35.09 2,420,956

May 62.56 56.01 1,413,143 48.47 42.71 2,772,742

June 69.81 58.33 1,387,374 53.79 44.51 2,533,994

July 76.35 67.51 1,076,773 58.53 51.03 1,939,081

August 78.35 65.60 943,430 60.10 50.00 1,596,658

September 74.57 65.38 985,527 57.35 50.00 2,013,586

October 71.34 58.12 1,227,329 54.41 43.93 2,030,711

November 71.16 53.20 1,231,504 53.17 39.48 2,304,881

December 60.00 46.91 1,385,264 44.67 35.05 1,982,900

2017 January 62.98 55.63 1,158,896 48.27 41.38 1,804,811

February 67.41 55.32 1,129,025 51.21 41.80 1,707,688

March(toMarch22) 59.96 52.85 1,211,001 44.76 39.30 1,980,015


DIRECTORS AND OFFICERS OF THE COMPANY Directors

ThefollowingisabriefbiographyofeachoftheCompany'sdirectors:

Dr.LeanneM.Baker,ofSebastopol,California,isanindependentdirectorofAgnicoEagle.FromNovember2011untilJune2013,Dr.BakerwasthePresidentandChiefExecutiveOfficerofSutterGoldMiningInc.Previously,Dr.BakerwasemployedbySalomonSmithBarneywhereshewasoneofthetop-rankedminingsectorequityanalystsintheUnitedStates.Dr.BakerisagraduateoftheColoradoSchoolofMines(M.S.andPh.D.inmineraleconomics).Dr.BakerhasbeenadirectorofAgnicoEaglesinceJanuary1,2003,andisalsoadirectorofSutterGoldMiningInc.(aminingexplorationcompanytradedontheTSX-VandtheOTCQX),ReunionGoldCorporation(aminingexplorationcompanytradedontheTSX-V)andMcEwenMiningInc.(agoldandsilverproducingcompanytradedontheNYSEArcaandtheTSX).Area of expertise: CorporateFinanceandMineralEconomics.

SeanBoyd,CPA,CA,ofToronto,Ontario,istheVice-ChairmanandChiefExecutiveOfficerandadirectorofAgnicoEagle.Mr.BoydhasbeenwithAgnicoEaglesince1985.PriortohisappointmentasVice-ChairmanandChiefExecutiveOfficerinApril2015,Mr.BoydservedasVice-Chairman,PresidentandChiefExecutiveOfficerfrom2012to2015,Vice-ChairmanandChiefExecutiveOfficerfrom2005to2012andasPresidentandChiefExecutiveOfficerfrom1998to2005,Vice-PresidentandChiefFinancialOfficerfrom1996to1998,TreasurerandChiefFinancialOfficerfrom1990to1996,SecretaryTreasurerduringaportionof1990andComptrollerfrom1985to1990.PriortojoiningAgnicoEaglein1985,hewasastaffaccountantwithClarksonGordon(Ernst&Young).Mr.BoydisaCharteredAccountantandagraduateoftheUniversityofToronto(B.Comm.).Mr.BoydhasbeenadirectorofAgnicoEaglesinceApril14,1998.Area of expertise: ExecutiveManagementandFinance.

MartineA.Celej,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Ms.CelejiscurrentlyaVice-President,InvestmentAdvisorwithRBCDominionSecuritiesandhasbeenintheinvestmentindustrysince1989.SheisagraduateofVictoriaCollegeattheUniversityofToronto(B.A.(Honours)).Ms.CelejhasbeenadirectorofAgnicoEaglesinceFebruary14,2011.Area of expertise: InvestmentManagement.

RobertJ.Gemmell,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Nowretired,Mr.Gemmellspent25yearsasaninvestmentbankerintheUnitedStatesandinCanada.Mostrecently,hewasPresidentandChiefExecutiveOfficerofCitigroupGlobalMarketsCanadaanditspredecessorcompanies(SalomonBrothersCanadaandSalomonSmithBarneyCanada)from1996to2008.Inaddition,hewasamemberoftheGlobalOperatingCommitteeofCitigroupGlobalMarketsfrom2006to2008.Mr.GemmellisagraduateofCornellUniversity(B.A.),OsgoodeHallLawSchool(LL.B.)andtheSchulichSchoolofBusiness(M.B.A.).Mr.GemmellhasbeenadirectorofAgnicoEaglesinceJanuary1,2011.Area ofexpertise: CorporateFinanceandBusinessStrategy.

MelLeiderman,FCPA,FCA,TEP,ICD.D,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Mr.LeidermanistheseniorpartneroftheTorontoaccountingfirmLiptonLLP,CharteredAccountants.HeisagraduateoftheUniversityofWindsor(B.A.)andisacertifieddirectoroftheInstituteofCorporateDirectors(ICD.D).HehasbeenadirectorofAgnicoEaglesinceJanuary1,2003andisalsoadirectorandachairmanoftheAuditCommitteeofMorguardNorthAmericanResidentialREIT.Area of expertise: AuditandAccounting.

DeborahMcCombe,P.Geo.ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Mrs.McCombeisthePresidentandCEOofRoscoePostleAssociatesInc.,aminingconsultantfirm("RPA").Shehasover30years'ofinternationalexperienceinexplorationprojectmanagement,feasibilitystudies,reserveestimation,duediligencestudiesandvaluationstudies.PriortojoiningRPA,Ms.McCombewasChiefMiningConsultantfortheOntarioSecuritiesCommissionandwasinvolvedinthedevelopmentandimplementationofNI43-101.SheisactivelyinvolvedinindustryassociationsasamemberoftheCommitteeforMineralReservesInternationalReportingStandards–(CIM);PresidentoftheAssociationofProfessionalGeoscientistsofOntario(2010–2011);aDirectoroftheProspectorsandDevelopersAssociationofCanada(1999–2011);aCIMDistinguishedLectureronNI43-101;amemberoftheCIMStandingCommitteeonReserveDefinitions;amemberoftheCSA'sMiningTechnicalAdvisoryandMonitoringCommittee;andaGuestLecturerattheSchulichSchoolofBusiness(M.B.A.inGlobalMineManagement)atYorkUniversity.Ms.McCombeholdsadegreeinGeologyfromWesternUniversity.Ms.McCombehasbeenadirectorofAgnicoEaglesinceFebruary12,2014.Area of expertise: ExecutiveManagementandMining.

JamesD.Nasso,ICD.D,ofToronto,Ontario,isChairmanoftheBoardofDirectorsandanindependentdirectorofAgnicoEagle.Mr.Nassoisnowretired.Mr.NassoisagraduateofSt.FrancisXavierUniversity(B.Comm.)andisacertified


directoroftheInstituteofCorporateDirectors(ICD.D).Mr.NassohasbeenadirectorofAgnicoEaglesinceJune27,1986.Area of expertise:ManagementandBusinessStrategy.

Dr.SeanRiley,ofAntigonish,NovaScotia,isanindependentdirectorofAgnicoEagle.Nowretired,Dr.RileyservedasPresidentofSt.FrancisXavierUniversityfrom1996to2014.Priorto1996,hiscareerwasinfinanceandmanagement,firstincorporatebankingandlaterinmanufacturing.Dr.RileyisagraduateofSt.FrancisXavierUniversity(B.A.(Honours))andofOxfordUniversity(M.Phil,D.Phil,InternationalRelations).Dr.RileyhasbeenadirectorofAgnicoEaglesinceJanuary1,2011.Area of expertise :ManagementandBusinessStrategy.

J.MerfynRoberts,CA,ofLondon,England,isanindependentdirectorofAgnicoEagle.Nowretired,Mr.Robertswasafundmanagerandinvestmentadvisorformorethan25yearsandhasbeencloselyassociatedwiththeminingindustry.From2007untilhisretirementin2011,hewasaseniorfundmanagerwithCQSManagementLtd.inLondon.Mr.RobertsisagraduateofLiverpoolUniversity(B.Sc.,Geology)andOxfordUniversity(M.Sc.,Geochemistry)andisamemberoftheInstituteofCharteredAccountantsinEnglandandWales.Mr.RobertshasbeenadirectorofAgnicoEaglesinceJune17,2008,andisalsoadirectorandamemberoftheAuditCommitteeofNewportExplorationLimitedandadirectorofRugbyMiningInc.Area of expertise: InvestmentManagement.

JamieSokalsky,CPA,CA,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Nowretired,Mr.Sokalskyhasover20years'experienceasaseniorexecutiveintheminingindustry,mostrecentlyasChiefExecutiveOfficerandPresidentofBarrickGoldCorporation("Barrick")fromJune2012toSeptember2014,andasChiefFinancialOfficerofBarrickfrom1999toJune2012andExecutiveVicePresidentofBarrickfromApril2004toJune2012.Priortoenteringtheminingindustry,Mr.Sokalskyservedfor10yearsatGeorgeWestonLimitedandbeganhisprofessionalcareeratErnst&WhinneyCharteredAccountants(KPMG).Mr.SokalskyisgraduateofLakeheadUniversity(B.Comm.(Honours)).Mr.SokalskyhasbeenadirectorofAgnicoEaglesinceJune2,2015,andisalsotheChairmanoftheboardofdirectorsofProbeMetalsInc.andadirectorofPengrowthEnergyCorporationandRoyalGold,Inc.Area of expertise: ExecutiveManagement,FinanceandAccounting.

HowardR.Stockford,P.Eng.,ofToronto,Ontario,isanindependentdirectorofAgnicoEagle.Nowretired,Mr.Stockfordhasover50yearsofexperienceintheminingindustry.Mostrecently,hewasExecutiveVice-PresidentofAurResourcesInc.("Aur")andadirectorofAurfrom1984untilAugust2007,whenitwastakenoverbyTeckComincoLimited.Mr.StockfordhaspreviouslyservedasPresidentoftheCIMandisamemberoftheAssociationofProfessionalEngineersofOntario,theProspectorsandDevelopersAssociationofCanadaandtheSocietyofEconomicGeologists.Mr.StockfordisagraduateoftheRoyalSchoolofMines,ImperialCollege,LondonUniversity,U.K.(B.Sc.,MiningGeology).Mr.StockfordhasbeenadirectorofAgnicoEaglesinceMay6,2005.Area of expertise: ExecutiveManagementandMining.

PerttiVoutilainen,ofEspoo,Finland,isanindependentdirectorofAgnicoEagle.Nowretired,Mr.Voutilainenisaminingindustryveteran.Until2005,hewastheChairmanoftheboardofdirectorsofRiddarhyttanResourcesAB.Previously,Mr.VoutilainenwastheChairmanoftheboardofdirectorsandChiefExecutiveOfficerofKansallisBankingGroupandPresidentafteritsmergerwithUnionBankofFinlanduntilhisretirementin2000.HewasalsoemployedbyOutokumpuCorp.,Finland'slargestminingandmetalscompany,for26years,includingasChiefExecutiveOfficerfor11years.Mr.VoutilainenholdsthehonorarytitleofMiningCounselor(Bergsrad),whichwasawardedtohimbythePresidentoftheRepublicofFinlandin2003.Mr.VoutilainenisagraduateofHelsinkiUniversityofTechnology(M.Sc.),HelsinkiUniversityofBusinessAdministration(M.Sc.)andPennsylvaniaStateUniversity(M.Eng.).HehasbeenadirectorofAgnicoEaglesinceDecember13,2005.Area of expertise: MiningandFinance.

Theby-lawsofAgnicoEagleprovidethatdirectorswillholdofficeforatermexpiringatthenextannualmeetingofshareholdersofAgnicoEagleoruntiltheirsuccessorsareelectedorappointedorthepositionisvacated.TheBoardannuallyappointstheofficersofAgnicoEagle,whoaresubjecttoremovalbyresolutionoftheBoardatanytime,withorwithoutcause(intheabsenceofawrittenagreementtothecontrary).

Committees

ThemembersoftheAuditCommitteeareDr.LeanneM.Baker(Chair),MelLeiderman,Dr.SeanRileyandJamieSokalsky.

ThemembersoftheCompensationCommitteeareRobertJ.Gemmell(Chair),MartineA.Celej,J.MerfynRobertsandHowardR.Stockford.

ThemembersoftheCorporateGovernanceCommitteearePerttiVoutilainen(Chair),JamesD.NassoandJ.MerfynRoberts.


ThemembersoftheHealth,Safety,EnvironmentalandSustainableDevelopmentCommitteeareDeborahMcCombe(Chair),JamesD.NassoandHowardR.Stockford.

Officers

ThefollowingisabriefbiographyofeachoftheCompany'sofficers(forMr.Boyd,see"DirectorsandOfficersoftheCompany–Directors"):

AmmarAl-Joundi,ofToronto,Ontario,isPresidentofAgnicoEagle,apositionhehasheldsinceApril6,2015.FromSeptember2010toJune2012,Mr.Al-JoundiwasSeniorVice-PresidentandChiefFinancialOfficerofAgnicoEagle.PriortoreturningtoAgnicoEaglein2015,Mr.Al-JoundiservedinvariousrolesatBarrick,includingasChiefFinancialOfficerfromJuly2012toFebruary2015,SeniorExecutiveVicePresidentfromJuly2014toFebruary2015andExecutiveVicePresidentfromJuly2012toJuly2014.PriortojoiningAgnicoEaglein2010,Mr.Al-Joundispent11yearsatBarrickservinginvariousseniorfinancialroles,includingSeniorVicePresidentofCapitalAllocationandBusinessStrategy,SeniorVicePresidentofFinance,andExecutiveDirectorandChiefFinancialOfficerofBarrickSouthAmerica.Priortojoiningtheminingindustry,Mr.Al-JoundiservedasVicePresident,StructuredFinanceatCitibank,Canada.Mr.Al-JoundiisagraduateofWesternUniversity(M.B.A.(Honours))andtheUniversityofToronto(BASc(MechanicalEngineering)).

DonaldG.Allan,CPA,CA, ofToronto,Ontario,isSeniorVice-President,CorporateDevelopmentofAgnicoEagle,apositionhehasheldsinceDecember14,2006.Priortothat,Mr.AllanhadbeenVice-President,CorporateDevelopmentsinceMay6,2002.Priortothat,Mr.Allanspent16yearsasaninvestmentbankercoveringtheminingandnaturalresourcessectorswiththefirmsSalomonSmithBarneyandMerrillLynch.Mr.AllanisagraduateoftheAmosTuckSchool,DartmouthCollege(M.B.A.)andtheUniversityofToronto(B.Comm.).Mr.AllanisalsoqualifiedasaCharteredAccountant.

AlainBlackburn,P.Eng.,ofOakville,Ontario,isSeniorVice-President,ExplorationofAgnicoEagle,apositionhehasheldsinceDecember14,2006.Priortothat,Mr.BlackburnhadbeenVice-President,ExplorationsinceOctober1,2002.Priortothat,Mr.BlackburnservedasAgnicoEagle'sManager,CorporateDevelopmentfromJanuary1999andExplorationManagerfromSeptember1996toJanuary1999.Mr.BlackburnjoinedAgnicoEaglein1988asChiefGeologistattheLaRondemine.Mr.BlackburnisagraduateofUniversitéduQuebecdeChicoutimi(P.Eng.)andUniversitéduQuebecenAbitibi-Temiscamingue(M.Sc.).

LouiseGrondin,Eng.P.Eng.,ofToronto,Ontario,isSeniorVice-President,Environment,SustainableDevelopmentandPeopleofAgnicoEagle,apositionshehasheldsinceFebruary2015.Priortothat,Ms.GrondinwasSeniorVice-President,EnvironmentandSustainableDevelopmentandbeforethatshewasVice-President,EnvironmentandSustainableDevelopment.PriortoheremploymentwithAgnicoEagle,Ms.GrondinworkedforBillitonCanadaLtd.asManagerEnvironment,HumanResourcesandSafety.Ms.GrondinisagraduateoftheUniversityofOttawa(B.Sc.)andMcGillUniversity(M.Sc.).Ms.GrondinisamemberoftheProfessionalEngineersofOntarioandoftheOrdredesIngénieursduQuébec.

R.GregoryLaing, ofOakville,Ontario,isGeneralCounsel,SeniorVice-President,LegalandCorporateSecretaryofAgnicoEagle,apositionhehasheldsinceDecember14,2006,priortowhich,Mr.LainghadbeenGeneralCounsel,Vice-President,LegalandCorporateSecretarysinceSeptember19,2005.Priortothat,hewasVicePresident,LegalofGoldcorpInc.fromOctober2003toJune2005andGeneralCounsel,VicePresident,LegalandCorporateSecretaryofTVXGoldInc.fromOctober1995toJanuary2003.HeworkedasacorporatesecuritieslawyerfortwoprominentTorontolawfirmspriortothat.Mr.LaingisagraduateoftheUniversityofWindsor(LL.B.)andQueen'sUniversity(B.A.).

MarcLegault,P.Eng,ofMississauga,Ontario,isSeniorVice-President,Operations–U.S.AandLatinAmericaofAgnicoEagle,apositionhehasheldsinceFebruary2017.Priortothat,hewasSeniorVice-President,ProjectEvaluationssince2012.Mr.LegaulthasbeenwithAgnicoEaglesince1988,whenhewashiredasanexplorationgeologistinVald'Or,Quebec.Sincethen,hehastakenonsuccessivelyincreasingresponsibilitiesintheCompany'sexploration,minegeologyandprojectevaluationactivities.Mr.LegaultisagraduateofCarletonUniversity(M.Sc.inGeology)andQueen'sUniversity(B.Sc.H.inGeologicalEngineering).Mr.LegaultisamemberoftheProfessionalEngineersofOntarioandoftheOrdredesIngénieursduQuébec.

JeanRobitaille,ofOakville,Ontario,isSeniorVice-President,BusinessStrategyandTechnicalServicesofAgnicoEagle,apositionhehasheldsinceFebruary2014.Priortothat,heheldvariouspositionswithAgnicoEaglesince1988,mostrecentlyasSeniorVice-President,TechnicalServicesandProjectDevelopment,Vice-President,Metallurgy&Marketing,GeneralManager,Metallurgy&MarketingandMillSuperintendentandProjectManagerfortheexpansionoftheLaRondemill.PriortojoiningAgnicoEagle,Mr.RobitailleworkedasametallurgistwithTeckMiningGroup.Mr.Robitailleisa


directorofOrlaMiningLtd.(aminingexplorationcompany)tradedontheTSX-VandhasservedontheboardofdirectorsoftheCanadaMiningInnovationCouncilsinceMay2014.Mr.RobitailleisamininggraduateoftheCollegedel'AbitibiTémiscaminguewithaspecialtyinmineralprocessing.

DavidSmith,P.Eng.,ofToronto,Ontario,isSeniorVice-President,FinanceandChiefFinancialOfficerofAgnicoEagle,apositionhehasheldsinceOctober24,2012.Priortothat,hewasSeniorVice-President,StrategicPlanningandInvestorRelations,apositionheheldsinceJanuary1,2011,priortothathewasSeniorVice-President,InvestorRelationsandpriortothathewasVice-President,InvestorRelations.HestartedworkininvestorrelationsatAgnicoEagleinFebruary2005.Priortothat,Mr.Smithwasamininganalystformorethanfiveyearsandheldavarietyofminingengineeringpositions,bothinCanadaandabroad.Mr.SmithisaCharteredDirectorandanalternateDirectoroftheWorldGoldCouncil.HeisagraduateofQueen'sUniversity(B.Sc.)andtheUniversityofArizona(M.Sc.).Mr.SmithisaProfessionalEngineer.

YvonSylvestre,ofMississauga,Ontario,isSeniorVice-President,Operations–Canada&Europe,apositionhehasheldsinceFebruary2014.Priortothat,hewasSeniorVice-President,Operations,Vice-President,Construction,MineGeneralManagerattheGoldexdivisionofAgnicoEagleand,previously,MillSuperintendentattheLaRondedivision.Mr.SylvestreisaMetallurgicalEngineeringTechnologygraduatefromCambrianCollegeinSudbury.Followinggraduation,heservedasMetallurgistandMillSuperintendentattheJouteldivisionofAgnicoEagleandalsoheldthepositionofMillSuperintendentattheTroilusdivisionofInmetMiningCorporation.

Shareholdings of Directors and Officers

AsatMarch22,2017,thedirectorsandofficersofAgnicoEagle,asagroup,beneficiallyowned,orcontrolledordirected,directlyorindirectly,anaggregateof478,872commonsharesorapproximately0.2%ofthe225,959,956issuedandoutstandingcommonshares.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

NodirectororofficeroftheCompanyis,orwithintenyearspriortothedatehereofhasbeen,adirector,chiefexecutiveofficerorchieffinancialofficerofanycompany(includingtheCompany)that:(i)wassubjecttoaceasetradeorder,anordersimilartoaceasetradeorderoranorderthatdeniedtherelevantcompanyaccesstoanyexemptionundersecuritieslegislation,thatwasineffectforaperiodofmorethan30consecutivedays,thatwasissuedwhilethedirectororofficerwasactinginthecapacityasdirector,chiefexecutiveofficerorchieffinancialofficer;or(ii)wassubjecttoaceasetradeorder,anordersimilartoaceasetradeorderoranorderthatdeniedtherelevantcompanyaccesstoanyexemptionundersecuritieslegislation,thatwasineffectforaperiodofmorethan30consecutivedays,thatwasissuedafterthedirectororofficerceasedtobeadirector,chiefexecutiveofficerorchieffinancialofficerandwhichresultedfromaneventthatoccurredwhilethatpersonwasactinginthecapacityasdirector,chiefexecutiveofficerorchieffinancialofficer.

Exceptasdescribedbelow,nodirectororofficeroftheCompany,orashareholderholdingasufficientnumberofsecuritiesoftheCompanytoaffectmateriallythecontroloftheCompany:(i)is,orwithintenyearspriortothedatehereofhasbeen,adirectororofficerofanycompany(includingtheCompany)that,whilethatpersonwasactinginthatcapacity,orwithinayearofthatpersonceasingtoactinthatcapacity,becamebankrupt,madeaproposalunderanylegislationrelatingtobankruptcyorinsolvencyorwassubjecttoorinstitutedanyproceedings,arrangementorcompromisewithcreditorsorhadareceiver,receivermanagerortrusteeappointedtoholditsassets;or(ii)has,withintenyearspriortothedatehereof,becomebankrupt,madeaproposalunderanylegislationrelatingtobankruptcyorinsolvency,orbecomesubjecttoorinstitutedanyproceedings,arrangementorcompromisewithcreditors,orhadareceiver,receivermanagerortrusteeappointedtoholdtheassetsofthedirector,officerorshareholder.

NodirectororofficeroftheCompany,orashareholderholdingasufficientnumberofsecuritiesoftheCompanytoaffectmateriallythecontroloftheCompany,hasbeensubjectto:(i)anypenaltiesorsanctionsimposedbyacourtrelatingtosecuritieslegislationorbyasecuritiesregulatoryauthorityorhasenteredintoasettlementagreementwithasecuritiesregulatoryauthority;or(ii)anyotherpenaltiesorsanctionsimposedbyacourtorregulatorybodythatwouldlikelybeconsideredimportanttoareasonableinvestorinmakinganinvestmentdecision.

Mr.Leiderman,adirectoroftheCompany,wasadirectorofColossusMineralsInc.("Colossus")fromAugust1,2011untilhisresignationonNovember13,2013.OnFebruary7,2014,ColossusfiledaproposaltoitscreditorsundertheBankruptcy and Insolvency Act (Canada).OnFebruary25,2014,theresolutionapprovinganamendedproposalwasapprovedbytherequisitemajorityofColossus'creditors.OnApril30,2014,Colossusannouncedthatithadcompletedtheimplementationofthecourt-approvedproposal.


Conflicts of Interest

TothebestoftheCompany'sknowledge,andotherthanasdisclosedinthisAIF,therearenoknownexistingorpotentialconflictsofinterestbetweentheCompanyandanydirectororofficeroftheCompany,exceptthatcertainofthedirectorsandofficersoftheCompanyserveasdirectorsandofficersofotherpubliccompaniesandthereforeitispossiblethataconflictmayarisebetweentheirdutiesasadirectororofficeroftheCompanyandtheirdutiesasadirectororofficerofsuchothercompany.

AUDIT COMMITTEE TheAuditCommitteehastwoprimaryobjectives.ThefirstistoadvisetheBoardofDirectorsinitsoversightresponsibilitiesregarding:

• thequalityandintegrityoftheCompany'sfinancialreportsandinformation;

• theCompany'scompliancewithlegalandregulatoryrequirements;

• theeffectivenessoftheCompany'sinternalcontrolsforfinance,accounting,internalaudit,ethicsandlegalandregulatorycompliance;

• theperformanceoftheCompany'sauditing,accountingandfinancialreportingfunctions;

• thefairnessofrelatedpartyagreementsandarrangementsbetweentheCompanyandrelatedparties;and

• theindependentauditors'performance,qualificationsandindependence.

ThesecondprimaryobjectiveoftheAuditCommitteeistopreparethereportsrequiredtobeincludedinmanagementinformationcircularsoftheCompanyinaccordancewithapplicablelawsortherulesofapplicablesecuritiesregulatoryauthorities.

TheBoardhasadoptedanAuditCommitteecharter,whichprovidesthateachmemberoftheAuditCommitteemustbeunrelatedtoandindependentfromtheCompanyasdeterminedbytheBoardinaccordancewiththeapplicablerequirementsofthelawsgoverningtheCompany,thestockexchangesonwhichtheCompany'ssecuritiesarelistedandapplicablesecuritiesregulatoryauthorities.Inaddition,eachmembermustbefinanciallyliterateandatleastonememberoftheAuditCommitteemustbeanauditcommitteefinancialexpert,asthetermisdefinedintherulesoftheSEC.TheAuditCommitteecharterisattachedasScheduleAtothisAIF.

Composition of the Audit Committee

TheAuditCommitteeiscomposedentirelyofdirectorswhoareunrelatedtoandindependentfromtheCompany(currently,Dr.Baker(Chair),Mr.Leiderman,Dr.RileyandMr.Sokalsky),eachofwhomisfinanciallyliterate,asthetermisusedintheCSA'sMultilateralInstrument52-110–Audit Committees .Inaddition,Mr.LeidermanandMr.SokalskyareCharteredAccountants;theBoardhasdeterminedthatbothofthemqualifyasanauditcommitteefinancialexperts,asthetermisdefinedintherulesoftheSEC.

Relevant Education and Experience

TheeducationandexperienceofeachmemberoftheAuditCommitteeissetoutunder"DirectorsandOfficersoftheCompany–Directors"above.

Pre-Approval Policies and Procedures

In2003,theAuditCommitteeestablishedapolicytopre-approveallservicesprovidedbytheCompany'sindependentpublicauditor,Ernst&YoungLLP.TheAuditCommitteedetermineswhichnon-auditservicestheindependentauditorsareprohibitedfromprovidingandauthorizespermittednon-auditservicestobeperformedbytheindependentauditorstotheextentthoseservicesarepermittedbySOXandotherapplicablelegislationandregulations.AllfeespaidtoErnst&YoungLLPin2016werepre-approvedbytheAuditCommittee.


External Auditor Service Fees

Ernst&YoungLLPhasservedastheCompany'sindependentpublicauditorforeachofthefiscalyearsendedDecember31,2016and2015.FeespaidtoErnst&YoungLLPin2016and2015aresetoutbelow.


2016 2015 (C$ thousands) Auditfees 2,461 2,305

Audit-relatedfees(1) 118 222

Taxfees(2) 851 308

Allotherfees(3) 144 214

Total (4) 3,574 3,049

Notes:

(1) Audit-relatedfeesconsistoffeespaidforassuranceandrelatedservicesperformedbytheauditorsthatarereasonablyrelatedtotheperformanceoftheauditoftheCompany'sfinancialstatements.Thisincludesconsultationwithrespecttofinancialreporting,accountingstandardsandcompliancewithSection404ofSOX.

(2) Taxfeeswerepaidforprofessionalservicesrelatingtotaxcompliance,taxadviceandtaxplanning.Theseservicesincludedthereviewoftaxreturnsandtaxplanningandadvisoryservicesinconnectionwithinternationalanddomestictaxationissues.

(3) AllotherfeeswerepaidforservicesotherthantheservicesdescribedaboveandincludefeesforprofessionalservicesrenderedbytheauditorsinconnectionwiththetranslationofsecuritiesregulatoryfilingsrequiredtocomplywithsecuritieslawsincertainCanadianjurisdictions.

(4) Nootherfeeswerepaidtoauditorsintheprevioustwoyears.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS Goldex

OnMarch8,2012andApril10,2012,aNoticeofActionandStatementofClaim(collectively,the"OntarioClaim")wereissuedbyWilliamLeslie,AFALivforsakringsaktiebolagandcertainotherentitiesagainsttheCompanyandcertainofitscurrentandformerofficersanddirectors.TheplaintiffsallegedthattheCompany'spublicdisclosureconcerningwaterflowissuesattheGoldexminewasmisleading.TheOntarioClaimwasissuedbytheplaintiffsonbehalfofallpersonsandentitieswhoacquiredsecuritiesoftheCompanyduringtheperiodMarch26,2010toOctober19,2011,excludingpersonsresidentordomiciledintheProvinceofQuebecatthetimetheypurchasedoracquiredsuchsecurities.Theplaintiffssought,amongotherthings,damagesofC$250million.

OnMarch28,2012,theCompanyandcertainofitscurrentandformerofficers,someofwhomalsoareorweredirectorsoftheCompany,werenamedasrespondentsinaMotionforLeavetoInstituteaClassActionandfortheAppointmentofaRepresentativePlaintiff(the"QuebecMotion").Theactionwasonbehalfofallpersonsandentitieswithfewerthan50employeesresidentinQuebecwhoacquiredsecuritiesoftheCompanybetweenMarch26,2010andOctober19,2011.TheproposedclassactionwasfordamagesofC$100millionarisingasaresultofallegedlymisleadingdisclosurebytheCompanyconcerningitsoperationsattheGoldexmine.

Followingmediation,theproceedingsweresettledforC$17.0millionwithoutanyadmissionofliabilitypursuanttoasettlementapprovedbytheOntarioandQuebeccourtsinFebruary2016.TheamountofthesettlementhasbeencoveredbytheinsurerstotheCompany.

CanadianMalartic

Class Action

OnAugust2,2016,thePartnershipwasservedwithaclassactionlawsuitwithrespecttoallegationsinvolvingtheCanadianMalarticmine.ThelawsuitwasfiledbyLouisTrottierwiththeSuperiorCourtofQuebec.Thecomplaintisinrespectof"neighbourhoodannoyances"arisingfromdust,noise,vibrationsandblastsatthemine.TheplaintiffsareseekingdamagesinanunspecifiedamountaswellaspunitivedamagesintheamountofC$20million.Proceedingsfor


thecertificationoftheclassarescheduledforApril11and12,2017.TheCompanyandthePartnershipwilltakeallnecessarystepstodefendthemselvesagainstthislawsuit.

ForadescriptionofcertaincollaborativeinitiativesbetweenthePartnershipandthecommunityofMalartic,see"OperationsandProduction–NorthernBusiness–CanadianMalarticMine–MiningandMillingFacilities–Environmental,PermittingandSocialMatters"inthisAIF.

Injunction

OnAugust15,2016,thePartnershipreceivednoticeofanapplicationforinjunctionrelatingtotheCanadianMalarticmine,whichhadbeenfiledbyDaveLemirewiththeSuperiorCourtofQuebecundertheEnvironment Quality Act (Quebec).AhearingrelatedtoaninterlocutoryinjunctionwascompletedonMarch17,2017andadecisionoftheSuperiorCourtofQuebecispending.TherequestforinjunctionaimstorestricttheCanadianMalarticmine'sminingoperationstosoundlevelsandminingvolumesbelowthelimitstowhichitissubject.TheCompanyandthePartnershiphavereviewedtheinjunctionrequest,considertherequestwithoutmeritandwilltakeallreasonablestepstodefendagainstthisinjunction.Whileatthistimethepotentialimpactsoftheinjunctioncannotbedefinitivelydetermined,theCompanyexpectsthatiftheinjunctionweretobegranted,therewouldbeanegativeimpactontheoperationsoftheCanadianMalarticmine,whichcouldincludeareductioninproductionandshiftreductionsresultinginthelossofjobs.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS OtherthanasdescribedinthisAIF,sinceJanuary1,2014,nodirector,officeror10%shareholderoftheCompanyoranyassociateoraffiliateofanysuchpersonorshareholder,hasorhadanymaterialinterest,directorindirect,inanytransactionthathasmateriallyaffectedorwillmateriallyaffecttheCompanyoranyofitssubsidiaries.

TRANSFER AGENT AND REGISTRAR TheregistrarandtransferagentfortheCompany'scommonsharesisComputershareTrustCompanyofCanada,Toronto,Ontario.

MATERIAL CONTRACTS TheCompanybelievesthecontractsdescribedbelow(otherthanthe2015NotePurchaseAgreementandtheTDLetterofCreditFacility,bothasdefinedbelow)constitutetheonlymaterialcontractstowhichitisaparty.

Credit Facility

OnAugust4,2011,theCompanyamendedandrestateditscreditfacilitywithagroupoffinancialinstitutionsthatprovidesa$1.2billionunsecuredrevolvingbankcreditfacility(the"CreditFacility").TheCreditFacilitywassubsequentlyamendedonJuly20,2012,September8,2014,September30,2015,June29,2016andOctober26,2016.TheCreditFacilitymaturesandallindebtednessthereunderisdueandpayableonJune22,2021.TheCompany,withtheconsentoflendersrepresentingatleast662/3%oftheaggregatecommitmentsundertheCreditFacility,mayextendthetermoftheCreditFacilityforadditionalone-yearterms.TheCreditFacilityisavailableinmultiplecurrenciesthroughprimerateandbaserateadvances,pricedattheapplicablerateplusamarginthatrangesfrom0.45%to1.75%,dependingontheCompany'screditrating,andthroughLIBORadvances,bankers'acceptancesandlettersofcredit,pricedattheapplicablerateplusamarginthatrangesfrom1.45%to2.75%dependingontheCompany'screditrating.ThelendersundertheCreditFacilityareeachpaidastandbyfeeataratethatrangesfrom0.29%to0.55%oftheundrawnportionofthefacility,dependingontheCompany'screditrating.TheCreditFacilityprovidesforanuncommittedaccordionfeaturewhichpermitstheCompanytorequestanincreaseintheprincipalamountofthefacilitybyupto$300million.NoincreasetotheprincipalamountofthefacilitywilloccurpursuanttotheaccordionfeatureunlessoneormorelendersagreetoincreasetheircommitmentsoranewlenderagreestocommitmentsundertheCreditFacility.PaymentandperformanceoftheCompany'sobligationsundertheCreditFacilityareguaranteedbyeachofitsmaterialsubsidiariesandcertainofitsothersubsidiaries(the"Guarantors"and,togetherwiththeCompany,eachan"Obligor").

TheCreditFacilitycontainscovenantsthatlimit,amongotherthings,theabilityofanObligorto:

• incuradditionalindebtedness;


• payordeclaredividendsormakeotherrestricteddistributionsorpaymentsinrespectoftheCompany'sequitysecuritiesifaneventofdefaulthasoccurredandiscontinuing;

• makesalesorotherdispositionsofmaterialassets;

• createliensonitsexistingorfutureassets,otherthanpermittedliens;

• enterintotransactionswithaffiliatesotherthantheObligors,exceptonacommerciallyreasonablebasisasifitweredealingwithsuchpersonatarm'slength;

• makeanyinvestmentorloanotherthan:investmentsinorloanstobusinessesrelatedtominingorabusinessancillaryorcomplementarytomining;investmentsincashequivalents;orcertaininter-companyinvestmentsorloans;

• enterintoormaintaincertainderivativeinstruments;and

• amalgamateorotherwisetransferitsassets.

TheCompanyisalsorequiredtomaintainatotalnetdebttoEBITDAratiobelowaspecifiedmaximumvalue.EventsofdefaultundertheCreditFacilityinclude,amongotherthings:

• thefailuretopayprincipalwhendueandpayableorinterest,feesorotheramountspayablewithinfivebusinessdaysofsuchamountsbecomingdueandpayable;

• thebreachbytheCompanyofanyfinancialcovenant;

• thebreachbyanyObligorofanyofitsobligationsorundertakingsundertheCreditFacilityorrelatedagreementsordocumentsthatisnotcuredwithin30daysafterwrittennoticeofthebreachhasbeengiventotheCompany;

• adefaultunderanyotherindebtednessoftheObligorsiftheeffectofsuchdefaultistoaccelerate,ortopermittheaccelerationof,theduedateofsuchindebtednessinanaggregateamountof$75millionormore;

• achangeofcontroloftheCompanywhichisdefinedtooccurupon(a)theacquisition,directlyorindirectly,byanymeanswhatsoever,byanyperson,orgroupofpersonsactingjointlyorinconcert,(collectively,an"offeror")ofbeneficialownershipof,orthepowertoexercisecontrolordirectionover,orsecuritiesconvertibleorexchangeableinto,anysecuritiesoftheCompanycarryinginaggregate(assumingtheexerciseofallsuchconversionorexchangerightsinfavouroftheofferor)morethan50%oftheaggregatevotesrepresentedbythevotingstockthenissuedandoutstandingorotherwiseentitlingtheofferortoelectamajorityoftheboardofdirectorsoftheCompany,or(b)thereplacementbywayofelectionorappointmentatanytimeofone-halformoreofthetotalnumberofthethenincumbentmembersoftheboardofdirectorsoftheCompany,ortheelectionorappointmentofnewdirectorscomprisingone-halformoreofthetotalnumberofmembersoftheboardofdirectorsinofficeimmediatelyfollowingsuchelectionorappointment;unless,inanysuchcase,thenominationofsuchdirectorsforelectionortheirappointmentisapprovedbytheboardofdirectorsoftheCompanyinofficeimmediatelyprecedingsuchnominationorappointmentincircumstanceswheresuchnominationorappointmentismadeotherthanasaresultofadissidentpublicproxysolicitation,whetheractualorthreatened(a"ChangeofControl");and

• variouseventsrelatingtothebankruptcyorinsolvencyorwinding-up,liquidationordissolutionorcessationofbusinessofanyObligor.

AsatMarch22,2017,therewasapproximately$0.8millionintheaggregatedrawnundertheCreditFacility(includingoutstandinglettersofcredit).

Letter of Credit Facilities

BNS Letter of Credit Facility

OnJune26,2012,theCompanyenteredintoaletterofcreditfacilitywithTheBankofNovaScotia,aslender,providingforaC$150millionuncommittedletterofcreditfacility(the"BNSLetterofCreditFacility").ThroughaseriesofamendmentstotheBNSLetterofCreditFacilityfromNovember5,2013toSeptember27,2016,theCompanyandthelenderincreasedthemaximumaggregateamountthatmaybeoutstandingundertheBNSLetterofCreditFacilitytoC$350million.

UnderthetermsoftheBNSLetterofCreditFacility,theCompanymayrequesttobeissuedoneormorelettersofcreditinamaximumaggregateamountoutstandingatanytimenotexceedingC$350million.TheBNSLetterofCreditFacilitymaybeusedbytheCompanytosupport(a)reclamationobligationsoftheCompanyoritssubsidiariesor(b)non-financialorperformanceobligationsoftheCompanyoritssubsidiariesthatarenotdirectlyrelatedtoreclamationobligations.Ifthe


CompanyfailstopayanyamountofareimbursementobligationundertheBNSLetterofCreditFacility,includinganyinterestthereon,onthedatesuchamountisdue,theoverdueamountwillbearinterestatequalto2%greaterthantheprimerate(ascalculatedundertheBNSLetterofCreditFacility).PaymentandperformanceoftheCompany'sobligationsundertheBNSLetterofCreditFacilityareguaranteedbytheGuarantors.

EventsofdefaultundertheBNSLetterofCreditFacilityinclude,amongotherthings:

• thefailuretopayanyamountdrawnundertheBNSLetterofCreditFacilitywithinthreebusinessdaysofwhennotifiedordemandedbythelender;

• thebreachbyanyObligorofanyobligationorundertakingundertheLetterofCreditFacilityorguaranteeprovidedpursuanttotheBNSLetterofCreditFacilitythathasnotbeenremediedwithin30daysfollowingwrittennoticeofthebreachbeinggivenbythelendertotheCompany;

• adefaultunderanyotherindebtednessoftheObligorsiftheeffectofsuchdefaultistoaccelerate,ortopermittheaccelerationof,theduedateofsuchindebtednessinanaggregateamountof$50millionormore;and

• aChangeofControl.

TheBNSLetterofCreditFacilityprovidesthatuponaneventofdefault,TheBankofNovaScotiamaydeclareimmediatelydueandpayableallamountsdrawnundertheBNSLetterofCreditFacility.

AsatMarch22,2017,therewasapproximatelyC$212millionintheaggregatedrawnundertheBNSLetterofCreditFacility.

TD Letter of Credit Facility

OnSeptember23,2015,theCompanyenteredintoastandbyletterofcreditfacilitywithTheToronto-DominionBank,aslender,providingforaC$150millionuncommittedletterofcreditfacility(asamended,the"TDLetterofCreditFacility").

UnderthetermsoftheTDLetterofCreditFacility,theCompanymayrequesttobeissuedoneormorelettersofcreditinamaximumaggregateamountoutstandingatanytimenotexceedingC$150million.TheTDLetterofCreditFacilitymaybeusedbytheCompanytosupport(a)thereclamationobligationsoftheCompany,itssubsidiariesoranyentityinwhichtheCompanyhasadirectorindirectinterestor(b)theperformanceobligations(otherthanwithrespecttoindebtednessforborrowedmoney)oftheCompany,itssubsidiariesoranyentityinwhichtheCompanyhasadirectorindirectinterestthatarenotdirectlyrelatedtoreclamationobligations.

PaymentandperformanceoftheCompany'sobligationsundertheTDLetterofCreditFacilityaresupportedbyanaccountperformancesecurityguaranteeissuedbyExportDevelopmentCanada("EDC")infavourofthelender.EDCissuedtheguaranteeinconnectionwithadeclarationandindemnitydatedSeptember23,2015betweenEDCandtheObligors(assupplemented,the"EDCIndemnity").PursuanttotheEDCIndemnity,eachoftheObligorshasagreedtoindemnifyEDCagainstallclaimsanddemandsmadeinrespectofanyindemnitybondingproductissuedbyEDCpursuanttotheEDCIndemnity.

AsatMarch22,2017,therewasapproximatelyC$70millionintheaggregatedrawnundertheTDLetterofCreditFacility.

Note Purchase Agreements

OnApril7,2010,theCompanyenteredintoanotepurchaseagreementwithcertaininstitutionalinvestors,providingfortheissuanceofnotesconsistingof$115million6.13%SeriesAseniornotesdue2017,$360million6.67%SeriesBseniornotesdue2020and$125million6.77%SeriesCseniornotesdue2022(the"2010NotePurchaseAgreement").OnJuly24,2012,theCompanyenteredintoanothernotepurchaseagreementwithcertaininstitutionalinvestors,providingfortheissuanceofnotesconsistingof$100million4.87%SeriesAseniornotesdue2022and$100million5.02%SeriesBseniornotesdue2024(the"2012NotePurchaseAgreement").OnSeptember30,2015,theCompanyenteredintothe2015NotePurchaseAgreement,providingfortheissuanceof$50million4.15%seniornotesdue2025(the"2015NotePurchaseAgreement").OnJune30,2016,theCompanyenteredintoanothernotepurchaseagreementwithcertaininstitutionalinvestors,providingfortheissuanceofnotesconsistingof$100million4.54%SeriesAseniornotesdue2023,$200million4.84%SeriesBseniornotesdue2026and$50million4.94%SeriesCseniornotesdue2028(togetherwiththe2010NotePurchaseAgreement,the2012NotePurchaseAgreementandthe2015NotePurchaseAgreement,the"NotePurchaseAgreements").

PaymentandperformanceoftheCompany'sobligationsundertheNotePurchaseAgreements,thenotesissuedpursuanttheretoandtheobligationsoftheGuarantorsundertheguaranteesareguaranteedbytheGuarantors.


TheNotePurchaseAgreementscontainrestrictivecovenantsthatlimit,amongotherthings,theabilityofanObligorto:

• enterintotransactionswithaffiliatesotherthantheObligors,exceptonacommerciallyreasonablebasisupontermsnolessfavourabletotheObligorthanwouldbeobtainableinacomparablearm'slengthtransaction;

• amalgamateorotherwisetransferitsassets;

• carryonbusinessotherthanthoserelatedtominingorabusinessancillaryorcomplementarytomining;

• engageinanydealingsortransactionswithanypersonorentityidentifiedundercertainanti-terrorismregulations;

• createliensonitsexistingorfutureassets,otherthanpermittedliens;

• incursubsidiaryindebtednesswheretheObligorisasubsidiaryoftheCompany;and

• makesalesorotherdispositionsofmaterialassets.

TheCompanyisalsorequiredtomaintainthesametotalnetdebttoEBITDAratioundertheNotePurchaseAgreementsasundertheCreditFacilityandtomaintainaminimumtangiblenetworth.EventsofdefaultundertheNotePurchaseAgreementsinclude,amongotherthings:

• thefailuretopayprincipalormakewholeamountswhendueandpayableorinterest,feesorotheramountspayablewithinfivebusinessdaysofsuchamountsbecomingdueandpayable;

• thebreachbyanyObligorofanyothertermorcovenantthatisnotcuredwithin30businessdaysaftertheearlierofwrittennoticeofthebreachhavingbeengiventotheCompanyoractualknowledgeofthebreachisobtained;

• thefindingthatanyrepresentationorwarrantymadebyanObligorwasfalseorincorrectinanymaterialrespectonthedateasofwhichitwasmade;

• adefaultunderanyotherindebtednessoftheObligorsiftheeffectofsuchdefaultistoaccelerate,ortopermittheaccelerationof,theduedateofsuchindebtednessinanaggregateamountof$50millionormore;and

• variouseventsrelatingtothebankruptcyorinsolvencyorwinding-up,liquidationordissolutionorcessationofbusinessofanyObligor.

TheNotePurchaseAgreementsprovidethat,uponcertaineventsofdefault,thenotesautomaticallybecomedueandpayablewithoutanyfurtheraction.Inaddition,theNotePurchaseAgreementscontaina"MostFavoredLender"clausewhichactstoincorporateintotheNotePurchaseAgreementsanygraceperiodsuponaneventofdefaultthatareshorterintheCreditFacilitythanintheNotePurchaseAgreements.

INTERESTS OF EXPERTS Ernst&YoungLLP,theauditorsoftheCompany,hasadvisedtheCompanythatitisindependentoftheCompanyinaccordancewiththeRulesofProfessionalConductoftheInstituteofCharteredAccountantsofOntarioandhascompliedwiththeSEC'srulesonauditorindependence.

NoneofAlainThibault,Eng.,AlexandreProulx,Eng.,CamilPrince,Eng.,CarlPednault,Eng.,CarolPlummer,Eng.,ChristianProvencher,P.Eng.,ChristianRoy,Eng.,DanielDoucet,Eng.,DanyLaflamme,Eng.,DenisCaron,Eng.,DominiqueGirard,Eng.,DonaldGervais,P.Geo.,DyaneDuquette,P.Geo.,FrancisBrunet,P.Eng.,FrançoisPetrucci,Eng.,FrançoisRobichaud,Eng.,GuyGosselin,Eng.,JeanFrançoisLagueux,Eng.,JulieLarouche,P.Geo.,LarryConnell,P.Eng.,LouiseGrondin,P.Eng.,MarcRuel,P.Geo.,MichelJulien,P.Eng.,PathiesNawejMuteb,Eng.,PaulCousin,P.Eng.,PierreMatte,Eng.,RichardGenest,P.Geo.,Eng.,SylvainBoily,Eng.,SylvieLampron,P.Eng.orTimHaldane,P.Eng.(each,a"QualifiedPerson"),eachofwhomhaspreparedorcertifiedareportunderNI43-101orapprovedscientificandtechnicalinformationreferencedinafilingmadebytheCompanyunderNationalInstrument51-102–Continuous Disclosure Obligations duringorrelatingtotheCompany'smostrecentlycompletedfinancialyear,hasreceivedadirectorindirectinterestinthepropertyoftheCompanyorofanyassociateoraffiliateoftheCompany.Asatthedatehereof,eachoftheQualifiedPersonsbeneficiallyowns,directlyorindirectly,lessthanonepercentofanyoutstandingsecuritiesoftheCompanyoranyassociateoraffiliateoftheCompany.EachoftheQualifiedPersonsis,orwasatthetimesuchpersonpreparedorcertifiedtherelevantreportunderNI43-101orapprovedtherelevantscientificandtechnicalinformation,anofficeroremployeeoftheCompanyand/oroneormoreofitsassociatesoraffiliates.


ADDITIONAL INFORMATION AdditionalinformationrelatingtotheCompanycanbefoundonSEDARatwww.sedar.com ,ontheSEC'swebsiteatwww.sec.gov andontheCompany'swebsiteatwww.agnicoeagle.com .Additionalinformation,includingdirectors'andofficers'remunerationandindebtedness,principalholdersoftheCompany'ssecuritiesandsecuritiesauthorizedforissuanceunderequitycompensationplans,iscontainedintheCompany'smanagementinformationcirculardatedMarch13,2017relatingtotheannualandspecialmeetingofshareholdersoftheCompanyscheduledforApril28,2017.AdditionalfinancialinformationisprovidedintheAnnualFinancialStatementsandAnnualMD&A.


SCHEDULE "A" AUDIT COMMITTEE CHARTER OF THE COMPANY

ThisChartershallgoverntheactivitiesoftheauditcommittee(the"AuditCommittee")oftheboardofdirectors(the"BoardofDirectors")ofAgnicoEagleMinesLimited(the"Corporation").

I. PURPOSE OF THE AUDIT COMMITTEE

TheAuditCommitteeshall:(a)assisttheBoardofDirectorsinitsoversightresponsibilitieswithrespectto:(i)theintegrityoftheCorporation'sandit'ssubsidiaries'financialstatements,(ii)theCorporation'scompliancewithlegalandregulatoryrequirements,(iii)theexternalauditor'squalificationsandindependence,and(iv)theperformanceoftheCorporation'sinternalandexternalauditfunctions;and(b)prepareanyreportoftheAuditCommitteerequiredtobeincludedintheCorporation'sannualreportorproxymaterial.TheheadoftheCorporation'sinternalauditfunctionandtheexternalauditorsshallhavedirectandreadyaccesstothechairoftheAuditCommittee(the"Chair").

TheAuditCommitteeshallhavetheauthoritytodelegatetooneormoreofitsmembers,responsibilityfordevelopingrecommendationsforconsiderationbytheAuditCommitteewithrespecttoanyofthemattersreferredtointhisCharter.

II. COMPOSITION

TheAuditCommitteeshallbecomprisedofaminimumofthreedirectors.NomemberoftheAuditCommitteeshallbeanofficeroremployeeoftheCorporationoranyofitsaffiliatesforthepurposesoftheapplicablecorporatestatute.EachmemberoftheAuditCommitteeshallbeanunrelatedandindependentdirectorasdeterminedbytheBoardofDirectorsinaccordancewiththeapplicablerequirementsofthelawsgoverningtheCorporation,theapplicablestockexchangesonwhichtheCorporation'ssecuritiesarelistedandapplicablesecuritiesregulatoryauthorities.(SeeScheduleAforrequirements.)

EachmemberoftheAuditCommitteeshallbefinanciallyliterate.UnlesstheAuditCommitteeshallotherwisedetermine,amemberoftheAuditCommitteeshallbeconsideredtobefinanciallyliterateifheorshehastheabilitytoreadandunderstandasetoffinancialstatementsthatpresentabreadthandlevelofcomplexityofaccountingissuesthataregenerallycomparabletothebreadthandcomplexityoftheissuesthatcanreasonablybeexpectedtoberaisedbytheCorporation'sfinancialstatements.

AtleastonememberoftheAuditCommitteeshallbeafinancialexpert.(SeeScheduleBfordefinition.)

ThemembersoftheAuditCommitteeshallbeappointedbytheBoardofDirectorsannuallyatthefirstmeetingoftheBoardofDirectorsafterameetingoftheshareholdersatwhichdirectorsareelectedandshallserveuntil:thenextannualmeetingoftheshareholders;theyresign;theirsuccessorsaredulyappointed;orsuchmemberisremovedfromtheAuditCommitteebytheBoardofDirectors.TheBoardofDirectorsshalldesignateonememberoftheAuditCommitteeastheChairor,ifitfailstodoso,themembersoftheAuditCommitteeshallappointtheChairfromamongitsmembers.

NomemberoftheAuditCommitteemayearnfeesfromtheCorporationoranyofitssubsidiariesotherthandirectorsfees(whichfeesmayincludecash,shares,restrictedshareunitsand/orotherin-kindconsiderationordinarilyavailabletodirectors,aswellasalloftheregularbenefitsthatotherdirectorsreceive).Forgreatercertainty,nomemberoftheAuditCommitteeshallacceptanyconsulting,advisoryorothercompensatoryfeefromtheCorporation.

III. MEETINGS

TheAuditCommitteeshallmeetatleastquarterlyormorefrequentlyasrequired.

AsapartofeachmeetingoftheAuditCommitteeatwhichtheAuditCommitteerecommendsthattheBoardofDirectorsapprovetheannualauditedfinancialstatementsoratwhichtheAuditCommitteereviewsthequarterlyfinancialstatements,theAuditCommitteeshallmeetinaseparatesessionwiththeexternalauditorand,ifdesired,withmanagementand/ortheinternalauditor.Inaddition,theAuditCommitteeortheChairshallmeetwithmanagementquarterlytoreviewtheCorporation'sfinancialstatementsasdescribedinSectionIV.5belowandtheAuditCommitteeoradesignatedmemberoftheAuditCommitteeshallmeetwiththeexternalauditorstoreviewtheCorporation'sfinancialstatementsonaquarterlyorotherregularbasisastheAuditCommitteemaydeemappropriate.

TheAuditCommitteeshallseektoactonthebasisofconsensus,butanaffirmativevoteofamajorityofmembersoftheAuditCommitteeparticipatinginanymeetingoftheAuditCommitteeshallbesufficientfortheadoptionofanyresolution.

AGNICO EAGLE A-1 ANNUAL INFORMATION FORM

IV. RESPONSIBILITIES AND DUTIES

TheAuditCommittee'sprimaryresponsibilitiesareto:

General

1. reviewandassesstheadequacyofthisCharteratleastannuallyand,wherenecessaryordesirable,recommendchangestotheBoardofDirectors;

2. reporttotheBoardofDirectorsregularlyatsuchtimesastheChairmaydeterminetobeappropriatebutnotlessfrequentlythanfourtimesperyear;

3. followtheprocessestablishedforallcommitteesoftheBoardofDirectorsforassessingtheAuditCommittee'sperformance;

Documents/ReportsReview

4. reviewtheCorporation'sfinancialstatementsandrelatedmanagement'sdiscussionandanalysis,AnnualInformationForm("AIF")andrelatedForm40-F,AnnualReportandanyotherannualreportsorotherfinancialinformationtobesubmittedtoanygovernmentalbodyorthepublic,includinganycertification,report,opinionorreviewrenderedbytheexternalauditorsbeforetheyareapprovedbytheBoardofDirectorsandpubliclydisclosed;

5. reviewwiththeCorporation'smanagementandtheexternalauditors,theCorporation'squarterlyfinancialstatementsandrelatedmanagement'sdiscussionandanalysis,beforetheyarereleased;

6. ensurethatadequateproceduresareinplaceforthereviewoftheCorporation'sdisclosureoffinancialinformationextractedorderivedfromtheCorporation'sfinancialstatementsotherthanthedisclosurereferredtointhetwoimmediatelyprecedingparagraphsandperiodicallyassesstheadequacyofsuchprocedures;

7. reviewtheeffectsofregulatoryandaccountinginitiatives,aswellasoff-balancesheetstructures,onthefinancialstatementsoftheCorporation;

8. reviewwiththeCorporation'smanagementanypressreleaseoftheCorporationwhichcontainsfinancialinformation(payingparticularattentiontotheuseofany"proforma"or"adjusted"non-GAAPinformation);

9. reviewandassess,onaquarterlybasis,management'sriskassessmentandriskmanagementstrategiesincludinghedgingandderivativestrategies;

ExternalAuditors

10. recommendexternalauditorsnominationstotheBoardofDirectorstobeputbeforetheshareholdersforappointmentand,asnecessary,theremovalofanyexternalauditorinofficefromtimetotime;

11. approvethefeesandothercompensationtobepaidtotheexternalauditors;

12. pre-approveallsignificantnon-auditengagementstobeprovidedtotheCorporationwiththeexternalauditors;

13. requiretheexternalauditorstosubmittotheAuditCommittee,onaregularbasis(atleastannually),aformalwrittenstatementdelineatingallrelationshipsbetweentheexternalauditorsandtheCorporationanddiscusswiththeexternalauditorsanyrelationshipsthatmightaffecttheexternalauditors'objectivityandindependence;

14. recommendtotheBoardofDirectorsanyactionrequiredtoensuretheindependenceoftheexternalauditors;

15. advisetheexternalauditorsoftheirultimateaccountabilitytotheBoardofDirectorsandtheAuditCommittee;

16. overseetheworkoftheexternalauditorsengagedforthepurposeofpreparinganauditreportorperformingotheraudit,reviewandattestationservicesfortheCorporation;

17. evaluatethequalifications,performanceandindependenceoftheexternalauditorswhicharetoreportdirectlytotheAuditCommittee,including(i)reviewingandevaluatingtheleadpartnerontheexternalauditors'engagementwiththeCorporation,(ii)consideringwhethertheexternalauditors'qualitycontrolsareadequateandtheprovisionofpermittednon-auditservicesiscompatiblewithmaintainingtheexternalauditors'independence,(iii)determinetherotationoftheleadexternalauditpartnerandtheexternalauditfirm,and

A-2 AGNICO EAGLE ANNUAL INFORMATION FORM

(iv)takeintoaccounttheopinionsofmanagementandtheinternalauditfunctioninassessingtheexternalauditors'qualifications,independenceandperformance;

18. presenttheAuditCommittee'sconclusionswithrespecttoitsevaluationofexternalauditorstotheBoardofDirectorsandtakesuchadditionalactiontosatisfyitselfofthequalifications,performanceandindependenceofexternalauditorsandmakefurtherrecommendationstotheBoardofDirectorsasitconsidersnecessary;

19. obtainandreviewareportfromtheexternalauditorsatleastannuallyregarding:theexternalauditors'internalquality-controlprocedures;materialissuesraisedbythemostrecentinternalquality-controlreview,orpeerreview,ofthefirm,orbyanyinquiryorinvestigationbygovernmentalorprofessionalauthoritieswithintheprecedingfiveyearsrespectingoneormoreexternalauditscarriedoutbythefirm;anystepstakentodealwithanysuchissues;andallrelationshipsbetweentheexternalauditorsandtheCorporation;

20. establishpoliciesfortheCorporation'shiringofemployeesorformeremployeesoftheexternalauditors;

InternalAuditor

21. receiveregularquarterlyreportsfromtheCorporation'sinternalauditoronthescopeandmaterialresultsofitsinternalauditactivities,basedontheInternalAuditCharter;

22. reviewanddiscusstheCorporation'sCodeofBusinessConductandEthicsandfraudpolicyandtheactionstakentomonitorandenforcecompliancewiththeCorporation'sCodeofBusinessConductandEthicsandfraudpolicy;

23. establishproceduresfor:

i) thereceipt,retentionandtreatmentofcomplaintsregardingaccounting,internalcontrolsorauditingmatters;

ii) theconfidential,anonymoussubmissionofconcernsregardingquestionableaccounting,internalcontrolandauditingmatters;and

iii) compliancewithapplicableforeigncorruptpracticeslegislation,guidelinesandpractices.

