Good morning. My name is Shelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Agnico and Eagle Annual General Meeting Conference Call. Thank you, Mr. Jim Naso, you may begin your conference.
Thank you. Ladies and gentlemen, welcome to the Annual and Special Meeting of the Shareholders Agnik Eagle Mines Limited. My name is Jim Naso, and I'm the Chair of the Board of Agnik Eagle Mines. Estimados, Damas, Y Caballeros, Esungan Presir, Paramedales, La Bienvenida and West Assemblia and the name of this room is the Arcadian room, right? Yes, the Arcadian room.
And I would like to acknowledge our Finnish shareholders. So would you please come forward and send a greeting? Thank
you.
In accordance with the bylaws, this won't take long for us, it's the boilerplate that we always run through and in a few minutes we will be getting into the real interesting stuff, but this is necessary. In accordance with the bylaws of the corporation, I will preside as Chair of this meeting Mr. Greg Langer, General Counsel, Senior Vice President, Legal and Corporate Secretary of the corporation will act as Secretary of the meeting and with the consent of the meeting, Shirley Tom and Rebecca Liu of Computershare Trust Company of Canada, The corporation's registrar and transfer agents will act as scrutineers. And could you please stand please and acknowledge that you're here. The ladies there you are.
Okay, good. Thank you. Since this meeting was called for 11 am and is now that time, I ask that the meeting come to order. After the formal business of the meeting, Shawn Boyd, the Vice President, Chief Executive Officer and Director of the Corporation will present a corporate update followed by a question and answer period. I would like to take a moment to introduce the head table and the other directors and some of the officers of the corporation who are with us today.
Seated with me at the head table are Sean Boyd, Vice President and Vice Chairman and CEO of our Corporation Amar Aljernby, President David Smith, Senior Vice President of Finance and Chief Financial Officer, Greg Lang. Seated with me are our fellow directors. Would you kindly stand when your name is called Martine Silesh, Robert Gemmell, Mel Lieberman, Deborah McComb, Doctor. Sean Reilly, Murphy Roberts and Jamie Sikalsky. Unfortunately, Doctor.
Leanne Baker could not be with us today, but these are my fellow directors and their great supporters of me and their company. I confirm the notice of the meeting that I have received the sworn affidavit of an officer of Computershare Trust Company of Canada stating that the notice of the meeting, the management information circular and the form of proxy have been sent and made available to each shareholder, each director and the auditors of Agnacuino. The affidavit as to such mailing has been signed by Computer Share and a Director Secretary of the meeting to keep a copy of the affidavit with the minutes of the meeting. With consent of the meeting, I will dispense with the reading of such notice. Next item, scrutineers report on voting.
The secretary has advised me that we have received the scrutineers report, which indicates the number of shares voted by proxy. I am pleased to report that to the best of my belief if the ballot were conducted, the number of shares attached to the shares represented at the meeting required to be withheld from or voted against the election of directors. The appointment of the auditors and the amendment to the corporation's incentive share repurchase plan is less than 5% of all the votes that might be cast at this meeting. Therefore, I propose to conduct the vote on these resolutions in addition to the non binding advisory vote on approach to the executive compensation by a show of hands. The scrutineers have also advised me that prior to the meeting, proxies were received from the holders of a sufficient number of shares to constitute a quorum.
I therefore declare the meeting to be regularly called and properly constituted for the transaction of business. I direct that form of the report of the scrutineers be annexed to the minutes of this meeting as scheduled. Next item, auditors report and financial statements. The first item of formal business is the presentation of the audit financial statements of Agnewoodel for the year ended December 31, 2018 and the Honors report on these financial statements, both of which have been previously sent or made available to the shareholders of the corporation. If anyone would like a copy of these financial statements, additional copies are available here.
I now place before the meeting the financial statements in the auditor's report. Questions regarding these statements will be entertained at the
end of the meeting.
Next item, election of directors. The next item in the form of business is the election of directors of the corporation. The articles of the corporation provide for a minimum of 5 and a maximum of 15 directors. The Board of Directors is determined that the total number of directors to be elected at this meeting is 10. I now declare the meeting open for nominations.
May I have nominations please? I'll now.
Mr. Chairman, I nominate as Directors of AdeCollegal Mines Limited Doctor. Leanne Baker, Shawn Boyd, Martine Sileges, Robert Gemmell, Mel Lederman, Deborah McComb, Jim Masso, Doctor. Sean Reilly, Murph and Roberts and Jamie Sikalsky, all as named in the management information circular. I know that they'd be elected directors of the corporation to hold office until the next annual shareholders meeting following this meeting or until their respective successors are elected or appointed.
Thank you, Don. Excuse me. May I have a second or a motion please?
I second the motion.
