(All dollar amounts expressed in U.S. dollars unless otherwise
noted and all units of measurement expressed in metric unless
otherwise noted) TORONTO, May 12 /PRNewswire-FirstCall/ --
Agnico-Eagle Mines Limited today announced that a positive
development decision was made for the 100% owned LaRonde II
project. LaRonde II is the extension of Zone 20 North beneath the
current infrastructure at the LaRonde mine. The gold reserves at
LaRonde II total 3.6 million ounces from 18.8 million tonnes
grading 6.0 grams per tonne. In addition to its gold reserves, the
LaRonde II deposit contains approximately 13 million ounces of
silver, 62,000 tonnes of copper and 155,000 tonnes of zinc. A
feasibility study on LaRonde II was recently completed and reviewed
by independent third parties. The study's base case projects an
after tax rate of return of 13.3%, based on a gold price of $450
per ounce, a C$/US$ exchange rate of 1.25 and byproduct prices of
$6.50 per ounce silver, $3,086 per tonne copper and $1,213 per
tonne zinc. Based on an operation of 6,000 tonnes of ore per day,
the feasibility study incorporates minesite operating costs of C$67
per tonne, construction capital costs of $210 million and average
sustaining capital expenditures of approximately $10 million to $12
million per year, post construction. The project will be funded
from existing cash and cash flows. Total cash costs are expected to
average $230 per ounce. Annual gold production is expected to
average 320,000 ounces annually with initial ramp-up of gold
production occurring in 2011, extending the life of the LaRonde
complex to at least 2020. Annual byproduct production is expected
to average 670,000 ounces of silver, 4,000 tonnes of copper and
8,600 tonnes of zinc. Conversion of the existing gold resource to
reserve could extend the life of the mine significantly. "Our
decision to build LaRonde II is an important step in expanding and
strengthening our gold production base in Quebec," said Sean Boyd,
Vice-Chairman and Chief Executive Officer. "With the new Goldex and
LaRonde II mines now under construction and feasibility studies in
progress on Suurikuusikko, Lapa (Phase II) and Pinos Altos we are
moving toward our objective of tripling our gold production by
2009," added Mr. Boyd. Internal rate of return sensitivities to the
gold price, gold grade, capital costs, operating costs, the C$/US
exchange and a capital expenditure schedule can be reviewed by
clicking on the link below or simply copy and past into your
internet browser.
http://www.agnico-eagle.com/files/LaRondeIIFeasibility.pdf Goldex
Mine Construction Proceeding Well The construction of the new 100%
owned Goldex mine, located near the town of Val d'Or, Quebec,
approximately 50 kilometres east of LaRonde, is well advanced both
on surface and underground. Construction of the concrete headframe
is complete and construction of the processing facility has begun.
Underground, approximately 800 metres of lateral development and a
further 400 metres of vertical raising has been completed in the
first quarter. Upon completion of construction, anticipated in the
second half of 2008, Goldex is expected to contribute an average of
170,000 ounces of gold production per year. Goldex has probable
gold reserves of 1.6 million ounces, sufficient for approximately
10 years of mine life at this level of production. Lapa Phase II
Feasibility Study Expected in Second Quarter, 2006 In 2005, the
Company announced a $30 million underground development, drilling
and metallurgical program at its 100% owned Lapa project, 10
kilometres east of LaRonde. The shaft is currently at a depth of
700 metres, while approximately 240 metres of lateral development
has been completed. Earlier than planned, a drift has been driven
into the ore on Level 69 to obtain information on the gold grade,
continuity and ground conditions. The goal is to determine whether
to proceed with the second phase of construction as soon as
possible thus accelerating the start of production. Positive
results from this program would result in an extension of the shaft
to a depth of approximately 1,370 metres below surface. Incremental
capital costs for this second phase are currently estimated at $80
million. Assuming no further additions to reserves and the current
reserve grade, the Company envisages a 10 year mine life with
initial production in late 2008, with annual gold production
averaging 125,000 ounces. Suurikuusikko Feasibility Study Expected
in Second Quarter, 2006 At the Suurikuusikko project in northern
Finland, a bankable feasibility study is expected to be finalized
in the second quarter of 2006. The study is based on an open pit
mining scenario initially, followed by underground mining via ramp
access, each feeding a 3,000 tonne per day surface processing
plant. Current probable reserves are 2.3 million ounces of gold,
from 13.7 million tonnes grading 5.3 grams per tonne. Presently
there are eight diamond drills on site; five are conducting infill
drilling, one is allocated to exploration and two are doing
condemnation drilling on the proposed tailings site. The deposit
remains open at depth and on strike. A full project update will be
provided prior to the planned site visit in June. Suurikuusikko
Tour Planned The Company is planning a property tour to its
Suurikuusikko project in northern Finland. A chartered plane will
be departing Toronto, Canada on June 13 to Kittila, Finland and
returning by June 15. The tour is also open to analysts and
institutional investors who wish travel directly from other
locations in Europe. Interested equity analysts and institutional
investors should contact Hazel Winchester at (416) 847-3717, or .
