Good morning. My name is Jesse, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Agnico Eagle Second Quarter Results 2020 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question- and- answer session. If you'd like to ask a question during this time, simply press star one on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. Mr. Sean Boyd, you may begin your conference.
Thank you, operator. Good morning, everyone, welcome to our second quarter 2020 conference call. Prior to getting into the slides, just be forewarned, we are presenting forward-looking statements in this presentation. There are two slides which go through the disclaimers on forward-looking statements. Please, at your leisure, read those. What I'd like to do is talk a little bit about Q2 and how we managed through the pandemic. Focus more on how we're positioned going forward, what the emphasis will be on our business in terms of driving Cash costs and using that to reinvest in the business and increase our dividend as we move forward. As you know, it has been a challenge. It's been a challenge for everyone.
From a business standpoint, we had seven of our eight mines were impacted, either with temporary shutdowns or with significant reductions in our activity levels at those mines due to COVID-19 and the fact that in some of our jurisdictions, mining was not considered an essential business. We were fortunate to be able to restart those operations earlier than we had expected. We continued our dialogue with the governments in our respective regions on our safety protocols and how we were positioned to restart and keep our employees safe. In both in Quebec and Mexico, both of those governments allowed the mining industry to restart before many other industries. That allowed us to ramp up and get things moving quicker than what was in our original plan.
As we've said before, the number one priority for us was to ensure that our employees were not only safe, but they were comfortable, their families were comfortable with our approach. Our communities were comfortable with our approach, our team put some unique ideas forward, particularly with respect to testing. That just added an extra layer of comfort and protection, and we'll talk a little bit about that. We closed Q2 strong. We started Q3 strong, as a result of that, we expect to have a strong second half in terms of production, declining costs, and also Cash cost generation.
It was important for us because in a lot of the meetings that we had over the last few months with investors and analysts, the question was always, well, how much is it going to cost to manage through the pandemic in terms of impact or costs on putting mines on care and maintenance, but more importantly, going forward, what was that going to do to your productivity? What was that going to do to your unit costs? On page five on the slide in our press release, we've broken those down, and we've given you the accounting treatment. In the quarter, we incurred a little over CAD 22 million. Roughly CAD 8 million of that was strictly the care and maintenance cost at those operations where we were on temporary suspension.
We had an additional CAD 14 million roughly, which were our payroll costs for employees that we temporarily laid off during the COVID-19. Those amounts of CAD 22 million were not included in our unit costs, either Cash costs or all-in sustaining costs, and we did not back those out of earnings in calculating our adjusted earnings. There's been differing treatments in the industry. We've chosen to leave them in our earnings calculation and not back them out for adjusted earnings. I think it's more important to focus on the costs going forward. In the quarter, we had CAD 2.3 million in costs around increased hygiene and screening and testing. Those were factored into our unit cost calculation, and we didn't adjust our normalized EPS for them. As we look forward, I think there was a couple things, in terms of moving parts.
We do know we have additional expenditures, to continue with the protocols around screening and hygiene and testing. Our number for that is about CAD 1 million a month, which amounts to about CAD 6 per ounce in additional costs. That's a number that the market's certainly been interested in for a number of the companies. That's where our number has landed. We've also been able to, because of our unique situation, having to reduce employment levels at seven of the eight mines, and in some cases, drastically reduce employment levels. On the restart, we reintroduced employees in stages. We gradually reintroduced employees, and that allowed us to get a pretty good feel, and match our employment levels and headcount levels against our productivity and our production levels.
We feel that there's going to be some cost savings there in terms of the total headcount, particularly on the contractor side. It looks like we won't have to call back as many contract workers as we had prior to the pandemic, which we think is a bit of an opportunity. We do have an additional cost of CAD 1.4 million per month. One of the things that was done early on is that in Nunavut, the communities are at high risk for COVID-19. It was important to ensure, and protect the communities that we had to separate our operations from those communities. As a result, as you know, we sent our Nunavut workforce home. They are still at home. We want them back, but we want them back when they're comfortable.
We believe we have a safe environment for them to come back, but we are still in discussions with the Nunavut public health authorities, the government of Nunavut, local government, community leaders on when is the most appropriate time to bring them back and ensure that the communities remain protected. There's no set timeline for that, but as we say, we continue to work with that. We have backfilled that workforce with some additional contract workers and some seasonal workers to help us manage while our Nunavut workforce is at home. In terms of second quarter highlights, we produced a little over 330,000 ounces, which is a bit more than we expected. When we started to see the impacts of the virus, there was a lot of uncertainty around the restarts. Our costs were higher on a unit basis because of producing less gold in the quarter.
