TORONTO, Apr 24, 2002 /PRNewswire-FirstCall via COMTEX/ --(All amounts expressed in U.S. dollars unless otherwise noted) Stock Symbols: AEM (NYSE) AGE (TSE) Agnico-Eagle Mines
Limited today reported first quarter net earnings of $0.5 million, or $0.01 per
share unchanged from the same period in 2001. Operating cash flow was $5.0
million, or $0.07 per share, compared to $5.8 million, or $0.11 per share in
2001. This represented an improvement in cash flow from continuing operations as
cash flow from operations in 2001 included a one-time tax refund of $1.5
million, or $0.03 per share.
Highlights for the first quarter include:
- Deep drilling program encounters highest-grade gold intersection at
depth to date on the LaRonde property.
- El Coco property continues to confirm potential as underground
drilling commenced from 20th level exploration drift.
- Refinancing of convertible notes completed, securing $144 million,
4.5% 10-year financing for the Company.
"Our ambitious 2002 drill program at LaRonde has already begun to reap benefits
for our shareholders with the highest-grade gold intersection at depth returned
to date and continued confirmation of the potential for a new gold zone on the
El Coco property", said Sean Boyd, President and Chief Executive Officer. "We
also continue to make steady progress toward our production objective of 7,000
tons per day by the fourth quarter of this year", added Mr. Boyd.
The Company is hosting a conference call to discuss first quarter results and to
provide an update on exploration and development activities at LaRonde on
Thursday April 25th, 2002 at 11:00 a.m. (EST). To participate in the conference
call, please dial (416) 640-4127. To access the rebroadcast, please dial
1-877-289-8525 and enter the reservation number 177334. The conference call can
also be accessed over the internet through the Company's website
www.agnico-eagle.com.
QUARTERLY MANAGEMENT DISCUSSION AND ANALYSIS
Change in Reporting Basis
As a result of its substantial US shareholder base and to maintain comparability
with other companies in the gold sector, the Company changed its primary basis
of reporting to US GAAP effective January 1, 2002. A full set of consolidated
financial statements and the related management discussion and analysis prepared
under Canadian GAAP will also continue to be prepared for statutory reporting
purposes in Canada and sent to shareholders.
Results of Operations
Excluding the El Coco royalty, cash costs to produce an ounce of gold remained
steady in the quarter. However, the total cash operating cost to produce an
ounce of gold was $161 compared to $127 in the first quarter of 2001. A gold
production increase of 6% to 60,259 ounces, coupled with increases in byproduct
metal production, was essentially offset by weaker prices for copper and zinc.
The net difference in total cash costs was essentially attributable to royalties
payable on the El Coco property, which increased from nil in the first quarter
of 2001 to $32 per ounce of gold produced in 2002. As previously projected,
production for the full year 2002 remains on target for approximately 340,000
ounces of gold at an estimated total cash cost of $130 per ounce.
Liquidity and Capital Resources
At March 31, 2002 Agnico-Eagle's consolidated cash and cash equivalents amounted
to $20.3 million while working capital improved to $53.3 million from $40.9
million at December 31, 2001. Including the undrawn portion of its bank credit
facility, the Company has $115.3 million of available liquidity.
Cash flow from operating activities in the first quarter improved to $5.0
million from $4.3 million, excluding a one-time tax refund of $1.5 million, in
the first quarter of 2001. The increase in cash flow from continuing operations
is attributable to an increased gold price, higher gold production and lower
interest expense, offset somewhat by lower byproduct metal prices.
For the three months, capital expenditures were $14.3 million compared to $9.6
million in the corresponding 2001 period. The increase is attributable to
increased underground development and the mill expansion associated with the
decision to expand the LaRonde operation to 7,000 tons per day.
Agnico-Eagle further strengthened its balance sheet in the first quarter with
the refinancing of its convertible notes, which were scheduled to mature in
2004. The Company realized net proceeds of $138.5 million from the issuance of
the new convertible debentures due 2012. Of this amount, $120.9 million was used
to fully redeem the 2004 convertible notes and the balance was added to the
Company's cash resources for general corporate purposes. Prior to this, the
Company had already repurchased $1.1 million of the debentures under a
previously announced normal course issuer bid.
DRILLING AND EXPLORATION
A total of seven drills were in operation in the first quarter, located
on the following target areas:
- Two drills on the 20th Level exploration drift on the El Coco
property.
