Stock Symbols: AEM (NYSE and TSX) TORONTO, Feb. 22
/PRNewswire-FirstCall/ -- Agnico-Eagle Mines Limited today reported
fourth quarter earnings of $11.7 million, or $0.13 per share. This
compares to net earnings of $15.6 million, or $0.18 per share, in
the fourth quarter of 2004. Cash flow provided by operating
activities was $24.6 million in the quarter, compared to $11.7
million in the prior year's fourth quarter. The Company's financial
position remains strong with cash and cash equivalents of $121
million at December 31, 2005, up from $106 million at year end
2004. For the full year 2005, earnings totaled $37.0 million, or
$0.42 per share, versus $47.9 million, or $0.56 per share in 2004.
The difference in year over year earnings is largely attributable
to a byproduct hedge loss and increased exploration expense in
2005. In 2005, cash flow provided by operating activities increased
substantially to $83.0 million versus $49.5 million in 2004. The
difference is principally due to a change in working capital in
2005. Payable gold production in the fourth quarter was 63,022
ounces at record low total cash cost per ounce(1) of minus $22.
This compares with 68,909 ounces at total cash costs of $13 per
ounce in the fourth quarter of 2004. Payable gold production for
the full year 2005 was 241,807 ounces at total cash costs per ounce
of $43, versus 271,567 ounces at total cash costs per ounce of $56
in 2004. Highlights for the quarter include: - Record reserves of
10.4 million ounces, a 32% increase from 2004 levels - Record low
total cash costs at LaRonde of minus $22 per ounce of gold - Record
quarterly cash flow provided by operating activities of $24.6
million - Construction continues at Goldex, our next new gold mine
- Acquisition of Suurikuusikko property in Finland completed
"Agnico-Eagle's low cost LaRonde operation continues to generate
strong levels of cash flow, which helps fund our gold growth
program", said Sean Boyd, Vice-Chairman and Chief Executive
Officer. "Great thanks and congratulations are due to the employees
at LaRonde as the mine has now processed approximately 7,250 tonnes
per day for over two years, while compiling a remarkable safety
record with over 400 days without a lost time accident", added Mr.
Boyd. -------------------------- (1) Total cash costs per ounce is
a non-GAAP measure. For a reconciliation of this measure to the
financial statements, see note 1 following the financial statements
Conference Call Tomorrow The Company's senior management will host
the Fourth Quarter and Year End Results Conference Call on Thursday
February 23, 2006 at 11:00 a.m. (E.S.T.). Management will also
provide an update of the Company's exploration and development
activities. To listen on the telephone, please dial (416) 644-3429
or 1 (800) 814-4890 toll free, at least five minutes before the
scheduled start of the presentation. The access phone number for
the archived audio replay is 1 (877) 289-8525, passcode 21172791
followed by the number sign. It will be available from Thursday,
February 23, 2006 at 1:00 pm until Thursday, March 2, 2006 at
11:59pm. Additionally, a live audio webcast of the call will be
available on the Company's website at http://www.agnico-eagle.com/.
The webcast will be archived for 180 days. The presentation slides
will be archived on the website. Gold Reserves at Record Level At
year end 2005, the Company's gold reserves totaled 10.4 million
ounces, an increase of 32% over 2004 levels. The largest increase
came from the partial conversion of Suurikuusikko resources to
reserves. In 2006 and 2007, it is expected that a major portion of
the Pinos Altos resources will be converted to reserves, while
further conversion at Suurikuusikko and LaRonde is anticipated,
continuing the growth in the overall reserve figure for
Agnico-Eagle. The goal is to increase gold reserves, from the
existing portfolio of mines and projects, to 14 million to 15
million ounces by 2008. A summary of the Company's gold reserves
follows:
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Gold Reserve Summary Proven & Probable Reserve (000's ounces)
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2005 2004
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LaRonde I 1,626 1,847 LaRonde II 3,682 3,258 Goldex 1,641 1,627
Lapa 1,168 1,168 Suurikuusikko 2,325 0 Other 1 3 - - Total 10,442
7,903 ------ -----
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Tonnage amounts and contained metal amounts presented in the tables
in this news release have been rounded to the nearest thousand. The
assumptions used for 2005 reserves and resources were $405 per
ounce gold, $6.35 per ounce silver, $1,125 per tonne zinc, $2,735
per tonne copper and a C$/US$ exchange rate of 1.30. For every 10%
change in the gold price (leaving all other assumptions unchanged),
there would be an estimated 5% change in proven and probable
reserves. The metals prices used in the reserve and resource
calculation are the trailing three year averages, as mandated by
the U.S. Securities and Exchange Commission. The significant
byproduct reserves and resources for silver, zinc and copper,
contained in the LaRonde ore body, are presented in the Detailed
Mineral Reserve and Resource Data section set out below. Please see
this section for more detailed reserve and resource estimates.