Going forward, we expect those costs to come down. We'll talk about that. We tightened up our guidance. We increased the lower end of the range. The guidance is now for the full- year 2020, 1.68 -1.73 million ounces. We had a fairly broad range, when we revised guidance at 1.63-1.73 million. We needed to do that because we were still in a period of a lot of uncertainty. We really weren't sure at that point when we were going to be able to restart and how quickly we were going to be able to ramp up. Now we've gone through the second quarter. We're comfortable tightening up that range and increasing the lower end of that range. In terms of full-year guidance, or going out into 2021 and 2022, we left that the same.
What that means is second half of this year, we expect to produce between 480,000 to 500,000 ounces per quarter at declining costs. Into next year, a little over 2 million ounces, which puts us about 500,000 ounces per quarter, and beyond that, over 500,000 ounces per quarter as we continue to ramp up. We continue to declare our dividend of CAD 0.20 a share. We'll certainly look in the third quarter at revisiting that and, given our track record of 37 years of consecutive dividend payments, and given the Cash cost generation, I think, it's logical to assume that over time that dividend will continue to go up. In the second quarter, I think it was important to note that we did receive some critical permits in the quarter. We received a permit to increase our processing rate in Finland to 2 million tons a year.
We received the permit at Meadowbank for the IVR open pit and for the Amaruq underground, and we also at Meliadine received approval to double the amount of saline water we can discharge to the sea. Those were three important permits that we were anticipating, and we did receive them in the second quarter. In terms of the ramp up, we did talk about the faster ramp up in the previous slide. As we said, we got able to restart earlier in Quebec than expected, about two weeks earlier. We got to restart in Mexico about 12 days earlier than we had expected. As a result, we closed the quarter strong in June, and that allowed us to gradually ramp up. In July, we're over 160,000 ounces of production. That sets us up for a strong second half as we said.
On an operational update, I'm not going to go into individual slides, although they are in the slide deck, as we go through the next series of slides, I'll touch on each of the operations. At LaRonde, prior to the onset of the pandemic, we had completed the planned infrastructure upgrades, in the West Mine area at LaRonde. We were actually developing in the West Mine area before we had to reduce activities there. We have been mining in the West Mine area in the second quarter, and we continue to see higher grade than we had forecast in the block model, which I think is important to see that realized as we mine out those areas. We're expecting in the second half to average about 8,500 tons a day from the LaRonde complex.
About 3,000 tons of that from LZ 5, about 12% of the tonnage will be sourced from the higher-grade West Mine area. At Meliadine in June, our throughput in the mill exceeded 4,300 tons a day. We had always talked about 4,000 tons a day as the level that we needed to achieve. We beat that in June. In the third quarter here, we will replace the repaired apron feeder. To reach 4,300 tons a day with the repaired apron feeder, really speaks to the success of those repairs. We will put in a new unit in the third quarter. We will upgrade the filter press system and other components that will allow us to go to 4,600 tons a day in the plant in the fourth quarter of 2020.
I think what's also important is we've been able to pump out the third mining horizon at Meliadine, which was always in the plan. Those are higher-grade areas, that's set up so that we can start mining in those higher-grade blocks in August and September and into the fourth quarter. We did make reference to our water discharge at Meliadine. We did get approval to double the discharge limit at Meliadine. We're doing that by truck in the third quarter. We can continue to do that by truck going forward, we feel strongly that the best solution is a waterline. We're moving forward with the process to get the waterline permitted. That's going to involve a lot of community discussion. One of the concerns that the community would have about a waterline is, does it impact the ability of the caribou to move?
They had that initial concern back in the early days of Baker Lake, back in 2007. It was pretty evident pretty quickly once the road was built, that the caribou were not bothered by the road, and they easily crossed the road. We think that's the same thing with the waterline. In a 35-km-long waterline, there's 70 crossover points for caribou. Ultimately, if we need to cover the entire waterline, we'll do it. Longer-term solution, eventually we'll get it approved, but in the meantime, we can continue with trucking the water at Meliadine. At Meadowbank, we made a lot of progress, even though we're at reduced activities, to catch up on the backlog of maintenance. You can see that in the results in June, where we mined over 110,000 tons of ore and waste per day.
Our target, as you know, was 100,000 tons of ore and waste per day. The mill restarted in late May, which is a couple of weeks sooner than we had planned. The mill is currently running in excess of 9,500 tons a day, both from the mine ore and from existing stockpiles. In the balance of 2020, we expect higher grades between two and a half and three grams per ton, which helps with our production in the second half and helps us to achieve our increased production for the second half. As we mentioned earlier, we received the permits for the Meadowbank Complex to mine the IVR open pit and the Amaruq underground. At Kittila, that was the one mine, where we were able to operate our plant continuously through the quarter.
