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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934

 

For the month of July, 2009.

Commission File Number

 

AGNICO-EAGLE MINES LIMITED

(Translation of registrant’s name into English)

 

145 King Street East, Suite 400, Toronto, Ontario M5C 2Y7

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F 
x   Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)( 1): o

 

Note: Regulation S-T Rule 101 (b)( 1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(7): o

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes o   No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-           .

 

 

 



 

EXHIBITS

 

Exhibit No.

 

Exhibit Description

1

 

Press Release dated July 29, 2009 announcing Second Quarter Results and the Corporation’s production status at Lapa and Kittila mines and approved expansion projects.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on  its behalf by the undersigned, thereunto duly authorized.

 

 

AGNICO-EAGLE MINES LIMITED

 

(Registrant)

 

 

 

 

Date: July 30, 2009

By:

/s/ R. Gregory Laing

 

 

R. Gregory Laing

 

 

General Counsel, Sr. Vice President, Legal

 

 

and Corporate Secretary

 

2



 

 

Stock Symbol: AEM (NYSE and TSX)

 

For further information:

 

 

Investor Relations

 

 

(416) 947-1212

 

(All amounts expressed in U.S. dollars unless otherwise noted)

 

AGNICO-EAGLE REPORTS Q2 2009 RESULTS;
RECORD QUARTERLY GOLD PRODUCTION;

COMMERCIAL PRODUCTION ACHIEVED AT LAPA AND KITTILA MINES;

EXPANSION PROJECTS APPROVED AT GOLDEX AND PINOS ALTOS

 

Toronto (July 29, 2009) – Agnico-Eagle Mines Limited (“Agnico-Eagle” or the “Company”) today reported quarterly net income of $1.2 million, or $0.01 per share, for the second quarter of 2009.  This result includes a non-cash foreign currency translation loss of $16.7 million, or $0.12 per share, as well as a stock option expense of $5.0 million, or $0.03 per share.  In the second quarter of 2008, the Company reported net income of $8.3 million, or $0.06 per share.  Excluding these non-cash items, net income increased significantly when compared to the second quarter of 2008 due to a large increase in gold revenue.

 

Cash provided by operating activities in the second quarter of 2009 was $26.4 million, down from cash provided by operating activities of $92.8 million in the second quarter of 2008. The impact of significantly higher gold production, compared to the second quarter of 2008, was more than offset by changes in working capital largely related to a build-up of gold in inventory.  Excluding the large changes in working capital movements, cash provided by operating activities increased significantly when compared to the second quarter of 2008 due to the large growth in gold revenue.

 

“Agnico-Eagle’s production growth continues as second quarter gold production increased 76% over the second quarter of 2008.  Both the Kittila and Lapa mines achieved commercial production, while heap leach gold production at the Pinos Altos mine has commenced.  Furthermore, our Meadowbank project continues to remain on schedule for Q1 2010 start up.”, said Sean Boyd, Vice-Chairman and Chief Executive Officer.  “As we optimize our existing asset base we have approved expansions at the Goldex and Pinos Altos mines.  Agnico-Eagle remains one of the most compelling growth stories in the gold business.  Additionally, over the next several quarters we expect to release the results of two more expansion studies, at Meadowbank and Kittila, further adding to our production growth beyond 2010”, added Mr. Boyd.

 

Second quarter 2009 highlights include:

 

·                  Record Production – record gold production of 119,053 ounces.  First gold poured at Pinos Altos in July

·                  Good Cost Performance – LaRonde, Goldex and Lapa achieve good minesite cost performance

·                  Commercial Production At Lapa And Kittila – commercial production achieved as of May 1 at both mines

 



 

·                  Remaining Two New Gold Mines On Schedule – Pinos Altos and Meadowbank remain on schedule for initial production in third quarter 2009 and first quarter 2010, respectively

·                  Growth profile bolstered – expected after-tax internal rate of return (“IRR”) of 76% at Goldex expansion and 17% at Pinos Altos expansion at Creston Mascota

 

Payable gold production(1) in the second quarter of 2009 was a record 119,053 ounces at total cash costs per ounce(2) of $326.  This compares with gold production of 67,757 ounces in the second quarter of 2008 at total cash costs per ounce of $113.

 

The increase in production, relative to the second quarter of 2008, is attributable to payable production from the Goldex, Lapa and Kittila mines, which were not in commercial production in that quarter.  The mill recovery rates at the Kittila mine have been increasing, resulting in commercial production being achieved in May.

 

For the first six months of 2009, Agnico-Eagle recorded net income of $55.6 million, or $0.36 per share, up from the $37.3 million, or $0.26 per share, recorded in the first half of 2008.  The increase in net income is primarily due to 78% higher gold production in 2009 due to the opening of new mines, somewhat offset by lower byproduct prices for zinc, silver and copper.

 

For the first six months of 2009, Agnico-Eagle generated cash provided by operating activities of $75.2 million, down from $146.6 million in the first half of 2008.  The decrease was largely due to changes in working capital related to the build-up of gold in inventory.  Excluding these working capital changes, cash provided by operating activities increased when compared to the first half of 2008 due to increased gold revenues, offset partly by lower byproduct revenue.

 

Payable gold production in the first half of 2009 was a record 210,864 ounces, up 78% from 118,649 in the first six months of 2008.  The increase was due to the start-up of the new Goldex, Kittila and Lapa mines.

 

Full year production guidance remains unchanged at 550,000 ounces to 575,000 ounces of gold.

 

Conference Call  Tomorrow

 

The Company will host its quarterly conference call on Thursday, July 30, 2009 at 11:00 a.m. (E.D.T.).  Management will review the Company’s financial results for the second quarter 2009 and provide an update of its exploration and development activities.

 

Via Webcast:

A live audio webcast of the call will be available on the Company’s website homepage at www.agnico-eagle.com.

 


(1) Payable production of a mineral means the quantity of mineral produced during a period contained in products that are sold by the Company, whether such products are sold during the period or held as inventory at the end of the period.

 

(2) Total cash costs per ounce is a non-GAAP measure.  For reconciliation of this measure to production costs, as reported in the financial statements, see Note 1 to the financial statements at the end of this news release.

 

2



 

Via Telephone:

For those preferring to listen by telephone, please dial 416-644-3418 or Toll Free 1-800-731-6941. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.

 

Replay archive:

Please dial the toll-free access number 1-877-289-8525, passcode 21294138#.

