Stock Symbols: AEM (NYSE and TSX) TORONTO, July 26
/PRNewswire-FirstCall/ -- Agnico-Eagle Mines Limited today reported
second quarter earnings of $37.1 million, or $0.32 per share. This
compares to net earnings of $12.8 million, or $0.15 per share, in
the second quarter of 2005. Higher metals prices drove 2006 second
quarter earnings higher, offset slightly by a non-cash foreign
exchange translation loss of $6.7 million, or $0.06 per share, and
a loss of $4.6 million, or $0.04 per share, on zinc forward sales.
Earnings in the first half of 2006 were $74.3 million, or $0.67 per
share. This is more than triple the $23.2 million, or $0.27 per
share, recorded in the first half of 2005, largely as a result of
stronger metals prices. The Company's financial position remains
strong with cash and cash equivalents of $415.5 million at June 30,
2006, up from $154.9 million at March 31, 2006. This balance
includes net proceeds of $238.2 million from the common equity
offering completed in June 2006. Payable gold production in the
second quarter of 2006 was 55,966 ounces at record low total cash
costs per ounce(1) of minus $975. This compares with payable gold
production of 61,771 ounces at total cash costs of $103 per ounce
in the second quarter of 2005. The lower production in the second
quarter 2006 was expected as the mining sequence contemplated the
extraction of several lower grade ore blocks during the quarter.
Payable gold production in the first half of 2006 was 120,201
ounces, up from 117,081 ounces in the first half of 2005. The
increase in gold production in 2006 was due to higher first half
grade and metal recoveries, offset slightly by lower milled
tonnage. The gold production target for the full year remains at
250,000 ounces. Highlights for the quarter include: - Record
quarterly cash flow provided by operating activities of $48.1
million - Record low total cash costs at LaRonde of minus $975 per
ounce of gold - Financing secured for growth projects with
completion of $238.2 million equity issue - New LaRonde II, Lapa
and Kittila gold mines approved by Board for construction -
Addition of Agnico-Eagle to the S&P/TSX 60 Index and 60 Capped
Index in May - LaRonde won the prestigious Quebec Mine Rescue
competition for the second consecutive year. First repeat winner in
event's 51 year history "Agnico-Eagle's leverage to the strong
metals prices was again demonstrated in the second quarter with
record quarterly cash flow and record low cash costs to produce an
ounce of gold", said Sean Boyd, Vice-Chairman and Chief Executive
Officer. "We believe that Agnico-Eagle's record financial and
operating performance, coupled with anticipated production growth
from our four gold development projects continues to provide an
attractive investment opportunity", added Mr. Boyd. Conference Call
Tomorrow The Company will host its quarterly conference call at
11:00 am on July 27. Management will review the Company's financial
results for the second quarter, 2006 and provide an update of its
exploration and development activities. Via Telephone: To
participate in the conference call, please dial (416) 644-3429,
Toll Free 800-814-4890. To ensure your participation, please call
approximately five minutes prior to the scheduled start of the
call. Via Webcast: Additionally, a live audio webcast of the call
will be available on the Company's website homepage at
http://www.agnico-eagle.com/. Replay archive: Please dial the
toll-free access number 877-289-8525, passcode 21172804 followed by
the number sign. The conference call will be replayed from
Thursday, July 27, 2006 1:00 PM (E.S.T.) to Thursday, August 3,
2006 11:59 PM (E.S.T.). The webcast along with presentation slides
will be archived for 180 days on the website. LaRonde Mine - Strong
Performance Continues LaRonde processed an average of 7,220 tonnes
of ore per day in the second quarter, compared with an average of
7,490 tonnes per day in the corresponding period of 2005. LaRonde
has now been operating at an average of approximately 7,300 tonnes
per day for eleven consecutive quarters, demonstrating the
reliability of this world class mine. Minesite costs per tonne(2)
were C$61 in the second quarter. These costs are higher than the
C$56 per tonne realized in the second quarter of 2005 largely due
to approximately 700 metres of lateral development work that was
accelerated into the 2006 quarter, and also due to higher costs for
fuel, cement, reagents and steel, as has been seen throughout the
mining industry. In the second quarter of 2006, approximately two
thirds of the higher than expected minesite costs was due to the
accelerated development, and one third was due to higher costs. For
the first six months of 2006, the minesite costs per tonne were
C$60, up from C$54 per tonne in the first half of 2005, largely due
to the previously mentioned factors. Minesite costs per tonne are
now expected to be approximately C$60 for the full year 2006. On a
per ounce basis, net of byproduct credits, LaRonde's total cash
