Stock Symbols: AEM (NYSE and TSX) TORONTO, Feb. 13
/PRNewswire-FirstCall/ -- Agnico-Eagle Mines Limited announced
today that it has exercised its option to acquire 100% of the Pinos
Altos project in northern Mexico from Industrias Penoles S.A. de
C.V. ("Penoles"). The option was granted to Agnico-Eagle by Penoles
under an exploration and option agreement dated March 15, 2005.
Under the Option Agreement, Agnico-Eagle will pay to Penoles, on
closing, $32.5 million in cash, 1,809,350 in common shares of
Agnico-Eagle and an additional $6.5 million worth of shares (valued
near the closing date). The closing date is scheduled to be March
15, 2006, and is subject to regulatory approvals and customary
closing conditions. Highlights of the Pinos Altos Project -
Indicated gold resources are now approximately 12.5 million tonnes
grading 3.9 g/t, or approximately 1.6 million ounces of gold.
Inferred gold resources are now approximately 3.2 million tonnes
grading 5.2 g/t, or 0.5 million ounces of gold - Indicated silver
resources are now approximately 12.5 million tonnes grading 102
g/t, or 41 million ounces of silver. Inferred silver resources are
now approximately 3.2 million tonnes grading 111 g/t, or 11.6
million ounces of silver - Indicated and inferred gold resources
have grown 95%, and 25%, respectively. - Indicated and inferred
silver resources have grown 143%, and 38%, respectively. -
Preliminary project assessment contemplates a 3,000 tonne per day
operation, via open pit and underground methods. Preliminary
capital expenditure estimates to bring the project into production
are approximately $150 million. "The acquisition of the Pinos Altos
property is another step towards our goal of building a multi-mine
gold company. This property, in the prolific gold producing Sierra
Madre region of northern Mexico, will be the subject of additional
exploration in 2006 as we advance towards a feasibility study" said
Sean Boyd, Vice-Chairman and Chief Executive Officer. "Due to the
large and growing gold and silver resource and large property
position, we anticipate further positive news as we step up our
exploration and feasibility work on the property" added Mr. Boyd.
The Pinos Altos Property The Pinos Altos project is located in the
Sierra Madre gold belt, 270 kilometres west of Chihuahua, the state
capital. The property is directly accessible by paved highway, and
within 10 kilometres of an extension of the state power grid which
is currently under construction. Penoles acquired the mineral
rights to the property in 1995 and their work to date has included
diamond drilling, metallurgical testing, initial permitting, and a
preliminary economic assessment. The purchase includes the mineral
rights and claims covering an area of approximately 11,000
hectares, of which only the eastern third has been extensively
explored, as well as surface rights of up to 400 hectares. A map of
the Pinos Altos property is available for download at the following
address. http://www.agnico-eagle.com/pinospropertymap.php The
Exploration Program Under the terms of the option agreement with
Penoles, Agnico-Eagle completed a total of 88 surface drill holes
and 49 underground drill holes resulting in a total of 19,768
metres of drill core. The program had three initial objectives:
first, to test for open pit potential, second, to confirm
previously calculated Penoles resource estimates and third, to test
the known zones at depth. Each of these objectives was achieved.
The exploration program focused on three known areas of
mineralization, the Santo Nino, Oberon de Weber, and Cerro Colorado
structures. The total strike length of the known mineralization is
approximately eight kilometres. The exploration to date has focused
on approximately one-third of this, so additional exploration
upside exists. Currently, the Santo Nino zone contains
approximately 60% of both the indicated and inferred gold resource
on the property. Exploration drilling to date has outlined the
Santo Nino deposit to approximately 750 metres in depth. This zone
is open both at depth and to the west. Since October 2005, diamond
drilling has tested the Santo Nino zone at depths greater than 200
metres to determine whether potentially economic intervals of
mineralization occur adjacent to historically mined areas. Several
intercepts confirmed that significant mineralization does occur
adjacent to these zones. Hole PA-05-64 intersected a 13.6 metre
thick interval grading 19.40 g/t gold and 141.12 g/t silver.
