Stock Symbol: AEM (NYSE and TSX) TORONTO, Aug. 9
/PRNewswire-FirstCall/ -- Agnico-Eagle Mines Limited
("Agnico-Eagle" or the "Company") today announced that a positive
development decision was made for the 100% owned Pinos Altos gold
project in northern Mexico. Additionally, as a result of recent
drilling at Pinos Altos, the gold ounces in reserves have increased
21% from the figure released in February 2007. The silver ounces in
these reserves has increased a further 18% over the same period.
The current gold reserves at Pinos Altos total 2.2 million ounces
from 20.0 million tonnes of ore in probable reserves grading 3.5
grams per tonne, an increase of 13% in gold grade over the previous
reserve estimate. The Pinos Altos deposit also includes
approximately 65.7 million ounces of silver in the reserve
category, an increase of approximately 10 million ounces over the
previous estimate. The Pinos Altos feasibility study did not
include the increase in gold grade and gold reserves announced
today. The study projects an after tax rate of return of 18.3%,
based on a gold price of $530 per ounce and a silver price of $9.59
per ounce. Average annual production is expected to be
approximately 150,000 ounces of gold, at average total cash costs
per ounce of $230 (including royalties and net of byproduct silver
credits). In addition, annual silver production is expected to
average over 2.0 million ounces per annum. The initial production
ramp-up is expected to begin in second quarter of 2009. Over an
estimated 11 year mine life, the feasibility study incorporates a
conventional milling operation of 4,000 tonnes of ore per day and a
heap leach operation reaching peak production rates of 2,500 tonnes
of ore per day. Metallurgical testing indicates that the ore is
non-refractory, yielding excellent gold recoveries of greater than
95% with conventional cyanidation processing (silver recoveries are
expected to average approximately 50%). Overall minesite operating
costs are expected to average $39 per tonne, with construction
capital costs of $190 million and average sustaining capital
expenditures of approximately $3 million per year. Agnico-Eagle
estimates that the project will be entirely funded from existing
cash and cash flows. "Our decision to build Pinos Altos is an
important step in expanding and strengthening our gold production
base on our way to having six operating gold mines," said Sean
Boyd, Vice-Chairman and Chief Executive Officer. "With the increase
in gold reserves and grades at Pinos Altos, we continue to
demonstrate the reserve growth potential of our development
projects and the ability to increase gold production and further
extend mine life. Additionally, we are excited to be operating in
Mexico, and working with the local communities in the development
of a new gold mine," added Mr. Boyd. Agnico-Eagle has signed a
letter of intent for delivery of the long-lead time ball and SAG
mills for the Pinos Altos project. All the necessary land
agreements with the four local ejidos are in place. Negotiations
for additional surface rights with the underlying royalty holder
are ongoing. If these negotiations are not successful,
modifications to the proposed mine plan contained in the base case
feasibility study will be implemented. Internal rate of return
sensitivities to the gold price, gold grade, capital costs,
operating costs and schedules detailing the life of mine plan,
capital expenditures and operating costs can be reviewed by
clicking on the link below or simply copy and paste into your
internet browser.
http://www.agnico-eagle.com/files/PinosAltos9Aug07.pdf Detail of
2007 Exploration Four drill rigs are operating on the Pinos Altos
property. Diamond drilling from the first underground drilling
station is planned to commence in October 2007. This drilling will
follow up on recent positive drill results at depth, targeting
possible extensions of the Santo Nino and Cerro Colorado zones.
Over 12,000 metres of diamond drilling is planned to be completed
by the end of 2007. The main focus of the underground exploration
program will be resource to reserve conversion of the Cerro
Colorado/Santo Nino zones and the area between them. Most
significantly, the results of the current exploration program
suggest that the Creston Colorado and Mascota zones (northwest of
the main Santo Nino deposit) may form part of a larger more
widespread zone, occurring at a similar geologic interval, but
separated by sub-vertical fault zones that displace the same
mineralized horizon. These zones are not included in the current
reserve and resource estimate at Pinos Altos and were not
considered in the feasibility study. Development on the underground
ramp began in March, 2007. Over 350 metres of ramp have been
completed to date and over 1,350 metres of ramp are expected to be
completed by year end 2008. Pinos Altos Analyst Tour Agnico-Eagle
is planning to host a tour of its Pinos Altos property on August 20
and August 21, 2007. The trip is open to equity analysts. A charter
will be departing from Toronto early in the morning on August 20,
returning late on August 21. Interested parties should contact
Hazel Winchester at (416) 847-3717 or as soon as possible as spaces
are limited. 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 in terms of reserves. The Company has full
exposure to changes in gold prices consistent with its policy of no
forward gold sales. It has paid a cash dividend for 25 consecutive
years. Notes to Investors Regarding the Use of Resources Cautionary
Note to investors concerning estimates of Measured and Indicated
Resources. This press release may use the terms "measured
resources" 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. 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 may
also use 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. Pinos Altos Detailed Mineral Reserve and
Resource Data
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Au Ag Tonnes Category Au(g/t) Ag(g/t) (000's oz.) (000's oz.)
