Exhibit 99.2



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(Prepared in accordance with International
Financial Reporting Standards)

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LOGO

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON  INTERNAL CONTROL OVER FINANCIAL REPORTING

To
the Board of Directors (the "Board") and Shareholders of Agnico Eagle Mines Limited:

We
have audited Agnico Eagle Mines Limited's internal control over financial reporting as of December 31, 2016, based on criteria established inInternal
Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (the "COSO
criteria"). Agnico Eagle Mines Limited's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control
over financial reporting included in the accompanying management certification report on internal control over financial reporting. Our responsibility is to express an opinion on Agnico Eagle Mines
Limited's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that: (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that revenues and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, Agnico Eagle Mines Limited maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016 based on the COSO criteria.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Agnico Eagle Mines Limited as of
December 31, 2016 and 2015, and the related consolidated statements of income and comprehensive income, equity and cash flows for each of the two years in the period ended December 31,
2016, and our report dated March 27, 2017 expressed an unqualified opinion thereon.

|                |  | /s/ Ernst & Young LLP             
|--------------- |  | ----------------------------------
|Toronto, Canada |  | Chartered Professional Accountants
|March 27, 2017  |  | Licensed Public Accountants       

2   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

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MANAGEMENT CERTIFICATION

Management of Agnico Eagle Mines Limited ("Agnico Eagle" or the "Company") is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Company's Chief Executive Officer and Chief Financial Officer and effected by
the Company's Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

The
Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial reporting as of
December 31, 2016. In making this assessment, the Company's management used the criteria outlined by the Committee of Sponsoring Organizations of the Treadway Commission in Internal
Control  Integrated Framework issued in 2013. Based on its assessment, management concluded that, as of December 31, 2016, the Company's internal control
over financial reporting was effective.

The
effectiveness of the Company's internal control over financial reporting as of December 31, 2016 has been audited by Ernst & Young LLP, an independent registered public
accounting firm, as stated in their report that appears herein.

|Toronto, Canada
March 27, 2017 |  | By | /s/SEAN BOYDSean Boyd Vice-Chairman and
Chief Executive Officer                     
|------------------------------ |  | -- | ------------------------------------------------------------------------------------
|                               |  | By | /s/DAVID SMITHDavid Smith Senior Vice-President, Finance and
Chief Financial Officer

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   3

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board and Shareholders of Agnico Eagle Mines Limited:

We
have audited the accompanying consolidated balance sheets of Agnico Eagle Mines Limited as of December 31, 2016 and 2015, and the related consolidated statements of income and comprehensive
income, equity and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Agnico Eagle Mines Limited at
December 31, 2016 and 2015 and the consolidated results of its operations and its cash flows for each of the years then ended in conformity with International Financial Reporting Standards as
issued by the International Accounting Standards Board.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Agnico Eagle Mines Limited's internal control over financial reporting
as of December 31, 2016, based on criteria established inInternal Control  Integrated Frameworkissued by
the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 27, 2017 expressed an unqualified opinion thereon.

|                |  | /s/ Ernst & Young LLP             
|--------------- |  | ----------------------------------
|Toronto, Canada |  | Chartered Professional Accountants
|March 27, 2017  |  | Licensed Public Accountants       

4   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

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AGNICO EAGLE MINES LIMITED        CONSOLIDATED BALANCE SHEETS(thousands of United States dollars, except share amounts)

|                                        |                                                                 | As at
December 31,
2016                                                           |           | As at
December 31,
2015 |          
|--------------------------------------- | --------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------- | ----------------------- | ---------
|                                        |                                                                 |                                                                                   |          
|ASSETS                                  |                                                                 |                                                                                   |           |                         |          
|                                        |                                                                
|Current assets:                         |                                                                 |                                                                                   |           |                         |          
|                                        |                                                                
|                                        | Cash and cash equivalents                                       |                                                                                   | $         | 539,974                 |          
|                                        |                                                                
|                                        | Short-term investments                                          |                                                                                   |           | 8,424                   |          
|                                        |                                                                
|                                        | Restricted cash                                                 |                                                                                   |           | 398                     |          
|                                        |                                                                
|                                        | Trade receivables (notes 6 and 17)                              |                                                                                   |           | 8,185                   |          
|                                        |                                                                
|                                        | Inventories (note 7)                                            |                                                                                   |           | 443,714                 |          
|                                        |                                                                
|                                        | Income taxes recoverable (note 23)                              |                                                                                   |           |                        |          
|                                        |                                                                
|                                        | Available-for-sale securities (notes 6 and 8)                   |                                                                                   |           | 92,310                  |          
|                                        |                                                                
|                                        | Fair value of derivative financial instruments (notes 6 and 20) |                                                                                   |           | 364                     |          
|                                        |                                                                
|                                        | Other current assets (note 9(a))                                |                                                                                   |           | 136,810                 |          
|                                        |                                                                
|Total current assets                    |                                                                 |                                                                                   | 1,230,179 |                         |          
|                                        |                                                                
|Non-current assets:                     |                                                                 |                                                                                   |           |                         |          
|                                        |                                                                
|                                        | Restricted cash                                                 |                                                                                   |           | 764                     |          
|                                        |                                                                
|                                        | Goodwill                                                        |                                                                                   |           | 696,809                 |          
|                                        |                                                                
|                                        | Property, plant and mine development (note 10)                  |                                                                                   |           | 5,106,036               |          
|                                        |                                                                
|                                        | Other assets (note 9(b))                                        |                                                                                   |           | 74,163                  |          
|                                        |                                                                
|Total assets                            |                                                                 | $                                                                                 | 7,107,951 |                         | $        
|                                        |                                                                
|LIABILITIES AND EQUITY                  |                                                                 |                                                                                   |           |                         |          
|                                        |                                                                
|Current liabilities:                    |                                                                 |                                                                                   |           |                         |          
|                                        |                                                                
|                                        | Accounts payable and accrued liabilities (note 11)              |                                                                                   | $         | 228,566                 |          
|                                        |                                                                
|                                        | Reclamation provision (note 12)                                 |                                                                                   |           | 9,193                   |          
|                                        |                                                                
|                                        | Interest payable (note 14)                                      |                                                                                   |           | 14,242                  |          
|                                        |                                                                
|                                        | Income taxes payable (note 23)                                  |                                                                                   |           | 35,070                  |          
|                                        |                                                                
|                                        | Finance lease obligations (note 13(a))                          |                                                                                   |           | 5,535                   |          
|                                        |                                                                
|                                        | Current portion of long-term debt (note 14)                     |                                                                                   |           | 129,896                 |          
|                                        |                                                                
|                                        | Fair value of derivative financial instruments (notes 6 and 20) |                                                                                   |           | 1,120                   |          
|                                        |                                                                
|Total current liabilities               |                                                                 |                                                                                   | 423,622   |                         |          
|                                        |                                                                
|Non-current liabilities:                |                                                                 |                                                                                   |           |                         |          
|                                        |                                                                
|                                        | Long-term debt (note 14)                                        |                                                                                   |           | 1,072,790               |          
|                                        |                                                                
|                                        | Reclamation provision (note 12)                                 |                                                                                   |           | 265,308                 |          
|                                        |                                                                
|                                        | Deferred income and mining tax liabilities (note 23)            |                                                                                   |           | 819,562                 |          
|                                        |                                                                
|                                        | Other liabilities (note 15)                                     |                                                                                   |           | 34,195                  |          
|                                        |                                                                
|Total liabilities                       |                                                                 |                                                                                   | 2,615,477 |                         |          
|                                        |                                                                
|EQUITY                                  |                                                                 |                                                                                   |           |                         |          
|                                        |                                                                
|                                        | Common shares (note 16):                                        |                                                                                   |           |                         |          
|                                        |                                                                 | Outstanding  225,465,654 common shares issued, less 500,514 shares held in trust |           |                         | 4,987,694
|                                        |                                                                
|                                        | Stock options (notes 16 and 18)                                 |                                                                                   |           | 179,852                 |          
|                                        |                                                                
|                                        | Contributed surplus                                             |                                                                                   |           | 37,254                  |          
|                                        |                                                                
|                                        | Deficit                                                         |                                                                                   |           | (744,453                | )        
|                                        |                                                                
|                                        | Accumulated other comprehensive income                          |                                                                                   |           | 32,127                  |          
|                                        |                                                                
|Total equity                            |                                                                 |                                                                                   | 4,492,474 |                         |          
|                                        |                                                                
|Total liabilities and equity            |                                                                 | $                                                                                 | 7,107,951 |                         | $        
|                                        |                                                                
|Commitments and contingencies (note 25) |                                                                 |                                                                                   |           |                         |          
|                                        |                                                                

On behalf of the Board:

|GRAPHIC                      |  | GRAPHIC                      
|---------------------------- |  | -----------------------------
|Sean Boyd, CPA, CA, Director |  | Dr. Leanne M. Baker, Director

See accompanying notes

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   5

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AGNICO EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(thousands of United States dollars, except per share amounts)

|                                                                |                                                      |                                                                               | Year Ended December 31, |  
|--------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------------------------------------------------------- | ----------------------- | -
|                                                                |                                                      |                                                                               |                        
|                                                                |                                                      |                                                                               | 2016                    |  
|                                                                |                                                      |                                                                               |                        
|REVENUES                                                        |                                                      |                                                                               |                         |  
|                                                                |                                                     
|Revenues from mining operations (note 17)                       |                                                      | $                                                                             | 2,138,232               |  
|                                                                |                                                     
|COSTS, EXPENSES AND OTHER INCOME                                |                                                      |                                                                               |                         |  
|                                                                |                                                     
|Production(i)                                                   |                                                      |                                                                               | 1,031,892               |  
|                                                                |                                                     
|Exploration and corporate development                           |                                                      |                                                                               | 146,978                 |  
|                                                                |                                                     
|Amortization of property, plant and mine development (note 10)  |                                                      |                                                                               | 613,160                 |  
|                                                                |                                                     
|General and administrative                                      |                                                      |                                                                               | 102,781                 |  
|                                                                |                                                     
|Impairment loss on available-for-sale securities (note 8)       |                                                      |                                                                               |                        |  
|                                                                |                                                     
|Finance costs (note 14)                                         |                                                      |                                                                               | 74,641                  |  
|                                                                |                                                     
|(Gain) loss on derivative financial instruments (note 20)       |                                                      |                                                                               | (9,468                  | )
|                                                                |                                                     
|Gain on sale of available-for-sale securities (note 8)          |                                                      |                                                                               | (3,500                  | )
|                                                                |                                                     
|Environmental remediation (note 12)                             |                                                      |                                                                               | 4,058                   |  
|                                                                |                                                     
|Gain on impairment reversal (note 22)                           |                                                      |                                                                               | (120,161                | )
|                                                                |                                                     
|Foreign currency translation loss (gain)                        |                                                      |                                                                               | 13,157                  |  
|                                                                |                                                     
|Other expenses                                                  |                                                      |                                                                               | 16,233                  |  
|                                                                |                                                     
|Income before income and mining taxes                           |                                                      |                                                                               | 268,461                 |  
|                                                                |                                                     
|Income and mining taxes expense (note 23)                       |                                                      |                                                                               | 109,637                 |  
|                                                                |                                                     
|Net income for the year                                         |                                                      | $                                                                             | 158,824                 |  
|                                                                |                                                     
|Net income per share  basic (note 16)                          |                                                      | $                                                                             | 0.71                    |  
|                                                                |                                                     
|Net income per share  diluted (note 16)                        |                                                      | $                                                                             | 0.70                    |  
|                                                                |                                                     
|Cash dividends declared per common share                        |                                                      | $                                                                             | 0.36                    |  
|                                                                |                                                     
|COMPREHENSIVE INCOME                                            |                                                      |                                                                               |                         |  
|                                                                |                                                     
|Net income for the year                                         |                                                      | $                                                                             | 158,824                 |  
|                                                                |                                                     
|Other comprehensive income (loss):                              |                                                      |                                                                               |                         |  
|                                                                |                                                     
|Items that may be subsequently reclassified to net income:      |                                                      |                                                                               |                         |  
|                                                                |                                                     
|                                                                | Available-for-sale securities and other investments: |                                                                               |                         |  
|                                                                |                                                     
|                                                                |                                                      | Unrealized change in fair value of available-for-sale securities              |                         |  
|                                                                |                                                     
|                                                                |                                                      | Reclassification to impairment loss on available-for-sale securities (note 8) |                         |  
|                                                                |                                                     
|                                                                |                                                      | Reclassification to gain on sale of available-for-sale securities (note 8)    |                         |  
|                                                                |                                                     
|                                                                |                                                      | Income tax impact of reclassification items (note 23)                         |                         |  
|                                                                |                                                     
|                                                                |                                                      | Income tax impact of other comprehensive income (loss) items (note 23)        |                         |  
|                                                                |                                                     
|                                                                |                                                      |                                                                               | 28,799                  |  
|                                                                |                                                     
|Items that will not be subsequently reclassified to net income: |                                                      |                                                                               |                         |  
|                                                                |                                                     
|                                                                | Pension benefit obligations:                         |                                                                               |                         |  
|                                                                |                                                     
|                                                                |                                                      | Remeasurement gain (loss) of pension benefit obligations (note 15(a))         |                         |  
|                                                                |                                                     
|                                                                |                                                      | Income tax impact (note 23)                                                   |                         |  
|                                                                |                                                     
|                                                                |                                                      |                                                                               | 688                     |  
|                                                                |                                                     
|Other comprehensive income (loss) for the year                  |                                                      |                                                                               | 29,487                  |  
|                                                                |                                                     
|Comprehensive income for the year                               |                                                      | $                                                                             | 188,311                 |  
|                                                                |                                                     

Note:

See accompanying notes

6   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

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AGNICO EAGLE MINES LIMITED        CONSOLIDATED STATEMENTS OF EQUITY(thousands of United States dollars, except share and per share amounts)

|                                  |                                                                                                              | Common Shares
Outstanding |           |   |           |         |   |         |         |   |        |   |   |         
|--------------------------------- | ------------------------------------------------------------------------------------------------------------ | ------------------------- | --------- | - | --------- | ------- | - | ------- | ------- | - | ------ | - | - | --------
|                                  |                                                                                                              |                           |           |   |           |         |   |         |         |   |        |   |   |         
|
|                                  |                                                                                                              |                          
|Balance December 31, 2014         |                                                                                                              | 214,236,234               |           | $ | 4,599,788 |         | $ | 200,830 |         | $ | 37,254 |   | $ | (779,382
|                                 
|Net income                        |                                                                                                              |                          |           |   |          |         |   |        |         |   |       |   |   | 24,583  
|                                 
|Other comprehensive loss          |                                                                                                              |                          |           |   |          |         |   |        |         |   |       |   |   | (173    
|                                 
|Total comprehensive income (loss) |                                                                                                              |                          |           |   |          |         |   |        |         |   |       |   |   | 24,410  
|                                 
|Transactions with owners:         |                                                                                                              |                           |           |   |           |         |   |         |         |   |        |   |   |         
|                                 
|                                  | Shares issued under employee stock option plan (notes 16 and 18(a))                                          |                           | 747,683   |   |           | 22,326  |   |         | (4,654  | ) |        |  |   |         
|                                 
|                                  | Stock options (notes 16 and 18(a))                                                                           |                           |          |   |           |        |   |         | 20,056  |   |        |  |   |         
|                                 
|                                  | Shares issued under incentive share purchase plan (note 18(b))                                               |                           | 512,438   |   |           | 14,033  |   |         |        |   |        |  |   |         
|                                 
|                                  | Shares issued under dividend reinvestment plan                                                               |                           | 345,734   |   |           | 9,305   |   |         |        |   |        |  |   |         
|                                 
|                                  | Shares issued for joint acquisition of Malartic CHL property (note 5)                                        |                           | 459,197   |   |           | 13,441  |   |         |        |   |        |  |   |         
|                                 
|                                  | Shares issued for acquisition of Soltoro Ltd. (note 5)                                                       |                           | 770,429   |   |           | 24,351  |   |         |        |   |        |  |   |         
|                                 
|                                  | Shares issued to settle CMGP Convertible Debentures previously issued by Osisko                              |                           | 871,680   |   |           | 24,779  |   |         |        |   |        |  |   |         
|                                 
|                                  | Dividends declared ($0.32 per share)                                                                         |                           |          |   |           |        |   |         |        |   |        |  |   |         
|                                 
|                                  | Restricted Share Unit plan and Long Term Incentive Plan (notes 16 and 18(c))                                 |                           | (292,600  | ) |           | (83     | ) |         |        |   |        |  |   |         
|                                 
|Balance December 31, 2015         |                                                                                                              | 217,650,795               |           | $ | 4,707,940 |         | $ | 216,232 |         | $ | 37,254 |   | $ | (823,734
|                                 
|Net income                        |                                                                                                              |                          |           |   |          |         |   |        |         |   |       |   |   | 158,824 
|                                 
|Other comprehensive income        |                                                                                                              |                          |           |   |          |         |   |        |         |   |       |   |   | 688     
|                                 
|Total comprehensive income        |                                                                                                              |                          |           |   |          |         |   |        |         |   |       |   |   | 159,512 
|                                 
|Transactions with owners:         |                                                                                                              |                           |           |   |           |         |   |         |         |   |        |   |   |         
|                                 
|                                  | Shares issued under employee stock option plan (notes 16 and 18(a))                                          |                           | 6,492,907 |   |           | 245,128 |   |         | (53,025 | ) |        |  |   |         
|                                 
|                                  | Stock options (notes 16 and 18(a))                                                                           |                           |          |   |           |        |   |         | 16,645  |   |        |  |   |         
|                                 
|                                  | Shares issued under incentive share purchase plan (note 18(b))                                               |                           | 344,778   |   |           | 15,443  |   |         |        |   |        |  |   |         
|                                 
|                                  | Shares issued under dividend reinvestment plan                                                               |                           | 224,732   |   |           | 8,893   |   |         |        |   |        |  |   |         
|                                 
|                                  | Shares issued under flow-through share private placement (note 16)                                           |                           | 374,869   |   |           | 13,593  |   |         |        |   |        |  |   |         
|                                 
|                                  | Dividends declared ($0.36 per share)                                                                         |                           |          |   |           |        |   |         |        |   |        |  |   |         
|                                 
|                                  | Restricted Share Unit plan, Performance Share Unit plan, and Long Term Incentive Plan (notes 16 and 18(c,d)) |                           | (122,941  | ) |           | (3,303  | ) |         |        |   |        |  |   |         
|                                 
|Balance December 31, 2016         |                                                                                                              | 224,965,140               |           | $ | 4,987,694 |         | $ | 179,852 |         | $ | 37,254 |   | $ | (744,453
|                                 

See accompanying notes

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   7

---



AGNICO EAGLE MINES LIMITED        CONSOLIDATED STATEMENTS OF CASH FLOWS(thousands of United States dollars)

|                                                                                       |                                                                |   | Year Ended
December 31, |         
|-------------------------------------------------------------------------------------- | -------------------------------------------------------------- | - | ----------------------- | --------
|                                                                                       |                                                                |   |                        
|                                                                                       |                                                                |   | 2016                    |         
|                                                                                       |                                                                |   |                        
|OPERATING ACTIVITIES                                                                   |                                                                |   |                         |         
|                                                                                       |                                                               
|Net income for the year                                                                |                                                                | $ | 158,824                 |         
|                                                                                       |                                                               
|Add (deduct) items not affecting cash:                                                 |                                                                |   |                         |         
|                                                                                       |                                                               
|                                                                                       | Amortization of property, plant and mine development (note 10) |   |                         | 613,160 
|                                                                                       |                                                               
|                                                                                       | Deferred income and mining taxes (note 23)                     |   |                         | 7,609   
|                                                                                       |                                                               
|                                                                                       | Gain on sale of available-for-sale securities (note 8)         |   |                         | (3,500  
|                                                                                       |                                                               
|                                                                                       | Stock-based compensation (note 18)                             |   |                         | 33,804  
|                                                                                       |                                                               
|                                                                                       | Impairment loss on available-for-sale securities (note 8)      |   |                         |        
|                                                                                       |                                                               
|                                                                                       | Gain on impairment reversal (note 22)                          |   |                         | (120,161
|                                                                                       |                                                               
|                                                                                       | Foreign currency translation loss (gain)                       |   |                         | 13,157  
|                                                                                       |                                                               
|                                                                                       | Other                                                          |   |                         | 14,012  
|                                                                                       |                                                               
|Adjustment for settlement of reclamation provision                                     |                                                                |   | (2,719                  | )       
|                                                                                       |                                                               
|Changes in non-cash working capital balances:                                          |                                                                |   |                         |         
|                                                                                       |                                                               
|                                                                                       | Trade receivables                                              |   |                         | (471    
|                                                                                       |                                                               
|                                                                                       | Income taxes                                                   |   |                         | 28,082  
|                                                                                       |                                                               
|                                                                                       | Inventories                                                    |   |                         | 20,355  
|                                                                                       |                                                               
|                                                                                       | Other current assets                                           |   |                         | 53,009  
|                                                                                       |                                                               
|                                                                                       | Accounts payable and accrued liabilities                       |   |                         | (35,408 
|                                                                                       |                                                               
|                                                                                       | Interest payable                                               |   |                         | (1,136  
|                                                                                       |                                                               
|Cash provided by operating activities                                                  |                                                                |   | 778,617                 |         
|                                                                                       |                                                               
|INVESTING ACTIVITIES                                                                   |                                                                |   |                         |         
|                                                                                       |                                                               
|Additions to property, plant and mine development (note 10)                            |                                                                |   | (516,050                | )       
|                                                                                       |                                                               
|Acquisitions, net of cash and cash equivalents acquired (note 5)                       |                                                                |   | (12,434                 | )       
|                                                                                       |                                                               
|Net purchases of short-term investments                                                |                                                                |   | (980                    | )       
|                                                                                       |                                                               
|Net proceeds from sale of available-for-sale securities and other investments (note 8) |                                                                |   | 9,461                   |         
|                                                                                       |                                                               
|Purchases of available-for-sale securities and other investments (note 8)              |                                                                |   | (33,774                 | )       
|                                                                                       |                                                               
|Decrease in restricted cash                                                            |                                                                |   | 287                     |         
|                                                                                       |                                                               
|Cash used in investing activities                                                      |                                                                |   | (553,490                | )       
|                                                                                       |                                                               
|FINANCING ACTIVITIES                                                                   |                                                                |   |                         |         
|                                                                                       |                                                               
|Dividends paid                                                                         |                                                                |   | (71,375                 | )       
|                                                                                       |                                                               
|Repayment of finance lease obligations (note 13(a))                                    |                                                                |   | (10,004                 | )       
|                                                                                       |                                                               
|Proceeds from long-term debt                                                           |                                                                |   | 125,000                 |         
|                                                                                       |                                                               
|Repayment of long-term debt                                                            |                                                                |   | (405,374                | )       
|                                                                                       |                                                               
|Notes issuance (note 14)                                                               |                                                                |   | 350,000                 |         
|                                                                                       |                                                               
|Long-term debt financing (note 14)                                                     |                                                                |   | (3,415                  | )       
|                                                                                       |                                                               
|Repurchase of common shares for stock-based compensation plans (notes 16 and 18(c,d))  |                                                                |   | (15,576                 | )       
|                                                                                       |                                                               
|Proceeds on exercise of stock options (note 18(a))                                     |                                                                |   | 192,103                 |         
|                                                                                       |                                                               
|Common shares issued (note 16)                                                         |                                                                |   | 29,027                  |         
|                                                                                       |                                                               
|Cash provided by (used in) financing activities                                        |                                                                |   | 190,386                 |         
|                                                                                       |                                                               
|Effect of exchange rate changes on cash and cash equivalents                           |                                                                |   | 311                     |         
|                                                                                       |                                                               
|Net increase (decrease) in cash and cash equivalents during the year                   |                                                                |   | 415,824                 |         
|                                                                                       |                                                               
|Cash and cash equivalents, beginning of year                                           |                                                                |   | 124,150                 |         
|                                                                                       |                                                               
|Cash and cash equivalents, end of year                                                 |                                                                | $ | 539,974                 |         
|                                                                                       |                                                               
|SUPPLEMENTAL CASH FLOW INFORMATION                                                     |                                                                |   |                         |         
|                                                                                       |                                                               
|Interest paid (note 14)                                                                |                                                                | $ | 71,401                  |         
|                                                                                       |                                                               
|Income and mining taxes paid                                                           |                                                                | $ | 105,184                 |         
|                                                                                       |                                                               

See accompanying notes

8   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

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AGNICO EAGLE MINES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
December 31, 2016

1.   CORPORATE INFORMATION

Agnico
Eagle Mines Limited ("Agnico Eagle" or the "Company") is principally engaged in the production and sale of gold, as well as related activities such as exploration and mine development. The
Company's mining operations are located in Canada, Mexico and Finland and the Company has exploration activities in Canada, Europe, Latin America and the United States. Agnico Eagle is a public
company incorporated under the laws of the Province of Ontario, Canada with its head and registered office located at 145 King Street East, Suite 400, Toronto, Ontario, M5C 2Y7.
The Company is listed on the Toronto Stock Exchange and the New York Stock Exchange. Agnico Eagle sells its gold production into the world market.

These
consolidated financial statements were authorized for issuance by the Board of Directors of the Company (the "Board") on March 27, 2017.

2.   BASIS OF PRESENTATION





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3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



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Recently Issued Accounting Pronouncements

IFRS 9  Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 and all previous versions of IFRS 9.
IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for
annual periods beginning on or after January 1, 2018, with early application permitted. Except for hedge accounting, retrospective application is required, but the provision of comparative
information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Company plans to adopt the new standard on the required
effective date.

During
2016, the Company performed a high-level impact assessment of all three aspects of IFRS 9. This preliminary assessment is based on currently available information and may be subject to
changes arising from further detailed analysis or additional reasonable and supportable information being made available to the Company in the future. Overall, there is no significant impact expected
on the balance sheet or statement of equity from the adoption of IFRS 9.

Classification and measurement

The
only change in IFRS 9 in respect of the classification of financial liabilities is that for those designated at fair value through profit or loss ("FVTPL"), fair value
changes attributable to the Company's own credit risk are presented in OCI. IFRS 9

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   21

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introduces
a new model for classifying financial assets. The standard introduces principle-based requirements for the classification of financial assets, using the following measurement categories:



The
Company is still evaluating its different financial assets to ensure appropriate classification under IFRS 9.

Impairment

The
new impairment requirements are based on a forward-looking expected credit loss model. The model applies to debt instruments measured at amortized cost or at FVOCI, as well as lease receivables,
trade receivables, contracts assets (as defined in IFRS 15), and loan commitments and financial guarantee contracts that are not at fair value
through profit or loss. The Company does not hold significant amounts of these types of financial assets and therefore does not expect these changes to have a significant impact.

Hedge accounting

The
changes in IFRS 9 relating to hedge accounting will have no impact as the Company does not currently apply hedge accounting.

IFRS 15  Revenue from Contracts with Customers

IFRS 15
was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount
that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The
new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual
periods beginning on or after January 1, 2018. Early adoption is permitted.

The
Company plans to adopt the new standard (including the clarifications issued by the IASB in April 2016) on the required effective date. During 2016, the Company commenced its preliminary
assessment of IFRS 15 and some of the key issues it has identified, and its initial views and perspectives, are set out below. These are based on the work completed to date and the Company's
current interpretation of IFRS 15 and may be subject to changes as more detailed analysis is completed and as interpretations evolve more generally. Furthermore, the Company is considering and
will continue to monitor any further development. To date, the issues set out immediately below were identified by the Company as requiring further consideration.

Provisionally priced sales

Some
of the Company's sales of metal in concentrate contain provisional pricing features. Under IAS 18, revenue is recognized under these contracts based on forward prices at the time of
delivery, which is when the risks and rewards
of ownership of the concentrate pass to the third-party smelters. Final prices for the metals contained in the concentrate are determined based on the prevailing spot market metal prices on a
specified future date, which is established as of the date that the concentrate is delivered to the smelter.

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AGNICO EAGLE MINES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
December 31, 2016

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company is currently evaluating the accounting treatment of these contracts under IFRS 15. The impact is expected to be immaterial. In 2016, revenue from concentrate
sales contracts was approximately 0.7% of total revenue.

Other presentation and disclosure requirements

IFRS 15
contains presentation and disclosure requirements which are more detailed than the current standards. The presentation requirements represent a significant change from current practice
and will increase the volume of disclosures required in the financial statements. Many of the disclosure requirements in IFRS 15 are completely new. In 2016, the Company started to consider the
systems, internal controls, policies and procedures necessary to collect and disclose the required information.

IFRS 16  Leases

In
January 2016, the IASB issued IFRS 16 Leaseswhich brings most leases on-balance sheet for
lessees by eliminating the distinction between operating and finance leases. Lessor accounting remains largely unchanged and the distinction between operating and finance leases is retained. Under
IFRS 16, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly, and the liability
accrues interest. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease. Lessees are permitted
to make an accounting policy election, by class of underlying asset, to apply a method like IAS 17's operating lease accounting and not recognize lease assets and lease liabilities for leases
with a lease term of 12 months or less and on a lease-by-lease basis, to apply a method similar to current operating lease accounting to leases for which the underlying asset is of low value.
IFRS 16 supersedes IAS 17 Leasesand related interpretations and is effective for periods
beginning on or after January 1, 2019, with earlier adoption permitted if IFRS 15 has also been applied. A lessee can choose to apply the standard using either a full retrospective or a
modified retrospective approach. The standard's transition provisions permit certain practical expedients. In 2017, the Company plans to assess the potential effect of IFRS 16 on its
consolidated financial statements.

