TORONTO, April 26, 2018 /CNW/ – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $44.9 million, or $0.19 per share, for the first quarter of 2018. This result includes non-cash foreign currency translation gains on deferred tax liabilities of $6.7 million ($0.03 per share), mark-to-market adjustments and derivative gains on financial instruments of $0.5 million (nil per share) and non-cash foreign currency translation gains of $3.5 million ($0.01 per share). Excluding these items would result in adjusted net income¹ of $34.2 million or $0.15 per share for the first quarter of 2018. In the first quarter of 2017, the Company reported net income of $76.0 million or $0.33 per share.

Included in the first quarter of 2018 net income and not adjusted above is non-cash stock option expense of $7.8 million ($0.03 per share).

In the first quarter of 2018, cash provided by operating activities decreased by 7% to $207.7 million ($180.5 million before changes in non-cash components of working capital), compared with cash provided by operating activities of $222.6 million in the first quarter of 2017 ($224.7 million before changes in non-cash components of working capital). The decrease in cash provided by operating activities before changes in non-cash components of working capital during the current period was mainly due to lower gold sales volumes and higher costs, partially offset by higher realized gold prices. The higher costs were primarily a result of the strengthening of local currencies against the U.S. dollar and higher costs at several operations, principally at Meadowbank.

“Our operations continued to deliver strong cash flow in the first quarter with unit production costs on the lower end of full year guidance and gold production tracking slightly above full year guidance. We remain focused on optimizing unit costs and increasing production as we transition through 2018 and begin to see the positive results of our growth phase in 2019”, said Sean Boyd, Agnico Eagle’s Chief Executive Officer. “During the first quarter, we continued to make very good progress at our Nunavutgrowth projects, with Amaruq permitting activities advancing as expected and development of the underground exploration ramp proceeding as planned. Construction activities and underground development remain on schedule and on budget at Meliadine”, added Mr. Boyd.

First quarter 2018 highlights include:

• Solid operational performance  – Payable gold production² in the first quarter of 2018 was 389,278 ounces at production costs per ounce of $759, total cash costs³ per ounce of $648 and all-in sustaining costs per ounce⁴ (“AISC”) of $889
• Production and cost guidance reiterated for 2018 – Full year production guidance is unchanged at 1.53 million ounces of gold at total cash costs per ounce of $625 to $675 and AISC of $890 to $940 per ounce.
• Nunavut development projects progressing on schedule and on budget – Amaruq permitting is on track for approval in the second quarter of 2018 and the underground exploration ramp is proceeding as planned. Meliadine construction and development is progressing well and procurement activities for the 2018 barge season are now complete
• Infill drilling at the East Malartic property yields favourable results, potential development options under review – Recent drilling at East Malartic has returned significant intersections of 2.5 grams per tonne (“g/t”) gold over 37.7 metres at 238 metres depth, including 3.6 g/t gold over 10.6 metres. Studies are underway to evaluate potential mining scenarios at both East Malartic and the neighbouring Odyssey project. Permitting activities to provide ramp access to both projects are currently underway
• Acquisition of Yamana Gold Inc.’s (“Yamana”) 50% interest in the Canadian exploration assets of Canadian Malartic Corporation (“CMC”) completed in late March 2018 – Agnico Eagle now owns the exploration assets of CMC, which include the Kirkland Lake and Hammond Reef projects. At Kirkland Lake, a 25,700 metre drill program will be carried out in 2018 to further evaluate known deposits and test new target areas
• Monetization of non-core assets – The Company is assessing opportunities to monetize non-core assets, including the West Pequop Joint Venture, Summit and PQX properties in Nevada, the Cobalt mining properties in the historic Cobalt silver district in Ontario, and its equity investment in Belo Sun Mining Corp. (“Belo Sun”) which it disposed of this month as previously announced
• A quarterly dividend of $0.11 per share was declared

First Quarter Financial and Production Highlights

In the first quarter of 2018, stable operational performance continued at the Company’s mines, which led to payable gold production of 389,278 ounces, compared to 418,216 ounces in the first quarter of 2017. This lower level of production in the 2018 period was primarily due to reduced throughput levels at Meadowbank as the mine transitions through the last full year of mining at site and at Lapa as mill processing did not resume until March 2018. A detailed description of the production of each mine is set out below.

Production costs per ounce for the first quarter of 2018 were $759, compared to $578 for the first quarter of 2017. Total cash costs per ounce for the first quarter of 2018 were $648, compared to $539 for the first quarter of 2017. Production costs per ounce and total cash costs per ounce in the first quarter of 2018 were affected by lower gold production levels at Meadowbank and Lapa, the strengthening of local currencies against the U.S. dollar and higher costs at several mines (principally at Meadowbank) compared to the first quarter of 2017. The impact of the strengthening of the local currencies was approximately $40 per ounce.

AISC for the first quarter of 2018 were $889, compared to $741 for the first quarter of 2017. The higher AISC is primarily due to expected lower gold production and higher total cash costs per ounce compared to the first quarter of 2017. A detailed description of the cost performance of each mine is set out below.

Cash Position Remains Strong

Cash and cash equivalents and short-term investments decreased to $464.8 million at March 31, 2018, from the December 31, 2017 balance of $643.9 million due to the ongoing investment in the Company’s growth projects and the recent acquisition of the Kirkland Lake and Hammond Reef projects.

The outstanding balance on the Company’s credit facility remained nil at March 31, 2018. This results in available credit lines of approximately $1.2 billion, not including the uncommitted $300 million accordion feature.

Subsequent to the quarter end, on April 5, 2018, the Company issued notes to certain institutional investors totalling $350 million. The notes consist of $45 million at 4.38% due 2028, $55 million at 4.48% due 2030 and $250 million at 4.63% due 2033. The terms of the notes are substantially the same as the terms of the outstanding notes of the Company. The Company previously announced its intention to issue these notes in its news release dated February 14, 2018.

Approximately 40% of the Company’s remaining 2018 Canadian dollar exposure is hedged at an average floor price of 1.28 C$/US$, of which about one third are designated for capital expenditures at Meliadine. Approximately 10% of the Company’s remaining 2018 Mexican peso exposure is hedged at an average floor price of 19.00 MXN/US$. The Company’s remaining 2018 Euro exposure is currently unhedged. The Company’s full year 2018 cost guidance was based on assumed exchange rates of 1.25 C$/US$ and 18.0 MXN/US$. Agnico Eagle anticipates adding to its operating currency hedges, pending market conditions.

Monetization of Non-Core Assets

The Company has been assessing the opportunity to monetize several non-core assets in its portfolio, including the West Pequop Joint Venture, Summit and PQX properties in Nevada, the Cobalt mining properties in the historic Cobalt silver district in Ontarioand its equity investment in Belo Sun which it disposed of this month.

West Pequop Joint Venture, Summit and PQX Properties

The Company has entered into an agreement with a subsidiary of Newmont Mining Corp (“Newmont”), whereby Newmont will purchase Agnico Eagle’s 51% interest in the West Pequop Joint Venture, and the Company’s 100% interest in the Summit and PQX properties in northeastern Nevada (collectively, the “Nevada Properties”). The Nevada Properties are adjacent to Newmont’s Long Canyon mine.

Under the purchase and sale agreement, the Company will receive a cash payment of $35 million and be granted a 0.8% net smelter return (“NSR”) royalty on the Nevada Properties held by the West Pequop Joint Venture and a 1.6% NSR on the Summit and PQX properties. The sale is expected to close in the second quarter of 2018.

Cobalt Mining Properties

In the mid-1950’s, five mining companies merged to become Cobalt Consolidated Mining Company (“CCMC”), one of the predecessors to Agnico Eagle. CCMC and, later, Agnico Eagle operated 25 mines in the Cobalt area and produced approximately 30 million ounces of silver and 3.2 million pounds of cobalt between 1957 and 1989.

The Company currently has two sizeable land packages in the Cobalt region, the Coleman property (178 claims covering approximately 1,750 hectares) and the South Lorrain Property (37 claims covering approximately 350 hectares).

The Company has initiated a strategic review of its Cobalt properties with the intent to realize value for the historical property portfolio. The Company expects that the outcome of such review may result in the sale of all or a portion of its Cobalt properties.

Disposition of Investment in Belo Sun

The Company reviews its portfolio of equity investments in junior mining companies on an ongoing basis. As previously announced, the Company has disposed of 44,551,000 common shares of Belo Sun for aggregate proceeds of C$14,924,585. For further details, please see the Company’s new release dated April 20, 2018.

_NORTHERN BUSINESS REVIEW

ABITIBI REGION, QUEBEC

Agnico Eagle is currently Quebec’s largest gold producer with a 100% interest in three mines (LaRonde, Goldex and Lapa) and a 50% interest in the Canadian Malartic mine. These mines are located within 50 kilometres of each other, which provides operating synergies and allows for the sharing of technical expertise.

LaRonde Mine – Higher Grades Drive Strong First Quarter Performance as the Mine Enters its Thirtieth Year of Production

The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988.

Production costs per tonne in the first quarter of 2018 increased when compared to the prior-year period due to higher underground and mill maintenance costs, lower throughput and the timing of unsold inventory. Production costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the reasons described above and the strengthening of the Canadian dollar relative to the U.S. dollar between periods, partially offset by higher gold production. For the remainder of the year, grades are expected to be more in line with 2018 guidance and mill throughput is expected to increase from levels seen in the first quarter of 2018.

Minesite costs per tonne⁵ in the first quarter of 2018 increased when compared to the prior-year period due to lower throughput levels and higher underground and mill maintenance costs. Minesite costs per tonne are expected to be in line with guidance over the balance of 2018. Total cash costs per ounce in the first quarter of 2018 decreased when compared to the prior-year period due to higher gold production and higher by-product metal revenues.