LaRonde Mine - Reliable Performance Continues LaRonde processed an
average of 7,316 tonnes of ore per day in the fourth quarter,
contributing to the strong operating performance of 7,297 tonnes
per day recorded during 2005 (7,397 tonnes per day in 2004). While
the design capacity of the plant is 6,350 tonnes per day, it has
now been operating at an average of approximately 7,250 tonnes per
day for over two years, demonstrating the reliability of this mine.
Minesite costs per tonne(2) were C$56 in the fourth quarter. These
costs are slightly higher than the expected range for the year of
C$53 per tonne to C$55 per tonne, due to higher costs for fuel,
reagents and steel, as has been seen throughout the mining
industry. For the full year, the minesite costs per tonne were on
budget at C$55, as compared with C$53 per tonne recorded for 2004.
The increase is largely due to cost increases as discussed above.
On a per ounce basis, net of byproduct credits, LaRonde's total
cash costs remained very low, by industry standards, at minus $22
per ounce in the fourth quarter. This compares favourably with the
results of the fourth quarter of 2004 when total cash costs per
ounce were $13. The main reason for the decrease in total cash
costs is the significantly higher byproduct metal prices realized
in 2005. Total cash costs for the full year were $43 per ounce in
2005 versus $56 per ounce in 2004. Both of these figures compare
favourably to the realized price of gold which was $449 per ounce
and $418 per ounce, for the respective periods. In spite of the
high production tonnage being achieved by the mine, the payable
quarterly gold production of 63,022 ounces was 9% lower than the
corresponding period in 2004. The main reason for the lower than
expected gold production was a recovered gold grade of 3.2 grams
per tonne, compared to the expected grade of 4.1 grams per tonne
due primarily to less ore from lower level gold zones and more zinc
ore. With high zinc prices prevailing over the past several
quarters, numerous stopes have been extended in length (thereby
increasing recovered tonnage), to recover the zinc ore which is
typically found in the immediate hanging wall. This had the effect
of reducing the gold head grade of the ore sent to the mill, and
displacing some gold/copper ore and other higher grade zinc ore.
Also contributing to lower than expected gold production was
decreased ore recovery in the lower mine. Ore recovery in the
stopes was budgeted at 95%, however, the actual percentage has been
consistently closer to 90%. In December 2005, the Company published
production and cost guidance for 2006 which factored in a reduced
gold grade and lower ore recovery. Agnico-Eagle is maintaining a
target for gold production of approximately 250,000 ounces in 2006.
At current metals prices, total cash costs would be significantly
less than our forecasted cost of $50 per ounce. Byproduct
production is expected to be over 5.7 million ounces of silver,
approximately 73,000 tonnes of zinc, and over 9,000 tonnes of
copper. Minesite costs per tonne are expected to range between C$56
and C$58. --------------------------- (2) Minesite costs per tonne
is a non-GAAP measure. For a reconciliation of this measure to the
financial statements, see Note 1 following the financial statements
Cash Position Grows in 2005 - No Long Term Debt Cash and cash
equivalents grew to nearly $121 million at December 31, 2005, due
to strong operating cash flows during the year. This compares
favourably with the December 31, 2004 balance of $106 million.
Additionally, the Company maintains substantially undrawn bank
lines of $150 million adding further financial flexibility.
Subsequent to year end, the Company redeemed its convertible
debentures. In connection with the redemption, and conversion of
debentures that accrued prior to the redemption date, the Company
issued approximately 10.3 million common shares. The Company has
also agreed to issue 1.2 million flow through common shares for
proceeds of approximately $35 million. As a result of these
transactions, the Company's shares outstanding will be
approximately 108 million with no long term debt. With record cash
flow, no long term debt, and excellent financial flexibility,
Agnico-Eagle is in a strong position to fund and build its pipeline
of gold projects. Goldex Mine - Construction Advances The Company
announced the construction of a new mine at its 100% owned Goldex
property in 2005. This new mine is located in the town of Val d'Or,
Quebec, approximately 50 kilometres east of LaRonde. Upon
completion of construction, Goldex is expected to contribute an
average of 170,000 ounces of gold per year at total cash costs of
approximately $200 per ounce. Goldex has gold reserves of 1.6
million ounces. Underground development and surface construction
are continuing at Goldex: - Rock work is well underway and the new
shaft collar has reached its final depth - Over 600 metres of
lateral development was excavated underground, via the existing
infrastructure - Over 150 metres of vertical development was
excavated underground for the ventilation and waste pass systems
Capital expenditures in 2006 at Goldex are expected to total $80
million. First gold production is expected in the second half of
2008, and a ten year mine life is anticipated. Lapa Project - Shaft
Sinking Progressing Well In 2005, the Company announced a $30
million underground development, drilling and metallurgical program
at its 100% owned Lapa project, 10 kilometres east of LaRonde. Lapa
is expected to contribute an average of 125,000 ounces of gold per
year at total cash costs of approximately $200 per ounce over a 10
year mine life. Lapa has gold reserves of 1.2 million ounces. The
first phase of the Lapa underground program includes a 825 metre
shaft sinking project. Shaft sinking commenced in March 2005, with
the current depth at over 600 metres. The 5 metre diameter,
concrete-lined, shaft is expected to reach its planned depth by
mid-2006. Underground diamond drilling, from existing
infrastructure, is underway with eight drill holes completed. The
results are pending. Positive results from this first phase program
would result in an extension of the shaft to a depth of
approximately 1,370 metres below surface. Consideration is being
given to accelerating the second phase of the shaft sinking
program. Incremental capital costs for this second phase are
currently estimated at $80 million. Assuming no further additions
to reserves and the current reserve grade, the Company envisages a
ten-year mine life with initial production in late 2008.