Thank you. Under the bylaws of the corporation, any additional director nominations for today's meeting are required to have been received by no later than the close of business on March 27, 2019. As no such nominations were received by the corporation prior to that date, there are no further nominees eligible to stand for election today. Accordingly, I now declare the nominations closed. You've heard the motion, which has been seconded.
Is there any discussion? If there is no further discussion, I was asked the meeting to vote on the motion by a show of hands. All those in favor, please signify by raising your hand. Contrary, if any, I declare the motion carried. Appointment of auditors.
The next item of formal business is the appointment of auditors of Agnik Legal for the current year. It is proposed that Ernst and Young Chartered Accounts be reappointed as auditors of the corporation to hold office until the next annual meeting of shareholders of the corporation or until our successes are appointed and the auditors' remuneration be fixed by the Board of Directors of the corporation. May I have an appropriate motion please? I so move, Mr. Chairman.
Thanks, Mr. Lieberman. May I have a second of the motion? I second the motion. Thank you, Jamie.
Thank you. You have heard the motion, which has been seconded. Is there any discussion? If there is no further discussion, I will ask the meeting to vote on the motion by a show of hands. All those in favor, please carried.
Amendment to the incentive share purchase plan. The next item of formal business to consider at this meeting is the approval of the amendment to the corporation's incentive share purchase plan as more fully described on Page 22 and in Appendix B of the management information circular. May I have an appropriate motion, please?
I move that the resolution approving the amendment to the corporation's incentive share purchase plan be as set out in the management information circular dated March 12, 2019 be approved.
Thank you, Deborah. May I have a second of the motion? I second the motion. Thank you, Doctor. Riley.
You have heard the motion, which has been seconded. Is there any discussion? If there is no further discussion, I will ask the meeting to vote on the motion by a show of hands. Contrary, if any, I declare the motion carried. Advisory resolution on approach to executive compensation.
The next item of form of business we consider at this meeting is the non binding advisory resolution of the corporation's approach to executive compensation as more fully described on Page 23 and Appendix D of the Management Information Circular. May I have an appropriate motion, please?
Mr. Chairman, I move that the resolution approving on an advisory basis, corporation's approach to executive compensation set out and exceed the management information search
for the date
of March 12, 2019 be approved.
Thank you, Mr. Campbell. May I have a second of the motion?
I second the motion.
Thank you, Martine. You've heard the motion which has been seconded. Is there any discussion? If there is no further discussion, I will now ask the meeting to vote in the motion by a show of hands. All those in favor, please signify by raising your hand.
Contrary, if any I declare the motion carried. If any shareholder is interested in the exact number of votes cast in a ballot for or withheld or against with respect to the motion, with each of these motions, he or she may obtain particulars after the meeting by contacting the secretary. The corporation will also issue a press release and a file on SEDAR, a report of the voting results at this meeting, termination of the meeting. Is there any further business? If there is no further business, I will now ask someone to move and someone to second the motion that this meeting will now terminate.
Mr. Chairman, I so move. Thank you, Murphy. May I have a second of the
motion? I'll second the motion.
Thank you, Deborah. All those in favor of the motion, please so signify by raising your hand. Contrary, Fenny, I declare the motion I declare the formal portion of this meeting is now terminated. We will now go to the Paul Penn award. At this time, we would like to introduce or to announce the Paul Penn Award winner.
Mr. Penna was the founder of Agnew Eagle and was widely noted for his philanthropy and concern for the well-being of his employees and the betterment of communities in which we operate. To provide some background on Mr. Pena and to introduce the 2019 winner, I would like to call up Ms. Louise Grandin, our Senior Vice President of Environment and Sustainable Development and People.
Louise, please.
Good morning, everybody. The Paul Pena Award is bestowed upon an Agnico Hillen employee who best exemplifies the philosophies of our founder. Through community involvement, dedication and hard work, Alpena left an enormous impact on the communities he was part of and helped change the lives of many people, one person at a time. This award ensures that his values continue to play a major role in the identity of Agnico Eco as a company, as well as allowing the legacy of Mr. Pena to live on through the positive initiatives laid forth by our employees.
And now for this year, I'm pleased to announce that the winner is Marcos Mendez Banda from our Pinos Altos Mine in Mexico. Congratulations, Marcos. We would like to recognize Marco's accomplishments and generous spirit and thank him for his efforts to inspire the youth in this community and to do better and improve their quality of life. For these reasons and more, we are proud that Marcos is the winner of the 12th Annual Paul Penna Award. Let me share a little bit about Marcos.