costs remained very low by industry standards, at a company record
of minus $975 in the second quarter. This compares favourably with
the results of the second quarter of 2005 when total cash costs per
ounce were $103. The main reason for the decrease in total cash
costs per ounce is the significantly higher byproduct metal prices
realized in 2006. The payable quarterly gold production of 55,966
ounces was slightly above budget, but 9% lower than in the
corresponding period in 2005. This reduction was expected due to
the scheduled mining of a lower grade portion of the orebody during
the quarter. Our full year production forecast remains at 250,000
ounces of gold. Byproduct production of 5.0 million ounces of
silver, approximately 77,000 tonnes of zinc, and 7,500 tonnes of
copper is now anticipated for 2006. Total cash costs for the year
are expected to be significantly less than nil. Silver and copper
production is expected to be slightly lower than previously
forecast due to the lower than expected grades that have been
encountered for these byproducts year to date. However, zinc
production is expected to be 6% above previous forecasts as zinc
recoveries have exceeded expectations. Cash Position Continues to
Grow in 2006 - No Long Term Debt Cash and cash equivalents grew to
$415.5 million at June 30, 2006 from the March 31, 2006 balance of
$154.9 million, largely as a result of the equity issue and the
strong cash generating performance from LaRonde. Additionally, the
Company maintains substantially undrawn bank lines of $150 million
adding further financial flexibility. The Company now has
approximately 120.1 million shares outstanding and no long term
debt. During the quarter, Agnico-Eagle added $48.1 million of cash
provided by operating activities (after changes in non-cash working
capital balances), and $238.2 million from the common equity
offering. Major expenditures in the quarter included $33.9 million
in project and sustaining capital expenditures. For the full year,
capital expenditures are now expected to total approximately $163
million, following the approval of the LaRonde II, Lapa and Kittila
projects. At June 30, 2006, the Company had 6,000 tonnes of zinc
sold forward at a contract rate of $1,235 per tonne, representing
approximately 15% of the remaining 2006 estimated zinc production.
The entire forward position expires by year end, at which point
Agnico-Eagle will have no outstanding metals derivatives. With a
large cash balance, strong cash flows, no long term debt, and
excellent financial flexibility, Agnico-Eagle is funded for the
development of its pipeline of gold projects in Canada, Finland and
Mexico. Mine Development and Project Updates At the 100% owned
Goldex project in northwestern Quebec, Agnico-Eagle commenced
construction in July 2005. Probable reserves of 1.6 million ounces
of gold are expected to be sufficient for a nine year mine life
with annual production averaging 170,000 ounces at total cash costs
of approximately $225 per ounce. The capital cost is expected to be
$135 million, of which $35 million had been incurred as at the end
of June 2006. The project is well advanced with the shaft collar
and headframe complete, while shaft sinking is to begin in the
third quarter. Construction of the surface facilities is advanced,
while underground development is well underway. During the quarter,
980 metres of lateral development and 260 metres of raising were
completed. Approximately 26,000 tonnes of ore were extracted and
stockpiled in the quarter. The project remains on time and on
budget, with first gold production expected in the second half of
2008. At the 100% owned LaRonde II project in northwestern Quebec,
construction commenced in the second quarter of 2006. Probable
reserves of 3.6 million ounces of gold are expected to support a 10
year mine life. Annual gold production is estimated to average
320,000 ounces at total cash costs of approximately $230 per ounce.
The capital cost is anticipated to be $210 million. Significant
amounts of the capital equipment have been purchased, detailed
engineering is underway, and underground development is advancing.
The development for the new winze is continuing. To date, very
little waste has been hauled to surface, with the majority of the
waste being used as backfill in the LaRonde production stopes.
LaRonde II is expected to begin production in 2011. At the 100%
owned Lapa project in northwestern Quebec the final phase of
construction commenced in the second quarter of 2006. Probable gold
reserves of 1.1 million ounces are expected to support annual
production of approximately 125,000 ounces per year at total cash
costs of approximately $210 per ounce. A seven year mine life is
expected with capital costs of approximately $90 million. The shaft
at Lapa is currently at a depth of 783 metres below surface,
towards an ultimate depth of 1,370 metres. Shaft sinking is
advancing at a rate of approximately three metres per day.
