TORONTO, Oct 23, 2002 /PRNewswire-FirstCall via COMTEX/ --(All amounts expressed in U.S. dollars unless otherwise noted) Stock Symbols: AEM (NYSE) AGE (TSX) Agnico-Eagle Mines
Limited today reported a third quarter net loss of $0.6 million, or $0.01 per
share compared to a net loss of $5.6 million, or $0.08 per share in the same
period in 2001. Operating cash flow improved to $2.3 million, or $0.03 per share
from $0.9 million, or $0.01 per share in the third quarter of 2001. For the year
to date, net earnings were $3.2 million, or $0.05 per share compared to a net
loss of $4.7 million, or $0.07 per share in 2001 while operating cash flow
increased to $14.9 million, or $0.22 per share from $10.9 million, or $0.16 per
share in 2001.
Highlights for the third quarter include:
- LaRonde underground mine and mill now operating at 7,000 tons per day
with successful commissioning of mill in early October, already
reaching peak daily rates of 7,900 tons.
- Although lower than anticipated, both earnings and cash flow improved
over prior year levels.
- Deep drilling encountered economic mineralization on western limits of
Zone 20 North suggesting greater than anticipated strike length and
potential new parallel gold zone.
- High grade gold results from Lapa Property drilling, east of LaRonde,
has led to follow up drill program in the fourth quarter.
"Although third quarter gold production was lower than anticipated the LaRonde
Mine is now operating at the planned expanded rate of 7,000 tons per day. As a
result, gold production in the fourth quarter is expected to achieve record
levels", said Sean Boyd, President and Chief Executive Officer.
The Company is hosting a conference call to discuss third quarter results and to
provide an update on exploration and development activities at LaRonde on
Thursday October 24th, 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 177339. 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 third quarter and year to date from those reported in 2001:
(millions of dollars) Third Quarter Year to date
----------------------------------------------------------------------
Increase in gold price $1.4 $6.0
Decrease in interest expense 1.0 4.2
Decrease/(increase) in El Coco royalty 0.2 (2.9)
Decrease in exploration 1.6 1.9
Increase in depreciation (0.1) (0.5)
Other 0.9 (0.8)
--- -----
Net positive variance $5.0 $7.9
---- ----
Excluding the El Coco royalty, cash costs to produce an ounce of gold in the
third quarter increased to $197 per ounce from $165 per ounce in 2001. Total
cash operating costs to produce an ounce of gold were $208 compared to $181 in
the same quarter of 2001. Gold production increased by 9% to 50,073 ounces in
the third quarter when compared to 2001. However, cash costs per ounce were
adversely affected by lower zinc production and slightly low grades on increased
ore throughput. On a per ton basis, minesite operating costs continue to decline
as ore throughput increases. Onsite operating costs at LaRonde in the quarter
were C$51 per ton, down from C$53 per ton in the same period of 2001. These
costs are expected to gradually decrease to C$45 per ton over the next year once
the mine and mill are optimized at the 7,000 ton per day rate.
The following table provides a reconciliation of the costs per ounce of gold
produced to the financial statements:
(millions of dollars, except where
noted) Third Quarter Year to date
----------------------------------------------------------------------
Cost of production per income statement $15.5 $52.7
Adjustments:
Byproduct revenues (4.8) (19.5)
Non cash reclamation provision (0.2) (0.9)
---- -----
Total cash operating costs $10.5 $32.3
----- -----
Gold production (ounces) 50,073 184,948
------ -------
Total cash operating cost per ounce $208 $173
---- ----
Gold production in the fourth quarter 2002 is forecast to reach 100,000 ounces.
Cash costs in the same period, excluding the El Coco royalty, are expected to be
approximately $110 per ounce. The El Coco royalty is estimated to add $50 per
ounce to cash costs in the fourth quarter. Gold production for the full year
2002 is now forecast to be 285,000 ounces at a cash cost of approximately $130
per ounce and total cash costs, including royalties, of approximately $165 per
ounce.
