Stock Symbols: AEM (NYSE) AGE (TSX) TORONTO, Oct. 26
/PRNewswire-FirstCall/ -- Agnico-Eagle Mines Limited today reports
third quarter earnings of $2.1 million, or $0.02 per share. This
compares to net earnings of $10.6 million, or $0.12 per share, in
the third quarter of 2004. Cash flow provided by operating
activities was $11.2 million in the quarter, compared to $16.7
million in the prior year's third quarter. The financial position
remains strong with cash and cash equivalents totaling $124
million. For the first nine months of 2005, earnings totaled $25.3
million, or $0.29 per share, versus $32.3 million, or $0.38 per
share, in the corresponding period of 2004. For the first nine
months of 2005, cash flow from operating activities totaled $58.4
million versus $37.8 million in the corresponding period of 2004.
Third quarter earnings in 2005 were negatively affected by
mark-to-market losses on byproduct metal derivative contracts of
$5.1 million, or $0.06 per share, a foreign exchange loss on
translation of the asset retirement obligations of $0.8 million, or
$0.01 per share, and a deferred tax expense of $1.1 million, or
$0.01 per share. Payable gold production in the third quarter was
61,704 ounces at total cash costs per ounce of $33(1). This
compares with 67,237 ounces at total cash costs of $77 per ounce in
the third quarter of 2004. Based on the operating results from the
first nine months, gold production for the full year 2005 is
expected to be approximately 250,000 ounces at total cash costs
below $100 per ounce. Highlights for the quarter include: - The
LaRonde mine's solid operating performance continues (7,908 tons of
ore per day processed in the quarter), with very low total cash
costs, by industry standards, of $33 per ounce of gold. -
Agnico-Eagle's $130 million offer for Riddarhyttan Resources AB was
successful with 82.6% now tendered to the offer, with total
ownership now set to exceed 96.6%. The offer period has been
extended one final time to November 4, 2005. The compulsory
acquisition of any remaining untendered shares is expected to be
initiated immediately thereafter. - The drilling campaign on the
Pinos Altos project in Mexico continues to return high grade gold
intercepts including 0.47 ounces per ton gold and 8.88 ounces per
ton silver over 46 feet in Cerro Colorado zone. A decision on
whether to exercise our option to purchase the property is expected
by mid-February, 2006. - The Goldex mine is now under construction
and proceeding well. Gold production at Goldex is expected to begin
in 2008, averaging 170,000 ounces per year, over a ten year mine
life, at total cash costs of approximately $200 per ounce. - Shaft
sinking at Lapa is progressing and now exceeds 1,600 feet in depth.
Following additional underground drilling (to begin by the end of
2005) and sampling, a bankable feasibility study is expected to be
completed in the fourth quarter of 2006. "Agnico-Eagle's low cost
LaRonde operation continues to generate strong cash flow to support
our growth plans", said Sean Boyd, President and Chief Executive
Officer. "Our successful acquisition of Riddarhyttan and its
Suurikuusikko gold property in Finland is an important step in our
plans to dramatically increase our gold production through the
development of several new gold mines over the next three years",
added Mr. Boyd. Conference Call Tomorrow The Company's senior
management will host the Third Quarter Results Conference Call on
Thursday October 27, 2005 at 11:30 a.m. (E.D.T.). Management will
also provide an update of the Company's exploration and development
activities. To listen on the telephone, please dial (416) 640-4127
or 1 (800) 814-4890 toll free, at least five minutes before the
scheduled start of the presentation. The access phone number for
the archived audio replay is 1 (877) 289-8525, passcode 21104891
followed by the number sign. It will be available from Thursday,
October 27, 2005 at 2:00 pm until Friday, November 4, 2005 at 11:59
pm. Additionally, a live audio webcast of the call will be
available on the Company's website at http://www.agnico-eagle.com/.
The presentation will be archived on the website until April 27,
2006. LaRonde Mine - Reliable Performance Continues LaRonde
processed an average of 7,908 tons of ore per day in the third
quarter, continuing the strong operating performance seen during
the first half of 2005 (8,103 tpd), and in 2004 (8,156 tpd). While
the design capacity of the plant is 7,000 tons per day, it has now
been operating at approximately 8,000 tons per day for nearly two
years, giving confidence that this performance can be sustained.
Record production, to date, was achieved from the lower levels of
the mine in the third quarter of 2005, accounting for approximately
70% of total production. This is very encouraging considering the
previously reported issues faced in the first and third quarters of
2005, which related to difficult ground conditions encountered in
the extraction of the 194 Sill Pillar. Minesite costs per ton were
C$52(2) in the third quarter. Similar to the second quarter, these
costs were slightly higher than expected due to higher costs for
fuel, reagents, and increased equipment maintenance and ground
support expense. For the first nine months of 2005, minesite costs
per ton were C$50, in the expected range for the year of C$48 to
C$50 per ton. In the first nine months of 2004, minesite costs per
ton were C$48. The higher amount in 2005 is largely due to
underground rehabilitation costs incurred in the first quarter, and
other higher costs, as set out above. On a per ounce basis, net of
byproduct credits, LaRonde's total cash costs remained very low, by
industry standards, at $33 per ounce in the third quarter. This
compares with the results of the third quarter of 2004 when total
cash costs per ounce were $77. The main reason for the decrease in
total cash costs is the significantly higher byproduct prices
realized in 2005. Year to date total cash costs were $66 per ounce
versus $77 per ounce in the first nine months of 2004. Both of
these numbers compare favourably to the realized price of gold
which was $432 per ounce and $393 per ounce for the respective
periods. In spite of the high production tonnage being achieved by
the mine, the payable quarterly gold production of 61,704 ounces
was 8% lower than the corresponding period in 2004. Contributing to
this reduction was a decision to continue to maximize the value of
the LaRonde orebody, even if it resulted in lower gold production.
