Agnico-Eagle reports strong operating and financial results (All
amounts expressed in U.S. dollars unless otherwise noted. Prepared
according to U.S. GAAP) TORONTO, May 5 /PRNewswire-FirstCall/ --
Agnico-Eagle Mines Limited today announced a continuation of its
strong financial and operating results as it reported first quarter
earnings of $10.4 million, or $0.12 per share. This compares to net
earnings of $12.9 million, or $0.15 per share, in the first quarter
of 2004. First quarter earnings in 2005 were negatively affected by
non-cash mark-to-market losses on byproduct metal derivative
contracts of $3.4 million, or $0.04 per share, and non-cash stock
option expenses of $1.2 million, or $0.01 per share. Cash flow from
operating activities in the quarter was $28.1 million compared to
$6.2 million in the prior year's first quarter. Gold production in
the first quarter was 55,310 ounces at low total cash costs per
ounce of gold of $67(1). This compares with 70,188 ounces at total
cash costs of $78 per ounce in the first quarter of 2004. Gold
production for 2005 is expected to be approximately 270,000 ounces.
Highlights for the quarter include: - LaRonde continued to achieve
high production rates with nearly 8,000 tons per day processed. -
The bulk sample was completed at Goldex with better than expected
results of 0.081 oz/ton, an improvement of 10% over the previous
bulk sample program. An internal feasibility study was completed
and is undergoing final independent review, with results expected
in June 2005. - The Lapa project surface infrastructure is complete
and shaft sinking is underway. - As previously announced, an
exploration and purchase option agreement was finalized for the
Pinos Altos property in Mexico. Two rigs are currently drilling on
site, and underground development allowing further underground
drilling targeting additional resource conversion is complete. A
decision on whether the Company will exercise the option is
expected before the end of 2005. "Agnico-Eagle's operating and
financial performance once again reinforces the quality of our low
cost LaRonde operation," said Sean Boyd, President and Chief
Executive Officer. "Furthermore, our strong balance sheet and
technical expertise places us in an excellent position to move our
projects forward and to look at new opportunities. We are steadily
moving towards our objective of building a multi-mine production
base," added Mr. Boyd. Annual General Meeting and Webcast /
Conference Call Tomorrow The Company's senior management will host
the Annual General Meeting and first quarter Results Presentation
on Friday May 6, 2005 at 10:30 a.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) 814-4860 toll free, at least five minutes before the
scheduled start of the presentation. Additionally, a live audio
webcast of the call will be available on the Company's website at
agnico-eagle.com. The presentation will be archived on the website
until November 6, 2005. LaRonde Continues Its Strong Ore Production
in First Quarter LaRonde achieved its targeted tonnage of almost
8,000 tons of ore per day in the first quarter, continuing the
strong performance seen during 2004. As a result of the excellent
ore production, minesite costs per ton were less than C$48(2). On a
per ounce basis, net of byproduct credits, LaRonde's total cash
costs remained very low at $67 per ounce. This compares favourably
with the results of the first quarter of 2004 when minesite costs
per ton were C$48 and total cash costs per ounce were $78. In spite
of the targeted tonnage being achieved by the mine, the quarterly
gold production of 55,310 oz was 21% lower than the corresponding
period in 2004. This reduction is primarily due to the mining of a
greater number of stopes from the upper mine (generally zinc rich)
than from the lower levels (generally gold rich). Rehabilitation
work was required in some areas of the sill pillar, below 194
Level, which resulted in a delay in extracting six of the higher
grade gold stopes. It is expected that many of these previously
planned gold rich stopes will still be mined in 2005, and the
Company is targeting gold production of approximately 270,000
ounces in 2005. Also contributing to the lower first quarter gold
output was an increase in dilution at LaRonde's lower levels, in
the western portion of the orebody. Strong Metals Production and
High Metals Prices Yield Solid Earnings and Cash Flows In spite of
the lower than expected gold production, strong metals prices and
byproduct production resulted in strong earnings and operating cash
flows. First quarter earnings were $10.4 million, or $0.12 per
share compared to net earnings of $12.9 million, or $0.15 per
share, in the first quarter of 2004. First quarter 2005 earnings
were negatively affected by non-cash mark-to- market losses on
byproduct metal derivative contracts of $3.4 million, or $0.04 per
share, and non-cash stock option expenses of $1.2 million, or $0.01
per share. Cash flow from operating activities in the quarter was
$28.1 million compared to $6.2 million in the prior year's
corresponding quarter. Lower gold production had a negative impact
on reported earnings but was offset by higher gold prices and
increased revenue associated with byproduct zinc and copper. In
addition, a buildup in metals inventory at the end of 2004 had
largely reversed in the first quarter of 2005. As a result, sales
volumes for gold, silver, and copper exceeded production.