4.   SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The
preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Management believes that the estimates used in the preparation of the consolidated financial statements are reasonable; however, actual results may differ
materially from these estimates. The key areas where significant judgments, estimates and assumptions have been made are summarized below.

Proven and Probable Mineral Reserves

Proven and probable mineral reserves are estimates of the amount of ore that can be economically and legally extracted from the Company's mining properties. The estimates are
based on information compiled by "qualified persons" as defined under the Canadian Securities Administrators' National Instrument 43-101  Standards of
Disclosure for Mineral Projects ("NI 43-101"). Such an analysis relating to the geological and technical data on the size, depth, shape and grade of the ore body and suitable production
techniques and recovery rates requires complex geological judgments to interpret the data. The estimation of recoverable proven and probable mineral reserves is based upon factors such as estimates of
commodity prices, future capital requirements and production costs, geological and metallurgical assumptions and judgments made in estimating the size and grade of the ore body and foreign
exchange rates.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   23

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As
the economic assumptions used may change and as additional geological information is acquired during the operation of a mine, estimates of proven and probable mineral reserves may change. Such
changes may impact the Company's consolidated balance sheets and consolidated statements of income and comprehensive income, including:



Exploration and Evaluation Expenditures

The application of the Company's accounting policy for exploration and evaluation expenditures requires judgment to determine whether future economic benefits are likely to
arise and whether activities have reached a stage where the technical feasibility and commercial viability of extracting the mineral is demonstrable.

Production Stage of a Mine

As each mine is unique, significant judgment is required to determine the date that a mine enters the production stage. The Company considers the factors outlined in
note 3 to these consolidated financial statements to make this determination.

Contingencies

Contingencies can be either possible assets or possible liabilities arising from past events which, by their nature, will be resolved only when one or more uncertain future
events occur or fail to occur. The assessment of the existence and potential impact of contingencies inherently involves the exercise of significant judgment and the use of estimates regarding the
outcome of future events.

Reclamation Provisions

Environmental remediation costs will be incurred by the Company at the end of the operating life of the Company's mining properties. Management assesses its reclamation
provision each reporting period or when new information becomes available. The ultimate environmental remediation costs are uncertain and cost estimates can vary in response to many factors, including
estimates of the extent and costs of reclamation activities, technological changes, regulatory changes, cost increases as compared to the inflation rate and changes in discount rates. These
uncertainties may result in future actual expenditures differing from the amount of the current provision. As a result, there could be significant adjustments to the provisions established that would
affect future financial results. The reclamation provision as at the reporting date represents management's best estimate of the present value of the future environmental remediation
costs required.

Income and Mining Taxes

Management is required to make estimates regarding the tax basis of assets and liabilities and related deferred income and mining tax assets and liabilities, amounts recorded
for uncertain tax positions, the measurement of income and mining tax expense, and estimates of the timing of repatriation of income. Several of these estimates require management to make

24   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

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assessments
of future taxable profit and, if actual results are significantly different than the Company's estimates, the ability to realize the deferred income and mining tax assets recorded on the
consolidated balance sheets could be affected.

Amortization

Property, plant and mine development comprise a large portion of the Company's total assets and as such the amortization of these assets has a significant effect on the
Company's consolidated financial statements. Amortization is charged according to the pattern in which an asset's future economic benefits are expected to be consumed. The determination of this
pattern of future economic benefits requires management to make estimates and assumptions about useful lives and residual values at the end of the asset's useful life. Actual useful lives and residual
values may differ significantly from current assumptions.

Impairment and Impairment Reversals

The Company evaluates each asset or CGU (excluding goodwill, which is assessed for impairment annually regardless of indicators and is not eligible for impairment reversals) in
each reporting period to determine if any indicators of impairment or impairment reversal exist. When completing an impairment test, the Company calculates the estimated
recoverable amount of CGUs, which requires management to make estimates and assumptions with respect to items such as future production levels, operating and capital costs, long-term commodity prices,
foreign exchange rates, discount rates, exploration potential, and closure and environmental remediation costs. These estimates and assumptions are subject to risk and uncertainty. Therefore, there is
a possibility that changes in circumstances will have an impact on these projections, which may impact the recoverable amount of assets or CGUs. Accordingly, it is possible that some or the entire
carrying amount of the assets or CGUs may be further impaired or the impairment charge reversed with the impact recognized in the consolidated statements of income and comprehensive income.

Joint Arrangements

Judgment is required to determine when the Company has joint control of a contractual arrangement, which requires a continuous assessment of the relevant activities and when
the decisions in relation to those activities require unanimous consent. Judgment is also continually required to classify a joint arrangement as either a joint operation or a joint venture when the
arrangement has been structured through a separate vehicle. Classifying the arrangement requires the Company to assess its rights and obligations arising from the arrangement. Specifically, the
Company considers the legal form of the separate vehicle, the terms of the contractual arrangement and other relevant facts and circumstances. This assessment often requires significant judgment, and
a different conclusion on joint control, or whether the arrangement is a joint operation or a joint venture, may have a material impact on the accounting treatment.

Management
evaluated its joint arrangement with Yamana Gold Inc. ("Yamana") to each acquire 50.0% of the shares of Osisko (now Canadian Malartic Corporation) under the principles of
IFRS 11 Joint Arrangements. The Company concluded that the arrangement qualified as a joint operation upon considering the following significant factors:



ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   25

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5.   ACQUISITIONS

Gunnarn Mining AB

On June 11, 2015, Agnico Eagle Sweden AB ("AE Sweden") an indirect wholly-owned subsidiary of the Company, acquired 55.0% of the issued and outstanding common
shares of Gunnarn Mining AB ("Gunnarn") from Orex Minerals Inc. ("Orex"), by way of a share purchase agreement (the "Gunnarn SPA"). The operation and governance of Gunnarn and the
Barsele project are governed by a joint venture agreement among the Company, AE Sweden, Orex and Gunnarn (the "Gunnarn JVA").

Under
the Gunnarn SPA, the consideration for the acquisition of the 55.0% of Gunnarn's outstanding common shares was $10.0 million, comprised of $6.0 million in cash payable at closing
and payments of $2.0 million in cash or, at AE Sweden's sole discretion, shares of the Company on each of the first and second anniversary of the closing. Under the Gunnarn JVA,
AE Sweden committed to incur an aggregate of $7.0 million of exploration expenses at the Barsele project by June 11, 2018, 45.0% or $3.1 million of which is considered
accrued purchase consideration. Accordingly, the Company's total purchase consideration for the acquisition of its 55.0% interest in Gunnarn was $13.1 million. AE Sweden may earn an additional
15.0% interest in Gunnarn under the Gunnarn JVA if it completes a feasibility study in respect of the Barsele project.

The
Gunnarn JVA also provides AE Sweden with the right to nominate a majority of the members of the board of directors of Gunnarn (based on current shareholdings) and AE Sweden is the sole operator of
the Barsele project and paid customary management fees.

In
connection with the transaction, Orex also obtained a 2.0% net smelter return royalty on production from the Barsele property, which the Company may repurchase at any time for $5.0 million.

The
Gunnarn acquisition was accounted for by the Company as an asset acquisition and transaction costs associated with the acquisition totaling $0.6 million were capitalized to the mining
properties acquired.

On
September 25, 2015, Orex assigned its interest in the Gunnarn JV Agreement to Barsele Minerals Corp. ("Barsele Minerals"), which was at the time a wholly-owned subsidiary of Orex. All of the
shares of Barsele Minerals were subsequently distributed to shareholders of Orex under a plan of arrangement.

26   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
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The
following table sets out the allocation of the purchase price to assets acquired and liabilities assumed, based on management's estimates of fair value:

|Total purchase price:                                  |  |   |        |   | 
|------------------------------------------------------ |  | - | ------ | - | 
|                                                      
|Cash paid for acquisition                              |  | $ | 5,994  |   | 
|                                                      
|Accrued consideration                                  |  |   | 7,150  |   | 
|                                                      
|Total purchase price to allocate                       |  | $ | 13,144 |   | 
|                                                      
|Fair value of assets acquired and liabilities assumed: |  |   |        |   | 
|                                                      
|Mining properties                                      |  | $ | 20,021 |   | 
|                                                      
|Cash and cash equivalents                              |  |   | 3      |   | 
|                                                      
|Other current assets                                   |  |   | 35     |   | 
|                                                      
|Accounts payable and accrued liabilities               |  |   | (80    | ) | 
|                                                      
|Long-term debt                                         |  |   | (29    | ) | 
|                                                      
|Other liabilities                                      |  |   | (6,806 | ) | 
|                                                      
|Net assets acquired                                    |  | $ | 13,144 |   | 
|                                                      

Soltoro Ltd.

On June 9, 2015, the Company acquired all of the issued and outstanding common shares of Soltoro Ltd. ("Soltoro"), including common shares issuable on the
exercise of Soltoro's outstanding options and warrants, by way of a plan of arrangement under theCanada Business Corporations Act(the "Soltoro
Arrangement"). At the time of its acquisition, Soltoro was a TSX Venture listed exploration company focused on the discovery of precious metals in Mexico.

Each
outstanding share of Soltoro was exchanged under the Soltoro Arrangement for: (i) C$0.01 in cash; (ii) 0.00793 of an Agnico Eagle common share; and (iii) one common share of
Palamina Corp., a company that was newly formed in connection with the Soltoro Arrangement.

Pursuant
to the Soltoro Arrangement, Soltoro transferred all mining properties located outside of the state of Jalisco, Mexico to Palamina Corp., and retained all mining properties located within the
state of Jalisco, Mexico. Agnico Eagle had no interest in Palamina Corp. upon the closing of the Soltoro Arrangement.

Agnico
Eagle's total purchase price of $26.7 million was comprised of $2.4 million in cash, including $1.6 million in cash contributed to Palamina Corp., and 770,429 Agnico
Eagle common shares issued from treasury. The Soltoro acquisition was accounted for as an asset acquisition and transaction costs associated with the acquisition totaling $1.4 million were
capitalized to the mining properties acquired separately from the purchase price allocation set out below.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   27

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The
following table sets out the allocation of the purchase price to assets acquired and liabilities assumed, based on management's estimates of fair value:

|Total purchase price:                                  |  |   |        |   | 
|------------------------------------------------------ |  | - | ------ | - | 
|                                                      
|Cash paid for acquisition                              |  | $ | 2,366  |   | 
|                                                      
|Agnico Eagle common shares issued for acquisition      |  |   | 24,351 |   | 
|                                                      
|Total purchase price to allocate                       |  | $ | 26,717 |   | 
|                                                      
|Fair value of assets acquired and liabilities assumed: |  |   |        |   | 
|                                                      
|Mining properties                                      |  | $ | 27,053 |   | 
|                                                      
|Cash and cash equivalents                              |  |   | 2,375  |   | 
|                                                      
|Available-for-sale securities                          |  |   | 17     |   | 
|                                                      
|Other current assets                                   |  |   | 130    |   | 
|                                                      
|Plant and equipment                                    |  |   | 33     |   | 
|                                                      
|Accounts payable and accrued liabilities               |  |   | (1,134 | ) | 
|                                                      
|Other current liabilities                              |  |   | (1,757 | ) | 
|                                                      
|Net assets acquired                                    |  | $ | 26,717 |   | 
|                                                      

Malartic CHL Property

On March 19, 2015, Agnico Eagle, Yamana and the Partnership completed the purchase of a 30.0% interest in the Malartic CHL property from Abitibi Royalties Inc.
("Abitibi") in exchange for 459,197 Agnico Eagle common shares, 3,549,695 Yamana common shares and 3.0% net smelter return royalties to each of Abitibi and Osisko Gold
Royalties Ltd. on the Malartic CHL property. Total Agnico Eagle common share consideration issued was valued at $13.4 million based on the closing price of the common shares on
March 18, 2015. The Malartic CHL property is located adjacent to the Company's jointly owned Canadian Malartic mine and the remaining 70.0% interest in the Malartic CHL property was jointly
acquired through the June 16, 2014 acquisition of Osisko (the predecessor to Canadian Malartic Corporation). Concurrent with the transaction closing, each of Abitibi, Agnico Eagle,
Yamana, the Partnership and Canadian Malartic Corporation released and discharged the others with respect to all proceedings previously commenced by Abitibi with respect to the Malartic CHL property.
As a result of the transaction, Agnico Eagle and Yamana jointly own a 100% interest in the Malartic CHL property through their respective indirect interests in the Partnership.

28   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
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6.   FAIR VALUE MEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described, as follows, based on the
lowest-level input that is significant to the fair value measurement as a whole:



The
fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

For
items that are recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing their classification at the end
of each reporting period.

During
the year ended December 31, 2016, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value
measurements.

The
Company's financial assets and liabilities include cash and cash equivalents, short-term investments, restricted cash, trade receivables, available-for-sale securities, accounts payable and
accrued liabilities, long-term debt and derivative financial instruments.

The
fair values of cash and cash equivalents, short-term investments, restricted cash and accounts payable and accrued liabilities approximate their carrying values due to their short-term nature.

Long-term
debt is recorded on the consolidated balance sheets at December 31, 2016 at amortized cost. The fair value of long-term debt is determined by applying a discount rate, reflecting the
credit spread based on the Company's credit rating, to future related cash flows which is categorized within Level 2 of the fair value hierarchy. As at December 31, 2016, the Company's
long-term debt had a fair value of $1,319.7 million (December 31, 2015  $1,226.5 million).

The
following table sets out the Company's financial assets and liabilities measured at fair value on a recurring basis as at December 31, 2016 using the fair value hierarchy:

|                                               |  | Level 1 |        | Level 2 |   | Level 3 |  | Total |  
|---------------------------------------------- |  | ------- | ------ | ------- | - | ------- |  | ----- | -
|                                               |  |        
|Financial assets:                              |  |         |        |         |   |         |  |       |  
|                                              
|Trade receivables                              |  | $       |       |         | $ | 8,185   |  | $     | 
|                                              
|Available-for-sale securities                  |  |         | 86,736 |         |   | 5,574   |  |       | 
|                                              
|Fair value of derivative financial instruments |  |         |       |         |   | 364     |  |       | 
|                                              
|Total financial assets                         |  | $       | 86,736 |         | $ | 14,123  |  | $     | 
|                                              
|Financial liabilities:                         |  |         |        |         |   |         |  |       |  
|                                              
|Fair value of derivative financial instruments |  | $       |       |         | $ | 1,120   |  | $     | 
|                                              
|Total financial liabilities                    |  | $       |       |         | $ | 1,120   |  | $     | 
|                                              

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   29

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The following table sets out the Company's financial assets and liabilities measured at fair value on a recurring basis as at December 31, 2015 using the
fair value hierarchy:

|                                               |  | Level 1 |        | Level 2 |   | Level 3 |  | Total |  
|---------------------------------------------- |  | ------- | ------ | ------- | - | ------- |  | ----- | -
|                                               |  |        
|Financial assets:                              |  |         |        |         |   |         |  |       |  
|                                              
|Trade receivables                              |  | $       |       |         | $ | 7,714   |  | $     | 
|                                              
|Available-for-sale securities                  |  |         | 27,630 |         |   | 4,233   |  |       | 
|                                              
|Fair value of derivative financial instruments |  |         |       |         |   | 87      |  |       | 
|                                              
|Total financial assets                         |  | $       | 27,630 |         | $ | 12,034  |  | $     | 
|                                              
|Financial liabilities:                         |  |         |        |         |   |         |  |       |  
|                                              
|Fair value of derivative financial instruments |  | $       |       |         | $ | 8,073   |  | $     | 
|                                              
|Total financial liabilities                    |  | $       |       |         | $ | 8,073   |  | $     | 
|                                              

Valuation Techniques

Trade Receivables

Trade receivables from provisional invoices for concentrate sales are valued using quoted forward rates derived from observable market data based on the month of expected
settlement (classified within Level 2 of the fair value hierarchy).