FraudPreventionandDetection

24. overseeandassessmanagement'scontrolsandprocessestopreventanddetectfraud;

25. receiveperiodicreportsfromtheinternalauditoronfindingsoffraudaswellassignificantfindingsregardingthedesignand/oroperationofinternalcontrolsandmanagementresponses;

FinancialReportingProcess

26. periodicallydiscusstheintegrity,completenessandaccuracyoftheCorporation'sinternalcontrolsandthefinancialstatementswiththeexternalauditorsintheabsenceoftheCorporation'smanagement;

27. inconsultationwiththeexternalauditors,reviewtheintegrityoftheCorporation'sfinancialinternalandexternalreportingprocesses;

28. considertheexternalauditors'assessmentoftheappropriatenessoftheCorporation'sauditingandaccountingprinciplesasappliedinitsfinancialreporting;

29. reviewanddiscusswithmanagementandtheexternalauditorsatleastannuallyandapprove,ifappropriate,anymaterialchangestotheCorporation'sauditingandaccountingprinciplesandpracticessuggestedbytheexternalauditors,internalauditpersonnelormanagement;

30. reviewanddiscusswiththeChiefExecutiveOfficer("CEO")andtheChiefFinancialOfficer("CFO")theproceduresundertakeninconnectionwiththeCEOandCFOcertificationsfortheinterimandannualfilingswithapplicablesecuritiesregulatoryauthorities;

31. reviewdisclosuresmadebytheCEOandCFOduringtheircertificationprocessfortheannualandinterimfilingswithapplicablesecuritiesregulatoryauthoritiesaboutanysignificantdeficienciesinthedesignoroperationof


internalcontrolswhichcouldadverselyaffecttheCorporation'sabilitytorecord,process,summarizeandreportfinancialdataoranymaterialweaknessesintheinternalcontrols,andanyfraudinvolvingmanagementorotheremployeeswhohaveasignificantroleintheCorporation'sinternalcontrols;

32. establishregularandseparatesystemsofreportingtotheAuditCommitteebymanagementandtheexternalauditorsofanysignificantdecisionmadeinmanagement'spreparationofthefinancialstatements,includingthereportingoftheviewofmanagementandtheexternalauditorsastotheappropriatenessofsuchdecisions;

33. discussduringtheannualaudit,andreviewseparatelywitheachofmanagementandtheexternalauditors,anysignificantmattersarisingfromthecourseofanyaudit,includinganyrestrictionsonthescopeofworkoraccesstorequiredinformation;whetherraisedbymanagement,theheadofinternalauditortheexternalauditors;

34. resolveanydisagreementsbetweenmanagementandtheexternalauditorsregardingfinancialreporting;

35. reviewwiththeexternalauditorsandmanagementtheextenttowhichchangesorimprovementsinfinancialoraccountingpractices,asapprovedbytheAuditCommittee,havebeenimplementedatanappropriatetimesubsequenttotheimplementationofsuchchangesorimprovements;

36. retainanddeterminethecompensationofanyindependentcounsel,accountantsorotheradvisorstoassistinitsoversightresponsibilities(theAuditCommitteeshallnotberequiredtoobtaintheapprovaloftheBoardofDirectorsforsuchpurposes);

37. discussanymanagementorinternalcontrollettersorproposalstobeissuedbytheexternalauditorsoftheCorporation;

DisclosureControlsandProcedures

38. obtainandreviewthestatementofCorporateDisclosureControls,ProceduresandPoliciespreparedbythedisclosurecommitteeoftheBoardofDirectorsand,ifappropriate,approvethedisclosurecontrolsandproceduressetoutinsuchstatementandanychangesmadethereto;

39. receiveconfirmationfromtheCEOandCFOthatreportstobefiledwithCanadiansecuritiesregulatoryauthorities,theheUnitedStatesSecuritiesandExchangeCommissionandanyotherapplicableregulatoryagency:

(a) havebeenpreparedinaccordancewiththeCorporation'sdisclosurecontrolsandprocedures;and

(b) containnomaterialmisrepresentationsoromissionsandfairlypresents,inallmaterialrespects,thefinancialcondition,resultsofoperationsandcashflowasofandfortheperiodcoveredbysuchreports;

40. receiveconfirmationfromtheCEOandCFOthattheyhaveconcludedthatthedisclosurecontrolsandproceduresareeffectiveasoftheendoftheperiodcoveredbythereports;

41. discusswiththeCEOandCFOanyreasonsforwhichanyoftheconfirmationsreferredtointhetwoprecedingparagraphscannotbegivenbytheCEOandCFO;

LegalCompliance

42. confirmthattheCorporation'smanagementhastheproperreviewsysteminplacetoensurethattheCorporation'sfinancialstatements,reports,pressreleasesandotherfinancialinformationsatisfylegalrequirements;

43. reviewlegalcompliancematterswiththeCorporation'slegalcounsel;

44. reviewwiththeCorporation'slegalcounselanylegalmatterthattheAuditCommitteeunderstandscouldhaveasignificantimpactontheCorporation'sfinancialstatements;

45. conductorauthorizeinvestigationsintomatterswithintheAuditCommittee'sscopeofresponsibilities;

46. performanyotheractivitiesinaccordancewiththisCharter,theCorporation'sby-lawsandgoverninglawthattheAuditCommitteeortheBoardofDirectorsdeemsnecessaryorappropriate;


RelatedPartyTransactions

47. reviewthefinancialreportingofanytransactionbetweentheCorporationandanyofficer,directororother"relatedparty"asdefinedwithintheCorporation'sAccountingPolicy(includinganyshareholderholdinganinterestgreaterthan5%intheCorporation)oranyentityinwhichanysuchpersonhasafinancialinterest;

ReportingandPowers

48. reporttotheBoardofDirectorsfollowingeachmeetingoftheAuditCommitteeandatsuchothertimesastheBoardofDirectorsmayconsiderappropriate;and

49. exercisesuchotherpowersandperformsuchotherdutiesandresponsibilitiesasareincidentaltothepurposes,dutiesandresponsibilitiesspecifiedhereinandasmayfromtimetotimebedelegatedtotheAuditCommitteebytheBoardofDirectors.

V. LIMITATION OF RESPONSIBILITY

WhiletheAuditCommitteehastheresponsibilitiesandpowersprovidedbythisCharter,itisnotthedutyoftheAuditCommitteetoplanorconductauditsortodeterminethattheCorporation'sfinancialstatementsarecompleteandaccurateandareinaccordancewithinternationalfinancialreportingstandards.Thisistheresponsibilityofmanagement(withrespecttowhomtheAuditCommitteeperformsanoversightfunction)andtheexternalauditors.


SCHEDULE A TO THE AUDIT COMMITTEE CHARTER OF THE CORPORATION

UnrelatedDirector

UndertheTorontoStockExchangerules,"independentdirector"meansadirectorwho:

(a) isnotamemberofmanagementandisfreefromanyinterestandanybusinessorotherrelationshipwhichintheopinionoftheExchangecouldreasonablybeperceivedtomateriallyinterferewiththedirector'sabilitytoactinthebestinterestofthecompany;and

(b) isabeneficialholder,directlyorindirectly,orisanomineeorassociateofabeneficialholder,collectivelyof10%orlessofthevotesattachingtoallissuedandoutstandingsecuritiesoftheapplicant.

TheExchangewillconsiderallrelevantfactorsinassessingtheindependenceofthedirector.Asageneralrule,thefollowingpersonswouldnotbeconsideredanindependentdirector:

i) apersonwhoiscurrently,orhasbeenwithinthepastthreeyears,anofficer,employeeoforserviceprovidertothecompanyoranyofitssubsidiariesoraffiliates;or

ii) apersonwhoisanofficer,employeeorcontrollingshareholderofacompanythathasamaterialbusinessrelationshipwiththeapplicant.

IndependentDirector

NationalInstrument–52-110

Adirectoris"independent"ifheorshehasnodirectorindirectmaterialrelationshipwiththeissuer.ThefollowingsummarizesthemajoraspectsofNationalInstrument52-110–Audit Committees ("NI52-110")relatingtotheindependenceofadirector.

Certain Relationships Automatically Exclude a Director From Serving on the Audit Committee

Ifadirector(oramemberofthedirector'simmediatefamily)hasaspecifiedtypeofrelationshipwiththeissuer(whichincludestheissuer'sparentandsubsidiaryentities),thenthatdirectorwillnotbeconsideredindependent.NI52-110assumesthatthefollowingpersonshaveamaterialrelationshipwiththeissuer(andarethereforeprecludedfromsittingontheauditcommittee):

Employment Relationships

• anindividualwhois,orhasbeenwithinthelastthreeyears,employeeorexecutiveofficeroftheissueroranindividualwhoseimmediatefamilymemberis,orhasbeenwithinthelastthreeyears,anexecutiveofficeroftheissuer;

• anindividualwho,orwhoseimmediatefamilymember,is,orhasbeenwithinthelastthreeyears,anexecutiveofficerofanotherentityifanyoftheissuer'scurrentexecutiveofficersservesorservedatthatsametimeonthecompensationcommitteeofthatentity;

• anindividualwhoreceived,orwhoseimmediatefamilymemberwhoisemployedasanexecutiveofficeroftheissuerwhoreceived,morethanC$75,000indirectcompensationfromtheissuerduringany12monthperiodwithinthelastthreeyears(otherthanremunerationforactingasamemberoftheboardofdirectorsoranyboardcommitteeoftheissuerandfixedamountsreceivedunderaretirementplanforpriorservicewiththeissuerthatisnotcontingentoncontinuedservice);

Relationships with Internal or External Auditors

• anindividualwhoisapartneroremployeeoftheissuer'sinternalorexternalauditororanindividualwhowaswithinthelastthreeyearsapartneroremployeeoftheissuer'sinternalorexternalauditorandpersonallyworkedontheissuer'sauditwithinthattime;

• anindividualwhosespouse,minorchildorstepchild,orchildorstepchildwhosharesahomewiththeindividual,is(i)apartneroftheissuer'sinternalorexternalauditor,(ii)anemployeeoftheissuer'sinternalorexternalauditorandparticipatesinitsaudit,assuranceortaxcompliance(butnottaxplanning)practice,(iii)oranindividualwho


waswithinthelastthreeyearsapartneroremployeeoftheissuer'sinternalorexternalauditorandpersonallyworkedontheissuer'sauditwithinthattime;

Advisory or Consulting Relationships

• anindividualwhoaccepts,directlyorindirectly,anyconsulting,advisoryorothercompensatoryfeefromtheissueroranysubsidiaryentityoftheissuer,otherthanremunerationforactingasamemberoftheboardoranyboardcommitteeorasapart-timechairorvice-chairoftheboardoranyboardcommittee,includingtheindirectacceptanceofafeebyanindividual'sspouse,minorchildorstepchild,orchildorstepchildwhosharestheindividual'shomeorbyanentityinwhichsuchindividualisapartner,member,officersuchasamanagingdirectororexecutiveofficerandwhichprovidesaccounting,consulting,legal,investmentbankingorfinancialadvisoryservicestotheissueroranysubsidiaryentityoftheissuer;and

Relationships with Affiliated Entities

• anindividualwhoisanaffiliatedentityoftheissueroranyofitssubsidiaryentities,whereaffiliatedentitymeansapersonthathasthedirectorindirectpowertodirectorcausethedirectionofmanagementandthepoliciesoftheissueroranyofitssubsidiaryentities,whetherthroughownershipofvotingsecuritiesorotherwise(otherthananindividualwhoowns,directlyorindirectly,tenpercentoflessofanyclassofvotingsecuritiesoftheissuerandisnotanexecutiveofficeroftheissuer)oranindividualwhoisbothadirectorandanemployeeofanaffiliatedentityoranexecutiveofficer,generalpartnerormanagingmemberofanaffiliatedentity.

The Materiality of Other Relationships is for the Board to Determine

Ifadirectorhasadirectorindirectrelationshipwiththeissuer,thenitwillbematerialif,intheviewoftheissuer'sboardofdirectors,therelationshipcouldreasonablyinterferewiththeexerciseofthedirector'sindependentjudgement.Theserelationshipsmayincludecommercial,charitable,industrial,banking,consulting,legal,accountingorfamilialrelationshipsoranyotherrelationshipthattheboardconsiderstobematerial.

Exceptions to the Independence Requirement

NI52-110providesexemptionsfromtheindependencerequirementsfor:

• auditcommitteememberswhoceasetobeindependentforreasonsoutsidetheircontrol(butonlyforalimitedperiodoftime);

• directorsappointedtotheauditcommitteetofillavacancyresultingfromthedeath,disabilityorresignationofamemberoftheauditcommittee(butonlyforalimitedperiodoftime).Thedirectorappointedtofillthevacancyisalsotemporarilyexemptfromthefinancialliteracyrequirements;

• auditcommitteemembers,underexceptionalandlimitedcircumstancesasdeterminedbytheboardinitsreasonablyjudgment,whoarenotconsultantsoradvisors,notanaffiliatedentityoftheissueroranyofitssubsidiaryentities,notanemployeeorofficeroftheissueroranimmediatefamilymemberofsuchanddonotactaschairoftheauditcommittee(butonlyforamaximumperiodoftwoyears);and

• U.S.listedissuerscomplyingwiththeauditcommitteerequirementsoftheirU.S.exchangeorquotationsystem(providedtheymakethenecessarydisclosureintheirAIF(AnnualInformationForm).

NewYorkStockExchangeRules

UndertheNewYorkStockExchangerules,thefollowingrequirementsmustbemettoqualifyasan"IndependentDirector":

(a) nodirectorqualifiesas"independent"unlesstheboardofdirectorsaffirmativelydeterminesthatthedirectorhasnomaterialrelationshipwiththelistedcompany(eitherdirectlyorasapartner,shareholderorofficerofanorganizationthathasarelationshipwiththecompany).Companiesmustdisclosethesedeterminations.

(b) inaddition,thefollowingpersonsarenotindependent:

• anydirectorwhois(orwhohasanimmediatefamilymemberwhois)anexecutiveofficer,otherthanonaninterimbasis,ofthelistedcompany;


• anydirectorwhoreceives(orwhohasanimmediatefamilymemberwhoreceives)morethan$120,000peryearindirectcompensationfromthelistedcompany;

• anydirectorwhois(orwhohasanimmediatefamilymemberwhois,inaprofessionalcapacity)apartneroremployeeofthelistedcompany'sinternalorexternalauditor;

• anydirectorwhois(orwhohasanimmediatefamilymemberwhois)employedasanexecutiveofficerofanothercompanywhereanyoftheexecutivesofthelistedcompanyalsoservesorservedonthatothercompany'scompensationcommittee;and

• anydirectorwhoisanemployee(orwhohasanimmediatefamilymemberwhoisanexecutiveofficer)ofanothercompanythathasmadepaymentsto,orreceivedpaymentsfrom,thelistedcompanyforpropertyorserviceswhichexceedsthegreaterof$1millionor2%ofsuchothercompany'sconsolidatedgrossrevenues.

Three Year "Cooling Off" Period. Foreachofthecategoriesabovewhereadirectorisnot(orispresumednottobe)independent,thereisathree-year"coolingoff"period.Accordingly,theexistenceoftheprohibitedrelationshipatanytimeduringtheprecedingthreeyearsispresumedtoimpairindependence.

Sarbanes-OxleyAct

(a) In General .Eachmemberoftheauditcommitteeoftheissuershallbeamemberoftheboardofdirectorsoftheissuer,andshallotherwisebeindependent.

(b) Criteria .Inordertobeconsideredtobeindependentforpurposesofthisparagraph,amemberofanauditcommitteeofanissuermaynot,otherthaninhisorhercapacityasamemberoftheauditcommittee,theboardofdirectorsoranyotherboardcommittee:

• acceptanyconsulting,advisoryorothercompensatoryfeefromtheissuer;or

• beanaffiliatedpersonoftheissueroranysubsidiarythereof.

Exemption Authority. TheCommissionmayexemptfromtherequirementsofsubparagraph(b)aparticularrelationshipwithrespecttoauditcommitteemembers,astheCommissiondeterminesappropriateinlightofthecircumstances.


SCHEDULE B TO THE AUDIT COMMITTEE CHARTER OF THE CORPORATION

AuditCommitteeFinancialExpert

An"auditcommitteefinancialexpert"mustpossessallofthefollowingattributes:

(a) anunderstandingofgenerallyacceptedaccountingprinciplesandfinancialstatements;

(b) theabilitytoassessthegeneralapplicationofsuchprinciplesinconnectionwiththeaccountingforestimates,accruals,andreserves;

(c) experiencepreparing,auditing,analyzingorevaluatingfinancialstatementsthatpresentabreadthandlevelofcomplexityofaccountingissuesthataregenerallycomparabletothebreathandcomplexityofissuesthatcanreasonablybeexpectedtoberaisedbytheissuer'sfinancialstatements,orexperienceactivelysupervisingoneormorepersonsengagedinsuchactivities;

(d) anunderstandingofinternalcontroloverandproceduresforfinancialreporting;and

(e) anunderstandingofauditcommitteefunctions.

Theauditcommitteefinancialexpertmustalsohaveacquiredthoseattributesthrough:

(a) educationandexperienceasaprincipalfinancialofficer,principalaccountingofficer,controller,publicaccountant,auditororexperienceinoneormorepositionsthatinvolvetheperformanceofsimilarfunctions;

(b) experienceactivelysupervisingaprincipalfinancialofficer,principalaccountingofficer,controller,publicaccountantorauditororpersonperformingsimilarfunctions;

(c) experienceoverseeingorassessingtheperformanceofcompaniesorpublicaccountantsforthepreparation,auditingorevaluationoffinancialstatements;or

(d) otherrelevantexperience.

"Activesupervision"meansthesupervisorparticipatedin,andcontributedto,theprocessofaddressingthesametypesofissuesrelatingtothepreparation,auditing,analysisandevaluationoffinancialstatementsasthepersonactuallyperformingthework.

AGNICO EAGLE B-1 ANNUAL INFORMATION FORM

QuickLinks

Exhibit99.1

AGNICOEAGLEMINESLIMITEDANNUALINFORMATIONFORMINTRODUCTORYNOTESNotetoInvestorsConcerningEstimatesofMineralReservesandMineralResourcesNotetoInvestorsConcerningCertainMeasuresofPerformanceSELECTEDFINANCIALDATAGLOSSARYOFSELECTEDMININGTERMSCORPORATESTRUCTUREDESCRIPTIONOFTHEBUSINESSGENERALDEVELOPMENTOFTHEBUSINESSOPERATIONSANDPRODUCTIONMINERALRESERVESMINERALRESOURCESRISKFACTORSDIVIDENDSDESCRIPTIONOFCAPITALSTRUCTURERATINGSMARKETFORSECURITIESDIRECTORSANDOFFICERSOFTHECOMPANYAUDITCOMMITTEELEGALPROCEEDINGSANDREGULATORYACTIONSINTERESTOFMANAGEMENTANDOTHERSINMATERIALTRANSACTIONSTRANSFERAGENTANDREGISTRARMATERIALCONTRACTSINTERESTSOFEXPERTSADDITIONALINFORMATIONSCHEDULE"A"AUDITCOMMITTEECHARTEROFTHECOMPANYSCHEDULEATOTHEAUDITCOMMITTEECHARTEROFTHECORPORATIONSCHEDULEBTOTHEAUDITCOMMITTEECHARTEROFTHECORPORATION


Exhibit 99.2

Annual AuditedConsolidatedFinancial Statements

(PreparedinaccordancewithInternationalFinancialReportingStandards)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING TotheBoardofDirectors(the"Board")andShareholdersofAgnicoEagleMinesLimited:

WehaveauditedAgnicoEagleMinesLimited'sinternalcontroloverfinancialreportingasofDecember31,2016,basedoncriteriaestablishedinInternal Control – Integrated Framework issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissionin2013(the"COSOcriteria").AgnicoEagleMinesLimited'smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreporting,andforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreportingincludedintheaccompanyingmanagementcertificationreportoninternalcontroloverfinancialreporting.OurresponsibilityistoexpressanopiniononAgnicoEagleMinesLimited'sinternalcontroloverfinancialreportingbasedonouraudit.

WeconductedourauditinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.

Acompany'sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany'sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat:(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatrevenuesandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany'sassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditionsorthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

Inouropinion,AgnicoEagleMinesLimitedmaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember31,2016basedontheCOSOcriteria.

Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),theconsolidatedbalancesheetsofAgnicoEagleMinesLimitedasofDecember31,2016and2015,andtherelatedconsolidatedstatementsofincomeandcomprehensiveincome,equityandcashflowsforeachofthetwoyearsintheperiodendedDecember31,2016,andourreportdatedMarch27,2017expressedanunqualifiedopinionthereon.

/s/Ernst&YoungLLPToronto,Canada CharteredProfessionalAccountantsMarch27,2017 LicensedPublicAccountants

2 AGNICO EAGLE ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTS

MANAGEMENT CERTIFICATION ManagementofAgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")isresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.Internalcontroloverfinancialreportingisaprocessdesignedby,orunderthesupervisionof,theCompany'sChiefExecutiveOfficerandChiefFinancialOfficerandeffectedbytheCompany'sBoard,managementandotherpersonnel,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

TheCompany'smanagement,includingtheCompany'sChiefExecutiveOfficerandChiefFinancialOfficer,assessedtheeffectivenessoftheCompany'sinternalcontroloverfinancialreportingasofDecember31,2016.Inmakingthisassessment,theCompany'smanagementusedthecriteriaoutlinedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissioninInternalControl–IntegratedFrameworkissuedin2013.Basedonitsassessment,managementconcludedthat,asofDecember31,2016,theCompany'sinternalcontroloverfinancialreportingwaseffective.

TheeffectivenessoftheCompany'sinternalcontroloverfinancialreportingasofDecember31,2016hasbeenauditedbyErnst&YoungLLP,anindependentregisteredpublicaccountingfirm,asstatedintheirreportthatappearsherein.

Toronto,CanadaMarch27,2017

By /s/SEANBOYD

SeanBoydVice-Chairman and Chief Executive Officer

By /s/DAVIDSMITH

DavidSmithSenior Vice-President, Finance and Chief Financial Officer

ANNUALAUDITEDCONSOLIDATEDFINANCIALSTATEMENTSAGNICO EAGLE 3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TotheBoardandShareholdersofAgnicoEagleMinesLimited:

WehaveauditedtheaccompanyingconsolidatedbalancesheetsofAgnicoEagleMinesLimitedasofDecember31,2016and2015,andtherelatedconsolidatedstatementsofincomeandcomprehensiveincome,equityandcashflowsforeachoftheyearsthenended.ThesefinancialstatementsaretheresponsibilityoftheCompany'smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.

WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion.

Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionofAgnicoEagleMinesLimitedatDecember31,2016and2015andtheconsolidatedresultsofitsoperationsanditscashflowsforeachoftheyearsthenendedinconformitywithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.

Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),AgnicoEagleMinesLimited'sinternalcontroloverfinancialreportingasofDecember31,2016,basedoncriteriaestablishedinInternal Control – Integrated FrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissionin2013,andourreportdatedMarch27,2017expressedanunqualifiedopinionthereon.

/s/Ernst&YoungLLPToronto,Canada CharteredProfessionalAccountantsMarch27,2017 LicensedPublicAccountants


AGNICO EAGLE MINES LIMITED CONSOLIDATED BALANCE SHEETS (thousands of United States dollars, except share amounts)

As at December 31,

2016

As at December 31,

2015

ASSETS

Currentassets:

Cashandcashequivalents $ 539,974 $ 124,150

Short-terminvestments 8,424 7,444

Restrictedcash 398 685

Tradereceivables(notes6and17) 8,185 7,714

Inventories(note7) 443,714 461,976

Incometaxesrecoverable(note23) – 817

Available-for-salesecurities(notes6and8) 92,310 31,863

Fairvalueofderivativefinancialinstruments(notes6and20) 364 87

Othercurrentassets(note9(a)) 136,810 194,689

Totalcurrentassets 1,230,179 829,425

Non-currentassets:

Restrictedcash 764 741

Goodwill 696,809 696,809

Property,plantandminedevelopment(note10) 5,106,036 5,088,967

Otherassets(note9(b)) 74,163 67,238

Totalassets $ 7,107,951 $ 6,683,180

LIABILITIES AND EQUITY

Currentliabilities:

Accountspayableandaccruedliabilities(note11) $ 228,566 $ 243,786

Reclamationprovision(note12) 9,193 6,245

Interestpayable(note14) 14,242 14,526

Incometaxespayable(note23) 35,070 14,852

Financeleaseobligations(note13(a)) 5,535 9,589

Currentportionoflong-termdebt(note14) 129,896 14,451

Fairvalueofderivativefinancialinstruments(notes6and20) 1,120 8,073

Totalcurrentliabilities 423,622 311,522

Non-currentliabilities:

Long-termdebt(note14) 1,072,790 1,118,187

Reclamationprovision(note12) 265,308 276,299

Deferredincomeandminingtaxliabilities(note23) 819,562 802,114

Otherliabilities(note15) 34,195 34,038

Totalliabilities 2,615,477 2,542,160

EQUITY

Commonshares(note16): Outstanding—225,465,654commonsharesissued,less500,514sharesheldintrust 4,987,694 4,707,940

Stockoptions(notes16and18) 179,852 216,232

Contributedsurplus 37,254 37,254

Deficit (744,453) (823,734)

Accumulatedothercomprehensiveincome 32,127 3,328

Totalequity 4,492,474 4,141,020

Totalliabilitiesandequity $ 7,107,951 $ 6,683,180

Commitmentsandcontingencies(note25)

OnbehalfoftheBoard:

SeanBoyd,CPA,CA,Director Dr.LeanneM.Baker,Director

See accompanying notes



CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(thousands of United States dollars, except per share amounts)

Year Ended December 31, 2016 2015 REVENUES

Revenuesfromminingoperations(note17) $ 2,138,232 $ 1,985,432

COSTS, EXPENSES AND OTHER INCOME

Production(i) 1,031,892 995,295

Explorationandcorporatedevelopment 146,978 110,353

Amortizationofproperty,plantandminedevelopment(note10) 613,160 608,609

Generalandadministrative 102,781 96,973

Impairmentlossonavailable-for-salesecurities(note8) – 12,035

Financecosts(note14) 74,641 75,228

(Gain)lossonderivativefinancialinstruments(note20) (9,468) 19,608

Gainonsaleofavailable-for-salesecurities(note8) (3,500) (24,600)

Environmentalremediation(note12) 4,058 2,003

Gainonimpairmentreversal(note22) (120,161) –

Foreigncurrencytranslationloss(gain) 13,157 (4,728)

Otherexpenses 16,233 12,028

Incomebeforeincomeandminingtaxes 268,461 82,628

Incomeandminingtaxesexpense(note23) 109,637 58,045

Netincomefortheyear $ 158,824 $ 24,583

Netincomepershare—basic(note16) $ 0.71 $ 0.11

Netincomepershare—diluted(note16) $ 0.70 $ 0.11

Cashdividendsdeclaredpercommonshare $ 0.36 $ 0.32

COMPREHENSIVE INCOME


Othercomprehensiveincome(loss):

Itemsthatmaybesubsequentlyreclassifiedtonetincome:

Available-for-salesecuritiesandotherinvestments:

Unrealizedchangeinfairvalueofavailable-for-salesecurities 36,757 4,822

Reclassificationtoimpairmentlossonavailable-for-salesecurities(note8) – 12,035

Reclassificationtogainonsaleofavailable-for-salesecurities(note8) (3,500) (24,600)

Incometaximpactofreclassificationitems(note23) 467 1,684

Incometaximpactofothercomprehensiveincome(loss)items(note23) (4,925) (613)

28,799 (6,672)

Itemsthatwillnotbesubsequentlyreclassifiedtonetincome:

Pensionbenefitobligations:

Remeasurementgain(loss)ofpensionbenefitobligations(note15(a)) 612 (205)

Incometaximpact(note23) 76 32

688 (173)

Othercomprehensiveincome(loss)fortheyear 29,487 (6,845)

Comprehensiveincomefortheyear $ 188,311 $ 17,738

Note:

(i) Exclusiveofamortization,whichisshownseparately.



AGNICO EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF EQUITY (thousands of United States dollars, except share and per share amounts)

Common Shares Outstanding

Shares

Amount

Stock Options

Contributed Surplus

Deficit

Accumulated Other

Comprehensive Income

Total Equity

Balance December 31, 2014 214,236,234 $4,599,788 $ 200,830 $ 37,254 $ (779,382) $ 10,000 $ 4,068,490

Netincome – – – – 24,583 – 24,583

Othercomprehensiveloss – – – – (173) (6,672) (6,845)

Totalcomprehensiveincome(loss) – – – – 24,410 (6,672) 17,738

Transactionswithowners:

Sharesissuedunderemployeestockoptionplan(notes16and18(a)) 747,683 22,326 (4,654) – – – 17,672

Stockoptions(notes16and18(a)) – – 20,056 – – – 20,056

Sharesissuedunderincentivesharepurchaseplan(note18(b)) 512,438 14,033 – – – – 14,033

Sharesissuedunderdividendreinvestmentplan 345,734 9,305 – – – – 9,305

SharesissuedforjointacquisitionofMalarticCHLproperty(note5) 459,197 13,441 – – – – 13,441

SharesissuedforacquisitionofSoltoroLtd.(note5) 770,429 24,351 – – – – 24,351

SharesissuedtosettleCMGPConvertibleDebenturespreviouslyissuedbyOsisko 871,680 24,779 – – – – 24,779

Dividendsdeclared($0.32pershare) – – – – (68,762) – (68,762)

RestrictedShareUnitplanandLongTermIncentivePlan(notes16and18(c)) (292,600) (83) – – – – (83)


Netincome – – – – 158,824 – 158,824

Othercomprehensiveincome – – – – 688 28,799 29,487

Totalcomprehensiveincome – – – – 159,512 28,799 188,311

Transactionswithowners:

Sharesissuedunderemployeestockoptionplan(notes16and18(a)) 6,492,907 245,128 (53,025) – – – 192,103

Stockoptions(notes16and18(a)) – – 16,645 – – – 16,645

Sharesissuedunderincentivesharepurchaseplan(note18(b)) 344,778 15,443 – – – – 15,443

Sharesissuedunderdividendreinvestmentplan 224,732 8,893 – – – – 8,893

Sharesissuedunderflow-throughshareprivateplacement(note16) 374,869 13,593 – – – – 13,593

Dividendsdeclared($0.36pershare) – – – – (80,231) – (80,231)

RestrictedShareUnitplan,PerformanceShareUnitplan,andLongTermIncentivePlan(notes16and18(c,d)) (122,941) (3,303) – – – – (3,303)




AGNICO EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of United States dollars)


2016 2015 OPERATING ACTIVITIES


Add(deduct)itemsnotaffectingcash:

Amortizationofproperty,plantandminedevelopment(note10) 613,160 608,609

Deferredincomeandminingtaxes(note23) 7,609 6,550

Gainonsaleofavailable-for-salesecurities(note8) (3,500) (24,600)

Stock-basedcompensation(note18) 33,804 35,822

Impairmentlossonavailable-for-salesecurities(note8) – 12,035

Gainonimpairmentreversal(note22) (120,161) –

Foreigncurrencytranslationloss(gain) 13,157 (4,728)

Other 14,012 3,145

Adjustmentforsettlementofreclamationprovision (2,719) (1,385)

Changesinnon-cashworkingcapitalbalances:

Tradereceivables (471) 52,019

Incometaxes 28,082 (2,333)

Inventories 20,355 (40,547)

Othercurrentassets 53,009 (74,106)

Accountspayableandaccruedliabilities (35,408) 20,464

Interestpayable (1,136) 710

Cashprovidedbyoperatingactivities 778,617 616,238

INVESTING ACTIVITIES

Additionstoproperty,plantandminedevelopment(note10) (516,050) (449,758)

Acquisitions,netofcashandcashequivalentsacquired(note5) (12,434) (12,983)

Netpurchasesofshort-terminvestments (980) (2,823)

Netproceedsfromsaleofavailable-for-salesecuritiesandotherinvestments(note8) 9,461 61,075

Purchasesofavailable-for-salesecuritiesandotherinvestments(note8) (33,774) (19,815)

Decreaseinrestrictedcash 287 49,785

Cashusedininvestingactivities (553,490) (374,519)

FINANCING ACTIVITIES

Dividendspaid (71,375) (59,512)

Repaymentoffinanceleaseobligations(note13(a)) (10,004) (23,657)

Proceedsfromlong-termdebt 125,000 436,000

Repaymentoflong-termdebt (405,374) (697,086)

Notesissuance(note14) 350,000 50,000

Long-termdebtfinancing(note14) (3,415) (1,689)

Repurchaseofcommonsharesforstock-basedcompensationplans(notes16and18(c,d)) (15,576) (11,899)

Proceedsonexerciseofstockoptions(note18(a)) 192,103 17,672

Commonsharesissued(note16) 29,027 9,411

Cashprovidedby(usedin)financingactivities 190,386 (280,760)

Effect of exchange rate changes on cash and cash equivalents 311 (14,346)

Net increase (decrease) in cash and cash equivalents during the year 415,824 (53,387)

Cash and cash equivalents, beginning of year 124,150 177,537

Cash and cash equivalents, end of year $ 539,974 $ 124,150

SUPPLEMENTAL CASH FLOW INFORMATION

Interestpaid(note14) $ 71,401 $ 69,414

Incomeandminingtaxespaid $ 105,184 $ 81,112




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(thousands of United States dollars, except share and per share amounts, unless otherwise indicated) December 31, 2016

1. CORPORATE INFORMATION

AgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")isprincipallyengagedintheproductionandsaleofgold,aswellasrelatedactivitiessuchasexplorationandminedevelopment.TheCompany'sminingoperationsarelocatedinCanada,MexicoandFinlandandtheCompanyhasexplorationactivitiesinCanada,Europe,LatinAmericaandtheUnitedStates.AgnicoEagleisapubliccompanyincorporatedunderthelawsoftheProvinceofOntario,Canadawithitsheadandregisteredofficelocatedat145KingStreetEast,Suite400,Toronto,Ontario,M5C2Y7.TheCompanyislistedontheTorontoStockExchangeandtheNewYorkStockExchange.AgnicoEaglesellsitsgoldproductionintotheworldmarket.

TheseconsolidatedfinancialstatementswereauthorizedforissuancebytheBoardofDirectorsoftheCompany(the"Board")onMarch27,2017.

2. BASIS OF PRESENTATION

A) StatementofCompliance

TheaccompanyingconsolidatedfinancialstatementsofAgnicoEaglehavebeenpreparedinaccordancewithInternationalFinancialReportingStandards("IFRS")asissuedbytheInternationalAccountingStandardsBoard("IASB")inUnitedStates("US")dollars.

Theseconsolidatedfinancialstatementswerepreparedonagoingconcernbasisunderthehistoricalcostmethodexceptforcertainfinancialassetsandliabilitieswhicharemeasuredatfairvalue.Significantaccountingpoliciesarepresentedinnote3totheseconsolidatedfinancialstatementsandhavebeenconsistentlyappliedineachoftheperiodspresented.

B) BasisofPresentation

Subsidiaries

TheseconsolidatedfinancialstatementsincludetheaccountsofAgnicoEagleanditsconsolidatedsubsidiaries.Allintercompanybalances,transactions,incomeandexpensesandgainsorlosseshavebeeneliminatedonconsolidation.SubsidiariesareconsolidatedwhereAgnicoEaglehastheabilitytoexercisecontrol.ControlofaninvesteeexistswhenAgnicoEagleisexposedtovariablereturnsfromtheCompany'sinvolvementwiththeinvesteeandhastheabilitytoaffectthosereturnsthroughitspowerovertheinvestee.TheCompanyreassesseswhetherornotitcontrolsaninvesteeiffactsandcircumstancesindicatethattherearechangestooneormoreoftheelementsofcontrol.

Joint Arrangements

Ajointarrangementisdefinedasanarrangementinwhichtwoormorepartieshavejointcontrol.Jointcontrolisthecontractuallyagreedsharingofcontroloveranarrangementbetweentwoormoreparties.Thisexistsonlywhenthedecisionsabouttherelevantactivitiesthatsignificantlyaffectthereturnsofthearrangementrequiretheunanimousconsentofthepartiessharingcontrol.

Ajointoperationisajointarrangementwherebythepartieshavejointcontrolofthearrangementandhaverightstotheassetsandobligationsfortheliabilitiesrelatingtothearrangement.TheseconsolidatedfinancialstatementsincludetheCompany'sinterestsintheassets,liabilities,revenuesandexpensesofthejointoperations,fromthedatethatjointcontrolcommenced.AgnicoEagle's50%interestinCanadianMalarticCorporationandCanadianMalarticGP("thePartnership"),thegeneralpartnershipthatholdstheCanadianMalarticminelocatedinQuebec,hasbeenaccountedforasajointoperation.


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A) BusinessCombinations

Inabusinesscombination,theacquisitionmethodofaccountingisused,wherebythepurchaseconsiderationisallocatedtothefairvalueofidentifiableassetsacquiredandliabilitiesassumedatthedateofacquisition.Preliminaryfairvaluesallocatedatareportingdatearefinalizedassoonastherelevantinformationisavailable,withinaperiodnottoexceedtwelvemonthsfromtheacquisitiondatewithretroactiverestatementoftheimpactofadjustmentstothosepreliminaryfairvalueseffectiveasattheacquisitiondate.Acquisitionrelatedcostsareexpensedasincurred.

Purchaseconsiderationmayalsoincludeamountspayableiffutureeventsoccurorconditionsaremet.Anysuchcontingentconsiderationismeasuredatfairvalueandincludedinthepurchaseconsiderationattheacquisitiondate.Subsequentchangestotheestimatedfairvalueofcontingentconsiderationarerecordedthroughtheconsolidatedstatementsofincome,unlessthepreliminaryfairvalueofcontingentconsiderationasattheacquisitiondateisfinalizedbeforethetwelvemonthmeasurementperiodinwhichcasetheadjustmentisallocatedtotheidentifiableassetsacquiredandliabilitiesassumedretrospectivelytotheacquisitiondate.

Wherethecostoftheacquisitionexceedsthefairvaluesoftheidentifiablenetassetsacquired,thedifferenceisrecordedasgoodwill.Againisrecordedthroughtheconsolidatedstatementsofincomeifthecostoftheacquisitionislessthanthefairvaluesoftheidentifiablenetassetsacquired.

Non-controllinginterestsrepresentthefairvalueofnetassetsinsubsidiariesthatarenotheldbytheCompanyasatthedateofacquisition.Non-controllinginterestsarepresentedintheequitysectionoftheconsolidatedbalancesheets.

Inabusinesscombinationachievedinstages,theCompanyremeasuresanypreviouslyheldequityinterestatitsacquisitiondatefairvalueandrecognizesanygainorlossintheconsolidatedstatementsofincome.

B) Non-currentAssetsandDisposalGroupsHeldForSaleandDiscontinuedOperations

TheCompanyclassifiesanon-currentassetordisposalgroupasheldforsaleifitishighlyprobablethattheywillbesoldintheircurrentconditionwithinoneyearfromthedateofclassification.AssetsanddisposalgroupsthatmeetthecriteriatobeclassifiedasanassetheldforsalearemeasuredatthelowerofcarryingamountandfairvaluelesscoststodisposeandtheCompanystopsamortizingsuchassetsfromthedatetheyareclassifiedasheldforsale.Assetsanddisposalgroupsthatmeetthecriteriatobeclassifiedasheldforsalearepresentedseparatelyintheconsolidatedbalancesheets.

Ifthecarryingamountoftheassetpriortobeingclassifiedasheldforsaleisgreaterthanthefairvaluelesscoststodispose,theCompanyrecognizesanimpairmentloss.Anysubsequentchangeinthemeasurementamountofitemsclassifiedasheldforsaleisrecognizedasagain,totheextentofanycumulativeimpairmentchargespreviouslyrecognizedtotherelatedassetordisposalgroup,orasafurtherimpairmentloss.

AdiscontinuedoperationisacomponentoftheCompanythatcanbeclearlydistinguishedfromtherestoftheentity,bothoperationallyandforfinancialreportingpurposes,thathasbeendisposedoforisclassifiedasheldforsaleandrepresents:a)aseparatesignificantlineofbusinessorgeographicalareaofoperations;b)apartofasingleco-ordinatedplantodisposeofanareaofoperations;orc)asubsidiaryacquiredexclusivelyforresale.Theresultsofthedisposalgroupsorregionswhicharediscontinuedoperationsarepresentedseparatelyintheconsolidatedstatementsofcomprehensiveincome.


C) ForeignCurrencyTranslation

ThefunctionalcurrencyoftheCompany,foreachsubsidiaryandforjointarrangements,isthecurrencyoftheprimaryeconomicenvironmentinwhichitoperates.ThefunctionalcurrencyofalloftheCompany'soperationsistheUSdollar.

OncetheCompanydeterminesthefunctionalcurrencyofanentity,itisnotchangedunlessthereisachangeintherelevantunderlyingtransactions,eventsandcircumstances.Anychangeinanentity'sfunctionalcurrencyisaccountedforprospectivelyfromthedateofthechange,andtheconsolidatedbalancesheetsaretranslatedusingtheexchangerateatthatdate.

Attheendofeachreportingperiod,theCompanytranslatesforeigncurrencybalancesasfollows:

• Monetaryitemsaretranslatedattheclosingrateineffectattheconsolidatedbalancesheetdate;

• Non-monetaryitemsthataremeasuredintermsofhistoricalcostaretranslatedusingtheexchangerateatthedateofthetransaction.Itemsmeasuredatfairvaluearetranslatedattheexchangerateineffectatthedatethefairvaluewasmeasured;and

• Revenueandexpenseitemsaretranslatedusingtheaverageexchangerateduringtheperiod.

D) CashandCashEquivalents

TheCompany'scashandcashequivalentsincludecashonhandandshort-terminvestmentsinmoneymarketinstrumentswithremainingmaturitiesofthreemonthsorlessatthedateofpurchase.TheCompanyplacesitscashandcashequivalentsandshort-terminvestmentsinhighqualitysecuritiesissuedbygovernmentagencies,financialinstitutionsandmajorcorporationsandlimitstheamountofcreditexposurebydiversifyingitsholdings.

E) Short-termInvestments

TheCompany'sshort-terminvestmentsincludefinancialinstrumentswithremainingmaturitiesofgreaterthanthreemonthsbutlessthanoneyearatthedateofpurchase.Short-terminvestmentsaredesignatedasheldtomaturityforaccountingpurposesandarecarriedatamortizedcost,whichapproximatesmarketvaluegiventheshort-termnatureoftheseinvestments.

F) Inventories

Inventoriesconsistoforestockpiles,concentrates,dorebarsandsupplies.Inventoriesarecarriedatthelowerofcostandnetrealizablevalue("NRV").Costisdeterminedusingtheweightedaveragebasisandincludesallcostsofpurchase,costsofconversionandothercostsincurredinbringingtheinventoriestotheirpresentlocationandcondition.Costofinventoriesincludesdirectcostsofmaterialsandlabourrelateddirectlytominingandprocessingactivities,includingproductionphasestrippingcosts,amortizationofproperty,plantandminedevelopmentdirectlyinvolvedintherelatedminingandproductionprocess,amortizationofanystrippingcostspreviouslycapitalizedanddirectlyattributableoverheadcosts.Wheninterruptionstoproductionoccur,anadjustmentismadetothecostsincludedininventories,suchthattheyreflectnormalcapacity.Abnormalcostsareexpensedintheperiodtheyareincurred.

Thecurrentportionoforestockpiles,oreinleachpadsandinventoriesisdeterminedbasedontheexpectedamountstobeprocessedwithinthenexttwelvemonths.Orestockpiles,oreonleachpadsandinventoriesnotexpectedtobeprocessedorusedwithinthenexttwelvemonthsareclassifiedaslong-term.

NRVisestimatedbycalculatingthenetsellingpricelesscoststobeincurredinconvertingtherelevantinventoriestosaleableproductanddeliveringittoacustomer.Coststocompletearebasedonmanagement'sbestestimateas


attheconsolidatedbalancesheetdate.AnNRVimpairmentmaybereversedinasubsequentperiodifthecircumstancesthattriggeredtheimpairmentnolongerexist.

G) FinancialInstruments

TheCompany'sfinancialassetsandliabilities(financialinstruments)includecashandcashequivalents,short-terminvestments,restrictedcash,tradereceivables,available-for-salesecurities,accountspayableandaccruedliabilities,long-termdebt(includingconvertibledebentures)andderivativefinancialinstruments.Allfinancialinstrumentsarerecordedatfairvalueatrecognition.Subsequenttoinitialrecognition,financialinstrumentsclassifiedastradereceivables,accountspayableandaccruedliabilitiesandlong-termdebt(excludingconvertibledebentures)aremeasuredatamortizedcostusingtheeffectiveinterestmethod.Otherfinancialassetsandliabilitiesarerecordedatfairvaluethroughtheconsolidatedstatementsofincome.

Available -for -sale Securities

TheCompany'sinvestmentsinavailable-for-salesecuritiesconsistprimarilyofinvestmentsincommonsharesofentitiesintheminingindustryrecordedusingtradedateaccounting.Investmentsaredesignatedasavailable-for-salebasedonthecriteriathattheCompanydoesnotholdthesefortradingpurposes.Thecostbasisofavailable-for-salesecuritiesisdeterminedusingtheaveragecostmethodandtheyarecarriedatfairvalue.Unrealizedgainsandlossesrecordedtomeasureavailable-for-salesecuritiesatfairvaluearerecognizedinothercomprehensiveincome.

Intheeventthatadeclineinthefairvalueofaninvestmentinavailable-for-salesecuritiesoccursandthedeclineinvalueisconsideredtobesignificantorprolonged,animpairmentchargeisrecordedintheconsolidatedstatementsofincomeandcomprehensiveincome.TheCompanyassesseswhetheradeclineinvalueisconsideredtobesignificantorprolongedbyconsideringavailableevidence,includingchangesingeneralmarketconditions,specificindustryandinvesteedata,thelengthoftimeandtheextenttowhichthefairvaluehasbeenlessthancostandthefinancialconditionoftheinvestee.

Derivative Instruments and Hedge Accounting

TheCompanyusesderivativefinancialinstruments(primarilyoptionandforwardcontracts)tomanageexposuretofluctuationsinby-productmetalprices,interestratesandforeigncurrencyexchangeratesandmayusesuchmeanstomanageexposuretocertaininputcosts.TheCompanydoesnotholdfinancialinstrumentsorderivativefinancialinstrumentsfortradingpurposes.

TheCompanyrecognizesallderivativefinancialinstrumentsintheconsolidatedfinancialstatementsatfairvalueregardlessofthepurposeorintentforholdingtheinstrument.Changesinthefairvalueofderivativefinancialinstrumentsareeitherrecognizedperiodicallyintheconsolidatedstatementsofincomeandcomprehensiveincomeorinequityasacomponentofaccumulatedothercomprehensiveincome,dependingonthenatureofthederivativefinancialinstrumentandwhetheritqualifiesforhedgeaccounting.Financialinstrumentsdesignatedashedgesaretestedforeffectivenessateachreportingperiod.Realizedgainsandlossesonthosecontractsthatareproventobeeffectivearereportedasacomponentoftherelatedtransaction.

H) Goodwill

Goodwillisrecognizedinabusinesscombinationifthecostoftheacquisitionexceedsthefairvaluesoftheidentifiablenetassetsacquired.Goodwillisthenallocatedtothecashgeneratingunit("CGU")orgroupofCGUsthatareexpectedtobenefitfromthesynergiesofthecombination.ACGUisthesmallestidentifiablegroupofassetsthatgeneratescashinflowswhicharelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets.


TheCompanyperformsgoodwillimpairmenttestsonanannualbasisasatDecember31eachyear.Inaddition,theCompanyassessesforindicatorsofimpairmentateachreportingperiodendand,ifanindicatorofimpairmentisidentified,goodwillistestedforimpairmentatthattime.IfthecarryingvalueoftheCGUorgroupofCGUstowhichgoodwillisassignedexceedsitsrecoverableamount,animpairmentlossisrecognized.Goodwillimpairmentlossesarenotreversed.

TherecoverableamountofaCGUorgroupofCGUsismeasuredasthehigherofvalueinuseandfairvaluelesscostsofdisposal.

I) MiningProperties,PlantandEquipmentandMineDevelopmentCosts

Miningproperties,plantandequipmentandminedevelopmentcostsarerecordedatcost,lessaccumulatedamortizationandaccumulatedimpairmentlosses.

Mining Properties

Thecostofminingpropertiesincludesthefairvalueattributabletoprovenandprobablemineralreservesandmineralresourcesacquiredinabusinesscombinationorassetacquisition,undergroundminedevelopmentcosts,deferredstripping,capitalizedexplorationandevaluationcostsandcapitalizedborrowingcosts.

Significantpaymentsrelatedtotheacquisitionoflandandmineralrightsarecapitalizedasminingpropertiesatcost.Ifamineableorebodyisdiscovered,suchcostsareamortizedtoincomewhencommercialproductioncommences,usingtheunits-of-productionmethod,basedonestimatedprovenandprobablemineralreserves.Ifnomineableorebodyisdiscovered,suchcostsareexpensedintheperiodinwhichitisdeterminedthatthepropertyhasnofutureeconomicvalue.Costcomponentsofaspecificprojectthatareincludedinthecapitalcostoftheassetincludesalariesandwagesdirectlyattributabletotheproject,suppliesandmaterialsusedintheproject,andincrementaloverheadcoststhatcanbedirectlyattributabletotheproject.

Assetsunderconstructionarenotamortizeduntiltheendoftheconstructionperiodoroncecommercialproductionisachieved.Uponachievingtheproductionstage,thecapitalizedconstructioncostsaretransferredtotheappropriatecategoryofplantandequipment.

Plant and Equipment

Expendituresfornewfacilitiesandimprovementsthatcanextendtheusefullivesofexistingfacilitiesarecapitalizedasplantandequipmentatcost.Thecostofanitemofplantandequipmentincludes:itspurchaseprice,includingimportdutiesandnon-refundablepurchasetaxes,afterdeductingtradediscountsandrebates;anycostsdirectlyattributabletobringingtheassettothelocationandconditionnecessaryforittobecapableofoperatinginthemannerintendedbymanagement;andtheestimateofthecostsofdismantlingandremovingtheitemandrestoringthesiteonwhichitislocatedotherthancoststhatariseasaconsequenceofhavingusedtheitemtoproduceinventoriesduringtheperiod.

Anitemofproperty,plantandequipmentisderecognizedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Anygainorlossarisingonderecognitionoftheasset(calculatedasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheasset)isincludedintheconsolidatedstatementofincomeandcomprehensiveincomewhentheassetisderecognized.

Amortizationofanassetbeginswhentheassetisinthelocationandconditionnecessaryforittooperateinthemannerintendedbymanagement.Amortizationceasesattheearlierofthedatetheassetisclassifiedasheldforsaleorthedatetheassetisderecognized.Assetsunderconstructionarenotamortizeduntiltheendoftheconstructionperiod.Amortizationischargedaccordingtoeithertheunits-of-productionmethodorona


straight-linebasis,accordingtothepatterninwhichtheasset'sfutureeconomicbenefitsareexpectedtobeconsumed.Theamortizationmethodappliedtoanassetisreviewedatleastannually.

Usefullivesofproperty,plantandequipmentarebasedonestimatedminelivesasdeterminedbyprovenandprobablemineralreserves.RemainingminelivesatDecember31,2016rangefrom1to18years.

Mine Development Costs

Minedevelopmentcostsincurredafterthecommencementofcommercialproductionarecapitalizedwhentheyareexpectedtohaveafutureeconomicbenefit.Activitiesthataretypicallycapitalizedincludecostsincurredtobuildshafts,drifts,rampsandaccesscorridorswhichenablestheCompanytoextractoreunderground.

TheCompanyrecordsamortizationonundergroundminedevelopmentcostsonaunits-of-productionbasisbasedontheestimatedtonnageofprovenandprobablemineralreservesoftheidentifiedcomponentoftheorebody.Theunits-of-productionmethoddefinesthedenominatorasthetotaltonnageofprovenandprobablemineralreserves.

Deferred Stripping

Inopenpitminingoperations,itisnecessarytoremoveoverburdenandotherwastematerialstoaccessorefromwhichmineralscanbeextractedeconomically.Theprocessofminingoverburdenandwastematerialsisreferredtoasstripping.

Duringthedevelopmentstageofthemine,strippingcostsarecapitalizedaspartofthecostofbuilding,developingandconstructingthemineandareamortizedoncetheminehasenteredtheproductionstage.

Duringtheproductionstageofamine,strippingcostsarerecordedasapartofthecostofinventoriesunlessthesecostsareexpectedtoprovideafutureeconomicbenefitand,insuchcases,arecapitalizedtoproperty,plantandminedevelopment.

Productionstagestrippingcostsprovideafutureeconomicbenefitwhen:

• Itisprobablethatthefutureeconomicbenefit(e.g.,improvedaccesstotheorebody)associatedwiththestrippingactivitywillflowtotheCompany;

• TheCompanycanidentifythecomponentoftheorebodyforwhichaccesshasbeenimproved;and

• Thecostsrelatingtothestrippingactivityassociatedwiththatcomponentcanbemeasuredreliably.

Capitalizedproductionstagestrippingcostsareamortizedovertheexpectedusefullifeoftheidentifiedcomponentoftheorebodythatbecomesmoreaccessibleasaresultofthestrippingactivity.

Borrowing Costs

Borrowingcostsarecapitalizedtoqualifyingassets.QualifyingassetsareassetsthattakeasubstantialperiodoftimetopreparefortheCompany'sintendeduse,whichincludesprojectsthatareintheexplorationandevaluation,developmentorconstructionstages.

Borrowingcostsattributabletotheacquisition,constructionorproductionofqualifyingassetsareaddedtothecostofthoseassetsuntilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduse.Allotherborrowingcostsarerecognizedasfinancecostsintheperiodinwhichtheyareincurred.Wherethefundsusedtofinanceaqualifyingassetformpartofgeneralborrowings,theamountcapitalizediscalculatedusingaweightedaverageofratesapplicabletotherelevantborrowingsduringtheperiod.


Leases

Thedeterminationofwhetheranarrangementis,orcontains,aleaseisbasedonthesubstanceofthearrangementattheinceptiondate,includingwhetherthefulfillmentofthearrangementisdependentontheuseofaspecificassetorassetsorwhetherthearrangementconveysarighttousetheasset.

LeasingarrangementsthattransfersubstantiallyalltherisksandrewardsofownershipoftheassettotheCompanyareclassifiedasfinanceleases.Financeleasesarerecordedasanassetwithacorrespondingliabilityatanamountequaltothelowerofthefairvalueoftheleasedassetsandthepresentvalueoftheminimumleasepayments.Eachleasepaymentisallocatedbetweentheliabilityandfinancecostsusingtheeffectiveinterestratemethod,wherebyaconstantrateofinterestexpenseisrecognizedonthebalanceoftheliabilityoutstanding.Theinterestelementoftheleaseischargedtotheconsolidatedstatementofincomeasafinancecost.Anassetleasedunderafinanceleaseisamortizedovertheshorteroftheleasetermanditsusefullife.

Allotherleasesarerecognizedasoperatingleases.Operatingleasepaymentsarerecognizedasanoperatingexpenseintheconsolidatedstatementsofincomeonastraight-linebasisovertheleaseterm.

J) DevelopmentStageExpenditures

Developmentstageexpendituresarecostsincurredtoobtainaccesstoprovenandprobablemineralreservesandprovidefacilitiesforextracting,treating,gathering,transportingandstoringtheminerals.Thedevelopmentstageofaminecommenceswhenthetechnicalfeasibilityandcommercialviabilityofextractingthemineralresourcehasbeendetermined.Coststhataredirectlyattributabletominedevelopmentarecapitalizedasproperty,plantandminedevelopmenttotheextentthattheyarenecessarytobringthepropertytocommercialproduction.

Abnormalcostsareexpensedasincurred.Indirectcostsareincludedonlyiftheycanbedirectlyattributedtotheareaofinterest.Generalandadministrativecostsarecapitalizedaspartofthedevelopmentexpenditureswhenthecostsaredirectlyattributedtoaspecificminingdevelopmentproject.

Commercial Production

Amineconstructionprojectisconsideredtohaveenteredtheproductionstagewhenthemineconstructionassetsareavailableforuse.Indeterminingwhethermineconstructionassetsareconsideredavailableforuse,thecriteriaconsideredinclude,butarenotlimitedto,thefollowing:

• Completionofareasonableperiodoftestingmineplantandequipment;

• Abilitytoproducemineralsinsaleableform(withinspecifications);and

• Abilitytosustainongoingproductionofminerals.

Whenamineconstructionprojectmovesintotheproductionstage,amortizationcommences,thecapitalizationofcertainmineconstructioncostsceasesandexpendituresareeithercapitalizedtoinventoriesorexpensedasincurred.Exceptionsincludecostsincurredforadditionsorimprovementstoproperty,plantandminedevelopmentandopen-pitstrippingactivities.

K) ImpairmentofLong-livedAssets

AttheendofeachreportingperiodtheCompanyassesseswhetherthereisanyindicationthatlong-livedassetsmaybeimpaired.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Ifitisnotpossibletoestimatetherecoverableamountoftheindividualasset,assetsaregroupedattheCGUlevelforthepurposeofassessingtherecoverableamount.AnimpairmentlossisrecognizedforanyexcessofthecarryingamountoftheCGUoveritsrecoverableamount.Theimpairmentloss


relatedtoaCGUisfirstallocatedtogoodwillandtheremaininglossisallocatedonapro-ratabasistotheremaininglong-livedassetsoftheCGUbasedontheircarryingamounts.

Anyimpairmentchargethatistakenonalong-livedassetexceptgoodwillisreversediftherearesubsequentchangesintheestimatesorsignificantassumptionsthatwereusedtorecognizetheimpairmentlossthatresultinanincreaseintherecoverableamountoftheCGU.Ifanindicatorofimpairmentreversalhasbeenidentified,arecoveryshouldberecognizedtotheextenttherecoverableamountoftheassetexceedsitscarryingamount.Theamountofthereversalislimitedtothedifferencebetweenthecurrentcarryingamountandtheamountwhichwouldhavebeenthecarryingamounthadtheearlierimpairmentnotbeenrecognizedandamortizationofthatcarryingamounthadcontinued.Impairmentsandsubsequentreversalsarerecordedintheconsolidatedstatementofincomeintheperiodinwhichtheyoccur.

L) Debt

Debtisinitiallyrecordedatfairvalue,netoffinancingcostsincurred.Debtissubsequentlymeasuredatamortizedcost.Anydifferencebetweentheamountsreceivedandtheredemptionvalueofthedebtisrecognizedintheconsolidatedstatementsofincomeovertheperiodtomaturityusingtheeffectiveinterestratemethod.Convertibledebenturesareaccountedforasafinancialliabilitymeasuredatfairvalueintheconsolidatedstatementsofincome.

