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Attention Business/Financial Editors
Agnico-Eagle reports second quarter 2008 results
Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars unless otherwise noted)
TORONTO, July 23 /CNW/ - Agnico-Eagle Mines Limited ("Agnico-Eagle" or
the "Company") today reported quarterly net income of $8.3 million, or $0.06
per share for the second quarter of 2008. This result includes a non-cash
foreign currency translation loss of $1.2 million, or $0.01 per share.
Additionally, the non-cash stock option expense totaled $2.6 million, or $0.02
per share in the second quarter. In the second quarter of 2007, the Company
reported net income of $37.8 million, or $0.28 per share. The reduction in net
income was almost entirely due to the 56% decrease in the realized price of
zinc, combined with a 7% decrease in zinc sales due to lower production,
compared to the second quarter of 2007. The decline in zinc production during
the quarter is due to the focus of mining on the lower mine at LaRonde where
the ore is more gold/copper rich and has lower zinc grades.
Second quarter 2008 cash provided by operating activities increased to
$92.8 million from $79.8 million in the second quarter of 2007, largely due to
changes in working capital.
<<
Second quarter 2008 highlights include:
- Strong Operating Results - good metal output and cost control
contributed to solid operating earnings and strong cash flow at
LaRonde from 59,452 ounces of gold
- Low Costs - Low total cash costs per ounce(1) at LaRonde of $113.
Excellent cost control at LaRonde with C$68 minesite costs per
tonne(2)
- Progress On Gold Production Growth - new Goldex mine is now operating
and approaching commercial production. Kittila gold mine project
preparing to open in the fourth quarter 2008
- Expanding Gold Deposits - preliminary exploration results demonstrate
the potential to continue to grow the gold deposits at Kittila, Pinos
Altos and Meadowbank. Scoping studies are underway on potential
expansions at these sites and also on the recently opened Goldex mine
- Health and Safety Excellence - the LaRonde team won the Quebec mine
rescue competition for an unprecedented 4th year in a row
>>
Payable gold production(3) in the second quarter of 2008 was 59,452
ounces (67,757 ounces including 8,305 ounces poured at Goldex during its
commissioning) at total cash costs per ounce of $113. This compares with
payable gold production of 56,392 ounces, at total cash costs per ounce of
minus $699, in the second quarter of 2007. The increase in production was
largely due to higher gold grades mined at LaRonde. However, the total cash
costs were significantly higher in the 2008 period as a result of much lower
prices realized for zinc, combined with lower zinc grades mined at LaRonde.
For the full year, gold production from LaRonde, Goldex and Kittila is
now forecast to total 300,000 ounces to 320,000 ounces. While LaRonde is
operating slightly ahead of plan, the production ramp-up at Goldex has been
slower than expected due to the slower than expected commissioning of the
production hoist. Also, delays in exotic piping delivery and some mechanical
and electrical installations in the Kittila mill are expected to push start-up
to the fourth quarter rather than September, as previously projected.
"Strong operational results were achieved once again this quarter from
our LaRonde operation where gold output is ahead of forecast and operating
costs are on budget. With the new Goldex mine expected to reach commercial
production in the third quarter and our new Kittila mine expected to open in
the fourth quarter, we anticipate seeing improving financial results over the
next several quarters," said Sean Boyd, Vice-Chairman and Chief Executive
Officer. "However, the Company is not immune to the cost pressures being
experienced throughout the mining industry. The continued strength of the
Canadian dollar and the Euro, combined with cost pressures for contract
services, fuel, steel, cement and reagents are leading to higher estimates for
capital and operating costs at our mines. A normal course review is underway
with revised estimates to be provided before year end," added Mr. Boyd.
The Company is undertaking its annual life of mine planning exercise
based on its most recently published mineral reserves (February 2008). The
results are expected to be released in the fourth quarter of 2008. At current
currency exchange rates and considering industry-wide cost escalation, capital
expenditures over the 2008 to 2010 period could be approximately 40% over the
estimates provided in Agnico-Eagle's press release of December 10, 2007. Of
this potential increase, approximately 40% would be attributable to the
difference in currently prevailing exchange rates, versus the three year
trailing average rates that were used in the 2007 forecast. The other 60%
would be due to increases in fuel, steel, cement, chemical reagents,
engineering and contractor costs, as experienced industry wide.