Significant station work and lateral development have also been
completed. The project is expected to startup in the fourth quarter
of 2008. Construction commenced at the Kittila project in northern
Finland in the second quarter of 2006. The project is expected to
produce an average of 150,000 ounces per year at total cash costs
of $250 per ounce of gold, over an estimated 13 year mine life.
Kittila has probable gold reserves of 2.4 million ounces. Capital
costs are expected to total $135 million. The first phase of
overburden removal (200,000 m3) at the Suurikuusikko Pit started in
early June. To date, about 50,000 m3 of overburden has been removed
from the ore body. Additionally, the access road, and a 110 kV
high-voltage power line, to the site have been completed. In-fill
and exploration drilling has continued during the quarter. The
objective is to in-fill the deeper portions of the main resource
areas and to explore the extensions of the new zones in the Central
and the North Rouravaara areas. Potential extensions to gold
mineralization in the Rouravaara and Rimminvuoma areas have been
intersected in the latest drilling. Kittila is expected to begin
production in the second half of 2008. At the 100% owned Pinos
Altos project in northern Mexico, a $23 million exploration program
has commenced. As previously announced, objectives of the
exploration program include: - 29,800 metre drilling program to
convert resources to reserves; - 21,400 metre drilling program to
drill at depth and expand the resource by drilling in
under-explored regions along strike; - completion of a feasibility
study by the end of the second quarter of 2007; - development of a
1,330 metre underground ramp to provide a deeper drilling platform,
and to expose the mineralization for sampling and examination.
Agnico-Eagle's consolidated exploration expenditures in 2006 are
now expected to total approximately $35 million, up from the
previously estimated $12 million, as a result of the approval of
the Pinos Altos program. Forward-Looking Statements The information
in this press release has been prepared as at July 26, 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 and forward
looking information under the provisions of Canadian provincial
securities laws. When used in this document, the words
"anticipate", "expect", "estimate," "forecast," "planned" and
similar expressions are intended to identify forward-looking
statements or information. Such statements and information include
without limitation: statements regarding timing of capital
expenditures and other assumptions; estimates of future mineral
production and sales; estimates of mine life; estimates of future
mining costs, cash costs, minesite costs and other expenses;
estimates of future capital expenditures and other cash needs, and
expectations as to the funding thereof; statements and information
as to the projected development of certain ore deposits, including
estimates of exploration, development and production and other
capital costs, and estimates of the timing of such exploration,
development and production or decisions with respect to such
exploration, development and production; estimates of reserves and
resources, and statements and information regarding anticipated
future exploration and feasibility study results; the anticipated
timing of events with respect to the Company's minesites;
statements and information regarding the sufficiency of the
Company's cash resources; and other statements and information
regarding anticipated trends with respect to the Company's capital
resources and results of operations. Such statements and
information reflect the Company's views as at the date of this
press release and are subject to certain risks, uncertainties and
assumptions, and undue reliance should not be placed on such
statements and information. Many factors, known and unknown, could
cause the actual results to be materially different from those
expressed or implied by such forward looking statements and
information. Such risks include, but are not limited to: the
volatility of prices of gold and other metals; uncertainty of
mineral reserves, mineral resources, mineral grades and mineral
recovery estimates; uncertainty of future production, capital
expenditures, and other costs; currency fluctuations; financing of
additional capital requirements; cost of exploration and
development programs; mining risks; risks associated with foreign
operations; risks related to title issues at the Pinos Altos
project; governmental and environmental regulation; the volatility
of the Company's stock price; and risks associated with the
Company's byproduct metal derivative strategies. For a more
detailed discussion of such risks and other factors, see Company's
Annual Information Form and Annual Report on Form 20-F, as amended,
for the year ended December 31, 2005, as well as the Company's
other filings with the Canadian Securities Administrators and the
U.S. Securities and Exchange Commission. The Company does not
intend, and does not assume any obligation, to update these
forward-looking statements and information. 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 materially 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, 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. Note to Investors Regarding the Use of Non-GAAP Financial
Measures This press release presents estimates of future "total
cash cost per ounce" and "minesite cost per tonne" that are not
recognized measures under United States generally accepted
accounting principles ("US GAAP"). This data may not be comparable
to data presented by other gold producers. These future estimates
are based upon the total cash costs per ounce and minesite costs
per tonne that the Company expects to incur to mine gold at the
applicable projects and do not include production costs
attributable to accretion expense and other asset retirement costs,
which will vary over time as each project is developed and mined.