We also received an important permit there, allowing us to move forward with the expansion in the processing facility to 2 million tons a day. We were impacted with our shaft sinking because the shaft sinking crew was Canadian. They were brought home during the pandemic. They've now been allowed to return and resume shaft sinking activities. We did continue on with the other construction related to that expansion program. Ultimately, we believe the future at Kittila is beyond 2 million tons a day, and that's why we're thinking about the opportunities we may see to increase the mining rate there. We've had some good exploration success there. I'll talk about that in a minute. As we step back and look at our production profile, we see our graph how we've gradually increased production over time.
We're now pushing on that sort of run rate of 2 million ounces a year. We expect to exceed that in 2021 and beyond. We continue to work our project pipeline, Kittila expansion's under construction, so is Meliadine phase II. Amaruq underground is in planning. Was delayed due to COVID-19. We're working on ways where it will not impact our 2022 production number. We think we can be successful doing that in terms of timing. I'll talk in a minute about the opportunity at Canadian Malartic Underground, which is an important project. Exploration continues to be a major focus here. I think what we've learned in the last 12-18 months, as we've said before, is there's still a lot of potential left in these mature mining camps. Whether it's LaRonde, whether it's Malartic, or whether it's Kirkland Lake.
As we mentioned at Kittila, it's a very long life asset, but we continue to drill that deposit. We continue to intercept ore grade material beyond the current resource limits. We're going to continue to probe at depth, and that's been a big part of our success. We don't mind drilling deep drill holes simply from the perspective we'd like to know what we own for planning purposes. That was the same story at Canadian Malartic Underground. The reason East Gouldie was found is because we were attempting to drill a hole about two kilometers underground. That was the target, tracing the plunge from the old East Malartic underground, and we hit the East Gouldie deposit. We've got 10 drills currently working there.
We've expanded the program to increase the drill meters by almost 20%, which is important to gather information on the potential size, but also tightening up the drill spacing and improving our confidence in the East Gouldie deposit. It's the East Gouldie deposit that makes this underground work. Without that, even at these gold prices, Odyssey and the East Malartic side was still low grade. It's now the volume and the number of mining horizons and the potential to make this a large tonnage underground mine that East Gouldie introduces. We certainly, combined with Yamana, Agnico, have the skills to understand what we own and what steps need to be taken to optimize it and turn it into a meaningful part of our business. We're doing that now. The stage 1 of that, as we said, is to increase our drilling.
We're working on a preliminary economic assessment, which we expect to be ready in early 2021, and the initial work on an underground exploration program, which is essentially the ramp. We're going to begin that this quarter. We've taken important steps to move that project forward. Essentially what that will do is extend the mine life at Canadian Malartic and have the potential to extend it for many, many years. Kirkland Lake, another old mining camp, we continue to drill at Upper Beaver. It is a mine. The question is: where do we stage it in our pipeline? We continue to drill, and we continue to assess the economics. We've now started to drill more targets along that land package, including Amalgamated Kirkland, which is close to the boundary with Kirkland Lake Gold. We're interested to see what those drill results return.
In Mexico, we continue to get high-grade results at the Amelia deposit. It's going to need some more drilling. The team's focused on completing those drill programs and then updating a study on the potential at Santa Gertrudis. I'll just add LaRonde here. We continue to drill both LZ5, the old Bousquet Barrick property to the west of LaRonde. Our intention there is to ultimately mine out several hundreds of thousands of more ounces there, and we're also drilling to the east of a main LaRonde ore deposit where we picked up massive sulfide mineralization over the last several months in the 20N Zinc South Zone. That continues to be a focus for us on the exploration front. On the operating results, we talked about most of these mines, but I'll talk about Goldex here. Goldex was actually doing extremely well prior to the pandemic.
It was exceeding its budget, getting very good productivity from the Railveyor system, getting good productivity in the high-grade sub-zone. We expect as we move through this year to be able to increase the mining rate in the sub-zone. We expect more production coming out of Goldex in the second half. The team has done a really good job optimizing that asset, generating Cash cost. at Malartic, we've talked about the underground potential, the mine during the second quarter actually did extremely well in terms of ramp up. In May, the monthly tonnage mill was 64,000 tons a day. That's a record. We have to congratulate the team because they did produce, in the second quarter, their 5 millionth ounce since the mine started. That's a tremendous achievement in a short period of time.
