Agnico-Eagle Reports Solid Second Quarter 2012 Operating and Financial Results; Increases Full Year Production Guidance; Announces Development of Satellite Zones at Goldex; Meliadine Continues To Grow
(All amounts expressed in U.S. dollars unless otherwise noted)
Stock Symbol: AEM (NYSE and TSX)
TORONTO, July 25, 2012 /PRNewswire/ – Agnico-Eagle Mines Limited (NYSE:AEM)(TSX:AEM) (“Agnico-Eagle” or the “Company”) today reported quarterly net income
of $43.3 million, or $0.25 per share, for the second quarter of
2012. These results include a loss (mainly impairment) on
available-for-sale securities of $18.3 million, or $0.11 per share,
stock option expense of $7.8 million, or $0.05 per share, a
non-recurring tax loss of $4.3 million, or $0.03 per share, and other
non-recurring expenses of $6.2 million or $0.04 per share. Partially
offsetting these items was a non-cash foreign currency translation gain
of $11.0 million, or $0.06 per share. Excluding these items would
result in adjusted net income of $68.9 million, or $0.40 per share. In
the second quarter of 2011, the Company reported net income of $68.8
million, or $0.41 per share.
For the first six months of 2012, net income was $121.8 million, or
$0.71 per share. This compares with the first six months of 2011 when
net income was $114.1 million, or $0.68 per share.
Cash flow generation was strong as second quarter 2012 cash provided by
operating activities was $194.1 million ($142.0 million before changes
in non-cash components of working capital), up from cash provided by operating activities of $162.8 million in the second quarter
of 2011 ($161.7 million before changes in non-cash components of
For the first six months of 2012, cash provided by operating activities
was a record $390.6 million as compared with the first half of 2011
when cash provided by operating activities was $337.6 million.
The higher net income and cash provided by operating activities in the
2012 periods were primarily due to stronger gold production and higher
realized gold prices, partly offset by lower byproduct revenues when
compared to the 2011 periods.
“Another good operating performance during the second quarter has
resulted in continued strength in our cash flows and earnings and a
strengthening of our financial position. In addition to steady
production from all of our mines, including record output at Meadowbank
and Pinos Altos, we are pleased to announce a higher estimate for our
full year production forecast,” said Sean Boyd, President and Chief
Executive Officer. ”Additionally, we are pleased to announce the start
of development of two satellite zones at Goldex. We expect first gold
production in early 2014 while we continue the exploration of other
satellite zones,” added Mr. Boyd.
Second quarter highlights include:
-- Record Quarterly Production at Meadowbank - record quarterly gold production of 98,403 ounces -- Record Quarterly Production at Low Costs at Pinos Altos- record quarterly production of 63,356 ounces of gold at total cash costs per ounce of $3581. -- Strong Cash Generation- quarterly cash provided by operating activities of $194.1 million, or $1.14 per share -- M and E Satellite Zones at Goldex Approved For Development -first production expected in early 2014 -- Meliadine Growing - recent drilling suggests further resource and reserve growth
Payable gold production(2) in the second quarter of 2012 was 265,350 ounces compared to 239,328
ounces in the second quarter of 2011. Without considering past
production from the Goldex mine (operations suspended October 2011),
the 2012 result was a quarterly record from the other five operating
mines. A description of the production and cost performance for each
mine is set out further below.
The higher level of production in the 2012 period was largely due to
record production at Meadowbank, higher grades at LaRonde and the ramp
up at Pinos Altos’ Creston Mascota operation (achieved commercial
production March 1, 2011) which also resulted in record gold production
at Pinos Altos.
(1)Total cash costs per ounce is a non-GAAP measure. For a reconciliation
to production costs, see footnote (ii) to the “Reconciliation of
Production Costs to Total Cash Costs per Ounce and Minesite costs per
tonne” contained herein. See also “Note Regarding Certain Measures of
(2)Payable production of a mineral means the quantity of mineral produced
during a period contained in products that are sold by the Company
whether such products are shipped during the period or held as
inventory at the end of the period.
In the first six months of 2012, payable gold production was 520,305
ounces. This compares with the first half of 2011 when payable gold
production was 491,690 ounces. The higher production in 2012 (in spite
of the suspension of Goldex) was largely due to the factors noted
Total cash costs for the second quarter of 2012 were $660 per
ounce. This compares with $565 per ounce in the second quarter of
2011. The higher costs in 2012 were largely attributable to lower
byproduct revenue at LaRonde (35% lower zinc production and 16% lower
realized zinc price) and the absence of production from the relatively
lower cost Goldex mine. These factors more than offset the positive
impact of higher gold production on unit costs.
For the first half of 2012, total cash costs were $628 per ounce. This
compares with $548 per ounce in the first six months of 2011. The
increase in 2012 is due to the factors that impacted the second
quarter, as mentioned above.
Agnico-Eagle is increasing its production guidance for 2012, which was
expected to be between 875,000 to 950,000 ounces of gold, to
approximately 975,000 ounces of gold. Total cash costs per ounce are
expected to be near the lower end of the previously provided range of
$690 to $750.
Second Quarter 2012 Results Conference Call and Webcast Tomorrow
The Company’s senior management will host a conference call on Thursday,
July 26, 2012 at 11:00 AM (E.D.T.) to discuss financial results and
provide an update of the Company’s exploration and development
Via Webcast: A live audio webcast of the meeting will be available on the Company's website homepage at www.agnico-eagle.com. Via Telephone: For those preferring to listen by telephone, please dial 416-644-3414 or Toll-free 800-814-4859. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call. Replay archive: Please dial 416-640-1917 or Toll-free 877-289-8525, access code 4507255#.
The webcast along with presentation slides will be archived for 180 days on the website. The conference call replay will expire on August 26,
Bank Debt Termed Out, Strengthening Financial Position
On July 24, 2012, Agnico-Eagle closed a private placement of an
aggregate of $200 million of guaranteed senior unsecured notes due 2022
and 2024 (the “Notes”) with a weighted average maturity of 11 years and
weighted average yield of 4.95%. Net proceeds from the sale of the
Notes will be used to reduce amounts outstanding under the Company’s
bank lines, thereby providing additional liquidity and strengthening
the Company’s financial position. This reduction is expected to occur
in the third quarter of 2012.
The Notes will not be registered under the Securities Act of 1933 (the
“Securities Act”) as amended, or under any state securities laws, nor
will the Notes be qualified by a prospectus under Canadian securities
laws. Unless so registered or qualified, as the case may be, the Notes
may not be offered or sold in the United States or Canada, except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state
securities laws or the prospectus requirements of Canadian securities
In addition, on July 20, 2012, the Company amended its non-amortizing,
unsecured $1.2 billion revolving credit facility to extend the
scheduled maturity to July 2017. Pricing terms were amended to reflect
improved market conditions.
Cash and cash equivalents totaled $289.1 million at June 30, 2012, up
from the March 31, 2012 balance of $199.1 million, as strong operating
cash flows exceeded capital expenditures and dividend payments.
Capital expenditures in the second quarter of 2012 were $104.4 million,
including $31.2 million at Meadowbank, $27.0 million at Meliadine,
$17.9 million at LaRonde, $14.4 million at Kittila, $9.2 million at
Pinos Altos and $2.3 million at Lapa.
Capital expenditures are expected to total approximately $452 million in
2012, up $34 million from previous guidance. The increase is primarily
due to the development of the M and E zones at Goldex ($24 million) and
other newly approved projects such as the accelerated development of
the Vault pit at Meadowbank into 2012 from 2013 ($9 million).
___________________________________________________________________ |2012 Capex Variance|Project |Cost (millions)| |___________________|_______________________________|_______________| |Meadowbank |Goose, Vault, Central Dyke |$17.0 | |___________________|_______________________________|_______________| |Meliadine |Various |$8.7 | |___________________|_______________________________|_______________| |Lapa |Exploration to Extend Mine Life|$5.2 | |___________________|_______________________________|_______________| |Kittila |Paste Plant, Feasibilty Study |$4.4 | |___________________|_______________________________|_______________| |Deferred Capex |Moved from 2012 to 2013 |($15.3) | |___________________|_______________________________|_______________| |Foreign Exchange |Impact of CAD, Euro |($10.0) | |___________________|_______________________________|_______________| |Goldex |Development of M and E Zones |$24.0 | |___________________|_______________________________|_______________| |Total | |$34.0 | |___________________|_______________________________|_______________|
Agnico-Eagle believes that, over the next five years, total capital
expenditures are likely to be in the neighbourhood of $500 million to
$600 million per year, on average. Expenditures considered in this
estimate include the 25% expansion at Kittila, new mines at La India in
Mexico and Meliadine in Nunavut, and the development of the M and E
zones at Goldex. With its current cash balances, anticipated cash flows
and available bank lines, management believes that the Company remains
fully funded for the development and exploration of its current
pipeline of expansions and new gold projects in Canada, Finland, Mexico
and the USA.