Suurikuusikko Project - Feasibility Study Expected In Second
Quarter Of 2006 On Large And Expanding Gold Reserve At the
Suurikuusikko project in northern Finland, a bankable feasibility
study is expected to be finalized in the second quarter of 2006. At
that time, a production decision is expected. The study will be
based on an open pit mining scenario initially, followed by
underground mining via ramp access, each feeding a 3,000 tonne per
day surface processing plant. Capital expenditures are estimated at
approximately $170 million. Current probable reserves are 2.3
million ounces of gold, from 13.7 million tonnes grading 5.3 grams
per tonne. The indicated resource contains 1.7 million tonnes
grading 4.2 grams per tonne, or 233,000 ounces of gold. The
inferred resource contains 6.7 million tonnes grading 4.4 grams per
tonne, or 934,000 ounces of gold. See the Notes to U.S. Investors
Relating to the Use of "Resources". Presently there are 8 diamond
drills on site; five are conducting infill drilling, two are
allocated to exploration and one is doing condemnation drilling on
the proposed tailings site. LaRonde II Project - Feasibility Study
Nearing Completion LaRonde II comprises the extension of the 20
North zone beneath the current infrastructure at the LaRonde mine,
including the Penna Shaft. The gold reserves at LaRonde II total
3.7 million ounces. A bankable feasibility study on LaRonde II has
been completed and an independent review is in progress. This
review is expected to be completed within the next two months. The
study envisages a production rate of 4,500 tonnes to 5,400 tonnes
per day, with potential gold production of more than 300,000 ounces
per year. More details on the study will be provided in the second
quarter of 2006. Pinos Altos - High Grade Precious Metals Values In
An Expanding Resource In the first quarter of 2006, the Company
exercised its option to acquire 100% of the Pinos Altos property in
northern Mexico from Industrias Penoles S.A. de C.V. It is
anticipated that the acquisition will close on March 15, 2006. The
indicated resource contains 12.5 million tonnes at 3.9 grams per
tonne gold, and 102.3 grams per tonne silver, or 1.6 million ounces
of gold, and 41.0 million ounces of silver. The inferred resource
contains 3.2 million tonnes at 5.2 grams per tonne gold, and 111.0
grams per tonne silver, or 0.5 million ounces of gold and 11.6
million ounces of silver. See the Notes to U.S. Investors Relating
to the Use of "Resources". Agnico-Eagle's preliminary analysis
contemplates a 3,000 tonne per day mining scenario with the open
pit and underground operations each supplying 1,500 tonnes per day.
Due to the high silver content, a conventional cyanidation Merrill
Crowe circuit with recoveries of approximately 92% for gold and 50%
for silver is envisioned. Preliminary capital cost estimates to
bring the project into production are approximately $150 million. A
feasibility study is expected to be completed by the second quarter
of 2007. The Company is in the final stages of preparing a detailed
exploration and work program for 2006. Further information is
expected to be released before the end of March, 2006.
Forward-Looking Statements The information in this press release
has been prepared as at February 22, 2006. Certain statements
contained in this press release constitute "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. When used in this
document, the words "anticipate", "expect", "estimate," "forecast,"
"planned" and similar expressions are intended to identify
forward-looking statements. Such statements include, without
limitation: estimates of future mineral production and sales;
estimates of future production costs, cash costs, minesite costs
and other expenses; estimates of future capital expenditures and
other cash needs; statements as to the projected development of
certain ore deposits, including estimates of exploration,
development and other capital costs, and estimates of the timing of
such development or decisions with respect to such development;
estimates of reserves and resources, and statements regarding
anticipated future exploration and feasibility study results; the
anticipated timing of events with respect to the Company's
minesites, the anticipated timing of events with respect to the
Company's acquisition of the Pinos Altos property; and other
statements regarding anticipated trends with respect to the
Company's capital resources and results of operations. Such
statements reflect the Company's views as at the date this press
release was prepared and are subject to certain risks,
uncertainties and assumptions. Many factors, known and unknown,
could cause the actual results to be materially different from
those expressed or implied by such forward- looking statements.
Such risks include, but are not limited to: the Company's
dependence upon its LaRonde mine for all of its current gold
production; uncertainty of mineral reserve, mineral resource,
mineral grade and mineral recovery estimates; uncertainty of future
production, capital expenditures, and other costs; gold and other
metals price volatility; currency fluctuations; mining risks; and
governmental and environmental regulation. For a more detailed
discussion of such risks and other factors, see Company's Annual
Information Form and Annual Report on Form 20-F for the year ended
December 31, 2004, as well as the Company's other filings with the
Canadian Securities Administrators and the U.S. Securities and
Exchange Commission. The Company does not intend, and does not
assume any obligation, to update these forward-looking statements.
