Stock Symbols: AEM (NYSE and TSX) TORONTO, Oct. 26
/PRNewswire-FirstCall/ -- Agnico-Eagle Mines Limited today reported
third quarter earnings of $45.2 million, or $0.38 per share. This
compares to net earnings of $2.1 million, or $0.02 per share, in
the third quarter of 2005. The third quarter 2006 earnings were
positively affected by a non-recurring after-tax gain of $11
million, or $0.09 per share, on the sale of Contact Diamond
Corporation shares. The earnings were negatively affected by a
non-cash foreign exchange translation loss of $1.0 million, or
$0.01 per share, and a loss of $1.0 million, or $0.01 per share, on
zinc forward sales. Earnings in the first nine months of 2006 were
a record of $119.5 million, or $1.05 per share. This is more than
quadruple the $25.3 million, or $0.29 per share, recorded in the
first nine months of 2005, largely as a result of stronger metals
prices. The Company's financial position remains strong with cash
and cash equivalents of $430.9 million at September 30, 2006, up
from $415.5 million at June 30, 2006. Record cash flow provided by
operating activities of $73.9 million more than covered capital
expenditures during the quarter of $41.4 million and investments of
$20 million. Payable gold production in the third quarter of 2006
was 59,603 ounces at total cash costs per ounce(1) of minus $709.
This compares with payable gold production of 61,704 ounces at
total cash costs of $33 per ounce in the second quarter of 2005.
Payable gold production in the first nine months of 2006 was
179,804 ounces at total cash costs of minus $625 per ounce, up from
178,785 ounces at total cash costs of $66 per ounce in the first
nine months of 2005. The gold production estimate for the full year
remains at approximately 250,000 ounces. Highlights for the quarter
include: - Record quarterly earnings of $45.2 million - Record
quarterly cash flow provided by operating activities of $73.9
million - Low total cash costs at LaRonde of minus $709 per ounce
of gold - Twenty consecutive months without a lost time accident
underground at LaRonde - Available bank lines doubled to $300
million; extended to 5 years by banking syndicate "The strong
performance of our low cost LaRonde Mine, combined with higher
metal prices, has helped Agnico-Eagle to generate record earnings
and cash flows this quarter" said Sean Boyd, Vice-Chairman and
Chief Executive Officer. "We also continue to make good progress
toward our goal of expanding our gold production and reserve base.
Mine construction and exploration has ramped up at four gold
projects with a fifth project in the latter stages of feasibility"
added Mr. Boyd. Conference Call Today The Company will host its
quarterly conference call today, October 26, at 3:00 pm E.D.T.
Management will review the Company's financial results for the
third 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 21172806 followed by
the number sign. The conference call will be replayed from
Thursday, October 26, 2006 5:00 pm E.D.T. to Saturday, November 4,
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 7,272 tonnes
of ore per day in the third quarter, compared with an average of
7,180 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 over three years, continuing to demonstrate the
reliability of this world class mine. Minesite costs per tonne(2)
were C$63 in the third quarter. These costs are higher than the
C$57 per tonne experienced in the third quarter of 2005. As
occurred in the second quarter of 2006, costs were negatively
affected by accelerated development work and general cost increases
in the industry. For the first nine months of 2006, the minesite
costs per tonne were C$61, up from C$55 per tonne in the first nine
months of 2005, largely due to the previously mentioned factors.
Minesite costs per tonne are expected to be approximately C$61 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 minus $709 in the third quarter. This compares favourably with
the results of the third quarter of 2005 when total cash costs per
ounce were $33. The main reason for the decrease in total cash
costs per ounce is the significantly higher byproduct metal prices
realized in 2006. The full year production forecast remains at an
estimated 250,000 ounces of gold. Byproduct production of 5.0
million ounces of silver, 77,000 tonnes of zinc, and 7,500 tonnes
of copper (all approximate amounts) are also anticipated for 2006.