As previously disclosed, gold production is expected to be below target for the
year due to delays in accessing higher grade gold mining blocks in Zone 20 North
at depth caused by delays in ventilation development which slowed level
development at depth. As a result, mining activity was concentrated on the upper
zinc/silver parts of Zone 20 North. The activity of work crews to develop Zone
20 North was curtailed by ventilation capacity at depth as well as record high
temperatures experienced during the summer. Improvements in the ventilation
system and normally cooler fall temperatures have resulted in a significant
improvement in the pace of development. In addition, as previously disclosed, an
electrical failure of the SAG mill drive resulted in 11 days of lost production
in July.
After a scheduled 6-day shutdown in early October, the mill was commissioned and
attained the new capacity of 7,000 tons per day within 48 hours. Since startup,
ore throughput has averaged 7,500 tons per day, with peak daily rates of 7,900
tons, and daily payable gold production has averaged 1,100 ounces. Currently the
mine and the mill are operating at the newly expanded production rate with gold
ore from the lower levels of the mine providing approximately 35% of the mill
feed. Approximately 85% of the ore processed in 2003 is expected to be sourced
from the lower gold-rich levels of the mine, resulting in increased gold
production in 2003.
Liquidity and Capital Resources
At September 30, 2002, Agnico-Eagle's consolidated cash and cash equivalents
were $17.7 million while working capital was $36.6 million. Including the
undrawn portion of its bank credit facility, the Company has $112.7 million of
available cash resources.
Cash flow from operating activities in the third quarter improved to $2.3
million from $0.9 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 ended September 30, 2002, capital expenditures were $21.5
million compared to $9.4 million in the corresponding 2001 period. The increase
is attributable to more intensive underground development and the mill expansion
associated with the expansion of the LaRonde operation to 7,000 tons per day.
For the full year, capital expenditures at the LaRonde Mine are expected to be
$55 million, approximately $10 million above budget due to overruns associated
with the delays in underground development, the replacement of the electrical
drive in the SAG mill, the addition of an underground spot cooling system and
the acceleration of tailings dam construction. Consolidated capital expenditures
for the Company are projected to be $60 million, including $5 million of
capitalized interest expense and foreign exchange translation losses.
Exploration and Development
Almost 44,000 feet of core drilling was completed during the quarter using eight
drills located on the following target areas:
- One drill on production delineation drilling between Levels 98 - 152.
- Three drills on definition drilling on and below Level 194.
- Two drills on Level 215 testing Zone 20 North at depth and to the west.
- Two drills on the 20th Level exploration drift and on the El Coco
Property.
During the quarter, the focus of delineation drilling shifted from the upper
levels of the mine to the lower levels reflecting the continuing transition to
the gold/copper-rich areas of Zone 20 North. However, additional intriguing
values were returned from the quartz vein zone in the upper mine. Two additional
intercepts were returned from the quartz vein zone first reported in the second
quarter. The latest quartz vein results are as follows:
------------------------------------------------------------------------
True Gold(oz/ton) Silver
Drill Hole Thickness(ft) Cut(2.0 oz) (oz/ton) Copper(%) Zinc(%)
------------------------------------------------------------------------
9821791 3.0 0.29 0.06 Trace Trace
------------------------------------------------------------------------
9821842 2.0 0.38 0.35 Trace Trace
------------------------------------------------------------------------
To date a total of 12 drill holes have been completed over a strike length of
300 feet and a vertical distance of 150 feet. Five of these drill holes have
encountered high-grade gold mineralization. Drill holes testing the upper limits
of Zone 20 South are systematically being extended south into the sediments to
test for further extensions of the quartz vein zone.
Reflecting the transition to the lower levels, definition drilling activity
increased significantly due to improved access on both Levels 194 and 215. Drill
holes were completed from the haulage drifts and production draw points between
Levels 191 and 215, where approximately 85% of 2003 production is expected be
sourced. Zone 20 North drilling, highlighted below, continued to confirm both
the thicknesses at depth and the strong correlation between improving gold
grades and higher copper grades.