Certain of the foregoing statements, primarily related to projects,
are based on preliminary views of the Company with respect to,
among other things, grade, tonnage, processing, mining methods,
capital costs, and location of surface infrastructure and actual
results and final decisions may be quite different from those
currently anticipated. About Agnico-Eagle Agnico-Eagle is a long
established Canadian gold producer with operations located in
Quebec and exploration and development activities in Canada,
Finland, the United States and Mexico. Agnico-Eagle's LaRonde Mine
is Canada's largest gold deposit. The Company has full exposure to
higher gold prices consistent with its policy of no forward gold
sales. It has paid a cash dividend for 26 consecutive years. Notes
to U.S. Investors Regarding the Use of Resources Cautionary Note to
U.S. investors concerning estimates of Measured and Indicated
Resources. This press release uses the terms "measured" and
"indicated resources." We advise U.S. investors that while those
terms are recognized and required by Canadian regulations, the U.S.
SEC does not recognize them. U.S. investors are cautioned not to
assume that any part or all of mineral deposits in these categories
will ever be converted into reserves. Cautionary Note to U.S.
investors concerning estimates of Inferred Resources. This press
release also uses the term "inferred resources." We advise U.S.
investors that while this term is recognized and required by
Canadian regulations, the U.S. 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. U.S. investors are cautioned not to
assume that part or all of an inferred resource exists, or is
economically or legally mineable. Detailed Mineral Reserve and
Resource Data
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Au Au Ag Cu Zn (000's Tonnes Category and Zone (g/t) (g/t) (%) (%)
oz.) (000's)
-------------------------------------------------------------------------
Proven Mineral Reserve
-------------------------------------------------------------------------
LaRonde I 2.92 84.90 0.42 4.31 635 6,768
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Goldex 1.88 1 18
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Bousquet 1.30 1 18
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Subtotal Proven Mineral Reserve 2.91 637 6,804
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Probable Mineral Reserve
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LaRonde I 2.86 65.54 0.31 3.40 991 10,780
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LaRonde II 5.98 21.78 0.33 0.81 3,682 19,154
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Suurikuusikko 5.26 2,325 13,757
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Lapa 8.88 1,168 4,090
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Goldex 2.39 1,640 21,375
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Subtotal Probable Mineral Reserve 4.41 9,805 69,157
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Total Proven and Probable Mineral Reserves 4.28 10,442 75,961
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Au Au Ag Cu Zn (000's Tonnes Category and Zone (g/t) (g/t) (%) (%)
oz.) (000's)
-------------------------------------------------------------------------
Measured Mineral Resource
-------------------------------------------------------------------------
Suurikuusikko 3.84 19 155
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Bousquet 13.04 40 95
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Total Measured Mineral ---------------------- Resource 7.33 59 250
-------- ---- -- ---
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Au Au Ag Cu Zn (000's Tonnes Category and Zone (g/t) (g/t) (%) (%)
oz.) (000's)
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Indicated Mineral Resource
-------------------------------------------------------------------------
LaRonde I 2.25 38.62 0.18 2.47 190 2,628
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LaRonde II 3.39 13.65 0.23 0.50 213 1,949
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Suurikuusikko 4.23 233 1,715
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Pinos Altos 3.94 102.25 1,582 12,484
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Lapa 5.49 133 754
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Bousquet 5.63 309 1,704
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Ellison 5.67 45 247
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Total Indicated Resource 3.92 2,705 21,482
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Au Au Ag Cu Zn (000's Tonnes Category and Zone (g/t) (g/t) (%) (%)
oz.) (000's)
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Inferred Mineral Resource
-------------------------------------------------------------------------
LaRonde II 6.15 30.05 0.52 1.20 1,025 5,182
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Suurikuusikko 4.35 934 6,688
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Pinos Altos 5.23 110.99 545 3,238
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Bousquet 7.45 399 1,667
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Goldex 1.92 197 3,194
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Lapa 7.69 423 1,709
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Ellison 6.40 199 965
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Total Inferred Resource 5.11 3,722 22,644
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Tonnage amounts and contained metal amounts presented in the tables
in this news release have been rounded to the nearest thousand.
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
United States Securities and Exchange Commission permits U.S.
mining companies, in their filings with the SEC, to disclose only
those mineral deposits that a company can economically and legally
extract or produce. We use certain terms in this press release,
such as "measured," "indicated," and "inferred," "resources," that
the SEC guidelines strictly prohibit U.S. registered companies from
including in their filings with the SEC. U.S. Investors are urged
to consider closely the disclosure in our Form 20-F, which may be
secured from us, or from the SEC's website at:
http://sec.gov/edgar.shtml. A "final" or "bankable" feasibility
study is required to meet the requirements to designate reserves
under Guide 7. Estimates were calculated using historic three-year
average metals prices and foreign exchange rates in accordance with
the SEC Industry Guide 7. Industry Guide 7 requires the use of
prices that reflect current economic conditions at the time of
reserve determination which Staff of the SEC has interpreted to
mean historic three-year average prices. The assumptions used for
2005 reserves and resources were $405 per ounce gold. There are no
known relevant issues that would materially affect the estimate. No
independent verification of the data has been published. The
assumptions used for 2005 mineral reserves and resources were $405
per ounce gold, $6.35 per ounce silver, $0.51 per pound zinc, $1.24
per pound copper and a C$/US$ exchange rate of 1.30. 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. The qualified person responsible for the LaRonde
I and LaRonde II mineral reserve and resource estimate is Marc
Ruel, P.Geo., Superintendent of Geology for the LaRonde Division.
