TORONTO, Jul 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 second quarter net earnings of $3.4 million, or $0.05 per
share compared to $0.5 million, or $0.01 per share in the same period in 2001.
Operating cash flow was $7.6 million, or $0.11 per share compared to $4.1
million, or $0.07 per share in 2001. For the year to date, net earnings were
$3.8 million, or $0.06 per share compared to $1.0 million, or $0.02 per share in
2001 while operating cash flow was $12.6 million, or $0.18 per share compared to
$9.9 million, or $0.18 per share in 2001.
Highlights for the second quarter include:
- LaRonde achieves new quarterly records for gold production and tons of
ore processed.
- Agnico-Eagle's full leverage to the gold price and increasing gold
production result in strong earnings and cash flow growth.
- Excellent drilling results from Zone 20 North Gold and discovery of new
high-grade vein mineralization on the western limit of Zone 20 South.
"As we move towards the fourth quarter and the completion of our expansion
program, we have begun to realize the benefits of this expansion through
increased gold production and strong earnings and cash flow in the second
quarter", said Sean Boyd, President and Chief Executive Officer. "In addition,
our extensive drill program continues to confirm increasing gold mineralization
at depth. This information will assist us in the evaluation of the feasibility
of developing a new deep mine at LaRonde", added Mr. Boyd.
The Company is hosting a conference call to discuss second quarter results and
to provide an update on exploration and development activities at LaRonde on
Thursday July 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 177338. 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
The following table provides a summary analysis of the key variances in net
earnings for the second quarter and year to date from those reported in 2001:
(millions of dollars) Second Quarter Year to date
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Increase in gold price $2.8 $4.9
Decrease in interest expense 1.7 3.2
Increase in El Coco royalty (1.5) (3.4)
Other (0.1) (1.8)
----- -----
Net variance $2.9 $2.9
----- -----
----- -----
Excluding the El Coco royalty, cash costs to produce an ounce of gold in the
second quarter increased somewhat to $124 per ounce from $111 per ounce in 2001.
Total cash operating costs to produce an ounce of gold were $164 compared to
$134 in the same quarter of 2001. A gold production increase of 13% to 74,617
ounces was more than offset by lower zinc production and a substantially weaker
zinc price. The majority of the net difference in total cash costs was
essentially attributable to royalties payable on the El Coco property, which
increased from $23 per ounce in the second quarter of 2001 to $40 per ounce of
gold produced in 2002. The following table provides a reconciliation of the
costs per ounce of gold produced to the financial statements:
(millions of dollars,
except where noted) Second Quarter Year to date
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Cost of production per income statement $19.6 $37.2
Adjustments:
Byproduct revenues (7.0) (14.6)
Non cash reclamation provision (0.4) (0.7)
----- -----
Total cash operating costs $12.2 $21.9
----- -----
Gold production (ounces) 74,617 134,876
------ -------
Total cash operating cost per ounce $164 $162
---- ----
Gold production in 2002 is now forecast to be 320,000 ounces. The decrease in
the gold production target for the year reflects the impact of delays in
development in Zone 20 North at depth caused by delays in ventilation
installation. As a result, more emphasis has been placed on production from
upper zinc/silver parts of Zone 20 North. This re-sequencing of production is
expected to push more gold production into 2003 and result in substantially
higher than budget zinc production in 2002. In addition, an electrical failure
of the SAG mill drive resulted in 11 days of lost production in July. As a
result of the lower than previously projected gold production, a higher El Coco
royalty due to the increased gold price and a weaker than budget zinc price,
cash costs are expected to be $145 per ounce for the full year compared to the
original budget of $130 per ounce.
Liquidity and Capital Resources
At June 30, 2002 Agnico-Eagle's consolidated cash and cash equivalents increased
to $28.3 million while working capital was $53.2 million. Including the undrawn
portion of its bank credit facility, the Company has $123.3 million of available
liquidity.
Cash flow from operating activities in the second quarter improved to $7.6
million from $4.1 million. 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 $15.2 million compared to $7.5
million in the corresponding 2001 period. The increase is attributable to
increased underground development and the mill expansion associated with the
expansion of the LaRonde operation to 7,000 tons per day.