Drilling from the Santo Nino underground workings confirmed that
the structure can be traced over thicknesses reaching 10 metres or
more (SN1925-53 returned 10 metres, true thickness, grading 6.40
g/t gold and 164.74 g/t silver). One of the most significant recent
results from the deep exploration program was PA-05-39A, which
tested the Cerro Colorado zone at a depth of almost 600 metres.
This hole returned grades of 9.74 g/t gold and 25.36 g/t silver
over a true thickness of 3.8 metres. This hole extended the
mineralization 200 metres down plunge from the previous intercept
(PA-05-52, previously released, returned grades of 19.64 g/t gold
and 337.45 g/t silver over a true thickness of 14.0 metres). Hole
PA-05-39A also confirmed that PA-05-39 had stopped short of the
high grade zone. The current results from PA-05-39A also suggest
that the Cerro Colorado and Santo Nino zones might join at depth.
This area will be the focus of further exploration in 2006. In the
Oberon de Weber sector, almost 1,000 metres east of Santo Nino,
results continue to confirm the promising open pit potential. In
particular PA-05-40 returned 4.49 g/t gold and 130.44 g/t silver
over true thickness of 22.0 metres. Exploration during the
remainder of 2006 will continue to test the potential extension of
mineralization at depth on the Oberon de Weber zone. Currently, two
drills continue to operate on the Pinos Altos property. These
drills are focused on testing further depth extensions of the Santo
Nino and Cerro Colorado structures. Particular attention is being
focused on the area below the Cerro Colorado structure where high
grade intersections were encountered in recent drilling. The
program has confirmed the open pit potential of both the Santo Nino
and Oberon de Weber structures. Our work to date has also confirmed
that all three structures remain open along strike and at depth.
Some of the most notable drill holes from the most recent program
have been tabulated below:
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TRUE Gold (g/t) Silver(g/t) Thickness From To (Cut (Cut Drill Hole
(metres) (metres) (metres) 60 g/t) 800 g/t)
-------------------------------------------------------------------------
Cerro Colorado Zone -------------------
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PA-05-39A 3.8 662.5 667.5 9.74 25.36
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Santo Nino Zone ---------------
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PA-05-64(1) 2.8 291.2 294.1 7.06 107.00
-------------------------------------------------------------------------
and 1.8 296.2 298.2 4.38 106.00
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and 13.6 299.4 314.0 19.40 141.12
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PA-05-77 31.5 263.5 295.0 3.04 68.77
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SN1925-53 10.0 30.3 40.0 6.40 164.48
-------------------------------------------------------------------------
SN1925-58 6.0 31.0 38.5 4.93 102.13
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Oberon de Weber Zone --------------------
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PA-05-53 3.5 43.3 51.5 8.22 56.41
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PA-05-40 22.0 36.0 60.5 4.49 130.44
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PA-05-49(2) 1.0 631.0 632.0 5.29 7.80
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Notes: 1. Voids due to mine excavations in intervals from 294.1 to
296.2 and from 298.2 to 299.4. 2: Result from last metre of core
before hole was abandoned due to technical difficulties. A
longitudinal section and geological map are available for download
at the following addresses. Long Section
http://www.agnico-eagle.com/pinoslongsection.php Geological Map
http://www.agnico-eagle.com/pinosgeologymap.php Additional infill
drilling on both the underground and open pit regions will be
required to convert the latest resource estimate into reserves.
Detailed engineering on the process plant, additional metallurgical
work, and mine planning will be undertaken. The objective is to
refine preliminary operating and processing parameters, including
capital cost estimates. Heap leaching of the lower grade material
is a possibility and remains to be validated. While a preliminary
base line environmental audit was initiated and has indicated no
significant impediments, further detailed work will be undertaken
as part of the environmental permitting process. Work on acquiring
all necessary permits will begin as soon as possible. The Mineral
Resource Initial resource estimates by Penoles, reviewed by
Agnico-Eagle, had calculated an indicated resource of 4.0 million
tonnes grading 6.29 grams per tonne of gold and 131 grams per tonne
of silver containing approximately 813,000 ounces of gold and 16.9
million ounces of silver. The Penoles estimate had also calculated
an inferred resource of 2.2 million tonnes grading 6.1 grams per
tonne gold and 117 grams per ton silver containing approximately
437,000 ounces of gold and 8.4 million ounces of silver. Based on
the results of Agnico-Eagle's extensive drill program, completed
over the past year, the new Pinos Altos resource is presented in
the following table.