Available bank lines under the credit facility, as of June 30, 2012,
were approximately $970 million.
LaRonde – Transition to Lower Mine Continues to be Challenging
The 100%-owned LaRonde mine in northwestern Quebec, Canada, began
operation in 1988. Current mine life is estimated to be through 2026.
The LaRonde mill processed an average of 6,294 tonnes per day (“tpd”) in
the second quarter of 2012, compared with an average of 6,587 tpd in
the corresponding period of 2011. The lower throughput in the 2012
period was largely due to the transition to the lower mine where
factors such as heat, congestion and the unbudgeted replacement of a
hoist rope negatively impacted the tonnage milled during the second
Minesite costs per tonne(3) were approximately C$97 in the second quarter of 2012. These costs are
higher than the C$84 per tonne experienced in the second quarter of
2011. The increase is largely due to the fourth quarter 2011 transition
into the deeper ore at LaRonde. Approximately two thirds of the ore
milled is now coming from the deeper, relatively higher grade mine.
(3)Minesite costs per tonne is a non-GAAP measure. For reconciliation to
production costs, see footnote (v) to the “Reconciliation of
production costs to Total Cash Costs per Ounce and Minesite Costs per
Tonne” contained herein. See also “Note Regarding Certain Measures of
For the first six months of 2012 the LaRonde mill processed an average
of 6,691 tpd. Minesite costs per tonne were approximately C$93,
slightly higher than the C$90 per tonne estimated for the full year.
On a per ounce basis, net of byproduct credits, LaRonde’s total cash
costs per ounce were $784 in the second quarter of 2012 on production
of 40,206 ounces of gold. This is in contrast with the second quarter
of 2011 when total cash costs per ounce were $231 on production of
27,525 ounces of gold. The increase in total cash costs was mainly due
to lower byproduct revenues (for example, the realized zinc price was
down approximately 16% and zinc production was down 35%, period over
period) and higher unit costs as previously mentioned. This was only
partly offset by the higher ounce production (which was largely due to
the 50% higher gold grades in the 2012 quarter).
In the first six months of 2012, LaRonde produced 83,487 ounces of gold
at total cash costs per ounce of $489. This is in contrast with the
first half of 2011 when the mine produced 64,418 ounces of gold at
total cash costs of $92 per ounce.
Post-2012, LaRonde is expected to ramp up production over the next
several years to an average life of mine production of more than
300,000 ounces of gold per year, reflecting the higher gold grades
expected at depth. As a result of the higher grades, the value of the
ore expected to be processed over LaRonde’s remaining 15-year life is
forecast to be approximately 50% higher than the value of the ore mined
in 2011 (assuming the same metals prices).
Kittila Mine – Increased Production at Lower Costs
The 100%-owned Kittila mine in northern Finland achieved commercial
production in May 2009. Current mine life is estimated to be through
The Kittila mill processed an average of 2,758 tpd in the second quarter
of 2012. In the second quarter of 2011, the Kittila mill processed
2,561 tpd. The mill operated below its design rate of 3,000 tpd in the
2012 period due to a planned maintenance shutdown which lasted for 18
days (maintenance shutdowns totaled 15 days in the second quarter of
Minesite costs per tonne at Kittila were approximately EUR75 in the second
quarter of 2012, compared to EUR79 in the second quarter of 2011. The
decrease in minesite costs was largely the result of successful cost
control measures and the higher throughput, as mentioned above.
For the first six months of 2012, the Kittila mill processed an average
of 2,969 tpd. Minesite costs per tonne were approximately EUR71, tracking
the EUR71 per tonne estimated for the full year.
Second quarter 2012 gold production at Kittila was 35,228 ounces with a
total cash cost per ounce of $681. In the second quarter of 2011 the
mine produced 30,811 ounces at total cash costs per ounce of $850. The
higher production and lower costs were largely the result of improved
throughput, higher mill recovery in the second quarter of 2012.
In the first six months of 2012, Kittila produced 81,986 ounces of gold
at total cash costs per ounce of $615. This is in contrast to the first
half of 2011 when the mine produced 71,128 ounces of gold at total cash
costs of $758 per ounce.
In the second half of 2012, two 10-day maintenance shutdowns are
scheduled for the mill. This follows the 18-day shutdown that occurred
in the second quarter of 2012. Annually, approximately 44 days are
budgeted for maintenance of the autoclave and other parts of the mill.
A study is underway examining the possibility of increasing the
production rate at Kittila by approximately 25%. Capital expenditures
are expected to be less than $100 million. This project is expected to
be reviewed and presented to the Board of Directors in late 2012.
Additionally, considering the drilling success at Kittila on the Rimpi
zone, a larger expansion may be possible in the future. A program is
now underway to accelerate the ramp development and exploration
drilling towards the northern end of the Kittila orebody. Incorporating
this new drilling, a study on a future phased expansion is ongoing.
Lapa – Steady Operating Results
The 100%-owned Lapa mine in northwestern Quebec achieved commercial
production in May 2009. Current mine life is estimated to be through
The Lapa circuit, located at the LaRonde mill, processed an average of
1,741 tpd in the second quarter of 2012. This compares with an average
of 1,763 tpd in the second quarter of 2011 as the Lapa circuit now
consistently exceeds its design rate of 1,500 tpd.
Minesite costs per tonne were C$113 in the second quarter of 2012,
compared to C$102 in the second quarter of 2011. The higher minesite
cost is largely due to higher expenditures for consumables and general
cost pressure in the industry.
For the first six months of 2012 the Lapa mill processed an average of
1,740 tpd. Minesite costs per tonne were approximately C$116, tracking
below the C$124 per tonne estimated for the full year.
Payable production in the second quarter of 2012 was 28,157 ounces of
gold at total cash costs per ounce of $634. This compares with the
second quarter of 2011, when production was 28,552 ounces of gold at
total cash cost per ounce of $599. The increase in cash costs is
largely due to the same factors that impacted the minesite cost per
In the first six months of 2012, Lapa produced 56,656 ounces of gold at
total cash costs per ounce of $650. This compares to the first half of
2011 when the mine produced 55,466 ounces of gold at total cash costs
of $614 per ounce.
Exploration continues to focus east of the orebody. New expenditures of
$5.2 million (largely lateral development and mobile equipment) were
approved with the goal being the extension of the mine’s life past
Pinos Altos – Record Gold Production at Low Cost Generates Record
Quarterly Mine Profit
The 100%-owned Pinos Altos mine in northern Mexico achieved commercial
production in November 2009. Current mine life is estimated to be
The Pinos Altos mill processed an average of 5,036 tpd in the second
quarter of 2012, a quarterly record. This compares favourably with
4,711 tonnes per day in the second quarter of 2011.
Approximately 753,000 tonnes of ore were stacked on the Pinos Altos and
Creston Mascota leach pads during the second quarter of 2012. In the
second quarter of 2011, approximately 686,000 tonnes were stacked on
the leach pads. The increase in tonnes stacked was mainly a result of a
full quarter of operation at Creston Mascota, which achieved commercial
production in March 2011.
Minesite costs per tonne were $30 in the second quarter of 2012,
compared to $28 in the second quarter of 2011. The higher costs in 2012
are largely a result of higher than planned processing costs partly
related to the higher overall milled tonnage.
For the first six months of 2012 the Pinos Altos mill processed an
average of 5,002 tpd. Minesite costs per tonne were approximately $28,
tracking slightly above the $27 per tonne estimated for the full year.