- Two drills on production delineation drilling between Levels 98
and 152.
- Two drills on definition drilling on and below Level 194.
- One drill on Level 215 testing Zone 20 North at depth and to the
west.
In addition, surface drilling on the El Coco Property was completed at the
beginning of March. In all, approximately 61,000 feet of diamond drilling was
completed during the quarter.
Delineation drilling above Level 152 continued and focused on Zones 20 North and
20 South. All of the results were generated from production draw points. The key
results from Zone 20 North were as follows:
-------------------------------------------------------------------------
Drill Hole True Gold(oz/ton) Silver Copper(%) Zinc(%)
Thickness Cut(1.5 oz) (oz/ton)
(ft)
-------------------------------------------------------------------------
14320571Au 26.9 0.26 10.75 0.08 0.15
-------------------------------------------------------------------------
14320571Zn 51.2 0.06 3.13 0.15 8.84
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Key results from Zone 20 South were as follows:
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Drill Hole True Gold(oz/ton) Silver Copper(%) Zinc(%)
Thickness Cut(2.0 oz) (oz/ton)
(ft)
-------------------------------------------------------------------------
09821763 13.5 0.94 7.10 0.58 10.15
-------------------------------------------------------------------------
09821781 13.8 0.60 4.67 0.31 8.09
-------------------------------------------------------------------------
09821782 20.0 0.29 3.70 0.22 8.49
-------------------------------------------------------------------------
09821783 16.7 0.51 5.96 0.42 10.43
-------------------------------------------------------------------------
09821784 16.4 0.14 0.77 0.07 0.69
-------------------------------------------------------------------------
10221743 9.2 0.31 7.71 2.51 9.93
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10221821 10.5 0.24 2.59 0.11 7.03
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10221823 15.4 0.48 2.67 0.17 7.35
-------------------------------------------------------------------------
10621871 16.1 0.28 2.76 0.28 2.19
-------------------------------------------------------------------------
13721661 9.2 0.44 1.60 1.48 1.62
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13721671 9.8 0.38 0.77 0.74 1.06
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The Zone 20 South drill holes were completed near the upper western ore limit
above Level 102. These mining blocks are scheduled for production during the
third quarter of 2002.
Definition drilling activity increased significantly due to improved access on
both Levels 194 and 212. The drill holes were completed from the haulage drifts
and production draw points. The results from Levels 194 to 212 in Zone 20 North
have been summarized below:
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Drill Hole True Gold(oz/ton) Silver Copper(%) Zinc(%)
Thickness Cut(1.5 oz) (oz/ton)
(ft)
-------------------------------------------------------------------------
19420511 44.9 0.14 2.58 0.81 1.35
-------------------------------------------------------------------------
19420512 45.9 0.16 1.97 0.62 0.82
-------------------------------------------------------------------------
19420521 34.4 0.12 1.71 0.43 0.67
-------------------------------------------------------------------------
19420522 31.5 0.12 1.59 0.33 1.10
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19420531 25.3 0.23 5.74 0.99 2.86
-------------------------------------------------------------------------
19420532 27.6 0.12 2.79 0.67 1.45
-------------------------------------------------------------------------
19420541 19.4 0.17 7.30 1.72 3.34
-------------------------------------------------------------------------
19420542 18.4 0.18 12.42 1.26 5.29
-------------------------------------------------------------------------
19420551 31.2 0.16 7.27 1.32 8.98
-------------------------------------------------------------------------
19420552 28.2 0.17 7.21 0.85 7.57
-------------------------------------------------------------------------
3194-29 24.3 0.14 1.50 1.18 1.30
-------------------------------------------------------------------------
3194-30 23.6 0.11 1.53 0.67 1.77
-------------------------------------------------------------------------
3194-31 36.1 0.13 1.33 0.79 1.61
-------------------------------------------------------------------------
3194-32 59.1 0.17 3.28 1.31 3.32
-------------------------------------------------------------------------
3194-33 29.5 0.18 5.75 1.18 7.23
-------------------------------------------------------------------------
3194-34 19.7 0.14 4.30 0.68 2.44
-------------------------------------------------------------------------
3194-35 32.8 0.29 1.88 1.23 0.82
-------------------------------------------------------------------------
3194-36 65.6 0.13 1.01 0.43 0.29
-------------------------------------------------------------------------
21220472 56.8 0.15 2.58 0.99 2.97
-------------------------------------------------------------------------
21220481 57.7 0.19 3.32 1.34 1.55
-------------------------------------------------------------------------
21220482 54.1 0.16 4.14 1.75 2.88
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Level 194 and 215 will be the main gold/copper-producing horizons from the
bottom of the Penna Shaft over the next four years. The definition drilling to
date has confirmed the LaRonde geological model from both grade and thickness
points of view. The tighter drilling has also confirmed last year's reserve
model.
