(All amounts expressed in U.S. dollars unless otherwise noted. Prepared according to U.S. GAAP)TORONTO, Jul 27, 2005 (Canada NewsWire via COMTEX) -- Agnico-Eagle Mines Limited today reported second
quarter earnings of $12.8 million, or $0.15 per share. This compares to net
earnings of $8.8 million, or $0.11 per share, in the second quarter of 2004.
For the first six months of 2005, earnings totaled $23.2 million ($0.27 per
share) versus $21.7 million ($0.26 per share) in the corresponding period of
2004.
Second quarter earnings in 2005 were positively affected by non-cash mark-
to-market gains on byproduct metal derivative contracts of $4.2 million
($0.05 per share), and a deferred tax recovery of $3.8 million ($0.04 per
share). Cash flow provided by operating activities was $19.1 million in the
quarter, compared to $14.9 million in the prior year's second quarter. Payable
gold production in the second quarter was 61,771 ounces at total cash costs
per ounce of gold of $103(1). This compares with 65,233 ounces at total cash
costs of $77 per ounce in the second quarter of 2004. Based on first half
operating results, gold production for the full year 2005 is expected to be
250,000 ounces to 260,000 ounces at total cash costs below $100 per ounce.
Highlights for the quarter include:
- Goldex Project was approved for construction by the Board. Gold
production at Goldex is expected in 2008, averaging 170,000 ounces per
year at total cash costs of $200 per ounce.
- LaRonde mine's solid operating performance drives strong earnings and
cash flows.
- The drilling campaign on the Pinos Altos project in Mexico has
returned multiple high grade gold intercepts extending the known
mineralization beyond the previously outlined gold and silver
resource.
- Agnico-Eagle's $130 million offer for Riddarhyttan Resources AB is
proceeding as planned. Subject to regulatory clearance, and 90%
acceptance of the offer, the acquisition is expected to be completed
in 2005.
"Agnico-Eagle's low cost LaRonde operation continues to generate strong
earnings and cash flows," said Sean Boyd, President and Chief Executive
Officer. "Our decision today to begin construction of a new gold mine at
Goldex is an important step toward our goal of building value by expanding our
low cost production base. Over the coming months we look forward to further
progress at our LaRonde II and Lapa projects in Quebec, and our international
opportunities in Finland and Mexico", added Mr. Boyd.
Conference Call Tomorrow
The Company's senior management will host the Second Quarter Results
Conference Call on Thursday July 28, 2005 at 12:00 p.m. (E.S.T.). Management
will also provide an update of the Company's exploration and development
activities. To listen on the telephone, please dial (416) 640-4127 or
1 (800) 814-4890 toll free, at least five minutes before the scheduled start
of the presentation. The access phone number for the archived audio replay is
1 (877) 289-8525, passcode 21104890 (followed by the number sign). It will be
available from Thursday, July 28, 2005 at 2:00 pm until Friday, August 5, 2005
at 11:59 pm. Additionally, a live audio webcast of the call will be available
on the Company's website at http://www.agnico-eagle.com. The presentation will
be archived on the website until January 28, 2006.
LaRonde Operating Results
Compared to the first quarter, the LaRonde mine improved its operating
performance, following delays in mining some high grade gold stopes in the
lower mine in the first quarter. As the required stope access rehabilitation
work was completed, the percentage of production from the gold-rich lower mine
improved, resulting in improvements in financial performance.
LaRonde processed over 8,200 tons of ore per day in the second quarter,
continuing the strong performance seen during the first quarter (7,946 tpd),
and in 2004 (8,156 tpd). Approximately 67% of this tonnage was from the lower
mine, showing continued improvement from the first quarter (64%) when
rehabilitation work forced higher tonnage from the upper mine.
As a result of the strong ore production, minesite costs per ton were
C$51(2) in the second quarter (slightly higher than expected due to higher
input costs such as fuel, and increased equipment maintenance and ground
support expense). For the first half of 2005, minesite costs per ton were
C$49, in the middle of the expected range for the year of C$48 per ton to
C$50 per ton. In the first half of 2004, minesite costs per ton were C$47. The
higher level in 2005 was largely due to rehabilitation costs incurred in the
first quarter, and higher input costs, set out above.
On a per ounce basis, net of byproduct credits, LaRonde's total cash
costs remained low, by industry standards, at $103 per ounce in the second
quarter. This compares with the results of the second quarter of 2004 when
total cash costs per ounce were $77. The main reason for the increase in total
cash costs is the lower gold production in 2005 of 117,081 ounces versus
135,421 in the first half of 2004.
Year to date total cash costs were $84 per ounce versus $78 per ounce in
the first six months of 2004.
In spite of the high tonnage being achieved by the mine, the payable
quarterly gold production of 61,771 ounces was 5% lower than the corresponding
period in 2004. Higher lead content, associated with higher zinc grades, had a
negative impact on gold recoveries in the mill. Also negatively impacting the
gold production was lower ore recovery in some high grade stopes in an attempt
to control dilution.
As a result of the delays in accessing higher grade gold stopes in the
first quarter, and the lower recoveries in the second quarter, the Company is
now targeting gold production of 250,000 ounces to 260,000 ounces in 2005 at
total cash costs below $100 per ounce. Byproduct production is expected to be
over 5 million ounces of silver, 165 million pounds of zinc, and 17 million
pounds of copper.
Strong Metals Production and High Metals Prices Yield Solid Earnings and
Cash Flows
In spite of the lower than expected payable gold production, strong
metals prices and byproduct production resulted, once again, in strong
earnings and cash flows. Second quarter earnings were $12.8 million, or
$0.15 per share compared to earnings of $8.8 million, or $0.11 per share, in
the second quarter of 2004.