The effective date of the estimate is February 22, 2006, using the
same operating and capital cost assumptions, parameters and methods
as that found in the 2005 Mineral Resource and Mineral Reserve
Report by Guy Gosselin, P.Geo. Agnico-Eagle Mines Limited, LaRonde
Division that was posted on SEDAR on March 23, 2005. A qualified
person Carl Pelletier, Geo., of Innovexplo Geological Services, was
responsible for the mineral reserve and mineral resource estimate
at Goldex. A description of the operating and capital cost
assumptions, parameters and methods may be found in the Technical
Report on the Estimation of Mineral Resources and Reserves for the
Goldex Extension that was posted on SEDAR on October 27, 2005. The
effective date of the estimate was September 9, 2005. The 2005
estimate differs from the previous in that a minor amount of proven
reserves in the form of development rock that was in stockpiles on
December 31, 2005. Although the price assumptions used to constrain
the wireframe models and also estimate the mineral resource and
reserve in 2005 are slightly lower than those currently used, it is
the opinion of the qualified person that the differences are not
significant. The qualified person responsible for the Lapa mineral
reserve and mineral resource estimate is Christian D'Amours, Geo.,
of Service Conseil Geopointcom. The effective date of the estimate
was February 23, 2005. Wireframe models of zones comprising the
Lapa deposit that were used to estimate the mineral resource were
derived using drill hole intercepts. The key assumptions used to
determine the drill hole intercept intervals were a gold price of
$360 per ounce, metallurgical recoveries of 85.9% for gold. Gold
assays were cut to 51.4 grams per tonne or 58.6 grams per tonne
depending on the zone. For the mineral resource models, a minimum
gold grade cut-off of 5.0 grams per tonne was used to evaluate
drill hole intercepts that have been adjusted to respect a minimum
mining width of 2.8 metres (horizontal width). Although the price
assumptions used to constrain the wireframe models and also
estimate the mineral resource and reserve in 2005 are slightly
lower than those currently used, it is the opinion of the qualified
person that the differences are not significant. The Lapa mineral
resource estimate was derived using a three dimensional block model
of the deposit; the grades were interpolated using the inverse
distance power squared method. In order to estimate the mineral
reserve, a dilution factor that averaged 22.8% was applied. For the
underground reserve models, the minimum in situ gold grade cut-off
was 6.0 grams per tonne or 6.5 grams per tonne depending on the
mining method. The Qualified Person responsible for the
Suurikuusikko mineral resource and mineral reserve estimate is
Normand Bedard P.Geo., the Abitibi Regional Division's Senior
Geologist. The effective date of the estimate is February 22, 2006.
A technical report describing the mineral resource and mineral
reserve estimate will be filed with the securities regulatory
authorities in due course. Wireframe models of zones comprising the
Suurikuusikko deposit that were used to estimate the mineral
resource were derived using drill hole intercepts. The key
assumptions used to determine the drill hole intercept intervals
were a gold price of $405 per ounce, metallurgical recoveries of
87% for gold, and cut-off grades that varied were applied depending
on whether the material could be potentially mined by open pit or
by underground methods. Gold assays were cut to 50 grams per tonne.
For the open pit resource models, a minimum gold grade cut-off of
1.0 grams per tonne was used to evaluate drill hole intercepts that
have been adjusted to respect a minimum mining width of 3.0 metres
(horizontal width). For the underground resource models, a minimum
gold grade cut-off of 3.0 grams per tonne was used to evaluate
drill hole intercepts that have been adjusted to respect a minimum
mining width of 3.0 metres (horizontal width). The Suurikuusikko
mineral resource estimate was derived using a three dimensional
block model of the deposit; the grades were interpolated using the
inverse distance power squared method. In order to estimate the
Suurikuusikko mineral reserve, a dilution factor was applied
between 10 and 20 percent depending on the mining method. For the
open pit reserve models, a minimum in situ gold grade cut-off of
1.7 grams per tonne was used. For the underground reserve models, a
minimum in situ gold grade cut-off of 4.0 grams per tonne was used.
The qualified person responsible for the Bousquet and Ellison
mineral reserve and resource estimates is Normand Bedard P.Geo.,
Regional Division's Senior Geologist. In estimating the Bousquet
and Ellison mineral resource and reserve, a minimum gold grade
cut-off of 3.0 grams per tonne was used to evaluate drill
intercepts that have been adjusted to respect a minimum mining
width of 3.0 metres. The estimate was derived using a combination
of three dimensional block modeling (grades were interpolated using
the inverse distance power squared method) for certain zones and
for other zones, by the polygonal method on longitudinal sections.