Gold production in the first quarter of 2018 increased when compared to the prior-year period due to higher grades resulting from the mining sequence in the lower part of the mine.

At the LaRonde 3 project, conversion and exploration drilling is ongoing at depth as the Company continues to evaluate a phased approach to development between the 311 level (a depth of 3.1 kilometres) and the 350 level (a depth of 3.5 kilometres). Under this phased approach, an additional two or three levels will be developed per year in either the east or west areas of the mine through 2022. This is expected to result in the conversion of approximately 1.2 million ounces of mineral resources into mineral reserves, with full mining activities to commence in 2022. The Company believes that this phased approach is a lower risk, less capital intensive option for developing the deeper levels of the LaRonde mine.

LaRonde Zone 5 – Commercial Production Remains on Schedule for Early Third Quarter 2018

In 2003, the Company acquired the LaRonde Zone 5 project from Barrick Gold Corporation. The property lies adjacent to and west of the LaRonde mining complex and previous operators exploited the deposit by open pit. In February 2017, LaRonde Zone 5 was approved by Agnico Eagle’s Board of Directors for development.

In the first quarter of 2018, development of the first five mining stopes was essentially completed and the first production blast is expected in early May 2018. The paste plant is expected to be commissioned in the second quarter of 2018. The development of LaRonde Zone 5 is on budget and on schedule with commercial production on schedule for early in the third quarter of 2018. For additional details on the project see the Company’s news release dated February 15, 2017.

Canadian Malartic Mine – Record Quarterly Gold Production; First Drill Results Reported for East Malartic Project

In June 2014, Agnico Eagle and Yamana acquired Osisko Mining Corporation and created the Canadian Malartic General Partnership (the “Partnership”). The Partnership owns and operates the Canadian Malartic mine in northwestern Quebec through a joint management committee. Each of Agnico Eagle and Yamana has an indirect 50% ownership interest in the Partnership. All volume numbers in this section reflect the Company’s 50% interest in the Canadian Malartic mine, except as noted.

Production costs per tonne in the first quarter of 2018 increased when compared to the prior-year period primarily due to higher contractor and fuel costs and the timing of unsold inventory, partially offset by higher throughput. Production costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the reasons described above and the strengthening of the Canadian dollar relative to the U.S. dollar between periods, partially offset by higher production.

Minesite costs per tonne in the first quarter of 2018 were higher when compared to the prior-year period due to the reasons described above. Total cash costs per ounce in the first quarter of 2018 were higher when compared to the prior-year period due to the reasons described above, partially offset by higher production.

Gold production in the first quarter of 2018 increased when compared to the prior-year period due to higher throughput and higher grades.

The Barnat extension project continues to progress on schedule and on budget. Since the beginning of the first quarter of 2018, the following activities have been undertaken:

• Construction of the temporary bridge which became operational in January 2018
• Ongoing overburden stripping and overload (new road bed foundation) preparation
• Backfill of the historically mined Buckshot pit was essentially completed

Production activities at Barnat are scheduled to begin in late 2019.

Infill Drilling at Odyssey Confirms Resource Grade; First Drill Results Reported from the East Malartic Zone

At the Canadian Malartic mine, exploration programs are ongoing to evaluate a number of near pit and underground targets. In addition, the Partnership is exploring the East Malartic and the Odyssey properties, which are located to the east of the Canadian Malartic open pit. These opportunities have the potential to provide new sources of ore for the Canadian Malartic mill.

The 2018 exploration program will consist of 140,000 metres of drilling with a budgeted cost (50% basis) of $8.6 million, including 80,000 metres for valuation in the upper and middle parts of the East Malartic Zone. There are currently three drill rigs at the East Malartic project and six rigs at the Odyssey project. In the first quarter of 2018, 22,089 metres of drilling (46 holes) were completed at the Odyssey project and 13,600 metres (18 holes) were completed at the East Malartic project.

Odyssey Zone

The Odyssey Zone lies on the east side of the Canadian Malartic property, approximately 3.0 kilometres east of the current limit of the Canadian Malartic open pit. Exploration results from the Odyssey Zone were last reported in the Company’s news release dated February 15, 2017.

The Odyssey Zone is composed of multiple mineralized bodies spatially associated with a porphyritic intrusion close to the contact of the Pontiac Group sediments and the Piché Group of volcanic rocks. They are grouped into two parallel elongated sheets, the Odyssey North and Odyssey South zones approximately 500 metres apart, which strike east-southeast and dip steeply south. The Odyssey North Zone plunges shallowly to the east and has been traced from a depth of 600 to 1,400 metres below surface along a strike length of approximately 1.3 kilometres. The Odyssey South Zone has been located between approximately 200 and 550 metres below surface over a strike length of 1.2 kilometres.

Initial indicated mineral resources for the Odyssey Zone are estimated at 9,000 ounces of gold (108,000 tonnes grading 2.45 g/t gold), while inferred mineral resources for the Odyssey Zone are estimated at 838,000 ounces of gold (11.2 million tonnes grading 2.32 g/t gold) as of December 31, 2017. All mineral resources are on a 50% basis.

Selected recent drill intercepts from the Odyssey South Zone are set out in the table below. The drill-hole collars are located on the Canadian Malartic and Odyssey local geology map, and the pierce points are shown on the composite longitudinal section. The intercepts reported for the Odyssey South Zone show uncapped and capped grades over estimated true widths, based on a preliminary geological interpretation that is being updated as new information becomes available with further drilling.

[Canadian Malartic and Odyssey Local Geology Map]

[Canadian Malartic and Odyssey Composite Longitudinal Section]

Exploration is currently focusing on infilling the near-surface portion of the deposit in Odyssey South. Recent drilling on the Odyssey South Zone returned several significant intersections that confirm its geological setting apart from the current mineral resource area, confirm the grade of the mineral resources and suggest that the size of the zone could increase. On the eastern side of the Odyssey South Zone, hole ODY18-5196 intersected 3.7 g/t gold over 8.9 metres at 270 metres depth and hole ODY18-5201 intersected 2.2 g/t gold over 18.2 metres at 319 metres depth. There are several recent intercepts in the central part of the Odyssey South Zone, including hole ODY18-5207 that intersected 2.5 g/t gold over 18.8 metres at 241 metres depth and hole ODY17-5191 that intersected 2.9 g/t gold over 7.8 metres at 421 metres depth. A further 360 metres to the west, hole ODY18-5198 intersected 18.5 g/t gold over 2.8 metres at 273 metres depth.

Another 410 metres to the west, well away from the current mineral resources, hole ODY18-5202 intersected 2.4 g/t gold over 8.3 metres at 369 metres depth.

Recent drilling at Odyssey has confirmed the mineral resources tonnage and grade in the central portion of the zone, and has extended the zone along strike and closer to surface.  Definition and expansion drilling will continue in the coming quarters to increase confidence in the grade and zone geometry.

East Malartic

In 2017, an initial inferred mineral resource was declared on the East Malartic property, which was previously a gold producing property. The East Malartic property is located directly adjacent to and east of the Canadian Malartic Mine, and west of the Odyssey Zone. Inferred mineral resources at East Malartic (on a 50% basis) are estimated at 1.2 million ounces of gold (19.0 million tonnes grading 2.02 g/t gold) to a depth of 1,000 metres. This is the first report of exploration drill results from the East Malarticproperty in a Company news release.

At the East Malartic project, the Partnership is exploring three mineralized zones with distinct geology that come together beneath and to the east of the Canadian Malartic open pit. The East Malartic and Sladen zones are intertwined, extending from beneath the open pit eastward to beneath the Odyssey North Zone, while the Sheehan Zone lies immediately north of East Malartic and Sladen in a shear zone including porphyritic intrusives and ultramafic volcanic rocks. Both the East Malartic and Sladen zones are related to the Sladen fault that also includes Canadian Malartic mineralization (to the west) and the Odyssey North Zone (to the east). The Sladen fault is at least 5 kilometres long, and hosts most of the mineralization at the Canadian Malartic, Sladen, East Malartic mines and Odyssey zones.

During 2017, exploration drilling at the East Malartic project included 59,000 metres (63 holes) of diamond drilling.

Selected drill intercepts from the 2017 drill program at the East Malartic project are set out in the table below. The drill-hole collars are located on the Canadian Malartic and Odyssey local geology map, and the pierce points are shown on the composite longitudinal section. The intercepts reported for the East Malartic project show uncapped and capped grades over estimated true widths, based on a preliminary geological interpretation that is being updated as new information becomes available with further drilling.

Among the most promising intercepts in the Sheehan Zone from the 2017 drill program, hole MEV17-EA-2004 intersected 7.4 g/t gold over 31.9 metres at 427 metres depth, including 16.8 g/t gold over 8.9 metres. Approximately 800 metres to the east, hole MEV17-SH-1005 intersected 3.5 g/t gold over 21.2 metres at 338 metres depth, including 9.5 g/t gold over 5.8 metres, also in the Sheehan Zone.

In the East Malartic and Sladen zones, there were also promising results in 2017. Hole MEV17-024 intersected 2.5 g/t gold over 37.7 metres at 238 metres depth, including 3.6 g/t gold over 10.6 metres, and separately including 7.1 g/t gold over 4.6 metres, in the East Malartic Zone. Approximately 500 metres to the southwest in the Sladen Zone, hole MEV17-016A intersected 3.2 g/t gold over 23.9 metres at 476 metres depth, including 8.8 g/t gold over 4.1 metres. At greater depths, the Sladen Zone was intersected by hole MEV17-001, yielding 2.8 g/t gold over 6.7 metres at 803 metres depth. Approximately 1,100 metres to the east, hole MEV17-EA-2002WA intersected the East Malartic Zone, yielding 2.2 g/t gold over 18.0 metres at 962 metres depth.

