TORONTO, April 30 /CNW-PRN/ - Agnico-Eagle Mines Limited today reported a
net loss of US$1.7 million, or US$0.03 per share for the quarter ended March
31, 1999 compared to a net loss of US$2.1 million, or US$0.05 per share in the
same period last year. Operating cash flow declined in the first quarter to a
deficit of US$0.8 million, or US$0.01 per share, compared to cash flow of nil
in the 1998 first quarter. ``The year 1999 is expected to be one of transition for Agnico-Eagle as
it moves production from its existing Shafts No.1 and No.2 into the new Shaft
No.3. However, operating performance continues to be excellent as onsite
operating costs per ton of ore milled have decreased by 10% and cash operating
costs to produce an ounce of gold continued to remain low at US$216 per
ounce,'' said Sean Boyd, Agnico- Eagle's President and Chief Executive
Officer. ``We also continue to be pleased with the results of recent definition
drilling. Further drilling has continued to confirm the high grade gold
content of Zone 7 and we now have sufficient drill data to complete a
feasibility study for a further expansion of LaRonde's facilities to 5,000
tons per day. The Company expects to announce a decision on any further
expansion plans late in the second quarter,'' added Mr. Boyd. Operating Results Onsite operating costs reported in the first quarter were C$59 per ton of
ore milled compared to C$66 per ton in first quarter of 1998. Cash operating
costs to produce an ounce of gold remained essentially unchanged at US$216 as
lower gold grades were offset by a weaker Canadian dollar and higher byproduct
revenues. The average gold price realized during the 1999 first quarter was US$288
per ounce, down four percent from US$300 per ounce realized in the first
quarter of 1998. The improvement in the net loss is primarily due to a
before-tax foreign exchange gain of US$1.2 million on the Company's Canadian
dollar monetary assets recorded in the quarter Strong Financial Position At March 31, 1999 Agnico-Eagle's financial position remained strong with
a cash balance, excluding bullion on hand, of US$60 million and a working
capital position of US$80 million. Including bullion on hand, Agnico-Eagle has
US$82 million available to complete the expansion of the LaRonde operation.
Approximately US$86 million remains to be spent to complete the expansion to
3,600 tons per day including US$50 million during the remainder of 1999 and
the balance in the years 2000 and 2001. Cash flow from operations will begin
to rise next year as the mining rate increases, resulting in higher gold
production and lower unit costs. This increased cash flow will be available to
partly fund LaRonde's expansion plans including the possible further expansion
to 5,000 tons per day. An expansion to 5,000 tons per day is estimated to
require an additional US$41 million. A long-term bank facility is currently
being negotiated to fund this potential expansion. LaRonde Exploration Update During the quarter, three drills were in operation. Two drills were
focused on definition drilling while one drill was focused on the exploration
program. The definition drilling program was conducted from the 7th Level
(Level 122 - 4,000 feet below surface) testing Zones 20 North and 20 South and
the 11th Level (Level 170 - 5,580 feet below surface) testing both Zones 20
North and 7. The exploration drilling was conducted from the 10th Level (Level
160 - 5,250 feet below surface) and tested Zones 20 North and 7 at depth. As previously reported, deep drilling in drill hole 3160-04 intersected
Zone 7 at a depth of 8,800 feet below surface. The following value was
obtained:
------------------------------------------------------------------------- Drill True Gold(oz/ton) Silver(oz/ton) Copper(%) Zinc(%) Hole Thickness (ft)
3160-04 9.8 0.14 1.64 0.43 1.59
This is the deepest gold value intersected to date on the LaRonde
property. Zone 7 is open in all directions at this depth and this result
demonstrates the potential to increase the overall size of the mineralized
zones at LaRonde. The continuation of drill hole 3160-04 was targeted to intersect Zone 20
North at a depth of 9,200 feet below surface. Due to mechanical failures, over
1,000 feet of drill rods were lost in the drill hole. At one point, the drill
hole was within 50 feet of the Zone 20 North horizon (i.e. the drill hole had
attained a length of 5,000 feet). A more powerful drill was deployed and a
wedge was inserted 4,000 feet down the drill hole. Drilling is continuing and
the hole is presently targeted to intersect Zone 20 North at a depth of 8,500
feet below surface. Zone 7 Update Defintion drilling below 5,000 feet continued to indicate that the Zone 7
massive sulphides were significantly thicker, more continuous and higher in
grade than the stringer mineralization previously encountered at higher
elevations in Zone 7. As previously reported, drill hole 3170-03 intersected
15 feet grading 0.53 ounces of gold per ton, 2.03 ounces of silver, 0.70
percent copper and 2.50 percent zinc at a depth of 5,700 feet below surface.