There's a lot more ounces to come, particularly as we look at the underground. There's a top-notch team there that's doing a really good job maximizing the open pit and now looking at the opportunity to extend the mine life with the underground component. In Mexico, the focus continues to be on advancing satellite opportunities, whether it's Cerro or Cubiro at Pinos Altos or Chipriona at La India. I should also give our thanks to our Mexican team. The mines are in a region where communities have been hit fairly hard with the virus, unfortunately. I think what that has done is it's allowed our teams to really be helpful in the community. What we've been able to do and what the team's been able to do is we've brought in additional medical resources and medical personnel to help the communities. We have the logistics.
We have better medical facilities in some of the communities. We're in a better position to respond. Our team has done an exceptional job of working together with the communities to help them deal with the pandemic in the communities. Our screening program has been effective. For the most part, we've been able to screen out employees prior to getting on-site. We've had some that were asymptomatic that did pass through screening. We isolated them immediately. We're using rapid testing, followed by the detailed testing after. The testing's been a big factor in our ability to manage through this. As I said earlier, our team did an exceptional job implementing testing in April in Nunavut. We now have a test facility in Quebec at Val-d'Or, which basically pre-screens and pre-tests every employee we bring up from the South into Nunavut.
By the time the plane arrives in Nunavut, we have the test results, essentially, and if all the tests are positive, all the employees are released to work on their 14-day shift. I think using testing, the highlight for us was early adoption of testing, the fact that our team thought about it and were able to execute, and the fact that in the regions where we've been, we found ourselves in a strong position to help the communities, and our team have really stepped up and done that. Just quickly on financial highlights, even though the quarter was down from a production standpoint due to COVID, we did have good earnings and Cash cost generation. We expect all those numbers to improve as we move through the second half.
We did draw down CAD 1 billion on our credit line as the pandemic struck, just to be extra cautious. We have now fully repaid the CAD 1 billion that we had drawn on the credit line. We've made reference to the dividends. I think it's important to note that over the last six years, even though we were in a heavy construction period and the gold price averaged around CAD 1,200, we increased our dividend in each and every one of those years. We raised the dividend in February of this year.
Given where the gold price is and given our growth trajectory in terms of production, we would expect that dividend to continue to increase as we move forward. Just to wrap up, we talked about our ability to manage through COVID and make sure not only were the employees safe, but the assets remained properly positioned to manage and deal with some things that we had to get done, largely in Q1 and then a little bit into Q2. We successfully did that, which sets us up for a strong second half and a strong 2021 and 2022. Again, renewed exploration focus where we feel we can continue to add a lot of value on some of our mature mines.
There's still good opportunity there, and those are high-quality ounces given they're at existing mines, not only near physical infrastructure, but near our skilled workforce, who's demonstrated a track record of being able to add value. Operator, that's the formal part of our presentation. We'd like to open up the lines if you could, and take questions.
Certainly. Again, if you'd like to ask a question, please press star then one on your telephone keypad. Again, that's star one to queue for a question. We'll pause briefly to compile the Q&A roster. Your first question comes from Ralph Profiti with Eight Capital. Your line is open.
Hi. Good morning, everyone.
Morning.
Sean, I'd like to ask two questions, if I may, please. Firstly, what's your gut feel on how big Kittila can be? You talked about sort of the sweet spot being above the 2 million ton per annum rate. Maybe you can give us some context around what you're thinking, how big the investment can be, and is this going to be sort of a larger high grade or a larger low grade deposit, compared to what we see now?
Our sense is that we're just taking it a step at a time. I think that it's pretty clear that we bought it initially, for CAD 150 million, when it was a little over 2 million ounces reserve, because we expected it to get bigger. I think the reserve and resource roughly 8 million ounces or so. We've mined over 1 million ounces. We're in the middle of that program to get to 2 million tons a year. We started at around 1 million tons a year, I think, so we've doubled it. The challenge we always had was to try to match the production rate with the size of the ore body. It's an anomaly, as you know, in Scandinavia, most deposits tend to be around 1 million ounces. This one will likely mine out at maybe 10 million ounces because it's still wide open. It's still growing.
I think our next level, our team is now starting to think beyond 2 million tons a day. I think a logical next level could be 2.4 -2.5 million tons a day. That'll take a few years, but we're already in the initial stages of thinking about how that could be done. As we drill the Sisar Zone at depth, maybe that opens up another mining horizon for us to allow us to increase the mining rate. It's still early, but given the size of the opportunity, the fact that we've been staging investment over a number of years to increase capacity there, I think that was the right approach. We'll continue with that steady sort of measured approach to maximizing what is a strong geological asset for us.