Agnico-Eagle generated net free cash flow (cash flow from operating
activities less cash flow used in investing activities) of over $12
million as cash and equivalents grew to over $117 million at March
31, 2005. Additionally, the Company maintains substantially undrawn
bank lines of $100 million. Additional detail is available in the
first quarter Management's Discussion and Analysis contained in
Agnico-Eagle's regulatory filings. Goldex Bulk Sample Delivers
Positive Results As previously disclosed, at the Company's 100%
owned Goldex project, located 35 miles east of LaRonde, the
assaying related to the bulk sample program was completed.
Approximately 10% of the samples taken from the diamond drill holes
contained visible gold. An 18,213 ton bulk sample was processed
during January and February, returning a grade of 0.081 ounces of
gold per ton, nearly 10% higher than the grade of 0.074 ounces of
gold per ton returned from the 113,000 ton bulk sample processed in
1996. Mill recoveries exceeded expectations. Based on the results,
it would appear that both muck samples and diamond drilling
underestimate the grade, while the chip and channel samples were
more representative of the deposit's grade. A new reserve estimate,
at December 31, 2004, was completed resulting in probable reserves
of 22.1 million tons grading 0.07 ounces of gold per ton for a
total of 1.6 million ounces. The Company is encouraged by the
positive results of the bulk sample, the technical simplicity of
the project, and its proximity to LaRonde, which will allow for the
use of existing infrastructure and other regional synergies. The
internal feasibility study is complete and is undergoing final
independent review. Results are expected in June 2005. Lapa Shaft
Sinking In Progress The Company previously announced a $30 million
underground development, drilling and metallurgical program at
Lapa. 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 in the first half
of 2006. The shaft will provide access for an underground diamond
drilling program to test the depth potential of the deposit, to
confirm the mining method and the 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. Shaft sinking commenced in mid-March. At the
end of March the shaft had attained a depth of 137 feet, and is
currently at 270 feet. 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 approximately $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.
LaRonde Level 236 Ramp Project Definition Drilling Definition
drilling is ongoing from the Level 218 exploration drift. The
purpose is to continue the definition of Zone 20 North in the new
mining area between Level 215 and Level 236. The more interesting
results have been summarized below:
-------------------------------------------------------------------------
Gold True (oz/ton) Drill Thickness Cut Silver Copper Zinc Hole (ft)
From To (1.5 oz) (oz/ton) (%) (%)
-------------------------------------------------------------------------
3218-01 65.6 347.8 413.4 0.16 2.22 1.36 0.34
-------------------------------------------------------------------------
3218-05 60.0 366.5 426.5 0.17 0.87 0.88 0.19
-------------------------------------------------------------------------
3218-07 49.2 492.1 545.6 0.21 1.15 0.61 0.33
-------------------------------------------------------------------------
3218-08 67.9 253.6 321.5 0.21 1.51 1.24 0.27
-------------------------------------------------------------------------
3218-10 43.0 451.8 505.6 0.24 0.68 0.27 0.33
-------------------------------------------------------------------------
3218-14 62.7 895.7 993.4 0.15 0.26 0.19 0.05
-------------------------------------------------------------------------
These most recent results confirmed previously encountered grades
and thicknesses in the original deep exploration drill holes. This
area is scheduled to be mined over the next three years. LaRonde II
Pre-feasibility Study to be Completed in Third Quarter Three drills
continue to test Zone 20 North below the bottom of the Penna Shaft
from the Level 215 exploration drift. The purpose is to continue to
convert additional resources into reserves and to define the
polymetallic zone to the west. The more interesting results have
been summarized below:
-------------------------------------------------------------------------
Gold True (oz/ton) Drill Thickness Cut Silver Copper Zinc Hole (ft)
From To (1.5 oz) (oz/ton) (%) (%)
-------------------------------------------------------------------------
3215-104B 16.4 4,526.2 4,551.8 0.09 0.39 0.29 0.28
-------------------------------------------------------------------------
3215-105C 24.6 3,669.2 3,700.4 0.18 0.74 0.34 0.19
-------------------------------------------------------------------------
3215-107 10.5 3,033.0 3,047.0 0.17 3.26 0.21 9.49
-------------------------------------------------------------------------
The Level 215 exploration drift is currently being completed. It is
now over 1,000 feet into the Bousquet property testing the western
extension of Zone 20 North. The above mentioned programs and
results are being incorporated into the LaRonde II pre-feasibility
study which is expected to be completed in the third quarter of
2005. Bousquet - Ellison Drilling to be Extended At the end of the
quarter three drills were in operation underground. Two of the most
interesting results were located on the Ellison Property, 1,000 to
1,200 feet to the west of the Ellison - Bousquet property boundary.
