I will be your conference operator today. At this time, I would like to welcome everyone to the Agnico Eagle Third Quarter Results 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the two. Thank you. Ammar Al-Joundi, you may begin your conference.
Well, thank you very much, and good morning, everyone. Thank you for taking the time out of your busy day to join us on our call this morning. Last quarter, we started the call by thanking our operating teams for delivering some exceptional operating results. In this quarter, we'd also like to thank our operating teams, not just for delivering solid operating results, but notably and importantly, we'd like to thank our operating team for delivering the best quarterly safety performance in the company's 65-year history. Nothing is more important than the safety of our people and our communities. A safe mine is a well-run mine, and a well-run mine is a safe mine. Thank you very much to all of our employees and our operating teams for delivering that.
With the strong results in this third quarter, we've now got nine months under our belt, and we are pleased to be able to say that we are reiterating guidance for 2022. Production guidance, capital expenditure guidance, and importantly, cost guidance. That hasn't been easy in the highest inflation environment in probably 40 or 50 years. The team has done a very good job, and again, congratulations on that. We are maintaining our guidance on all of those, albeit at the higher end of the cost guidance. This strong quarterly production allows us to have strong earnings per share, cash flow per share, and create value per share, and maintain our strong financial position on both liquidity and cash flow generation.
The real story that I think you'll see during this call is the continued progress on our expansion projects and some excellent and exciting drill results. These are the items that are going to drive value creation going forward, and I think that what really separates us and differentiates us versus our peers. Finally, as an introduction, we are proud to say that we are announcing an interim target of a 30% reduction in Greenhouse Gas Emissions by 2030 on our way to a target of zeero Greenhouse Gas Emissions by 2050. This is not a challenge we take lightly. It's not a challenge we think is going to be easy, but it's a challenge we are prepared to undertake and are confident we'll achieve. Next slide, please. Thank you. Some of the third quarter highlights.
Solid quarterly production and costs, $817,000 ounces of production at cash costs of $779 and all-in sustaining costs of about $1,100. Quarterly net income of $0.17 but adjusted to $0.52, and Dave will talk about that later. Operating cash flow at a solid $1.26 per share. Some of the highlights of the operating results include record gold production at Amaruq. That's 123,000 ounces this quarter. I think that is a world-class mine by any standards, and some material improvements at Macassa, a great ore body that is coming into its stride. I'm gonna be asking Dominique Girard and Natasha Vaz in a moment to talk a little bit about progress on those two projects. Pressures related to cost inflation, workforce availability, and COVID-19 remained.
We were able to manage them during the third quarter. We see continued pressure on inflation. We are starting to see some potential relief. I think it's too early to say that we are completely past this situation. We are, in fact, expecting and planning for continued cost pressures going forward. The team is focused on that and focused not just on mitigating cost pressures where we can, but optimizing mine efficiency, mine throughput, gold production, which also helps to offset some of the cost pressures, and the team has done a good job with that. Financial position remains very strong. We have paid down another $100 million of debt as it came due. We told all of you we are planning to pay our debt as it comes due through cash flow, and that's what we're doing.
Some additional share buybacks of about $43 million, about 1 million shares this past quarter, and a quarterly dividend of $0.40, continually paying a dividend since 1983. Maybe, Dominic, if I can ask you to talk a little bit about Amaruq and then Natasha, a little bit about Macassa.
Thank you, Ammar. Amaruq did a strong quarter and a record quarter also for the division. This have been obtained with very good result with operation, maintenance, mill throughput, and also a good grade coming from the pits. As we mentioned in the past, more we go deep in Whale Tail, more the grade is going higher. We have also interesting grade at the IVR pit.
Plus the underground ore, which is coming in right now. Underground did also an important milestone, which we mentioned in February 2021, that's gonna be $180 million to build it, and we did it at the cost and on schedule too, which is a good achievement despite COVID situation and inflationary situation where we are. I would like to thank all the employees, the contractors, suppliers, and also the local community support to which we developed that project. We've also celebrated in Q3, four million ounces ore at Meadowbank, so quite a good success this quarter.
Thank you. Natasha?
Thanks, Ammar, and good morning, everyone. With respect to Macassa, the site had a very solid quarter, and more importantly, the mine is starting to become more reliable. As the press release mentions, a big factor that led to our strong performance in the quarter was the added ventilation through the mine. The connection of Shaft Four to our existing workings resulted in improved ventilation in the areas we were mining. And that also contributed to lower temperatures and improved working conditions. This improved ventilation helped with our productivity gains in the quarter relative to our budget. Now, besides the ventilation improvements, we're also seeing better adherence to plan quarter-over-quarter.