Available-for-sale Securities

Available-for-sale securities representing shares of publicly traded entities are recorded at fair value using quoted market prices (classified within Level 1 of the
fair value hierarchy). Available-for-sale securities representing shares of non-publicly traded entities or non-transferable shares of publicly traded entities are recorded at fair value using
external broker-dealer quotations corroborated by option pricing models (classified within Level 2 of the fair value hierarchy).

Derivative Financial Instruments

Derivative financial instruments classified within Level 2 of the fair value hierarchy are recorded at fair value using external broker-dealer quotations corroborated by
option pricing models or option pricing models that utilize a variety of inputs that are a combination of quoted prices and market-corroborated inputs. Derivative financial instruments are classified
as fair value through profit and loss.

30   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---





AGNICO EAGLE MINES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
December 31, 2016

7.   INVENTORIES

|                                                   |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015
|-------------------------------------------------- |  | - | ----------------------- |  | - | -----------------------
|                                                   |  |  
|Ore in stockpiles and on leach pads                |  | $ | 90,536                  |  | $ | 88,633                 
|                                                  
|Concentrates and dore bars                         |  |   | 108,193                 |  |   | 108,657                
|                                                  
|Supplies                                           |  |   | 244,985                 |  |   | 264,686                
|                                                  
|Total current inventories                          |  | $ | 443,714                 |  | $ | 461,976                
|                                                  
|Non-current ore in stockpiles and on leach pads(i) |  |   | 62,780                  |  |   | 61,167                 
|                                                  
|Total inventories                                  |  | $ | 506,494                 |  | $ | 523,143                
|                                                  

Note:

During the year ended December 31, 2016, a charge of $6.6 million (2015  $8.6 million) was recorded
within production costs to reduce the carrying value of inventories to their net realizable value.

8.   AVAILABLE-FOR-SALE SECURITIES

|                                                            |  |   | As at
December 31,
2016 |   |   | As at
December 31,
2015 |  
|----------------------------------------------------------- |  | - | ----------------------- | - | - | ----------------------- | -
|                                                            |  |   |                        
|Cost                                                        |  | $ | 91,200                  |   | $ | 64,832                  |  
|                                                            | 
|Accumulated impairment losses                               |  |   | (36,017                 | ) |   | (36,842                 | )
|                                                            | 
|Unrealized gains in accumulated other comprehensive income  |  |   | 37,634                  |   |   | 4,030                   |  
|                                                            | 
|Unrealized losses in accumulated other comprehensive income |  |   | (507                    | ) |   | (157                    | )
|                                                            | 
|Total estimated fair value of available-for-sale securities |  | $ | 92,310                  |   | $ | 31,863                  |  
|                                                            | 

During the year ended December 31, 2016, the Company received net proceeds of $6.0 million
(2015  $54.4 million) and recognized a gain before income taxes of $3.5 million (2015  $24.6 million)
on the sale of certain available-for-sale securities.

During
the year ended December 31, 2016, the Company recorded an impairment loss of nil (2015  $12.0 million) on certain available-for-sale
securities that were determined to have an impairment that was significant or prolonged.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   31

---



9.   OTHER ASSETS



|                                                     |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015 | 
|---------------------------------------------------- |  | - | ----------------------- |  | - | ----------------------- | 
|                                                     |  |  
|Federal, provincial and other sales taxes receivable |  | $ | 77,380                  |  | $ | 89,313                  | 
|                                                    
|Prepaid expenses                                     |  |   | 47,416                  |  |   | 71,811                  | 
|                                                    
|Insurance receivable                                 |  |   |                        |  |   | 12,288                  | 
|                                                    
|Other                                                |  |   | 12,014                  |  |   | 21,277                  | 
|                                                    
|Total other current assets                           |  | $ | 136,810                 |  | $ | 194,689                 | 
|                                                    



|                                                |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015 | 
|----------------------------------------------- |  | - | ----------------------- |  | - | ----------------------- | 
|                                                |  |  
|Non-current ore in stockpiles and on leach pads |  | $ | 62,780                  |  | $ | 61,167                  | 
|                                               
|Other assets                                    |  |   | 11,383                  |  |   | 6,071                   | 
|                                               
|Total other assets                              |  | $ | 74,163                  |  | $ | 67,238                  | 
|                                               

32   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



10. PROPERTY, PLANT AND MINE DEVELOPMENT

|                                             |  |   | Mining
Properties |   |   | Plant and
Equipment |   |   | Mine
Development
Costs |   |   | Total      |   | 
|-------------------------------------------- |  | - | ----------------- | - | - | ------------------- | - | - | ---------------------- | - | - | ---------- | - | 
|                                             |  |  
|As at December 31, 2014                      |  | $ | 1,939,940         |   | $ | 2,009,247           |   | $ | 1,206,678              |   | $ | 5,155,865  |   | 
|                                            
|Additions                                    |  |   | 103,664           |   |   | 174,477             |   |   | 283,221                |   |   | 561,362    |   | 
|                                            
|Disposals                                    |  |   | (88               | ) |   | (6,269              | ) |   | (1,757                 | ) |   | (8,114     | ) | 
|                                            
|Amortization                                 |  |   | (168,612          | ) |   | (352,090            | ) |   | (99,444                | ) |   | (620,146   | ) | 
|                                            
|Transfers between categories                 |  |   | (209,294          | ) |   | 239,041             |   |   | (29,747                | ) |   |           |   | 
|                                            
|As at December 31, 2015                      |  |   | 1,665,610         |   |   | 2,064,406           |   |   | 1,358,951              |   |   | 5,088,967  |   | 
|                                            
|Additions                                    |  |   | 53,072            |   |   | 244,018             |   |   | 279,119                |   |   | 576,209    |   | 
|                                            
|Gain on impairment reversal                  |  |   | 83,992            |   |   | 36,169              |   |   |                       |   |   | 120,161    |   | 
|                                            
|Disposals                                    |  |   | (1,890            | ) |   | (17,658             | ) |   |                       |   |   | (19,548    | ) | 
|                                            
|Amortization                                 |  |   | (207,383          | ) |   | (342,208            | ) |   | (110,162               | ) |   | (659,753   | ) | 
|                                            
|Transfers between categories                 |  |   | 12,135            |   |   | 39,556              |   |   | (51,691                | ) |   |           |   | 
|                                            
|As at December 31, 2016                      |  | $ | 1,605,536         |   | $ | 2,024,283           |   | $ | 1,476,217              |   | $ | 5,106,036  |   | 
|                                            
|As at December 31, 2015                      |  |   |                   |   |   |                     |   |   |                        |   |   |            |   | 
|                                            
|Cost                                         |  | $ | 3,330,464         |   | $ | 4,273,798           |   | $ | 1,867,172              |   | $ | 9,471,434  |   | 
|                                            
|Accumulated amortization and net impairments |  |   | (1,664,854        | ) |   | (2,209,392          | ) |   | (508,221               | ) |   | (4,382,467 | ) | 
|                                            
|Net carrying amount  December 31, 2015      |  | $ | 1,665,610         |   | $ | 2,064,406           |   | $ | 1,358,951              |   | $ | 5,088,967  |   | 
|                                            
|As at December 31, 2016                      |  |   |                   |   |   |                     |   |   |                        |   |   |            |   | 
|                                            
|Cost                                         |  | $ | 2,593,659         |   | $ | 4,233,945           |   | $ | 2,050,980              |   | $ | 8,878,584  |   | 
|                                            
|Accumulated amortization and net impairments |  |   | (988,122          | ) |   | (2,209,663          | ) |   | (574,763               | ) |   | (3,772,548 | ) | 
|                                            
|Net carrying amount  December 31, 2016      |  | $ | 1,605,537         |   | $ | 2,024,282           |   | $ | 1,476,217              |   | $ | 5,106,036  |   | 
|                                            

As at December 31, 2016, assets under construction, and therefore not yet being depreciated, included in the net carrying amount of property, plant and
mine development amounted to $532.3 million (December 31, 2015  $350.7 million).

During
the year ended December 31, 2016, the Company disposed of property, plant and mine development with a carrying value of $19.5 million
(2015  $8.1 million). The loss on disposal was recorded in the other expenses line item in the consolidated statements of income and comprehensive income.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   33

---



Geographic Information:

|                                           |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015 | 
|------------------------------------------ |  | - | ----------------------- |  | - | ----------------------- | 
|                                           |  |  
|Northern Business:                         |  |   |                         |  |   |                         | 
|Canada                                     |  | $ | 3,266,594               |  | $ | 3,196,494               | 
|                                          
|Finland                                    |  |   | 867,257                 |  |   | 851,867                 | 
|                                          
|Southern Business:                         |  |   |                         |  |   |                         | 
|Mexico                                     |  |   | 961,943                 |  |   | 1,030,364               | 
|                                          
|United States                              |  |   | 10,242                  |  |   | 10,242                  | 
|                                          
|Total property, plant and mine development |  | $ | 5,106,036               |  | $ | 5,088,967               | 
|                                          

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

|                                               |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015 | 
|---------------------------------------------- |  | - | ----------------------- |  | - | ----------------------- | 
|                                               |  |  
|Trade payables                                 |  | $ | 111,173                 |  | $ | 121,633                 | 
|                                              
|Wages payable                                  |  |   | 42,522                  |  |   | 40,020                  | 
|                                              
|Accrued liabilities                            |  |   | 55,893                  |  |   | 51,533                  | 
|                                              
|Other liabilities                              |  |   | 18,978                  |  |   | 30,600                  | 
|                                              
|Total accounts payable and accrued liabilities |  | $ | 228,566                 |  | $ | 243,786                 | 
|                                              

In 2016 and 2015, the other liabilities balance consisted primarily of various employee payroll tax withholdings and other payroll taxes.

12. RECLAMATION PROVISION

Agnico
Eagle's reclamation provision includes both asset retirement obligations and environmental remediation liabilities. Reclamation provision estimates are based on current legislation, third party
estimates, management's estimates and feasibility study calculations. Assumptions based on current economic conditions, which the Company believes are reasonable, have been used to estimate the
reclamation provision. However, actual reclamation costs will ultimately depend on future economic conditions and costs for the necessary reclamation work. Changes in reclamation provision estimates
during the period reflect changes in cash flow estimates as well as assumptions including discount and inflation rates. The discount rates used in the calculation of the reclamation provision at
December 31, 2016 ranged between 0.74% and 2.35% (December 31, 2015  between 0.48% and 2.37%).

34   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



The
following table reconciles the beginning and ending carrying amounts of the Company's asset retirement obligations. The settlement of the obligation is estimated to occur through to 2069.

|                                                            |  |   | Year Ended
December 31,
2016 |   |   | Year Ended
December 31,
2015 |   | 
|----------------------------------------------------------- |  | - | ---------------------------- | - | - | ---------------------------- | - | 
|                                                            |  |  
|Asset retirement obligations  long-term, beginning of year |  | $ | 269,068                      |   | $ | 242,615                      |   | 
|                                                           
|Asset retirement obligations  current, beginning of year   |  |   | 4,443                        |   |   | 2,863                        |   | 
|                                                           
|Current year additions and changes in estimate, net         |  |   | (9,112                       | ) |   | 64,305                       |   | 
|                                                           
|Current year accretion                                      |  |   | 3,847                        |   |   | 4,178                        |   | 
|                                                           
|Liabilities settled                                         |  |   | (1,113                       | ) |   | (1,496                       | ) | 
|                                                           
|Foreign exchange revaluation                                |  |   | (1,474                       | ) |   | (38,954                      | ) | 
|                                                           
|Reclassification from long-term to current, end of year     |  |   | (5,953                       | ) |   | (4,443                       | ) | 
|                                                           
|Asset retirement obligations  long-term, end of year       |  | $ | 259,706                      |   | $ | 269,068                      |   | 
|                                                           

The following table reconciles the beginning and ending carrying amounts of the Company's environmental remediation liability. The settlement of the obligation
is estimated to occur through to 2025.

|                                                                   |  |   | Year Ended
December 31,
2016 |   |   | Year Ended
December 31,
2015 |   | 
|------------------------------------------------------------------ |  | - | ---------------------------- | - | - | ---------------------------- | - | 
|                                                                   |  |  
|Environmental remediation liability  long-term, beginning of year |  | $ | 7,231                        |   | $ | 7,302                        |   | 
|                                                                  
|Environmental remediation liability  current, beginning of year   |  |   | 1,802                        |   |   | 3,906                        |   | 
|                                                                  
|Current year additions and changes in estimate, net                |  |   | 243                          |   |   | 180                          |   | 
|                                                                  
|Liabilities settled                                                |  |   | (1,606                       | ) |   | (562                         | ) | 
|                                                                  
|Foreign exchange revaluation                                       |  |   | 1,172                        |   |   | (1,793                       | ) | 
|                                                                  
|Reclassification from long-term to current, end of year            |  |   | (3,240                       | ) |   | (1,802                       | ) | 
|                                                                  
|Environmental remediation liability  long-term, end of year       |  | $ | 5,602                        |   | $ | 7,231                        |   | 
|                                                                  

13. LEASES





ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   35

---





|                    |  | As at
December 31, 2016 |                                | As at
December 31, 2015 |  
|------------------- |  | ----------------------- | ------------------------------ | ----------------------- | -
|                    |  |                         | Minimum
Finance
Lease
Payments |                         |  
|                    |  |                        
|Within 1 year       |  | $                       | 5,955                          |                         | $
|                   
|Between 1  5 years |  |                         | 6,630                          |                         |  
|                   
|Total               |  | $                       | 12,585                         |                         | $
|                   



36   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---







|                    |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015 | 
|------------------- |  | - | ----------------------- |  | - | ----------------------- | 
|                    |  |  
|Within 1 year       |  | $ | 3,691                   |  | $ | 1,780                   | 
|                   
|Between 1  3 years |  |   | 4,780                   |  |   | 2,479                   | 
|                   
|Between 3  5 years |  |   | 2,127                   |  |   | 2,205                   | 
|                   
|Thereafter          |  |   | 9,543                   |  |   | 10,272                  | 
|                   
|Total               |  | $ | 20,141                  |  | $ | 16,736                  | 
|                   