In 2018, the exploration focus will be to convert inferred mineral resources to indicated mineral resources in the shallower portions of the Odyssey South and East Malartic zones and further drilling to better define the geometry of the higher-grade internal zones at the Odyssey Zone.

In addition, permitting activities are underway for an exploration ramp to provide underground access to the shallower portions of the Odyssey South and East Malartic zones. Development of the ramp, which will provide access for underground drilling and collection of a bulk sample, is expected to begin in late 2018. The goal of the underground development program is to provide higher grade feed to the Canadian Malartic mill and extend the current mine life.

Kirkland Lake Project Update

On March 28, 2018, the Company completed the acquisition of Yamana’s indirect 50% interest in the Canadian exploration assets of CMC. As a result, Agnico Eagle now owns the transferred CMC exploration assets, which include the Kirkland Lake and Hammond Reef projects. The Company previously announced the entering into of an asset purchase agreement for the Canadian exploration assets of CMC in its news release dated December 21, 2017.

The Hammond Reef project in northwestern Ontario covers approximately 31,145 hectares and contains open pit measured and indicated mineral resources of 4.5 million ounces gold (208.4 million tonnes at 0.67 g/t gold) and open pit inferred mineral resources of 12,000 ounces gold (0.5 million tonnes at 0.74 g/t gold). Mineral resources are estimated as of December 31, 2017and are reported on a 100% basis. For a detailed breakdown of mineral resources, please refer to the Company’s press release dated February 14, 2018.

The Kirkland Lake project in northeastern Ontario covers approximately 27,312 hectares and mineral reserves and mineral resources have been outlined on several properties. Deposits in the Kirkland Lake area include: Upper Beaver, Anoki and McBean, Amalgamated Kirkland, Upper Canada and Munro. The primary deposits on the Kirkland Lake property are outlined on the plan map shown below.

[Kirkland Lake Property Regional Geology Map]

At Kirkland Lake, an initial $5 million exploration program consisting of 25,700 metres of drilling is planned for 2018. The primary exploration focus for the Kirkland Lake project this year will be:

• Expanding and locating new gold mineralization on the Upper Beaver and Upper Canada properties
• Prospecting along the Larder-Cadillac Deformation Zone
• Completing a technical review of all exploration data for the Upper Beaver deposit in order to determine the next steps at the property, including the evaluation of potential synergies between Upper Beaver and Upper Canada

The Upper Beaver deposit is atypical of the Kirkland Lake – Larder Lake mining district. Gold-copper mineralization is predominantly hosted in an alkalic intrusive complex and is associated with disseminated pyrite and chalcopyrite and magnetite-sulphide veining.

The Upper Beaver deposit contains underground mineral reserves of 1.4 million ounces of gold and 20,000 tonnes of copper (8.0 million tonnes grading 5.43 g/t gold and 0.25% copper), underground measured and indicated mineral resources of 0.4 million ounces of gold and 5,100 tonnes of copper (3.6 million tonnes grading 3.45 g/t gold and 0.14% copper) and underground inferred mineral resources of 1.4 million ounces of gold and 17,300 tonnes of copper (8.7 million tonnes grading 5.07 g/t gold and 0.20% copper). Mineral reserves and mineral resources are estimated as of December 31, 2017 and are reported on a 100% basis. For a detailed breakdown of mineral reserves and mineral resources, please refer to the Company’s press release dated February 14, 2018.

The exploration program at Upper Beaver in 2018 will consist of:

• Nine diamond drill holes, totalling approximately 4,500 metres, designed to test shallow geophysical and soil anomalies predominantly outside of the known mineralized zones
• Approximately 6,000 metres of drilling (one pilot and four wedge holes) to test for down-dip, down-plunge and on strike extensions of the deep inferred mineral resource at a depth of 1,300 to 1,785 metres

The past-producing Upper Canada property is located approximately six kilometres southwest of the Upper Beaver property. The Upper Canada deposit, which is approximately 1.6 kilometres north of the main Larder-Cadillac Deformation Zone (“LCDZ”), occurs within a 300 to 400 metres wide strongly altered deformation corridor that is interpreted as a splay from the LCDZ. Host rocks are primarily volcanic tuffs and sediments that have been intruded by syenite bodies. Gold mineralization is associated with intensely altered shear zones with fine pyrite and ancillary sulfide mineralization. En-echelon higher-grade lenses are present within a broader envelope of lower grade mineralization.

The Upper Canada deposit contains open pit inferred mineral resources of 0.3 million ounces of gold (4.9 million tonnes grading 1.97 g/t gold) and underground inferred mineral resources of 1.4 million ounces of gold (7.2 million tonnes grading 6.22 g/t gold). Mineral resources are estimated as of December 31, 2017 and are reported on a 100% basis.

The exploration program at Upper Canada in 2018 will consist of:

• 20 diamond drill holes, totalling approximately 6,000 metres, designed to test regional targets, including parallel structures with open pit potential
• Approximately 5,000 metres of near deposit drilling to test areas of known mineralization that are outside of the current inferred mineral resource envelopes

In addition to the drill programs at Upper Beaver and Upper Canada, approximately 1,600 metres of drilling will be carried out to test structural targets between the Upper Canada deposit and the Munro deposit. This area is thought to host the LCDZ under thick overburden cover.

Lapa – Milling Operations Re-started

The 100% owned Lapa mine in northwestern Quebec achieved commercial production in May 2009.

Production costs per tonne in the first quarter of 2018 decreased when compared to the prior-year period due to the timing of unsold inventory as milling operations resumed in March 2018. Production costs per ounce in the first quarter of 2018 decreased when compared to the prior-year period due to the reasons described above.

Minesite costs per tonne in the first quarter of 2018 increased when compared to the prior-year period due to lower throughput levels. Total cash costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to lower production and the strengthening of the Canadian dollar relative to the U.S. dollar between periods.

Gold production in the first quarter of 2018 decreased when compared to the prior-year period due to lower throughput levels as the mine approaches the end of operations.

Milling operations resumed in March 2018 with processing expected to continue through the commencement of production from LaRonde Zone 5 in the third quarter of 2018. Mining operations will continue into the second quarter at a reduced rate. Production guidance from Lapa for 2018 remains unchanged at 10,000 ounces.

Goldex – Deep 1 Production Ramp Up Ongoing; South Zone and Deep 2 Development Progressing Well

The 100% owned Goldex mine in northwestern Quebec began production from the M and E satellite zones in September 2013.

Production costs per tonne in the first quarter of 2018 decreased when compared to the prior-year period due to the timing of unsold inventory. Production costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the strengthening of the Canadian dollar relative to the U.S. dollar between periods and lower production.

Minesite costs per tonne in the first quarter of 2018 were essentially the same when compared to the prior-year period. Total cash costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the strengthening of the Canadian dollar relative to the U.S. dollar between periods and lower production.

Gold production in the first quarter of 2018 decreased when compared to the prior-year period due to lower grades and recoveries.

The Deep 1 ramp-up continues as scheduled with average daily throughput expected to be approximately 3,500 tonnes per day in 2018 as the establishment of the mining pyramid progresses. Drilling and ramp development continues at the Deep 2 Zone.

Studies are ongoing to evaluate the potential to increase throughput from the Deep 1 Zone and the potential to accelerate mining activities on a portion of the Deep 2 Zone, both of which could enhance production levels or extend the current mine life at Goldex and reduce operating costs.

At the South Zone, where gold mineralization is hosted in quartz veins, underground development is underway on two levels. The first stope in the South Zone is expected to be mined in August and there is potential to mine a total of five stopes in 2018. The South Zone is estimated to contain indicated mineral resources of 57,000 ounces of gold (432,000 tonnes grading 4.09 g/t gold) and inferred mineral resources of 169,000 ounces of gold (1.1 million tonnes grading 4.74 g/t gold).

Agnico Eagle acquired the Akasaba West gold-copper deposit in January 2014. Located less than 30 kilometres from Goldex, the Akasaba West deposit is expected to create flexibility and synergies for the Company’s operations in the Abitibi region by utilizing extra milling capacity at both Goldex and LaRonde, while reducing costs.

The public hearings under the Quebec environmental assessment process (Bureau des Audiences Publiques en Environnement or “BAPE”) were completed for the Akasaba project in 2017 and the BAPE report was issued to the Quebec Minister of the Environment on June 2, 2017. The report concludes that the project is acceptable under certain conditions.  Under the Federal process, the Canadian Environmental Assessment Agency released its Preliminary Environmental Assessment Report on the Akasaba project on February 21, 2018 for public comments. Permitting activities continue with both Provincial and Federal government agencies. Final recommendations are expected in 2018 and start-up is projected for 2020.

NUNAVUT REGION

Agnico Eagle has identified Nunavut as a politically attractive and stable jurisdiction with enormous geological potential. With the Company’s Meadowbank mine and two significant development assets (Meliadine and the Amaruq satellite deposit at Meadowbank) and other exploration projects, Nunavut has the potential to be a strategic operating platform with the ability to generate strong production and cash flows over several decades.

Meadowbank – Production Affected by Adverse Weather Conditions and Ore Hardness

The 100% owned Meadowbank mine in Nunavut, northern Canada, achieved commercial production in March 2010. The mine produced its two millionth ounce of gold in 2015.

Production costs per tonne in the first quarter of 2018 increased when compared to the prior-year period primarily due to lower throughput levels and the timing of unsold inventory. Production costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to reasons described above, the strengthening of the Canadian dollar relative to the U.S. dollar between periods and lower gold production.

Minesite costs per tonne in the first quarter of 2018 increased when compared to the prior-year period due to the reasons described above. Total cash costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the reasons described above.

Gold production in the first quarter of 2018 decreased when compared to the prior-year period due to harder ore and reduced access to the pits due to adverse winter weather conditions. Gold production guidance remains unchanged at 220,000 ounces for the full year 2018.

