Agnico-Eagle continues record operating and financial performance
in third quarter (All amounts expressed in U.S. dollars unless
otherwise noted) TORONTO, Oct. 27 /PRNewswire-FirstCall/ --
Agnico-Eagle Mines Limited today announced continued strong
financial and operating results as it reported third quarter
earnings of $10.6 million, or $0.12 per share compared to a net
loss of $11.9 million, or $(0.14) per share, in the third quarter
of 2003. Operating cash flow in the quarter was $18.9 million, or
$0.22 per share compared to a cash deficit of $6.6 million, or
$(0.08) per share, in the prior year's third quarter. For the year
to date, net earnings were $32.3 million, or $0.38 per share,
compared to a net loss of $21.9 million, or $(0.26) per share, in
the first nine months of 2003. Over the same periods, operating
cash flow increased to $56.8 million, or $0.67 per share, a
substantial improvement from the cash deficit of $6.5 million, or
$(0.08) per share in the first nine months of 2003. Highlights for
the quarter include: - Second consecutive quarter of ore production
exceeding 8,000 tons per day drives gold production up 31%,
compared to the prior year's third quarter, to over 67,000 ounces
and cash costs down 79% to match a previous record of $77 per
ounce. - Drill intercepts from LaRonde's Level 215 exploration
drift continue to confirm richer polymetallic zone at depth as it
crosses the former Bousquet boundary. - Underground program well
underway at Lapa with shaft collar completed as drilling continues
to trace deposit at depth. - Underground program at Goldex deposit
enters bulk sample extraction and drilling phase. "Steady-state
operations at the LaRonde mine have allowed the Company to deliver
record earnings and cash flows to date in 2004," said Sean Boyd,
President and Chief Executive Officer. "Solid progress continues to
be made on our regional growth opportunities as we advance our
three main projects to feasibility," added Mr. Boyd. Conference
Call Tomorrow The Company's senior management will host a
conference call on Thursday, October 28, 2004 at 11:00 a.m.
(E.S.T.) to discuss financial results and provide an update on the
Company's exploration and development activities. To participate in
the conference call, please dial (416) 640-4127. To ensure your
participation, please call approximately five minutes prior to the
scheduled start of the call. A live audio webcast of the call will
be available on the Company's website at
http://www.agnico-eagle.com/. The conference call will be replayed
from Thursday, October 28, 2004 1:00 p.m. (E.S.T.) to Thursday,
November 4, 2004 11:59 p.m. (E.S.T.). Please dial the toll-free
access number 877-289-8525, passcode 21031484 followed by the
number sign. LaRonde Generates Net Free Cash Flow for Company For
the second consecutive quarter, LaRonde processed over 8,000 tons
of ore per day as over 741,000 tons of ore was put through the
mill. The surface stockpile at LaRonde has increased to
approximately 84,000 tons of ore, sufficient for 10 days of
production. In addition, 60,000 tons of ore from the Bousquet
stockpile remain on surface representing another seven days of mill
production. As a result of the increased ore production, minesite
operating costs improved by 11% to C$50 per ton, when compared to
the third quarter of 2003. Although improved over the prior year,
minesite operating costs per ton in the third quarter were above
target due to non-recurring repairs to the coarse ore bin and
filter press in the mill and to the Level 122 underground pumping
station. Operating costs and gold production in the lower level
mining horizon were also negatively affected by unscheduled repairs
of the ventilation and hoisting systems and higher than budgeted
dilution, predominantly from backfill from adjacent primary stopes
mined in 2003. However, as byproduct production exceeded
expectations, net metals revenue per ton amounted to nearly C$88
resulting in a gross profit margin of approximately C$38 per ton
mined and processed in the third quarter. Production of all metals
in the third quarter improved when compared to the prior year's
third quarter with gold production up 31% to 67,237 ounces while
byproduct silver, zinc and copper production increased by 132%,
135% and 7%, respectively. As a result of the improvement in metals
production, improved prices for all byproduct metals and the
elimination of production royalties, total cash operating costs
decreased by 79% to $77 per ounce of gold produced in the third
quarter of 2004 as compared to the third quarter of 2003. These
strong operating results contributed to robust operating cash flows
and resulted in net free cash flow to the Company of $9.5 million,
before financing activities and expenditures on new projects and
investments. As a result of this performance, the Company's cash
balance improved to $120.3 million in the third quarter as
investments in new projects and marketable securities of $6.9
million was more than offset by the issuance of common equity of
$18.5 million. Cash Costs Expected to be Well Below Target for 2004
Taking into consideration year to date performance, the Company's
latest targets for all metals production as compared to the
previous forecast for production and operating costs follows:
-------------------------------------------------------------------------
New Forecast Previous Forecast
-------------------------------------------------------------------------
Ore processed (000's tons) 2,963 2,900 Daily throughput rate (tons)
8,096 7,945 Grades: Gold (oz./t) 0.11 0.11 Silver (oz./t) 2.36 2.43
Zinc (%) 3.95 3.87 Copper (%) 0.53 0.54 Payable metal production:
Gold (ozs.) 280,000 293,000 Silver (000's ozs.) 5,600 5,500 Zinc
(000's lbs.) 162,000 155,000 Copper (000's lbs.) 22,600 23,200
Minesite operating costs (C$/ton) 46-48 45-47 Total cash operating
costs ($/oz.) 75-80 70-80
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LaRonde's total cash operating costs are expected to remain
essentially on target in a range of $75 to $80 per ounce, as lower
gold production is offset by higher byproduct production and metal
prices. The target for total cash operating costs is based on a
balance of year silver price of $5.75 per ounce, zinc price of
$0.45 per pound, copper price of $1.20 per pound and C$/US$
exchange rate of 1.30. Given that the year is three quarters
complete, the sensitivity to changes in metal prices and exchange
rates is not expected to be material. Please refer to the Summary
Management Discussion and Analysis later in this press release for
a discussion of the financial results. Deep Drilling at LaRonde
Points to Richer Polymetallic Zone Six drills were in operation
underground at LaRonde in the third quarter located in the
following target areas: - Three drills on the LaRonde II
exploration program below Level 215. - Three drills on
definition/delineation drilling above the Level 215 mining horizon.
On deep exploration, three drills tested Zone 20 North below the
bottom of the Penna Shaft from the Level 215 exploration drift.
Currently, the Level 215 exploration drift is approximately 200
feet west of the former LaRonde/Bousquet boundary. The most
interesting results are summarized below:
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Gold True (oz/ton) Drill Thickness Cut Silver Copper(%) Zinc(%)
Hole (ft) From To (1.5 oz) (oz/ton)
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3215-95 40.7 3,103.6 3,152.2 0.22 1.60 0.52 6.26
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uncut 40.7 3,103.6 3,152.2 0.26 1.60 0.52 6.26
-------------------------------------------------------------------------
3215-64B 71.8 2,300.8 2,377.9 0.11 0.61 0.17 0.06
-------------------------------------------------------------------------
including 25.3 2,300.8 2,328.4 0.18 0.33 0.10 0.14
-------------------------------------------------------------------------
The most significant result was obtained in drill hole 3215-95,
representing the third hole to confirm a higher grade polymetallic
zone at depth. The intercept, located at a depth of 9,339 feet and
approximately 3,700 feet to the west of the Penna Shaft, straddled
the former Terrex-LaRonde property boundary. The intersection
consisted of 30% to 90% massive pyrite with occurrences of
sphalerite and chalcopyrite hosted by a siliceous matrix. Visible
gold was noted in a quartz vein. The vein graded 2.55 ounces of
gold (uncut) over an interval of 2.1 feet. With the most recent
result, the polymetallic zone has been traced over a length of
approximately 1,500 feet and a vertical height of 500 feet. There
are several deep drill holes in progress, and planned for the
fourth quarter, that are specifically targeted for this
polymetallic area within Zone 20 North. These drill holes are
expected to be completed prior to the new reserve and resource
estimate, planned for release in February 2005 along with year end
results. However, it appears that there has been an increase in the
gold grade and a significant increase in the amount of contained
zinc at depth. This is expected to result in a material improvement
in the value per ton of the ore at depth and the LaRonde II
project's economics. Lapa Underground Program Proceeding Well At
the Company's 100% owned Lapa property, located seven miles east of
LaRonde, site leveling is now complete and the shaft collar is
currently 70 feet below surface. Foundation work on the headframe
and the hoist room has also commenced. The hoist was dismantled at
LaRonde's Shaft No. 1 site and is currently being refurbished for
future installation at Lapa. At the end of the quarter, there were
two surface drills on the property, both of which were testing the
depth potential below the main deposit. Drill hole 118-04-57C,
testing below the eastern portion of the deposit, intersected 0.21
ounces of gold per ton over 19.7 feet, at a depth of 4,987 feet
below surface. Drill hole 118-04-57E returned a preliminary
intersection of 0.20 ounces per ton gold over 12.5 feet at a depth
of 4,560 feet below surface. The detailed results follow:
------------------------------------------------------------ Drill
Hole True Gold(oz/ton) Thickness(ft) From To Cut(1.5 oz)
------------------------------------------------------------
118-04-57C 19.7 6,189.9 6,210.2 0.21
------------------------------------------------------------
118-04-57E 12.5 5,997.0 6,009.8 0.20
------------------------------------------------------------ These
two drill intercepts have successfully traced the mineralization
1,100 feet below the previously defined resource envelope. This may
have a positive impact on the resource estimate due in February
2005. The Company previously announced a $30 million underground
development, drilling and metallurgical program at Lapa. Lapa
contains 1.2 million ounces of proven and probable gold reserves in
a deposit traced to a depth of 4,000 feet below surface over a
strike length of 2,000 feet and a vertical extent of 3,000 feet
with thicknesses ranging from 10 to 100 feet. The deposit remains
open for expansion at depth. The Lapa underground program includes
a 2,700-foot shaft sinking project. The 16-foot diameter
concrete-lined shaft is expected to be completed by the first half
of 2006 providing access for an underground diamond drilling
program to test the depth potential of the deposit, to confirm the