14. LONG-TERM DEBT

|                                    |  |   | As at
December 31,
2016 |   |   | As at
December 31,
2015 | 
|----------------------------------- |  | - | ----------------------- | - | - | ----------------------- | 
|                                    |  |  
|Credit Facility(i)(ii)              |  | $ | (6,416                  | ) | $ | 258,083                 | 
|                                   
|2016 Notes(i)                       |  |   | 347,716                 |   |   |                        | 
|                                   
|2015 Note(i)                        |  |   | 49,429                  |   |   | 49,364                  | 
|                                   
|2012 Notes(i)                       |  |   | 198,894                 |   |   | 198,722                 | 
|                                   
|2010 Notes(i)                       |  |   | 598,167                 |   |   | 597,567                 | 
|                                   
|Other attributable debt instruments |  |   | 14,896                  |   |   | 28,902                  | 
|                                   
|Total debt                          |  | $ | 1,202,686               |   | $ | 1,132,638               | 
|                                   
|Less: current portion               |  |   | 129,896                 |   |   | 14,451                  | 
|                                   
|Total long-term debt                |  | $ | 1,072,790               |   | $ | 1,118,187               | 
|                                   

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   37

---



Scheduled Debt Principal Repayments

|                                    |  |   | 2017    |  |   | 2018 |  |   | 2019 |  |   | 2020    |  |   | 2021 |  |   | 2022 and
Thereafter |  |   | Total     | 
|----------------------------------- |  | - | ------- |  | - | ---- |  | - | ---- |  | - | ------- |  | - | ---- |  | - | ------------------- |  | - | --------- | 
|                                    |  |  
|2016 Notes                          |  | $ |        |  | $ |     |  | $ |     |  | $ |        |  | $ |     |  | $ | 350,000             |  | $ | 350,000   | 
|                                   
|2015 Note                           |  |   |        |  |   |     |  |   |     |  |   |        |  |   |     |  |   | 50,000              |  |   | 50,000    | 
|                                   
|2012 Notes                          |  |   |        |  |   |     |  |   |     |  |   |        |  |   |     |  |   | 200,000             |  |   | 200,000   | 
|                                   
|2010 Notes                          |  |   | 115,000 |  |   |     |  |   |     |  |   | 360,000 |  |   |     |  |   | 125,000             |  |   | 600,000   | 
|                                   
|Other attributable debt instruments |  |   | 14,896  |  |   |     |  |   |     |  |   |        |  |   |     |  |   |                    |  |   | 14,896    | 
|                                   
|Total                               |  | $ | 129,896 |  | $ |     |  | $ |     |  | $ | 360,000 |  | $ |     |  | $ | 725,000             |  | $ | 1,214,896 | 
|                                   

Credit Facility

On September 30, 2015, the Company amended its unsecured revolving bank credit facility (the "Credit Facility"), extending the maturity date from June 22,
2019 to June 22, 2020 and amending pricing terms.

On
October 26, 2016, the Company further amended the Credit Facility to, among other things, extend the maturity date from June 22, 2020 to June 22, 2021 and amend
pricing terms.

At
December 31, 2016, the Credit Facility was fully repaid (December 31, 2015  drawn down by $265.0 million). Outstanding letters of credit
under the Credit Facility resulted in Credit Facility availability of $1,199.2 million at December 31, 2016.

2016 Notes

On June 30, 2016, the Company closed a $350.0 million private placement of guaranteed senior unsecured notes (the "2016 Notes") which, on issuance, had a
weighted average maturity of 9.43 years and weighted average yield of 4.77%. Proceeds from the offering of the 2016 Notes were used to repay amounts outstanding under the Credit Facility.

The
following table sets out details of the individual series of the 2016 Notes:

|         |  |   | Principal |  | Interest Rate |  | Maturity Date | 
|-------- |  | - | --------- |  | ------------- |  | ------------- | 
|         |  |  
|Series A |  | $ | 100,000   |  | 4.54%         |  | 6/30/2023     | 
|        
|Series B |  |   | 200,000   |  | 4.84%         |  | 6/30/2026     | 
|        
|Series C |  |   | 50,000    |  | 4.94%         |  | 6/30/2028     | 
|        
|Total    |  | $ | 350,000   |  |               |  |               | 
|        

2015 Note

On September 30, 2015, the Company closed a private placement consisting of a $50.0 million guaranteed senior unsecured note (the "2015 Note") with a
September 30, 2025 maturity date and a yield of 4.15%. An amount equal to or greater than the net proceeds from the 2015 Note must be applied toward mining projects in the Province of
Quebec, Canada.

38   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



2012 Notes

On July 24, 2012, the Company closed a $200.0 million private placement of guaranteed senior unsecured notes (the "2012 Notes") which, on issuance, had a
weighted average maturity of 11.0 years and weighted average yield of 4.95%.

The
following table sets out details of the individual series of the 2012 Notes:

|         |  |   | Principal |  | Interest Rate |  | Maturity Date | 
|-------- |  | - | --------- |  | ------------- |  | ------------- | 
|         |  |  
|Series A |  | $ | 100,000   |  | 4.87%         |  | 7/23/2022     | 
|        
|Series B |  |   | 100,000   |  | 5.02%         |  | 7/23/2024     | 
|        
|Total    |  | $ | 200,000   |  |               |  |               | 
|        

2010 Notes

On April 7, 2010, the Company closed a $600.0 million private placement of guaranteed senior unsecured notes (the "2010 Notes" and, together with the 2016
Notes, the 2015 Note and the 2012 Notes, the "Notes") which, on issuance, had a weighted average maturity of 9.84 years and weighted average yield of 6.59%.

The
following table sets out details of the individual series of the 2010 Notes:

|         |  |   | Principal |  | Interest Rate |  | Maturity Date | 
|-------- |  | - | --------- |  | ------------- |  | ------------- | 
|         |  |  
|Series A |  | $ | 115,000   |  | 6.13%         |  | 4/7/2017      | 
|        
|Series B |  |   | 360,000   |  | 6.67%         |  | 4/7/2020      | 
|        
|Series C |  |   | 125,000   |  | 6.77%         |  | 4/7/2022      | 
|        
|Total    |  | $ | 600,000   |  |               |  |               | 
|        

CMGP Convertible Debentures

In connection with its joint acquisition of Osisko on June 16, 2014, the Partnership was assigned and assumed certain outstanding debt obligations of Osisko relating to
the Canadian Malartic mine. Agnico Eagle's indirect attributable interest in such debt instruments included senior unsecured convertible debentures (the "CMGP Convertible Debentures") with
principal outstanding of C$37.5 million ($34.6 million), a November 2017 maturity date and a 6.875% interest rate.

On
June 30, 2015, the negotiated early settlement of all of the CMGP Convertible Debentures was completed. As a result of this settlement, 871,680 Agnico Eagle common shares with a fair
value of $24.8 million were released from a depositary to the holders of the CMGP Convertible Debentures along with a cash payment of $10.1 million to settle the Company's share of the
obligations. In the year ended December 31, 2015, a mark-to-market loss of $2.4 million was recorded in the other expenses line item of the consolidated statements of income and
comprehensive income related to the CMGP Convertible Debentures. Additional cash consideration of $3.2 million was paid to the holders of the CMGP Convertible Debentures upon settlement and was
recorded in the other expenses line item of the consolidated statements of income and comprehensive income. As at December 31, 2015, the CMGP Convertible Debentures had principal outstanding
of nil.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   39

---



Other Loans

In connection with its joint acquisition of Osisko on June 16, 2014, the Partnership was assigned and assumed certain outstanding debt obligations of Osisko relating to
the Canadian Malartic mine. Agnico Eagle's indirect attributable interest in such debt obligations included a secured loan facility (the "CMGP Loan"). A scheduled repayment of
C$20.0 million ($15.4 million) was made on June 30, 2016, resulting in attributable outstanding principal of C$20.0 million ($14.9 million) as at December 31,
2016 (December 31, 2015  $28.9 million).

Covenants

Payment and performance of Agnico Eagle's obligations under the Credit Facility and the Notes is guaranteed by each of its material subsidiaries and certain of its other
subsidiaries (the "Guarantors").

The
Credit Facility contains covenants that limit, among other things, the ability of the Company to incur additional indebtedness, make distributions in certain circumstances and sell material
assets.

The
note purchase agreements pursuant to which the Notes were issued (the "Note Purchase Agreements") contain covenants that restrict, among other things, the ability of the Company to
amalgamate or otherwise transfer its assets, sell material assets, carry on a business other than one related to mining and the ability of the Guarantors to incur indebtedness.

The
Credit Facility and Note Purchase Agreements also require the Company to maintain a total net debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio below a
specified maximum value.

The
CMGP Loan requires the Partnership to maintain a minimum EBITDA to interest expense ratio and a maximum debt to EBITDA ratio.

The
Company was in compliance with all covenants contained in the Credit Facility and Note Purchase Agreements as at December 31, 2016. The Partnership was in compliance with all CMGP Loan
covenants as at December 31, 2016.

Interest on Long-term Debt

Total long-term debt interest costs incurred during the year ended December 31, 2016 were $63.1 million
(2015  $58.8 million).

Total
borrowing costs capitalized to property, plant and mine development during the year ended December 31, 2016 were $3.1 million
(2015  $1.7 million) at a capitalization rate of 1.70% (2015  1.25%).

During
the year ended December 31, 2016, cash interest paid on the Credit Facility was $3.6 million (2015  $8.7 million), cash standby fees
paid on the Credit Facility were $5.2 million (2015  $3.8 million) and cash interest paid on the Notes was $59.8 million
(2015  $49.4 million).

40   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---





AGNICO EAGLE MINES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
December 31, 2016

15. OTHER LIABILITIES

Other
liabilities consist of the following:

|                                                            |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015
|----------------------------------------------------------- |  | - | ----------------------- |  | - | -----------------------
|                                                            |  |  
|Long-term portion of capital lease obligations (note 13(a)) |  | $ | 6,319                   |  | $ | 9,547                  
|                                                           
|Pension benefit obligations (note 15(a))                    |  |   | 19,273                  |  |   | 17,146                 
|                                                           
|Other                                                       |  |   | 8,603                   |  |   | 7,345                  
|                                                           
|Total other liabilities                                     |  | $ | 34,195                  |  | $ | 34,038                 
|                                                           

Executives Plan

Agnico Eagle provides the Executives Plan for certain current and former senior officers. It is considered a defined benefit plan as defined in
IAS 19  Employee Benefits with a pension formula based on final average earnings in excess of the amounts payable from the registered plan. Assets for the
Executives Plan consist of deposits on hand with regulatory authorities that are refundable when benefit payments are made or on the ultimate wind-up of the plan. The estimated average remaining
service life of the plan at December 31, 2016 is 2.0 years. The funded status of the Executives Plan is based on actuarial valuations performed as of December 31, 2016.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   41

---



The
funded status of the Executives Plan for 2016 and 2015 is as follows:

|                                                                 |  |   | Year Ended December 31, |   |  
|---------------------------------------------------------------- |  | - | ----------------------- | - | -
|                                                                 |  |  
|                                                                 |  |   | 2016                    |   |  
|                                                                 |  |  
|Reconciliation of the Executives Plan assets:                    |  |   |                         |   |  
|                                                                
|Executives Plan assets, beginning of year                        |  | $ | 2,011                   |   | $
|                                                                
|Agnico Eagle's contributions                                     |  |   | 327                     |   |  
|                                                                
|Benefit payments                                                 |  |   | (88                     | ) |  
|                                                                
|Administrative Expenses                                          |  |   | (119                    | ) |  
|                                                                
|Interest on Executives Plan assets                               |  |   | 86                      |   |  
|                                                                
|Net return on Executives Plan assets excluding interest          |  |   | (86                     | ) |  
|                                                                
|Effect of exchange rate changes                                  |  |   | 61                      |   |  
|                                                                
|Executives Plan assets, end of year                              |  |   | 2,192                   |   |  
|                                                                
|Reconciliation of Executives Plan defined benefit obligation:    |  |   |                         |   |  
|                                                                
|Defined benefit obligation, beginning of year                    |  |   | 10,641                  |   |  
|                                                                
|Service cost                                                     |  |   | 326                     |   |  
|                                                                
|Benefit payments                                                 |  |   | (88                     | ) |  
|                                                                
|Interest cost                                                    |  |   | 456                     |   |  
|                                                                
|Actuarial losses arising from changes in economic assumptions    |  |   | 400                     |   |  
|                                                                
|Actuarial (gains) losses arising from Executives Plan experience |  |   | (185                    | ) |  
|                                                                
|Effect of exchange rate changes                                  |  |   | 317                     |   |  
|                                                                
|Defined benefit obligation, end of year                          |  |   | 11,867                  |   |  
|                                                                
|Net defined benefit liability, end of year                       |  | $ | 9,675                   |   | $
|                                                                

42   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



The components of Agnico Eagle's pension expense recognized in the consolidated statements of income relating to the Executives Plan are as follows:

|                                            |  |   | Year Ended December 31, |   |  
|------------------------------------------- |  | - | ----------------------- | - | -
|                                            |  |  
|                                            |  |   | 2016                    |   |  
|                                            |  |  
|Service cost                                |  | $ | 326                     |   | $
|                                           
|Administrative Expenses                     |  |   | 119                     |   |  
|                                           
|Interest cost on defined benefit obligation |  |   | 456                     |   |  
|                                           
|Interest on Executives Plan assets          |  |   | (86                     | ) |  
|                                           
|Pension expense                             |  | $ | 815                     |   | $
|                                           

The remeasurements of the net defined benefit liability recognized in other comprehensive income (loss) relating to the Executives Plan are as follows:

|                                                            |  |   | Year Ended December 31,
|----------------------------------------------------------- |  | - | -----------------------
|                                                            |  |  
|                                                            |  |   | 2016                   
|                                                            |  |  
|Actuarial losses relating to the defined benefit obligation |  | $ | 215                    
|                                                           
|Net return on Executives Plan assets excluding interest     |  |   | 86                     
|                                                           
|Total remeasurements of the net defined benefit liability   |  | $ | 301                    
|                                                           

In 2017, the Company expects to make contributions of $0.2 million and benefit payments of $0.1 million related to the Executives Plan.

