TORONTO, Oct. 28 /CNW-PRN/ - Agnico-Eagle Mines Limited today reported a
net loss of US$5.1 million, or US$0.09 per share for the quarter ended
September 30, 1999 compared to a net loss of US$2.5 million, or US$0.05 per
share in the same period last year. Operating cash flow declined in the third
quarter to a deficit of US$5.5 million, or US$0.10 per share, compared to cash
flow of US$0.2 million, or nil per share in the 1998 third quarter. Earnings
and cash flows were weaker than in 1998 due to 20-year low gold prices,
decreased gold production due to the mining of lower grade gold ore from the
nearly depleted mining areas of Shafts No. 1 and No. 2 and the settlement of
the lawsuit with Noranda Inc. for C$1.9 million (US$1.3 million). These
factors were partially offset by a continued improvement in mine operating
cost performance with operating costs per ton declining 13 percent to C$53 per
ton. ``The third quarter was characterized by very difficult operating
conditions in the few remaining mining blocks at Shafts No. 1 and No. 2 along
with steady progress on the soon to be completed development and expansion
program at our new Shaft No. 3,'' said Sean Boyd, Agnico-Eagle's President and
Chief Executive Officer. ``In addition, since our last drilling update on
October 14, new drill results from Shaft No. 3 continue to confirm thicker
mineralization and higher grades than previously indicated,'' added Mr. Boyd. Operating Results Onsite operating costs improved in the second quarter to C$53 per ton of
ore milled compared to C$61 per ton in same quarter of 1998. However, gold
production was substantially lower at 15,024 ounces due to a combination of
factors including difficult mining conditions and lower gold grades at Shaft
No. 1, and the commissioning of the new 5000 ton per day SAG mill in August
which resulted in two weeks of downtime in the mill. As a result, the year to date cash operating costs to produce an ounce of
gold increased to US$256 per ounce from US$214 per ounce as gold production
decreased to 73,824 ounces from 113,387 ounces in 1998. On a quarterly basis,
cash costs per ounce in the third quarter were abnormally high at US$375. The
average gold price realized to date in 1999 is US$273 per ounce, down eight
percent from US$296 per ounce realized in 1998. For the year to date, the net
loss was US$9.7 million, or US$0.18 per share compared to US$6.6 million, or
US$0.14 per share in 1998. Fourth quarter operating results are expected to improve as the new SAG
mill will be operational for the full quarter and more ore will be processed
from the new mining areas at Shaft No. 3 including the first mining block from
Zone 20 South - El Coco. In addition, the daily mining rate will reach 3,600
tons per day by December compared to the average daily throughput in the third
quarter of approximately 2,000 tons per day. Financial Position At September 30, 1999 Agnico-Eagle's financial position remained strong
with a cash balance of US$35 million and a working capital position of US$39
million. In August, the Company announced that a US$100 million 8-year bank
facility had been fully underwritten with Deutsche Bank AG and Barclays Bank
PLC. Since that time, the facility has been successfully syndicated to a
number of other banks including The Bank of Nova Scotia, Standard Bank London
Limited, Dresdner Bank Kleinwort Benson and CIBC World Markets. The credit
facility is expected to close by the middle of November, as scheduled. As part of this credit facility, the Company is required to put in place
downside price protection for gold in the form of put options on approximately
20% of its total current gold reserves and resources. The cost of purchasing
these put options will be financed, in part, by selling call options on a
small percentage of the Company's by-product metal reserves. Consistent with
its policy of the last 20 years, the Company will not sell away any of the
upside on its future gold production. The Company plans to spend US$89 million to the end of 2002 to complete
its ongoing expansion program. Of this amount, US$24 million is expected to be
spent in the last quarter of 1999, US$44 million in 2000, US$17 million in
2001 and US$4 million in 2002. The Company's cash and bullion balance, along
with projected cash flows from operations over this period are expected to be
sufficient to cover the remaining US$89 million investment required to achieve
a production rate of 5000 tons per day. The bank facility is intended to
provide the working capital required during the early years of the capital
expenditure program and to enhance Agnico-Eagle's liquidity and financial
flexibility. Laronde Exploration Program Since our last exploration update on October 14, additional drill results
have been received from the definition drilling programs on Zone 20 South and
Zone 20 North. These results continue to identify higher grade gold
mineralization and thicker mining widths than expected. A total of six drills