Amaruq Satellite Deposit – Permitting and Development Activities On Budget and Schedule for Start-up in the Third Quarter of 2019

Agnico Eagle has a 100% interest in the Amaruq satellite deposit, approximately 50 kilometres northwest of the Meadowbank mine. Amaruq is situated on a 99,878-hectare property, almost adjacent to the 68,735-hectare Meadowbank property.

Development of the Amaruq property was approved in February 2017 by the Company’s Board of Directors as a satellite deposit to supply ore to the existing Meadowbank mill, pending the receipt of the required permits. The Amaruq project was included in a National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) technical report about the Meadowbank Complex, posted on SEDAR on March 22, 2018.

The initial mining plan at Amaruq contemplates production of approximately 2.1 million ounces of gold between 2019 and 2024, leaving approximately 60% of the current mineral reserve and mineral resource base uncovered by the mine plan. Pre-mining activities are expected to start in 2018 at the Whale Tail deposit, which is a satellite pit that will produce ore to feed the Meadowbank mill.

Production is currently forecast to begin in the third quarter of 2019 (with approximately four to five months of production in 2019). Production in 2019 is expected to be between 135,000 and 190,000 ounces, with a mid-point of 162,500 ounces. In 2020, production is expected to be between 260,000 and 270,000 ounces, with a mid-point of 265,000 ounces. The Company continues to investigate additional opportunities to optimize the mine plan at Amaruq.

On March 15, 2018, the project certificate for the development and operation of the Whale Tail pit was received from the Nunavut Impact Review Board. Permitting activities are ongoing with the Nunavut Water Board and the Department of Fisheries and Oceans to finalize the Whale Tail Water License A and the authorization for work in aquatic habitat. The Company expects that the final approvals for the Whale Tail project will be received in the second quarter of 2018 and construction activities are projected to start in the third quarter.

Continued Focus on Site Development Activities, Installation of the Underground Exploration Ramp and Deep Exploration in the First Quarter of 2018

During the first quarter of 2018, Amaruq site activities focused on:

• Underground ramp development, which advanced by 128 metres
• Detailed engineering studies for Whale Tail infrastructure (52% complete)
• Long haul truck fleet purchases secured for 2018 and 2019
• Procurement of key items for the 2018 barge season
• Expansion of the temporary camp facility and construction of an underground maintenance shop
• Approval for the expansion of the exploration road to a production haulage road – work began in April 2018

The first round of the underground exploration ramp was blasted in early January 2018, and at March 31, 2018, the ramp had advanced by 128 lateral metres to 29 metres vertical depth. For the full year 2018, approximately 1.2 kilometres of underground development is planned at a cost of $21 million, which will be expensed and not included in capital costs. The main purpose of building the ramp is to carry out additional exploration drilling and evaluate the potential for underground mining activities at both the Whale Tail and V zones.

During the first quarter, 108 definition drill holes totaling 9,179 metres were completed to infill the first few benches of the open pit in preparation of the first year production.

The Amaruq project remains on budget with capital expenditures in 2018 forecast to be approximately $175 million.

Exploration continues at depth at both the Whale Tail deposit and V Zone, well below the planned pit depths. In the first quarter of 2018, the Company drilled 5,002 metres in 15 drill holes at the Amaruq project, part of the first phase of a 67,000-metre drill program in 2018. The purpose was to infill and expand the Whale Tail deposit at depth in order to define the shape of the folded mineralization in this area. Exploration results at Amaruq were last reported in the Company’s news release dated February 14, 2018.

Selected recent intercepts from the project are set out in the table below.  The drill hole collars are located on the Amaruq project local geology map; the pierce points are shown on the Amaruq project composite longitudinal section.  All intercepts reported for the Amaruq project show uncapped and capped grades over estimated true widths, based on a preliminary geological interpretation that is being updated as new information becomes available with further drilling.

[Amaruq Project Local Geology Map]

[Amaruq Project Composite Longitudinal Section]

The Whale Tail deposit has been defined over at least 2.3 kilometres of strike length and extends from surface to 915 metres depth.

Hole AMQ18-1677 is a significant recent deep hole that had multiple intercepts, including some narrow, very high grades between 540 and 627 metres depth. The first three intercepts were in quartz veins in ultramafic host rocks, in a parallel structure approximately 50 metres north of the iron formation that hosts the main Whale Tail mineralized zone, and included 23.1 g/t gold over 2.8 metres at 540 metres depth, 18.6 g/t gold over 2.9 metres at 580 metres depth and 16.6 g/t gold over 3.3 metres at 598 metres depth. A lower intercept from the same drill hole – 6.4 g/t gold over 7.2 metres at 627 metres depth – was in the main Whale Tail mineralized unit.

The parallel structure to the north of the main iron formation has the potential to improve the economics of the underground portion of the Whale Tail deposit. It will continue to be investigated while testing Whale Tail at depth.

A branch from the same hole, numbered AMQ18-1677A, intersected 13.8 g/t gold over 8.5 metres at 641 metres depth. This intercept confirms the width of the model at this location within the mineral resources but at a grade higher than anticipated. Two new intercepts have encountered mineralization west of the current underground mineral resources, which is one of the goals of the 2018 exploration drill program.  Hole AMQ18-1669A intersected 6.5 g/t gold over 2.8 metres at 582 metres depth, while AMQ17-1607C intersected 8.5 g/t gold over 3.3 metres at 673 metres depth. These intercepts extend the main Whale Tail mineralized unit to the west by approximately 130 metres from the current mineral resources, below 580 metres depth.

The Whale Tail deposit remains open at depth and along strike. The drill program for the remainder of 2018 will continue to test the Whale Tail deposit and the parallel structure to its north at depth, to expand the mineral resources and continue to convert inferred to indicated mineral resources. Drilling has also resumed in the V Zone to test its depth and lateral extent.

Meliadine Project – Mine Development and Construction Schedule Progressing on Plan and on Budget

Located near Rankin Inlet, Nunavut, Canada, the Meliadine project was acquired in July 2010, and is Agnico Eagle’s largest gold deposit in terms of mineral resources. The Company owns 100% of the 111,757 hectare property.

In February 2017, the Company’s Board of Directors approved the construction of the Meliadine project. The mine was initially forecast to begin operations in the third quarter of 2019. However, given the progress of construction and development activities in 2017 and through the first quarter of 2018, the Company announced in February 2018 that the Meliadine project is expected to begin operations in the second quarter of 2019.

The forecast parameters surrounding the Company’s proposed Meliadine operations were based on a preliminary economic assessment, which is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the forecast production amounts will be realized. The basis for the preliminary economic assessment and the qualifications and assumptions made by the qualified person who undertook the preliminary economic assessment are set out in this news release and the Company’s news release dated February 15, 2017. The results of the preliminary economic assessment had no impact on the results of any pre-feasibility or feasibility study in respect of Meliadine.

Expected gold production for 2019 is estimated to be approximately 170,000 ounces.  In 2020, expected production is approximately 385,000 ounces of gold.  The Company is evaluating potential opportunities to increase production in 2019.

At December 31, 2017, the Meliadine property was estimated to contain proven and probable mineral reserves of 3.7 million ounces of gold (16.0 million tonnes grading 7.12 g/t gold), indicated mineral resources of 3.1 million ounces of gold (25.3 million tonnes grading 3.77 g/t gold) and inferred mineral resources of 2.7 million ounces of gold (13.8 million tonnes grading 6.04 g/t gold). In addition, there are numerous other known gold occurrences along the 80-kilometre-long greenstone belt that require further evaluation.

For additional technical details on the project see the Company’s news release dated February 15, 2017.

2018 Activities and Additional Opportunities to Create Value at Meliadine

The Meliadine project remains on budget with capital expenditures in 2018 forecast to be approximately $398 million. The 2019 project capital forecast is unchanged at approximately $130 million.

Recent development/construction highlights include:

• Mechanical/Piping/Electrical/Instrumentation (MPEI) is progressing as planned for both the process plant and power plant; limited mechanical equipment will be airlifted ahead of the barge season to continue to advance the construction schedule
• Commissioning of the process plant is expected to begin in the first quarter of 2019
• The generators for the power plant are expected to be delivered to the site on the first sealift of 2018 in June
• The multiservice building (office, warehouse, maintenance) will be fully functional in the second quarter of 2018
• Civil work for the paste and crusher plant are underway and will be ready for construction in the second quarter of 2018
• The SAG mill components are on site and installation began in April 2018
• In the first quarter of 2018, approximately 2,118 metres of lateral underground development was completed, which was slightly ahead of budget
• In the first quarter of 2018, approximately 5,500 metres of underground delineation drilling had been completed, which is in line with the budget. As a result, 90% of the stopes that will be developed in 2018 have been delineated. The delineation of 2019 stopes is progressing well
• Results from the delineation drilling have generally been in line with the block model
• The remaining procurement packages have now been awarded, with follow up for delivery on the 2018 sealift

The Company believes that there are numerous opportunities to create additional value at Meliadine, both at the mine and on the large land package. These include:

• Optimization of the current mine plan (advance Phase 2 pit implementation)
• Potential to optimize labour costs once the mine is in operation (via improved use of telecommunications)
• Minesite exploration upside through mineral resource conversion and expansion of known ore zones (most zones are open below a vertical depth of 450 metres)
• Potential for the discovery of new deposits along the 80 kilometre-long greenstone belt

FINLAND AND SWEDEN

Agnico Eagle’s Kittila mine in Finland is the largest primary gold producer in Europe and hosts the Company’s largest mineral reserves. Exploration activities continue to expand the mineral reserves and mineral resources and the Company has approved an expansion to add an underground shaft and increase expected mill throughput by 25 percent to 2.0 million tonnes per annum (“mtpa”). In Sweden, the Company has a 55% interest in the Barsele exploration project.

