Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Agnico Eagle Third Quarter 2018 Results 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.
Thank you. Mr. Sean Boyd, Chief Executive Officer, you may begin your conference.
Thank you, operator, and good morning, everyone, and welcome to our Q3 2018 conference call. Please note that this presentation does contain forward looking statements, and there's material in the slide deck that outlines the cautionary statements around that. What we'd like to do is just give you a sense as we have gone through Q3 of 2018 sort of our positioning as we close the balance of the year and enter 20 19. And essentially, as we look at our operations and our strategy, we see a strategy that continues to be effective in driving growth, in driving value per share. And we're really focused now just in the final stages of executing on the growth that we see in Nunavut as well as moving forward on several projects within the pipeline.
So our growth in production is important as it's going to drive cash flow per share and also drive free cash flow as we see a significant drop in our capital going forward and we'll go through some of those numbers. So we're fast approaching now the point where we'll be entering a harvesting phase, where we're harvesting cash for the benefit of our shareholders. We're still being able to invest in the future of our business as we move some projects forward. We'll talk a little bit about that. As you saw the quarter, a strong production quarter resulted in our increasing our guidance.
We'll go through that. We talked about the CapEx declining dramatically going forward from roughly $1,100,000,000 in 2018, which is the peak as we build out the balance of the Nunavut platform falling dramatically, as we said, in 20 19. That drives, particularly in the back half of next year, a significant bump in net free cash flow. But I think the importance of the Nunavut growth as we can see in the fact that the projects are on schedule and on budget, it really points to the in house skills that we have here and the fact that we have a process that allows us to be our own general contractors and build these mines. So we just had the opportunity and pleasure of being at the Meliadine site this week with our Board and it was great to see the sort of energy and excitement as we sort of round out the development plans and the construction phase of Meliadine going into next year.
We're shifting gears a little bit now as we near the end of the big construction phase in Nunavut. We're now focused on the pipeline and the projects that could provide additional growth in production and cash flow per share, things like the Amaruq underground, and we'll talk a little bit about that in this presentation. Focusing on the quarter, as we said, a strong quarter from a production standpoint, a little over 420,000 ounces, good cost performance. Our total cash cost of 6.30 $7 per ounce. As a result of that strong Q3, we've increased our 2018 production guidance to be 1,600,000 ounces.
We're forecasting our total cash costs and our all in sustaining costs to be at or slightly below the midpoint of our guidance range. Also given the positive development progress that we see in Nunavut, particularly at Meliadine, we are now guiding to a number that we expect to exceed the midpoint of the current guidance range. And so we'll be in a better position in February when we talk to you next on the conference call for Q4 2018 when we'll have an update on Nunavut and Meliadine in Amaruq and what that does for our production expectations in 2019 beyond. As we said, the Meliadine project on budget slightly ahead of schedule, which drives the sort of slight bump in guidance expectations for next year, almost 90% complete in construction. We will begin commissioning the plants early in Q1.
We expect commercial production in Q2 2019. Amaruq, just touching quickly on that, we received the permit by the middle of July. Construction is well advanced on the dike. Ramp continues underground. And as we said, we're already now looking and we'll talk a little bit more about it about the underground phase there.
And we've done some analysis, done some work, worked on some concepts. We're confident there's an underground mine there and as a result, we're now, as we said in the press release, capitalizing the exploration ramp. The drilling at Amaruq, we continue to get high grade results at depth. So this deposit remains wide open as does Meliadine and we'll talk a little bit about that. Just touching quickly on some of the mines, both LaRonde and Canadian Malartic continue to be big solid cash flow generators.
So good steady performance out of those mines. They'll be drivers for us in terms of cash flow generation over the next several years. We also had a good performance at Meadowbank, good throughput rates and good grade at Meadow Bank and that also contributes to the increase in guidance in 2018. From a financial position standpoint, we ended the quarter with $533,000,000 in cash. We've not drawn anything on our lines of 1,200,000,000 dollars I think it's important to note that Q3 of 2018 was our peak quarter from a CapEx perspective.