mining method, continuity and estimated dilution factor and to
extract a 15,000 ton metallurgical bulk sample. The objective of
the bulk sample is to refine the metallurgical process and
determine whether the frequency of coarse visible gold is
sufficient to justify an increase in the reserve grade closer to
the uncut grade, which would have a positive impact on the
project's economics. Positive results from this 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 after the bulk sample are currently
estimated at approximately $80 million. Assuming no further
additions to reserves, 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 of approximately $175 per ounce. Goldex Bulk Sample Program
on Schedule At the Company's 100% owned Goldex project, located 35
miles east of LaRonde, all the level rehabilitation has been
completed and underground development and diamond drilling has
commenced. The purpose of the current exploration and development
program is to increase the confidence level in the gold grade of
the deposit. The Goldex deposit is an underground bulk mining
opportunity that has probable gold reserves of 1.65 million ounces
in 24.0 million tons grading 0.07 oz/ton. For that purpose, a total
of roughly 2,000 feet of raise development are planned to be
excavated through the centre of the gold mineralization at three
separate locations along the 1,500 feet strike length of the
deposit. The raises will be mapped and sampled as development
proceeds over the next three to four months. To date, 373 feet of
raising and development have been completed and 4,700 tons of ore
have been extracted and stockpiled on surface with an average grade
of 0.07 ounces per ton. A 20,000 ton bulk sample is scheduled to be
processed at a local milling facility in January 2005. The mill
tests as well as the information from 21,000 feet of diamond
drilling and detailed mapping will be used to refine the current
reserve estimate as well as complete the final feasibility study by
the second quarter of 2005. To date, 6,840 feet of diamond drilling
has been completed and the preliminary results are within the
predicted grade range. Overall, work on the project is proceeding
on schedule. Where to Find Maps The longitudinal illustrations that
detail the drill results presented in this news release can be
viewed and downloaded from the Company's website
http://www.agnico-eagle.com/ (Press Release) or : Longitudinal 20
North
http://ir.thomsonfn.com/IRUploads/10493/FileUpload/LONG20N.pdf
--------------------------------------------------------------
Property Map
http://ir.thomsonfn.com/IRUploads/10493/FileUpload/Property%20Map.pdf
---------------------------------------------------------------------
Lapa Longitudinal
http://ir.thomsonfn.com/IRUploads/10493/FileUpload/Lapa.pdf
-----------------------------------------------------------
Agnico-Eagle to Renew Shelf Prospectus The Company intends to renew
its short form base shelf prospectus with the securities
commissions in each of the provinces of Canada and shelf
registration statement with the United States Securities and
Exchange Commission. Under this prospectus, Agnico-Eagle may from
time to time offer by way of shelf prospectus supplement debt
securities, common shares or warrants to purchase debt securities
or common shares in the aggregate amount of up to $500,000,000. The
Company is required to maintain the shelf registration under the
terms of its November 2002 warrant indenture. Each whole warrant
entitles the holder to purchase one common share at a price of $19
per common share at any time during the remaining term of the
warrant, which expires November 14, 2007. The warrants trade in
U.S. dollars on both the Toronto Stock Exchange, under the symbol
AGE.WT.U, and on the Nasdaq National Market, under the symbol
AEMLW. Agnico-Eagle has no present intention to offer securities
under the shelf prospectus other than common shares issuable upon
the exercise of the warrants in the United States. Scientific and
Technical Data A qualified person, Guy Gosselin, P.Eng., P.Geo.,
LaRonde Division's Chief Geologist, has verified the LaRonde
exploration information disclosed in this news release. The
verification procedures, the quality assurance program and quality
control procedures used in preparing such data may be found in the
2004 Mineral Resource and Mineral Reserve Report, Agnico-Eagle
Mines Limited, LaRonde Division, dated March 26, 2004, filed on
SEDAR. A qualified person, Carl Pelletier, P.Geo., of Innovexplo
Geological Services, has supervised the preparation of and verified
the scientific and technical information regarding the Goldex
project, including sampling, analytical and test data underlying
such information. A qualified person, Dino Lombardi, P.Geo. has
supervised the preparation of and verified the scientific and
technical information regarding the Lapa project as defined under
National Instrument 43-101. Forward Looking Statements The
information in this press release has been prepared as at October
27, 2004. 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
reflect the Company's views at the time with respect to future
events and are subject to certain risks, uncertainties and
assumptions. Many factors could cause the actual results to be
materially different from those expressed or implied by such
forward-looking statements, including, among others, those which
are discussed under the heading "Risk Factors" in the Company's
Annual Information Form and Annual Report on Form 20-F for the year
ended December 31, 2003. 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 eastern Canada and the
western United States. 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 24 consecutive years.
