Stock Symbols: AEM (NYSE)
AGE (TSX)
(All amounts expressed in U.S. dollars unless otherwise noted)
TORONTO, Oct. 26 /PRNewswire-FirstCall/ - Agnico-Eagle Mines Limited
today reports third quarter earnings of $2.1 million, or $0.02 per share. This
compares to net earnings of $10.6 million, or $0.12 per share, in the third
quarter of 2004. Cash flow provided by operating activities was $11.2 million
in the quarter, compared to $16.7 million in the prior year's third quarter.
The financial position remains strong with cash and cash equivalents totaling
$124 million.
For the first nine months of 2005, earnings totaled $25.3 million, or
$0.29 per share, versus $32.3 million, or $0.38 per share, in the
corresponding period of 2004. For the first nine months of 2005, cash flow
from operating activities totaled $58.4 million versus $37.8 million in the
corresponding period of 2004.
Third quarter earnings in 2005 were negatively affected by mark-to-market
losses on byproduct metal derivative contracts of $5.1 million, or $0.06 per
share, a foreign exchange loss on translation of the asset retirement
obligations of $0.8 million, or $0.01 per share, and a deferred tax expense of
$1.1 million, or $0.01 per share.
Payable gold production in the third quarter was 61,704 ounces at total
cash costs per ounce of $33(1). This compares with 67,237 ounces at total cash
costs of $77 per ounce in the third quarter of 2004. Based on the operating
results from the first nine months, gold production for the full year 2005 is
expected to be approximately 250,000 ounces at total cash costs below $100 per
ounce.
Highlights for the quarter include:
- The LaRonde mine's solid operating performance continues (7,908 tons
of ore per day processed in the quarter), with very low total cash
costs, by industry standards, of $33 per ounce of gold.
- Agnico-Eagle's $130 million offer for Riddarhyttan Resources AB was
successful with 82.6% now tendered to the offer, with total ownership
now set to exceed 96.6%. The offer period has been extended one final
time to November 4, 2005. The compulsory acquisition of any remaining
untendered shares is expected to be initiated immediately thereafter.
- The drilling campaign on the Pinos Altos project in Mexico continues
to return high grade gold intercepts including 0.47 ounces per ton
gold and 8.88 ounces per ton silver over 46 feet in Cerro Colorado
zone. A decision on whether to exercise our option to purchase the
property is expected by mid-February, 2006.
- The Goldex mine is now under construction and proceeding well. Gold
production at Goldex is expected to begin in 2008, averaging 170,000
ounces per year, over a ten year mine life, at total cash costs of
approximately $200 per ounce.
- Shaft sinking at Lapa is progressing and now exceeds 1,600 feet in
depth. Following additional underground drilling (to begin by the end
of 2005) and sampling, a bankable feasibility study is expected to be
completed in the fourth quarter of 2006.
"Agnico-Eagle's low cost LaRonde operation continues to generate strong
cash flow to support our growth plans", said Sean Boyd, President and Chief
Executive Officer. "Our successful acquisition of Riddarhyttan and its
Suurikuusikko gold property in Finland is an important step in our plans to
dramatically increase our gold production through the development of several
new gold mines over the next three years", added Mr. Boyd.
Conference Call Tomorrow
The Company's senior management will host the Third Quarter Results
Conference Call on Thursday October 27, 2005 at 11:30 a.m. (E.D.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 21104891 followed by the number sign. It
will be available from Thursday, October 27, 2005 at 2:00 pm until Friday,
November 4, 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 April 27, 2006.
LaRonde Mine - Reliable Performance Continues
LaRonde processed an average of 7,908 tons of ore per day in the third
quarter, continuing the strong operating performance seen during the first
half of 2005 (8,103 tpd), and in 2004 (8,156 tpd). While the design capacity
of the plant is 7,000 tons per day, it has now been operating at approximately
8,000 tons per day for nearly two years, giving confidence that this
performance can be sustained.
Record production, to date, was achieved from the lower levels of the
mine in the third quarter of 2005, accounting for approximately 70% of total
production. This is very encouraging considering the previously reported
issues faced in the first and third quarters of 2005, which related to
difficult ground conditions encountered in the extraction of the 194 Sill
Pillar.
Minesite costs per ton were C$52(2) in the third quarter. Similar to the
second quarter, these costs were slightly higher than expected due to higher
costs for fuel, reagents, and increased equipment maintenance and ground
support expense. For the first nine months of 2005, minesite costs per ton
were C$50, in the expected range for the year of C$48 to C$50 per ton. In the
first nine months of 2004, minesite costs per ton were C$48. The higher amount
in 2005 is largely due to underground rehabilitation costs incurred in the
first quarter, and other higher costs, as set out above.
On a per ounce basis, net of byproduct credits, LaRonde's total cash
costs remained very low, by industry standards, at $33 per ounce in the third
quarter. This compares with the results of the third quarter of 2004 when
total cash costs per ounce were $77. The main reason for the decrease in total
cash costs is the significantly higher byproduct prices realized in 2005.
Year to date total cash costs were $66 per ounce versus $77 per ounce in
the first nine months of 2004. Both of these numbers compare favourably to the
realized price of gold which was $432 per ounce and $393 per ounce for the
respective periods.
In spite of the high production tonnage being achieved by the mine, the
payable quarterly gold production of 61,704 ounces was 8% lower than the
corresponding period in 2004. Contributing to this reduction was a decision to
continue to maximize the value of the LaRonde orebody, even if it resulted in
lower gold production. Due to the relatively high zinc price prevailing over
the past several quarters, numerous stopes have been extended in length, and
thereby increasing tonnage, to recover the zinc rich zone which is typically
found in the immediate hanging wall. This has the effect of reducing the gold
head grade of the ore sent to the mill, and displacing some gold/copper ore.
However, this results in improved earnings and cash flows.
Also contributing to this gold production decrease were two lost days of
production due to smoke from a nearby forest fire. Additionally, higher lead
content, associated with higher zinc grades, continues to have a negative
impact on gold and copper recoveries in the mill.
The Company is targeting gold production of approximately 250,000 ounces
in 2005 at total cash costs below $100 per ounce. Byproduct production is
expected to be over 5 million ounces of silver, approximately 170 million
pounds of zinc, and nearly 17 million pounds of copper.
------------------
(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
Financial Position - Continues to Strengthen
Cash and cash equivalents grew to nearly $124 million at September 30,
2005, due to strong operating cash flows. Additionally, the Company maintains
substantially undrawn bank lines of $100 million. Agnico-Eagle has received a
commitment from its banking syndicate to increase these facilities to
$150 million, and to extend the term to December, 2009. These amendments
remain subject to definitive documentation.
As a result of the Board approval for the construction of the Goldex
mine, the Company's 2005 capital expenditures are expected to be slightly more
than $60 million, which includes an additional $19 million for Goldex.
Agnico-Eagle expects to fund Goldex principally from internal cash flows and
other available cash resources.
As a result of the Riddarhyttan transaction, Agnico-Eagle will issue
approximately 10.3 million common shares from treasury. Additionally, if
Agnico-Eagle elects to purchase the Pinos Altos property, a payment of
$39 million in cash and 1.8 million shares of Agnico-Eagle, issued from
treasury, will be made. Considering both of these transactions, the Company
would still have fewer than 100 million shares outstanding, less than many of
its peers. This is expected to contribute to the ability of the Company to
continue to generate per share value going forward.
Pinos Altos - More High Grade Drill Results
As detailed in the March 16, 2005 press release, an exploration and
purchase option agreement was finalized with Industrias Penoles S.A. de C.V.
("Penoles") for 100% of the Pinos Altos property in Mexico.
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 approximately 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 permitting for a potential mining operation.
Six surface rigs are currently drilling on site, with another rig
drilling underground. Agnico-Eagle's spending to date totals $2.4 million,
with $0.4 million remaining to fulfill the terms of the option agreement.
However, following a mutually agreed upon extension of two months, a
decision on whether the Company will exercise its option, for $39 million in
cash and 1.8 million shares of Agnico-Eagle, is expected by mid-February,
2006. Also, Agnico-Eagle intends to spend an additional $1.3 million on
exploration during this extension period, mainly on deep drilling.
During the third quarter of 2005, the diamond drilling program has
targeted three sectors:
- Open pit resource exploration mainly on the Oberon de Weber and Cerro
Colorado zones (39 holes including 1 in progress, for a total length
of 14,132 feet);
- Resource conversion at Santo Nino, consisting of 3 surface holes (in
progress) for 2,306 feet, and 28 short underground diamond drill holes
(including one in progress) for 2,949 feet within the zone along the
1925 level; and
- Deep resource exploration (seven holes, including one in progress for
a total length of 11,457 feet).
The best results in the period came from the Oberon de Weber open pit
drilling, the deep exploration and mineral resource confirmation at Santo
Nino, and at depth near Cerro Colorado. A map showing the approximate location
of the drill holes may be viewed on-line at
http://www.agnico-eagle.com/url/05-10-26/pinos_altos.pdf.
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Gold Silver
(oz/ton, (oz/ton,
True cut cut
Thickness to 1.75 to 23.33
Drill Hole Number (ft) From (ft) To (ft) oz/ton) oz/ton)
-------------------------------------------------------------------------
Santo Nino Zone
-------------------------------------------------------------------------
PA-05-14(1) 49.2 2,198.5 2,262.8 0.12 2.88
-------------------------------------------------------------------------
PA-05-17(1) 34.4 240.5 285.4 0.13 1.59
-------------------------------------------------------------------------
PA-05-21 13.5 137.8 160.8 0.14 2.80
-------------------------------------------------------------------------
Santo Nino Zone
Underground
-------------------------------------------------------------------------
SN1925-12 44.6 15.7 60.4 0.07 3.16
-------------------------------------------------------------------------
SN1925-29 14.8 6.6 21.3 0.20 3.82
-------------------------------------------------------------------------
SN1925-39 16.1 31.5 47.6 0.09 2.62
-------------------------------------------------------------------------
SN1925-55 25.6 154.2 195.5 0.15 4.74
-------------------------------------------------------------------------
Oberon de Weber
Zone
-------------------------------------------------------------------------
PA-05-29(2) 15.7 58.1 77.1 0.05 6.04
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and 32.8 98.4 137.8 0.09 2.53
-------------------------------------------------------------------------
PA-05-41 23.0 65.6 90.2 0.33 4.97
-------------------------------------------------------------------------
PA-05-42 42.7 356.0 401.9 0.08 3.44
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Cerro Colorado
Zone
-------------------------------------------------------------------------
PA-05-39 45.9 1,751.9 1,807.72 0.03 1.39
-------------------------------------------------------------------------
PA-05-52 45.9 1,673.2 1,727.34 0.47 8.88
-------------------------------------------------------------------------
Notes: 1. Previously released drill hole with new silver grade results.
2. Void due to mine excavation in interval from 77.1 ft to 98.4 ft.
Hole PA-05-52, the deepest hole to date on the Cerro Colorado zone at
over 1,200 feet below surface, returned very high grades of 0.47 ounces per
ton gold and almost 9 ounces per ton of silver, over 46 feet true horizontal
width. This hole reinforces the fact that some very high grade mineralization
is present outside of the current mineral resource.
Hole PA-05-39 tested the Cerro Colorado zone at approximately 1,500 feet
in depth, and approximately 1,000 feet west of the Santo Nino Zone. Although
the assay results were low, a wide zone of 46 feet, containing visible gold,
was defined at a grade of 0.03 ounces per ton gold with silver assays of
1.39 ounces per ton. This suggests good potential for finding economic
mineralization in the region between Cerro Colorado and Santo Nino. Also, the
latest two drilling results confirm the depth potential of the Cerro Colorado
zone, which remains open at depth and to the east.
Hole PA-05-14, the deepest exploration drill hole to date on the Santo
Nino zone (2,300 feet below surface), showed mineralization at over 300 feet
below the current limits of the Pinos Altos mineral resource. Additionally,
holes PA-05-17 and PA-05-21 extended the strike length of the near-surface
zone to the east and to the west.
Several holes were drilled from underground workings almost 1,100 feet
below surface. Results from these underground holes (SN1925-12, -29, -39 and
-55), spaced roughly 130 feet apart, confirm a potentially economic zone at
depth. The implied strike length is over 650 feet, with thicknesses that vary
between 15 feet and 45 feet.
The three most significant holes in the Oberon de Weber zone are holes
PA-05-29, PA-05-41 and PA-05-42. These holes confirm surface mineralization,
approximately 3,000 feet to the east of the Santo Nino Zone, in an area
adjacent to existing workings (mined in the early 1900s).
The Cerro Colorado zone drill results, and the good intersections at
depth in the Santo Nino zone, have contributed to the decision to extend the
exploration program for two months. A scoping study is in progress, and is
expected to be completed by the end of 2005. A revised resource estimate is
expected to be presented at this time. Both will be considered in the decision
on whether, or not, to exercise the option.
Goldex Mine - Construction Advances
Following a favourable review from an independent third party, a positive
production decision was made, in July, 2005, for the 100%-owned Goldex
project, 35 miles east of LaRonde. The Goldex reserves are approximately
22.1 million tons with a grade of 0.07 ounces per ton, or 1.6 million ounces
of gold.
Contracts for surface and underground work have been awarded and
significant surface site preparation work has already been completed.
Underground work includes lateral and vertical development, and upgrading the
ventilation system. Underground work, accessed through existing
infrastructure, is ongoing. The sinking of the production shaft is expected to
commence in the third quarter of 2006.
The Goldex 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.
Lapa Project - 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. Shaft sinking commenced in March, 2005, with the
current depth at over 1,600 feet. A strong advance of approximately 10 feet
per day was achieved in September. The 16-foot diameter, concrete-lined, shaft
is expected to be completed in mid-2006.
Underground diamond drilling, from existing infrastructure, 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 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 a ten-year mine life with
start-up in late 2008. Steady-state production levels of approximately 125,000
ounces of gold per annum, at total cash costs below $200 per ounce, are
expected.
Suurikuusikko Project - Acquisition of Riddarhyttan Substantially
Completed
On May 12, 2005, Agnico-Eagle announced a bid for Riddarhyttan, a public
company listed on the Swedish stock exchange, valuing the shares not already
owned by Agnico-Eagle at nearly $130 million.
Currently, 82.6% of the Riddarhyttan shares have been tendered to
Agnico-Eagle's offer. Including the 14% previously owned by the Company,
Agnico-Eagle will own, on settlement, 96.6% of the outstanding shares.
Agnico-Eagle is now extending the tender period one final time to
November 4, 2005 to acquire as many shares under the offer as reasonably
possible. Following completion of the offer, Agnico-Eagle intends to initiate
the compulsory acquisition process, under Swedish law, to purchase the
remaining shares in Riddarhyttan. In connection therewith, the shares of
Riddarhyttan will be de-listed from the Stockholm Stock Exchange.
As at July 19, 2005, Riddarhyttan has reported a measured gold resource
of 2.74 million tons grading 0.18 ounces per ton (0.50 million ounces), an
indicated resource of 10.24 million tons grading 0.15 ounces per ton
(1.53 million ounces) and an inferred resource of 13.72 million tons grading
0.12 ounces per ton (1.70 million ounces), using a cut-off of 0.06 ounces per
ton, on the Suurikuusikko deposit. No new resource estimate is available at
this time.
Currently, pilot plant testing is proceeding on pressure oxidation as the
selected process. The reserves and resources are being recalculated to be in
compliance with National Instrument 43-101. The current drill program is
focused on in-fill drilling and resource conversion, as there has been a
significant increase in the resource category over the past year. A bankable
feasibility study is expected to be completed in the second quarter of 2006.
The study will be based on an open pit mining scenario with underground mining
via ramp access and a one million metric ton per annum surface processing
plant.
Five drills remain active on the property. Agnico-Eagle believes that
there is considerable potential along strike, as the known strike length of
mineralization is approximately 15 kilometres, while only two kilometers have
been drilled to date. Further information is available on the Riddarhyttan
website.
LaRonde II Project - Feasibility Study Nearing Completion
A bankable feasibility study on LaRonde II is anticipated to be completed
by the end of 2005, with an independent review expected to be completed in the
first quarter of 2006. The internal shaft, or "winze" option has been selected
as the most cost-efficient. The benefits of the winze include; maximizing the
use of existing infrastructure, and a shorter lead time, which will enable
LaRonde II's production to overlap with LaRonde's production for several
years. This should enable the mill to continue to operate at capacity for a
longer period. Additionally, the winze provides lower technical risk, and
better capital distribution over time. The study envisages a production rate
of 5,000 tons to 6,000 tons per day, with potential gold production of more
than 300,000 ounces per year.
Forward Looking Statements
The information in this press release has been prepared as at October 26,
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", "intend" 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, Lapa, and LaRonde II; the anticipated timing of
events with respect to the Company's exploration and decision in connection
with its Pinos Altos option; the completion of 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, including challenging ground conditions at the
LaRonde mine; 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 Securities Administrators 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 Geopointcom.
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 may now be 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.
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.
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.
Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Nine months ended
Dollars except where noted, September 30, September 30,
US GAAP basis) 2005 2004 2005 2004
-------------------------------------------------------------------------
Income and cash flow
LaRonde Division
Revenues from mining
operations $ 58,608 $ 47,986 $ 169,946 $ 142,254
Production costs 32,548 26,172 93,789 75,993
-------------------------------------------------------------------------
Gross profit (exclusive of
amortization shown below) $ 26,060 $ 21,814 $ 76,157 $ 66,261
Amortization 6,276 5,861 19,470 17,302
-------------------------------------------------------------------------
Gross profit $ 19,784 $ 15,953 $ 56,687 $ 48,959
-------------------------------------------------------------------------
Net income for period $ 2,057 $ 10,556 $ 25,299 $ 32,270
Net income per share (basic
and fully diluted) $ 0.02 $ 0.12 $ 0.29 $ 0.38
Cash flow provided by
operating activities $ 11,151 $ 16,683 $ 58,358 $ 37,803
Cash flow used in investing
activities $ (17,444) $ (14,184) $ (49,683) $ (47,058)
Cash flow provided by
financing activities $ 9,431 $ 18,540 $ 9,256 $ 19,024
Weighted average number of
common shares
Outstanding - basic
(in thousands) 86,638 84,791 86,330 84,658
Tons of ore milled (000's) 727.6 741.5 2,194.3 2,184.4
Head grades:
Gold (oz. per ton) 0.09 0.10 0.09 0.10
Silver (oz. per ton) 2.47 2.70 2.28 2.49
Zinc 4.30% 4.53% 4.21% 4.04%
Copper 0.43% 0.54% 0.39% 0.54%
Recovery rates:
Gold 91.33% 92.09% 90.64% 91.87%
Silver 84.40% 88.10% 84.40% 86.60%
Zinc 83.90% 84.70% 82.70% 84.00%
Copper 73.80% 78.10% 75.10% 78.80%
Payable metal produced:
Gold (ounces) 61,704 67,237 178,785 202,658
Silver (ounces in thousands) 1,295 1,501 3,597 4,187
Zinc (pounds in thousands) 44,604 48,349 130,092 122,479
Copper (pounds in thousands) 4,235 5,814 11,929 16,729
Payable metal sold:
Gold (ounces) 64,852 67,052 195,539 202,473
Silver (ounces in thousands) 1,092 1,501 3,611 4,187
Zinc (pounds in thousands) 46,656 46,912 128,481 121,042
Copper (pounds in thousands) 4,637 5,859 14,411 16,774
Realized prices per unit of
production:
Gold (per ounce) $ 432 $ 409 $ 432 $ 393
Silver (per ounce) $ 7.04 $ 6.45 $ 6.94 $ 6.22
Zinc (per pound) $ 0.61 $ 0.44 $ 0.60 $ 0.47
Copper (per pound) $ 1.88 $ 1.29 $ 1.62 $ 1.26
Total cash costs (per
ounce)(x):
Production costs $ 527 $ 440 $ 525 $ 392
Less: Net byproduct revenues (467) (334) (433) (295)
Inventory adjustments (25) (24) (24) (18)
Accretion expense and
other (2) (5) (2) (2)
-------------------------------------------------------------------------
Total cash costs (per ounce) $ 33 $ 77 $ 66 $ 77
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Minesite costs per ton milled
(Canadian dollars) $ 52 $ 50 $ 50 $ 48
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(x) See Note 1: Reconciliation of Total Cash Costs Per Ounce and Total
Minesite Costs Per Ton
Consolidated Balance Sheet Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, September 30, December 31,
US GAAP basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 123,957 $ 106,014
Metals awaiting settlement 46,128 43,442
Income taxes recoverable 7,546 16,105
Inventories:
Ore stockpiles 11,177 9,036
Concentrates 2,862 9,065
Supplies 8,463 8,292
Other current assets 25,304 19,843
-------------------------------------------------------------------------
Total current assets 225,437 211,797
Fair value of derivative financial instruments 3,429 2,689
Other assets 24,027 25,234
Future income and mining tax assets 60,344 51,407
Mining properties 453,490 427,037
-------------------------------------------------------------------------
$ 766,727 $ 718,164
-------------------------------------------------------------------------
--------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 26,714 $ 28,667
Dividends payable 876 3,399
Interest payable 808 2,426
-------------------------------------------------------------------------
Total current liabilities 28,398 34,492
-------------------------------------------------------------------------
Fair value of derivative financial instruments 4,312 -
Long-term debt 142,025 141,495
Asset retirement obligation and other
liabilities 16,303 14,815
Future income and mining tax liabilities 64,618 57,136
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 86,864,554 (2004 - 86,072,779) 631,067 620,704
Stock options 2,504 465
Warrants 15,732 15,732
Contributed surplus 7,181 7,181
Deficit (147,457) (172,756)
Accumulated other comprehensive gain (loss) 2,044 (1,100)
-------------------------------------------------------------------------
Total shareholders' equity 511,071 470,226
-------------------------------------------------------------------------
$ 766,727 $ 718,164
-------------------------------------------------------------------------
--------------------------
Consolidated Statement of Income and
Comprehensive 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) 2005 2004 2005 2004
-------------------------------------------------------------------------
REVENUES
Revenues from mining
operations $ 58,608 $ 47,986 $ 169,946 $ 142,254
Interest and sundry (193) 59 754 1,415
-------------------------------------------------------------------------
58,415 48,045 170,700 143,669
COSTS AND EXPENSES
Production 32,548 26,172 93,789 75,993
Fair value of derivative
financial instruments 5,066 - 4,312 993
Exploration and corporate
development 4,296 581 10,423 1,323
Equity loss in junior
exploration companies 584 517 2,557 1,415
Amortization 6,276 5,861 19,470 17,302
General and administrative 2,522 1,895 8,683 5,706
Provincial capital tax 387 (191) 1,297 1,003
Interest 2,573 1,742 7,227 5,771
Foreign currency (gain) loss 763 38 (88) (341)
-------------------------------------------------------------------------
Income before income, mining
and federal capital taxes 3,400 11,430 23,030 34,504
Federal capital tax 246 253 728 794
Income and mining tax expense
(recovery) 1,097 621 (2,997) 1,440
-------------------------------------------------------------------------
Net income for the period $ 2,057 $ 10,556 $ 25,299 $ 32,270
-------------------------------------------------------------------------
--------------------------------------------
Net income per share - basic
and diluted $ 0.02 $ 0.12 $ 0.29 $ 0.38
-------------------------------------------------------------------------
--------------------------------------------
Weighted average number of
shares (in thousands)
Basic 86,638 84,791 86,330 84,658
Diluted 87,096 85,278 86,788 85,145
-------------------------------------------------------------------------
--------------------------------------------
Comprehensive income:
Net income for the period $ 2,057 $ 10,556 $ 25,299 $ 32,270
-------------------------------------------------------------------------
Other comprehensive income
(loss), net of tax:
Unrealized gain (loss) on
hedging activities 1,047 937 930 (125)
Dilution gain on issuance of
shares by subsidiary, net
of tax - 1,837 - 1,837
Unrealized gain (loss) on
available-for-sale
securities 3,239 555 4,216 (613)
Cumulative translation
adjustment on equity
investee 101 - (1,905) -
Adjustments for derivative
instruments maturing
during the period (1) 657 (35) (2,274)
Adjustments for realized
gains on available-for-sale
securities due to
dispositions in the period (62) - (62) (632)
-------------------------------------------------------------------------
Other comprehensive income
(loss) for the period 4,324 3,986 3,144 (1,807)
-------------------------------------------------------------------------
Comprehensive income for the
period $ 6,381 $ 14,542 $ 28,443 $ 30,463
-------------------------------------------------------------------------
--------------------------------------------
Consolidated Statement of Shareholders'
Equity Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Nine months ended
Dollars except where noted, September 30, September 30,
US GAAP basis - Unaudited) 2005 2004 2005 2004
-------------------------------------------------------------------------
Deficit
Balance, beginning of period $(149,514) $(196,341) $(172,756) $(218,055)
Net income for the period 2,057 10,556 25,299 32,270
-------------------------------------------------------------------------
Balance, end of period $(147,457) $(185,785) $(147,457) $(185,785)
-------------------------------------------------------------------------
--------------------------------------------
Accumulated other comprehensive
income (loss)
Balance, beginning of period $ (2,280) $ (11,233) $ (1,100) $ (5,440)
Other comprehensive income
(loss) for the period 4,324 3,986 3,144 (1,807)
-------------------------------------------------------------------------
Balance, end of period $ 2,044 $ (7,247) $ 2,044 $ (7,247)
-------------------------------------------------------------------------
--------------------------------------------
Consolidated Statement 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,
2005 2004 2005 2004
-------------------------------------------------------------------------
Operating activities
Net income for the period $ 2,057 $ 10,556 $ 25,299 $ 32,270
Add (deduct) items not
affecting cash from
operating activities:
Amortization 6,276 5,861 19,470 17,302
Future income and mining
taxes (recoveries) 1,235 1,739 (2,997) 4,228
Unrealized loss on
derivative contracts - (38) - 136
Amortization of deferred
costs and other 8,168 755 11,282 2,883
-------------------------------------------------------------------------
17,736 18,873 53,054 56,819
Change in non-cash working
capital balances
Metals awaiting settlement (10,669) 551 (2,686) (6,959)
Income taxes recoverable 44 (1,157) 8,559 (3,467)
Inventories 1,189 (2,366) 3,891 (3,437)
Prepaid expenses and other (1,058) (1,598) (889) 778
Accounts payable and accrued
liabilities 5,527 3,997 (1,953) (3,579)
Interest payable (1,618) (1,617) (1,618) (2,352)
-------------------------------------------------------------------------
Cash flows provided by
operating activities 11,151 16,683 58,358 37,803
-------------------------------------------------------------------------
Investing activities
Additions to mining properties (15,685) (11,780) (44,888) (33,777)
Investments and other (1,759) (2,404) (4,795) (13,281)
-------------------------------------------------------------------------
Cash flows used in
investing activities (17,444) (14,184) (49,683) (47,058)
-------------------------------------------------------------------------
Financing activities
Dividends paid - - (2,542) (2,480)
Common shares issued 9,431 18,540 11,798 21,504
-------------------------------------------------------------------------
Cash flows provided by
financing activities 9,431 18,540 9,256 19,024
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and cash
equivalents 21 46 12 208
Net increase in cash and
cash equivalents during
the period 3,159 21,085 17,943 9,977
Cash and cash equivalents,
beginning of period 120,798 99,257 106,014 110,365
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 123,957 $ 120,342 $ 123,957 $ 120,342
-------------------------------------------------------------------------
--------------------------------------------
Other operating cash flow
information:
Interest paid during the
period $ 4,326 $ 3,023 $ 8,311 $ 6,489
-------------------------------------------------------------------------
--------------------------------------------
Income, mining, and capital
taxes paid (recovered)
during the period $ 265 $ (271) $ (6,476) $ 2,259
-------------------------------------------------------------------------
--------------------------------------------
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 operating cost per ton to the financial
statements:
3 Months 3 Months 9 months 9 months
ended ended ended ended
(thousands of dollars, September September September September
except where noted) 30, 2005 30, 2004 30, 2005 30, 2004
-------------------------------------------------------------------------
Cost of production per
Consolidated Statements
of Income $ 32,548 $ 26,172 $ 93,789 $ 75,993
Adjustments:
Byproduct revenues (28,812) (21,639) (77,509) (59,815)
Inventory adjustment(i) (1,588) 795 (4,119) (103)
Non-cash reclamation
provision (108) (176) (320) (437)
----------- ---------- ---------- ----------
Cash operating costs $ 2,040 $ 5,152 $ 11,841 $ 15,638
Gold production (ounces) 61,704 67,237 178,785 202,658
----------- ---------- ---------- ----------
Total cash costs (per ounce) $ 33 $ 77 $ 66 $ 77
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
3 Months 3 Months 9 months 9 months
ended ended ended ended
(thousands of dollars, September September September September
except where noted) 30, 2005 30, 2004 30, 2005 30, 2004
-------------------------------------------------------------------------
Cost of production per
Consolidated Statements
of Income $ 32,548 $ 26,172 $ 93,789 $ 75,993
Adjustments:
Inventory adjustment (i) and
hedging adjustments(ii) (915) 2,127 (3,530) 3,338
Non-cash reclamation
provision (108) (176) (320) (437)
----------- ---------- ---------- ----------
Minesite operating costs
(US$) $ 31,525 $ 28,123 $ 89,939 $ 78,894
----------- ---------- ---------- ----------
Minesite operating costs (C$) $ 37,913 $ 36,834 $ 109,986 $ 104,824
Tons milled (000's tons) 728 742 2,194 2,184
----------- ---------- ---------- ----------
Minesite costs per ton (C$)
(iii) $ 52 $ 50 $ 50 $ 48
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
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
CONTACT: David Smith, Director, Investor Relations,
(416) 947-1212
http://www.prnewswire.com
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