The Company is also studying several internal growth opportunities that
could add further value to the asset base through increases to the gold
production profile. These include scoping studies on the large underground
gold resource below Meadowbank's Goose Island pit, the potential for expansion
of the Pinos Altos reserves at depth and to the west of the Santo Nino pit,
the 0.4 million ounce gold inferred resource at the Creston Mascota deposit
(near Pinos Altos), and the deep underground mineralization at Kittila, which
is currently being delineated. Each of these deposits remains open for further
expansion. Additionally, the Company is already examining options to increase
the production rate at its new Goldex mine.
"With several of our key gold deposits increasing in size, additional
production growth is possible beginning in 2010. The internal growth
opportunities, combined with a conservative and measured approach to
acquisitions will allow us to steadily build per share value while maintaining
a low political risk profile," said Mr. Boyd.
For the first six months of 2008, net income was $37.3 million, or $0.26
per share versus $62.7 million, or $0.49 per share, in the first six months of
2007. The decrease was largely due to 35% lower zinc prices between the
comparative periods.
For the first six months of 2008, cash provided by operating activities
was $146.6 million, up from $135.9 million in the first half of 2007. The
increase was largely due to changes in working capital.
Conference Call Tomorrow
The Company will host its quarterly conference call on Thursday, July 24,
2008 at 11:00 a.m. (E.D.T.). Management will review the Company's financial
results for the second quarter 2008 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.
Via Telephone:
For those preferring to listen by telephone, please dial 416-644-3415 or
Toll Free 1-800-732-9307. 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 21276635
followed by the number sign.
The conference call will be replayed from Thursday, July 24, 2008 at 1:30
PM (E.D.T.) to Thursday, July 31, 2008 11:59 PM (E.D.T.).
The webcast along with presentation slides will be archived for 180 days
on the website.
LaRonde Mine - Strong Production and Cost Control Performance Continues
The LaRonde mill processed an average of 7,281 tonnes of ore per day in
the second quarter of 2008, compared with an average of 7,470 tonnes per day
in the second quarter of 2007. LaRonde has now been operating at an average of
more than 7,300 tonnes per day for more than four and a half years, continuing
to demonstrate the reliability of this world class mine.
Minesite costs per tonne were C$68 in the second quarter. These costs are
slightly lower than the C$71 per tonne experienced in the second quarter of
2007, largely due to the benefit of the accelerated lateral development which
was completed over the past year.
For the first six months of 2008, the minesite costs per tonne were on
plan at C$66, as compared to the first six months of 2007 when the minesite
costs per tonne were $67. The slightly lower cost is largely due to the
benefit of the accelerated lateral development, as discussed above.
On a per ounce basis, net of byproduct credits, LaRonde's total cash
costs per ounce remained very low by industry standards, at $113 in the second
quarter. This compares with the results of the second quarter of 2007 when
total cash costs per ounce were minus $699. The increase in total cash costs
is due to much lower byproduct revenues resulting mainly from lower realized
prices, and payable production, for zinc. Zinc production was lower due to the
ongoing transition to the lower mine where the gold/copper grades are higher
and the zinc/silver grades tend to be lower.
For the first six months of 2008, LaRonde's total cash costs per ounce
were minus $123, as compared to the first half of 2007 when the total cash
costs per ounce were minus $490. The higher costs were largely due to lower
byproduct revenues, as discussed above.
Additionally, commercial lead concentrate from the new mill circuit was
produced for the first time in May.
Cash Position Remains Strong, Despite Large Investments in Gold Growth;
Advanced Negotiations on Larger Bank Facility
Cash and cash equivalents decreased to approximately $150.0 million at
June 30, 2008 from the March 31, 2008 balance of $294.4 million. As expected,
all of the Company's operating cash flow and a portion of its existing cash
balances were reinvested in its gold growth projects. During the quarter,
Agnico-Eagle added $92.8 million of cash provided by operating activities.
Capital expenditures in the quarter totaled $266.6 million, including $67.2
million on the construction of Meadowbank, $18.7 million on Goldex, $66.7
million at Kittila, $10.6 million on the LaRonde Extension, $72.6 million at
Pinos Altos and $20.5 million at Lapa.
In addition, during the second quarter, a $50 million strategic
investment was made in Gold Eagle Mines Ltd. Also, in the second quarter, the
Company drew $75 million under its credit facility to help fund its growth
investments.
To help maintain a conservative financial profile and superior liquidity,
the Company is in advanced negotiations regarding the possibility of
increasing the size of its bank credit facilities. The current facility is
$300 million with only $75 million drawn at June 30, 2008.