The
following table sets out significant weighted average assumptions used in measuring the Company's Executives Plan defined benefit obligation:

|                                  |  | As at December 31,
|--------------------------------- |  | ------------------
|                                  |  |                   
|                                  |  | 2016              
|                                  |  |                   
|Assumptions:                      |  |                   
|                                 
|Discount rate  beginning of year |  | 4.0%              
|                                 
|Discount rate  end of year       |  | 3.8%              
|                                 
|Rate of compensation increase     |  | 3.0%              
|                                 

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   43

---



The following is a summary of the effect of changes in significant actuarial assumptions on the Company's Executives Plan defined benefit obligation:

|                                                   |  |   | As at
December 31,
2016 |   | 
|-------------------------------------------------- |  | - | ----------------------- | - | 
|                                                   |  |  
|Change in assumption:                              |  |   |                         |   | 
|                                                  
|0.5% increase in discount rate                     |  | $ | (766                    | ) | 
|                                                  
|0.5% decrease in discount rate                     |  |   | 845                     |   | 
|                                                  
|0.5% increase in the rate of compensation increase |  |   | 19                      |   | 
|                                                  
|0.5% decrease in the rate of compensation increase |  |   | (19                     | ) | 
|                                                  

The summary of the effect of changes in significant actuarial assumptions was prepared using the same methods and actuarial assumptions as those used for the
calculation of the Executives Plan defined benefit obligation as at the end of the fiscal year, except for the change in the single actuarial assumption being evaluated. The modification of several
actuarial assumptions at the same time could lead to different results.

Other Plans

In
addition to the Executives Plan, the Company maintains the Basic Plan and the Supplemental Plan. Under the Basic Plan, Agnico Eagle contributes 5.0% of certain employees' base employment
compensation to a defined contribution plan. In 2016, $9.7 million (2015  $9.8 million) was contributed to the Basic Plan, $0.2 million of
which related to contributions for key management personnel (2015  $0.2 million). Effective January 1, 2008, the Company adopted the Supplemental
Plan for designated executives at the level of Vice-President or above. The Supplemental Plan is funded by the Company through notional contributions equal to 10.0% of the designated executive's
earnings for the year (including salary and short-term bonus). In 2016, the Company made $1.4 million (2015  $1.3 million) in notional
contributions to the Supplemental Plan, $0.9 million (2015  $0.9 million) of which related to contributions for key management personnel. The
Company's liability related to the Supplemental Plan is $7.1 million at December 31, 2016 (December 31, 2015  $5.3 million). The
Supplemental Plan is accounted for as a cash balance plan.

16. EQUITY

Common Shares

The Company's authorized share capital includes an unlimited number of common shares with no par value. As at December 31, 2016, Agnico Eagle's issued common shares
totaled 225,465,654 (December 31, 2015  218,028,368), less 500,514 common shares held in a trust (December 31,
2015  377,573 common shares held in a trust).

369,972 common
shares are held in a trust in connection with the Company's RSU plan (December 31, 2015  373,785 common shares held in a
trust). 124,500 common shares are held in a trust in connection with the Company's PSU plan (December 31, 2015  nil).

44   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



In
the first quarter of 2015, a Long Term Incentive Plan ("LTIP") was implemented for certain employees of the Partnership and Canadian Malartic Corporation, both of which are jointly-owned, comprised
of 50.0% deferred cash, 25.0% Agnico Eagle common shares and 25.0% Yamana common shares and vesting over a period ranging between 18 to 36 months. As at December 31, 2016,
6,042 Agnico Eagle common shares were held in a trust in connection with the LTIP (December 31, 2015  3,788 common shares held in
a trust).

The
trusts have been evaluated under IFRS 10  Consolidated Financial Statements and are consolidated in the accounts of the Company, with shares held in
trust offset against the Company's issued shares in its consolidated financial statements. The common shares purchased and held in a trust are excluded from the basic net income per share calculations
until they have vested. All of the non-vested common shares held in a trust are included in the diluted net income per share calculations, unless the impact is anti-dilutive.

The
following table sets out the maximum number of common shares that would be outstanding if all dilutive instruments outstanding at December 31, 2016 were exercised:

|Common shares outstanding at December 31, 2016                                                             |  | 224,965,140 | 
|---------------------------------------------------------------------------------------------------------- |  | ----------- | 
|                                                                                                          
|Employee stock options                                                                                     |  | 5,478,837   | 
|                                                                                                          
|Common shares held in a trust in connection with the RSU plan (note 18(c)), PSU plan (note 18(d)) and LTIP |  | 500,514     | 
|                                                                                                          
|Total                                                                                                      |  | 230,944,491 | 
|                                                                                                          

Net Income Per Share

The
following table sets out the weighted average number of common shares used in the calculation of basic and diluted net income per share:

|                                                                              |                                                                                  |   | Year Ended December 31, |      
|----------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | - | ----------------------- | -----
|                                                                              |                                                                                  |  
|                                                                              |                                                                                  |   | 2016                    |      
|                                                                              |                                                                                  |  
|Net income for the year                                                       |                                                                                  | $ | 158,824                 |      
|                                                                             
|Weighted average number of common shares outstanding  basic (in thousands)   |                                                                                  |   | 222,737                 |      
|                                                                             
|                                                                              | Add: Dilutive impact of common shares related to the RSU plan, PSU plan and LTIP |   |                         | 639  
|                                                                             
|                                                                              | Add: Dilutive impact of employee stock options                                   |   |                         | 2,378
|                                                                             
|Weighted average number of common shares outstanding  diluted (in thousands) |                                                                                  |   | 225,754                 |      
|                                                                             
|Net income per share  basic                                                  |                                                                                  | $ | 0.71                    |      
|                                                                             
|Net income per share  diluted                                                |                                                                                  | $ | 0.70                    |      
|                                                                             

Diluted net income per share has been calculated using the treasury stock method. In applying the treasury stock method, outstanding employee stock options with
an exercise price greater than the average quoted market price of the common shares for the period outstanding are not included in the calculation of diluted net income per share as the impact would
be anti-dilutive.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   45

---



For
the year ended December 31, 2016, 20,000 (year ended December 31, 2015  6,806,055) employee stock options were excluded from the calculation of
diluted net income per share as their impact would have been anti-dilutive.

Flow-through share private placement

On March 10, 2016, the Company raised approximately C$25.0 million ($18.7 million) through the issuance of 374,869 flow-through common shares at a
price of C$66.69 per common share. Flow-through shares are securities issued to investors whereby the deductions for tax purposes related to resource exploration and evaluation expenditures may be
claimed by investors instead of the issuer, subject to a renouncement process. At the time the flow-through shares were issued, the sale of tax deductions were deferred and were presented in the
accounts payable and accrued liabilities line item in the consolidated balance sheets because the Company had not yet fulfilled its obligation to pass on the tax deductions to the investor. At the
time the Company fulfills its obligation, the sale of tax deductions is recognized in the income statement as a reduction of deferred tax expense. The closing price of the Company's common shares on
the March 10, 2016 issuance date was C$48.49, resulting in an increase to share capital of approximately C$18.2 million ($13.6 million). The initial C$6.8 million
($5.1 million) liability is drawn down as eligible expenditures are incurred because the Company has a positive intention to renounce these expenses. During the year ended December 31,
2016, the liability was fully extinguished based on eligible expenditures incurred.

17. REVENUES FROM MINING OPERATIONS AND TRADE RECEIVABLES

Agnico
Eagle is a gold mining company with mining operations in Canada, Mexico and Finland. The Company earns a significant proportion of its revenues from the production and sale of gold in both dore
bar and concentrate form. The remainder of revenue and cash flow is generated by the production and sale of by-product metals. The revenue from by-product metals is primarily generated by production
at the LaRonde mine in Canada (silver, zinc and copper) and the Pinos Altos mine in Mexico (silver).

The
cash flow and profitability of the Company's operations are significantly affected by the market price of gold and, to a lesser extent, silver, zinc and copper. The prices of these metals can
fluctuate significantly and are affected by numerous factors beyond the Company's control.

During
the year ended December 31, 2016, four customers each contributed more than 10.0% of total revenues from mining operations for a combined total of approximately 80.9% of revenues from
mining operations in the Northern and Southern business units. However, because gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited
number of customers for the sale of its product.

Trade
receivables are recognized once the transfer of ownership for the metals sold has occurred and reflect the amounts owing to the Company in respect of its sales of dore bars or concentrates to
third parties prior to the satisfaction in full of the payment obligations of the third parties. As at December 31, 2016, the Company had $8.2 million (December 31,
2015  $7.7 million) in receivables relating to provisionally priced concentrate sales. For the year ended December 31, 2016, the Company recognized
mark-to-market gains of $0.6 million (year ended December 31, 2015  losses of $0.5 million) on concentrate receivables.

46   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



|                                      |  |   | Year Ended December 31,
|------------------------------------- |  | - | -----------------------
|                                      |  |  
|                                      |  |   | 2016                   
|                                      |  |  
|Revenues from mining operations:      |  |   |                        
|                                     
|Gold                                  |  | $ | 2,049,871              
|                                     
|Silver                                |  |   | 85,096                 
|                                     
|Zinc                                  |  |   | 1,413                  
|                                     
|Copper                                |  |   | 1,852                  
|                                     
|Total revenues from mining operations |  | $ | 2,138,232              
|                                     

In 2016, precious metals (gold and silver) accounted for 99.9% of Agnico Eagle's revenues from mining operations
(2015  99.7%). The remaining revenues from mining operations consisted of net by-product metal revenues from non-precious metals.

18. STOCK-BASED COMPENSATION



ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   47

---





|                                 |  | Year Ended
December 31, 2016 |   | Year Ended
December 31, 2015 |                                
|-------------------------------- |  | ---------------------------- | - | ---------------------------- | -------------------------------
|                                 |  | Number of
Stock
Options      |   |                              | Weighted
Average
Exercise
Price
|                                 |  |                             
|Outstanding, beginning of year   |  | 12,082,212                   |   | C$                           | 43.65                          
|                                
|Granted                          |  | 2,160,075                    |   |                              | 36.65                          
|                                
|Exercised                        |  | (6,492,907                   | ) |                              | 38.48                          
|                                
|Forfeited                        |  | (141,038                     | ) |                              | 38.42                          
|                                
|Expired                          |  | (2,129,505                   | ) |                              | 76.46                          
|                                
|Outstanding, end of year         |  | 5,478,837                    |   | C$                           | 34.40                          
|                                
|Options exercisable, end of year |  | 1,606,558                    |   | C$                           | 40.27                          
|                                



|                         |  | Stock Options Outstanding |  | Stock Options Exercisable                   | 
|------------------------ |  | ------------------------- |  | ------------------------------------------- | 
|Range of Exercise Prices |  | Number
Outstanding        |  | Weighted
Average
Remaining
Contractual
Life | 
|                        
|C$28.03  C$38.15        |  | 4,747,712                 |  | 3.15 years                                  | 
|                        
|C$40.66  C$66.17        |  | 731,125                   |  | 1.16 years                                  | 
|                        
|C$28.03  C$66.17        |  | 5,478,837                 |  | 2.89 years                                  | 
|                        



48   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---





|                                                  |  | Year Ended December 31,
|------------------------------------------------- |  | -----------------------
|                                                  |  |                        
|                                                  |  | 2016                   
|                                                  |  |                        
|Risk-free interest rate                           |  | 0.89%                  
|                                                 
|Expected life of stock options (in years)         |  | 2.5                    
|                                                 
|Expected volatility of Agnico Eagle's share price |  | 45.0%                  
|                                                 
|Expected dividend yield                           |  | 1.33%                  
|                                                 





ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   49

---





50   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---







AGNICO EAGLE MINES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
December 31, 2016

19. CAPITAL AND FINANCIAL RISK MANAGEMENT

The
Company's activities expose it to a variety of financial risks: market risk (including interest rate risk, commodity price risk and foreign currency risk), credit risk and liquidity risk. The
Company's overall risk management policy is to support the delivery of the Company's financial targets while minimizing the potential adverse effects on the Company's performance.

Risk
management is carried out by a centralized treasury department under policies approved by the Board. The Company's financial activities are governed by policies and procedures and its financial
risks are identified, measured and managed in accordance with its policies and risk tolerance.













ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   51

---





|                |  |   | Impact on Income Before Income
and Mining Taxes and Equity |   |  
|--------------- |  | - | ---------------------------------------------------------- | - | -
|                |  |  
|                |  |   | 10.0% Strengthening
of the US Dollar                       |   |  
|                |  |  
|                |  |   |                                                            |   |  
|Canadian dollar |  | $ | 7,015                                                      |   | $
|               
|Euro            |  | $ | 2,159                                                      |   | $
|               
|Mexican peso    |  | $ | (66                                                        | ) | $
|               





|                                       |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015 | 
|-------------------------------------- |  | - | ----------------------- |  | - | ----------------------- | 
|                                       |  |  
|Cash and cash equivalents              |  | $ | 539,974                 |  | $ | 124,150                 | 
|                                      
|Short-term investments                 |  |   | 8,424                   |  |   | 7,444                   | 
|                                      
|Restricted cash                        |  |   | 1,162                   |  |   | 1,426                   | 
|                                      
|Trade receivables                      |  |   | 8,185                   |  |   | 7,714                   | 
|                                      
|Derivative financial instrument assets |  |   | 364                     |  |   | 87                      | 
|                                      
|Total                                  |  | $ | 558,109                 |  | $ | 140,821                 | 
|                                      

52   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---









|               |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015 | 
|-------------- |  | - | ----------------------- |  | - | ----------------------- | 
|               |  |  
|Long-term debt |  | $ | 1,202,686               |  | $ | 1,132,638               | 
|              
|Total equity   |  |   | 4,492,474               |  |   | 4,141,020               | 
|              
|Total          |  | $ | 5,695,160               |  | $ | 5,273,658               | 
|              



20. DERIVATIVE FINANCIAL INSTRUMENTS

Currency Risk Management

The Company utilizes foreign exchange economic hedges to reduce the variability in expected future cash flows arising from changes in foreign currency exchange rates. The
Company is primarily exposed to currency fluctuations relative to the US dollar as a portion of the Company's operating costs and capital expenditures are denominated in foreign currencies; primarily
the Canadian dollar, the Euro and the Mexican peso. These potential currency fluctuations increase the volatility of, and could have a significant impact on, the Company's production costs. The
economic hedges relate to a portion of the foreign currency denominated cash outflows arising from foreign currency denominated expenditures. The Company does not apply hedge accounting to these
arrangements.

As
at December 31, 2016, the Company had outstanding foreign exchange zero cost collars. The purchase of US dollar put options was financed through selling US dollar call options at a higher
level such that the net premium payable to the different counterparties by the Company was nil. At December 31, 2016, the zero cost collars related to $179.4 million of 2017

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   53

---



expenditures
and the Company recognized mark-to-market adjustments in the (gain) loss on derivative financial instruments line item of the consolidated statements of income and comprehensive income.
Mark-to-market gains and losses related to foreign exchange derivative financial instruments are recorded at fair value based on broker-dealer quotations corroborated by option pricing models that
utilize period end forward pricing of the applicable foreign currency to calculate fair value.