It is therefore not practicable to reconcile these forward-looking
non-GAAP financial measures to the most comparable GAAP measure. A
reconciliation of the Company's total cash cost per ounce and
minesite cost per tonne to the most comparable financial measures
calculated and presented in accordance with US GAAP for the
Company's historical results of operations is set forth in the
notes to the financial statements attached hereto and in the
Company's Annual Information Form and Annual Report on Form 20-F,
as amended, for the year ended December 31, 2005, as well as the
Company's other filings with the Canadian Securities Administrators
and the U.S. Securities and Exchange Commission. Notes to U.S.
Investors Regarding the Use of Resources Cautionary Note to
investors concerning estimates of Measured and Indicated Resources.
This press release may use the terms "measured resources" and
"indicated resources". We advise investors that while those terms
are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission (the "SEC") does not recognize
them. Investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be converted into
reserves. Cautionary Note to investors concerning estimates of
Inferred Resources. This press release may also use the term
"inferred resources". We advise investors that while this term is
recognized and required by Canadian regulations, the SEC does not
recognize it. "Inferred resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all
or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that part or all of an inferred resource
exists, or is economically or legally mineable. Scientific and
Technical Data Agnico-Eagle Mines Limited is reporting mineral
resource and reserve estimates in accordance with the CIM
guidelines for the estimation, classification and reporting of
resources and reserves. Cautionary Note to U.S. Investors - The SEC
permits U.S. mining companies, in their filings with the SEC, to
disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms
in this press release, such as "measured," "indicated," and
"inferred," "resources," that the SEC guidelines strictly prohibit
U.S. registered companies from including in their filings with the
SEC. U.S. Investors are urged to consider closely the disclosure in
our Form 20-F, which may be secured from us, or from the SEC's
website at: http://sec.gov/edgar.shtml. A "final" or "bankable"
feasibility study is required to meet the requirements to designate
reserves under Guide 7. Estimates were calculated using historic
three-year average metals prices and foreign exchange rates in
accordance with the SEC Industry Guide 7. Industry Guide 7 requires
the use of prices that reflect current economic conditions at the
time of reserve determination which Staff of the SEC has
interpreted to mean historic three-year average prices. The
assumptions used for 2005 mineral reserves and resources estimates
reported by the Company were $405 per ounce gold, $6.35 per ounce
silver, $0.51 per pound zinc, $1.24 per pound copper and C$/US$,
US$/Euro$, and MXP/US$ exchange rates of 1.30, 1.21 and 11.0
respectively. Canadian Securities Administrators, National
Instrument 43-101 ("NI 43-101") requires mining companies to
disclose reserves and resources using the subcategories of "proven"
reserves, "probable" reserves, "measured" resources, "indicated"
resources and "inferred" resources. Mineral resources that are not
mineral reserves do not have demonstrated economic viability. A
mineral reserve is the economically mineable part of a measured or
indicated resource demonstrated by at least a preliminary
feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A mineral reserve includes diluting
materials and allows for losses that may occur when the material is
mined. A proven mineral reserve is the economically mineable part
of a measured resource for which quantity, grade or quality,
densities, shape and physical characteristics are so well
established that they can be estimated with confidence sufficient
to allow the appropriate application of technical and economic
parameters, to support production planning and evaluation of the
economic viability of the deposit. A probable mineral reserve is
the economically mineable part of an indicated mineral resource for
which quantity, grade or quality, densities, shape and physical
characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and
economic parameters, to support mine planning and evaluation of the
economic viability of the deposit. A mineral resource is a
concentration or occurrence of natural, solid, inorganic or
fossilized organic material in or on the earth's crust in such form
and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological evidence
and knowledge. A measured mineral resource is that part of a
mineral resource for which quantity, grade or quality, densities,
shape, physical characteristics, can be estimated with a level of
confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough to confirm both geological and grade
continuity. An indicated mineral resource is that part of a mineral
resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of
confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough for geological and grade continuity to be