New Goldex Mine Now Operating; Four More New Gold Mines Under
Construction
At the 100% owned Goldex mine in northwestern Quebec, proven and probable
reserves are 1.6 million ounces of gold (23.1 million tonnes grading 2.2 grams
per tonne). Current reserves are estimated to be sufficient for a nine year
mine life with expected annual production averaging 175,000 ounces. With a
large additional resource, the mine remains open for expansion. Please see the
table titled "Detailed Mineral Reserve and Resource Data - December 31, 2007"
later in this press release for further detail.
The initial ore was fed into the Goldex mill in the third week of April
and commercial production (70% capacity for 30 consecutive days) is expected
to be declared in the third quarter. Approximately 8,300 ounces of gold were
poured during the second quarter. The full production rate of 6,900 tonnes per
day is expected by the fourth quarter 2008.
A total of 38,659 metres of production drilling, representing 0.9 million
tonnes of ore, were completed during the second quarter. According to plan, a
total of 1.4 million tonnes have been drilled so far in 2008. Approximately
130,000 tonnes of ore are broken underground.
Largely due to the slower than expected commissioning of the production
hoist, the underground operation at Goldex has been slower to ramp-up than
previously expected. As a result, 2008 production at Goldex is now expected to
total 60,000 ounces to 70,000 ounces rather than the previously expected
90,000 ounces.
Construction commenced at the 100% owned Kittila mine project in northern
Finland in the second quarter of 2006. The project is expected to produce an
average of 150,000 ounces of gold per year over its estimated mine life of 13
years. Initial start-up is expected in the fourth quarter. Kittila has
probable gold reserves of 3.0 million ounces (18.2 million tonnes grading 5.1
grams per tonne).
During the second quarter, an amended environmental permit was received.
Kittila now has all the necessary permits to construct and operate the mine.
Pit blasts in ore began in May. At June 30, 2008, the ore stockpiles
totaled 62,000 tonnes with average grade of 4.7 grams of gold per tonne.
The construction of the processing plant is ongoing. During the quarter
the focus was on electrical, piping and the lining of the autoclave. The
oxygen plant for the autoclave is complete, while SAG mill installation is
nearing completion.
A delay in start-up of Kittila is now anticipated. This is due to slower
than expected progress in the mill as a result of later than anticipated
equipment deliveries and installation. Gold production in 2008 is now expected
to be 20,000 ounces to 30,000 ounces rather than the previous estimate of
50,000 ounces.
Considering the growth in reserves and resources to date, the Company has
begun to contemplate future increases to the production rate and also methods
to access the deeper mineralization at Kittila. An exploration update, with
the main focus on Kittila, is expected this quarter.
At the 100% owned Lapa mine project in northwestern Quebec, the final
phase of construction commenced in the second quarter of 2006. Proven and
probable gold reserves of 1.1 million ounces (3.8 million tonnes grading
8.9 grams per tonne) are expected to support estimated annual production of
125,000 ounces per year over an anticipated mine life of seven years.
Lateral and vertical raise development is well underway with a lateral
advance of more than 1,800 metres, and raise development of 1,385 metres
completed during the second quarter. Construction of the surface service
facilities is proceeding well. Initial production from Lapa is expected to
begin in mid-2009.
At the 100% owned LaRonde mine in northwestern Quebec, construction
commenced in the second quarter of 2006 on the new infrastructure to access
the deep ore (the LaRonde Extension). Proven and probable reserves of 5.0
million ounces (34.9 million tonnes grading 4.4 grams per tonne) are expected
to support a mine life through 2021. Annual gold production is anticipated to
average 340,000 ounces over the remaining 14 year mine life, with the LaRonde
Extension beginning production in 2011.
During the second quarter, sinking of the internal shaft for the
Extension began. As planned, approximately 80 metres of advance was achieved.
Also, the fresh air intake at Level 218 and the exhaust raise excavation were
started during the period.
At the 100% owned Pinos Altos mine project in northern Mexico, the
property has probable gold reserves of 2.5 million ounces (24.7 million tonnes
grading 3.2 grams per tonne). Additionally, the property contains a large
silver reserve of over 73.1 million ounces (from the same 24.7 million tonnes
grading 92.2 grams per tonne). The project was approved for construction in
August 2007. Average annual production is expected to be approximately 190,000
ounces of gold over an estimated 12 year mine life with start-up expected in
the third quarter of 2009.
A new land and royalty agreement was finalized with the Pinos Altos
landowner in May 2008.
Project construction is underway. Open pit stripping has commenced and
had achieved the planned rate of 25,000 tonnes per day by the end of the
second quarter. Construction of the processing plant is expected to begin in
September.