There's been a lot of focus by the site on the short-term plans to deliver our weekly and monthly targets, so kudos to the team on that. On the equipment side, we're starting to see slightly better availability on our battery trucks, but with the added ventilation, we also have the flexibility of utilizing our conventional trucks if and when needed. If we look out further, I'm sure everyone wants to know about the future of Macassa, and we continue to work on that, and we continue to work on the new mine strategy. We're planning on running a few scenarios when we get the year-end model to better understand the optimum production levels at Macassa and the possible benefits associated with the AK Zone. All in all, a very good quarter.
The mine's starting to stabilize, and we're very, very proud of the entire team and at Macassa for the hard work and dedication to get us to this point. With that, I'll pass it back to Ammar.
Thanks, Natasha. Dom. Look, the real excitement continues to be on the key value drivers, and I'll just hit a few highlights quickly. Dominic mentioned Amaruq underground, completed on schedule, on budget. That's never easy. It's particularly tough in Nunavut, and it's particularly difficult in an inflationary environment where not only are costs going up, but access to people, access to equipment. Congratulations on that. The Odyssey project remains on schedule. The shaft-sinking activities are expected to resume early in January. Again, excellent performance by the team there. I'm going to go so far as to say that I think it would be difficult for any company in this environment to keep a project as ambitious as that on schedule.
Our team has done it, and I think the way we're able to do it is because we've got access to the best people, the best contractors, and the best suppliers in the regions where we have been operating for 60+ years. The Detour Lake mine, we were up there just a couple of days ago. What an exceptional property. We've installed the screen between in front of the second crusher. The team did a great job doing that in the quarter, on schedule, on budget. They used the 6x10 grizzly feed, which worked flawlessly. Importantly, in September, we reached the equivalent of 28 million tons per annum throughput at lower energy usage. We are very confident with what the team has done.
We are looking forward to installing the second screen into the first circuit in the fourth quarter. With that, and it's early, but we are confident, that not only will we be able to reach the 28 million ton per annum target, but one, possibly reach it ahead of schedule, and two, possibly exceed that number. On Kirkland Lake, the commissioning of the Number Four Shaft is expected to be done at the end of this year. The underground ramp from Macassa to the Amalgamated Kirkland deposit has been completed. When we did the merger, we identified this as an opportunity to create some synergies.
It's done now, 8 months after the merger, and I think, and I hope that's a demonstration of our commitment to hit the ground running and to deliver some of the synergies that we promised that we would. Some exceptional, by the way, drill results in that area that the team will talk about in a moment. The Kittila shaft sinking is completed and commissioning expected to start in the fourth quarter. The Meliadine expansion to 6,000 tons per day progressing as expected. I just wanna make two points. One is, we've mentioned this before, everything we just talked about is exciting and all of it is at existing assets, leveraging existing infrastructure, leveraging competitive advantages. That's how you always get in our business the best return on capital and the best risk-adjusted return on capital.
Secondly, every single one of these expansions are not just expansions in throughput, but open up the potential at all of these mines, which still have exceptional exploration upside, and we'll talk about that next. Next slide, please. Thank you. Yeah, I'll just talk very briefly about this, and then I'll ask Guy and Eric to comment, being the experts they are in there. What I would say to you is that at Odyssey and Detour, two world-class multi-decade mines, very good infill continued results. What's really exciting to me and to all of us is the step-out drilling. Both of these multi-decade assets, we had good step-out results, 1-2 kilometers beyond the existing perimeter of the ore body.
It's early to say what that means, but it is exceptionally promising for these mines, world-class mines. At Macassa, as I mentioned, the ramp to the amalgamated Kirkland deposit is now complete. We're drilling. I just want to point out the one hole we talked about here, effectively 31 grams over 3.5 meters. That's pretty impressive, 64 meters underground. At Fosterville, Eric will talk a little bit about it. Maybe what I'll do is I'll just ask Guy and Eric to briefly talk about some of the things they're most excited about.
Thank you, Ammar. Overall, 2022 will be obviously the most important year in terms of exploration spending in the company. From the original budget of $325 million that we've announced since early in the year, we've added an additional $30 million that was announced in the August press release following good results. Year to date, we've successfully completed in excess of one million meters of core, on schedule to complete our total of 1.2 million meters of drilling, which is a lot, thanks to all of our drill contractors and service providers on each of the projects. With all of that, we're certainly positioning ourselves favorably for the year-end reserves and resources update.
We've seen in mid-year, the addition of Detour with 5.4 million ounces, and good success at several of the mines, which will more than offset the production depletion of 2.2-3.4 we're anticipating this year. We've seen solid results at near-mine at several operations, like Kittila, LaRonde, Meliadine and Amaruq. More importantly, on the key value driver project, we've seen some solid result, good step out, as mentioned by Ammar Al-Joundi. Starting by Odyssey in Canadian Malartic, we continue to have 14 drill rigs operating. We're on our way to complete our target program for this year with 160 kilometers of drilling.