------------------------------------------------------------------------
True Gold(oz/ton) Silver
Drill Hole Thickness(ft) Cut(1.5 oz) (oz/ton) Copper(%) Zinc(%)
------------------------------------------------------------------------
19120461 30.8 0.27 2.24 1.67 0.88
------------------------------------------------------------------------
19120463 20.3 0.34 2.62 1.00 1.64
------------------------------------------------------------------------
19120471 33.8 0.15 1.88 0.97 0.51
------------------------------------------------------------------------
19420441 28.5 0.14 0.87 0.34 0.72
------------------------------------------------------------------------
19420471 45.6 0.14 2.71 3.48 0.45
------------------------------------------------------------------------
19420482 36.1 0.25 3.29 1.36 0.72
------------------------------------------------------------------------
19420483 34.8 0.18 1.87 1.24 0.44
------------------------------------------------------------------------
3194-41 39.4 0.20 1.92 1.57 0.59
------------------------------------------------------------------------
3194-43 36.1 0.26 0.58 0.24 0.03
------------------------------------------------------------------------
3194-44 35.4 0.17 0.50 0.28 0.10
------------------------------------------------------------------------
3194-49 29.5 0.16 6.33 1.46 5.14
------------------------------------------------------------------------
3194-50 39.4 0.11 3.97 0.84 4.47
------------------------------------------------------------------------
3194-52 31.2 0.13 2.99 0.72 1.92
------------------------------------------------------------------------
3194-54 18.0 0.23 2.60 0.71 1.10
------------------------------------------------------------------------
21220401 57.1 0.16 1.29 1.08 0.16
------------------------------------------------------------------------
21220422 64.0 0.15 1.40 1.26 0.19
------------------------------------------------------------------------
21220431 72.2 0.13 1.23 1.00 0.23
------------------------------------------------------------------------
21520441 76.1 0.15 1.43 0.99 0.29
------------------------------------------------------------------------
21520461 79.7 0.18 2.32 1.33 0.69
-------------------------------------------------------------------------
Two mining blocks were extracted during the quarter while mining was in progress
on two other blocks on Levels 194 and 215, with dilution and grades meeting
expectations.
Three definition drill holes completed from Level 194 to further define Zone 20
North were extended into Zone 20 South yielding higher than expected grades.
Drill holes will continue to be extended south into the zone as the systematic
definition of Zone 20 North continues. The latest Zone 20 South results have
been summarized below:
------------------------------------------------------------------------
True Gold(oz/ton) Silver
Drill Hole Thickness(ft) Cut(1.5 oz) (oz/ton) Copper(%) Zinc(%)
------------------------------------------------------------------------
3194-41 9.8 0.16 0.96 0.65 1.95
------------------------------------------------------------------------
3194-43 9.2 0.20 1.51 0.14 1.57
------------------------------------------------------------------------
3194-50 11.5 0.24 0.57 0.22 0.31
------------------------------------------------------------------------
On the deep exploration program, one additional deep drill hole was completed
below the bottom of the Penna Shaft and it encountered two separate gold-bearing
zones. The results have been summarized below:
------------------------------------------------------------------------
True Gold(oz/ton) Silver
Drill Hole Thickness(ft) (oz/ton) Copper(%) Zinc(%)
------------------------------------------------------------------------
3215-22F 9.2 0.29 0.04 0.01 0.04
------------------------------------------------------------------------
16.7 0.22 0.14 LV 0.01
------------------------------------------------------------------------
Drill hole 3215-22F was completed at the end of the quarter encountering two
gold bearing zones. The drill hole was significant for three main reasons:
- The drill hole encountered a broad zone of alteration and gold
mineralization up to 200 feet thick.
- The value over 16.7 feet (southern intercept) appears to correlate with
Zone 20 North. This intercept is the deepest and western most value on
Zone 20 North encountering the zone at a depth of 9,900 feet below
surface. The value lies on the current western limit of the present
mineral resource estimate, suggesting that the strike length may be
greater than presently indicated.