The construction of a 2,800 metre underground exploration ramp commenced
in March 2007 and has advanced approximately 1,400 metres. Additionally, the
development of the production decline has advanced approximately 650 metres.
Three surface exploration drills and two underground exploration drills
are currently operating at Pinos Altos. Preliminary results of this program
are planned to be released in the third quarter. Based on the results obtained
to date, there is good potential for expanding reserves at depth and along
strike to the west of the Santo Nino pit.
Exploration drilling also continues on the Creston/Mascota area. This
region, approximately 10 kilometres northwest of the main Santo Nino deposit
at Pinos Altos, currently has an inferred gold resource of 7.7 million tonnes
grading 1.4 grams per tonne gold and 16.2 grams per tonne silver. The resource
could possibly be processed via heap leach although a milling option is also
being contemplated. Baseline engineering, community and environmental work has
commenced. An initial scoping study, on what could be a stand-alone mining
operation, is expected to be completed by the end of 2008.
Agnico-Eagle's 100% owned Meadowbank project in Nunavut has probable gold
reserves of 3.5 million ounces (29.3 million tonnes grading 3.7 grams per
tonne). With a large additional gold resource, the project remains open for
expansion. Initial gold production is anticipated in the first quarter 2010.
Annual gold production is currently estimated to average 360,000 ounces over
the estimated nine year life of the mine.
The final amended water License B was approved and received during the
second quarter 2008. Subsequently, the final water License A was approved and
received. Meadowbank now has all the necessary permits to operate the mine.
The all-weather road from the deep-water port at Baker Lake to the
Meadowbank project site was also completed in the second quarter of 2008.
Construction of the permanent camp facilities is underway and
approximately 290 beds are now available.
Pre-stripping of the Portage pit is underway, with the waste used in road
construction and stockpiled for dyke construction. Construction of the
processing plant, power plant and service buildings are underway.
Agnico-Eagle is currently in the early stages of examining the
underground mining potential at the southern end of the Meadowbank deposit,
specifically below the Goose Island and Goose South deposits. Currently three
drills are operating. The gold-bearing mineralization has been encountered to
a depth of 500 metres and an exploration update on this project is expected
later this year.
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
higher gold prices consistent with its policy of no forward gold sales. It has
paid a cash dividend for 26 consecutive years.
<<
(1) Total cash costs per ounce is a non-GAAP measure. For reconciliation
of total cash costs per ounce to production costs, as reported in the
financial statements, see Note 1 to the financial statements at the
end of this news release.
(2) 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.
(3) Payable gold production means the quantity of a 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.
AGNICO-EAGLE MINES LIMITED
SUMMARIZED QUARTERLY DATA
(thousands of United States dollars, except where noted,
US GAAP basis)
(Unaudited)
Three months ended Six Months ended
------------------ ----------------
June 30, June 30,
-------- --------
2008 2007 2008 2007
---- ---- ---- ----
Income and cash flows
LaRonde Division
Revenues from mining
operations.................. $ 85,398 $ 117,935 $ 204,532 $ 218,665
Production costs............. 46,041 42,810 89,692 78,988
------- ------- ------- -------
Gross profit (exclusive
of amortization shown below) $ 39,357 $ 75,125 $ 114,840 $ 139,677
Amortization................. 7,516 7,094 14,546 14,022
------- ------- ------- -------
Gross profit................. $ 31,841 $ 68,031 $ 100,294 $ 125,655
------- ------- ------- -------
------- ------- ------- -------
Net income for the period.... $ 8,347 $ 37,809 $ 37,255 $ 62,731
Net income per share (basic). $ 0.06 $ 0.28 $ 0.26 $ 0.49
Net income per share
(diluted)................... $ 0.06 $ 0.27 $ 0.26 $ 0.48
Cash provided by operating
activities.................. $ 92,792 $ 79,832 $ 146,616 $ 135,898
Cash used in investing
activities.................. $(316,066) $ (25,242) $(476,837) $(104,536)
Cash provided by (used in)
financing activities........ $ 78,493 $ 1,853 $ 84,977 $ (8,810)
Weighted average number of
common shares outstanding
- basic (in thousands)...... 143,720 133,788 143,546 127,473
Tonnes of ore milled......... 662,593 679,765 1,338,775 1,351,249
Head grades:
Gold (grams per tonne)...... 3.09 2.82 2.84 2.91
Silver (grams per tonne).... 60.03 68.60 62.35 76.40
Zinc........................ 2.82% 3.44% 3.33% 3.57%
Copper...................... 0.40% 0.32% 0.34% 0.35%
Recovery rates:
Gold........................ 90.45% 91.54% 90.26% 91.09%
Silver...................... 85.92% 87.40% 85.95% 87.41%
Zinc........................ 87.20% 87.60% 88.13% 86.40%
Copper...................... 88.44% 86.40% 87.07% 85.50%
Payable production:
Gold (ounces)............... 59,452 56,392 110,344 114,980
Silver (ounces in thousands) 956 1,135 1,982 2,532
Zinc (tonnes)............... 13,863 17,462 33,331 35,406
Copper (tonnes)............. 2,165 1,689 3,618 3,680
Payable metal sold:
Gold (ounces)............... 56,650 57,366 108,245 114,124
Silver (ounces in thousands) 955 1,153 1,973 2,777
Zinc (tonnes)............... 15,260 16,460 33,970 34,227
Copper (tonnes)............. 2,108 1,988 3,530 3,966
Realized prices (US$):
Gold (per ounce)............ $ 804 $ 683 $ 940 $ 676
Silver (per ounce).......... $ 16.56 $ 13.28 $ 18.29 $ 13.60
Zinc (per tonne)............ $ 1,728 $ 3,950 $ 2,169 $ 3,352
Copper (per tonne).......... $ 8,534 $ 7,008 $ 9,349 $ 6,549
Total cash costs (per ounce)
(US$):
Production costs............. $ 774 $ 759 $ 813 $ 687
Less: Net byproduct revenues. (671) (1,396) (931) (1,230)
Inventory adjustments....... 15 (57) 1 58
Accretion expense and other. (5) (5) (6) (5)
Total cash costs
(per ounce)(1).............. $ 113 $ (699) $ (123) $ (490)
------- ------- ------- -------
------- ------- ------- -------
Minesite costs per tonne
milled (C$)(1).............. $ 68 $ 71 $ 66 $ 67
------- ------- ------- -------
------- ------- ------- -------
(1) Total cash costs (per ounce) and minesite costs per tonne milled are
non-GAAP measures. For a reconciliation of these measures to the
financial statements, see note 1 to these financial statements.
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars, US GAAP basis)
(Unaudited)
As at As at
June 30, December 31,
-------- ------------
2008 2007
---- ----
ASSETS
Current
Cash and cash equivalents.................... $ 149,953 $ 396,019
Trade receivables............................ 81,264 79,419
Inventories:
Ore stockpiles.............................. 7,362 5,647
Concentrates................................ 1,733 1,913
Supplies.................................... 17,224 15,637
Other current assets......................... 133,631 107,459
---------- ----------
Total current assets.......................... 391,167 606,094
Other assets.................................. 15,996 16,436
Future income and mining tax assets........... 26,392 5,905
Property, plant and mine development.......... 2,543,312 2,107,063
---------- ----------
$ 2,976,867 $ 2,735,498
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities...... $ 171,980 $ 108,227
Dividends payable............................. 438 26,280
Total current liabilities..................... 172,418 134,507
---------- ----------
Bank debt..................................... 75,000 -
---------- ----------
Reclamation provision and other liabilities... 70,477 57,941
---------- ----------
Future income and mining tax liabilities...... 521,638 484,116
---------- ----------
Shareholders' equity
Common shares
Authorized - unlimited
Issued - 143,752,762 (December 31, 2007
- 142,403,379).............................. 1,976,075 1,931,667
Stock options................................. 33,986 23,573
Contributed surplus........................... 15,166 15,166
Retained earnings............................. 149,495 112,240
Accumulated other comprehensive loss.......... (37,388) (23,712)
---------- ----------
Total shareholders' equity.................... 2,137,334 2,058,934
---------- ----------
$ 2,976,867 $ 2,735,498
---------- ----------
---------- ----------
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 Six Months ended
------------------ ----------------
June 30, June 30,
-------- --------
2008 2007 2008 2007
---- ---- ---- ----
REVENUES
Revenues from mining
operations.................. $ 85,398 $ 117,935 $ 204,532 $ 218,665
Interest and sundry income... 2,644 6,071 6,759 11,345
Gain on sale of
available-for-sale
securities.................. - 1,337 406 3,202
------ ------- ------- -------
88,042 125,343 211,697 233,212
COSTS AND EXPENSES
Production................... 46,041 42,810 89,692 78,988
Loss (gain) on derivative
financial instruments....... - (299) - 5,829
Exploration and corporate
development................. 8,940 9,037 17,838 14,866
Amortization................. 7,516 7,094 14,546 14,022
General and administrative... 9,759 7,623 29,627 16,676
Provincial capital tax....... 1,006 1,438 1,875 2,500
Interest..................... 264 970 1,318 1,721
Foreign currency loss (gain). 1,163 8,045 (7,726) 6,778
------ ------- ------- -------
Income before income,
mining and federal capital
taxes....................... 13,353 48,625 64,527 91,832
Income and mining tax expense 5,006 10,816 27,272 29,101
------ ------- ------- -------
Net income for the period.... $ 8,347 $ 37,809 $ 37,255 $ 62,731
------ ------- ------- -------
------ ------- ------- -------
Net income per share
- basic..................... $ 0.06 $ 0.28 $ 0.26 $ 0.49
------ ------- ------- -------
------ ------- ------- -------
Net income per share
- diluted................... $ 0.06 $ 0.27 $ 0.26 $ 0.48
------ ------- ------- -------
------ ------- ------- -------
Weighted average number
of shares outstanding
(in thousands)
Basic....................... 143,720 133,788 143,546 127,473
Diluted..................... 144,851 138,056 144,682 131,741