Second quarter earnings in 2005 were positively affected by non-cash mark-
to-market gains on byproduct metal derivative contracts of $4.2 million
($0.05 per share), and a deferred tax recovery of $3.8 million ($0.04 per
share). Cash flow provided by operating activities in the quarter was
$19.1 million, compared to $14.9 million in the prior year's second quarter.
For the six months ended June 30, 2005, earnings totaled $23.2 million
($0.27 per share) versus $21.7 million ($0.26 per share) in the corresponding
period in 2004. Non-cash mark-to-market derivative gains totaled $0.8 million
($0.01 per share) in the first six months, while non-cash deferred tax
recovery totaled $4.1 million ($0.05 per share). Agnico-Eagle expects to
accrue deferred tax expense at the statutory rate of approximately 40% for the
balance of the year.
Cash flow provided by operating activities totaled $47.2 million for the
first half of 2005 versus $21.1 million in the first half of 2004. The sharp
improvement is partly due to a reduction of metals inventories accumulated in
the fourth quarter of 2004, which were sold in 2005. In the second quarter of
2005, sales volumes for gold, silver, zinc and copper each approximated
production, leaving stockpiled inventories relatively unchanged.
Agnico-Eagle generated net free cash flow (cash flow provided by
operating activities less cash flow used in investing activities) of
$2.8 million during the second quarter as cash and equivalents grew to nearly
$121 million at June 30, 2005. For the year to date, net free cash flow was
$15.0 million. Additionally, the Company maintains substantially undrawn bank
lines of $100 million.
As a result of the approval for the construction of the Goldex mine, the
Company's 2005 capital expenditures are now expected to be just over
$60 million, which now includes an additional $19 million for Goldex.
Agnico-Eagle expects to fund Goldex principally from internal cash flows and
cash resources, with the exception of small private placements of flow through
common shares. Agnico-Eagle plans to complete a private placement of 500,000
flow through common shares at a price of C$20 per share in August 2005 for
total proceeds of C$10 million.
Positive Feasibility Study Results in Goldex Production Decision
Following a favourable review from an independent third party, a positive
production decision was made for the Goldex project. This first step is
consistent with the Company's goal of operating in several gold camps
globally, while maintaining low levels of political risk.
The project base case projects an after-tax internal rate of return of
15%, based on $400 gold per ounce, a C$/US$ exchange rate of 1.30, minesite
operating costs of C$17/ton, and capital costs of $135 million. Annual gold
production is expected to average over 170,000 ounces over a 10 year mine
life, at total cash costs of approximately $200 per ounce.
Sensitivities to gold price, gold grade, capital cost, operating cost,
and a capital expenditure schedule can be reviewed by following this link.
Goldex will benefit from regional synergies with the nearby LaRonde mine
and Lapa project. In-house technical expertise, procurement synergies, and a
long history of exploring and operating in the region are advantages that
should help Goldex achieve success.
Management is excited to be constructing a second mine in the Abitibi
Region, advancing our strategy of building a multi-mine platform. Agnico-Eagle
is also pleased to be providing significant economic benefit to the Abitibi
region through the creation of approximately 200 permanent jobs. Goldex will
be the first new mine in the Val d'Or - Bourlamaque camp in the last ten
years.
The 100% owned Goldex project (1.6 million ounces of probable gold
reserves) is located 35 miles east of LaRonde. Mobilization will begin
immediately with first gold production expected in 2008.
Lapa Shaft Sinking Progressing Well
The Company previously announced a $30 million underground development,
drilling and metallurgical program at its 100% owned Lapa project, seven miles
East of LaRonde.
Lapa contains 4.5 million tons, grading 0.26 ounces per ton, totalling
1.2 million ounces of probable gold reserves. In addition Lapa contains
indicated mineral resources of 832,000 tons grading 0.16 ounces per ton for a
total of 133,000 ounces and inferred mineral resources of 1.9 million tons
grading 0.22 ounces per ton for a total of 414,000 ounces.
The first phase of the Lapa underground program includes a 2,700-foot
shaft sinking project. The 16-foot diameter, concrete-lined, shaft is expected
to be completed near mid-year, 2006. Shaft sinking commenced in mid-March with
the current depth at 824 feet. Excavation of the first underground station is
complete. The contractor is currently averaging 9.0 feet per shift including
the installation of all services. Underground diamond drilling is expected to
start in the fourth quarter of this year.
Positive results from this first phase program would result in an
extension of the shaft to a depth of approximately 4,500 feet below surface.
Incremental capital costs for phase two, to bring the project into full
production, are currently estimated at $80 million. Assuming no further
additions to reserves and the current reserve grade, the Company envisages an
eight-year mine life with steady-state production levels by late 2008 of
approximately 125,000 ounces of gold per annum at cash operating costs below
$200 per ounce.
The 100% owned Lapa project is located seven miles east of LaRonde. As a
result, Lapa should benefit strongly from regional synergies.
Bid for Riddarhyttan Expected to be Completed in 2005
On May 12, Agnico-Eagle announced a bid for all the remaining shares of
Riddarhyttan, a public company listed on the Swedish stock exchange (current
ownership of 14%), valuing the shares not already owned by Agnico-Eagle at
nearly $130 million. The U.S. SEC has declared Agnico-Eagle's registration
statement effective. It is currently anticipated that the transaction will be
completed in 2005.