Yeah. Okay. Sean, will we see from East Gouldie, more drill results before the year-end 2020 reserve and resource statement comes out? Maybe just a broader question. Given the care and the due diligence and, you know, you're doing around all these operations, when it comes to reserve and resource replacement, how are you guys shaping up as you bring back the full capabilities of the exploration program?
Okay. We'll start with the East Gouldie. Our plan is to have drill results come out with the Q3 results. Exploration activities were suspended in Quebec, for actually longer than the production activities were suspended. We weren't able to drill things like LaRonde Deep and the targets at Canadian Malartic underground. That's resumed, as we said in the release, with 10 drills. There's certainly lots of information that will be available to us prior to the end of October when we put out our Q3. The expectation is that we will put those results out. The plan is to update the resource in February, to put out a PEA at some point in the first part of 2021.
Our sense is that we'll have to make a bigger decision for the overall project, which would include a shaft, and we'll have to make that decision based on resource. We won't have, or won't be in a position to have drilled it all off, to the levels of a reserve. We're comfortable doing that based on what we know, we believe. We think the drilling now, where we tighten up the spacing will increase our confidence level to be able to do that. We've done this a number of times. I think what we're seeing in East Gouldie is thick and higher grade with a higher grade core. It's still open. I think that's what we're facing in terms of decisions as we move forward. That's why we're not rushing it. We're taking this a step at a time, but I think it's important.
I think Yamana and Agnico both recognize now that it adds a lot of value because you could have potentially a significantly sized underground mine from a tonnage perspective that would extend the life of Canadian Malartic for a long time. Now it's to sort of put our collective experience together. Try to work it into our own respective pipelines. It's clearly our priority given the potential here, that's how we're going to work it. That's going to require us to regularly update the market on our thinking, which we're in a position to do as we go forward. Reserve resource replacement, another question. I would expect we're working on a number of areas where we believe we can convert our resource to reserve. We had a slight decline this year, it's not just drilling, it's completing studies.
It's a great question because we spent some time while our drills were down talking about strategy around what resources do we need to put to work in the second half of the year to make up for that lost time of drilling, but also to ensure that we get the studies done on a timely basis to move resources to reserve. We're confident that we can, at a minimum, maintain what we have. Hopefully, we can grow it. This isn't a prediction. All I can say is the plan is designed to ensure that we pick up the pace of drilling in the second half to make up for the time we lost in Q2, and we're well-positioned to complete the studies we feel we need to get completed to convert resource to reserve. What the final number is, we never know. I think we're well-positioned.
Okay. That's great, Sean. Thanks.
Your next question comes from Jackie Przybylowski with BMO Capital Markets. Your line is open.
Thanks very much. I just wanted to ask, I guess, another exploration question. The results that you put out on the zinc deposit at LaRonde look fantastic. I know it's still very early. I guess, more strategically, how do you guys think about zinc in your portfolio? Is this something that you'd be comfortable mining yourselves and having in your portfolio longer term?
Absolutely. At one point, our friends at Barrick, years ago, when Agnico was 50% zinc revenue and 50% gold out of LaRonde, and we were happy to take that zinc because we were selling it at a CAD 1.50, my friends at Barrick used to see me at conferences and say, "How's the zinc mine going, Sean?" We have a history of zinc. We've made a lot of money at zinc. We've used the money we made at zinc to build a gold business, partly to build a gold business. We'd be really comfortable with that. We hope it's a sizable lens. These things are lenses. It's relatively near infrastructure down there. It would certainly give us flexibility. The NSR value of some of these holes is very high. It's not a surprise. It's something we're used to seeing.
I think that the fact that we've hit something, I think, just reinforces the fact that we have to continue the systematic drilling. What we've decided to do is focus more drilling there. Ultimately, do we need to extend the ramp eastward to give us a better platform to drill below 3 kilometers as we move to the east and potentially move on to the adjoining property which we own, which used to be Barrick's called El Coco, because that wasn't really drilled at depth at all. As we move to the west, Barrick on Bousquet never really drilled that at the depths we're mining at LaRonde. There's lots of potential there, and really what you have is a very wide felsic package of rocks, which run through that belt, and there's still lots of open areas which haven't been drilled.
It's our job over the next few years to ensure we keep drills turning, to see what we have there. It's not only the physical infrastructure we can leverage off of, it's the skill set that we have in place there. That's part of our strategy.
That's great. Thanks very much, Sean.
Thanks.
Your next question comes from John Tumazos with John Tumazos Very Independent Research. Your line is open.
Hello, John.
Congratulations on the good times.
Thank you.