reasonable assumed. An inferred mineral resource is that part of a
mineral resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling
and reasonably assumed, but not verified, geological and grade
continuity. The estimate is based on limited information and
sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes. Mineral
resources which are not mineral reserves do not have demonstrated
economic viability. Investors are cautioned not to assume that part
or all of an inferred resource exists, or is economically or
legally mineable. A feasibility study is a comprehensive study of a
mineral deposit in which all geological, engineering, legal,
operating, economic, social, environmental and other relevant
factors are considered in sufficient detail that it could
reasonably serve as the basis for a final decision by a financial
institution to finance the development of the deposit for mineral
production. The qualified person responsible for the LaRonde I and
LaRonde II mineral reserve and resource estimate is Marc Ruel,
P.Geo., Superintendent of Geology for the LaRonde Division. The
effective date of the estimate is February 22, 2006, using, except
for the operating and capital cost assumptions (that are described
above), estimation parameters and methods that are not
significantly different as that found in the 2005 Mineral Resource
and Mineral Reserve Report by Guy Gosselin, P.Geo. Agnico-Eagle
Mines Limited, LaRonde Division that was posted on SEDAR on March
23, 2005. A qualified person Carl Pelletier, P.Geo., of Innovexplo
Geological Services, was responsible for the mineral reserve, and
mineral resource estimate, at Goldex. A description of the
operating and capital cost assumptions, parameters and methods may
be found in the Technical Report on the Estimation of Mineral
Resources and Reserves for the Goldex Extension that was posted on
SEDAR on October 27, 2005. The effective date of the estimate was
September 9, 2005. The estimate reported on February 23, 2006
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 to estimate the mineral resource and
reserve on September 9, 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
Normand Bedard P.Geo., the Abitibi Regional Division's Senior
Geologist. A description of the Lapa mineral resource and mineral
reserve estimate, and the operating and capital cost assumptions,
parameters and methods may be found in the Technical Report on the
Lapa Gold Project that was posted on SEDAR on June 8, 2006. The
effective date of the estimate is May 31, 2006. The qualified
person responsible for the Kittila 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. The Kittila open pit mineral reserve was revised
on April 11th, 2006 by a qualified person, Patrice Live Eng. of
Breton, Bandeville et Associes of Montreal, Quebec. For the revised
open pit reserves, a minimum 1.40 gram per tonne gold grade was
used. This resulted in a minor change in the Kittila mine project's
probable reserves and mineral resources. Other than the open pit
parameters describe above, information regarding the scientific and
technical information contained herein, including a discussion of
the verification procedures, is set out in the technical report on
the Suurikuusikko project (now the Kittila mine project) that was
posted on SEDAR on March 14, 2006. The qualified person responsible
for the Pinos Altos mineral resource estimate is Christian
D'Amours, P.Geo. of Service Conseil Geopointcom of Val d'Or Quebec.
The effective date of the estimate is February 13, 2006. A
technical report describing the resource estimate will be filed
with the securities regulatory authorities in due course. Wireframe
models of zones comprising the Pinos Altos deposit that were used
to estimate the mineral resource were derived using drill hole
intercepts. The key assumptions used to determine the drill hole
intercept intervals were a gold price of $400 per ounce, a silver
price of $6.00 per ounce, metallurgical recoveries of 92.4% for
gold and 47.8% for silver, and net smelter return cut-offs that
varied were applied depending on whether the material could be
potentially mined by open pit or by underground methods. Gold
assays were cut to 41 grams per tonne while silver assays were cut
to 1,500 grams per tonne. For the open pit resource models
(estimated to a maximum depth of approximately 130 metres to 170
metres, depending on the zone), a minimum net smelter return
cut-off of $11.90 per tonne was used to evaluate drill hole
intercepts that have been adjusted to respect a minimum mining
width of 4.0 metres (horizontal width). For the underground
resource models, a minimum net smelter return cut-off of $35.60 per
tonne was used to evaluate drill hole intercepts that have been
adjusted to respect a minimum mining width of 3.0 metres
(horizontal width). The mineral resource estimate was derived using
a three dimensional block model of the deposit; the grades were
interpolated using the inverse distance power squared method. The
same cut-off values and metallurgical recoveries were used to
estimate the mineral resource as were to build the wireframe models
but the price assumptions are the mean historic three-year average
prices assumptions (fixed by the Company and described above).