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of United States dollars, US GAAP basis)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- --------------------
2008 2007 2008 2007
---------- ---------- --------- ----------
Operating activities
Net income for the period.... $8,347 $37,809 $37,255 $62,731
Add (deduct) items not
affecting cash:
Amortization............... 7,516 7,094 14,546 14,022
Future income and mining
taxes..................... 11,175 5,931 26,874 22,261
Unrealized loss on
derivative contracts...... - (705) - 5,018
Gain on sale of available-
for-sale securities....... - (1,337) (406) (3,202)
Amortization of deferred
costs and other........... 4,980 19,073 8,589 23,522
Changes in non-cash working
capital balances
Trade receivables.......... 12,261 (1,331) (1,845) 8,476
Income taxes payable....... (4,648) (301) - 2,890
Other taxes recoverable.... (14,144) (6,376) (15,461) (3,207)
Inventories................ (3,510) (3,417) (3,363) (6,008)
Other current assets....... 35,904 (1,773) 28,227 (8,826)
Accounts payable and
accrued liabilities....... 34,911 25,165 52,200 18,221
---------- ---------- --------- ----------
Cash provided by operating
activities.................. 92,792 79,832 146,616 135,898
---------- ---------- --------- ----------
Investing activities
Additions to property, plant
and mine development........ (266,593) (106,416) (424,623) (169,390)
Acquisition, investments and
other....................... (49,473) (14,869) (52,214) (31,189)
Cash acquired upon
acquisition of Cumberland
Resources Ltd............... - 96,043 - 96,043
---------- ---------- --------- ----------
Cash used in investing
activities.................. (316,066) (25,242) (476,837) (104,536)
---------- ---------- --------- ----------
Financing activities
Dividends paid............... - - (23,779) (13,406)
Bank debt.................... 75,000 - 75,000 -
Proceeds from common shares
issued...................... 3,493 1,853 33,756 4,596
---------- ---------- --------- ----------
Cash provided by (used in)
financing activities........ 78,493 1,853 84,977 (8,810)
---------- ---------- --------- ----------
Effect of exchange rate
changes on cash and cash
equivalents................. 315 11,276 (822) 14,165
---------- ---------- --------- ----------
Net increase in cash and
cash equivalents during
the period.................. (144,466) 67,719 (246,066) 36,717
Cash and cash equivalents,
beginning of period......... 294,419 427,615 396,019 458,617
---------- ---------- --------- ----------
Cash and cash equivalents,
end of period............... $149,953 $495,334 $149,953 $495,334
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Other operating cash flow
information:
Interest paid during the
period...................... $18 $540 $702 $1,129
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Income, mining and capital
taxes paid during the
period...................... - $3,112 - $3,137
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Note 1: Reconciliation of Total Cash Costs Per Ounce and Minesite Costs
Per Tonne
Three Three Six Six
months months months months
ended ended ended ended
(thousands of dollars, June 30, June 30, June 30, June 30,
except where noted) 2008 2007 2008 2007
---------------------- ---------- ---------- --------- ----------
Production costs per
Consolidated Statements
of Income................... $46,041 $42,810 $89,692 $78,988
Adjustments:
Byproduct revenues........... (39,862) (78,745) (102,804) (141,489)
Inventory adjustment(i)...... 864 (3,210) 135 6,683
Non-cash reclamation
provision................... (306) (280) (613) (544)
---------- ---------- --------- ----------
Cash operating costs......... $6,737 $(39,425) $(13,590) $(56,362)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Gold production (ounces)..... 59,452 56,392 110,344 114,980
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Total cash costs
(per ounce)(ii)............. $113 $(699) $(123) $(490)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Three Three Six Six
months months months months
ended ended ended ended
(thousands of dollars, June 30, June 30, June 30, June 30,
except where noted) 2008 2007 2008 2007
---------------------- ---------- ---------- --------- ----------
Production costs per
Consolidated Statements of
Income...................... $46,041 $42,810 $89,692 $78,988
Adjustments:
Inventory adjustments(iii) (1,902) 1,401 (902) 4,895
Non-cash reclamation
provision................... (306) (280) (613) (544)
---------- ---------- --------- ----------
Minesite operating
costs (US$)................. 43,833 $43,931 88,177 $83,339
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Minesite operating
costs (C$).................. 44,787 $48,037 88,782 $90,719
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Tonnes of ore milled
(000's tonnes).............. 663 680 1,339 1,351
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Minesite costs per
tonne (C$)(iv).............. $68 $71 $66 $67
---------- ---------- --------- ----------
---------- ---------- --------- ----------
-------------
Notes:
(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 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 hedging adjustments 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.