DRILLING AND EXPLORATION
A total of six drills were in operation, completing 43,620 feet of diamond
drilling in the quarter. The drills were located on the following target areas:
- One drill on production delineation drilling between Levels 98 - 152.
- Two drills on definition drilling on and below Level 194.
- Two drills on Level 215 testing Zone 20 North at depth and to the west.
- One drill on the 20th Level exploration drift on the El Coco Property.
Delineation drilling above Level 152 focused on Zones 20 North and 20 South. All
of the results were generated from production draw points. Highlights from Zone
20 North drilling are as follows:
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True Gold(oz/ton) Silver
Drill Hole Thickness(ft) Cut(1.5 oz) (oz/ton) Copper(%) Zinc(%)
-------------------------------------------------------------------------
10620691 18.4 0.19 8.21 1.75 4.13
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10620711 15.7 0.13 3.90 2.07 3.44
-------------------------------------------------------------------------
10620712 12.1 0.11 4.96 1.32 10.87
-------------------------------------------------------------------------
10620731 12.8 0.19 3.09 1.00 3.29
-------------------------------------------------------------------------
10620732 13.1 0.13 4.96 1.24 2.18
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3152-06Au 9.8 0.17 1.27 0.08 0.02
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3152-06Zn 47.6 0.02 2.45 0.11 6.00
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3152-08Au 31.5 0.20 1.73 1.52 1.66
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3152-08Zn 51.8 0.02 2.80 0.04 11.22
-------------------------------------------------------------------------
3152-11Au 16.4 0.17 0.59 0.30 0.02
-------------------------------------------------------------------------
3152-11Zn 47.6 0.03 3.13 0.15 6.55
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The 106 Series drill holes were located along the upper western edge of Zone 20
North. The series of drill holes drilled below Level 152 close to the western
margin continued to confirm the transition between zinc-silver mineralization in
the upper part of the deposit, grading to increasing gold- copper at depth.
Highlights from Zone 20 South follow:
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True Gold(oz/ton) Silver
Drill Hole Thickness(ft) Cut(2.0 oz) (oz/ton) Copper(%) Zinc(%)
-------------------------------------------------------------------------
09821771 14.1 0.32 4.90 0.50 6.51
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10221861 14.4 0.28 2.64 0.10 4.67
-------------------------------------------------------------------------
10221871 11.5 0.66 5.99 0.14 6.97
-------------------------------------------------------------------------
10221872 13.5 0.68 6.47 0.20 7.01
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10221891 16.4 0.47 4.45 0.12 6.09
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10621902 9.2 0.31 4.45 0.04 8.87
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These drill holes were close to the upper western ore limit above Level 102.
These mining blocks are scheduled for production during the third quarter of
2002. The drilling indicated that several additional high-grade blocks would be
available for production during the second half of the year.
An intriguing value was returned in drill hole 09821822, which tested the upper
western limit of Zone 20 South for production purposes. The drill hole was
inadvertently extended 44 feet to the south and entered the Cadillac Sediments,
intersecting a quartz vein containing numerous specks of visible gold returning
an intersection of 0.60 ounces of gold per ton over a core length of 3.3 feet,
28 feet within the sediments. Two additional drill holes were completed along
strike, both returning high-grade values. To date, the vein has been traced over
a strike length of 200 feet. The type and grade of mineralization is highly
unusual for the Cadillac Sediments. The results from the three completed drill
holes have been tabulated below. Follow up drilling is in progress.