Drill hole D05-2805 intersected the zone at a depth of 6,400 feet
below surface approximately 1,050 feet to the west of the boundary
intersecting 0.34 ounces of gold over a true thickness of 9.5 feet.
A second drill hole, D04-2803 intersected the zone at a depth of
7,870 feet below surface at approximately 1,200 west of the
boundary, returning 0.71 ounces of gold per ton over a true
thickness of 9.2 feet.
----------------------------------------------- Gold True (oz/ton)
Drill Thickness Cut Hole (ft) From To (1.5 oz)
----------------------------------------------- D05-2805 9.5
3,264.4 3,279.2 0.34
----------------------------------------------- D04-2803 9.2
4,749.0 4,760.5 0.71
----------------------------------------------- At this early
stage, it is difficult to correlate the two values as there is a
vertical distance of 1,400 feet and a horizontal distance of 150
feet. However, the alteration appears to increase in intensity at
depth. The results are sufficiently positive to add an additional
four drill holes and extend the drill program by two months to
obtain a better picture of the potential in this area. Drilling
Commences on Pinos Altos An exploration and purchase option
agreement was finalized in March for the Pinos Altos property in
Mexico. Under the terms of its option agreement with Industrias
Penoles, SA de CV, Agnico-Eagle is required to invest $2.8 million
over the next five months on a 55,000-foot diamond drilling
program. The components of the program include open pit exploration
and resource to reserve conversion, underground resource to reserve
conversion and deep exploration drilling. After the five-month
exploration program is completed, Agnico-Eagle will have a
two-month period to exercise its option to purchase Penoles' 100%
interest in the project. If Agnico-Eagle exercises its option, the
purchase price will be approximately $65 million, to be satisfied
with $39 million in cash and 1,809,350 shares of Agnico-Eagle. Two
rigs are currently drilling on site, and underground development is
complete allowing further underground drilling, targeting
additional resource conversion. Two additional drill rigs will be
added in the near future to facilitate the rapid advancement of the
exploration program. A decision on whether the Company will
exercise its option is expected before the end of 2005. Tour of
LaRonde and Regional Projects is Next Week The Company is planning
a tour of the LaRonde Mine and the Company's regional projects on
Tuesday May 10, 2005 and Wednesday, May 11, 2005. Visits to Goldex,
Lapa and LaRonde will be conducted on those dates. Institutional
investors and analysts should register their interest with Hazel
Winchester at (416)847-3717 or . 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
statements regarding future exploration results; the anticipated
timing of events with respect to the Company's exploration and
prospective decision in connection with its Pinos Altos option; 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 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 A qualified person, Guy Gosselin, Ing., 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 November 15, 2004, filed on SEDAR.