The conference call will be replayed from Thursday, July 30, 2009 at 1:00 PM (E.D.T.) to Thursday, August 6, 2009 11:59 PM (E.D.T.).

 

The webcast along with presentation slides will be archived for 180 days on the website.

 

Strong Financial Position Maintained

 

Cash and cash equivalents decreased to $173.9 million at June 30, 2009 from the March 31, 2009 balance of $208.4 million.  Long term debt is $485 million at June 30, 2009, up from $415 million at March 31, 2009.  During the second quarter, the Company replaced a pre-existing US$300 million credit line, maturing September 2010, with a new non-amortizing US$600 million revolving credit facility, maturing June 2012.  As a result, the Company now has US$900 million of credit lines, of which $396 million was available at June 30, 2009.  In addition, the Company signed an unsecured C$95 million bonding facility with Export Development Canada, which will be used to provide letters of credit relating to the reclamation of the Meadowbank project.

 

Capital expenditures in the quarter were $155 million, including $60 million at Meadowbank, $43 million at Pinos Altos, $24 million at Kittila, $19 million at LaRonde, $7 million at Lapa and $2 million at Goldex.

 

In 2009, full year capital expenditures are expected to total approximately $550 million, up $10 million from previous guidance, reflecting new expansion expenditures at Goldex.  An additional $64 million will be invested for the Creston Mascota expansion in 2010.

 

LaRonde Mine – Continued Cost Control and Production Consistency

 

The 100% owned LaRonde mine in northwestern Quebec, Canada, began operation in 1988.  Overall, proven and probable gold reserves at LaRonde total approximately 5.0 million ounces from 35.8 million tonnes grading 4.3 grams per tonne (“g/t”).  Life of mine average gold production is expected to be approximately 320,000 ounces per year through 2022.  First production from the new internal shaft of the LaRonde Extension remains on schedule for late 2011.

 

The LaRonde mill processed an average of 7,212 tonnes of ore per day in the second quarter of 2009, compared with an average of 7,281 tonnes per day in the prior-year period.  With a steady-state operation of approximately 7,200 tonnes per day for approximately six years, LaRonde continues to be a consistent, reliable world class mine.

 

Net of byproduct credits, LaRonde’s total cash costs per ounce were $109 in the second quarter on production of 58,034 ounces of gold.  This compares with the results of the

 

3



 

second quarter of 2008 when total cash costs per ounce were $113 on production of 59,452 ounces of gold.

 

For the first six months of 2009, LaRonde’s total cash costs per ounce were $196 on gold production of 109,372 ounces, as compared to the first half of 2008, when the total cash cost per ounce were minus $123 on production of 110,344 ounces of goldThe year-over-year increase in total cash costs is primarily due to the significantly lower realized prices of byproduct metals. The realized prices for silver, zinc and copper for six months ending June 30, 2009 were 24%, 34% and 46% lower, respectively, compared to the first half of 2008.

 

Minesite costs per tonne(3) were approximately C$74 in the second quarter, as expected, compared to C$68 in the second quarter of 2008.  On a year-to-date basis, 2009 minesite costs per tonne were C$73, which compares to C$66 in the first half of 2008.  These costs are higher than the comparable periods in 2008 due to ore stockpile adjustments and the impact of general cost inflation.

 

LaRonde Extension – Shaft Sinking Nearly Complete

 

During the second quarter of 2009, approximately 120 metres of shaft sinking was completed on the new internal shaft, leaving approximately 120 metres to the final depth of 2,880 metres.  The shaft is expected to be completed during the fourth quarter of 2009 with preproduction development starting thereafter.  The project is on schedule to start production in late 2011.

 

Goldex Mine – Reaches Design Capacity

 

The 100% owned Goldex mine in northwestern Quebec began operation in 2008.  Proven and probable gold reserves total 1.6 million ounces from 23.8 million tonnes grading 2.1 g/t.  Life of mine average annual gold production is expected to be approximately 160,000 ounces per year through 2017.

 

The Goldex mine has successfully reached the design capacity for the plant in the second quarter of 2009, with an average of 6,875 tonnes of ore milled daily.  In the first quarter of 2009, the mill processed an average of 6,770 tonnes per day.

 

Second quarter 2009 gold production at Goldex was 35,645 ounces at total cash costs per ounce of $365.  This compares with 35,959 ounces at total cash costs per ounce of $338 in first quarter of 2009.  The higher cash cost per ounce was due to an expected decrease in grade during the second quarter.

 

For the six month period ending June 30, 2009, total cash costs at Goldex were $352 per ounce on gold production of 71,604 ounces.  There is no meaningful comparable prior year period, as Goldex achieved commercial production in August 2008.

 

Cost control was very good at Goldex as minesite costs per tonne were C$24 in the second quarter, compared to C$25 in the first quarter of 2009.

 


(3) Minesite costs per tonne is a non-GAAP measure.  For reconciliation of this measure to production costs, as reported in the financial statements, see Note 1 to the financial statements at the end of this news release.

 

4



 

During the second quarter of 2009, approximately 1.1 million tonnes of ore were blasted at Goldex compared with approximately 677,000 tonnes hoisted.  This difference is necessary as the mining method used at Goldex requires some of the broken ore to be temporarily left within the mining block as ground support.  As a result, minesite costs per tonne are expected to decrease going forward as all production blasting is expected to be completed in 2012, while the anticipated mine life extends into 2017.

 

Goldex Expansion – Low Capital, High Return Project

 

The Board of Directors has approved the expansion of Goldex to 8,000 tonnes per day with the ramp-up to this higher rate expected to be achieved by late-2011.

 

Capital costs are expected to total approximately $10 million, providing an internal rate of return of  approximately 76% at $780 per ounce for gold and a C$/US$ exchange rate of 1.10.  Annual incremental gold production is expected to be approximately 20,000 ounces per year, over a mine life into 2017.  As a result, total gold production at Goldex is expected to be approximately 173,000 ounces per year beginning in 2011.

 

The large majority of the capital is to be spent on a surface crushing plant, with minor amounts for modifications to ore conveyance.  Detailed engineering is underway and construction of the project will begin in the fourth quarter of 2009.  A certificate of authorization, and all necessary permits, were received to increase the production rate at Goldex from 6,900 tonnes per day up to 8,500 tonnes per day.

 

In spite of the increased mining rate, Agnico-Eagle expects to extend the mine life of Goldex.  There are several nearby zones underground, on the Goldex property, that are likely to be mined.  They are currently in the resource category and not included in reserves.  For example, it is expected that the nearby “M” zone will contribute approximately 250,000 ounces of gold to the overall reserves at Goldex by year end 2009, thus increasing the mine life in spite of the higher production rate.