Historically, increased drill hole density has improved initial resource-
reserve estimates based on widely spaced drill holes usually drilled from the
shaft stations. Historically, ore development and production has indicated an
upgrade of 5% with respect to drill hole indicated grades. Currently, level
development has advanced to the point where production crosscuts are being
driven on four levels (i.e., Levels 191, 194, 212, 215)
Based on an initial comparison with the current reserve model, the
following trends are indicated by the first quarter drilling results:
- Thicknesses greater than expected.
- Gold grades as estimated in the reserve model or slightly higher.
- Average net smelter returns higher due to higher copper and silver
grades.
- Increased copper grades at depth confirm LaRonde geological model.
- More tons per mining block due to higher specific gravity, improving
mine flexibility.
With respect to the deep drilling program, one additional deep drill hole
was completed below the bottom of the shaft. The results have been
summarized below:
-------------------------------------------------------------------------
Drill Hole True Gold(oz/ton) Silver Copper(%) Zinc(%)
Thickness (oz/ton)
(ft)
-------------------------------------------------------------------------
3215-21B 86.6 0.24 0.33 0.03 0.03
-------------------------------------------------------------------------
(cut 1.5oz) 86.6 0.21 0.33 0.03 0.03
-------------------------------------------------------------------------
The drill hole encountered visible gold and intersected Zone 20 North at a depth
of 9,050 feet, approximately 200 feet to the east and below previous drill hole
3194-08, which had intersected 0.18 ounces of gold per ton over 76 feet and
approximately 350 feet to the west and below previous drill hole 3220- 05, which
had intersected 0.17 ounces of gold per ton over 82 feet.
The intersection was the highest grade continuous interval encountered at depth
to date and continued to confirm the trend of increasing thickness at depth. The
presence of visible gold at depth in this drill intersection indicates that
areas of higher grade mineralization can occur at depth in Zone 20 North. The
higher grade areas would enhance the economics of any deep development program.
A study evaluating various development options at depth is underway and is
expected to be completed over the next year.
Two drills will continue to test the area above, below and to the west of the
most recent value. The objective of this phase of drilling will be to extend the
resource outline to the west and to provide additional information on the
quality and volume of the gold mineralization at depth.
The eastern exploration program continued on two fronts, from the 20th Level
exploration drift and from surface. A total of 10 drill holes were completed
from surface while 12 drill holes were completed from the 20th Level exploration
drift. Drilling from underground was completed to a depth of 4,000 feet from
surface. The drilling has indicated a mineralized envelope approximately 450
feet long starting at a depth of approximately 1,300 feet below surface and is
open for expansion at depth and to the east. Assays are pending from the drill
holes completed from underground. The most significant results from surface are
summarized below:
-------------------------------------------------------------------------
Drill Hole True Gold(oz/ton) Silver Copper(%) Zinc(%)
Thickness Cut(1.5 oz) (oz/ton)
(ft)
-------------------------------------------------------------------------
106-02-14 9.2 0.08 3.46 0.04 1.52
-------------------------------------------------------------------------
106-02-15 9.2 0.05 0.40 0.06 0.35
-------------------------------------------------------------------------
106-02-23 9.2 0.04 0.34 0.09 0.40
-------------------------------------------------------------------------
Although the results returned to date are not economic, the geology observed in
the drill core, consisting of host rocks, alteration and sulphide
mineralization, is considered favourable for the discovery of economic gold
zones. To date a total of 759 feet of level development has been completed on
the El Coco Property. Drilling in the second quarter will test the down plunge
extension of the mineralized envelope from the new drill stations.
EXPANSION UPDATE
Construction is on schedule to reach the 7,000 ton per day expanded production
rate in the fourth quarter of this year.