A portion of the resource estimate is based on estimates reported
when the Bousquet I mine closed in 1996. The resource was reviewed
and reclassified using the CIM definition and guidelines. This
information is of a good quality and is considered reliable.
Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Year ended Dollars
except where noted, December 31, December 31, US GAAP basis) 2005
2004 2005 2004
-------------------------------------------------------------------------
Income and cash flow LaRonde Division Revenues from mining
operations $ 71,392 $ 45,795 $ 241,338 $ 188,049 Production costs
33,576 22,175 127,365 98,168
-------------------------------------------------------------------------
Gross profit (exclusive of amortization shown below) $ 37,816 $
23,620 $ 113,973 $ 89,881 Amortization 6,592 4,461 26,062 21,763
-------------------------------------------------------------------------
Gross profit $ 31,224 $ 19,159 $ 87,911 $ 68,118
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income for period $ 11,695 $ 15,609 $ 36,994 $ 47,879 Net
income per share (basic and fully diluted) $ 0.13 $ 0.18 $ 0.42 $
0.56 Cash flow provided by operating activities $ 24,622 $ 11,722 $
82,980 $ 49,525 Cash flow used in investing activities $ (30,038) $
(28,196) $ (79,721) $ (75,254) Cash flow provided by financing
activities $ 2,416 $ 2,149 $ 11,672 $ 21,173 Weighted average
number of common shares Outstanding - basic (in thousands) 97,127
85,989 89,030 85,157 Tonnes of ore milled 673,270 718,927 2,671,811
2,700,650 Head grades: Gold (grams per tonne) 3.20 3.32 3.11 3.41
Silver (grams per tonne) 75.80 88.00 77.50 86.10 Zinc 3.61% 4.00%
4.06% 4.03% Copper 0.39% 0.52% 0.39% 0.54% Recovery rates: Gold
91.07% 90.39% 90.75% 91.49% Silver 85.80% 86.20% 84.80% 86.50% Zinc
85.00% 82.00% 83.20% 83.50% Copper 82.50% 79.30% 76.90% 78.90%
Payable metal produced: Gold (ounces) 63,022 68,909 241,807 271,567
Silver (ounces in thousands) 1,234 1,512 4,831 5,699 Zinc (tonnes)
17,535 20,323 76,545 75,879 Copper (tonnes) 1,967 2,761 7,378
10,349 Payable metal sold: Gold (ounces) 66,890 52,464 262,429
254,937 Silver (ounces in thousands) 1,610 1,175 5,221 5,362 Zinc
(tonnes) 17,444 19,781 75,722 75,221 Copper (tonnes) 1,984 1,622
8,521 9,230 Realized prices per unit of production: Gold (per
ounce) $ 491 $ 438 $ 449 $ 418 Silver (per ounce) $ 9.05 $ 7.32 $
8.01 $ 6.84 Zinc (per tonne) $ 1,818 $ 1,212 $ 1,513 $ 1,036 Copper
(per tonne) $ 4,882 $ 3,064 $ 4,376 $ 2,954 Total cash costs (per
ounce): Production costs $ 532 $ 322 $ 527 $ 362 Less: Net
byproduct revenues (611) (330) (511) (304) Inventory adjustments 59
23 29 - Accretion expense and other (2) (2) (2) (2)
-------------------------------------------------------------------------
Total cash costs (per ounce) $ (22) $ 13 $ 43 $ 56
-------------------------------------------------------------------------
Minesite costs per tonne milled (Canadian dollars) $ 56 $ 52 $ 55 $
53
-------------------------------------------------------------------------
Consolidated Balance Sheet Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, December 31, December 31, US
GAAP basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
ASSETS Current Cash and cash equivalents $ 120,982 $ 106,014 Metals
awaiting settlement 56,304 43,442 Income taxes recoverable 7,723
16,105 Inventories: Ore stockpiles 12,831 9,036 Concentrates 920
9,065 Supplies 10,092 8,292 Other current assets 34,483 19,843
-------------------------------------------------------------------------
Total current assets 243,335 211,797 Fair value of derivative
financial instruments - 2,689 Other assets 7,995 25,234 Future
income and mining tax assets 61,781 51,407 Mining properties
661,196 427,037
-------------------------------------------------------------------------
$ 974,307 $ 718,164
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and
accrued liabilities $ 37,793 $ 28,667 Dividends payable 3,809 3,399
Interest payable 2,243 2,426
-------------------------------------------------------------------------
Total current liabilities 43,845 34,492
-------------------------------------------------------------------------
Fair value of derivative financial instruments 9,699 - Long-term
debt 131,056 141,495 Asset retirement obligation and other
liabilities 16,220 14,815 Future income and mining tax liabilities
118,420 57,136 Shareholders' Equity Common shares Authorized -
unlimited Issued - 97,836,954 (2004 - 86,072,779) 764,659 620,704
Stock options 2,869 465 Warrants 15,732 15,732 Contributed surplus
7,181 7,181 Deficit (138,697) (172,756) Accumulated other
comprehensive income (loss) 3,323 (1,100)
-------------------------------------------------------------------------
Total shareholders' equity 655,067 470,226
-------------------------------------------------------------------------
$ 974,307 $ 718,164
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Statement of Income and Comprehensive Income -
Unaudited Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Year ended Dollars
except per share December 31, December 31, amounts, US GAAP basis)
2005 2004 2005 2004
-------------------------------------------------------------------------
REVENUES Revenues from mining operations $ 71,392 $ 45,795 $
241,338 $ 188,049 Interest and sundry (2,819) 97 (2,065) 655