Riddarhyttan's resource estimate for its 100% owned Suurikuusikko gold
deposit in northern Finland continues to grow. As at July 19, 2005,
Riddarhyttan has reported a measured gold resource of 2.5 million tonnes
grading 6.2 grams per tonne (0.5 million ounces), an indicated resource of
9.3 million tonnes grading 5.1 grams per tonne (1.5 million ounces) and an
inferred resource of 12.5 million tonnes grading 4.2 grams per tonne
(1.7 million ounces), using a cut-off of two grams per tonne, on the
Suurikuusikko deposit.
Five drills are active on the property for the purpose of in-fill
drilling, and depth and strike extension. Further detail is available at the
Riddarhyttan Resources AB website.
Drilling Continues on Pinos Altos
Following a three year examination of opportunities in the Sierra Madre
gold and silver camp, an exploration and purchase option agreement was
finalized with Industrias Penoles S.A. de C.V. (Penoles) in March for 100% of
the Pinos Altos property in Mexico (as detailed in the March 16, 2005 press
release). Pinos Altos contains an indicated gold resource of 4.4 million tons,
grading 0.18 ounces of gold per ton and 3.82 ounces per ton of silver,
containing 800,000 ounces of gold and 16.9 million ounces of silver. In
addition, the property has an inferred resource of 2.5 million tons, grading
0.18 ounces per ton of gold and 3.41 ounces per ton of silver, containing
approximately 400,000 ounces of gold and 8.4 million ounces of silver. Penoles
work to date has also included metallurgical testing and initial work on the
permitting for a potential mining operation.
Three surface rigs are currently drilling on site, with another drilling
underground. Spending to date totals $1.2 million, with $1.6 million remaining
to fulfill the terms of the option agreement.
During the second quarter, the diamond drilling program targeted three
sectors:
- Open pit resource exploration (twenty one holes including two in
progress, for 9,144 feet)
- Resource conversion (three holes, for 4,583 feet); and
- Deep resource exploration (two holes, including one in progress for
3,533 feet).
<<
Significant results to date are presented in the following table:
-------------------------------------------------------------------------
Gold Silver
(oz/ton, (oz/ton,
True Gold cut Silver cut to
Drill Thickness (oz/ton, to 1.75 (oz/ton, 23.33
Hole (ft) From To uncut) oz/ton) uncut) oz/ton)
-------------------------------------------------------------------------
PA-05-01A 33.5 1,550.2 1,589.5 0.11 0.11 4.20 4.20
-------------------------------------------------------------------------
PA-05-02 14.8 291.0 306.8 0.33 0.33 4.86 4.86
-------------------------------------------------------------------------
PA-05-03 85.3 1,341.8 1,427.8 0.58 0.39 32.27 9.86
-------------------------------------------------------------------------
PA-05-04 33.5 231.0 266.4 n.s.r. n.s.r. n.s.r. n.s.r.
-------------------------------------------------------------------------
PA-05-05 30.2 459.3 492.1 0.09 0.09 0.29 0.29
-------------------------------------------------------------------------
PA-05-06 18.0 225.4 250.7 0.23 0.23 3.06 3.06
-------------------------------------------------------------------------
PA-05-07 28.5 1,902.9 1,952.1 0.16 0.16 2.44 2.44
-------------------------------------------------------------------------
PA-05-08 40.7 181.7 224.7 0.16 0.16 3.25 3.25
-------------------------------------------------------------------------
PA-05-09 85.3 262.1 359.2 0.11 0.11 3.36 3.36
-------------------------------------------------------------------------
PA-05-10 108.3 246.1 368.1 0.10 0.10 2.38 2.38
-------------------------------------------------------------------------
PA-05-11 155.8 411.7 688.0 0.27 0.21 2.56 2.56
-------------------------------------------------------------------------
PA-05-12 33.1 314.3 357.6 0.04 0.04 1.36 1.36
-------------------------------------------------------------------------
PA-05-13 27.9 206.7 236.2 n.s.r. n.s.r. n.s.r. n.s.r.
-------------------------------------------------------------------------
PA-05-14 49.2 2,198.5 2,262.8 0.12 0.12 a.p. a.p.
-------------------------------------------------------------------------
PA-05-15 14.8 299.5 315.3 n.s.r. n.s.r. n.s.r. n.s.r.
-------------------------------------------------------------------------
PA-05-16 23.0 306.8 331.4 0.03 0.03 0.81 0.81
-------------------------------------------------------------------------
PA-05-17 34.4 240.5 285.4 0.13 0.13 a.p. a.p.
-------------------------------------------------------------------------
PA-05-18 9.2 50.9 60.7 0.03 0.03 0.71 0.71
-------------------------------------------------------------------------
PA-05-19 9.8 79.1 90.2 0.08 0.08 0.41 0.41
-------------------------------------------------------------------------
PA-05-20 30.2 183.7 236.2 0.31 0.30 3.81 3.81
-------------------------------------------------------------------------
Drill holes PA-05-21 to PA-05-26 are in progress, or assays pending.
n.s.r. = no significant result; a.p = silver assays
pending
The drilling was successful in identifying a potential open pit resource
on the property, creating the possibility for an accelerated development
schedule. Agnico-Eagle is currently investigating the possibility of using
heap leach technology to process a portion of the Pinos Altos resource. This
could potentially reduce processing costs and project lead-time.
Additionally, the drilling has extended the mineralized zone at depth
which has potential to add significantly to the resource.
A decision on whether the Company will exercise its option, for
approximately $65 million, is expected before the end of 2005.
LaRonde II Update
Significant progress has been made on the LaRonde II pre-feasibility
study. Completed sections of the study include: detailed risk analysis;
hoisting and access options; mine planning and stope sequencing; geomechanical
studies; and potential infrastructure requirements. Cost estimates were also
received for the various hoisting and access options. The final study is
expected to be completed in the fourth quarter of 2005.