Total cash costs for the year are expected to be significantly less
than nil. Cash Position Continues to Grow; $300 Million, Five Year
Credit Line Secured Cash and cash equivalents grew to $430.9
million at September 30, 2006 from the June 30, 2006 balance of
$415.5 million, largely due to the strong cash generating
performance from LaRonde. Additionally, the Company maintains
substantially undrawn bank lines of $300 million. Available amounts
under the Company's credit facility with a syndicate of banks
including Scotia Capital, Societe Generale, the Toronto-Dominion
Bank, N M Rothschild and Sons Ltd., and National Bank of Canada
were doubled to $300 million. The credit facility's term was also
extended to 2011. The Company has approximately 120.7 million
shares outstanding and no long term debt. During the quarter,
Agnico-Eagle added a record $73.9 million of cash provided by
operating activities. Major expenditures in the quarter included
$41.4 million in project and sustaining capital expenditures, and a
$20 million investment in Stornoway Diamond Corporation
(Agnico-Eagle owns approximately 14% of the common shares of
Stornoway, as of October 24, 2006). For the full year, capital
expenditures are expected to total approximately $169 million, as
the Company's four gold development projects are well underway. At
September 30, 2006, the Company had 3,000 tonnes of zinc sold
forward at a contract price 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 well funded for
the development and exploration of its pipeline of gold projects in
Canada, Finland, Mexico and the United States. Four New Gold
Projects Under Construction, Fifth in Feasibility Stage At the 100%
owned Goldex gold project in northwestern Quebec, Agnico-Eagle
commenced construction in July 2005. Probable reserves of 1.6
million ounces of gold (21.4 million tonnes grading 2.4 grams per
tonne) are estimated 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 estimated to
total $135 million, of which $54 million had been incurred as at
the end of September 2006. The project is well advanced with the
shaft collar and headframe complete. On September 29, 2006, the
first bench in the shaft was blasted. The shaft is currently down
to a depth of 75 metres. During the quarter, 1,126 metres of
lateral development and 293 metres of raising were completed.
Approximately 18,000 tonnes of ore were extracted and stockpiled in
the quarter. The total ore stockpile now stands at approximately
78,000 tonnes. First gold production is expected in the second half
of 2008. Construction commenced at the Kittila project in northern
Finland in the second quarter of 2006 with first production
expected in the second half of 2008. The project is expected to
produce an average of 150,000 ounces per year at total cash costs
of approximately $250 per ounce of gold, over an estimated 13 year
mine life. Kittila has probable gold reserves of 2.4 million ounces
(14.2 million tonnes grading 5.2 grams per tonne). Capital costs
are estimated to total $135 million of which approximately $6
million had been incurred as of September 30, 2006. Work on site
infrastructure is progressing well and concrete foundations for the
service/office and process buildings has been completed. Mining of
waste rock for the tailings dam has been initiated and work on the
portal for the decline has also been completed. The underground
development contract has been awarded and work is about to begin.
Surface stripping for the open pits is well advanced with
approximately 75,000 cubic metres removed to date. In-fill and
exploration drilling continues to test targets on the Suurikuusikko
trend. Six drills are currently operating on the property. 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 (3.4 million tonnes grading 10.2
grams per tonne) are expected to support estimated annual
production of 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, of which
approximately $10 million has been spent as of September 30, 2006.
Underground diamond drilling continues, with in-fill drilling
returning results as expected. Several drill holes have returned
encouraging grades and thicknesses outside of the current reserve
and resource envelope on the Contact South Zone. An updated reserve
and resource estimate will be provided with the fourth quarter
results in February 2007. The shaft at Lapa is currently at a depth
of 894 metres below surface, towards an ultimate depth of 1,370
metres. Significant shaft station work and lateral development have
also been completed. Gold production at Lapa is expected to begin
in the fourth quarter 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
(18.8 million tonnes grading 6.0 grams per tonne) are expected to
support a 10 year mine life. Annual gold production is anticipated
to average 320,000 ounces at total cash costs of approximately $230
per ounce. The capital cost is anticipated to be $210 million with
approximately $3.3 million spent as of September 30, 2006.