Payable production in the second quarter of 2012 was a record 63,356
ounces of gold at total cash costs per ounce of $358, including the
satellite Creston Mascota operation. This compares with production of
51,066 ounces at a total cash cost of $299 in the second quarter of
2011. The increase in production was largely due to the ramp up from
Creston Mascota and the increase in the total cash costs per ounce was
due to lower byproduct credits from silver combined with a reduction in
In the first six months of 2012, Pinos Altos produced 120,372 ounces of
gold at total cash costs per ounce of $320. This is in contrast to the
first half of 2011 when the mine produced 99,067 ounces of gold at
total cash costs of $306 per ounce.
The Pinos Altos mine has been awarded the prestigious Silver Hard Hat
(Casco de la Plata) award by the Chamber of Mines in Mexico for its
mine safety record in the past year which includes more than one year
of operations without a lost time accident.
La India – The Next New Mine
Infill drilling, permitting, and engineering activities continued at the
La India project in Sonora, Mexico which is expected to be developed as
an open pit heap leach operation. La India is approximately 60
kilometres by air from Pinos Altos.
More detailed project information is expected to be provided in 2012.
Meadowbank – Record Mill Throughput and Gold Production
The 100%-owned Meadowbank mine is located in Nunavut, northern
Canada. Current mine life is estimated to be through 2017.
The Meadowbank mill processed an average of 9,901 tpd in the second
quarter of 2012, a quarterly record. This compares with 7,332 tpd in
the second quarter of 2011. The higher throughput, period over period,
is largely due to the July 2011 commissioning of the permanent
secondary crushing unit.
Minesite costs per tonne were C$90 in the second quarter of 2012.
Minesite costs per tonne were C$81 in the second quarter of 2011. The
higher costs in the 2012 period were in spite of the higher throughput
which was more than offset by stockpile drawdowns (the stockpile is
higher cost) and reduced levels of deferred stripping. Before these
accounting adjustments, the total production expense per tonne was
actually lower in the 2012 period.
For the first six months of 2012, the Meadowbank mill processed an
average of 9,825 tpd. Minesite costs per tonne were approximately C$91,
tracking below the C$97 per tonne estimated for the full year.
Payable production in the second quarter of 2012 was a quarterly record
at 98,403 ounces of gold at total cash costs per ounce of $804. This
compares with payable production in the second quarter of 2011 of
59,376 ounces of gold at total cash costs per ounce of $910. The large
increase in gold production (grade up 21%, period over period, on top
of the higher throughput) was only partly offset by increased minesite
costs in 2012 resulting in lower cash costs.
In the first six months of 2012, Meadowbank produced 177,804 ounces of
gold at total cash costs per ounce of $901. This is in contrast to the
first half of 2011 when the mine produced 121,113 ounces of gold at
total cash costs of $927 per ounce.
Goldex Mine – GEZ Remains Suspended. Based on Preliminary Economic
Assessment, M and E Zones Under Development
Upon startup in 2008 at the 100%-owned Goldex mine in northwestern
Quebec, mining was focused on the Goldex Extension Zone (“GEZ”).
However, ore production was suspended in October 2011 due to
geotechnical concerns with the rock above the mining horizon. All gold
reserves were transferred to the resource category and the property was
written down to salvage value. The operations in the GEZ remain
Since the suspension, work on site has focused on monitoring, assessment
and remediation. Additionally, exploration continued on several other
nearby mineralized zones on the property. A team of independent
consultants and Agnico-Eagle staff performed a thorough review,
including a preliminary economic assessment based only on the indicated
resources, to determine whether future mining operations in these
zones, including the M and E Zones, would be viable. After their
review of the assessment, the Board of Directors has approved these two
zones for development and first gold production (via longhole open
stoping with paste backfill) is expected in early 2014. All necessary
operating permits have been received.
The operations will use the existing infrastructure including the shaft
and mill. Expected approximate life of mine operating metrics, based
on the preliminary economic assessment of the M and E Zones, are set
out in the table below.
_________________________________________________ |Daily Throughput |5,100 tpd | |__________________________________|______________| |Gold Grade |1.5 g/t | |__________________________________|______________| |Mill Recovery |92% | |__________________________________|______________| |Total Gold Production Through 2017|300,000 ounces| |__________________________________|______________| |Minesite Cost |C$41 per tonne| |__________________________________|______________| |Total Cash Costs |$900 per ounce| |__________________________________|______________| |Life of Mine |4 years | |__________________________________|______________| |Exchange Rate |C$1.03 per USD| |__________________________________|______________| |Net Free Cash Flow |$70 million | |__________________________________|______________|
Capital expenditures to commercial production are expected to total
approximately $95 million. The expected after-tax internal rate of
return resulting from the preliminary economic assessment, assuming a
gold price of $1500 per ounce, exceeds Agnico-Eagle’s investment target
rate of 15%.
Additionally, the cash flows from this project will help fund
exploration and possible development of additional mineralized zones
including the D Zone. The D Zone is approximately 150 metres below the
GEZ. Drilling to date has outlined a large and growing mineral
resource as set out in the table below.
Goldex Mineral Resources as of December 31, 2011 Category Gold Tonnes (g/t) (x000) Measured Resources (Underground) GEZ 1.86 12,360 Total Measured Resources 1.86 12,360 Indicated Resources (Underground) GEZ 1.60 7,807 E zone 1.61 4,269 M zone 1.84 4,355 D zone 1.81 3,722 Other zones* 1.86 4,295 Total Indicated Resources 1.72 24,448 Measured and Indicated Resources 1.77 36,808 Inferred Resources (Underground) GEZ 1.80 2,529 E zone 1.28 2,480 M zone 1.29 1,354 D zone 1.57 21,804 Other zones* 1.96 2,914 Total Inferred Resources 1.59 31,081
* “Other zones” includes P, E2, M2, S and South zones
The exploration program on the D Zone is expected to comprise
underground drilling from the ramp with approximately $5 million
remaining to be spent in 2012.
Meliadine – Exploration Success Continues. Permitting and Permanent
Road Construction Underway
In July 2010, Agnico-Eagle completed the acquisition of the Meliadine
project near Rankin Inlet, Nunavut.
Approximately $91 million is expected to be spent on Meliadine
exploration and infrastructure in 2012. The main focus of the
exploration program is conversion drilling in the main deposit which
will be incorporated in an updated feasibility study. Additionally,
construction is underway on a permanent all-season road linking the
project with the community of Rankin Inlet which is approximately 24
The initially planned drill program is expected to be completed by the
end of July. This program focused both on conversion of resources to
reserves, but also on exploration drilling outside of the current
The conversion program has been focusing mainly on Tiriganiaq, F Zone
and Wesmeg deposits, while the exploration drill program has been
focusing on the expansion of Wesmeg, Pump, F zone and Discovery
The Company recently approved a $9.8-million supplementary budget to
extend the drill program by two months. The supplementary drilling is
designed to add new resources in lateral and deep extensions of the
known deposits. The focus will be the newly discovered Normeg zone as
well as extending the Pump, F Zone and Wesmeg deposits. The locations
of selected drill collars and the areas of drilling for the rest of the
season are shown on the geology map below.
Wesmeg Zone Extended
Resource conversion drilling has continued to outline good grades and
thicknesses between surface and 175 metres depth in the central portion
of the Wesmeg zone. Drilling has also extended the Wesmeg zone
westward by more than 300 metres. The Wesmeg zone now extends
approximately 3.6 kilometres east-west. Recent intercepts at Wesmeg
are set out in the table below, and on the Wesmeg/Normeg longitudinal
Significant recent Wesmeg drill results
__________________________________________________________________________ | | | | | Depth |Estimated| Gold | Gold | | Drill | Program | From | To | below | true | grade |grade | | Hole | |(metres)|(metres)|surface | width | (g/t) |(g/t) | | | | | |(metres)|(metres) |(uncut)|(cut)*| |_________|____________|________|________|________|_________|_______|______| |M12-1453 |Conversion | 23.0| 29.0| 18| 6.0| 8.6| 8.3| |_________|____________|________|________|________|_________|_______|______| |M12-1457 |Exploration | 11.8| 22.6| 12| 9.4| 3.1| 3.1| |_________|____________|________|________|________|_________|_______|______| | |Exploration | 12.7| 18.0| 10| 5.0| 5.2| 5.2| |including| | | | | | | | |_________|____________|________|________|________|_________|_______|______| |M12-1469 |Exploration | 42.5| 51.0| 34| 7.9| 4.3| 4.3| |_________|____________|________|________|________|_________|_______|______| | |Exploration | 47.2| 51.0| 35| 3.5| 8.3| 8.3| |including| | | | | | | | |_________|____________|________|________|________|_________|_______|______| |M12-1500 | Conversion | 70.0| 84.0| 55| 13.2| 11.1| 5.4| |_________|____________|________|________|________|_________|_______|______| | | Conversion | 77.0| 84.0| 59| 6.8| 17.8| 6.3| |including| | | | | | | | |_________|____________|________|________|________|_________|_______|______| |M12-1505 | Conversion | 41.7| 50.3| 33| 7.7| 4.0| 4.0| |_________|____________|________|________|________|_________|_______|______| |M12-1524 |Exploration | 123.1| 130.2| 94| 6.8| 3.9| 3.9| |_________|____________|________|________|________|_________|_______|______| |M12-1577 | Conversion | 57.0| 65.7| 43| 8.2| 7.9| 7.9| |_________|____________|________|________|________|_________|_______|______| |M12-1594 | Conversion | 221.2| 229.0| 166| 7.4| 7.6| 6.0| |_________|____________|________|________|________|_________|_______|______| | | Conversion | 221.2| 224.0| 166| 2.6| 16.4| 12.1| |including| | | | | | | | |_________|____________|________|________|________|_________|_______|______|
* Holes at Wesmeg zone use a capping factor of 30.0 g/t gold.