(v) Payable gold production means the quantity of gold produced during
a period contained in products that are or will be sold by the
Company, whether such products are sold during the period or held
as inventory at the end of the period.
Detailed Mineral Reserve and Resource Data - December 31, 2007
-------------------------------------------------------------------------
Au
Category (000's Tonnes
and Zone Au(g/t) Ag(g/t) Cu(%) Zn(%) oz.) (000's)
-------------------------------------------------------------------------
Proven Mineral
Reserve
-------------------------------------------------------------------------
Goldex 2.23 18 250
-------------------------------------------------------------------------
Lapa 10.65 1 2.8
-------------------------------------------------------------------------
LaRonde 2.77 73.80 0.33 3.81 416 4,672
-------------------------------------------------------------------------
Subtotal Proven
Mineral Reserve 2.75 435 4,924
-------------------------------------------------------------------------
Probable Mineral
Reserve
-------------------------------------------------------------------------
Goldex 2.20 1,616 22,849
-------------------------------------------------------------------------
Kittila 5.12 2,996 18,205
-------------------------------------------------------------------------
Lapa 8.86 1,070 3,756
-------------------------------------------------------------------------
LaRonde 4.67 34.61 0.30 1.67 4,542 30,225
-------------------------------------------------------------------------
Meadowbank 3.67 3,453 29,261
-------------------------------------------------------------------------
Pinos Altos 3.21 92.21 2,547 24,657
-------------------------------------------------------------------------
Subtotal Probable
Mineral Reserve 3.91 16,224 128,952
-------------------------------------------------------------------------
Total Proven and
Probable Mineral
Reserves 3.87 16,659 133,877
-------------------------------------------------------------------------
--------------------------------------------------------------
Category Tonnes
and Zone Au(g/t) Ag(g/t) Cu(%) Zn(%) (000's)
--------------------------------------------------------------
Indicated
Mineral
Resource
--------------------------------------------------------------
Bousquet 5.63 1,704
--------------------------------------------------------------
Ellison 5.68 415
--------------------------------------------------------------
Goldex 2.75 304
--------------------------------------------------------------
Kittila 3.03 5,416
--------------------------------------------------------------
Lapa 4.48 865
--------------------------------------------------------------
LaRonde 2.14 25.33 0.14 1.70 5,643
--------------------------------------------------------------
Meadowbank 2.30 14,582
--------------------------------------------------------------
Pinos Altos 1.36 49.88 6,182
--------------------------------------------------------------
Total Indicated
Resource 2.48 35,111
--------------------------------------------------------------
--------------------------------------------------------------
Category Tonnes
and Zone Au(g/t) Ag(g/t) Cu(%) Zn(%) (000's)
--------------------------------------------------------------
Inferred Mineral
Resource
--------------------------------------------------------------
Bousquet 7.45 1,667
--------------------------------------------------------------
Ellison 5.81 786
--------------------------------------------------------------
Goldex 2.35 11,889
--------------------------------------------------------------
Kittila 3.39 10,832
--------------------------------------------------------------
Lapa 8.96 759
--------------------------------------------------------------
LaRonde 6.26 22.65 0.47 1.07 4,723
--------------------------------------------------------------
Meadowbank 3.49 3,434
--------------------------------------------------------------
Pinos Altos 1.44 24.08 12,237
--------------------------------------------------------------
Total Inferred
Resource 3.19 46,326
--------------------------------------------------------------
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.