Due to the relatively high zinc price prevailing over the past
several quarters, numerous stopes have been extended in length, and
thereby increasing tonnage, to recover the zinc rich zone which is
typically found in the immediate hanging wall. This has the effect
of reducing the gold head grade of the ore sent to the mill, and
displacing some gold/copper ore. However, this results in improved
earnings and cash flows. Also contributing to this gold production
decrease were two lost days of production due to smoke from a
nearby forest fire. Additionally, higher lead content, associated
with higher zinc grades, continues to have a negative impact on
gold and copper recoveries in the mill. The Company is targeting
gold production of approximately 250,000 ounces in 2005 at total
cash costs below $100 per ounce. Byproduct production is expected
to be over 5 million ounces of silver, approximately 170 million
pounds of zinc, and nearly 17 million pounds of copper.
------------------ (1) Total cash costs per ounce is a non-GAAP
measure. For a reconciliation of this measure to the financial
statements, see note 1 following the financial statements (2)
Minesite costs per ton is a non-GAAP measure. For a reconciliation
of this measure to the financial statements, see Note 1 following
the financial statements Financial Position - Continues to
Strengthen Cash and cash equivalents grew to nearly $124 million at
September 30, 2005, due to strong operating cash flows.
Additionally, the Company maintains substantially undrawn bank
lines of $100 million. Agnico-Eagle has received a commitment from
its banking syndicate to increase these facilities to $150 million,
and to extend the term to December, 2009. These amendments remain
subject to definitive documentation. As a result of the Board
approval for the construction of the Goldex mine, the Company's
2005 capital expenditures are expected to be slightly more than $60
million, which includes an additional $19 million for Goldex.
Agnico-Eagle expects to fund Goldex principally from internal cash
flows and other available cash resources. As a result of the
Riddarhyttan transaction, Agnico-Eagle will issue approximately
10.3 million common shares from treasury. Additionally, if
Agnico-Eagle elects to purchase the Pinos Altos property, a payment
of $39 million in cash and 1.8 million shares of Agnico-Eagle,
issued from treasury, will be made. Considering both of these
transactions, the Company would still have fewer than 100 million
shares outstanding, less than many of its peers. This is expected
to contribute to the ability of the Company to continue to generate
per share value going forward. Pinos Altos - More High Grade Drill
Results As detailed in the March 16, 2005 press release, an
exploration and purchase option agreement was finalized with
Industrias Penoles S.A. de C.V. ("Penoles") for 100% of the Pinos
Altos property in Mexico. Pinos Altos contains an indicated gold
resource of 4.4 million tons, grading 0.18 ounces of gold per ton
and 3.82 ounces per ton of silver, containing approximately 800,000
ounces of gold and 16.9 million ounces of silver. In addition, the
property has an inferred resource of 2.5 million tons, grading 0.18
ounces per ton of gold and 3.41 ounces per ton of silver,
containing approximately 400,000 ounces of gold and 8.4 million
ounces of silver. Penoles' work to date has also included
metallurgical testing and initial work on permitting for a
potential mining operation. Six surface rigs are currently drilling
on site, with another rig drilling underground. Agnico-Eagle's
spending to date totals $2.4 million, with $0.4 million remaining
to fulfill the terms of the option agreement. However, following a
mutually agreed upon extension of two months, a decision on whether
the Company will exercise its option, for $39 million in cash and
1.8 million shares of Agnico-Eagle, is expected by mid-February,
2006. Also, Agnico-Eagle intends to spend an additional $1.3
million on exploration during this extension period, mainly on deep
drilling. During the third quarter of 2005, the diamond drilling
program has targeted three sectors: - Open pit resource exploration
mainly on the Oberon de Weber and Cerro Colorado zones (39 holes
including 1 in progress, for a total length of 14,132 feet); -
Resource conversion at Santo Nino, consisting of 3 surface holes
(in progress) for 2,306 feet, and 28 short underground diamond
drill holes (including one in progress) for 2,949 feet within the
zone along the 1925 level; and - Deep resource exploration (seven
holes, including one in progress for a total length of 11,457
feet). The best results in the period came from the Oberon de Weber
open pit drilling, the deep exploration and mineral resource
confirmation at Santo Nino, and at depth near Cerro Colorado. A map
showing the approximate location of the drill holes may be viewed
on-line at
http://www.agnico-eagle.com/url/05-10-26/pinos_altos.pdf.