The most recent results indicate potential high-grade gold structures
within the overall mineralized envelope that will be investigated for
underground mining potential beneath the current resource envelope. In
the central portion of the Wesmeg zone, hole M12-1577 had the best
shallow intercept at 7.9 g/t gold over 8.2 metres, at 43 metres depth.
Mineralization at greater depth, outside of the current resource
envelope, was drilled by hole M12-1594 that intersected 6.0 g/t gold
over 7.4 metres including 12.1 g/t gold over 2.6 metres at 166 metres
depth, indicating potential for a narrower high-grade core.
The new westernmost Wesmeg intercepts are approximately 1,400 metres
west of the current resources envelope. Drill hole M12-1469
intersected 4.3 g/t gold over 7.9 metres at 34 metres depth, hole
M12-1524 intersected 3.9 g/t gold over 6.8 metres at 94 metres depth,
and hole M12-1457 intersected 3.1 g/t gold over 9.4 metres at 12 metres
depth including 5.2 g/t gold over 5.0 metres.
New Normeg Zone Growing
The Normeg zone was discovered in 2011 approximately mid-way between the
Tiriganiaq and Wesmeg zones by extending drill hole M11-1314, which was
originally designed for resource conversion in the Tiriganiaq deposit
(previously reported in the Company’s February 15, 2012 exploration
news release). Recent follow-up drilling at Normeg seems to indicate a
gold structure that is plunging eastward from surface to at least 380
metres depth over a distance of 800 metres along plunge. Selected
intercepts are shown in the table below, and on the Wesmeg/Normeg
Significant recent Normeg drill results
___________________________________________________________________________ | | | | | Depth |Estimated| Gold | Gold | |Drill Hole | Program | From | To | below | true | grade |grade | | | |(metres)|(metres)|surface | width | (g/t) |(g/t) | | | | | |(metres)|(metres) |(uncut)|(cut)*| |___________|___________|________|________|________|_________|_______|______| |M11-1314** |Exploration| 480.0| 487.0| 380| 6.8| 5.1| 5.1| |___________|___________|________|________|________|_________|_______|______| |M12-1475 |Exploration| 8.5| 18.0| 10| 8.9| 9.0| 5.9| |___________|___________|________|________|________|_________|_______|______| | including|Exploration| 16.0| 18.0| 12| 1.8| 40.8| 25.9| |___________|___________|________|________|________|_________|_______|______| |M12-1576 |Exploration| 247.0| 256.0| 174| 8.7| 12.0| 5.8| |___________|___________|________|________|________|_________|_______|______| | including|Exploration| 253.0| 256.0| 177| 2.8| 27.4| 11.1| |___________|___________|________|________|________|_________|_______|______| |M12-1605***|Exploration| 46.0| 52.0| 38| 5.3| 9.1| 7.8| |___________|___________|________|________|________|_________|_______|______| | and |Exploration| 71.0| 76.0| 58| 4.4| 13.4| 9.3| |___________|___________|________|________|________|_________|_______|______| |M12-1621 |Exploration| 391.0| 405.0| 338| 13.3| 11.2| 7.6| |___________|___________|________|________|________|_________|_______|______| | including|Exploration| 391.0| 394.0| 334| 2.7| 15.5| 14.0| |___________|___________|________|________|________|_________|_______|______| | including|Exploration| 402.0| 405.0| 343| 2.7| 36.3| 21.2| |___________|___________|________|________|________|_________|_______|______|
* Holes at Normeg zone use a capping factor of 30.0 g/t gold.
** This intersection of hole M11-1314 was previously reported in the
Company’s exploration news releases dated February 15, 2012 and June
***Preliminary results for Hole M12-1605, check assays pending
The intercepts show Normeg to have consistent grade and widths along the
plunge. Hole M12-1605 (preliminary results) yielded two intersections
at 38 and 58 metres depth: the upper one of 7.8 g/t gold over 5.3
metres, and the lower one of 9.3 g/t gold over 4.4 metres. At a depth
of 174 metres, hole M12-1576 intersected 5.8 g/t gold over 8.7
metres. At 338 metres depth, hole M12-1621 intersected 7.6 g/t gold
over 13.3 metres. And, as previously reported, hole M11-1314
intersected 5.1 g/t gold over 6.8 metres at 380 metres depth. The
results so far indicate that the zone could be up to 14 metres thick
and include narrower high-grade intercepts, with potential for
F Zone Extends to West
Conversion drilling in the F Zone to 150 metres depth is almost
completed and is delivering positive results. As well, the regional
exploration program has encountered mineralization approximately 800
metres west of the F Zone resource envelope, suggesting a westward
extension. The 2012 results are expected to lead to an increase in
reserves from the conversion program as well as resources from the
western extension and the deep exploration drilling that is underway
beneath the current resource envelope. Selected intercepts from recent
F Zone and nearby regional drilling are shown in the table below and on
the F Zone longitudinal section.
Significant recent regional exploration and F Zone drill results
_________________________________________________________________________ | | | | | Depth |Estimated| Gold | Gold | | Drill | Program | From | To | below | true | grade |grade | | Hole | |(metres)|(metres)|surface | width | (g/t) |(g/t) | | | | | |(metres)|(metres) |(uncut)|(cut)*| |_________|___________|________|________|________|_________|_______|______| |M12-1506 |Exploration| 80.0| 83.7| 56| 4.2| 7.7| 7.7| |_________|___________|________|________|________|_________|_______|______| |M12-1528 |Exploration| 164.6| 168.7| 140| 4.3| 3.0| 3.0| |_________|___________|________|________|________|_________|_______|______| |M12-1559 | Conversion| 182.0| 188.0| 139| 5.8| 5.3| 5.3| |_________|___________|________|________|________|_________|_______|______| | and | Conversion| 201.5| 211.7| 155| 9.4| 5.3| 5.3| |_________|___________|________|________|________|_________|_______|______| | | Conversion| 206.8| 211.2| 157| 4.2| 7.4| 7.4| |including| | | | | | | | |_________|___________|________|________|________|_________|_______|______| |M12-1565 | Conversion| 163.0| 168.3| 133| 5.0| 15.2| 15.1| |_________|___________|________|________|________|_________|_______|______| |M12-1596 | Conversion| 53.6| 59.6| 46| 5.5| 7.2| 7.2| |_________|___________|________|________|________|_________|_______|______| |M12-1604 | Conversion| 97.1| 107.0| 84| 9.2| 6.0| 6.0| |_________|___________|________|________|________|_________|_______|______| |M12-1629 | Conversion| 85.4| 93.8| 66| 8.3| 6.3| 6.3| |_________|___________|________|________|________|_________|_______|______|
* Holes in regional exploration program use a capping factor of 30.0 g/t
gold. Holes at F zone use a capping factor of 35.0 g/t gold.
The shallow intercepts include hole M12-1596 that yielded 7.2 g/t gold
over 5.5 metres at 46 metres depth. As well, regional exploration hole
M12-1506 intersected 7.7 g/t gold over 4.2 metres at 56 metres depth,
approximately one kilometre northwest of F Zone’s current resources.
