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Agnico-Eagle Mines Limited (AEM)

October 19, 2011 9:00 am ET

Executives

Unknown Speaker -

Eberhard W. Scherkus - President, Chief Operating Officer, Director and Member of Health, Safety & Environment Committee

Sean Boyd - Vice Chairman, Chief Executive Officer and Chief Executive Officer of Sudbury Contact

Analysts

Peter Campbell - Jennings Capital Inc., Research Division

Richard Gray - Cormark Securities Inc., Research Division

John Kratochwil - Canaccord Genuity, Research Division

Anita Soni - Crédit Suisse AG, Research Division

John D. Bridges - JP Morgan Chase & Co, Research Division

Don MacLean - Paradigm Capital, Inc., Research Division

David West - Salman Partners Inc., Research Division

Unknown Analyst -

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Agnico-Eagle Goldex update conference call. [Operator Instructions] I would like to remind everyone that this conference is being recorded today, Wednesday, October 19, 2011, at 9:00 a.m. Eastern time. And I would now like to turn the conference over to Mr. Sean Boyd, Chief Executive Officer. Please go ahead, sir.

Sean Boyd

Thank you, operator. And good morning, everyone, and good afternoon, good evening, for those I know we have people calling in, in different time zones. We appreciate you calling in to this update on Goldex.

Unfortunately, we've had to announce that we have suspended mining operations indefinitely at our Goldex mine in Val d'Or due to stability issues in the large rock mass, which is situated directly above the mining activities.

We are, obviously, disappointed for both our employees and our shareholders that we have had to take this decision. But given the information and input that we received late last week from several experts that we had at the site, looking at the situation, and the potential risk that the rock instability may have had on our employees, it was the right decision to make.

And although, as we indicated in the press release, we will be assessing the potential to extract a portion of the 13 million tonnes of broken ore that remains underground, there is really no guarantee that we'll be able to able to do this. And so as a result, we took the decision with our board, late yesterday, to write-off the investment in Goldex, resulting in the after-tax charge in the third quarter of approximately $170 million or about $1 per share.

We also expect to take an additional provision for remediation, but we're currently working on those numbers. And we expect that we'll have more information on that number next week, when we provide more detail on our third quarter results.

As for our employees, we want to thank them for their efforts and their understanding. We, Ebe and his team, are at the site, and have been meeting with the employees and working on ways that we can minimize the impact on them. We're looking at several options to continue to utilize their skills and their expertise within the company, either at Goldex in ongoing remediation or maintenance programs or at our other operations in Canada.

So what has changed in the last, sort of week to 10 days? Well, essentially as we indicated, we had several experts, including a second rock mechanics consultant that was on site last Thursday. And as they reviewed information and began their analysis, they came to the conclusion quite quickly that there was instability in the rock mass as we indicated. No one's exactly sure where or what at this point. But their recommendation was to suspend mucking operations so that we could go into a period where we could gather more information, by doing additional drilling and monitoring, just to find out exactly what's happening at that rock mass.

We also had our grouting experts there and hydrology experts there, and essentially, they concurred that it would make a lot of sense to suspend the mucking so that we could do more assessment work and find out really what was happening within the rock mass. When we had all of that collective information coming at us last Thursday and Friday when our -- Ebe and the team were at site. It became apparent that we really had no other choice but to suspend the operations.

And the question that the board had was, is there a guarantee that we will be going back and extracting and mucking any of those 13 million tonnes? We can't say that we will be. So as a result, as we indicated, we decided to take the accounting charge now. And that was the appropriate thing to do.

As we sort of look forward from the perspective of our overall business, there's really no change in how we're going to approach our business. We're still focused on optimizing our existing assets. We're looking at expansions, other existing assets. Goldex was an important mine and was a good solid cash flow generator. Taking that out of the equation still doesn't change the fact that we can fund all of our growth, including Meliadine, including other potential expansions that we're looking at. So we still have the balance sheet and the cash flow generation to fund our business. So that doesn't change.

So essentially, what we're going to do over the next 2 to 3 months is continue our budgeting process, looking out our mines, looking to optimize them. And as we've indicated over the last -- that while capital allocation is critically important in how we're driving the business going forward, so we're going to obviously be selective. We -- taking Goldex out means that we will have to be focused on those opportunities that clearly have the best return, things like Meliadine, et cetera, key to all the drilling. So there are some important pieces of the puzzle that we're going to emphasize and get focused.