Marcos has been with Tecnico Eagle since 2009 and has worked his way up from general assistance to a truck and heavy machinery operator at our Pinos Altos mine in Mexico. Marcos is driven by acts that have a positive social impact and always has his community's well-being top of mind. He sees the hope in youth and instills in them the value of helping others in need. Through his efforts, he is changing the mentality of youth by creating positive actions in the community that keep them focused on a shared goal and away from societal pressures and vices. Growing up in a loving family, Marcos learned the value of helping others at an early age.
After high school, Marcos landed his first job as park rangers at the Bethasieci waterfall. Through his position, he discovered a passion for and a deep dedication to the environment. At Technical Eagle, he began to transform his passion for the environment and for helping those in need into action. Today, as President of the 60 Volunteer Strong Ocampo Youth Action Group, Marcos leads several community initiatives, including clothing and food drives, as well as environmental campaigns that involve connecting litter and creating awareness for a cleaner world. Barco also organizes gatherings to unite people from different communities for better integration and partnership.
Notably, the single handedly raised funds for a young victim he single handedly raised funds for a young victim of a car accident to help with the cost of medical care and surgery. And thanks to his efforts, the young man is thriving and in good health today. Marcos continued to devote a large part of his time honor, Marco says our best reward for the effort that we carry out is a sincere smile, a hug and a thank you. Marcos, you truly embody the spirit of all that Mr. Pena valued as a leader and member of his community.
And It's a very important part of our DNA and that we mustn't forget our founder, Mr. Penn, rest his soul and he is responsible for all these things that happen and of course people would follow what it is. We have a very special company, a very special culture and it's extremely important to us. Our culture comes first, which means all the people and the rest is business and we are very good at all of those things. So thank you.
Thank you. Safe Harbor, we will now proceed with the presentation by management of the corporation. But before I turn the meeting over to Mr. Boyd, I would like to caution you that management's presentations may include certain forward looking statements. These statements are based on management's current expectations, but are naturally subject to uncertainty and changes in circumstances.
These factors may cause the corporation's actual results to be materially different from the expectations expressed or implied by such forward looking statements. The corporation is not under any obligation to update the forward looking statements in today's presentation. Detailed information about risks and uncertainties is included in our most recent securities filings with the Ontario Securities Commission and the Securities and Exchange Commission. Now, with great pleasure, I would like to introduce Don Boyd. And I must say, he is very special.
He is special to us, special to our employees and special to the industry. He has given a very, very good account of himself and him and his very senior people as well as all our employees are the reason we are here today and the success we had over the many years, a constant continual success of good numbers and good relationships with our people and communities, all of that's important. So I won't go any further other than to say one of the finest CEOs in the mining industry.
Thank you, Jim. And thank you to Jim and the Board for their support and encouragement over the years and for keeping the spirit and legacy of Paul Penna in the forefront of the company. It's nice to be here in the Arcadian Court At NICO, in our over 60 years of mining and running a gold company, we spent 20 years in this building. And those were 20 years that Paul Pena was with us in this building. So it's not like we're trying to shift the meeting every year to make it difficult to find the hot lunch.
But this was a place that we felt comfortable coming to and we've actually booked it for next year. So put that in your diary, we'll be back here next year, last Friday in April, I think is the date. But what we'd like to talk about today is certainly give you an update on the company, on where we're going on the financial performance, how we see the financial metrics and the return metrics improve as we go forward. But we also wanted to chat about gold, about the industry, about how we're positioned in the industry, but also some of the benefits that we're seeing from our employees' activities, particularly in Canada. And there's a lot of interesting dynamics going on in the gold mining space on the M and A front.
So we'll also talk to you about that and how we see that playing out. But one of the things that we've been fortunate to be able to do over the last 60 years is develop a strategy that's well matched to our skills and well matched to the opportunities and the challenges in this industry. There's no question, it's a tough business. We're fortunate that we've been able to think long term and adopt our practices and policies to deal with the long term nature of this business. We're patient.
We're disciplined. We're focused. That's allowed us to deliver not only for our shareholders, but for all of our stakeholders. And it also puts us in a tremendous position going forward to continue to perform, both on the bottom line, but also make big contributions in the community, and we'll talk a little bit about that. Jim talked about the safe harbor statement.
I'll start and talk a little bit about gold. I'll just go back a bit. I don't want to miss John Hathaway. John Hathaway, for those who don't know him, has been following the gold space for a number of years. I first met John in the early 1990s.
He runs a gold fund. And he's an individual that is able to articulate a case for gold in a very simple manner. It can often be a complex topic. But we would agree with John, what we're seeing now is we're seeing a number of factors that seem to be coming together at roughly the same time, which point to and make a very bullish case for gold. I think one of the overriding determinants of what gold is going to do over the next few years is really global debt.