At the Penna Shaft, hoisting began for the first time at the new safety factor
of 4.0 to 1, increasing the skip load from the Level 220 loadout at the bottom
of the shaft to 18 tons per skip. Both the Level 220 loadout and the mid shaft
dump were completed during the first quarter. The mid shaft dump will reduce the
amount of waste hoisted to surface and provide an additional source of rock fill
for the upper levels. Other underground construction activity included the
installation and commissioning of the second Geho pump on Level 122, the
maintenance facilities on Level 134 and commencement of development of the ore
silo on Level 215. Development is now through the ore on the lower levels of the
Penna Shaft with initial ore production from the higher gold grade mining blocks
planned for May, contributing to the planned ramp up in gold production in the
last three quarters of 2002.
In the processing plant, a ball mill has been procured and is being refurbished
for the expanded grinding circuit. A contract for the grinding bay was awarded
and the ball mill foundations have been completed. In addition, a contract was
awarded for the foundation work on the precious metals circuit and construction
has now begun. The processing plant is expected to commence operation at 7,000
tons per day in October.
EXPANDING PROPERTY POSITION
Agnico-Eagle has recently agreed to acquire two gold properties, increasing its
property position in the Bousquet Cadillac Mining Belt. The first was the
Ellison property, consisting of eight contiguous claims between Barrick's
Bousquet Mine and Cambior's Doyon Mine. Under a letter of intent signed with
Yorbeau Resources Inc., Agnico-Eagle will acquire a 100% undivided interest in
the Ellison property for C$500,000, a net smelter royalty varying from 1.5% to
2.5% and an additional cash payment of C$500,000 upon commencement of commercial
production. The Ellison property contains three mineralized zones. A previous
estimate of the mineral resource on Ellison yielded 861,000 tons grading 0.20
ounces per ton gold.
The second acquisition consisted of two claim blocks, the Zulapa and Tonawanda
properties, located approximately 10 kilometres east of the LaRonde Mine. Under
an agreement with Breakwater Resources Ltd., Agnico-Eagle has the option to
acquire a 60% undivided interest in the properties for C$200,000 and a
commitment to invest C$3.5 million in exploration on the properties over a five
year period. Agnico-Eagle also has the option to increase its interest in the
properties to 80%. A gold zone was previously intercepted by three diamond drill
holes on the Cadillac fault at a vertical depth of approximately 1,900 feet. All
three holes returned mineralization with the first hole grading 0.29 ounces of
gold per ton over a true thickness of 26 feet, the second 0.64 ounces of gold
per ton over seven feet and the last 0.25 ounces of gold per ton over seven
feet. The Company is preparing a program to test the extent of the
mineralization in all directions.
The Longitudinal illustrations that detail the drill results presented in
this report can be viewed and/or downloaded from the Company's website:
www.agnico-eagle.com (Press Release) or
http://files.newswire.ca/3/drillingprogramzone22.gif
http://files.newswire.ca/3/long_20n1.gif
http://files.newswire.ca/3/long_20n2.gif
http://files.newswire.ca/3/long_20n3.gif
http://files.newswire.ca/3/long_20s.gif
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 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 Canada and the Southwestern United States. Agnico-
Eagle's operating history includes almost three decades of gold production
primarily from underground mining operations. The Company is focused on an
expansion program at LaRonde that is expected to increase annual gold production
and reduce cash costs to produce an ounce of gold. Current proven and probable
mineral reserves stand at 3.3 million contained ounces, with an additional 5.2
million ounces in the mineral resource category at its LaRonde Mine.
Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars Three months ended March 31,
except where noted, US GAAP basis) 2002 2001
-------------------------------------------------------------------------
Consolidated Financial Data
Income and cash flow
Revenues from mining operations $ 25,547 $ 21,116
Net income for period $ 477 $ 498
Net income per share $ 0.01 $ 0.01
Operating cash flow (before
non-cash working capital) $ 4,972 $ 5,806
Operating cash flow per share $ 0.07 $ 0.11
Weighted average number of
shares- basic (in thousands) 68,006 54,248
Operating and Financial Summary
- LaRonde Division
Revenues from mining operations $ 25,547 $ 21,116
Mine operating costs 17,603 11,873
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Mine operating profit $ 7,944 $ 9,243
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Tons of ore milled 477,333 477,989
Head grades:
Gold 0.14 0.13
Silver 2.52 2.10
Zinc 5.24% 5.22%
Copper 0.22% 0.17%
Recovery rates:
Gold 94.54% 93.20%
Silver 83.70% 82.70%
Zinc 84.90% 78.80%
Copper 60.30% 60.30%
Payable production:
Gold (ounces) 60,259 56,623
Silver (ounces in thousands) 724 634
Zinc (pounds in thousands) 35,997 33,262
Copper (pounds in thousands) 1,131 927
Realized prices per unit of
production (US$):
Gold (per ounce) $ 300 $ 269
Silver (per ounce) $ 4.48 $ 4.48
Zinc (per pound) $ 0.36 $ 0.46
Copper (per pound) $ 0.72 $ 0.84
Onsite cash costs per ton milled (C$) $ 52 $ 50
Operating costs per gold ounce
produced (US$):
Onsite operating costs (including
reclamation provision) $ 258 $ 288
Less: Non-cash reclamation provision (5) (5)
Net byproduct revenues (124) (156)
-------------------------------------------------------------------------
Cash operating costs $ 129 $ 127
El Coco royalty 32 -
-------------------------------------------------------------------------
Total cash costs $ 161 $ 127
Non-cash costs:
Reclamation provision 5 5
Depreciation and amortization 54 60
-------------------------------------------------------------------------
Total operating costs $ 220 $ 192
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Balance Sheets Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, March 31, December 31,
US GAAP basis) 2002 2001
-------------------------------------------------------------------------
(Unaudited)
ASSETS
Current
Cash and cash equivalents $ 20,295 $ 21,180
Metals awaiting settlement and
gold bullion 29,233 20,080
Income taxes recoverable - 628
Inventories:
In-process and unsold products 5,806 5,854
Supplies 3,722 3,903
Prepaid expenses and other 5,996 3,822
-------------------------------------------------------------------------
Total current assets 65,052 55,467
Fair values of derivative financial
instruments 7,693 6,851
Investments and other assets 6,904 6,035
Future income and mining tax assets 28,677 27,196
Mining properties 312,221 301,221
-------------------------------------------------------------------------
$ 420,547 $ 396,770
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued
liabilities $ 10,753 $ 9,423
Dividends payable 564 1,853
Income and mining taxes payable 9 1,231
Interest payable 385 2,052
-------------------------------------------------------------------------
Total current liabilities 11,711 14,559
-------------------------------------------------------------------------
Long-term debt (note 4) 173,750 151,081
-------------------------------------------------------------------------
Reclamation provision and other
liabilities 4,269 4,055
-------------------------------------------------------------------------
Fair values of derivative financial
instruments 6,742 7,026
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Future income and mining tax liabilities 18,317 18,317
-------------------------------------------------------------------------
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 68,251,002
(2001 - 67,722,853) (note 3) 412,729 407,347
Contributed surplus 7,181 7,181
Deficit (196,743) (197,220)
Accumulated other comprehensive loss (17,409) (15,576)
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Total shareholders' equity 205,758 201,732
-------------------------------------------------------------------------
$ 420,547 $ 396,770
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Consolidated Statements of Income
(Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars Three months ended March 31,
except where noted, US GAAP basis) 2002 2001
-------------------------------------------------------------------------
REVENUES
Revenues from mining operations $ 25,547 $ 21,116
Interest and sundry income 36 325
-------------------------------------------------------------------------
25,583 21,441
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COSTS AND EXPENSES
Production 17,603 11,873
Exploration 749 973
Depreciation and amortization 3,251 3,381
General and administrative 1,001 1,070
Capital tax 380 325
Interest 1,916 3,439
Foreign exchange gain - (331)
-------------------------------------------------------------------------
Income before income and mining taxes 683 711
Income and mining tax expense 206 213
-------------------------------------------------------------------------
Net income for the period $ 477 $ 498
-------------------------------------------------------------------------
Net income per share - basic and
diluted (note 3) $ 0.01 $ 0.01
-------------------------------------------------------------------------
Weighted average number of shares
(in thousands) -
basic 68,006 55,270
diluted 79,283 55,481
-------------------------------------------------------------------------
Comprehensive income (loss):
Net income for the period $ 477 $ 498
Unrealized loss on hedging activities,
net of related income taxes (1,833) -
Cumulative transitional adjustment upon