Kittila – Higher Throughout Partially Offsets Lower Grades and Recoveries

The 100% owned Kittila mine in northern Finland achieved commercial production in 2009.

Production costs per tonne in the first quarter of 2018 decreased when compared to the prior-year period due to higher throughput levels. Production costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the strengthening of the Euro relative to the U.S. dollar between periods and lower production.

Minesite costs per tonne in the first quarter of 2018 were essentially the same when compared to the prior-year period. Total cash costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the strengthening of the Euro relative to the U.S. dollar between periods and lower production.

Gold production in the first quarter of 2018 decreased when compared to the prior-year period due to lower grades and recoveries. In addition, a 10-day planned maintenance shutdown at the mill took place in April 2018. This shutdown was factored into the 2018 guidance.

In February 2018, the Company’s Board of Directors approved an expansion to increase throughput rates at Kittila to 2.0 mtpa from the current rate of 1.6 mtpa. This expansion includes the construction of a 1,044 metre deep shaft, a processing plant expansion as well as other infrastructure and service upgrades.

This expansion project is expected to increase the efficiency of the mine and decrease or maintain current operating costs while providing access to the deeper mining horizons. In addition, the shaft is expected to provide access to the mineral resources located below 1,150 metres, where recent exploration programs have shown promising results. This expansion project remains on schedule and exploration drilling is ongoing to expand and infill the mineral reserve and mineral resource base at depth.

SOUTHERN BUSINESS REVIEW

Agnico Eagle’s Southern Business operations are focused in Mexico. These operations have been a source of growing precious metals production (gold and silver), stable operating costs and strong free cash flow since 2009.

Pinos Altos – Advancement of Satellite Deposits is a Key Focus in 2018

The 100% owned Pinos Altos mine in northern Mexico achieved commercial production in November 2009.

Production costs per tonne in the first quarter of 2018 increased when compared to the prior-year period due to lower throughput, higher costs associated with underground mining and the timing of unsold inventory. Production costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to lower gold production, the strengthening of the Mexican peso relative to the U.S. dollar between periods and the reasons described above.

Minesite costs per tonne in the first quarter of 2018 increased when compared to the prior-year period due to the reasons described above. Total cash costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to lower gold production, slightly lower by-product revenue, the strengthening of the Mexican peso relative to the U.S. dollar between periods and the reasons described above.

Gold production in the first quarter of 2018 decreased when compared to the prior-year period due to lower throughput and lower grades, however, throughput and grades are expected to improve over the balance of 2018 with resulting lower unit costs.

In 2018, Pinos Altos is transitioning into a predominantly underground mining operation, with associated higher costs, and limited open pit production. The development of satellite deposits provides an opportunity to lower unit costs by filling available capacity at the processing and heap leaching facility. Optimization opportunities are being studied to reduce unit costs

During the first quarter of 2018, construction was completed on the Phase IV heap leach pad and ore stacking commenced. This pad will receive the remaining open pit ore being mined at Pinos Altos in 2018, and will have the capacity to process heap leach ore from other sources.

A key focus in the first quarter of 2018 was on the continued advancement of the Sinter and Cubiro satellite deposits at Pinos Altos. The Sinter deposit will be mined from underground and a small open pit. At Sinter, tree clearing has been completed and permits have been received for open pit mining and underground ramp development. Construction of the portal and underground development activities are expected to begin in the second quarter of 2018, with initial production from Sinter expected to commence in the fourth quarter of this year.

The Cubiro deposit is an underground exploration opportunity, located immediately west of the Creston Mascota mine, which is envisioned to potentially produce high grade ore that will be trucked to the Pinos Altos processing facilities as early as in 2022. The access road is under construction with completion expected in July 2018. Portal and ramp development will be initiated once the access road is completed and 420 metres of underground development is planned for the fourth quarter of 2018. Underground exploration and delineation are expected to commence in early 2019.

Exploration in the First Quarter of 2018 Focused on Reyna de Plata Deposit

The Reyna de Plata deposit is an opportunity for another satellite source of ore on the Pinos Altos property, approximately 1,200 metres north of the Oberon de Weber pit. Exploration permits were received for the Reyna de Plata deposit in the fourth quarter of 2017, and a 5,000-metre drill program commenced in mid-January 2018. In the first quarter of 2018, exploration included 3,450 metres of infill drilling focused on converting inferred to indicated mineral resources within the current resources pit model.

Selected recent drill results and drill hole collar coordinates are set out in the tables below.  The collars are also located on the Pinos Altos Local Geology Map. All intercepts reported for the Reyna de Plata Zone show uncapped and capped gold and silver grades over estimated true widths, based on a preliminary geological interpretation that will be updated as new information becomes available with further drilling.

Reyna de Plata Deposit at Pinos Altos mine exploration drill collar coordinates

[Pinos Altos Local Geology Map]

The geological focus of the Pinos Altos property is a horst structure – which is an uplifted block of rocks – at least 10 kilometers long by 3 kilometers wide, defined by the Reyna de Plata Fault to the north and the Santo Niño Fault to the south. The Reyna de Plata deposit hosts inferred mineral resources of 110,000 ounces gold and 3.9 million ounces silver (5.8 million tonnes grading 0.59 g/t gold and 21.14 g/t silver) at open pit depth, as well as 93,000 ounces gold and 1.4 million ounces silver (1.2 million tonnes grading 2.35 g/t gold and 35.11 g/t silver) at underground depth. These inferred mineral resources formed part of the total Pinos Altos mineral resources estimate as of December 31, 2017.

The Reyna de Plata deposit lies along the Reyna de Plata Fault, as does the Sinter Zone 1,740 metres to the northwest. The Reyna de Plata deposit consists of low-sulphidation epithermal vein-style mineralization over a 2.5-kilometre strike length in an east-west direction. The gold and silver mineralization is accompanied by green-clear-white quartz and calcite in veins, stockwork and breccia.

Recent drilling has yielded significant shallow intervals such as hole RP18-038 that intersected multiple mineralized intervals, including 1.7 g/t gold and 27 g/t silver over 9.6 metres at 35 metres depth and 4.2 g/t gold and 144 g/t silver over 3.6 metres at 112 metres depth. Approximately 100 metres to the east, hole RP18-039 intersected 2.0 g/t gold and 53 g/t silver over 22.9 metres at 57 metres depth and 3.8 g/t gold and 44 g/t silver over 2.7 metres at 97 metres depth. Approximately 270 metres to the northwest of the latter hole, hole RP18-043 intersected 0.9 g/t gold and 12 g/t silver over 17.7 metres at 31 metres depth. The results of this program are expected to increase the mineral resources and allow for the conversion to indicated mineral resources at Reyna de Plata in the year-end mineral resources estimate.

Different mining options are currently being studied for the potential exploitation of the deposit.

Creston Mascota – Mining Transitions to Bravo Deposit; Drilling Continues to Extend Mineralization at Madrono

The 100% owned Creston Mascota open pit heap leach, located less than 7 kilometres from Pinos Altos, has been operating since late 2010.

Production costs per tonne in the first quarter of 2018 increased when compared to the prior-year period due to fewer tonnes processed, higher contractor and maintenance costs and the timing of unsold inventory. Production costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the strengthening of the Mexican peso relative to the U.S. dollar between periods and the reasons described above.

Minesite costs per tonne in the first quarter of 2018 increased when compared to the prior-year period due to the reasons described above. Total cash costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to the strengthening of the Mexican peso relative to the U.S. dollar between periods and reasons described above.

Gold production in the first quarter of 2018 increased when compared to the prior-year period due to optimizations made to the leaching process, which resulted in faster initial recoveries from on-pad inventories when compared to the prior-year period. Silver recoveries also improved in the current period largely due to a finer crush size.

In 2018, the Creston Mascota pit will be transitioning to the Bravo pit, located immediately to the south.  Higher costs are expected due to longer hauling distances and higher stripping volumes. Optimization opportunities are being studied to reduce unit costs. The development of satellite deposits provide an opportunity to extend mine life at the Creston Mascota heap leaching facility.

During the first quarter of 2018, work continued on the access road to the Bravo deposit (92% completed) and a new waste rock storage site has been located closer to the deposit, which is expected to reduce waste haulage costs. Initial mining activities have commenced at Bravo and it is expected to be the primary ore source at Creston Mascota for approximately the next two years.

Soil removal at the Phase V heap leach pad was completed in March 2018, and the new pad is expected to be in operation in the third quarter of 2018.

Drilling Continues to Expand Mineralized Zones at Madrono

Exploration at the high-grade Madrono Zone, immediately southeast of the Creston Mascota pit, began in early 2016, and to the end of 2017 a total of 33,045 metres (162 holes) had been drilled on the zone. The initial indicated mineral resources at the Madrono zone are 56,000 ounces gold and 863,000 ounces silver (858,000 tonnes grading 2.03 g/t gold and 31.26 g/t silver), all at underground depth. The Madrono zone also has inferred mineral resources of 144,000 ounces gold and 2.6 million ounces silver (1,941,000 tonnes grading 2.31 g/t gold and 40.97 g/t silver), all at underground depth. The Madrono zone’s mineral resources formed part of the total Pinos Altos mineral resources estimate as of December 31, 2017.

Drilling in the first quarter of 2018 totalled 5,073 metres of infill and exploration drilling in 24 holes. The Madrono zone is a potential satellite mining opportunity to provide mill feed to extend the mine life at Pinos Altos.

Drilling results for Madrono were last reported in the Company’s news release dated February 14, 2018.