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Core Gold(oz/ton) Silver
Drill Hole Length(ft) Cut(2.0 oz) (oz/ton) Copper(%) Zinc(%)
-------------------------------------------------------------------------
09821822 3.3 0.60 2.25 0.01 0.10
-------------------------------------------------------------------------
3098-01 3.6 0.98 0.38 NV NV
-------------------------------------------------------------------------
3098-02 2.0 0.27 0.15 LV LV
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Definition drilling increased significantly due to the increased access on both
Levels 194 and 215. The drill holes were completed from the haulage drifts and
production draw points. The drill holes from Zone 20 North have been summarized
below:
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True Gold(oz/ton) Silver
Drill Hole Thickness(ft) Cut(1.5 oz) (oz/ton) Copper(%) Zinc(%)
-------------------------------------------------------------------------
19120491 44.0 0.24 2.05 0.98 0.73
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19120501 48.9 0.14 2.15 0.92 0.56
-------------------------------------------------------------------------
19120502 54.1 0.12 2.69 0.84 0.69
-------------------------------------------------------------------------
19420501 48.2 0.12 2.12 0.64 1.26
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3194-37 37.7 0.21 1.21 0.92 0.36
-------------------------------------------------------------------------
3194-40 23.6 0.30 0.52 0.45 0.52
-------------------------------------------------------------------------
21220481 62.7 0.18 3.27 1.25 2.03
-------------------------------------------------------------------------
21220482 56.1 0.16 4.15 1.75 2.88
-------------------------------------------------------------------------
21220492 42.0 0.13 4.40 0.71 3.42
-------------------------------------------------------------------------
21520471 57.4 0.18 2.57 1.25 0.61
-------------------------------------------------------------------------
21520472 57.4 0.14 2.53 1.27 1.90
-------------------------------------------------------------------------
21520473 86.9 0.16 3.76 0.75 3.92
-------------------------------------------------------------------------
21520481 61.4 0.17 6.86 0.99 6.00
-------------------------------------------------------------------------
21520482 59.7 0.14 2.83 1.09 3.20
-------------------------------------------------------------------------
21520491 49.5 0.09 2.50 0.32 4.50
-------------------------------------------------------------------------
21520492 53.1 0.11 5.21 0.33 5.79
-------------------------------------------------------------------------
Most of the drilling during the quarter was restricted between Levels 191 to
215. Drilling on Level 194 started to confirm the higher-grade mineralization
originally encountered in previously reported drilling conducted from the Penna
Shaft station (drill holes 3194-37, 40, 47). The thickest intercept drilled from
the Level 215 horizon was obtained in drill hole 21520473 which intersected 86.9
feet grading 0.16 ounces of gold, 3.76 ounces of silver, 0.75% copper and 3.92%
zinc. On a net smelter return basis and thickness, this drill hole returned the
best combination of grade and thickness of any drill hole completed to date in
the lower part of the mine.
One additional deep drill hole was completed immediately below the bottom of the
shaft. The results have been summarized below:
-------------------------------------------------------------------------
True Gold(oz/ton) Silver
Drill Hole Thickness(ft) Cut(1.5 oz) (oz/ton) Copper(%) Zinc(%)
-------------------------------------------------------------------------
3194-47 11.2 0.22 0.35 0.18 0.03
-------------------------------------------------------------------------
This drill hole was completed along the western margin of Zone 20 North, outside
of the current reserve-resource limit. The gold values were higher than
expected, once again providing credence to the possibility of zoning within Zone
20 North and higher-grade mineralization towards the west. Furthermore,
definition drilling conducted from Levels 152 to 215 also appear to confirm this
observation. Currently, two drills are in operation, both probing the western
margin at depths of 8,500 feet and 9,500 feet below surface.
The eastern exploration program continued on the 20th Level exploration drift,
with a total of 7 drill holes completed below the level. While no significant
results were returned, the favourable geology, sulfide mineralization (i.e.
chalcopyrite & sphalerite) continued to be intersected. Surface mapping has also
traced the favourable geological unit across the El Coco Property onto the
Sphinx Property.
The underground drilling has also determined the western limit of the alteration
zone, confirming the western plunge originally indicated by surface drilling.
The alteration zone is open to the east and at depth. Currently, one drill is
continuing to test the horizon at depth and to the east. To date a total of
3,864 feet of level development has been completed on the El Coco Property.
EXPANSION UPDATE
Construction is on schedule to reach the 7,000 ton per day expanded production
rate in the fourth quarter of this year.
Underground, the first production stope on Level 194 was blasted during June.