SUMMARY QUARTERLY MANAGEMENT DISCUSSION AND ANALYSIS UNITED STATES
GAAP (all figures are expressed in US dollars unless otherwise
noted) Results of Operations Agnico-Eagle reported third quarter
net income of $10.6 million, or $0.12 per share, compared to a net
loss of $11.9 million, or $(0.14) per share, in the third quarter
of 2003. Gold production in the third quarter of 2004 was 67,237
ounces, an increase of 31% over 51,192 ounces in the third quarter
of 2003. For the year to date, Agnico-Eagle reported net income of
$32.3 million, or $0.38 per share, compared to a net loss of $21.9
million, or $(0.26) per share, in the first nine months of 2003.
Gold production increased 22% in the first nine months of 2004 to
202,658 ounces from 166,354 ounces in 2003. As disclosed last
quarter, production continued to increase as LaRonde benefited from
operational improvements, a more focused mining plan, and increased
ore throughput. Year to date tonnage processed increased 20% to
2,184,383 tons in the first nine months of 2004 compared to
1,821,585 tons in the same period in 2003. The table below
summarizes the key variances in net income for the third quarter
and year to date of 2004 from the net loss reported for the same
periods in 2003. (millions of dollars) Third Quarter Year to Date
-------------------------------------------------------------------------
Increase in gold production $ 6.0 $ 13.1 Elimination of production
royalty 3.0 10.1 Increase in gold price 1.9 10.0 Increase in net
copper revenue 0.9 8.5 Increase in net zinc revenue 8.1 12.7
Increase in net silver revenue 6.2 13.0 Stronger Canadian dollar,
net of hedges (0.1) (2.0) Increased amortization (1.4) (3.5) Cost
of increased ore throughput (3.1) (9.3) Corporate costs and other
0.9 1.6 ------- ------- Net positive variance $ 22.4 $ 54.2 -------
------- ------- ------- As shown in the table above, revenues from
all metals benefited from increased production and increased metal
prices in both the third quarter and year to date. The summarized
quarterly data presented later in this MD&A shows the increases
in unit realized prices for all metals for both the third quarter
and year to date. Net copper and zinc revenues benefited from
increased production and metal prices but these benefits were
partially offset by increased smelting and refining charges
attributable to the increase in production of these metals and
increasing costs associated with shipping these metals to overseas
smelters. In all, revenues from mining operations increased 93% and
67% respectively in the third quarter and first nine months of
2004. Net income was also positively affected by the elimination of
the production royalty on an area of the mine that is essentially
mined out. For the second consecutive quarter, LaRonde processed
over 8,000 tons of ore per day as over 741,000 tons of ore was put
through the mill. The surface stockpile at LaRonde has increased to
approximately 84,000 tons of ore, sufficient for 10 days of
production. In addition, 60,000 tons of ore from the Bousquet
stockpile remain on surface representing another seven days of mill
production. As a result of the increased ore production, minesite
operating costs improved by 11% to C$50 per ton, when compared to
the third quarter of 2003. Although improved over the prior year,
minesite operating costs per ton in the third quarter were above
target due to non-recurring repairs to the coarse ore bin and
filter press in the mill and to the Level 122 underground pumping
station. Operating costs and gold production in the lower level
mining horizon were also negatively affected by unscheduled repairs
of the ventilation and hoisting systems and higher than budgeted
dilution, predominantly from backfill from adjacent primary stopes
mined in 2003. However, as byproduct production exceeded
expectations, net metals revenue per ton amounted to nearly C$88
resulting in a gross profit margin of approximately C$38 per ton
mined and processed in the third quarter. In the third quarter of
2004 total cash operating costs per ounce decreased significantly
to $77 per ounce of gold produced from $368 per ounce in the third
quarter of 2003. For the year to date 2004, total cash operating
costs decreased to $77 from $287 in the same period of 2003. The
main drivers leading to the decrease in total cash operating costs,
for both the quarter and year to date, were higher gold production,
higher net byproduct revenue resulting from increased production
and higher byproduct metal prices, and the elimination of the
production royalty. Operating costs per ton decreased to C$50 in
the third quarter of 2004 compared to C$56 in the third quarter of
2003 due mainly to the mill processing more tons of ore in the
third quarter. Similarly, operating cost per ton decreased to C$48