And what we see is a global debt level that's increasing actually faster than the economies are able to grow. So it's there's probably no painless way off of that debt treadmill. In fact, in the U. S, we've seen government debt double, more than double in the last 10 years to $21,000,000,000,000 And that puts a lot of pressure on certainly economies. It actually puts central banks in a position where they can't really raise interest rates.
And those are conditions which are generally very favorable for gold. So ultimately, how we sort of sort ourselves out of this debt mess will determine actually what the gold price is. And I was in Switzerland recently, and I was on a panel discussing gold and Bitcoin. And one of the questions that came from the audience was, how do we see Bitcoin in 10 to 15 years in terms of its impact on the gold price? And I answered that to say, well, that's the wrong question.
The question should be, where is the U. S. Dollar in 10 to 15 years? And then we'll be able to tell you what the gold price is. So this debt question and how we resolve it is going to be a key driver.
But sort of rounding that out is although we saw a good Q1 from GDP in the U. S, there's still some signs of weakening economies around the globe. That's also another reason why governments will not raise interest rates. So we're in a period now where we've gone from a tightening policy to sort of a policy of not quite easing, but we're likely not going to see, at least for the next couple of years, interest rates go up. And in fact, we could actually see some monetary easing to help with the debt situation, to help with the situation where we see a weakening economy.
Inflation is not here yet, but inflation could be on the horizon. We know that labor markets are tight in the U. S. Wage rates will rise, wages are really the key driver of inflation. But those first four points are exactly the things that investors worry about.
And I think you've heard us say before in the last couple of years, we've seen much more interest from generalist investors in what Agnico Eagle is doing and what the prospects are for Agnico Eagle, but also more broadly, what are the high quality gold miners doing? What are how are they positioned going forward? What we're lacking in the gold price equation is investment demand. And they're certainly focused on these factors as being potential drivers for the gold price. We'll talk a little bit about how we think we can get to a catalyst to get them more involved in the space.
On supply and demand, certainly from supply side, as miners, we know how difficult it is in this business to constantly place reserve, replace reserves, but also to grow the business in a way that actually adds value. It's very difficult. So we're probably going to see supply or mine supply be relatively flat for the next couple of years. We've seen reserves decline in the industry. We've seen the grades of deposits decline.
We've seen fewer and fewer big discoveries. This is what's probably driving some of the M and A, which we'll talk about in a minute. But on the demand side, we've seen some aggressive buying from central banks. In fact, in 2018 last year, we saw the largest buying, net buying by central banks in 50 years, up over 70% from the year before. And in fact, this morning, there were numbers out for January February.
And in January February, we saw Central Bank gold buying up over 60% from where it was in January February of last year. So something's concerning the central banks to the point where they're buying gold at levels they haven't bought in 5 decades. Part of that is likely the diversification away from the U. S. Dollar.
Certainly, the Chinese and the Russians would like to diversify away from the U. S. Dollar. And this comes back to this question on where is the U. S.
Dollar going to be in 5 or 10 years? Is it still the reserve currency? Certainly, Russia and China are suggesting it may not be. And that ultimately is going to be what we think is going to drive the gold price. Gold has sort of been quietly doing its thing.
There are still some skeptics, a lot of skeptics. There's still some stigma around owning gold investments. I was surprised when I was in Zurich a couple of weeks ago where a Swiss bank had basically said that up until recently, they did not have a gold stock on their improved investment list, which means that they could not put a gold stock in their clients' accounts. That was shocking. Fortunately, the gold stock they added was at nicoegle, but it's just telling that you've got banks in Europe that still aren't comfortable putting gold stocks in their clients' portfolio.
So there's still a lot of work to do, but certainly, we see the interest now and the investors are just looking for the catalyst. Gold is technically acting very well. Gold bottomed in 2015. Since 2015, we've just seen a series of higher lows. So technically, the gold price is actually working well.
And think about that gold price. That gold price is doing that in the face of record high stock markets. And recently, the U. S. Dollar was at a 2 year high.
So that's good, solid, quiet work that the gold price is doing. So I think that also demonstrates that there is a segment of the investment community that still looks to gold as a store of value and a great portfolio diversifier. We can also see it in the next slide. So we can see that over an extended period of time, gold's actually stacked up very well over the last 18 years against the general stock market. So again, very quietly, you wouldn't expect that to be the case.
But clearly, there is a part of the investment world that sees gold as something that they would like to have. And if you actually think back to the central banks, not only are they buying more, but actually there are several central banks that have actually requested gold back from vaults outside of their country in banks. They actually want it back brought back home. So I think that tells you the focus that these central banks are having on their reserve currencies. The opportunity that we see though is actually not in the gold bullion.
It's actually with the equities because the equities are trading at a discount. This is courtesy of Scotiabank. The equities are trading at a discount to where the gold price is. And there's another measure, which is more long term than this period. If you actually look at the XAU Index over 25 years, the XAU Index is just a stock index of the major gold producers.