Extraction was delayed awaiting the completion of the ore pass between Level 194
and 215, which was slowed due to a delay in installing ventilation to that
depth. The spot cooling system was completed by the end of June and started in
early July. During the changeover planned for the end of September, the surface
fans will be upgraded bringing them up to maximum capacity.
At the mill, the refinery heating and ventilation system was upgraded and the
vacuum cleaning system was completed in the concentrate load out area. The
grinding bay foundations were completed and the building erected. Mechanical
installation of the ball mill was commenced with the motor in place and
electrical installation started. Piping modifications to the copper and zinc
circuits are progressing well and erection of the two additional leach tanks and
the ultra high capacity thickeners was completed. The refinery foundations were
completed and building erection is also proceeding well.
With regards to the deep mining project of LaRonde's 5.2 million ounce resource
position, a project team has been assembled and a detailed feasibility study
initiated. The results of this study are expected to be available in the first
half of 2003.
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/LONG_20N1.pdf
http://files.newswire.ca/3/LONG_20N2.pdf
http://files.newswire.ca/3/LONG_20N3.pdf
http://files.newswire.ca/3/LONG_20S.pdf
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 Three months Six months
dollars, except where noted) ended June 30, ended June 30,
2002 2001 2002 2001
-------------------------------------------------------------------------
Consolidated Financial Data
Income and cash flow
Revenues from mining
operations $ 30,616 $ 29,513 $ 56,163 $ 50,269
Net income (loss) for period $ 3,360 $ 480 $ 3,837 $ 978
Net income (loss) per share $ 0.05 $ 0.01 $ 0.06 $ 0.02
Operating cash flow (before
non-cash working capital) $ 7,633 $ 4,134 $ 12,605 $ 9,940
Operating cash flow per share $ 0.11 $ 0.07 $ 0.18 $ 0.18
Weighted average number of
shares - basic (in thousands) 69,050 56,668 68,524 56,310
Operating and Financial
Summary
LaRonde Division
Revenues from mining
operations $ 30,616 $ 29,513 $ 56,163 $ 50,629
Mine operating costs 19,613 21,256 37,216 33,129
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Mine operating profit (loss) $ 11,003 $ 8,257 $ 18,947 $ 17,500
-------------------------------------------------------------------------
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Tons of ore milled 491,083 459,400 968,416 937,389
Head grades:
Gold 0.17 0.16 0.16 0.15
Silver 2.28 2.53 2.39 2.31
Zinc 3.64% 5.32% 4.43% 5.27%
Copper 0.30% 0.21% 0.26% 0.19%
Recovery rates:
Gold 92.92% 93.83% 93.73% 93.54%
Silver 80.10% 80.70% 81.92% 81.60%
Zinc 81.40% 78.10% 83.35% 78.50%
Copper 74.40% 60.30% 65.23% 60.30%
Payable production:
Gold (ounces) 74,617 65,937 134,876 122,560
Silver (ounces in thousands) 709 723 1,433 1,357
Zinc (pounds in thousands) 24,740 32,600 60,737 65,862
Copper (pounds in thousands) 2,084 1,039 3,215 1,965
Realized prices per unit of
production (US$):
Gold (per ounce) $ 310 $ 267 $ 306 $ 266
Silver (per ounce) $ 4.67 $ 4.59 $ 4.59 $ 4.57
Zinc (per pound) $ 0.36 $ 0.42 $ 0.35 $ 0.46
Copper (per pound) $ 0.78 $ 0.88 $ 0.77 $ 0.86
Onsite operating costs per
ton milled (Canadian dollars) $ 52 $ 52 $ 52 $ 52
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating costs per gold
ounce produced (US$):
Onsite operating costs
(including reclamation
provision) $ 219 $ 237 $ 237 $ 261
Less: Non-cash reclamation
provision (5) (5) (5) (5)
Net byproduct revenues (90) (121) (106) (137)
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Cash operating costs $ 124 $ 111 $ 126 $ 119
Accrued El Coco royalties 40 23 36 12
-------------------------------------------------------------------------
Total cash costs $ 164 $ 134 $ 162 $ 131
Non-cash costs:
Reclamation provision 5 5 5 5
Depreciation and amortization 49 48 51 48
-------------------------------------------------------------------------
Total operating costs $ 218 $ 187 $ 218 $ 184
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Consolidated Balance Sheets Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States June 30, December 31,
dollars, US GAAP basis) 2002 2001
-------------------------------------------------------------------------
(Unaudited)
ASSETS
Current
Cash and cash equivalents $ 28,311 $ 21,180
Metals awaiting settlement and gold bullion 29,567 20,080
Income taxes recoverable - 628
Inventories:
In-process and unsold metal products 5,772 5,854
Supplies 3,808 3,903
Prepaid expenses and other 3,509 3,822
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Total current assets 70,967 55,467