Selected recent drill results from the Madrono Zone and drill hole collar coordinates are set out in the tables below. The collars are also located on the Pinos Altos Local Geology Map. All intercepts reported for the Madrono Zone show uncapped and capped gold and silver grades over estimated true widths, based on a preliminary geological interpretation that will be updated as new information becomes available with further drilling.

Madrono Zone at Creston Mascota mine exploration drill collar coordinates

[Pinos Altos Local Geology Map]

Recent results at Madrono are encouraging for the potential of a broad area of mineralization at the junction of the Madrono and Santa Martha veins. Intercepts in this area include hole MAD18-133 that intersected 1.7 g/t gold and 22 g/t silver over 7.7 metres at 128 metres depth. Sixty metres to the northwest, hole MAD18-134 intersected 2.0 g/t gold and 28 g/t silver over 7.5 metres at 118 metres depth. Also nearby is hole MAD18-136 that intersected 2.2 g/t gold and 47 g/t silver over 16.2 metres at 145 metres depth.

These intercepts indicate the presence of an ore shoot plunging to the southwest with potential to grow at depth and laterally. The Madrono Zone continues to be open at depth. Mineral resources are expected to be updated at the end of this year considering various mining scenarios.

La India – Modifications to Heap Leach Process Expected to Improve Gold Production

The 100% owned La India mine in Sonora, Mexico, located approximately 70 kilometres from the Company’s Pinos Altos mine, achieved commercial production in February 2014.

Production costs per tonne in the first quarter of 2018 were the same when compared to the prior-year period. Production costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to lower gold production and the strengthening of the Mexican peso relative to the U.S. dollar between periods.

Minesite costs per tonne in the first quarter of 2018 were essentially the same when compared to the prior-year period. Total cash costs per ounce in the first quarter of 2018 increased when compared to the prior-year period due to lower gold production, lower by-product revenue and the strengthening of the Mexican peso relative to the U.S. dollar between periods.

Gold production in the first quarter of 2018 decreased when compared to the prior-year period due to lower recoveries.

In 2017, La India transitioned to mining the Main Zone by open pit. This zone has slower recoveries than the North Zone, which are being addressed with an optimization strategy to improve production and costs. The development of satellite deposits also provides an opportunity to extend mine life.

In the first quarter of 2018, several small modifications that are part of a broader optimization plan were completed to the La India heap leach process to improve gold production. Improvements included:

• At the absorption, desorption and refining (“ADR”) plant, two additional carbon columns were installed and commissioned in mid-March with positive results
• An additional carbon regeneration kiln has also been ordered with commissioning expected by June 2018
• At the heap leach pad, ore stacking and irrigation plans have been optimized, which is expected to provide more effective leaching dynamics

La India Exploration Focused on Extending Near-Pit Mineralization and Other Near-Mine Targets

During the first quarter of 2018, exploration drilling was predominately focused in the El Realito area to evaluate the potential to increase mineral resources in close proximity to the current mining areas. Drilling was also carried out on the Los Tubos Zone to explore northeast- and northwest-trending mineralized structures. Drilling results for the La India property were last reported in the Company’s news release dated February 14, 2018.

Mine-site exploration at the La India property in the first quarter of 2018 included 2,665 metres (22 holes) at Los Tubos and 4,168 metres (27 holes) at El Realito, totalling 6,833 metres of the 25,000-metre budget in 2018. In addition, the regional exploration at the La India property in the first quarter of 2018 included mapping and surface sampling at Chipriona as well as metallurgical testing. Exploration and definition drilling of the Chipriona structure will resume in May.

Selected recent drill results from the La India property and the drill hole collar coordinates are set out in the tables below. The collars are located on the La India Area Property and Location Map.  The intercepts reported for the La India property show uncapped and capped gold and silver grades over estimated true widths, based on a preliminary geological interpretation that will be updated as new information becomes available with further drilling. The gold and silver grades for the Chipriona regional target are not capped as the project is at too early a stage to determine capping values.

Additional drilling is planned in the El Realito, Los Tubos, El Cochi, Main Zone, Chipriona and Tarachi areas over the remainder of 2018.

[La India Area Property and Location Map]

El Realito Zone; Encouraging results, Open to the Northeast and Southwest

Exploration drilling is defining and extending the mineralization at the El Realito satellite project, which is approximately 1.5 kilometres east of the North and La India zones, to evaluate the potential to increase mineral resources in close proximity to the existing La India mining operations, with encouraging results. Initial indicated mineral resources have been declared at El Realito of 112,000 ounces gold and 642,000 ounces silver (5.0 million tonnes grading 0.70 g/t gold and 4.00 g/t silver); inferred mineral resources are 18,000 ounces gold and 97,000 ounces silver (1.4 million tonnes grading 0.40 g/t gold and 2.20 g/t silver). The mineral resources at El Realito formed part of the total mineral resources estimate for La India as of December 31, 2017.

The El Realito mineralization is found in northeast-striking subvertical parallel structural corridors of breccia that appear to have acted as conduits, bringing gold and silver mineralization into the favourable subhorizontal volcanic rock layers (the lower porphyritic dacite).

An infill drill program is underway at El Realito, with some holes being extended to explore areas outside the current mineral resources. An example of this is hole INER18-125 that intersected 1.6 g/t gold and 21 g/t silver over 3.3 metres at 86 metres depth, followed by 2.4 g/t gold and 3 g/t silver over 14.1 metres at 134 metres depth, including 6.8 g/t gold and 5 g/t silver over 3.2 metres.  This hole extends both the subvertical and the subhorizontal mineralization approximately 50 metres to the southwest.

Approximately 600 metres to the northeast, hole INER18-139 intersected 3.1 g/t gold and 15 g/t silver over 7.2 metres at 56 metres depth. Previous mineralization encountered in this area grades lower than this and was mostly in subhorizontal layers, whereas this mineralization is thought to be related to the subvertical feeder zone. El Realito remains open to the northeast and southwest.

Chipriona Zone; Indications of Sulphide Potential

The Chipriona satellite target is located approximately one kilometre north of the North Zone at the La India mine. Agnico Eagle acquired its 100% interest in the Chipriona property in December 2016. Mineralization at Chipriona consists of what appears to be structurally controlled gold- and silver-rich veins, stringers and breccia with significant sulphide zinc, lead and copper content.  Metallurgical testing will be conducted to determine the potential processing and cut-off grades for this type of mineralization. A diamond drill program on Chipriona began in the second quarter of 2017 and 8,582 metres (38 holes) were completed last year. Results of the initial holes were reported in the Company’s news release dated September 5, 2017. Selected results from the remainder of the program are included in this new release.

Initial results at Chipriona have been encouraging. Surface mapping and sampling have traced stacked structures within the Chipriona mineralized corridor that has a width ranging from tens of metres to a few hundred metres over a northwest strike length of at least 2,000 metres; 1,200 metres of this length has been confirmed through drill-testing. Mineralization has been intersected from surface to a depth of 214 metres. The project hosts a swarm of parallel and subparallel structural pathways that are favourable hosts for sulphide-based gold-silver mineralization with base metal credits. Significant mineralization has been intersected near surface over substantial widths; this suggests the potential for bulk mining lower-grade mineralization in stockwork zones that surround high-grade feeder zones. The gold and silver grades reported at Chipriona are uncapped.

The strongest intercept to date at Chipriona is also the deepest. In the southeast part of the zone, hole CHP17-024 intersected 2.3 g/t gold and 24 g/t silver over 16.5 metres at 214 metres depth, including 7.5 g/t gold and 20 g/t silver over 4.5 metres. Close to surface in the same area, hole CHP17-012 intersected 0.6 g/t gold and 216 g/t silver over 18.0 metres at 10 metres depth, including 1.5 g/t gold and 813 g/t silver over 4.0 metres.

Approximately 300 metres to the southeast, hole CHP17-035 intersected 0.9 g/t gold and 34 g/t silver over 56.3 metres at 37 metres depth, including 1.4 g/t gold and 40 g/t silver over 28.9 metres. In the same vicinity, hole CHP17-028 intersected 0.2 g/t gold and 269 g/t silver over 3.4 metres at 27 metres depth, as well as 4.1 g/t gold and 66 g/t silver over 3.4 metres at 48 metres depth.

Approximately 1,000 metres to the northwest, hole CHP17-036 intersected 0.7 g/t gold and 170 g/t silver over 28 metres at 20 metres depth, including 1.8 g/t gold and 370 g/t silver over 7.6 metres.

The mineralized system remains open along strike, and shows significant potential at depth; parallel mineralized structures show Chipriona-like potential. Definition drilling is expected to start soon to look at opportunities for either bulk-mineable or high-grade areas in the known portion of the zone. Exploration drilling will test for extensions of the mineralized system.

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Your early FRIDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight/9 AM EST

i) Chinese yuan vs USA dollar/CLOSED DOWN 6.3380  /shanghai bourse CLOSED UP 7.20 POINTS OR 0.23%   / HANG SANG CLOSED UP 272.99 POINTS OR 0.91%
2. Nikkei closed UP 148.26 POINTS OR 0.66%/  /USA: YEN RISES TO 109.34/  

3. Europe stocks OPENED GREEN     /USA dollar index RISES TO 91.75/Euro FALLS TO 1.20892

3b Japan 10 year bond yield: FALLS TO . +.06/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.34/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI:: 68.02  and Brent: 74.53

3f Gold UP/Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil UP for WTI and UP FOR Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.58%/Italian 10 yr bond yield DOWN to 1.74% /SPAIN 10 YR BOND YIELD DOWN TO 1.25%

3j Greek 10 year bond yield FALLS TO : 3.93?????????????????

