Barnat Pit Wall Failure Cuts Agnico Eagle 2026 Output Outlook

Agnico Eagle Mines posted record free cash flow and a record cash balance in the second quarter. A wall failure at the Barnat open pit forced the company to lower its 2026 production outlook to the low end of guidance.

The Toronto-based gold miner generated $1.3 billion in free cash flow and ended June with $3.5 billion of cash on hand, both all-time highs. Shareholder returns hit a record $625 million for the quarter, including $400 million in share buybacks.

The ground movement at the Barnat pit on July 1 will cut roughly 370,000 ounces of gold that had been planned for extraction over 2026-2028. Dominique Girard, executive vice president of operations, said on the company's earnings call that about 1 million tons of rock slid from the wall. The company plans to build safety berms 15 to 25 meters high during the third quarter and expects to resume mining in the pit in the fourth quarter. The pit had already produced more gold than the original mine plan, CEO Ammar Al-Joundi noted.

“We are going to be milling the low-grade stockpile,” Al-Joundi said. “The mill is going to be busy.” The company still expects to produce 3.3 million to 3.5 million ounces for the full year, though at the lower end of that range.

Operational results elsewhere were strong. Agnico reported record mill throughput at mines representing more than half of its total production. Kittila in Finland, Detour Lake in Ontario, and Macassa in Ontario all set throughput records. Fosterville in Australia increased development rates by 514% year over year. The company’s all-in sustaining costs came in at $1,460 per ounce, below the midpoint of guidance and well below the industry average.

CFO James Porter said the company is “in a gold price environment where we are truly able to do it all.” Capital spending reached $800 million in the quarter, funding the Hope Bay mine construction, shaft sinking at Canadian Malartic, and the Detour Underground project. Agnico also closed on the acquisition of three companies in Finland, consolidating a 2,500-square-kilometer land package in the Central Lapland Greenstone Belt. The company said it expects to grow production in Finland to more than 500,000 ounces per year.

Hope Bay, the new mine in Nunavut, received a formal go-ahead in May after detailed engineering reached 70% completion. The first barge of construction materials is scheduled to leave for the site around Aug. 10. Al-Joundi described the project as a “world-class, low-cost mine” with the potential to produce 400,000 to 450,000 ounces annually for decades.

Agnico's Alpha Score from AlphaScala stands at 55 out of 100, with a Mixed label. The score reflects the company's strong financial position balanced against the operational risk from the pit wall failure and the broader challenges of the mining sector.

Successful remediation at Barnat that allows mining to resume in the fourth quarter without further delays would reduce the risk. Continued strength in gold prices, which remain above $4,000 an ounce, would support cash flow and shareholder returns. Productivity initiatives, including autonomous trucking and the new integrated operating center at Detour, could further offset inflationary pressures on labor and diesel costs.

Additional ground movement at Barnat or other pits would make the situation worse. A sharp drop in gold prices would crimp the free cash flow that funds both buybacks and growth projects. Cost inflation, particularly in labor and diesel, could push all-in sustaining costs above guidance. The company acknowledged that labor turnover is a challenge across the industry, though it noted its retention rates are roughly half those of peers.

Al-Joundi emphasized the company’s long-term strategy of increasing gold production per share through disciplined investment in low-risk jurisdictions. “We have the assets, we have the projects, we have the resources, and we have the people,” he said. “We are making it happen right now.”