M) ReclamationProvisions

Assetretirementobligations("AROs")arisefromtheacquisition,developmentandconstructionofminingpropertiesandplantandequipmentduetogovernmentcontrolsandregulationsthatprotecttheenvironmentontheclosureandreclamationofminingproperties.ThemajorpartsofthecarryingamountofAROsrelatetotailingsandheapleachpadclosureandrehabilitation,demolitionofbuildingsandminefacilities,ongoingwatertreatmentandongoingcareandmaintenanceofclosedmines.TheCompanyrecognizesanAROatthetimetheenvironmentaldisturbanceoccursoraconstructiveobligationisdeterminedtoexistbasedontheCompany'sbestestimateofthetimingandamountofexpectedcashflowsexpectedtobeincurred.WhentheAROprovisionisrecognized,thecorrespondingcostiscapitalizedtotherelateditemofproperty,plantandminedevelopment.Reclamationprovisionsthatresultfromdisturbanceinthelandtoextractoreinthecurrentperiodisincludedinthecostofinventories.

Thetimingoftheactualenvironmentalremediationexpendituresisdependentonanumberoffactorssuchasthelifeandnatureoftheasset,theoperatinglicenceconditionsandtheenvironmentinwhichthemineoperates.Reclamationprovisionsaremeasuredattheexpectedvalueoffuturecashflowsdiscountedtotheirpresentvalueusingarisk-freeinterestrate.AROsareadjustedeachperiodtoreflectthepassageoftime(accretion).Accretionexpenseisrecordedinfinancecostseachperiod.UponsettlementofanARO,theCompanyrecordsagainorlossiftheactualcostdiffersfromthecarryingamountoftheARO.Settlementgainsorlossesarerecordedintheconsolidatedstatementsofincome.

Expectedcashflowsareupdatedtoreflectchangesinfactsandcircumstances.Theprincipalfactorsthatcancauseexpectedcashflowstochangearetheconstructionofnewprocessingfacilities,changesinthequantitiesofmaterialinprovenandprobablemineralreservesandacorrespondingchangeinthelife-of-mineplan,changingorecharacteristicsthatimpactrequiredenvironmentalprotectionmeasuresandrelatedcosts,changesinwaterqualitythatimpacttheextentofwatertreatmentrequiredandchangesinlawsandregulationsgoverningtheprotectionoftheenvironment.

Eachreportingperiod,provisionsforAROsareremeasuredtoreflectanychangestosignificantassumptions,includingtheamountandtimingofexpectedcashflowsandrisk-freeinterestrates.Changestothereclamation


provisionresultingfromchangesinestimateareaddedtoordeductedfromthecostoftherelatedasset,exceptwherethereductionofthereclamationprovisionexceedsthecarryingvalueoftherelatedassetsinwhichcasetheassetisreducedtonilandtheremainingadjustmentisrecognizedintheconsolidatedstatementsofincome.

Environmentalremediationliabilities("ERLs")aredifferentiatedfromAROsinthatERLsdonotarisefromenvironmentalcontaminationinthenormaloperationofalong-livedassetorfromalegalorconstructiveobligationtotreatenvironmentalcontaminationresultingfromtheacquisition,constructionordevelopmentofalong-livedasset.TheCompanyisrequiredtorecognizealiabilityforobligationsassociatedwithERLsarisingfrompastacts.ERLsaremeasuredbydiscountingtheexpectedrelatedcashflowsusingarisk-freeinterestrate.TheCompanypreparesestimatesofthetimingandamountofexpectedcashflowswhenanERLisincurred.Eachreportingperiod,theCompanyassessescostestimatesandotherassumptionsusedinthevaluationofERLstoreflectevents,changesincircumstancesandnewinformationavailable.ChangesinthesecostestimatesandassumptionshaveacorrespondingimpactonthevalueoftheERL.AnychangeinthevalueofERLsresultsinacorrespondingchargeorcredittotheconsolidatedstatementsofincome.UponsettlementofanERL,theCompanyrecordsagainorlossiftheactualcostdiffersfromthecarryingamountoftheERLintheconsolidatedstatementsofincome.

N) Post-employmentBenefits

InCanada,theCompanymaintainsadefinedcontributionplancoveringallofitsemployees(the"BasicPlan").TheBasicPlanisfundedbyCompanycontributionsbasedonapercentageofincomeforservicesrenderedbyemployees.Inaddition,theCompanyhasasupplementalplanfordesignatedexecutivesatthelevelofVice-Presidentorabove(the"SupplementalPlan").UndertheSupplementalPlan,anadditional10.0%ofthedesignatedexecutives'incomeiscontributedbytheCompany.

TheCompanyalsoprovidesanon-registeredsupplementaryexecutiveretirementdefinedbenefitplanforcertaincurrentandformerseniorofficers(the"ExecutivesPlan").TheExecutivesPlanbenefitsaregenerallybasedontheemployee'syearsofserviceandlevelofcompensation.PensionexpenserelatedtotheExecutivesPlanisthenetofthecostofbenefitsprovided(includingthecostofanybenefitsprovidedforpastservice),thenetinterestcostonthenetdefinedliability/asset,andtheeffectsofsettlementsandcurtailmentsrelatedtospecialevents.Pensionfundassetsaremeasuredattheircurrentfairvalues.Thecostsofpensionplanimprovementsarerecognizedimmediatelyinexpensewhentheyoccur.Remeasurementsofthenetdefinedbenefitliabilityarerecognizedimmediatelyinothercomprehensiveincome(loss)andaresubsequentlytransferredtoretainedearnings.

Defined Contribution Plan

TheCompanyrecognizesthecontributionspayabletoadefinedcontributionplaninexchangeforservicesrenderedbyemployeesasanexpense,unlessanotherpolicyrequiresorpermitstheinclusionofthecontributioninthecostofanasset.Afterdeductingcontributionsalreadypaid,aliabilityisrecordedthroughouteachperiodtoreflectunpaidbutearnedcontributions.Ifthecontributionpaidexceedsthecontributionduefortheservicebeforetheendofthereportingperiod,theCompanyrecognizesthatexcessasanassettotheextentthattheprepaymentwillleadtoareductioninfuturepaymentsoracashrefund.

Defined Benefit Plan

Planassetsaremeasuredattheirfairvalueattheconsolidatedbalancesheetdateandaredeductedfromthepresentvalueofplanliabilitiestoarriveatanetdefinedbenefitliability/asset.Thedefinedbenefitobligationreflectstheexpectedfuturepaymentsrequiredtosettletheobligationresultingfromemployeeserviceinthecurrentandpriorperiods.

Currentservicecostrepresentstheactuariallycalculatedpresentvalueofthebenefitsearnedbytheactiveemployeesineachperiodandreflectstheeconomiccostforeachperiodbasedoncurrentmarketconditions.The


currentservicecostisbasedonthemostrecentactuarialvaluation.Thenetinterestonthenetdefinedbenefitliability/assetisthechangeduringtheperiodinthedefinedbenefitliability/assetthatarisesfromthepassageoftime.

Pastservicecostrepresentsthechangeinthepresentvalueofthedefinedbenefitobligationresultingfromaplanamendmentorcurtailment.Pastservicecostsfromplanamendmentsthatincreaseordecreasevestedorunvestedbenefitsarerecognizedimmediatelyinnetincomeattheearlierofwhentherelatedplanamendmentoccursorwhentheentityrecognizesrelatedrestructuringcostsorterminationbenefits.

Gainsorlossesonplansettlementsaremeasuredasthedifferenceinthepresentvalueofthedefinedbenefitobligationandsettlementprice.Thisresultsinagainorlossbeingrecognizedwhenthebenefitobligationsettles.Actuarialgainsandlossesarerecordedontheconsolidatedbalancesheetsaspartofthebenefitplan'sfundedstatus.Gainsandlossesarerecognizedimmediatelyinothercomprehensiveincomeandaresubsequentlytransferredtoretainedearningsandarenotsubsequentlyrecognizedinnetincome.

O) ContingentLiabilitiesandOtherProvisions

Provisionsarerecognizedwhenapresentobligationexists(legalorconstructive),asaresultofapastevent,forwhichitisprobablethatanoutflowofresourceswillberequiredtosettletheobligation,andareliableestimatecanbemadeoftheamountoftheobligation.Theamountrecognizedasaprovisionisthebestestimateoftheexpenditurerequiredtosettletheobligationattheconsolidatedbalancesheetdate,measuredusingtheexpectedcashflowsdiscountedforthetimevalueofmoney.Theincreaseinprovision(accretion)duetothepassageoftimeisrecognizedasafinancecostintheconsolidatedstatementsofincome.

Contingentliabilitiesarepossibleobligationswhoseexistencewillbeconfirmedonlyontheoccurrenceornon-occurrenceofuncertainfutureeventsoutsidetheentity'scontrol,orpresentobligationsthatarenotrecognizedbecauseitisnotprobablethatanoutflowofeconomicbenefitswouldberequiredtosettletheobligationortheamountcannotbemeasuredreliably.Contingentliabilitiesarenotrecognizedbutaredisclosedanddescribedinthenotestotheconsolidatedfinancialstatements,includinganestimateoftheirpotentialfinancialeffectanduncertaintiesrelatingtotheamountortimingofanyoutflow,unlessthepossibilityofsettlementisremote.InassessinglosscontingenciesrelatedtolegalproceedingsthatarependingagainsttheCompanyorunassertedclaimsthatmayresultinsuchproceedings,theCompany,withassistancefromitslegalcounsel,evaluatestheperceivedmeritsofanylegalproceedingsorunassertedclaimsaswellastheperceivedmeritsoftheamountofreliefsoughtorexpectedtobesought.

P) Stock-basedCompensation

TheCompanyoffersequity-settledawards(theemployeestockoptionplan,incentivesharepurchaseplan,restrictedshareunitplanandperformanceshareunitplan)tocertainemployees,officersanddirectorsoftheCompany.

Employee Stock Option Plan ("ESOP")

TheCompany'sESOPprovidesforthegrantingofoptionstodirectors,officers,employeesandserviceproviderstopurchasecommonshares.Optionshaveexercisepricesequaltothemarketpriceonthedaypriortothedateofgrant.Thefairvalueoftheseoptionsisrecognizedintheconsolidatedstatementsofincomeandcomprehensiveincomeorintheconsolidatedbalancesheetsifcapitalizedaspartofproperty,plantandminedevelopmentovertheapplicablevestingperiodasacompensationcost.Anyconsiderationpaidbyemployeesonexerciseofoptionsorpurchaseofcommonsharesiscreditedtosharecapital.


FairvalueisdeterminedusingtheBlack-Scholesoptionvaluationmodel,whichrequirestheCompanytoestimatetheexpectedvolatilityoftheCompany'ssharepriceandtheexpectedlifeofthestockoptions.Limitationswithexistingoptionvaluationmodelsandtheinherentdifficultiesassociatedwithestimatingthesevariablescreatedifficultiesindeterminingareliablesinglemeasureofthefairvalueofstockoptiongrants.Thecostisrecordedoverthevestingperiodoftheawardtothesameexpensecategoryoftheawardrecipient'spayrollcostsandthecorrespondingentryisrecordedinequity.Equity-settledawardsarenotremeasuredsubsequenttotheinitialgrantdate.ThedilutiveimpactofstockoptiongrantsisfactoredintotheCompany'sreporteddilutednetincomepershare.Thestockoptionexpenseincorporatesanexpectedforfeiturerate,estimatedbasedonexpectedemployeeturnover.

Incentive Share Purchase Plan ("ISPP")

UndertheISPP,directors(excludingnon-executivedirectors),officersandemployees(the"Participants")oftheCompanymaycontributeupto10.0%oftheirbasicannualsalariesandtheCompanycontributesanamountequalto50.0%ofeachParticipant'scontribution.AllcommonsharessubscribedforundertheISPPareissuedbytheCompany.

TheCompanyrecordsanexpenseequaltoitscashcontributiontotheISPP.Noforfeiturerateisappliedtotheamountsaccrued.Whereanemployeeleavespriortothevestingdate,anyaccrualforcontributionsbytheCompanyduringthevestingperiodrelatedtothatemployeeisreversed.

Restricted Share Unit ("RSU") Plan

TheRSUplanisopentodirectorsandcertainemployees,includingseniorexecutives,oftheCompany.Commonsharesarepurchasedandheldinatrustuntiltheyhavevested.Thecostisrecordedoverthevestingperiodoftheawardtothesameexpensecategoryastheawardrecipient'spayrollcosts.ThecostoftheRSUsisrecordedwithinequityuntilsettled.Equity-settledawardsarenotremeasuredsubsequenttotheinitialgrantdate.

Performance Share Unit ("PSU") Plan

ThePSUplanisopentoseniorexecutivesoftheCompany.Commonsharesarepurchasedandheldinatrustuntiltheyhavevested.PSUsaresubjecttovestingrequirementsbasedonspecificperformancemeasurementsbytheCompany.ThefairvaluefortheportionofthePSUsrelatedtomarketconditionsisbasedontheapplicationofpricingmodelsatthegrantdateandthefairvaluefortheportionrelatedtonon-marketconditionsisbasedonthemarketvalueofthesharesatthegrantdate.CompensationexpenseisbasedonthecurrentbestestimateoftheoutcomeforthespecificperformancemeasurementestablishedbytheCompanyandisrecognizedoverthevestingperiodbasedonthenumberofunitsestimatedtovest.ThecostofthePSUsisrecordedwithinequityuntilsettled.Equity-settledawardsarenotremeasuredsubsequenttotheinitialgrantdate.

Q) RevenueRecognition

Revenuefromminingoperationsconsistsofgoldrevenues,netofsmelting,refining,transportationandothermarketingcharges.Revenuesfromby-productmetalsalesareshownnetofsmelterchargesaspartofrevenuesfromminingoperations.

Revenuefromthesaleofgoldandsilverisrecognizedwhenthefollowingconditionshavebeenmet:

• TheCompanyhastransferredtothebuyerthesignificantrisksandrewardsofownership;

• TheCompanyretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnoreffectivecontroloverthegoodssold;

• Theamountofrevenuecanbemeasuredreliably;


• ItisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheCompany;and

• Thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.

Revenuefromgoldandsilverintheformofdorebarsisrecordedwhentherefinedgoldorsilverissoldanddeliveredtothecustomer.Generally,allofthegoldandsilverintheformofdorebarsrecoveredintheCompany'smillingprocessissoldintheperiodinwhichitisproduced.

UnderthetermsoftheCompany'sconcentratesalescontractswiththird-partysmelters,finalpricesforthemetalscontainedintheconcentratearedeterminedbasedontheprevailingspotmarketmetalpricesonaspecifiedfuturedate,whichisestablishedasofthedatethattheconcentrateisdeliveredtothesmelter.TheCompanyrecordsrevenuesunderthesecontractsbasedonforwardpricesatthetimeofdelivery,whichiswhentherisksandrewardsofownershipoftheconcentratepassestothethird-partysmelters.Thetermsofthecontractsresultindifferencesbetweentherecordedestimatedpriceatdeliveryandthefinalsettlementprice.Thesedifferencesareadjustedthroughrevenueateachsubsequentfinancialstatementdate.

R) ExplorationandEvaluationExpenditures

Explorationandevaluationexpendituresarethecostsincurredintheinitialsearchformineraldepositswitheconomicpotentialorintheprocessofobtainingmoreinformationaboutexistingmineraldeposits.Explorationexpenditurestypicallyincludecostsassociatedwithprospecting,sampling,mapping,diamonddrillingandotherworkinvolvedinsearchingforore.Evaluationexpendituresarethecostsincurredtoestablishthetechnicalandcommercialviabilityofdevelopingmineraldepositsidentifiedthroughexplorationactivitiesorbyacquisition.

Explorationandevaluationexpendituresareexpensedasincurredunlessitcanbedemonstratedthattheprojectwillgeneratefutureeconomicbenefit.Whenitisdeterminedthataprojectcangeneratefutureeconomicbenefitthecostsarecapitalizedintheproperty,plantandminedevelopmentlineitemoftheconsolidatedbalancesheets.

Theexplorationandevaluationphaseendswhenthetechnicalfeasibilityandcommercialviabilityofextractingthemineralisdemonstrable.

S) NetIncomePerShare

Basicnetincomepershareiscalculatedbydividingnetincomeforagivenperiodbytheweightedaveragenumberofcommonsharesoutstandingduringthatsameperiod.Dilutednetincomepersharereflectsthepotentialdilutionthatcouldoccurifholderswithrightstoconvertinstrumentstocommonsharesexercisetheserights.Convertibledebtisdilutivewheneveritsimpactonnetincome,includingmark-to-marketgains(losses),interestandtaxexpense,perordinaryshareobtainableonconversionislessthanbasicnetincomepershare.Theweightedaveragenumberofcommonsharesusedtodeterminedilutednetincomepershareincludesanadjustment,usingthetreasurystockmethod,forstockoptionsoutstanding.Underthetreasurystockmethod:

• Theexerciseofoptionsisassumedtooccuratthebeginningoftheperiod(ordateofissuance,iflater);

• Theproceedsfromtheexerciseofoptionsplusthefutureperiodcompensationexpenseonoptionsgrantedareassumedtobeusedtopurchasecommonsharesattheaveragemarketpriceduringtheperiod;and

• Theincrementalnumberofcommonshares(thedifferencebetweenthenumberofsharesassumedissuedandthenumberofsharesassumedpurchased)isincludedinthedenominatorofthedilutednetincomepersharecalculation.


T) IncomeTaxes

Currentanddeferredtaxexpensesarerecognizedintheconsolidatedstatementsofincomeexcepttotheextentthattheyrelatetoabusinesscombination,ortoitemsrecognizeddirectlyinequityorinothercomprehensiveincome(loss).

Currenttaxexpenseisbasedonsubstantivelyenactedstatutorytaxratesandlawsattheconsolidatedbalancesheetdate.

Deferredtaxisrecognizedinrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandthetaxbasisofsuchassetsandliabilitiesmeasuredusingtaxratesandlawsthataresubstantivelyenactedattheconsolidatedbalancesheetdateandeffectiveforthereportingperiodwhenthetemporarydifferencesareexpectedtoreverse.

Deferredtaxesarenotrecognizedinthefollowingcircumstances:

• Whereadeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwill;

• Whereadeferredtaxassetorliabilityarisesontheinitialrecognitionofanassetorliabilityinatransactionwhichisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithernetincomeortaxableprofits;and

• FortemporarydifferencesrelatingtoinvestmentsinsubsidiariesandjointlycontrolledentitiestotheextentthattheCompanycancontrolthetimingofthereversalofthetemporarydifferenceanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

Deferredtaxassetsarerecognizedforunusedtaxlossesandtaxcreditscarriedforwardanddeductibletemporarydifferencestotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichtheycanbeutilizedexceptasnotedabove.

Ateachreportingperiod,previouslyunrecognizeddeferredtaxassetsarereassessedtodeterminewhetherithasbecomeprobablethatfuturetaxableprofitswillallowthedeferredtaxassetstoberecovered.

Recently Issued Accounting Pronouncements

IFRS9–FinancialInstruments

InJuly2014,theIASBissuedthefinalversionofIFRS9FinancialInstrumentsthatreplacesIAS39andallpreviousversionsofIFRS9.IFRS9bringstogetherallthreeaspectsoftheaccountingforfinancialinstrumentsproject:classificationandmeasurement,impairmentandhedgeaccounting.IFRS9iseffectiveforannualperiodsbeginningonorafterJanuary1,2018,withearlyapplicationpermitted.Exceptforhedgeaccounting,retrospectiveapplicationisrequired,buttheprovisionofcomparativeinformationisnotcompulsory.Forhedgeaccounting,therequirementsaregenerallyappliedprospectively,withsomelimitedexceptions.TheCompanyplanstoadoptthenewstandardontherequiredeffectivedate.

During2016,theCompanyperformedahigh-levelimpactassessmentofallthreeaspectsofIFRS9.ThispreliminaryassessmentisbasedoncurrentlyavailableinformationandmaybesubjecttochangesarisingfromfurtherdetailedanalysisoradditionalreasonableandsupportableinformationbeingmadeavailabletotheCompanyinthefuture.Overall,thereisnosignificantimpactexpectedonthebalancesheetorstatementofequityfromtheadoptionofIFRS9.

Classification and measurement

TheonlychangeinIFRS9inrespectoftheclassificationoffinancialliabilitiesisthatforthosedesignatedatfairvaluethroughprofitorloss("FVTPL"),fairvaluechangesattributabletotheCompany'sowncreditriskarepresentedinOCI.IFRS9


introducesanewmodelforclassifyingfinancialassets.Thestandardintroducesprinciple-basedrequirementsfortheclassificationoffinancialassets,usingthefollowingmeasurementcategories:

• Debtinstrumentsatamortizedcost;

• DebtinstrumentsatfairvaluethroughOCI("FVOCI")withcumulativegainsandlossesreclassifiedtoprofitorlossuponderecognition;

• Debtinstruments,derivativesandequityinstrumentsatFVTPL;and

• EquityinstrumentsdesignatedatFVOCIwithnorecyclingofgainsandlossesuponderecognition.

TheCompanyisstillevaluatingitsdifferentfinancialassetstoensureappropriateclassificationunderIFRS9.

Impairment

Thenewimpairmentrequirementsarebasedonaforward-lookingexpectedcreditlossmodel.ThemodelappliestodebtinstrumentsmeasuredatamortizedcostoratFVOCI,aswellasleasereceivables,tradereceivables,contractsassets(asdefinedinIFRS15),andloancommitmentsandfinancialguaranteecontractsthatarenotatfairvaluethroughprofitorloss.TheCompanydoesnotholdsignificantamountsofthesetypesoffinancialassetsandthereforedoesnotexpectthesechangestohaveasignificantimpact.

Hedge accounting

ThechangesinIFRS9relatingtohedgeaccountingwillhavenoimpactastheCompanydoesnotcurrentlyapplyhedgeaccounting.

IFRS15–RevenuefromContractswithCustomers

IFRS15wasissuedinMay2014andestablishesafive-stepmodeltoaccountforrevenuearisingfromcontractswithcustomers.UnderIFRS15,revenueisrecognizedatanamountthatreflectstheconsiderationtowhichanentityexpectstobeentitledinexchangefortransferringgoodsorservicestoacustomer.

ThenewrevenuestandardwillsupersedeallcurrentrevenuerecognitionrequirementsunderIFRS.EitherafullretrospectiveapplicationoramodifiedretrospectiveapplicationisrequiredforannualperiodsbeginningonorafterJanuary1,2018.Earlyadoptionispermitted.

TheCompanyplanstoadoptthenewstandard(includingtheclarificationsissuedbytheIASBinApril2016)ontherequiredeffectivedate.During2016,theCompanycommenceditspreliminaryassessmentofIFRS15andsomeofthekeyissuesithasidentified,anditsinitialviewsandperspectives,aresetoutbelow.ThesearebasedontheworkcompletedtodateandtheCompany'scurrentinterpretationofIFRS15andmaybesubjecttochangesasmoredetailedanalysisiscompletedandasinterpretationsevolvemoregenerally.Furthermore,theCompanyisconsideringandwillcontinuetomonitoranyfurtherdevelopment.Todate,theissuessetoutimmediatelybelowwereidentifiedbytheCompanyasrequiringfurtherconsideration.

Provisionally priced sales

SomeoftheCompany'ssalesofmetalinconcentratecontainprovisionalpricingfeatures.UnderIAS18,revenueisrecognizedunderthesecontractsbasedonforwardpricesatthetimeofdelivery,whichiswhentherisksandrewardsofownershipoftheconcentratepasstothethird-partysmelters.Finalpricesforthemetalscontainedintheconcentratearedeterminedbasedontheprevailingspotmarketmetalpricesonaspecifiedfuturedate,whichisestablishedasofthedatethattheconcentrateisdeliveredtothesmelter.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(thousands of United States dollars, except share and per share amounts, unless otherwise indicated) December 31, 2016

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

TheCompanyiscurrentlyevaluatingtheaccountingtreatmentofthesecontractsunderIFRS15.Theimpactisexpectedtobeimmaterial.In2016,revenuefromconcentratesalescontractswasapproximately0.7%oftotalrevenue.

Other presentation and disclosure requirements

IFRS15containspresentationanddisclosurerequirementswhicharemoredetailedthanthecurrentstandards.Thepresentationrequirementsrepresentasignificantchangefromcurrentpracticeandwillincreasethevolumeofdisclosuresrequiredinthefinancialstatements.ManyofthedisclosurerequirementsinIFRS15arecompletelynew.In2016,theCompanystartedtoconsiderthesystems,internalcontrols,policiesandproceduresnecessarytocollectanddisclosetherequiredinformation.

IFRS16–Leases

InJanuary2016,theIASBissuedIFRS16–Leases whichbringsmostleaseson-balancesheetforlesseesbyeliminatingthedistinctionbetweenoperatingandfinanceleases.Lessoraccountingremainslargelyunchangedandthedistinctionbetweenoperatingandfinanceleasesisretained.UnderIFRS16,alesseerecognizesaright-of-useassetandaleaseliability.Theright-of-useassetistreatedsimilarlytoothernon-financialassetsanddepreciatedaccordingly,andtheliabilityaccruesinterest.Theleaseliabilityisinitiallymeasuredatthepresentvalueoftheleasepaymentspayableovertheleaseterm,discountedattherateimplicitinthelease.Lesseesarepermittedtomakeanaccountingpolicyelection,byclassofunderlyingasset,toapplyamethodlikeIAS17'soperatingleaseaccountingandnotrecognizeleaseassetsandleaseliabilitiesforleaseswithaleasetermof12monthsorlessandonalease-by-leasebasis,toapplyamethodsimilartocurrentoperatingleaseaccountingtoleasesforwhichtheunderlyingassetisoflowvalue.IFRS16supersedesIAS17–Leases andrelatedinterpretationsandiseffectiveforperiodsbeginningonorafterJanuary1,2019,withearlieradoptionpermittedifIFRS15hasalsobeenapplied.Alesseecanchoosetoapplythestandardusingeitherafullretrospectiveoramodifiedretrospectiveapproach.Thestandard'stransitionprovisionspermitcertainpracticalexpedients.In2017,theCompanyplanstoassessthepotentialeffectofIFRS16onitsconsolidatedfinancialstatements.

4. SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS

ThepreparationoftheseconsolidatedfinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgments,estimatesandassumptionsthataffecttheamountsreportedintheconsolidatedfinancialstatementsandaccompanyingnotes.Managementbelievesthattheestimatesusedinthepreparationoftheconsolidatedfinancialstatementsarereasonable;however,actualresultsmaydiffermateriallyfromtheseestimates.Thekeyareaswheresignificantjudgments,estimatesandassumptionshavebeenmadearesummarizedbelow.

ProvenandProbableMineralReserves

ProvenandprobablemineralreservesareestimatesoftheamountoforethatcanbeeconomicallyandlegallyextractedfromtheCompany'sminingproperties.Theestimatesarebasedoninformationcompiledby"qualifiedpersons"asdefinedundertheCanadianSecuritiesAdministrators'NationalInstrument43-101–StandardsofDisclosureforMineralProjects("NI43-101").Suchananalysisrelatingtothegeologicalandtechnicaldataonthesize,depth,shapeandgradeoftheorebodyandsuitableproductiontechniquesandrecoveryratesrequirescomplexgeologicaljudgmentstointerpretthedata.Theestimationofrecoverableprovenandprobablemineralreservesisbaseduponfactorssuchasestimatesofcommodityprices,futurecapitalrequirementsandproductioncosts,geologicalandmetallurgicalassumptionsandjudgmentsmadeinestimatingthesizeandgradeoftheorebodyandforeignexchangerates.


Astheeconomicassumptionsusedmaychangeandasadditionalgeologicalinformationisacquiredduringtheoperationofamine,estimatesofprovenandprobablemineralreservesmaychange.SuchchangesmayimpacttheCompany'sconsolidatedbalancesheetsandconsolidatedstatementsofincomeandcomprehensiveincome,including:

• ThecarryingvalueoftheCompany'sproperty,plantandminedevelopmentandgoodwillmaybeaffectedduetochangesinestimatedfuturecashflows;

• Amortizationchargesintheconsolidatedstatementsofincomeandcomprehensiveincomemaychangewheresuchchargesaredeterminedusingtheunits-of-productionmethodorwheretheusefullifeoftherelatedassetschange;

• Capitalizedstrippingcostsrecognizedintheconsolidatedbalancesheetsaseitherpartofminingpropertiesoraspartofinventoriesorchargedtoincomemaychangeduetochangesintheratiooforetowasteextracted;and

• Reclamationprovisionsmaychangewherechangestotheprovenandprobablemineralreserveestimatesaffectexpectationsaboutwhensuchactivitieswilloccurandtheassociatedcostoftheseactivities.

ExplorationandEvaluationExpenditures

TheapplicationoftheCompany'saccountingpolicyforexplorationandevaluationexpendituresrequiresjudgmenttodeterminewhetherfutureeconomicbenefitsarelikelytoariseandwhetheractivitieshavereachedastagewherethetechnicalfeasibilityandcommercialviabilityofextractingthemineralisdemonstrable.

ProductionStageofaMine

Aseachmineisunique,significantjudgmentisrequiredtodeterminethedatethatamineenterstheproductionstage.TheCompanyconsidersthefactorsoutlinedinnote3totheseconsolidatedfinancialstatementstomakethisdetermination.

Contingencies

Contingenciescanbeeitherpossibleassetsorpossibleliabilitiesarisingfrompasteventswhich,bytheirnature,willberesolvedonlywhenoneormoreuncertainfutureeventsoccurorfailtooccur.Theassessmentoftheexistenceandpotentialimpactofcontingenciesinherentlyinvolvestheexerciseofsignificantjudgmentandtheuseofestimatesregardingtheoutcomeoffutureevents.

ReclamationProvisions

EnvironmentalremediationcostswillbeincurredbytheCompanyattheendoftheoperatinglifeoftheCompany'sminingproperties.Managementassessesitsreclamationprovisioneachreportingperiodorwhennewinformationbecomesavailable.Theultimateenvironmentalremediationcostsareuncertainandcostestimatescanvaryinresponsetomanyfactors,includingestimatesoftheextentandcostsofreclamationactivities,technologicalchanges,regulatorychanges,costincreasesascomparedtotheinflationrateandchangesindiscountrates.Theseuncertaintiesmayresultinfutureactualexpendituresdifferingfromtheamountofthecurrentprovision.Asaresult,therecouldbesignificantadjustmentstotheprovisionsestablishedthatwouldaffectfuturefinancialresults.Thereclamationprovisionasatthereportingdaterepresentsmanagement'sbestestimateofthepresentvalueofthefutureenvironmentalremediationcostsrequired.

IncomeandMiningTaxes

Managementisrequiredtomakeestimatesregardingthetaxbasisofassetsandliabilitiesandrelateddeferredincomeandminingtaxassetsandliabilities,amountsrecordedforuncertaintaxpositions,themeasurementofincomeandminingtaxexpense,andestimatesofthetimingofrepatriationofincome.Severaloftheseestimatesrequiremanagementtomake


assessmentsoffuturetaxableprofitand,ifactualresultsaresignificantlydifferentthantheCompany'sestimates,theabilitytorealizethedeferredincomeandminingtaxassetsrecordedontheconsolidatedbalancesheetscouldbeaffected.

Amortization

Property,plantandminedevelopmentcomprisealargeportionoftheCompany'stotalassetsandassuchtheamortizationoftheseassetshasasignificanteffectontheCompany'sconsolidatedfinancialstatements.Amortizationischargedaccordingtothepatterninwhichanasset'sfutureeconomicbenefitsareexpectedtobeconsumed.Thedeterminationofthispatternoffutureeconomicbenefitsrequiresmanagementtomakeestimatesandassumptionsaboutusefullivesandresidualvaluesattheendoftheasset'susefullife.Actualusefullivesandresidualvaluesmaydiffersignificantlyfromcurrentassumptions.

ImpairmentandImpairmentReversals

TheCompanyevaluateseachassetorCGU(excludinggoodwill,whichisassessedforimpairmentannuallyregardlessofindicatorsandisnoteligibleforimpairmentreversals)ineachreportingperiodtodetermineifanyindicatorsofimpairmentorimpairmentreversalexist.Whencompletinganimpairmenttest,theCompanycalculatestheestimatedrecoverableamountofCGUs,whichrequiresmanagementtomakeestimatesandassumptionswithrespecttoitemssuchasfutureproductionlevels,operatingandcapitalcosts,long-termcommodityprices,foreignexchangerates,discountrates,explorationpotential,andclosureandenvironmentalremediationcosts.Theseestimatesandassumptionsaresubjecttoriskanduncertainty.Therefore,thereisapossibilitythatchangesincircumstanceswillhaveanimpactontheseprojections,whichmayimpacttherecoverableamountofassetsorCGUs.Accordingly,itispossiblethatsomeortheentirecarryingamountoftheassetsorCGUsmaybefurtherimpairedortheimpairmentchargereversedwiththeimpactrecognizedintheconsolidatedstatementsofincomeandcomprehensiveincome.

JointArrangements

JudgmentisrequiredtodeterminewhentheCompanyhasjointcontrolofacontractualarrangement,whichrequiresacontinuousassessmentoftherelevantactivitiesandwhenthedecisionsinrelationtothoseactivitiesrequireunanimousconsent.Judgmentisalsocontinuallyrequiredtoclassifyajointarrangementaseitherajointoperationorajointventurewhenthearrangementhasbeenstructuredthroughaseparatevehicle.ClassifyingthearrangementrequirestheCompanytoassessitsrightsandobligationsarisingfromthearrangement.Specifically,theCompanyconsidersthelegalformoftheseparatevehicle,thetermsofthecontractualarrangementandotherrelevantfactsandcircumstances.Thisassessmentoftenrequiressignificantjudgment,andadifferentconclusiononjointcontrol,orwhetherthearrangementisajointoperationorajointventure,mayhaveamaterialimpactontheaccountingtreatment.

ManagementevaluateditsjointarrangementwithYamanaGoldInc.("Yamana")toeachacquire50.0%ofthesharesofOsisko(nowCanadianMalarticCorporation)undertheprinciplesofIFRS11JointArrangements.TheCompanyconcludedthatthearrangementqualifiedasajointoperationuponconsideringthefollowingsignificantfactors:

• Therequirementthatthejointoperatorspurchasealloutputfromtheinvesteeandinvesteerestrictionsonsellingtheoutputtoanythirdparty;

• Thepartiestothearrangementaresubstantiallytheonlysourceofcashflowcontributingtothecontinuityofthearrangement;and

• Ifthesellingpricedropsbelowcost,thejointoperatorsarerequiredtocoveranyobligationstheentitycannotsatisfy.


5. ACQUISITIONS

GunnarnMiningAB

OnJune11,2015,AgnicoEagleSwedenAB("AESweden")anindirectwholly-ownedsubsidiaryoftheCompany,acquired55.0%oftheissuedandoutstandingcommonsharesofGunnarnMiningAB("Gunnarn")fromOrexMineralsInc.("Orex"),bywayofasharepurchaseagreement(the"GunnarnSPA").TheoperationandgovernanceofGunnarnandtheBarseleprojectaregovernedbyajointventureagreementamongtheCompany,AESweden,OrexandGunnarn(the"GunnarnJVA").

UndertheGunnarnSPA,theconsiderationfortheacquisitionofthe55.0%ofGunnarn'soutstandingcommonshareswas$10.0million,comprisedof$6.0millionincashpayableatclosingandpaymentsof$2.0millionincashor,atAESweden'ssolediscretion,sharesoftheCompanyoneachofthefirstandsecondanniversaryoftheclosing.UndertheGunnarnJVA,AESwedencommittedtoincuranaggregateof$7.0millionofexplorationexpensesattheBarseleprojectbyJune11,2018,45.0%or$3.1millionofwhichisconsideredaccruedpurchaseconsideration.Accordingly,theCompany'stotalpurchaseconsiderationfortheacquisitionofits55.0%interestinGunnarnwas$13.1million.AESwedenmayearnanadditional15.0%interestinGunnarnundertheGunnarnJVAifitcompletesafeasibilitystudyinrespectoftheBarseleproject.

TheGunnarnJVAalsoprovidesAESwedenwiththerighttonominateamajorityofthemembersoftheboardofdirectorsofGunnarn(basedoncurrentshareholdings)andAESwedenisthesoleoperatoroftheBarseleprojectandpaidcustomarymanagementfees.

Inconnectionwiththetransaction,Orexalsoobtaineda2.0%netsmelterreturnroyaltyonproductionfromtheBarseleproperty,whichtheCompanymayrepurchaseatanytimefor$5.0million.

TheGunnarnacquisitionwasaccountedforbytheCompanyasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$0.6millionwerecapitalizedtotheminingpropertiesacquired.

OnSeptember25,2015,OrexassigneditsinterestintheGunnarnJVAgreementtoBarseleMineralsCorp.("BarseleMinerals"),whichwasatthetimeawholly-ownedsubsidiaryofOrex.AllofthesharesofBarseleMineralsweresubsequentlydistributedtoshareholdersofOrexunderaplanofarrangement.


Thefollowingtablesetsouttheallocationofthepurchasepricetoassetsacquiredandliabilitiesassumed,basedonmanagement'sestimatesoffairvalue:

Total purchase price:

Cashpaidforacquisition $ 5,994

Accruedconsideration 7,150

Totalpurchasepricetoallocate $ 13,144

Fair value of assets acquired and liabilities assumed:

Miningproperties $ 20,021

Cashandcashequivalents 3

Othercurrentassets 35

Accountspayableandaccruedliabilities (80)

Long-termdebt (29)

Otherliabilities (6,806)

Netassetsacquired $ 13,144

SoltoroLtd.

OnJune9,2015,theCompanyacquiredalloftheissuedandoutstandingcommonsharesofSoltoroLtd.("Soltoro"),includingcommonsharesissuableontheexerciseofSoltoro'soutstandingoptionsandwarrants,bywayofaplanofarrangementundertheCanada Business CorporationsAct (the"SoltoroArrangement").Atthetimeofitsacquisition,SoltorowasaTSXVenturelistedexplorationcompanyfocusedonthediscoveryofpreciousmetalsinMexico.

EachoutstandingshareofSoltorowasexchangedundertheSoltoroArrangementfor:(i)C$0.01incash;(ii)0.00793ofanAgnicoEaglecommonshare;and(iii)onecommonshareofPalaminaCorp.,acompanythatwasnewlyformedinconnectionwiththeSoltoroArrangement.

PursuanttotheSoltoroArrangement,SoltorotransferredallminingpropertieslocatedoutsideofthestateofJalisco,MexicotoPalaminaCorp.,andretainedallminingpropertieslocatedwithinthestateofJalisco,Mexico.AgnicoEaglehadnointerestinPalaminaCorp.upontheclosingoftheSoltoroArrangement.

AgnicoEagle'stotalpurchasepriceof$26.7millionwascomprisedof$2.4millionincash,including$1.6millionincashcontributedtoPalaminaCorp.,and770,429AgnicoEaglecommonsharesissuedfromtreasury.TheSoltoroacquisitionwasaccountedforasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$1.4millionwerecapitalizedtotheminingpropertiesacquiredseparatelyfromthepurchasepriceallocationsetoutbelow.


Thefollowingtablesetsouttheallocationofthepurchasepricetoassetsacquiredandliabilitiesassumed,basedonmanagement'sestimatesoffairvalue:

Total purchase price:

Cashpaidforacquisition $ 2,366

AgnicoEaglecommonsharesissuedforacquisition 24,351

Totalpurchasepricetoallocate $ 26,717

Fair value of assets acquired and liabilities assumed:

Miningproperties $ 27,053

Cashandcashequivalents 2,375

Available-for-salesecurities 17

Othercurrentassets 130

Plantandequipment 33

Accountspayableandaccruedliabilities (1,134)

Othercurrentliabilities (1,757)

Netassetsacquired $ 26,717

MalarticCHLProperty

OnMarch19,2015,AgnicoEagle,YamanaandthePartnershipcompletedthepurchaseofa30.0%interestintheMalarticCHLpropertyfromAbitibiRoyaltiesInc.("Abitibi")inexchangefor459,197AgnicoEaglecommonshares,3,549,695Yamanacommonsharesand3.0%netsmelterreturnroyaltiestoeachofAbitibiandOsiskoGoldRoyaltiesLtd.ontheMalarticCHLproperty.TotalAgnicoEaglecommonshareconsiderationissuedwasvaluedat$13.4millionbasedontheclosingpriceofthecommonsharesonMarch18,2015.TheMalarticCHLpropertyislocatedadjacenttotheCompany'sjointlyownedCanadianMalarticmineandtheremaining70.0%interestintheMalarticCHLpropertywasjointlyacquiredthroughtheJune16,2014acquisitionofOsisko(thepredecessortoCanadianMalarticCorporation).Concurrentwiththetransactionclosing,eachofAbitibi,AgnicoEagle,Yamana,thePartnershipandCanadianMalarticCorporationreleasedanddischargedtheotherswithrespecttoallproceedingspreviouslycommencedbyAbitibiwithrespecttotheMalarticCHLproperty.Asaresultofthetransaction,AgnicoEagleandYamanajointlyowna100%interestintheMalarticCHLpropertythroughtheirrespectiveindirectinterestsinthePartnership.


6. FAIR VALUE MEASUREMENT

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Allassetsandliabilitiesforwhichfairvalueismeasuredordisclosedintheconsolidatedfinancialstatementsarecategorizedwithinthefairvaluehierarchy,described,asfollows,basedonthelowest-levelinputthatissignificanttothefairvaluemeasurementasawhole:

Level1–Unadjustedquotedpricesinactivemarketsthatareaccessibleatthemeasurementdateforidentical,unrestrictedassetsorliabilities;

Level2–Quotedpricesinmarketsthatarenotactiveorinputsthatareobservable,eitherdirectlyorindirectly,forsubstantiallythefulltermoftheassetorliability;and

Level3–Pricesorvaluationtechniquesthatrequireinputsthatarebothsignificanttothefairvaluemeasurementandunobservable(supportedbylittleornomarketactivity).

ThefairvaluehierarchygivesthehighestprioritytoLevel1inputsandthelowestprioritytoLevel3inputs.

Foritemsthatarerecognizedatfairvalueonarecurringbasis,theCompanydetermineswhethertransfershaveoccurredbetweenlevelsinthehierarchybyreassessingtheirclassificationattheendofeachreportingperiod.

DuringtheyearendedDecember31,2016,therewerenotransfersbetweenLevel1andLevel2fairvaluemeasurements,andnotransfersintooroutofLevel3fairvaluemeasurements.

TheCompany'sfinancialassetsandliabilitiesincludecashandcashequivalents,short-terminvestments,restrictedcash,tradereceivables,available-for-salesecurities,accountspayableandaccruedliabilities,long-termdebtandderivativefinancialinstruments.

Thefairvaluesofcashandcashequivalents,short-terminvestments,restrictedcashandaccountspayableandaccruedliabilitiesapproximatetheircarryingvaluesduetotheirshort-termnature.

Long-termdebtisrecordedontheconsolidatedbalancesheetsatDecember31,2016atamortizedcost.Thefairvalueoflong-termdebtisdeterminedbyapplyingadiscountrate,reflectingthecreditspreadbasedontheCompany'screditrating,tofuturerelatedcashflowswhichiscategorizedwithinLevel2ofthefairvaluehierarchy.AsatDecember31,2016,theCompany'slong-termdebthadafairvalueof$1,319.7million(December31,2015–$1,226.5million).

ThefollowingtablesetsouttheCompany'sfinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisasatDecember31,2016usingthefairvaluehierarchy:

Level 1 Level 2 Level 3 Total Financial assets:

Tradereceivables $ – $ 8,185 $ – $ 8,185

Available-for-salesecurities 86,736 5,574 – 92,310

Fairvalueofderivativefinancialinstruments – 364 – 364

Totalfinancialassets $ 86,736 $ 14,123 $ – $ 100,859

Financial liabilities:

Fairvalueofderivativefinancialinstruments $ – $ 1,120 $ – $ 1,120

Totalfinancialliabilities $ – $ 1,120 $ – $ 1,120


ThefollowingtablesetsouttheCompany'sfinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisasatDecember31,2015usingthefairvaluehierarchy:

Level 1 Level 2 Level 3 Total Financial assets:

Tradereceivables $ – $ 7,714 $ – $ 7,714

Available-for-salesecurities 27,630 4,233 – 31,863

Fairvalueofderivativefinancialinstruments – 87 – 87

Totalfinancialassets $ 27,630 $ 12,034 $ – $ 39,664

Financial liabilities:

Fairvalueofderivativefinancialinstruments $ – $ 8,073 $ – $ 8,073

Totalfinancialliabilities $ – $ 8,073 $ – $ 8,073

Valuation Techniques

TradeReceivables

Tradereceivablesfromprovisionalinvoicesforconcentratesalesarevaluedusingquotedforwardratesderivedfromobservablemarketdatabasedonthemonthofexpectedsettlement(classifiedwithinLevel2ofthefairvaluehierarchy).

Available-for-saleSecurities

Available-for-salesecuritiesrepresentingsharesofpubliclytradedentitiesarerecordedatfairvalueusingquotedmarketprices(classifiedwithinLevel1ofthefairvaluehierarchy).Available-for-salesecuritiesrepresentingsharesofnon-publiclytradedentitiesornon-transferablesharesofpubliclytradedentitiesarerecordedatfairvalueusingexternalbroker-dealerquotationscorroboratedbyoptionpricingmodels(classifiedwithinLevel2ofthefairvaluehierarchy).

DerivativeFinancialInstruments

DerivativefinancialinstrumentsclassifiedwithinLevel2ofthefairvaluehierarchyarerecordedatfairvalueusingexternalbroker-dealerquotationscorroboratedbyoptionpricingmodelsoroptionpricingmodelsthatutilizeavarietyofinputsthatareacombinationofquotedpricesandmarket-corroboratedinputs.Derivativefinancialinstrumentsareclassifiedasfairvaluethroughprofitandloss.




7. INVENTORIES

As at December 31,

2016

As at December 31,

2015 Oreinstockpilesandonleachpads $ 90,536 $ 88,633

Concentratesanddorebars 108,193 108,657

Supplies 244,985 264,686

Totalcurrentinventories $ 443,714 $ 461,976

Non-currentoreinstockpilesandonleachpads(i) 62,780 61,167

Totalinventories $ 506,494 $ 523,143

Note:

(i) OrethattheCompanydoesnotexpecttoprocesswithin12monthsisclassifiedaslong-termandisrecordedintheotherassetslineitemontheconsolidatedbalancesheets.

DuringtheyearendedDecember31,2016,achargeof$6.6million(2015–$8.6million)wasrecordedwithinproductioncoststoreducethecarryingvalueofinventoriestotheirnetrealizablevalue.

8. AVAILABLE-FOR-SALE SECURITIES

As at December 31,

2016

As at December 31,

2015 Cost $ 91,200 $ 64,832

Accumulatedimpairmentlosses (36,017) (36,842)

Unrealizedgainsinaccumulatedothercomprehensiveincome 37,634 4,030

Unrealizedlossesinaccumulatedothercomprehensiveincome (507) (157)

Totalestimatedfairvalueofavailable-for-salesecurities $ 92,310 $ 31,863

DuringtheyearendedDecember31,2016,theCompanyreceivednetproceedsof$6.0million(2015–$54.4million)andrecognizedagainbeforeincometaxesof$3.5million(2015–$24.6million)onthesaleofcertainavailable-for-salesecurities.

DuringtheyearendedDecember31,2016,theCompanyrecordedanimpairmentlossofnil(2015–$12.0million)oncertainavailable-for-salesecuritiesthatweredeterminedtohaveanimpairmentthatwassignificantorprolonged.


9. OTHER ASSETS

(a) OtherCurrentAssets

As at December 31,

2016

As at December 31,

2015

Federal,provincialandothersalestaxesreceivable $ 77,380 $ 89,313

Prepaidexpenses 47,416 71,811

Insurancereceivable – 12,288

Other 12,014 21,277

Totalothercurrentassets $ 136,810 $ 194,689

(b) OtherAssets

As at December 31,

2016

As at December 31,

2015

Non-currentoreinstockpilesandonleachpads $ 62,780 $ 61,167

Otherassets 11,383 6,071

Totalotherassets $ 74,163 $ 67,238


10. PROPERTY, PLANT AND MINE DEVELOPMENT

Mining

Properties Plant and Equipment

Mine Development

Costs Total

As at December 31, 2014 $ 1,939,940 $ 2,009,247 $ 1,206,678 $ 5,155,865

Additions 103,664 174,477 283,221 561,362

Disposals (88) (6,269) (1,757) (8,114)

Amortization (168,612) (352,090) (99,444) (620,146)

Transfersbetweencategories (209,294) 239,041 (29,747) –

As at December 31, 2015 1,665,610 2,064,406 1,358,951 5,088,967

Additions 53,072 244,018 279,119 576,209

Gainonimpairmentreversal 83,992 36,169 – 120,161

Disposals (1,890) (17,658) – (19,548)

Amortization (207,383) (342,208) (110,162) (659,753)

Transfersbetweencategories 12,135 39,556 (51,691) –

As at December 31, 2016 $ 1,605,536 $ 2,024,283 $ 1,476,217 $ 5,106,036

As at December 31, 2015

Cost $ 3,330,464 $ 4,273,798 $ 1,867,172 $ 9,471,434

Accumulatedamortizationandnetimpairments (1,664,854) (2,209,392) (508,221) (4,382,467)

Netcarryingamount–December31,2015 $ 1,665,610 $ 2,064,406 $ 1,358,951 $ 5,088,967


Cost $ 2,593,659 $ 4,233,945 $ 2,050,980 $ 8,878,584

Accumulatedamortizationandnetimpairments (988,122) (2,209,663) (574,763) (3,772,548)

Netcarryingamount–December31,2016 $ 1,605,537 $ 2,024,282 $ 1,476,217 $ 5,106,036

AsatDecember31,2016,assetsunderconstruction,andthereforenotyetbeingdepreciated,includedinthenetcarryingamountofproperty,plantandminedevelopmentamountedto$532.3million(December31,2015–$350.7million).

DuringtheyearendedDecember31,2016,theCompanydisposedofproperty,plantandminedevelopmentwithacarryingvalueof$19.5million(2015–$8.1million).Thelossondisposalwasrecordedintheotherexpenseslineitemintheconsolidatedstatementsofincomeandcomprehensiveincome.


GeographicInformation:

As at December 31,

2016

As at December 31,

2015

Northern Business: Canada $ 3,266,594 $ 3,196,494

Finland 867,257 851,867

Southern Business: Mexico 961,943 1,030,364

UnitedStates 10,242 10,242

Totalproperty,plantandminedevelopment $ 5,106,036 $ 5,088,967

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

As at December 31,

2016

As at December 31,

2015

Tradepayables $ 111,173 $ 121,633

Wagespayable 42,522 40,020

Accruedliabilities 55,893 51,533

Otherliabilities 18,978 30,600

Totalaccountspayableandaccruedliabilities $ 228,566 $ 243,786

In2016and2015,theotherliabilitiesbalanceconsistedprimarilyofvariousemployeepayrolltaxwithholdingsandotherpayrolltaxes.

12. RECLAMATION PROVISION

AgnicoEagle'sreclamationprovisionincludesbothassetretirementobligationsandenvironmentalremediationliabilities.Reclamationprovisionestimatesarebasedoncurrentlegislation,thirdpartyestimates,management'sestimatesandfeasibilitystudycalculations.Assumptionsbasedoncurrenteconomicconditions,whichtheCompanybelievesarereasonable,havebeenusedtoestimatethereclamationprovision.However,actualreclamationcostswillultimatelydependonfutureeconomicconditionsandcostsforthenecessaryreclamationwork.Changesinreclamationprovisionestimatesduringtheperiodreflectchangesincashflowestimatesaswellasassumptionsincludingdiscountandinflationrates.ThediscountratesusedinthecalculationofthereclamationprovisionatDecember31,2016rangedbetween0.74%and2.35%(December31,2015–between0.48%and2.37%).


ThefollowingtablereconcilesthebeginningandendingcarryingamountsoftheCompany'sassetretirementobligations.Thesettlementoftheobligationisestimatedtooccurthroughto2069.


2016


2015

Assetretirementobligations–long-term,beginningofyear $ 269,068 $ 242,615

Assetretirementobligations–current,beginningofyear 4,443 2,863

Currentyearadditionsandchangesinestimate,net (9,112) 64,305

Currentyearaccretion 3,847 4,178

Liabilitiessettled (1,113) (1,496)

Foreignexchangerevaluation (1,474) (38,954)

Reclassificationfromlong-termtocurrent,endofyear (5,953) (4,443)

Assetretirementobligations–long-term,endofyear $ 259,706 $ 269,068

ThefollowingtablereconcilesthebeginningandendingcarryingamountsoftheCompany'senvironmentalremediationliability.Thesettlementoftheobligationisestimatedtooccurthroughto2025.


2016


2015

Environmentalremediationliability–long-term,beginningofyear $ 7,231 $ 7,302

Environmentalremediationliability–current,beginningofyear 1,802 3,906

Currentyearadditionsandchangesinestimate,net 243 180

Liabilitiessettled (1,606) (562)

Foreignexchangerevaluation 1,172 (1,793)

Reclassificationfromlong-termtocurrent,endofyear (3,240) (1,802)

Environmentalremediationliability–long-term,endofyear $ 5,602 $ 7,231

13. LEASES

(a) FinanceLeases

TheCompanyhasenteredintosale-leasebackagreementswiththirdpartiesforvariousfixedandmobileequipmentwithinCanada.Thesearrangementsrepresentsale-leasebacktransactionsinaccordancewithIAS17–Leases.Thesale-leasebackagreementshaveanaverageeffectiveannualinterestrateof3.3%andtheaveragelengthofthecontractsisfiveyears.


Allofthesale-leasebackagreementshaveendofleaseclausesthatqualifyasbargainpurchaseoptionsthattheCompanyexpectstoexecute.AsatDecember31,2016,thetotalnetbookvalueofassetsrecordedundersale-leasebackfinanceleasesamountedto$5.3million(December31,2015–$7.1million).

TheCompanyhasagreementswiththirdpartyprovidersofmobileequipment.ThesearrangementsrepresentfinanceleasesinaccordancewiththeguidanceinIAS17–Leases.Theleasesarefortwotosevenyearsandhaveanaverageeffectiveannualinterestrateof8.2%.

AsaresultofitsJune16,2014jointacquisitionofOsisko,AgnicoEagleassumedindirectattributablesecuredfinanceleaseobligationsofC$38.3million($35.3million)providedinseparatetrancheswithmaturitiesrangingbetween2015and2019anda7.5%interestrate.AsatDecember31,2016,theCompany'sattributablefinanceleaseobligationsamountedto$5.9million(December31,2015–$13.7million).

Thefollowingtablesetsoutfutureminimumleasepaymentsunderfinanceleasestogetherwiththepresentvalueofthenetminimumleasepayments:



Minimum Finance Lease

Payments Interest Present

Value

Minimum Finance Lease

Payments Interest Present

Value

Within1year $ 5,955 $ 420 $ 5,535 $ 10,191 $ 602 $ 9,589

Between1–5years 6,630 311 $ 6,319 10,057 510 9,547

Total $ 12,585 $ 731 $ 11,854 $ 20,248 $ 1,112 $ 19,136

AsatDecember31,2016,thetotalnetbookvalueofassetsrecordedunderfinanceleases,includingsale-leasebackfinanceleases,was$21.1million(December31,2015–$38.0million).Theamortizationofassetsrecordedunderfinanceleasesisincludedintheamortizationofproperty,plantandminedevelopmentlineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.


(b) OperatingLeases

TheCompanyhasanumberofoperatingleaseagreementsinvolvingofficefacilities.Someoftheleasesforofficefacilitiescontainescalationclausesforincreasesinoperatingcostsandpropertytaxes.Futureminimumleasepaymentsrequiredtomeetobligationsthathaveinitialorremainingnon-cancellableleasetermsinexcessofoneyearareasfollows:

As at December 31,

2016

As at December 31,

2015

Within1year $ 3,691 $ 1,780

Between1–3years 4,780 2,479

Between3–5years 2,127 2,205

Thereafter 9,543 10,272

Total $ 20,141 $ 16,736

DuringtheyearendedDecember31,2016,$2.1million(yearendedDecember31,2015–$1.4million)ofoperatingleasepaymentswererecognizedintheconsolidatedstatementsofincome.

14. LONG -TERM DEBT

As at December 31,

2016

As at December 31,

2015

CreditFacility(i)(ii) $ (6,416) $ 258,083

2016Notes(i) 347,716 –

2015Note(i) 49,429 49,364

2012Notes(i) 198,894 198,722

2010Notes(i) 598,167 597,567

Otherattributabledebtinstruments 14,896 28,902

Totaldebt $ 1,202,686 $ 1,132,638

Less:currentportion 129,896 14,451

Totallong-termdebt $ 1,072,790 $ 1,118,187

(i) Inclusiveofdeferredfinancingcosts.Thetermsofthe2016Notes,2015Note,2012Notesand2010Notesaredefinedbelow.

(ii) AmountsoutstandingundertheCreditFacility(asdefinedbelow)werefullyrepaidasatDecember31,2016.TheDecember31,2016balancerelatestodeferredfinancingcostswhicharebeingamortizedonastraight-linebasisuntilthematuritydateofJune22,2021.CreditFacilityavailabilityisreducedbyoutstandinglettersofcredit,amountingto$0.8millionatDecember31,2016.


ScheduledDebtPrincipalRepayments

2017 2018 2019 2020 2021 2022 and Thereafter Total

2016Notes $ – $ – $ – $ – $ – $ 350,000 $ 350,000

2015Note – – – – – 50,000 50,000

2012Notes – – – – – 200,000 200,000

2010Notes 115,000 – – 360,000 – 125,000 600,000

Otherattributabledebtinstruments 14,896 – – – – – 14,896

Total $ 129,896 $ – $ – $ 360,000 $ – $ 725,000 $ 1,214,896

CreditFacility

OnSeptember30,2015,theCompanyamendeditsunsecuredrevolvingbankcreditfacility(the"CreditFacility"),extendingthematuritydatefromJune22,2019toJune22,2020andamendingpricingterms.

OnOctober26,2016,theCompanyfurtheramendedtheCreditFacilityto,amongotherthings,extendthematuritydatefromJune22,2020toJune22,2021andamendpricingterms.

AtDecember31,2016,theCreditFacilitywasfullyrepaid(December31,2015–drawndownby$265.0million).OutstandinglettersofcreditundertheCreditFacilityresultedinCreditFacilityavailabilityof$1,199.2millionatDecember31,2016.

2016Notes

OnJune30,2016,theCompanycloseda$350.0millionprivateplacementofguaranteedseniorunsecurednotes(the"2016Notes")which,onissuance,hadaweightedaveragematurityof9.43yearsandweightedaverageyieldof4.77%.Proceedsfromtheofferingofthe2016NoteswereusedtorepayamountsoutstandingundertheCreditFacility.

Thefollowingtablesetsoutdetailsoftheindividualseriesofthe2016Notes:

Principal Interest Rate Maturity Date SeriesA $ 100,000 4.54% 6/30/2023

SeriesB 200,000 4.84% 6/30/2026

SeriesC 50,000 4.94% 6/30/2028

Total $ 350,000

2015Note

OnSeptember30,2015,theCompanyclosedaprivateplacementconsistingofa$50.0millionguaranteedseniorunsecurednote(the"2015Note")withaSeptember30,2025maturitydateandayieldof4.15%.Anamountequaltoorgreaterthanthenetproceedsfromthe2015NotemustbeappliedtowardminingprojectsintheProvinceofQuebec,Canada.


2012Notes

OnJuly24,2012,theCompanycloseda$200.0millionprivateplacementofguaranteedseniorunsecurednotes(the"2012Notes")which,onissuance,hadaweightedaveragematurityof11.0yearsandweightedaverageyieldof4.95%.