Deeper intercepts include hole M12-1565 that cut 5.0 metres grading
15.1 g/t gold at 133 metres depth.
Pump Zone Extended, New Discovery Between the Two Branches of the Zone
Recent drilling at the Pump West and Pump North deposits continue to
deliver high gold grades near surface. Exploration has located gold
mineralization between the two resource areas, confirming the potential
to grow the Pump zone substantially. Both branches of the mineralized
zone are open along strike and at depth. Selected intercepts are set
out in the table below, and on the Pump longitudinal section.
Significant recent Pump zone drill results
__________________________________________________________________________ | | | | | Depth |Estimated| Gold | Gold | | Drill | Program | From | To | below | true | grade |grade | | Hole | |(metres)|(metres)|surface | width | (g/t) |(g/t) | | | | | |(metres)|(metres) |(uncut)|(cut)*| |__________|___________|________|________|________|_________|_______|______| |M12-1429 | Conversion| 39.2| 42.9| 29| 3.7| 15.0| 14.6| |__________|___________|________|________|________|_________|_______|______| |M12-1442 | Conversion| 125.2| 138.0| 94| 12.5| 4.3| 4.3| |__________|___________|________|________|________|_________|_______|______| | | Conversion| 135.0| 138.0| 96| 3.0| 7.6| 7.6| |including | | | | | | | | |__________|___________|________|________|________|_________|_______|______| |M12-1444 | Conversion| 78.8| 83.0| 59| 4.2| 6.3| 6.3| |__________|___________|________|________|________|_________|_______|______| |M12-1452 | Conversion| 40.4| 51.0| 32| 10.2| 4.3| 4.3| |__________|___________|________|________|________|_________|_______|______| | | Conversion| 40.4| 44.0| 30| 3.5| 6.4| 6.4| |including | | | | | | | | |__________|___________|________|________|________|_________|_______|______| |M12-1521**| Conversion| 25.5| 39.0| 23| 12.8| 5.3| 5.3| |__________|___________|________|________|________|_________|_______|______| | | Conversion| 34.0| 39.0| 26| 4.3| 7.9| 7.9| |including | | | | | | | | |__________|___________|________|________|________|_________|_______|______| |M12-1626 |Exploration| 178.5| 181.5| 142| 3.0| 6.5| 6.5| |__________|___________|________|________|________|_________|_______|______| |M12-1639 |Exploration| 231.0| 236.0| 171| 5.0| 8.6| 8.6| |__________|___________|________|________|________|_________|_______|______| | and |Exploration| 251.0| 254.6| 184| 3.6| 8.1| 8.1| |__________|___________|________|________|________|_________|_______|______|
* Holes at Pump deposit use a capping factor of 35.0 g/t gold.
** Preliminary results for Hole M12-1521, check assays pending
In Pump North, hole M12-1521 (preliminary results) cut 12.8 metres grading 5.3 g/t gold including 4.3 metres grading 7.9
g/t gold at 26 metres depth. In Pump West, hole M12-1452 intersected
4.3 g/t gold over 10.2 metres at 32 metres depth. Between the two
branches and outside the current resources envelope, hole M12-1639
yielded 8.6 g/t gold over 5.0 metres at 171 metres depth.
Dividend Record and Payment Dates for the Third Quarter of 2012
________________________ |Record |Payment | |Date |Date | |___________|____________| |September 1|September 15| |___________|____________|
Dividend Reinvestment Program
Please follow the link below for information on the Company’s dividend
Additional details regarding the Company, its financial and operating
history and its ongoing activities are available at
Agnico-Eagle is a long established, Canadian headquartered, gold
producer with operations located in Canada, Finland and Mexico, and
exploration and/or development activities in Canada, Finland, Mexico
and the United States. The Company has full exposure to higher gold
prices consistent with its policy of no forward gold sales and
maintains a corporate strategy based on increasing shareholders
exposure to gold, on a per share basis. It has declared a cash
dividend for 30 consecutive years. www.agnico-eagle.com
AGNICO-EAGLE MINES LIMITED
SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS
(thousands of United States dollars, except where noted, US GAAP basis)
Three months ended Six months ended June 30, June 30, 2012 2011 2012 2011 Gross mine profit (exclusive of amortization shown below) (Note 1) LaRonde $29,342 $46,017 $92,608 $95,000 Goldex - 46,739 - 87,072 Lapa 26,222 27,737 53,899 46,915 Kittila 31,489 18,934 80,538 46,765 Pinos Altos 79,887 52,568 149,022 99,827 Meadowbank 72,715 28,942 121,487 58,859 Total Operating Margin 239,655 220,937 497,554 434,438 Amortization 66,310 59,235 130,863 121,164 Corporate 96,169 56,936 182,005 131,146 Income before income and 77,176 104,766 184,686 182,128 mining taxes Income and mining taxes 33,904 35,941 62,866 68,039 Net income for the period $43,272 $68,825 $121,820 $114,089 Net income per share - basic $0.25 $0.41 $0.71 $0.68 Cash provided by operating $194,082 $162,821 $390,579 $337,587 activities Realized price per sales volume (US$): Gold (per ounce) $1,602 $1,530 $1,642 $1,466 Silver (per ounce) $26.33 $38.50 $30.75 $37.31 Zinc (per tonne) $1,901 $2,257 $2,026 $2,340 Copper (per tonne) $6,455 $8,565 $7,842 $9,377 Payable production: Gold (ounces) LaRonde 40,206 27,525 83,487 64,418 Goldex - 41,998 - 80,498 Lapa 28,157 28,552 56,656 55,466 Kittila 35,228 30,811 81,986 71,128 Pinos Altos 63,356 51,066 120,372 99,067 Meadowbank 98,403 59,376 177,804 121,113 Total gold (ounces) 265,350 239,328 520,305 491,690 Silver (000s ounces) LaRonde 532 736 1,222 1,416 Pinos Altos 537 452 1,044 858 Meadowbank 26 13 44 26 Total silver (000s ounces) 1,095 1,201 2,310 2,300 Zinc (tonnes) 9,558 14,678 22,536 26,619 Copper (tonnes) 1,004 666 2,330 1,483 Payable metal sold: Gold (ounces - LaRonde) 39,886 28,589 83,631 66,048 Gold (ounces - Goldex) - 41,564 - 83,459 Gold (ounces - Lapa) 27,793 29,749 55,690 55,525 Gold (ounces - Kittila) 34,476 29,794 78,703 70,492 Gold (ounces - Pinos Altos) 66,373 48,847 118,518 94,331 Gold (ounces - Meadowbank) 93,299 58,767 167,913 120,695 Total gold (ounces) 261,827 237,310 504,455 490,550 Silver (000s ounces - 482 726 1,200 1,405 LaRonde) Silver (000s ounces - Pinos 525 428 1,018 837 Altos) Silver (000s ounces - 24 14 42 35 Meadowbank) Total silver (ounces) 1,031 1,168 2,260 2,277 Zinc (tonnes) 10,379 16,649 23,411 24,951 Copper (tonnes) 1,085 658 2,378 1,478 Total cash costs per ounce of gold (US$) (Note 2): LaRonde $784 $231 $489 $92 Goldex $0 $385 $0 $407 Lapa $634 $599 $650 $614 Kittila $681 $850 $615 $758 Pinos Altos $358 $299 $320 $306 Meadowbank $804 $910 $901 $927 Weighted average total cash $660 $565 $628 $548 costs per ounce
Gross mine profit is calculated as total revenues from all metals, by
mine, minus total production costs, by mine.
Total cash costs per ounce of gold is calculated net of silver, copper,
zinc and other byproduct credits. The weighted average total cash cost
per ounce is based on commercial production ounces. Total cash costs
per ounce is a non-GAAP measure. See “reconciliation of production
costs to total cash costs per ounce and minesite costs per tonne”
contained herein for details.