Over a 25 year period, the ratio of the ex AU to the gold price was 0.25 on average. It's currently 0.06. So another measure that there's a huge opportunity here in gold equities. And I think that's what generalist investors are trying to determine now. I think they've concluded that going forward, the gold price is likely to do better, and it's how to play it.
I think they've concluded based on a lot of the work we do, and we probably do more investor meetings than most of our peers. I think they've concluded that one of the best ways to play it going forward is to be positioned in the high quality gold teams. So we look forward to that. I'll use this slide just to talk about industry M and A and our view on industry M and A. So this just depicts the top market cap companies, and this has evolved over the last 6 or 7 months.
If we looked at this probably 10 years ago, Ignico would have been probably number 15 on this list. And we really never set out to be focused on how do we move up the ladder and how do we get bigger from a market cap perspective. We were just trying to focus on how do we make the business better, how do we keep the share count down so that, that better business reflects on a better per share performance. And lo and behold, we found ourselves sort of moving up in terms of relative size on a market cap basis. But if you sort of roll it back a few months when Goldcorp was on its own, Agnico was sitting number 4 in size and Goldcorp had fallen to number 5.
And if we think back to last year and think about those top 5, I think we all know based on what we heard or read in the press that we know Newmont had talked to Barrick in 2014. We know that Barrick was always talking to Randgold. We know that Newcrest, who is number 3, was also in discussions with Barrick that didn't work. We know now that Barrick was actually had a dialogue with Randgold and ultimately decided to do a deal to put that together. We know Newcrest was talking to Goldcorp, and that deal didn't happen.
Newmont shows up and takes Goldcorp. There's only one company out of the top 5 that was not involved in any of that and that was us. Why? Because we're confident in our strategy to continue to do what we've done for the last 20 years, which is to outperform the specter. And we don't think the best way forward for creating value for our shareholders is big M and A.
The best way forward is to actually focus on a strategy that's worked for a long time and that is still well positioned based on our skill set and our opportunity set to continue to deliver. So you're going to see us continue to be disciplined looking at early stage opportunities where our exploration people and our mine building people and ultimately our operators can turn those early stage opportunities into meaningful parts of our business, and here's how that plays out. As we said at the start, this industry is struggling to grow. Well, because Agnico Eagle made some smart investments during the period from 2012 to 2015, where we were investing in the future when a lot of the industry was still trying to deconstruct and find the right size and improve their financial position, we were actually thinking ahead and making investments. What that's done is that's put us in a position to continue to grow the output as we move forward.
And we would expect that beyond 2021, we can still move that output up based on what we've built and some of the projects that are in the pipeline. But because of the grade of the new projects coming online, we expect to be able to slightly reduce our costs. And you don't often see that in the industry. So we've got a really good opportunity here to drive organic growth that drives value for our shareholders. And how does this look like in terms of growing operating margin relative to what our expectations are in terms of investing back in the business?
So in 2017 2018, those big chunks of yellow are essentially construction CapEx, largely to build the Nunavut platform. So those 2 years were the largest 2 years in our 60 plus year history where we were investing in new projects. And that spend requirement has come off dramatically as we are currently in the commissioning phase of the 2 new projects in Nunavut, which took up the bulk of that spending in 2017 2018. So the production on the last slide drives the blue line, which is basically the operating margin coming out of the mines. And as we look forward, we estimate that we'll be spending somewhere between $500,000,000 $700,000,000 in both sustaining and growth CapEx combined.
The gray bar is the sustaining capital. So a lot of the industry was reducing their all in sustaining costs by actually squeezing their mines. You can see that we continue to invest steadily in all of our mines in terms of sustaining capital. We don't have to play catch up in that sustaining capital number because we were squeezing our mines. So we're confident that we have this growing gap and free cash flow generation and free cash flow generation where we're generating much more from the mines and required to spend much less on projects to continue the growth beyond 2,000,000 ounces post 2020.
Here is on a per share basis. So you hear us talk often of not really how big you are, it's really what you're able to do from a per share perspective. And there's a couple of points in this slide. This inflection point that you hear us talking about is coming very soon, because we're roughly going from a company that was producing 400,000 ounces per quarter for the last several years to a company that's going to produce 500,000 ounces per quarter and more as we go beyond 2020. That's with keeping the share count roughly the same.
So we're going to drive on that basis earnings per share, but most importantly, cash flow per share. So you can see the rising yellow line as we go into 2019 2020 to the point where we get to sort of the best on a cash flow per share basis in the industry. We added a new component here. We added Franco, Nevada, because as investors are looking at where they want to put their money in the space, we can tell you that the generalist investor is risk averse. We spend the good part of our meetings, the first 20 minutes anyways, just talking about risk, risk in the industry, potential risk in our business with new commissionings and growth projects.