We spent $340,000,000 that's a record in a quarter for us in terms of CapEx and that starts to fall in Q4 2018. We're expecting to spend about $300,000,000 this current quarter. So we're already on the downtrend in terms of CapEx spend and we should see a significant drop out in CapEx in 2019. At the same time, this production starts to grow dramatically and we have a good ability to control unit costs because a big portion of this increase in production is due to increasing grades into the mine plan. And we'll talk a little bit about that as we talk about the assets.
On LaRonde, as we said, a solid quarter, almost 90,000 ounces coming from LaRonde. We were mining just based on the mining sequence slightly below reserve grade there at 5.2 grams per tonne in the quarter. So we would expect to see stronger orders from a production standpoint at LaRonde as we move forward. LaRonde Zone 5 also in production, dilution a bit lower, grade a bit higher. As you know, that project, it's not just to generate additional cash and leverage off of existing infrastructure, it's also to test a new communications technology that was installed there for automated mining equipment that we plan on using in the lower part of the LaRonde mine as we mine below 3 kilometers.
There's also opportunity at LaRonde Zone 5 to mine additional ounces. So what we proposed when we went into LaRonde Zone 5 initially as a base case with the expectation that if we proved our cost assumptions and our productivity assumptions that there's additional ounces that were left by Barrick on that property when we bought it 13 or 14 years ago. So we've had a good start there at Iran Zone 5 and that's only going to strengthen the Iran complex as we move forward. Lapa, I think we constantly ask, is this it? Is it finally it?
When is it finished? They're using the word final now. So I guess this is it. And so I think I said for the last 3 or 4 conference calls, congratulations, Lapa. Thanks for just outstanding performance.
And as the employees move on to other operations, well, I guess I'm going to say it again because they keep going. But from what I've been told, this is it. We'll have processed the final ore at LAPA in December of this year. And one of the reasons we've been able to increase guidance again is the fact that Lapa has produced more ounces in 2018 than we expected. So good job on the Lapa team.
Canadian Malartic, continued solid performance, both in terms of production, cash generation, cost per ounce, throughput year over year was up, grades are higher, our net extension project is progressing and proceeding on budget and on schedule. So things are moving along very nicely there. And I think from our standpoint, the team is now focused on potential underground opportunities there as we drill East Malartic and Odyssey. So we'll provide an update in February on the progress we're making there. Goldex, good solid quarter at 31,000 ounces, a little over $600 in total cash costs.
Again, we continue to drill. We're seeing good numbers in the South zone, seems to be a bit bigger than we thought. So that will incrementally improve our production and output as we move forward. What we're doing now in the budget phase is that we're at that point as we look out to next year. We have a series of menu items in front of us to determine what's the best sort of CapEx investment number sustaining in growth year.
So things like Akasaba would be considered a menu item. And our focus is really looking at the gold price roughly at $1200, what should be the capital number next year. We originally said earlier this year that it would be in that $650,000,000 to $700,000,000 range. Hopefully, we can get it a little bit lower than that and still allow us to keep moving the critical value drivers forward as we grow output beyond 2,000,000 ounces past 2020. Meadowbank, as we said, good solid quarter.
We had a lot more tonnes than what we had expected in the budget. Not only were we mining at bulk, we also had ore from the Portage pit, which had better grades and slightly better grades than we had expected. Again, one of the reasons why guidance was up in 2018 was due to the performance of Meadowbank. But if you look at Meadowbank, the average grade now 2.5 grams per tonne. We will complete mining at Meadowbank roughly by the end of this year.
We'll process a stockpile first half of next year, then transition into Amaruq. So essentially what we're doing in Nunavut is removing from a grade of 2.5 grams per ton to grades at eliadine of 7 grams per ton and at Amaruq close ultimately to 4 grams per ton In the early years, less than 4 grams per ton because we're in the upper part of the open pit where grades are lower. But certainly, Nunavut is going to be a key driver because of the quality of the ore that's going to be introduced into the mine plan. At Amaruq, we talked about the permit. I think what's important about the permitting process in Nunavut is it's well defined and it sticks to well defined timelines.