We've been getting solid results in filling the Odyssey, and Odyssey will be potentially moved towards reserve at year-end 2022, and we are anticipating to start production at the end of Q1 2023 with some very positive result in this, in the core portion with a deposit up to 5.7 gram over 21 meter at 367 meter below surface. At East Gouldie, at depth, the infill is continuing, some of the notable intercept, 4.6 gram over 50 meter in a core portion of the deposit. We continue to get pleasantly surprised by the western extension of the East Gouldie moving towards the Norlartic zone, with some intercept located 670 meter west of the current resources, returning 4.2 gram over 12 meter.
Quite interesting to see how the East Gouldie continue to shape up terrain towards the west. Moving in Nunavut at Hope Bay, we're conducting a very aggressive drill program over there, focusing on exploration only, completing to the end of the third quarter, 76,000 meters. We're getting good results at depth in Doris, and we're pleasantly surprised at depth. Recently, we are ramping up activity in Meliadine.
We've mobilized a second drill contractor that has two rig over there, and we're starting to drill a deeper drill hole in a Madrid deposit, and we've seen good visual intercept reporting interesting width with quartz vein and visible gold, which we will continue to see the outcome of those, and we anticipate to continue ramp up of activity in Madrid and Doris, and to have a better, a clearer picture of the full potential of the asset by later on in 2023. Closer in the Abitibi at AK, as mentioned by Ammar, we've been aggressively drilling since the merger, both from surface and underground. The team has been closely working together over there. We have in excess of 135 drill holes that were completed year to date.
We're gonna be updating resources over there at year-end, and that could have a near-term impact, adding potentially to production at the Macassa as early as 2024. On that, I will pass to Eric to talk about Detour and Fosterville.
Great. Thanks, Guy. In terms of Detour, we had, again, some very good progress in the quarter, both in terms of the productivity of the drilling and the results. We drilled about 74,000 meters in total, and the main focus remaining on the west side of the pit and to the west, and the extension of that up to about 2-2.5 kilometers to the west, showing some additional really good results. The intercepts closer to the pit showing broad zones of mineralization similar to what we see in the pit, and including some more high-grade intercepts as we previously announced. Further to the west, again, showing some more higher grade holes with quartz and visible gold.
Everything coming together very well there, and we believe we're on track to again add more to the open pit and underground project as we go ahead. Macassa, the project, continued to focus on both the Deep Mine and on the AK project. The Deep Mine, the main targets were really the main break in the South Mine Complex to the east. Main break, we were looking at the high-grade corridor, which is actually just east of Number Four Shaft. This is a new target that we haven't been able to drill much until we get the recent drilling in there. There was a very high-grade hole that we've announced in there, 25 grams over about 2.5 meters, I believe. To the SMC East, additional extension of the zone there.
Fosterville was also very exciting this quarter. We finally got a lot more, you know, of the drilling in progress there. Remember, we were having to delay a lot of that to the second half of the year, and so we're now starting to receive quite a few results and showing a number of holes with high grade and the continuation of the zone up to about 200 meters down plunge. We've also identified a new structure, which we call the Cardinal Zone, that has additional high-grade results similar to the Swan Zone. Still a lot to evaluate with the Cardinal, but in total, showing good continuation of the Swan Zone to depth with more high-grade lenses.
You know, so we're very pleased with that, and we think that it bodes very well for the future at Fosterville.
Thank you very much. I mean, those are excellent results. What I wanna emphasize again is none of these are results at the top of a mountain in a country we've never been in. These are at operations where we have the people, we have the infrastructure, we have the competitive advantage, and we'll immediately create value for our shareholders. Thank you, guys. Just moving on to the next slide. As important, Sean Boyd has always said, as important as what we do is how we do it. We are continuing to demonstrate the culture of the company. We talk in this slide about, and I've mentioned the record quarterly safety performance. Again, that is a fantastic and a representation of the culture of the company, but also how we operate.
The interim target of 30% we discussed. What I wanna talk a little bit about, very briefly, are the bottom points. You know, we are well rated by all the external agencies. If you take a look at greenhouse gas emission and water usage relative to our peers, we are doing very, very well. Take a look at some of these points at the bottom, and I'm gonna focus maybe a little bit on Mexico. Agnico Eagle was awarded the 17th best place to work anywhere in Mexico. This is not just mining companies. This is against any company in Mexico as measured by this best place to work award. That is pretty impressive and shows who we are.