>>
Forward-Looking Statements
The information in this press release has been prepared as at July 23,
2008. 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 or information.
Such statements include without limitation: the Company's estimates of
production, including estimated ore grades, metal production, mine start-up
dates, life of mine horizons, forecast total cash costs and minesite costs,
actual production estimates 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;
the Company's cash position and other statements and information regarding
anticipated trends with respect to the Company's operations and exploration.
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:
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 press release or the Company's Form
20-F referred to below; prices for gold, silver, zinc and copper 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 mineral 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 mineral recovery estimates; uncertainty of
future production, delays in equipment delivery and installation, 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
Annual Information Form and Annual Report on Form 20-F for the year ended
December 31, 2007, 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 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 and 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 may use 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 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.
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 15, 2008 were based on three-year average prices for the period
ending December 31, 2007 of $583 per ounce gold, $10.77 per ounce silver,
$1.19 per pound zinc, $2.65 per pound copper and C$/US$, US$/Euro, and Mexican
Peso/US$ exchange rates of 1.14, 1.29 and 10.91, 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, 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 mineral reserves presented in this disclosure are not a subset of
mineral resources.
A Qualified Person, Dyane Duquette P.Geo., Superintendent of Geology for
the Goldex mine, was responsible for the mineral reserve and mineral resource
estimate at the Goldex project. Additional information regarding the Goldex
mineral resource and mineral reserve estimate required by Canadian securities
laws is set out in the Company's Technical Report for the Goldex Project that
was filed on SEDAR on October 27, 2005 and in the Company's press release
dated February 15, 2008.
The Kittila mine project mineral resource and mineral reserve estimate
was prepared by Jyrki Korteniemi, the Superintendent of Geology for the
Kittila mine project under the supervision of a Qualified Person, Marc Legault
P.Eng., the Company's Vice-President, Project Development. Additional
information regarding the Kittila mineral resource and mineral reserve
required by Canadian securities laws is set out in the Company's Technical
Report for the Kittila Project that was filed on SEDAR on March 14, 2006 and
in the Company's press release dated February 15, 2008.
The Qualified Person responsible for the Lapa mineral reserve and mineral
resource estimate is Normand Bédard P.Geo., the Superintendent of Geology for
the Lapa mine project. Additional information regarding the Lapa mineral
resource and mineral reserve required by Canadian securities laws is set out
in the Company's Technical Report for the Lapa Project that was filed on SEDAR
on June 8, 2006 and in the Company's press release dated February 15, 2008.
The Qualified Person responsible for the LaRonde mineral reserve and
resource estimate is François Blanchet Ing., Superintendent of Geology for the
LaRonde Division. The effective date of the estimate is December 31, 2007.
Additional information regarding the LaRonde mineral resource and mineral
reserve required by Canadian securities laws is set out in the Company's
Technical Report for the LaRonde Project that was filed on SEDAR on March 23,
2005 and in the Company's press release dated February 15, 2008.
The Qualified Person responsible for the Meadowbank mineral resource
estimate is Daniel Doucet Ing., Principal Engineer Geology for the Company's
Technical Services Group, Abitibi Regional Office. Additional information
regarding the Meadowbank mineral resource and mineral reserve required by
Canadian securities laws is set out in the Company's Technical Report for the
Meadowbank Project that was filed by Cumberland Resources Ltd. on SEDAR on
March 31, 2005 and in the Company's press release dated February 15, 2008.
The Qualified Person responsible for the Pinos Altos mineral resource and
reserve estimate is Daniel Doucet, Ing., Principal Engineer Geology for the
Company's Technical Services Group, Abitibi Regional Office. Additional
information regarding the Pinos Altos mineral resource and mineral reserve
required by Canadian securities laws is set out in the Company's Technical
Report for the Pinos Altos Project that was filed on SEDAR on September 24,
2007 and in the Company's press release dated February 15, 2008.
The contents of this press release have been prepared under the
supervision of, and reviewed by, Marc Legault, the Company's Vice President,
Project Development, a "Qualified Person" for the purposes of NI 43-101.
Note Regarding Certain Measures Of Performance
This press release presents measures including "total cash costs per
ounce" and "minesite cost 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, and
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 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 out in Note 1 to the financial statements included
herein.
-30-
/For further information: David Smith; VP, Investor Relations, (416)
947-1212/
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