(All dollar amounts expressed in U.S. dollars unless otherwise noted and
all units of measurement expressed in metric unless otherwise noted)
Stock Symbols: AEM (NYSE and TSX)
TORONTO, May 11 /PRNewswire-FirstCall/ - Agnico-Eagle Mines Limited today reported first quarter earnings of $37.2 million, or $0.35 per share. This compares to net earnings of $10.4 million, or $0.12 per share, in the first quarter of 2005. First quarter 2006 earnings included an after tax gain of $15.4 million, or $0.15 per share, from the sale of certain marketable securities. The quarterly earnings were negatively affected by a non-cash foreign exchange translation loss of $1.9 million, or $0.02 per share.
The Company's financial position remains strong with cash and cash equivalents of $154.9 million at March 31, 2006, up from $121.0 million at year end 2005.
Payable gold production in the first quarter was 64,235 ounces at record low total cash cost per ounce(1) of minus $241. This compares with payable gold production of 55,310 ounces at total cash costs of $67 per ounce in the first quarter of 2005. The 16% increase in year over year gold production was mainly due improved gold recoveries and a 12% increase in gold grades, as production from the lower levels at LaRonde increased. Highlights for the quarter include:
- Record low total cash costs at LaRonde of minus $241 per ounce of
gold.
- Record quarterly earnings of $37.2 million, or $0.35 per share.
- Redemption of the convertible debentures for common shares,
eliminating all the Company's long term debt.
- Closing the acquisition of 100% of the Pinos Altos project in
northern Mexico.
- Addition of Agnico-Eagle to the S&P/TSX 60 Index and 60 Capped Index
in May.
"Consistently high levels of production from Agnico-Eagle's low cost LaRonde operation, combined with the robust pricing environment for all metals, continues to provide us with strong cash flows", said Sean Boyd, Vice- Chairman and Chief Executive Officer. "We believe that our shareholders will continue to benefit from strong cash flows and continued growth in gold reserves, leading us towards our goal of tripling gold production by 2009", added Mr. Boyd.
Shareholders' Meeting Tomorrow
The Company will host its Annual and Special Meeting of Shareholders on Friday, May 12, 2006 at 10:30 a.m. (E.S.T.) at the King Edward Hotel, 37 King St. E., in Toronto, Canada. Management will review the Company's financial results for the first quarter 2006 and provide an update of its exploration and development activities.
Via Telephone:
To listen on the telephone, please dial (416) 644-3422 or 1 (800) 814-4862 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 21184235 followed by the number sign. It will be available from Friday, May 12, 2006 at 1:00 pm until Friday, May 19, 2006 at 11:59pm.
Via Webcast:
Additionally, a live audio webcast of the call will be available on the Company's website at http://www.agnico-eagle.com. The webcast along with presentation slides will be archived for 180 days on the website.
LaRonde Mine - Reliable Performance Leads To Further Records
LaRonde processed an average of 7,350 tonnes of ore per day in the first quarter, compared with an average of 7,300 tonnes per day in the corresponding period of 2005. LaRonde has now been operating at an average of approximately 7,300 tonnes per day for ten consecutive quarters, demonstrating the reliability of this world class mine.
Minesite costs per tonne(2) were C$57 in the first quarter. These costs are within the expected range for the year of C$56 per tonne to C$58 per tonne, once again demonstrating the reliability of the mine. These costs are higher than the C$52 per tonne realized in the first quarter of 2005 due to higher costs for fuel, reagents and steel, as has been seen throughout the mining industry.
On a per ounce basis, net of byproduct credits, LaRonde's total cash costs remained very low by industry standards, at a company record of minus $241 per ounce in the first quarter. This compares favourably with the results of the first quarter of 2005 when total cash costs per ounce were $67. The main reason for the decrease in total cash costs per ounce is the significantly higher byproduct metal prices realized in 2006 and the increase in gold production during the quarter.
The payable quarterly gold production of 64,235 ounces was 16% higher than in the corresponding period in 2005. The main reason for the increase was a recovered gold grade of 3.3 grams per tonne, compared to 2.9 grams per tonne in the first quarter of 2005 as an increasing proportion of ore production was derived from the lower levels of the mine where gold grades are higher. Gold recovery in the mill also increased from 90.6% to 91.9%, further contributing to the increased gold output.
2006 Total Cost Per Ounce Guidance Revised
Considering significantly higher metals prices than presented in our previous guidance in December 2005, total cash costs for the full year 2006 are now expected to be significantly below nil, as demonstrated in the first quarter. Production estimates of 250,000 ounces of gold, and byproduct production of 5.7 million ounces of silver, approximately 73,000 tonnes of zinc, and over 9,000 tonnes of copper remains intact. Minesite costs per tonne are expected to continue to be in the range of C$56 to C$58.
Cash Position Continues to Grow in 2006 - No Long Term Debt
Cash and cash equivalents grew to $154.9 million at March 31, 2006 from the 2005 year end balance of $121.0 million.
During the quarter Agnico-Eagle added $19.7 million of cash provided by operating activities (after changes in non-cash working capital balances), $35.3 million from flow through common share financings, $32.3 million from the sale of certain marketable securities and $10.1 million from the exercise of common stock options. Major expenditures in the quarter included $42.5 million (including $10 million of refundable value added tax) in the purchase of 100% of the Pinos Altos project in Mexico and $21.0 million in project and sustaining capital expenditures.
Additionally, the Company maintains substantially undrawn bank lines of $150 million adding further financial flexibility. The Company now has approximately 111 million shares outstanding and no long term debt, following the complete redemption of the convertible debentures in February.
With a series of strong cash flows over recent quarters, no long term debt, and excellent financial flexibility, Agnico-Eagle is in a strong position to fund and build its pipeline of gold projects.
Forward-Looking Statements
The information in this press release has been prepared as at May 11, 2006. 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 and goals of future gold and byproduct mineral production and sales; 2006 cost guidance, including estimates of future production costs, total cash costs per ounce, minesite costs and other expenses; estimates of future capital expenditures and other cash needs; 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 as at the date this press release was prepared 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, 2005, as well as the Company's other filings with the Canadian Securities Administrators 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.
Certain of the foregoing statements, primarily related to projects, are based on preliminary views of the Company with respect to, among other things, grade, tonnage, processing, mining methods, capital costs, and location of surface infrastructure and actual results and final decisions may be quite different from those currently anticipated.
About Agnico-Eagle
Agnico-Eagle is a long established Canadian gold producer with operations located in Quebec and exploration and development activities in Canada, Finland, Mexico and the United States. Agnico-Eagle's LaRonde Mine 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 26 consecutive years. -------------------------------
(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 tonne is a non-GAAP measure. For a reconciliation
of this measure to the financial statements, see Note 1 to the
financial statements
AGNICO-EAGLE MINES LIMITED
SUMMARIZED QUARTERLY DATA
(thousands of United States Dollars - Unaudited)
Three months ended
------------------
March 31,
---------
2006 2005
---- ----
LaRonde Division
Revenues from mining operations.............. $ 90,581 $ 61,766
Production costs............................. 33,187 30,973
------------ ------------
Gross profit (exclusive of amortization
shown below)................................ $ 57,394 $ 30,793
Amortization................................. 5,997 7,211
------------ ------------
Gross profit................................. $ 51,397 $ 23,582
------------ ------------
------------ ------------
Net income for the period.................... $ 37,190 $ 10,449
Net income per share (basic)................. $ 0.35 $ 0.12
Net income per share (diluted)............... $ 0.34 $ 0.12
Cash provided by operating activities........ $ 19,711 $ 28,105
Cash used in investing activities............ $ (31,206) $ (15,904)
Cash provided by (used in) financing
activities.................................. $ 45,456 $ (1,095)
Weighted average number of common shares
outstanding - basic (in thousands).......... 106,127 86,131
Tonnes of ore milled......................... 661,528 656,635
Head grades:
Gold (grams per tonne)..................... 3.30 2.94
Silver (grams per tonne)................... 77.00 73.00
Zinc....................................... 3.79% 4.14%
Copper..................................... 0.41% 0.39%
Recovery rates:
Gold....................................... 91.91% 90.56%
Silver..................................... 86.50% 83.60%
Zinc....................................... 86.70% 81.70%
Copper..................................... 83.80% 77.10%
Payable production:
Gold (ounces).............................. 64,235 55,310
Silver (ounces in thousands)............... 1,227 1,097
Zinc (tonnes).............................. 18,462 18,661
Copper (tonnes)............................ 2,053 1,810
Payable metal sold:
Gold (ounces).............................. 69,677 70,137
Silver (ounces in thousands)............... 1,190 1,398
Zinc (tonnes).............................. 18,179 6,792
Copper (tonnes)............................ 2,038 1,831
Realized prices (US$):
Gold (per ounce)........................... $ 611 $ 430
Silver (per ounce)......................... $ 10.83 $ 6.85
Zinc (per tonne)........................... $ 2,640 $ 1,323
Copper (per tonne)......................... $ 5,812 $ 3,241
Total cash costs (per ounce) (US$):
Production costs............................. $ 517 $ 560
Less: Net byproduct revenues................. (748) (455)
Inventory adjustments...................... (8) (36)
Accretion expense and other................ (2) (2)
------------ ------------
Total cash costs (per ounce)(1).............. $ (241) $ 67
------------ ------------
------------ ------------
Minesite costs per tonne milled (C$)......... $ 57 $ 52
------------ ------------
------------ ------------
(1) Total cash costs (per ounce) and Minesite costs per tonne milled are
non-GAAP measures. For a reconciliation of these measures to the
financial statements, see note 1 to the financial statements
AGNICO-EAGLE MINES LIMITED
SUMMARY CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars - Unaudited)
As at As at
March 31, December 31,
--------- ------------
2006 2005
---- ----
ASSETS
Current
Cash and cash equivalents................... $ 154,909 $ 120,982
Metals awaiting settlement.................. 65,212 56,304
Income taxes recoverable.................... 4,434 7,723
Other taxes recoverable..................... 12,558 6,794
Ore stockpiles............................ 5,077 12,831
Concentrates.............................. 2,328 920
Supplies.................................. 9,768 10,092
Other current assets........................ 10,621 27,689
------------ ------------
Total current assets.......................... 264,907 243,335
Other assets.................................. 3,891 7,995
Future income and mining tax assets........... 54,303 63,543
Property, plant and mine development.......... 743,083 661,196
------------ ------------
$ 1,066,184 $ 976,069
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Short-term debt............................. $ 3,264 $ -
Accounts payable and accrued liabilities.... 24,584 37,793
Dividends payable........................... 643 3,809
Interest payable............................ - 2,243
------------ ------------
Total current liabilities..................... 28,491 43,845
------------ ------------
Fair value of derivative financial
instruments.................................. 12,127 9,699
------------ ------------
Long-term debt................................ - 131,056
------------ ------------
Reclamation provision and other liabilities... 16,369 16,220
------------ ------------
Future income and mining tax liabilities...... 123,459 120,182
------------ ------------
Shareholders' equity
Common shares
Authorized - unlimited
Issued - 111,424,876 (2005 - 97,836,954)..... 973,116 764,659
Stock options.................................. 4,243 2,869
Warrants....................................... 15,732 15,732
Contributed surplus............................ 7,181 7,181
Deficit........................................ (107,344) (138,697)
Accumulated other comprehensive income (loss).. (7,190) 3,323
------------ ------------
Total shareholders' equity..................... 885,738 655,067
------------ ------------
$ 1,066,184 $ 976,069
------------ ------------
------------ ------------
AGNICO-EAGLE MINES LIMITED
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(thousands of United States dollars except per share amounts - Unaudited)
Three months ended
------------------
March 31,
---------
2006 2005
---- ----
REVENUES
Revenues from mining operations............... $ 90,581 $ 61,766
Interest and sundry income.................... 23,054 1,229
------------ ------------
113,635 62,995
COSTS AND EXPENSES
Production.................................... 33,187 30,973
Loss on derivative financial instruments...... 7,431 4,020
Exploration and corporate development......... 5,517 2,763
Equity loss in junior exploration companies... 84 1,134
Amortization.................................. 5,997 7,211
General and administrative.................... 5,544 3,749
Provincial capital tax........................ 553 599
Interest...................................... 1,357 2,552
Foreign currency loss (gain).................. 1,868 (384)
------------ ------------
Income before income, mining and federal
capital taxes................................ 52,097 10,378
Federal capital tax........................... 204 248
Income and mining tax expense (recovery)...... 14,703 (319)
Net income for the period..................... $ 37,190 $ 10,449
------------ ------------
------------ ------------
Net income per share - basic.................. $ 0.35 $ 0.12
------------ ------------
------------ ------------
Net income per share - diluted................ $ 0.34 $ 0.12
------------ ------------
------------ ------------
Weighted average number of shares (in thousands)
Basic....................................... 106,127 86,131
Diluted..................................... 108,598 86,545
AGNICO-EAGLE MINES LIMITED
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
(thousands of United States Dollars - Unaudited)
Three months ended
------------------
March 31,
---------
2006 2005
---- ----
Operating activities
Net income for the period..................... $ 37,190 $ 10,449
Add (deduct) items not affecting cash:
Amortization................................ 5,997 7,211
Future income and mining taxes.............. 11,702 (319)
Unrealized loss on derivative contracts..... 6,683 3,439
Gain on sale of securities.................. (21,574) -
Amortization of deferred costs and other.... 1,854 2,681
------------ ------------
41,852 23,461
Changes in non-cash working capital balances
Metals awaiting settlement.................. (8,908) 1,753
Income taxes recoverable.................... 3,289 2,951
Other taxes recoverable..................... 3,986 74
Inventories................................. (2,151) 1,703
Prepaid expenses and other.................. (2,905) 263
Accounts payable and accrued liabilities.... (13,209) (483)
Interest payable............................ (2,243) (1,617)
------------ ------------
Cash provided by operating activities......... 19,711 28,105
------------ ------------
Investing activities
Additions to mining properties................ (20,975) (15,182)
Acquisitions, investments and other........... (10,231) (722)
------------ ------------
Cash used in investing activities............. (31,206) (15,904)
------------ ------------
Financing activities
Dividends paid................................ (3,166) (2,542)
Short-term debt............................... 3,264 -
Common shares issued.......................... 45,358 1,447
------------ ------------
Cash provided by (used in) financing
activities................................... 45,456 (1,095)
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents............................. (34) (6)
------------ ------------
Net increase (decrease) in cash and cash
equivalents during the period................ 33,927 11,100
Cash and cash equivalents,
beginning of period.......................... 120,982 106,014
------------ ------------
Cash and cash equivalents, end of period...... $ 154,909 $ 117,114
------------ ------------
------------ ------------
Other operating cash flow information:
Interest paid during the period............... $ 4,681 $ 3,824
------------ ------------
------------ ------------
Income, mining and capital taxes paid
(recovered) during the period................ $ 484 $ (2,527)
------------ ------------
------------ ------------
Note 1:
Reconciliation of Total Cash Costs Per Ounce and Total Minesite Costs
Per Tonne
(thousands of dollars, except where noted)
------------------------------------------ 3 Months 3 months
ended ended
March 31, March 31,
2006 2005
------------ ------------
Cost of production per Consolidated
Statements of Income......................... $ 33,187 $ 30,973
Adjustments:
Byproduct revenues............................ (48,039) (25,261)
Inventory adjustment(i)....................... (504) (1,894)
Non-cash reclamation provision................ (105) (107)
------------ ------------
Cash operating costs.......................... $ (15,461) $ 3,711
Gold production (ounces)...................... 64,235 55,310
------------ ------------
Total cash costs (per ounce)(iii)............. $ (241) $ 67
------------ ------------
------------ ------------
(thousands of dollars, except where noted)
------------------------------------------ 3 Months 3 months
ended ended
March 31, March 31,
2006 2005
------------ ------------
Cost of production per Consolidated
Statements of Income......................... $ 33,187 $ 30,973
Adjustments:
Inventory adjustment(ii)...................... 110 (3,220)
Non-cash reclamation provision................ (105) (107)
------------ ------------
Minesite operating costs (US$)................ $ 33,192 $ 27,646
------------ ------------
Minesite operating costs (C$)................. $ 38,005 $ 33,918
Tonnes milled (000's tonnes).................. 662 657
------------ ------------
Minesite costs per tonne (C$)(iv)............. $ 57 $ 52
------------ ------------
------------ ------------
---------------------------------
Notes:
(i) Under the Company's revenue recognition policy, revenue is
recognized on concentrates when legal title passes. Since total
cash 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) Inventory adjustments for the minesite costs per tonne calculation
reflect only costs associated with unsold concentrates as minesite
costs per tonne are calculated on a production basis.
(iii) 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
above, 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 tonne 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.
(iv) Minesite cost per tonne 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 above, 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
tonnes 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 tonne 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 tonne mined, in order to be economically viable the
estimated revenue on a per tonne basis must be in excess of the
minesite cost per tonne. Management is aware that this per tonne
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.
SOURCE Agnico-Eagle Mines Limited
-0- 05/11/2006
/CONTACT: David Smith, Director, Investor Relations, (416) 947-1212/
(AEM. AEM)
CO: Agnico-Eagle Mines Limited
ST: Ontario
IN: MNG
SU: ERN CCA
-30-
JW
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