-------------------------------------------------------------------------
68,573 45,892 239,273 188,704 COSTS AND EXPENSES Production 33,576
22,175 127,365 98,168 Fair value of derivative financial
instruments 4,023 (136) 8,335 - Exploration and corporate
development 6,158 2,261 16,581 3,584 Equity loss in junior
exploration companies 342 809 2,899 2,224 Amortization 6,592 4,461
26,062 21,763 General and administrative 3,044 1,158 11,727 6,864
Provincial capital tax 55 (580) 1,352 423 Interest 586 2,434 7,813
8,205 Foreign currency loss 1,948 1,781 1,860 1,440
-------------------------------------------------------------------------
Income before income, mining and federal capital taxes 12,249
11,529 35,279 46,033 Federal capital tax 334 255 1,062 1,049 Income
and mining tax expense (recovery) 220 (4,335) (2,777) (2,895)
-------------------------------------------------------------------------
Net income for the period $ 11,695 $ 15,609 $ 36,994 $ 47,879
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income per share - basic and diluted $ 0.13 $ 0.18 $ 0.42 $
0.56
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number of shares (in thousands) Basic 97,127
85,989 89,030 85,157 Diluted 114,003 86,403 105,905 85,572
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Comprehensive income: Net income for the period $ 11,695 $ 15,609 $
36,994 $ 47,879
-------------------------------------------------------------------------
Other comprehensive income, net of tax: Unrealized gain on hedging
activities 205 2,722 1,135 2,597 Dilution gain on issuance of
shares by subsidiary, net of tax - - - 1,837 Unrealized gain on
available-for-sale securities 6,012 1,217 10,228 604 Cumulative
translation adjustment on equity investee (331) 1,937 (2,236) 1,937
Adjustments for derivative instruments maturing during the period
(3,363) (709) (3,398) (2,983) Adjustments for realized gains on
available- for-sale securities due to dispositions in the period
(3) - (65) (632) Reversal of minimum pension liability - 980 - 980
Tax effect of OCI balances (1,241) - (1,241) -
-------------------------------------------------------------------------
Other comprehensive income for the period 1,279 6,147 4,423 4,340
-------------------------------------------------------------------------
Comprehensive income for the period $ 12,974 $ 21,756 $ 41,417 $
52,219
-------------------------------------------------------------------------
Consolidated Statement of Shareholders' Equity Agnico-Eagle Mines
Limited
-------------------------------------------------------------------------
(thousands of United States Three months ended Year ended Dollars
except where noted, December 31, December 31, US GAAP basis -
Unaudited) 2005 2004 2005 2004
-------------------------------------------------------------------------
Deficit Balance, beginning of period $(147,457) $(185,785)
$(172,756) $(218,055) Dividends declared (2,935) (2,580) (2,935)
(2,580) Net income for the period 11,695 15,609 36,994 47,879
-------------------------------------------------------------------------
Balance, end of period $(138,697) $(172,756) $(138,697) $(172,756)
-------------------------------------------------------------------------
Accumulated other comprehensive income (loss) Balance, beginning of
period $ 2,044 $ (7,247) $ (1,100) $ (5,440) Other comprehensive
income for the period 1,279 6,147 4,423 4,340
-------------------------------------------------------------------------
Balance, end of period $ 3,323 $ (1,100) $ 3,323 $ (1,100)
-------------------------------------------------------------------------
Consolidated Statement of Cash Flows - Unaudited Agnico-Eagle Mines
Limited
-------------------------------------------------------------------------
Three months ended Year ended (thousands of United States December
31, December 31, Dollars, US GAAP basis) 2005 2004 2005 2004
-------------------------------------------------------------------------
Operating activities Net income for the period $ 11,695 $ 15,609 $
36,994 $ 47,879 Add (deduct) items not affecting cash from
operating activities: Amortization 6,592 4,461 26,062 21,763 Future
income and mining taxes (recoveries) 220 (1,874) (2,777) 2,338
Unrealized loss on derivative contracts 4,023 951 8,335 1,087
Amortization of deferred costs and other 44 1,876 7,014 4,792
-------------------------------------------------------------------------
22,574 21,023 75,628 77,859 Change in non-cash working capital
balances Metals awaiting settlement (10,176) (2,916) (12,862)
(9,875) Income taxes recoverable (177) (5,405) 8,382 (8,872)
Inventories (1,341) (5,129) 2,550 (8,566) Prepaid expenses and
other (165) (2,368) (1,054) (1,590) Accounts payable and accrued
liabilities 12,472 4,883 10,519 1,304 Interest payable 1,435 1,617
(183) (735)
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Cash flows provided by operating activities 24,622 11,705 82,980
49,525
-------------------------------------------------------------------------
Investing activities Additions to mining properties (25,382)
(19,541) (70,270) (53,318) Investments and other (4,656) (8,655)
(9,451) (21,936)
-------------------------------------------------------------------------
Cash flows used in investing activities (30,038) (28,196) (79,721)