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Gold Silver (oz/ton, (oz/ton, True cut cut Thickness to 1.75 to
23.33 Drill Hole Number (ft) From (ft) To (ft) oz/ton) oz/ton)
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Santo Nino Zone
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PA-05-14(1) 49.2 2,198.5 2,262.8 0.12 2.88
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PA-05-17(1) 34.4 240.5 285.4 0.13 1.59
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PA-05-21 13.5 137.8 160.8 0.14 2.80
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Santo Nino Zone Underground
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SN1925-12 44.6 15.7 60.4 0.07 3.16
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SN1925-29 14.8 6.6 21.3 0.20 3.82
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SN1925-39 16.1 31.5 47.6 0.09 2.62
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SN1925-55 25.6 154.2 195.5 0.15 4.74
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Oberon de Weber Zone
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PA-05-29(2) 15.7 58.1 77.1 0.05 6.04
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and 32.8 98.4 137.8 0.09 2.53
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PA-05-41 23.0 65.6 90.2 0.33 4.97
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PA-05-42 42.7 356.0 401.9 0.08 3.44
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Cerro Colorado Zone
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PA-05-39 45.9 1,751.9 1,807.72 0.03 1.39
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PA-05-52 45.9 1,673.2 1,727.34 0.47 8.88
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Notes: 1. Previously released drill hole with new silver grade
results. 2. Void due to mine excavation in interval from 77.1 ft to
98.4 ft. Hole PA-05-52, the deepest hole to date on the Cerro
Colorado zone at over 1,200 feet below surface, returned very high
grades of 0.47 ounces per ton gold and almost 9 ounces per ton of
silver, over 46 feet true horizontal width. This hole reinforces
the fact that some very high grade mineralization is present
outside of the current mineral resource. Hole PA-05-39 tested the
Cerro Colorado zone at approximately 1,500 feet in depth, and
approximately 1,000 feet west of the Santo Nino Zone. Although the
assay results were low, a wide zone of 46 feet, containing visible
gold, was defined at a grade of 0.03 ounces per ton gold with
silver assays of 1.39 ounces per ton. This suggests good potential
for finding economic mineralization in the region between Cerro
Colorado and Santo Nino. Also, the latest two drilling results
confirm the depth potential of the Cerro Colorado zone, which
remains open at depth and to the east. Hole PA-05-14, the deepest
exploration drill hole to date on the Santo Nino zone (2,300 feet
below surface), showed mineralization at over 300 feet below the
current limits of the Pinos Altos mineral resource. Additionally,
holes PA-05-17 and PA-05-21 extended the strike length of the
near-surface zone to the east and to the west. Several holes were
drilled from underground workings almost 1,100 feet below surface.
Results from these underground holes (SN1925-12, -29, -39 and -55),
spaced roughly 130 feet apart, confirm a potentially economic zone
at depth. The implied strike length is over 650 feet, with
thicknesses that vary between 15 feet and 45 feet. The three most
significant holes in the Oberon de Weber zone are holes PA-05-29,
PA-05-41 and PA-05-42. These holes confirm surface mineralization,
approximately 3,000 feet to the east of the Santo Nino Zone, in an
area adjacent to existing workings (mined in the early 1900s). The
Cerro Colorado zone drill results, and the good intersections at
depth in the Santo Nino zone, have contributed to the decision to
extend the exploration program for two months. A scoping study is
in progress, and is expected to be completed by the end of 2005. A
revised resource estimate is expected to be presented at this time.
Both will be considered in the decision on whether, or not, to
exercise the option. Goldex Mine - Construction Advances Following
a favourable review from an independent third party, a positive
production decision was made, in July, 2005, for the 100%-owned
Goldex project, 35 miles east of LaRonde. The Goldex reserves are
approximately 22.1 million tons with a grade of 0.07 ounces per
ton, or 1.6 million ounces of gold. Contracts for surface and
underground work have been awarded and significant surface site
preparation work has already been completed. Underground work
includes lateral and vertical development, and upgrading the
ventilation system. Underground work, accessed through existing
infrastructure, is ongoing. The sinking of the production shaft is
expected to commence in the third quarter of 2006. The Goldex base
case projects an after-tax internal rate of return of 15%, based on
$400 gold per ounce, a C$/US$ exchange rate of 1.30, minesite
operating costs of C$17/ton, and capital costs of $135 million.
Annual gold production is expected to average over 170,000 ounces
over a 10 year mine life, at total cash costs of approximately $200
per ounce. Lapa Project - Shaft Sinking Progressing Well The
Company previously announced a $30 million underground development,
drilling and metallurgical program at its 100% owned Lapa project,
seven miles east of LaRonde. Lapa contains 4.5 million tons,
grading 0.26 ounces per ton, totalling 1.2 million ounces of
probable gold reserves. In addition, Lapa contains indicated
mineral resources of 832,000 tons grading 0.16 ounces per ton, for
a total of 133,000 ounces, and inferred mineral resources of 1.9
million tons grading 0.22 ounces per ton, for a total of 414,000
ounces. The first phase of the Lapa underground program includes a
2,700-foot shaft sinking project. Shaft sinking commenced in March,
2005, with the current depth at over 1,600 feet. A strong advance
of approximately 10 feet per day was achieved in September. The
16-foot diameter, concrete-lined, shaft is expected to be completed
in mid-2006. Underground diamond drilling, from existing
infrastructure, is expected to start in the fourth quarter of this
year. Positive results from this first phase program would result
in an extension of the shaft to a depth of approximately 4,500 feet
below surface. Incremental capital costs to bring the project into
full production are currently estimated at $80 million. Assuming no
further additions to reserves and the current reserve grade, the
Company envisages a ten-year mine life with start-up in late 2008.
Steady-state production levels of approximately 125,000 ounces of
gold per annum, at total cash costs below $200 per ounce, are
expected. Suurikuusikko Project - Acquisition of Riddarhyttan
Substantially Completed On May 12, 2005, Agnico-Eagle announced a
bid for Riddarhyttan, a public company listed on the Swedish stock
exchange, valuing the shares not already owned by Agnico-Eagle at
nearly $130 million. Currently, 82.6% of the Riddarhyttan shares
have been tendered to Agnico-Eagle's offer. Including the 14%
previously owned by the Company, Agnico-Eagle will own, on
settlement, 96.6% of the outstanding shares. Agnico-Eagle is now
extending the tender period one final time to November 4, 2005 to
acquire as many shares under the offer as reasonably possible.
Following completion of the offer, Agnico-Eagle intends to initiate
the compulsory acquisition process, under Swedish law, to purchase
the remaining shares in Riddarhyttan. In connection therewith, the
shares of Riddarhyttan will be de-listed from the Stockholm Stock
Exchange. As at July 19, 2005, Riddarhyttan has reported a measured
gold resource of 2.74 million tons grading 0.18 ounces per ton
(0.50 million ounces), an indicated resource of 10.24 million tons
grading 0.15 ounces per ton (1.53 million ounces) and an inferred
resource of 13.72 million tons grading 0.12 ounces per ton (1.70
million ounces), using a cut-off of 0.06 ounces per ton, on the
Suurikuusikko deposit. No new resource estimate is available at
this time. Currently, pilot plant testing is proceeding on pressure
oxidation as the selected process. The reserves and resources are
being recalculated to be in compliance with National Instrument
43-101. The current drill program is focused on in-fill drilling
and resource conversion, as there has been a significant increase
in the resource category over the past year. A bankable feasibility
study is expected to be completed in the second quarter of 2006.