This drill hole confirmed the original exploration drill hole that had
encountered 0.37 ounces of gold per ton. 1.97 ounces silver, 0.29 percent
copper and 4.81 percent zinc over a true thickness of 19.0 feet. The most recent results, conducted from the 11th Level continued to
confirm Zone 7's higher grade. Two additional drill holes were completed with
the following values:
------------------------------------------------------------------------- Drill True Gold(oz/ton) Silver(oz/ton) Copper(%) Zinc(%) Hole Thickness Cut(1.5 oz) (ft)
3160-05 9.8 0.52 2.92 1.31 6.10
3170-07 9.2 0.28 1.90 0.43 1.80
The latest drill holes have confirmed Zone 7 as a high-grade zone over a
vertical distance of 800 feet and a horizontal distance of 600 feet. The most
attractive gold values were intercepted in drill hole 3160-05 where a
three-foot section intersected coarse visible gold averaging 39.0 ounces of
gold per ton. This high grade value has been cut to 1.5 ounces per ton for the
purposes of reporting the drill intersection noted above. Drill hole 3160-05 was located outside the present resource outline and
may link up with a previous drill intersection located on the 9th Level (Level
146 - 4,800 feet below surface). This latter drill hole intersected 0.22
ounces of gold per ton, 1.75 ounces of silver, 0.17 percent copper and 4.43
percent zinc over a true thickness of 9.2 feet. One of the most interesting Zone 7 features has been the frequent
occurrence of visible gold. Visible gold was noted in the recent drill results
including drill hole 3160-04, which intersected Zone 7 at a depth of 8,800
feet below surface. Drilling is continuing to test Zone 7 including the 2,400
foot gap between drill hole 3160-04 at 8,800 feet and an earlier drill hole
that intersected Zone 7 at 6,400 feet below surface. Zone 20 South Update Definition drilling continued from the 7th Level (Level 122 - 4,000 feet
below surface), testing the western limit of Zone 20 South. The following
values were intersected:
------------------------------------------------------------------------- Drill True Gold(oz/ton) Silver(oz/ton) Copper(%) Zinc(%) Hole Thickness (ft)
12221681 15.1 0.17 1.20 0.10 2.27
12221683 11.2 0.26 1.65 0.44 1.47
3122-18 10.8 0.20 1.29 0.15 2.50
In addition, exploration drilling intersected Zone 20 South three hundred
feet below the 10th Level. The following value was obtained:
-------------------------------------------------------------------------
Drill True Gold(oz/ton) Silver(oz/ton) Copper(%) Zinc(%)
Hole Thickness
(ft)
-------------------------------------------------------------------------
3170-02 13.1 0.12 1.29 0.19 2.48
-------------------------------------------------------------------------
This value was significant because it extended the lower portion of Zone
20 South mineralization upward by an additional 300 feet. It also suggests
that the upper and lower sections of Zone 20 South may link up to become one
larger zone. Zone 20 North Update Three drills continued testing Zone 20 North from the 7th, 10th and 11th
Levels. Some of the more recent drill holes are highlighted below:
------------------------------------------------------------------------- Drill True Gold(oz/ton) Silver(oz/ton) Copper(%) Zinc(%) Hole Thickness Cut(1oz) (ft)
3122-21-Gold 10.2 0.14 1.67 0.35 0.29
-Zinc 27.2 0.04 3.16 0.01 8.35
3122-26-Gold 16.4 0.12 2.39 0.15 0.73
-Zinc 21.3 0.05 4.18 0.02 11.21
3122-31-Gold 15.7 0.13 1.04 0.13 0.09
-Zinc 27.9 0.02 1.81 0.01 7.10
12220683-Gold 9.2 0.10 1.57 0.12 0.05
Zinc 18.7 0.08 3.35 0.01 12.1
The tighter definition drilling continues to indicate higher gold grades
in both Zone 20 North Gold and in Zone 20 North Zinc than grades encountered
in earlier widely spaced drilling. Ongoing development work on the 7th Level
has exposed Zone 20 North in two additional draw points to the west of Shaft
No.3 and has confirmed the drilling results. Production from this area is
planned to start in July of this year. The ore will be trucked by the ramp to
Shaft No.1, representing the first commercial production from the Shaft No.3
zones. Exploration drilling results, obtained from the 11th Level, are as
follows:
------------------------------------------------------------------------- Drill True Gold(oz/ton) Silver(oz/ton) Copper(%) Zinc(%) Hole Thickness (ft)
3170-05 Gold 9.8 0.25 4.13 2.83 0.87
3170-07 Zinc 31.2 0.01 4.87 0.01 11.13
Both of these drill holes intersected Zone 20 North outside of presently
known ore reserve limits. Drill hole 3170-05 intersected Zone 20 North Gold at
the western limit while drill hole 3170-07 intersected Zone 20 North at its
eastern limit. Within two weeks, the drill located on the 11th Level is scheduled to
test Zone 20 North at a depth of 8,000 feet. This hole will be targeted at the
mid point between drill hole 3146-16 and the new target area of drill hole
3160-04 approximately 8,500 feet below surface.