- The two intercepts are separated by 100 feet of altered felsic
volcanics. Previously completed deep drilling has encountered similar
mineralization, which was originally interpreted to be isolated gold
values. The northern intercept grading 0.29 ounces of gold per ton over
9.2 feet may be the indication of a new parallel zone.
Currently three drills are testing Zone 20 North at depth. Two drills are
testing Zone 20 North along both the eastern and western resource limits at a
depth of 7,800 feet below surface, while a third is testing the zone along the
western resource margin at a depth of 8,800 feet below surface.
The infrastructure (rail installation, dump, locomotive charging station) has
been completed for the Level 215 exploration drift and level development has
commenced towards the west. It is expected that the first new drill station will
be completed by early November. The Level 215 exploration drift will provide
additional drill data that will be incorporated into a study evaluating the
economic potential of the Penna Shaft at depth. In addition, the new exploration
drift will act as the platform to test the unexplored ground near the western
limits of the LaRonde property.
The eastern exploration program continued on the 20th Level exploration drift
where an additional four drill holes below the level were completed. The
drilling continued to trace the alteration zone, down 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. A total of 587 feet of development drifting was completed
during the quarter, with the drift now located 1,465 feet from the Sphinx
property boundary, which is anticipated to be reached by the middle of 2003.
Grassroots Exploration
As previously disclosed, an option agreement was signed earlier this year
between Agnico-Eagle and Breakwater Resources Ltd. for their Zulapa and
Tonawanda properties, known collectively as the Lapa Property. Agnico-Eagle has
the ability to earn a 60% interest over a five-year option period by completing
certain work commitments. The Lapa Property is located in Cadillac Township,
Quebec, and has the potential to host a gold mine similar to other mines located
along the Cadillac-Larder Lake Break. Work by Breakwater between 1981-1989
resulted in a mineral inventory calculation of 1,854,659 tonnes at 0.19 ounces
of gold per ton from all of the zones.
In 1999, Breakwater completed a four hole drill program designed to test "Zone
A" and discovered a new gold bearing horizon, called the "Contact Zone" located
approximately 160 feet to the north of "Zone A". This new zone consisted of a
sericitized shear zone containing blue-grey quartz stringers and veins along
with disseminated mineralization consisting of arsenopyrite, stibnite,
pyrrhotite as well as visible gold found locally. The shear dipped vertically
and was hosted by the Piche Group (ultramafic) and was located at the contact
with the Cadillac Group (sediments). Three of the four holes returned the
following results:
--------------------------------------------------------
True Gold(oz/ton) Gold(oz/ton)
Drill Hole Thickness(ft) Cut(1.0 oz) (uncut)
--------------------------------------------------------
LA99-02 26.2 0.29 0.39
--------------------------------------------------------
LA99-03 9.8 0.34 0.42
--------------------------------------------------------
LA99-04 6.5 0.25 0.25
--------------------------------------------------------
To date, Agnico-Eagle has completed 10,000 feet of drilling consisting of four
holes. Three of these holes intersected the Contact Zone at a vertical depth of
2,100 feet below surface and along a strike length of 750 feet, which is open to
the east, west and at depth. The holes returned the following results:
--------------------------------------------------------
True Gold(oz/ton) Gold(oz/ton)
Drill Hole Thickness(ft) Cut(1.0 oz) (uncut)
--------------------------------------------------------
118-02-01A 9.5 0.23 0.34
--------------------------------------------------------
118-02-02B 14.9 0.32 0.32
--------------------------------------------------------
118-02-03 5.9 0.13 0.13
--------------------------------------------------------
Hole 118-02-02B encountered auriferous mineralization in a second zone
approximately 20 feet further north of the Contact Zone. This new zone returned
0.32 ounces per ton gold over a true thickness of 10.4 feet. A second phase
drill program is planned for the fourth quarter and is designed to test the ore
zone 500 feet below Agnico-Eagle's first set of holes as well as to test for the
structures existence towards the east. This program should allow for the
calculation of a mineral inventory and if necessary a possible third phase drill
program would concentrate on infill drilling in order to calculate a mineral
resource.