Significant amounts of the capital equipment have been ordered,
detailed engineering is underway, and underground development is
advancing. The three hoists have been acquired and are being
refurbished. The development for the new winze is continuing with
the upper cut for the sheave deck in progress. LaRonde II is
expected to begin production in 2011. At the 100% owned Pinos Altos
project in northern Mexico, a $23 million exploration program is
underway. 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. Currently, four drills
are operating on the property, with two additional drills now
mobilizing. At the end of September, approximately 11,855 metres of
the program had been drilled. Construction of the permanent camp is
well underway. Assuming a production decision is made on the basis
of the planned feasibility study, gold and silver production at
Pinos Altos could begin in 2009. Exploration Update and Quebec Mine
Tour A review of Agnico-Eagle's advanced exploration projects,
focusing on Kittila and Pinos Altos, is expected to be published in
late November 2006 via press release. Encouraging results continue
to be returned from both projects, as well as from Quebec at Lapa,
Goldex and LaRonde. Additionally, Agnico-Eagle is hosting a tour to
its Quebec operations on November 28/29. Interested parties should
contact Hazel Winchester at . Management Appointments Agnico-Eagle
is proud to announce that Mr. Patrice Gilbert has joined the
Company as Vice President, Human Resources. Mr. Gilbert was most
recently a senior human resources manager with Placer Dome's
international operations. The Company is also proud to announce the
promotions of Mr. Daniel Racine to Vice President, Operations and
Mr. Marc Legault to Vice President, Project Development. Both Mr.
Racine and Mr. Legault are long serving employees of Agnico-Eagle
and are assuming additional responsibilities as the Company
undertakes the construction of four new gold mines. Forward-Looking
Statements The information in this press release has been prepared
as at October 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 and amounts 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/A, which may be obtained from us, or from the SEC's
website at: http://sec.gov/edgar.shtml. A "final" or "bankable"
feasibility study is required to meet the requirements to designate
reserves under Industry Guide 7. Estimates were calculated using
historic three-year average metals prices and foreign exchange
rates in accordance with the SEC Industry Guide 7. Industry Guide 7
requires the use of prices that reflect current economic conditions
at the time of reserve determination which Staff of the SEC has
interpreted to mean historic three-year average prices. The
assumptions used for 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. The Canadian Securities Administrators' National
Instrument 43-101 ("NI 43-101") requires mining companies to
disclose reserves and resources using the subcategories of "proven"
reserves, "probable" reserves, "measured" resources, "indicated"
resources and "inferred" resources. Mineral resources that are not
mineral reserves do not have demonstrated economic viability. A
mineral reserve is the economically mineable part of a measured or
indicated resource demonstrated by at least a preliminary
feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A mineral reserve includes diluting
materials and allows for losses that may occur when the material is
mined. A proven mineral reserve is the economically mineable part
of a measured resource for which quantity, grade or quality,
densities, shape and physical characteristics are so well
established that they can be estimated with confidence sufficient
to allow the appropriate application of technical and economic
parameters, to support production planning and evaluation of the
economic viability of the deposit. A probable mineral reserve is
the economically mineable part of an indicated mineral resource for
which quantity, grade or quality, densities, shape and physical
characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and
economic parameters, to support mine planning and evaluation of the
economic viability of the deposit. A mineral resource is a
concentration or occurrence of natural, solid, inorganic or
fossilized organic material in or on the earth's crust in such form
and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological evidence
and knowledge. A measured mineral resource is that part of a
mineral resource for which quantity, grade or quality, densities,
shape, physical characteristics, can be estimated with a level of
confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough to confirm both geological and grade
continuity. An indicated mineral resource is that part of a mineral
resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of
confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough for geological and grade continuity to be
reasonable assumed. An inferred mineral resource is that part of a
mineral resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling
and reasonably assumed, but not verified, geological and grade
continuity. The estimate is based on limited information and
sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes. Mineral
resources which are not mineral reserves do not have demonstrated
economic viability. Investors are cautioned not to assume that part
or all of an inferred resource exists, or is economically or
legally mineable. A feasibility study is a comprehensive study of a
mineral deposit in which all geological, engineering, legal,
operating, economic, social, environmental and other relevant
factors are considered in sufficient detail that it could
reasonably serve as the basis for a final decision by a financial
institution to finance the development of the deposit for mineral
production. The qualified person responsible for the LaRonde I and
LaRonde II mineral reserve and resource estimate is Marc Ruel,
P.Geo., Superintendent of Geology for the LaRonde mine. The
effective date of the estimate is February 22, 2006, using, except
for the operating and capital cost assumptions (that are described
above), key assumptions, parameters and methods used to estimated
the mineral resources and reserves that are not significantly
different as that found in the Technical Report by Guy Gosselin,
P.Geo., that was posted on SEDAR on March 23, 2005. Issues that
might materially affect the LaRonde I and LaRonde II mineral
resources and resources are set out in the Technical Report filed
on March 23, 2005. A qualified person, Carl Pelletier, P.Geo., of
Innovexplo Geological Services of Val d'Or Quebec, was responsible
for the mineral reserve and mineral resource estimate at the Goldex
project. Descriptions of the key assumptions, parameters and
methods used to estimate the mineral resources and reserves and of
any issues which might materially affect the latter 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 surface stockpiles that was measured 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
Superintendent of Technical Services, Lapa project. A description
of the key assumptions, parameters and methods used to estimate the
mineral resources and reserves and any issues which might
materially affect the latter 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 Superintendent of
Technical Services, Lapa project. 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
description of the key assumptions, parameters and methods used to
estimate the mineral resources and reserves, 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. There are no
known environmental, permitting, legal, title, taxation,
socio-political, marketing, or other relevant issues that
materially affect the Kittila mineral resources or mineral
reserves. 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. 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. The data
verification process of historic drill hole information for Pinos
Altos consisted of comparing a selective amount of primary
information in the mineral resource data base (such as drill hole
location, orientation, sample location, assay result and geological
description data) against original records (such as field drill
sites, original survey reports and drill core descriptions, drill
core stored in the library, and assay laboratory reports).