LaRonde Expansion Program Update
Shaft Sinking & Mill Expansion
Shaft No.3 has reached a depth of 6,200 feet of a planned depth of 7,350
feet. Ground conditions continue to be excellent. Shaft completion is
scheduled for the end of the fourth quarter. Construction of the new 5,000 ton per day SAG mill circuit and the 5,000
ton ore bin is progressing well. The SAG mill circuit will be operational in
the third quarter. Foundation work started on the pastefill plant, which is
expected to be operational by the end of this year. 5,000 TPD Feasibility Study As previously reported, due to its increasing reserve position, the
Company is conducting a feasibility study with respect to increasing the daily
ore throughput from the planned 3,600 tons per day to 5,000 tons per day. This
study is expected to be completed and a decision made during the second
quarter. The Company intends to proceed with the higher production rate if the
following minimum criteria are met:
1. Minimum reserve/resource position of 36 million tons of ore.
2. Proven & Probable Reserves of 1.5 million ounces of gold, total
resource of 5.0 million ounces of gold.
3. Payback on incremental investment of better than 3 years.
4. Financing in place to fund the additional investment.
The incremental capital cost to reach 5,000 tons per day is estimated to
be US$41 million. Based on the preliminary mining plan, gold production would
increase to 280,000 ounces per year by 2002 with silver production of 2.3
million ounces, copper production of 16 million pounds and zinc production of
90 million pounds. This projected profile is expected to result in a payback
on the US$41 million incremental investment of less than three years, using a
US$300 per ounce gold price. The Company is currently in the process of negotiating a long-term bank
facility for the additional investment that would be required to increase the
daily production rate to 5,000 tons 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 majority of 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, 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 most of 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. During the fourth quarter of 1998, critical third party suppliers and
financial institutions were identified and contacted regarding their
preparedness for the transition to the Year 2000. Reliability of the
commitments or comfort that will be expressed will then have to be evaluated
and a contingency plan will be defined where either criticality or
insufficient comfort warrants it. This will be equally 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 analysis and 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 time frames and 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. Risks and uncertainties related to year 2000 conversion are
disclosed herein. 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 and Ontario. Agnico-Eagle's operating history
includes 24 years of continuous gold production primarily from underground
mining operations. Agnico-Eagle is currently focused on a development and
expansion program at its LaRonde Division that is expected to result in
increased gold production and expanded gold reserves.
Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, Three months ended March 31,
except per share and per ounce amounts) 1999 1998
(Note 1)
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Consolidated Financial Data
Income and cash flow
Revenue from mining operations (Note 2) $ 10,106 $ 10,524
Net loss for period $ (1,745) $ (2,130)
Loss per share $ (0.03) $ (0.05)
Operating cash flow (Note 3) $ (761) $ (19)
Operating cash flow per share $ (0.01) $ -
Gold production - ounces 33,006 35,732
Average gold price - per ounce realized $ 288 $ 300
Average exchange rate - US$ per
Canadian dollar 0.6628 0.6999
Weighted average number of shares
- basic (in thousands) 53,211 43,846
Operating and Financial Summary
LaRonde Division
Revenues from mining operations (Note 2) $ 10,106 $ 10,524
Mine operating costs 7,983 8,195
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Mine operating profit $ 2,123 $ 2,329
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Tons of ore milled 203,870 182,516
Grade - ounces of gold per ton 0.18 0.21
Gold production - ounces 33,006 35,732
Copper production - pounds 1,224,174 1,417,704
Zinc production - pounds 1,563,985 -
Onsite operating costs per ton milled
(Canadian dollars) $ 59 $ 66
------------------------
Operating costs per gold ounce produced (US$):
Onsite operating costs
(including reclamation provision) $ 242 $ 235
Less: Non-cash reclamation provision (3) (4)
Net byproduct revenues (23) (16)
------------------------
Cash operating costs $ 216 $ 215
Non-cash costs:
Reclamation provision 3 4
Depreciation and amortization 40 49
------------------------
Total operating costs $ 259 $ 268
------------------------
------------------------
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 of foreign currency
transactions and translation. Comparative figures for periods prior
to January 1, 1999, denominated in Canadian dollars, are translated
into United States dollars, under generally accepted accounting
principles in Canada, using the closing spot Canadian and United
States currency exchange rate as at December 31, 1998 of $1.5333.