in the first nine months of 2004 compared to C$52 in the first nine
months of 2003 due mainly to a 30% increase in mill throughput and
improved underground productivity for the year to date 2004
compared to the same period in 2003. 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:
(thousands of dollars, except where noted) Q3 2004 Q3 2003 YTD 2004
YTD 2003
-------------------------------------------------------------------------
Cost of production per Statement of Income (Loss) $ 26,172 $ 25,909
$ 75,993 $ 74,837 Adjustments: Byproduct revenues (21,639) (7,150)
(59,815) (28,017) Production royalty - (3,000) - (10,074) Inventory
adjustment (i) 795 132 (103) 1,165 Non-cash reclamation provision
(176) (85) (437) (302) ---------- ---------- ---------- ----------
Cash operating costs $ 5,152 $ 15,806 $ 15,638 $ 37,609 Gold
production (ounces) 67,236 51,192 202,657 166,384 ----------
---------- ---------- ---------- Cash operating cost (per ounce) $
77 $ 309 $ 77 $ 226 Production royalty (per ounce) - 59 - 61
---------- ---------- ---------- ---------- Total cash operating
costs (per ounce) (iii) $ 77 $ 368 $ 77 $ 287 ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
(thousands of dollars, except where noted) Q3 2004 Q3 2003 YTD 2004
YTD 2003
-------------------------------------------------------------------------
Cost of production per Statement of Income (Loss) $ 26,172 $ 25,909
$ 75,993 $ 74,837 Adjustments: Production royalty - (3,000) -
(10,074) Inventory adjustment (i) and hedging adjustments (ii)
2,127 277 3,338 1,575 Non-cash reclamation provision (176) (85)
(437) (302) ---------- ---------- ---------- ---------- Minesite
operating costs (US$) $ 28,123 $ 23,101 $ 78,894 $ 66,036
---------- ---------- ---------- ---------- Minesite operating
costs (C$) $ 36,834 $ 31,887 $ 104,824 $ 94,234 Tons milled (000's
tons) 741 571 2,184 1,822 ---------- ---------- ----------
---------- Operating costs per ton (C$) (iii) $ 50 $ 56 $ 48 $ 52
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- 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 cost 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 indicate 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. Taking into consideration year to date
performance, the Company's latest targets for all metals production
as compared to the previous forecast for production and operating
costs follows:
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New Forecast Previous Forecast
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Ore processed (000's tons) 2,963 2,900 Daily throughput rate (tons)
8,096 7,945 Grades: Gold (oz./t) 0.11 0.11 Silver (oz./t) 2.36 2.43
Zinc (%) 3.95 3.87 Copper (%) 0.53 0.54 Payable metal production:
Gold (ozs.) 280,000 293,000 Silver (000's ozs.) 5,600 5,500 Zinc
(000's lbs.) 162,000 155,000 Copper (000's lbs.) 22,600 23,200
Minesite operating costs (C$/ton) 46-48 45-47 Total cash operating
costs ($/oz.) 75-80 70-80
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LaRonde's total cash operating costs are expected to remain
essentially on target in a range of $75 to $80 per ounce, as lower
gold production is offset by higher byproduct production and metal
prices. The target for total cash operating costs is based on a
balance of year silver price of $5.75 per ounce, zinc price of
$0.45 per pound, copper price of $1.20 per pound and C$/US$
exchange rate of 1.30. Given that the year is three quarters
complete, the sensitivity to changes in metal prices and exchange
rates is not expected to be material. Liquidity and Capital
Resources At September 30 2004, Agnico-Eagle's cash and short term
investments were $120.3 million while working capital was $172.3
million. At December 31, 2003, the Company had $110.4 million in
cash and short term investments and $140.6 million in working
capital. The Company currently has $125 million in undrawn credit
lines and is currently negotiating a refinancing of its credit
facility. Cash flow from operating activities, before working
capital changes, was $18.9 million in the third quarter of 2004
compared to $(6.6) million in the third quarter of 2003. For the
year to date, operating cash flow, before working capital changes,
was $56.8 million compared to $(6.5) million in the first nine
months of 2003. Operating cash flow was positively impacted by
higher gold production and increased gold and byproduct metal
prices partially offset by a stronger Canadian dollar. For the year
to date, positive operating cash flow was partially offset by a
buildup in metal settlements receivable and ore inventories, due to
the sharp increase in metals production and revenues. For the three
months ended September 30, 2004, capital expenditures were $11.8
million compared to $7.5 million in the third quarter of 2003.