are currently working underground at LaRonde. Zone 20 South - El Coco The 20 South - El Coco underground drill program continues to confirm
higher grade mineralization within the known resource outline as well as
extending the known area of mineralization. Two new drill holes have been
completed within the present resource outline over the past two weeks. The
following results were obtained:
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True Gold(oz/ton) Silver
Drill Hole Thickness (ft.) Cut (1.5 oz) (oz/ton) Copper(%) Zinc(%)
-----------------------------------------------------------------------
3122-32 10.5 0.16 0.98 0.08 3.84
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3122-33 26.9 0.58 3.76 0.39 6.05
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Uncut 26.9 0.95 3.76 0.39 6.05
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In addition, drill holes were completed outside of the known Zone 20
South resource outline. Two drill holes intersected Zone 20 South at depth
while one continued to extend the zone upward. The following values were
intersected:
True
Gold (oz/ton)
Silver Drill Hole Thickness (ft.) Cut (1.5 oz)
(oz/ton)
Copper(%)
Zinc(%)
20-293
10.2
0.09
2.66
0.10
5.72
3134-77
11.5
0.15
1.42
1.10
2.04
3134-78
9.2
0.33
1.05
0.46
2.09
In addition to another high grade gold intersection within the known
mineralized zone (hole 3122-33), drilling has now extended Zone 20 South down
to the Level 146 horizon (4,700 feet below surface). Furthermore, there are
also indications that Zone 20 South may extend up to the 20th Level drift
(2,800 feet below surface). Development on the 20th Level exploration drift is
in progress to provide drill platforms to conduct additional drilling. Four
drills are currently drilling Zone 20 South, the first on the 20th Level
exploration drift (testing the upward extension), the second on Level 122
continuing the definition drilling program, the third on Level 134 continuing
to confirm the downward extension and the fourth on Level 146 testing for
further depth potential. A surface exploration program has also begun on the El Coco property and
the Company's Sphinx property immediately to the east of El Coco. A recently
completed geophysical survey of both properties has identified several targets
that will be drill tested beginning in mid- November. This work will assist
the Company in identifying specific target areas for the extensive underground
drifting and drilling program that will begin across El Coco and Sphinx by the
middle of next year. Zone 20 North The Zone 20 North definition drill program continues to return positive
results from Levels 134 and 194 at Shaft No. 3. On Level 194 drill hole
3194-05 returned the following results:
------------------------------------------------------------------------
True Gold(oz/ton) Silver
Drill Hole Thickness (ft.) Cut (1.5 oz) (oz/ton) Copper(%) Zinc(%)
------------------------------------------------------------------------
3194-05-Au 44.3 0.19 1.83 1.46 0.53
------------------------------------------------------------------------
-Zn 9.2 0.01 0.63 0.09 8.32
------------------------------------------------------------------------
The drill hole intersected Zone 20 North at the currently known western
limit and was approximately 350 feet west of an earlier reported hole
(3194-04) which returned 0.36 ounces of gold per ton and 5.55 ounces of silver
with copper and zinc mineralization over a true thickness of 42 feet.
Definition drilling along Level 194 has now indicated a Zone 20 North strike
length of 1,500 feet compared to a previously estimated strike length in this
area of 750 feet. Zone 20 North remains open for expansion along strike to the
east and west. A drill is currently being set up on Level 206 (approximately 400 feet)
below Level 194 to test the downward extension of the higher grade gold
mineralization encountered on Level 194. This will be followed by drilling
from Level 215. The company anticipates having both the Level 206 and Level
215 drilling completed by the end of 1999. From Level 134 the program to define the western limit on the upper
portion of Zone 20 North continued. The following result was obtained:
------------------------------------------------------------------------
True Gold(oz/ton) Silver
Drill Hole Thickness (ft.) Cut (1.5 oz) (oz/ton) Copper(%) Zinc(%)
------------------------------------------------------------------------
3134-76-Au 36.1 0.16 1.24 0.28 0.04
------------------------------------------------------------------------
-Zn 53.0 0.03 5.81 0.06 10.90
------------------------------------------------------------------------
This result continues the confirmation of increased mineralized thickness
and higher gold grades in an area where we had previously encountered
primarily zinc/silver mineralization. Both the Level 134 and 194 drilling
results continue to confirm that Zone 20 North gold mineralization is more
extensive than originally thought. With the completion of the Level 194 definition drilling program, the
drill on this level has resumed the deep drilling program on Zone 20 North.