The
Company's other foreign currency derivative strategies in 2016 and 2015 consisted mainly of writing US dollar call options with short maturities to generate premiums that would, in essence,
enhance the spot transaction rate received when exchanging US dollars for Canadian dollars and Mexican pesos. All of these derivative transactions expired prior to period end such that no derivatives
were outstanding as at December 31, 2016 or December 31, 2015. The call option premiums were recognized in the (gain) loss on derivative financial instruments line item of the
consolidated statements of income and comprehensive income.

Commodity Price Risk Management

To mitigate the risks associated with fluctuating diesel fuel prices, the Company uses derivative financial instruments as economic hedges of the price risk on a portion of
diesel fuel costs associated with the Meadowbank mine's diesel fuel exposure as it relates to operating costs. There were derivative financial instruments outstanding as at December 31, 2016
relating to 1.0 million gallons of heating oil (December 31, 2015  7.0 million gallons of heating oil). The related mark-to-market
adjustments prior to settlement were recognized in the (gain) loss on derivative financial instruments line item of the consolidated statements of income and comprehensive income. The Company does not
apply hedge accounting to these arrangements.

Mark-to-market
gains and losses related to heating oil derivative financial instruments are based on broker-dealer quotations that utilize period end forward pricing to calculate fair value.

As
at December 31, 2016 and December 31, 2015, there were no metal derivative positions. The Company may from time to time utilize short-term financial instruments as part of its
strategy to minimize risks and optimize returns on its by-product metal sales.

The
following table sets out a summary of the amounts recognized in the (gain) loss on derivative financial instruments line item of the consolidated statements of income and comprehensive income:

|                                                           |  |   | Year Ended December 31,
|---------------------------------------------------------- |  | - | -----------------------
|                                                           |  |  
|
|                                                           |  |  
|Premiums realized on written foreign exchange call options |  | $ | (2,569                 
|                                                          
|Realized loss (gain) on warrants                           |  |   | 543                    
|                                                          
|Unrealized (gain) loss on warrants(i)                      |  |   | (580                   
|                                                          
|Realized loss on currency and commodity derivatives        |  |   | 357                    
|                                                          
|Unrealized gain on currency and commodity derivatives(i)   |  |   | (7,219                 
|                                                          
|(Gain) loss on derivative financial instruments            |  | $ | (9,468                 
|                                                          

Note:

54   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



21. SEGMENTED INFORMATION

Agnico Eagle operates in a single industry, namely exploration for and production of gold. The Company's primary operations are in Canada, Mexico and Finland. The Company
identifies its reportable segments as those operations whose operating results are reviewed by the Chief Operating Decision Maker ("CODM"), the Chief Executive Officer for the purpose of allocating
resources and assessing performance and that represent more than 10.0% of the combined revenue from mining operations, income or loss or total assets of all operating segments. Each of the Company's
significant operating mines and projects are considered to be separate operating segments. Certain operating segments that do not meet the quantitative thresholds are still disclosed where the Company
believes that the information is useful. The CODM also reviews segment income (defined as revenues from mining operations less production costs, exploration and corporate development expenses and
impairment losses and reversals) on a mine-by-mine basis. The following are the Company's reportable segments organized according to their relationship with the Company's three business units and
reflect how the Company manages its business and how it classifies its operations for planning and measuring performance:

|Northern Business: |  | LaRonde mine, Lapa mine, Goldex mine, Meadowbank mine including the Amaruq deposit, Canadian Malartic joint operation, Meliadine project and Kittila mine
|------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|                  
|Southern Business: |  | Pinos Altos mine, Creston Mascota deposit at Pinos Altos and La India mine                                                                               
|                  
|Exploration:       |  | United States Exploration office, Europe Exploration office, Canada Exploration offices and Latin America Exploration office                             

Revenues from mining operations and production costs for the reportable segments are reported net of intercompany transactions.

Corporate
and other assets and specific income and expense items are not allocated to reportable segments.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   55

---



|Year Ended December 31, 2016           |                                                      | Revenues from
Mining
Operations |           | Production
Costs |   | Exploration and
Corporate
Development |   | Gain on
Impairment
Reversal |          | Segment
Income
(Loss) |   |        
|-------------------------------------- | ---------------------------------------------------- | ------------------------------- | --------- | ---------------- | - | ------------------------------------- | - | --------------------------- | -------- | --------------------- | - | -------
|                                      
|Northern Business:                     |                                                      |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|LaRonde mine                           |                                                      | $                               | 388,180   |                  | $ | (179,496                              | ) | $                           |         |                       | $ |       
|                                      
|Lapa mine                              |                                                      |                                 | 92,160    |                  |   | (52,974                               | ) |                             |         |                       |   |       
|                                      
|Goldex mine                            |                                                      |                                 | 149,730   |                  |   | (63,310                               | ) |                             |         |                       |   |       
|                                      
|Meadowbank mine                        |                                                      |                                 | 384,023   |                  |   | (218,963                              | ) |                             | (63,488  | )                     |   | 37,161 
|                                      
|Canadian Malartic joint operation      |                                                      |                                 | 371,920   |                  |   | (183,635                              | ) |                             | (4,044   | )                     |   |       
|                                      
|Meliadine project                      |                                                      |                                 |          |                  |   |                                      |   |                             |         |                       |   | 83,000 
|                                      
|Kittila mine                           |                                                      |                                 | 252,346   |                  |   | (141,871                              | ) |                             |         |                       |   |       
|                                      
|Total Northern Business                |                                                      |                                 | 1,638,359 |                  |   | (840,249                              | ) |                             | (67,532  | )                     |   | 120,161
|                                      
|Southern Business:                     |                                                      |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|Pinos Altos mine                       |                                                      |                                 | 294,377   |                  |   | (114,557                              | ) |                             |         |                       |   |       
|                                      
|Creston Mascota deposit at Pinos Altos |                                                      |                                 | 62,967    |                  |   | (27,341                               | ) |                             |         |                       |   |       
|                                      
|La India mine                          |                                                      |                                 | 142,529   |                  |   | (49,745                               | ) |                             |         |                       |   |       
|                                      
|Total Southern Business                |                                                      |                                 | 499,873   |                  |   | (191,643                              | ) |                             |         |                       |   |       
|                                      
|Exploration                            |                                                      |                                 |          |                  |   |                                      |   |                             | (79,446  | )                     |   |       
|                                      
|Segments totals                        |                                                      | $                               | 2,138,232 |                  | $ | (1,031,892                            | ) | $                           | (146,978 | )                     | $ | 120,161
|                                      
|Total segments income                  |                                                      |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|Corporate and other:                   |                                                      |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|                                       | Amortization of property, plant and mine development |                                 |           |                  |   |                                       |   |                             |          | (613,160              | ) |        
|                                      
|                                       | General and administrative                           |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|                                       | Finance costs                                        |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|                                       | Gain on derivative financial instruments             |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|                                       | Gain on sale of available-for-sale securities        |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|                                       | Environmental remediation                            |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|                                       | Foreign currency translation loss                    |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|                                       | Other expenses                                       |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      
|                                       | Income before income and mining taxes                |                                 |           |                  |   |                                       |   |                             |          |                       |   |        
|                                      

56   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



|
|

|Year Ended December 31, 2015           |                                                      | Revenues from
Mining
Operations |           | Production
Costs |   | Exploration and
Corporate
Development |   | Segment
Income
(Loss) |          |  
|-------------------------------------- | ---------------------------------------------------- | ------------------------------- | --------- | ---------------- | - | ------------------------------------- | - | --------------------- | -------- | -
|                                      
|Northern Business:                     |                                                      |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|LaRonde mine                           |                                                      | $                               | 318,207   |                  | $ | (172,283                              | ) | $                     |         |  
|                                      
|Lapa mine                              |                                                      |                                 | 104,785   |                  |   | (52,571                               | ) |                       |         |  
|                                      
|Goldex mine                            |                                                      |                                 | 133,845   |                  |   | (61,278                               | ) |                       |         |  
|                                      
|Meadowbank mine                        |                                                      |                                 | 446,898   |                  |   | (230,564                              | ) |                       | (43,676  | )
|                                      
|Canadian Malartic joint operation      |                                                      |                                 | 333,280   |                  |   | (171,473                              | ) |                       | (6,093   | )
|                                      
|Kittila mine                           |                                                      |                                 | 206,357   |                  |   | (126,095                              | ) |                       |         |  
|                                      
|Total Northern Business                |                                                      |                                 | 1,543,372 |                  |   | (814,264                              | ) |                       | (49,769  | )
|                                      
|Southern Business:                     |                                                      |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|Pinos Altos mine                       |                                                      |                                 | 250,909   |                  |   | (105,175                              | ) |                       |         |  
|                                      
|Creston Mascota deposit at Pinos Altos |                                                      |                                 | 66,472    |                  |   | (26,278                               | ) |                       |         |  
|                                      
|La India mine                          |                                                      |                                 | 124,679   |                  |   | (49,578                               | ) |                       |         |  
|                                      
|Total Southern Business                |                                                      |                                 | 442,060   |                  |   | (181,031                              | ) |                       |         |  
|                                      
|Exploration                            |                                                      |                                 |          |                  |   |                                      |   |                       | (60,584  | )
|                                      
|Segments totals                        |                                                      | $                               | 1,985,432 |                  | $ | (995,295                              | ) | $                     | (110,353 | )
|                                      
|Total segments income                  |                                                      |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|Corporate and other:                   |                                                      |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | Amortization of property, plant and mine development |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | General and administrative                           |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | Impairment loss on available-for-sale securities     |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | Finance costs                                        |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | Loss on derivative financial instruments             |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | Gain on sale of available-for-sale securities        |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | Environmental remediation                            |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | Foreign currency translation gain                    |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|                                       | Other expenses                                       |                                 |           |                  |   |                                       |   |                       |          |  
|                                      
|Income before income and mining taxes  |                                                      |                                 |           |                  |   |                                       |   |                       |          |  
|                                      

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   57

---



|                                       |  |   | Total Assets as at
|-------------------------------------- |  | - | ------------------
|                                       |  |  
|
|                                       |  |  
|Northern Business:                     |  |   |                   
|                                      
|LaRonde mine                           |  | $ | 808,981           
|                                      
|Lapa mine                              |  |   | 16,473            
|                                      
|Goldex mine                            |  |   | 248,766           
|                                      
|Meadowbank mine                        |  |   | 500,207           
|                                      
|Canadian Malartic joint operation      |  |   | 1,956,285         
|                                      
|Meliadine project                      |  |   | 781,999           
|                                      
|Kittila mine                           |  |   | 961,392           
|                                      
|Total Northern Business                |  |   | 5,274,103         
|                                      
|Southern Business:                     |  |   |                   
|                                      
|Pinos Altos mine                       |  |   | 667,123           
|                                      
|Creston Mascota deposit at Pinos Altos |  |   | 60,308            
|                                      
|La India mine                          |  |   | 428,005           
|                                      
|Total Southern Business                |  |   | 1,155,436         
|                                      
|Exploration                            |  |   | 198,738           
|                                      
|Corporate and other                    |  |   | 479,674           
|                                      
|Total assets                           |  | $ | 7,107,951         
|                                      

The following table sets out the carrying amount of goodwill by segment for the years ended December 31, 2015 and December 31, 2016:

|                       |  | Meliadine
Project |          | La India Mine |   | Canadian
Malartic Joint Operation |  | Total |         | 
|---------------------- |  | ----------------- | -------- | ------------- | - | --------------------------------- |  | ----- | ------- | 
|                       |  |                  
|Cost                   |  | $                 | 200,064  |               | $ | 39,017                            |  | $     | 657,792 | 
|                      
|Accumulated impairment |  |                   | (200,064 | )             |   |                                  |  |       |        | 
|                      
|Carrying amount        |  | $                 |         |               | $ | 39,017                            |  | $     | 657,792 | 
|                      

58   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



The following table sets out capital expenditures by segment:

|                                       |  |  
|-------------------------------------- |  | -
|
|                                       |  |  
|
|                                       |  |  
|Northern Business:                     |  |  
|                                      
|LaRonde mine                           |  | $
|                                      
|Lapa mine                              |  |  
|                                      
|Goldex mine                            |  |  
|                                      
|Meadowbank mine                        |  |  
|                                      
|Canadian Malartic joint operation      |  |  
|                                      
|Meliadine project                      |  |  
|                                      
|Kittila mine                           |  |  
|                                      
|Total Northern Business                |  |  
|                                      
|Southern Business:                     |  |  
|                                      
|Pinos Altos mine                       |  |  
|                                      
|Creston Mascota deposit at Pinos Altos |  |  
|                                      
|La India mine                          |  |  
|                                      
|Total Southern Business                |  |  
|                                      
|Corporate and other                    |  |  
|                                      
|Total capital expenditures             |  | $
|                                      

The following table sets out revenues from mining operations by geographic area(i):

|                                      |  |  
|------------------------------------- |  | -
|
|                                      |  |  
|
|                                      |  |  
|Canada                                |  | $
|                                     
|Mexico                                |  |  
|                                     
|Finland                               |  |  
|                                     
|Total revenues from mining operations |  | $
|                                     

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   59

---





AGNICO EAGLE MINES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(thousands of United States dollars, except share and per share amounts, unless otherwise indicated)
December 31, 2016

21. SEGMENTED INFORMATION (Continued)

The
following table sets out non-current assets by geographic area:

|                         |  |  
|------------------------ |  | -
|
|                         |  |  
|
|                         |  |  
|Canada                   |  | $
|                        
|Mexico                   |  |  
|                        
|Finland                  |  |  
|                        
|United States            |  |  
|                        
|Total non-current assets |  | $
|                        

22. IMPAIRMENT AND IMPAIRMENT REVERSALS

Goodwill Impairment Testing

The Company performs goodwill impairment tests on an annual basis as at December 31 each year. In addition, the Company assesses for indicators of impairment at each
reporting period end and if an indicator of impairment is identified, goodwill and long-lived assets are tested for impairment at that time. If an indicator of impairment exists, the recoverable
amount of the asset is calculated in order to determine if any impairment loss is required. An impairment loss is recognized for any excess of the carrying amount of the asset over its recoverable
amount.

The
estimated recoverable amount of the Canadian Malartic joint operation segment as at December 31, 2016 and December 31, 2015 was determined on the basis of fair value less costs to
dispose of the Canadian Malartic mine as well as the exploration properties included in the joint operation. The estimated recoverable amount of the Canadian Malartic mine was calculated by
discounting the estimated future net cash flows over the estimated life of the mine using a nominal discount rate of 6.00% (2015  5.25%), commensurate with the
estimated level of risk associated with the Canadian Malartic mine. The recoverable amount calculation was based on an estimate of future production levels applying gold prices of $1,250 per ounce
(in real terms) (2015  $1,150 to $1,250 per ounce), foreign exchange rates of US$0.75:C$1.00 to US$0.80:C$1.00
(2015  US$0.75:C$1.00 to US$0.80:C$1.00), an inflation rate of 2.0% (2015  2.0%), and capital, operating and reclamation
costs based on applicable life-of-mine plans. Exploration properties within the joint operation were valued by reference to comparable recent transactions. The Canadian Malartic joint operation
segment estimated recoverable amount exceeded its carrying amount at December 31, 2016 and December 31, 2015. The discounted cash flow approach uses significant unobservable inputs and
is therefore considered Level 3 fair value measurement under the fair value hierarchy.