Verification also consisted of reviewing the historic assay data
base and selecting additional samples for check assaying. This
verification was done under the supervision of a qualified person,
Marc Legault, P.Eng., the Company's Vice President, Project
Development. The historic drill hole information that was verified
showed acceptable results and only a very small but acceptable
error rate was observed. Although this method of selective
verification suggests that the entire mineral resource data base is
of good quality, there may be errors in the proportion of data that
was not verified. All of the exploration information collected by
the Company (except for the assay results) and inserted into the
mineral resource data base was verified against original records by
a qualified person, Dino Lombardi, P.Geo., the Company's Senior
Geologist for International Projects. The quality of the assay data
inserted into the Pinos Altos mineral resource data base was
monitored by a qualified person, Keith Blair, P.Geo. of Applied
Geoscience LLC of Reno, Nevada. The verification methods used do
not eliminate all of the possible errors (for example, sample bias
that can only be verified through additional testing). There are no
known environmental, permitting, legal, title, taxation,
socio-political, marketing, or other relevant issues that
materially affect the Pinos Altos mineral resources. AGNICO-EAGLE
MINES LIMITED SUMMARIZED QUARTERLY DATA (thousands of United States
dollars, except where noted - Unaudited) Three months ended Nine
months ended -------------------- --------------------- September
30, September 30, ------------- ------------- 2006 2005 2006 2005
---- ---- ---- ---- Income and cash flows Revenues from mining
operations.............. $108,798 $58,608 $326,251 $169,946
Production costs......... 36,456 32,548 105,210 93,789 -----------
----------- ----------- ----------- Gross profit (exclusive of
amortization shown below)............ $72,342 $26,060 $221,041
$76,157 Amortization............. 6,119 6,276 18,224 19,470
----------- ----------- ----------- ----------- Gross
profit............. $66,223 $19,784 $202,817 $56,687 -----------
----------- ----------- ----------- ----------- -----------
----------- ----------- Net income for the period..............
$45,203 $2,057 $119,485 $25,299 Net income per share
(basic)........... $0.38 $0.02 $1.05 $0.29 Net income per share
(diluted)......... $0.37 $0.02 $1.02 $0.29 Cash flow provided by
operating activities.... $73,945 $11,151 $141,751 $58,358 Cash flow
used in investing activities.... $(61,531) $(17,444) $(125,907)
$(49,683) Cash flow provided by financing activities.... $2,268
$9,431 $294,173 $9,256 Weighted average number of common shares
outstanding - basic (in thousands).......... 120,386 86,638 113,649
86,330 Tonnes of ore milled..... 669,026 660,058 1,987,456
1,998,541 Head grades: Gold (grams per tonne). 3.01 3.09 3.07 3.09
Silver (grams per tonne)............ 75.9 84.68 77.00 78.17
Zinc................... 4.43% 4.30% 4.16% 4.21%
Copper................. 0.39% 0.43% 0.37% 0.39% Recovery rates:
Gold................... 92.34% 91.33% 91.88% 90.64%
Silver................. 88.30% 84.40% 87.50% 84.40%
Zinc................... 87.70% 83.90% 87.30% 82.70%
Copper................. 81.70% 73.80% 82.30% 75.10% Payable
production: Gold (ounces).......... 59,603 61,704 179,804 178,785
Silver (ounces in thousands)......... 1,233 1,295 3,707 3,597 Zinc
(tonnes).......... 22,068 20,232 61,318 59,009 Copper
(tonnes)........ 1,884 1,921 5,527 5,411 Payable metal sold: Gold
(ounces).......... 57,326 64,852 187,969 195,539 Silver (ounces in
thousands)......... 1,137 1,092 3,512 3,611 Zinc (tonnes)..........