The drill has completed 200 feet of its planned 3,000 foot length. The target
of this drill hole is approximately 8,800 feet below surface between the
recently reported deep intersection on Zone 20 North at 9,700 feet below
surface and an earlier drill intersection at 7,400 feet below surface. Each of
these drill holes intersected massive sulfide mineralization over true
thicknesses of approximately 50 feet containing gold, silver, copper and zinc.
Results of the current deep drill hole are anticipated prior to the release of
the updated reserve and resource calculation in February 2000. The Longitudinal illustrations that detail the drill results presented in
this news release and an earlier release on October 14 can be viewed and/or
downloaded from the Company's website:
LaRonde Expansion Program
Shaft Sinking and Mill Expansion
Shaft No. 3 is currently at a depth of 6,950 feet and ground conditions
continue to be excellent. Shaft sinking remains on schedule with 400 feet
remaining to be completed by the middle of February 2000. Underground
infrastructure completed during the quarter included the main pumping station
on Level 122, the 5,000 ton ore bin, truck dump and waste pass rock breaker on
Level 146 and completion of the paste backfill lines down to the 188 sublevel
horizon. In addition, the main upcast and downcast ventilation fans are
nearing completion and the chute and conveyor installations are currently
underway on Level 152. Underground development continues to progress on budget
with 20,000 feet completed to the end of the third quarter. The 5,000 ton per day SAG mill was placed into operation in early August
and was fully commissioned by the end of the month. Significant progress was
made on the paste backfill plant with the erection of structural steel and
commencement of equipment installation. The design of the precious metals
recovery circuit has been completed, foundation contracts have been awarded
and construction has commenced. This facility is scheduled to be completed by
the end of third quarter 2000 at which time the Company will be in a position
to process the planned 5,000 tons of ore per day. Year 2000 The Company is fully aware of the potential disruption that may be caused
by the passage to the Year 2000 and other data-related problems associated
with it. The primary concern has been the financial systems used by Agnico-Eagle.
The Company's critical systems have been confirmed by our vendors to be Year
2000 compliant. These systems are currently being upgraded to the most recent
versions that are confirmed to be compliant. The inventory of equipment and instrumentation used in Agnico-Eagle's
mine operations has been completed. Testing of these systems and contacting of
customers and suppliers to confirm compliance has been completed for critical
process control equipment. Moreover, third party suppliers have been requested
to warrant compliance of date sensitive instrumentation as a condition
attached to any purchase order issued for such instrumentation. Based on the Company's current assessment, Agnico-Eagle has determined
that its mission critical systems are already Year 2000 compliant and major
systems modification is not expected. Therefore, costs to complete this
process are not expected to be material. Favourable responses have been received from critical third party
suppliers and financial institutions regarding their preparedness for the
transition to the Year 2000. Reliability of the commitments or comfort that
will be expressed has been evaluated and a contingency plan has been defined
where either criticality or insufficient comfort warrants it. This has equally
been the case for financial systems and mine operation equipment and
instrumentation. The time frames during which the Company believes it will complete its
Year 2000 modifications and the cost estimates to complete these modifications
are based on management's best estimates, which were made in reliance on
numerous assumptions of future events, including the continued availability of
certain resources and other factors. Any change in these assumptions may
affect projections made by the Company. There can be no guarantee that the
estimated costs will be achieved; actual results could differ materially from
those anticipated. This press release contains certain ``forward-looking statements''
(within the meaning of the United States Private Securities Litigation Reform
Act of 1995) that involve a number of risks and uncertainties. There can be no
assurance that such statements will prove to be accurate; actual results and
future events could differ materially from those anticipated in such
statements. Other risks and uncertainties are disclosed under the heading
``Risk Factors'' in the Company's Annual Information Form (AIF) filed with
certain Canadian securities regulators (including the Ontario and Quebec
Securities Commissions) and with the United States Securities and Exchange
Commission (as Form 20-F). Agnico-Eagle Mines Limited is an established Canadian gold producer with
operations located principally in northwestern Quebec and exploration and
development activities in Quebec, Ontario and Nevada. Consistently one of the
industry's lowest-cost producers, Agnico's operating history includes 24 years
of continuous gold production primarily from underground mining operations.