the adoption of FAS 133 related to the
accounting for derivative instruments
and hedging activities, net of related
income taxes - (1,785)
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Comprehensive loss for the period $ (1,356) $ (1,287)
-------------------------------------------------------------------------
Consolidated Statements of Deficit
(Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars Three months ended March 31,
except where noted, US GAAP basis) 2002 2001
-------------------------------------------------------------------------
Deficit
Balance, beginning of period $ (197,220) $ (190,465)
Net income for the period 477 498
-------------------------------------------------------------------------
Balance, end of period $ (196,743) $ (189,967)
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Consolidated Statements of Cash Flows
(Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars Three months ended March 31,
except where noted, US GAAP basis) 2002 2001
-------------------------------------------------------------------------
Operating activities
Net income for the period $ 477 $ 498
Add (deduct) items not affecting cash
from operating activities
Depreciation and amortization 3,251 3,381
Deferred income and mining tax
recoveries - 1,011
Amortization of deferred interest
and financing costs on long-term
debt and other 1,244 916
-------------------------------------------------------------------------
4,972 5,806
Net change in non-cash working capital
balances related to operations
Metals awaiting settlement and
gold bullion (9,153) 505
Inventories 229 (3,944)
Prepaid expenses and other (2,174) 2,368
Income and mining taxes recoverable
and payable (594) (93)
Accounts payable and accrued liabilities 1,330 (2,751)
Interest payable (1,667) (1,120)
-------------------------------------------------------------------------
Cash flows from (used in) operating
activities (7,057) 771
-------------------------------------------------------------------------
Investing activities
Additions to mining properties (14,252) (9,601)
Increase in investments and other (9) 6
-------------------------------------------------------------------------
Cash flows used in investing activities (14,261) (9,595)
-------------------------------------------------------------------------
Financing activities
Dividends paid (1,289) (1,116)
Common shares issued 5,226 765
Proceeds from long-term debt 143,750 7,500
Financing costs (5,266) -
Repayment of the Company's senior
convertible notes (121,971) -
Resale of the Company's own shares held by
a subsidiary company and other - 1,566
-------------------------------------------------------------------------
Cash flows from financing activities 20,450 8,715
-------------------------------------------------------------------------
Effect of exchange rate changes on cash
and cash equivalents (17) 294
Net increase (decrease) in cash and
cash equivalents (885) 185
Cash and cash equivalents, beginning
of period 21,180 13,906
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 20,295 $ 14,091
-------------------------------------------------------------------------
Other operating cash flow information:
Interest paid during the period, net
of capitalized interest of
$685 (2001 - nil) $ 18,712 $ 3,785
-------------------------------------------------------------------------
Taxes paid (recovered) during the period $ 3,329 $ (2,521)
-------------------------------------------------------------------------
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AGNICO-EAGLE MINES LIMITED
Notes to Interim Consolidated Financial Statements,
US GAAP basis (Unaudited)
-------------------------------------------------------------------------
1. Basis of Presentation
Prior to January 1, 2002, the Company's consolidated financial
statements were prepared under Canadian generally accepted
accounting principles ("Canadian GAAP"). A reconciliation to United
States generally accepted accounting principles ("US GAAP") is
presented in Note 11 to the 2001 annual consolidated financial
statements. As a result of its substantial US shareholder base and
to maintain comparability with other companies in the gold sector,
the Company changed its primary basis of reporting to US GAAP
effective January 1, 2002. Interim consolidated financial
statements and the related management discussion and analysis
prepared under Canadian GAAP will also continue to be prepared for
statutory reporting purposes in Canada and sent to shareholders.
The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with US GAAP in US
dollars. They do not include all of the disclosures required by
generally accepted accounting principles for annual financial
statements. In the opinion of management, the unaudited interim
consolidated financial statements reflect all adjustments, which
consist only of normal and recurring adjustments, necessary to
present fairly the financial position at March 31, 2002 and the
results of operations and cash flows for the three-month period
ended March 31, 2002 and 2001.
Operating results for the three-month period ended March 31, 2002
are not necessarily indicative of the results that may be expected
for the full year ending December 31, 2002. Accordingly, these
unaudited interim financial statements should be read in
conjunction with the fiscal 2001 annual consolidated financial
statements, including the accounting policies and notes thereto,
included in the Annual Report and Annual Information Form/Form 20-F
for the year ended December 31, 2001.
2. Use of Estimates
The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make 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 and prudent; however, actual results could differ from
these estimates.