We received, as we said, the Amaruq permit mid July, which was around roughly 2 weeks from the anticipated time to receive that permit. That allowed us to get started on the dike construction. So things are progressing well there to begin mining activities there in Q2 and commercial production in Q3 at Amaruq. What's important here is we continue to drill the deposit. We continue to see very good drill results as we look to extend the deposit at depth, look to understand how the V Zone and the Whale Tail Zone may come together at depth, what that means and the implications of that for an underground mine.
We've concluded that we're confident that there will be an underground mine once we mine out the Whale Tail and B Zone. As a result, the permit process has commenced mid October for the V Zone and the underground, and that's approximately a 2 year process. So we've started to put our planners and engineers on looking at different concepts around underground mining there. There's a concept that is looking at do we make a smaller pit and mine ore from underground, which would lower CapEx to develop the pit. So there's lots of opportunities there to improve the returns at Amaruq as we get the production dates established.
But the big driver is Meliadine. That's a project that we didn't start erecting steel until August of last year. And very soon we'll be able to introduce ore into the processing facility. Essentially, the process of the power plant is complete. They were just in the early stages of starting up the power plant on Monday when we were there.
So good progress has been made. And also one of the key things is the fact that we kept that ramp going. We've got a sizable stockpile, but more importantly, not just good solid tonnage, but good grade at roughly 8.5 grams per ton. So we're expecting a strong start at Nellie Dean for next year. At Quitola, the focus is continuing to be on trying to optimize that big deposit and that includes the shaft and expansion of the mill and both of those initiatives are tracking according to schedule and the budget.
In the Southern business, Pinos Altos continues to generate very good cash flow, almost 50,000 ounces of production, cash costs a little over $500 an ounce. We're focused there on developing satellite zones at Sinter. We expect to commence production from Sinter before the end of the year. We're also focused on bringing the Cabiro deposit into the mine plan, working on optimizing with ore sorting there. So our focus in Mexico is really to keep that cash generating business going and extending the mine life by focusing on satellite deposits as well as projects like Santa Gertrudis and Barquinho.
Lindeak focused on El Realito and extending the mine life there, good solid cash flow generation. There's lots more exploration we're doing in the Vicinda mine site and our expectations are we can extend the life there. So just to summarize, essentially, as we said, we're quickly approaching that point where we'll be able to harvest the cash from the business. And that's a result of some good thinking and smart investing, particularly during that period from 2012 to 2015 when the bulk of the industry was to start contracting and deconstructing and rightsizing businesses. So our focus is on just the execution as we said, but also focused on sort of the visibility of the business for the next 8 to 10 years, Sort of beyond 2020, where did we ultimately get it to 2,200,000, 2,300,000, 2,400,000 ounces.
That's the focus of our planning teams, our budgeting teams, and looking at getting to those levels, while investing a moderate amount in the future through those projects, but also at the same time generating that free cash flow. We did touch a little bit on exploration. It's a key value driver. We'll have more of a fulsome update in our February press release. But what we can say, we continue seeing some results at Amaruq.
We continue to get good results at Meliadine, Kirkland Lake, Goldex, LaRonde, East Malartic, Santa Gertrudis, that's the pipeline. And that's why as we look out at the M and A landscape, our focus should just be on what we've done successfully for the last 20 years, continue to work the pipeline, look for early stage opportunities that can strengthen the pipeline and use the in house mine building and exploration skills to turn those early stage opportunities into meaningful parts of our business. One of the things we get asked, if you go into this harvesting mode, what are you going to do with the cash? We point to a couple of things, pay down our debt as it matures to improve our financial flexibility, but also we're in a strong position, clearly gold price dependent, but we're in a strong position to boost our dividend. Our dividend is clearly important to us.
We've paid 1 for 35 years. We didn't eliminate it during the period when gold fell from $1700 to sub $1100,000,000 And in fact, we were the 1st company to start the dividend higher in 2016, essentially eco and nuance. So, the dividend is important to us, It's $100,000,000 a year. We're certainly in a position we feel based on the strength of the business and the confidence we have in our ability to execute to look at returning cash to shareholders through the dividend. So I'll now open it up operator for questions.
Thank you.
Our first question is from David Houghton with CIBC. Your line is open.
Good morning, Sean and team. Thank you very much for the update. Amaruq underground, just having a think about what your planning could be. With previously, at least I've been previously of the expectation that you develop an underground, say, 2 years after the start up of the open pit. But it looks like you're thinking that you may be able to accelerate that.
Can you just give us an outline of what your thoughts are?
Yes. It's early. I'll allow a Juan to give you some color, but I think what's important is the fact that based on how we've progressed on the development of the Whale Tail pit, based on exploration results, we have been busy over the last several months of looking at various concepts and we saw some initial runs and numbers and cuts that what that could look like. And clearly, that's important because if there is a period of overlap from the underground where the grades are better and with the open pit, then you could see a decent increase in production, which wasn't in any of our modeling, which wasn't in any of our life of mine plans. So these are the things we're sort of been focused on now, but Yvonne's going to provide you a bit more color.
I won't add much more that Sean has added. But at this stage, I think we're confident enough with the resource quality that in some cases we can advance the process on some of these ideas. So I think that's the main issue at this stage. And I think that also we've seen some synergies between the underground and the open pit operations that over the next year or so will develop further. But we're planning some type of updates on the underground opportunity scenarios and probably going to be timing around next year's guidance in February.
Okay. So we'll get a little bit more detail at that stage. But I would have presumed that whatever you can get from the higher grade underground would simply displace the slightly lower grade open pit ore without necessarily looking at expansion of the operation?
Potentially, you're basically address a
slower stripping strategy with the pit. So we'll consider all of these scenarios as we go forward. And one other option that's possible is a potential increase in throughput rate, modest increase in throughput rate. There's certainly the ability in the plant that if the numbers work that we'd have room to handle a bit more ore.
Okay. All right. In your commentary, you had mentioned that you're starting to drill already the Meliadine production stopes. Early days I know, but is the ore as you would have expected it given what you've seen so far or are there any variations to the plan that you could talk about?
I won't go into specifics, but the early stage of delineation has shown that in some areas we're getting little larger thickness. We're also seeing some opportunities where we have some parallel lens that we may be potentially in a position to mine them together. So it may have some slight impact on grade, but significantly impact on productivity. So we're looking at all of these, but don't expect too many changes as far as overall ounces at this stage and grade.
All right. Well, I guess if you're looking for a trend that's the way you want the trend to move in your favor.
Yes. We're quite happy with the delineation work and it sort of secures our early start up and production profile for the current guidance.
Okay. Over to LaRonde now. You had 6,000 tonnes per day on average in Q3. Is there potential to ramp up LaRonde beyond that or you feel comfortable with that kind of level of throughput?
Well, I think we've been ramping up at the deep ore body. Now we're sort of ramping up in the western part of the deeper ore body. I think what we're seeing now at around the 6,000 tons per day nameplate is pretty well what we can do. As we entertain some of these opportunities around automation, availability or mucking time underground is clearly like the benefit here. So as we evolve on our automation projects, perhaps this is an opportunity down the road, but for the next year or 2, the 6,000 number is basically what you're going to see.
Okay. Thank you. I'll leave it there for now.
Showing no further questions. I'll turn the call back to the presenters.
Very good. Thank you, operator, and thanks, everyone. And hopefully that music at the start didn't scare you away. We don't really control that tune. But if there's any questions or follow-up questions, please reach out to us and we'd be happy to help you.
Thanks again.
Ladies and gentlemen, this concludes today's conference call. You may now disconnect.