Normand Bedard Geo., the Regional Division's Senior Geologist has
verified the Bousquet and Ellison exploration information disclosed
in this news release. 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 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. 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. (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 March 31,
except where noted, US GAAP basis) 2005 2004
-------------------------------------------------------------------------
Income and cash flow LaRonde Division Revenues from mining
operations $ 61,766 $ 48,604 Production costs 30,973 24,141
-------------------------------------------------------------------------
Gross profit (exclusive of amortization shown below) $ 30,793 $
24,463 Amortization 7,211 5,582
-------------------------------------------------------------------------
Gross profit $ 23,582 $ 18,881 ---------------------------
-------------------------------------------------------------------------
Net income for the period $ 10,449 $ 12,909 Net income per share
(basic and fully diluted) $ 0.12 $ 0.15 Cash flow provided by
operating activities $ 28,105 $ 6,219 Cash flow used in investing
activities $ (15,904) $ (9,381) Cash flow used in financing
activities $ (1,095) $ (1,068) Weighted average number of common
shares outstanding - basic (in thousands) 86,131 84,525 Tons of ore
milled 715,121 689,176 Head grades: Gold (oz. per ton) 0.09 0.11
Silver (oz. per ton) 2.13 2.30 Zinc 4.13% 3.90% Copper 0.39% 0.55%
Recovery rates: Gold 90.56% 92.19% Silver 83.60% 84.93% Zinc 77.10%
81.81% Copper 81.70% 79.94% Payable metal produced: Gold (ounces)
55,310 70,188 Silver (ounces in thousands) 1,097 1,128 Zinc (pounds
in thousands) 41,141 36,647 Copper (pounds in thousands) 3,989
5,840 Payable metal sold: Gold (ounces) 70,137 70,470 Silver
(ounces in thousands) 1,398 1,128 Zinc (pounds in thousands) 37,454
36,804 Copper (pounds in thousands) 6,216 5,855 Realized prices per
unit of production: Gold (per ounce) $ 430 $ 412 Silver (per ounce)
$ 6.85 $ 6.72 Zinc (per pound) $ 0.60 $ 0.47 Copper (per pound) $
1.47 $ 1.25 Total cash costs (per ounce): Production costs $ 560 $
344 Less: Net byproduct revenues (455) (260) Inventory adjustments
(36) (4) Accretion expense and other (2) (2)
-------------------------------------------------------------------------
Total cash costs (per ounce) $ 67 $ 78 ---------------------------
-------------------------------------------------------------------------
Minesite costs per ton milled (Canadian dollars) $ 48 $ 48
---------------------------
-------------------------------------------------------------------------
Consolidated Balance Sheets Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, March 31, December 31, US GAAP
basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
ASSETS Current Cash and cash equivalents $ 117,114 $ 106,014 Metals
awaiting settlement 41,689 43,442 Income taxes recoverable 13,154
16,105 Inventories: Ore stockpiles 10,451 9,036 Concentrates 4,136
9,065 Supplies 8,564 8,292 Other current assets 19,659 19,843
-------------------------------------------------------------------------
Total current assets 214,767 211,797 Fair value of derivative
financial instruments 2,525 2,689 Other assets 23,818 25,234 Future
income and mining tax assets 52,952 51,407 Mining properties
436,402 427,037
-------------------------------------------------------------------------
$ 730,464 $ 718,164 ---------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and
accrued liabilities $ 28,200 $ 28,667 Dividends payable 841 3,399
Interest payable 809 2,426
-------------------------------------------------------------------------
Total current liabilities 29,850 34,492
-------------------------------------------------------------------------
Fair value of derivative financial instruments 3,439 - Long-term
debt 141,083 141,495 Asset retirement obligations and other
liabilities 14,979 14,815 Future income and mining tax liabilities
58,228 57,136 Shareholders' Equity Common shares Authorized -
unlimited Issued - 86,192,939 (2004 - 86,072,779) 622,167 620,704
Stock options 1,988 465 Warrants 15,732 15,732 Contributed surplus
7,181 7,181 Deficit (162,307) (172,756) Accumulated other
comprehensive loss (1,876) (1,100)
-------------------------------------------------------------------------
Total shareholders' equity 482,885 470,226
-------------------------------------------------------------------------
$ 730,464 $ 718,164 ---------------------------
-------------------------------------------------------------------------
Consolidated Statements of Income and Comprehensive Income
Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, except per share amounts,
Three months ended March 31, US GAAP basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
REVENUES Revenues from mining operations $ 61,766 $ 48,604 Interest
and sundry 648 421
-------------------------------------------------------------------------
62,414 49,025 COSTS AND EXPENSES Production 30,973 24,141 Fair
value of derivative financial instruments 3,439 216 Exploration and
corporate development 2,763 290 Equity loss in junior exploration
companies 1,134 289 Amortization 7,211 5,582 General and
administrative 3,749 1,799 Provincial capital tax 599 455 Interest
2,552 1,757 Foreign currency (gain) loss (384) 139
-------------------------------------------------------------------------
Income before income, mining and federal capital taxes 10,378
14,357 Federal capital tax 248 266 Income and mining tax expense