Impairment Reversals

The Company assesses for indicators of impairment reversal on long-lived assets other than goodwill that have previously been impaired at each reporting period end. If an
indicator of impairment reversal is identified, the recoverable amount of the asset is calculated in order to determine if any impairment reversal is required. An impairment loss recognized in a prior
period can only be reversed if there are subsequent changes in the estimates or significant assumptions that were used to determine the recoverable amount since the impairment loss was recognized. A
gain on impairment reversal is recognized for any excess of the recoverable amount of the asset over its carrying amount. The amount of the reversal is limited to the difference between the current
carrying amount and the amount which would have been the carrying amount had the earlier impairment not been recognized and amortization of that carrying amount had continued.

60   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



In
2016, the Company completed an internal technical study on the Amaruq satellite deposit at the Meadowbank mine. Board approval for the development of the project was received on February 15,
2017. The favourable project economics and the expected potential for extensions to the Company's current mine plan in relation to the Amaruq satellite deposit at the Meadowbank mine is an impairment
reversal indicator for the Meadowbank mine CGU. The updated mine plan represents an observable indication that the value of the CGU has increased significantly and is a favourable change to the extent
and manner in which the asset is expected to be used. There is significant judgement involved in the determination of whether a previously recognized impairment loss should be reversed.

The
estimated recoverable amount of the Meadowbank mine CGU as at December 31, 2016 was determined on the basis of fair value less costs to dispose of the mine. The estimated recoverable amount
of the Meadowbank mine CGU was calculated by discounting the estimated future net cash flows over the estimated life of the mine using a nominal discount rate of 7.25%
(2015  3.75%), commensurate with the estimated level of risk associated with the Meadowbank mine CGU. The recoverable amount calculation was based on an estimate
of future production levels applying gold prices of $1,250 per ounce (in real terms), foreign exchange rates of US$0.75:C$1.00 to US$0.80:C$1.00, an inflation rate of 2.0%, and capital,
operating and reclamation costs based on applicable life-of-mine plans. The estimated recoverable amount of the Meadowbank mine CGU exceeded its carrying amount at December 31, 2016. The
Meadowbank mine CGU's maximum impairment reversal is limited to the difference between the current carrying amount and the previous carrying amount less amortization that would have been recognized
had the assets not been previously impaired. Certain assets that are not expected to be utilized in conjunction with the Amaruq satellite deposit had recoverable amounts less than their current
carrying amounts and therefore no impairment reversal was applied. The Company determined that the Amaruq satellite deposit will utilize some of the existing infrastructure at the Meadowbank mine,
primarily the mill, camp, road and airstrip, to generate cashflows at the Amaruq satellite deposit and these assets were written up to the maximum of the previous carrying amount that would have been
determined had no impairment loss been recognized for the assets in prior years. A gain on impairment reversal of $37.2 million ($27.6 million, net of tax) was recognized in the gain on
impairment reversal line item in the consolidated statements of income and comprehensive income to increase the carrying amount of related plant and equipment. The discounted cash flow approach uses
significant unobservable inputs and is therefore considered Level 3 fair value measurement under the fair value hierarchy.

In
2016, the Company completed internal studies to optimize the previous Meliadine mine plan that had been outlined in an updated NI 43-101 technical report dated February 11, 2015.
These internal studies evaluated various
opportunities to improve the project economics and the after-tax internal rate of return. Board approval for development of the project was received on February 15, 2017. The favourable project
economics and the expected potential for extensions to the Company's current mine plan is an impairment reversal indicator for the Meliadine project CGU. The updated mine plan represents an observable
indication that the value of the CGU has increased significantly and is a favourable change to the extent and manner in which the asset is expected to be used. There is significant judgment involved
in the determination of whether a previously recognized impairment loss should be reversed.

The
estimated recoverable amount of the Meliadine project CGU as at December 31, 2016 was determined on the basis of fair value less costs to dispose of the mine. The estimated recoverable
amount of the Meliadine project CGU was calculated by discounting the estimated future net cash flows over the estimated life of the mine using a nominal discount rate of 9.00%
(2015  7.50%), commensurate with the estimated level of risk associated with the Meliadine project CGU. The recoverable amount calculation was based on an
estimate of future production levels applying gold prices of $1,250 per ounce (in real terms), foreign exchange rates of US$0.75:C$1.00 to US$0.80:C$1.00, an inflation rate of 2.0% and capital,
operating and reclamation costs based on applicable life-of-mine plans. As the Meliadine project CGU's estimated recoverable amount exceeded the previous carrying amount less amortization that would
have been recognized had the assets not been impaired, a gain on impairment reversal of $83.0 million ($53.6 million, net of tax) was recognized in the gain on impairment reversal line
item in the consolidated statements of income and comprehensive income to increase the carrying amount of the related

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   61

---



mining
property. The discounted cash flow approach uses significant unobservable inputs and is therefore considered Level 3 fair value measurement under the fair value hierarchy.

Key Assumptions

Discount rates were based on each asset group's weighted average cost of capital, of which the two main components are the cost of equity and the after-tax cost of debt. Cost
of equity was calculated based on the capital asset pricing model, incorporating the risk-free rate of return based on Government of Canada marketable bond yields as at the valuation date, the
Company's beta coefficient adjustment to the market equity risk premium based on the volatility of the Company's return in relation to that of a comparable market portfolio, plus a size premium and
Company-specific risk factor. Cost of debt was determined by applying an appropriate market indication of the Company's borrowing capabilities and the corporate income tax rate applicable to each
asset group's jurisdiction. Gold price estimates were determined using forecasts of future prices prepared by industry analysts, which were available as at or close to the valuation date. Foreign
exchange estimates are based on a combination of currency forward curves and estimates that reflect the outlooks of major global financial institutions.

23. INCOME AND MINING TAXES

Income and mining taxes expense is made up of the following components:

|                                      |                                                   |  
|------------------------------------- | ------------------------------------------------- | -
|
|                                      |                                                   |  
|
|                                      |                                                   |  
|Current income and mining taxes       |                                                   | $
|                                     
|Deferred income and mining taxes:     |                                                   |  
|                                     
|                                      | Origination and reversal of temporary differences |  
|                                     
|Total income and mining taxes expense |                                                   | $
|                                     

62   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



The income and mining taxes expense is different from the amount that would have been calculated by applying the Canadian statutory income tax rate as a result
of the following:

|                                                               |                                                            |  
|-------------------------------------------------------------- | ---------------------------------------------------------- | -
|
|                                                               |                                                            |  
|
|                                                               |                                                            |  
|Combined federal and composite provincial tax rates            |                                                            |  
|                                                              
|Expected income tax expense at statutory income tax rate       |                                                            | $
|                                                              
|Increase (decrease) in income and mining taxes resulting from: |                                                            |  
|                                                              
|                                                               | Mining taxes                                               |  
|                                                              
|                                                               | Tax law changes                                            |  
|                                                              
|                                                               | Impact of foreign tax rates                                |  
|                                                              
|                                                               | Permanent differences                                      |  
|                                                              
|                                                               | Impact of foreign exchange on deferred income tax balances |  
|                                                              
|Total income and mining taxes expense                          |                                                            | $
|                                                              

The following table sets out the components of Agnico Eagle's net deferred income and mining tax liabilities:

|                                                 |  |   | As at
December 31,
2016 |   |   | As at
December 31,
2015 |   | 
|------------------------------------------------ |  | - | ----------------------- | - | - | ----------------------- | - | 
|                                                 |  |  
|Mining properties                                |  | $ | 1,046,218               |   | $ | 1,039,105               |   | 
|                                                
|Net operating and capital loss carry forwards    |  |   | (80,227                 | ) |   | (86,126                 | ) | 
|                                                
|Mining taxes                                     |  |   | (76,344                 | ) |   | (75,410                 | ) | 
|                                                
|Reclamation provisions and other liabilities     |  |   | (70,085                 | ) |   | (75,455                 | ) | 
|                                                
|Total deferred income and mining tax liabilities |  | $ | 819,562                 |   | $ | 802,114                 |   | 
|                                                

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   63

---



|                                                                  |  |  
|----------------------------------------------------------------- |  | -
|
|                                                                  |  |  
|
|                                                                  |  |  
|Deferred income and mining tax liabilities  beginning of year    |  | $
|                                                                 
|Income and mining tax impact recognized in net income             |  |  
|                                                                 
|Income tax impact recognized in other comprehensive income (loss) |  |  
|                                                                 
|Reduction of flow-through share liability                         |  |  
|                                                                 
|Deferred income and mining tax liabilities  end of year          |  | $
|                                                                 

The Company operates in different jurisdictions and, accordingly, it is subject to income and other taxes under the various tax regimes in the countries in
which it operates. The tax rules and regulations in many countries are highly complex and subject to interpretation. The Company may be subject in the future to a review of its historic income and
other tax filings and, in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules and regulations to the Company's
business conducted within the country involved.

The
deductible temporary differences and unused tax losses in respect of which a deferred tax asset has not been recognized in the consolidated balance sheets are as follows:

|                                                                    |  |   | As at
December 31,
2016 |  |   | As at
December 31,
2015 | 
|------------------------------------------------------------------- |  | - | ----------------------- |  | - | ----------------------- | 
|                                                                    |  |  
|Net capital loss carry forwards                                     |  | $ | 34,298                  |  | $ | 90,647                  | 
|                                                                   
|Other deductible temporary differences                              |  |   | 202,614                 |  |   | 213,879                 | 
|                                                                   
|Unrecognized deductible temporary differences and unused tax losses |  | $ | 236,912                 |  | $ | 304,526                 | 
|                                                                   

The Company also has unused tax credits of $12.9 million as at December 31, 2016 (December 31,
2015  $9.9 million) for which a deferred tax asset has not been recognized.

Capital
loss carry forwards and other deductible temporary differences have no expiry date while the unused tax credits expire in 2020.

The
Company has $410.5 million (2015  $412.8 million) of taxable temporary differences associated with its investments in subsidiaries for which
deferred income tax has not been recognized, as the Company is able to control the timing of the reversal of the taxable temporary differences and it is probable that they will not reverse in the
foreseeable future.

The
Company is subject to taxes in Canada, Mexico and Finland, each with varying statutes of limitations. Prior taxation years generally remain subject to examination.

64   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

---



24. EMPLOYEE BENEFITS AND COMPENSATION OF KEY MANAGEMENT PERSONNEL

During the year ended December 31, 2016, employee benefits expense was $479.1 million (2015  $463.0 million). There
were no related party transactions in 2016 or 2015 other than compensation of key management personnel. Key management personnel include the members of the Board and the senior leadership team.

|                                                   |  |   | Year Ended December 31, | 
|-------------------------------------------------- |  | - | ----------------------- | 
|                                                   |  |  
|
|                                                   |  |  
|Salaries, short-term incentives and other benefits |  | $ | 16,620                  | 
|                                                  
|Post-employment benefits                           |  |   | 1,489                   | 
|                                                  
|Share-based payments                               |  |   | 13,591                  | 
|                                                  
|Total                                              |  | $ | 31,700                  | 
|                                                  

25. COMMITMENTS AND CONTINGENCIES

As part of its ongoing business and operations, the Company has been required to provide assurance in the form of letters of credit for environmental and site restoration
costs, custom credits, government grants and other general corporate purposes. As at December 31, 2016, the total amount of these guarantees was $251.6 million.

Certain
of the Company's properties are subject to royalty arrangements. The following are the most significant royalty arrangements:



The
Company regularly enters into various earn-in and shareholder agreements, often with commitments to pay net smelter return and other royalties.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   65

---



The
Company had the following purchase commitments as at December 31, 2016, of which $29.4 million related to capital expenditures:

|           |  |   | Purchase
Commitments | 
|---------- |  | - | -------------------- | 
|           |  |  
|2017       |  | $ | 43,289               | 
|          
|2018       |  |   | 8,562                | 
|          
|2019       |  |   | 6,520                | 
|          
|2020       |  |   | 5,035                | 
|          
|2021       |  |   | 3,854                | 
|          
|Thereafter |  |   | 16,971               | 
|          
|Total      |  | $ | 84,231               | 
|          

26. ONGOING LITIGATION

On August 2, 2016, the Partnership was served with a class action lawsuit with respect to allegations involving the Canadian Malartic mine. The complaint is in respect
of "neighbourhood annoyances" arising from dust, noise, vibrations and blasts at the mine. The plaintiffs are seeking damages in an unspecified amount as well as punitive damages in the amount of
$20.0 million. Proceedings for the certification of the class are scheduled for April 11 and 12, 2017. The Company and the Partnership will take all necessary steps to defend themselves
from this lawsuit.

On
August 15, 2016, the Partnership received notice of an application for injunction relating to the Canadian Malartic mine, which has been filed under theEnvironment
Quality Act(Quebec). A hearing related to an interlocutary injunction was completed on March 17, 2017 and a decision of the Superior Court of Quebec is pending. The
request for injunction aims to restrict the Canadian Malartic mine's mining operations to sound levels and mining volumes below the limits to which it is subject. Agnico Eagle and the Partnership have
reviewed the injunction request, consider the request without merit and will take all reasonable steps to defend against this injunction. While at this time the potential impacts cannot be
definitively determined, the Company expects that if the injunction were to be granted there would be a negative impact on the operations of the Canadian Malartic mine, which could include a reduction
in production.

27. SUBSEQUENT EVENTS

Dividends Declared

On February 15, 2017, Agnico Eagle announced that the Board approved the payment of a quarterly cash dividend of $0.10 per common share (a total value of
approximately $22.5 million), paid on March 15, 2017 to holders of record of the common shares of the Company on March 1, 2017.

Purchase of Otis Gold Corporation Common Shares

On February 28, 2017, the Company completed the purchase of 14,420,000 common shares of Otis Gold Corporation ("Otis") pursuant to a private placement. The
Company paid C$0.35 per Otis common share, for total consideration of approximately C$5.0 million. Upon the closing of the transaction, Agnico Eagle held approximately 9.95% of the issued and
outstanding common shares of Otis on a non-diluted basis.

66   AGNICO EAGLEANNUAL AUDITED CONSOLIDATED FINANCIAL
STATEMENTS

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Purchase of GoldQuest Mining Corporation Common Shares

On March 8, 2017, the Company completed the purchase of 38,100,000 common shares of GoldQuest Mining Corporation ("GoldQuest") pursuant to a private placement.
The Company paid C$0.60 per GoldQuest common share, for total consideration of approximately C$22.9 million. Upon the closing of the transaction, Agnico Eagle held approximately 15.0% of the
issued and outstanding common shares of GoldQuest on a non-diluted basis.

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTSAGNICO
EAGLE   67

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