Current proven and probable gold reserves stand at 1.5 million contained
ounces, with an additional 3.5 million ounces in the mineral resource category
at its LaRonde Mine. Agnico-Eagle is currently focused on the expansion and
large scale exploration program of its LaRonde Mine which is expected to
result in increased gold production and expanded gold reserves.
- Summarized Quarterly Data
Agnico-Eagle Mines Limited
- (Unaudited)
- (thousands of United States
Three months ended
Nine months ended
- dollars, except per share and
September 30,
September 30,
- per ounce amounts) (Note 1)
1999
1998
1999
1998
Consolidated Financial Data
Income and cash flow
Revenues from mining
operations (Note 2) $ 5,557 $ 10,293 $ 22,873 $ 32,004
Net loss for period $ (5,063) $ (2,533) $ (9,698) $ (6,622)
Loss per share $ (0.09) $ (0.05) $ (0.18) $ (0.14)
Operating cash flow (Note 3) $ (5,500) $ 237 $ (7,100) $ 537
Operating cash flow per share $ (0.10) $ 0.00 $ (0.13) $ 0.01
Gold production-ounces 15,024 37,075 73,824 113,387
Average gold price - per ounce
realized $ 263 $ 292 $ 273 $ 296
Average exchange rate - US$
per Canadian dollar 0.6731 0.6607 0.6708 0.6841
Weighted average number of
shares - basic (in thousands) 53,257 53,017 53,345 48,853
Operating and Financial Summary
LaRonde Division
Revenues from mining operations
(Note 2) $ 5,557 $ 10,293 $ 22,873 $ 32,004
Mine operating costs 6,542 8,289 21,950 25,681
-------------------------------------------------------------------------
Mine operating profit (loss) $ (985) $ 2,004 $ 923 $ 6,323
-------------------------------------------------------------------------
----------------------------------------
Tons of ore milled 182,992 207,262 570,570 588,071
Grade - ounces of gold per ton 0.09 0.19 0.14 0.21
Gold production - ounces 15,024 37,075 73,824 113,387
Silver production - ounces 49,493 53,459 194,666 217,216
Copper production - pounds 603,486 1,677,246 2,806,810 4,624,208
Zinc production - pounds 1,302,825 190,052 4,650,620 190,052
Onsite operating costs per
ton milled (Canadian dollars) $ 53 $ 61 $ 57 $ 65
-------------------------------------------------------------------------
----------------------------------------
Operating costs per gold ounce
produced (US$):
Onsite operating costs
(including reclamation
provision) $ 431 $ 226 $ 296 $ 229
Less: Non cash reclamation
provision (4) (3) (4) (3)
Net by-product revenues (52) (9) (36) (12)
-------------------------------------------------------------------------
Cash operating costs $ 375 $ 214 $ 256 $ 214
Non cash costs:
Reclamation provision 4 3 4 3
Depreciation and amortization 103 34 58 43
-------------------------------------------------------------------------
Total operating costs $ 482 $ 251 $ 318 $ 260
-------------------------------------------------------------------------
----------------------------------------
Notes to Summarized Quarterly Data and Consolidated Financial
Statements:
(1) Effective January 1, 1999, Agnico-Eagle changed its functional and
reporting currency from Canadian to United States dollars. The
temporal method is applied for the accounting currency transactions and
translation. Comparative figures for periods prior to January 1, 1999,
denominated into Canadian dollars, are translated into United States
dollars, under generally accepted Canadian accounting principles, using
the closing spot Canadian and United States currency exchange rate as
at December 31, 1998 of $1.5333.
(2) Revenues from mining operations consists of gold and by product
revenues net of smelting and refining charges.
(3) Before non-cash working capital adjustments.