Fair values of derivative financial instruments 1,728 6,851
Investments and other assets 11,340 6,035
Future income and mining tax assets 27,179 27,196
Mining properties 323,746 301,221
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$ 434,960 $ 396,770
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 15,151 $ 9,423
Dividends payable 534 1,853
Income and mining taxes payable 63 1,231
Interest payable 2,066 2,052
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Total current liabilities 17,814 14,559
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Long-term debt 173,750 151,081
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Reclamation provision and other liabilities 4,620 4,055
-------------------------------------------------------------------------
Fair values of derivative financial instruments 6,833 7,026
-------------------------------------------------------------------------
Future income and mining tax liabilities 16,830 18,317
-------------------------------------------------------------------------
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 69,431,407 (2000 - 67,722,853) 420,179 407,347
Contributed surplus 7,181 7,181
Deficit (193,383) (197,220)
Accumulated other comprehensive loss (18,864) (15,576)
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Total shareholders' equity 215,113 201,732
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$ 434,960 $ 396,770
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Interim Consolidated Statements
of Income (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months Six months
dollars, except per share ended June 30, ended June 30,
amounts, US GAAP basis) 2002 2001 2002 2001
-------------------------------------------------------------------------
REVENUES
Revenues from mining
operations $ 30,616 $ 29,513 $ 56,163 $ 50,629
Interest and sundry income 577 3,004 613 3,329
-------------------------------------------------------------------------
31,193 32,517 56,776 53,958
COSTS AND EXPENSES
Production 19,613 21,256 37,216 33,129
Exploration 894 913 1,643 1,886
Depreciation and amortization 3,678 3,145 6,929 6,526
General and administrative 1,498 989 2,499 2,059
Capital tax 612 557 992 882
Interest 1,737 3,446 3,653 6,885
-------------------------------------------------------------------------
Loss before the undernoted 3,161 2,211 3,844 2,591
Foreign currency gain (loss) 501 (24) 501 307
-------------------------------------------------------------------------
Loss before income and mining
tax recoveries 3,662 2,187 4,345 2,898
Income and mining tax
recoveries 302 1,707 508 1,920
-------------------------------------------------------------------------
Net income for the period $ 3,360 $ 480 $ 3,837 $ 978
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Loss per share - basic and
diluted (note 3) $ 0.05 $ 0.01 $ 0.06 $ 0.02
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number of
shares (in thousands)-
basic 69,050 56,668 68,524 56,310
diluted 80,546 64,030 80,021 63,674
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Comprehensive income (loss):
Net Income for the period $ 3,360 $ 480 $ 3,837 $ 978
Other comprehensive loss:
Unrealized loss on hedging
activities, net of
related income taxes (1,455) - (3,288) -
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 income for
the period $ 1,905 $ 480 $ 549 $ (807)
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Interim Consolidated Statements of
Deficit (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, June 30, December 31,
US GAAP basis) 2002 2001
-------------------------------------------------------------------------
(Unaudited)
Deficit
Balance, beginning of period $ (197,220) $ (190,465)
Net income (loss) for the period 3,837 (5,401)
Dividends declared - (1,354)
-------------------------------------------------------------------------
Balance, end of period $ (193,383) $ (197,220)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive loss
Balance, beginning of period $ (15,576) $ (13,791)
Other comprehensive loss for the period (3,288) (1,785)
-------------------------------------------------------------------------
Balance, end of period $ (18,864) $ (15,576)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Interim Consolidated Statements
of Cash Flows (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months Six months
dollars, US GAAP basis) ended June 30, ended June 30,
2002 2001 2002 2001
-------------------------------------------------------------------------
Operating activities
Net income for the period $ 3,360 $ 480 $ 3,837 $ 978
Add (deduct) items not
affecting cash from operating