(recovery) (319) 1,182
-------------------------------------------------------------------------
Net income for the period $ 10,449 $ 12,909
---------------------------
-------------------------------------------------------------------------
Net income per share - basic and diluted $ 0.12 $ 0.15
---------------------------
-------------------------------------------------------------------------
Weighted average number of shares (in thousands) Basic 86,131
84,525 Diluted 86,545 85,051 ---------------------------
-------------------------------------------------------------------------
Comprehensive income: Net income for the period $ 10,449 $ 12,909
-------------------------------------------------------------------------
Other comprehensive loss, net of tax: Unrealized gain on hedging
activities 93 185 Unrealized loss on available-for-sale securities
(154) (442) Cumulative translation adjustment on equity investee
(696) - Adjustments for derivative instruments maturing during the
period (19) (784) Adjustments for realized gains on
available-for-sale securities due to dispositions in the period -
(508)
-------------------------------------------------------------------------
Other comprehensive loss for the period (776) (1,549)
-------------------------------------------------------------------------
Comprehensive income for the period $ 9,673 $ 11,360
---------------------------
-------------------------------------------------------------------------
Consolidated Statement of Shareholders' Equity Agnico-Eagle Mines
Limited
-------------------------------------------------------------------------
(thousands of United States dollars, Three months ended March 31,
US GAAP basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
Deficit Balance, beginning of period $ (172,756) $ (218,055) Net
income for the period 10,449 12,909
-------------------------------------------------------------------------
Balance, end of period $ 162,307) $ (205,146)
---------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive loss Balance, beginning of period $
(1,100) $ (5,440) Other comprehensive loss for the period (776)
(1,549)
-------------------------------------------------------------------------
Balance, end of period $ (1,876) $ (6,989)
---------------------------
-------------------------------------------------------------------------
Consolidated Statements of Cash Flows Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, Three months ended March 31,
US GAAP basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
Operating activities Net income for the period $ 10,449 $ 12,909
Add (deduct) items not affecting cash from operating activities:
Amortization 7,211 5,582 Future income and mining taxes
(recoveries) (319) 1,957 Unrealized loss on derivative contracts
3,439 216 Amortization of deferred costs and other 2,681 158
-------------------------------------------------------------------------
23,461 20,822 Change in non-cash working capital balances Metals
awaiting settlement 1,753 (7,847) Income taxes recoverable 2,951
(1,116) Inventories 1,703 (1,671) Prepaid expenses and other 337
1,700 Accounts payable and accrued liabilities (483) (3,306)
Interest payable (1,617) (2,363)
-------------------------------------------------------------------------
Cash flows provided by operating activities 28,105 6,219
-------------------------------------------------------------------------
Investing activities Additions to mining properties (15,182)
(10,223) Increase in investments and other (722) 842
-------------------------------------------------------------------------
Cash flows used in investing activities (15,904) (9,381)
-------------------------------------------------------------------------
Financing activities Dividends paid (2,542) (2,480) Common shares
issued 1,447 1,412
-------------------------------------------------------------------------
Cash flows used in financing activities (1,095) (1,068)
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (6) 52
Net increase (decrease) in cash and cash equivalents during the
period 11,100 (4,178) Cash and cash equivalents, beginning of
period 106,014 110,365
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 117,114 $ 106,187
---------------------------
-------------------------------------------------------------------------
Other operating cash flow information: Interest paid during the
period $ 4,012 $ 3,113 ---------------------------
-------------------------------------------------------------------------
Income, mining and capital taxes paid (recovered) during the period
$ (2,527) $ 1,161 ---------------------------
-------------------------------------------------------------------------
Note 1 Reconciliation of Total Cash Costs Per Ounce and Total
Minesite Costs Per Ton Total cash cost is not a recognized measure
under US GAAP and this data may not be comparable to data presented
by other gold producers. We believe that this generally accepted
industry measure is a realistic indication of operating performance
and is useful in allowing year over year comparisons. As
illustrated in the table below, this measure is calculated by
adjusting Production Costs as shown in the Statement of Income and
Comprehensive Income for net byproduct revenues, royalties,
inventory adjustments and asset retirement provisions. This measure
is intended to provide investors with information about the cash
generating capabilities of our mining operations. Management uses
this measure to monitor the performance of our mining operations.