 

Kittila Mine – Commercial Production Achieved at May 1; Ramping Up Production To Design Parameters

 

The 100% owned Kittila mine in northern Finland poured its first gold in January 2009.  Proven and probable gold reserves total 3.2 million ounces from 21.4 million tonnes grading 4.7 g/t.  Life of mine average gold production is expected to be approximately 150,000 ounces per year through 2023.

 

During the second quarter of 2009, the Kittila mill achieved commercial production and processed an average of 1,980 tonnes per day, reflecting the start-up phase of the project.  In June the mill processed an average of approximately 2,300 tonnes per day.  This compares to the expected full production rate of 3,000 tonnes per day.  The current performance improvements are in line with the Company’s expectations.

 

Second quarter 2009 gold production at Kittila was 13,771 ounces at total cash costs per ounce of $658.  These costs are expected to decline as the mine continues to ramp up towards full production capacity and the mill achieves higher recoveries.  Life of mine

 

5



 

total cash costs per ounce are expected to be approximately $350 per ounce.  Minesite costs per tonne at Kittila were approximately €43 in the second quarter.

 

During the second quarter, operations at Kittila were focused on improving gold recovery through a metallurgical optimization process aimed to achieve Kittila’s design gold recoveries of 83% to 89% in the mill, over the life of the mine. The optimization process has delivered significant results to date, with mill recoveries averaging 49% in the second quarter and 65% in June, both much higher than the average of 28% realized in the first quarter of 2009.

 

A scoping study is underway examining the possibility of significantly increasing the designed production rate at Kittila.  This plan involves sinking a shaft on the property combined with an increase in milling capacity.  Results of the study are expected to be released later this year and will incorporate the most recent exploration drilling.  Eleven drills, two underground and nine on surface, are currently working on resource to reserve conversion and other exploration around the current reserves.  Year to date, over 46,200 metres of diamond drilling has been completed at Kittila while an additional 14,600 metres of drilling has been completed on regional exploration in Finland.  Results will be presented in an upcoming exploration update.

 

Lapa – Commercial Production Achieved at May 1; Production Nearing Design Parameters

 

The 100% owned Lapa mine in northwestern Quebec began production in April 2009.  Proven and probable gold reserves total 1.1 million ounces from 3.8 million tonnes grading 8.8 g/t.  Life of mine average gold production is expected to be approximately 115,000 ounces per year through 2015.

 

On May 1, Lapa achieved commercial production.  Production from the Lapa mine (all of which is processed at the LaRonde mill), has averaged 1,270 tonnes per day in June, which is progressing towards design parameters.   The expected production rate over the life of the mine is 1,500 tonnes per day.

 

Second quarter 2009 gold production at Lapa was 11,603 ounces at total cash costs per ounce of $948, partly reflecting the mine and mill start-up where some low grade development ore was mixed with higher grade stope ore and used to commission the mill.  These costs are expected to decline as the mine continues to ramp up towards full production capacity and the drilling, blasting, excavation and filling cycle are optimized for the orebody.  Over the life of the mine, total cash costs per ounce are expected to average approximately $315.  Minesite costs per tonne at Lapa were approximately C$149 in the second quarter, reflecting the start-up phase of the mine.

 

To date, nine of the 750 stopes expected to be extracted over the mine life have been removed.  Reconciliation with the mill is expected to be completed during the third quarter once more consistent feed is delivered to it.  Dilution has initially been higher than plan, however, improvements are expected as the mine and its operations are optimized.

 

6



 

Pinos Altos Construction Progressing On Schedule – Pours First Gold from Heap Leach

 

The 100% owned Pinos Altos mine in northern Mexico has begun to pour gold from the heap leach and is expected to begin production from its milling operation in the third quarter of 2009.  Proven and probable gold reserves total 3.6 million ounces and 100 million ounces of silver from 41.8 million tonnes grading 2.7 g/t of gold and 74.6 g/t silver.  Life of mine average gold production is expected to be approximately 170,000 ounces per year through 2028, including production from Creston Mascota.  Over this period, annual silver production is expected to average 2.5 million ounces.

 

The first ore was placed on the leach pads during May 2009 and the first gold bar was poured in July.  Once the project is in full operation, heap leaching of low grade ores is expected to contribute approximately 5-10% of the total planned gold production from Pinos Altos.

 

Construction of the mill at Pinos Altos is 90% complete and commissioning of the milling circuit is in progress.  Open pit stripping continued at better than planned rate with 5.1 million tonnes mined, including stripping at the Oberon de Weber pit.

 

Underground development productivity remains better than anticipated.  Connection of the main production ramp and the exploration ramp is expected sometime during the third quarter, after which time, development of initial mining levels is expected to commence.  Project to date development is now nearly seven kilometres in total.

 

Approximately 37,000 metres of diamond drilling were completed at the Pinos Altos mine site and on property-wide exploration in the first half of 2009.  Two surface and two underground diamond drills were testing deep mine exploration targets at Santo Nino and Cerro Colorado and expanding the resource on strike and at depth at San Eligio.  Outside the mine-site,  three other drills were exploring the main northern Reyna de Plata structure at El Sinter, testing the Cubiro gold showing in the western portion of the property, and exploring for extensions of the Creston Mascota deposit.  Results will be presented in an upcoming exploration update.

 

Creston Mascota Approved for Construction – First gold expected early 2011

 

The Company is about to begin construction of a stand-alone open pit, heap leach operation on the Creston Mascota deposit, approximately 10 kilometres to the northwest of the main Santo Nino deposit at Pinos Altos.

 

Probable reserves at Creston Mascota total approximately 6.7 million tonnes grading 1.65 g/t gold and 17.1 g/t silver, or approximately 357,000 ounces of gold and 3.7 million ounces of silver.

 

The recently reviewed feasibility study contemplates a 4,000 tonne per day operation with first production in early 2011.  Gold recoveries of 65% and silver recoveries of 16% are assumed for the heap leach operation planned at Creston Mascota.  The waste to ore stripping ratio is expected to be approximately 4:1.  Minesite costs per tonne are

 

7



 

assumed to be approximately $13.  Total cash costs are expected to be $340 per ounce of gold.

 

Capital costs are expected to total approximately $64 million, providing an internal rate of return of  approximately 17% at $780 per ounce for gold and $13.70 per ounce for silver.  Annual gold production is expected to be approximately 46,000 ounces per year, over a five year mine life.