Space is limited so please register your interest as soon as
possible. Pinos Altos Entering Feasibility Study Stage as Executive
for Mexico Appointed Agnico-Eagle is pleased to announce the
appointment of Tim Haldane, P.Eng. as Vice President, Mexico. Mr.
Haldane has 28 years of broad-based mining experience. Most
recently, he was Vice President, Development with an intermediate
gold producer where he was responsible for the successful
construction and startup of a mine in Mexico. In the first quarter
of 2006, the Company exercised its option and acquired 100% of the
Pinos Altos project in northern Mexico from Industrias Penoles S.A.
de C.V. The Pinos Altos project's indicated resource contains 12.5
million tonnes at 3.9 grams per tonne gold, and 102.3 grams per
tonne silver, or 1.6 million ounces of gold, and 41.0 million
ounces of silver. The project's inferred resource contains 3.2
million tonnes at 5.2 grams per tonne gold, and 111.0 grams per
tonne silver, or 0.5 million ounces of gold and 11.6 million ounces
of silver. See the Notes to U.S. Investors Relating to the Use of
"Resources". Agnico-Eagle's preliminary analysis contemplates a
3,000 tonne per day mining scenario with the open pit and
underground operations each supplying 1,500 tonnes per day. The
preliminary estimate of capital cost required to bring the project
into production is approximately $150 million. The Company plans to
provide a detailed exploration and timetable for the feasibility
study later in the second quarter. A feasibility study is expected
to be completed by the end of the second quarter of 2007.
Forward-Looking Statements The information in this press release
has been prepared as at May 12, 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 include, without limitation: estimates
of future mineral production and sales; estimates of future
production costs, total cash costs per ounce, minesite 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
anticipated future exploration and feasibility study results; the
anticipated timing of events with respect to the Company's
minesites; 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 as at the
date this press release was prepared 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.
Certain of the foregoing statements, primarily related to projects,
are based on preliminary views of the Company with respect to,
among other things, grade, tonnage, processing, mining methods,
capital costs, and location of surface infrastructure and actual
results and final decisions may be quite different from those
currently anticipated. Additional risks and uncertainties relating
to such statements and the Company's business include, but are not
limited to: the Company's dependence upon its LaRonde mine for all
of its current gold production; uncertainty of mineral reserve,
mineral resource, mineral grade and mineral recovery estimates;
uncertainty of future production, capital expenditures, and other
costs; gold and other metals price volatility; currency
fluctuations; mining risks; and governmental and environmental
regulation. For a more detailed discussion of such risks and other
factors, see Company's Annual Information Form and Annual Report on
Form 20-F for the year ended December 31, 2005, as well as the
Company's other filings with the Canadian Securities Administrators
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
Quebec and exploration and development activities in Canada,
Finland, Mexico and the United States. 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. Notes
to U.S. Investors Regarding the Use of Resources Cautionary Note to
investors concerning estimates of Measured and Indicated Resources.
This press release uses the terms "measured" and "indicated
resources". We advise investors that while those terms are
recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission (the "SEC") does not recognize
them. U.S. investors are cautioned not to assume that any part or
all of mineral deposits in these categories will ever be converted
into reserves. Cautionary Note to investors concerning estimates of
Inferred Resources. This press release also uses the term "inferred
resources". We advise investors that while this term is recognized
and required by Canadian regulations, the SEC does not recognize
it. "Inferred resources" have a great amount of uncertainty as to
their existence, and great uncertainty 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. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or pre-feasibility
studies, except in rare cases. Investors are cautioned not to
assume that part or all of an inferred resource exists, or is
economically or legally mineable. 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.