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Category and Zone Contained Contained Gold Silver Gold Silver
Tonnes Indicated Mineral Resource (g/t) (g/t) (000's oz.) (000's
oz.) (000's)
-------------------------------------------------------------------------
Open Pit 2.72 80.88 569 16,890 6,495
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Underground 5.26 125.42 1,013 24,152 5,989
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Total Indicated Resource 3.94 102.25 1,582 41,042 12,484
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Category and Zone Contained Contained Gold Silver Gold Silver
Tonnes Inferred Mineral Resource (g/t) (g/t) (000's oz.) (000's
oz.) (000's)
-------------------------------------------------------------------------
Open Pit 2.54 75.35 42 1,233 509
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Underground 5.74 117.64 503 10,322 2,729
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Total Inferred Resource 5.23 110.99 545 11,555 3,238
-------------------------------------------------------------------------
Tonnage amounts and contained metal amounts presented in the tables
in this news release have been rounded to the nearest 1000.
Preliminary Assessment Agnico-Eagle's preliminary estimates
contemplate a 3,000 tonne per day mining scenario with the open pit
and underground operations each supplying 1,500 tonnes per day. Due
to the high silver content, a conventional cyanidation Merrill
Crowe circuit with recoveries of approximately 92% for gold and 50%
for silver is envisioned. Preliminary capital cost estimates to
bring the project into production are approximately $150 million.
It is contemplated that all infrastructure could be located within
a 400 hectare footprint on privately owned land. Any expansion of
the operating footprint could require the obtaining of additional
surface rights. Future Work Based on the positive drilling results
and the growing precious metals resource, Agnico-Eagle will
accelerate its work program on the property with the objective of
completing a bankable feasibility study on the property by the end
of the second quarter of 2007. The work program will include
additional drilling at depth in the area between the Cerro Colorado
and Santo Nino structures where there are suggestions that the two
structures may join at depth. Currently, two drills are on site,
however, additional drills with greater depth capability are being
sourced and will be added to the program shortly. The main
objectives of the program will be to convert the present resource
estimates into reserves, and test the potential target areas.
Agnico-Eagle has also engaged the local communities in the project
area to ensure that the project provides real, long term benefits
to the residents living and working in the region. Agnico-Eagle has
opened a regional office in Chihuahua to facilitate the feasibility
study and permitting process, to carry out further exploration on
the Pinos Altos property, and to evaluate other opportunities in
Mexico. Reconnaissance prospecting and mapping has indicated that
additional gold mineralization is known to exist on the property. A
detailed work plan will be completed over the next month comprised
of work required on the feasibility study and further exploration
on the property following up on known gold showings. The
Transaction The shares will be issued to Penoles under a prospectus
supplement to Agnico-Eagle's base shelf prospectus dated November
14, 2004, filed with securities regulators in each province of
Canada and with the U.S. Securities and Exchange Commission.
Forward Looking Statements Certain of the foregoing statements are
based on preliminary views of the Company with respect to such
matters as, among other things, grade, tonnage, processing, mining
methods and location of surface infrastructure and actual results
and final decisions may be quite different. The information in this
press release has been prepared as at February 13, 2006. Certain
statements contained in this press release constitute
"forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. When used
in this document, the words "anticipate", "expect", "estimate,"
"forecast," "planned" and similar expressions are intended to
identify forward-looking statements. Such statements 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 most recently filed Annual
Information Form and Annual Report on Form 20-F. 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
Quebec and exploration and development activities in Canada,
Finland, the United States and Mexico. Agnico-Eagle's LaRonde Mine
is Canada's largest gold deposit. The Company has full exposure to
higher gold prices consistent with its policy of no forward gold
sales. It has paid a cash dividend for 26 consecutive years.