As you go forward, how do you plan for 2021 or investment decisions? Whether it's probably not CAD 1,200 gold from two years ago, but you probably aren't using CAD 1,950 for today either. How do you plan vis-à-vis health protocols and manning? Clearly, if you have less people at your site, it spreads less virus, and that's a great advance. Thank you.
I think we're assuming that most of the protocols remain in place. Ultimately, I guess there's a vaccine possibly, or there's an effective treatment, and if that occurs, then I'd say face coverings go away and testing goes away. I think hygiene and the focus on hygiene and possibly screening, I think, probably stays going forward. I think the way we've looked at this strategically, not knowing whether there's a second wave or whether we stay at an increased level going forward, what we tried to do in the second quarter is get to our governments who made a call that mining was not essential. The fact that we were able to open up early or mining was able to open up early, I think the governments in those regions have concluded that mining can operate safely because there's a lot of natural physical distancing.
The governments got very comfortable with our screening and hygiene and testing procedures. I think that was part of the equation. Part of the reason for doing it was the unknown. If there were more cases in the regions we operate in, we wanted to be able to make the strong case that mining was essential to be able to continue to operate. I think we've done that, and I think the fact that we've been able to open up earlier than other industries is a testament to that. I think in our dialogue with the governments, the governments have said to us, they've congratulated us on the methods and procedures to keep our employees safe in the communities, things like sending the Nunavut workforce home, the extra testing.
They've also added that they have concluded that mining will be important going forward because of the economic damage done to large parts of the economy. I think they've concluded, as all of us have concluded, that mining, particularly gold mining, can be very profitable, which means we're paying a lot of taxes and we got a lot of high-paying jobs. I think we've made the case that we can continue to go. As far as investment decisions as we look on out, I think there's a few things there, and that's sort of the number one question we're getting is the industry going to have a better result this time versus 12 years ago or so when gold ran and we didn't deliver the margin expansion? There's a couple of keys to that.
One major difference is the fact that we're not seeing the input price pressures we saw 12 years ago across the board, probably due to a lack of activity in terms of big projects in the resource space. We're not in that position where 12 years ago, the gold price went from sub CAD 300 to over CAD 1,000 in a short period of time. The industry made a strategic mistake where they kept calculating reserves, as you know, at a higher and higher price every year, which saw a dramatic dilution in the quality of their businesses over a short period of time.
Here we are now as an industry where we've had a relatively stable reserve price, anywhere between CAD 1100 to CAD 1,300 for a number of years, which means the base on which the mine plans are built to deliver the margin expansion over the next three to five years is pretty solid and conservative. It's up to the industry to maintain that conservatism in terms of the reserve and resources, and we're at CAD 1,200. We're not going to be tempted to go a lot higher. I think for us, it's a focus on Cash cost generation, stay disciplined, work our pipeline in a measured fashion, but be mindful that the price level is good. Let's continue to explore. Let's continue to understand what we own. Let's continue to look at early-stage opportunities which we could bring into the pipeline.
There's no real significant change in how we think about this. It's really about how can we continue to be a high-quality business that can continue to drive per share value. We were asked a question today, the fact that did it matter to you that this week your stock went through CAD 100, and that you've hit an all-time high in CAD and that other companies have not returned to all-time highs? Does that matter?
I said, "Well, it really only matters from the perspective that it actually reinforces that the strategy that we put together in the late 1990s when we were single asset, CAD 50 million in revenue, CAD 4 million in EBITDA, one mine, the strategy was to diversify away from one mine to get bigger, but do it in a way that actually added value." I think the share price in August of 1998 was less than CAD 5. The fact that it's hit CAD 100 sort of reinforces that strategy worked. It's just stay focused and trying to make sure that we continue to be a high-quality business.
Thank you.
Your next question comes from Anita Soni with CIBC. Your line is open.
Hi, good morning, everyone. My question, let's go back to Canadian Malartic and East Gouldie. I'm just wondering what kinds of I know it's very early stage and you're going to do a PFS and that's going to be out in early 2021. If we're trying to figure out how to envision this opportunity here, what kind of tonnage would you be able to pull from an underground? You've got a 50,000 ton per day mill that you're going to be feeding into.
Yeah. It's too early, to really give some clarity on that. I think the reason that I think both Yamana and Agnico, there's two reasons, I think, it's sort of become elevated in terms of priority. It was the ability to have multiple mining horizons now, when you include Odyssey, when you include the old East Malartic, you add East Gouldie, which is a thicker and better grade. What that ultimate number is, it's too early to put a number out. We still need to do the work. I think it's at a level which gives both Yamana and Agnico some comfort. When you layer in the higher grade from East Gouldie, you potentially have a sizable opportunity here. I think we have to be able to drill it. I think the fact that we're starting the ramp this quarter is important.