And so the investor, from what we gather, would like to be exposed to the space with as little risk as possible. And they have found their way into the royalty space, which we're not arguing is not a bad place to be, it's actually a good place to be. What we're saying now, based on all the investments that we've made over the last little while, that we're delivering cash flow per share growth, which is better than the biggest royalty company. So that's a good place to be when generalist investors are now looking at where do they want to put their money. We get asked the question often.
We get we've had it from one of our bigger shareholders who manages $1,700,000,000,000 And they said, well, why don't we just invest more in the royalty companies we hold versus Ignico? Well, this is one reason. Going forward, we're going to drive cash flow per share growth. But the other reason is, is the royalty companies will put up money that other people spend, which is good. It's a good model.
And those companies have delivered a lot of value. The difference with us is we give you a lot more leverage because every dollar that's spent, we're directing where it gets spent and how it gets spent. And it's the skill set of our people that have a track record of decades of knowing how to spend that money efficiently and effectively. And I think that just bolsters the argument and the leverage. People ask us and we got the call we got the question on the conference call.
Well, given this inflection point in cash flow and free cash flow, what are you going to do with the money? And one of the things that we've done for a big part of our 60 years is we've been focused on making sure we paid a dividend. And as you've heard us say many times before, there were years when it was very difficult to keep paying a dividend. But it was clearly important. And I remember Paul Pena used to say, look, Sean, it's actually not exactly how much we're paying because shareholders understand when times are tough.
The fact that you've actually made a point of paying something when times are tough, they really actually appreciate it more. So for 36 years, we've paid a dividend. And I think this chart says a few things. So quietly over the last 5 years, we've managed to increase it each year. And we're increasing it each year when we were in the biggest capital investment program in our history in 2017 'eighteen, and we increased it in each of the last 5 years during a period where the gold price was relatively flat, which is the yellow line.
So I think that is a sign of the confidence we have in our business going forward to generate increasing cash flows. And I would expect that as we go forward, we haven't made the decisions because the decision on how much we pay as a dividend will be based on what is the investment opportunity in front of us based on largely on our internal pipeline. So we focused on the internal pipeline, repaying some debt, but also very much given our history and our track record and the importance of paying a dividend, that number is likely to go up. Now how does the math work? Well, this is where the generalist investor really gets focused in the meetings.
Once they get over the risk and understanding the opportunity set, they'll say, hey, run these numbers quickly. You're going to produce 2,200,000 ounces. And in one case, one of our German shareholders said, we're using $1500,000,000 So run that math for us. So we said, okay, that's easy. Thanks for using a nice round number.
Well, if our cash costs are $600,000,000 and the margin is $900,000,000 on $2,200,000,000 well, that's $2,000,000,000 Okay, that's good. What comes off of the $2,000,000,000 Well, we have exploration, we'd have admin, we'd have interest on the debt, we'd have cash taxes, and let's use a round number of $500,000,000 maybe $450,000,000 but let's use $500,000,000 keep the math simple. So that's 1.5 $1,000,000,000 we're left with. Off of that, we said we're going to spend between $500,000,000 $700,000,000 on investing in the business. So let's say $600,000,000 then we're down to $900,000,000 That's a lot of cash generating in the business when our dividend is basically a little over $100,000,000 So that's the type of potential we have to keep investing in the business, to keep improving our financial flexibility, but also to doing what we like to do, which is improve the dividend.
You've seen this many times before, we've added something else. We've added the S and P 500 index. So this is our performance over roughly a 20 year period. And that shows that not only have we outperformed the gold price and outperformed the XAU index, which we referred to earlier, which is a stock index of our peers, we've actually outperformed the S and P 500. And that's through a strategy that we expect to continue to employ that's worked well for us.
We're not saying it's easy. It's actually quite challenging, and we're fortunate to have employees that understand the strategy and understand where they fit in the strategy and understand what the expectations are for them to be able to continue to do this. So the only other company that had this type of outperformance was Randgold. And Randgold has clearly made a choice that they would shift gears and take a different approach going forward. And that approach was to do a 0 premium merger with Barrick.
Like, nicoego is not looking to do a 0 premium merger with anybody. We're more focused on how we sort of execute. So we've heard this. What I wanted to do is I just wanted to spend the last minute just talking about our business in Canada because I think it's important. The mining industry struggled over the last several years in Canada.
We've lost Alcan. We've lost Falconbridge. We've lost INCO. We've lost Noranda. We've effectively lost Goldcorp.