The study will be based on an open pit mining scenario with
underground mining via ramp access and a one million metric ton per
annum surface processing plant. Five drills remain active on the
property. Agnico-Eagle believes that there is considerable
potential along strike, as the known strike length of
mineralization is approximately 15 kilometres, while only two
kilometers have been drilled to date. Further information is
available on the Riddarhyttan website. LaRonde II Project -
Feasibility Study Nearing Completion A bankable feasibility study
on LaRonde II is anticipated to be completed by the end of 2005,
with an independent review expected to be completed in the first
quarter of 2006. The internal shaft, or "winze" option has been
selected as the most cost-efficient. The benefits of the winze
include; maximizing the use of existing infrastructure, and a
shorter lead time, which will enable LaRonde II's production to
overlap with LaRonde's production for several years. This should
enable the mill to continue to operate at capacity for a longer
period. Additionally, the winze provides lower technical risk, and
better capital distribution over time. The study envisages a
production rate of 5,000 tons to 6,000 tons per day, with potential
gold production of more than 300,000 ounces per year. Forward
Looking Statements The information in this press release has been
prepared as at October 26, 2005. Certain statements contained in
this press release constitute "forward- looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995. When used in this document, the words
"anticipate", "expect", "estimate," "forecast," "planned", "intend"
and similar expressions are intended to identify forward-looking
statements. Such statements include, without limitation: estimates
of future mineral production and sales; estimates of future
production costs and other expenses; estimates of future capital
expenditures and other cash needs; statements as to the projected
development of certain ore deposits, including estimates of
exploration, development and other capital costs, and estimates of
the timing of such development or decisions with respect to such
development; estimates of reserves and resources, and statements
regarding future exploration results; the anticipated timing of
events with respect to the Company's minesites, including Goldex,
Lapa, and LaRonde II; the anticipated timing of events with respect
to the Company's exploration and decision in connection with its
Pinos Altos option; the completion of the Company's bid for
Riddarhyttan; the ability of the Company to achieve its objective
of building a multi-mine production base; and other statements
regarding anticipated trends with respect to the Company's capital
resources and results of operations. Such statements reflect the
Company's views at the time with respect to future events and are
subject to certain risks, uncertainties and assumptions. Many
factors, known and unknown, could cause the actual results to be
materially different from those expressed or implied by such
forward- looking statements. Such risks include, but are not
limited to: the Company's dependence upon its LaRonde mine for all
of its current gold production; uncertainty of mineral reserve,
mineral resource, mineral grade and mineral recovery estimates;
uncertainty of future production, capital expenditures, and other
costs; gold and other metals price volatility; currency
fluctuations; mining risks, including challenging ground conditions
at the LaRonde mine; and governmental and environmental regulation.
For a more detailed discussion of such risks and other factors, see
Company's Annual Information Form and Annual Report on Form 20-F
for the year ended December 31, 2004, as well as the Company's
other filings with the Ontario Securities Commission and the U.S.
Securities and Exchange Commission. The Company does not intend,
and does not assume any obligation, to update these forward-
looking statements. About Agnico-Eagle Agnico-Eagle is a long
established Canadian gold producer with operations located in
northwestern Quebec and exploration and development activities in
Canada, the United States, and Mexico. Agnico-Eagle's LaRonde Mine
in Quebec is Canada's largest gold deposit. The Company has full
exposure to higher gold prices consistent with its policy of no
forward gold sales. It has paid a cash dividend for 25 consecutive
years. Scientific and Technical Data Canadian Securities
Administrators National Instrument 43-101 ("NI 43-101") requires
mining companies to disclose reserves and resources using the
subcategories of "proven" reserves, "probable" reserves, "measured"
resources, "indicated" resources and "inferred" resources. Mineral
resources that are not mineral reserves do not have demonstrated
economic viability. A mineral reserve is the economically mineable
part of a measured or indicated resource demonstrated by at least a
preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and
other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified. A mineral reserve
includes diluting materials and allows for losses that may occur
when the material is mined. A proven mineral reserve is the
economically mineable part of a measured resource for which
quantity, grade or quality, densities, shape and physical
characteristics are so well established that they can be estimated
with confidence sufficient to allow the appropriate application of
technical and economic parameters, to support production planning
and evaluation of the economic viability of the deposit. A probable
mineral reserve is the economically mineable part of an indicated
mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of
confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. A mineral
resource is a concentration or occurrence of natural, solid,
inorganic or fossilized organic material in or on the earth's crust
in such form and quantity and of such a grade or quality that it
has reasonable prospects for economic extraction. The location,
quantity, grade, geological characteristics and continuity of a
mineral resource are known, estimated or interpreted from specific
geological evidence and knowledge. A measured mineral resource is
that part of a mineral resource for which quantity, grade or
quality, densities, shape, physical characteristics, can be
estimated with a level of confidence sufficient to allow the
appropriate application of technical and economic parameters, to
support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable
exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes that are spaced closely enough to
confirm both geological and grade continuity. An indicated mineral
resource is that part of a mineral resource for which quantity,
grade or quality, densities, shape and physical characteristics can
be estimated with a level of confidence sufficient to allow the
appropriate application of technical and economic parameters, to
support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable
exploration and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonable assumed. An
inferred mineral resource is that part of a mineral resource for
which quantity and grade or quality can be estimated on the basis
of geological evidence and limited sampling and reasonably assumed,
but not verified, geological and grade continuity. The estimate is
based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes. Mineral resources which are not
mineral reserves do not have demonstrated economic viability.