activities:
Depreciation and amortization 3,678 3,145 6,929 6,526
Provision for (recoveries of)
future income and mining taxes - 1,745 - 2,756
Unrealized (gain) loss on
derivative contracts - (2,647) - (2,800)
Amortization of deferred
interest and financing costs 595 768 1,839 1,543
Other - 643 - 937
-------------------------------------------------------------------------
7,633 4,134 12,605 9,940
Net change in non-cash working
capital balances related
to operations
Metals awaiting settlement
and gold bullion (334) (7,227) (9,487) (6,722)
Inventories (52) 3,281 177 (663)
Prepaid expenses and other 2,487 1,467 313 1,374
Income and mining taxes 54 (284) (540) 2,084
Accounts payable and accrued
liabilities 4,398 (3,307) 5,728 (6,058)
Interest payable 1,681 1,118 14 (2)
-------------------------------------------------------------------------
Cash flows from (used in)
operating activities 15,867 (818) 8,810 (47)
-------------------------------------------------------------------------
Investing activities
Additions to mining properties (15,202) (7,454) (29,454) (17,055)
Decrease (increase) in
investments and other (295) 29 (304) 35
-------------------------------------------------------------------------
Cash flows used in investing
activities (15,497) (7,425) (29,758) (17,020)
-------------------------------------------------------------------------
Financing activities
Dividends paid (30) 2 (1,319) (1,114)
Common shares issued 7,338 82,251 12,564 83,016
Financing cost - (5,373) (5,266) (5,373)
Proceeds from long-term debt - - 143,750 7,500
Repayment of the Company's
senior convertible notes (198) - (122,169) -
Resale of the Company's own
shares held by a subsidiary
company and other - 4,831 - 6,397
-------------------------------------------------------------------------
Cash flows from financing
activities 7,110 81,711 27,560 90,426
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and cash
equivalents 536 (224) 519 70
Net increase (decrease) in
cash and cash equivalents 8,016 73,244 7,131 73,429
Cash and cash equivalents,
beginning of period 20,295 14,091 21,180 13,906
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 28,311 $ 87,335 $ 28,311 $ 87,335
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other operating cash flow
information:
Interest paid during
the period $ 530 $ 1,477 $ 19,242 $ 5,262
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Taxes paid (recovered) during
the period $ (690) $ 317 $ 2,639 $ (2,245)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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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 June 30, 2002 and the results of operations and cash
flows for the three and six month periods ended June 30, 2002 and
2001.
Operating results for the three and six month periods ended June 30,
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
For the six-month period ended June 30, 2002, 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 68,524 56,310
Dilutive effect of employees stock options 1,229 308
Dilutive effect of the Company's convertible
debentures 10,268 7,056
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Adjusted weighted average number of shares,
for purposes of calculating diluted earnings
per share 80,021 63,674
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The Company's 2012 convertible debentures are anti-dilutive and thus
have not been included in the calculation of fully-diluted earnings
per share.
The following table presents the maximum number of common shares that
would be outstanding if all dilutive instruments outstanding at
June 30, 2002 were exercised:
Common shares outstanding at June 30, 2002 69,431,407
Convertible debenture (based on debenture
holders' option) 10,267,919
Employees' stock options 3,575,200
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83,274,526
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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 six-month period ended June 30, 2002, 1,628,500 (2001 -
157,650) employee stock options were exercised for cash of
$11.6 million (2001 - $0.8 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 six-
month period ended June 30, 2002, the Company would have reported net
income of $2.7 million (2001 - $0.7 million), after giving
effect to the grants subsequent to 1994. The weighted average
exercise price of options granted in 2002 amounted to C$16.14 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 December
31, 2002 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:
Sea Boyd, President and CEO, Agnico-Eagle
Mines Limited, (416) 947-1212
(AGE. AEM)
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