20,541 20,126 59,340 54,904 Copper (tonnes)........ 1,880 1,614
5,534 7,384 Realized prices per unit of metal sold (US$): Gold (per
ounce)....... $600 $432 $632 $432 Silver (per ounce)..... $12.39
$7.04 $12.09 $6.94 Zinc (per tonne)....... $3,525 $913 $3,345
$1,162 Copper (per tonne)..... $6,843 $1,915 $8,818 $2,835 Total
cash costs (per ounce) (US$): Production costs......... $612 $527
$585 $525 Less: Net byproduct revenues................ (1,340)
(467) (1,224) (433) Inventory adjustments......... 21 (25) 16 (24)
Accretion expense and other........... (2) (2) (2) (2) -----------
----------- ----------- ----------- Total cash costs (per
ounce)(3).......... $(709) $33 $(625) $66 ----------- -----------
----------- ----------- ----------- ----------- -----------
----------- Minesite costs per tonne milled (C$)(3).... $63 $57 $61
$55 ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- AGNICO-EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS (thousands of United States dollars -
Unaudited) As at As at September December 30, 2006 31, 2005
----------- ----------- ASSETS Current Cash and cash
equivalents...................... $430,883 $120,982 Metals awaiting
settlement..................... 80,082 56,304 Income taxes
recoverable....................... - 7,723 Other taxes
recoverable........................ 12,189 6,794 Inventories: Ore
stockpiles............................... 2,815 12,831
Concentrates................................. 4,177 920
Supplies..................................... 11,257 10,092 Other
current assets........................... 9,632 27,689 -----------
----------- Total current assets.............................
551,035 243,335 Other assets.....................................
31,669 7,995 Future income and mining tax assets..............
25,051 63,543 Property, plant and mine development.............
805,504 661,196 ----------- ----------- $1,413,259 $976,069
----------- ----------- ----------- ----------- LIABILITIES AND
SHAREHOLDERS' EQUITY Current Accounts payable and accrued
liabilities....... 30,572 37,793 Dividends
payable.............................. 643 3,809 Income taxes
payable........................... 6,751 - Interest
payable............................... - 2,243 Fair value of
derivative financial instruments......................... 6,229
9,699 ----------- ----------- Total current
liabilities........................ 44,195 53,544 -----------
----------- Long-term debt................................... -
131,056 ----------- ----------- Reclamation provision and other
liabilities...... 17,485 16,220 ----------- ----------- Future
income and mining tax liabilities......... 130,773 120,182
----------- ----------- Shareholders' equity Common shares
Authorized - unlimited Issued - 120,738,053 (December 31, 2005 -
97,836,954)................................. 1,225,931 764,659
Stock options.................................... 5,408 2,869
Warrants......................................... 15,727 15,732
Contributed surplus.............................. 7,181 7,181
Deficit.......................................... (25,049)
(138,697) Accumulated other comprehensive income (loss).... (8,392)
3,323 ----------- ----------- Total shareholders'
equity....................... 1,220,806 655,067 -----------
----------- $1,413,259 $976,069 ----------- ----------- -----------
----------- AGNICO EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE INCOME (thousands of United States dollars
except share and per share amounts - Unaudited) Three months ended
Nine months ended -------------------- --------------------
September 30, September 30, ------------- ------------- 2006 2005
2006 2005 ---- ---- ---- ---- REVENUES Revenues from mining
operations................ $108,798 $58,608 $326,251 $169,946
Interest and sundry income. 12,039 (290) 16,644 654 Gain on sale of
available- for-sale securities....... 1,062 97 22,975 100
---------- ---------- ---------- ---------- 121,899 58,415 365,870
170,700 COSTS AND EXPENSES Production................. 36,456
32,548 105,210 93,789 Loss on derivative financial instruments.....