Investors are cautioned not to assume that part or all of an
inferred resource exists, or is economically or legally mineable.
The terms "measured", "indicated" and "inferred" mineral resources
are terms recognized and required under certain securities
legislation. United States investors are advised that the SEC does
not recognize these terms. "Inferred mineral resources" have a
great amount of uncertainty as to their existence and as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a
higher category. Estimates of inferred mineral resources may not
form the basis of feasibility or other economic studies. United
States investors are cautioned not to assume that all or any part
of measured or indicated mineral resources will ever be converted
into mineral reserves. United States investors are also cautioned
not to assume that all or any part of an inferred mineral resource
exists or is economically or legally mineable. Riddarhyttan
Technical Data The mineral resource estimate reported herein for
Riddarhyttan's Suurikuusikko property was prepared for Riddarhyttan
in accordance with the Australasian Code for Reporting Mineral
Resources and Ore Reserves, September 1999 ("JORC Code").
Riddarhyttan's mineral resources disclosed herein were estimated
using a minimum gold grade cut-off of 2 grams of gold per ton.
Mineral resource estimates prepared under reporting codes other
than NI 43-101 should not be relied upon as they may not conform to
NI 43-101 standards and definitions. However, reserve and resource
categories in the JORC Code are substantially similar to the
corresponding categories of mineral reserves and resources required
under NI 43-101. To the best of Agnico-Eagle's knowledge, the
Riddarhyttan estimate is relevant and reliable. The Riddarhyttan
resource data in this press release has been compiled by Lars-Goran
Ohlsson and Thomas Lindholm (Riddarhyttan Resources AB) who by
SveMin, Foreningen for gruvor, mineral- och metallproducenter, is
registered as a "Qualified Person" and Bill Fleshman, a certified
professional geologist in Australia. Pinos Altos Technical Data The
Pinos Altos exploration results disclosed in this press release
were reviewed by Dino Lombardi, P.Geo., Senior Geologist
International Projects. The mineral resource estimate reported
herein for Penoles's Pinos Altos property was completed in June
2003 and was reviewed Marc H. Legault, P.Eng., Agnico-Eagle's
Manager Project Evaluations and a qualified person as defined by NI
43-101. The data disclosed, including the sampling, analytical and
test data underlying the mineral resource estimate, has been
verified. The key assumptions and parameters used in the estimate
are a gold price of $300 per ounce, a silver price of $4.75 per
ounce, a 0.10 ounce per ton gold grade cut-off, and metallurgical
recoveries of 92.39% for gold and 47.83% for silver. Gold assays
were cut to 0.89 ounces per ton while silver assays were cut to
19.25 ounces per ton. We believe the estimate of mineral resources
at Pinos Altos is not likely to be materially affected by any known
environmental, permitting, legal, title, taxation, socio-political,
marketing or other relevant issues. Because Pinos Altos is not
considered to be a material property for Agnico-Eagle, a technical
report describing the resource estimate will not be filed with the
securities regulatory authorities. Agnico-Eagle Technical Data The
qualified person responsible for the Lapa mineral reserve and
mineral resource estimate is Christian D'Amours, Geo., of Service
Conseil Geopointcom. In estimating the Lapa resource and reserve, a
minimum gold grade cut-off of 0.15 and 0.19 ounce/ton, respectively
was used to evaluate drill intercepts that have been adjusted to
respect a minimum mining width of 9.2 ft. The estimate was derived
using a three dimensional block model of the deposit; the grades
were interpolated using the inverse distance power squared method.
A qualified person Carl Pelletier, Geo., of Innovexplo Geological
Services, supervised the preparation of and verified the scientific
and technical information regarding the Goldex project including
sampling, analytical and test data underlying the mineral reserve
and resource estimate. A qualified person, R. Mohan Srivastava,
P.Geo., of Froidevaux, Srivastava & Schofield Consultants, was
responsible for the mineral estimate process at Goldex. Because
Goldex may now be considered to be a material property for
Agnico-Eagle, a technical report describing the resource estimate
will be filed with the securities regulatory authorities shortly.
The minimum gold grade cut-off used to evaluate drill intercepts at
Goldex was 0.04 oz/ton over a minimum true thickness of 50 feet.
The reserve was derived by evaluating a three-dimensional model of
the Goldex Extension zone, whose gold grade was estimated using a
95% confidence interval grade calculation method, and then
adjusting the model envelope to only include sectors with a high
probability of exceeding the cut-off grade. Agnico-Eagle Mines Ltd.