Look at the one below La India. Now, La India isn't a huge mine, but the team there won a distinction as a socially responsible company, not by the mining industry, but by the Mexican Center for Philanthropy and the Foundation for Sustainability and Equity. Sometimes it's the small things on the ground at the communities that really make a difference, and it's these types of things that show the culture of the company. While these are small, potentially, awards, they're very important, and they show who we are. Moving on to some of the financial results, David, would you mind covering this?
I don't mind at all, Ammar. I'll just focus on a few numbers here. Just looking on the extreme right of the slide of page 10, the operating margin, it's $2.4 billion year to date. That's a big number. I think the size, the scale, and the liquidity of companies are more important in this market than ever. Certainly, Agnico is delivering on these important metrics. If you look at the pie graph just below that for Q3, operating margin in line with what we've done year to date, about $800 million. Importantly, it's well-balanced between our regions. I think that diversification and balance throughout the portfolio is very important and very comforting to our investors as well.
The last number I'd focus on on this slide is the quarterly and year-to-date cash flow per share numbers, and that extrapolates to a yearly number of more than $5 per share of cash flow. I guess this is just a commentary on current market conditions, but if you told me a few years ago that Agnico was going to generate more than $5 per share of cash flow, I would've said the share price might be close to or above $100 per share. I guess we're seeing a market where we're certainly not near the top of the market for valuation of gold equities, and I think we've got a really solid base here for the share price to continue moving higher as the equities and the gold price recover going into next year.
Flipping over to the next page, just talking about the balance sheet briefly. Of course, we do have strong liquidity, more than $800 million of cash and undrawn bank facilities of $1.2 billion. If you look at the debt maturity schedule at the bottom, it's a very light maturity schedule, spread out over time on purpose. We've got tremendous financial flexibility to make sure that we can continue doing what we've been doing for decades. That's it.
Thank you, Dave. Next slide, please. On the synergies, I'll hit these very quickly. We divide them into corporate synergies, operational optimization, and strategic optimization. On the corporate synergies. You know, I don't wanna say it was easy, but, you know, we've done a really good job on that. Frankly, better even than we anticipated and roughly double the original estimate that we gave. Congratulations to the team, and we are continuing to do it every chance we get. There was another $2 million saving annually by consolidating some insurance policies that we had. Small things that add up, and thank you to the team on that. The real slice is obviously on the operational side of it. We are targeting $130 million a year.
I will tell you, we have identified more than $130 million a year of opportunities, but not everything you identify happens. We remain confident on the $130 million a year. We said it'll take a couple of years to get there, and we are going to exceed our expectation for 2022. On the strategic optimization, you know, we talked a little bit about Amalgamated Kirkland, 8 months into it, the ramp is done, the drilling is well underway, and we're hopeful to bring production there in 2024. Again, I mentioned that we were up at, well, frankly all the sites recently, but including Detour.
I can tell you that the combination of the two companies, the technical discussions are already making a big difference in a mine as big and as important as Detour. Things like improvement in the maintenance programs and even the move and the analysis towards the underground mine and our target of 1 million ounces a year. We've made good progress, and I can assure everyone that progress is happening faster with the combination of the companies rather than individually. Moving on. Our vision remains the same. We have a simple, consistent, disciplined, and proven approach to value creation. It's the same approach we've had for 65 years, and it's based on the following. First, build a high quality business.
To us, that means low costs, strong margins, strong cash flows, and we've delivered that again, so far this year. It means robust production profile from premier jurisdictions. Our strategy is to go into places in the world that have the geologic potential for multiple mines over multiple decades, and the political stability to operate multiple mines over multiple decades, and to build a competitive advantage in those regions and to leverage that competitive advantage. That's what we're doing with our expansion projects, with our exploration. Proven leadership with a track record of building value per share. We don't care how big we get. We only care about creating value on a per share basis in a responsible manner, and that's what we're going to continue to do.
Finally, to always have a strong balance sheet, strong financial position, you need to have that in a cyclical business. It's essential, and we're doing that. To always do this in the most responsible way, environmentally, socially, and from a governance perspective. Frankly, not to be just trusted and welcome, but to actually be a part of the community in which you operate. To have growth potential from existing mines and a high quality exploration program, I think you've seen that. We have largely built this company over many decades through the drill bit, and we're continuing to do that. It's a long history of capital returns, 38 years of dividend payments, without missing a beat, and we're very proud of that.
In conclusion, you know, the story of Agnico remains the same this quarter as it was last quarter, and it'll be the same next quarter, and it'll be the same next year and hopefully the year after. One, deliver strong operational results consistently, reliably. As David Smith, our CFO, always says, our desire is not only to create value to be the sleep easy at night investment, for investors. Two, to have the best growth profile possible and the lowest risk possible, which we get by being in regions, where we've been for decades and building off existing infrastructure with existing teams. Three, to continue to deliver value through the drill bit, through exceptional programs in those good regions.