SeriesB 100,000 5.02% 7/23/2024

Total $ 200,000

2010Notes

OnApril7,2010,theCompanycloseda$600.0millionprivateplacementofguaranteedseniorunsecurednotes(the"2010Notes"and,togetherwiththe2016Notes,the2015Noteandthe2012Notes,the"Notes")which,onissuance,hadaweightedaveragematurityof9.84yearsandweightedaverageyieldof6.59%.



SeriesB 360,000 6.67% 4/7/2020

SeriesC 125,000 6.77% 4/7/2022

Total $ 600,000

CMGPConvertibleDebentures

InconnectionwithitsjointacquisitionofOsiskoonJune16,2014,thePartnershipwasassignedandassumedcertainoutstandingdebtobligationsofOsiskorelatingtotheCanadianMalarticmine.AgnicoEagle'sindirectattributableinterestinsuchdebtinstrumentsincludedseniorunsecuredconvertibledebentures(the"CMGPConvertibleDebentures")withprincipaloutstandingofC$37.5million($34.6million),aNovember2017maturitydateanda6.875%interestrate.

OnJune30,2015,thenegotiatedearlysettlementofalloftheCMGPConvertibleDebentureswascompleted.Asaresultofthissettlement,871,680AgnicoEaglecommonshareswithafairvalueof$24.8millionwerereleasedfromadepositarytotheholdersoftheCMGPConvertibleDebenturesalongwithacashpaymentof$10.1milliontosettletheCompany'sshareoftheobligations.IntheyearendedDecember31,2015,amark-to-marketlossof$2.4millionwasrecordedintheotherexpenseslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincomerelatedtotheCMGPConvertibleDebentures.Additionalcashconsiderationof$3.2millionwaspaidtotheholdersoftheCMGPConvertibleDebenturesuponsettlementandwasrecordedintheotherexpenseslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.AsatDecember31,2015,theCMGPConvertibleDebentureshadprincipaloutstandingofnil.


OtherLoans

InconnectionwithitsjointacquisitionofOsiskoonJune16,2014,thePartnershipwasassignedandassumedcertainoutstandingdebtobligationsofOsiskorelatingtotheCanadianMalarticmine.AgnicoEagle'sindirectattributableinterestinsuchdebtobligationsincludedasecuredloanfacility(the"CMGPLoan").AscheduledrepaymentofC$20.0million($15.4million)wasmadeonJune30,2016,resultinginattributableoutstandingprincipalofC$20.0million($14.9million)asatDecember31,2016(December31,2015–$28.9million).

Covenants

PaymentandperformanceofAgnicoEagle'sobligationsundertheCreditFacilityandtheNotesisguaranteedbyeachofitsmaterialsubsidiariesandcertainofitsothersubsidiaries(the"Guarantors").

TheCreditFacilitycontainscovenantsthatlimit,amongotherthings,theabilityoftheCompanytoincuradditionalindebtedness,makedistributionsincertaincircumstancesandsellmaterialassets.

ThenotepurchaseagreementspursuanttowhichtheNoteswereissued(the"NotePurchaseAgreements")containcovenantsthatrestrict,amongotherthings,theabilityoftheCompanytoamalgamateorotherwisetransferitsassets,sellmaterialassets,carryonabusinessotherthanonerelatedtominingandtheabilityoftheGuarantorstoincurindebtedness.

TheCreditFacilityandNotePurchaseAgreementsalsorequiretheCompanytomaintainatotalnetdebttoearningsbeforeinterest,taxes,depreciationandamortization("EBITDA")ratiobelowaspecifiedmaximumvalue.

TheCMGPLoanrequiresthePartnershiptomaintainaminimumEBITDAtointerestexpenseratioandamaximumdebttoEBITDAratio.

TheCompanywasincompliancewithallcovenantscontainedintheCreditFacilityandNotePurchaseAgreementsasatDecember31,2016.ThePartnershipwasincompliancewithallCMGPLoancovenantsasatDecember31,2016.

InterestonLong-termDebt

Totallong-termdebtinterestcostsincurredduringtheyearendedDecember31,2016were$63.1million(2015–$58.8million).

Totalborrowingcostscapitalizedtoproperty,plantandminedevelopmentduringtheyearendedDecember31,2016were$3.1million(2015–$1.7million)atacapitalizationrateof1.70%(2015–1.25%).

DuringtheyearendedDecember31,2016,cashinterestpaidontheCreditFacilitywas$3.6million(2015–$8.7million),cashstandbyfeespaidontheCreditFacilitywere$5.2million(2015–$3.8million)andcashinterestpaidontheNoteswas$59.8million(2015–$49.4million).




15. OTHER LIABILITIES

Otherliabilitiesconsistofthefollowing:

As at December 31,

2016

As at December 31,

2015 Long-termportionofcapitalleaseobligations(note13(a)) $ 6,319 $ 9,547

Pensionbenefitobligations(note15(a)) 19,273 17,146

Other 8,603 7,345

Totalotherliabilities $ 34,195 $ 34,038

(a) PensionBenefitObligations

Executives Plan

AgnicoEagleprovidestheExecutivesPlanforcertaincurrentandformerseniorofficers.ItisconsideredadefinedbenefitplanasdefinedinIAS19–EmployeeBenefitswithapensionformulabasedonfinalaverageearningsinexcessoftheamountspayablefromtheregisteredplan.AssetsfortheExecutivesPlanconsistofdepositsonhandwithregulatoryauthoritiesthatarerefundablewhenbenefitpaymentsaremadeorontheultimatewind-upoftheplan.TheestimatedaverageremainingservicelifeoftheplanatDecember31,2016is2.0years.ThefundedstatusoftheExecutivesPlanisbasedonactuarialvaluationsperformedasofDecember31,2016.


ThefundedstatusoftheExecutivesPlanfor2016and2015isasfollows:

Year Ended December 31, 2016 2015 Reconciliation of the Executives Plan assets:

ExecutivesPlanassets,beginningofyear $ 2,011 $ 2,278

AgnicoEagle'scontributions 327 312

Benefitpayments (88) (202)

AdministrativeExpenses (119) –

InterestonExecutivesPlanassets 86 83

NetreturnonExecutivesPlanassetsexcludinginterest (86) (83)

Effectofexchangeratechanges 61 (377)

ExecutivesPlanassets,endofyear 2,192 2,011

Reconciliation of Executives Plan defined benefit obligation:

Definedbenefitobligation,beginningofyear 10,641 11,895

Servicecost 326 435

Benefitpayments (88) (202)

Interestcost 456 445

Actuariallossesarisingfromchangesineconomicassumptions 400 –

Actuarial(gains)lossesarisingfromExecutivesPlanexperience (185) 48

Effectofexchangeratechanges 317 (1,980)

Definedbenefitobligation,endofyear 11,867 10,641

Net defined benefit liability, end of year $ 9,675 $ 8,630


ThecomponentsofAgnicoEagle'spensionexpenserecognizedintheconsolidatedstatementsofincomerelatingtotheExecutivesPlanareasfollows:

Year Ended December 31, 2016 2015 Servicecost $ 326 $ 435

AdministrativeExpenses 119 –

Interestcostondefinedbenefitobligation 456 445

InterestonExecutivesPlanassets (86) (83)

Pensionexpense $ 815 $ 797

Theremeasurementsofthenetdefinedbenefitliabilityrecognizedinothercomprehensiveincome(loss)relatingtotheExecutivesPlanareasfollows:

Year Ended December 31, 2016 2015 Actuariallossesrelatingtothedefinedbenefitobligation $ 215 $ 48

NetreturnonExecutivesPlanassetsexcludinginterest 86 83

Totalremeasurementsofthenetdefinedbenefitliability $ 301 $ 131

In2017,theCompanyexpectstomakecontributionsof$0.2millionandbenefitpaymentsof$0.1millionrelatedtotheExecutivesPlan.

ThefollowingtablesetsoutsignificantweightedaverageassumptionsusedinmeasuringtheCompany'sExecutivesPlandefinedbenefitobligation:

As at December 31, 2016 2015 Assumptions:

Discountrate–beginningofyear 4.0% 4.0%

Discountrate–endofyear 3.8% 4.0%

Rateofcompensationincrease 3.0% 3.0%


ThefollowingisasummaryoftheeffectofchangesinsignificantactuarialassumptionsontheCompany'sExecutivesPlandefinedbenefitobligation:

As at December 31,

2016

Change in assumption:

0.5%increaseindiscountrate $ (766)

0.5%decreaseindiscountrate 845

0.5%increaseintherateofcompensationincrease 19

0.5%decreaseintherateofcompensationincrease (19)

ThesummaryoftheeffectofchangesinsignificantactuarialassumptionswaspreparedusingthesamemethodsandactuarialassumptionsasthoseusedforthecalculationoftheExecutivesPlandefinedbenefitobligationasattheendofthefiscalyear,exceptforthechangeinthesingleactuarialassumptionbeingevaluated.Themodificationofseveralactuarialassumptionsatthesametimecouldleadtodifferentresults.

Other Plans

InadditiontotheExecutivesPlan,theCompanymaintainstheBasicPlanandtheSupplementalPlan.UndertheBasicPlan,AgnicoEaglecontributes5.0%ofcertainemployees'baseemploymentcompensationtoadefinedcontributionplan.In2016,$9.7million(2015–$9.8million)wascontributedtotheBasicPlan,$0.2millionofwhichrelatedtocontributionsforkeymanagementpersonnel(2015–$0.2million).EffectiveJanuary1,2008,theCompanyadoptedtheSupplementalPlanfordesignatedexecutivesatthelevelofVice-Presidentorabove.TheSupplementalPlanisfundedbytheCompanythroughnotionalcontributionsequalto10.0%ofthedesignatedexecutive'searningsfortheyear(includingsalaryandshort-termbonus).In2016,theCompanymade$1.4million(2015–$1.3million)innotionalcontributionstotheSupplementalPlan,$0.9million(2015–$0.9million)ofwhichrelatedtocontributionsforkeymanagementpersonnel.TheCompany'sliabilityrelatedtotheSupplementalPlanis$7.1millionatDecember31,2016(December31,2015–$5.3million).TheSupplementalPlanisaccountedforasacashbalanceplan.

16. EQUITY

CommonShares

TheCompany'sauthorizedsharecapitalincludesanunlimitednumberofcommonshareswithnoparvalue.AsatDecember31,2016,AgnicoEagle'sissuedcommonsharestotaled225,465,654(December31,2015–218,028,368),less500,514commonsharesheldinatrust(December31,2015–377,573commonsharesheldinatrust).

369,972commonsharesareheldinatrustinconnectionwiththeCompany'sRSUplan(December31,2015–373,785commonsharesheldinatrust).124,500commonsharesareheldinatrustinconnectionwiththeCompany'sPSUplan(December31,2015–nil).


Inthefirstquarterof2015,aLongTermIncentivePlan("LTIP")wasimplementedforcertainemployeesofthePartnershipandCanadianMalarticCorporation,bothofwhicharejointly-owned,comprisedof50.0%deferredcash,25.0%AgnicoEaglecommonsharesand25.0%Yamanacommonsharesandvestingoveraperiodrangingbetween18to36months.AsatDecember31,2016,6,042AgnicoEaglecommonshareswereheldinatrustinconnectionwiththeLTIP(December31,2015–3,788commonsharesheldinatrust).

ThetrustshavebeenevaluatedunderIFRS10–ConsolidatedFinancialStatementsandareconsolidatedintheaccountsoftheCompany,withsharesheldintrustoffsetagainsttheCompany'sissuedsharesinitsconsolidatedfinancialstatements.Thecommonsharespurchasedandheldinatrustareexcludedfromthebasicnetincomepersharecalculationsuntiltheyhavevested.Allofthenon-vestedcommonsharesheldinatrustareincludedinthedilutednetincomepersharecalculations,unlesstheimpactisanti-dilutive.

ThefollowingtablesetsoutthemaximumnumberofcommonsharesthatwouldbeoutstandingifalldilutiveinstrumentsoutstandingatDecember31,2016wereexercised:

CommonsharesoutstandingatDecember31,2016 224,965,140

Employeestockoptions 5,478,837

CommonsharesheldinatrustinconnectionwiththeRSUplan(note18(c)),PSUplan(note18(d))andLTIP 500,514

Total 230,944,491

NetIncomePerShare

Thefollowingtablesetsouttheweightedaveragenumberofcommonsharesusedinthecalculationofbasicanddilutednetincomepershare:

Year Ended December 31, 2016 2015 Netincomefortheyear $ 158,824 $ 24,583

Weightedaveragenumberofcommonsharesoutstanding–basic(inthousands) 222,737 216,168

Add:DilutiveimpactofcommonsharesrelatedtotheRSUplan,PSUplanandLTIP 639 300

Add:Dilutiveimpactofemployeestockoptions 2,378 633

Weightedaveragenumberofcommonsharesoutstanding–diluted(inthousands) 225,754 217,101

Netincomepershare–basic $ 0.71 $ 0.11

Netincomepershare–diluted $ 0.70 $ 0.11

Dilutednetincomepersharehasbeencalculatedusingthetreasurystockmethod.Inapplyingthetreasurystockmethod,outstandingemployeestockoptionswithanexercisepricegreaterthantheaveragequotedmarketpriceofthecommonsharesfortheperiodoutstandingarenotincludedinthecalculationofdilutednetincomepershareastheimpactwouldbeanti-dilutive.


FortheyearendedDecember31,2016,20,000(yearendedDecember31,2015–6,806,055)employeestockoptionswereexcludedfromthecalculationofdilutednetincomepershareastheirimpactwouldhavebeenanti-dilutive.

Flow-throughshareprivateplacement

OnMarch10,2016,theCompanyraisedapproximatelyC$25.0million($18.7million)throughtheissuanceof374,869flow-throughcommonsharesatapriceofC$66.69percommonshare.Flow-throughsharesaresecuritiesissuedtoinvestorswherebythedeductionsfortaxpurposesrelatedtoresourceexplorationandevaluationexpendituresmaybeclaimedbyinvestorsinsteadoftheissuer,subjecttoarenouncementprocess.Atthetimetheflow-throughshareswereissued,thesaleoftaxdeductionsweredeferredandwerepresentedintheaccountspayableandaccruedliabilitieslineitemintheconsolidatedbalancesheetsbecausetheCompanyhadnotyetfulfilleditsobligationtopassonthetaxdeductionstotheinvestor.AtthetimetheCompanyfulfillsitsobligation,thesaleoftaxdeductionsisrecognizedintheincomestatementasareductionofdeferredtaxexpense.TheclosingpriceoftheCompany'scommonsharesontheMarch10,2016issuancedatewasC$48.49,resultinginanincreasetosharecapitalofapproximatelyC$18.2million($13.6million).TheinitialC$6.8million($5.1million)liabilityisdrawndownaseligibleexpendituresareincurredbecausetheCompanyhasapositiveintentiontorenouncetheseexpenses.DuringtheyearendedDecember31,2016,theliabilitywasfullyextinguishedbasedoneligibleexpendituresincurred.

17. REVENUES FROM MINING OPERATIONS AND TRADE RECEIVABLES

AgnicoEagleisagoldminingcompanywithminingoperationsinCanada,MexicoandFinland.TheCompanyearnsasignificantproportionofitsrevenuesfromtheproductionandsaleofgoldinbothdorebarandconcentrateform.Theremainderofrevenueandcashflowisgeneratedbytheproductionandsaleofby-productmetals.Therevenuefromby-productmetalsisprimarilygeneratedbyproductionattheLaRondemineinCanada(silver,zincandcopper)andthePinosAltosmineinMexico(silver).

ThecashflowandprofitabilityoftheCompany'soperationsaresignificantlyaffectedbythemarketpriceofgoldand,toalesserextent,silver,zincandcopper.ThepricesofthesemetalscanfluctuatesignificantlyandareaffectedbynumerousfactorsbeyondtheCompany'scontrol.

DuringtheyearendedDecember31,2016,fourcustomerseachcontributedmorethan10.0%oftotalrevenuesfromminingoperationsforacombinedtotalofapproximately80.9%ofrevenuesfromminingoperationsintheNorthernandSouthernbusinessunits.However,becausegoldcanbesoldthroughnumerousgoldmarkettradersworldwide,theCompanyisnoteconomicallydependentonalimitednumberofcustomersforthesaleofitsproduct.

TradereceivablesarerecognizedoncethetransferofownershipforthemetalssoldhasoccurredandreflecttheamountsowingtotheCompanyinrespectofitssalesofdorebarsorconcentratestothirdpartiespriortothesatisfactioninfullofthepaymentobligationsofthethirdparties.AsatDecember31,2016,theCompanyhad$8.2million(December31,2015–$7.7million)inreceivablesrelatingtoprovisionallypricedconcentratesales.FortheyearendedDecember31,2016,theCompanyrecognizedmark-to-marketgainsof$0.6million(yearendedDecember31,2015–lossesof$0.5million)onconcentratereceivables.


Year Ended December 31, 2016 2015 Revenuesfromminingoperations:

Gold $ 2,049,871 $ 1,911,500

Silver 85,096 66,991

Zinc 1,413 505

Copper 1,852 6,436

Totalrevenuesfromminingoperations $ 2,138,232 $ 1,985,432

In2016,preciousmetals(goldandsilver)accountedfor99.9%ofAgnicoEagle'srevenuesfromminingoperations(2015–99.7%).Theremainingrevenuesfromminingoperationsconsistedofnetby-productmetalrevenuesfromnon-preciousmetals.

18. STOCK-BASED COMPENSATION

(a) EmployeeStockOptionPlan

TheCompany'sESOPprovidesforthegrantofstockoptionstodirectors,officers,employeesandserviceproviderstopurchasecommonshares.UndertheESOP,stockoptionsaregrantedatthefairmarketvalueoftheunderlyingsharesonthedaypriortothedateofgrant.Thenumberofcommonsharesthatmaybereservedforissuancetoanyonepersonpursuanttostockoptions(undertheESOPorotherwise),warrants,sharepurchaseplansorotherarrangementsmaynotexceed5.0%oftheCompany'scommonsharesissuedandoutstandingatthedateofgrant.

OnApril24,2001,theCompensationCommitteeoftheBoardadoptedapolicypursuanttowhichstockoptionsgrantedafterthatdatehaveamaximumtermoffiveyears.In2016,theshareholdersapprovedaresolutiontoincreasethenumberofcommonsharesreservedforissuanceundertheESOPto31,300,000commonshares.

Ofthe2,160,075stockoptionsgrantedundertheESOPin2016,540,027stockoptionsvestedwithin30daysofthegrantdate.Theremainingstockoptions,allofwhichexpirein2021,vestinequalinstallmentsoneachanniversarydateofthegrantoverathree-yearperiod.Ofthe3,068,080stockoptionsgrantedundertheESOPin2015,688,995stockoptionsvestedimmediately.Theremainingstockoptions,allofwhichexpirein2020,vestinequalinstallmentsoneachanniversarydateofthegrantoverathree-yearperiod.UpontheexerciseofstockoptionsundertheESOP,theCompanyissuescommonsharesfromtreasurytosettletheobligation.


ThefollowingtablesetsoutactivitywithrespecttoAgnicoEagle'soutstandingstockoptions:

Year Ended December 31, 2016


Number of Stock

Options

Weighted Average Exercise

Price

Number of Stock

Options


Price

Outstanding,beginningofyear 12,082,212 C$ 43.65 11,913,210 C$ 48.84

Granted 2,160,075 36.65 3,068,080 29.09

Exercised (6,492,907) 38.48 (747,683) 29.68

Forfeited (141,038) 38.42 (92,314) 40.40

Expired (2,129,505) 76.46 (2,059,081) 57.20

Outstanding,endofyear 5,478,837 C$ 34.40 12,082,212 C$ 43.65

Optionsexercisable,endofyear 1,606,558 C$ 40.27 7,519,120 C$ 50.71

TheaveragesharepriceofAgnicoEagle'scommonsharesduringtheyearendedDecember31,2016wasC$58.52(yearendedDecember31,2015–C$36.16).

Theweightedaveragegrantdatefairvalueofstockoptionsgrantedin2016wasC$9.69(2015–$C8.10).

ThefollowingtablesetsoutinformationaboutAgnicoEagle'sstockoptionsoutstandingandexercisableatDecember31,2016:

Stock Options Outstanding

Stock Options Exercisable

Range of Exercise Prices Number

Outstanding

Weighted Average

Remaining Contractual

Life


PriceNumber

Exercisable


Price

C$28.03–C$38.15 4,747,712 3.15years C$ 31.65 907,308 C$ 31.06

C$40.66–C$66.17 731,125 1.16years $ 52.25 699,250 $ 52.23

C$28.03–C$66.17 5,478,837 2.89years C$ 34.40 1,606,558 C$ 40.27

TheweightedaverageremainingcontractualtermofstockoptionsexercisableatDecember31,2016was2.08years.

TheCompanyhasreservedforissuance5,478,837commonsharesintheeventthatthesestockoptionsareexercised.


ThenumberofcommonsharesavailableforthegrantofstockoptionsundertheESOPasatDecember31,2016andDecember31,2015was6,289,059and2,678,591,respectively.

SubsequenttotheyearendedDecember31,2016,2,003,140stockoptionsweregrantedundertheESOP,ofwhich500,796stockoptionsvestedwithin30daysofthegrantdate.Theremainingstockoptions,allofwhichexpirein2022,vestinequalinstallmentsoneachanniversarydateofthegrantoverathree-yearperiod.

AgnicoEagleestimatedthefairvalueofstockoptionsundertheBlack-Scholesoptionpricingmodelusingthefollowingweightedaverageassumptions:

Year Ended December 31, 2016 2015 Risk-freeinterestrate 0.89% 1.50%

Expectedlifeofstockoptions(inyears) 2.5 2.7

ExpectedvolatilityofAgnicoEagle'sshareprice 45.0% 45.0%

Expecteddividendyield 1.33% 1.69%

TheCompanyuseshistoricalvolatilitytoestimatetheexpectedvolatilityofAgnicoEagle'sshareprice.Theexpectedtermofstockoptionsgrantedisderivedfromhistoricaldataonemployeeexerciseandpost-vestingemploymentterminationexperience.

ThetotalcompensationexpensefortheESOPrecordedinthegeneralandadministrativelineitemoftheconsolidatedstatementsofincomeandcomprehensiveincomefor2016was$16.6million(2015–$20.1million).OfthetotalcompensationcostfortheESOP,$0.3millionwascapitalizedaspartoftheproperty,plantandminedevelopmentlineitemoftheconsolidatedbalancesheetsin2016(2015–$0.6million).

(b) IncentiveSharePurchasePlan

OnJune26,1997,theCompany'sshareholdersapprovedtheISPPtoencourageParticipantstopurchaseAgnicoEagle'scommonsharesatmarketvalue.In2009,theISPPwasamendedtoremovenon-executivedirectorsaseligibleParticipants.

UndertheISPP,Participantsmaycontributeupto10.0%oftheirbasicannualsalariesandtheCompanycontributesanamountequalto50.0%ofeachParticipant'scontribution.AllcommonsharessubscribedforundertheISPPareissuedbytheCompany.Thetotalcompensationcostrecognizedin2016relatedtotheISPPwas$5.1million(2015–$4.7million).

In2016,344,778commonsharesweresubscribedforundertheISPP(2015–512,438)foravalueof$15.4million(2015–$14.0million).InMay2015,theCompany'sshareholdersapprovedanincreaseinthemaximumnumberofcommonsharesreservedforissuanceundertheISPPto7,100,000from6,100,000.AsatDecember31,2016,AgnicoEaglehasreservedforissuance1,554,970commonshares(2015–1,899,748)undertheISPP.

(c) RestrictedShareUnitPlan

In2009,theCompanyimplementedtheRSUplanforcertainemployees.EffectiveJanuary1,2012,theRSUplanwasamendedtoincludedirectorsandseniorexecutivesoftheCompanyaseligibleparticipants.


AdeferredcompensationbalanceisrecordedforthetotalgrantdatevalueonthedateofeachRSUplangrant.Thedeferredcompensationbalanceisrecordedasareductionofequityandisamortizedascompensationexpenseoverthevestingperiodofthreeyears.

In2016,354,592(2015–423,822)RSUsweregrantedwithagrantdatefairvalueof$28.62(2015–$27.99).In2016,theCompanyfundedtheRSUplanbytransferring$10.1million(2015–$11.5million)toanemployeebenefittrustthatthenpurchasedcommonsharesoftheCompanyintheopenmarket.ThegrantdatefairvalueoftheRSUsgenerallyapproximatesthecostofpurchasingthesharesintheopenmarket.Oncevested,thecommonsharesinthetrustaredistributedtosettletheobligationalongwithacashpaymentreflectingtheaccumulatedamountthatwouldhavebeenpaidasdividendshadthecommonsharesbeenoutstanding.

CompensationexpenserelatedtotheRSUplanwas$10.4millionin2016(2015–$12.0million).CompensationexpenserelatedtotheRSUplanisincludedaspartofthegeneralandadministrativelineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.

SubsequenttotheyearendedDecember31,2016,360,500RSUsweregrantedundertheRSUplan.

(d) PerformanceShareUnitPlan

Beginningin2016,theCompanyadoptedaPSUplanforseniorexecutivesoftheCompany.PSUsaresubjecttovestingrequirementsoverathreeyearperiodbasedonspecificperformancemeasurementsestablishedbytheCompany.ThefairvaluefortheportionofthePSUsrelatedtomarketconditionsisbasedontheapplicationofpricingmodelsatthegrantdateandthefairvaluefortheportionrelatedtonon-marketconditionsisbasedonthemarketvalueofthesharesatthegrantdate.CompensationexpenseisbasedonthecurrentbestestimateoftheoutcomeforthespecificperformancemeasurementestablishedbytheCompanyandisrecognizedoverthevestingperiodbasedonthenumberofunitsestimatedtovest.

In2016,183,000(2015–nil)PSUsweregrantedwithagrantdatefairvalueof$32.20.TheCompanyfundedthePSUplanbytransferring$5.3million(2015–nil)toanemployeebenefittrustthatthenpurchasedcommonsharesoftheCompanyintheopenmarket.Oncevested,thecommonsharesinthetrustaredistributedtosettletheobligationalongwithacashpaymentreflectingtheaccumulatedamountthatwouldhavebeenpaidasdividendshadthecommonsharesbeenoutstanding.

CompensationexpenserelatedtothePSUplanwas$2.2millionin2016(2015–nil).CompensationexpenserelatedtothePSUplanisincludedaspartofthegeneralandadministrativelineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.

SubsequenttotheyearendedDecember31,2016,182,000PSUsweregrantedunderthePSUplan.




19. CAPITAL AND FINANCIAL RISK MANAGEMENT

TheCompany'sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(includinginterestraterisk,commoditypriceriskandforeigncurrencyrisk),creditriskandliquidityrisk.TheCompany'soverallriskmanagementpolicyistosupportthedeliveryoftheCompany'sfinancialtargetswhileminimizingthepotentialadverseeffectsontheCompany'sperformance.

RiskmanagementiscarriedoutbyacentralizedtreasurydepartmentunderpoliciesapprovedbytheBoard.TheCompany'sfinancialactivitiesaregovernedbypoliciesandproceduresanditsfinancialrisksareidentified,measuredandmanagedinaccordancewithitspoliciesandrisktolerance.

a) MarketRisk

Marketriskistheriskthatchangesinmarketfactors,suchasinterestrates,commoditypricesandforeignexchangerates,willaffectthevalueofAgnicoEagle'sfinancialinstruments.TheCompanycanchoosetoeitheracceptmarketriskormitigateitthroughtheuseofderivativesandothereconomichedgingstrategies.

i. InterestRateRisk

Interestrateriskistheriskthatthefairvalueoffuturecashflowsofafinancialinstrumentwillfluctuateasaresultofchangesinmarketinterestrates.TheCompany'sexposuretotheriskofchangesinmarketinterestratesrelatesprimarilytotheCompany'slong-termdebtobligationsthathavefloatinginterestrates.

Theimpactofa1.0%changeininterestratesonincomebeforeincomeandminingtaxesandequityasatDecember31,2016isapproximately$2.6million(2015–$4.5million).

ii. CommodityPriceRisk

a. MetalPrices

AgnicoEagle'srevenuesfromminingoperationsandnetincomearesensitivetometalprices.Changesinthemarketpriceofgoldmaybeattributedtonumerousfactorssuchasdemand,globalmineproductionlevels,centralbankpurchasesandsalesandinvestorsentiment.Changesinthemarketpricesofby-productmetals(silver,zincandcopper)maybeattributedtofactorssuchasdemandandglobalmineproductionlevels.

Inordertomitigatetheimpactoffluctuatingby-productmetalprices,theCompanyoccasionallyentersintoderivativefinancialinstrumentcontractsunderitsBoard-approvedRiskManagementPoliciesandProcedures.TheCompanyhasalong-standingpolicyofnoforwardgoldsales.However,thepolicydoesallowtheCompanytouseothereconomichedgingstrategies,whereappropriate,tomitigateby-productmetalpricingrisks.TheCompanyoccasionallybuysputoptions,entersintopricecollarsandentersintoforwardcontractstoprotectminimumby-productmetalpriceswhilemaintainingfullexposuretothepriceofgold.TheRiskManagementCommitteehasapprovedthestrategyofusingshort-termcalloptionsinanattempttoenhancetherealizedby-productmetalprices.TheCompany'spolicydoesnotallowspeculativetrading.

b. Fuel

Tomitigatetherisksassociatedwithfluctuatingdieselfuelprices,theCompanyusesderivativefinancialinstrumentsaseconomichedgesofthepriceriskonaportionofitsdieselfuelcosts(refertonote20totheseconsolidatedfinancialstatementsforfurtherdetailsonderivativefinancialinstruments).

iii. ForeignCurrencyRisk

TheCompanyreceivespaymentforallofitsmetalsalesinUSdollarsandpaysmostofitsoperatingandcapitalcostsinCanadiandollars,EurosorMexicanpesos.Thisgivesrisetosignificantcurrencyriskexposure.TheCompanyentersintocurrencyeconomichedgingtransactionsundertheBoard-approvedForeignExchangeRiskManagementPoliciesandProcedurestohedgepartofitsforeigncurrencyexposure.Thepolicydoesnot


permitthehedgingoftranslationexposure(thatis,thegainsandlossesthatarisefromtheaccountingtranslationofCanadiandollar,EuroorMexicanpesodenominatedassetsandliabilitiesintoUSdollars),asitdoesnotgiverisetocashexposure.TheCompany'sforeigncurrencyderivativefinancialinstrumentstrategyincludestheuseofpurchasedputs,soldcalls,collarsandforwardsthatarenotheldforspeculativepurposes(refertonote20totheseconsolidatedfinancialstatementsforfurtherdetailsontheCompany'sderivativefinancialinstruments).

ThefollowingtablesetsoutthetranslationimpactonincomebeforeincomeandminingtaxesandequityfortheyearendedDecember31,2016ofa10.0%changeintheexchangerateoftheUSdollarrelativetotheCanadiandollar,EuroandMexicanpeso,withallothervariablesheldconstant.

Impact on Income Before Income and Mining Taxes and Equity

10.0%Strengthening of the US Dollar

10.0% Weakening

of the US Dollar

Canadiandollar $ 7,015 $ (7,015)

Euro $ 2,159 $ (2,159)

Mexicanpeso $ (66) $ 66

b) CreditRisk

Creditriskistheriskthatathirdpartymightfailtofulfillitsobligationsunderthetermsofafinancialinstrument.Creditriskarisesfromcashandcashequivalents,short-terminvestments,restrictedcash,tradereceivablesandderivativefinancialinstruments.TheCompanyholdsitscashandcashequivalents,restrictedcashandshort-terminvestmentsinhighlyratedfinancialinstitutionsresultinginalowlevelofcreditrisk.Fortradereceivablesandderivativefinancialinstruments,historicallevelsofdefaulthavebeennegligible,resultinginalowlevelofcreditrisk.TheCompanymitigatescreditriskbydealingwithrecognizedcredit-worthycounterpartiesandlimitingconcentrationrisk.Forderivativefinancialinstrumentliabilities,theCompanyassumesnocreditriskwhenthefairvalueofaninstrumentisnegative.Themaximumexposuretocreditriskisequaltothecarryingamountoftheinstrumentsasfollows:

As at December 31,

2016

As at December 31,

2015

Cashandcashequivalents $ 539,974 $ 124,150

Short-terminvestments 8,424 7,444

Restrictedcash 1,162 1,426

Tradereceivables 8,185 7,714

Derivativefinancialinstrumentassets 364 87

Total $ 558,109 $ 140,821


c) LiquidityRisk

LiquidityriskistheriskthattheCompanywillencounterdifficultyinmeetingobligationsassociatedwithfinancialliabilitiesthataresettledbydeliveringcashoranotherfinancialasset.TheCompanymonitorsitsriskofashortageoffundsbymonitoringitsdebtratingandprojectedcashflowstakingintoaccountthematuritydatesofexistingdebtandotherpayables.TheCompanymanagesexposuretoliquidityriskbymaintainingcashbalances,havingaccesstoundrawncreditfacilitiesandaccesstopublicdebtmarkets.Contractualmaturitiesrelatingtofinanceleaseobligationsaredetailedinnote13(a)totheseconsolidatedfinancialstatementsandcontractualmaturitiesrelatingtolong-termdebtaredetailedinnote14totheseconsolidatedfinancialstatements.Otherfinancialliabilities,includingaccountspayableandaccruedliabilitiesandderivativefinancialinstruments,havematuritieswithinoneyearofDecember31,2016.

d) CapitalRiskManagement

TheCompany'sprimarycapitalmanagementobjectiveistomaintainanoptimalcapitalstructuretosupportcurrentandlong-termbusinessactivitiesandtoprovidefinancialflexibilityinordertomaximizevalueforequityholders.

AgnicoEagle'scapitalstructurecomprisesamixoflong-termdebtandtotalequityasfollows:

As at December 31,

2016

As at December 31,

2015

Long-termdebt $ 1,202,686 $ 1,132,638

Totalequity 4,492,474 4,141,020

Total $ 5,695,160 $ 5,273,658

TheCompanymanagesitscapitalstructureandmakesadjustmentstoitbasedonchangesineconomicconditionsandtherequirementsoffinancialcovenants.Toeffectivelymanageitscapitalrequirements,AgnicoEaglehasinplacearigorousplanning,budgetingandforecastingprocesstoensureithastheappropriateliquiditytomeetitsoperatingandgrowthobjectives.TheCompanyhastheabilitytoadjustitscapitalstructurebyvariousmeans.

Seenote14totheseconsolidatedfinancialstatementsfordetailsrelatedtoAgnicoEagle'scompliancewithitslong-termdebtcovenants.

20. DERIVATIVE FINANCIAL INSTRUMENTS

CurrencyRiskManagement

TheCompanyutilizesforeignexchangeeconomichedgestoreducethevariabilityinexpectedfuturecashflowsarisingfromchangesinforeigncurrencyexchangerates.TheCompanyisprimarilyexposedtocurrencyfluctuationsrelativetotheUSdollarasaportionoftheCompany'soperatingcostsandcapitalexpendituresaredenominatedinforeigncurrencies;primarilytheCanadiandollar,theEuroandtheMexicanpeso.Thesepotentialcurrencyfluctuationsincreasethevolatilityof,andcouldhaveasignificantimpacton,theCompany'sproductioncosts.Theeconomichedgesrelatetoaportionoftheforeigncurrencydenominatedcashoutflowsarisingfromforeigncurrencydenominatedexpenditures.TheCompanydoesnotapplyhedgeaccountingtothesearrangements.

AsatDecember31,2016,theCompanyhadoutstandingforeignexchangezerocostcollars.ThepurchaseofUSdollarputoptionswasfinancedthroughsellingUSdollarcalloptionsatahigherlevelsuchthatthenetpremiumpayabletothedifferentcounterpartiesbytheCompanywasnil.AtDecember31,2016,thezerocostcollarsrelatedto$179.4millionof2017


expendituresandtheCompanyrecognizedmark-to-marketadjustmentsinthe(gain)lossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.Mark-to-marketgainsandlossesrelatedtoforeignexchangederivativefinancialinstrumentsarerecordedatfairvaluebasedonbroker-dealerquotationscorroboratedbyoptionpricingmodelsthatutilizeperiodendforwardpricingoftheapplicableforeigncurrencytocalculatefairvalue.

TheCompany'sotherforeigncurrencyderivativestrategiesin2016and2015consistedmainlyofwritingUSdollarcalloptionswithshortmaturitiestogeneratepremiumsthatwould,inessence,enhancethespottransactionratereceivedwhenexchangingUSdollarsforCanadiandollarsandMexicanpesos.AllofthesederivativetransactionsexpiredpriortoperiodendsuchthatnoderivativeswereoutstandingasatDecember31,2016orDecember31,2015.Thecalloptionpremiumswererecognizedinthe(gain)lossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.

CommodityPriceRiskManagement

Tomitigatetherisksassociatedwithfluctuatingdieselfuelprices,theCompanyusesderivativefinancialinstrumentsaseconomichedgesofthepriceriskonaportionofdieselfuelcostsassociatedwiththeMeadowbankmine'sdieselfuelexposureasitrelatestooperatingcosts.TherewerederivativefinancialinstrumentsoutstandingasatDecember31,2016relatingto1.0milliongallonsofheatingoil(December31,2015–7.0milliongallonsofheatingoil).Therelatedmark-to-marketadjustmentspriortosettlementwererecognizedinthe(gain)lossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome.TheCompanydoesnotapplyhedgeaccountingtothesearrangements.

Mark-to-marketgainsandlossesrelatedtoheatingoilderivativefinancialinstrumentsarebasedonbroker-dealerquotationsthatutilizeperiodendforwardpricingtocalculatefairvalue.

AsatDecember31,2016andDecember31,2015,therewerenometalderivativepositions.TheCompanymayfromtimetotimeutilizeshort-termfinancialinstrumentsaspartofitsstrategytominimizerisksandoptimizereturnsonitsby-productmetalsales.

Thefollowingtablesetsoutasummaryoftheamountsrecognizedinthe(gain)lossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincome:


2016

2015

Premiumsrealizedonwrittenforeignexchangecalloptions $ (2,569) $ (2,654)

Realizedloss(gain)onwarrants 543 (9,072)

Unrealized(gain)lossonwarrants(i) (580) 2,213

Realizedlossoncurrencyandcommodityderivatives 357 29,297

Unrealizedgainoncurrencyandcommodityderivatives(i) (7,219) (176)

(Gain)lossonderivativefinancialinstruments $ (9,468) $ 19,608

Note:

(i) Unrealizedgainsandlossesonfinancialinstrumentsthatdidnotqualifyforhedgeaccountingarerecognizedthroughthe(gain)lossonderivativefinancialinstrumentslineitemoftheconsolidatedstatementsofincomeandcomprehensiveincomeandthroughtheotherlineitemoftheconsolidatedstatementsofcashflows.


21. SEGMENTED INFORMATION

AgnicoEagleoperatesinasingleindustry,namelyexplorationforandproductionofgold.TheCompany'sprimaryoperationsareinCanada,MexicoandFinland.TheCompanyidentifiesitsreportablesegmentsasthoseoperationswhoseoperatingresultsarereviewedbytheChiefOperatingDecisionMaker("CODM"),theChiefExecutiveOfficerforthepurposeofallocatingresourcesandassessingperformanceandthatrepresentmorethan10.0%ofthecombinedrevenuefromminingoperations,incomeorlossortotalassetsofalloperatingsegments.EachoftheCompany'ssignificantoperatingminesandprojectsareconsideredtobeseparateoperatingsegments.CertainoperatingsegmentsthatdonotmeetthequantitativethresholdsarestilldisclosedwheretheCompanybelievesthattheinformationisuseful.TheCODMalsoreviewssegmentincome(definedasrevenuesfromminingoperationslessproductioncosts,explorationandcorporatedevelopmentexpensesandimpairmentlossesandreversals)onamine-by-minebasis.ThefollowingaretheCompany'sreportablesegmentsorganizedaccordingtotheirrelationshipwiththeCompany'sthreebusinessunitsandreflecthowtheCompanymanagesitsbusinessandhowitclassifiesitsoperationsforplanningandmeasuringperformance:

NorthernBusiness: LaRondemine,Lapamine,Goldexmine,MeadowbankmineincludingtheAmaruqdeposit,CanadianMalarticjointoperation,MeliadineprojectandKittilamine

SouthernBusiness: PinosAltosmine,CrestonMascotadepositatPinosAltosandLaIndiamine

Exploration: UnitedStatesExplorationoffice,EuropeExplorationoffice,CanadaExplorationofficesandLatinAmericaExplorationoffice

Revenuesfromminingoperationsandproductioncostsforthereportablesegmentsarereportednetofintercompanytransactions.

Corporateandotherassetsandspecificincomeandexpenseitemsarenotallocatedtoreportablesegments.



Revenues from Mining

Operations

Production Costs

Exploration and Corporate

Development

Gain on Impairment

Reversal

Segment Income (Loss)

Northern Business:

LaRondemine $ 388,180 $ (179,496) $ – $ – $ 208,684

Lapamine 92,160 (52,974) – – 39,186

Goldexmine 149,730 (63,310) – – 86,420

Meadowbankmine 384,023 (218,963) (63,488) 37,161 138,733

CanadianMalarticjointoperation 371,920 (183,635) (4,044) – 184,241

Meliadineproject – – – 83,000 83,000

Kittilamine 252,346 (141,871) – – 110,475

Total Northern Business 1,638,359 (840,249) (67,532) 120,161 850,739

Southern Business:

PinosAltosmine 294,377 (114,557) – – 179,820

CrestonMascotadepositatPinosAltos 62,967 (27,341) – – 35,626

LaIndiamine 142,529 (49,745) – – 92,784

Total Southern Business 499,873 (191,643) – – 308,230

Exploration – – (79,446) – (79,446)

Segments totals $ 2,138,232 $ (1,031,892) $ (146,978) $ 120,161 $ 1,079,523

Total segments income $ 1,079,523

Corporateandother:

Amortizationofproperty,plantandminedevelopment (613,160)

Generalandadministrative (102,781)

Financecosts (74,641)

Gainonderivativefinancialinstruments 9,468

Gainonsaleofavailable-for-salesecurities 3,500

Environmentalremediation (4,058)

Foreigncurrencytranslationloss (13,157)

Otherexpenses (16,233)

Incomebeforeincomeandminingtaxes $ 268,461



Revenues from Mining

Operations

Production Costs

Exploration and Corporate

Development

Segment Income (Loss)

Northern Business:

LaRondemine $ 318,207 $ (172,283) $ – $ 145,924

Lapamine 104,785 (52,571) – 52,214

Goldexmine 133,845 (61,278) – 72,567

Meadowbankmine 446,898 (230,564) (43,676) 172,658

CanadianMalarticjointoperation 333,280 (171,473) (6,093) 155,714

Kittilamine 206,357 (126,095) – 80,262

Total Northern Business 1,543,372 (814,264) (49,769) 679,339

Southern Business:

PinosAltosmine 250,909 (105,175) – 145,734

CrestonMascotadepositatPinosAltos 66,472 (26,278) – 40,194

LaIndiamine 124,679 (49,578) – 75,101

Total Southern Business 442,060 (181,031) – 261,029

Exploration – – (60,584) (60,584)

Segments totals $ 1,985,432 $ (995,295) $ (110,353) $ 879,784

Total segments income $ 879,784

Corporateandother:

Amortizationofproperty,plantandminedevelopment (608,609)

Generalandadministrative (96,973)

Impairmentlossonavailable-for-salesecurities (12,035)

Financecosts (75,228)

Lossonderivativefinancialinstruments (19,608)

Gainonsaleofavailable-for-salesecurities 24,600

Environmentalremediation (2,003)

Foreigncurrencytranslationgain 4,728

Otherexpenses (12,028)

Incomebeforeincomeandminingtaxes $ 82,628


Total Assets as at

December 31, 2016

December 31, 2015

Northern Business:

LaRondemine $ 808,981 $ 834,881

Lapamine 16,473 50,951

Goldexmine 248,766 201,257

Meadowbankmine 500,207 595,682

CanadianMalarticjointoperation 1,956,285 2,012,648

Meliadineproject 781,999 561,271

Kittilamine 961,392 933,362

Total Northern Business 5,274,103 5,190,052

Southern Business:

PinosAltosmine 667,123 585,735

CrestonMascotadepositatPinosAltos 60,308 70,670

LaIndiamine 428,005 501,179

Total Southern Business 1,155,436 1,157,584

Exploration 198,738 199,606

Corporate and other 479,674 135,938

Total assets $ 7,107,951 $ 6,683,180

ThefollowingtablesetsoutthecarryingamountofgoodwillbysegmentfortheyearsendedDecember31,2015andDecember31,2016:

Meliadine Project

La India Mine

Canadian Malartic Joint

Operation

Total

Cost $ 200,064 $ 39,017 $ 657,792 $ 896,873

Accumulatedimpairment (200,064) – – (200,064)

Carrying amount $ – $ 39,017 $ 657,792 $ 696,809


Thefollowingtablesetsoutcapitalexpendituresbysegment:

Capital Expenditures Year Ended December 31,

2016

2015

Northern Business:

LaRondemine $ 64,288 $ 67,342

Lapamine – 6,491

Goldexmine 78,388 48,818

Meadowbankmine 38,248 65,230

CanadianMalarticjointoperation 60,434 43,368

Meliadineproject 116,136 66,747

Kittilamine 75,904 56,404

Total Northern Business 433,398 354,400

Southern Business:

PinosAltosmine 59,572 61,829

CrestonMascotadepositatPinosAltos 9,287 4,195

LaIndiamine 10,507 23,379

Total Southern Business 79,366 89,403

Corporate and other 3,286 5,955

Total capital expenditures $ 516,050 $ 449,758

Thefollowingtablesetsoutrevenuesfromminingoperationsbygeographicarea(i):


2016

2015

Canada $ 1,386,013 $ 1,337,017

Mexico 499,873 442,058

Finland 252,346 206,357

Total revenues from mining operations $ 2,138,232 $ 1,985,432

(i) Presentedbasedonthelocationoftheminefromwhichtheproductoriginated.




21. SEGMENTED INFORMATION (Continued)

Thefollowingtablesetsoutnon-currentassetsbygeographicarea:

Non-current Assets as at

December 31, 2016

December 31, 2015

Canada $ 3,970,435 $ 3,878,644

Mexico 1,010,063 1,082,524

Finland 887,032 882,345

UnitedStates 10,242 10,242

Total non -current assets $ 5,877,772 $ 5,853,755

22. IMPAIRMENT AND IMPAIRMENT REVERSALS

GoodwillImpairmentTesting

TheCompanyperformsgoodwillimpairmenttestsonanannualbasisasatDecember31eachyear.Inaddition,theCompanyassessesforindicatorsofimpairmentateachreportingperiodendandifanindicatorofimpairmentisidentified,goodwillandlong-livedassetsaretestedforimpairmentatthattime.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Animpairmentlossisrecognizedforanyexcessofthecarryingamountoftheassetoveritsrecoverableamount.

TheestimatedrecoverableamountoftheCanadianMalarticjointoperationsegmentasatDecember31,2016andDecember31,2015wasdeterminedonthebasisoffairvaluelesscoststodisposeoftheCanadianMalarticmineaswellastheexplorationpropertiesincludedinthejointoperation.TheestimatedrecoverableamountoftheCanadianMalarticminewascalculatedbydiscountingtheestimatedfuturenetcashflowsovertheestimatedlifeofthemineusinganominaldiscountrateof6.00%(2015–5.25%),commensuratewiththeestimatedlevelofriskassociatedwiththeCanadianMalarticmine.Therecoverableamountcalculationwasbasedonanestimateoffutureproductionlevelsapplyinggoldpricesof$1,250perounce(inrealterms)(2015–$1,150to$1,250perounce),foreignexchangeratesofUS$0.75:C$1.00toUS$0.80:C$1.00(2015–US$0.75:C$1.00toUS$0.80:C$1.00),aninflationrateof2.0%(2015–2.0%),andcapital,operatingandreclamationcostsbasedonapplicablelife-of-mineplans.Explorationpropertieswithinthejointoperationwerevaluedbyreferencetocomparablerecenttransactions.TheCanadianMalarticjointoperationsegmentestimatedrecoverableamountexceededitscarryingamountatDecember31,2016andDecember31,2015.ThediscountedcashflowapproachusessignificantunobservableinputsandisthereforeconsideredLevel3fairvaluemeasurementunderthefairvaluehierarchy.

ImpairmentReversals

TheCompanyassessesforindicatorsofimpairmentreversalonlong-livedassetsotherthangoodwillthathavepreviouslybeenimpairedateachreportingperiodend.Ifanindicatorofimpairmentreversalisidentified,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentreversalisrequired.Animpairmentlossrecognizedinapriorperiodcanonlybereversediftherearesubsequentchangesintheestimatesorsignificantassumptionsthatwereusedtodeterminetherecoverableamountsincetheimpairmentlosswasrecognized.Againonimpairmentreversalisrecognizedforanyexcessoftherecoverableamountoftheassetoveritscarryingamount.Theamountofthereversalislimitedtothedifferencebetweenthecurrentcarryingamountandtheamountwhichwouldhavebeenthecarryingamounthadtheearlierimpairmentnotbeenrecognizedandamortizationofthatcarryingamounthadcontinued.


In2016,theCompanycompletedaninternaltechnicalstudyontheAmaruqsatellitedepositattheMeadowbankmine.BoardapprovalforthedevelopmentoftheprojectwasreceivedonFebruary15,2017.ThefavourableprojecteconomicsandtheexpectedpotentialforextensionstotheCompany'scurrentmineplaninrelationtotheAmaruqsatellitedepositattheMeadowbankmineisanimpairmentreversalindicatorfortheMeadowbankmineCGU.TheupdatedmineplanrepresentsanobservableindicationthatthevalueoftheCGUhasincreasedsignificantlyandisafavourablechangetotheextentandmannerinwhichtheassetisexpectedtobeused.Thereissignificantjudgementinvolvedinthedeterminationofwhetherapreviouslyrecognizedimpairmentlossshouldbereversed.

TheestimatedrecoverableamountoftheMeadowbankmineCGUasatDecember31,2016wasdeterminedonthebasisoffairvaluelesscoststodisposeofthemine.TheestimatedrecoverableamountoftheMeadowbankmineCGUwascalculatedbydiscountingtheestimatedfuturenetcashflowsovertheestimatedlifeofthemineusinganominaldiscountrateof7.25%(2015–3.75%),commensuratewiththeestimatedlevelofriskassociatedwiththeMeadowbankmineCGU.Therecoverableamountcalculationwasbasedonanestimateoffutureproductionlevelsapplyinggoldpricesof$1,250perounce(inrealterms),foreignexchangeratesofUS$0.75:C$1.00toUS$0.80:C$1.00,aninflationrateof2.0%,andcapital,operatingandreclamationcostsbasedonapplicablelife-of-mineplans.TheestimatedrecoverableamountoftheMeadowbankmineCGUexceededitscarryingamountatDecember31,2016.TheMeadowbankmineCGU'smaximumimpairmentreversalislimitedtothedifferencebetweenthecurrentcarryingamountandthepreviouscarryingamountlessamortizationthatwouldhavebeenrecognizedhadtheassetsnotbeenpreviouslyimpaired.CertainassetsthatarenotexpectedtobeutilizedinconjunctionwiththeAmaruqsatellitedeposithadrecoverableamountslessthantheircurrentcarryingamountsandthereforenoimpairmentreversalwasapplied.TheCompanydeterminedthattheAmaruqsatellitedepositwillutilizesomeoftheexistinginfrastructureattheMeadowbankmine,primarilythemill,camp,roadandairstrip,togeneratecashflowsattheAmaruqsatellitedepositandtheseassetswerewrittenuptothemaximumofthepreviouscarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognizedfortheassetsinprioryears.Againonimpairmentreversalof$37.2million($27.6million,netoftax)wasrecognizedinthegainonimpairmentreversallineitemintheconsolidatedstatementsofincomeandcomprehensiveincometoincreasethecarryingamountofrelatedplantandequipment.ThediscountedcashflowapproachusessignificantunobservableinputsandisthereforeconsideredLevel3fairvaluemeasurementunderthefairvaluehierarchy.

In2016,theCompanycompletedinternalstudiestooptimizethepreviousMeliadinemineplanthathadbeenoutlinedinanupdatedNI43-101technicalreportdatedFebruary11,2015.Theseinternalstudiesevaluatedvariousopportunitiestoimprovetheprojecteconomicsandtheafter-taxinternalrateofreturn.BoardapprovalfordevelopmentoftheprojectwasreceivedonFebruary15,2017.ThefavourableprojecteconomicsandtheexpectedpotentialforextensionstotheCompany'scurrentmineplanisanimpairmentreversalindicatorfortheMeliadineprojectCGU.TheupdatedmineplanrepresentsanobservableindicationthatthevalueoftheCGUhasincreasedsignificantlyandisafavourablechangetotheextentandmannerinwhichtheassetisexpectedtobeused.Thereissignificantjudgmentinvolvedinthedeterminationofwhetherapreviouslyrecognizedimpairmentlossshouldbereversed.

TheestimatedrecoverableamountoftheMeliadineprojectCGUasatDecember31,2016wasdeterminedonthebasisoffairvaluelesscoststodisposeofthemine.TheestimatedrecoverableamountoftheMeliadineprojectCGUwascalculatedbydiscountingtheestimatedfuturenetcashflowsovertheestimatedlifeofthemineusinganominaldiscountrateof9.00%(2015–7.50%),commensuratewiththeestimatedlevelofriskassociatedwiththeMeliadineprojectCGU.Therecoverableamountcalculationwasbasedonanestimateoffutureproductionlevelsapplyinggoldpricesof$1,250perounce(inrealterms),foreignexchangeratesofUS$0.75:C$1.00toUS$0.80:C$1.00,aninflationrateof2.0%andcapital,operatingandreclamationcostsbasedonapplicablelife-of-mineplans.AstheMeliadineprojectCGU'sestimatedrecoverableamountexceededthepreviouscarryingamountlessamortizationthatwouldhavebeenrecognizedhadtheassetsnotbeenimpaired,againonimpairmentreversalof$83.0million($53.6million,netoftax)wasrecognizedinthegainonimpairmentreversallineitemintheconsolidatedstatementsofincomeandcomprehensiveincometoincreasethecarryingamountoftherelated


miningproperty.ThediscountedcashflowapproachusessignificantunobservableinputsandisthereforeconsideredLevel3fairvaluemeasurementunderthefairvaluehierarchy.

KeyAssumptions

Discountrateswerebasedoneachassetgroup'sweightedaveragecostofcapital,ofwhichthetwomaincomponentsarethecostofequityandtheafter-taxcostofdebt.Costofequitywascalculatedbasedonthecapitalassetpricingmodel,incorporatingtherisk-freerateofreturnbasedonGovernmentofCanadamarketablebondyieldsasatthevaluationdate,theCompany'sbetacoefficientadjustmenttothemarketequityriskpremiumbasedonthevolatilityoftheCompany'sreturninrelationtothatofacomparablemarketportfolio,plusasizepremiumandCompany-specificriskfactor.CostofdebtwasdeterminedbyapplyinganappropriatemarketindicationoftheCompany'sborrowingcapabilitiesandthecorporateincometaxrateapplicabletoeachassetgroup'sjurisdiction.Goldpriceestimatesweredeterminedusingforecastsoffuturepricespreparedbyindustryanalysts,whichwereavailableasatorclosetothevaluationdate.Foreignexchangeestimatesarebasedonacombinationofcurrencyforwardcurvesandestimatesthatreflecttheoutlooksofmajorglobalfinancialinstitutions.

23. INCOME AND MINING TAXES

Incomeandminingtaxesexpenseismadeupofthefollowingcomponents:


2016

2015

Currentincomeandminingtaxes $ 102,028 $ 51,495

Deferredincomeandminingtaxes:

Originationandreversaloftemporarydifferences 7,609 6,550

Totalincomeandminingtaxesexpense $ 109,637 $ 58,045


TheincomeandminingtaxesexpenseisdifferentfromtheamountthatwouldhavebeencalculatedbyapplyingtheCanadianstatutoryincometaxrateasaresultofthefollowing:


2016

2015

Combinedfederalandcompositeprovincialtaxrates 26.0% 26.0%

Expectedincometaxexpenseatstatutoryincometaxrate $ 69,666 $ 21,442

Increase(decrease)inincomeandminingtaxesresultingfrom:

Miningtaxes 33,949 19,042

Taxlawchanges (1,557) 4,357

Impactofforeigntaxrates (9,370) (8,499)

Permanentdifferences 2,387 1,359

Impactofforeignexchangeondeferredincometaxbalances 14,562 20,344

Totalincomeandminingtaxesexpense $ 109,637 $ 58,045

ThefollowingtablesetsoutthecomponentsofAgnicoEagle'snetdeferredincomeandminingtaxliabilities:

As at December 31,

2016

As at December 31,

2015

Miningproperties $ 1,046,218 $ 1,039,105

Netoperatingandcapitallosscarryforwards (80,227) (86,126)

Miningtaxes (76,344) (75,410)

Reclamationprovisionsandotherliabilities (70,085) (75,455)

Totaldeferredincomeandminingtaxliabilities $ 819,562 $ 802,114



2016

2015

Deferredincomeandminingtaxliabilities–beginningofyear $ 802,114 $ 797,192

Incomeandminingtaximpactrecognizedinnetincome 7,888 6,025

Incometaximpactrecognizedinothercomprehensiveincome(loss) 4,458 (1,103)

Reductionofflow-throughshareliability 5,102 –

Deferredincomeandminingtaxliabilities–endofyear $ 819,562 $ 802,114

TheCompanyoperatesindifferentjurisdictionsand,accordingly,itissubjecttoincomeandothertaxesunderthevarioustaxregimesinthecountriesinwhichitoperates.Thetaxrulesandregulationsinmanycountriesarehighlycomplexandsubjecttointerpretation.TheCompanymaybesubjectinthefuturetoareviewofitshistoricincomeandothertaxfilingsand,inconnectionwithsuchreviews,disputescanarisewiththetaxingauthoritiesovertheinterpretationorapplicationofcertaintaxrulesandregulationstotheCompany'sbusinessconductedwithinthecountryinvolved.

Thedeductibletemporarydifferencesandunusedtaxlossesinrespectofwhichadeferredtaxassethasnotbeenrecognizedintheconsolidatedbalancesheetsareasfollows:

As at December 31,

2016

As at December 31,

2015

Netcapitallosscarryforwards $ 34,298 $ 90,647

Otherdeductibletemporarydifferences 202,614 213,879

Unrecognizeddeductibletemporarydifferencesandunusedtaxlosses $ 236,912 $ 304,526

TheCompanyalsohasunusedtaxcreditsof$12.9millionasatDecember31,2016(December31,2015–$9.9million)forwhichadeferredtaxassethasnotbeenrecognized.

Capitallosscarryforwardsandotherdeductibletemporarydifferenceshavenoexpirydatewhiletheunusedtaxcreditsexpirein2020.

TheCompanyhas$410.5million(2015–$412.8million)oftaxabletemporarydifferencesassociatedwithitsinvestmentsinsubsidiariesforwhichdeferredincometaxhasnotbeenrecognized,astheCompanyisabletocontrolthetimingofthereversalofthetaxabletemporarydifferencesanditisprobablethattheywillnotreverseintheforeseeablefuture.

TheCompanyissubjecttotaxesinCanada,MexicoandFinland,eachwithvaryingstatutesoflimitations.Priortaxationyearsgenerallyremainsubjecttoexamination.


24. EMPLOYEE BENEFITS AND COMPENSATION OF KEY MANAGEMENT PERSONNEL

DuringtheyearendedDecember31,2016,employeebenefitsexpensewas$479.1million(2015–$463.0million).Therewerenorelatedpartytransactionsin2016or2015otherthancompensationofkeymanagementpersonnel.KeymanagementpersonnelincludethemembersoftheBoardandtheseniorleadershipteam.