is reporting mineral resource and reserve estimates in accordance
with the CIM guidelines for the estimation, classification and
reporting of resources and reserves. The effective date of each
estimate is December 31, 2004. More recent information on
exploration, mining, processing, metallurgy and other economic
factors have also been used. Reserve estimates were calculated
using historic three-year average metals prices and foreign
exchange rates in accordance with the Securities and Exchange
Commission's ("SEC") Industry Guide 7. Industry Guide 7 requires
the use of prices that reflect current economic conditions at the
time of reserve determination which Staff of the SEC has
interpreted to mean historic three-year average prices. The
assumptions used for 2004 reserves and resources were $360 per
ounce gold, $5.42 per ounce silver, $0.41 per pound zinc, $0.95 per
pound copper and a C$/US$ exchange rate of 1.42. There are no known
relevant issues that would materially affect the estimates. No
independent verification of the data has been published. Tonnage
amounts and contained metal amounts presented in the tables in this
news release have been rounded to the nearest 1000. The qualified
person responsible for the LaRonde II pre-feasibility study is
Carol Plummer, P.Eng., Mine Superintendent for LaRonde. The
qualified person responsible for the Lapa pre-feasibility and
Goldex feasibility studies is Rosaire Emond Ing., Goldex Project
Manager. The qualified person responsible for the LaRonde mineral
reserve and resource estimate is Guy Gosselin, Ing., P.Geo.,
Manager Exploration. A description of the operating and capital
cost assumptions, parameters and methods used to estimate the Penna
shaft can be found in the LaRonde Division SEDAR disclosure cited
above. Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines
Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Nine months ended
Dollars except where noted, September 30, September 30, US GAAP
basis) 2005 2004 2005 2004
-------------------------------------------------------------------------
Income and cash flow LaRonde Division Revenues from mining
operations $ 58,608 $ 47,986 $ 169,946 $ 142,254 Production costs
32,548 26,172 93,789 75,993
-------------------------------------------------------------------------
Gross profit (exclusive of amortization shown below) $ 26,060 $
21,814 $ 76,157 $ 66,261 Amortization 6,276 5,861 19,470 17,302
-------------------------------------------------------------------------
Gross profit $ 19,784 $ 15,953 $ 56,687 $ 48,959
-------------------------------------------------------------------------
Net income for period $ 2,057 $ 10,556 $ 25,299 $ 32,270 Net income
per share (basic and fully diluted) $ 0.02 $ 0.12 $ 0.29 $ 0.38
Cash flow provided by operating activities $ 11,151 $ 16,683 $
58,358 $ 37,803 Cash flow used in investing activities $ (17,444) $
(14,184) $ (49,683) $ (47,058) Cash flow provided by financing
activities $ 9,431 $ 18,540 $ 9,256 $ 19,024 Weighted average
number of common shares Outstanding - basic (in thousands) 86,638
84,791 86,330 84,658 Tons of ore milled (000's) 727.6 741.5 2,194.3
2,184.4 Head grades: Gold (oz. per ton) 0.09 0.10 0.09 0.10 Silver
(oz. per ton) 2.47 2.70 2.28 2.49 Zinc 4.30% 4.53% 4.21% 4.04%
Copper 0.43% 0.54% 0.39% 0.54% Recovery rates: Gold 91.33% 92.09%
90.64% 91.87% Silver 84.40% 88.10% 84.40% 86.60% Zinc 83.90% 84.70%
82.70% 84.00% Copper 73.80% 78.10% 75.10% 78.80% Payable metal
produced: Gold (ounces) 61,704 67,237 178,785 202,658 Silver
(ounces in thousands) 1,295 1,501 3,597 4,187 Zinc (pounds in
thousands) 44,604 48,349 130,092 122,479 Copper (pounds in
thousands) 4,235 5,814 11,929 16,729 Payable metal sold: Gold
(ounces) 64,852 67,052 195,539 202,473 Silver (ounces in thousands)
1,092 1,501 3,611 4,187 Zinc (pounds in thousands) 46,656 46,912
128,481 121,042 Copper (pounds in thousands) 4,637 5,859 14,411
16,774 Realized prices per unit of production: Gold (per ounce) $
432 $ 409 $ 432 $ 393 Silver (per ounce) $ 7.04 $ 6.45 $ 6.94 $
6.22 Zinc (per pound) $ 0.61 $ 0.44 $ 0.60 $ 0.47 Copper (per
pound) $ 1.88 $ 1.29 $ 1.62 $ 1.26 Total cash costs (per ounce)(x):
Production costs $ 527 $ 440 $ 525 $ 392 Less: Net byproduct
revenues (467) (334) (433) (295) Inventory adjustments (25) (24)
(24) (18) Accretion expense and other (2) (5) (2) (2)
-------------------------------------------------------------------------
Total cash costs (per ounce) $ 33 $ 77 $ 66 $ 77
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Minesite costs per ton milled (Canadian dollars) $ 52 $ 50 $ 50 $
48
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(x) See Note 1: Reconciliation of Total Cash Costs Per Ounce and
Total Minesite Costs Per Ton Consolidated Balance Sheet
Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, September 30, December 31, US
GAAP basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
ASSETS Current Cash and cash equivalents $ 123,957 $ 106,014 Metals
awaiting settlement 46,128 43,442 Income taxes recoverable 7,546
16,105 Inventories: Ore stockpiles 11,177 9,036 Concentrates 2,862
9,065 Supplies 8,463 8,292 Other current assets 25,304 19,843
-------------------------------------------------------------------------
Total current assets 225,437 211,797 Fair value of derivative
financial instruments 3,429 2,689 Other assets 24,027 25,234 Future
income and mining tax assets 60,344 51,407 Mining properties
453,490 427,037
-------------------------------------------------------------------------
$ 766,727 $ 718,164
-------------------------------------------------------------------------
-------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY
Current Accounts payable and accrued liabilities $ 26,714 $ 28,667
Dividends payable 876 3,399 Interest payable 808 2,426
-------------------------------------------------------------------------
Total current liabilities 28,398 34,492
-------------------------------------------------------------------------
Fair value of derivative financial instruments 4,312 - Long-term
debt 142,025 141,495 Asset retirement obligation and other
liabilities 16,303 14,815 Future income and mining tax liabilities
64,618 57,136 Shareholders' Equity Common shares Authorized -
unlimited Issued - 86,864,554 (2004 - 86,072,779) 631,067 620,704
Stock options 2,504 465 Warrants 15,732 15,732 Contributed surplus
7,181 7,181 Deficit (147,457) (172,756) Accumulated other
comprehensive gain (loss) 2,044 (1,100)
-------------------------------------------------------------------------
Total shareholders' equity 511,071 470,226
-------------------------------------------------------------------------