The Longitudinal illustrations that detail the drill results presented in this
press release can be viewed and/or downloaded from the Company's website:
www.agnico-eagle.com (Press Release) or
http://files.newswire.ca/3/20N2.pdf
http://files.newswire.ca/3/20N3.pdf
http://files.newswire.ca/3/inf.pdf
http://files.newswire.ca/3/Qtz.pdf
http://files.newswire.ca/3/Results.pdf
http://files.newswire.ca/3/Zone22.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 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 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 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 Three months ended Nine months ended
States dollars, September 30, September 30,
except where noted) 2002 2001 2002 2001
-------------------------------------------------------------------------
Consolidated Financial Data
Income and cash flow
Revenues from mining
operations $ 20,224 $ 18,944 $ 76,387 $ 69,573
Net income (loss)
for period $ (630) $ (5,631) $ 3,207 $ (4,653)
Net income (loss)
per share $ (0.01) $ (0.08) $ 0.05 $ (0.07)
Operating cash flow
(before non-cash
working capital) $ 2,343 $ 939 $ 14,948 $ 10,879
Operating cash flow
per share $ 0.03 $ 0.01 $ 0.22 $ 0.16
Weighted average number
of shares - basic
(in thousands) 69,549 67,201 68,863 59,238
Operating and
Financial Summary
LaRonde Division
Revenues from mining
operations $ 20,224 $ 18,944 $ 76,387 $ 69,573
Mine operating costs 15,460 13,995 52,676 47,124
-------------------------------------------------------------------------
Mine operating profit $ 4,764 $ 4,949 $ 23,711 $ 22,449
-------------------------------------------------------------------------
Tons of ore milled 456,818 386,929 1,425,234 1,324,317
Head grades:
Gold 0.13 0.13 0.15 0.14
Silver 2.25 2.48 2.34 2.36
Zinc 4.01% 5.22% 4.30% 5.26%
Copper 0.31% 0.20% 0.28% 0.19%
Recovery rates:
Gold 92.43% 91.29% 93.28% 92.95%
Silver 77.60% 76.80% 80.41% 80.10%
Zinc 67.20% 78.40% 78.28% 78.50%
Copper 63.60% 52.60% 63.44% 58.00%
Payable production:
Gold (ounces) 50,073 45,928 184,948 168,488
Silver (ounces
in thousands) 547 570 1,990 1,927
Zinc (pounds
in thousands) 20,713 26,808 81,450 92,670
Copper (pounds
in thousands) 1,728 716 4,943 2,681
Realized prices per unit
of production:
Gold (per ounce) $ 314 $ 284 $ 307 $ 271
Silver (per ounce) $ 4.73 $ 4.21 $ 4.65 $ 4.40
Zinc (per pound) $ 0.37 $ 0.37 $ 0.36 $ 0.42
Copper (per pound) $ 0.74 $ 0.66 $ 0.75 $ 0.75
Onsite operating costs
per ton milled
(Canadian dollars) $ 51 $ 53 $ 51 $ 52
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating costs per gold
ounce produced:
Onsite operating costs
(including reclamation
provision) $ 304 $ 291 $ 256 $ 269
Less: Non-cash reclamation
provision (5) (5) (5) (5)
Net byproduct
revenues (102) (121) (108) (133)
-------------------------------------------------------------------------
Cash operating costs $ 197 $ 165 $ 143 $ 131
Accrued El Coco royalties 11 16 30 13
-------------------------------------------------------------------------
Total cash costs $ 208 $ 181 $ 173 $ 144
Non-cash costs:
Reclamation provision 5 5 5 5
Depreciation
and amortization 66 51 55 49
-------------------------------------------------------------------------
Total operating costs $ 279 $ 237 $ 233 $ 198
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Balance Sheets Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States September 30, December 31,
dollars, US GAAP basis) 2002 2001
-------------------------------------------------------------------------
(Unaudited)
ASSETS
Current
Cash and cash equivalents $ 17,699 $ 21,180
Metals awaiting settlement and gold bullion 17,654 20,080
Income taxes recoverable 857 628
Inventories:
In-process and unsold metal products 5,137 5,854
Supplies 4,950 3,903
Prepaid expenses and other 3,633 3,822
-------------------------------------------------------------------------
Total current assets 49,930 55,467
Fair values of derivative financial instruments 2,656 6,851
Investments and other assets 12,100 6,035
Future income and mining tax assets 26,886 27,196
Mining properties 341,919 301,221
-------------------------------------------------------------------------
$ 433,491 $ 396,770
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 12,134 $ 9,423
Dividends payable 509 1,853
Income and mining taxes payable 271 1,231
Interest payable 407 2,052
-------------------------------------------------------------------------
Total current liabilities 13,321 14,559