3k Gold at $1319.00 silver at:16.52     7 am est) SILVER NEXT RESISTANCE LEVEL AT $18.50

3l USA vs Russian rouble; (Russian rouble UP 29/100 in roubles/dollar) 62.43

3m oil into the 68 dollar handle for WTI and 74 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.34 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 0.9905 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1967 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to +0.58%

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 2.97% early this morning (THIS IS DEADLY TO ALL MARKETS). Thirty year rate at 3.15%

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

Nasdaq Surges Alongside The Dollar; 10Y Yield Slides Ahead Of GDP

In the aftermath of blockbuster earnings from Amazon, which is set to open at an all time high as it breathes down Apple’s neck for the title of first $1 trillion market cap company, and Intel, it is hardly a surprise that Nasdaq futures are pointing sharply higher (especially with Gartman shorting the Nasdaq yesterday).

What is more surprising is the broader weakness elsewhere, with Dow futures down 90 points and even the S&P in the red, as Asian shares rose and European equities were little changed. Traders are cautious ahead of today’s Q1 GDP print, which is expected to slide from 2.9% to 2.0%, especially in the aftermath of the terrible UK GDP print earlier, which sent cable, gilt yields and May rate hike odds tumbling.

Major European stock gauges were mixed, with the Stoxx 600 index little changed, and heading for its longest streak of consecutive weekly gains since October 2017. Amundi, Europe’s biggest asset manager, climbed after reporting record 1Q inflows, while Electrolux slumped after raising its projection for raw material costs in 2018. German and British benchmarks outperforming as the pound and euro fell after the U.K.’s worst growth figures since 2012, while data out of France and Spain also disappointed.  Meanwhile, investors continued to pull money out of European equity funds in the week through Wednesday, according to a BofAML, citing EPFR Global data

Asia equity markets traded mostly higher as the region got an uplift from the momentum in US where all majors extended on gains amid tech outperformance after strong Facebook results, which was later followed after-market by Amazon, Intel, Microsoft and Western Digital which all beat on earnings forecasts. As such, ASX 200 (+0.2%) and Nikkei 225 (+0.5%) traded positive although gains were relatively mild as participants also digested a flurry of data releases and earnings, while KOSPI (+0.6%) benefited from a warming of ties amid the historic inter-Korean summit. Elsewhere, Shanghai Comp. (-0.7%) and Hang Seng (+0.2%) were mixed with underperformance in the mainland following a neutral position by the PBoC in today’s open market operations, while data also showed a slowdown in the pace of Chinese Industrial Profit growth.

The most notable move overnight was, again, the dollar, as there seems to be no stopping the greenback even as Treasuries edge higher a second day, with the yield sliding below 2.97% and ever further from the 3.00% level which was crossed for the first time since 2014 just two days ago.

Meanwhile, the ominous, pre-recessionary flattening has resumed, and the 2s10s is back under 50bps this morning.

The Bloomberg Dollar Spot Index advances for the eighth day in nine amid an accelerating short squeeze, which we warned about a week ago…

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… hitting a fresh three-month high as investors scale back expectations that central banks other than the Fed are confident in tightening. In fact, the dollar is headed for its best week since December 2016.

Elsewhere in FX, as noted above, U.K. GDP data misses estimates, slashing the odds of a BOE hike next month, making the pound the worst G-10 performer.  The euro slid amid disappointing data out of France, while the won climbed with Korean leaders’ summit in focus; The yen was near the bottom of a five-week spiral on concerns its yield differentials against the dollar would widen further after the Bank of Japan signaled it’s in no hurry to exit.

Overnight the BoJ concluded its latest policy meeting and kept monetary policy unchanged as expected with NIRP held at -0.10% and the 10yr JGB yield target at around 0%. The decision was made by 8-1 vote with Kataoka the dissenter again, but the biggest surprise was that the central bank removed its reference to achieving 2% CPI target around FY19. Furthermore, BoJ stated that risks to economy were balanced for FY2018 but are skewed to downside for FY2019.  BoJ Governor Kuroda said it is appropriate to continue powerful monetary easing, and said that the timeframe for a price target was a limit implying immediate policy change, adds was just a forecast, not a limit and inflation momentum to continue faster to the 2% target.

Meanwhile, the ECB’s Survey of Professional Forecasters maintains 2018 inflation at 1.5%, cuts 2019 inflation to 1.6% to 1.7%. ECB’s Mersch said the path of normalization remains conditional on outlook for price stability, adds underlying strength of Euro area economy continues to support their confidence that inflation will converge to their aim.

SNB’s Jordan says there has been a reduction in significant overvaluation of CHF however the currency remains overvalued; he adds negative interest rates and market intervention remain essential as situation is still fragile.

Data include annualized GDP and U. of Michigan Consumer Sentiment Index. Charter Communications, Chevron, Colgate-Palmolive, and TransCanada are among companies reporting earnings

Overnight bulletin summary

• Soft UK growth data leads to a weaker GBP and lifts FTSE
• BoJ keeps monetary policy unchanged Kuroda reiterates it is appropriate to continue powerful monetary easing
• Looking ahead, highlights include, US GDP, ECB’s Lautenschlaeger and BoE’s Carney

Market Snapshot

• S&P 500 futures down 0.3% to 2,667.75
• STOXX Europe 600 up 0.05% to 383.95
• MXAP up 0.6% to 172.86
• MXAPJ up 0.8% to 561.89
• Nikkei up 0.7% to 22,467.87
• Topix up 0.3% to 1,777.23
• Hang Seng Index up 0.9% to 30,280.67
• Shanghai Composite up 0.2% to 3,082.23
• Sensex up 1% to 35,055.38
• Australia S&P/ASX 200 up 0.7% to 5,953.65
• Kospi up 0.7% to 2,492.40
• German 10Y yield fell 2.4 bps to 0.569%
• Euro down 0.3% to $1.2070
• Italian 10Y yield fell 3.0 bps to 1.493%
• Spanish 10Y yield fell 2.5 bps to 1.245%
• Brent futures down 0.4% to $74.45/bbl
• Gold spot up 0.1% to $1,317.85
• U.S. Dollar Index up 0.4% to 91.88

Top Overnight News

• North Korean leader Kim Jong Un and South Korean President Moon Jae-in agreed Friday to finally end a seven-decade war this year, and pursue the “complete denuclearization” of the Korean Peninsula
• Economic growth in France, the euro-area’s second largest economy, cooled sharply in the first quarter, and while weather was a factor, the slowdown may heighten concerns about the broader outlook for the euro area. Data weighed on the euro, which fell for the third day reaching its lowest since mid- January vs the dollar
• The Bank of Japan left its stimulus program unchanged on Friday, while removing language from its statement declaring that it would reach 2 percent inflation around fiscal 2019. The decision to maintain the yield-curve control program and asset purchases was forecast by all analysts surveyed by Bloomberg
• Whipped by a global stock selloff and climbing bond yields, Norway’s $1 trillion wealth fund reported its first loss in two years in the first quarter. The sovereign wealth fund lost 171 billion kroner ($21 billion), or 1.5 percent, the investor said on Friday
• Profit growth at Chinese industrial firms posted a sharp deceleration in March, as factory inflation moderated. Industrial profits rose 3.1 percent last month from a year earlier, the slowest gain since 2016

Asia equity markets traded mostly higher as the region got an uplift from the momentum in US where all majors extended on gains amid tech outperformance after strong Facebook results, which was later followed after-market by Amazon, Intel, Microsoft and Western Digital which all beat on earnings forecasts. As such, ASX 200 (+0.2%) and Nikkei 225 (+0.5%) traded positive although gains were relatively mild as participants also digested a flurry of data releases and earnings, while KOSPI (+0.6%) benefited from a warming of ties amid the historic inter-Korean summit. Elsewhere, Shanghai Comp. (-0.7%) and Hang Seng (+0.2%) were mixed with underperformance in the mainland following a neutral position by the PBoC in today’s open market operations, while data also showed a slowdown in the pace of Chinese Industrial Profit growth. Finally, 10yr JGBs were marginally higher with prices underpinned at the open to track the upside in USTs and with gains then held throughout the session including after an uneventful BoJ announcement in which it kept policy unchanged but removed the wording on reaching inflation goal around FY19.

Top Asian News

• BOJ Maintains Stimulus While Removing Language on Timing of 2%
• Sony’s New CEO Sets Conservative Targets as He Seeks Revival
• Malaysia’s Prime Minister Says Markets to Decide on Currency
• Tencent-Backed Little Red Book Is Said to Seek $200 Million
• Hedge Fund Judah Value Jumped 46% This Year on Agritrade

European stocks also pushed higher (Stoxx 600 +0.1%) post Thursday earnings as tech outperformance buoyed general sentiment, alongside an easing of geopolitical tensions following constructive dialog between Korea’s leaders. FTSE saw significant strengthening following uninspiring GDP data, that weakened the GBP and further reduced the possibility of tighter monetary policy. While expectations were focused on bad weather having a significant adverse impact, this was quoted to have had only a “limited effect” which pushed expectations of a rate hike in May to sub 25% from 50-50 prior.