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars, US GAAP basis)
As at As at June 30, December 31, 2012 2011 ASSETS Current Cash and cash equivalents $ $ 289,052 221,458 Trade receivables 75,892 75,899 Inventories: Ore stockpiles 26,537 28,155 Concentrates and dore bars 65,211 57,528 Supplies 175,100 182,389 Income taxes recoverable - 371 Available-for-sale 76,525 145,411 securities Other current assets 100,575 110,369 Total current assets 808,892 821,580 Other assets 86,200 88,048 Goodwill 229,279 229,279 Property, plant and mine development 3,943,179 3,895,355 $ $ 5,067,550 5,034,262 LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued $ $ liabilities 215,408 203,547 Environmental remediation 32,953 26,069 liability Interest payable 9,301 9,356 Income taxes payable 43,882 - Capital lease 12,176 11,068 obligations Fair value of derivative financial 4,129 4,404 instruments Total current 317,849 254,444 liabilities Long-term debt 830,000 920,095 Reclamation provision and other 118,072 145,988 liabilities Deferred income and mining tax 527,818 498,572 liabilities SHAREHOLDERS' EQUITY Common shares Authorized - unlimited Issued -171,443,385 (December 31, 3,194,581 3,181,381 2011 - 170,859,604) Stock options 137,879 117,694 Warrants 24,858 24,858 Contributed surplus 15,665 15,166 Deficit (75,505) (129,021) Accumulated other comprehensive loss (23,667) (7,106) 3,273,811 3,202,972 Non-controlling - 12,191 interest Total shareholders' 3,273,811 3,215,163 equity $ $ 5,067,550 5,034,262
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(thousands of United States dollars except share and per share amounts,
US GAAP basis)
Three months ended Six months ended June 30, June 30, 2012 2011 2012 2011 REVENUES Revenues from mining $ $ $ $ operations 459,561 433,691 932,495 845,759 Interest and sundry income (4,344) 757 (3,180) 2,356 (expense) and other Gain (loss) on sale and write-down of (18,312) 420 (18,312) 4,814 available-for-sale securities 436,905 434,868 911,003 852,929 COSTS AND EXPENSES Production 219,906 212,754 434,941 411,321 Exploration and corporate 34,286 17,289 57,394 34,267 development Amortization of property, plant 66,310 59,235 130,863 121,164 and mine development General and 32,015 24,122 65,943 59,274 administrative Provincial capital 4,001 - 4,001 - tax Interest 14,220 13,989 28,667 27,997 expense Foreign currency translation (11,009) 2,713 4,508 16,778 loss (gain) Income before income and mining 77,176 104,766 184,686 182,128 taxes Income and mining 33,904 35,941 62,866 68,039 taxes Net income for the $ $ $ $ period 43,272 68,825 121,820 114,089 Net income per share - $ 0.25 $ 0.41 $ 0.71 $ 0.68 basic Net income per share - $ 0.25 $ 0.40 $ 0.71 $ 0.66 diluted Weighted average number of common shares outstanding (in thousands) Basic 170,985 169,029 170,937 168,949 Diluted 171,279 172,448 171,148 172,632
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of United States dollars, US GAAP basis)
Three months ended Six months ended June 30, June 30, 2012 2011 2012 2011 OPERATING ACTIVITIES Net income for $ 43,272 $ 68,825 $ $ the period 121,820 114,089 Add (deduct) items not affecting cash: Amortization of 66,310 59,235 130,863 121,164 property, plant and mine development Deferred income 15,069 17,035 25,389 25,914 and mining taxes Environmental (6,059) - (12,291) - remediation Loss (gain) on sale of 15,984 (534) 15,089 (6,962) available-for-sale securities and derivative financial instruments Stock-based 7,426 17,135 42,409 58,161 compensation, foreign currency translation and other Changes in non-cash working capital balances: Trade 15,000 6,745 7 48,128 receivables Income taxes (payable) 24,013 550 43,882 (12,507) recoverable Inventories (9,295) (37,667) 2,254 (54,262) Other current (8,955) (9,525) 9,855 (5,059) assets Accounts payable and 41,209 51,727 11,357 48,856 accrued liabilities Interest (9,892) (10,705) (55) 65 payable Cash provided by 194,082 162,821 390,579 337,587 operating activities INVESTING ACTIVITIES Additions to property, (104,368) (114,402) (180,363) (211,251) plant and mine development Acquisitions, 30,732 (2,154) 19,407 2,045 investments and other Cash used in (73,636) (116,556) (160,956) (209,206) investing activities FINANCING ACTIVITIES Dividends (30,283) (23,313) (60,798) (49,133) paid Repayment of capital (2,744) (4,186) (5,856) (7,239) lease obligations Proceeds of 255,000 80,000 255,000 80,000 long-term debt Repayment of (255,000) (80,000) (345,000) (130,000) long-term debt Long-term debt (327) - (327) - financing costs Repurchase of common - - (12,031) (3,723) shares for restricted share unit plan Common shares 4,096 5,319 7,676 15,350 issued Cash used in (29,258) (22,180) (161,336) (94,745) financing activities Effect of exchange rate (1,211) 49 (693) 678 changes on cash and cash equivalents Net increase in cash and 89,977 24,134 67,594 34,314 cash equivalents during the period Cash and cash 199,075 114,825 221,458 104,645 equivalents, beginning of period Cash and cash $ $ $ $ equivalents, end of 289,052 138,959 289,052 138,959 period Supplemental cash flow information: Interest $ 23,887 $ 23,075 $ 27,980 $ 26,304 paid Income and mining $ 1,286 $ 14,537 $ 5,591 $ 49,756 taxes paid
AGNICO-EAGLE MINES LIMITED
RECONCILIATION OF PRODUCTION COSTS TO
TOTAL CASH COSTS PER OUNCE AND MINESITE COSTS PER TONNE
Total Cash Costs per Ounce of Gold Produced (thousands of United States dollars, except where noted) Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Total Production costs per $219,906 $212,754 $434,941 $411,321 Consolidated Statements of Income Attributable to 55,483 54,457 113,663 102,342 LaRonde Attributable to - 16,357 - 34,231 Goldex Attributable to 18,450 17,333 37,107 34,084 Lapa Attributable to 23,515 25,961 49,545 54,461 Kittila Attributable to 40,819 38,085 75,980 68,992 Pinos Altos Attributable to 81,639 60,561 158,646 117,211 Meadowbank Total $219,906 $212,754 $434,941 $411,321 LaRonde Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $55,483 $54,457 $113,663 $102,342 costs Adjustments: Byproduct (23,334) (45,516) (70,852) (98,495) revenues Inventory adjustment and other (42) (1,899) (757) 3,453 adjustments (i) Non-cash reclamation (599) (684) (1,203) (1,384) provision Cash operating $31,508 $6,358 $40,851 $5,916 costs Gold production 40,206 27,525 83,487 64,418 (ounces) Total cash costs $784 $231 $489 $92 (per ounce) (ii) Goldex Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production - 16,357 - $34,231 costs Adjustments: Byproduct - 107 - 194 revenues Inventory adjustment and other - (224) - (1,533) adjustments (i) Non-cash reclamation - (58) - (113) provision Cash operating - $16,182 - $32,779 costs Gold production - 41,998 - 80,498 (ounces) Total cash costs - $385 - $407 (per ounce) (ii) Lapa Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $18,450 $17,333 $37,107 $34,084 costs Adjustments: Byproduct 115 157 176 223 revenues Inventory adjustment and other (685) (366) (702) (208) adjustments (i) Non-cash reclamation (15) (15) 221 (30) provision Cash operating $17,865 $17,109 $36,802 $34,069 costs Gold production 28,157 28,552 56,656 55,466 (ounces) Total cash costs $634 $599 $650 $614 (per ounce) (ii) Kittila Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $23,515 $25,961 $49,545 $54,461 costs Adjustments: Byproduct 134 15 253 92 revenues Inventory adjustment and other 446 2,920 886 2,077 adjustments (i) Non-cash reclamation (99) (55) (256) (105) provision Stripping (capitalized - (2,643) - (2,643) vs expensed) (iii) Cash operating $23,996 $26,198 $50,428 $53,882 costs Gold production 35,228 30,811 81,986 71,128 (ounces) Total cash costs $681 $850 $615 $758 (per ounce) (ii) Pinos Altos (includes Creston Mascota) Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $40,819 $38,085 $75,980 $68,992 costs Adjustments: Byproduct (13,750) (15,986) (30,199) (30,989) revenues Inventory adjustment and other (1,149) 292 605 5,989 adjustments (i) Non-cash reclamation (195) (348) (628) (630) provision Stripping (capitalized (3,017) (6,765) (7,197) (13,090) vs expensed) (iii) Cash operating $22,708 $15,278 $38,561 $30,272 costs Gold production 63,356 51,066 120,372 99,067 (ounces) Total cash costs $358 $299 $320 $306 (per ounce) (ii) Meadowbank Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $81,639 $60,561 $158,646 $117,211 costs Adjustments: Byproduct (484) (395) (1,118) (844) revenues Inventory adjustment and other (186) 260 5,068 2,686 adjustments (i) Non-cash reclamation (395) (427) (789) (839) provision Stripping (capitalized (1,441) (5,950) (1,663) (5,950) vs expensed) (iii) Cash operating $79,133 $54,049 $160,144 $112,264 costs Gold production 98,403 59,376 177,804 121,113 (ounces) Total cash costs $804 $910 $901 $927 (per ounce) (ii) Minesite Cost per Tonne (thousands of United States dollars, except where noted) LaRonde Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $55,483 $54,457 $113,663 $102,342 costs Adjustments: Inventory adjustments 113 (2,055) (12) 2,462 (iv) Non-cash reclamation (599) (684) (1,203) (1,384) provision Minesite $54,997 $51,718 $112,448 $103,420 operating costs Minesite operating costs $55,524 $50,259 $113,254 $100,616 (C$) Tonnes of ore 573 599 1,218 1,184 milled (000s) Minesite cost per tonne (C$) $97 $84 $93 $85 (v) Goldex Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production - $16,357 - $34,231 costs Adjustments: Inventory adjustments - (20) - (1,181) (iv) Non-cash reclamation - (58) - (113) provision Minesite - $16,279 - $32,937 operating costs Minesite operating costs - $15,658 - $31,985 (C$) Tonnes of ore - 769 - 1,484 milled (000s) Minesite cost per tonne (C$) - $20 - $22 (v) Lapa Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $18,450 $17,333 $37,107 $34,084 costs Adjustments: Inventory adjustments (635) (274) (615) 32 (iv) Non-cash reclamation (15) (15) 221 (30) provision Minesite $17,800 $17,044 $36,713 $34,086 operating costs Minesite operating costs $17,968 $16,289 $36,872 $32,929 (C$) Tonnes of ore 159 160 317 302 milled (000s) Minesite cost per tonne (C$) $113 $102 $116 $109 (v) Kittila Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $23,515 $25,961 $49,545 $54,461 costs Adjustments: Inventory adjustments 451 2,920 891 2,077 (iv) Non-cash reclamation (99) (55) (256) (105) provision Stripping (capitalized vs - (2,643) - (2,643) expensed)(iii) Minesite $23,867 $26,183 $50,180 $53,790 operating costs Minesite EUR EUR EUR EUR operating costs 18,729 18,395 38,187 38,105 (EUR) Tonnes of ore 251 233 540 495 milled (000s) Minesite cost per tonne (EUR) EUR 75 EUR 79 EUR 71 EUR 77 (v) Pinos Altos (includes Creston Mascota) Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $40,819 $38,085 $75,980 $68,992 costs Adjustments: Inventory adjustments (1,108) (181) 646 4,883 (iv) Non-cash reclamation (195) (348) (628) (630) provision Stripping (capitalized vs (3,017) (6,765) (7,197) (13,090) expensed)(iii) Minesite $36,499 $30,791 $68,801 $60,155 operating costs Tonnes of ore processed 1,211 1,114 2,445 2,147 (000s) Minesite cost per tonne (US$) $30 $28 $28 $28 (v) Meadowbank Three months Three months Six months Six months ended ended ended ended June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011 Production $81,639 $60,561 $158,646 $117,211 costs Adjustments: Inventory adjustments 51 1,193 5,480 3,965 (iv) Non-cash reclamation (395) (427) (789) (839) provision Stripping (capitalized vs (1,441) (5,950) (1,663) (5,950) expensed)(iii) Minesite $79,854 $55,377 $161,674 $114,387 operating costs Minesite operating costs $80,678 $53,939 $162,408 $112,181 (C$) Tonnes of ore 901 667 1,788 1,296 milled (000s) Minesite cost per tonne (C$) $90 $81 $91 $87 (v)
(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 cost per ounce is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. The Company believes that this generally accepted industry measure is a realistic indication of operating performance and is useful in allowing year over year comparisons. As illustrated in the tables 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) The Company has decided to report total cash costs using the more common industry practice of deferring certain stripping costs that can be attributed to future production. The methodology is in line with the Gold Institute Production Cost Standard. The purpose of adjusting for these stripping costs is to enhance the comparability of cash costs to the majority of the Company's peers within the mining industry. (iv) This inventory adjustment reflects production costs associated with unsold concentrates. (v) 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 tables above, this measure is calculated by adjusting production costs as shown in the Consolidated Statements of Income and Comprehensive Income for inventory, asset retirement provisions and deferred stripping costs, and then dividing by tonnes processed through the mill. Since total cash costs data can be affected by fluctuations in byproduct metal prices and exchange rates, management believes minesite costs per tonne provides additional information regarding the performance of mining operations and allows management to monitor operating costs on a more consistent basis as the per tonne measure eliminates the cost variability associated with varying production levels. Management also uses this measure to determine the economic viability of mining blocks. As each mining block is evaluated based on the net realizable value of each tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware that this per tonne measure is impacted by fluctuations in production levels and thus uses this evaluation tool in conjunction with production costs prepared in accordance with US GAAP. This measure supplements production cost information prepared in accordance with US GAAP and allows investors to distinguish between changes in production costs resulting from changes in production versus changes in operating performance.
Note Regarding Certain Measures of Performance
This press release presents measures including “total cash costs per
ounce” and “minesite costs per tonne” that are not recognized measures
under US GAAP. This data may not be comparable to data presented by
other gold producers. The Company believes that these generally
accepted industry measures are realistic indicators of operating
performance and useful for year-over-year comparisons. However, both of
these non-GAAP measures should be considered together with other data
prepared in accordance with US GAAP. These measures, taken by
themselves, are not necessarily indicative of operating costs or cash
flow measures prepared in accordance with US GAAP. A reconciliation of
the Company’s total cash costs per ounce and minesite costs per tonne
to the most comparable financial measures calculated and presented in
accordance with US GAAP for the Company’s historical results of
operations is set out above.
The information in this news release has been prepared as at July 25,
2012. Certain statements contained in this news 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 and are referred to herein as “forward-looking statements”. When
used in this document, words such as “anticipate”, “expect”,
“estimate”, “forecast”, “planned”, “will”, “likely”, “schedule” and
similar expressions are intended to identify forward-looking
Such statements include without limitation: the Company’s
forward-looking production guidance, including estimated ore grades,
project timelines, drilling programs, drilling results, orebody
configurations, metal production, life of mine estimates, production
estimates, total cash costs per ounce estimates, cash flows, the
estimated timing of scoping and other studies, the methods by which ore
will be extracted or processed, expansion projects and potential
expansion projects, recovery rates, mill throughput, and projected
exploration and capital expenditures, including costs, ability to
obtain permits and other estimates upon which such projections are
based; the Company’s ability to fund its current pipeline of projects;
the impact of maintenance shutdowns at Kittila; the Company’s goal to
build a mine at Meliadine or La India; the Company’s ability to produce
at Goldex; the Company’s ability to increase resources and convert
resources to reserves, and other statements and information regarding
anticipated trends with respect to the Company’s operations, proposed
expansions, exploration and the funding thereof. Such statements
reflect the Company’s views as at the date of this news release and are
subject to certain risks, uncertainties and assumptions.