Since market prices for gold are quoted on a per ounce basis, using
this per ounce measure allows management to assess the mine's cash
generating capabilities at various gold prices. Management is aware
that this per ounce measure of performance can be impacted by
fluctuations in byproduct metal prices and exchange rates.
Management compensates for the limitation inherent with this
measure by using it in conjunction with the minesite cost per ton
measure (discussed below) as well as other data prepared in
accordance with US GAAP. Management also performs sensitivity
analyses in order to quantify the effects of fluctuating metal
prices and exchange rates. Minesite cost per ton is not a
recognized measure under US GAAP and this data may not be
comparable to data presented by other gold producers. As
illustrated in the table below, this measure is calculated by
adjusting Production Costs as shown in the Statement of Income and
Comprehensive Income for inventory and hedging adjustments and
asset retirement provisions and then dividing by tons processed
through the mill. Since total cash cost data can be affected by
fluctuations in byproduct metal prices and exchange rates,
management believes this measure provides additional information
regarding the performance of mining operations and allows
management to monitor operating costs on a more consistent basis as
the per ton measure eliminates the cost variability associated with
varying production levels. Management also uses this measure to
determine the economic viability of mining blocks. As each mining
block is evaluated based on the net realizable value of each ton
mined, in order to be economically viable the estimated revenue on
a per ton basis must be in excess of the minesite cost per ton.
Management is aware that this per ton measure is impacted by
fluctuations in production levels and thus uses this evaluation
tool in conjunction with production costs prepared in accordance
with US GAAP. This measure supplements production cost information
prepared in accordance with US GAAP and allows investors to
distinguish between changes in production costs resulting from
changes in production versus changes in operating performance. The
following tables provide a reconciliation of the total cash
operating costs per ounce of gold produced and operating cost per
ton to the financial statements: (thousands of dollars, except
where noted) Q1 2005 Q1 2004
---------------------------------------------------------------------
Cost of production per Consolidated Statements of Income $ 30,973 $
24,141 Adjustments: Byproduct revenues (25,261) (18,210) Production
royalty - Inventory adjustment(i) (1,894) (294) Non-cash
reclamation provision (107) (131) --------- --------- Cash
operating costs $ 3,711 $ 5,506 Gold production (ounces) 55,310
70,188 --------- --------- Total cash costs (per ounce) $ 67 $ 78
--------- --------- --------- --------- (thousands of dollars,
except where noted) Q1 2005 Q1 2004
---------------------------------------------------------------------
Cost of production per Consolidated Statements of Income $ 30,973 $
24,141 Adjustments: Inventory adjustment(i) and hedging
adjustments(ii) (3,220) 865 Non-cash reclamation provision (107)
(131) --------- --------- Minesite operating costs (US$) $ 27,646 $
24,875 --------- --------- Minesite operating costs (C$) $ 33,918 $
32,790 Tons milled (000's tons) 649 689 --------- ---------
Minesite costs per ton (C$)(iii) $ 48 $ 48 --------- ---------
--------- --------- Notes: (i) Under the Company's revenue
recognition policy, revenue is recognized on concentrates when
legal title passes. Since total cash operating costs are calculated
on a production basis, this adjustment reflects the portion of
concentrate production for which revenue has not been recognized in
the period. (ii) Hedging adjustments reflect gains and losses on
the Company's derivative positions entered into to hedge the
effects of foreign exchange fluctuations on production costs. These
items are not reflective of operating performance and thus have
been eliminated when calculating operating costs per ton. (iii)
Total cash operating costs and operating cost per ton data are not
recognized measures under US GAAP. Management uses these generally
accepted industry measures in evaluating operating performance and
believes them to be realistic indications of such performance. The
data also indicates the Company's ability to generate cash flow and
operating earnings at various gold prices. This additional
information should be considered together with other data prepared
in accordance with US GAAP. DATASOURCE: Agnico-Eagle Mines Limited
CONTACT: David Smith, Director, Investor Relations, (416) 947-1212
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