-------------------------------------------------------------------------
Long-term debt 173,750 151,081
-------------------------------------------------------------------------
Reclamation provision and other liabilities 5,060 4,055
-------------------------------------------------------------------------
Fair values of derivative financial instruments 5,489 7,026
-------------------------------------------------------------------------
Future income and mining tax liabilities 17,371 18,317
-------------------------------------------------------------------------
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 69,722,269 (2001 - 67,722,853) 423,639 407,347
Contributed surplus 7,181 7,181
Deficit (194,013) (197,220)
Accumulated other comprehensive loss (18,307) (15,576)
-------------------------------------------------------------------------
Total shareholders' equity 218,500 201,732
-------------------------------------------------------------------------
$ 433,491 $ 396,770
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Interim Consolidated Statements of Income
(Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Nine months ended
dollars, except per share September 30, September 30,
amounts, US GAAP basis) 2002 2001 2002 2001
-------------------------------------------------------------------------
REVENUES
Revenues from mining
operations $ 20,224 $ 18,944 $ 76,387 $ 69,573
Interest and sundry
income 2,160 40 2,773 3,369
-------------------------------------------------------------------------
22,384 18,984 79,160 72,942
COSTS AND EXPENSES
Production 15,460 13,995 52,676 47,124
Exploration 1,081 2,697 2,724 4,583
Depreciation and
amortization 3,313 3,230 10,242 9,756
General and administrative 1,364 882 3,863 2,941
Capital tax 182 474 1,174 1,356
Interest 1,833 2,846 5,486 9,731
-------------------------------------------------------------------------
Income (loss) before
the undernoted (849) (5,140) 2,995 (2,549)
Foreign currency gain (loss) 439 (530) 940 (223)
-------------------------------------------------------------------------
Income (loss) before income
and mining tax recoveries (410) (5,670) 3,935 (2,772)
Income and mining tax
expense (recoveries) 220 (39) 728 1,881
-------------------------------------------------------------------------
Net income (loss) for
the period $ (630) $ (5,631) $ 3,207 $ (4,653)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income (loss) per
share - basic and
diluted (note 3) $ (0.01) $ (0.08) $ 0.05 $ (0.07)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number
of shares (in thousands)-
basic 69,549 67,201 68,863 59,238
diluted 80,923 77,953 80,237 69,991
-------------------------------------------------------------------------
Comprehensive income
(loss):
Net Income (loss) for
the period $ (630) $ (5,631) $ 3,207 $ (4,653)
Other comprehensive loss:
Unrealized gain (loss)
on hedging activities,
net of related
income taxes 557 - (2,731) -
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)
-------------------------------------------------------------------------
Comprehensive income (loss)
for the period $ (73) $ (5,631) $ 476 $ (6,438)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Interim Consolidated Statements of Deficit Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, September 30, December 31,
US GAAP basis) 2002 2001
-------------------------------------------------------------------------
(Unaudited)
Deficit
Balance, beginning of period $ (197,220) $ (190,465)
Net income (loss) for the period 3,207 (5,401)
Dividends declared - (1,354)
-------------------------------------------------------------------------
Balance, end of period $ (194,013) $ (197,220)
-------------------------------------------------------------------------
Accumulated other comprehensive loss
Balance, beginning of period $ (15,576) $ (13,791)
Other comprehensive loss for the period (2,731) (1,785)
-------------------------------------------------------------------------
Balance, end of period $ (18,307) $ (15,576)
-------------------------------------------------------------------------
Interim Consolidated Statements of Cash Flows
(Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Nine months ended
dollars, US GAAP basis) September 30, September 30,
2002 2001 2002 2001
-------------------------------------------------------------------------
Operating activities
Net income (loss)
for the period $ (630) $ (5,631) $ 3,207 $ (4,653)
Add (deduct) items not
affecting cash from
operating activities:
Depreciation and
amortization 3,313 3,230 10,242 9,756
Provision for (recoveries
of) future income and
mining taxes 541 (728) 541 2,028
Unrealized (gain) loss on
derivative contracts (1,344) 1,177 (1,344) (1,623)
Amortization of deferred
interest and
financing costs 463 836 2,302 2,379
Other - 2,055 - 2,992
-------------------------------------------------------------------------
2,343 939 14,948 10,879
Net change in non-cash
working capital balances
related to operations
Metals awaiting settlement
and gold bullion 11,913 926 2,426 (5,796)
Inventories (507) (1,940) (330) (2,603)
Prepaid expenses and other (124) (631) 189 743
Income and mining taxes (649) (718) (1,189) 1,366
Accounts payable and
accrued liabilities (3,016) (671) 2,712 (6,729)
Interest payable (1,659) (1,443) (1,645) (1,445)
-------------------------------------------------------------------------
Cash flows from (used in)
operating activities 8,301 (3,538) 17,111 (3,585)
-------------------------------------------------------------------------
Investing activities
Additions to mining
properties (21,486) (9,421) (50,940) (26,476)
Increase in investments
and other (504) (253) (808) (218)
-------------------------------------------------------------------------
Cash flows used in
investing activities (21,990) (9,674) (51,748) (26,694)
-------------------------------------------------------------------------
Financing activities
Dividends paid (25) - (1,344) (1,114)
Common shares issued 3,502 1,508 16,066 84,524
Financing cost - 164 (5,266) (5,209)
Proceeds from
long-term debt - - 143,750 7,500
Repayment of the Company's
senior convertible notes - - (122,169) -
Resale of the Company's
own shares held by a
subsidiary company and other - 1,082 - 7,479
-------------------------------------------------------------------------
Cash flows from
financing activities 3,477 2,754 31,037 93,180
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Effect of exchange rate
changes on cash and
cash equivalents (400) (464) 119 (394)
Net increase (decrease) in
cash and cash equivalents (10,612) (10,922) (3,481) 62,507
Cash and cash equivalents,
beginning of period 28,311 87,335 21,180 13,906
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Cash and cash equivalents,
end of period $ 17,699 $ 76,413 $ 17,699 $ 76,413
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Other operating cash
flow information:
Interest paid during
the period $ 3,708 $ 3,674 $ 22,950 $ 8,936
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Taxes paid (recovered)
during the period $ 663 $ 688 $ 3,302 $ (1,516)
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AGNICO-EAGLE MINES LIMITED
Notes to Interim Consolidated Financial Statements, US GAAP basis
(Unaudited)
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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 September 30, 2002 and the results of operations and cash
flows for the three and nine month periods ended September 30, 2002
and 2001.
Operating results for the three and nine month periods ended
September 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 nine-month period ended September 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 68,863 59,238
Dilutive effect of employees stock options 1,106 3,699
Dilutive effect of the Company's
convertible debentures 10,268 7,054
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Adjusted weighted average number of shares, for
purposes of calculating diluted earnings per share 80,237 69,991
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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
September 30, 2002 were exercised:
Common shares outstanding at September 30, 2002 69,722,269
Convertible debenture (based on debenture holders' option) 10,267,919
Employees' stock options 2,862,000
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82,852,188
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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 nine-month period ended September 30, 2002, 1,887,600
(2001 - 377,850) employee stock options were exercised for cash of
$14.2 million (2001 - $1.9 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
nine-month period ended September 30, 2002, the Company would have
reported net income of $1.5 million (2001 - $(5.1) 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
September 30, December 31,
2002 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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