Forward Looking Statements
The information in this press release has been prepared as at May 5,
2005. Certain statements contained in this press release constitute "forward-
looking statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. When used in this document, the words
"anticipate", "expect", "estimate," "forecast," "planned" and similar
expressions are intended to identify forward-looking statements.
Such statements include, without limitation: estimates of future mineral
production and sales; estimates of future production costs and other expenses;
estimates of future capital expenditures and other cash needs; statements as
to the projected development of certain ore deposits, including estimates of
exploration, development and other capital costs, and estimates of the timing
of such development or decisions with respect to such development; estimates
of reserves and resources, and statements regarding future exploration
results; the anticipated timing of events with respect to the Company's
minesites, including Goldex and Lapa; the anticipated timing of events with
respect to the Company's exploration and decision in connection with its Pinos
Altos option; the Company's bid for Riddarhyttan; the ability of the Company
to achieve its objective of building a multi-mine production base; and other
statements regarding anticipated trends with respect to the Company's capital
resources and results of operations. Such statements reflect the Company's
views at the time with respect to future events and are subject to certain
risks, uncertainties and assumptions. Many factors, known and unknown, could
cause the actual results to be materially different from those expressed or
implied by such forward-looking statements. Such risks include, but are not
limited to: the Company's dependence upon its LaRonde mine for all of its
current gold production; uncertainty of mineral reserve, mineral resource,
mineral grade and mineral recovery estimates; uncertainty of future
production, capital expenditures, and other costs; gold and other metals price
volatility; currency fluctuations; mining risks; and governmental and
environmental regulation. For a more detailed discussion of such risks and
other factors, see Company's Annual Information Form and Annual Report on Form
20-F for the year ended December 31, 2004, as well as the Company's other
filings with the Ontario Securities Commission and the U.S. Securities and
Exchange Commission. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements.
About Agnico-Eagle
Agnico-Eagle is a long established Canadian gold producer with operations
located in northwestern Quebec and exploration and development activities in
Canada, the United States, and Mexico. Agnico-Eagle's LaRonde Mine in Quebec
is Canada's largest gold deposit. The Company has full exposure to higher gold
prices consistent with its policy of no forward gold sales. It has paid a cash
dividend for 25 consecutive years.
Scientific and Technical Data
Canadian Administrator's National Instrument 43-101 ("NI 43-101")
requires mining companies to disclose reserves and resources using the
subcategories of "proven" reserves, "probable" reserves, "measured" resources,
"indicated" resources and "inferred" resources. Mineral resources that are not
mineral reserves do not have demonstrated economic viability.
A mineral reserve is the economically mineable part of a measured or
indicated resource demonstrated by at least a preliminary feasibility study.
This study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the
time of reporting, that economic extraction can be justified. A mineral
reserve includes diluting materials and allows for losses that may occur when
the material is mined. A proven mineral reserve is the economically mineable
part of a measured resource for which quantity, grade or quality, densities,
shape and physical characteristics are so well established that they can be
estimated with confidence sufficient to allow the appropriate application of
technical and economic parameters, to support production planning and
evaluation of the economic viability of the deposit. A probable mineral
reserve is the economically mineable part of an indicated mineral resource for
which quantity, grade or quality, densities, shape and physical
characteristics can be estimated with a level of confidence sufficient to
allow the appropriate application of technical and economic parameters, to
support mine planning and evaluation of the economic viability of the deposit.
A mineral resource is a concentration or occurrence of natural, solid,
inorganic or fossilized organic material in or on the earth's crust in such
form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade, geological
characteristics and continuity of a mineral resource are known, estimated or
interpreted from specific geological evidence and knowledge. A measured
mineral resource is that part of a mineral resource for which quantity, grade
or quality, densities, shape, physical characteristics, can be estimated with
a level of confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough to confirm both
geological and grade continuity. An indicated mineral resource is that part of
a mineral resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters, to support mine planning and evaluation of the economic viability
of the deposit. The estimate is based on detailed and reliable exploration and
testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough for geological and grade continuity to be reasonable assumed.
An inferred mineral resource is that part of a mineral resource for which
quantity and grade or quality can be estimated on the basis of geological
evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information
and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes. Mineral resources which
are not mineral reserves do not have demonstrated economic viability.
Investors are cautioned not to assume that part or all of an inferred
resource exists, or is economically or legally mineable.
The terms "measured", "indicated" and "inferred" mineral resources are
terms recognized and required under certain securities legislation. United
States investors are advised that the SEC does not recognize these terms.
"Inferred mineral resources" have a great amount of uncertainty as to their
existence and as to their economic and legal feasibility. It cannot be assumed
that all or any part of an inferred mineral resource will ever be upgraded to
a higher category. Estimates of inferred mineral resources may not form the
basis of feasibility or other economic studies. United States investors are
cautioned not to assume that all or any part of measured or indicated mineral
resources will ever be converted into mineral reserves. United States
investors are also cautioned not to assume that all or any part of an inferred
mineral resource exists or is economically or legally mineable.
Riddarhyttan Technical Data
The mineral resource estimate reported herein for Riddarhyttan's
Suurikuusikko property was prepared for Riddarhyttan in accordance with the
Australasian Code for Reporting Mineral Resources and Ore Reserves, September
1999 ("JORC Code"). Riddarhyttan's mineral resources disclosed herein were
estimated using a minimum gold grade cut-off of 2 grams of gold per ton.
Mineral resource estimates prepared under reporting codes other than NI 43-101
should not be relied upon as they may not conform to NI 43-101 standards and
definitions. However, reserve and resource categories in the JORC Code are
substantially similar to the corresponding categories of mineral reserves and
resources required under NI 43-101. To the best of Agnico-Eagle's knowledge,
the Riddarhyttan estimate is relevant and reliable.
The Riddarhyttan resource data in this press release has been compiled by
Lars-Goran Ohlsson and Thomas Lindholm (Riddarhyttan Resources AB) who by
SveMin, Foreningen for gruvor, mineral- och metallproducenter, is registered
as a "Qualified Person" and Bill Fleshman, a certified professional geologist
in Australia.
Pinos Altos Technical Data
The Pinos Altos exploration results disclosed in this press release were
reviewed by Dino Lombardi, P.Geo., Senior Geologist International Projects.
The mineral resource estimate reported herein for Penoles's Pinos Altos
property was completed in June 2003 and was reviewed Marc H. Legault, P.Eng.,
Agnico-Eagle's Manager Project Evaluations and a qualified person as defined
by NI 43-101. The data disclosed, including the sampling, analytical and test
data underlying the mineral resource estimate, has been verified. The key
assumptions and parameters used in the estimate are a gold price of $300 per
ounce, a silver price of $4.75 per ounce, a 0.10 ounce per ton gold grade
cut-off, and metallurgical recoveries of 92.39% for gold and 47.83% for
silver. Gold assays were cut to 0.89 ounces per ton while silver assays were
cut to 19.25 ounces per ton. We believe the estimate of mineral resources at
Pinos Altos is not likely to be materially affected by any known
environmental, permitting, legal, title, taxation, socio-political, marketing
or other relevant issues. Because Pinos Altos is not considered to be a
material property for Agnico-Eagle, a technical report describing the resource
estimate will not be filed with the securities regulatory authorities.
Agnico-Eagle Technical Data
The qualified person responsible for the Lapa mineral reserve and mineral
resource estimate is Christian D'Amours, Geo., of Service Conseil Géopointcom.
In estimating the Lapa resource and reserve, a minimum gold grade cut-off of
0.15 and 0.19 ounce/ton, respectively was used to evaluate drill intercepts
that have been adjusted to respect a minimum mining width of 9.2 ft. The
estimate was derived using a three dimensional block model of the deposit; the
grades were interpolated using the inverse distance power squared method.
A qualified person Carl Pelletier, Geo., of Innovexplo Geological
Services, supervised the preparation of and verified the scientific and
technical information regarding the Goldex project including sampling,
analytical and test data underlying the mineral reserve and resource estimate.
A qualified person, R. Mohan Srivastava, P.Geo., of Froidevaux, Srivastava &
Schofield Consultants, was responsible for the mineral estimate process at
Goldex. Because Goldex is now considered to be a material property for
Agnico-Eagle, a technical report describing the resource estimate will be
filed with the securities regulatory authorities shortly.
Agnico-Eagle Mines Ltd. is reporting mineral resource and reserve
estimates in accordance with the CIM guidelines for the estimation,
classification and reporting of resources and reserves. The effective date of
each estimate is December 31, 2004. More recent information on exploration,
mining, processing, metallurgy and other economic factors have also been used.
Reserve estimates were calculated using historic three-year average metals
prices and foreign exchange rates in accordance with the Securities and
Exchange Commission's ("SEC") Industry Guide 7. Industry Guide 7 requires the
use of prices that reflect current economic conditions at the time of reserve
determination which Staff of the SEC has interpreted to mean historic
three-year average prices. The assumptions used for 2004 reserves and
resources were $360 per ounce gold, $5.42 per ounce silver, $0.41 per pound
zinc, $0.95 per pound copper and a C$/US$ exchange rate of 1.42. There are no
known relevant issues that would materially affect the estimates. No
independent verification of the data has been published.
Tonnage amounts and contained metal amounts presented in the tables in
this news release have been rounded to the nearest 1000.
The qualified person responsible for the LaRonde II pre-feasibility study
is Carol Plummer, P.Eng., Mine Superintendent for LaRonde. The qualified
person responsible for the Lapa pre-feasibility and Goldex feasibility studies
is Rosaire Emond Ing., Goldex Project Manager.
The qualified person responsible for the LaRonde mineral reserve and
resource estimate is Guy Gosselin, Ing., P.Geo., Manager Exploration. A
description of the operating and capital cost assumptions, parameters and
methods used to estimate the Penna shaft can be found in the LaRonde Division
SEDAR disclosure cited above.
The qualified person responsible for the Lapa mineral reserve and mineral
resource estimate is Christian D'Amours, P.Geo., of Service Conseil
Géopointcom. In estimating the Lapa resource and reserve, a minimum gold grade
cut-off of 0.15 and 0.19 oz/ton, respectively was used to evaluate drill
intercepts that have been adjusted to respect a minimum mining width of
9.2 ft. The estimate was derived using a three dimensional block model of the
deposit; the grades were interpolated using the inverse distance power squared
method.
The Goldex mineral reserve and resource estimate was supervised by
qualified person Carl Pelletier, P.Geo., of Innovexplo Geological Services.
Mr. Pelletier also supervised the preparation of and verified the scientific
and technical information regarding the Goldex project including sampling,
analytical and test data underlying the mineral reserve and resource estimate.
A qualified person, R. Mohan Srivastava, P.Geo., of Froidevaux, Srivastava &
Schofield Consultants, was responsible for the mineral estimate process at
Goldex.
The minimum gold grade cut-off used to evaluate drill intercepts at
Goldex was 0.04 oz/ton over a minimum true thickness of 50 feet. The reserve
was derived by evaluating a three-dimensional model of the Goldex Extension
zone, whose gold grade was estimated using a 95% confidence interval grade
calculation method, and then adjusting the model envelope to only include
sectors with a high probability of exceeding the cut-off grade.
------------------------------
(1) Total cash costs per ounce is a non-GAAP measure. For a
reconciliation of this measure to the financial statements, see
note 1 following the financial statements
(2) Minesite costs per ton is a non-GAAP measure. For a reconciliation of
this measure to the financial statements, see Note 1 following the
financial statements
Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of
United States Dollars Three months ended Six months ended
except where noted, June 30, June 30,
US GAAP basis) 2005 2004 2005 2004
-------------------------------------------------------------------------
Income and cash flow
LaRonde Division
Revenues from mining
operations $ 49,572 $ 45,664 $ 111,338 $ 94,268
Production costs 30,268 25,680 61,241 49,821
-------------------------------------------------------------------------
Gross profit (exclusive of
amortization shown below) $ 19,304 $ 19,984 $ 50,097 $ 44,447
Amortization 5,983 5,859 13,194 11,441
-------------------------------------------------------------------------
Gross profit $ 13,321 $ 14,125 $ 36,903 $ 33,006
--------------------------------------------
-------------------------------------------------------------------------
Net income for period $ 12,794 $ 8,805 $ 23,242 $ 21,714
Net income per share (basic
and fully diluted) $ 0.15 $ 0.11 $ 0.27 $ 0.26
Cash flow provided by
operating activities $ 19,103 $ 14,901 $ 47,208 $ 21,120
Cash flow used in investing
activities $ (16,334) $ (23,493) $ (32,239) $ (32,874)
Cash flow (used in) provided
by financing activities $ 920 $ 1,552 $ (175) $ 484
Weighted average number of
common shares
Outstanding - basic
(in thousands) 86,220 84,648 86,176 84,592
Tons of ore milled 751,608 753,724 1,466,729 1,442,926
Head grades:
Gold (oz. per ton) 0.09 0.09 0.09 0.10
Silver (oz. per ton) 2.21 2.26 2.17 2.26
Zinc 4.11% 3.80% 4.12% 3.80%
Copper 0.36% 0.54% 0.38% 0.54%
Recovery rates:
Gold 90.02% 91.69% 90.28% 91.69%
Silver 85.20% 85.88% 84.40% 85.92%
Zinc 82.50% 83.37% 82.10% 83.38%
Copper 74.50% 78.99% 75.80% 78.96%
Payable metal produced:
Gold (ounces) 61,771 65,233 117,081 135,421
Silver (ounces in thousands) 1,204 1,558 2,302 2,686
Zinc (pounds in thousands) 44,347 37,483 85,488 74,130
Copper (pounds in thousands) 3,705 5,075 7,694 10,915
Payable metal sold:
Gold (ounces) 60,550 65,233 130,687 135,421
Silver (ounces in thousands) 1,121 1,558 2,519 2,686
Zinc (pounds in thousands) 44,371 37,483 81,825 74,130
Copper (pounds in thousands) 3,558 5,075 9,774 10,915
Realized prices per unit of
production:
Gold (per ounce) $ 427 $ 393 $ 429 $ 401
Silver (per ounce) $ 7.16 $ 6.22 $ 7.01 $ 6.42
Zinc (per pound) $ 0.58 $ 0.47 $ 0.59 $ 0.48
Copper (per pound) $ 1.55 $ 1.26 $ 1.51 $ 1.25
Total cash costs (per ounce):
Production costs $ 490 $ 394 $ 523 $ 368
Less: Net byproduct revenues (379) (300) (416) (272)
Inventory adjustments (6) (15) (21) (16)
Accretion expense
and other (2) (2) (2) (2)
-------------------------------------------------------------------------
Total cash costs (per ounce) $ 103 $ 77 $ 84 $ 78
-------------------------------------------------------------------------
Minesite costs per ton milled
(Canadian dollars) $ 51 $ 47 $ 49 $ 47
-------------------------------------------------------------------------
Consolidated Balance Sheet Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, June 30, December 31,
US GAAP basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 120,798 $ 106,014
Metals awaiting settlement 35,459 43,442
Income taxes recoverable 7,590 16,105
Inventories:
Ore stockpiles 10,790 9,036
Concentrates 4,535 9,065
Supplies 8,365 8,292
Other current assets 20,948 19,843
-------------------------------------------------------------------------
Total current assets 208,485 211,797
Fair value of derivative financial instruments 2,814 2,689
Other assets 23,187 25,234
Future income and mining tax assets 57,680 51,407
Mining properties 444,189 427,037
-------------------------------------------------------------------------
$ 736,355 $ 718,164
-------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 21,187 $ 28,667
Dividends payable 828 3,399
Interest payable 2,426 2,426
-------------------------------------------------------------------------
Total current liabilities 24,441 34,492
-------------------------------------------------------------------------
Long-term debt 141,326 141,495
Asset retirement obligation and other liabilities 15,115 14,815
Future income and mining tax liabilities 59,177 57,136
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 86,268,696 (2004 - 86,072,779) 623,087 620,704
Stock options 2,090 465
Warrants 15,732 15,732
Contributed surplus 7,181 7,181
Deficit (149,514) (172,756)
Accumulated other comprehensive loss (2,280) (1,100)
-------------------------------------------------------------------------
Total shareholders' equity 496,296 470,226
-------------------------------------------------------------------------
$ 736,355 $ 718,164
-------------------------
-------------------------------------------------------------------------
Consolidated Statement of Income Agnico-Eagle Mines Limited
and Comprehensive Income - Unaudited
-------------------------------------------------------------------------
(thousands of
United States Dollars Three months ended Six months ended
except per share amounts, June 30, June 30,
US GAAP basis) 2005 2004 2005 2004
-------------------------------------------------------------------------
REVENUES
Revenues from mining
operations $ 49,572 $ 45,664 $ 111,338 $ 94,268
Interest and sundry 4,492 158 1,701 363
-------------------------------------------------------------------------
54,064 45,822 113,039 94,631
COSTS AND EXPENSES
Production 30,268 25,680 61,241 49,821
Exploration and corporate
development 3,364 452 6,127 742
Equity loss in junior
exploration companies 838 609 1,973 898
Amortization 5,983 5,859 13,194 11,441
General and administrative 2,412 2,012 6,161 3,811
Provincial capital tax 311 739 910 1,194
Interest 2,102 2,272 4,654 4,029
Foreign currency gain (467) (518) (851) (379)
-------------------------------------------------------------------------
Income before income, mining
and federal capital taxes 9,253 8,717 19,630 23,074
Federal capital tax 234 275 482 541
Income and mining tax
expense (recovery) (3,775) (363) (4,094) 819
-------------------------------------------------------------------------
Net income for the period $ 12,794 $ 8,805 $ 23,242 $ 21,714
--------------------------------------------
-------------------------------------------------------------------------
Net income per share -
basic and diluted $ 0.15 $ 0.11 $ 0.27 $ 0.26
--------------------------------------------
-------------------------------------------------------------------------
Weighted average number
of shares (in thousands)
Basic 86,220 84,648 86,176 84,592
Diluted 86,627 85,141 86,583 85,084
--------------------------------------------
-------------------------------------------------------------------------
Comprehensive income:
Net income for the period $ 12,794 $ 8,805 $ 23,242 $ 21,714
-------------------------------------------------------------------------
Other comprehensive income,
net of tax:
Unrealized loss on hedging
activities (210) (1,247) (117) (1,062)
Unrealized gain (loss) on
available-for-sale
securities 1,130 (726) 977 (1,168)
Cumulative translation
adjustment on equity
investee (1,310) (2,006) -
Adjustments for derivative
instruments maturing
during the period (15) (2,147) (34) (2,931)
Adjustments for realized gains
on available-for-sale
securities due to dispositions
in the period - (124) - (632)
-------------------------------------------------------------------------
Other comprehensive loss for
the period (405) (4,244) (1,180) (5,793)
-------------------------------------------------------------------------
Comprehensive income for
the period $ 12,389 $ 4,561 $ 22,062 $ 15,921
--------------------------------------------
-------------------------------------------------------------------------
Consolidated Statement of Agnico-Eagle Mines Limited
Shareholders' Equity
-------------------------------------------------------------------------
(thousands of
United States Dollars Three months ended Six months ended
except where noted, June 30, June 30,
US GAAP basis - Unaudited) 2005 2004 2005 2004
-------------------------------------------------------------------------
Deficit
Balance, beginning of period $(162,308) $(205,146) $(172,756) $(218,055)
Net income for the period 12,794 8,805 23,242 21,714
-------------------------------------------------------------------------
Balance, end of period $(149,514) $(196,341) $(149,514) $(196,341)
-------------------------------------------------------------------------
Accumulated other
comprehensive loss
Balance, beginning of period $ (1,875) $ (6,989) $ (1,100) $ (5,440)
Other comprehensive loss for
the period (405) (4,244) (1,180) (5,793)
-------------------------------------------------------------------------
Balance, end of period $ (2,280) $ (11,233) $ (2,280) $ (11,233)
-------------------------------------------------------------------------
Consolidated Statement of Cash Flows Agnico-Eagle Mines Limited
- Unaudited
-------------------------------------------------------------------------
(thousands of Three months ended Six months ended
United States Dollars, June 30, June 30,
US GAAP basis) 2005 2004 2005 2004
-------------------------------------------------------------------------
Operating activities
Net income for the period $ 12,794 $ 8,805 $ 23,242 $ 21,714
Add (deduct) items not
affecting cash from operating
activities:
Amortization 5,983 5,859 13,194 11,441
Future income and mining
taxes (recoveries) (3,913) 532 (4,232) 2,489
Unrealized loss on
derivative contracts - (42) - 174
Amortization of deferred
costs and other (3,006) 1,970 3,115 2,128
-------------------------------------------------------------------------
11,858 17,124 35,319 37,946
Change in non-cash working
capital balances
Metals awaiting settlement 6,230 337 7,983 (7,510)
Income taxes recoverable 5,564 (1,194) 8,515 (2,310)
Inventories 999 600 2,702 (1,071)
Prepaid expenses and other (139) 676 198 2,376
Accounts payable and accrued
liabilities (7,026) (4,270) (7,509) (7,576)
Interest payable 1,617 1,628 - (735)
-------------------------------------------------------------------------
Cash flows provided by
operating activities 19,103 14,901 47,208 21,120
-------------------------------------------------------------------------
Investing activities
Additions to mining
properties (14,020) (11,774) (29,203) (21,997)
Investments and other (2,314) (11,719) (3,036) (10,877)
-------------------------------------------------------------------------
Cash flows used in investing
activities (16,334) (23,493) (32,239) (32,874)
-------------------------------------------------------------------------
Financing activities
Dividends paid - - (2,542) (2,480)
Common shares issued 920 1,552 2,367 2,964
-------------------------------------------------------------------------
Cash flows (used in) provided
by financing activities 920 1,552 (175) 484
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and cash
equivalents (5) 110 (10) 162
Net increase (decrease) in
cash and cash equivalents
during the period 3,684 (6,930) 14,784 (11,108)
Cash and cash equivalents,
beginning of period 117,114 106,187 106,014 110,365
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 120,798 $ 99,257 $ 120,798 $ 99,257
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other operating cash flow
information:
Interest paid during the
period $ (27) $ 353 $ 3,985 $ 3,466
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Income, mining, and capital
taxes paid (recovered)
during the period $ (5,823) $ 1,369 $ (8,350) $ 2,530
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Note 1
Reconciliation of Total Cash Costs Per Ounce and Total Minesite Costs
Per Ton
Total cash cost is not a recognized measure under US GAAP and this data
may not be comparable to data presented by other gold producers. We
believe that this generally accepted industry measure is a realistic
indication of operating performance and is useful in allowing year over
year comparisons. As illustrated in the table below, this measure is
calculated by adjusting Production Costs as shown in the Statement of
Income and Comprehensive Income for net byproduct revenues, royalties,
inventory adjustments and asset retirement provisions. This measure is
intended to provide investors with information about the cash generating
capabilities of our mining operations. Management uses this measure to
monitor the performance of our mining operations. Since market prices for
gold are quoted on a per ounce basis, using this per ounce measure allows
management to assess the mine's cash generating capabilities at various
gold prices. Management is aware that this per ounce measure of
performance can be impacted by fluctuations in byproduct metal prices and
exchange rates. Management compensates for the limitation inherent with
this measure by using it in conjunction with the minesite cost per ton
measure (discussed below) as well as other data prepared in accordance
with US GAAP. Management also performs sensitivity analyses in order to
quantify the effects of fluctuating metal prices and exchange rates.
Minesite cost per ton is not a recognized measure under US GAAP and this
data may not be comparable to data presented by other gold producers. As
illustrated in the table below, this measure is calculated by adjusting
Production Costs as shown in the Statement of Income and Comprehensive
Income for inventory and hedging adjustments and asset retirement
provisions and then dividing by tons processed through the mill. Since
total cash cost data can be affected by fluctuations in byproduct metal
prices and exchange rates, management believes this measure provides
additional information regarding the performance of mining operations and
allows management to monitor operating costs on a more consistent basis
as the per ton measure eliminates the cost variability associated with
varying production levels. Management also uses this measure to determine
the economic viability of mining blocks. As each mining block is
evaluated based on the net realizable value of each ton mined, in order
to be economically viable the estimated revenue on a per ton basis must
be in excess of the minesite cost per ton. Management is aware that this
per ton measure is impacted by fluctuations in production levels and thus
uses this evaluation tool in conjunction with production costs prepared
in accordance with US GAAP. This measure supplements production cost
information prepared in accordance with US GAAP and allows investors to
distinguish between changes in production costs resulting from changes in
production versus changes in operating performance.
The following tables provide a reconciliation of the total cash operating
costs per ounce of gold produced and minesite operating cost per ton to
the financial statements:
(thousands of dollars, 3 Months 6 months 3 Months 6 months
except where noted) ended ended ended ended
June 30, June 30, June 30, June 30,
2005 2005 2004 2004
-------------------------------------------------------------------------
Cost of production per
Consolidated Statements of
Income $30,268 $61,241 $25,680 $49,821
Adjustments:
Byproduct revenues (23,436) (48,697) (19,921) (38,132)
Inventory adjustment(i) (358) (2,531) (603) (898)
Non-cash reclamation
provision (105) (212) (131) (261)
--------- --------- --------- ---------
Cash operating costs $6,369 $9,801 $5,025 $10,530
Gold production (ounces) 61,771 117,081 65,233 135,421
--------- --------- --------- ---------
Total cash costs (per ounce) $103 $84 $77 $78
--------- --------- --------- ---------
--------- --------- --------- ---------
(thousands of dollars, 3 Months 6 months 3 Months 6 months
except where noted) ended ended ended ended
June 30, June 30, June 30, June 30,
2005 2005 2004 2004
-------------------------------------------------------------------------
Cost of production per
Consolidated Statements of
Income $30,268 $61,241 $25,680 $49,821
Adjustments:
Inventory adjustment(i) and
hedging adjustments(ii) 605 (2,615) 383 1,211
Non-cash reclamation
provision (106) (212) (131) (261)
--------- --------- --------- ---------
Minesite operating costs (US$) $30,767 $58,414 $25,932 $50,771
--------- --------- --------- ---------
Minesite operating costs (C$) $38,155 $72,073 $35,201 $67,990
Tons milled (000's tons) 752 1,467 754 1,443
--------- --------- --------- ---------
Minesite costs per ton
(C$)(iii) $51 $49 $47 $47
--------- --------- --------- ---------
--------- --------- --------- ---------
Notes:
(i) Under the Company's revenue recognition policy, revenue is
recognized on concentrates when legal title passes. Since total
cash operating costs are calculated on a production basis, this
adjustment reflects the portion of concentrate production for which
revenue has not been recognized in the period.
(ii) Hedging adjustments reflect gains and losses on the Company's
derivative positions entered into to hedge the effects of foreign
exchange fluctuations on production costs. These items are not
reflective of operating performance and thus have been eliminated
when calculating operating costs per ton.
(iii) Total cash operating costs and operating cost per ton data are not
recognized measures under US GAAP. Management uses these generally
accepted industry measures in evaluating operating performance and
believes them to be realistic indications of such performance. The
data also indicates the Company's ability to generate cash flow and
operating earnings at various gold prices. This additional
information should be considered together with other data prepared
in accordance with US GAAP.
>>
SOURCE: Agnico-Eagle Mines Limited
David Smith, Director, Investor Relations, (416) 947-1212
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