Scientific and Technical Data Agnico-Eagle Mines Limited is
reporting mineral resource and reserve estimates in accordance with
the CIM guidelines for the estimation, classification and reporting
of resources and reserves. Investors should be aware that the
United States Securities and Exchange Commission ("SEC") does not
recognize the term "mineral resource". Estimates were calculated
using historic three-year average metals prices and foreign
exchange rates in accordance with the 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 2005 reserves and
resources were $405 per ounce gold, $6.35 per ounce silver. There
are no known relevant issues that would materially affect the
estimate. No independent verification of the data has been
published. The Qualified Person responsible for the Pinos Altos
mineral resource estimate is Christian D'Amours, P.Geo. of Service
Conseil Geopointcom of Val d'Or Quebec. The effective date of the
estimate is February 13th 2006. A technical report describing the
resource estimate will be filed with the securities regulatory
authorities in due course. Wireframe models of zones comprising the
Pinos Altos deposit that were used to estimate the mineral resource
were derived using drill hole intercepts. The key assumptions used
to determine the drill hole intercept intervals were a gold price
of $400 per ounce, a silver price of $6.00 per ounce, metallurgical
recoveries of 92.4% for gold and 47.8% for silver, and net smelter
return cut-offs that varied were applied depending on whether the
material could be potentially mined by open pit or by underground
methods. Gold assays were cut to 41 grams per tonne while silver
assays were cut to 1,500 grams per tonne. For the open pit resource
models (estimated to a maximum depth of approximately 130 metres to
170 metres, depending on the zone), a minimum net smelter return
cut-off of $11.90 per tonne was used to evaluate drill hole
intercepts that have been adjusted to respect a minimum mining
width of 4.0 metres (horizontal width). For the underground
resource models, a minimum net smelter return cut-off of $35.60 per
tonne was used to evaluate drill hole intercepts that have been
adjusted to respect a minimum mining width of 3.0 metres
(horizontal width). The mineral resource estimate was derived using
a three dimensional block model of the deposit; the grades were
interpolated using the inverse distance power squared method. The
same cut-off values and metallurgical recoveries were used to
estimate the mineral resource as were to build the wireframe models
but the price assumptions were cut-offs varied open pit and
underground resource models were determined using mean historic
three-year average prices assumptions (described above). Although
the price assumptions used to constrain the wireframe models are
slightly lower than those used to compile the resource model, it is
the opinion of the qualified person that the differences are not
significant. The Pinos Altos exploration drilling program was
supervised by Dino Lombardi, P.Geo., Senior Geologist International
Projects, who is a Qualified Person as defined in National
Instrument 43-101. Mr. Lombardi prepared and reviewed the
exploration results disclosed in this press release. At Pinos
Altos, the diamond drilling equipment recovers either NQ (48 mm
diameter) or HQ (64 mm diameter) core samples. In a few cases, BQ
(36.5 mm diameter) core was also recovered. The drill core selected
for analysis was sawed in half with one half sent to a commercial
analytical laboratory and the other half retained for future
reference. Agnico-Eagle, with the help of Keith Blair, P.Geo.of
Applied Geoscience LLC of Reno Nevada, have established an
Analytical Quality Assurance Program to control and assure the
analytical quality of assays in its exploration at Pinos Altos.
This program includes the systematic addition of blank samples,
duplicate samples and certified standards to each batch of samples
sent for analysis to commercial accredited laboratories. Blank
samples are used to check for possible contamination in
laboratories, duplicate samples quantify overall precision while
certified standards determine the analytical accuracy. In addition,
approximately 10% of the assayed samples are sent to a second
certified laboratory for check analysis. BSI Inspectorate
Laboratories, an ISO 9002 / 9001:2000 accredited exploration
analysis laboratory, collects the split core samples directly from
the Pinos Altos project site, then prepares the samples at its
facilities in Durango, Mexico and finally performs gold and silver
analyses at its lab in Reno, Nevada. ALS Chemex in Reno, Nevada,
also an ISO accredited laboratory, re-analyzes all of the samples
selected for check assaying. The gold assaying method, using a 2
assay-ton charge, is by Fire Assay with either an atomic absorption
(AA) finish or, if the AA result is greater than 3 ppm of gold,
gravimetric finish as requested by the project geologist. Silver
analysis, from a 1 assay-ton charge, is either by three acid
digestion followed by atomic absorption or, if the AA result is
greater than 200 ppm of silver by Fire Assay with a gravimetric
finish as requested. Canadian Administrator's National Instrument
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. DATASOURCE: Agnico-Eagle Mines Limited CONTACT:
David Smith, Director, Investor Relations, (416) 947-1212
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