Capital expenditures at the LaRonde mine decreased to $7.2 million
from $8.7 million in the third quarter of 2003. Although capital
expenditures at LaRonde decreased in the third quarter of 2004,
total capital expenditures increased $4.1 million compared to the
third quarter of 2003. This increase is primarily attributable to
project expenditures for Lapa and Goldex and the purchase of gold
properties from Contact Diamond Corporation (an equity investee of
Agnico-Eagle). For the year to date September 30, 2004, capital
expenditures were $33.8 million compared to $29.0 million in the
first nine months of 2003. Capital expenditures at the LaRonde mine
decreased to $23.4 million from $29.0 million in the first nine
months of 2003. The capital expenditures in 2004 represent
sustaining capital and the final construction costs for Phase I of
LaRonde's water treatment facility and bulk air cooling plant. The
remainder of the capital expenditures in 2004 represents continued
expenditures for the Company's regional projects, namely Lapa,
Goldex and LaRonde II, all of which have met the requirement for
capitalization under US GAAP, and the purchase of gold properties
from Contact Diamond. For the full year, capital expenditures are
now forecast to be $54.9 million compared to the original budget of
$31.4 million. The increase is primarily due to the commencement of
the underground programs at Lapa and Goldex. In the third quarter
of 2004, Agnico-Eagle generated net free cash flow (before
financing activities) of $2.5 million. Before investment purchases
of $2.4 million and project expenditures of $4.6 million, third
quarter net free cash flow was $9.5 million. In addition, during
the third quarter, the Company realized proceeds of $18.5 million
from the issuance of common equity. The third quarter of 2004 marks
the first time the Company has generated net free cash flow since
beginning the expansion at LaRonde, and shows the Company's ability
to fund project expenditures with internally generated funds. The
Company's ability to continue generating net free cash flow is
dependent on continued strength in gold and byproduct metal prices
and continued cost savings generated from economies of scale at
LaRonde as the mill processes more tons of ore. In the second
quarter of 2004, Agnico-Eagle purchased 12.7 million common shares
in Riddarhyttan Resources AB ("Riddarhyttan") from its then largest
shareholder, Swedish private company Dunross & Co. AB. Along
with a further 0.8 million shares purchased in the second quarter
and transaction costs, total cash consideration of $11.8 million
was paid by Agnico-Eagle. The Company's ownership in Riddarhyttan
currently represents 13.8% of the outstanding shares. In the third
quarter of 2004, cash spent on investments and other assets was
$2.4 million. This represents mostly purchases of
available-for-sale securities. In the first nine months of 2003,
cash spent on investments and other assets included $9.0 million in
the second quarter for the purchase of the Lapa property and $4.2
million in the third quarter for the purchase of the Bousquet
property offset by cash inflows generated from sales of
available-for-sale securities. Summarized Quarterly Data
(Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Dollars Three months ended Nine months
ended except where noted, September 30, September 30, US GAAP
basis) 2004 2003 2004 2003
-------------------------------------------------------------------------
Financial Data Income and cash flow LaRonde Division Revenues from
mining operations $ 47,986 $ 24,845 $ 142,254 $ 84,971 Mine
operating costs 26,172 25,909 75,993 74,837
-------------------------------------------------------------------------
Mine operating profit (loss) $ 21,814 $ (1,064) $ 66,261 $ 10,134
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income (loss) for period $ 10,556 $ (11,869) $ 32,270 $
(21,885) Net income (loss) per share $ 0.12 $ (0.14) $ 0.38 $
(0.26) Operating cash flow (before non-cash working capital) $
18,873 $ (6,580) $ 56,819 $ (6,525) Weighted average number of
shares - basic (in thousands) 84,658 83,954 84,791 83,838 Tons of
ore milled 741,483 570,661 2,184,383 1,821,585 Head grades: Gold
(oz. per ton) 0.10 0.10 0.10 0.10 Silver (oz. per ton) 2.70 1.69
2.49 2.14 Zinc 4.53% 2.71% 4.04% 3.18% Copper 0.54% 0.62% 0.54%
0.53% Recovery rates: Gold 92.09% 91.60% 91.87% 91.26% Silver
88.10% 79.79% 86.60% 81.43% Zinc 84.70% 75.00% 84.00% 77.10% Copper
78.10% 79.90% 78.80% 79.40% Payable production: Gold (ounces)
67,237 51,192 202,658 166,354 Silver (ounces in thousands) 1,501
648 4,187 2,733 Zinc (pounds in thousands) 48,349 20,561 122,479
75,605 Copper (pounds in thousands) 5,814 5,411 16,729 14,382
Realized prices per unit of production: Gold (per ounce) $ 409 $
340 $ 393 $ 349 Silver (per ounce) $ 6.45 $ 5.00 $ 6.22 $ 4.57 Zinc
(per pound) $ 0.44 $ 0.40 $ 0.47 $ 0.35 Copper (per pound) $ 1.29 $
0.85 $ 1.26 $ 0.73 Onsite operating costs per ton milled (Canadian
dollars) $ 50 $ 56 $ 48 $ 52
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Operating costs per gold ounce produced: Onsite operating costs
(including asset retirement expenses) $ 440 $ 451 $ 392 $ 396 Less:
Non-cash asset retirement expenses (5) (2) (2) (2) Foreign exchange