Top European News

• Draghi’s ‘Moderation’ Rears Its Head in French Slowdown; Betting on Lower Euro-Area Rates Seen as the Way to Go for Now
• Norway’s $1 Trillion Wealth Fund Posts First Loss in Two Years
• Romanian President Calls for Premier’s Resignation
• German Unemployment Falls as Companies Overcome Soft Patch

In currencies, the DXY index is gathering momentum, largely at the expense of the Greenback’s currency counterparts in the basket (and beyond), and has now cleared a few more chart resistance levels, around 91.526 and from 90.702-751, with the latter entering a multi-month channel that targets 91.996 ahead of 92.000 for more obvious psychological rather than technical reasons. DXY high so far is around 91.825, and another supportive factor comes from month-end rebalancing models signalling net Dollar demand. Sterling’s dramatic turnaround from flavour of the month to one of the market’s worst enemies continues after the UK economy came to a virtual standstill in Q1 and not all because of the Beast from East, according to the ONS. BoE tightening expectations have been knocked back accordingly, with a May hike now down to circa 20% from evens pre-data and almost baked in at one stage (before misses on the labour, CPI and retail sales fronts last week). Cable is now threatening to lose the 1.3800 handle vs just over 1.4000 at the start of April/Q2 and the 1.4375 post-Brexit vote peak set only recently (on April 17). EUR/JPY/CHF: All reeling and feeling the weight of dovish/downbeat Central Bank policy pronouncements after the ECB acknowledged a slowdown in growth, the BoJ removed its timetable for inflation reaching target and the SNB maintained that the Franc is still highly valued, albeit not has strong as it has been. Eur/Usd has tumbled further from brief post-meeting peaks around 1.2210 to a low of circa 1.2065 and eyeing a 1.2050 Fib for potential support, while Usd/Jpy is consolidating gains above 109.00, but remains capped just ahead of 109.50 and the 109.65 Fib. Usd/Chf has breached 0.9900, but Eur/Chf is sub-1.2000 on the aforementioned single currency weakness.

In commodities, As we approach week end some profit taking noted in the crude complex, that has been further compounded by FX effects, with not much specific news aside from a fire in a Wisconsin oil refinery that had little effect on the fossil fuel. In the metals scope reports were seen from the EU that conditions being set by the US to extend tariff deadlines were unacceptable, with a slight rise in aluminium seen. Gold currently at almost 5 week lows, with the yellow metal heading for its biggest weekly fall in a month.

US Event Calendar

• 8:30am: U.S. Employment Cost Index, 1Q, est. 0.7%, prior 0.6%
• 8:30am: U.S. GDP Annualized QoQ, 1Q A, est. 2%, prior 2.9%; Personal Consumption, 1Q A, est. 1.1%, prior 4%
  • U.S. GDP Price Index, 1Q A, est. 2.2%, prior 2.3%
  • U.S. Core PCE QoQ, 1Q A, est. 2.5%, prior 1.9%
• 10am: U.S. U. of Mich. Sentiment, April F, est. 98, prior 97.8;
  • Current Conditions, April F, est. 106.2, prior 115
  • Expectations, April F, no est., prior 86.8
  • 1 Yr Inflation, April F, no est., prior 2.7%
  • 5-10 Yr Inflation, April F, no est., prior 2.4%

DB’s Jim Reid concludes the overnight wrap

What’s the best cure for a mini bond market tantrum? Perhaps to arrange a Mr Draghi press conference. It has certainly been the case in recent months that his pressers have generally been interpreted as dovish and yesterday the bond rally mostly came towards the end of his Q&A. Overall 10y Bunds closed down -4.0bps yesterday and Treasuries (-4.5bps) fell for the first time in eight days. At one stage yesterday the 10yr Bund/Treasury spread returned to 29 year wides of 239.6bp (see graph in the pdf). As recently as late 2012 this ratio was almost zero and last traded flat in February 2012. So quite a divergence in recent years.

As DB’s Mark Wall discussed, there was a contrast between a virtually unchanged prepared press statement in which the Governing Council kept its faith in growth and inflation and the Draghi Q&A where there was a clearer sense of caution. The most important point Mark and his team took from the press conference was the fact that the Governing Council had not discussed monetary policy. Instead the Council focused on the “very important” current data. The underlying air of caution coupled with the absence of any preparation for an imminent and important policy decision means the probability of the QE announcement coming in June has declined. DB now see July as the most likely timing of the announcement that net asset purchases will cease. The forecast for the sequencing and timing of monetary withdrawal remain the same with QE ending in December 2018 after a taper in Q4 and the first 20bp deposit rate hike in June 2019.

For credit investors, Mr Draghi played down concerns about a CSPP taper, saying that there is no specific strategy behind the slowdown while also partly blaming it on seasonality. A reminder that Michal in my team wrote a note on this sharp slowdown earlier this week suggesting there was enough evidence that buying was slowing. We’ll perhaps be able to tell more on Monday when the latest numbers are released.

Post the ECB, the Euro finished -0.48% lower versus the Greenback with that move aiding European equity markets with the Stoxx 600 closing +0.94%. US equity markets also bounced back strongly following solid corporate results from the tech sector, with Facebook and AMD up 9.1% and 13.7% respectively. The Nasdaq (+1.64%) rose for the first time in six days while the S&P (+1.04%) and Dow (+0.99%) also advanced. After the bell, the strength in tech seems to be continuing with Amazon up c7% while Baidu and Intel are both up c6% following their quarterly results.

This morning in Asia, markets are trading modestly higher with the Nikkei (+0.42%), Kospi (+0.64%) and Hang Seng (+0.10%) all up, while the Shanghai Comp. is down -0.74%. Datawise, Japan’s April core Tokyo CPI was below  market at 0.6% yoy (vs. 0.8% expected). March IP was above expectations at 2.2% yoy (vs. 2%), the jobless rate was in line at 2.5% while retail trade was below market (1% yoy vs. 1.5% expected). Elsewhere, China’s March industrial profits grew 3.1% yoy (vs. 10.8% previous).

With the ECB out of the way, this morning we had the BoJ meeting where members voted 8-1 to keep rates unchanged while Mr Kataoka continued to cast a dissent vote. Notably, the BOJ has removed previous wording on reaching its 2% inflation target around fiscal 2019, while it kept its 2019 & 2020 inflation forecasts of 1.8% unchanged. We shall hopefully get more info on this at Governor Kuroda’s press conference just after we go to print this morning at 7:30am London time.

Over in Asia this morning, Kim Jong Un became the first North Korean Leader to set foot in South Korea since the 1950’s Korean war as he met with South Korea’s President Moon Jae-in for meetings. Kim said he “felt a flood of  emotion” and called for “a new history of peace and prosperity” while indicating to Moon “let’s meet often”. Looking ahead, Kim is expected to meet with President Trump sometime in May or June for talks.

Looking ahead to today, the big focus for the market this afternoon is likely to be a first look at Q1 GDP in the US. The consensus is for a +2.0% annualized qoq reading while our US economists expect +2.2%. Our colleagues have  previously noted that their index of key economic indicators continues to point to 3% plus growth so even if today’s Q1 disappoints they doubt that policymakers will rethink the near term trajectory for interest rates. They also highlight that the initial Q1 GDP print has missed the median consensus expectation in each of the last eight years—partly due to well-known issues with residual seasonality. On average, forecasters have overestimated Q1 growth by 46 basis points (bps). This has been even more acute over the last five years as the median forecast has missed by 64 bps.  This release has also been prone to substantial revision. Real GDP growth has been revised up in four of the last five years and in five of the last eight years.

The average upward revision has been 88 bps while the average of the three downward revisions over this period (2010, 2011 and 2014) was 193 bps. So as DB’s Brett Ryan suggested, policymakers and market participants are likely to substantially discount the advance GDP figures in the first quarter, at least until the BEA issues its benchmark revision in July.

Also out today will be the Q1 employment cost index which our US economists forecast to come in at +0.8% (consensus at +0.7%). An upside surprise to our economists forecast would boost the year over year growth rate of the ECI above its Q4 2017 post recession high of 2.7% and could cause the market to price a greater probability of an additional fourth rate hike this year (which is our house forecast). According to Bloomberg the odds of this is at 41%, but notably up from the lows of 18% earlier this month.

Moving onto trade, ahead of the next week’s visit to China to discuss trade relations, President Trump’s economic adviser Mr Kudlow told CNBC that “it’s going to cover a broad area. All of the disputes will be discussed”. He added that “I’ve high hopes for this (trip)”, although also noted that “I’m always the optimist about this”. On the other side, Bloomberg has cited unnamed sources which suggest China’s State Council is considering plans to cut the import duty on passenger cars by half, from 25% currently to 10% or 15%. The potential cut is consistent with  President Xi’s comments in the Boao forum where he indicated a commitment to cut import tariffs on cars.

Over in Italy, the Five Star Party Leader Luigi Di Maio said “we’re available to sit at the table to negotiate a contract” to form the next government, potentially with the Democratic Party, but “if we don’t succeed, we go back and vote” in a new election.

Moving along, yesterday’s data in the US was a bit of a mixed bag. The April Kansas City Fed manufacturing index was above market at 26 (vs. 17 expected). In the details, the new orders index jumped to a 15-year high of +37 while the production index rose 13pts to a 7-year high of +33. The weekly initial jobless claims fell to a 49 year low (209k vs. 230k expected) while continuing claims was also lower than expectations (1,837k vs. 1,850k expected), although this was partly due to post Easter data distortions. Elsewhere, the March advance goods trade deficit narrowed to a six month low of -$68bln (vs. -$75bln), as exports of goods rose 2.5% mom while imports fell 2.1% mom. Finally, the March core durable goods orders (0% mom vs. 0.5% expected), core capital goods orders (-0.1% mom vs. 0.5% expected) and wholesale inventories (0.5% mom vs. 0.7% expected) were all weaker than expected.

In Europe, Germany’s May GfK consumer confidence index was in line at 10.8, with households less optimistic about the economic outlook but still positive about their willingness to spend. In the UK, the April CBI retailing reported  sales index improved 6pts mom to -2 (vs. -3 expected), while the Distributive trade survey showed a net 25% of retailers were optimistic of annual sales growth in May.

Looking at the day ahead, in Europe we’ll get flash April CPI reports in France and Spain along with the advance Q1 GDP reading in the former. Germany’s unemployment rate for April is also out along with the advance Q1 GDP report for the UK and April confidence indicators for the Euro area. In the US, we’ll see the first release of Q1 GDP along with the Q1 employment cost index and final April University of Michigan consumer sentiment report. Elsewhere, BOE’s Carney and Haldane will speak while Exxon Mobil and Chevron are due to report earnings.