(2) Revenue from mining operations consists of gold and byproduct
revenues net of smelting and refining charges.
(3) Before non-cash working capital adjustments
Consolidated Balance Sheets Agnico-Eagle Mines Limited
as at March 31,
-------------------------------------------------------------------------
(thousands of United States dollars) December 31,
1999 1998
-------------------------------------------------------------------------
(Unaudited)
ASSETS
Current
Cash and cash equivalents $ 59,690 $ 76,262
Metals awaiting settlement and gold bullion 22,499 23,210
Income taxes recoverable 693 714
Prepaid expenses, supplies and other 5,857 6,558
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Total current assets 88,739 106,744
Investments, loans, advances and other assets 12,978 13,560
Future income and mining tax assets 4,657 4,061
Mining properties 169,672 156,388
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$ 276,046 $ 280,753
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 5,164 $ 6,832
Dividends payable 627 1,660
Income and mining taxes payable 2,648 2,885
Current interest due on senior
convertible notes 789 1,897
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Total current liabilities 9,228 13,274
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Senior convertible notes 106,196 105,239
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Reclamation provision 4,613 4,507
-------------------------------------------------------------------------
Future income and mining tax liabilities 9,413 9,695
-------------------------------------------------------------------------
Minority interest 3,592 3,592
-------------------------------------------------------------------------
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 55,168,605 (1998 - 55,112,625) 151,610 151,307
Other paid in capital 14,535 14,535
Contributed surplus 3,886 3,886
Deficit (13,244) (11,499)
Company's own shares held by subsidiary company (13,783) (13,783)
-------------------------------------------------------------------------
Total shareholders' equity 143,004 144,446
-------------------------------------------------------------------------
$ 276,046 $ 280,753
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Consolidated Statements of Loss (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, Three months ended March 31,
except per share amounts) 1999 1998
-------------------------------------------------------------------------
REVENUES
Revenues from mining operations $ 10,106 $ 10,524
Interest and sundry income 647 611
-------------------------------------------------------------------------
10,753 11,135
COSTS AND EXPENSES
Production 8,187 8,195
Exploration 402 757
Depreciation and amortization 1,331 1,636
General and administrative 980 897
Capital tax 348 199
Interest 2,149 2,036
-------------------------------------------------------------------------
Loss before the undernoted (2,644) (2,585)
Foreign currency gain (loss) 321 (245)
-------------------------------------------------------------------------
Loss before income and mining tax recoveries (2,323) (2,830)
Income and mining tax recoveries (578) (700)
-------------------------------------------------------------------------
Net loss for the period $ (1,745) $ (2,130)
-------------------------------------------------------------------------
Loss per share $ (0.03) $ (0.05)
-------------------------------------------------------------------------
Consolidated Statements of Cash Flows Agnico-Eagle Mines Limited
(Unaudited)
-------------------------------------------------------------------------
(thousands of United States dollars) Three months ended March 31,
1999 1998
-------------------------------------------------------------------------
Operating activities
Net loss for the period $ (1,745) $ (2,130)
Add (deduct) items not affecting cash from
operating activities
Depreciation and amortization 1,331 1,636
Recoveries of future income and mining taxes (744) (798)
Foreign currency translation (gain) loss (732) 192
Amortization of deferred interest and
financing costs on senior convertible notes 1,022 922
Other 106 159
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(762) (19)
Net change in non-cash working capital balances
related to operations
Metals awaiting settlement and gold bullion 711 (42)
Prepaid expenses, supplies and other 701 630
Income and mining taxes recoverable and payable (216) (30)
Accounts payable and accrued liabilities (1,668) (1,218)
Current interest due on senior convertible notes (1,108) (1,040)
-------------------------------------------------------------------------
Cash flows used in operating activities (2,342) (1,719)
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Investing activities
Additions to mining properties (14,635) (8,123)
Purchase of shares of subsidiary companies
and other 1 (541)
-------------------------------------------------------------------------
Cash flows used in investing activities (14,634) (8,664)
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Financing activities
Dividends paid (1,033) (796)
Shares issued under employee plans 273 150
Purchase of the Company's own shares held by
subsidiary company and other - (239)
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Cash flows used in financing activities (760) (885)
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Effect of exchange rate changes on cash
and cash equivalents 1,164 -
Net decrease in cash and cash equivalents (16,572) (11,268)
Cash and cash equivalents, beginning of period 76,262 60,308
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Cash and cash equivalents, end of period $ 59,690 $ 49,040
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Other operating cash flow information:
Interest paid during the period $ 2,232 $ 1,651
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------------------------
Income and mining taxes paid during the period $ 763 $ 327
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