(000's)
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Probable Mineral Reserve
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Total open pit 2.98 85.93 899 25,906 9,378
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Total underground 3.90 116.86 1,324 39,748 10,579
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Subtotal Probable Mineral Reserve 3.47 102.33 2,224 65,654 19,957
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Total Probable Mineral Reserves 3.47 102.33 2,224 65,654 19,957
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Au Ag Tonnes Category and Zone Au(g/t) Ag(g/t) (000's oz.) (000's
oz.) (000's)
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Indicated Mineral Resource
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Total underground 1.92 74.35 158 6,115 2,570
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Total Indicated Resource 1.92 74.35 158 6,115 2,570
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Au Ag Tonnes Category and Zone Au(g/t) Ag(g/t) (000's oz.) (000's
oz.) (000's)
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Inferred Mineral Resource
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Total underground 2.83 80.28 274 7,765 3,008
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Total Inferred Resource 2.83 80.28 274 7,765 3,008
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Tonnage amounts and contained metal amounts presented in the tables
in this news release have been rounded to the nearest thousand.
Reserves are not a sub-set of resources. The effective date of the
mineral resources and reserves is August 9, 2007. 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", and "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
obtained 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 Industry 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 the August 9, 2007 Pinos Altos mineral
reserves and resources estimate reported by the Company were $486
per ounce gold, $8.69 per ounce silver, and MXP/US$ exchange rate
of 11.02. The 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, under the Canadian Securities
Administrator's National Instrument 43-101, responsible for the
Pinos Altos mineral resource estimate is Daniel Doucet, Ing.,
Principal Engineer Geology for the Company's Technical Services
Group, Abitibi Regional Office. The effective date of the estimate
is August 9, 2007. A technical report describing the resource and
reserve estimate will be filed with the securities regulatory
authorities in due course. Mr. Doucet has verified the data
disclosed, including the sampling, analytical and test data
underlying the information contained in this press release.
Wireframe models of zones comprising the Pinos Altos deposit that
were used to estimate the mineral resource were derived using drill
hole intercepts of either breccia or stockwork mineralization. Gold
assays were cut to either 15 grams per tonne or 46 grams per tonne,
depending on the rock type. Silver assays were either not cut, or
cut to 2,200 grams per tonne depending on the mineralization type.
For the open pit resource models (estimated to a maximum depth of
approximately 250 metres, depending on the zone), a minimum net
smelter return cut off of either $16.00 per tonne for potential
mill feed or $6.00 per tonne for potential heap leach feed 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 $33.00 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). In order to determine the
net smelter return, the average metallurgical recoveries by heap
leach for gold and silver used were 68.0% and 7.0% respectively
while the average metallurgical recovery by milling for gold and
silver were 95.0% and 48.0% respectively. 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. A 10% dilution was applied for the open pit
reserve estimate while a dilution that averaged 13% was applied for
the underground reserve estimate. The same metallurgical recoveries
were used in the estimation of the mineral reserves as for the
mineral resources. Mining recoveries of 100% for open pit mining
and 95% for underground. The net smelter return cut-offs for open
pit reserves used were either $16.00 per tonne (after dilution) for
milling or $6.00 per tonne (after dilution) for heap leach. For the
underground reserves, a net smelter return cut-off of $35.00 per
tonne (after dilution) was used. For every 10% change in the gold
price or exchange rate (leaving all other assumptions unchanged),
there would be an estimated 4% change in probable reserves. The
metal prices and exchange rates used in the current reserve and
resource estimate are the trailing three year averages for such
prices or rates in each case (as of December 31 2006), as mandated
by the U.S. Securities and Exchange Commission. The data
verification process of historic drill hole information for Pinos
Altos consisted of comparing a selective amount of primary
information in the mineral resource data base (such as drill hole
location, orientation, sample location, assay result and geological
description data) against original records (such as field drill
sites, original survey reports and drill core descriptions, drill
core stored in the library, and assay laboratory reports).