 

Construction on the project will begin in the fourth quarter of 2009 and is expected to take approximately 18 months to complete.

 

Separately, the Company is studying the possibility of increasing the milled production rate at the main Pinos Altos deposits from 4,000 tonnes per day to 6,000 tonnes per day, reflecting the 125% increase in reserve tonnage since 2007.  Results of the scoping study are expected by the third quarter of 2010.

 

Meadowbank Project Remains on Schedule for Q1, 2010 Start-Up

 

The 100% owned Meadowbank mine project in Nunavut, northern Canada, is expected to begin production in the first quarter of 2010.  Probable gold reserves total 3.6 million ounces from 32.8 million tonnes grading 3.5 g/t.  Life of mine average annual gold production is expected to be approximately 350,000 ounces through 2019.

 

Construction of the new Meadowbank mine project is well advanced.  Highlights include the completion of the semi-autogenous (“SAG”) and ball mill foundations and the installation of the SAG mill.  Two thickeners and the cyanide destruction tank have been completed.  The dewatering of Second Portage Lake Phase One has been finished.  The balance will be completed upon the delivery of the water treatment plant expected this summer.  Two of the six generators were installed in the power plant.

 

The 2009 sea-lift season is underway, including the remaining materials and consumables required for project completion.  All of the major equipment for the various milling circuits is already in place.

 

Pre-stripping in the Portage pit is underway with approximately 2.0 million tonnes of waste rock hauled during the first half of 2009.

 

In the first half of 2009, approximately 27,400 metres of exploration drilling was completed at the Meadowbank minesite in the winter program.  Four drills were dedicated to the mining area between Portage and Goose zones and also at depth.  An additional 20,500 metres were completed on exploration targets on the surrounding Meadowbank property, using three drills.  The targets included the Vault deposit, located approximately 10 kilometres to the north.  Results will be presented in an upcoming exploration update.

 

A scoping study is underway which is considering an increase in the average daily production rate from 8,500 tonnes per day to 10,000 tonnes per day.  This would increase the average annual gold production to more than 400,000 ounces.  Results of the study are expected in the third quarter of 2009, with review in the fourth quarter.

 

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About Agnico-Eagle

 

Agnico-Eagle is a long established, Canadian headquartered, gold producer with operations located in Canada, Finland and Mexico, and exploration and development activities in Canada, Finland, Mexico and the United States.  Agnico-Eagle’s LaRonde mine is Canada’s largest operating gold mine in terms of reserves.  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 27 consecutive years.

 

9



 

AGNICO-EAGLE MINES LIMITED

SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS

(thousands of United States dollars, except where noted, US GAAP basis)

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

Gross profit (exclusive of amortization shown below)

 

 

 

 

 

 

 

 

 

LaRonde

 

$

50,653

 

$

39,357

 

$

88,299

 

$

114,840

 

Goldex

 

19,107

 

 

37,573

 

 

Lapa

 

(834

)

 

(834

)

 

Kittila

 

3,145

 

 

3,145

 

 

Operating margin

 

72,071

 

39,357

 

128,183

 

114,840

 

Amortization

 

15,470

 

7,516

 

27,600

 

14,546

 

Corporate

 

38,016

 

18,488

 

52,662

 

35,767

 

Income before tax

 

18,585

 

13,353

 

47,921

 

64,527

 

Tax provision

 

17,358

 

5,006

 

(7,647

)

27,272

 

Net earnings

 

$

1,227

 

$

8,347

 

$

55,568

 

$

37,255

 

Net earning per share

 

$

0.01

 

$

0.06

 

$

0.36

 

$

0.26

 

Operating cash flow

 

$

26,369

 

$

92,792

 

$

75,192

 

$

146,616

 

Realized price per sales volume (US$):

 

 

 

 

 

 

 

 

 

Gold (per ounce)

 

$

962

 

$

804

 

$

965

 

$

940

 

Silver (per ounce)

 

$

14.32

 

$

16.56

 

$

13.93

 

$

18.29

 

Zinc (per tonne)

 

$

1,698

 

$

1,728

 

$

1,421

 

$

2,169

 

Copper (per tonne)

 

$

5,832

 

$

8,534

 

$

5,058

 

$

9,349

 

Payable production:

 

 

 

 

 

 

 

 

 

Gold (ounces)

 

 

 

 

 

 

 

 

 

LaRonde

 

58,034

 

59,452

 

109,372

 

110,344

 

Goldex

 

35,645

 

8,305

 

71,604

 

8,305

 

Lapa (Note 1)

 

11,603

 

 

11,603

 

 

Kittila (Note 2)

 

13,771

 

 

18,285

 

 

Total gold (ounces)

 

119,053

 

67,757

 

210,864

 

118,649

 

Silver (000’s ounces)

 

1,034

 

956

 

2,063

 

1,982

 

Zinc (tonnes)

 

14,928

 

13,863

 

28,219

 

33,331

 

Copper (tonnes)

 

2,066

 

2,165

 

3,748

 

3,618

 

Payable metal sold:

 

 

 

 

 

 

 

 

 

Gold (ounces – LaRonde)

 

59,608

 

56,650

 

110,561

 

108,245

 

Gold (ounces – Goldex)

 

33,501

 

 

66,965

 

 

Gold (ounces – Lapa)

 

3,167

 

 

3,167

 

 

Gold (ounces – Kittila)

 

6,780

 

 

6,780

 

 

Silver (000’s ounces)

 

1,012

 

955

 

2,024

 

1,973

 

Zinc (tonnes)

 

12,804

 

15,260

 

29,861

 

33,970

 

Copper (tonnes)

 

2,066

 

2,108

 

3,752

 

3,530

 

Total cash costs per ounce (Note 3):

 

 

 

 

 

 

 

 

 

Gold

 

 

 

 

 

 

 

 

 

LaRonde

 

$

109

 

$

113

 

$

196

 

$

(123

)

Goldex

 

$

365

 

 

$

352

 

 

Lapa (Note 1)

 

$

948

 

 

$

948

 

 

Kittila (Note 2)

 

$

658

 

 

$

658

 

 

Weighted average total cash costs per ounce

 

$

326

 

$

113

 

$

320

 

$

(123

)

 

10



 

Note 1

 

Lapa achieved commercial production as of May 1, 2009.  Payable production includes commercial production ounces of 11,603 since May 1, 2009; non-commercial production ounces were nil.