Although the price assumptions used to constrain the wireframe
models are slightly lower than used to compile the resource model,
it is the opinion of the qualified person that the differences are
not significant. --------------------------------- (1) Total cash
costs per ounce is a non-GAAP measure. For a reconciliation of this
measure to production costs as reported in the financial
statements, see Note 1 following the financial statements (2)
Minesite costs per tonne is a non-GAAP measure. For a
reconciliation of this measure to production costs as reported in
the financial statements, see Note 1 to the financial statements
AGNICO EAGLE MINES LIMITED SUMMARIZED QUARTERLY DATA (thousands of
United States dollars, except where noted - Unaudited) Three months
ended Six months ended ------------------ ---------------- June 30,
June 30, -------- -------- 2006 2005 2006 2005 ---- ---- ---- ----
Income and cash flow LaRonde Division Revenues from mining
operations................ $126,872 $49,572 $217,453 $111,338
Production costs........... 35,567 30,268 68,754 61,241 ------
------ ------ ------ Gross profit (exclusive of amortization shown
below).................... $91,305 $19,304 $148,699 $50,097
Amortization............... 6,108 5,983 12,105 13,194 ------ ------
------ ------ Gross profit............... $85,197 $13,321 $136,594
$36,903 ------ ------ ------ ------ ------ ------ ------ ------ Net
income for the period.. $37,092 $12,794 $74,282 $23,242 Net income
per share (basic)................... $0.32 $0.15 $0.67 $0.27 Net
income per share (diluted)................. $0.31 $0.15 $0.65 $0.27
Cash flow provided by operating activities...... $48,095 $19,103
$67,806 $47,208 Cash flow used in investing
activities................ $(33,170) $(16,334) $(64,376) $(32,239)
Cash flow provided by (used in) financing
activities................ $246,449 $920 $291,905 $(175) Weighted
average number of common shares outstanding - basic (in
thousands).... 114,434 86,220 110,281 86,176 Tonnes of ore
milled....... 656,902 681,848 1,318,430 1,330,594 Head grades: Gold
(grams per tonne)... 2.89 3.13 3.10 3.03 Silver (grams per tonne).
78.20 75.90 77.60 74.50 Zinc..................... 4.27% 4.11% 4.03%
4.12% Copper................... 0.33% 0.36% 0.37% 0.38% Recovery
rates: Gold..................... 91.35% 89.98% 91.65% 90.25%
Silver................... 87.70% 85.10% 87.10% 84.40%
Zinc..................... 87.20% 82.10% 87.00% 81.90%
Copper................... 81.10% 74.50% 82.60% 75.80% Payable
production: Gold (ounces)............ 55,966 61,771 120,201 117,081
Silver (ounces in thousands).............. 1,247 1,205 2,474 2,302
Zinc (tonnes)............ 20,787 20,116 39,250 38,777 Copper
(tonnes).......... 1,590 1,680 3,643 3,490 Payable metal sold: Gold
(ounces)............ 60,966 60,550 130,643 130,687 Silver (ounces
in thousands).............. 1,185 1,121 2,375 2,519 Zinc
(tonnes)............ 20,621 20,127 38,799 37,116 Copper
(tonnes).......... 1,616 1,614 3,654 4,433 Realized prices (US$):
Gold (per ounce)......... $687 $427 $646 $429 Silver (per
ounce)....... $13.06 $7.16 $11.94 $7.01 Zinc (per tonne).........
$3,786 $1,279 $3,249 $1,301 Copper (per tonne)....... $14,901
$3,417 $9,833 $3,329 Total cash costs (per ounce) (US$): Production
costs........... $636 $490 $572 $523 Less: Net byproduct
revenues............ (1,523) (379) (1,109) (416) Inventory
adjustments.... (86) (6) (44) (21) Accretion expense and
other................... (2) (2) (2) (2) ------ ------ ------
------ Total cash costs (per ounce)(1)............ $(975) $103
$(583) $84 ------ ------ ------ ------ ------ ------ ------ ------
Minesite costs per tonne milled (C$)(1)............ $61 $56 $60 $54
------ ------ ------ ------ ------ ------ ------ ------ (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 the financial statements AGNICO
EAGLE MINES LIMITED CONSOLIDATED BALANCE SHEETS (thousands of
United States dollars - Unaudited) As at As at June 30, December
31, -------- ------------ 2006 2005 ---- ---- ASSETS Current Cash
and cash equivalents.................... $415,471 $120,982 Metals
awaiting settlement................... 96,864 56,304 Income taxes
recoverable..................... - 7,723 Other taxes
recoverable...................... 12,604 6,794 Inventories: Ore
stockpiles............................. 4,400 12,831
Concentrates............................... 2,664 920
Supplies................................... 10,314 10,092 Other
current assets......................... 10,253 27,689 ------ ------
Total current assets........................... 552,570 243,335
Other assets................................... 3,411 7,995 Future
income and mining tax assets............ 35,605 63,543 Property,
plant and mine development........... 770,588 661,196 -------
------- $1,362,174 $976,069 ---------- -------- ---------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY Current Short-term
debt.............................. $7,232 $- Accounts payable and
accrued liabilities..... 28,604 37,793 Dividends
payable............................ 643 3,809 Income taxes
payable......................... 2,535 - Interest
payable............................. - 2,243 ------ ------ Total
current liabilities...................... 39,014 43,845 ------
------ Fair value of derivative financial instruments. 11,602 9,699
------ ------ Long-term debt................................. -
131,056 ------ ------- Reclamation provision and other
liabilities.... 17,309 16,220 ------ ------ Future income and
mining tax liabilities....... 129,132 120,182 ------- -------
Shareholders' equity Common shares Authorized - unlimited Issued -
120,111,865 (December 31, 2005 - 97,836,954) (note
5)........................ 1,215,925 764,659 Stock
options.................................. 5,050 2,869
Warrants....................................... 15,732 15,732
Contributed surplus............................ 7,181 7,181
Deficit........................................ (70,252) (138,697)
Accumulated other comprehensive income (loss).. (8,519) 3,323
------ ------ Total shareholders' equity.....................