Cautionary Note to U.S. Investors - The SEC permits U.S. mining
companies, in their filings with the SEC, to disclose only those
mineral deposits that a company can economically and legally
extract or produce. We use certain terms in this press release,
such as "measured," "indicated," and "inferred," "resources," that
the SEC guidelines strictly prohibit U.S. registered companies from
including in their filings with the SEC. U.S. Investors are urged
to consider closely the disclosure in our Form 20-F, which may be
secured from us, or from the SEC's website at:
http://sec.gov/edgar.shtml. A "final" or "bankable" feasibility
study is required to meet the requirements to designate reserves
under Guide 7. 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 mineral reserves and resources estimates reported by the
Company were $405 per ounce gold, $6.35 per ounce silver, $0.51 per
pound zinc, $1.24 per pound copper and C$/US$, US$/Euro$, and
MXP/US$ exchange rates of 1.30, 1.21 and 11.0 respectively.
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. A feasibility study is a comprehensive study of a
mineral deposit in which all geological, engineering, legal,
operating, economic, social, environmental and other relevant
factors are considered in sufficient detail that it could
reasonably serve as the basis for a final decision by a financial
institution to finance the development of the deposit for mineral
production. The qualified person responsible for the LaRonde I and
LaRonde II mineral reserve and resource estimate is Marc Ruel,
P.Geo., Superintendent of Geology for the LaRonde Division. The
effective date of the estimate is February 22, 2006, using, except
for the operating and capital cost assumptions (that are described
above), estimation parameters and methods that are not
significantly different as that found in the 2005 Mineral Resource
and Mineral Reserve Report by Guy Gosselin, P.Geo. Agnico-Eagle
Mines Limited, LaRonde Division that was posted on SEDAR on March
23, 2005. A qualified person Carl Pelletier, P.Geo., of Innovexplo
Geological Services, was responsible for the mineral reserve and
mineral resource estimate at Goldex. A description of the operating
and capital cost assumptions, parameters and methods may be found
in the Technical Report on the Estimation of Mineral Resources and
Reserves for the Goldex Extension that was posted on SEDAR on
October 27, 2005. The effective date of the estimate was September
9, 2005. The 2005 estimate differs from the previous in that a
minor amount of proven reserves in the form of development rock
that was in stockpiles on December 31, 2005. Although the price
assumptions used to constrain the wireframe models and also
estimate the mineral resource and reserve in 2005 are slightly
lower than those currently used, it is the opinion of the qualified
person that the differences are not significant. The qualified
person responsible for the Lapa mineral reserve and mineral
resource estimate is Christian D'Amours, P.Geo., of Service Conseil
Geopointcom. The effective date of the estimate was February 23,
2005. Wireframe models of zones comprising the Lapa 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 $360 per ounce,
metallurgical recoveries of 85.9% for gold. Gold assays were cut to
51.4 grams per tonne or 58.6 grams per tonne depending on the zone.
For the mineral resource models, a minimum gold grade cut-off of
5.0 grams per tonne was used to evaluate drill hole intercepts that
have been adjusted to respect a minimum mining width of 2.8 metres
(horizontal width). Although the price assumptions used to
constrain the wireframe models and also estimate the mineral
resource and reserve in 2005 are slightly lower than those
currently used, it is the opinion of the qualified person that the
differences are not significant. The Lapa 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. In order to estimate the mineral reserve, a
dilution factor that averaged 22.8% was applied. For the
underground reserve models, the minimum in situ gold grade cut-off
was 6.0 grams per tonne or 6.5 grams per tonne depending on the
mining method. The qualified person responsible for the
Suurikuusikko mineral resource and mineral reserve estimate is
Normand Bedard P.Geo., the Abitibi Regional Division's Senior
Geologist. The effective date of the estimate is February 22, 2006.
A technical report describing the mineral resource and mineral
reserve estimate was posted on SEDAR on March 14 2006. 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 are the mean historic three-year average
prices assumptions (fixed by the Company and described above).
Although the price assumptions used to constrain the wireframe
models are slightly lower than used to compile the resource model,
it is the opinion of the qualified person that the differences are
not significant. DATASOURCE: Agnico-Eagle Mines Limited CONTACT:
David Smith, Director, Investor Relations, (416) 947-1212
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