 

Note 2

 

Kittila achieved commercial production as of May 1, 2009.  Payable production includes commercial production ounces of 12,018 since May 1, 2009.  Non-commercial production was 1,753 ounces.

 

Note 3

 

Total cash costs per ounce is calculated net of copper, zinc and other byproduct credits. The weighted average is based on commercial production ounces.  Total cash costs per ounce is a non-GAAP measure.  For a reconciliation to the financial statements, see Note 2 to the financial statements.  See also “Note Regarding Certain Measures of Performance”

 

11



 

AGNICO-EAGLE MINES LIMITED

CONSOLIDATED BALANCE SHEETS

(thousands of United States dollars, US GAAP basis)

(Unaudited)

 

 

 

As at
June 30, 2009

 

As at
December 31, 2008

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current

 

 

 

 

 

Cash and cash equivalents

 

$

173,905

 

$

99,381

 

Trade receivables

 

78,151

 

45,640

 

Inventories:

 

 

 

 

 

Ore stockpiles

 

34,234

 

24,869

 

Concentrates

 

19,396

 

5,013

 

Supplies

 

35,475

 

40,014

 

Other current assets

 

136,565

 

136,377

 

Total current assets

 

477,726

 

351,294

 

Other assets

 

11,429

 

8,383

 

Future income and mining tax assets

 

26,883

 

21,647

 

Property, plant and mine development

 

3,296,595

 

2,997,500

 

 

 

$

3,812,633

 

$

3,378,824

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

130,549

 

$

139,795

 

Dividends payable

 

277

 

28,304

 

Interest payable

 

486

 

146

 

Income taxes payable

 

6,791

 

4,814

 

 

 

 

 

 

 

Total current liabilities

 

138,103

 

173,059

 

 

 

 

 

 

 

Bank debt

 

485,000

 

200,000

 

 

 

 

 

 

 

Fair value of derivative financial instruments

 

349

 

12,823

 

 

 

 

 

 

 

Reclamation provision and other liabilities

 

80,999

 

71,770

 

 

 

 

 

 

 

Future income and mining tax liabilities

 

441,137

 

403,416

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common shares

 

 

 

 

 

Authorized — unlimited

 

 

 

 

 

Issued — 155,968,644 (December 31, 2008 — 154,808,918)

 

2,348,875

 

2,299,747

 

Stock options

 

58,409

 

41,052

 

Warrants

 

24,858

 

24,858

 

Contributed surplus

 

15,166

 

15,166

 

Retained earnings

 

213,109

 

157,541

 

Accumulated other comprehensive income (loss)

 

6,628

 

(20,608

)

 

 

 

 

 

 

Total shareholders’ equity

 

2,667,045

 

2,517,756

 

 

 

$

3,812,633

 

$

3,378,824

 

 

12



 

AGNICO-EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(thousands of United States dollars except share and per share amounts, US GAAP basis)

(Unaudited)

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

Revenues from mining operations

 

$

133,084

 

$

85,398

 

$

238,915

 

$

204,532

 

Interest and sundry income

 

5,103

 

2,644

 

9,796

 

6,759

 

Gain on sale of available-for-sale securities

 

341

 

 

535

 

406

 

 

 

138,528

 

88,042

 

249,246

 

211,697

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

Production

 

61,013

 

46,041

 

110,731

 

89,692

 

Exploration and corporate development

 

9,735

 

8,940

 

15,984

 

17,838

 

Amortization

 

15,470

 

7,516

 

27,600

 

14,546

 

General and administrative

 

13,253

 

9,759

 

32,053

 

29,627

 

Provincial capital tax

 

1,473

 

1,006

 

2,582

 

1,875

 

Interest

 

2,335

 

264

 

3,204

 

1,318

 

Foreign currency loss (gain)

 

16,664

 

1,163

 

9,171

 

(7,726

)

Income before income, mining and federal capital taxes

 

18,585

 

13,353

 

47,921

 

64,527

 

Income and mining tax expense (recovery)

 

17,358

 

5,006

 

(7,647

)

27,272

 

 

 

 

 

 

 

 

 

 

 

Net income for the period

 

$

1,227

 

$

8,347

 

$

55,568

 

$

37,255

 

 

 

 

 

 

 

 

 

 

 

Net income per share — basic

 

$

0.01

 

$

0.06

 

$

0.36

 

$

0.26

 

Net income per share — diluted

 

$

0.01

 

$

0.06

 

$

0.35

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding (in thousands)

 

 

 

 

 

 

 

 

 

Basic

 

155,805

 

143,720

 

155,498

 

143,546

 

Diluted

 

157,763

 

144,851

 

157,432

 

144,682

 

 

13



 

AGNICO-EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands of United States dollars, US GAAP basis)

(Unaudited)

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

 

2009

 

2008

 

2009

 

2008

 

Operating activities

 

 

 

 

 

 

 

 

 

Net income for the period

 

$

1,227

 

$

8,347

 

$

55,568

 

$

37,255

 

Add (deduct) items not affecting cash:

 

 

 

 

 

 

 

 

 

Amortization

 

15,470

 

7,516

 

27,600

 

14,546

 

Future income and mining taxes

 

17,209

 

11,175

 

(7,929

)

26,874

 

Gain on sale of available-for-sale securities

 

(341

)

 

(535

)

(406

)

Amortization of deferred costs and other

 

20,194

 

4,980

 

20,230

 

8,589

 

Changes in non-cash working capital balances

 

 

 

 

 

 

 

 

 

Trade receivables

 

(17,314

)

12,261

 

(32,511

)

(1,845

)

Income taxes payable

 

2,570

 

(4,648

)

1,977

 

 

Inventories

 

(13,928

)

(3,510

)

(12,005

)

(3,363

)

Other current assets

 

(8,496

)

21,760

 

21,424

 

12,766

 

Interest payable

 

(62

)

 

340

 

 

Accounts payable and accrued liabilities

 

9,840

 

34,911

 

1,033

 

52,200

 

 

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

26,369

 

92,792

 

75,192

 

146,616

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

Additions to property, plant and mine development

 

(155,002

)

(266,593

)

(310,349

)

(424,623

)

Acquisition, investments and other

 

2,926

 

(49,473

)

3,416

 

(52,214

)

 

 

 

 

 

 

 

 

 

 

Cash used in investing activities

 

(152,076

)

(316,066

)

(306,933

)

(476,837

)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Dividends paid

 

 

 

(27,132

)

(23,779

)

Repayment of capital lease and other

 

(6,520

)