(75,254)
-------------------------------------------------------------------------
Financing activities Dividends paid - - (2,542) (2,480) Common
shares issued 2,416 2,149 14,214 23,653
-------------------------------------------------------------------------
Cash flows provided by financing activities 2,416 2,149 11,672
21,173
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 25 14
37 205 Net increase in cash and cash equivalents during the period
(2,975) (14,328) 14,968 (4,351) Cash and cash equivalents,
beginning of period 123,957 120,342 106,014 110,365
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 120,982 $ 106,014 $
120,982 $ 106,014
-------------------------------------------------------------------------
Other operating cash flow information: Interest paid during the
period $ (7) $ 510 $ 8,304 $ 6,999
-------------------------------------------------------------------------
Income, mining, and capital taxes paid (recovered) during the
period $ 217 $ (2,037) $ (6,259) $ 222
-------------------------------------------------------------------------
Note 1 Reconciliation of Total Cash Costs Per Ounce and Total
Minesite Costs Per Tonne Total cash cost is not a recognized
measure under US GAAP and this data may not be comparable to data
presented by other gold producers. We believe 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 below, this measure is calculated by
adjusting Production Costs as shown in the Statement 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 our mining operations. Management uses
this measure to monitor the performance of our 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 cost 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. Minesite cost 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 below, this measure is calculated by
adjusting Production Costs as shown in the Statement 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 cost data can be affected by
fluctuations in byproduct metal prices and exchange rates,
management believes this measure 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 cost
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. The following tables provide a reconciliation of the
total cash operating costs per ounce of gold produced and operating
cost per tonne to the financial statements: 3 Months 3 Months 12
months 12 months ended ended ended ended (thousands of dollars,
December December December December except where noted) 31, 2005
31, 2004 31, 2005 31, 2004
-------------------------------------------------------------------------
Cost of production per Consolidated Statements of Income $ 33,576 $
22,175 $ 127,365 $ 98,168 Adjustments: Byproduct revenues (38,523)
(22,706) (123,450) (82,521) Inventory adjustment(i) 3,693 1,489
6,991 - Non-cash reclamation provision (109) (56) (429) (493)
---------- ---------- ---------- ---------- Cash operating costs $
(1,363) $ 902 $ 10,477 $ 15,154 Gold production (ounces) 63,022
68,909 241,807 271,567 ---------- ---------- ---------- ----------
Total cash costs (per ounce) $ (22) $ 13 $ 43 $ 56 ----------
---------- ---------- ---------- ---------- ---------- ----------
---------- 3 Months 3 Months 12 months 12 months ended ended ended
ended (thousands of dollars, December December December December
except where noted) 31, 2005 31, 2004 31, 2005 31, 2004
-------------------------------------------------------------------------
Cost of production per Consolidated Statements of Income $ 33,576 $
22,175 $ 127,365 $ 98,168 Adjustments: Inventory adjustment(i) and
hedging adjustments(ii) (1,221) 8,769 (4,751) 12,107 Non-cash
reclamation provision (109) (56) (429) (493) ---------- ----------
---------- ---------- Minesite costs (US$) $ 32,246 $ 30,888 $
122,185 $ 109,782 ---------- ---------- ---------- ----------
Minesite costs (C$) $ 37,848 $ 37,878 $ 147,834 $ 142,702 Tonnes
milled (000's tonnes) 673 719 2,672 2,701 ---------- ----------
---------- ---------- Minesite costs per tonne (C$)(iii) $ 56 $ 52
$ 55 $ 53 ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- Notes: (i) Under the Company's
revenue recognition policy, revenue is recognized on concentrates
when legal title passes. Since total cash operating costs are
calculated on a production basis, this adjustment reflects the
portion of concentrate production for which revenue has not been
recognized in the period. (ii) Hedging adjustments reflect gains
and losses on the Company's derivative positions entered into to
hedge the effects of foreign exchange fluctuations on production
costs. These items are not reflective of operating performance and
thus have been eliminated when calculating operating costs per
tonne. (iii) Total cash operating costs and operating cost per
tonne data are not recognized measures under US GAAP. Management
uses these generally accepted industry measures in evaluating
operating performance and believes them to be realistic indications
of such performance. The data also indicates the Company's ability
to generate cash flow and operating earnings at various gold
prices. This additional information should be considered together
with other data prepared in accordance with US GAAP. DATASOURCE:
Agnico-Eagle Mines Limited CONTACT: David Smith, Director, Investor
Relations, (416) 947-1212
Copyright