2016

2015

Salaries,short-termincentivesandotherbenefits $ 16,620 $ 13,620

Post-employmentbenefits 1,489 1,452

Share-basedpayments 13,591 13,919

Total $ 31,700 $ 28,991

25. COMMITMENTS AND CONTINGENCIES

Aspartofitsongoingbusinessandoperations,theCompanyhasbeenrequiredtoprovideassuranceintheformoflettersofcreditforenvironmentalandsiterestorationcosts,customcredits,governmentgrantsandothergeneralcorporatepurposes.AsatDecember31,2016,thetotalamountoftheseguaranteeswas$251.6million.

CertainoftheCompany'spropertiesaresubjecttoroyaltyarrangements.Thefollowingarethemostsignificantroyaltyarrangements:

• TheCompanyhasaroyaltyagreementwiththeFinnishgovernmentrelatingtotheKittilamine.Starting12monthsaftertheKittilamine'soperationscommenced,theCompanyhasbeenrequiredtopay2.0%onnetsmelterreturns,definedasrevenuelessprocessingcosts.Theroyaltyispaidonanannualbasisinthefollowingyear.

• TheCompanyiscommittedtopay2.0%netsmelterreturnontheBarselepropertyinSweden.Thenetsmelterreturnisdefinedasgrossproceedslessrefiningcosts.Paymentshouldbedonequarterlyonemonthinarrears.TheCompanyhasabuyoutoptiontopurchasetherighttobepaidtheroyalty,foranaggregateconsiderationofUS$5million.

• ThePartnershipiscommittedtopayaroyaltyonproductionfromcertainpropertiesinQuebec,Canada.Thetypeofroyaltyagreementsinclude,butarenotlimitedto,netsmelterreturnroyalties,withpercentagesrangingfrom1.5%to5.0%.

• TheCompanyiscommittedtopayaroyaltyonproductionfromcertainpropertiesinQuebec,Canada.Thetypeofroyaltyagreementsinclude,butarenotlimitedto,netprofitsinterestroyaltiesandnetsmelterreturnroyalties,withpercentagesrangingfrom2.5%to5.0%.

• TheCompanyiscommittedtopayaroyaltyonproductionfromcertainpropertiesinMexico.Thetypeofroyaltyagreementsinclude,butarenotlimitedto,netsmelterreturnroyalties,withpercentagesrangingfrom0.5%to3.5%.

TheCompanyregularlyentersintovariousearn-inandshareholderagreements,oftenwithcommitmentstopaynetsmelterreturnandotherroyalties.


TheCompanyhadthefollowingpurchasecommitmentsasatDecember31,2016,ofwhich$29.4millionrelatedtocapitalexpenditures:

Purchase

Commitments

2017 $ 43,289

2018 8,562

2019 6,520

2020 5,035

2021 3,854

Thereafter 16,971

Total $ 84,231

26. ONGOING LITIGATION

OnAugust2,2016,thePartnershipwasservedwithaclassactionlawsuitwithrespecttoallegationsinvolvingtheCanadianMalarticmine.Thecomplaintisinrespectof"neighbourhoodannoyances"arisingfromdust,noise,vibrationsandblastsatthemine.Theplaintiffsareseekingdamagesinanunspecifiedamountaswellaspunitivedamagesintheamountof$20.0million.ProceedingsforthecertificationoftheclassarescheduledforApril11and12,2017.TheCompanyandthePartnershipwilltakeallnecessarystepstodefendthemselvesfromthislawsuit.

OnAugust15,2016,thePartnershipreceivednoticeofanapplicationforinjunctionrelatingtotheCanadianMalarticmine,whichhasbeenfiledundertheEnvironment Quality Act (Quebec).AhearingrelatedtoaninterlocutaryinjunctionwascompletedonMarch17,2017andadecisionoftheSuperiorCourtofQuebecispending.TherequestforinjunctionaimstorestricttheCanadianMalarticmine'sminingoperationstosoundlevelsandminingvolumesbelowthelimitstowhichitissubject.AgnicoEagleandthePartnershiphavereviewedtheinjunctionrequest,considertherequestwithoutmeritandwilltakeallreasonablestepstodefendagainstthisinjunction.Whileatthistimethepotentialimpactscannotbedefinitivelydetermined,theCompanyexpectsthatiftheinjunctionweretobegrantedtherewouldbeanegativeimpactontheoperationsoftheCanadianMalarticmine,whichcouldincludeareductioninproduction.

27. SUBSEQUENT EVENTS

DividendsDeclared

OnFebruary15,2017,AgnicoEagleannouncedthattheBoardapprovedthepaymentofaquarterlycashdividendof$0.10percommonshare(atotalvalueofapproximately$22.5million),paidonMarch15,2017toholdersofrecordofthecommonsharesoftheCompanyonMarch1,2017.

PurchaseofOtisGoldCorporationCommonShares

OnFebruary28,2017,theCompanycompletedthepurchaseof14,420,000commonsharesofOtisGoldCorporation("Otis")pursuanttoaprivateplacement.TheCompanypaidC$0.35perOtiscommonshare,fortotalconsiderationofapproximatelyC$5.0million.Upontheclosingofthetransaction,AgnicoEagleheldapproximately9.95%oftheissuedandoutstandingcommonsharesofOtisonanon-dilutedbasis.


PurchaseofGoldQuestMiningCorporationCommonShares

OnMarch8,2017,theCompanycompletedthepurchaseof38,100,000commonsharesofGoldQuestMiningCorporation("GoldQuest")pursuanttoaprivateplacement.TheCompanypaidC$0.60perGoldQuestcommonshare,fortotalconsiderationofapproximatelyC$22.9million.Upontheclosingofthetransaction,AgnicoEagleheldapproximately15.0%oftheissuedandoutstandingcommonsharesofGoldQuestonanon-dilutedbasis.


QuickLinks

Exhibit99.2

REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMONINTERNALCONTROLOVERFINANCIALREPORTINGMANAGEMENTCERTIFICATIONREPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMAGNICOEAGLEMINESLIMITEDCONSOLIDATEDBALANCESHEETS(thousandsofUnitedStatesdollars,exceptshareamounts)AGNICOEAGLEMINESLIMITEDCONSOLIDATEDSTATEMENTSOFEQUITY(thousandsofUnitedStatesdollars,exceptshareandpershareamounts)AGNICOEAGLEMINESLIMITEDCONSOLIDATEDSTATEMENTSOFCASHFLOWS(thousandsofUnitedStatesdollars)


Exhibit 99.3

Management'sDiscussion andAnalysis

FortheyearendedDecember31,2016

(PreparedinaccordancewithInternationalFinancialReportingStandards)

AGNICO EAGLE MINES LIMITED MANAGEMENT'S DISCUSSION AND ANALYSIS

Table of Contents

This

Management'sDiscussionandAnalysis("MD&A")datedMarch27,2017ofAgnicoEagleMinesLimited("AgnicoEagle"orthe"Company")shouldbereadinconjunctionwiththeCompany'sannualconsolidatedfinancialstatementsfortheyearendedDecember31,2016thatwerepreparedinaccordancewithInternationalFinancialReportingStandards("IFRS")asissuedbytheInternationalAccountingStandardsBoard("IASB").TheannualconsolidatedfinancialstatementsandthisMD&AarepresentedinUnitedStatesdollars("USdollars","$"or"US$")andallunitsofmeasurementareexpressedusingthemetric

system,unlessotherwisespecified.CertaininformationinthisMD&AispresentedinCanadiandollars("C$"),MexicanpesosorEuropeanUnioneuros("Euros"or"€").AdditionalinformationrelatingtotheCompany,includingtheCompany'sAnnualInformationFormfortheyearendedDecember31,2016(the"AIF"),isavailableontheCanadianSecuritiesAdministrators'(the"CSA")SEDARwebsiteatwww.sedar.com.

ExecutiveSummary 1

Strategy 1

PortfolioOverview 2

KeyPerformanceDrivers 4

BalanceSheetReview 7

ResultsofOperations 8–RevenuesfromMiningOperations 8–ProductionCosts 9–ExplorationandCorporateDevelopmentExpense 13–AmortizationofProperty,PlantandMineDevelopment 13–GeneralandAdministrativeExpense 14–ImpairmentLossonAvailable-for-saleSecurities 14–FinanceCosts 14–GainonImpairmentReversal 14–ForeignCurrencyTranslationLoss(Gain) 15–IncomeandMiningTaxesExpense 15

LiquidityandCapitalResources 15–OperatingActivities 15–InvestingActivities 15–FinancingActivities 17–ContractualObligations 19–Off-BalanceSheetArrangements 20–2017LiquidityandCapitalResourcesAnalysis 20

QuarterlyResultsReview 21

Outlook 21–GoldProduction 21–FinancialOutlook 23

RiskProfile 25–CommodityPricesandForeignCurrencies 26–CostInputs 27–InterestRates 27–FinancialInstruments 28–OperationalRisk 28–RegulatoryRisk 30

ControlsEvaluation 30

OutstandingSecurities 31

Governance 31

SustainableDevelopmentManagement 32

EmployeeHealthandSafety 32

Community 33

Environment 33

CriticalIFRSAccountingPoliciesandAccountingEstimates 34–DerivativeInstrumentsandHedgeAccounting 34–Goodwill 34–MiningProperties,PlantandEquipmentandMineDevelopmentCosts

34

–DevelopmentStageExpenditures 36–ImpairmentofLong-livedAssets 37–ReclamationProvisions 37–Stock-basedCompensation 38–RevenueRecognition 38–IncomeTaxes 39

RecentlyIssuedAccountingPronouncements 39

MineralReserveData 41

Non-GAAPFinancialPerformanceMeasures 43

SummarizedQuarterlyData 54

ThreeYearFinancialandOperatingSummary 60

NOTE TO INVESTORS CONCERNING FORWARD -LOOKING INFORMATION CertainstatementsinthisMD&A,referredtohereinas"forward-lookingstatements",constitute"forward-lookinginformation"undertheprovisionsofCanadianprovincialsecuritieslawsandconstitute"forward-lookingstatements"withinthemeaningoftheUnitedStatesPrivateSecuritiesLitigationReformActof1995.Thesestatementsrelateto,amongotherthings,theCompany'splans,objectives,expectations,estimates,beliefs,strategiesandintentionsandcangenerallybeidentifiedbytheuseofwordssuchas"anticipate","believe","budget","could","estimate","expect","forecast","intend","likely","may","plan","project","schedule","should","target","will","would"orothervariationsofthesetermsorsimilarwords.Forward-lookingstatementsinthisMD&Ainclude,butarenotlimitedto,thefollowing:



• anticipatedlevelsortrendsforpricesofgoldandby-productmetalsminedbytheCompanyorforexchangeratesbetweencurrenciesinwhichcapitalisraised,revenueisgeneratedorexpensesareincurredbytheCompany;


• estimatesoffuturecosts,includingminingcosts,totalcashcostsperounce,all-insustainingcostsperounce,minesitecostspertonneandothercosts;



• estimatesofmineralreservesandmineralresourcesandtheirsensitivitiestogoldpricesandotherfactors,oregradesandmineralrecoveriesandstatementsregardinganticipatedfutureexplorationresults;



• anticipatedtimingofeventsattheCompany'sminesites,minedevelopmentprojectsandexplorationprojects;


• statementsregardinganticipatedlegislationandregulations,includingwithrespecttoclimatechange,andestimatesoftheimpactontheCompany;and


Forward-lookingstatementsarenecessarilybaseduponanumberoffactorsandassumptionsthat,whileconsideredreasonablebyAgnicoEagleasofthedateofsuchstatements,areinherentlysubjecttosignificantbusiness,economicandcompetitiveuncertaintiesandcontingencies.ThefactorsandassumptionsofAgnicoEagleuponwhichtheforward-lookingstatementsinthisMD&Aarebased,andwhichmayprovetobeincorrect,includetheassumptionssetoutelsewhereinthisMD&Aaswellas:thattherearenosignificantdisruptionsaffectingAgnicoEagle'soperations,whetherduetolabourdisruptions,supplydisruptions,damagetoequipment,naturalorman-madeoccurrences,miningormillingissues,politicalchanges,titleissuesorotherwise;thatpermitting,developmentandexpansionateachofAgnicoEagle'smines,minedevelopmentprojectsandexplorationprojectsproceedonabasisconsistentwithexpectations,andthatAgnicoEagledoesnotchangeitsexplorationordevelopmentplansrelatingtosuchprojects;thattheexchangeratesbetweentheCanadiandollar,Euro,MexicanpesoandtheUSdollarwillbeapproximatelyconsistentwithcurrentlevelsorassetoutinthisMD&A;thatpricesforgold,silver,zincandcopperwillbeconsistentwithAgnicoEagle'sexpectations;thatpricesforkeyminingandconstructionsupplies,includinglabourcosts,remainconsistentwithAgnicoEagle'sexpectations;thatproductionmeetsexpectations;thatAgnicoEagle'scurrentestimatesofmineralreserves,mineralresources,mineralgradesandmineralrecoveriesareaccurate;thattherearenomaterialdelaysinthetimingforcompletionofdevelopmentprojects;andthattherearenomaterialvariationsinthecurrenttaxandregulatoryenvironmentsthataffectAgnicoEagle.

Theforward-lookingstatementsinthisMD&AreflecttheCompany'sviewsasatthedateofthisMD&Aandinvolveknownandunknownrisks,uncertaintiesandotherfactorswhichcouldcausetheactualresults,performanceorachievementsoftheCompanyorindustryresultstobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedor

impliedbysuchforward-lookingstatements.Suchfactorsinclude,amongothers,theriskfactorssetoutin"RiskFactors"below.Giventheseuncertainties,readersarecautionednottoplaceunduerelianceontheseforward-lookingstatements,whichspeakonlyasofthedatemade.Exceptasotherwiserequiredbylaw,theCompanyexpresslydisclaimsanyobligationorundertakingtoreleasepubliclyanyupdatesorrevisionstoanysuchstatementstoreflectanychangeintheCompany'sexpectationsoranychangeinevents,conditionsorcircumstancesonwhichanysuchstatementisbased.ThisMD&Acontainsinformationregardingestimatedtotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonneinrespectoftheCompanyoratcertainoftheCompany'sminesandminedevelopmentprojects.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresarerealisticindicatorsofoperatingperformanceandareusefulinallowingyearoveryearcomparisons.Investorsarecautionedthatthisinformationmaynotbesuitableforotherpurposes.

Meaningof"including"and"suchas":WhenusedinthisMD&A,theterms"including"and"suchas"meanincludingandsuchas,withoutlimitation.

NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESERVES AND MINERALRESOURCES ThemineralreserveandmineralresourceestimatescontainedinthisMD&AhavebeenpreparedinaccordancewiththeCanadiansecuritiesregulatoryauthorities'(the"CSA")NationalInstrument43-101Standards of Disclosure for Mineral Projects ("NI43-101").ThesestandardsaresimilartothoseusedbytheUnitedStatesSecuritiesandExchangeCommission's(the"SEC")IndustryGuideNo.7,asinterpretedbyStaffattheSEC("Guide7").However,thedefinitionsinNI43-101differincertainrespectsfromthoseunderGuide7.Accordingly,mineralreserveinformationcontainedorincorporatedbyreferencehereinmaynotbecomparabletosimilarinformationdisclosedbyU.S.companies.UndertherequirementsoftheSEC,mineralizationmaynotbeclassifiedasa"reserve"unlessthedeterminationhasbeenmadethatthemineralizationcouldbeeconomicallyandlegallyproducedorextractedatthetimethereservedeterminationismade.TheSECdoesnotrecognizemeasuresof"mineralresource".

Themineralreserveandmineralresourcedatapresentedhereinareestimates,andnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoverywillberealized.TheCompanydoesnotincludeequivalentgoldouncesforby-productmetalscontainedinmineralreservesinitscalculationofcontainedounces.


Thisdocumentusestheterms"measuredmineralresources"and"indicatedmineralresources".InvestorsareadvisedthatwhilethesetermsarerecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizethem.Investors are cautioned not to assume that any part or allof mineral deposits in these categories will ever be converted into mineral reserves.


Thisdocumentusestheterm"inferredmineralresources".InvestorsareadvisedthatwhilethistermisrecognizedandrequiredbyCanadianregulations,theSECdoesnotrecognizeit."Inferredmineralresources"haveagreatamountofuncertaintyastotheirexistenceandastotheireconomicandlegalfeasibility.Itcannotbeassumedthatanypartorallofaninferredmineralresourcewilleverbeupgradedtoahighercategory.UnderCanadianrules,estimatesofinferredmineralresourcesmaynotformthebasisoffeasibilityorpre-feasibilitystudies,exceptinrarecases.Investors are cautioned not to assume that any part or all of an inferred mineral resource exists, or is economically or legally mineable.

NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE ThisMD&Adisclosescertainmeasures,including"totalcashcostsperounce","all-insustainingcostsperounce","adjustednetincome"and"minesitecostspertonne"thatarenotrecognizedmeasuresunderIFRS.Thesemeasuresmaynotbecomparabletosimilarmeasuresreportedbyothergoldproducers.ForareconciliationofthesemeasurestothemostdirectlycomparablefinancialinformationpresentedintheconsolidatedfinancialstatementspreparedinaccordancewithIFRS,seeNon-GAAP Financial Performance Measures inthisMD&A.

Thetotalcashcostsperounceofgoldproducedisreportedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).Thetotalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeforby-productrevenues,inventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Thetotalcashcostsperounceofgold

producedonaco-productbasisiscalculatedinthesamemannerasthetotalcashcostsperounceofgoldproducedonaby-productbasis,exceptthatnoadjustmentismadeforby-productmetalrevenues.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.Thetotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecash-generatingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scash-generatingcapabilitiesatvariousgoldprices.

All-insustainingcostsperounceisusedtoshowthefullcostofgoldproductionfromcurrentoperations.TheCompanycalculatesall-insustainingcostsperounceofgoldproducedonaby-productbasisastheaggregateoftotalcashcostsperounceonaby-productbasis,sustainingcapitalexpenditures(includingcapitalizedexploration),generalandadministrativeexpenses(includingstockoptions)andreclamationexpenses,andthendividingbythenumberofouncesofgoldproduced.Theall-insustainingcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastheall-insustainingcostsperounceofgoldproducedonaby-productbasis,exceptthatthetotalcashcostsperounceonaco-productbasisisused,meaningnoadjustmentismadeforby-productmetalrevenues.TheCompany'smethodologyforcalculatingall-insustainingcostsperouncemaydifferfromthemethodologyusedbyotherproducersthatdiscloseall-insustainingcostsperounce.TheCompanymaychangethemethodologyitusestocalculateall-insustainingcostsperounceinthefuture,includinginresponsetotheadoptionofformalindustryguidanceregardingthismeasurebytheWorldGoldCouncil.

Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsperounceofgoldproducedonaby-productbasis,by-productmetalprices.ManagementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonneaswellasotherdatapreparedinaccordancewithIFRS.

Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingexchangeratesandmetalprices.ThisMD&Aalsocontainsinformationastoestimatedfuturetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonne.Theestimatesarebaseduponthetotalcashcostsperounce,all-insustainingcostsperounceandminesitecostspertonnethattheCompanyexpectstoincurtominegoldatitsminesandprojectsand,consistentwiththereconciliationoftheseactualcostsreferredtoabove,donotincludeproductioncostsattributabletoaccretionexpenseandotherassetretirementcosts,whichwillvaryovertimeaseachprojectisdevelopedandmined.Itisthereforenotpracticabletoreconciletheseforward-lookingnon-GAAPfinancialmeasurestothemostcomparableIFRSmeasure.

Executive Summary

AgnicoEagleisaseniorCanadiangoldminingcompanythathasproducedpreciousmetalssince1957.TheCompany'sminesarelocatedinCanada,MexicoandFinland,withexplorationanddevelopmentactivitiesinCanada,Europe,LatinAmericaandtheUnitedStates.TheCompanyanditsshareholdershavefullexposuretogoldpricesduetoitslong-standingpolicyofnoforwardgoldsales.AgnicoEaglehasdeclaredacashdividendeveryyearsince1983.

AgnicoEagleearnsasignificantproportionofitsrevenueandcashflowfromtheproductionandsaleofgoldinbothdorebarandconcentrateform.Theremainderofrevenueandcashflowisgeneratedbytheproductionandsaleofby-productmetals,primarilysilver,zincandcopper.In2016,AgnicoEaglerecordedproductioncostsperounceofgoldof$621andtotalcashcostsperounceofgoldproducedof$573onaby-productbasisand$643onaco-productbasisonpayablegoldproductionof1,662,888ounces.Theaveragerealizedpriceofgoldincreasedby8.0%from$1,156perouncein2015to$1,249perouncein2016.

AgnicoEagle'soperatingminesanddevelopmentprojectsarelocatedinwhattheCompanybelievestobepoliticallystablecountriesthataresupportiveoftheminingindustry.ThepoliticalstabilityoftheregionsinwhichAgnicoEagleoperateshelpstoprovideconfidenceinitscurrentandfutureprospectsandprofitability.ThisisimportantforAgnicoEagleasitbelievesthatmanyofitsnewminesandrecentlyacquiredminingprojectshavelong-termminingpotential.

Highlights

• Continuedstrongoperationalperformancewithpayablegoldproductionof1,662,888ouncesandproductioncostsperounceofgoldof$621during2016.

• Totalcashcostsperounceofgoldproducedof$573onaby-productbasisand$643onaco-productbasisin2016.

• All-insustainingcostsperounceofgoldproducedof$824onaby-productbasisand$894onaco-productbasisin2016.

• Provenandprobablegoldreservestotaled19.9millionouncesatDecember31,2016,a5.0%increasecomparedwith19.1millionouncesatDecember31,2015.

• AsatDecember31,2016,AgnicoEaglehadstrongliquiditywith$548.4millionincashandcashequivalentsandshortterminvestmentsalongwithapproximately$1.2billioninundrawncreditlines.

• TheCompany'soperationsarelocatedinmining-friendlyregionsthattheCompanybelieveshavelowpoliticalriskandlong-termminingpotential.

• TheCompanymaintainsasolidfinancialpositionandforecastsbeingfullyfundedforitscurrentlyplanneddevelopmentoftheAmaruqdepositandtheMeliadinemineproject,investmentinexistingminesandkeyexplorationprojects.

• TheCompanyhasstrongseniormanagementcontinuityasitschiefexecutiveofficerhasover30yearsofservicewiththeCompany.

• InFebruary2017,theCompanydeclaredaquarterlycashdividendof$0.10percommonshare.AgnicoEaglehasnowdeclaredacashdividendeveryyearsince1983.

Strategy

AgnicoEagle'sabilitytoconsistentlyexecuteitsbusinessstrategyhasprovidedasolidfoundationforgrowth.

TheCompany'sgoalsareto:

• Deliverhighqualitygrowthwhilemeetingexpectationsandmaintaininghighperformance standardsinhealth,safety,environmentandcommunitydevelopment;

• Buildastrongpipeline ofprojectstodrivefutureproduction;and

• Employthebestpeople andmotivatethemtoreachtheirpotential.

Thesethreepillars–performance, pipeline and people –formthebasisofAgnicoEagle'ssuccessandcompetitiveadvantage.Bydeliveringonthem,theCompanystrivestocontinuetobuilditsproductionbaseandgenerateincreasedvalueforshareholders,whilemakingmeaningfulcontributionstoitsemployeesandcommunities.

MANAGEMENT'SDISCUSSIONANDANALYSISAGNICO EAGLE 1

Portfolio Overview

NorthernBusiness

Canada – LaRonde Mine

The100%ownedLaRondemineinnorthwesternQuebec,theCompany'sfirstmine,achievedcommercialproductionin1988.TheLaRondemineextension,theportionoftheminebelowthe245level,achievedcommercialproductioninDecember2011andisexpectedtoextendthelifeoftheminethrough2024.

In2003,theCompanyacquiredtheBousquetgoldproperty,whichadjoinstheLaRondeminingcomplextotheeastandhoststheBousquetZone5,whichtheCompanyhasrenamedLaRondeZone5.LaRondeZone5hasbeenapprovedfordevelopmentsubjecttopermittingapproval,whichisexpectedtobereceivedbymid-2018,withminingexpectedtocommenceshortlythereafter.

In2016,thefirstmineralreservesweredeclaredintheeasternportionofLaRonde3,theportionoftheLaRondeminebelowthecurrentlyplanned3.1kilometredepthatLaRonde,andadditionalinferredmineralresourcesweredeclaredinthewesternportionofLaRonde3.StudiesareongoingtoevaluatethepotentialtominetheLaRonde3portionofthedeposit.

TheLaRondemine'sprovenandprobablemineralreserveswereapproximately3.5millionouncesatDecember31,2016.

Canada – Lapa Mine

Commercialproductionwasachievedatthe100%ownedLapamineinnorthwesternQuebecinMay2009.Basedonthecurrentlifeofmineplan,Lapaisexpectedtooperateuntiltheendofthesecondquarterof2017,withproductioncomingfromtheZoneDeepEastandZone7Deepareas.TheCompanyisevaluatingopportunitiestocontinueproductionintothesecondhalfof2017.

TheLapamine'sprovenandprobablemineralreserveswereapproximately38,000ouncesatDecember31,2016.

Canada – Goldex Mine

The100%ownedGoldexmineinnorthwesternQuebecachievedcommercialproductionfromtheMandEsatellitezonesinOctober2013.

TheCompanyacquiredtheAkasabaWestdepositinJanuary2014.Locatedlessthan30kilometresfromGoldex,theCompanybelievesthattheAkasabaWestdepositcouldcreateflexibilityandsynergiesfortheCompany'soperationsintheAbitibiregionbyutilizingextramillingcapacityatbothGoldexandLaRonde,whilereducingoverallcosts.ThepermittingprocesshascommencedatAkasabaandpermittingactivitiesareexpectedtocontinueuntil2018.TheCompanyexpectstobeginsourcingopenpitorefromAkasabaWestin2019.TheAkasabaWestdeposit'sprovenandprobablemineralreserveswereapproximately0.1millionouncesatDecember31,2016.

InJuly2015,theCompanyannouncedtheapprovaloftheDeep1projectatGoldex,whichisexpectedtobegincommissioninginearly2018.StudiesareongoingtoevaluatethepotentialtoincreasethroughputfromtheDeep1ZoneandthepotentialtomineaportionoftheDeep2Zone,bothofwhichcouldenhanceproductionlevelsorextendthecurrentminelifeatGoldexandreduceoperatingcosts.

TheGoldexmine'sprovenandprobablemineralreserveswereapproximately0.9millionouncesatDecember31,2016.

Canada – Canadian Malartic Mine

AgnicoEagleandYamanaGoldInc.("Yamana")jointlyacquired100.0%ofOsiskoMiningCorporation("Osisko")onJune16,2014pursuanttoacourt-approvedplanofarrangementundertheCanada Business Corporations Act (the"OsiskoArrangement").AsaresultoftheOsiskoArrangement,AgnicoEagleandYamanaeachindirectlyown50.0%ofOsiskoandCanadianMalarticGP,whichnowholdstheCanadianMalarticmineinnorthwesternQuebec.AgnicoEagleandYamanaarejointlyexploring,throughtheirindirectownershipofCanadianMalarticCorporation(thesuccessortoOsisko),theKirklandLakeassets,theHammondReefprojectandthePandoraandWood-Pandoraproperties.

TheOdysseypropertyliesontheeastsideoftheCanadianMalarticproperty,approximately1.5kilometreseastofthecurrentlimitoftheopenpit.In2016,explorationprogramsdefinedthemineralizationattheOdysseyNorthandSouthzones,resultinginanestimatedinitialmineralresourcefortheOdysseyproperty.PermittingactivitiesrelatedtotheBarnatextensionandthere-routingoftheadjacentHighway117areexpectedtocontinueinthefirsthalfof2017,nodateforapprovalhas

2 AGNICO EAGLE MANAGEMENT'SDISCUSSIONANDANALYSIS

beenset.ProductionactivitiesatBarnatarecurrentlyanticipatedtobegininlate2018,dependingonthetimingofthestartofconstructionoftheHighway117diversion.

AgnicoEagle'sattributableshareofprovenandprobablemineralreservesattheCanadianMalarticminewereapproximately3.5millionouncesatDecember31,2016.

Canada – Meadowbank Mine

In2007,theCompanyacquiredCumberlandResourcesLtd.,whichhelda100%interestintheMeadowbankgoldprojectinNunavut,Canada.CommercialproductionwasachievedbyAgnicoEagleattheMeadowbankmineinMarch2010.

The100%ownedAmaruqprojectislocatedapproximately50kilometresnorthwestoftheMeadowbankmineinNunavut,Canada.Inlate2015,theCompanyreceivedapprovalfortheconstructionofanall-weatherexplorationroadlinkingtheAmaruqprojecttotheMeadowbankmine.In2016,theCompanycompletedaninternaltechnicalstudyontheAmaruqsatellitedepositatMeadowbank.Basedonthisstudy,theCompanyhasapprovedtheprojectfordevelopmentpendingthereceiptoftherequiredpermits,whicharecurrentlyexpectedtobereceivedbythesecondquarterof2018.Productioniscurrentlyforecasttobegininthethirdquarterof2019,subjecttothetimingofthereceiptoftherequiredpermits.

AtMeadowbank,opportunitiesarebeinginvestigatedtopotentiallyextendproductionattheVaultpitthroughyear-end2018.TheVaultpitextensionisexpectedtopartiallybridgetheproductiongapattheMeadowbankminethroughtotheexpectedcommencementofdevelopmentoftheAmaruqproject.

TheMeadowbankmine'sprovenandprobablemineralreserveswereapproximately0.7millionouncesatDecember31,2016.

Canada – Meliadine Mine Project

OnJuly6,2010,AgnicoEagleacquiredits100%interestintheMeliadinemineprojectinNunavut,CanadathroughitsacquisitionofComaplexMineralsCorp.

In2016,internalstudieswerecarriedouttooptimizethepreviousMeliadinemineplanthathadbeenoutlinedinanupdatedNI43-101technicalreportdatedFebruary11,2015.Theseinternalstudiesevaluatedvariousopportunitiestoimprovetheprojecteconomicsandtheafter-taxinternalrateofreturn.Basedontheresultsoftheseinternalstudies,theCompany'sBoardofDirectorsapprovedtheconstructionoftheMeliadinemineproject.Themineisexpectedtobeginoperationsinthethirdquarterof2019,whichisapproximatelyoneyearaheadofthepreviousschedule.Overanestimated14-yearminelife,itisanticipatedthatapproximately5.3millionouncesofgoldwillbeproducedatMeliadine.Thisrepresentsapproximatelyhalfofthecurrentlyknownmineralreserveandmineralresourcebaseforthisproject.

Budgeted2017Meliadinemineprojectcapitalexpendituresof$360.0millionarefocusedonfurtherundergrounddevelopment,conversionandundergrounddelineationdrilling,installationofundergroundventilationandheating,completionofthefuelfarminRankinInlet,completionofthecampcomplex,closinginoftheprocessandpowerplantbuildingsandconstructionofthesecondrampportal.

TheMeliadinemineprojecthadprovenandprobablemineralreservesofapproximately3.4millionouncesatDecember31,2016.

Finland – Kittila Mine

The100%ownedKittilamineinnorthernFinlandwasaddedtotheCompany'sportfoliothroughtheacquisitionofRiddarhyttanResourcesABin2005.ConstructionattheKittilaminewascompletedin2008andcommercialproductionwasachievedinMay2009.

In2017,theCompanywillcontinuetoevaluatetheeconomicsofincreasingthroughputratesatKittila.IncreasingtheminingratecouldpotentiallybesupportedbythedevelopmentoftheRimpiandSisarzones.DrillingisongoingtofurtherevaluatetheSisarzone,wheremineralizationhasnowbeenoutlinedtoadepthof2.0kilometresbelowsurface

ProvenandprobablemineralreservesattheKittilamineamountedtoapproximately4.5millionouncesatDecember31,2016.


SouthernBusiness

Mexico – Pinos Altos Mine

In2006,theCompanycompletedtheacquisitionofthePinosAltosproperty,thenanadvancedstageexplorationpropertyinnorthernMexico.CommercialproductionwasachievedatthePinosAltosmineinNovember2009.AshaftsinkingprojectwascompletedinJune2016atthePinosAltosmine.Thenewshafthasimprovedthematchingofminingandmillcapacityastheopenpitminingoperationwindsdown.

In2016,drillingatPinosAltossuccessfullyreplacedthemineralreservesthatweremined.In2016,explorationattheCerroColoradoZoneoutlinedadditionalmineralizationontheboundariesofthezone,andfurtherdrillingwillbecarriedoutin2017toevaluatethispotential.

ThePinosAltosmine'sprovenandprobablemineralreserveswereapproximately1.4millionouncesatDecember31,2016.

Mexico – Creston Mascota Deposit at Pinos Altos

The100%ownedCrestonMascotadepositatPinosAltosislocatedapproximatelysevenkilometresnorthwestofthemaindepositatthePinosAltosmineinnorthernMexico.CommercialproductionwasachievedattheCrestonMascotadepositatPinosAltosinMarch2011.TheCompanybelievesthattheMadronoandCubirozonescouldpotentiallyextendthelifeoftheCrestonMascotaheapleachfacility.In2017,additionaldrillingisplannedfortheBravo,MadronoandCubirozonestofurtherdelineateareasthattheCompanybelievesmayhavehighergradeareasthatcouldpotentiallyprovideadditionalfeedtothePinosAltosmill.

Inthefourthquarterof2016,workonthePhase4leachpadwascompletedwithstackingofmaterialexpectedtobegininthefirstquarterof2017.

Provenandprobablemineralreserveswereapproximately0.1millionouncesattheCrestonMascotadepositatPinosAltosatDecember31,2016.

Mexico – La India Mine

AgnicoEaglecompleteditsacquisitionofGraydResourceCorporation("Grayd")onJanuary23,2012.GraydownedtheLaIndiaproject,whichislocatedapproximately70kilometresnorthwestofthePinosAltosmineinnorthernMexico.InSeptember2012,developmentandconstructionoftheLaIndiaminewasapprovedbytheBoardandcommercialproductionwasachievedinFebruary2014.

In2016,additionaldrillingwascarriedoutatLaIndiawithafocusonextendingmineralizationintheMainZoneandtheLaIndiaZoneandconversionofsulfidemineralizationintomineralreservesandmineralresources.Additionally,stepoutdrillingin2016atthenearbyElRealitoprojectalsoyieldedencouragingresults.AdditionalexplorationworkisplannedatElRealitoandtheCerrodeOroareasin2017.GeologicalworkiscontinuingatLosTubostoalsodefinedrilltargetsduring2017.Withtheincreasedmineralreservesandmineralresources,andthepotentialforfutureadditionsatothersatellitezones,studiesareunderwaytolookatpotentialexpansionoptionsattheLaIndiamine.

TheLaIndiamine'sprovenandprobablemineralreserveswereapproximately1.0millionouncesatDecember31,2016.

Mexico – El Barqueno Project

OnNovember28,2014,theCompanyacquiredCaydenResourcesInc.("Cayden")pursuanttoacourt-approvedplanofarrangementundertheBusiness Corporations Act (BritishColumbia).Caydenholdsa100.0%interestintheMorelosSurpropertyaswellasanoptiontoacquirea100%interestintheElBarquenoproperty,bothlocatedinMexico.

AgnicoEaglebelievesthatElBarquenoultimatelyhasthepotentialtobedevelopedintoaseriesofopenpitsutilizingheapleachand/ormillprocessing,similartothePinosAltosmine.ConceptualdesignstudiesandadditionalmetallurgicaltestingareongoingatElBarqueno.Explorationexpendituresin2017areexpectedtototalapproximately$16.8million.

Key Performance Drivers

ThekeydriversoffinancialperformanceforAgnicoEagleinclude:

• Thespotpriceofgold,silver,zincandcopper;

• Productionvolumes;

• Productioncosts;and

• Canadiandollar/USdollar,Mexicanpeso/USdollarandEuro/USdollarexchangerates.


SpotPriceofGold,Silver,ZincandCopper

GOLD ($ per ounce)

2016 2015 % Change Highprice $1,375 $1,308 5.1%

Lowprice $1,061 $1,046 1.4%

Averageprice $1,248 $1,160 7.6%

Averagepricerealized $1,249 $1,156 8.0%

In2016,theaveragemarketpriceperounceofgoldwas7.6%higherthanin2015.TheCompany'saveragerealizedpriceperounceofgoldin2016was8.0%higherthanin2015.

SILVER ($ per ounce)

2016 2015 % Change Highprice $21.14 $18.23 16.0%

Lowprice $13.75 $13.71 0.3%

Averageprice $17.11 $15.70 9.0%

Averagepricerealized $17.28 $15.63 10.6%

Netby-product(primarilysilver,zincandcopper)revenueistreatedasareductionofproductioncostsincalculatingtotalcashcostsperounceofgoldproducedonaby-productbasisandall-insustainingcostsperounceofgoldproducedona


by-productbasis.In2016,theaveragemarketpriceperounceofsilverwas9.0%higherthanin2015.TheCompany'saveragerealizedpriceperounceofsilverin2016was10.6%higherthanin2015.

ZINC ($ per tonne) COPPER ($ per tonne)

AgnicoEagle'saveragerealizedsalespriceyear-over-yearforzincincreasedby9.2%andaveragerealizedsalespricesforcopperyear-over-yeardecreasedby3.9%overthesameperiod.Significantquantitiesofby-productmetalsareproducedbytheLaRondemine(silver,zincandcopper)andthePinosAltosmine(silver).

TheCompanyhasneversoldgoldforward,allowingtheCompanytotakefulladvantageofrisinggoldprices.Managementbelievesthatlowcostproductionisthebestprotectionagainstadecreaseingoldprices.

ProductionVolumesandCosts

ChangesinproductionvolumeshaveadirectimpactontheCompany'sfinancialresults.Totalpayablegoldproductionwas1,662,888ouncesin2016,adecreaseof0.5%comparedwith1,671,340ouncesin2015,primarilyduetodecreasedamountoforeprocessedandlowergoldgradeandmillrecoveryratesattheMeadowbankminein2016comparedto2015anddecreasedgoldgradeattheLapaandLaIndiaminesandtheCrestonMascotadepositatPinosAltos.PartiallyoffsettingtheoveralldecreaseingoldproductionwereincreasedtonnesmilledattheKittilaandCanadianMalarticminesandhighergoldgradeandmillrecoveryratesattheLaRondemine.AgnicoEagle'saveragerealizedgoldpriceincreasedby$93,or8.0%,to$1,249perouncein2016from$1,156perouncein2015.

ProductioncostsarediscussedindetailintheResults of Operations sectionbelow.

ForeignExchangeRates(RatiotoUS$)

TheexchangerateoftheCanadiandollar,MexicanpesoandEurorelativetotheUSdollarisanimportantfinancialdriverfortheCompanyforthefollowingreasons:

• AllrevenuesareearnedinUSdollars;

• AsignificantportionofoperatingcostsattheLaRonde,Lapa,Goldex,MeadowbankandCanadianMalarticminesare,andmineconstructioncostsattheAmaruqdepositandtheMeliadinemineprojectwillbe,incurredinCanadiandollars;

• AsignificantportionofoperatingcostsatthePinosAltosmine,theCrestonMascotadepositatPinosAltosandtheLaIndiamineareincurredinMexicanpesos;and

• AsignificantportionofoperatingcostsattheKittilamineareincurredinEuros.

TheCompanymitigatespartofitsforeigncurrencyexposurebyusingcurrencyhedgingstrategies.

CANADIAN DOLLAR MEXICAN PESO EURO


Onaverage,theCanadiandollar,MexicanpesoandEuroallweakenedrelativetotheUSdollarin2016comparedwith2015,decreasingcostsdenominatedinlocalcurrencieswhentranslatedintoUSdollarsforreportingpurposes.

Balance Sheet Review

TotalassetsatDecember31,2016of$7,108.0millionincreasedcomparedtoDecember31,2015totalassetsof$6,683.2million.Ofthe$424.8millionincreaseintotalassetsbetweenperiods,$415.8millionrelatedtoanincreaseincashandcashequivalentsbetweenperiods.TheDecember31,2014balanceof$6,809.3millionwascomparabletothetotalassetsbalanceasatDecember31,2015.

Cashandcashequivalentswere$540.0millionatDecember31,2016,anincreaseof$415.8millioncomparedwithDecember31,2015primarilyduetocashprovidedbyoperatingactivitiesof$778.6million,theissuanceofthe2016Notes(asdefinedbelow)inanaggregateprincipalamountof$350.0milliononJune30,2016and$192.1millionofproceedsfromtheexerciseofstockoptions,partiallyoffsetby$516.1millionincapitalexpenditures,anet$280.3millionrepaymentoflong-termdebtand$71.4millionindividendspaidduring2016.

Currentinventorybalancesdecreasedby$18.3millionfrom$462.0millionatDecember31,2015to$443.7millionatDecember31,2016primarilyduetoplannedpartsinventorydrawdownsattheMeadowbankmine.Non-currentoreinstockpilesandonleachpadsatDecember31,2016of$62.8millionwerecomparablewithDecember31,2015non-currentoreinstockpilesandonleachpadsof$61.2million.

Available-for-salesecuritiesincreasedfrom$31.9millionatDecember31,2015to$92.3millionatDecember31,2016primarilydueto$29.6millioninnewinvestmentsin2016and$33.2millioninunrealizedfairvaluegains,partiallyoffsetby$2.4millionindispositionsduring2016.

Property,plantandminedevelopmentincreasedby$17.1millionto$5,106.0millionatDecember31,2016comparedwithDecember31,2015primarilyduetoa$516.1millionincreaserelatedtocapitalexpendituresduring2016anda$120.2millionincreaseduetoimpairmentreversalsattheMeadowbankmineandMeliadinemineproject.Thisincreasewaspartiallyoffsetbyamortizationexpenseof$613.2millionduring2016.

Totalliabilitiesincreasedto$2,615.5millionatDecember31,2016from$2,542.2millionatDecember31,2015primarilyduetoa$70.0millionnetincreaseinlong-termdebtanda$21.0millionincreaseinincometaxespayable.Ofthetotal$198.6milliondecreaseintotalliabilitiesbetweentheDecember31,2014balanceof$2,740.8millionandtheDecember31,2015balanceof$2,542.2million,$235.0millionrelatedtoanetrepaymentundertheCompany's$1.2billionunsecuredrevolvingcreditfacility(the"CreditFacility"),whichwaspartiallyoffsetbyincreasesinaccountspayable,accruedliabilitiesandreclamationprovisionsduring2015.

Accountspayableandaccruedliabilitiesdecreasedby$15.2millionbetweenDecember31,2015andDecember31,2016primarilyduetoa$12.3millionsecuritiesclassactionlawsuitsettlementagreementthatwaspaidbytheCompany'sinsurers.

Incometaxespayableincreasedby$21.0millionbetweenDecember31,2015andDecember31,2016asthecurrenttaxexpenseexceededpaymentstotaxauthorities.

Long-termdebtincreasedby$70.0millionbetweenDecember31,2015andDecember31,2016primarilyduetotheissuanceofthe2016Notes,partiallyoffsetby$265.0millioninnetCreditFacilityrepayments.

AgnicoEagle'sreclamationprovisiondecreasedby$8.0millionbetweenDecember31,2015andDecember31,2016primarilyduetothere-measurementoftheCompany'sreclamationprovisionsbyapplyingupdatedexpectedcashflowsandassumptionsasatDecember31,2016.

Deferredincomeandminingtaxliabilitiesincreasedby$17.4millionbetweenDecember31,2015andDecember31,2016primarilyduetothegainonimpairmentreversalof$37.2millionrecordedattheMeadowbankmineand$83.0millionattheMeliadinemineproject,withatotalimpactof$39.0millionondeferredincomeandminingtaxes.

FairValueofDerivativeFinancialInstruments

TheCompanyoccasionallyentersintocontractstolimittheriskassociatedwithdecreasedby-productmetalprices,increasedforeigncurrencycosts(includingcapitalexpenditures)andinputcosts.Thecontractsactaseconomichedgesofunderlyingexposuresandarenotheldforspeculativepurposes.AgnicoEagledoesnotusecomplexderivativecontractstohedgeexposures.ThefairvalueoftheCompany'sderivativefinancialinstrumentsisoutlinedinthefinancialinstrumentsnotetotheCompany'sannualconsolidatedfinancialstatements.


Results of Operations

AgnicoEaglereportednetincomeof$158.8million,or$0.71pershare,in2016comparedwithnetincomeof$24.6million,or$0.11pershare,in2015.In2014,theCompanyreportednetincomeof$83.0million,or$0.43pershare.AgnicoEaglereportedbasicadjustednetincomeof$109.5million,or$0.49pershare,in2016comparedwithbasicadjustednetincomeof$73.5million,or$0.34pershare,in2015.In2014,theCompanyreportedbasicadjustednetincomeof$124.2million,or$0.64pershare.In2016,operatingmargin(revenuesfromminingoperationslessproductioncosts)increasedto$1,106.3millionfrom$990.1millionin2015.In2014,operatingmarginwas$892.2million.

RevenuesfromMiningOperations

Revenuesfromminingoperationsincreasedby$152.8million,or7.7%,to$2,138.2millionin2016from$1,985.4millionin2015primarilyduetohighersalespricesrealizedongoldandsilver,aswellasincreasedsilverproduction,partiallyoffsetbylowergoldproductionandsales.Revenuesfromminingoperationswere$1,896.8millionin2014.

RevenuesfromtheNorthernBusinessincreasedby$95.0million,or6.2%,to$1,638.4millionin2016from$1,543.4millionin2015,primarilyduetohighersalespricesrealizedongoldandsilver,partiallyoffsetbylowergoldproductionandsales.RevenuesfromtheSouthernBusinessincreasedby$57.8million,or13.1%,to$499.9millionin2016from$442.1millionin2015,primarilyduetothehigherrealizedsalespricesnotedabove.RevenuesfromtheNorthernBusinesswere$1,491.9million,andrevenuesfromtheSouthernBusinesswere$404.9millionin2014.

Salesofpreciousmetals(goldandsilver)accountedfor99.9%ofrevenuesfromminingoperationsin2016,upfrom99.7%in2015and98.6%in2014.Theincreaseinthepercentageofrevenuesfrompreciousmetalscomparedwith2015isprimarilyduetohighersalespricesrealizedongoldandsilver,aswellasincreasedsilverproduction,partiallyoffsetbylowergoldproductionandsales.Revenuesfromminingoperationsareaccountedfornetofrelatedsmelting,refining,transportationandothercharges.


Thetablebelowsetsoutrevenuesfromminingoperations,productionvolumesandsalesvolumesbymetal:

2016 2015 2014

(thousands of United States dollars) Revenuesfromminingoperations:

Gold $ 2,049,871 $ 1,911,500 $ 1,807,927

Silver 85,096 66,991 62,466

Zinc 1,413 505 9,901

Copper 1,852 6,436 16,479

Lead(i) – – (7)

Totalrevenuesfromminingoperations $ 2,138,232 $ 1,985,432 $ 1,896,766

Payableproduction(ii):

Gold(ounces) 1,662,888 1,671,340 1,429,288

Silver(thousandsofounces) 4,759 4,258 3,564

Zinc(tonnes) 4,687 3,501 10,515

Copper(tonnes) 4,416 4,941 4,997

Payablemetalsold:

Gold(ounces) 1,630,865 1,645,081 1,425,338

Silver(thousandsofounces) 4,761 4,184 3,633

Zinc(tonnes) 3,554 3,596 10,535

Copper(tonnes) 4,522 4,947 5,003

Notes:

(i) Leadconcentraterevenuesofnilin2016(2015–nil;2014–$0.1million)arenettedagainstdirectfeesofnil(2015–nil;2014–$0.1million).Othermetalrevenuesderivedfromleadconcentrateareincludedintheirrespectivemetalcategoriesintheabovetable.

(ii) Payableproduction(anon-GAAP,non-financialperformancemeasure)isthequantityofmineralproducedduringaperiodcontainedinproductsthatareorwillbesoldbytheCompany,whethersuchproductsaresoldduringtheperiodorheldasinventoriesattheendoftheperiod.

Revenuesfromgoldincreasedby$138.4millionor7.2%in2016comparedwith2015primarilyduetoan8.0%increaseintheCompany'saveragerealizedgoldpriceperounceto$1,249in2016comparedto$1,156in2015.Thisincreasewaspartiallyoffsetbya0.8%decreaseofgoldsalesto1,630,865ouncesin2016comparedto1,645,081ouncesin2015primarilyduetolowerproductionandsalesattheMeadowbankandLapamines.

Revenuesfromsilverincreasedby$18.1millionor27.0%in2016comparedwith2015primarilyduetoa13.8%increaseinsilversales.AgnicoEagle'saveragerealizedsilverpriceperounceincreasedby10.6%to$17.28in2016from$15.63in2015.Revenuesfromzincincreasedby$0.9millionor179.8%to$1.4millionin2016comparedwith$0.5millionin2015primarilyduetoa9.2%increaseintherealizedzincpricebetweenperiods,aswellaslowerdirectcostsassociatedwithzincsales.Revenuesfromcopperdecreasedby$4.6millionor71.2%in2016comparedwith2015primarilyduetoa3.9%declineintherealizedcopperpriceandan8.6%decreaseintonnessold.

ProductionCosts

Productioncostsincreasedto$1,031.9millionin2016comparedwith$995.3millionin2015primarilyduetohigherproductionexpensesattheCanadianMalartic,KittilaandPinosAltosmines.PartiallyoffsettingtheoverallincreasewastheimpactofaweakerCanadiandollarandMexicanpesorelativetotheUSdollar.Productioncostswere$1,004.6millionin2014.


Thetablebelowsetsoutproductioncostsbymine:

2016 2015 2014

(thousands of United States dollars) LaRondemine $ 179,496 $ 172,283 $ 188,736

Lapamine 52,974 52,571 61,056

Goldexmine 63,310 61,278 64,836

Meadowbankmine 218,963 230,564 270,824

CanadianMalarticmine(attributable50.0%) 183,635 171,473 113,916

Kittilamine 141,871 126,095 116,893

PinosAltosmine 114,557 105,175 123,342

CrestonMascotadepositatPinosAltos 27,341 26,278 28,007

LaIndiamine 49,745 49,578 36,949

Totalproductioncosts $ 1,031,892 $ 995,295 $ 1,004,559

Thediscussionofproductioncostsbelowrefersto"totalcashcostsperounceofgoldproduced"and"minesitecostspertonne",neitherofwhicharerecognizedmeasuresunderIFRS.ForareconciliationofthesemeasurestoproductioncostsandadiscussionoftheirusebytheCompany,seeNon-GAAP Financial Performance Measures inthisMD&A.

ProductioncostsattheLaRondeminewere$179.5millionin2016,a4.2%increasecomparedwith2015productioncostsof$172.3millionprimarilyduetoincreasedundergroundandmillmaintenancecostsandadecreaseininventory.During2016,theLaRondemineprocessedanaverageof6,121tonnesoforeperdaycomparedwith6,141tonnesoforeperdayduring2015.ProductioncostspertonneincreasedtoC$106in2016comparedwithC$98in2015duetothesamefactorsasnotedabove.MinesitecostspertonneincreasedtoC$106in2016comparedwithC$99in2015duetothesamefactorsasnotedabove,otherthantheinventoryadjustment.

ProductioncostsattheLapaminewere$53.0millionin2016,a0.8%increasecomparedwith2015productioncostsof$52.6million.During2016,theLapamineprocessedanaverageof1,619tonnesoforeperdaycomparedwith1,534tonnesoforeperdayprocessedduring2015.Theincreaseinthroughputbetweenperiodswasduetotheprocessingoflowergradeorefromnewzonespreviouslyexcludedfromthemineplan.ProductioncostspertonnedecreasedtoC$118in2016comparedwithC$119in2015duetohigherthroughputlevelsandanincreaseininventory.MinesitecostspertonneincreasedtoC$121in2016comparedwithC$117in2015primarilyduetothehighercostsassociatedwithdevelopmentworkinnewzones,otherthantheinventoryadjustment.

ProductioncostsattheGoldexminewere$63.3millionin2016,a3.3%increasecomparedwith2015productioncostsof$61.3millionprimarilyduetoincreasedthroughput.During2016,theGoldexmineprocessedanaverageof6,954tonnesoforeperdaycomparedwith6,336tonnesoforeperdayprocessedduring2015.Theincreaseinthroughputbetweenperiodswasprimarilyduetobetterundergroundminingandmillingperformance.ProductioncostspertonnedecreasedtoC$33in2016comparedwithC$34in2015duetohigherthroughputlevelsandanincreaseininventory.MinesitecostspertonneremainedunchangedatC$33between2015and2016.

ProductioncostsattheMeadowbankminewere$219.0millionin2016,a5.0%decreasecomparedwith2015productioncostsof$230.6millionprimarilyduetolowerthroughput,aloweramountofstrippingcostsbeingcapitalizedandanincreaseininventory.During2016,theMeadowbankmineprocessedanaverageof10,697tonnesoforeperdaycomparedwith11,049tonnesoforeperdayprocessedduring2015.ThedecreaseinthroughputbetweenperiodswasprimarilyduetoharderorebeingprocessedfromtheVaultpit.ProductioncostspertonneincreasedtoC$73in2016comparedwithC$71in2015duetothedecreaseintonnageprocessed.MinesitecostspertonneincreasedtoC$74in2016comparedwithC$70in2015duetothefactorsnotedabove,otherthantheinventoryadjustment.

AttributableproductioncostsattheCanadianMalarticminewere$183.6millionin2016,a7.1%increasecomparedwith2015productioncostsof$171.5millionprimarilyduetoincreasedthroughputandhighercontractorcosts.During2016,theCanadianMalarticmineprocessedanaverageof26,833tonnesoforeperdayattributabletotheCompanycomparedwith26,150tonnesoforeperdayprocessedin2015.Theincreaseinthroughputbetweenperiodswasprimarilyduetoimproved


crusherperformance.ProductioncostspertonneincreasedtoC$25in2016comparedwithC$23in2015duetounplannedmaintenanceontheleachtank,ballmillandcrushercomponentsintheprocessplantandadditionalstrippingcosts.MinesitecostspertonneincreasedtoC$25in2016comparedwithC$23in2015primarilyduetothesamefactorsnotedabove.

ProductioncostsattheKittilaminewere$141.9millionin2016,anincreaseof12.5%comparedwith2015productioncostsof$126.1millionprimarilyduetoincreasedthroughputandhighercontractorandmillmaintenancecosts.During2016,theKittilamineprocessedanaverageof4,554tonnesoforeperday,anincreaseof13.5%comparedwiththe4,011tonnesoforeperdayprocessedduring2015primarilyduetoadditionalminedevelopmentleadingtoimprovedoreaccessandstrongminingproductivity.Productioncostspertonneremainedthesameat€77between2015and2016.Minesitecostspertonneincreasedslightlyto€77in2016comparedwith€76in2015.

ProductioncostsatthePinosAltosminewere$114.6millionin2016,anincreaseof8.9%comparedwith2015productioncostsof$105.2millionprimarilyduetohigherconsumablecosts,variationsintheproportionofheapleachoretomilledore,variationsintheopenpitoretoundergroundore,fluctuationsinthewastetoorestrippingratiointheopenpitminesandadecreaseininventory,partiallyoffsetbyaweakerMexicanpesorelativetotheUSdollarbetweenperiods.During2016,thePinosAltosminemillprocessedanaverageof5,415tonnesoforeperday,adecreaseof0.9%comparedwiththe5,462tonnesoforeperdayprocessedduring2015.In2016,approximately278,100tonnesoforewerestackedonthePinosAltosmineleachpad,adecreaseof27.7%comparedwiththeapproximately384,700tonnesoforestackedin2015,primarilyduetominesequencing.Productioncostspertonneincreasedto$51in2016comparedwith$44in2015duetolowerthroughputandtheincreasedcostfactorsnotedabove.Minesitecostspertonneincreasedto$49in2016comparedwith$45in2015primarilyduetothesamefactorsnotedabove,otherthantheinventoryadjustment.

ProductioncostsattheCrestonMascotadepositatPinosAltoswere$27.3millionin2016,anincreaseof4.0%comparedwith2015productioncostsof$26.3millionprimarilyduetohigherre-handlingcosts,partiallyoffsetbyaweakerMexicanpesorelativetotheUSdollarbetweenperiods.During2016,approximately2,119,200tonnesoforewerestackedontheleachpadattheCrestonMascotadepositatPinosAltos,anincreaseof1.0%comparedwiththeapproximate2,098,800tonnesoforestackedin2015.Productioncostspertonneremainedunchangedat$13between2015and2016.Minesitecostspertonneincreasedslightlyto$13in2016comparedwith$12in2015.

ProductioncostsattheLaIndiaminewere$49.7millionin2016,anincreaseof0.3%comparedwith2015productioncostsof$49.6million.During2016,theLaIndiaminestackedapproximately5,837,400tonnesoforeontheleachpad,anincreaseof8.7%comparedwiththeapproximate5,371,400tonnesoforestackedin2015primarilyduetounexpectedadditionalorefoundinareaspreviouslythoughttohavecontainedwaste.Productioncostspertonneremainedunchangedat$9between2015and2016.Minesitecostspertonneremainedunchangedat$9between2015and2016.

Total Production Costs by Category

TotalcashcostsperounceofgoldproducedispresentedinthisMD&Aonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productrevenues,inventoryproductioncosts,smelting,refining


andmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.

Totalproductioncostsperounceofgoldproduced,representingtheweightedaverageofalloftheCompany'sproducingmines,increasedto$621in2016comparedwith$596in2015anddecreasedfrom$705in2014.Totalcashcostsperounceofgoldproducedonaby-productbasisincreasedto$573in2016comparedwith$567in2015anddecreasedfrom$637in2014.Totalcashcostsperounceofgoldproducedonaco-productbasisincreasedto$643in2016comparedwith$626in2015anddecreasedfrom$721in2014.SetoutbelowisananalysisofthechangeintotalproductioncostsperounceandtotalcashcostsperounceateachoftheCompany'sminingoperations:

• AttheLaRondemine,totalproductioncostsperounceofgoldproduceddecreasedto$587in2016comparedwith$643in2015primarilyduetoa14.1%increaseingoldproduction.Totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$501in2016comparedwith$590in2015primarilyduetotheincreaseingoldproductionnotedaboveandhigherby-productrevenues.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$668in2016comparedwith$760in2015,reflectingtheincreaseingoldproductionnotedabove.

• AttheLapamine,totalproductioncostsperounceofgoldproducedincreasedto$717in2016comparedwith$578in2015duetolowerproductionandhighercostsassociatedwithdevelopmentworkinthenewzonesthatwerepreviouslyexcludedfromthemineplan.Totalcashcostsperounceofgoldproducedonaby-productbasisincreasedto$732in2016comparedwith$590in2015duetothesamefactorsnotedabove.Totalcashcostsperounceofgoldproducedonaco-productbasisincreasedto$732in2016comparedwith$591in2015duetothesamefactorsasnotedabove.

• AttheGoldexmine,totalproductioncostsperounceofgoldproduceddecreasedto$525in2016comparedwith$531in2015duetoa4.6%increaseingoldproductionandanincreaseininventory.Totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$532in2016comparedwith$538in2015duetotheincreaseingoldproductionnotedabove.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$532in2016comparedwith$538in2015duetothesamefactorsasnotedabove,otherthantheinventoryadjustment.