Four, finally, to always do it with the best ESG credentials and to be a welcome member of the communities in which we operate. With that, the call or part of the call will end, and we'll transfer over to questions, operator.
We will now begin the question and answer session. Did you have a question? Please press star followed by the one on your touch tone phone. You will hear a three-tone prompt acknowledging your request. Your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any key. One moment please for your first question. First question comes from Joshua Wolfson of RBC Capital Markets. Please go ahead.
Thanks. Good morning. Had a couple questions on inflation. The commentary in the release that mentions inflation ramping up for the next couple of months. I guess I'm curious to understand, you know, what's causing that to be realized now versus maybe what the prior disclosures or prior quarters. Is that a matter of inventory or hedging that's now sort of rolling off or rolling on.
Hi, Josh. It's Ammar here. We don't really see an acceleration of inflation. In fact, we're hopeful that we're past the peak, and we're starting to see a little bit of light at the end of the tunnel. What we are trying to say, though, is that it's, I think, too early to say that it's over. You know, we are still planning to do everything we can to control costs because, you know, it's our job to do that and we just wanna be responsible. I don't think we're seeing it, and we didn't intend to suggest that inflation is accelerating, but rather that we're still taking it very seriously and doing everything we can to mitigate it.
The other question on inflation relates to Odyssey and the cost reevaluation there. Could you maybe provide a bit more information on you know what was incorporated in the original study maybe you know in terms of flexibility and whether we should think about you know the greater than 5%-7% upside being to the cost this year also being applicable you know there?
Yeah, that's a good question. We are making good progress at Odyssey, and we're gonna start to have some production, as you know, in the first quarter. Every year, we go through a budget process, and every year, we take a look at all the costs. We are going through that process right now at Odyssey and taking into consideration what we've seen over the last 12 months. It's too early right now. We will give guidance on that as we go through. You know, our expectation is that we're gonna have to work extra hard to offset some of these cost pressures. What I will say, and I'm gonna ask Dominique to talk a little bit about this because the team has done sort of two really good things.
One is, there are two parts to inflation. There's the, you know, the cost of material goes up, and you manage that the best you can. One of the big issues that the industry's been struggling with, but that Dominique and his team, I think, have done an exceptional job with is, you can't lose out on the efficiency. In this case, efficiency of construction means are you getting the manpower? Are you getting the contractors? Are you getting the suppliers? They've done a very good job with that. They've also done a good job in looking at opportunities to increase the revenue side of things on that project. Maybe Dominique, if you can talk a little bit about that.
Yeah. One of the opportunity that we have is the internal zone at Odyssey South. We know that the mineralization is there. It is complex, but still, that's gonna be just close to our infrastructure. We're gonna see in the coming years some answers coming, let's say, over what we already planned, coming from those zones. I need to say that the construction team is quite a strong team there, and they're looking to different alternative by phasing or revising the scope, by doing engineering and to, let's say, to mitigate the cost. Two things also important about cost. On the ramp development side, our cost per meter is better than expected, so that's gonna be helpful overall. Also on the sinking, that's the best place in the world to sink a shaft.
Right now, the partnership team is staffed with people from over 20 years of experience in shaft sinking that did LaRonde, that did Lapa project, also people that have been to the Kittila project in the shaft sinking. Now our contractor, RedPath, is also doing A-team, using people after let's say have been at Macassa, have been at Kittila, were in the BTD area, a very good place to sink a shaft. We, let's say, proof is gonna be in the pudding, but let's see what's gonna be the performances. They're gonna have good infrastructure with a very robust Galloway system that we've did achieve on that. We've put a good set up, and they're gonna have A team.
Overall, that's gonna be, I think, okay on cost.
Yeah. Just to finish, I think the message, Josh, 'cause a lot of people are interested in this, obviously. The message is, we still see an inflationary environment out there. We are working very hard to mitigate it. We can't predict with any level of accuracy, frankly, what the inflationary environment's gonna be. We couldn't do it in January. We can't do it now. I don't think anybody can. I can tell you, the project is going well and, the team is doing a good job.
All right. I guess the shaft disclosures, you know, speak well towards the costs for the eventual second shaft. Maybe if I can tuck in one more question on the inflation side of things. Just because there is, you know, a larger amount of inventory stocking practices, I guess, across the northern operations, and then also some hedging in place, is there any kind of percentage impact you could provide of, you know, what the overall exposure has been to inflation so far? Like, would you say half, two-thirds, 75%, 100%, whatever the case is, of the actual inflation we're seeing today that's been reflected in the cost structure?