 

(6,882

)

 

Bank debt

 

70,000

 

75,000

 

285,000

 

75,000

 

Sales-leaseback financing

 

10,888

 

 

10,888

 

 

Credit facility financing cost

 

(4,572

)

 

(4,572

)

 

Proceeds from common shares issued

 

18,451

 

3,493

 

47,392

 

33,756

 

 

 

 

 

 

 

 

 

 

 

Cash provided by financing activities

 

88,247

 

78,493

 

304,694

 

84,977

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

2,990

 

315

 

1,571

 

(822

)

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents during the period

 

(34,470

)

(144,466

)

74,524

 

(246,066

)

Cash and cash equivalents, beginning of period

 

208,375

 

294,419

 

99,381

 

396,019

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

173,905

 

$

149,953

 

$

173,905

 

$

149,953

 

 

 

 

 

 

 

 

 

 

 

Other operating cash flow information:

 

 

 

 

 

 

 

 

 

Interest paid during the period

 

$

1,987

 

$

18

 

$

3,509

 

$

702

 

Income, mining and capital taxes paid during the period

 

$

1,112

 

$

 

$

2,859

 

$

 

 

14



 

Note 4  The following tables provide a reconciliation of the total cash costs per ounce of gold produced and minesite costs per tonne to production costs as set out the interim consolidated financial statements:

 

Total Cash Costs per Ounce of Gold By Mine

 

(thousands of dollars, except where noted)

 

Three months ended
June 30, 2009

 

Three months ended
June 30, 2008

 

Six months ended
June 30, 2009

 

Six months ended
June 30, 2008

 

Total Production costs per Consolidated Statements of Income

 

$

61,013

 

$

46,041

 

$

110,731

 

$

89,692

 

 

 

 

 

 

 

 

 

 

 

Attributable to LaRonde

 

41,526

 

46,041

 

79,773

 

89,692

 

Attributable to Goldex

 

12,479

 

 

23,950

 

 

Attributable to Lapa

 

3,818

 

 

3,818

 

 

Attributable to Kittila

 

3,190

 

 

3,190

 

 

Total

 

$

61,013

 

$

46,041

 

$

110,731

 

$

89,692

 

 

 

 

 

 

 

 

 

 

 

LaRonde Cash Costs per Ounce

 

 

 

 

 

 

 

 

 

Production costs

 

$

41,526

 

$

46,041

 

$

79,773

 

$

89,692

 

Adjustments:

 

 

 

 

 

 

 

 

 

Byproduct revenues

 

(37,031

)

(39,862

)

(58,857

)

(102,804

)

Inventory adjustment(i)

 

2,138

 

864

 

1,109

 

135

 

Non-cash reclamation provision

 

(293

)

(306

)

(567

)

(613

)

Cash operating costs

 

$

6,340

 

$

6,737

 

$

21,458

 

$

(13,590

)

Gold production (ounces)

 

58,034

 

59,452

 

109,372

 

110,344

 

Total cash costs (per ounce)(ii)

 

$

109

 

$

113

 

$

196

 

$

(123

)

 

 

 

 

 

 

 

 

 

 

Goldex Cash Costs per Ounce

 

 

 

 

 

 

 

 

 

Production costs

 

$

12,479

 

$

 

$

23,950

 

$

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustment(i)

 

586

 

 

1,329

 

 

Non-cash reclamation provision

 

(50

)

 

(96

)

 

Cash operating costs

 

$

13,015

 

$

 

$

25,183

 

$

 

Gold production (ounces)

 

35,645

 

 

71,604

 

 

Total cash costs (per ounce)(ii)

 

$

365

 

$

 

$

352

 

$

 

 

 

 

 

 

 

 

 

 

 

Lapa Cash Costs per Ounce

 

 

 

 

 

 

 

 

 

Production costs

 

$

3,818

 

$

 

$

3,818

 

$

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustment(i)

 

7,191

 

 

7,191

 

 

Non-cash reclamation provision

 

(7

)

 

(7

)

 

Cash operating costs

 

$

11,002

 

$

 

$

11,002

 

$

 

Gold production (ounces)

 

11,603

 

 

11,603

 

 

Total cash costs (per ounce)(ii)

 

$

948

 

$

 

$

948

 

$

 

 

 

 

 

 

 

 

 

 

 

Kittila Cash Costs per Ounce

 

 

 

 

 

 

 

 

 

Production costs

 

$

3,190

 

$

 

$

3,190

 

$

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustment(i)

 

4,784

 

 

4,784

 

 

Non-cash reclamation provision

 

(62

)

 

(62

)

 

Cash operating costs

 

$

7,912

 

$

 

$

7,912

 

$

 

Gold production (ounces)

 

12,018

 

 

12,018

 

 

Total cash costs (per ounce)(ii)

 

$

658

 

$

 

$

658

 

$

 

 

15



 

Mine Site Cost per Tonne

 

(thousands of dollars, except where noted)

 

Three months ended
June 30, 2009

 

Three months ended
June 30, 2008

 

Six months ended
June 30, 2009

 

Six months ended
June 30, 2008

 

 

 

 

 

 

 

 

 

 

 

LaRonde Cost per Tonne

 

 

 

 

 

 

 

 

 

Production costs

 

$

41,526

 

$

46,041

 

$

79,773

 

$

89,692

 

Adjustments: Inventory adjustments (iii)

 

2,137

 

(1,902

)

1,109

 

(902

 

Non-cash reclamation provision

 

(293

)

(306

)

(567

)

(613

)

Minesite operating costs (US$)

 

$

43,370

 

$

43,833

 

$

80,315

 

$

88,177

 

Minesite operating costs (C$)

 

$

48,602

 

$

44,787

 

$

95,096

 

$

88,782

 

Tonnes of ore milled (000’s tonnes)

 

656

 

663

 

1,305

 

1,339

 

Minesite costs per tonne (C$) (iv)

 

$

74

 

$

68

 

$

73

 

$

66

 

 

 

 

 

 

 

 

 

 

 

Goldex Cost per Tonne

 

 

 

 

 

 

 

 

 

Production costs

 

$

12,479

 

$

 

$

23,950

 

$

 

Adjustments: Inventory adjustments (iii)

 

586

 

 

1,329

 

 

Non-cash reclamation provision

 

(50

)

 

(96

)

 

Minesite operating costs (US$)

 

$

13,015

 

$

 

$

25,183

 

$

 

Minesite operating costs (C$)

 

$

14,887

 

$

 