We had that permitted a while ago. It makes sense now to move that forward. That creates an ability to drill it better. In planning, the exploration ramp, can easily be converted to a production ramp and ultimately we need a shaft. We've got ore coming up from a ramp, ultimately, and a shaft. When you think about the shaft, that's further down the line. You may have some impact in terms of production before a shaft is completed, not that significant. Helpful, but not that significant. Ultimately, you need the shaft to augment what's coming out of the ramp. We'll provide more clarity early in 2021 on those types of numbers.
Okay. Thank you. A question with regards to 2021 costs. Second half of the year, you're guiding now to CAD 740-CAD 690 on the Cash cost range, and you can see that with the graphs that you've put out, that you're starting to hit those kinds of number with higher production levels. Is that an okay run rate to be using for next year, considering the production levels are similar, if not slightly higher?
I think it's reasonable. We're still in the middle of our budgeting process, but I think it's reasonable.
Okay. In terms of capital, I know you said there's sort of an ongoing CAD 500 -CAD 700 million that people should be using for their combined growth capital and sustaining capital projections, and then you add exploration on top of that. Do you think that continues to remain a valid assumption, or should we be sort of tweaking things in terms of the exploration with the higher gold price, some projects moving forward, accelerating some spending?
Yeah, I think the fact that Kittila starts to come down gives us some room to add things. Next year at Canadian Malartic, it's not that significant. It's the ramp, which is not a totally big number. We'll move some things in there to replace things like Kittila. I think it's reasonable to assume we're at the higher end of that range at CAD 700. Exploration's around CAD 100. I don't think that's unrealistic, but we still have to do the work, and that's part of the budget process, which concludes in November and December of this year.
Last question, because that's been the focus of questions from investors, just about the gold companies in general. Is there any view to changing the gold price assumptions that you're using on your reserves going into next year?
Not significantly, no. That's always a healthy discussion here. Exploration, their bias is for more ounces, which they'd like a higher price, but our operating teams have won that arm wrestling match for the last several years. The bias is knowing it's important to deliver on production and cost targets. You need to stay conservative, we feel, as we calculate reserve and resource. The way our plan's laid out is to maintain reserves, maybe increase them a bit without having to adjust the gold price. We'll see how that all unfolds over the next six months as we pick up drilling and try to make up for the meters we didn't get in Q2.
Okay. Just last comment, congrats to Yvon on making it out. I know you're still with us until the end of the year, but congratulations, to Dominique on his promotion.
Yeah. Thank you. You didn't mention Ammar, who's got more reports to him.
Yeah, I'm not sure if I should congratulate poor Ammar.
No, that's okay, because Ammar's been wandering around the halls here since he came back from Barrick a second time with nothing to do. We figured, we better give him something to do.
Okay.
No, just kidding. I think everybody's earned their increase in responsibility. I think we're fortunate here that we have some pretty deep bench strength. We've been very focused on how we bring along our younger people and give them different exposure and different levels of responsibility. Dominique's a good example of that. He started as a summer student 20-plus years ago. He's worked at a number of our operations in the Abitibi and Kittila and Nunavut. He's gone through tech services, mine planning, and environment strategy. I think we're fortunate, and that's just part of a natural process that good companies do. They develop people. We're lucky. Thanks for congratulating Yvon. Yvon really, though, his focus, his wife beats him at golf all the time, and he just couldn't take it anymore, so he said he needed to spend more time golfing.
All right. Thank you very much, and congrats to Ammar as well.
Okay.
Your next question comes from Carey MacRury with Canaccord Genuity. Your line is open.
Hi, good morning, Sean.
Morning.
Morning.
Maybe just another question on Cash cost for the second half. In terms of, you've had the quick ramp up now back at Meliadine and Amaruq, just wondering what we can expect on a Cash cost front on those two operations?
Yeah. Dominique, go.
Yeah. For Meadowbank, that's going to decrease because obviously the unit's going to Cash cost is going to be between CAD 1,100 and CAD 1,200 for the second half at Meadowbank. Meliadine is going to be in the CAD 650-ish, around that for the second half. This is what we forecast for now.
Maybe, there's been a lot of questions around the Malartic underground, but do you envision that this operation will be concurrent with the open pit or really it's sort of a post open pit operation?