Well, again, we're going through the budget right now, but you're right in that we did, you know, we have to do barge shipments. A fair number of the items have been purchased. What I would say is that, yeah, I would expect that, on average, it's in that sort of 7% more expensive than it was last year. I'll ask Dave to talk a little bit about fuel in a second because, you know, that's a big chunk of it. We've also had some relief on the currency side of things, so we've had some, you know, less movement on wage inflation. There is some inflation. We're going through the budgets.
Again, the message I would give everyone is, we're not immune to it, but the team has done a good job. It, again, just to emphasize before I ask Dave to talk about oil, it's not just the input costs, it's we are really focusing as well on doing everything we can with efficiency to help offset some of those pressures.
Yeah. On the fuel front, for 2023, we're about 36% hedged on our exposure. It is actually above our budget guidance rate, probably a little bit less than 10% from what we told you last February. We're feeling pretty comfortable about that position. Again, who knows what the oil price is going to be in the second half of next year when we're more exposed on the physical side, because of course, in the second half we'll have to do our shipments to Nunavut for the coming year. It's gonna be something we watch as always and try and pick a way to make sure that we can have confidence to give guidance in February and continue to do what we said we're going to do.
Certainly inflation is something on the top of our mind.
Great. Thank you very much.
Anita, please go ahead. Your line is open.
Hi. Good morning. Thanks for taking my call. I just had a question with regards to some of the exploration highlights and specifically at the Hope Bay. Could you talk about some of the sort of the high hits that you would say, you know, that are more interesting to you and you know, what do you need to see that develop to before you would go ahead with that project?
Hi, Anita, it's Guy. Yeah, we're quite pleased. We've been focusing for the first part of the year and the Doris at depth because we were seeing obviously some potential fold hinge repetition at depth, and we continue to validate those that apparent second fold end, which as you saw in the press release, we've been getting some quite interesting results, up to 7.3 gram over 15 meters, 19.6 over 4.5. That fold end has continued to shape up. We're obviously the drill spacing, it's not there yet to make it resources, but we were very close by some of the lower portion of the mining infrastructure in a BTD.
Therefore, we undertook quite early this year to extend the drift into that area very early when we saw the first sign of those good results. We're currently in a position now to drill it from underground as well with two drill rig addressing from that BCO area. Quite interesting. As I mentioned as well, we currently also mobilize the second drill contractor major to help at beefing up our drilling capacity at Madrid. We're now drilling some extension drill hole at the bottom of Madrid, stepping out at depth and to the north. We're quite pleased again when assays are still pending and when we see good quartz vein with visible gold at depth and a down plunge extension.
We are really trying to demonstrate our theory when we acquired a project that we think we can significantly grow the resources at Madrid and Doris within a couple of years of drilling, and then come back with a better assessment on how we can think about developing the project in the future.
Thank you. Can I just move to some of the more operational items like at Malartic, the grades came down a little bit, but I think you're running a little bit below right now what the average for the year would be. I'm just wondering if that or the guidance that you had provided, I think was like 1.14 for the year. I'm just wondering if you could see a grade uptick going into Q4. Similarly at Detour, it came down about 10%. Are you expecting a grade uptick into Q4 on that one?
Yes. Hi, Anita. Dominic speaking. We are aligned with guidance at Canadian Malartic. Everything is as planned. I would say it's just a question of sequence and stockpiles that we process more a bit in Q3, but everything is going as planned there.
Hi, Anita. With respect to Detour, we're still tracking well against guidance. I think the grade was about 0.94 for the year, and that's where we expect to be. The first half of the year we were in phase two, which was higher grade material. Yeah.
Thanks. Then the last question, just while I have you, Natasha, is on the Macassa costs. They seem, you know, bucking the trend. It seems like the unit costs are going down. I was just wondering what was the main driver of that. Is that the ventilation that you've newly installed this quarter? Or can we see further gains in Q4?
Yes, Anita. We did see a lower cost, but that's a function of higher throughput in comparison to budget. Yes, the ventilation has helped us, and hopefully it continues to going into the future. Then when Number Four Shaft comes along, we should see improvements there as well.
Anita, that's a perfect example, Anita, of you know, never underestimate the importance of throughput and good old-fashioned efficiency trying to mitigate costs.
Thank you. I'll leave it at that.
Thank you. The next question comes from John Tumazos of Very Independent Research. Please go ahead.
Thank you. As the new shaft ramps up at Macassa, can we expect the tonnage to go from 814 in the September quarter toward the 2,000 ton a day capacity of the mill, with the grade staying around 21 grams? I guess some of the deeper zones are higher grade and lower grade. I don't know which stopes you would access first. You can hold the grade and get toward 2,000 ton a day. It's a 400,000 ounce mine. I was wondering what year we should hope for that?