$

30,079

 

$

 

Tonnes of ore milled (000’s tonnes)

 

626

 

 

1,235

 

 

Minesite costs per tonne (C$) (iv)

 

$

24

 

$

 

$

24

 

$

 

 

 

 

 

 

 

 

 

 

 

Lapa Cost per Tonne

 

 

 

 

 

 

 

 

 

Production costs

 

$

3,818

 

$

 

$

3,818

 

$

 

Adjustments: Inventory adjustments (iii)

 

7,191

 

 

7,191

 

 

Non-cash reclamation provision

 

(7

)

 

(7

)

 

Minesite operating costs (US$)

 

$

11,002

 

$

 

$

11,002

 

$

 

Minesite operating costs (C$)

 

$

12,145

 

$

 

$

12,145

 

$

 

Tonnes of ore milled (000’s tonnes)

 

81

 

 

81

 

 

Minesite costs per tonne (C$) (iv)

 

$

149

 

$

 

$

149

 

$

 

 

 

 

 

 

 

 

 

 

 

Kittila Cost per Tonne

 

 

 

 

 

 

 

 

 

Production costs

 

$

3,190

 

$

 

$

3,190

 

$

 

Adjustments: Inventory adjustments (iii)

 

4,784

 

 

4,784

 

 

Non-cash reclamation provision

 

(62

)

 

(62

)

 

Minesite operating costs (US$)

 

$

7,912

 

$

 

$

7,912

 

$

 

Minesite operating costs (EUR)

 

5,717

 

 

5,717

 

 

Tonnes of ore milled (000’s tonnes)

 

132

 

 

132

 

 

Minesite costs per tonne (EUR) (iv)

 

43

 

 

43

 

 

 

16



 


(i)

Under the Company’s revenue recognition policy, revenue is recognized on concentrates when legal title passes. Since total cash costs are calculated on a production basis, this inventory adjustment reflects the sales margin on the portion of concentrate production for which revenue has not been recognized in the period.

 

 

(ii)

Total cash costs per ounce is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. The Company believes 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 above, this measure is calculated by adjusting Production Costs as shown in the Consolidated Statements 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 the Company’s mining operations. Management uses this measure to monitor the performance of the Company’s 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 costs per tonne 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.

 

 

(iii)

This inventory adjustment reflects production costs associated with unsold concentrates.

 

 

(iv)

Minesite costs per tonne 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 above, this measure is calculated by adjusting Production Costs as shown in the Consolidated Statements of Income and Comprehensive Income for inventory and asset retirement provisions and then dividing by tonnes processed through the mill. Since total cash costs data can be affected by fluctuations in byproduct metal prices and exchange rates, management believes minesite costs per tonne provides additional information regarding the performance of mining operations and allows management to monitor operating costs on a more consistent basis as the per tonne 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 tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware that this per tonne 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.

 

17



 

Detailed Mineral Reserve and Resource Data (as at December 31, 2008)

 

 

 

Au

 

Ag

 

Cu

 

Zn

 

Pb

 

Au

 

Tonnes

 

Category and Operation

 

(g/t)

 

(g/t)

 

(%)

 

(%)

 

(%)

 

(000s oz.)

 

(000s)

 

Proven Mineral Reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goldex

 

1.95

 

 

 

 

 

 

 

 

 

27

 

434

 

Kittila

 

4.84

 

 

 

 

 

 

 

 

 

31

 

199

 

Lapa

 

7.53

 

 

 

 

 

 

 

 

 

6

 

23

 

LaRonde

 

2.76

 

67.87

 

0.33

 

3.27

 

0.37

 

362

 

4,075

 

Pinos Altos

 

1.35

 

19.08

 

 

 

 

 

 

 

4

 

97

 

Subtotal Proven Mineral Reserves

 

2.77

 

 

 

 

 

 

 

 

 

430

 

4,828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Probable Mineral Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goldex

 

2.05

 

 

 

 

 

 

 

 

 

1,544

 

23,391

 

Kittila

 

4.69

 

 

 

 

 

 

 

 

 

3,193

 

21,171

 

Lapa

 

8.80

 

 

 

 

 

 

 

 

 

1,055

 

3,730

 

LaRonde

 

4.52

 

31.18

 

0.28

 

1.42

 

0.12

 

4,612

 

31,735

 

Meadowbank

 

3.45

 

 

 

 

 

 

 

 

 

3,638

 

32,773

 

Pinos Altos

 

2.68

 

74.61

 

 

 

 

 

 

 

3,589

 

41,669

 

Subtotal Probable Mineral Reserves

 

3.55

 

 

 

 

 

 

 

 

 

17,631

 

154,469

 

Total Proven and Probable Mineral Reserves

 

3.53

 

 

 

 

 

 

 

 

 

18,061

 

159,297

 

 

 

 

Au

 

Ag

 

Cu

 

Zn

 

Pb

 

Tonnes

 

 

 

Category and Operation

 

(g/t)

 

(g/t)

 

(%)

 

(%)

 

(%)

 

(000s)

 

 

 

Indicated Mineral Resources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bousquet

 

5.63

 

 

 

 

 

 

 

 

 

1,704

 

 

 

Ellison

 

5.68

 

 

 

 

 

 

 

 

 

415

 

 

 

Goldex

 

1.79

 

 

 

 

 

 

 

 

 

220

 

 

 

Kittila

 

2.99

 

 

 

 

 

 

 

 

 

3,471

 

 

 

Lapa

 

4.36

 

 

 

 

 

 

 

 

 

987

 

 

 

LaRonde

 

1.83

 

26.77

 

0.15

 

1.55

 

0.16

 

6,349

 

 

 

Meadowbank

 

2.17

 

 

 

 

 

 

 

 

 

21,956

 

 

 

Pinos Altos

 

1.00

 

26.08

 

 

 

 

 

 

 

12,468

 

 

 

Total Indicated Resources

 

2.07

 

 

 

 

 

 

 

 

 

47,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Au

 

Ag

 

Cu

 

Zn

 

Pb

 

Tonnes

 

 

 

Category and Operation

 

(g/t)

 

(g/t)

 

(%)

 

(%)

 

(%)

 

(000s)

 

 

 

Inferred Mineral Resources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bousquet

 

7.45

 

 

 

 

 

 

 

 

 

1,667

 

 

 

Ellison

 

5.81

 

 

 

 

 

 

 

 

 

786

 

 

 

Goldex

 

2.42

 

 

 

 

 

 

 

 

 

11,949

 

 

 

Kittila

 

4.42

 

 

 

 

 

 

 

 

 

17,550

 

 

 

Lapa

 

7.97

 

 

 

 

 

 

 

 

 

761

 

 

 

LaRonde

 

5.91

 

18.91

 

0.44

 

0.77

 

0.08

 

4,937

 

 

 

Meadowbank

 

2.78

 

 

 

 

 

 

 

 

 

4,953

 

 

 

Pinos Altos

 

1.65

 

39.95

 

 

 

 

 

 

 

4,000

 

 

 

Total Inferred Resources

 

3.84

 

 

 

 

 

 

 

 

 

46,603

 

 

 

 

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Forward-Looking Statements

 

The information in this press release has been prepared as at July 29, 2009. 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, words such as “anticipate”, “expect”, “estimate,” “forecast,” “planned”, “will”, “likely” and similar expressions are intended to identify forward-looking statements and are referred to herein as “forward-looking statements”.