967 5,066 13,012 4,312 Exploration and corporate
development............... 7,808 4,296 20,143 10,423 Equity loss in
junior exploration companies..... 346 584 663 2,557
Amortization............... 6,119 6,276 18,224 19,470 General and
administrative. 5,853 2,522 16,672 8,683 Provincial capital
tax..... 729 387 1,626 1,297 Interest................... 349 2,573
1,923 7,227 Foreign currency loss (gain) 1,037 763 9,555 (88)
---------- ---------- ---------- ---------- Income before income,
mining and federal capital taxes. 62,235 3,400 178,842 23,030
Federal capital tax........ - 246 - 728 Income and mining tax
expense (recovery)........ 17,032 1,097 59,357 (2,997) ----------
---------- ---------- ---------- Net income for the period..
$45,203 $2,057 $119,485 $25,299 ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- Net income
per share - basic..................... $0.38 $0.02 $1.05 $0.29
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- Net income per share -
diluted................... $0.37 $0.02 $1.02 $0.29 ----------
---------- ---------- ---------- ---------- ---------- ----------
---------- Weighted average number of shares outstanding (in
thousands) Basic.................... 120,386 86,638 113,649 86,330
Diluted.................. 123,822 87,096 117,086 86,788 AGNICO
EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of United States dollars - Unaudited) Three months ended
Nine months ended -------------------- --------------------
September 30, September 30, ------------- ------------- 2006 2005
2006 2005 ---- ---- ---- ---- Operating activities Net income for
the period.. $45,203 $2,057 $119,485 $25,299 Add (deduct) items not
affecting cash: Amortization............. 6,119 6,276 18,224 19,470
Future income and mining taxes............ 13,275 1,235 45,109
(2,997) Unrealized loss (gain) on derivative contracts.... (3,545)
5,066 4,571 4,312 Gain on sale of available-for-sale
securities.............. (1,063) (97) (22,975) (100) Amortization
of deferred costs and other......... (2,210) 3,199 17,345 7,070
Changes in non-cash working capital balances Metals awaiting
settlement.............. 16,782 (10,669) (23,778) (2,686) Fair
value of derivative financial instruments... (6,387) - (18,118) -
Income taxes recoverable. 4,216 44 14,474 8,559 Other taxes
recoverable.. 415 - 4,355 - Inventories.............. (871) 1,189
(3,260) 3,891 Other current assets..... 43 (1,058) (4,217) (889)
Accounts payable and accrued liabilities..... 1,968 5,527 (7,221)
(1,953) Interest payable......... - (1,618) (2,243) (1,618)
---------- ---------- ---------- ---------- Cash provided by
operating activities................ 73,945 11,151 141,751 58,358
---------- ---------- ---------- ---------- Investing activities
Additions to mining properties................ (41,395) (15,685)
(95,903) (44,888) Acquisitions, investments and
other................. (20,136) (1,759) (30,004) (4,795) ----------
---------- ---------- ---------- Cash used in investing
activities................ (61,531) (17,444) (125,907) (49,683)
---------- ---------- ---------- ---------- Financing activities
Dividends paid............. - - (3,166) (2,542) Short-term
debt............ (7,232) - - Proceeds from common shares
issued............. 9,500 9,431 297,339 11,798 ----------
---------- ---------- ---------- Cash provided by financing
activities...... 2,268 9,431 294,173 9,256 ---------- ----------
---------- ---------- Effect of exchange rate changes on cash and
cash equivalents.......... 730 21 (116) 12 ---------- ----------
---------- ---------- Net increase in cash and cash equivalents
during the period................ 15,412 3,159 309,901 17,943 Cash
and cash equivalents, beginning of period....... 415,471 120,798
120,982 106,014 ---------- ---------- ---------- ---------- Cash
and cash equivalents, end of period............. $430,883 $123,957
$430,883 $123,957 ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- Other operating cash
flow information: Interest paid during the
period.................... $117 $4,326 $3,436 $8,311 ----------
---------- ---------- ---------- ---------- ---------- ----------
---------- Income, mining and capital taxes paid (recovered) during
the period......... $264 $265 $1,232 $(6,476) ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Note 1: Reconciliation of Total Cash Costs Per Ounce and Total
Minesite Costs Per Tonne Three months ended Nine months ended
-------------------- -------------------- (thousands of dollars,
September 30, September 30, except where noted) -------------
------------- ------------------- 2006 2005 2006 2005 ---- ----
---- ---- Cost of production per Consolidated Statements of Income
$36,456 $32,548 $105,210 $93,789 Adjustments: Byproduct revenues
(79,873) (28,812) (219,998) (77,509) Inventory adjustment(i) 1,250
(1,588) 2,812 (4,119) Non-cash reclamation provision (116) (108)
(333) (320) ---------- ---------- ---------- ---------- Cash