• AttheMeadowbankmine,totalproductioncostsperounceofgoldproducedincreasedto$701in2016comparedwith$604in2015duetoan18.2%decreaseinproduction,aloweramountofstrippingcostsbeingcapitalizedandadecreaseininventory.Totalcashcostsperounceofgoldproducedonaby-productbasisincreasedto$715in2016comparedwith$613in2015duetothesamefactorsnotedabove,otherthantheinventoryadjustment.Totalcashcostsperounceofgoldproducedonaco-productbasisincreasedto$727in2016comparedwith$623in2015duetothesamefactorsasnotedabove,otherthantheinventoryadjustment.

• AttheCanadianMalarticmine,totalproductioncostsperounceofgoldproducedincreasedto$628in2016comparedwith$600in2015duetounplannedmaintenanceontheleachtank,ballmillandcrushercomponentsintheprocessplantandadditionalstrippingcosts.Totalcashcostsperounceofgoldproducedonaby-productbasisincreasedto$606in2016comparedwith$596during2015asaresultofthesamefactorsnotedabove.Totalcashcostsperounceofgoldproducedonaco-productbasisincreasedto$626in2016comparedwith$613during2015asaresultofthesamefactorsasnotedabove.

• AttheKittilamine,totalproductioncostsperounceofgoldproduceddecreasedto$701in2016comparedwith$711in2015duetoa14.2%increaseingoldproductionandanincreaseininventory.Totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$699in2016comparedwith$709in2015duetothesamefactorsasnotedabove,otherthantheinventoryadjustment.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$700in2016comparedwith$710in2015duetothesamefactorsasnotedabove,otherthantheinventoryadjustment.

• AtthePinosAltosmine,totalproductioncostsperounceofgoldproducedincreasedto$594in2016comparedwith$545in2015duetohigherconsumablecosts,variationsintheproportionofheapleachoretomilledore,variationsinopenpitoretoundergroundore,fluctuationsinthewastetoorestrippingratioandadecreaseininventory.Totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$356in2016comparedwith$387in2015.Thisdecreasewasprimarilyduetoincreasedby-productrevenueduetohighersilverpricesandaweakerMexicanpesorelativetotheUSdollarbetweenperiods.Totalcashcostsperounceofgoldproducedonaco-productbasis


increasedto$585in2016comparedwith$578in2015duetothesamefactorsasnotedabove,otherthanby-productrevenueandtheinventoryadjustment.

• AttheCrestonMascotadepositatPinosAltos,totalproductioncostsperounceofgoldproducedincreasedto$578in2016comparedto$480in2015duetoa13.5%decreaseingoldproductionandadecreaseininventory.Totalcashcostsperounceofgoldproducedonaby-productbasisincreasedto$516in2016comparedwith$430in2015.Thisincreasewasprimarilyduetothedecreaseingoldproductionnotedabove,partiallyoffsetbyaweakerMexicanpesorelativetotheUSdollarbetweenperiods,otherthantheinventoryadjustment.Totalcashcostsperounceofgoldproducedonaco-productbasisincreasedto$588in2016comparedwith$474in2015duetothesamefactorsasnotedabove,otherthantheinventoryadjustment.

• AttheLaIndiamine,totalproductioncostsperounceofgoldproduceddecreasedto$432in2016comparedwith$475in2015duetoa10.3%increaseingoldproductionandanincreaseininventory.Totalcashcostsperounceofgoldproducedonaby-productbasisdecreasedto$395in2016comparedwith$436in2015.ThisdecreasewasprimarilyduetheincreaseingoldproductionnotedaboveandaweakerMexicanpesorelativetotheUSdollarbetweenperiods,otherthantheinventoryadjustment.Totalcashcostsperounceofgoldproducedonaco-productbasisdecreasedto$468in2016comparedwith$475in2015duetothesamefactorsasnotedabove,otherthantheinventoryadjustment.

ExplorationandCorporateDevelopmentExpense

Explorationandcorporatedevelopmentexpenseincreasedby33.2%to$147.0millionin2016from$110.4millionin2015.Explorationandcorporatedevelopmentexpensewas$56.0millionin2014.

AsummaryoftheCompany'ssignificant2016explorationandcorporatedevelopmentactivitiesissetoutbelow:

• InCanada,explorationexpensesincreasedby71.2%to$96.0millionin2016comparedwith2015primarilyduetoincreasedexplorationattheAmaruqprojectlocated50kilometresnorthwestoftheMeadowbankmineinNunavut.

• Explorationexpensesdecreasedby18.3%to$20.8millioninLatinAmericacomparedwith2015primarilyduetodecreasedexplorationattheElBarquenoandMorelosSurprojectsinMexico.

• Explorationexpensesdecreasedby31.1%to$2.5millionintheUnitedStatesandincreasedby49.0%to$5.9millioninEuropein2016comparedwith2015.

• Corporatedevelopmentandprojectevaluationexpensesincreasedby2.7%to$21.7millionin2016comparedwith2015primarilyduetoincreasedprojectevaluationexpensesattheMinasChaparralprojectinMexico.

Thetablebelowsetsoutexplorationexpensebyregionandtotalcorporatedevelopmentexpense:

2016 2015 2014 (thousands of United States dollars) Canada $ 96,026 $ 56,099 $ 27,773

LatinAmerica 20,812 25,483 8,006

UnitedStates 2,525 3,666 2,615

Europe 5,877 3,943 5,044

Corporatedevelopmentexpense 21,738 21,162 12,564

Totalexplorationandcorporatedevelopmentexpense $ 146,978 $ 110,353 $ 56,002

AmortizationofProperty,PlantandMineDevelopment

Amortizationofproperty,plantandminedevelopmentexpenseincreasedto$613.2millionin2016comparedwith$608.6millionin2015and$433.6millionin2014.Theincreaseinamortizationofproperty,plantandminedevelopmentbetween2015and2016wasprimarilyduetotheincreasedamortizationatthePinosAltosmineasaresultoftheshaftgoingintocommercialproductioninJulyof2016andincreasedtonnageattheKittilamine,partiallyoffsetbylowerdepreciationattheGoldexandLaIndiaminesduetoreserveincreasesasatDecember31,2015.Amortizationexpensecommencesonceoperationsareincommercialproduction.


GeneralandAdministrativeExpense

Generalandadministrativeexpenseswere$102.8millionin2016,whichwerecomparabletogeneralandadministrativeexpensesof$97.0millionin2015.Generalandadministrativeexpenseswere$118.8millionin2014.

ImpairmentLossonAvailable-for-saleSecurities

Impairmentlossonavailable-for-salesecuritieswasnilin2016comparedwith$12.0millionin2015and$15.8millionin2014.Impairmentlossevaluationsofavailable-for-salesecuritiesarebasedonwhetheradeclineinfairvalueisconsideredtobesignificantorprolonged.

FinanceCosts

Financecostsdecreasedto$74.6millionin2016comparedwith$75.2millionin2015and$73.4millionin2014.Thetablebelowsetsoutthecomponentsoffinancecosts:

2016 2015 2014 (thousands of United States dollars) Stand-byfeesoncreditfacilities $ 5,387 $ 4,025 $ 4,605

Amortizationofcreditfacilities,financingandnoteissuancecosts 2,470 2,437 2,757

InterestonCreditFacility 3,102 8,892 7,499

Interestonnotes 60,044 49,937 49,414

Accretionexpenseonreclamationprovisions 3,832 4,164 5,173

Otherinterestandpenalties 2,871 7,476 5,651

Interestcapitalizedtoconstructioninprogress (3,065) (1,703) (1,706)

Totalfinancecosts $ 74,641 $ 75,228 $ 73,393

SeeLiquidity and Capital Resources – Financing Activities inthisMD&AfordetailsontheCreditFacilityandnotesreferencedabove.

GainonImpairmentReversal

AttheendofeachreportingperiodtheCompanyassesseswhetherthereisanyindicationthatanimpairmentlossrecognizedinpriorperiodsforanassetotherthangoodwillmaynolongerexistormayhavedecreased.Ifanindicatorofimpairmentreversalexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentreversalisrequired.Againonimpairmentreversalisrecognizedforanyexcessoftherecoverableamountoftheassetoveritscarryingamount.Thecarryingamountofanassetisnotincreasedabovethelowerofitsrecoverableamountandthecarryingamountthatwouldhavebeendeterminednetofamortizationhadnoimpairmentlossbeenrecognizedinpriorperiods.

AsatDecember31,2016,theCompanyidentifiedindicatorsofpotentialimpairmentreversalfortheCompany'sMeadowbankmineandMeliadinemineproject.Asaresultoftheidentificationoftheseindicators,theCompanyestimatedtherecoverableamountsoftheMeadowbankmineandMeliadinemineprojectcashgeneratingunitsandconcludedtherecoverableamountsexceededthecarryingamounts.TheCompanyrecordedagainonimpairmentreversalof$37.2millionattheMeadowbankmineand$83.0millionattheMeliadinemineproject(refertonote22intheCompany'sannualconsolidatedfinancialstatementsforadditionaldetails).

Adiscountedcashflowapproachwasusedtoestimatefairvaluelesscostsofdisposal,whichrepresentstherecoverableamountofproperty,plantandminedevelopmentassetsthatwasusedtodeterminetheimpairmentreversalamounts.ThetotalgainonimpairmentreversalrecordedduringtheyearendedDecember31,2016was$120.2million.

AttheendofeachreportingperiodtheCompanyalsoassesseswhetherthereisanyindicationthatlong-livedassetsmaybeimpaired.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Animpairmentlossisrecognizedforanyexcessofthecarryingamountoftheassetoveritsrecoverableamount.Therecoverableamountsarebasedoneachasset'sfuturecashflowsandrepresentseachasset'sfairvaluelesscostsofdisposal.


BasedonassessmentscompletedbytheCompany,noimpairmentlosseswererequiredin2016,2015or2014.

Management'sestimatesoffuturenetcashflowsaresubjecttoriskanduncertainties.Therefore,itisreasonablypossiblethatchangescouldoccurwhichmayaffecttherecoverabilityoftheCompany'slong-livedassetsandgoodwill.ThismayhaveamaterialeffectontheCompany'sfutureconsolidatedfinancialstatements.

ForeignCurrencyTranslationLoss(Gain)

TheCompany'soperatingresultsandcashflowaresignificantlyaffectedbychangesintheexchangeratebetweentheUSdollarandeachoftheCanadiandollar,MexicanpesoandEuroasalloftheCompany'srevenuesareearnedinUSdollarswhileasignificantportionofitsoperatingandcapitalcostsareincurredinsuchothercurrencies.DuringtheperiodfromJanuary1,2015throughDecember31,2016,thedailyUSdollar(noon)exchangerateasreportedbytheBankofCanadahasfluctuatedbetweenC$1.17andC$1.46,14.57Mexicanpesosand20.83Mexicanpesosand€0.83and€0.96perUS$1.00.

Aforeigncurrencytranslationlossof$13.2millionwasrecordedin2016comparedwithaforeigncurrencytranslationgainof$4.7millionin2015andaforeigncurrencytranslationlossof$3.8millionin2014.Onaverage,theUSdollarstrengthenedagainsttheCanadiandollar,MexicanpesoandEuroin2016comparedwith2015.TheUSdollaralsostrengthenedagainsttheMexicanpesoandEuroandweakenedagainsttheCanadiandollaronDecember31,2016,comparedtoDecember31,2015.Thenetforeigncurrencytranslationlossin2016wasprimarilyduetothetranslationimpactofmonetaryassetsdenominatedinMexicanpesosandEurosandmonetaryliabilitiesdenominatedinCanadiandollars,offsetpartiallybythetranslationimpactofmonetaryliabilitiesdenominatedinMexicanpesosandEurosandmonetaryassetsdenominatedinCanadiandollars.

IncomeandMiningTaxesExpense

In2016,theCompanyrecordedincomeandminingtaxesexpenseof$109.6milliononincomebeforeincomeandminingtaxesof$268.5millionataneffectivetaxrateof40.8%.In2015,theCompanyrecordedincomeandminingtaxesexpenseof$58.0milliononincomebeforeincomeandminingtaxesof$82.6millionataneffectivetaxrateof70.2%.TheCompany's2016and2015effectivetaxrateswerehigherthantheapplicablestatutorytaxrateof26.0%primarilyduetotheimpactofminingtaxes,foreignexchangeandnon-deductibleexpenses.In2014,theCompanyrecordedincomeandminingtaxesexpenseof$106.2milliononincomebeforeincomeandminingtaxesof$189.1millionataneffectivetaxrateof56.1%.

Liquidity and Capital Resources

AsatDecember31,2016,theCompany'scashandcashequivalents,short-terminvestmentsandcurrentrestrictedcashtotaled$548.8millioncomparedwith$132.3millionatDecember31,2015.TheCompany'spolicyistoinvestexcesscashinhighlyliquidinvestmentsofthehighestcreditqualitytoreducerisksassociatedwiththeseinvestments.Suchinvestmentswithremainingmaturitiesofgreaterthanthreemonthsandlessthanoneyearatthetimeofpurchaseareclassifiedasshort-terminvestments.Decisionsregardingthelengthofmaturitiesarebasedoncashflowrequirements,ratesofreturnandvariousotherfactors.

Workingcapital(currentassetslesscurrentliabilities)increasedto$806.6millionatDecember31,2016comparedwith$517.9millionatDecember31,2015.

OperatingActivities

Cashprovidedbyoperatingactivitiesincreasedby$162.4millionto$778.6millionin2016comparedwith2015.Theincreaseincashprovidedbyoperatingactivitieswasprimarilyduetoincreasesintheaveragerealizedpriceofgold,theimpactoncostsofaweakerCanadiandollarrelativetotheUSdollarandmorefavourableworkingcapitalchangesbetweenperiods.Partiallyoffsettingthesepositiveimpactsoncashprovidedbyoperatingactivitieswasa$36.6millionincreaseinexplorationandcorporatedevelopmentexpensesbetween2015and2016.Cashprovidedbyoperatingactivitieswas$668.3millionin2014,$52.1millionhigherthanin2015primarilyduetohigheraveragerealizedpricesofallmetalsin2014comparedwith2015.

InvestingActivities

Cashusedininvestingactivitiesincreasedto$553.5millionin2016from$374.5millionin2015.Theincreaseincashusedininvestingactivitiesbetweenperiodswasprimarilyduetoa$66.3millionincreaseincapitalexpenditures,a$51.6milliondecreaseinnetproceedsfromthesaleofavailable-for-salesecuritiesandotherinvestmentsanda$14.0millionincreaseinpurchasesofavailable-for-salesecuritiesandotherinvestments.Cashusedininvestingactivitieswas$851.6millionin2014,


includingcapitalexpendituresof$475.4millionand$403.5millioninnetcashexpendituresassociatedwiththeCompany'sjointacquisitionofOsisko,partiallyoffsetby$44.7millioninnetproceedsfromthesaleofavailable-for-salesecuritiesandwarrants.

In2016,theCompanyinvestedcashof$516.1millioninprojectsandsustainingcapitalexpenditurescomparedwith$449.8millionin2015.Capitalexpendituresin2016included$116.1millionattheMeliadinemineproject,$78.4millionattheGoldexmine,$75.9millionattheKittilamine,$64.3millionattheLaRondemine,$60.4millionattheCanadianMalarticmine(theCompany'sattributableportion),$59.6millionatthePinosAltosmine,$38.3millionattheMeadowbankmine,$10.5millionattheLaIndiamine,$9.3millionattheCrestonMascotadepositatPinosAltosand$3.3millionatotherprojects.The$66.3millionincreaseincapitalexpendituresbetween2015and2016wasprimarilyduetosignificantexpendituresthatwereincurredin2016relatingtothedevelopmentoftheMeliadinemineproject,includingthepurchaseoflongleadtimeequipmentandmaterialtopreparefortheupcomingbargeseason.

OnMarch8,2017,theCompanycompletedthepurchaseof38,100,000commonsharesofGoldQuestMiningCorporation("GoldQuest")pursuanttoaprivateplacement.TheCompanypaidC$0.60perGoldQuestcommonshare,fortotalconsiderationofapproximatelyC$22.9million.Upontheclosingofthetransaction,AgnicoEagleheldapproximately15.0%oftheissuedandoutstandingcommonsharesofGoldQuestonanon-dilutedbasis.

OnFebruary28,2017,theCompanycompletedthepurchaseof14,420,000commonsharesofOtisGoldCorporation("Otis")pursuanttoaprivateplacement.TheCompanypaidC$0.35perOtiscommonshare,fortotalconsiderationofapproximatelyC$5.0million.Upontheclosingofthetransaction,AgnicoEagleheldapproximately9.95%oftheissuedandoutstandingcommonsharesofOtisonanon-dilutedbasis.

OnDecember22,2016,theCompanysubscribedfor22,500,000commonsharesofCartierResourcesInc.("Cartier")inanon-brokeredprivateplacementatapriceofC$0.20perCartiercommonshare,fortotalcashconsiderationofC$4.5million.Uponclosingthetransaction,theCompanyheldapproximately19.97%oftheissuedandoutstandingcommonsharesofCartieronanon-dilutedbasis.OnMarch20,2017,theCompanysubscribedforanadditional3,365,369commonsharesofCartierfortotalproceedsofapproximatelyC$0.6million.Uponclosingthetransaction,theCompanyheldapproximately19.85%oftheissuedandoutstandingcommonsharesofCartieronanon-dilutedbasis.

OnDecember13,2016,theCompanysubscribedfor12,100,000commonsharesofG4GCapitalCorp.,subsequentlyrenamedWhiteGoldCorp("WhiteGold")inanon-brokeredprivateplacementatapriceofC$1.20perWhiteGoldcommonshare,fortotalcashconsiderationofapproximatelyC$14.5million.Uponclosingthetransaction,theCompanyheldapproximately19.93%oftheissuedandoutstandingcommonsharesofWhiteGoldonanon-dilutedbasis.OnMarch21,2017,theCompanysubscribedforanadditional1,110,000sharesofWhiteGoldfortotalproceedsofapproximatelyC$1.5million.Uponclosingthetransaction,theCompanyheldapproximately19.93%oftheissuedandoutstandingcommonsharesofWhiteGoldonanon-dilutedbasis.

OnMarch16,2016,theCompanysubscribedfor11,680,000commonsharesofBeloSunMiningCorp.("BeloSun")inanon-brokeredprivateplacementatapriceofC$0.53perBeloSuncommonshare,fortotalcashconsiderationofapproximatelyC$6.2million.OnJuly27,2016,theCompanysubscribedfor14,922,760commonsharesofBeloSunpursuanttopublicofferingbyBeloSunatapriceofC$0.85perBeloSuncommonshare,fortotalcashconsiderationofapproximatelyC$12.7million.Uponclosingthetransaction,theCompanyheldapproximately19.2%oftheissuedandoutstandingcommonsharesofBeloSunonanon-dilutedbasis.

OnJune11,2015,AgnicoEagleSwedenAB("AESweden"),anindirectwholly-ownedsubsidiaryoftheCompany,acquired55.0%oftheissuedandoutstandingcommonsharesofGunnarnMiningAB("Gunnarn")fromOrexMineralsInc.("Orex"),bywayofasharepurchaseagreement(the"GunnarnSPA").TheoperationandgovernanceofGunnarnandtheBarseleprojectaregovernedbyajointventureagreementamongtheCompany,AESweden,OrexandGunnarn(the"GunnarnJVA").UndertheGunnarnSPA,theconsiderationfortheacquisitionofthe55.0%ofGunnarn'soutstandingcommonshareswas$10.0million,comprisedof$6.0millionincashpayableatclosingandpaymentsof$2.0millionincashor,atAESweden'ssolediscretion,sharesoftheCompany,oneachofthefirstandsecondanniversaryoftheclosing.UndertheGunnarnJVA,AESwedencommittedtoincuranaggregateof$7.0millionofexplorationexpensesattheBarseleprojectbyJune11,2018,45.0%or$3.1millionofwhichisconsideredaccruedpurchaseconsideration.Accordingly,theCompany'stotalpurchaseconsiderationfortheacquisitionofits55.0%interestinGunnarnwas$13.1million.AESwedenmayearnanadditional15.0%interestinGunnarnundertheGunnarnJVAifitcompletesafeasibilitystudyinrespectoftheBarseleproject.TheGunnarnJVAalsoprovidesAESwedenwiththerighttonominateamajorityofthemembersoftheboardofdirectorsofGunnarn(basedoncurrentshareholdings)andAESwedenisthesoleoperatoroftheBarseleprojectandpaidcustomarymanagementfees.Inconnectionwiththetransaction,Orexalsoobtaineda2.0%netsmelterreturnroyaltyonproductionfromtheBarseleproperty,whichtheCompanymayrepurchaseatanytimefor$5.0million.TheGunnarnacquisitionwas


accountedforbytheCompanyasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$0.6millionwerecapitalizedtotheminingpropertiesacquired.OnSeptember25,2015,OrexMineralsInc.assigneditsinterestintheGunnarnJVAgreementtoBarseleMineralsCorp.("BarseleMinerals"),whichwasatthetimeawholly-ownedsubsidiaryofOrex.AllofthesharesofBarseleMineralsweresubsequentlydistributedtoshareholdersofOrexunderaplanofarrangement.

OnJune9,2015,theCompanyacquiredalloftheissuedandoutstandingcommonsharesofSoltoroLtd.("Soltoro"),includingcommonsharesissuableontheexerciseofSoltoro'soutstandingoptionsandwarrants,bywayofaplanofarrangementundertheCanadaBusinessCorporationsAct(the"SoltoroArrangement").EachoutstandingshareofSoltorowasexchangedundertheSoltoroArrangementfor:(i)C$0.01incash;(ii)0.00793ofanAgnicoEaglecommonshare;and(iii)onecommonshareofPalaminaCorp.,acompanythatwasnewlyformedinconnectionwiththeSoltoroArrangement.PursuanttotheSoltoroArrangement,SoltorotransferredallminingpropertieslocatedoutsideofthestateofJalisco,MexicotoPalaminaCorp.andretainedallotherminingproperties.AgnicoEaglehadnointerestinPalaminaCorp.upontheclosingoftheSoltoroArrangement.AgnicoEagle'stotalpurchasepriceof$26.7millionwascomprisedof$2.4millionincash,including$1.6millionincashcontributedtoPalaminaCorp.and770,429AgnicoEaglecommonsharesissuedfromtreasury.TheSoltoroacquisitionwasaccountedforasanassetacquisitionandtransactioncostsassociatedwiththeacquisitiontotaling$1.4millionwerecapitalizedtotheminingpropertiesacquired.

OnMay21,2015,theCompanysubscribedfor62,500,000commonsharesofBeloSuninanon-brokeredprivateplacementatapriceofC$0.24perBeloSuncommonshare,fortotalcashconsiderationofC$15.0million.

OnMarch19,2015,AgnicoEagle,YamanaandCanadianMalarticGPcompletedthepurchaseofa30.0%interestintheMalarticCHLpropertyfromAbitibiRoyaltiesInc.("Abitibi")inexchangefor459,197AgnicoEaglecommonshares,3,549,695Yamanacommonsharesand3.0%netsmelterreturnroyaltiestoeachofAbitibiandOsiskoGoldRoyaltiesLtd.ontheMalarticCHLproperty.TotalAgnicoEaglecommonshareconsiderationissuedwasvaluedat$13.4millionbasedontheclosingpriceofthecommonsharesonMarch18,2015.TheMalarticCHLpropertyislocatedadjacenttotheCompany'sjointlyownedCanadianMalarticmineandtheremaining70.0%interestintheMalarticCHLpropertywasjointlyacquiredthroughtheJune16,2014acquisitionofOsisko(thepredecessortoCanadianMalarticCorporation).Concurrentwiththetransactionclosing,eachofAbitibi,AgnicoEagle,Yamana,CanadianMalarticGPandCanadianMalarticCorporationreleasedanddischargedtheotherswithrespecttoallproceedingspreviouslycommencedbyAbitibiwithrespecttotheMalarticCHLproperty.Asaresultofthetransaction,AgnicoEagleandYamanajointlyowna100.0%interestintheMalarticCHLpropertythroughtheirrespectiveindirectinterestsinCanadianMalarticGP.

In2016,theCompanyreceivednetproceedsof$9.5millionfromthesaleofavailable-for-salesecuritiesandotherinvestmentscomparedwith$61.1millionin2015and$44.7millionin2014.In2016,theCompanypurchased$33.8millionofavailable-for-salesecuritiesandotherinvestmentscomparedwith$19.8millionin2015and$27.2millionin2014.TheCompany'sinvestmentsinavailable-for-salesecuritiesconsistprimarilyofinvestmentsincommonsharesofentitiesintheminingindustry.

FinancingActivities

Cashprovidedbyfinancingactivitiesof$190.4millionin2016increasedcomparedwithcashusedinfinancingactivitiesof$280.8millionin2015primarilyduetotheissuanceofthe2016NotesonJune30,2016andthereceiptof$192.1millionofproceedsfromtheexerciseofstockoptions,partiallyoffsetbya$19.3millionincreaseinnetrepaymentsofdebtbetweenperiods.Cashprovidedbyfinancingactivitieswas$229.2millionin2014,whichincludednetproceedsfromlong-termdebtof$286.0million,partiallyoffsetbydividendspaidof$54.1million.

In2016,theCompanypaiddividendsof$71.4millioncomparedwith$59.5millionin2015and$54.1millionin2014.AgnicoEaglehasdeclaredacashdividendeveryyearsince1983.AlthoughtheCompanyexpectstocontinuepayingdividends,futuredividendswillbeatthediscretionoftheBoardandwillbesubjecttofactorssuchasincome,financialconditionandcapitalrequirements.

OnOctober26,2016,theCompanyamendedits$1.2billionCreditFacilityto,amongotherthings,extendthematuritydatefromJune22,2020toJune22,2021andamendingpricingterms.AsatDecember31,2016,theCompany'soutstandingbalanceundertheCreditFacilitywasnil.CreditFacilityavailabilityisreducedbyoutstandinglettersofcredit,amountingto$0.8millionatDecember31,2016.AsatDecember31,2016,$1,199.2millionwasavailableforfuturedrawdownundertheCreditFacility.

OnJune30,2016,theCompanycloseda$350.0millionprivateplacementofguaranteedseniorunsecurednotes(the"2016Notes"),which,onissuance,hadaweightedaveragematurityof9.43yearsandaweightedaverageyieldof4.77%.Proceedsfromtheofferingofthe2016NoteswereusedtorepayamountsoutstandingundertheCreditFacility.


OnJune29,2016,theCompanyenteredintoastandbyletterofcreditfacilitywithafinancialinstitutionprovidingforaC$100.0millionuncommittedletterofcreditfacility(the"ThirdLCFacility").TheThirdLCFacilitymaybeusedtosupportthereclamationobligationsornon-financialorperformanceobligationsoftheCompanyoritssubsidiaries.TheobligationsoftheCompanyundertheThirdLCFacilityareguaranteedbycertainofitssubsidiaries.AsatDecember31,2016,totallettersofcreditoutstandingundertheThirdLCFacilityamountedto$38.2million.

OnMarch10,2016,theCompanyraisedapproximatelyC$25.0million($18.7million)throughtheissuanceof374,869commonsharesatapriceofC$66.69percommonshare.Flow-throughsharesaresecuritiesissuedtoinvestorswherebythedeductionsfortaxpurposesrelatedtoresourceexplorationandevaluationexpendituresmaybeclaimedbyinvestorsinsteadoftheissuer,subjecttoarenouncementprocess.Atthetimetheflow-throughsharesareissued,thesaleoftaxdeductionsisdeferredandpresentedintheaccountspayableandaccruedliabilitieslineiteminthebalancesheetbecausetheCompanyhadnotyetfulfilleditsobligationtopassonthetaxdeductionstotheinvestor.AtthetimetheCompanyfulfillsitsobligation,thesaleoftaxdeductionsisrecognizedintheincomestatementasareductionofdeferredtaxexpense.TheclosingpriceoftheCompany'scommonsharesontheMarch10,2016issuancedatewasC$48.49,resultinginanincreasetosharecapitalofapproximatelyC$18.2million($13.6million).TheinitialC$6.8million($5.1million)liabilityisdrawndownaseligibleexpendituresareincurredbecausetheCompanyhasapositiveintentiontorenouncetheseexpenses.DuringtheyearendedDecember31,2016,theliabilitywasfullyextinguishedbasedoneligibleexpendituresincurred.

OnSeptember30,2015,theCompanyclosedaprivateplacementconsistingofa$50.0millionguaranteedseniorunsecurednote(the"2015Note")withaSeptember30,2025maturitydateandayieldof4.15%.Underthenotepurchaseagreementinrespectofthe2015Note,theCompanyagreedthatanamountequaltoorgreaterthanthenetproceedsfromthe2015NotewouldbespentonminingprojectsintheProvinceofQuebec,Canada.

OnSeptember23,2015,theCompanyenteredintoastandbyletterofcreditfacilitywithafinancialinstitutionprovidingforaC$150.0millionuncommittedletterofcreditfacility(asamended,the"SecondLCFacility").TheSecondLCFacilitymaybeusedbytheCompanytosupportthereclamationobligationsoftheCompany,itssubsidiariesoranyentityinwhichtheCompanyhasadirectorindirectinterestortheperformanceobligations(otherthanwithrespecttoindebtednessforborrowedmoney)oftheCompany,itssubsidiariesoranyentityinwhichtheCompanyhasadirectorindirectinterestthatarenotdirectlyrelatedtoreclamationobligations.PaymentandperformanceoftheCompany'sobligationsundertheSecondLCFacilityaresupportedbyanaccountperformancesecurityguaranteeissuedbyExportDevelopmentCanadainfavourofthelender.AsatDecember31,2016,$52.2millionhadbeendrawnundertheSecondLCFacility.

OnJuly31,2015,theCompanyamendeditscreditagreementwithafinancialinstitutionrelatingtoitsuncommittedletterofcreditfacility(asamended,the"FirstLCFacility").EffectiveNovember5,2013,theamountavailableundertheFirstLCFacilityincreasedfromC$175.0milliontoC$200.0million.EffectiveSeptember28,2015,theamountavailableundertheFirstLCFacilitywasincreasedtoC$250.0million.EffectiveSeptember27,2016,theamountavailableundertheFirstLCFacilitywasincreasedtoC$350.0million.TheobligationsoftheCompanyundertheFirstLCFacilityareguaranteedbycertainofitssubsidiaries.TheFirstLCFacilitymaybeusedtosupportthereclamationobligationsornon-financialorperformanceobligationsoftheCompanyoritssubsidiaries.AsatDecember31,2016,$158.7millionhadbeendrawnundertheFirstLCFacility.

OnJuly24,2012,theCompanyclosedaprivateplacementof$200.0millionofguaranteedseniorunsecurednotes(the"2012Notes").The2012Notesmaturein2022and2024andatissuancehadaweightedaveragematurityof11.0yearsandweightedaverageyieldof4.95%.Proceedsfromtheofferingofthe2012NoteswereusedtorepayamountsoutstandingundertheCreditFacility.

OnApril7,2010,theCompanyclosedaprivateplacementof$600.0millionofguaranteedseniorunsecurednotesduein2017,2020and2022(the"2010Notes")withaweightedaveragematurityof9.84yearsandweightedaverageyieldof6.59%.Proceedsfromtheofferingofthe2010NoteswereusedtorepayamountsundertheCompany'sthenoutstandingcreditfacilities.

InconnectionwithitsjointacquisitionofOsiskoonJune16,2014,CanadianMalarticGPwasassignedandassumedcertainoutstandingdebtandfinanceleaseobligationsofOsiskorelatingtotheCanadianMalarticmine.AgnicoEagle'sindirectattributableinterestinsuchdebtandfinanceleaseobligationsincludedasecuredloanfacility(the"CMGPloan")witharemainingscheduledC$20.0millionrepaymentonJune30,2017anda6.875%perannuminterestrate.AsatDecember31,2016,theattributableoutstandingprincipalisC$20.0million($14.9million).AgnicoEagle'sindirectattributableinterestinthefinanceleaseobligationsofCMGPincludesecuredfinanceleaseobligationsprovidedinseparatetrancheswithremainingmaturitiesupto2019anda7.5%interestrate.AsatDecember31,2016,theCompany'sattributablefinanceleaseobligationswere$5.9million.


TheCompanywasincompliancewithallcovenantscontainedintheCreditFacility,2016Notes,2015Note,2012Notes,2010Notes,FirstLCFacility,SecondLCFacilityandtheThirdLCFacilityasatDecember31,2016.CanadianMalarticGPwasincompliancewithallcovenantsundertheCMGPLoanasatDecember31,2016.

TheCompanyissuedcommonsharesundertheCompany'sincentivesharepurchaseplananddividendreinvestmentplanforgrossproceedsof$29.0millionin2016comparedwith$9.4millionin2015and$10.4millionin2014.

ContractualObligations

AgnicoEagle'scontractualobligationsasatDecember31,2016aresetoutbelow:

Total 2017 2018-2019 2020-2021 Thereafter (millions of United States dollars) Reclamationprovisions(i) $ 397.3 $ 9.2 $ 15.0 $ 8.9 $ 364.2

Purchasecommitments(ii) 84.2 43.3 15.1 8.8 17.0

Pensionobligations(iii) 6.6 0.1 0.9 1.6 4.0

Financeandoperatingleases 31.9 9.2 11.1 2.1 9.5

Long-termdebt(iv) 1,214.9 129.9 — 360.0 725.0

Total(v) $ 1,734.9 $ 191.7 $ 42.1 $ 381.4 $ 1,119.7

Notes:

(i) Miningoperationsaresubjecttoenvironmentalregulationsthatrequirecompaniestoreclaimandremediatelanddisturbedbyminingoperations.TheCompanyhassubmittedclosureplanstotheappropriategovernmentalagencieswhichestimatethenature,extentandcostsofreclamationforeachofitsminingproperties.Expectedreclamationcashflowsarepresentedaboveonanundiscountedbasis.ReclamationprovisionsrecordedintheCompany'sconsolidatedfinancialstatementsaremeasuredattheexpectedvalueoffuturecashflowsdiscountedtotheirpresentvalueusingarisk-freeinterestrate.

(ii) Purchasecommitmentsincludecontractualcommitmentsfortheacquisitionofproperty,plantandminedevelopment.AgnicoEagle'sattributableinterestinthepurchasecommitmentsassociatedwithitsjointoperationstotaled$2.7millionasatDecember31,2016.

(iii) AgnicoEagleprovidesanon-registeredsupplementaryexecutiveretirementdefinedbenefitplanforcertaincurrentandformerseniorofficers(the"ExecutivesPlan").TheExecutivesPlanbenefitsaregenerallybasedontheemployee'syearsofserviceandlevelofcompensation.Thedataincludedinthistablehavebeenactuariallydetermined.

(iv) WithrespecttotheCompany'slong-termdebtobligations,theCompanyhasassumedthatrepaymentwilloccuroneachinstrument'srespectivematuritydate.

(v) TheCompany'sfutureoperatingcashflowsareexpectedtobesufficienttosatisfyitscontractualobligations.


Off-BalanceSheetArrangements

TheCompany'soff-balancesheetarrangementsasatDecember31,2016includeoperatingleaseswithvariouscounterpartiesof$20.1million(seeNote13(b)totheconsolidatedfinancialstatements)andoutstandinglettersofcreditforenvironmentalandsiterestorationcosts,customcredits,governmentgrantsandothergeneralcorporatepurposesof$251.6millionundertheCreditFacility,FirstLCFacility,SecondLCFacilityandThirdLCFacility(seeNote25totheconsolidatedfinancialstatements).IftheCompanyweretoterminatetheseoff-balancesheetarrangements,theCompany'sliquidityposition(asoutlinedinthetablebelow)issufficienttosatisfyanyrelatedpenaltiesorobligations.

2017LiquidityandCapitalResourcesAnalysis

TheCompanybelievesthatithassufficientcapitalresourcestosatisfyits2017mandatoryexpenditurecommitments(includingthecontractualobligationssetoutabove)anddiscretionaryexpenditurecommitments.Thefollowingtablesetsoutexpectedcapitalrequirementsandresourcesfor2017:

Amount

(millions of United States

dollars)

2017MandatoryCommitments:

Contractualobligations(seetableabove) $ 191.7

Accountspayableandaccruedliabilities(asatDecember31,2016) 228.6

Interestpayable(asatDecember31,2016) 14.2

Incometaxespayable(asatDecember31,2016) 35.1

Total2017mandatoryexpenditurecommitments $ 469.6

2017 Discretionary Commitments:

Expected2017capitalexpenditures $ 859.4

Expected2017explorationandcorporatedevelopmentexpenses 103.2

Total2017discretionaryexpenditurecommitments 962.6

Total 2017 mandatory and discretionary expenditure commitments $ 1,432.2

2017 Capital Resources:

Cash,cashequivalentsandshort-terminvestments(asatDecember31,2016) $ 548.4

Expected2017cashprovidedbyoperatingactivities 650.9

Workingcapital,excludingcash,cashequivalentsandshort-terminvestments(asatDecember31,2016) 258.2

AvailableundertheCreditFacility(asatDecember31,2016) 1,199.2

Total 2017 Capital Resources $ 2,656.7

WhiletheCompanybelievesitscapitalresourceswillbesufficienttosatisfyall2017commitments(mandatoryanddiscretionary),theCompanymaychoosetodecreasecertainofitsdiscretionaryexpenditurecommitments,whichincludecertaincapitalexpenditures,shouldunexpectedfinancialcircumstancesariseinthefuture.TheCompanybelievesthatitwillcontinuetohavesufficientcapitalresourcesavailabletosatisfyitsplanneddevelopmentandgrowthactivities.


Quarterly Results Review

FortheCompany'sdetailed2016and2015quarterlyfinancialandoperatingresultsseeSummarized Quarterly Data inthisMD&A.

Revenuesfromminingoperationsincreasedby3.4%to$499.2millioninthefourthquarterof2016comparedwith$482.9millioninthefourthquarterof2015primarilyduetohighersalespricesrealizedongoldandsilver,partiallyoffsetbya5.1%decreaseingoldsalesbetweenperiods.Productioncostsincreasedby11.0%to$255.1millioninthefourthquarterof2016comparedwith$229.8millioninthefourthquarterof2015duetoincreasedproductionandtonnageprocessed,partiallyoffsetbytheimpactofaweakerMexicanpesorelativetotheUSdollarbetweenperiods.Explorationandcorporatedevelopmentexpensesincreasedby37.9%to$35.8millioninthefourthquarterof2016comparedwith$26.0millioninthefourthquarterof2015primarilyduetoincreasedexplorationexpensesincurredattheAmaruqprojectattheMeadowbankMineinNunavut.Amortizationofproperty,plantandminedevelopmentdecreasedby3.6%to$151.4millioninthefourthquarterof2016comparedwith$157.1millioninthefourthquarterof2015primarilyduetoloweramortizationattheLaIndiaandGoldexminesduetoanincreaseindepreciablereservesasatDecember31,2015,partiallyoffsetbyhigheramortizationatthePinosAltosmineduetotheshaftgoingintocommercialproductioninthethirdquarterof2016.Netincomeof$62.7millionwasrecordedinthefourthquarterof2016afterincomeandminingtaxesexpenseof$52.8millioncomparedwithanetlossof$15.5millioninthefourthquarterof2015afterincomeandminingtaxesexpenseof$34.6million.

Cashprovidedbyoperatingactivitiesdecreasedby14.3%to$120.6millioninthefourthquarterof2016comparedwith$140.7millioninthefourthquarterof2015.Thedecreaseincashprovidedbyoperatingactivitieswasprimarilyduetoa$34.2milliondecreaseinworkingcapitalbalances,partiallyoffsetbya$16.3millionincreaseinrevenueduetoa9.3%increaseintheaveragerealizedpriceofgoldbetweenperiods.

Outlook

Thefollowingsectioncontains"forward-lookingstatements"and"forward-lookinginformation"withinthemeaningofapplicablesecuritieslaws.PleaseseeNote to Investors Concerning Forward-Looking Information inthisMD&Aforadiscussionofassumptionsandrisksrelatingtosuchstatementsandinformation.

GoldProduction

LaRonde Mine

In2017,payablegoldproductionattheLaRondemineisexpectedtobeapproximately315,000ounces.Overthe2017to2019period,averageannualpayablegoldproductionattheLaRondemineisexpectedtobeapproximately347,000ounces.Infilldrillingcompletedin2016successfullyupgradedportionsoftheLaRonde3mineralresourcebase,whichwillcontinuetobeexploredgoingforward.Aswell,throughoutthethree-yearguidanceperioditisexpectedthattherewillbeanincreaseingradeclosertothatoftheaveragemineralreserves.Totalcashcostsperounceofgoldproducedonaby-productbasisattheLaRondemineareexpectedtobeapproximately$510in2017comparedwith$501in2016.

Lapa Mine

In2017,payablegoldproductionattheLapamineisexpectedtobeapproximately15,000ounces.Underthecurrentlifeofmineplan,Lapaisexpectedtooperateuntiltheendofthesecondquarterof2017,withproductioncomingfromZoneDeepEastandZone7Deep.TheCompanyisevaluatingopportunitiestocontinueproductionintothesecondhalfof2017.Totalcashcostsperounceofgoldproducedonaby-productbasisattheLapamineareexpectedtobeapproximately$1,002in2017comparedwith$732in2016,reflectingexpectationsofdecreasedproductionandlowergoldgrade.

Goldex Mine

In2017,payablegoldproductionattheGoldexmineisexpectedtobeapproximately105,000ounces.Overthe2017to2019period,averageannualpayablegoldproductionattheGoldexmineisexpectedtobeapproximately113,000ounces.Throughoutthethreeyearguidanceperiod,miningwilltransitionfromtheMandEsatellitezonestotheDeep1zone.CommissioningoftheDeep1projectremainsonbudgetandscheduleforcommencementofmininginearly2018.Totalcashcostsperounceofgoldproducedonaby-productbasisattheGoldexmineareexpectedtobeapproximately$667in2017comparedwith$532in2016,reflectingexpectationsofdecreasedproductionduetolowergoldgrade.


Meadowbank Mine

In2017,payablegoldproductionattheMeadowbankmineisexpectedtobeapproximately320,000ounces.Overthe2017to2018period,averageannualpayablegoldproductionattheMeadowbankmineisexpectedtobeapproximately242,500ounces.Productionguidancehasincreasedslightlyoverpreviousguidanceduetoaslightincreaseinmineralreservesatyear-end2016andtheminingofhighergradeoreinthePortagepit.AttheVaultpit,opportunitiesarebeinginvestigatedtopotentiallyextendproductionthroughyear-end2018.TheAmaruqsatellitedepositatMeadowbankisexpectedtogointoproductioninthethirdquarterof2019andprovideapproximately135,000ouncesinitsfirstpartialyearofcommercialproduction.Totalcashcostsperounceofgoldproducedonaby-productbasisattheMeadowbankmineareexpectedtobeapproximately$683in2017comparedwith$715in2016,reflectingexpectationsofincreasedproduction.

Canadian Malartic Mine

In2017,attributablepayablegoldproductionattheCanadianMalarticmineisexpectedtobeapproximately300,000ounces.Overthe2017to2019period,averageannualattributablepayablegoldproductionattheCanadianMalarticmineisexpectedtobeapproximately315,000ounces.TheupdatedlifeofmineplanforMalarticprovidesearlieraccesstohighergradezonesthatarelocateddeeperintheCanadianMalarticpit.Totalcashcostsperounceofgoldproducedonaby-productbasisattheCanadianMalarticmineareexpectedtobeapproximately$578in2017comparedwith$606in2016,reflectingexpectationsofincreasedproductionandhighergoldgrade.

Kittila Mine

In2017,payablegoldproductionattheKittilamineisexpectedtobeapproximately190,000ounces.Overthe2017to2019period,averageannualpayablegoldproductionattheKittilamineisexpectedtobeapproximately200,000ounces.TheCompanyiscarryingoutstudiestoevaluatetheeconomicsofincreasingthroughputratesfromthecurrent1.6milliontonnesperannumto2.0milliontonnes,whichcouldbefurthersupportedbycontinueddevelopmentoftheRimpiandSisarzones.Totalcashcostsperounceofgoldproducedonaby-productbasisattheKittilamineareexpectedtobeapproximately$728in2017comparedwith$699in2016,reflectingexpectationsofdecreasedproduction.

Pinos Altos Mine

In2017,payablegoldproductionatthePinosAltosmineisexpectedtobeapproximately170,000ounces.Overthe2017to2019period,averageannualpayablegoldproductionatthePinosAltosmineisexpectedtobeapproximately173,000ounces.CommissioningofthePinosAltosshaftwascompletedin2016shouldallowforincreasedthroughputatthemill.ExplorationoftheCerroColoradoZoneoutlinedadditionalmineralizationontheboundariesofthezone,andfurtherdrillingwillbecarriedoutin2017toevaluatethispotential.Totalcashcostsperounceofgoldproducedonaby-productbasisatthePinosAltosmineareexpectedtobeapproximately$474in2017comparedwith$356in2016,reflectingexpectationsofdecreasedproductionduetochangesintheminingsequenceandtheweakeningoftheMexicanpesorelativetotheUSdollarduring2016.

Creston Mascota deposit at Pinos Altos

In2017,payablegoldproductionattheCrestonMascotadepositatPinosAltosisexpectedtobeapproximately40,000ounces.Overthe2017to2019period,averageannualpayablegoldproductionattheCrestonMascotadepositatPinosAltosisexpectedtobeapproximately25,000ounces.RecentexplorationatBravo,CubiroandMadronohasyieldedpositiveresultsandfurtherdrillingisplannedfor2017.Totalcashcostsperounceofgoldproducedonaby-productbasisattheCrestonMascotadepositatPinosAltosareexpectedtobeapproximately$812in2017comparedwith$516in2016,reflectingexpectationsofdecreasedproductionastheminelifewindsdownandtheweakeningoftheMexicanpesorelativetotheUSdollarduring2016.

La India Mine

In2017,payablegoldproductionattheLaIndiamineisexpectedtobeapproximately100,000ounces.Overthe2017to2019period,averageannualpayablegoldproductionattheLaIndiamineisexpectedtobeapproximately107,000ounces.Stepoutdrillingin2016atthenearbyElRealitoprojectyieldedencouragingresults,andadditionalworkisplannedfor2017.Totalcashcostsperounceofgoldproducedonaby-productbasisattheLaIndiamineareexpectedtobeapproximately$583in2017comparedwith$395in2016,reflectingdecreasedproduction,lowertonnesprocessedandtheweakeningoftheMexicanpesorelativetotheUSdollarduring2016.


Production Summary

WiththeachievementofcommercialproductionattheKittila,LapaandPinosAltosminesin2009,theMeadowbankminein2010,theCrestonMascotadepositatPinosAltosandLaRondemineextensionin2011,theGoldexmineMandEZonesin2013andtheLaIndiaminein2014,alongwiththejointacquisitionoftheCanadianMalarticmineonJune16,2014,AgnicoEaglehastransformedfromaonemineoperationtoaneightmineseniorgoldminingcompanyoverthelasteightyears.In2016,theCompanyachievedannualpayablegoldproductionof1,662,888ounces.AstheCompanyplansitsnextgrowthphasefromthisexpandedproductionplatform,itexpectstocontinuetodeliveronitsvisionandstrategy.Annualpayablegoldproductionisexpectedtodecreasetoapproximately1,555,000ouncesin2017,representinga6.9%decreasecomparedwith2016.TheCompanyexpectsthatthemaincontributorstoachievingthetargetedlevelsofpayablegoldproduction,mineralreservesandmineralresourcesin2017willinclude:

• IncreasedproductionfromtheMeadowbank,LaRondeandCanadianMalarticminesduetotheminingofhighergradeore;

• Continuedmillandmineplanoptimization;and

• ContinuedconversionofAgnicoEagle'scurrentmineralresourcestomineralreserves.

FinancialOutlook

Revenue from Mining Operations and Production Costs

In2017,theCompanyexpectstocontinuetogeneratesolidcashflowwithpayablegoldproductionofapproximately1,555,000ouncescomparedwith1,662,888ouncesin2016.ThisexpecteddecreaseinpayablegoldproductionisprimarilyduetotheplannedwinddownoftheLapaminein2017,changesintheminingsequenceofPinosAltosresultinginlowergoldproductionin2017andlowerproductionattheGoldexmineasaresultoflowerthroughput.

Thetablebelowsetsoutactualpayableproductionin2016andexpectedpayableproductionin2017:

2017

Forecast2016 Actual

Gold(ounces) 1,555,000 1,662,888

Silver(thousandsofounces) 4,435 4,759

Zinc(tonnes) 7,267 4,687

Copper(tonnes) 4,480 4,416

In2017,theCompanyexpectstotalcashcostsperounceofgoldproducedonaby-productbasisattheLaRondeminetobeapproximately$510comparedwith$501in2016.Incalculatingexpectationsoftotalcashcostsperounceofgoldproducedonaby-productbasisfortheLaRondemine,netsilver,zincandcopperby-productrevenueoffsetsproductioncosts.Therefore,productionandpriceassumptionsforby-productmetalsplayanimportantroleintheLaRondemine'sexpectedtotalcashcostsperounceofgoldproducedonaby-productbasisduetoitssignificantby-productproduction.ThePinosAltosminealsogeneratessignificantsilverby-productrevenue.Anincreaseinby-productmetalpricesaboveforecastedlevelswouldresultinimprovedtotalcashcostsperounceofgoldproducedonaby-productbasisatthesemines.Totalcashcostsperounceofgoldproducedonaco-productbasisareexpectedtobeapproximately$699in2017attheLaRondeminecomparedwith$668in2016.

AsproductioncostsattheLaRonde,Lapa,Goldex,MeadowbankandCanadianMalarticminesaredenominatedprimarilyinCanadiandollars,productioncostsattheKittilaminearedenominatedprimarilyinEurosandproductioncostsatthePinosAltosmine,theCrestonMascotadepositatPinosAltosandtheLaIndiaminearedenominatedprimarilyinMexicanpesos,theCanadiandollar/USdollar,Euro/USdollarandMexicanpeso/USdollarexchangeratesalsoaffecttheCompany'sexpectationsforthetotalcashcostsperounceofgoldproducedbothonaby-productandco-productbasis.


Thetablebelowsetsoutthemetalpriceandexchangerateassumptionsusedinderivingtheexpected2017totalcashcostsperounceofgoldproducedonaby-productbasis(forecastedproductionforeachmetalisshowninthetableabove)aswellastheactualmarketaverageclosingpricesforeachvariablefortheperiodofJanuary1,2017throughFebruary28,2017:

2017

Assumptions

Actual Market Average

(January 1, 2017 – February 28, 2017)

Silver(perounce) $16.00 $17.33

Zinc(pertonne) $2,425 $2,779

Copper(pertonne) $5,500 $5,837

Diesel(C$perlitre) $0.80 $0.72

C$/US$exchangerate(C$) $1.28 $1.32

Euro/US$exchangerate(Euros) €0.91 €0.94

Mexicanpeso/US$exchangerate(Mexicanpesos) 18.00 20.92

SeeRisk Profile – Commodity Prices and Foreign Currencies inthisMD&Afortheexpectedimpactonforecast2017totalcashcostsperounceofgoldproducedonaby-productbasisofcertainchangesincommoditypriceandexchangerateassumptions.

Exploration and Corporate Development Expenditures

In2017,AgnicoEagleexpectstoincurexplorationandcorporatedevelopmentexpensesofapproximately$103.2million.ExplorationexpensesareexpectedtobefocusedontheAmaruqprojectinNunavut,theLaRonde3deepdeposit,theBarseleprojectinSweden,theSisarzoneattheKittilamineinFinland,satellitetargetsatthePinosAltosandLaIndiaminesinMexicoandtheElBarquenoprojectinJaliscoState,Mexico.AttheAmaruqproject,thefirstphaseofaplanned75,000metredrillprogram(costingapproximately$21.9million)commencedinearlyFebruary2017.AgnicoEagle'sexpectedexplorationprogramattheElBarquenoprojectin2017ofapproximately$16.8millionwillfocusonmineralresourcedevelopment,conversionandregionalexploration.AtBarsele,$8.8millionwillbespentwithafocustoexpandthemineralresourcesalongstrikeandatdepthandtotestthegapbetweentheCentralandAvanzones.AtKittila,approximately$7.9millionwillbespentonfurtherdeepdrilling,includingattheSisarzone.

ExplorationprogramsaredesignedtoinfillandexpandknowndepositsandtestotherfavourabletargetareasthatcouldultimatelysupplementtheCompany'sexistingproductionprofile.Explorationissuccessdrivenandthusplannedexplorationcouldchangemateriallybasedontheresultsofthevariousexplorationprograms.Whenitisdeterminedthataprojectcangeneratefutureeconomicbenefit,thecostsofdrillinganddevelopmenttofurtherdelineatetheorebodyonsuchapropertyarecapitalized.In2017,theCompanyexpectstocapitalizeapproximately$21.7millionondrillinganddevelopmentrelatedtofurtherdelineatingorebodiesandconvertingmineralresourcesintomineralreserves.

Other Expenses

Generalandadministrativeexpensesareexpectedtobebetween$95.0millionand$115.0millionin2017comparedwith$102.8millionin2016.Amortizationofproperty,plantandminedevelopmentisexpectedtobebetween$590.0millionand$620.0millionin2017comparedwith$613.2millionin2016.TheCompany'seffectivetaxrateisexpectedtobebetween40.0%and45.0%in2017.


Capitalexpenditures,includingsustainingcapital,constructionanddevelopmentcostsandcapitalizedexplorationcosts,areexpectedtototalapproximately$859.4millionin2017.TheCompanyexpectstofundits2017capitalexpendituresthrough


operatingcashflowfromthesaleofitsgoldproductionandtheassociatedby-productmetals.Significantcomponentsoftheexpected2017capitalexpendituresprogramincludethefollowing:

• $284.4millioninsustainingcapitalexpendituresrelatingtotheLaRondemine($67.7million),CanadianMalarticmine($65.9million–portionattributabletotheCompany),Kittilamine($52.7million),PinosAltosmine($48.4million),Meadowbankmine($20.3million),Goldexmine($17.0million),LaIndiamine($6.9million)andtheCrestonMascotadepositatPinosAltos($5.5million);

• $553.3millionincapitalizeddevelopmentexpendituresrelatingtotheMeliadinemineproject($355.8million),Amaruq($73.1million),Goldexmine($55.8million),LaRondeZone5($35.0million),Kittilamine($24.1million),PinosAltosmine($5.8million)andtheCanadianMalarticmine($1.7million–portionattributabletotheCompany);and

• $21.7millionincapitalizeddrillingexpenditures.

Duringthe2017year,asignificantportionofCompany'scapitalcommitmentswillrelatetotheconstructionoftheMeliadinemineproject.TheMeliadinemineproject'sforecast$355.8millionindevelopmentexpendituresrepresentapproximately60.7%ofthe$553.3milliontotal.TheMeliadinemineprojectwillalsohaveanestimated$3.9millionincapitalizeddrillingexpenditures.Thekeyelementsofthe$359.7millionprograminclude:

• 5,600metresofundergrounddevelopment(includingthestartofasecondrampportal);

• Approximately12,500metresofconversiondrillingand14,000metresofundergrounddelineationdrilling;

• Completionofthecampcomplexinthesecondquarterof2017;

• Installationofundergroundventilationandheatinginfrastructurebythefourthquarterof2017;

• CompletionofthefuelfarminRankinInletandattheminesiteinthefourthquarterof2017;

• Closinginoftheprocessandpowerplantbuildingsbytheendof2017;and

• Constructionofsecondrampportalinthesecondtofourthquartersof2017.

TheCompanycontinuestoexamineotherpossiblecorporatedevelopmentopportunitieswhichmayresultintheacquisitionofcompaniesorassetsusingtheCompany'ssecurities,cashoracombinationthereof.Ifcashisusedtofundacquisitions,AgnicoEaglemayberequiredtoissuedebtorsecuritiestosatisfycashpaymentrequirements.

All-in Sustaining Costs per Ounce of Gold Produced

All-insustainingcostsperounceofgoldproducediscalculatedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).All-insustainingcostsperounceofgoldproducedonaby-productbasisiscalculatedastheaggregateoftotalcashcostsperounceofgoldproducedonaby-productbasisandsustainingcapitalexpenditures(includingcapitalizedexploration),generalandadministrativeexpenses(includingstockoptions)andnon-cashreclamationprovisionexpenseperounceofgoldproduced.All-insustainingcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerasall-insustainingcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismadetototalcashcostsperounceofgoldproduced.Thecalculationofall-insustainingcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.

AgnicoEagle'sall-insustainingcostsperounceofgoldproducedonaby-productbasisareexpectedtobeapproximately$850to$900in2017comparedwith$824in2016.

Risk Profile

TheCompanymitigatesthelikelihoodandpotentialseverityofthevariousrisksitencountersinitsday-to-dayoperationsthroughtheapplicationofhighstandardsintheplanning,constructionandoperationofitsminingfacilities.Emphasisisplacedonhiringandretainingcompetentpersonnelanddevelopingtheirskillsthroughtraining,includingsafetyandlosscontroltraining.TheCompany'soperatingandtechnicalpersonnelhaveasolidtrackrecordofdevelopingandoperatingpreciousmetalminesandseveraloftheCompany'smineshavereceivedsafetyanddevelopmentawards.Nevertheless,theCompanyanditsemployeescontinueeffortstoimproveworkplacesafetywithanemphasisonsafetyproceduretrainingforbothminingandsupervisoryemployees.


TheCompanyalsoattemptstomitigatesomeofitsnormalbusinessriskthroughthepurchaseofinsurancecoverage.AnInsurableRiskManagementPolicy,approvedbytheBoard,governsthepurchaseofinsurancecoverageandrestrictscoveragetoinsurancecompaniesofthehighestcreditquality.ForamorecompletelistoftheriskfactorsaffectingtheCompany,pleasesee"RiskFactors"intheAIF.

CommodityPricesandForeignCurrencies

AgnicoEagle'snetincomeissensitivetometalpricesandtheCanadiandollar/USdollar,Mexicanpeso/USdollarandEuro/USdollarexchangerates.Forthepurposeofthesensitivityanalysessetoutinthetablebelow,theCompanyappliedthefollowingmetalpriceandexchangerateassumptionsfor2017:

• Silver–$16.00perounce;

• Zinc–$2,425pertonne;

• Copper–$5,500pertonne;

• Diesel–C$0.80perlitre;

• Canadiandollar/USdollar–C$1.28per$1.00;

• Euro/USdollar–€0.91per$1.00;and

• Mexicanpeso/USdollar–18.00Mexicanpesosper$1.00.

Changesinthemarketpriceofgoldmaybeattributedtonumerousfactorssuchasdemand,globalmineproductionlevels,centralbankpurchasesandsalesandinvestorsentiment.Changesinthemarketpricesofothermetalsmaybeattributedtofactorssuchasdemandandglobalmineproductionlevels.Changesinthemarketpriceofdieselmaybeattributedtofactorssuchassupplyanddemand.Changesinexchangeratesmaybeattributedtofactorssuchassupplyanddemandforcurrenciesandeconomicconditionsineachcountryorcurrencyarea.In2016,therangesofmetalprices,dieselpricesandexchangerateswereasfollows:

• Silver:$13.75–$21.14perounce,averaging$17.11perounce;

• Zinc:$1,451–$2,907pertonne,averaging$2,094pertonne;

• Copper:$4,310–$5,945pertonne,averaging$4,867pertonne;

• Diesel:C$0.56–C$0.77perlitre,averagingC$0.67perlitre;

• Canadiandollar/USdollar:C$1.25–C$1.47per$1.00,averagingC$1.32per$1.00;

• Euro/USdollar:€0.86–€0.97per$1.00,averaging€0.90per$1.00;and

• Mexicanpeso/USdollar:17.05–21.39Mexicanpesosper$1.00,averaging18.69Mexicanpesosper$1.00.