 

Such statements include without limitation: the Company’s forward-looking production guidance, including estimated ore grades, metal production, life of mine horizons, the estimated timing of scoping studies, internal rates of return, and projected exploration and capital expenditures, including costs and other estimates upon which such projections are based; the Company’s goal to increase its mineral reserves and resources; and other statements and information regarding anticipated trends with respect to the Company’s operations, exploration and the funding thereof. Such statements reflect the Company’s views as at the date of this press release and are subject to certain risks, uncertainties and assumptions. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico-Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions of Agnico-Eagle contained in this news release, which may prove to be incorrect, include, but are not limited to, the assumptions set forth herein and in management’s discussion and analysis and the Company’s Annual Report on Form 20-F for the year ended December 31, 2008 (“Form 20-F”) as well as: that there are no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, damage to equipment, natural occurrences, political changes, title issues or otherwise; that permitting, development and expansion at each of Agnico-Eagle’s development projects proceeds on a basis consistent with current expectations, and that Agnico-Eagle does not change its development plans relating to such projects; that the exchange rate between the Canadian dollar, European Union euro, Mexican peso and the United  States dollar will be approximately consistent with current levels or as set out in this news release; that prices for gold, silver, zinc, copper and lead will be consistent with Agnico-Eagle’s expectations; that prices for key mining and construction supplies, including labour costs, remain consistent with Agnico-Eagle’s current expectations; that production meets expectations; that Agnico-Eagle’s current estimates of mineral reserves, mineral resources, mineral grades and metal recovery are accurate; that there are no material delays in the timing for completion of ongoing development projects; and that there are no material variations in the current tax and regulatory environment.  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 volatility of prices of gold and other metals; uncertainty of mineral reserves, mineral resources, mineral grades and metal 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; 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, see the Company’s Form 20-F for the year ended December 31, 2008, as well as the Company’s other filings with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission (the “SEC”). The Company does not intend, and does

 

19



 

not assume any obligation, to update these forward-looking statements and information, except as required by law. Accordingly, readers are advised not to place undue reliance on 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, total cash costs, minesite costs, and location of surface infrastructure.  Actual results and final decisions may be materially different from those current anticipated.

 

Notes To Investors Regarding The Use Of Resources

 

Cautionary Note To Investors Concerning Estimates Of Measured And Indicated Resources.

 

This press release uses the terms “measured resources” and “indicated resources”. We advise investors that while those terms are recognized and required by Canadian regulations, 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 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”, 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 mineral reserves and resources estimate reported by the Company on February 18th, 2009 were based on three-year average prices

 

20



 

for the period ending December 31, 2008  of $725 per ounce  gold, $13.32 per ounce silver, $1.27 per pound zinc, $3.15 per pound copper, $0.90 per pound lead and C$/US$, US$/Euro and MXP/US$ exchange rates of 1.09, 1.37 and 11.00, respectively.

 

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 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, 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 reasonably 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

 

21



 

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 mineral reserves presented in this disclosure are separate from and not a portion of the mineral resources.

 

Property/Project name and
location

 

Qualified Person
responsible for the current
Mineral Resource and
Reserve Estimate and
relationship to Agnico-
Eagle

 

Date of most recent SEDAR
Technical Report (NI 43-
101) disclosure

LaRonde, Bousquet & Ellison, Quebec ,Canada

 

François Blanchet Ing., LaRonde Division Superintendent of geology

 

March 24, 2005

Kittila, Finland

 

Marc Legault P.Eng., VP Project Development

 

December 11, 2008

Pinos Altos, Chihuahua, Mexico

 

Dyane Duquette, P.Geo., Principal geologist, Abitibi Technical Services Group

 

March 25, 2009

Meadowbank, Nunavut, Canada

 

Dyane Duquette, P.Geo., Principal geologist, Abitibi Technical Services Group

 

December 15, 2008

Goldex, Quebec, Canada

 

Richard Genest, Ing., Goldex Division Superintendent of geology

 

October 27, 2005

Lapa, Quebec, Canada

 

Normand Bédard, P.Geo., Lapa Division Superintendent of geology

 

June 8, 2006.

 

The effective date for all of the Company’s mineral resource and reserve estimates in this press release is December 31st, 2008. No independent verification of the data has been published. Additional information about each of the mineral projects that is required by NI 43-101, sections 3.2 and 3.3 and paragraphs 3.4 (a), (c) and (d) can be found in the Technical Reports referred to above, which may be found at www.sedar.com. Other important operating information can be found in the Company’s press release dated December 11, 2008.

 

The contents of this press release have been prepared under the supervision of, and reviewed by, Marc Legault P.Eng., Vice-president Project Development and a “Qualified Person” for the purposes of NI 43-101.

 

22



 

Note Regarding Certain Measures Of Performance

 

This press release presents measures including “total cash costs per ounce” and “minesite costs per tonne” that are not recognized measures under US GAAP. This data may not be comparable to data presented by other gold producers. The Company believes that these generally accepted industry measures are realistic indicators of operating performance and useful for year-over-year comparisons. However, both of these non-GAAP measures should be considered together with other data prepared in accordance with US GAAP, these measures, taken by themselves, are not necessarily indicative of operating costs or cash flow measures prepared in accordance with US GAAP.  The Company provides a reconciliation of realized total cash costs per ounce and minesite costs per tonne to the most comparable US GAAP measures in its annual and interim filings with securities regulators in Canada and the United States.  A reconciliation of the Company’s total cash costs per ounce and minesite costs 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 out in Note 1 to the financial statements included herein.

 

23