1,165,117 655,067 --------- ------- $1,362,174 $976,069 ---------
------- --------- ------- AGNICO EAGLE MINES LIMITED CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (thousands of United
States dollars except per share amounts - Unaudited) Three months
ended Six months ended ------------------ ---------------- June 30,
June 30, -------- -------- 2006 2005 2006 2005 ---- ---- ---- ----
REVENUES Revenues from mining operations................ $126,872
$49,572 $217,453 $111,338 Interest and sundry income. 3,125 299
4,605 947 Gain on sale of available- for-sale securities....... 339
- 21,913 - ---- - ------ - 130,336 49,871 243,971 112,285 COSTS AND
EXPENSES Production................. 35,567 30,268 68,754 61,241
Loss (gain) on derivative financial instruments..... 4,614 (4,193)
12,045 (754) Exploration and corporate development...............
6,818 3,364 12,335 6,127 Equity loss in junior exploration
companies..... 233 838 317 1,973 Amortization............... 6,108
5,983 12,105 13,194 General and administrative. 5,275 2,412 10,819
6,161 Provincial capital tax..... 344 311 897 910
Interest................... 217 2,102 1,574 4,654 Foreign currency
loss (gain).................... 6,650 (467) 8,518 (851) ----- -----
----- ----- Income before income, mining and federal capital taxes.
64,510 9,253 116,607 19,630 Federal capital tax........ (204) 234 -
482 Income and mining tax expense (recovery)........ 27,622 (3,775)
42,325 (4,094) ------ ------- ------ ------- Net income for the
period.. $37,092 $12,794 $74,282 $23,242 ------ ------- ------
------- ------ ------- ------ ------- Net income per share -
basic..................... $0.32 $0.15 $0.67 $0.27 ----- -----
----- ----- ----- ----- ----- ----- Net income per share -
diluted................... $0.31 $0.15 $0.65 $0.27 ----- -----
----- ----- ----- ----- ----- ----- Weighted average number of
shares outstanding (in thousands) Basic.................... 114,434
86,220 110,281 86,176 Diluted.................. 117,817 86,627
113,664 86,583 AGNICO EAGLE MINES LIMITED CONSOLIDATED STATEMENTS
OF CASH FLOWS (thousands of United States dollars - Unaudited)
Three months ended Six months ended ------------------
---------------- June 30, June 30, -------- -------- 2006 2005 2006
2005 ---- ---- ---- ---- Operating activities Net income for the
period.. $37,092 $12,794 $74,282 $23,242 Add (deduct) items not
affecting cash: Amortization............. 6,108 5,983 12,105 13,194
Future income and mining taxes................... 20,133 (3,913)
31,835 (4,232) Unrealized loss on derivative contracts.... 1,433
(4,193) 8,116 (754) Gain on sale of securities.............. (339)
- (21,913) - Amortization of deferred costs and other.........
5,970 1,187 7,824 3,869 Changes in non-cash working capital
balances Metals awaiting settlement.............. (31,652) 6,230
(40,560) 7,983 Income taxes recoverable. 6,969 5,564 10,258 8,515
Other taxes recoverable.. (46) - 3,940 - Inventories..............