Consolidated Balance Sheets Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars) September 30, December 31,
1999 1998
-------------------------------------------------------------------------
(Unaudited)
ASSETS
Current
Cash and cash equivalents $ 34,851 $ 76,262
Metals awaiting settlement and gold bullion 4,828 23,210
Income taxes recoverable 746 714
Prepaid expenses, supplies and other 9,188 6,558
-------------------------------------------------------------------------
Total current assets 49,613 106,744
-------------------------------------------------------------------------
Investments, loans, advances and other assets 11,796 13,560
Future income and mining tax assets 7,398 4,061
Mining properties 202,676 156,388
-------------------------------------------------------------------------
$ 271,483 $ 280,753
-------------------------------------------------------------------------
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 6,886 $ 6,832
Dividends payable 638 1,660
Income and mining taxes payable 2,649 2,885
Current interest due on senior convertible notes 789 1,897
-------------------------------------------------------------------------
Total current liabilities 10,962 13,274
-------------------------------------------------------------------------
Senior convertible notes 108,141 105,239
-------------------------------------------------------------------------
Reclamation provision and other liabilities 5,016 4,507
-------------------------------------------------------------------------
Future income and mining tax liabilities 8,258 9,695
-------------------------------------------------------------------------
Minority interest 3,287 3,592
-------------------------------------------------------------------------
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 55,288,708 (1998 - 55,112,625) 152,378 151,307
Other paid in capital 14,535 14,535
Contributed surplus 3,886 3,886
Deficit (21,197) (11,499)
Company's own shares held by a subsidiary company (13,783) (13,783)
-------------------------------------------------------------------------
Total shareholders' equity 135,819 144,446
-------------------------------------------------------------------------
$ 271,483 $ 280,753
-------------------------------------------------------------------------
----------------------------
Consolidated Statements of Loss Agnico-Eagle Mines Limited
(Unaudited)
-------------------------------------------------------------------------
(thousands of United Three months ended Nine months ended
States dollars, except September 30, September 30,
per share amounts) 1999 1998 1999 1998
-------------------------------------------------------------------------
REVENUES
Revenues from mining operations $ 5,557 $ 10,293 $ 22,873 $ 32,004
Interest and sundry income 561 1,249 2,293 2,830
-------------------------------------------------------------------------
6,118 11,542 25,166 34,834
COSTS AND EXPENSES
Production 6,700 8,595 22,233 25,681
Exploration 688 456 2,051 1,614
Depreciation and amortization 1,553 1,240 4,262 4,649
General and administrative 877 868 2,988 2,586
Capital tax 227 375 765 933
Interest 2,166 2,228 6,467 6,432
Other 970 - 970 -
-------------------------------------------------------------------------
Loss before the undernoted (7,063) (2,220) (14,570) (7,061)
Foreign currency gain (loss) (1,108) (652) 703 (1,164)
-------------------------------------------------------------------------
Loss before income and mining
tax recoveries (8,171) (2,872) (13,867) (8,225)
Income and mining tax recoveries (3,108) (339) (4,169) (1,603)
-------------------------------------------------------------------------
Net loss for the period $ (5,063) $ (2,533) $ (9,698) $ (6,622)
-------------------------------------------------------------------------
----------------------------------------
Loss per share $ (0.09) $ (0.05) $ (0.18) $ (0.14)
-------------------------------------------------------------------------
Consolidated Statements of Cash Flows Agnico-Eagle Mines Limited
(Unaudited)
-------------------------------------------------------------------------
(thousands of United States Three months ended Nine months ended
dollars) September 30, September 30,
1999 1998 1999 1998
-------------------------------------------------------------------------
Operating activities
Net loss for the period $ (5,063) $ (2,533) $ (9,698) $ (6,622)
Add (deduct) items not affecting
cash from operating activities:
Depreciation and amortization 1,553 1,240 4,262 4,649
Future provision of income and
mining recoveries (3,255) (497) (4,640) (2,062)
Foreign currency translation loss 959 545 135 1,082
Amortization of deferred interest
and financing costs on senior
convertible notes 1,073 1,014 3,139 2,894
Other (767) 468 (298) 596
-------------------------------------------------------------------------
(5,500) 237 (7,100) 537
Net change in non-cash working
capital balances related to
operations
Metals awaiting settlement and
gold bullion 13,573 1,808 18,382 2,358
Prepaid expenses, supplies and
other (3,144) (1,617) (2,630) (191)
Income and mining taxes
recoverable and payable (72) 371 (268) 568
Accounts payable and accrued
liabilities 2,695 831 362 124
Current interest due on senior
convertible notes (1,107) (1,025) (1,108) (980)
-------------------------------------------------------------------------
Cash flows from operating
activities 6,445 605 7,638 2,416
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Investing activities
Additions to mining properties (15,478) (12,6
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