and byproduct metals hedge gains (24) - (18) - Net byproduct
revenues (334) (140) (295) (168)
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Cash operating costs $ 77 $ 309 $ 77 $ 226 Accrued El Coco
royalties - 59 - 61
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Total cash operating costs $ 77 $ 368 $ 77 $ 287 Non-cash costs:
Reclamation provision 2 2 2 2 Amortization 87 87 85 83
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Total operating costs $ 166 $ 457 $ 164 $ 372
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-------------------------------------------------------------------------
Balance Sheet Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, September 30, December 31, US
GAAP basis) 2004 2003
-------------------------------------------------------------------------
(Unaudited) ASSETS Current Cash and short term investments $
120,342 $ 110,365 Metals awaiting settlement 41,529 34,570
Inventories: Ore stockpiles 9,394 6,557 In-process concentrates
1,244 1,346 Supplies 6,978 6,276 Income taxes recoverable 11,006
7,539 Prepaid expenses and other 9,585 10,363
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Total current assets 200,078 177,016 Fair value of derivative
financial instruments 3,989 7,573 Investments, loans, advances and
other assets 23,846 11,214 Future income and mining tax assets
43,506 41,579 Mining properties 416,104 399,719
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$ 687,523 $ 637,101
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LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and
accrued liabilities $ 26,221 $ 29,915 Dividends payable 777 3,327
Interest payable 809 3,161
-------------------------------------------------------------------------
Total current liabilities 27,807 36,403
-------------------------------------------------------------------------
Long-term debt 143,750 143,750
-------------------------------------------------------------------------
Asset retirement obligation and other liabilities 15,886 15,377
-------------------------------------------------------------------------
Future income and mining tax liabilities 51,345 40,848
-------------------------------------------------------------------------
Shareholders' Equity Common shares Authorized - unlimited Issued -
85,828,481 (2003 - 84,469,804) 618,436 601,305 Warrants 15,732
15,732 Contributed surplus 7,181 7,181 Employee stock options 418 -
Deficit (185,785) (218,055) Accumulated other comprehensive loss
(7,247) (5,440)
-------------------------------------------------------------------------
Total shareholders' equity 448,735 400,723
-------------------------------------------------------------------------
$ 687,523 $ 637,101
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Note: Certain items have been reclassified from financial
statements previously presented to conform to the current
presentation. Statement of Income (Loss) and Comprehensive Income
(Loss) (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Dollars, Three months ended Nine months
ended except per share September 30, September 30, amounts, US GAAP
basis) 2004 2003 2004 2003
-------------------------------------------------------------------------
REVENUES Revenues from mining operations $ 47,986 $ 24,845 $
142,254 $ 84,971 Interest and sundry income 59 489 422 3,252
-------------------------------------------------------------------------
48,045 25,334 142,676 88,223 COSTS AND EXPENSES Production 26,172
25,909 75,993 74,837 Exploration and corporate development 581
2,199 1,323 4,637 Equity loss in junior exploration companies 517 -
1,415 - Amortization 5,861 4,471 17,302 13,775 General and
administrative 1,895 1,594 5,706 5,301 Provincial capital tax (191)
408 1,003 1,182 Interest 1,742 2,236 5,771 6,694 Foreign currency
loss (gain) 38 (17) (341) (41)
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Income (loss) before taxes 11,430 (11,466) 34,504 (18,162) Federal
capital tax 253 309 794 898 Income and mining tax expense 621 94
1,440 1,082
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Income (loss) before cumulative catch-up adjustment 10,556 (11,869)
32,270 (20,142) Cumulative catch-up adjustment relating to SFAS 143
- - - (1,743)
-------------------------------------------------------------------------
Net income (loss) for the period $ 10,556 $ (11,869) $ 32,270 $
(21,885)
-------------------------------------------------------------------------
Net income (loss) before cumulative catch-up adjustment per share -
basic and diluted $ 0.12 $ (0.14) $ 0.38 $ (0.24) Cumulative
catch-up adjustment per share - - - (0.02)
-------------------------------------------------------------------------
Net income (loss) per share - basic and diluted $ 0.12 $ (0.14) $
0.38 $ (0.26)
-------------------------------------------------------------------------
Weighted average number of shares (in thousands) basic 84,791
83,954 84,658 83,838 diluted 85,278 83,954 85,145 83,838
-------------------------------------------------------------------------
Comprehensive income (loss): Net income (loss) for the period $
10,556 $ (11,869) $ 32,270 $ (21,885) Other comprehensive income
(loss): Unrealized gain (loss) on hedging activities 937 (901)