Forward-looking statements are necessarily based upon a number of
factors and assumptions that, while considered reasonable by
Agnico-Eagle as of the date of such statements, are inherently subject
to significant business, economic and competitive uncertainties and
contingencies. The factors and assumptions of Agnico-Eagle contained in
this news release, which may prove to be incorrect, include, but are
not limited to, the assumptions set forth herein and in management’s
discussion and analysis and the Company’s Annual Report on Form 20-F
for the year ended December 31, 2011 (“Form 20-F”) as well as: that
there are no significant disruptions affecting operations, whether due
to labour disruptions, supply disruptions, damage to equipment, natural
occurrences, equipment failures, accidents, political changes, title
issues or otherwise; that permitting, production and expansion at each
of Agnico-Eagle’s mines and growth projects proceeds on a basis
consistent with current expectations, and that Agnico-Eagle does not
change its plans relating to such projects; that the exchange rate
between the Canadian dollar, European Union euro, Mexican peso and the
United States dollar will be approximately consistent with current
levels or as set out in this news release; that prices for gold,
silver, zinc, copper and lead will be consistent with Agnico-Eagle’s
expectations; that prices for key mining and construction supplies,
including labour costs, remain consistent with Agnico-Eagle’s current
expectations; that Agnico-Eagle’s current estimates of mineral
reserves, mineral resources, mineral grades and metal recovery are
accurate; that there are no material delays in the timing for
completion of ongoing growth projects; that the Company’s current plans
to optimize production are successful; and that there are no material
variations in the current tax and regulatory environment. Many
factors, known and unknown, could cause the actual results to be
materially different from those expressed or implied by such
forward-looking statements. Such risks include, but are not limited to:
the volatility of prices of gold and other metals; uncertainty of
mineral reserves, mineral resources, mineral grades and metal recovery
estimates; uncertainty of future production, capital expenditures, and
other costs; currency fluctuations; financing of additional capital
requirements; cost of exploration and development programs; mining
risks; risks associated with foreign operations; governmental and
environmental regulation; the volatility of the Company’s stock price;
and risks associated with the Company’s byproduct metal derivative
strategies. For a more detailed discussion of such risks and other
factors, see the Form 20-F, as well as the Company’s other filings with
the Canadian Securities Administrators and the U.S. Securities and
Exchange Commission (the “SEC”). The Company does not intend, and does
not assume any obligation, to update these forward-looking statements
and information, except as required by law. Accordingly, readers are
advised not to place undue reliance on forward-looking statements.
Certain of the foregoing statements, primarily related to projects, are
based on preliminary views of the Company with respect to, among other
things, grade, tonnage, processing, recoveries, mining methods, capital
costs, total cash costs, minesite costs, and location of surface
infrastructure. Actual results and final decisions may be materially
different from those currently anticipated.
Notes to Investors Regarding the Use of Resources
Cautionary Note to Investors Concerning Estimates of Measured and
This news release uses the terms “measured resources” and “indicated
resources”. We advise investors that while those terms are recognized
and required by Canadian regulations, the SEC does not recognize them. Investors are cautioned not to assume that any part or all of mineral
deposits in these categories will ever be converted into reserves.
Cautionary Note to Investors Concerning Estimates of Inferred Resources
This press release also uses the term “inferred resources”. We advise
investors that while this term is recognized and required by Canadian
regulations, the SEC does not recognize it. “Inferred resources” have a
great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot be
assumed that all or any part of an inferred mineral resource will ever
be upgraded to a higher category. Under Canadian rules, estimates of
inferred mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred
resource exists, or is economically or legally mineable.
Scientific and Technical Data
Agnico-Eagle Mines Limited is reporting mineral resource and reserve
estimates in accordance with the CIM guidelines for the estimation,
classification and reporting of resources and reserves.
Cautionary Note To U.S. Investors - The SEC permits U.S. mining companies, in their filings with the SEC,
to disclose only those mineral deposits that a company can economically
and legally extract or produce. Agnico-Eagle uses certain terms in this
press release, such as “measured”, “indicated”, and “inferred”, and
“resources” that the SEC guidelines strictly prohibit U.S. registered
companies from including in their filings with the SEC. U.S. investors
are urged to consider closely the disclosure in our Form 20-F, which
may be obtained from us, or from the SEC’s website at:
http://sec.gov/edgar.shtml. A “final” or “bankable” feasibility study
is required to meet the requirements to designate reserves under
Industry Guide 7.
Estimates for all properties 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 the Staff of the SEC has interpreted to mean
historic three-year average prices. The assumptions used for the
mineral reserves and resources estimates reported by the Company on
herein were based on three-year average prices for the period ending
December 31, 2011 of $1,255 per ounce gold, $23.00 per ounce silver,
$0.91 per pound zinc, $3.25 per pound copper, $0.95 per pound lead and
C$/US$, US$/Euro and MXP/US$ exchange rates of 1.05, 1.37 and 12.86,
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 mineral 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 mineral
resource demonstrated by at least a preliminary feasibility study. A
probable mineral reserve is the economically mineable part of an
indicated and, in some circumstances, a measured mineral resource
demonstrated by at least a preliminary feasibility study.
A mineral resource is a concentration or occurrence of natural, solid,
inorganic material, or natural, solid fossilized organic material
including base and precious metals in or on the Earth’s crust in such
form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological evidence and
knowledge. A measured mineral resource is that part of a mineral
resource for which quantity, grade or quality, densities, shape and
physical characteristics 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. The
estimate is based on detailed and reliable exploration, sampling and
testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes
that are spaced closely enough to confirm both geological and grade
continuity. An indicated mineral resource is that part of a mineral
resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and
economic parameters, to support mine planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed
and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for geological
and grade continuity to be reasonably assumed. An inferred mineral
resource is that part of a mineral resource for which quantity and
grade or quality can be estimated on the basis of geological evidence
and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill 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 technical and economic study of
the selected development option for a mineral project that includes
appropriately detailed assessments of realistically assumed mining,
processing, metallurgical, economic, marketing, legal, environmental,
social and governmental considerations together with any other relevant
operational factors and detailed financial analysis, that are necessary
to demonstrate at the time of reporting that extraction is reasonably
justified (economically mineable). The results of the study may
reasonably serve as the basis for a final decision by a proponent or
financial institution to proceed with, or finance, the development of
the project. The confidence level of the study will be higher than that
of a Pre-Feasibility Study.
The mineral reserves presented in this disclosure are separate from and
not a portion of the mineral resources.
Property/Project Qualified Person Qualified Person Date of most name and location responsible for responsible for recent Technical the current Exploration and Report (NI Mineral Resource relationship to 43-101) filed on and Reserve Agnico-Eagle SEDAR Estimate and relationship to Agnico-Eagle LaRonde, Bousquet FranÃ§ois Blanchet FranÃ§ois Blanchet March 23, 2005 & Ellison, Ing., LaRonde Ing., LaRonde Quebec, Canada Division Division Superintendent of Superintendent of geology geology Kittila, Kuotko Daniel Doucet, Daniel Doucet, March 4, 2010 and Kylmakangas, Ing., Corporate Ing., Corporate Finland Director of Director of Reserve Reserve Development Development Pinos Altos, La Pinos Altos: Mine site: Dyane March 25, 2009 India, Mexico. Dyane Duquette, Duquette, P.Geo.; Swanson, Quebec, P.Geo., Regional: Manuel Canada Superintendent of Padilla, geology, Exploration Technical Technical Manager Services Group; for Mexico La India project: Matthew D. Gray, C.P.G., independent consultant; Tarachi project: Gary Giroux, P.Eng., independent consultant Meadowbank, Elzear Belzile, Mine site: Marc February 15, 2012 Nunavut, Canada Ing., Independent Ruel, P.Geo., Consultant Corporate Director of Mine Geology & Grade Control; Regional: Denis Vaillaincourt, P.Geo., Exploration manager for Eastern Canada Goldex, Quebec, Richard Genest, Richard Genest, October 19, 2011 Canada Ing., Goldex Ing., Goldex Division Division Superintendent of Superintendent of geology geology Lapa, Quebec, Normand BÃ©dard, Richard Dubuc, June 8, 2006 Canada P.Geo., Lapa P.Geo., Lapa Division Division Superintendent of Superintendent of geology geology Meliadine, Dyane Duquette, Denis March 8, 2011 Nunavut, Canada P.Geo., Vaillancourt, Superintendent of P.Geo., geology, Exploration Technical manager for Services Group Eastern Canada
The effective date for all of the Company’s mineral resource and reserve
estimates in this press release is December 31, 2011. Additional
information about each of the mineral projects that is required by NI
43-101, sections 3.2 and 3.3 and paragraphs 3.4 (a), (c) and (d) can be
found in the Technical Reports referred to above, which may be found at
www.sedar.com. Other important operating information can be found in
the Company’s Form 20-F.
The contents of this press release have been prepared under the
supervision of, and reviewed by Alain Blackburn P.Eng., Senior
Vice-President Exploration and a “Qualified Person” for the purposes of
SOURCE Agnico-Eagle Mines Limited