Thefollowingtablesetsouttheimpactonforecasted2017totalcashcostsperounceofgoldproducedonaby-productbasisofspecificallyidentifiedchangesinassumedmetalprices,thedieselpriceandexchangerates.Specificallyidentifiedchangesineachvariablewereconsideredinisolationwhileholdingallotherassumptionsconstant.Basedonhistoricalmarketdataandthe2016pricerangesshownabove,thesespecificallyidentifiedchangesinassumedmetalpricesandexchangeratesarereasonablylikelyin2017.


Changes in Variable

Impact on Forecasted2017

Total Cash Costs perOunce

of Gold Produced (By-Product Basis)

Silver–$1perounce $3

Zinc–10% $1

Copper–10% $2

Diesel–10% $3

Canadiandollar/USdollar–1% $4

Euro/USdollar–1% $1

Mexicanpeso/USdollar–10% $5

Inordertomitigatetheimpactoffluctuatingby-productmetalprices,theCompanyoccasionallyentersintoderivativefinancialinstrumentcontractsunderitsBoard-approvedRiskManagementPoliciesandProcedures.TheCompanyhasalong-standingpolicyofnoforwardgoldsales.However,thepolicydoesallowtheCompanytouseotherhedgingstrategieswhereappropriatetomitigateforeignexchangeandby-productmetalpricingrisks.TheCompanyoccasionallybuysputoptions,entersintopricecollarsandentersintoforwardcontractstoprotectminimumby-productmetalpriceswhilemaintainingfullexposuretothepriceofgold.TheRiskManagementCommitteehasapprovedthestrategyofusingshort-termcalloptionsinanattempttoenhancerealizedby-productmetalprices.TheCompany'spolicydoesnotallowspeculativetrading.

TheCompanyreceivespaymentforallofitsmetalsalesinUSdollarsandpaysmostofitsoperatingandcapitalcostsinCanadiandollars,EurosorMexicanpesos.Thisgivesrisetosignificantcurrencyriskexposure.TheCompanyentersintocurrencyhedgingtransactionsunderitsBoard-approvedForeignExchangeRiskManagementPoliciesandProcedurestohedgepartofitsforeigncurrencyexposure.Thepolicydoesnotpermitthehedgingoftranslationexposure(thatis,thegainsandlossesthatarisefromtheaccountingtranslationofCanadiandollar,EuroorMexicanpesodenominatedassetsandliabilitiesintoUSdollars),asitdoesnotgiverisetocashexposure.TheCompany'sforeigncurrencyderivativefinancialinstrumentstrategyincludestheuseofpurchasedputs,soldcalls,collarsandforwardsthatarenotheldforspeculativepurposes.

CostInputs

TheCompanyconsidersandmayenterintoriskmanagementstrategiestomitigatepriceriskoncertainconsumablesincluding,butnotlimitedto,dieselfuel.Thesestrategieshavelargelybeenconfinedtolongertermpurchasingcontractsbutmayincludefinancialandderivativeinstruments.

InterestRates

TheCompany'scurrentexposuretomarketriskforchangesininterestratesrelatesprimarilytodrawdownsonitsCreditFacilityanditsinvestmentportfolio.DrawdownsontheCreditFacilityareusedprimarilytofundaportionofthecapitalexpendituresrelatedtotheCompany'sdevelopmentprojectsandworkingcapitalrequirements.AsatDecember31,2016,therewerenoamountsoutstandingontheCompany'sCreditFacility.Inaddition,theCompanyinvestsitscashininvestmentswithshortmaturitiesorwithfrequentinterestresettermsandacreditratingofR1-Highorbetter.Asaresult,theCompany'sinterestincomefluctuateswithshort-termmarketconditions.AsatDecember31,2016,short-terminvestmentswere$8.4million.

AmountsdrawnundertheCreditFacilityaresubjecttofloatinginterestratesbasedonbenchmarkratesavailableintheUnitedStatesandCanadaoronLIBOR.Inthepast,theCompanyhasenteredintoderivativeinstrumentstohedgeagainstunfavorablechangesininterestrates.TheCompanywillcontinuetomonitoritsinterestrateexposureandmayenterintosuchagreementstomanageitsexposuretofluctuatinginterestrates.


FinancialInstruments

TheCompanyoccasionallyentersintocontractstolimittheriskassociatedwithfluctuationsinby-productmetalprices,interestratesandforeigncurrencyexchangeratesandmayusesuchmeanstomanageexposuretocertaininputcosts.Thecontractsactaseconomichedgesofunderlyingexposuresandarenotheldforspeculativepurposes.AgnicoEagledoesnotusecomplexderivativecontractstohedgeexposures.

Usingfinancialinstrumentscreatesvariousfinancialrisks.CreditriskistheriskthatthecounterpartiestofinancialcontractswillfailtoperformonanobligationtotheCompany.Creditriskispartiallymitigatedbydealingwithhighqualitycounterpartiessuchasmajorbanks.Marketliquidityriskistheriskthatafinancialpositioncannotbeliquidatedquickly.TheCompanyprimarilymitigatesmarketliquidityriskbyspreadingoutthematurityoffinancialcontractsovertime,usuallybasedonprojectedproductionlevelsforthespecificmetalbeinghedged,suchthattherelevantmarketswillbeabletoabsorbthecontracts.Mark-to-marketriskistheriskthatanadversechangeinmarketpricesformetalswillaffectfinancialcondition.Becausederivativecontractsareprimarilyusedaseconomichedges,changesinmark-to-marketvaluemayimpactincome.Foradescriptionoftheaccountingtreatmentofderivativefinancialinstruments,pleaseseeCritical IFRS Accounting Policies and Accounting Estimates – DerivativeInstruments and Hedge Accounting inthisMD&A.

OperationalRisk

Thebusinessofgoldminingisgenerallysubjecttorisksandhazards,includingenvironmentalhazards,industrialaccidents,equipmentfailures,unusualorunexpectedrockformations,changesintheregulatoryenvironment,cave-ins,rockbursts,rockfalls,groundconditions,pitwallfailures,floodingandgoldbullionlosses.Theoccurrenceoftheseorsimilartypesofeventsandcircumstancesmayresultindamageto,ordestructionof,mineralpropertiesorproductionfacilities,personalinjuryordeath,environmentaldamage,delaysinmining,monetarylossesandlegalliability.TheCompanycarriesinsurancetoprotectitselfagainstcertainrisksofminingandprocessinginamountsthatitconsiderstobeadequatebutwhichmaynotprovidecoverageincertainunforeseencircumstances.TheCompanymayalsobecomesubjecttoliabilityforpollution,cave-insorotherhazardsagainstwhichitcannotinsureoragainstwhichithaselectednottoinsurebecauseofpremiumcostsorotherreasons.TheCompanyalsomaybecomesubjecttoliabilitieswhichexceedpolicylimits.Inthesecircumstances,theCompanymayberequiredtoincursignificantcoststhatcouldhaveamaterialadverseeffectonitsfinancialperformanceandresultsofoperations.

TheMeadowbank,LaRondeandCanadianMalarticminesweretheCompany'smostsignificantpayablegoldproductioncontributorsin2016at18.8%,18.4%and17.6%respectively.Theseminesareexpectedtoaccountfor60.2%oftheCompany'spayablegoldproductionin2017.

Thefollowingtablesetsoutexpected2017payablegoldproductionbymine:

Expected Payable Gold Production

(Ounces)

Expected Payable Gold Production

(%)

LaRondemine 315,000 20.3%

Lapamine 15,000 1.0%

Goldexmine 105,000 6.8%

Meadowbankmine 320,000 20.6%

CanadianMalarticmine(attributable50.0%) 300,000 19.3%

Kittilamine 190,000 12.2%

PinosAltosmine 170,000 10.9%

CrestonMascotadepositatPinosAltos 40,000 2.6%

LaIndiamine 100,000 6.3%

Total 1,555,000 100.0%


Miningisacomplexandunpredictablebusinessand,therefore,actualpayablegoldproductionmaydifferfromexpectations.AdverseconditionsaffectingminingormillingmayhaveamaterialadverseimpactontheCompany'sfinancialperformanceandresultsofoperations.TheCompanyanticipatesusingrevenuegeneratedbyitsoperationstofinancethecapitalexpendituresrequiredatitsmineprojects.

TheCompanymaynotachieveexpectedpayablegoldproductionlevelsasaresultofoccurrencessuchascave-ins,rockfalls,rockbursts,pitwallfailures,firesorfloodingorasaresultofotheroperationalproblemssuchasafailureofaproductionhoist,anautoclave,afilterpressoragrindingmill.Payablegoldproductionmayalsobeaffectedbyunfavorableweatherconditions,groundconditionsorseismicactivity,lowerthanexpectedoregrades,higherthanexpecteddilution,electricalpowerinterruptions,thephysicalormetallurgicalcharacteristicsoftheoreandheapleachprocessingresultingincontainmentdischarge.TheCompanyhasfailedtomeetpayablegoldproductionforecastsinthepastduetoadverseconditionssuchasrockfalls,productiondrillingchallenges,lowerthanplannedmillrecoveriesandgrades,higherthanexpecteddilution,minestructuralissuesanddelaysinthecommencementofproductionandrampupatnewmines.In2014,goldproductionwasnegativelyaffectedbytendaysofdowntimeresultingfromaproductionhoistdrivefailureatLaRonde.In2015,goldproductionwasnegativelyaffectedbylowerthanexpectedgradesatKittilaandadecisionduringtheyeartoextendtheVaultpitatMeadowbankresultinginlowerthanexpected2015production.Occurrencesofthisnatureandotheraccidents,adverseconditions,operationalproblemsorregulatorycircumstancesinfutureyearsmayresultintheCompany'sfailuretoachievecurrentorfutureproductionexpectations.

TheCompanybelievesthattheLaRondemineextensionisthedeepestoperationintheWesternHemisphere,withanexpectedmaximumdepthofover3kilometres.TheoperationsoftheLaRondemineextensionrelyoninfrastructureforhaulingoreandmaterialstothesurface,includingawinze(orinternalshaft)andaseriesoframpslinkingminingdepositstothePennaShaftthatserviceshistoricoperationsattheLaRondemine.ThedepthoftheoperationsposessignificantchallengestotheCompany,suchasgeomechanicalandseismicrisksandventilationandairconditioningrequirements,whichmayresultindifficultiesanddelaysinachievinggoldproductionobjectives.OperationsatthelowerleveloftheLaRondeminearesubjecttohighlevelsofgeomechanicalstressandtherearefewresourcesavailabletoassisttheCompanyinmodellingthegeomechanicalconditionsatthesedepths,whichmayresultintheCompanynotbeingabletoextracttheoreattheselevelsascurrentlycontemplated.In2014,tendaysofdowntimeresultingfromaproductionhoistdrivefailureresultedinannualproductionatLaRondebeingapproximately10,000ouncesbelowtheCompany'sexpectations.ThecontinuedsustainingdevelopmentoftheLaRondemineextensionissubjecttoanumberofrisksandchallenges,includingunforeseengeologicalformations,theimplementationofnewminingprocessesandengineeringandminedesignadjustments.TheseoccurrencesmayresultinoperationaldelaysandinadditionalcostsbeingincurredbytheCompanybeyondthosebudgeted.

TheCompany'sstatedmineralreservesandmineralresourcesareestimatesandnoassurancecanbegiventhattheanticipatedtonnagesandgradeswillbeachievedorthattheindicatedlevelofrecoveryofgoldwillberealized.TheoregradeactuallyrecoveredbytheCompanymaydifferfromtheexpectedgradesofthemineralreservesandmineralresources.Theestimatesofmineralreservesandmineralresourceshavebeendeterminedbasedon,amongotherthings,assumedmetalprices,foreignexchangeratesandoperatingcosts.Prolongeddeclinesinthemarketpriceofgold(orapplicableby-productmetalprices)mayrendermineralreservescontainingrelativelylowergradesofmineralizationuneconomicaltorecoverandcouldmateriallyreducetheCompany'smineralreserves.Shouldsuchreductionsoccur,theCompanymayberequiredtorecordamaterialimpairmentlossonitsinvestmentinminingpropertiesordelayordiscontinueproductionorthedevelopmentofnewprojects,resultinginnetlossesandreducedcashflow.Marketpricefluctuationsofgold(orapplicableby-productmetalprices),aswellasincreasedproductioncostsorreducedrecoveryrates,mayrendermineralreservescontainingrelativelylowergradesofmineralizationuneconomicaltorecoverandmayultimatelyresultinarestatementofmineralreservesandmineralresources.Short-termfactorsrelatingtothemineralreserve,suchastheneedfororderlydevelopmentoforebodiesortheprocessingofnewordifferentgrades,mayimpairtheprofitabilityofamineinanyparticularreportingperiod.

Mineralresourceestimatesforpropertiesthathavenotcommencedproductionoratdepositsthathavenotyetbeenexploitedarebased,inmostinstances,onverylimitedandwidelyspaceddrillholeinformation,whichisnotnecessarilyindicativeofconditionsbetweenandaroundthedrillholes.Accordingly,suchmineralresourceestimatesmayrequirerevisionasmoredrillinginformationbecomesavailableorasactualproductionexperienceisgained.

TheCompany'soperationsincludeamineinFinlandandminesinMexico.Theseoperationsareexposedtovariouslevelsofpolitical,economicandotherrisksanduncertaintiesthataredifferentfromthoseencounteredattheCompany'sCanadianproperties.Theserisksanduncertaintiesvaryfromcountrytocountryandmayinclude:extremefluctuationsincurrencyexchangerates;highratesofinflation;labourunrest;risksofwarorcivilunrest;expropriationandnationalization;


renegotiationornullificationofexistingconcessions,licenses,permitsandcontracts;illegalmining;corruption;restrictionsonforeignexchangeandrepatriation;hostagetaking;securityissues;andchangingpoliticalconditionsandcurrencycontrols.Inaddition,theCompanymustcomplywithmultipleandpotentiallyconflictingregulationsinCanada,theUnitedStates,EuropeandMexico,includingexportrequirements,taxes,tariffs,importdutiesandothertradebarriers,aswellashealth,safetyandenvironmentalrequirements.

TheCompany'sMeadowbankmine,whichistheCompany'slargestmineintermsofproduction,islocatedintheKivalliqDistrictofNunavutinnorthernCanada,approximately70kilometresnorthofBakerLake.Inaddition,theAmaruqproperty,located50kilometresnorthwestoftheMeadowbankmine,hasbeenapprovedasasatelliteoperationtotheMeadowbankmine(pendingreceiptofrequiredpermits).TheCompanybuilta110-kilometreall-weatherroadfromBakerLake,whichprovidessummershippingaccessviaHudsonBaytotheMeadowbankmineandtheCompanyisbuildinganall-weatherroadbetweenMeadowbankandtheAmaruqproperty.However,theCompany'soperationsareconstrainedbytheremotenessofthemine,particularlyastheportofBakerLakeisonlyaccessibleapproximately2.5monthsperyear.MostofthematerialsthattheCompanyrequiresfortheoperationoftheMeadowbankmine,includingtheexplorationandpotentialdevelopmentoftheAmaruqdeposit,mustbetransportedthroughtheportofBakerLakeduringthisshippingseason,whichmaybefurthertruncatedduetoweatherconditions.IftheCompanyisnotabletoacquireandtransportnecessarysuppliesduringthistime,thismayresultinaslowdownorstoppageofoperationsattheMeadowbankmineordevelopmentoftheAmaruqdepositatMeadowbank.Furthermore,ifmajorequipmentfails,anyitemsnecessarytoreplaceorrepairsuchequipmentmayhavetobeshippedthroughBakerLakeduringthiswindow.FailuretohavethenecessarymaterialsrequiredforoperationsortorepairorreplacemalfunctioningequipmentattheMeadowbankminemayrequiretheslowdownorstoppageofoperations.

TheCompany'sMeliadineproject,located290kilometressoutheastoftheMeadowbankmine,isalsolocatedintheKivalliqDistrictofNunavut,approximately25kilometresnorthwestofthehamletofRankinInletonthewestcoastofHudsonBay.MostofthematerialsthattheCompanyrequiresforminedevelopmentmustbetransportedthroughtheportofRankinInletduringitsapproximately14-weekshippingseason.IftheCompanycannotidentifyandprocuresuitableequipmentandmaterialswithinatimeframethatpermitstransportingthemtotheprojectwithinthisshippingseason,itcouldresultindelaysand/orcostincreasesintheconstructionordevelopmentontheproperty.

RegulatoryRisk

TheCompany'sminingandmineralprocessingoperations,explorationactivitiesandpropertiesaresubjecttothelawsandregulationsoffederal,provincial,stateandlocalgovernmentsinthejurisdictionsinwhichtheCompanyoperates.Theselawsandregulationsareextensiveandgovernprospecting,exploration,development,production,exports,taxes,labourstandards,occupationalhealthandsafety,wastedisposal,toxicsubstances,environmentalprotection,minesafetyandothermatters.Compliancewithsuchlawsandregulationsincreasesthecostsofplanning,designing,drilling,developing,constructing,operating,closing,reclaimingandrehabilitatingminesandotherfacilities.Newlawsorregulations,amendmentstocurrentlawsandregulationsgoverningoperationsandactivitiesofminingcompaniesormorestringentimplementationorinterpretationthereofcouldhaveamaterialadverseimpactontheCompany,causeareductioninlevelsofproductionanddelayorpreventthedevelopmentofnewminingproperties.Regulatoryenforcement,intheformofcomplianceorinfractionnotices,hasoccurredatsomeoftheCompany'sminesand,whilethecurrentrisksrelatedtosuchenforcementarenotexpectedtobematerial,theriskoffinesorcorrectiveactioncannotberuledoutinthefuture.

Controls Evaluation

TheCompany'smanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting("ICFR")anddisclosurecontrolsandprocedures("DC&P").

ICFRisaframeworkdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithIFRS.ManagementhasusedtheInternal Control – Integrated Framework issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissionin2013("COSO")inordertoassesstheeffectivenessoftheCompany'sICFR.

DC&PformabroaderframeworkdesignedtoprovidereasonableassurancethatinformationrequiredtobedisclosedbytheCompanyinitsannualandinterimfilingsandotherreportsfiledundersecuritieslegislationisrecorded,processed,summarizedandreportedwithinthetimeframespecifiedinsecuritieslegislationandincludescontrolsandproceduresdesignedtoensurethatinformationrequiredtobedisclosedbytheCompanyinitsannualandinterimfilingsandotherreportssubmittedundersecuritieslegislationisaccumulatedandcommunicatedtotheCompany'smanagementtoallowtimelydecisionsregardingrequireddisclosure.


Together,theICFRandDC&Pframeworksprovideinternalcontroloverfinancialreportinganddisclosure.TheCompanymaintainsdisclosurecontrolsandproceduresthataredesignedtoprovidereasonableassurancethatinformation,whichisrequiredtobedisclosedintheCompany'sannualandinterimfilingsandotherreportsfiledundersecuritieslegislation,isaccumulatedandcommunicatedinatimelyfashion.Duetotheirinherentlimitations,theCompanyacknowledgesthat,nomatterhowwelldesigned,ICFRandDC&Pcanprovideonlyreasonableassuranceofachievingthedesiredcontrolobjectivesandassuchmaynotpreventordetectallmisstatements.Further,theeffectivenessofICFRissubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewithpoliciesorproceduresmaychange.

TheCompanyhasretrospectivelyreviewedandevaluatedtheeffectivenessofthedesignandoperationofitscontrolsandproceduresrelatedtotheimpairmenttestingofitslong-livedassets(specifically,property,plant&minedevelopmentandgoodwill)andhasconcludedithadnotmaintainedeffectiveinternalcontroloverfinancialreportingasofDecember31,2015.Specifically,acontrolemployedbytheCompanyinitsreviewandevaluationofcertainassumptionsemployedindeterminingtherecoverableamountofcashgeneratingunitssubjecttoimpairmenttestingwasnotdesignedwithsufficientprecisiontopreventordetectapotentialmaterialerrorintheCompany'sfinancialinformation.ThisresultedinareasonablepossibilitythatamaterialmisstatementintheCompany'sconsolidatedfinancialstatementsrelatedtoimpairmenttestingonlong-livedassetswouldnothavebeenpreventedordetectedonatimelybasis.

Therefore,managementhasconcludedthatapreviouslyunreportedmaterialweaknessexistedinthisreviewcontrolasofDecember31,2015.Amaterialweaknessisadeficiency,orcombinationofdeficiencies,inICFR,suchthatthereisareasonablepossibilitythatamaterialmisstatementoftheCompany'sannualorinterimfinancialstatementswillnotbepreventedordetectedonatimelybasis.ThematerialweaknessidentifieddidnotresultinanyidentifiedmisstatementorerrorintheCompany'sconsolidatedfinancialstatementsasatandfortheyearendedDecember31,2015andtherewerenochangesintheCompany'spreviouslyreleasedfinancialstatements.TheCompanyadvisesthatbecauseofthematerialweakness,itsICFRandDC&PwereineffectiveasofDecember31,2015andcontinuedtobeineffectiveuntilthematerialweaknesswasremediatedasdescribedbelow.

InordertoaddressthematerialweaknessidentifiedasofDecember31,2015,thecontrolsrelatedtoimpairmenttestingoflong-livedassetshavebeenre-designedforthe2016year-endimpairmentprocess,andadditionalcontrolshavebeenintroduced,toincreasetheprecisionlevelofthereviewofkeyassumptionstopreventordetecterror.Amaterialweaknessisnotconsideredremediateduntiltheapplicableremedialcontrolsoperateforasufficientperiodoftime.ThecontrolsrelatingtoimpairmenttestingweretestedasofDecember31,2016andmanagementhasconcluded,throughthistesting,thatthesecontrolsareoperatingeffectively.Basedontheseefforts,theidentifiedmaterialweaknessrelatingtointernalcontrolsoverimpairmenttestingoflong-livedassetshasbeenremediated.

Thechangesimplementedhavenotmateriallyaffected,andarenotreasonablylikelytomateriallyaffect,theCompany'sICFRinotherrespects.TheCompany'smanagement,underthesupervisionoftheCompany'sChiefExecutiveOfficerandChiefFinancialOfficer,hasevaluatedtheeffectivenessofitsICFRandDC&PasatDecember31,2016.Basedonthisevaluation,managementconcludedthattheCompany'scorrectedICFRandDC&PwereeffectiveasatDecember31,2016.

Outstanding Securities

ThefollowingtablesetsoutthemaximumnumberofcommonsharesthatwouldbeoutstandingifalldilutiveinstrumentsoutstandingatMarch13,2017wereexercised:

CommonsharesoutstandingatMarch13,2017 224,932,981

Employeestockoptions 7,050,128

CommonsharesheldinatrustinconnectionwiththeRestrictedShareUnitplan,PerformanceShareUnitplanandLongTermIncentivePlan 949,422

Total 232,932,531

Governance

AgnicoEagle'sSustainableDevelopmentPolicy,revisedbytheBoardofDirectorsin2016,formallyoutlinestheguidingprinciplesandcommitmentsthattheCompanystrivestouphold.TheSustainableDevelopmentPolicyisbasedonfour


fundamentalvaluesofsustainabledevelopmentatAgnicoEagle:respectfortheCompany'semployees;protectionoftheenvironment;safeoperations;andrespectfortheCompany'scommunities.

Sustainable Development Management

In2016,theCompanycontinuedtheprocessofincorporatinghealth,safetyandenvironmentalsustainabilityintoallaspectsandstagesofitsbusiness,fromthecorporateobjectivesandexecutiveresponsibilityof'maintaininghighstandardsinsustainability'toexplorationandacquisitionactivities,daytodayoperatingandsiteclosure.Thisintegrationbeganin2012withtheadoptionofanintegratedHealth,Safety,EnvironmentandSocialAcceptabilityPolicy(the"SustainableDevelopmentPolicy")thatreflectstheCompany'scommitmenttoresponsibleminingpractices.TheCompanybelievesthattheSustainableDevelopmentPolicywillleadtotheachievementofmoresustainablepracticesthroughoversightandaccountability.

TheSustainableDevelopmentPolicyoperatesthroughthedevelopmentandimplementationofaformalandintegratedHealth,SafetyandEnvironmentalManagementSystem,termedtheResponsibleMiningManagementSystem(the"RMMS"),acrossalldivisionsoftheCompany.ThePartnershiphascommittedtoimplementingtheRMMSatCanadianMalarticinthefuture.TheaimoftheRMMSistopromoteacultureofaccountabilityandleadershipinmanaginghealth,safety,environmentalandsocialacceptabilitymatters.RMMSimplementationissupportedbysoftwarewidelyusedintheCanadianminingindustrythatisconsistentwiththeISO14001EnvironmentalManagementSystemandtheOHSAS18001HealthandSafetyManagementSystem.

TheRMMSincorporatestheCompany'scommitmentsasasignatorytotheCyanideCode,avoluntaryprogramthataddressesthesafeproduction,transport,storage,handlinganddisposalofcyanide.TheCompanybecameasignatorytotheCyanideCodeinSeptember2011.

TheRMMSalsointegratestherequirementsoftheMiningAssociationofCanada'sindustry-leadingTowardsSustainableMiningInitiative(the"TSMInitiative"),aswellastheGlobalReportingInitiative'ssustainabilityreportingguidelinesfortheminingindustry.InDecember2010,theCompanybecameamemberoftheMiningAssociationofCanadaandendorsedtheTSMInitiative.TheTSMInitiativewasdevelopedtohelpminingcompaniesevaluatethequality,comprehensivenessandrobustnessoftheirmanagementsystemsundersixperformanceelements:crisismanagement;energyandgreenhousegasemissionsmanagement;tailingsmanagement;biodiversityconservationmanagement;healthandsafety;andaboriginalrelationsandcommunityoutreach.

TheCompanyhasadoptedandimplementedtheWorldGoldCouncil'sConflict-FreeGoldStandard.ThisimplementationwasinitiatedonJanuary1,2013.

Employee Health and Safety

TheCompany'soverallhealthandsafetyperformance,asmeasuredbyaccidentfrequency,improvedduring2016.Acombinedlost-timeandrestrictedworkaccidentfrequencyrate(excludingtheCanadianMalarticmine)of1.04wasachieved,a15%reductionfromthe2015rateof1.23andsubstantiallybelowthetargetrateof1.40.ThisisthebestcombinedaccidentfrequencyrateeverrecordedbytheCompany.Extensivehealthandsafetytrainingwasalsoprovidedtoemployeesduring2016.

OneofthemeasuresimplementedbytheCompanytoimprovesafetyperformanceistheworkplacesafetycardsystem.ThissystemwasimplementedacrossalloftheCompany'soperations,inCanadaandabroad,tostrengthentherisk-basedtrainingprogram.DevelopedbytheQuebecMiningAssociation(the"AMQ"),thesafetycardsystemteachesworkersandsupervisorstouserisk-basedthinkingintheirduties.Workersandtheirsupervisorsmustmeeteverydaytodiscusson-the-jobhealthandsafetymatters.ThesafetycardsystemalsoallowstheCompany'sworkersandsupervisorstodocumentdailyinspectionsandrecordobservationsonconditionsintheworkplace,aswellasthenatureofrisks,issuesandotherrelevantinformation.Inaddition,itallowssupervisorstoexchangeandanalyzeallrelevantinformationbetweenshiftsandvarioustechnicalservicestoimproveefficiencyandsafety.

In2016,theAMQacknowledgedtheCompany'sstrongperformanceintheareaofhealthandsafety,recognizing28oftheCompany'ssupervisorsfromtheLaRonde,LapaandGoldexminesforkeepingtheirworkerssafe.ThesupervisorsreceivedAMQsecuritytrophyawardsfor50,000ormorehourssupervisedwithoutalost-timeaccident.Together,thisgroupof28supervisorsachievedmorethan2,000,000hourssupervisedwithoutalost-timeaccidentforamemberoftheircrew.

EachoftheCompany'sminingoperationshasitsownEmergencyResponsePlanandhaspersonneltrainedtorespondtosafety,fireandenvironmentalemergencies.Eachminealsomaintainstheappropriateresponseequipment.In2014,the


corporatecrisismanagementplanwasupdatedtoalignwithindustrybestpracticesandtheTSMInitiativerequirements.Emergencyresponsesimulationswerealsoperformedatalldivisions.TheTSMInitiativealsocontainsaHealthandSafetyprotocol.

TheCanadianMalarticmine'scombinedaccidentfrequencyratein2016was1.4,comparedtoanobjectiveof1.2,andcomparedtothe2015rateof1.28.

Community

TheCompany'sgoal,ateachofitsoperationsworldwide,istohireasmuchofitsworkforceaspossible,includingmanagementteams,directlyfromthelocalregioninwhichtheoperationislocated.In2016,theoverallcompanyaverageforlocalhiringwas76%.TheCompanybelievesthatprovidingemploymentisoneofthemostsignificantcontributionsitcanmaketothecommunitiesinwhichitoperates.

TheCompanycontinueditseffortsincommunitydevelopmentagreementsinNunavut.In2015,theMeadowbankIIBAwasrenewedandtheMeliadineIIBAwassigned.In2016,theCompanycontinueditsdialoguewithFirstNationsintheAbitibiregion.ThePartnershiphasenteredintonegotiationswithFirstNationsaroundtheKirklandLakeprojectandhasalsoinitiatedadialoguewithFirstNationsintheAbitibiregion.

TheCanadianMalarticminecontinueditscontributiontotheeconomicdevelopmentfund(FEMO)whichwasestablishedpriortominedevelopmenttodiversifythelocaleconomythroughouttheminelifesothatthetownofMalarticiswellequippedtofacetheeventualmineclosure.TheCanadianMalarticminehasalsoparticipatedinforumsinitiatedbythetowncouncilonthefutureofthetownofMalartic.Approximately98%ofthehiringin2016attheCanadianMalarticminewasfromthelocalarea.

In2016,theCompanycontinueditssupportoftheKivalliqMineTrainingSocietyandfortheuniqueupwardmobilitytrainingprogramforInuitemployeesdevelopedatMeadowbank.ThisprogramprovidestrainingandcareerpathopportunitiesforInuitwithlimitededucationandworkexperienceintheareaofheavyequipmentoperations,milloperationsandsiteservices.SkillsacquiredthroughtheprogramareeasilytransferabletoothersectorsoftheNunavuteconomy.

Fortheeighthyearinarow,thePinosAltosminewascertifiedasaSociallyResponsibleCompanybytheMexicanCentreforPhilanthropy(CentroMexicanoparalaFilantrop?ia)andtheAllianceforSocialResponsibilityofEnterprises(AlianzaporlaResponsabilidadSocialEmpresarialenMexico).ThiscertificationrecognizestheexcellenceofthesocialresponsibilitypracticesatthePinosAltosmine.

TheCompanycontinuestosupportanumberofcommunityhealthandeducationalinitiativesintheregionsurroundingthePinosAltosmine,includingtheestablishmentofalocalsewingcooperativeanddonatingmaterialfortheconstructionofnewclassroomsorfortherepairofexistingclassrooms.

Environment

TheCompany'sexplorationactivitiesandminingandprocessingoperationsaresubjecttothefederal,state,provincial,territorial,regionalandlocalenvironmentallawsandregulationsinthejurisdictionsinwhichtheCompany'sactivitiesandfacilitiesarelocated.Theseincluderequirementsforplanningandimplementingtheclosureandreclamationofminingpropertiesandrelatedfinancialassurance.Eachmineissubjecttoenvironmentalassessmentandpermittingprocessesduringdevelopmentand,inoperation,hasanenvironmentalmanagementsystemconsistentwithISO140001aswellasaninternalauditprogram.TheCompanyworkscloselywithregulatoryauthoritiesineachjurisdictionwhereitoperatestoensureongoingcompliance.

TheCompanyhasreportedgreenhousegasemissionsandclimatechangeriskfactorsannuallytotheCarbonDisclosureProjectsince2007.


In2016,theCanadianMalarticminereceivedonenon-complianceblastnoticeand12non-compliancenoisenotices(whichincludesnoticesreceivedininstanceswherenoiselevelswereotherwisewithinthemunicipalnoiselimits),adecreasefromthe25infractionsreceivedin2015.Themine'steamofon-siteenvironmentalexpertscontinuetomonitorregulatory


complianceintermsofapprovals,permitsandobservanceofdirectivesandrequirementsandcontinuetoimplementimprovementmeasures.

Critical IFRS Accounting Policies and Accounting Estimates

AgnicoEagle'ssignificantIFRSaccountingpoliciesaredisclosedintheSummaryofSignificantAccountingPoliciesnotetotheconsolidatedfinancialstatements.

ThepreparationoftheconsolidatedfinancialstatementsinaccordancewithIFRSrequiresmanagementtomakeestimatesandjudgmentsthataffectthereportedamountsofassets,liabilities,revenuesandexpenses.Inmakingjudgmentsaboutthecarryingvalueofassetsandliabilities,theCompanyusesestimatesbasedonhistoricalexperienceandassumptionsthatareconsideredreasonableinthecircumstances.AlthoughtheCompanyevaluatesitsaccountingestimatesperiodically,actualresultsmaydifferfromtheseestimates.

TheCompanybelievesthefollowingcriticalaccountingpoliciesrelatetoitsmoresignificantjudgmentsandestimatesusedinthepreparationofitsconsolidatedfinancialstatements.ManagementhasdiscussedthedevelopmentandselectionofthefollowingcriticalaccountingpolicieswiththeAuditCommitteewhichhasreviewedtheCompany'sdisclosureinthisMD&A.

DerivativeInstrumentsandHedgeAccounting

TheCompanyusesderivativefinancialinstruments(primarilyoptionandforwardcontracts)tomanageexposuretofluctuationsinby-productmetalprices,interestratesandforeigncurrencyexchangeratesandmayusesuchmeanstomanageexposuretocertaininputcosts.TheCompanydoesnotholdfinancialinstrumentsorderivativefinancialinstrumentsfortradingpurposes.

TheCompanyrecognizesallderivativefinancialinstrumentsintheconsolidatedfinancialstatementsatfairvalueregardlessofthepurposeorintentforholdingtheinstrument.Changesinthefairvalueofderivativefinancialinstrumentsareeitherrecognizedperiodicallyintheconsolidatedstatementsofincomeandcomprehensiveincomeorinequityasacomponentofaccumulatedothercomprehensiveincome,dependingonthenatureofthederivativefinancialinstrumentandwhetheritqualifiesforhedgeaccounting.Financialinstrumentsdesignatedashedgesaretestedforeffectivenessateachreportingperiod.Realizedgainsandlossesonthosecontractsthatareproventobeeffectivearereportedasacomponentoftherelatedtransaction.

Goodwill

Goodwillisrecognizedinabusinesscombinationifthecostoftheacquisitionexceedsthefairvaluesoftheidentifiablenetassetsacquired.Goodwillisthenallocatedtothecashgeneratingunit("CGU")orgroupofCGUsthatareexpectedtobenefitfromthesynergiesofthecombination.ACGUisthesmallestidentifiablegroupofassetsthatgeneratescashinflowswhicharelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets.

TheCompanyperformsgoodwillimpairmenttestsonanannualbasisasatDecember31eachyear.Inaddition,theCompanyassessesforindicatorsofimpairmentateachreportingperiodendand,ifanindicatorofimpairmentisidentified,goodwillistestedforimpairmentatthattime.IfthecarryingvalueoftheCGUorgroupofCGUstowhichgoodwillisassignedexceedsitsrecoverableamount,animpairmentlossisrecognized.Goodwillimpairmentlossesarenotreversed.

TherecoverableamountofaCGUorgroupofCGUsismeasuredasthehigherofvalueinuseandfairvaluelesscostsofdisposal.

MiningProperties,PlantandEquipmentandMineDevelopmentCosts

Miningproperties,plantandequipmentandminedevelopmentcostsarerecordedatcost,lessaccumulatedamortizationandaccumulatedimpairmentlosses.

Mining Properties

Thecostofminingpropertiesincludesthefairvalueattributabletoprovenandprobablemineralreservesandmineralresourcesacquiredinabusinesscombinationorassetacquisition,undergroundminedevelopmentcosts,deferredstripping,capitalizedexplorationandevaluationcostsandcapitalizedborrowingcosts.

Significantpaymentsrelatedtotheacquisitionoflandandmineralrightsarecapitalizedasminingpropertiesatcost.Ifamineableorebodyisdiscovered,suchcostsareamortizedtoincomewhencommercialproductioncommences,usingthe


units-of-productionmethod,basedonestimatedprovenandprobablemineralreserves.Ifnomineableorebodyisdiscovered,suchcostsareexpensedintheperiodinwhichitisdeterminedthatthepropertyhasnofutureeconomicvalue.Costcomponentsofaspecificprojectthatareincludedinthecapitalcostoftheassetincludesalariesandwagesdirectlyattributabletotheproject,suppliesandmaterialsusedintheproject,andincrementaloverheadcoststhatcanbedirectlyattributabletotheproject.

Assetsunderconstructionarenotamortizeduntiltheendoftheconstructionperiodoroncecommercialproductionisachieved.Uponachievingtheproductionstage,thecapitalizedconstructioncostsaretransferredtotheappropriatecategoryofplantandequipment.

Plant and Equipment

Expendituresfornewfacilitiesandimprovementsthatcanextendtheusefullivesofexistingfacilitiesarecapitalizedasplantandequipmentatcost.Thecostofanitemofplantandequipmentincludes:itspurchaseprice,includingimportdutiesandnon-refundablepurchasetaxes,afterdeductingtradediscountsandrebates;anycostsdirectlyattributabletobringingtheassettothelocationandconditionnecessaryforittobecapableofoperatinginthemannerintendedbymanagement;andtheestimateofthecostsofdismantlingandremovingtheitemandrestoringthesiteonwhichitislocatedotherthancoststhatariseasaconsequenceofhavingusedtheitemtoproduceinventoriesduringtheperiod.

Anitemofproperty,plantandequipmentisderecognizedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Anygainorlossarisingonderecognitionoftheasset(calculatedasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheasset)isincludedinstatementofprofitorlossandothercomprehensiveincomewhentheassetisderecognized.

Amortizationofanassetbeginswhentheassetisinthelocationandconditionnecessaryforittooperateinthemannerintendedbymanagement.Amortizationceasesattheearlierofthedatetheassetisclassifiedasheldforsaleorthedatetheassetisderecognized.Assetsunderconstructionarenotamortizeduntiltheendoftheconstructionperiod.Amortizationischargedaccordingtoeithertheunits-of-productionmethodoronastraight-linebasis,accordingtothepatterninwhichtheasset'sfutureeconomicbenefitsareexpectedtobeconsumed.Theamortizationmethodappliedtoanassetisreviewedatleastannually.

Usefullivesofproperty,plantandequipmentarebasedonestimatedminelivesasdeterminedbyprovenandprobablemineralreserves.RemainingminelivesatDecember31,2016rangefrom1to18years.

Mine Development Costs

Minedevelopmentcostsincurredafterthecommencementofproductionarecapitalizedwhentheyareexpectedtohaveafutureeconomicbenefit.Activitiesthataretypicallycapitalizedincludecostsincurredtobuildshafts,drifts,rampsandaccesscorridorswhichenabletheCompanytoextractoreunderground.

TheCompanyrecordsamortizationonundergroundminedevelopmentcostsonaunits-of-productionbasisbasedontheestimatedtonnageofprovenandprobablemineralreservesoftheidentifiedcomponentoftheorebody.Theunits-of-productionmethoddefinesthedenominatorasthetotaltonnageofprovenandprobablemineralreserves.

Deferred Stripping

Inopenpitminingoperations,itisnecessarytoremoveoverburdenandotherwastematerialstoaccessorefromwhichmineralscanbeextractedeconomically.Theprocessofminingoverburdenandwastematerialsisreferredtoasstripping.

Duringthedevelopmentstageofthemine,strippingcostsarecapitalizedaspartofthecostofbuilding,developingandconstructingthemineandareamortizedoncetheminehasenteredtheproductionstage.

Duringtheproductionstageofamine,strippingcostsarerecordedasapartofthecostofinventoriesunlessthesecostsareexpectedtoprovideafutureeconomicbenefitand,insuchcases,arecapitalizedtoproperty,plantandminedevelopment.

Productionstagestrippingcostsprovideafutureeconomicbenefitwhen:

• Itisprobablethatthefutureeconomicbenefit(e.g.,improvedaccesstotheorebody)associatedwiththestrippingactivitywillflowtotheCompany;

• TheCompanycanidentifythecomponentoftheorebodyforwhichaccesshasbeenimproved;and


• Thecostsrelatingtothestrippingactivityassociatedwiththatcomponentcanbemeasuredreliably.

Capitalizedproductionstagestrippingcostsareamortizedovertheexpectedusefullifeoftheidentifiedcomponentoftheorebodythatbecomesmoreaccessibleasaresultofthestrippingactivity.

Borrowing Costs

Borrowingcostsarecapitalizedtoqualifyingassets.QualifyingassetsareassetsthattakeasubstantialperiodoftimetopreparefortheCompany'sintendeduse,whichincludesprojectsthatareintheexplorationandevaluation,developmentorconstructionstages.

Borrowingcostsattributabletotheacquisition,constructionorproductionofqualifyingassetsareaddedtothecostofthoseassetsuntilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduse.Allotherborrowingcostsarerecognizedasfinancecostsintheperiodinwhichtheyareincurred.Wherethefundsusedtofinanceaqualifyingassetformpartofgeneralborrowings,theamountcapitalizediscalculatedusingaweightedaverageofratesapplicabletotherelevantborrowingsduringtheperiod.

Leases

Thedeterminationofwhetheranarrangementis,orcontains,aleaseisbasedonthesubstanceofthearrangementattheinceptiondate,includingwhetherthefulfillmentofthearrangementisdependentontheuseofaspecificassetorassetsorwhetherthearrangementconveysarighttousetheasset.

LeasingarrangementsthattransfersubstantiallyalltherisksandrewardsofownershipoftheassettotheCompanyareclassifiedasfinanceleases.Financeleasesarerecordedasanassetwithacorrespondingliabilityatanamountequaltothelowerofthefairvalueoftheleasedassetsandthepresentvalueoftheminimumleasepayments.Eachleasepaymentisallocatedbetweentheliabilityandfinancecostsusingtheeffectiveinterestratemethod,wherebyaconstantrateofinterestexpenseisrecognizedonthebalanceoftheliabilityoutstanding.Theinterestelementoftheleaseischargedtotheconsolidatedstatementofincomeasafinancecost.Anassetleasedunderafinanceleaseisamortizedovertheshorteroftheleasetermanditsusefullife.

Allotherleasesarerecognizedasoperatingleases.Operatingleasepaymentsarerecognizedasanoperatingexpenseintheconsolidatedstatementsofincomeonastraight-linebasisovertheleaseterm.

DevelopmentStageExpenditures

Developmentstageexpendituresarecostsincurredtoobtainaccesstoprovenandprobablemineralreservesandprovidefacilitiesforextracting,treating,gathering,transportingandstoringtheminerals.Thedevelopmentstageofaminecommenceswhenthetechnicalfeasibilityandcommercialviabilityofextractingthemineralresourcehasbeendetermined.Coststhataredirectlyattributabletominedevelopmentarecapitalizedasproperty,plantandminedevelopmenttotheextentthattheyarenecessarytobringthepropertytocommercialproduction.

Abnormalcostsareexpensedasincurred.Indirectcostsareincludedonlyiftheycanbedirectlyattributedtotheareaofinterest.Generalandadministrativecostsarecapitalizedaspartofthedevelopmentexpenditureswhenthecostsaredirectlyattributedtoaspecificminingdevelopmentproject.

Commercial Production

Amineconstructionprojectisconsideredtohaveenteredtheproductionstagewhenthemineconstructionassetsareavailableforuse.Indeterminingwhethermineconstructionassetsareconsideredavailableforuse,thecriteriaconsideredinclude,butarenotlimitedto,thefollowing:

• Completionofareasonableperiodoftestingmineplantandequipment;

• Abilitytoproducemineralsinsaleableform(withinspecifications);and

• Abilitytosustainongoingproductionofminerals.

Whenamineconstructionprojectmovesintotheproductionstage,amortizationcommences,thecapitalizationofcertainmineconstructioncostsceasesandexpendituresareeithercapitalizedtoinventoriesorexpensedasincurred.Exceptionsincludecostsincurredforadditionsorimprovementstoproperty,plantandminedevelopmentandopen-pitstrippingactivities.


ImpairmentofLong-livedAssets

AttheendofeachreportingperiodtheCompanyassesseswhetherthereisanyindicationthatlong-livedassetsmaybeimpaired.Ifanindicatorofimpairmentexists,therecoverableamountoftheassetiscalculatedinordertodetermineifanyimpairmentlossisrequired.Ifitisnotpossibletoestimatetherecoverableamountoftheindividualasset,assetsaregroupedattheCGUlevelforthepurposeofassessingtherecoverableamount.AnimpairmentlossisrecognizedforanyexcessofthecarryingamountoftheCGUoveritsrecoverableamount.TheimpairmentlossrelatedtoaCGUisfirstallocatedtogoodwillandtheremaininglossisallocatedonapro-ratabasistotheremaininglong-livedassetsoftheCGUbasedontheircarryingamounts.

Anyimpairmentchargethatistakenonalong-livedassetexceptgoodwillisreversediftherearesubsequentchangesintheestimatesorsignificantassumptionsthatwereusedtorecognizetheimpairmentlossthatresultinanincreaseintherecoverableamountoftheCGU.Ifanindicatorofimpairmentreversalhasbeenidentified,arecoveryshouldberecognizedtotheextenttherecoverableamountoftheassetexceedsitscarryingamount.Theamountofthereversalislimitedtothedifferencebetweenthecurrentcarryingamountandtheamountwhichwouldhavebeenthecarryingamounthadtheearlierimpairmentnotbeenrecognizedandamortizationofthatcarryingamounthadcontinued.Impairmentsandsubsequentreversalsarerecordedintheconsolidatedstatementofincomeintheperiodinwhichtheyoccur.

ReclamationProvisions

Assetretirementobligations("AROs")arisefromtheacquisition,developmentandconstructionofminingpropertiesandplantandequipmentduetogovernmentcontrolsandregulationsthatprotecttheenvironmentontheclosureandreclamationofminingproperties.ThemajorpartsofthecarryingamountofAROsrelatetotailingsandheapleachpadclosureandrehabilitation,demolitionofbuildingsandminefacilities,ongoingwatertreatmentandongoingcareandmaintenanceofclosedmines.TheCompanyrecognizesanAROatthetimetheenvironmentaldisturbanceoccursoraconstructiveobligationisdeterminedtoexistbasedontheCompany'sbestestimateofthetimingandamountofexpectedcashflowsexpectedtobeincurred.WhentheAROprovisionisrecognized,thecorrespondingcostiscapitalizedtotherelateditemofproperty,plantandminedevelopment.Reclamationprovisionsthatresultfromdisturbanceinthelandtoextractoreinthecurrentperiodisincludedinthecostofinventories.

Thetimingoftheactualenvironmentalremediationexpendituresisdependentonanumberoffactorssuchasthelifeandnatureoftheasset,theoperatinglicenceconditionsandtheenvironmentinwhichthemineoperates.Reclamationprovisionsaremeasuredattheexpectedvalueoffuturecashflowsdiscountedtotheirpresentvalueusingarisk-freeinterestrate.AROsareadjustedeachperiodtoreflectthepassageoftime(accretion).Accretionexpenseisrecordedinfinancingcostseachperiod.UponsettlementofanARO,theCompanyrecordsagainorlossiftheactualcostdiffersfromthecarryingamountoftheARO.Settlementgainsorlossesarerecordedintheconsolidatedstatementsofincome.

Expectedcashflowsareupdatedtoreflectchangesinfactsandcircumstances.Theprincipalfactorsthatcancauseexpectedcashflowstochangearetheconstructionofnewprocessingfacilities,changesinthequantitiesofmaterialinprovenandprobablemineralreservesandacorrespondingchangeinthelife-of-mineplan,changingorecharacteristicsthatimpactrequiredenvironmentalprotectionmeasuresandrelatedcosts,changesinwaterqualitythatimpacttheextentofwatertreatmentrequiredandchangesinlawsandregulationsgoverningtheprotectionoftheenvironment.

Eachreportingperiod,provisionsforAROsarere-measuredtoreflectanychangestosignificantassumptions,includingtheamountandtimingofexpectedcashflowsandrisk-freeinterestrates.Changestothereclamationprovisionresultingfromchangesinestimateareaddedtoordeductedfromthecostoftherelatedasset,exceptwherethereductionofthereclamationprovisionexceedsthecarryingvalueoftherelatedassetsinwhichcasetheassetisreducedtonilandtheremainingadjustmentisrecognizedintheconsolidatedstatementsofincome.

Environmentalremediationliabilities("ERLs")aredifferentiatedfromAROsinthatERLsdonotarisefromenvironmentalcontaminationinthenormaloperationofalong-livedassetorfromalegalorconstructiveobligationtotreatenvironmentalcontaminationresultingfromtheacquisition,constructionordevelopmentofalong-livedasset.TheCompanyisrequiredtorecognizealiabilityforobligationsassociatedwithERLsarisingfrompastacts.ERLsaremeasuredbydiscountingtheexpectedrelatedcashflowsusingarisk-freeinterestrate.TheCompanypreparesestimatesofthetimingandamountofexpectedcashflowswhenanERLisincurred.Eachreportingperiod,theCompanyassessescostestimatesandotherassumptionsusedinthevaluationofERLstoreflectevents,changesincircumstancesandnewinformationavailable.ChangesinthesecostestimatesandassumptionshaveacorrespondingimpactonthevalueoftheERL.AnychangeinthevalueofERLsresultsinacorrespondingchargeorcredittotheconsolidatedstatementsofincome.Uponsettlementofan


ERL,theCompanyrecordsagainorlossiftheactualcostdiffersfromthecarryingamountoftheERLintheconsolidatedstatementsofincome.

Stock-basedCompensation

TheCompanyoffersequity-settledawards(theemployeestockoptionplan,incentivesharepurchaseplan,restrictedshareunitplanandperformanceshareunitplan)tocertainemployees,officersanddirectorsoftheCompany.

Employee Stock Option Plan ("ESOP")

TheCompany'sESOPprovidesforthegrantingofoptionstodirectors,officers,employeesandserviceproviderstopurchasecommonshares.Optionshaveexercisepricesequaltothemarketpriceonthedaypriortothedateofgrant.Thefairvalueoftheseoptionsisrecognizedintheconsolidatedstatementsofincomeandcomprehensiveincomeorintheconsolidatedbalancesheetsifcapitalizedaspartofproperty,plantandminedevelopmentovertheapplicablevestingperiodasacompensationcost.Anyconsiderationpaidbyemployeesonexerciseofoptionsorpurchaseofcommonsharesiscreditedtosharecapital.

FairvalueisdeterminedusingtheBlack-Scholesoptionvaluationmodel,whichrequirestheCompanytoestimatetheexpectedvolatilityoftheCompany'ssharepriceandtheexpectedlifeofthestockoptions.Limitationswithexistingoptionvaluationmodelsandtheinherentdifficultiesassociatedwithestimatingthesevariablescreatedifficultiesindeterminingareliablesinglemeasureofthefairvalueofstockoptiongrants.Thecostisrecordedoverthevestingperiodoftheawardtothesameexpensecategoryoftheawardrecipient'spayrollcostsandthecorrespondingentryisrecordedinequity.Equity-settledawardsarenotre-measuredsubsequenttotheinitialgrantdate.ThedilutiveimpactofstockoptiongrantsisfactoredintotheCompany'sreporteddilutednetincomepershare.Thestockoptionexpenseincorporatesanexpectedforfeiturerate,estimatedbasedonexpectedemployeeturnover.

Incentive Share Purchase Plan ("ISPP")

UndertheISPP,directors(excludingnon-executivedirectors),officersandemployees(theparticipants)oftheCompanymaycontributeupto10.0%oftheirbasicannualsalariesandtheCompanycontributesanamountequalto50.0%ofeachparticipant'scontribution.AllcommonsharessubscribedforundertheISPPareissuedbytheCompany.

TheCompanyrecordsanexpenseequaltoitscashcontributiontotheISPP.Noforfeiturerateisappliedtotheamountsaccrued.Whereanemployeeleavespriortothevestingdate,anyaccrualforcontributionsbytheCompanyduringthevestingperiodrelatedtothatemployeeisreversed.

Restricted Share Unit ("RSU") Plan

TheRSUplanisopentodirectorsandcertainemployees,includingseniorexecutives,oftheCompany.Commonsharesarepurchasedandheldinatrustuntiltheyhavevested.Thecostisrecordedoverthevestingperiodoftheawardtothesameexpensecategoryastheawardrecipient'spayrollcosts.ThecostoftheRSUsisrecordedwithinequityuntilsettled.Equity-settledawardsarenotremeasuredsubsequenttotheinitialgrantdate.

Performance Share Unit ("PSU") Plan

ThePSUplanisopentoseniorexecutivesoftheCompany.Commonsharesarepurchasedandheldinatrustuntiltheyhavevested.PSUsaresubjecttovestingrequirementsbasedonspecificperformancemeasurementsbytheCompany.ThefairvaluefortheportionofthePSUsrelatedtomarketconditionsisbasedontheapplicationofpricingmodelsatthegrantdateandthefairvaluefortheportionrelatedtonon-marketconditionsisbasedonthemarketvalueofthesharesatthegrantdate.CompensationexpenseisbasedonthecurrentbestestimateoftheoutcomeforthespecificperformancemeasurementestablishedbytheCompanyandisrecognizedoverthevestingperiodbasedonthenumberofPSUsestimatedtovest.

RevenueRecognition

Revenuefromminingoperationsconsistsofgoldrevenues,netofsmelting,refining,transportationandothermarketingcharges.Revenuesfromby-productmetalsalesareshownnetofsmelterchargesaspartofrevenuesfromminingoperations.


Revenuefromthesaleofgoldandsilverisrecognizedwhenthefollowingconditionshavebeenmet:

• TheCompanyhastransferredtothebuyerthesignificantrisksandrewardsofownership;

• TheCompanyretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnoreffectivecontroloverthegoodssold;

• Theamountofrevenuecanbemeasuredreliably;

• ItisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheCompany;and

• Thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.

Revenuefromgoldandsilverintheformofdorebarsisrecordedwhentherefinedgoldorsilverissoldanddeliveredtothecustomer.Generally,allofthegoldandsilverintheformofdorebarsrecoveredintheCompany'smillingprocessissoldintheperiodinwhichitisproduced.

UnderthetermsoftheCompany'sconcentratesalescontractswiththird-partysmelters,finalpricesforthemetalscontainedintheconcentratearedeterminedbasedontheprevailingspotmarketmetalpricesonaspecifiedfuturedate,whichisestablishedasofthedatethattheconcentrateisdeliveredtothesmelter.TheCompanyrecordsrevenuesunderthesecontractsbasedonforwardpricesatthetimeofdelivery,whichiswhentherisksandrewardsofownershipoftheconcentratepassestothethird-partysmelters.Thetermsofthecontractsresultindifferencesbetweentherecordedestimatedpriceatdeliveryandthefinalsettlementprice.Thesedifferencesareadjustedthroughrevenueateachsubsequentfinancialstatementdate.

IncomeTaxes

Currentanddeferredtaxexpensesarerecognizedintheconsolidatedstatementsofincomeexcepttotheextentthattheyrelatetoabusinesscombination,ortoitemsrecognizeddirectlyinequityorinothercomprehensiveincome(loss).

Currenttaxexpenseisbasedonsubstantivelyenactedstatutorytaxratesandlawsattheconsolidatedbalancesheetdate.

Deferredtaxisrecognizedinrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandthetaxbasisofsuchassetsandliabilitiesmeasuredusingtaxratesandlawsthataresubstantivelyenactedattheconsolidatedbalancesheetdateandeffectiveforthereportingperiodwhenthetemporarydifferencesareexpectedtoreverse.

Deferredtaxesarenotrecognizedinthefollowingcircumstances:

• Whereadeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwill;

• Whereadeferredtaxassetorliabilityarisesontheinitialrecognitionofanassetorliabilityinatransactionwhichisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithernetincomeortaxableprofits;and

• FortemporarydifferencesrelatingtoinvestmentsinsubsidiariesandjointlycontrolledentitiestotheextentthattheCompanycancontrolthetimingofthereversalofthetemporarydifferenceanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

Deferredtaxassetsarerecognizedforunusedtaxlossesandtaxcreditscarriedforwardanddeductibletemporarydifferencestotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichtheycanbeutilizedexceptasnotedabove.

Ateachreportingperiod,previouslyunrecognizeddeferredtaxassetsarereassessedtodeterminewhetherithasbecomeprobablethatfuturetaxableprofitswillallowthedeferredtaxassetstoberecovered.

Recently Issued Accounting Pronouncements

IFRS9–FinancialInstruments

InJuly2014,theIASBissuedthefinalversionofIFRS9FinancialInstrumentsthatreplacesIAS39andallpreviousversionsofIFRS9.IFRS9bringstogetherallthreeaspectsoftheaccountingforfinancialinstrumentsproject:classificationandmeasurement,impairmentandhedgeaccounting.IFRS9iseffectiveforannualperiodsbeginningonorafterJanuary1,2018,withearlyapplicationpermitted.Exceptforhedgeaccounting,retrospectiveapplicationisrequired,buttheprovisionofcomparativeinformationisnotcompulsory.Forhedgeaccounting,therequirementsaregenerallyappliedprospectively,withsomelimitedexceptions.TheCompanyplanstoadoptthenewstandardontherequiredeffectivedate.


During2016,theCompanyperformedahigh-levelimpactassessmentofallthreeaspectsofIFRS9.ThispreliminaryassessmentisbasedoncurrentlyavailableinformationandmaybesubjecttochangesarisingfromfurtherdetailedanalysisoradditionalreasonableandsupportableinformationbeingmadeavailabletotheCompanyinthefuture.Overall,thereisnosignificantimpactexpectedonthebalancesheetorstatementofequityfromtheadoptionofIFRS9.

Classification and measurement

TheonlychangeinIFRS9inrespectoftheclassificationoffinancialliabilitiesisthatforthosedesignatedatfairvaluethroughprofitorloss("FVTPL"),fairvaluechangesattributabletotheCompany'sowncreditriskarepresentedinOCI.IFRS9introducesanewmodelforclassifyingfinancialassets.Thestandardintroducesprinciple-basedrequirementsfortheclassificationoffinancialassets,usingthefollowingmeasurementcategories:

• Debtinstrumentsatamortizedcost;

• DebtinstrumentsatfairvaluethroughOCI("FVOCI")withcumulativegainsandlossesreclassifiedtoprofitorlossuponderecognition;

• Debtinstruments,derivativesandequityinstrumentsatFVTPL;and

• EquityinstrumentsdesignatedatFVOCIwithnorecyclingofgainsandlossesuponderecognition.

TheCompanyisstillevaluatingitsdifferentfinancialassetstoensureappropriateclassificationunderIFRS9.

Impairment

Thenewimpairmentrequirementsarebasedonaforward-lookingexpectedcreditlossmodel.ThemodelappliestodebtinstrumentsmeasuredatamortizedcostoratFVOCI,aswellasleasereceivables,tradereceivables,contractsassets(asdefinedinIFRS15),andloancommitmentsandfinancialguaranteecontractsthatarenotatfairvaluethroughprofitorloss.TheCompanydoesnotholdsignificantamountsofthesetypesoffinancialassetsandthereforedoesnotexpectthesechangestohaveasignificantimpact.