3. Capital Stock
Weighted average number of shares for purposes of calculating basic
and diluted earnings per share have been determined as follows (in
thousands):
Weighted average number of shares for
purposes of calculating basic
earnings per share 68,006 55,270
Dilutive effect of employees stock
options 1,009 211
Dilutive effect of the Company's 2012
convertible debenture 10,268 -
-------------------------------------------------------------------
Adjusted weighted average number of
shares, for purposes of calculating
diluted earnings per share 79,283 55,481
-------------------------------------------------------------------
The following table presents the maximum number of common shares
that would be outstanding if all dilutive instruments outstanding
at March 31, 2002 were exercised:
Common shares outstanding at March 31, 2002 68,251,002
Convertible debenture (based on debenture
holders' option) 10,267,919
Employees' stock options 4,259,650
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82,778,571
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Issued and outstanding capital includes the advances to officers
and directors of $0.4 million (2001 - $0.4 million).
During the three-month period ended March 31, 2002, 520,550 (2001 -
69,850) employee stock options were exercised for cash of $3.3
million (2001 - $0.3 million).
The Company accounts for its stock-based plan under Accounting
Principles Board Opinion 25 "Accounting for Stock Issued to
Employees", which results in the recording of no compensation
expense in Agnico-Eagle's circumstances. On a pro forma basis under
Financial Standards Accounting Board ("FASB") Statement No. 123,
for the three-month period ended March 31, 2002, the Company would
have reported a loss of $0.3 million (2001 - loss of $0.2 million),
after giving effect to the grants subsequent to 1994. The weighted
average grant date fair value of options granted in 2002 amounted
to C$15.93 per share. The estimated fair value of the options is
amortized to expense over the options' vesting period, on a pro
forma basis.
Agnico-Eagle estimated the fair value of options under the Black-
Scholes option-pricing model and the following weighted average
assumptions using a risk free interest rate of 5.5%; expected
volatility of Agnico-Eagle's share price of 32.4%; expected
dividend yield of 0.46% and an expected life of the options of 2
years.
The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. As the Company's employee
stock options have characteristics significantly different from
those of traded options, and because changes in the subjective
input assumptions, such as expected stock market price volatility,
can materially affect the fair value estimate, in management's
opinion, the existing pricing models do not necessarily provide a
reliable single measure of the fair value of its employee stock
options.
4. Long-term debt
March 31, 2002 December 31, 2001
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(Unaudited)
Convertible debenture (note 4(a)) $ 143,750 $ -
Senior convertible notes (note 4(b)) - 121,081
Revolving credit facility 30,000 30,000
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$ 173,750 $ 151,081
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(a) Convertible debentures
On February 11, 2002, Agnico-Eagle issued $143.75 million
aggregate stated amount at maturity of convertible debentures due
February 11, 2012 for net proceeds of $138.5 million after
deducting underwriting commissions and other issue costs totalled
$5.3 million. The debentures bear interest of 4.50% per annum
payable in cash or in common shares, at the Company's option, semi
annually. The debentures are convertible to common shares of
Agnico-Eagle at the option of the holder, at any time on or prior
to maturity, at a rate of 71.429 common shares per $1,000 stated
amount. The debentures are redeemable by the Company, in whole or
in part, at any time on or after February 15, 2006 for cash.
(b) Senior convertible notes
In February 2002, the entire amount of the Company's senior
convertible notes was called for redemption on March 18, 2002 for
cash of $120.9 million. There is no gain or loss on the
redemption of the Company's senior convertible notes.
5. Recent Accounting Pronouncement
Staff Accounting Bulletin No. 74 released by the staff of the U.S.
Securities and Exchange Commission ("SEC") requires disclosures of
certain information related to new accounting standards which have
not been adopted due to delayed effective dates. FAS No. 143 on
"Asset Retirement Obligations", which is effective for financial
years beginning after June 15, 2002, requires asset retirement
obligations to be initially measured at fair value at the time the
obligation is incurred. A corresponding amount is capitalized as
part of the asset's carrying amount and depreciated over the
asset's useful life using a systematic and rational allocation
method. Agnico-Eagle is currently evaluating the impact of adopting
FAS No. 143. Effective January 1, 2002, the Company adopted FAS No.
144 on "Accounting for the Impairment of Long-Lived Assets", which
sets out accounting criteria for the determination of impairment of
long-lived assets. The adoption of FAS No. 144, has no material
impact on the Company's financial results.
SOURCE Agnico-Eagle Mines Limited
CONTACT: Sean Boyd, President and CEO, Agnico-Eagle Mines Limited,
(416) 947-1212
(AGE. AEM)
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