Despite what they say about the head office in Vancouver, the reality is it's run out of Denver. So we're kind of shrinking in a way in terms of the companies that are in this country doing work, not only in Canada, but also around the world. While that's happening, Agnico is actually growing in Canada. In fact, last year, we were the largest producer of Canadian gold ounces with our mines in Canada, and that number is set to grow 50% as we bring on and optimize the platform in Nunavut and as we expand some of our other platforms. So that's not a small business.
That's actually quite a big business. We have 6,900 employees in Canada. Again, that's pretty big business. In Canada last year, on CapEx, we spent $900,000,000 and on wages and goods and services and taxes, etcetera, we spent $1,900,000,000 dollars So that's pretty big business in Canada. Since 2007, we've invested over $5,000,000,000 in Nunavut.
We're currently 15% of the GDP of Nunavut going to 25% of the GDP of Nunavut. So what we do know as Canadians is we have tremendous mineral wealth in the North. And as Canadians, we think that companies like Ignico, who are Canadian based in Canada, should be the companies that help to develop those resources and create the infrastructure that allows Canadians to benefit from responsible resource development. So we're working hard with the various governments, including the federal government to make the case. That's not easy.
Not easy. We've seen the challenges that had in pipelines. There's no coherent strategy on what to do and how to do it. But we're certainly doing our part, and we think there's certainly a lot of potential to open up Canada's North, not just for the benefit of the people that live there in Nunavut, the Inuit, but also for all Canadians to take advantage of that wealth. It's there.
We should take advantage of it. And we can say from Agnique Legal's perspective that we've built a model of responsible resource development, and we're looking forward to do much more. But we certainly would like some help from the government in terms of infrastructure, not just in terms of transportation, but the opportunity is really on the energy side. How can we invest in clean energy renewable technology? And maybe that the answer to that ultimately a power line, maybe it's wind power, but we're actively working those files.
So if you get the opportunity to make the case that that's a good strategy for this country to people in the government, then please do that. So I'll leave it at that, and I'll turn the meeting back over to Jim. But before I do that, again, I want to thank the Board for their support, but also thank the shareholders. Thank the shareholders for continuing to come out to the meeting, but to continue to track and follow Ignico. And we've got, in some instances, 3 generations here where their grandparents were shareholders of Agnico.
And I'll close by thanking our 10,000 plus employees for making it all happen and their families for the hard work and commitment to post those results that we continue to post. So thank you very much.
Not only is he a fine young man, but he's the best CEO in our industry, in the credit to our industry. And all of this is possible, as Sean mentioned, a very special culture made up by very special people, which makes us a special company. And I thank one and every one of our employees for making all this possible, because we never do anything alone. We always do it by favorite concept in the world together. Anyway, thanks very much.
Now I open up the floor to questions. Anybody? Proxy holders, please state your name, identify yourself as a shareholder or proxy holder, please.
My name is Norma Chapman. I'm a shareholder. Now I have two questions. One,
what is a paste plant that we read about?
I didn't get that. I'm sorry?
What is a paste plant? Go ahead.
We have an expert on paste. Right there.
I wouldn't say an expert, but I'll answer the question. As part of our mining method, we create openings underground and we fill them back up. We use tailings that are from the process plant, mix them up with cement and then create the paste and backfill material that will create good rock mechanics for future mining. To make sure you continue mining securely.
The other question is, what is the difference between production cost per ounce of gold and cash costs per ounce of gold?
So the cash cost per ounce is literally all of the cash costs and the production costs and effectively the depreciation. So the non cash amortization They are very similar. They are both representing the cost of production in the mines.
Thank you. Any more questions?
My name is Winfried Froehov, I'm President of W. Froehov Consulting Limited, which is a shareholder of Agnigo. And it acquired its position by buying into Paul Penner's company, which ultimately ended up with Agnigo. I have a question on sustainability. Based on the company's current mining properties, reasonable escalation of tool costs, reasonably stable economic conditions, At current oil prices, when do you expect to fall under the 2018 oil production?
I think the question, our cash costs this quarter were $6.23 So as we go forward, we are anticipating all in sustaining costs to be sub $900,000,000 which includes a component of capital as well as the production cost that Dave referred to on a cash cost basis, we should be roughly $6.25 to $6.50 So I think the question was, if the gold price fell, how sustainable would the business be? I think the key for us was the timing of the big CapEx going forward. We spent the big amounts in 2017 2018. So these mines could withstand a much lower gold price, much lower than where it is now and keep operating and still generate cash given the low nature of the current cash costs.
Thank you. Any more questions? If there are no further questions, I would like to go ahead, sorry.
Yes. It's more of a statement than a question. First, I would like to congratulate Enid Regal. I have been shareholder now for about 10 years or so. And I would like to congratulate them what they are doing for Enidra people in the north.