operating costs $(42,283) $2,040 $(112,309) $11,841 ----------
---------- ---------- ---------- ---------- ---------- ----------
---------- Gold production (ounces) 59,603 61,704 179,804 178,785
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- Total cash costs (per ounce)(ii) $(709) $33
$(625) $66 ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- Three months ended Nine months
ended -------------------- -------------------- (thousands of
dollars, September 30, September 30, except where noted)
------------- ------------- --------------------- 2006 2005 2006
2005 ---- ---- ---- ---- Cost of production per Consolidated
Statements of Income $36,456 $32,548 $105,210 $93,789 Adjustments:
Inventory adjustments(iii) 1,250 (915) 2,812 (3,530) Non-cash
reclamation provision (116) (108) (333) (320) ---------- ----------
---------- ---------- Minesite operating costs (US$) $37,590
$31,525 $107,689 $89,939 ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- Minesite
operating costs (C$) $42,153 $37,913 $121,591 $109,986 ----------
---------- ---------- ---------- ---------- ---------- ----------
---------- Tonnes of ore milled (000's tonnes) 669 660 1,987 1,999
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- Minesite costs per tonne (C$)(iv) $63 $57 $61
$55 ---------- ---------- ---------- ---------- -------------------
Notes: (i) Under the Company's revenue recognition policy, revenue
is recognized on concentrates when legal title passes. Since total
cash costs are calculated on a production basis, this inventory
adjustment reflects the sales margin on the portion of concentrate
production for which revenue has not been recognized in the period.
(ii) Total cash costs is not a recognized measure under US GAAP and
this data may not be comparable to data presented by other gold
producers. The Company believes that this generally accepted
industry measure is a realistic indication of operating performance
and is useful in allowing year over year comparisons. As
illustrated in the table above, this measure is calculated by
adjusting Production Costs as shown in the Consolidated Statements
of Income and Comprehensive Income for net byproduct revenues,
royalties, inventory adjustments and asset retirement provisions.
This measure is intended to provide investors with information
about the cash generating capabilities of the Company's mining
operations. Management uses this measure to monitor the performance
of the Company's mining operations. Since market prices for gold
are quoted on a per ounce basis, using this per ounce measure
allows management to assess the mine's cash generating capabilities
at various gold prices. Management is aware that this per ounce
measure of performance can be impacted by fluctuations in byproduct
metal prices and exchange rates. Management compensates for the
limitation inherent with this measure by using it in conjunction
with the minesite costs per tonne measure (discussed below) as well
as other data prepared in accordance with US GAAP. Management also
performs sensitivity analyses in order to quantify the effects of
fluctuating metal prices and exchange rates. (iii) This inventory
adjustment reflects production costs associated with unsold
concentrates. (iv) Minesite costs per tonne is not a recognized
measure under US GAAP and this data may not be comparable to data
presented by other gold producers. As illustrated in the table
above, this measure is calculated by adjusting Production Costs as
shown in the Consolidated Statements of Income and Comprehensive
Income for inventory and hedging adjustments and asset retirement
provisions and then dividing by tonnes processed through the mill.
Since total cash costs data can be affected by fluctuations in
byproduct metal prices and exchange rates, management believes 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 costs per tonne. Management is aware
that this per tonne measure is impacted by fluctuations in
production levels and thus uses this evaluation tool in conjunction
with production costs prepared in accordance with US GAAP. This
measure supplements production cost information prepared in
accordance with US GAAP and allows investors to distinguish between
changes in production costs resulting from changes in production
versus changes in operating performance.
-------------------------------------------------------------------------
(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 to the financial statements at
the end of this news release (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 (3) Total cash costs (per ounce) and
minesite costs per tonne milled are non-GAAP measures. For a
reconciliation of these measures to the financial statements, see
note 1 to these financial statements. DATASOURCE: Agnico-Eagle
Mines Limited CONTACT: David Smith, Director, Investor Relations,
(416) 947-1212
Copyright