Verification also consisted of reviewing the historic assay data
base and selecting additional samples for check assaying. The
historic drill hole information that was verified showed acceptable
results and only a very small but acceptable error rate was
observed. Although this method of selective verification suggests
that the entire mineral resource data base is of good quality,
there may be errors in the proportion of data that was not
verified. All of the exploration information collected by the
Company (except for the assay results) and inserted into the
mineral resource data base was verified against original records.
The quality of the assay data inserted into the Pinos Altos mineral
resource data base was monitored. The verification methods used do
not eliminate all of the possible errors (for example, sample bias
that can only be verified through additional testing). There are no
known environmental, permitting, legal, title, taxation,
socio-political, marketing, or other relevant issues that
materially affect the Pinos Altos mineral resources.
Forward-Looking Statements The information in this press release
has been prepared as at August 9, 2007. 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 and forward looking
information under the provisions of Canadian provincial securities
laws. When used in this document, the words "anticipate", "expect",
"estimate," "forecast," "planned" and similar expressions are
intended to identify forward-looking statements or information.
Such statements and information include without limitation:
statements regarding timing and amounts of capital expenditures and
other assumptions; estimates of future reserves, resources, mineral
production and sales; estimates of mine life; estimates of future
mining costs, cash costs, minesite costs and other expenses;
estimates of future capital expenditures and other cash needs, and
expectations as to the funding thereof; statements and information
as to the projected development of certain ore deposits, including
estimates of exploration, development and production and other
capital costs, and estimates of the timing of such exploration,
development and production or decisions with respect to such
exploration, development and production; estimates of reserves and
resources, and statements and information regarding anticipated
future exploration and; the anticipated timing of events with
respect to the Company's minesites and; statements and information
regarding the sufficiency of the Company's cash resources. Such
statements and information reflect the Company's views as at the
date of this press release and are subject to certain risks,
uncertainties and assumptions, and undue reliance should not be
placed on such statements and information. Many factors, known and
unknown could cause the actual results to be materially different
from those expressed or implied by such forward looking statements
and information. Such risks include, but are not limited to: the
volatility of prices of gold and other metals; uncertainty of
mineral reserves, mineral resources, mineral grades and mineral
recovery estimates; uncertainty of future production, capital
expenditures, and other costs; currency fluctuations; financing of
additional capital requirements; cost of exploration and
development programs; mining risks; risks associated with foreign
operations; risks related to title issues at the Pinos Altos
project; governmental and environmental regulation; the volatility
of the Company's stock price; and risks associated with the
Company's byproduct metal derivative strategies. For a more
detailed discussion of such risks and other factors that may affect
the Company's ability to achieve the expectations set forth in the
forward-looking statements contained in this document, see
Company's Annual Information Form and Annual Report on Form 20-F
for the year ended December 31, 2006, 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 and information. Note to Investors
Regarding the Use of Non-GAAP Financial Measures This press release
presents estimates of future "total cash cost per ounce" and
"minesite cost per tonne" that are not recognized measures under
United States generally accepted accounting principles ("US GAAP").
This data may not be comparable to data presented by other gold
producers. These future estimates are based upon the total cash
costs per ounce and minesite costs per tonne that the Company
expects to incur to mine gold at the applicable projects and do not
include production costs attributable to accretion expense and
other asset retirement costs, which will vary over time as each
project is developed and mined. It is therefore not practicable to
reconcile these forward-looking non-GAAP financial measures to the
most comparable GAAP measure. A reconciliation of the Company's
total cash cost per ounce and minesite cost per tonne to the most
comparable financial measures calculated and presented in
accordance with US GAAP for the Company's historical results of
operations is set forth in the notes to the financial statements
contained in the Company's Annual Information Form and Annual
Report on Form 20-F for the year ended December 31, 2006, as well
as the Company's other filings with the Canadian Securities
Administrators and the U.S. Securities and Exchange Commission.
DATASOURCE: Agnico-Eagle Mines Limited CONTACT: David Smith, VP,
Investor Relations, (416) 947-1212
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