(238) 999 (2,389) 2,702 Prepaid expenses and
other................... (1,355) (139) (4,260) 198 Accounts payable
and accrued liabilities..... 4,020 (7,026) (9,189) (7,509) Interest
payable......... - 1,617 (2,243) - - ----- ------- - Cash provided
by operating activities................ 48,095 19,103 67,806 47,208
------ ------ ------ ------ Investing activities Additions to
mining properties................ (33,533) (14,020) (54,508)
(29,202) Acquisitions, investments and other................. 363
(2,314) (9,868) (3,036) --- ------- ------- ------- Cash used in
investing activities................ (33,170) (16,334) (64,376)
(32,239) ------ ------ ------ ------ Financing activities Dividends
paid............. - - (3,166) (2,542) Short-term debt............
3,968 - 7,232 - Common shares issued....... 242,481 920 287,839
2,367 ------- --- ------- ----- Cash provided by (used in)
financing activities...... 246,449 920 291,905 (175) ------- ---
------- ----- Effect of exchange rate changes on cash and cash
equivalents............... (812) (5) (846) (10) ----- --- -----
---- Net increase in cash and cash equivalents during the
period................ 260,562 3,684 294,489 14,784 Cash and cash
equivalents, beginning of period....... 154,909 117,114 120,982
106,014 ------- ------- ------- ------- Cash and cash equivalents,
end of period............. $415,471 $120,798 $415,471 $120,798
-------- -------- -------- -------- -------- -------- --------
-------- Other operating cash flow information: Interest paid
during the period.................... $45 $161 $3,319 $3,985 ---
----- ------ ------ --- ----- ------ ------ Income, mining and
capital taxes paid (recovered) during the period $484 $(4,682) $968
$(6,741) ---- -------- ---- -------- ---- -------- ---- --------
Note 1: Reconciliation of Total Cash Costs Per Ounce and Total
Minesite Costs Per Tonne (thousands of dollars, Three months ended
Six months ended except where noted) ------------------
---------------- ---------------------- June 30, June 30, --------
-------- 2006 2005 2006 2005 ---- ---- ---- ---- Cost of production
per Consolidated Statements of Income................. $ 35,567 $
30,268 $ 68,754 $ 61,241 Adjustments: Byproduct revenues.........
(85,188) (23,436) (133,227) (48,697) Inventory adjustment(i)....
(4,833) (358) (5,337) (2,531) Non-cash reclamation
provision................. (112) (105) (217) (212) ---------
-------- --------- -------- Cash operating costs....... $(54,566) $
6,369 $(70,027) $ 9,801 --------- -------- --------- --------
--------- -------- --------- -------- Gold production (ounces)...
55,966 61,771 120,201 117,081 --------- -------- --------- --------
--------- -------- --------- -------- Total cash costs (per
ounce)(ii)........... $ (975) $ 103 $ (583) $ 84 --------- --------
--------- -------- --------- -------- --------- -------- (thousands
of dollars, Three months ended Six months ended except where noted)
------------------ ---------------- ---------------------- June 30,
June 30, -------- -------- 2006 2005 2006 2005 ---- ---- ---- ----
Cost of production per Consolidated Statements of
Income................. $ 35,567 $ 30,268 $ 68,754 $ 61,241
Adjustments: Inventory adjustment(iii).. 153 605 1,562 (2,615)
Non-cash reclamation provision................. (112) (106) (217)
(212) --------- -------- --------- -------- Minesite operating
costs (US$)..................... $ 35,608 $ 30,767 $ 70,099 $
58,414 --------- -------- --------- -------- Minesite operating
costs (C$)...................... $ 39,973 $ 38,155 $ 79,438 $
72,073 --------- -------- --------- -------- --------- --------
--------- -------- Tonnes milled (000's tonnes)............ 657 682
1,318 1,331 --------- -------- --------- -------- ---------
-------- --------- -------- Minesite costs per tonne
(C$)(iv).................. $ 61 $ 56 $ 60 $ 54 --------- --------
--------- -------- --------- -------- --------- --------
----------- 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 adjustment reflects the portion of concentrate
production for which revenue has not been recognized in the period.
(ii) 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
above, 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. (iii) Inventory
adjustments for the minesite costs per tonne calculation reflect
only costs associated with unsold concentrates as minesite costs
per tonne are calculated on a production basis. (iv) 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 above, 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. DATASOURCE: Agnico-Eagle Mines Limited CONTACT: David
Smith, Director, Investor Relations, (416) 947-1212
Copyright