Hedge accounting

ThechangesinIFRS9relatingtohedgeaccountingwillhavenoimpactastheCompanydoesnotcurrentlyapplyhedgeaccounting.

IFRS15–RevenuefromContractswithCustomers

IFRS15wasissuedinMay2014andestablishesafive-stepmodeltoaccountforrevenuearisingfromcontractswithcustomers.UnderIFRS15,revenueisrecognizedatanamountthatreflectstheconsiderationtowhichanentityexpectstobeentitledinexchangefortransferringgoodsorservicestoacustomer.

ThenewrevenuestandardwillsupersedeallcurrentrevenuerecognitionrequirementsunderIFRS.EitherafullretrospectiveapplicationoramodifiedretrospectiveapplicationisrequiredforannualperiodsbeginningonorafterJanuary1,2018.Earlyadoptionispermitted.

TheCompanyplanstoadoptthenewstandard(includingtheclarificationsissuedbytheIASBinApril2016)ontherequiredeffectivedate.During2016,theCompanycommenceditspreliminaryassessmentofIFRS15andsomeofthekeyissuesithasidentified,anditsinitialviewsandperspectives,aresetoutbelow.ThesearebasedontheworkcompletedtodateandtheCompany'scurrentinterpretationofIFRS15andmaybesubjecttochangesasmoredetailedanalysisiscompletedandasinterpretationsevolvemoregenerally.Furthermore,theCompanyisconsideringandwillcontinuetomonitoranyfurtherdevelopment.Todate,thefollowingissuessetoutimmediatelybelowwereidentifiedbytheCompanyasrequiringconsideration.

Provisionally priced sales

SomeoftheCompany'ssalesofmetalinconcentratecontainprovisionalpricingfeatures.UnderIAS18,revenueisrecognizedunderthesecontractsbasedonforwardpricesatthetimeofdelivery,whichiswhentherisksandrewardsofownershipoftheconcentratepasstothethird-partysmelters.Finalpricesforthemetalscontainedintheconcentratearedeterminedbasedontheprevailingspotmarketmetalpricesonaspecifiedfuturedate,whichisestablishedasofthedatethattheconcentrateisdeliveredtothesmelter.


TheCompanyiscurrentlyevaluatingtheaccountingtreatmentofthesecontractsunderIFRS15.Theimpactisexpectedtobeimmaterial.In2016,revenuefromconcentratesalescontractswasapproximately0.7%oftotalrevenue.

Other presentation and disclosure requirements

IFRS15containspresentationanddisclosurerequirementswhicharemoredetailedthanthecurrentstandards.Thepresentationrequirementsrepresentasignificantchangefromcurrentpracticeandwillincreasethevolumeofdisclosuresrequiredinthefinancialstatements.ManyofthedisclosurerequirementsinIFRS15arecompletelynew.In2016,theCompanystartedtoconsiderthesystems,internalcontrols,policiesandproceduresnecessarytocollectanddisclosetherequiredinformation.

IFRS16–Leases

InJanuary2016,theIASBissuedIFRS16–Leaseswhichbringsmostleaseson-balancesheetforlesseesbyeliminatingthedistinctionbetweenoperatingandfinanceleases.Lessoraccountingremainslargelyunchangedandthedistinctionbetweenoperatingandfinanceleasesisretained.UnderIFRS16,alesseerecognizesaright-of-useassetandaleaseliability.Theright-of-useassetistreatedsimilarlytoothernon-financialassetsanddepreciatedaccordingly,andtheliabilityaccruesinterest.Theleaseliabilityisinitiallymeasuredatthepresentvalueoftheleasepaymentspayableovertheleaseterm,discountedattherateimplicitinthelease.Lesseesarepermittedtomakeanaccountingpolicyelection,byclassofunderlyingasset,toapplyamethodlikeIAS17'soperatingleaseaccountingandnotrecognizeleaseassetsandleaseliabilitiesforleaseswithaleasetermof12monthsorlessandonalease-by-leasebasis,toapplyamethodsimilartocurrentoperatingleaseaccountingtoleasesforwhichtheunderlyingassetisoflowvalue.IFRS16supersedesIAS17–LeasesandrelatedinterpretationsandiseffectiveforperiodsbeginningonorafterJanuary1,2019,withearlieradoptionpermittedifIFRS15hasalsobeenapplied.Alesseecanchoosetoapplythestandardusingeitherafullretrospectiveoramodifiedretrospectiveapproach.Thestandard'stransitionprovisionspermitcertainreliefs.In2017,theCompanyplanstoassessthepotentialeffectofIFRS16onitsconsolidatedfinancialstatements.TheCompanyplanstoadoptthenewstandardontherequiredeffectivedate.

Mineral Reserve Data

ThescientificandtechnicalinformationsetoutinthisMD&Ahasbeenapprovedbythefollowing"qualifiedpersons"asdefinedundertheCSA'sNationalInstrument43-101StandardsofDisclosureforMineralProperties:mineralreservesandmineralresources(otherthanfortheCanadianMalarticmine)–DanielDoucet,Eng.,SeniorCorporateDirector,ReserveDevelopment;mineralreservesandmineralresources(fortheCanadianMalarticmine)–DonaldGervais,P.Geo.,DirectorofTechnicalServicesatCanadianMalarticCorporationandSylvieLampron,Eng.,PrincipalEngineeratCanadianMalarticCorporation;Quebecoperations–ChristianProvencher,Eng.,Vice-President,Canada;Nunavutoperations–DominiqueGirard,Eng.,Vice-President,NunavutOperations;Kittilaoperations–FrancisBrunet,Eng.,CorporateDirector,Mining;SouthernBusinessoperations–CarolPlummer,Eng.,Vice-President,ProjectDevelopment,SouthernBusiness;environmental–LouiseGrondinP.Eng.,SeniorVice-President,Environment,SustainableDevelopmentandPeople;metallurgy–PaulCousin,Eng.,Vice-President,Metallurgy;andExploration–GuyGosselin,Eng.,Vice-President,Exploration.TheCompany'smineralreservesestimatewasderivedfrominternallygenerateddataorgeologyreports.

TheassumptionsusedforthemineralreserveestimatesatallminesandprojectsreportedinthisMD&A(excepttheCanadianMalarticmine,theMeliadinemineprojectandtheUpperBeaverproject)asatDecember31,2016are$1,150perouncegold,$16.50perouncesilver,$0.95perpoundzincand$2.15perpoundcopper.ForeignexchangeratesassumptionsofC$1.20perUS$1.00,€0.91perUS$1.00and16.00MexicanpesosperUS$1.00wereusedforallminesandprojectsotherthantheLapaandMeadowbankminesinCanada,theCrestonMascotadepositatPinosAltos,andSantoNinopitatthePinosAltosmineinMexico,whichusedforeignexchangeratesassumptionsofC$1.30perUS$1.00and16.00MexicanpesosperUS$1.00(otherassumptionsunchanged)duetotheirshorterremainingminelives.

AttheMeliadinemineproject,theassumptionsremainedthesameasatDecember2015,whichwere$1,100perouncegoldandaforeignexchangerateofC$1.16perUS$1.00.

TheCanadianMalarticGeneralPartnership(the"Partnership"),ownedbyAgnicoEagle(50%)andYamanaGoldInc.("Yamana")(50%),whichownsandoperatestheCanadianMalarticmine,andtheCanadianMalarticCorporation("CMC"),ownedbyAgnicoEagle(50%)andYamana(50%),whichownsandmanagestheUpperBeaverprojectinKirklandLake,haveestimatedtheDecember2016mineralreservesoftheCanadianMalarticmineandtheUpperBeaverprojectusingthefollowingassumptions:$1,200perouncegoldand$2.75perpoundcopper;acut-offgradeattheCanadianMalarticmine


between0.33g/tand0.37g/tgold(dependingonthedeposit);aC$125/tonnenetsmelterreturn(NSR)fortheUpperBeaverproject;andanforeignexchangerateofC$1.25perUS$1.00.

Proven and Probable Mineral Reserves by Property (i) Tonnes

GoldGrade (Grams

per Tonne)

Contained Gold

(Ounces) (ii)

(thousands)

(thousands)

Proven Mineral Reserves

LaRondemine(notincludingZone5) 5,833 4.91 921

LaRondeZone5 2,836 2.12 194

Lapamine 259 4.58 38

Goldexmine 294 1.47 14

Meadowbankmine 1,704 1.75 96

CanadianMalarticmine(attributable50.0%) 25,560 0.95 785

Meliadinemineproject 34 7.31 8

Kittilamine 1,148 4.19 155

PinosAltosmine 3,512 2.69 304

CrestonMascotadepositatPinosAltos 65 0.94 2

LaIndiamine 213 0.61 4

Total Proven Mineral Reserves 41,458 1.89 2,520

Probable Mineral Reserves

LaRondemine(notincludingZone5) 11,758 5.64 2,132

LaRondeZone5 3,429 2.08 230

Goldexmine 16,507 1.64 872

Akasabaproject 4,942 0.89 142

Meadowbankmine 6,515 2.94 615

CanadianMalarticmine(attributable50.0%) 76,274 1.13 2,764

Meliadinemineproject 14,495 7.32 3,410

UpperBeaverproject 3,996 5.43 698

Kittilamine 28,907 4.65 4,325

PinosAltosmine 13,889 2.51 1,120

CrestonMascotadepositatPinosAltos 2,426 1.29 100

LaIndiamine 43,756 0.72 1,016

Total Probable Mineral Reserves 226,895 2.39 17,423

Total Proven and Probable Mineral Reserves 268,353 2.31 19,943

Notes:

(i) Completeinformationontheverificationprocedures,qualityassuranceprogram,qualitycontrolprocedures,expectedpaybackperiodofcapital,parametersandmethodsandotherfactorsthatmaymateriallyaffectscientificandtechnicalinformationpresentedinthisMD&Aanddefinitionsofcertaintermsusedhereinmaybefoundin:theAIFundertheheading"InformationonMineralReservesandMineralResourcesoftheCompany";theTechnicalReportonthe2005LaRondeMineralResource&MineralReserveEstimatefiledwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch23,2005;theTechnicalReportontheLapaGoldProject,CadillacTownship,Quebec,Canadafiledwith


CanadiansecuritiesregulatoryauthoritiesonSEDARonJune8,2006;theTechnicalReportontheDecember31,2009,MineralResourceandMineralReserveEstimateandtheSuuriExtensionProject,KittilaMine,FinlandfiledwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch4,2010;theTechnicalReportontheMineralResourcesandMineralReservesatMeadowbankGoldMine,Nunavut,CanadaasatDecember31,2011filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch23,2012;thePinosAltosGold-SilverMiningProject,ChihuahuaState,Mexico,TechnicalReportonMineralResourcesandReservesasofDecember31,2008filedwithCanadiansecuritiesregulatoryauthoritiesonMarch25,2009;theUpdatedTechnicalReportontheMeliadineGoldProject,Nunavut,CanadadatedFebruary11,2015filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonMarch12,2015;theTechnicalReportontheJune30,2012UpdateoftheMineralResourcesandMineralReserves,LaIndiaGoldProject,MunicipalityofSahuaripa,Sonora,MexicodatedAugust31,2012filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonOctober12,2012;theTechnicalReportonProductionoftheMandEZonesatGoldexMinedatedOctober14,2012filedwiththeCanadiansecuritiesregulatoryauthoritiesonSEDARonNovember1,2012;andtheTechnicalReportontheMineralResourceandMineralReserveEstimatesfortheCanadianMalarticPropertyasatJune16,2014filedwithCanadiansecuritiesregulatoryauthoritiesonSEDARonAugust13,2014.

(ii) Totalcontainedgoldouncesdoesnotincludeequivalentgoldouncesfortheby-productmetalscontainedinthemineralreserves.

Non-GAAP Financial Performance Measures

ThisMD&Apresentscertainfinancialperformancemeasures,includingadjustednetincome,totalcashcostsperounceofgoldproduced(onbothaby-productandco-productbasis),minesitecostspertonneandall-insustainingcostsperounceofgoldproduced(onbothaby-productandco-productbasis),thatarenotrecognizedmeasuresunderIFRS.Thisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Non-GAAPfinancialperformancemeasuresshouldbeconsideredtogetherwithotherdatapreparedinaccordancewithIFRS.


AdjustedNetIncome

AdjustednetincomeisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Thismeasureiscalculatedbyadjustingnetincomeasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomefornon-recurring,unusualandotheritems.TheCompanybelievesthatthisgenerallyacceptedindustrymeasureallowstheevaluationoftheresultsofcontinuingoperationsandisusefulinmakingcomparisonsbetweenperiods.AdjustednetincomeisintendedtoprovideinvestorswithinformationabouttheCompany'scontinuingincomegeneratingcapabilities.ManagementusesthismeasuretomonitorandplanfortheoperatingperformanceoftheCompanyinconjunctionwithotherdatapreparedinaccordancewithIFRS.

2016 2015 (i) 2014 (i)

(thousands of United States dollars) Net income for the period – basic $ 158,824 $ 24,583 $ 82,970

Less:DilutiveimpactofCMGPConvertibleDebentures(ii) – – (7,345)

Net income for the period – diluted $ 158,824 $ 24,583 $ 75,625

Impairmentlossonavailable-for-salesecurities – 12,035 15,763

Gainonsaleofavailable-for-salesecurities (3,500) (24,600) (5,635)

Foreigncurrencytranslationloss(gain) 13,157 (4,728) 3,781

(Gain)lossonderivativefinancialinstruments (9,468) 19,608 6,156

Mark-to-marketloss(gain)onCMGPConvertibleDebentures(iii) – 2,416 (7,995)

Gainonimpairmentreversal,netoftax (81,210) – –

Incomeandminingtaxesadjustments(iv) 4,755 24,742 23,323

Other(v) 26,963 19,442 5,832

Adjusted net income for the period – basic $ 109,521 $ 73,498 $ 124,195

Adjusted net income for the period – diluted $ 109,521 $ 73,498 $ 116,850

Netincomepershare–basic $ 0.71 $ 0.11 $ 0.43

Netincomepershare–diluted $ 0.70 $ 0.11 $ 0.39

Adjustednetincomepershare–basic $ 0.49 $ 0.34 $ 0.64

Adjustednetincomepershare–diluted $ 0.49 $ 0.34 $ 0.60

Notes:

(i) Beginningin2016,theCompanydecidedtoexcludestockbasedcompensationexpensefromthecalculationofadjustednetincome.AdjustednetincomefortheyearsendedDecember31,2015and2014havebeenrestatedtoreflectthischange.StockoptionexpensefortheyearendedDecember31,2016was$16.3million(2015–$19.5million;2014–$20.1million).

(ii) InconnectionwiththejointacquisitionofOsiskoonJune16,2014,AgnicoEagleindirectlyassumeditsattributableinterestintheseniorunsecuredconvertibledebenturespreviouslyissuedbyOsiskoandassumedbyCanadianMalarticGP(the"CMGPConvertibleDebentures").OnJune30,2015,thenegotiatedearlysettlementofalltheCMGPConvertibleDebentureswascompleted,resultinginprincipaloutstandingofnil.TheimpactoftheCMGPConvertibleDebentureshasbeenincludedinthecalculationofdilutednetincome,dilutedadjustednetincome,dilutednetincomepershareanddilutedadjustednetincomepersharewheredilutiveandhasbeenexcludedfromthecalculationofdilutednetincome,dilutedadjustednetincome,dilutednetincomepershareanddilutedadjustednetincomepersharewhereanti-dilutive.ThedilutiveimpactoftheCMGPConvertibleDebentureswasexcludedfromthecalculationofdilutednetincome,dilutedadjustednetincome,dilutednetincomepershareanddilutedadjustednetincomepersharefortheyearendedDecember31,2015astheirimpactwouldhavebeenanti-dilutivefortheportionoftheyeartheywereoutstanding.

(iii) WheretheimpactoftheCMGPConvertibleDebenturesisdilutive,theadjustmentformark-to-marketloss(gain)onCMGPConvertibleDebenturesisexcludedfromthecalculationofadjustednetincomefortheperiodonadilutedbasisasitisalreadyincorporatedinthecalculationofnetincomefortheperiodonadilutedbasis.

(iv) Incomeandminingtaxadjustmentsreflectforeigncurrencytranslationrecordedtotheincomeandminingtaxesexpense,recognitionofpreviouslyunrecognizedcapitallosses,theresultofincomeandminingtaxaudits,impactoftaxlawchangesandreflectiveadjustmentstopriorperiodoperatingresults.

(v) TheCompanyincludescertainadjustmentsin"Other"totheextentthatmanagementbelievesthattheseitemsarenotreflectiveoftheunderlyingperformanceoftheCompany'scoreoperatingbusiness.Examplesofitemshistoricallyincludedin"Other"includechangesinestimatesofassetretirementobligationsatclosedsites,gainsandlossesonthedisposalofassetsandothernon-recurringitems.FortheyearendedDecember31,2015,the"Other"lineitemalsoincludedadjustmentsforacatch-upofamortizationexpenserelatedtothefinalizationoftheacquisitiondatefairvalueestimatesofdepreciableminingpropertiesincludedinthepurchasepriceallocationoftheCompany'sJune16,2014jointacquisitionofOsisko;andpaymentsmaderelatedtotheJune30,2015negotiatedearlysettlementoftheCMGP

ConvertibleDebenturesthatwereassumedbyCMGPinconnectionwiththeCompany'sjointacquisitionofOsisko.


TotalCashCostsperOunceofGoldProducedandMinesiteCostsperTonne

TheCompanybelievesthattotalcashcostsperounceofgoldproducedandminesitecostspertonnearerealisticindicatorsofoperatingperformanceandfacilitateperiodoverperiodcomparisons.However,bothofthesenon-GAAPgenerallyacceptedindustrymeasuresshouldbeconsideredtogetherwithotherdatapreparedinaccordancewithIFRS.Thesemeasures,takenbythemselves,arenotnecessarilyindicativeofoperatingcostsorcashflowmeasurespreparedinaccordancewithIFRS.

Totalcashcostsperounceofgoldproducedisreportedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincome(loss)forby-productrevenues,inventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.TotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecashgeneratingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scashgeneratingcapabilitiesatvariousgoldprices.Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsperounceofgoldproducedonaby-productbasis,by-productmetalprices.Managementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonne(discussedbelow)aswellasotherdatapreparedinaccordancewithIFRS.Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingmetalpricesandexchangerates.

AgnicoEagle'sprimarybusinessisgoldproductionandthefocusofitscurrentoperationsandfuturedevelopmentisonmaximizingreturnsfromgoldproduction,withothermetalproductionbeingincidentaltothegoldproductionprocess.Accordingly,allmetalsotherthangoldareconsideredby-products.

Totalcashcostsperounceofgoldproducedisreportedonaby-productbasisbecause(i)themajorityoftheCompany'srevenuesaregoldrevenues,(ii)theCompanyminesore,whichcontainsgold,silver,zinc,copperandothermetals,(iii)itisnotpossibletospecificallyassignallcoststorevenuesfromthegold,silver,zinc,copperandothermetalstheCompanyproduces,and(iv)itisamethodusedbymanagementandtheBoardtomonitoroperations.

Minesitecostspertonneiscalculatedbyadjustingproductioncostsasshownintheconsolidatedstatementsofincomeandcomprehensiveincome(loss)forinventoryproductioncostsandotheradjustmentsandthendividingbytonnesoforeprocessed.Asthetotalcashcostsperounceofgoldproducedmeasurecanbeimpactedbyfluctuationsinby-productmetalpricesandexchangerates,managementbelievesthattheminesitecostspertonnemeasureprovidesadditionalinformationregardingtheperformanceofminingoperations.Managementalsousesminesitecostspertonnetodeterminetheeconomicviabilityofminingblocks.Aseachminingblockisevaluatedbasedonthenetrealizablevalueofeachtonnemined,inordertobeeconomicallyviabletheestimatedrevenueonapertonnebasismustbeinexcessoftheminesitecostspertonne.ManagementisawarethatthispertonnemeasureofperformancecanbeimpactedbyfluctuationsinproductionlevelsandcompensatesforthisinherentlimitationbyusingthismeasureinconjunctionwithproductioncostspreparedinaccordancewithIFRS.

Thefollowingtablessetoutareconciliationoftotalcashcostsperounceofgoldproduced(onbothaby-productbasisandco-productbasis)andminesitecostspertonnetoproductioncosts,exclusiveofamortization,aspresentedintheconsolidatedstatementsofincomeandcomprehensiveincome(loss)inaccordancewithIFRS.


TotalProductionCostsbyMine


2016


2015


2014

(thousands of United States dollars) LaRondemine $ 179,496 $ 172,283 $ 188,736

Lapamine 52,974 52,571 61,056

Goldexmine 63,310 61,278 64,836

Meadowbankmine 218,963 230,564 270,824

CanadianMalarticmine(i) 183,635 171,473 113,916

Kittilamine 141,871 126,095 116,893

PinosAltosmine 114,557 105,175 123,342

CrestonMascotadepositatPinosAltos 27,341 26,278 28,007

LaIndiamine(ii) 49,745 49,578 36,949

Productioncostspertheconsolidatedstatementsofincomeandcomprehensiveincome $ 1,031,892 $ 995,295 $ 1,004,559

ReconciliationofProductionCoststoTotalCashCostsperOunceofGoldProduced(iii)byMineandReconciliationofProductionCoststoMinesiteCostsperTonne(iv)byMine

(thousandsofUnitedStatesdollars,exceptasnoted)

LaRonde Mine Per Ounce of Gold Produced (iii)




(thousands) ($ per ounce) (thousands) ($ per ounce) (thousands) ($ perounce)

Goldproduction(ounces) 305,788 267,921 204,652

Productioncosts $ 179,496 $ 587 $ 172,283 $ 643 $ 188,736 $ 922

Inventoryandotheradjustments(v) 24,914 81 31,417 117 27,070 133

Cashoperatingcosts(co-productbasis) $ 204,410 $ 668 $ 203,700 $ 760 $ 215,806 $ 1,055

By-productmetalrevenues (51,136) (167) (45,678) (170) (79,015) (387)

Cashoperatingcosts(by-productbasis) $ 153,274 $ 501 $ 158,022 $ 590 $ 136,791 $ 668

LaRonde Mine Per Tonne (iv)




(thousands) ($ per tonne) (thousands) ($ per tonne) (thousands) ($ pertonne)

Tonnesoforemilled(thousandsoftonnes) 2,240 2,241 2,085


Productioncosts(C$) C$ 237,934 C$ 106 C$ 218,649 C$ 98 C$ 208,222 C$ 100

Inventoryandotheradjustments(C$)(vi) (1,447) – 4,150 1 (1,364) (1)

Minesiteoperatingcosts(C$) C$ 236,487 C$ 106 C$ 222,799 C$ 99 C$ 206,858 C$ 99


Lapa Mine Per Ounce of Gold Produced (iii)







Inventoryandotheradjustments(v) 1,173 15 1,161 13 750 8

Cashoperatingcosts(co-productbasis) $ 54,147 $ 732 $ 53,732 $ 591 $ 61,806 $ 667

By-productmetalrevenues (28) – (62) (1) (61) –


Lapa Mine Per Tonne (iv)





Tonnesoforemilled(thousandsoftonnes) 593 560 639



Inventoryandotheradjustments(C$)(vi) 1,580 3 (710) (2) 848 2


Goldex Mine Per Ounce of Gold Produced (iii)







Inventoryandotheradjustments(v) 912 7 878 7 (720) (8)


By-productmetalrevenues (26) – (23) – (20) –


Goldex Mine Per Tonne (iv)




($ per

(thousands) ($ per tonne) (thousands) ($ per tonne) (thousands) tonne) Tonnesoforemilled(thousandsoftonnes) 2,545 2,313 2,117



Inventoryandotheradjustments(C$)(vi) 1,231 – (1,181) (1) (631) (1)



Meadowbank Mine Per Ounce of Gold Produced (iii)







Inventoryandotheradjustments(v) 8,105 26 7,282 19 2,688 6




Meadowbank Mine Per Tonne (iv)








Inventoryandotheradjustments(C$)(vi) 5,681 1 (4,073) (1) 5,088 1


Canadian Malartic Mine Per Ounce of Gold Produced (i)(iii)







Inventoryandotheradjustments(v) (553) (2) 3,630 13 (10,862) (76)




Canadian Malartic Mine Per Tonne (i)(iv)




($ per

(thousands) ($ per tonne) (thousands) ($ per tonne) (thousands) tonne) Tonnesoforemilled(thousandsoftonnes) 9,821 9,545 5,263



Inventoryandotheradjustments(C$)(vi) (3,399) – (3,003) – (9,115) (1)



Kittila Mine Per Ounce of Gold Produced (iii)







Inventoryandotheradjustments(v) (26) (1) (187) (1) 3,051 21


By-productmetalrevenues (200) (1) (155) (1) (124) (1)


Kittila Mine Per Tonne (iv)







Productioncosts(€) € 128,599 € 77 € 112,285 € 77 € 88,744 € 77

Inventoryandotheradjustments(€)(vi) (505) – (956) (1) 1,243 1

Minesiteoperatingcosts(€) € 128,094 € 77 € 111,329 € 76 € 89,987 € 78

Pinos Altos Mine Per Ounce of Gold Produced (iii)







Inventoryandotheradjustments(v) (1,840) (9) 6,458 33 (581) (3)




Pinos Altos Mine Per Tonne (iv)





Tonnesoforeprocessed(thousandsoftonnes) 2,260 2,378 2,520


Inventoryandotheradjustments(vi) (3,698) (2) 2,481 1 (2,376) (1)

Minesiteoperatingcosts $ 110,859 $ 49 $ 107,656 $ 45 $ 120,966 $ 48

Creston Mascota deposit at PinosAltos Per Ounce of Gold Produced (iii)







Inventoryandotheradjustments(v) 472 10 (328) (6) 1,232 26




Creston Mascota deposit at PinosAltos Per Tonne (iv)







Inventoryandotheradjustments(vi) (77) – (757) (1) 870 –


La India Mine Per Ounce of Gold Produced (ii)(iii)





Goldproduction(ounces)(ii) 115,162 104,362 71,601


Inventoryandotheradjustments(v) 4,189 36 (28) – 1,172 16




La India Mine Per Tonne (ii)(iv)







Inventoryandotheradjustments(vi) 2,909 – (657) – 778 –


Notes:

(i) OnJune16,2014,AgnicoEagleandYamanajointlyacquired100%ofOsiskobywayoftheOsiskoArrangement.AsaresultoftheOsiskoArrangement,AgnicoEagleandYamanaeachindirectlyown50%ofOsisko(nowCanadianMalarticCorporation)andCanadianMalarticGP,whichnowholdstheCanadianMalarticmine.TheinformationsetoutinthistablereflectstheCompany's50%interestintheCanadianMalarticminesincethedateofacquisition.


(ii) TheLaIndiamineachievedcommercialproductiononFebruary1,2014.ThecalculationoftotalcashcostsperounceofgoldproducedfortheyearendedDecember31,2014excludes3,492ouncesofpayablegoldproductionastheywereproducedpriortotheachievementofcommercialproduction.

(iii) TotalcashcostsperounceofgoldproducedisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatareportedbyothergoldproducers.Totalcashcostsperounceofgoldproducedisreportedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productmetalrevenues,inventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresprovidearealisticindicationofoperatingperformanceandprovideusefulcomparisonpointsbetweenperiods.TotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecashgeneratingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scashgeneratingcapabilitiesatvariousgoldprices.Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsofgoldproducedonaby-productbasis,by-productmetalprices.ManagementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonneaswellasotherdatapreparedinaccordancewithIFRS.Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingmetalpricesandexchangerates.

(iv) MinesitecostspertonneisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatareportedbyothergoldproducers.Thismeasureiscalculatedbyadjustingproductioncostsasshownintheconsolidatedstatementsofincomeandcomprehensiveincomeforinventoryproductioncosts,andthendividingbytonnesoforemilled.Asthetotalcashcostsperounceofgoldproducedmeasurecanbeaffectedbyfluctuationsinby-productmetalpricesandexchangerates,managementbelievesthattheminesitecostspertonnemeasureprovidesadditionalinformationregardingtheperformanceofminingoperations,eliminatingtheimpactofvaryingproductionlevels.Managementalsousesthismeasuretodeterminetheeconomicviabilityofminingblocks.Aseachminingblockisevaluatedbasedonthenetrealizablevalueofeachtonnemined,inordertobeeconomicallyviabletheestimatedrevenueonapertonnebasismustbeinexcessoftheminesitecostspertonne.ManagementisawarethatthispertonnemeasureofperformancecanbeimpactedbyfluctuationsinprocessinglevelsandcompensatesforthisinherentlimitationbyusingthismeasureinconjunctionwithproductioncostspreparedinaccordancewithIFRS.

(v) UndertheCompany'srevenuerecognitionpolicy,revenueisrecognizedwhenlegaltitleandriskistransferred.Astotalcashcostsperounceofgoldproducedarecalculatedonaproductionbasis,aninventoryadjustmentismadetoreflectthesalesmarginontheportionofproductionnotyetrecognizedasrevenue.Otheradjustmentsincludetheadditionofsmelting,refiningandmarketingchargestoproductioncosts.

(vi) Thisinventoryandotheradjustmentreflectsproductioncostsassociatedwiththeportionofproductionstillininventory.


All-inSustainingCostsperOunceofGoldProduced

All-insustainingcostsperounceofgoldproducedisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatareportedbyothergoldproducers.TheCompanybelievesthatthismeasureprovidesinformationaboutoperatingperformance.However,thisnon-GAAPmeasureshouldbeconsideredtogetherwithotherdatapreparedinaccordancewithIFRSasitisnotnecessarilyindicativeofoperatingcostsorcashflowmeasurespreparedinaccordancewithIFRS.

BasedontherecommendationsoftheWorldGoldCouncilmadein2013,theCompanymodifieditscalculationofall-insustainingcostsperounceofgoldproducedbeginningin2014.All-insustainingcostsperounceofgoldproducedispresentedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).All-insustainingcostsperounceofgoldproducedonaby-productbasisiscalculatedastheaggregateoftotalcashcostsperounceofgoldproducedonaby-productbasisandsustainingcapitalexpenditures(includingcapitalizedexploration),generalandadministrativeexpenses(includingstockoptions)andnon-cashreclamationprovisionexpenseperounceofgoldproduced.All-insustainingcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerasall-insustainingcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismadetototalcashcostsperounceofgoldproduced.Thecalculationofall-insustainingcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.

Priortomodifyingitscalculationofall-insustainingcostsperounceofgoldproducedfor2014basedontherecommendationsoftheWorldGoldCouncil,theCompanycalculatedall-insustainingcostsperounceofgoldproducedonaby-productbasisastheaggregateoftotalcashcostsperounceofgoldproducedonaby-productbasisandsustainingcapitalexpenditures,generalandadministrativeexpenses(netofstockoptions)andexplorationandcorporatedevelopmentexpenses(excludinggreenfieldexploration)perounceofgoldproduced.All-insustainingcostsperounceofgoldproducedonaco-productbasiswouldhavebeencalculatedinthesamemannerasall-insustainingcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenues,netofsmelting,refiningandmarketingchargeswouldhavebeenmadetototalcashcostsperounceofgoldproduced.


ReconciliationofProductionCoststoAll-inSustainingCostsperOunceofGoldProduced

(United States dollars per ounce of gold produced, except wherenoted)


2016


2015


2014

Productioncostspertheconsolidatedstatementsofincomeandcomprehensiveincome(thousandsofUnitedStatesdollars) $1,031,892 $995,295 $1,004,559

Adjustedgoldproduction(ounces)(i) 1,662,888 1,671,340 1,425,796

Productioncostsperounceofadjustedgoldproduction(i) $621 $596 $705

Adjustments:

Inventoryandotheradjustments(ii) 22 30 16

Totalcashcostsperounceofgoldproduced(co-productbasis)(iii) $643 $626 $721

By-productmetalrevenues (70) (59) (84)

Totalcashcostsperounceofgoldproduced(by-productbasis)(iii) $573 $567 $637

Adjustments:

Sustainingcapitalexpenditures(includingcapitalizedexploration) 187 183 230

Generalandadministrativeexpenses(includingstockoptions) 62 58 83

Non-cashreclamationprovisionandother 2 2 4

All-insustainingcostsperounceofgoldproduced(by-productbasis) $824 $810 $954

By-productmetalrevenues 70 59 84

All-insustainingcostsperounceofgoldproduced(co-productbasis) $894 $869 $1,038

Notes:

(i) TheLaIndiamineachievedcommercialproductiononFebruary1,2014.Thecalculationsoftotalcashcostsperounceofgoldproducedandall-insustainingcostsperounceofgoldproducedfortheyearendedDecember31,2014excludes3,492ouncesofpayablegoldproductionastheywereproducedpriortotheachievementofcommercialproduction.

(ii) UndertheCompany'srevenuerecognitionpolicy,revenueisrecognizedwhenlegaltitleandriskistransferred.Astotalcashcostsperounceofgoldproducedarecalculatedonaproductionbasis,thisinventoryadjustmentreflectsthesalesmarginontheportionofproductionnotyetrecognizedasrevenue.

(iii) TotalcashcostsperounceofgoldproducedisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Totalcashcostsperounceofgoldproducedispresentedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productmetalrevenues,inventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Accordingly,thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresprovidearealisticindicationofoperatingperformanceandprovideusefulcomparisonpointsbetweenperiods.TotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecashgeneratingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scashgeneratingcapabilitiesatvariousgoldprices.Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsofgoldproducedonaby-productbasis,by-productmetalprices.ManagementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonneaswellasotherdatapreparedinaccordancewithIFRS.Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingmetalpricesandexchangerates.


SUMMARIZED QUARTERLY DATA (thousands of United States dollars, except where noted)

Three Months Ended

March 31,

2016 June 30,

2016 September 30,

2016 December 31,

2016 Total 2016

Operating margin (i) :

Revenuesfromminingoperations $ 490,531 $ 537,628 $ 610,863 $ 499,210 $ 2,138,232

Productioncosts 243,973 255,436 277,371 255,112 1,031,892

Totaloperatingmargin(i) 246,558 282,192 333,492 244,098 1,106,340

Operating margin (i) by mine:

NorthernBusiness

LaRondemine 48,055 54,985 61,587 44,058 208,684

Lapamine 10,806 14,437 10,181 3,762 39,186

Goldexmine 22,184 22,896 27,834 13,506 86,420

Meadowbankmine 33,329 34,733 46,190 50,807 165,060

CanadianMalarticmine(ii) 41,740 50,133 55,981 40,430 188,285

Kittilamine 24,086 22,079 36,714 27,596 110,475

SouthernBusiness

PinosAltosmine 35,820 48,392 60,699 34,909 179,820

CrestonMascotadepositatPinosAltos 8,989 9,719 10,448 6,470 35,626

LaIndiamine 21,549 24,818 23,858 22,560 92,784

Totaloperatingmargin(i) 246,558 282,192 333,492 244,098 1,106,340

Gainonimpairmentreversal – – – (120,161) (120,161)


Exploration,corporateandother 73,730 89,624 84,079 97,447 344,880

Incomebeforeincomeandminingtaxes 27,197 37,910 87,941 115,413 268,461

Incomeandminingtaxes(recovery) (591) 18,920 38,549 52,759 109,637

Netincomefortheperiod $ 27,788 $ 18,990 $ 49,392 $ 62,654 $ 158,824

Netincomepershare–basic(US$) $ 0.13 $ 0.09 $ 0.22 $ 0.28 $ 0.71

Netincomepershare–diluted(US$) $ 0.13 $ 0.08 $ 0.22 $ 0.28 $ 0.70

Cash flows:

Cashprovidedbyoperatingactivities $ 145,704 $ 229,456 $ 282,856 $ 120,601 $ 778,617

Cashusedininvestingactivities $ (107,595) $ (122,651) $ (142,701) $ (180,543) $ (553,490)

Cash(usedin)providedbyfinancingactivities $ (1,588) $ 199,494 $ 11,840 $ (19,360) $ 190,386


Realized prices (US$):

Gold(perounce) $ 1,192 $ 1,268 $ 1,332 $ 1,196 $ 1,249

Silver(perounce) $ 15.09 $ 17.21 $ 19.52 $ 16.76 $ 17.28

Zinc(pertonne) $ 1,540 $ 1,852 $ 2,170 $ 2,346 $ 2,047

Copper(pertonne) $ 4,297 $ 4,714 $ 4,819 $ 5,578 $ 4,827

Payable production (iii) :

Gold(ounces)

NorthernBusiness

LaRondemine 75,337 75,159 71,784 83,508 305,788

Lapamine 21,709 21,914 16,242 14,065 73,930

Goldexmine 32,340 31,452 32,742 24,170 120,704

Meadowbankmine 72,311 72,402 72,731 94,770 312,214


Kittilamine 48,127 46,209 54,835 53,337 202,508

SouthernBusiness

PinosAltosmine 48,117 49,458 48,512 46,685 192,772


LaIndiamine 28,231 27,438 30,779 28,714 115,162

Totalgold(ounces) 411,336 408,932 416,187 426,433 1,662,888

Silver(thousandsofounces)

NorthernBusiness

LaRondemine 247 266 203 272 988

Lapamine 3 1 1 – 5

Goldexmine – 1 – – 1

Meadowbankmine 43 66 59 53 221

CanadianMalarticmine(ii) 77 86 96 81 340

Kittilamine 3 2 3 4 12

SouthernBusiness

PinosAltosmine 587 633 644 641 2,505

CrestonMascotadepositatPinosAltos 48 50 55 48 201

LaIndiamine 117 105 126 138 486

Totalsilver(thousandsofounces) 1,125 1,210 1,187 1,237 4,759

Zinc(tonnes) 614 1,318 1,010 1,745 4,687

Copper(tonnes) 1,154 1,141 1,177 944 4,416


Payable metal sold:

Gold(ounces)

NorthernBusiness

LaRondemine 75,257 72,005 78,096 67,803 293,161

Lapamine 19,836 22,911 16,851 14,621 74,219

Goldexmine 31,955 30,605 33,275 24,059 119,894

Meadowbankmine 71,589 70,021 78,710 85,318 305,638

CanadianMalarticmine(ii)(iv) 65,085 72,259 72,950 67,900 278,194

Kittilamine 50,725 44,580 55,710 51,687 202,702

SouthernBusiness

PinosAltosmine 43,224 52,287 60,541 43,410 199,462


LaIndiamine 26,165 27,748 26,050 29,320 109,283



NorthernBusiness

LaRondemine 232 267 225 257 981

Lapamine 1 – – 1 2

Goldexmine – – 1 – 1


CanadianMalarticmine(ii)(iv) 73 77 87 77 312


SouthernBusiness

PinosAltosmine 530 647 812 598 2,587


LaIndiamine 86 123 91 152 452


Zinc(tonnes) 605 673 1,374 902 3,554

Copper(tonnes) 1,156 1,164 1,201 1,001 4,522


Three Months Ended

March 31,

2015 June 30,

2015 September 30,

2015 December 31,

2015 Total 2015

Operating margin (i) :

Revenuesfromminingoperations $ 483,596 $ 510,109 $ 508,795 $ 482,932 $ 1,985,432

Productioncosts 247,280 263,612 254,584 229,819 995,295

Totaloperatingmargin(i) 236,316 246,497 254,211 253,113 990,137

Operating margin (i) by mine:

NorthernBusiness

LaRondemine 30,015 32,799 32,443 50,667 145,924

Lapamine 14,687 11,351 13,813 12,363 52,214

Goldexmine 19,253 15,525 20,681 17,108 72,567

Meadowbankmine 46,577 49,600 55,493 64,664 216,334


Kittilamine 27,415 16,145 21,528 15,174 80,262

SouthernBusiness

PinosAltosmine 34,652 44,538 37,217 29,327 145,734


LaIndiamine 20,590 18,834 19,845 15,832 75,101

Totaloperatingmargin(i) 236,316 246,497 254,211 253,113 990,137


Exploration,corporateandother 43,706 67,973 110,258 76,963 298,900

Income(loss)beforeincomeandminingtaxes 56,713 20,909 (14,015) 19,021 82,628

Incomeandminingtaxes(recovery) 27,970 10,826 (15,309) 34,558 58,045

Netincome(loss)fortheperiod $ 28,743 $ 10,083 $ 1,294 $ (15,537) $ 24,583

Netincome(loss)pershare–basic(US$) $ 0.13 $ 0.05 $ 0.01 $ (0.07) $ 0.11

Netincome(loss)pershare–diluted(US$) $ 0.13 $ 0.05 $ 0.01 $ (0.07) $ 0.11

Cash flows:

Cashprovidedbyoperatingactivities $ 143,455 $ 188,349 $ 143,687 $ 140,747 $ 616,238

Cashusedininvestingactivities $ (53,892) $ (104,476) $ (100,365) $ (115,786) $ (374,519)

Cash(usedin)providedbyfinancingactivities $ (123,182) $ (64,514) $ 7,396 $ (100,460) $ (280,760)


Realized prices (US$):

Gold(perounce) $ 1,202 $ 1,196 $ 1,119 $ 1,094 $ 1,156

Silver(perounce) $ 17.02 $ 16.41 $ 14.93 $ 14.56 $ 15.63

Zinc(pertonne) $ 2,072 $ 2,231 $ 1,909 $ 1,602 $ 1,875

Copper(pertonne) $ 5,056 $ 6,274 $ 4,538 $ 4,568 $ 5,023

Payable production (iii) :

Gold(ounces)

NorthernBusiness

LaRondemine 58,893 64,007 71,860 73,161 267,921

Lapamine 25,920 19,450 25,668 19,929 90,967

Goldexmine 29,250 26,462 32,068 27,646 115,426

Meadowbankmine 88,523 91,276 99,425 102,580 381,804


Kittilamine 44,654 41,986 46,455 44,279 177,374

SouthernBusiness

PinosAltosmine 50,106 50,647 47,725 44,496 192,974


LaIndiamine 26,523 25,803 28,604 23,432 104,362



NorthernBusiness

LaRondemine 198 201 221 296 916


CanadianMalarticmine(ii) 96 57 39 29 221


SouthernBusiness 2 2 3 4 11

PinosAltosmine 562 576 606 640 2,384


LaIndiamine 69 72 67 55 263


Zinc(tonnes) 936 827 739 999 3,501

Copper(tonnes) 1,167 1,133 1,306 1,335 4,941


Payable metal sold:

Gold(ounces)

NorthernBusiness

LaRondemine 60,943 59,376 69,143 65,067 254,529

Lapamine 23,497 20,771 23,331 23,278 90,877

Goldexmine 27,907 27,306 33,004 27,875 116,092

Meadowbankmine 84,780 96,870 100,440 103,667 385,757

CanadianMalarticmine(ii)(iv) 59,261 67,522 72,651 71,982 271,416

Kittilamine 48,982 39,385 47,070 43,499 178,936

SouthernBusiness

PinosAltosmine 41,433 54,402 49,327 41,418 186,580


LaIndiamine 26,898 23,803 28,983 25,366 105,050



NorthernBusiness

LaRondemine 205 225 220 308 958


CanadianMalarticmine(ii)(iv) 54 80 53 98 285


SouthernBusiness

PinosAltosmine 446 616 620 607 2,289


LaIndiamine 63 76 66 56 261

Totalsilver(thousandsofounces) 888 1,106 1,037 1,153 4,184

Zinc(tonnes) 1,264 733 650 949 3,596

Copper(tonnes) 1,160 1,131 1,302 1,354 4,947

Notes:

(i) Operatingmarginiscalculatedasrevenuesfromminingoperationslessproductioncosts.

(ii) OnJune16,2014,AgnicoEagleandYamanajointlyacquired100%ofOsiskobywayoftheOsiskoArrangement.AsaresultoftheOsiskoArrangement,AgnicoEagleandYamanaeachindirectlyown50%ofOsisko(nowCanadianMalarticCorporation)andCanadianMalarticGP,whichnowholdstheCanadianMalarticmine.TheinformationsetoutinthistablereflectstheCompany's50%interestintheCanadianMalarticminesincethedateofacquisition.

(iii) Payableproduction(anon-GAAPnon-financialperformancemeasure)isthequantityofmineralproducedduringaperiodcontainedinproductsthatareorwillbesoldbytheCompany,whethersuchproductsaresoldduringtheperiodorheldasinventoriesattheendoftheperiod.

(iv) TheCanadianMalarticmine'spayablemetalsoldexcludesthe5.0%netsmelterroyaltytransferredtoOsiskoGoldRoyaltiesLtd.,pursuanttotheOsiskoArrangement.


THREE YEAR FINANCIAL AND OPERATING SUMMARY (thousands of United States dollars, except where noted)

2016 2015 2014 Revenuesfromminingoperations $ 2,138,232 $ 1,985,432 $ 1,896,766

Productioncosts 1,031,892 995,295 1,004,559

Operatingmargin(i) 1,106,340 990,137 892,207

Amortizationofproperty,plantandminedevelopment 613,160 608,609 433,628

Gainonimpairmentreversal (120,161) – –

Exploration,corporateandother 344,880 298,900 269,441

Incomebeforeincomeandminingtaxes 268,461 82,628 189,138

Incomeandminingtaxes 109,637 58,045 106,168

Netincomefortheyear $ 158,824 $ 24,583 $ 82,970

Netincomepershare–basic $ 0.71 $ 0.11 $ 0.43

Netincomepershare–diluted $ 0.70 $ 0.11 $ 0.39

Operatingcashflow $ 778,617 $ 616,238 $ 668,324

Investingcashflow $ (553,490) $ (374,519) $ (851,619)

Financingcashflow $ 190,386 $ (280,760) $ 229,236

Dividendsdeclaredpershare $ 0.36 $ 0.32 $ 0.32

CapitalexpendituresperConsolidatedStatementsofCashFlows $ 516,050 $ 449,758 $ 475,412

Averagegoldpriceperouncerealized $ 1,249 $ 1,156 $ 1,261

Averagesilverpriceperouncerealized $ 17.28 $ 15.63 $ 18.27

Averagezincpricepertonnerealized $ 2,047 $ 1,875 $ 2,224

Averagecopperpricepertonnerealized $ 4,827 $ 5,023 $ 6,596

Weightedaveragenumberofcommonsharesoutstanding–basic(thousands) 222,737 216,168 195,223

Workingcapital(includingundrawncreditlines) $ 2,005,785 $ 1,441,991 $ 1,274,627

Totalassets $ 7,107,951 $ 6,683,180 $ 6,840,538

Long-termdebt $ 1,072,790 $ 1,118,187 $ 1,374,643

Shareholders'equity $ 4,492,474 $ 4,141,020 $ 4,068,490


Operating Summary

LaRondemine

Revenuesfromminingoperations $ 388,180 $ 318,207 $ 308,794

Productioncosts 179,496 172,283 188,736

Operatingmargin(i) $ 208,684 $ 145,924 $ 120,058


Grossprofit $ 123,392 $ 65,626 $ 55,113

Tonnesoforemilled 2,240,144 2,241,424 2,085,300

Gold–gramspertonne 4.44 3.91 3.24

Goldproduction–ounces 305,788 267,921 204,652

Silverproduction–thousandsofounces 988 916 1,275

Zincproduction–tonnes 4,687 3,501 10,515

Copperproduction–tonnes 4,416 4,941 4,997

Totalcashcostsperounceofgoldproduced($perouncebasis):

Productioncosts $ 587 $ 643 $ 922

Adjustments:


Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 668 $ 760 $ 1,055


Totalcashcostsperounceofgoldproduced–by-productbasis(iii) $ 501 $ 590 $ 668

Minesitecostspertonne(iv) C$ 106 C$ 99 C$ 99

Lapamine





Grossprofit $ 8,271 $ 21,275 $ 28,207

Tonnesoforemilled 592,683 559,926 638,800






Adjustments:


Totalcashcostsperounceofgoldproduced–co-productbasis(iii) $ 732 $ 591 $ 667

By-productmetalrevenues – (1) –



Goldexmine





Grossprofit $ 45,142 $ 16,839 $ 8,186






Adjustments:

Inventoryandotheradjustments(ii) 7 7 (8)


By-productmetalrevenues – – –



Meadowbankmine





Grossprofit $ 42,515 $ 71,403 $ 185,487




Silverproduction–thousandsofounces 221 221 135



Adjustments:






CanadianMalarticmine(v)





Grossprofit $ 70,621 $ 58,757 $ 35,011







Adjustments:

Inventoryandotheradjustments(ii) (2) 13 (76)






Kittilamine





Grossprofit $ 53,114 $ 31,614 $ 25,944







Adjustments:

Inventoryandotheradjustments(ii) (1) (1) 21




Minesitecostspertonne(iv) € 77 € 76 € 78

PinosAltosmine





Grossprofit $ 115,719 $ 103,840 $ 85,484

Tonnesoforeprocessed 2,260,155 2,378,406 2,520,400



Silverproduction–thousandsofounces 2,505 2,384 1,731




Adjustments:

Inventoryandotheradjustments(ii) (9) 33 (3)




Minesitecostspertonne(iv) $ 49 $ 45 $ 48

CrestonMascotadepositatPinosAltos





Grossprofit $ 16,728 $ 22,326 $ 21,940







Adjustments:

Inventoryandotheradjustments(ii) 10 (6) 26






LaIndiamine(vi)





Grossprofit $ 20,741 $ (6,329) $ 13,207





Totalcashcostsperounceofgoldproduced($perouncebasis)(vi):


Adjustments:

Inventoryandotheradjustments(ii) 36 – 16





Notes:

(i) Operatingmarginiscalculatedasrevenuesfromminingoperationslessproductioncosts.(ii) UndertheCompany'srevenuerecognitionpolicy,revenueisrecognizedwhenlegaltitlepasses.Astotalcashcostsperounceofgoldproducedarecalculatedona

productionbasis,thisinventoryadjustmentreflectsthesalesmarginontheportionofproductionnotyetrecognizedasrevenue.Otheradjustmentsincludetheadditionofsmelting,refiningandmarketingchargestoproductioncosts.

(iii) TotalcashcostsperounceofgoldproducedisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Totalcashcostsperounceofgoldproducedispresentedonbothaby-productbasis(deductingby-productmetalrevenuesfromproductioncosts)andco-productbasis(beforedeductingby-productmetalrevenues).Totalcashcostsperounceofgoldproducedonaby-productbasisiscalculatedbyadjustingproductioncostsasrecordedintheconsolidatedstatementsofincomeandcomprehensiveincomeforby-productmetalrevenues,inventoryproductioncosts,smelting,refiningandmarketingchargesandotheradjustments,andthendividingbythenumberofouncesofgoldproduced.Totalcashcostsperounceofgoldproducedonaco-productbasisiscalculatedinthesamemannerastotalcashcostsperounceofgoldproducedonaby-productbasisexceptthatnoadjustmentforby-productmetalrevenuesismade.Thecalculationoftotalcashcostsperounceofgoldproducedonaco-productbasisdoesnotreflectareductioninproductioncostsorsmelting,refiningandmarketingchargesassociatedwiththeproductionandsaleofby-productmetals.TheCompanybelievesthatthesegenerallyacceptedindustrymeasuresprovidearealisticindicationofoperatingperformanceandprovideusefulcomparisonpointsbetweenperiods.TotalcashcostsperounceofgoldproducedisintendedtoprovideinformationaboutthecashgeneratingcapabilitiesoftheCompany'sminingoperations.ManagementalsousesthesemeasurestomonitortheperformanceoftheCompany'sminingoperations.Asmarketpricesforgoldarequotedonaperouncebasis,usingthetotalcashcostsperounceofgoldproducedonaby-productbasismeasureallowsmanagementtoassessamine'scashgeneratingcapabilitiesatvariousgoldprices.Managementisawarethattheseperouncemeasuresofperformancecanbeaffectedbyfluctuationsinexchangeratesand,inthecaseoftotalcashcostsofgoldproducedonaby-productbasis,by-productmetalprices.Managementcompensatesfortheseinherentlimitationsbyusingthesemeasuresinconjunctionwithminesitecostspertonne(discussedbelow)aswellasotherdatapreparedinaccordancewithIFRS.Managementalsoperformssensitivityanalysesinordertoquantifytheeffectsoffluctuatingmetalpricesandexchangerates.

(iv) MinesitecostspertonneisnotarecognizedmeasureunderIFRSandthisdatamaynotbecomparabletodatapresentedbyothergoldproducers.Thismeasureiscalculatedbyadjustingproductioncostsasshownintheconsolidatedstatementsofincomeandcomprehensiveincomeforinventoryproductioncosts,andthendividingbytonnesoforemilled.Asthetotalcashcostsperounceofgoldproducedmeasurecanbeimpactedbyfluctuationsinby-productmetalpricesandexchangerates,managementbelievesthattheminesitecostspertonnemeasureprovidesadditionalinformationregardingtheperformanceofminingoperations,eliminatingtheimpactofvaryingproductionlevels.Managementalsousesthismeasuretodeterminetheeconomicviabilityofminingblocks.Aseachminingblockisevaluatedbasedonthenetrealizablevalueofeachtonnemined,inordertobeeconomicallyviabletheestimatedrevenueonapertonnebasismustbeinexcessoftheminesitecostspertonne.ManagementisawarethatthispertonnemeasureofperformancecanbeimpactedbyfluctuationsinprocessinglevelsandcompensatesforthisinherentlimitationbyusingthismeasureinconjunctionwithproductioncostspreparedinaccordancewithIFRS.


(v) OnJune16,2014,AgnicoEagleandYamanajointlyacquired100%ofOsiskobywayoftheOsiskoArrangement.AsaresultoftheOsiskoArrangement,AgnicoEagleandYamanaeachindirectlyown50%ofOsisko(nowCanadianMalarticCorporation)andCanadianMalarticGP,whichnowholdstheCanadianMalarticmine.TheinformationsetoutinthistablereflectstheCompany's50%interestintheCanadianMalarticminesincethedateofacquisition.

(vi) TheLaIndiamineachievedcommercialproductiononFebruary1,2014.ThecalculationoftotalcashcostsperounceofgoldproducedfortheyearendedDecember31,2014excludes3,492ouncesofpayablegoldproductionastheywereproducedpriortotheachievementofcommercialproduction.


QuickLinks

Exhibit99.3

NOTETOINVESTORSCONCERNINGFORWARD-LOOKINGINFORMATIONNOTETOINVESTORSCONCERNINGESTIMATESOFMINERALRESERVESANDMINERALRESOURCES

CautionaryNotetoInvestorsConcerningEstimatesofMeasuredandIndicatedMineralResourcesCautionaryNotetoInvestorsConcerningEstimatesofInferredMineralResources

NOTETOINVESTORSCONCERNINGCERTAINMEASURESOFPERFORMANCEGOLD($perounce)SILVER($perounce)TotalProductionCostsbyCategorySUMMARIZEDQUARTERLYDATA(thousandsofUnitedStatesdollars,exceptwherenoted)THREEYEARFINANCIALANDOPERATINGSUMMARY(thousandsofUnitedStatesdollars,exceptwherenoted)

Exhibit 99.4

Rule 13a-14(a) or Rule 15d-14(a) Certification - CEO I, Sean Boyd, certify that: 1. I have reviewed this annual report on Form 40-F of Agnico Eagle Mines Limited; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the

financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; 4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act

Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer andhave:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to

ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our

supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness

of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s

auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control

over financial reporting.

Toronto, Canada

March 27, 2017

/s/ Sean BoydSean BoydVice-Chairman and Chief Executive Officer

Exhibit 99.5

Rule 13a-14(a) or Rule 15d-14(a) Certification - CFO I, David Smith, certify that: 1. I have reviewed this annual report on Form 40-F of Agnico Eagle Mines Limited; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the

financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; 4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act

Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer andhave:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to

ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our

supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness

of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s

auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control

over financial reporting.

Toronto, Canada

March 27, 2017

/s/ David SmithDavid SmithSenior Vice-President, Finance and Chief Financial Officer

Exhibit 99.6

Rule 13a-14(b) Certification CEO In connection with the annual report of Agnico Eagle Mines Limited (the “Company”) on Form 40-F for the fiscal year ended December 31, 2016 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Sean Boyd, the Vice-Chairman, President and Chief Executive Officer of the Company,certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Toronto, Canada March 27, 2017

/s/ Sean BoydSean BoydVice-Chairman and Chief Executive Officer

Exhibit 99.7

Rule 13a-14(b) Certification CFO In connection with the annual report of Agnico Eagle Mines Limited (the “Company”) on Form 40-F for the fiscal year ended December 31, 2016 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, David Smith, the Senior Vice-President, Finance and Chief Financial Officer of theCompany, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Toronto, Canada March 27, 2017

/s/ David SmithDavid SmithSenior Vice-President, Finance and Chief Financial Officer

Exhibit 99.8

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the reference to our Firm under the caption “Interests of Experts” and to the inclusion in the Annual Report on Form 40-F of Agnico Eagle MinesLimited for the year ended December 31, 2016 filed with the Securities and Exchange Commission on March 27, 2017 (the “Annual Report”), and theincorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8(registration nos. 333-130339 and 333-152004) of our reports dated March 27, 2017, with respect to the consolidated financial statements of Agnico Eagle MinesLimited as of December 31, 2016 and December 31, 2015 and for each of the years in the two-year period ended December 31, 2016 and with respect to theeffectiveness of internal control over financial reporting of Agnico Eagle Mines Limited, which are included in the Annual Report. Toronto, Canada March 27, 2017

/s/ Ernst & Young LLPERNST & YOUNG LLPChartered Professional Accountants Licensed Public Accountants

Exhibit 99.9

CONSENT OF DANIEL DOUCET I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Daniel DoucetDaniel DoucetSenior Corporate Director, Reserve Development

Exhibit 99.10

CONSENT OF DONALD GERVAIS I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Donald GervaisDonald GervaisDirector of Technical Services at Canadian Malartic Corporation

Exhibit 99.11

CONSENT OF SYLVIE LAMPRON I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Sylvie LampronSylvie LampronPrincipal Engineer at Canadian Malartic Corporation

Exhibit 99.12

CONSENT OF GUY GOSSELIN I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Guy GosselinGuy GosselinVice-President, Exploration

Exhibit 99.13

CONSENT OF LOUISE GRONDIN I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Louise GrondinLouise GrondinSenior Vice-President, Environment, Sustainable Development and People

Exhibit 99.14

CONSENT OF CAROL PLUMMER I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Carol PlummerCarol PlummerVice President, Project Development, Southern Business

Exhibit 99.15

CONSENT OF PAUL COUSIN I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Paul CousinPaul CousinVice-President, Metallurgy

Exhibit 99.16

CONSENT OF FRANCIS BRUNET I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Francis BrunetFrancis BrunetCorporate Director Mining

Exhibit 99.17

CONSENT OF DOMINIQUE GIRARD I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Dominique GirardDominique GirardVice-President Technical Services and Nunavut Operations

Exhibit 99.18

CONSENT OF CHRISTIAN PROVENCHER I consent to the inclusion in the Annual Report on Form 40-F of Agnico Eagle Mines Limited for the year ended December 31, 2016 filed with the Securities andExchange Commission on March , 2017 (the “Annual Report”) of my name and the information that I have approved of as a “qualified person” under theCanadian Securities Administrators National Instrument 43-101 in the Annual Information Form of Agnico Eagle Mines Limited dated March , 2017 (the “AIF”)filed as part of the Annual Report. I also consent to the incorporation by reference in the Registration Statements on Form F-10 (registration no. 333-206498), Form F-3D (registration no. 333-215096) and Form S-8 (registration nos. 333-130339 and 333-152004) of the reference to my name and the above-mentioned information in the AIF. March 27, 2017

/s/ Christian ProvencherChristian ProvencherVice-President, Canada