So it is a disappointment. We're not happy to be doing this. But as we said, at the end of the day, as we have deliberated over the last few days, both internally at management at the site, and with the board, it was the right decision to make as we gathered this information over the last few days.

And that's a quick introduction on sort of what happened and why we took the decision, and what it means for us going forward. I'd like to open it up now for questions. We have our technical team on site at Goldex, and we have our senior -- the balance of our senior team here in Toronto.

So operator, if you could open it up for questions, we would appreciate that. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question this morning comes from the line of John Bridges of JP Morgan.

John D. Bridges - JP Morgan Chase & Co, Research Division

Sean, very sorry to hear the news. I was just wondering though whether, given the other resources that you've identified at the mine deeper and apparently away from the shear zone, whether why you've written off the whole of the investment? I'm thinking that you've got mining in the vicinity, so even if you were forced to, in a worst case situation to backfill the stope, then presume that you can pump all tailings in there, and maybe in 6 to 12 months time, you could be good to go again.

Sean Boyd

Yes, that's a good question. We've had that question this morning. That was actually part of the deliberations with the auditors. Some people this morning were comparing it to Cameco. But this is a different situation. We're talking about a 400-meter thick large rock mass, where consultants are telling us that it's not stable. So it's a bit of a different situation. Now you make about good point, which I didn't mention in the introduction, that we are continuing the drilling of the D Zone. Our own technical team, as far as potential ability to extract value from Goldex going forward, they clearly haven't given up, as Ebe pointed out last night in a discussion we had. But what we didn't want to do is have to come back in 3 or 4 months if the news was bad or it got worse, and then have to take another hit. We have enough information from our experts to say, "Look, you have instability over essentially your 1.6 million-ounce reserve and there's a chance you may not go back." So it wasn't an easy decision, but we thought it made the most sense and it was the most conservative approach that we had to take, given the information we had. And could we have waited next week, and maybe gathered some more facts between now and having another board meeting? We didn't really want to wait. This was sort of material news. We owed it to our employees and we owed it actually to the safety of our employees to actually stop mucking operations last night. So it's happened so quickly.

John D. Bridges - JP Morgan Chase & Co, Research Division

Okay. But would it be fair to say that there's a 30% to 40% probability that you will actually be able to access all or part of the resource at some stage?

Sean Boyd

I don't really want to put probabilities on it because it's very difficult to do, because it's still something that's -- where there's still more information that needs to be gathered. And that's really why we're going to go on a monitoring and investigation program right now, to be able to sort of make that final determination, possibly at some point next year. Our guys have some ideas, but they haven't really had a chance to thrash those out and really collectively think about the options. We're dealing with some information that we felt we had to get out to the market. Now given the expertise that we have, there may be a solution to extracting a portion of the 13 million tonnes that is broken underground. And there may, in fact, be a way that we can mine the D Zone. But the thing that we have to remember about the D Zone is that, the economics of Goldex worked well because there was no requirement for backfill. So we have to make the determination at some point in the D Zone, whether we require a backfill, which would change the cost profile of that resource. What we have done is we've moved the reserve into resource. So we haven't taken it out of resource, and we've done that because we're going to continue to study our options. But we thought it was prudent to take the accounting provision, and if there is something down the road that we can do to salvage some value, then we're certainly going to propose it to our board.

John D. Bridges - JP Morgan Chase & Co, Research Division

Finally, the D Zone, is that well away from this shear zone that has the weak rock?

Eberhard W. Scherkus

Ebe here. Yes, it is, John. All of the various zones on Goldex and Goldex Extension D, tend to be down rake. So it is offset from the shear zone. However, one thing that we have to be aware of, that there will be -- would potentially be a pillar between the Goldex Extension Zone and the D Zone, so that has to be modeled very carefully. And with respect to your original question, if I may add just a little bit more color. Before we even ever contemplate going back, this monitoring and drilling program that we are currently undertaking, we want to fully be able to understand what happened, why it happened. And, yes, there are ways that potentially we can go back. But we can only look at those methods once we have a full understanding of what actually occurred, and why it happened so quickly in the last couple of months. So that was another factor that contributed to this decision. We were starting to see accelerated subsidence. So -- and I think the final nail in the coffin, and there were 2 of them, one was the soil mechanics expert who basically said, there's too much subsidence to be just strictly by lowering the water table, that's one. The second was the grouting expert who basically said, we're just dumping concrete into a black hole, and so it does no good, so I would suggest you focus on maintaining infrastructure rather than trying to seal off these cracks that have developed. So that was the sort of the final straw, and we got that word last Thursday.