And on the same hand, I'd also like to say how ashamed of our federal and provincial governments that they haven't done more for the native people. It seems to me, especially the federal government, the provincial, they seem to have more concern and most of the money that they make from our taxpayers, they dump in the cities like Toronto and Vancouver, I could go as far as go back as Elliott Lake. Elliott Lake at one time made 1,000,000,000 for a federal and provincial government. But basically the money was all sent to the cities like Toronto and these cities. So while the federal government doesn't wake up and do something more like put the infrastructure in the north, which is badly needed, adjusted this case and the provincial government is busy building LRTs in Toronto.
Is there a question there?
I just wanted to say I am quite happy with any agreements. Thank you.
Thank you. I think what we can say there is that's an interesting point, because we had the good fortune of having Prime Minister Harper visit Meadowbank, and he actually spent a night there with our employees. And in response to a question about the environment, his answer was basically the people of Nunavut have just as much of a right as the people in Toronto and Vancouver and Montreal to a future of prosperity. And that prosperity is likely going to be driven by responsible resource development. We should mention that with the Amaruq deposit and the Meliadine deposit, based on reserve and part of the We estimate that our payments to the Inuit associations for those two mines combined will be $450,000,000 So there's substantial benefits to be had in the North with responsible development.
In the North, we're the largest industrial employees of Inuit. We spend $8,000,000 annually in our properties in Nunavut for training of Inuit workers. So ultimately, our goal is to do exactly what we've done in Finland and Mexico, have Inuit run the entire business just like we have in Finland and Mexico. We're a long way off from that, but we're making really good strides. And they're our partners.
The people of Nunavut actually own 18% of the land mass of Nunavut. And so they're our partners in resource development, and we've been up there since 2007, and we've worked very well together. And we've created a lot of value and wealth and we look forward to doing a lot more.
And I might add that through our efforts through the paycheck, we created a burgeoning middle class in Nunavut. And the Inuit wonderful people were nomads 70, 80 years ago and today we are moving forward. We are moving together always. Any more questions? Go ahead.
With my wife, Deborah, sitting with me to Paul Penna days. And I want to ask about the people of Agnico. You've given the Paul Penna award. Chairman has talked about the CEO being the best in the industry. Compliments and congratulations to you.
You've thanked thousands of people of Agnico and you've talked about partnership and your ensemble going forward. Maybe you could take a moment. You've talked about production. People also recognize that what separates companies, the caliber of their human capital, human capital infrastructure. You have a leadership team here.
You have thousands of people. You know the industry. I know you, Mr. Boyd, have been with this organization a long time. You've had other companies up on the bar charts.
You probably have people who've been with you for a long, long time, veterans of the company, not sure what their transition is in and out and their longevity with the company, how long they've been veterans. But I thought maybe you could take a moment to just talk about the caliber of the workforce at not just the leadership and management level, but all the way across.
Thank you. Yes, that's an excellent question. That's a big part of our competitive advantage is the broad range of skills, the experience, but most importantly is how the team functions and operates together as a team. And that makes my job easy and easier because we have trust and faith in the advice that we get, and we know that advice is based on the best intentions for the company, and we take decisions accordingly. The Board takes succession and leadership development extremely seriously.
We take time every quarter in our quarterly Board meetings to talk about people development and leadership development and succession planning. We're fortunate as we look forward and look at the opportunity set that exists for this company and the way that the company needs to be positioned to take advantage of those opportunities, we have all the skills in house. So fortunately, we're not looking forward and saying, oh my goodness, we have to hire a headhunter because we're short in this area or that area of the key people. So it's the continuity, I think, which is key and it's the commitment. As we like to say, mining is a tough business.
You need people that show up to work every day committed to make a contribution and to make a difference. And we're fortunate that and we take comfort in the fact that knowing that those 10,000 people that show up to work each and every day are working hard for the company, for the shareholders, but they're also working hard on things like safety to make sure everybody goes home every day and they look after each other. So it's that combination. And people say, well, how do you focus on it? Do you need to focus on it?
Isn't it all about culture? We've been blessed over 6 decades to have a culture which almost feeds and grows on itself. And I think we've been lucky because not only do we have highly competent and skilled people that know their job, they're just quality individuals. And that's what I think makes this company special and allows us to continue to outperform. And so we pay a lot of attention to it, and we have plans to develop the next generation of leaders.
And they're going to take this company and run it for another 60 plus years and do an exceptional job.
Thank you, Sean. Any more questions? If there are no further questions, I would like to thank everyone for joining us today and making this a successful meeting. We now invite you to join the directors, members of our senior management team for lunch. And if you have any questions, please feel free to come forward.
We'd be happy to accommodate you. And thank you for coming again. Have a good day.