$ 766,727 $ 718,164
-------------------------------------------------------------------------
-------------------------- Consolidated Statement of Income and
Comprehensive Income - Unaudited Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Nine months ended
Dollars except per share September 30, September 30, amounts, US
GAAP basis) 2005 2004 2005 2004
-------------------------------------------------------------------------
REVENUES Revenues from mining operations $ 58,608 $ 47,986 $
169,946 $ 142,254 Interest and sundry (193) 59 754 1,415
-------------------------------------------------------------------------
58,415 48,045 170,700 143,669 COSTS AND EXPENSES Production 32,548
26,172 93,789 75,993 Fair value of derivative financial instruments
5,066 - 4,312 993 Exploration and corporate development 4,296 581
10,423 1,323 Equity loss in junior exploration companies 584 517
2,557 1,415 Amortization 6,276 5,861 19,470 17,302 General and
administrative 2,522 1,895 8,683 5,706 Provincial capital tax 387
(191) 1,297 1,003 Interest 2,573 1,742 7,227 5,771 Foreign currency
(gain) loss 763 38 (88) (341)
-------------------------------------------------------------------------
Income before income, mining and federal capital taxes 3,400 11,430
23,030 34,504 Federal capital tax 246 253 728 794 Income and mining
tax expense (recovery) 1,097 621 (2,997) 1,440
-------------------------------------------------------------------------
Net income for the period $ 2,057 $ 10,556 $ 25,299 $ 32,270
-------------------------------------------------------------------------
-------------------------------------------- Net income per share -
basic and diluted $ 0.02 $ 0.12 $ 0.29 $ 0.38
-------------------------------------------------------------------------
-------------------------------------------- Weighted average
number of shares (in thousands) Basic 86,638 84,791 86,330 84,658
Diluted 87,096 85,278 86,788 85,145
-------------------------------------------------------------------------
-------------------------------------------- Comprehensive income:
Net income for the period $ 2,057 $ 10,556 $ 25,299 $ 32,270
-------------------------------------------------------------------------
Other comprehensive income (loss), net of tax: Unrealized gain
(loss) on hedging activities 1,047 937 930 (125) Dilution gain on
issuance of shares by subsidiary, net of tax - 1,837 - 1,837
Unrealized gain (loss) on available-for-sale securities 3,239 555
4,216 (613) Cumulative translation adjustment on equity investee
101 - (1,905) - Adjustments for derivative instruments maturing
during the period (1) 657 (35) (2,274) Adjustments for realized
gains on available-for-sale securities due to dispositions in the
period (62) - (62) (632)
-------------------------------------------------------------------------
Other comprehensive income (loss) for the period 4,324 3,986 3,144
(1,807)
-------------------------------------------------------------------------
Comprehensive income for the period $ 6,381 $ 14,542 $ 28,443 $
30,463
-------------------------------------------------------------------------
-------------------------------------------- Consolidated Statement
of Shareholders' Equity Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Nine months ended
Dollars except where noted, September 30, September 30, US GAAP
basis - Unaudited) 2005 2004 2005 2004
-------------------------------------------------------------------------
Deficit Balance, beginning of period $(149,514) $(196,341)
$(172,756) $(218,055) Net income for the period 2,057 10,556 25,299
32,270
-------------------------------------------------------------------------
Balance, end of period $(147,457) $(185,785) $(147,457) $(185,785)
-------------------------------------------------------------------------
-------------------------------------------- Accumulated other
comprehensive income (loss) Balance, beginning of period $ (2,280)
$ (11,233) $ (1,100) $ (5,440) Other comprehensive income (loss)
for the period 4,324 3,986 3,144 (1,807)
-------------------------------------------------------------------------
Balance, end of period $ 2,044 $ (7,247) $ 2,044 $ (7,247)
-------------------------------------------------------------------------
-------------------------------------------- Consolidated Statement
of Cash Flows - Unaudited Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended, Nine months ended
Dollars, US GAAP basis) September 30, September 30, 2005 2004 2005
2004
-------------------------------------------------------------------------
Operating activities Net income for the period $ 2,057 $ 10,556 $
25,299 $ 32,270 Add (deduct) items not affecting cash from
operating activities: Amortization 6,276 5,861 19,470 17,302 Future
income and mining taxes (recoveries) 1,235 1,739 (2,997) 4,228
Unrealized loss on derivative contracts - (38) - 136 Amortization
of deferred costs and other 8,168 755 11,282 2,883
-------------------------------------------------------------------------
17,736 18,873 53,054 56,819 Change in non-cash working capital
balances Metals awaiting settlement (10,669) 551 (2,686) (6,959)
Income taxes recoverable 44 (1,157) 8,559 (3,467) Inventories 1,189
(2,366) 3,891 (3,437) Prepaid expenses and other (1,058) (1,598)
(889) 778 Accounts payable and accrued liabilities 5,527 3,997
(1,953) (3,579) Interest payable (1,618) (1,617) (1,618) (2,352)
-------------------------------------------------------------------------
Cash flows provided by operating activities 11,151 16,683 58,358
37,803
-------------------------------------------------------------------------
Investing activities Additions to mining properties (15,685)
(11,780) (44,888) (33,777) Investments and other (1,759) (2,404)
(4,795) (13,281)
-------------------------------------------------------------------------
Cash flows used in investing activities (17,444) (14,184) (49,683)
(47,058)
-------------------------------------------------------------------------
Financing activities Dividends paid - - (2,542) (2,480) Common
shares issued 9,431 18,540 11,798 21,504
-------------------------------------------------------------------------
Cash flows provided by financing activities 9,431 18,540 9,256
19,024
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 21 46
12 208 Net increase in cash and cash equivalents during the period
3,159 21,085 17,943 9,977 Cash and cash equivalents, beginning of
period 120,798 99,257 106,014 110,365
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 123,957 $ 120,342 $
123,957 $ 120,342
-------------------------------------------------------------------------
-------------------------------------------- Other operating cash