Operator

Your next question comes from the line of Don Snow [ph] of Snow Corp.

Unknown Analyst -

Listening to this announcement, I found one phrase very interesting, which is you repeatedly stated that you're studying your options. That raises the issue of the timing of this announcement, which is 2 days before October option expiration date. And I'm just curious as to why it had to be released today, as opposed to, let's say, next week. Because your stock is now down over $8. You've wiped out all October call options. You've wiped out all the November call options. I would like to know, Mr. Boyd, do you write call options in your stock, or any of your gold fund buddies write call options in the stock? Because I wish an independent investigator would launch an investigation into what the hell is going on with the options market vis-à-vis gold mine management. I wish that somebody would take a look and examine these guys, right side, upside, left, up and down, and find out what's going on, subpoena your telephone records and find out what's going on with you guys. I find the timing of this announcement very suspicious and insufferable. Do you have any...

Sean Boyd

Well, thanks for the question. The timing of announcement is driven off of the materiality of information, and not on option expiry. Never, ever owned or bought or traded in options on Agnico or options on any stock. So that's not an issue. So we run our business based on the business, and not based on option expiry dates, and that's all I can say to that.

Operator

Your next question comes from the line of Anita Soni of Credit Suisse.

Anita Soni - Crédit Suisse AG, Research Division

My question is with regards to the shear zone, initially. Did your initial geotechnical investigations, when you're designing the mine, indicate that there was a shear zone there?

Eberhard W. Scherkus

Ebe here. Our initial drilling encountered excellent rock quality, all through the top of the ore zone. And that would have meant RQDs in excess of 75%. Nothing to indicate that type of shear zone. However, what they have done now, is once we modeled it and we introduced water, they said that some of this ultramafic material, which is in the shear zone, has now become unconfined and lubricated. And then as a result, has started moving. And so drilling into it now -- and that's one of the reasons why we've been able to confirm movement is that the RQD we are getting now versus the original RQD when we drilled over the zone and back in the '90s and 2000, do not compare.

Anita Soni - Crédit Suisse AG, Research Division

Okay. So when the original drilling was done back in the '90s it wasn't...

Unknown Analyst -

It was done in the '90s from the original shaft from the exploration drive. And we have the core data that went right over the top of the Goldex Extension Zone and through the shear zones, and we had excellent RQDs.

Anita Soni - Crédit Suisse AG, Research Division

So when was the last time that you guys have done any kind of geotechnical drilling prior to starting up the mine?

Eberhard W. Scherkus

We did that when we started the mine, when we did our bulk sample. And that was incorporated into the feasibility 2003, 2005.

Anita Soni - Crédit Suisse AG, Research Division

And then could you just give me a kind of a chronological history on exactly what happened in terms of -- you punch through the shear zone at this point? Just -- and then in subsequent 2 months this happened, and we had an expert come in and look at it at this point. Like that kind of timeline, that would be...

Eberhard W. Scherkus

Well, I would say the general timeline was about 18 months ago in March of 2010. We have one of the final blasts on the eastern part of the Goldex Extension Zone, the eastern stope. And with that, we had sloughing. And the sloughing was in granite, and it was as pretty much as expected. However, what did happen, is it continued to slough as we continue to muck. And that sloughing over time broke through into the volcanics, into the hanging wall. And as a result of that, we started to get a slow infiltration of water. And we have grasped, where we monitored our pumping capacity, and we saw a gradual increase of water. And what the water also did was to wash out any silts or dissolve any other minerals that may have been in there. And all of a sudden, the flow increased over time. So once the flow increased, we started getting a lower water table over the last, I would say, over the last year, 15 months. And then with that, we remodeled it. And like even as late as this May when we remodeled it, to the answer we got back was that the rock mass was essentially stable. Then we continued to increase -- have increased water inflow, and we decided to -- and we've done a lot of additional drilling to try and grout it, to try and seal it. And we incorporated all this new drill hole information into the water, plus the addition of water. And then the consultant came back in early October, and basically said, as a result of this new information, new parameters, plus water, your rock mass now is inherently unstable. And we have reason to believe that actually a block caving has been initiated and starting. So the only way to stop the propagation of block caving and having a major caving up the surface, would be to stop mucking, and that the stope would fill itself and the situation would stabilize. So we got that report in early October, and it was a complete different report from the one that we had got earlier last spring. And then, of course, we were, I would say, well, we're going to need a second opinion on this. And this is the same company that have done a lot of our work over the years at LaRonde. They've been involved from -- at Goldex from day 1. They're an international and a reputable firm. And we got a second opinion from a second international reputable firm, and they concurred with their opinion. So and that was concurred during the middle of last week. So that's a bit of the...

Anita Soni - Crédit Suisse AG, Research Division

So you have had 3 rock mechanics experts on this?

Eberhard W. Scherkus

Well, we had our own internal and we had 2 external.

Anita Soni - Crédit Suisse AG, Research Division

Oh, 2 external. So I'm just -- the press release you put out last week indicated that the first rock mechanic expert said that, it didn't -- they didn't say that it was unstable. They said it negatively impacted the integrity of the rock mass, but they hadn't suggested failure at that point, or at least that's what this press release was saying.

Eberhard W. Scherkus

Well, that's what they said, because we still had evidence underground over the stope that we hadn't detected any movement underground. If we had a chimney through the surface, we would've expected some silt or mud or foreign material. We had put in over 7,000 tonnes of concrete. We checked the pH of our water underground, was there any change on alkalinity of the water underground? We did not notice any change in alkalinity. We have not noticed any movement with drill holes over the Goldex Extension Zone. And the way the report was written was also, well, it might be this, and possibly this might have occurred, however, in light of this, we would suggest. So it was, I would say, not loosely termed, but there was sufficient evidence to suggest to come to that recommendation. So as a result, when you're diagnosed with terminal illness, you get a second opinion. And that is what we did. And the second opinion, the people concurred quickly and immediately that the first opinion was correct.

Anita Soni - Crédit Suisse AG, Research Division

Okay. So where do we go from here? There is -- I mean, in terms of subsidence? There is a -- obviously, you said that you're waiting for the stope basics or the underground mine to fill up?

Eberhard W. Scherkus

It is still. We have no evidence that there is a void underground. That was one of the risks. We believe that the stope, as it presently stands, is full. So as a result of stopping all mucking activity, there's no further reason to believe that this cave or anything should propagate upwards. But we want to drill it and establish where exactly we have had the failure. We want to locate it. We want to know the extent of it, because we don't know. We want to drill it from underground. We want to put in additional instrumentation to be able to see which way it has moved, which we do not know. And once we have all that information, then we can look at the potential ways of perhaps recovering the ore by filling it. There are ideas. We have lots of ideas. The other thing we're going to do is, we're going to fill the depression on surface. And we also found out from the individual that have the grout -- the grouting expert, and this was way back in 2003, 2004, when we grouted the shaft collar. The contact between the rock face and the soil, there is a band that can essentially be considered quicksand. So this material is very mobile, and would tend to flow first. So by backfilling the area above the stope, we stop the flow of this material, and that would help stabilize surface subsidence. We're also looking at we have to drill -- we are drilling a large diameter drill holes into the top of the stope. And with that, we will be able to very precisely survey, we're going to put a camera down and get pictures of it, and then see exactly what has happened. Right now, we're dealing with just instrumentation and drill holes on our periphery. We're going to reexamine our seismicity records. Because one of the questions we asked both rock mechanics experts, well, if you have major failure of this sort, there should be some seismicity records. There should be some snap, crackle or pop that we picked up. And when you look at our seismicity records, where we do get the snap, crackle, pop, are along the north and along the south contacts of the zone. There is very little evidence to suggest any seismicity had occurred above the ore body. However, their answer to that was, "Well, with that type of rock you have there, it may not -- it may be so subtle that you may not have been able to pick it up." So that's sort of our plan going forward. And we are going to evaluate whether we can put paste fill on top of it as we extract. These are some of the options. But as Sean said, there are no guarantees that any of these will work, so that is why we took the write-off.

Anita Soni - Crédit Suisse AG, Research Division

Right. And this is going to take -- I mean, it sounds like a lot of studies and monitoring and investigation needs to be done. So I mean, timelines are -- you're looking at least a year before you have some kind of an answer on this? Meaning that, whether or not you'll be able to extract the 13 million tonnes?

Eberhard W. Scherkus

Well, that's why we put the word indefinitely in there, because we have no guarantees.

Operator

Your next question comes from the line of David West of Salman Partners.

David West - Salman Partners Inc., Research Division

Yes, most of my answers questions have been answered. I do have one other question here. What's left in your stockpiles there at Goldex?

Eberhard W. Scherkus

About 70,000 tonnes. So we're good for until the end of the month.

David West - Salman Partners Inc., Research Division

You know approximately what the grade is?

Eberhard W. Scherkus

A run of mine, it would be about 1.7 to 2 grams.

Operator

Your next question comes from the line of Don MacLean of Paradigm.

Don MacLean - Paradigm Capital, Inc., Research Division

And I think most of us are grateful that you have released this news on a timely basis, once you were pretty certain what was happening. Sean and Ebe, you did to touch on that remediation efforts. Can you just give us a little bit more explanation of the implications to the surface areas around it, including the process plant itself? And whether there's implications to whether that will be impaired enough that there's no value left to that, as part of your write-down?

Sean Boyd

Just before, Ebe, you start there, just in terms of the write-down on the plant and equipment, we are taking salvage value. So the plant isn't being written down to 0. And the mobile equipment, I think we're writing it down to about a third of the value. So it's not down entirely to 0. So, Ebe, on the subsidence?

Eberhard W. Scherkus

Our current plan is to put in a fence along the highway, grouting that area. Our consultants think that -- or believe that, that can secure the highway into town. And that there shouldn't be any problem with that. They feel we can do the same thing with the process plant and the office building and shaft. So, basically, you have 2 impermeable fences and restore the water table. They feel most of the damage to the entrance to the mine and around to the buildings is due to the water table related effects, and not due to rock mass issues. The only rock mass issues we have are right in the entranceway to the mine, where we have a cone of depression of about 21 feet. So we should be able to secure all of our infrastructure and the public infrastructure.

Don MacLean - Paradigm Capital, Inc., Research Division

Okay. No Tim Hortons involved there then?

Eberhard W. Scherkus

No. But there is a Walmart about a kilometer away. But there's no problem with that.

Don MacLean - Paradigm Capital, Inc., Research Division

Okay. And just in terms of, Sean, the -- you have a bid in for Grayd. Have you had any conversation with them, or what's your sense on what happens there?

Sean Boyd

Yes, I did have a chance to speak to them, and we basically said, we would regroup later today. Under our agreement with them, there's no requirement for us to change anything, but we are mindful that to takeover bid and we certainly see that as an important part of our company going forward. So we'd certainly like to complete that, and all we did was promise them that we would circle back with them later today. So we still need to do that.

Operator

Your next question comes from the line of Richard Gray of Cormark.

Richard Gray - Cormark Securities Inc., Research Division

Most of my questions have been answered, too. But I'm just curious, in the kind of 50-kilometer radius of that mill, do you guys have any targets or expiration properties that you'll send your guys out to see if there's any ounces there? I mean, is there anything nearby that you can conceivably put in the mill at some point?

Sean Boyd

Ebe?

Eberhard W. Scherkus

We have a couple of options, one is a Swanson deposit, which is about, I would say, about 25 kilometers, 20 kilometers away from here. Metallurgy and geology, very similar to Goldex. So it's a small deposit, and it might be good for a year or so. And then we also have to look at our Bousquet Zone 5. I mean that's a remote possibility but that is another -- sort of low-grade deposit of about 20 million tonnes of about 1.7 to 2 grams as well. But you'd have to look at the trucking aspect of it, which could be expensive. So there are those options that we would look at. But I think we'd have to look harder at our M Zone, looking -- look at our deep zone, and then see whether we can potentially recover any of the ore from the Goldex Extension Zone.

Operator

Your next question comes from the line of John Kratochwil Creditor of Canaccord Genuity.

John Kratochwil - Canaccord Genuity, Research Division

Sorry, my answers have been answered by this point.

Operator

Your next question comes from the line of Peter Campbell of Jennings Capital.

Peter Campbell - Jennings Capital Inc., Research Division

Just one point of clarification on the M Zone. Did you have any opportunity for getting into the M Zone? It is further west. It is closer to surface. Like is it, in any way, affected by the water inflows and the surface subsidence?

Eberhard W. Scherkus

No, it is not, but we already have started development of the M Zone. This was part of our mining plan. And so we do have an ore pass system and we do have ramp access, so this is very close to being ready for production. Of course, with what happened with the Goldex Extension Zone, we're going to have to revisit the mining method and look at filling methods rather than open stoping.

Operator

Your next question comes from the line of Alfredo Meta [ph] of Glacier Capital.

Unknown Analyst -

I've missed the part about Grayd resources, and just wanted to be clear in terms of what the implications are with respect to that pending acquisition.

Sean Boyd

Yes, just to sort of repeat that, thanks for the question, is that we have been in touch with people at Grayd. As we've indicated to them, and we've indicated on the call, we see that as an important acquisition for us going forward, given for all the reasons we've said when we made the bid. And we indicated to them that we would give them a call later today and discuss that. And under the agreement, there's no requirement for us to change anything. But certainly, we're mindful it's a takeover bid, and we certainly want people to tender to that. So we will be talking to them later today.

Operator

[Operator Instructions] Your next question is a follow-up from Anita Soni of Credit Suisse.

Anita Soni - Crédit Suisse AG, Research Division

Ebe, how much did backfilling add to the mining cost per tonne?

Eberhard W. Scherkus

It's pretty early. It would depend on what we do, whether we use rock fill or whether we use a paste fill. But I would imagine that, based on filling costs elsewhere, we would probably be looking at $3 to $5 a tonne.

Anita Soni - Crédit Suisse AG, Research Division

And then with respect to -- Sean, with respect to your focus going forward in terms of strategy going forward now that Goldex seems to be on -- at least on pause in the best case scenario, which areas are you looking towards developing and redeploying your efforts? In Meliadine, right?

Sean Boyd

Well, I think what we're saying is that we have to focus on our assets that have the best potential upside, and clearly, we've got those indications at Meliadine. We've had some recent drilling at Kittila, which indicates that we're continuing to get above-average reserve grade material closer to surface as we move to the north. So we're going through that process right now, through a budgeting process, which will take us another sort of 2 to 3 months to look at the mining plan, discuss some of these alternatives that Ebe has discussed in answer to some questions this morning. To see whether there's any short-term replacement for the Goldex in the vicinity, whether it's actually on the Goldex property or somewhere along Highway 117. So there's a bunch of ideas, but we need to flush those out as we sort of go forward. But as we said earlier, there's -- we have, with the remaining mines and the cash flow that's being generated, we have more than enough from a financial capacity perspective to manage all of the investment opportunities we have internally.

Operator

Your next question comes from the line of Michael Cook of TD Securities.

Unknown Analyst -

It's Michael Carrier [ph], TD Securities in London. You mentioned that you'd probably been out to secure the main infrastructure, including the shaft. I'm guessing that the shaft, the main production shaft is well away from the area affected by instability. But having said that, have you seen any movements in the shaft at all? Or is that still unstable as it stands?

Eberhard W. Scherkus

We have detected 2 inches of movement in the headframe, and the overall movement that is permissible in the original design would be up to 6 inches, and that is at the top. And we have also detected some cracking about 300 feet down on the shaft, so -- and that was another reason to stop mucking and to stop any potential movement.

Unknown Analyst -

And has there been sort of seismicity in and around the shaft that you detected at all?

Eberhard W. Scherkus

None. It is in a relaxation zone, so we're experiencing relaxation rather than seismicity.

Operator

Your next question comes from Andy Shopeck [ph], a private investor.

Unknown Speaker

How many people are currently employed at the property? How many are actively working in the mine? And what provisions, if any, are you trying to make for any future employment for these folks?

Sean Boyd

There's about 230 that are working at the mine. As we said, Ebe and his team have just started the meetings with the employees. So we do have opportunities to replace contractors at some of our other Canadian operations with Goldex employees. We have some ongoing work to do at Goldex, in terms of the remediation and monitoring effort and maintenance of equipment. So we'll be looking at that, and also some of our other Canadian operations, like in Meadowbank, could certainly use some skill that we have at Goldex. So that's what we're just working through now. It's very early, but they just started the employee meetings in the last few hours.

Unknown Speaker

Are there any possible future labor related charges, severance costs, et cetera, that might be incurred once this analysis is finally done?

Sean Boyd

We're looking at this now, as I indicated in the introduction, over the next week or so we're getting a lot of that data in. We did indicate in the press release that when we updated 1.5 weeks ago or so, we had an estimate that it would cost us about $5 million more this year in remediation, and we estimate that about $20 million next year. So we're just getting the input on those numbers. But I wouldn't think there would be material severance costs here, because we think there are opportunities to utilize the bulk of the skills that we have there at Goldex. But as we said, it's still early, we'll have more information on that next week.

Operator

And gentlemen, I'm showing no further questions at this time. Please continue.

Sean Boyd

Thank you, everyone, for participating in the call. If there's any other questions, we're here to answer them. Feel free to give us a call or send us an email. Thank you very much.

Operator

Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation and you may now disconnect your lines.

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Source: Agnico-Eagle Mines Ltd. - Special Call
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