That's a tough one now, because of the need for a shaft. The timeline is very much a focus. You can see how we manage the timeline in Nunavut. We didn't go too fast. We wanted to make sure that we were careful with respect to the timeline, so we don't want to have to speed up. If there's a gap, there's a gap, because the underground could be around for 10 to 20 years. We've got to make sure we get all the right infrastructure in place in the right timeframe.
In the event of an underground-only scenario, can you just reconfigure the mills to operate at a lower level? Potential thinking?
Yes, we can. Yeah.
Okay. Great. That's it for me. Thanks.
If you'd like to ask a question, please press star one. Your next question comes from Tanya Jakusconek with Scotiabank. Your line is open.
Good morning, everybody. I'm going to ask, I think, a question to the technical team. I don't know who wants to take it: Yvon, Dominique, Ammar. What do you guys need to see at Amaruq to start on the underground again?
Well, the development restarted. We continue to do the ramp. The underground is an opportunity, which is a higher grade that we put out with the open pit. Underground alone is not a project, but on top of the ore with the pit, it is a project. We're still doing the study on that to finalize our numbers, and we're going to provide information beginning next year about the results of that.
How ultimately it fits into the mine plan?
Sorry, what's the question?
Yes. How it fits into the mine plan. We will have more details on more of a mine plan in February of next year?
Yes. That's going to be integrated. Again, the underground could be as long as we have open pit, so we should be able to have ounces starting in 2022, going to the end of the life of mine that we have right now of 2027.
Okay. More to come there. Okay. Maybe, Sean, just for you, I'm just looking at your 480,000 to 500,000 ounces per quarter coming through the second half of the year and into next year. You choose a gold price, but you look like you're going to be generating a lot Cash cost, then you deduct that CAD 700 million of CapEx, and I think the debt repayment is minimal. You're going to generate quite a bit of really Cash cost and unallocated Cash cost. can you talk a little bit about how you see that and your priorities for that, and what minimum cash balance you're going to keep on the balance sheet so that we can have an idea of where we can go with this dividend?
Yeah. I'll just start with the allocation of the Cash cost. dave can talk about the strategy and thinking around the balance sheet. I think it's pretty clear that our current dividend at CAD 0.80, which is around CAD 200 million a year based on where the gold price is now, we can certainly pay more and a lot more, and the propensity and the track record is to pay more. That's certainly something we're looking at now that we've come through the impacts of the virus on the operations in Q2, and we're heading into a stronger period of production and cash generation. That'll certainly be a priority. We'll continue to work the project pipeline. Exploration's a focus for us. I think the Canadian Malartic Underground has sort of moved up the ladder in terms of priorities.
That's a focus, but that doesn't chew up a lot of cash next year. It's more when we decide to go with a shaft, we need to make room for that as we look at it. Certainly, part of it will be increasing our financial flexibility. I think this is a period where the gold industry will find itself with a lot of cash, like it did back in the late 1970s and in 1980, when gold went from sub CAD 50- CAD 800. Our debt repayment, as you mentioned, there isn't anything till 2022, we're going to sort of build up a bunch of flexibility. I'll let Dave talk about some of his thoughts on that.
Yeah. So Tanya, as you may know, we used to carry a minimum balance of about CAD 100 million of cash for working capital purposes. I think given the virus and all the uncertainty related to that, it's probably prudent to carry more than that, at least in the near term. I would think that we would be more like CAD 150 -CAD 200 million of cash as a minimum balance just due to that uncertainty. As Sean was saying, starting basically now, we expect to start generating strong net Cash cost, and I think you're going to see our cash balance start to grow very quickly, especially next year, which leads us, of course, to the fun problems of what are you going to do with all the money? Sean already talked about increasing the dividend.
I think we're probably going to have the opportunity to do that. Again, near term, we'll carry more cash. I think longer term, we're a bigger company than we used to be, so maybe we will carry a little bit more cash for working capital purposes. Let's just round off my answer at about CAD 150 million minimum.
Okay. We've got that CAD 100 million of exploration, which Sean had mentioned. Going through, we've got that CAD 700 million or thereabouts of the CapEx, and really not much in terms of debt repayment and anything in excess of CAD 150 million or thereabout in the balance sheet could potentially go to dividends.
Yeah, theoretically. It's just how we split it up, and I just think that it's not all going to go to dividends.
I appreciate that, yeah.
we'll have a bigger cushion on the balance sheet. I think our track record of 37 years and the fact that we didn't eliminate it when others did a few years back, and we were the first to actually start it up again and increase it, and it's gone up in each of the last six years, I think sort of demonstrates our mindset around dividends. Kind of means it's going up, but it's not really up to the board, and we'll have those discussions around the Q3 results.
Okay. All right. Thank you so much.
Thanks, Tanya.