Well, I'll start with that, John, and it's nice to hear from you again. Then I'll pass it to Natasha. I mean, what you've done is you've done an excellent job of outlining the potential of that ore body. I mean, it is a great ore body, and that's why we're investing, you know, the shaft, the infrastructure, the ventilation. You know, we are working on the budget right now. It's going to take, frankly, a couple of years to get there. You're absolutely right. This mine has the potential to be a significant producer, again, in a very good jurisdiction, and I would also say, with a lot of exploration potential remaining. Maybe I'll ask Natasha to comment.
Yeah, that's correct, Ammar. So John, with respect to the shaft, it has the capability of hoisting 2,000 tons of ore a day. It's right near our main reserves, which is the South Mine complex. We expect our throughput to increase. We're running scenarios right now. We're looking at a new mine strategy. We're looking at different scenarios, mining methods, changing up mining sequences to see how we can optimize the deposit and also the exploration potential. We believe in the exploration potential here. Our reserve grade right now sits at 17, 16, 17 grams, and we hope to continue that trend.
It is a couple of year endeavor, John.
For next year, for example, what might be a reasonable expectation for tons per day?
We'd feel uncomfortable giving guidance, specific guidance for next year, right now. That'll all come out in February.
If I can switch back to Agnico legacy properties. The underground at Canadian Malartic in measured indicated and inferred resources is almost 8 million ounces now in four zones, where the East Gouldie is about 3.2 grams, and the other three zones average about 2 grams in resources. When the infill drilling is done and the engineering is detailed and the optimization iterations have gone through, should we be modeling 3 grams for East Gouldie and 2 grams for the other zones? Or is it going to get higher with optimization and infill drilling, or is it gonna get lower? You know, sometimes those mining engineers take an incremental ton and dilute you a little bit.
Well, I mean, Guy, go ahead.
Yeah. I think on the grade. When you're gonna see the resources update, when we are moving to indicated, we are incorporating dilution. We're expecting using our realistic mining scenario. You're gonna see obviously a lower grade transiting from inferred to indicated because we are adding that dilution. As you indicate, you know, East Gouldie is closer to 3 gram overall inferred. When adding the infill, we don't see any surprise in terms of the infill. While in fact, we confirm the thickness. The grade is as expected. I do believe that our zone is growing lateally. This is the most positive surprise that we see. The core portion is being confirmed by infill drill hole.
We're gonna be adding the dilution when moving to indicated. The math you did is about that. Then after that, it will be a matter of the blend, incorporating the Odyssey South and the Odyssey North and the East Gouldie. Each of the three area having their respective grade into the mining sequence to get to the average grade of the operation.
The 3 grams and the 2 grams, it doesn't feel as good as Macassa or Fosterville, but it's a lot of tons and a lot of ounces.
Yeah, it's 19,000 tons a day. I mean, it's a big, big mine.
You know, the gold price isn't so good this week, and we do have this problem with inflation. It makes me wonder if your partner Peter thought this was so good that he sold his company and traded it for South Deep in South Africa. How low do you think your cost per ton are gonna be at 19,000 tons to make real good money on this?
Well, we're going through all those economics right now, but you know, as you're pointing out, it is a big underground mine. It's going from the biggest open pit mine in Canada to the biggest underground mine in Canada. You know, we're going through the economics, but I think as Guy said, you know, this is something that I think we are uniquely able to develop because of Goldex, our experience at Goldex. This is going to be bulk underground mining like Goldex, which as you know was our view right from the beginning when we acquired this asset.
Thank you.
Thank you.
Thank you. The next question comes from Tanya Jakusconek from Scotiabank. Please go ahead.
Great. Good morning, everyone. Thank you so much for taking my questions. Just wanted to circle back to just the inflation picture, just the bigger picture. Ammar, I know I asked on the Q2 conference call where inflation was running in your costs at the time, and I think 70% is what you said in Q2. Is that sort of similarly what you saw in your Q3 costs?
Yes. Yes, Tanya. Nice to hear from you, by the way.
Okay, thank you. I just wanted to circle back on the relief that you are seeing out there, encouraging, and we all want to see that. Fuel you mentioned, and we see that with oil coming off. You mentioned supply constraints. Is that transportation, so a relief in transportation costs? Like, how should we think about the supply constraint helping or the relief you're seeing there?
Tanya, Dominic speaking. We start to see some positive news on the supply where containers from China to North America was at some point 10 times the cost during COVID. Let's say we are right now around two times the cost pre-COVID, and it is still going down. This is good news showing that supply chain slowly, let's say, improving. When we also hear from our supplier, main supplier, that their inventory level is the highest since the start of the COVID, and the back orders are at the lower level. That's signs that it's getting in the right place.