flow information: Interest paid during the period $ 4,326 $ 3,023 $
8,311 $ 6,489
-------------------------------------------------------------------------
-------------------------------------------- Income, mining, and
capital taxes paid (recovered) during the period $ 265 $ (271) $
(6,476) $ 2,259
-------------------------------------------------------------------------
-------------------------------------------- Note 1 Reconciliation
of Total Cash Costs Per Ounce and Total Minesite Costs Per Ton
Total cash cost is not a recognized measure under US GAAP and this
data may not be comparable to data presented by other gold
producers. We believe that this generally accepted industry measure
is a realistic indication of operating performance and is useful in
allowing year over year comparisons. As illustrated in the table
below, this measure is calculated by adjusting Production Costs as
shown in the Statement of Income and Comprehensive Income for net
byproduct revenues, royalties, inventory adjustments and asset
retirement provisions. This measure is intended to provide
investors with information about the cash generating capabilities
of our mining operations. Management uses this measure to monitor
the performance of our mining operations. Since market prices for
gold are quoted on a per ounce basis, using this per ounce measure
allows management to assess the mine's cash generating capabilities
at various gold prices. Management is aware that this per ounce
measure of performance can be impacted by fluctuations in byproduct
metal prices and exchange rates. Management compensates for the
limitation inherent with this measure by using it in conjunction
with the minesite cost per ton measure (discussed below) as well as
other data prepared in accordance with US GAAP. Management also
performs sensitivity analyses in order to quantify the effects of
fluctuating metal prices and exchange rates. Minesite cost per ton
is not a recognized measure under US GAAP and this data may not be
comparable to data presented by other gold producers. As
illustrated in the table below, this measure is calculated by
adjusting Production Costs as shown in the Statement of Income and
Comprehensive Income for inventory and hedging adjustments and
asset retirement provisions and then dividing by tons processed
through the mill. Since total cash cost data can be affected by
fluctuations in byproduct metal prices and exchange rates,
management believes this measure provides additional information
regarding the performance of mining operations and allows
management to monitor operating costs on a more consistent basis as
the per ton measure eliminates the cost variability associated with
varying production levels. Management also uses this measure to
determine the economic viability of mining blocks. As each mining
block is evaluated based on the net realizable value of each ton
mined, in order to be economically viable the estimated revenue on
a per ton basis must be in excess of the minesite cost per ton.
Management is aware that this per ton measure is impacted by
fluctuations in production levels and thus uses this evaluation
tool in conjunction with production costs prepared in accordance
with US GAAP. This measure supplements production cost information
prepared in accordance with US GAAP and allows investors to
distinguish between changes in production costs resulting from
changes in production versus changes in operating performance. The
following tables provide a reconciliation of the total cash
operating costs per ounce of gold produced and operating cost per
ton to the financial statements: 3 Months 3 Months 9 months 9
months ended ended ended ended (thousands of dollars, September
September September September except where noted) 30, 2005 30, 2004
30, 2005 30, 2004
-------------------------------------------------------------------------
Cost of production per Consolidated Statements of Income $ 32,548 $
26,172 $ 93,789 $ 75,993 Adjustments: Byproduct revenues (28,812)
(21,639) (77,509) (59,815) Inventory adjustment(i) (1,588) 795
(4,119) (103) Non-cash reclamation provision (108) (176) (320)
(437) ----------- ---------- ---------- ---------- Cash operating
costs $ 2,040 $ 5,152 $ 11,841 $ 15,638 Gold production (ounces)
61,704 67,237 178,785 202,658 ----------- ---------- ----------
---------- Total cash costs (per ounce) $ 33 $ 77 $ 66 $ 77
----------- ---------- ---------- ---------- ----------- ----------
---------- ---------- 3 Months 3 Months 9 months 9 months ended
ended ended ended (thousands of dollars, September September
September September except where noted) 30, 2005 30, 2004 30, 2005
30, 2004
-------------------------------------------------------------------------
Cost of production per Consolidated Statements of Income $ 32,548 $
26,172 $ 93,789 $ 75,993 Adjustments: Inventory adjustment (i) and
hedging adjustments(ii) (915) 2,127 (3,530) 3,338 Non-cash
reclamation provision (108) (176) (320) (437) -----------
---------- ---------- ---------- Minesite operating costs (US$) $
31,525 $ 28,123 $ 89,939 $ 78,894 ----------- ---------- ----------
---------- Minesite operating costs (C$) $ 37,913 $ 36,834 $
109,986 $ 104,824 Tons milled (000's tons) 728 742 2,194 2,184
----------- ---------- ---------- ---------- Minesite costs per ton
(C$) (iii) $ 52 $ 50 $ 50 $ 48 ----------- ---------- ----------
---------- ----------- ---------- ---------- ---------- Notes: (i)
Under the Company's revenue recognition policy, revenue is
recognized on concentrates when legal title passes. Since total
cash operating costs are calculated on a production basis, this
adjustment reflects the portion of concentrate production for which
revenue has not been recognized in the period. (ii) Hedging
adjustments reflect gains and losses on the Company's derivative
positions entered into to hedge the effects of foreign exchange
fluctuations on production costs. These items are not reflective of
operating performance and thus have been eliminated when
calculating operating costs per ton. (iii) Total cash operating
costs and operating cost per ton data are not recognized measures
under US GAAP. Management uses these generally accepted industry
measures in evaluating operating performance and believes them to
be realistic indications of such performance. The data also
indicates the Company's ability to generate cash flow and operating
earnings at various gold prices. This additional information should
be considered together with other data prepared in accordance with
US GAAP. DATASOURCE: Agnico-Eagle Mines Limited CONTACT: David
Smith, Director, Investor Relations, (416) 947-1212
Copyright