(125) 7,099 Dilution gain on issuance of shares by subsidiary, net
of tax 1,837 4,500 1,837 4,500 Unrealized gain (loss) on
available-for- sale securities 555 1,649 (613) 1,633 Adjustments
for derivative instruments maturing during the period 657 - (2,274)
- Adjustments for realized gains on available-for- sale securities
due to dispositions in the period - - (632) (1,485)
-------------------------------------------------------------------------
Other comprehensive income (loss) 3,986 5,248 (1,807) 11,747
-------------------------------------------------------------------------
Comprehensive income (loss) for the period $ 14,542 $ (6,621) $
30,463 $ (10,138)
-------------------------------------------------------------------------
Note: Certain items have been reclassified from financial
statements previously presented to conform to the current
presentation. Statement of Deficit and Accumulated Other
Comprehensive Loss (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Dollars, Three months ended Nine months
ended except where noted September 30, September 30, US GAAP basis)
2004 2003 2004 2003
-------------------------------------------------------------------------
Deficit Balance, beginning of period $ (196,341) $ (206,039) $
(218,055) $ (196,023) Net income (loss) for the period 10,556
(11,869) 32,270 (21,885)
-------------------------------------------------------------------------
Balance, end of period $ (185,785) $ (217,908) $ (185,785) $
(217,908)
-------------------------------------------------------------------------
Accumulated other comprehensive loss Balance, beginning of period $
(11,233) $ (14,667) $ (5,440) $ (21,166) Other comprehensive income
(loss) for the period 3,986 5,248 (1,807) 11,747
-------------------------------------------------------------------------
Balance, end of period $ (7,247) $ (9,419) $ (7,247) $ (9,419)
-------------------------------------------------------------------------
Note: Certain items have been reclassified from financial
statements previously presented to conform to the current
presentation. Statement of Cash Flows (Unaudited) Agnico-Eagle
Mines Limited
-------------------------------------------------------------------------
(thousands of United Three months ended Nine months ended States
Dollars, September 30, September 30, US GAAP basis) 2004 2003 2004
2003
-------------------------------------------------------------------------
Operating activities Net income (loss) for the period $ 10,556 $
(11,869) $ 32,270 $ (21,885) Add (deduct) items not affecting cash
from operating activities: Amortization 5,861 4,471 17,302 13,775
Provision for future income and mining taxes 1,739 187 4,228 2,251
Unrealized (gain) loss on derivative contracts (38) (171) 136
(2,677) Cumulative catch-up adjustment related to SFAS 143 - - -
1,743 Amortization of deferred costs and other 755 802 2,883 268
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Cash flow from operations, before working capital changes 18,873
(6,580) 56,819 (6,525) Change in non-cash working capital balances
Metals awaiting settlement 551 10,375 (6,959) 10,888 Income taxes
recoverable (1,157) (977) (3,467) (1,848) Inventories (2,366) (908)
(3,437) (3,264) Prepaid expenses and other (1,598) (2,802) 778
(1,109) Accounts payable and accrued liabilities 3,997 3,289
(3,579) 1,971 Interest payable (1,617) (1,636) (2,352) (1,563)
-------------------------------------------------------------------------
Cash flows from (used in) operating activities 16,683 761 37,803
(1,450)
-------------------------------------------------------------------------
Investing activities Additions to mining properties (11,780)
(7,468) (33,777) (28,976) Investments and other (2,404) (4,192)
(13,281) (12,079)
-------------------------------------------------------------------------
Cash flows used in investing activities (14,184) (11,660) (47,058)
(41,055)
-------------------------------------------------------------------------
Financing activities Dividends paid - - (2,480) (2,431) Common
shares issued 18,540 4,640 21,504 6,960
-------------------------------------------------------------------------
Cash flows provided by financing activities 18,540 4,640 19,024
4,529
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Effect of exchange rate changes on cash and cash equivalents 46 54
208 (85) Net decrease in cash and cash equivalents 21,085 (6,205)
9,977 (38,061) Cash and short term investments, beginning of period
99,257 121,078 110,365 152,934
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Cash and short term investments, end of period $ 120,342 $ 114,873
$ 120,342 $ 114,873
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Other operating cash flow information: Interest paid during the
period $ 3,023 $ 3,477 $ 6,489 $ 7,401
-------------------------------------------------------------------------
Capital taxes paid during the period $ (271) $ 1,065 $ 2,259 $
2,234
-------------------------------------------------------------------------
Note: Certain items have been reclassified from financial
statements previously presented to conform to the current
presentation. DATASOURCE: Agnico-Eagle Mines Limited CONTACT: Barry
Landen, V.P. Corporate Affairs, Agnico-Eagle Mines Limited, (416)
947-1212
Copyright