Maybe a bit also, and this is a bit speculating, but on the workforce, I recall Guy told me at the beginning, this is, what, I don't know, two years ago, that watch out because we start having problem with drillers, and you're gonna be hit in 6-12 months, and he was right. But now what we see on the driller side is getting in the better position. I think we're getting also on the workforce that should stabilize. We have some projects. We saw recently some project slowdown in Quebec and in Ontario. So that could be good news for us to take advantage of that.
When we talk about, you know, labor and a bit of slowdown, I know that your labor negotiations are currently being worked on for the Abitibi and for Nunavut. Should we be thinking that, you know, this 7-8% is sort of where we should be thinking about for your sort of wages, or do you think we could do a bit better?
No, we think we could do a bit better. Of course, we need to stay competitive, and we need to pay our workforce a fair price. Negotiations gonna happen, depends on where, which divisions. We're expecting, let's say, depending where in the world, Finland or Canada, if I could say for those one, between 3.5% and 5%. This is our expectation for now.
That's good. Can I just ask on consumables, have we seen any relief on consumables? You know, obviously not fuel, but any other consumables that you're seeing relief on that's not oil-based?
Well, I can make a quick comment. You know, I get these updates all the time, Tanya, and I can tell you know, that over the last week, is the first time I've seen emails where people are saying, "Look, there's a little bit of relief." For example, in Finland, which has always been our highest inflation environment, they are actually seeing some relief on cyanide, on steel, and other consumables. To be fair, they had the biggest spike, so it's not surprising that they'd be at the vanguard of a possible relief, but we are starting to see it. Again, I just
We are seeing some relief, but you know, our job is to you know, hope for the best, but plan for the worst, and we're still all over it.
Yeah, no, I appreciate it. Ammar, maybe just the optimism in me coming out on this call. Would like to see a bit of relief in this inflation level that we're seeing right now. Appreciate that. If I could fit one more question in just for maybe Guy and Eric and, oh, actually, Ammar, maybe from a bigger picture from you. I know we're starting to think about reserves and resources at year-end, and I know you have your reserves, some of them at $1,250 and some of them at $1,300, and I think resources at $1,575. You know, what are you thinking about for reserve and resource pricing? That's my first question.
Hi, Tanya. We're still evaluating what will be our year-end reserves and resources assumption, looking at the FX rate, looking at the tendency for the gold price, the three-year trailing average. We usually come out with that number only at the back end of the year, early January, so too soon to comment. We were not too far apart in the portfolio. Now moving forward, obviously we would like to unify the portfolio with a more across the board assumption. We're considering all of that, and we'll get back to you in February.
Oh, okay. No, that's fair enough. Just on what you mentioned previously, on the reserve replacements, I got obviously Detour as one asset where you're gonna grow reserves at year-end. I had Kitikmeot, LaRonde, Meliadine, and Amaruq. Did I hear correctly that that's where we're going to be replacing our depletion this year?
As I mentioned when we met in August, we obviously nailed down the most of the assets. We've seen the update at Detour at mid-year. We continue to update, integrating all of the resource results, sorry, in the different mines. I still sort of reiterate what I told you mid-year, that we're gonna be having a partial replacement in the operations, plus the net gain at Detour, minus the depletion from operations. We're gonna see an overall net gain. How much is it? Don't know. Again, we'll figure that out once we consolidate everything at the end of the year.
Okay. That's fair enough. Thank you very much for taking my questions.
Thank you. Maybe, operator, maybe just one final question, and then I think we'll wrap it up.
Thank you. The final question comes from . Please go ahead.
Thanks, guys, for taking my question. Just to get a better sense in terms of how we could think about the AK project, you know, phasing in. The Macassa Mill has spare capacity, but some of that spare capacity is obviously gonna get chewed up with the shaft. Is it fair to assume that AK material would be kind of a buffer material filling the mill, but being kind of second priority to primary Macassa ore?
Hi, Mike. I will take this one. Jean speaking. Listen, as Natasha mentioned, we are reviewing the mine plan with the Shaft Four and the ventilation. In fact, we will have to optimize the mill. This is the first element I will say, so it will be which ore will bring the largest or the highest profit first. On the other side, we have started metallurgical test work since the merge was completed, and we are reviewing the full mill to try to optimize to be more efficient. It's ongoing, and we expect in the first half of 2023 to have all of the information. On that basis, after we'll make the proper decision, we need to adapt the mill.
Okay. Thank you.
Well, thank you everyone. I think with that, operator, we'll terminate the call. Thank you everyone, and have a nice weekend. Bye-bye.
Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation.