Agnico-Eagle reports second quarter results; New gold mine to be
built at Goldex (All amounts expressed in U.S. dollars unless
otherwise noted. Prepared according to U.S. GAAP) TORONTO, July 27
/PRNewswire-FirstCall/ -- 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:
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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)
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PA-05-01A 33.5 1,550.2 1,589.5 0.11 0.11 4.20 4.20
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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. (equal sign) no significant result; a.p (equal
sign) 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
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 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 Geopointcom. 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. DATASOURCE: Agnico-Eagle Mines Limited
CONTACT: David Smith, Director, Investor Relations, (416) 947-1212
Copyright