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Agnico-Eagle continues record operating and financial performance
in third quarter
(All amounts expressed in U.S. dollars unless otherwise noted)
TORONTO, Oct. 27 /PRNewswire-FirstCall/ -- Agnico-Eagle Mines Limited today
announced continued strong financial and operating results as it reported third
quarter earnings of $10.6 million, or $0.12 per share compared to a net loss of
$11.9 million, or $(0.14) per share, in the third quarter of 2003. Operating
cash flow in the quarter was $18.9 million, or $0.22 per share compared to a
cash deficit of $6.6 million, or $(0.08) per share, in the prior year's third
quarter. For the year to date, net earnings were $32.3 million, or $0.38 per
share, compared to a net loss of $21.9 million, or $(0.26) per share, in the
first nine months of 2003. Over the same periods, operating cash flow increased
to $56.8 million, or $0.67 per share, a substantial improvement from the cash
deficit of $6.5 million, or $(0.08) per share in the first nine months of 2003.
Highlights for the quarter include:
- Second consecutive quarter of ore production exceeding 8,000 tons per
day drives gold production up 31%, compared to the prior year's third
quarter, to over 67,000 ounces and cash costs down 79% to match a
previous record of $77 per ounce.
- Drill intercepts from LaRonde's Level 215 exploration drift continue
to confirm richer polymetallic zone at depth as it crosses the former
Bousquet boundary.
- Underground program well underway at Lapa with shaft collar completed
as drilling continues to trace deposit at depth.
- Underground program at Goldex deposit enters bulk sample extraction
and drilling phase.
"Steady-state operations at the LaRonde mine have allowed the Company to
deliver record earnings and cash flows to date in 2004," said Sean Boyd,
President and Chief Executive Officer. "Solid progress continues to be made on
our regional growth opportunities as we advance our three main projects to
feasibility," added Mr. Boyd.
Conference Call Tomorrow
The Company's senior management will host a conference call on Thursday,
October 28, 2004 at 11:00 a.m. (E.S.T.) to discuss financial results and
provide an update on the Company's exploration and development activities. To
participate in the conference call, please dial (416) 640-4127. To ensure your
participation, please call approximately five minutes prior to the scheduled
start of the call. A live audio webcast of the call will be available on the
Company's website at http://www.agnico-eagle.com/. The conference call will be
replayed from Thursday, October 28, 2004 1:00 p.m. (E.S.T.) to Thursday,
November 4, 2004 11:59 p.m. (E.S.T.). Please dial the toll-free access number
877-289-8525, passcode 21031484 followed by the number sign.
LaRonde Generates Net Free Cash Flow for Company
For the second consecutive quarter, LaRonde processed over 8,000 tons of ore
per day as over 741,000 tons of ore was put through the mill. The surface
stockpile at LaRonde has increased to approximately 84,000 tons of ore,
sufficient for 10 days of production. In addition, 60,000 tons of ore from the
Bousquet stockpile remain on surface representing another seven days of mill
production. As a result of the increased ore production, minesite operating
costs improved by 11% to C$50 per ton, when compared to the third quarter of
2003. Although improved over the prior year, minesite operating costs per ton
in the third quarter were above target due to non-recurring repairs to the
coarse ore bin and filter press in the mill and to the Level 122 underground
pumping station. Operating costs and gold production in the lower level mining
horizon were also negatively affected by unscheduled repairs of the ventilation
and hoisting systems and higher than budgeted dilution, predominantly from
backfill from adjacent primary stopes mined in 2003. However, as byproduct
production exceeded expectations, net metals revenue per ton amounted to nearly
C$88 resulting in a gross profit margin of approximately C$38 per ton mined and
processed in the third quarter.
Production of all metals in the third quarter improved when compared to the
prior year's third quarter with gold production up 31% to 67,237 ounces while
byproduct silver, zinc and copper production increased by 132%, 135% and 7%,
respectively. As a result of the improvement in metals production, improved
prices for all byproduct metals and the elimination of production royalties,
total cash operating costs decreased by 79% to $77 per ounce of gold produced
in the third quarter of 2004 as compared to the third quarter of 2003.
These strong operating results contributed to robust operating cash flows and
resulted in net free cash flow to the Company of $9.5 million, before financing
activities and expenditures on new projects and investments. As a result of
this performance, the Company's cash balance improved to $120.3 million in the
third quarter as investments in new projects and marketable securities of $6.9
million was more than offset by the issuance of common equity of $18.5 million.
Cash Costs Expected to be Well Below Target for 2004
Taking into consideration year to date performance, the Company's latest
targets for all metals production as compared to the previous forecast for
production and operating costs follows:
-------------------------------------------------------------------------
New Forecast Previous Forecast
-------------------------------------------------------------------------
Ore processed (000's tons) 2,963 2,900
Daily throughput rate (tons) 8,096 7,945
Grades:
Gold (oz./t) 0.11 0.11
Silver (oz./t) 2.36 2.43
Zinc (%) 3.95 3.87
Copper (%) 0.53 0.54
Payable metal production:
Gold (ozs.) 280,000 293,000
Silver (000's ozs.) 5,600 5,500
Zinc (000's lbs.) 162,000 155,000
Copper (000's lbs.) 22,600 23,200
Minesite operating costs (C$/ton) 46-48 45-47
Total cash operating costs ($/oz.) 75-80 70-80
-------------------------------------------------------------------------
LaRonde's total cash operating costs are expected to remain essentially on
target in a range of $75 to $80 per ounce, as lower gold production is offset
by higher byproduct production and metal prices. The target for total cash
operating costs is based on a balance of year silver price of $5.75 per ounce,
zinc price of $0.45 per pound, copper price of $1.20 per pound and C$/US$
exchange rate of 1.30. Given that the year is three quarters complete, the
sensitivity to changes in metal prices and exchange rates is not expected to be
material.
Please refer to the Summary Management Discussion and Analysis later in this
press release for a discussion of the financial results.
Deep Drilling at LaRonde Points to Richer Polymetallic Zone
Six drills were in operation underground at LaRonde in the third quarter
located in the following target areas:
- Three drills on the LaRonde II exploration program below Level 215.
- Three drills on definition/delineation drilling above the Level 215
mining horizon.
On deep exploration, three drills tested Zone 20 North below the bottom of the
Penna Shaft from the Level 215 exploration drift. Currently, the Level 215
exploration drift is approximately 200 feet west of the former LaRonde/Bousquet
boundary. The most interesting results are summarized below:
-------------------------------------------------------------------------
Gold
True (oz/ton)
Drill Thickness Cut Silver Copper(%) Zinc(%)
Hole (ft) From To (1.5 oz) (oz/ton)
-------------------------------------------------------------------------
3215-95 40.7 3,103.6 3,152.2 0.22 1.60 0.52 6.26
-------------------------------------------------------------------------
uncut 40.7 3,103.6 3,152.2 0.26 1.60 0.52 6.26
-------------------------------------------------------------------------
3215-64B 71.8 2,300.8 2,377.9 0.11 0.61 0.17 0.06
-------------------------------------------------------------------------
including 25.3 2,300.8 2,328.4 0.18 0.33 0.10 0.14
-------------------------------------------------------------------------
The most significant result was obtained in drill hole 3215-95, representing
the third hole to confirm a higher grade polymetallic zone at depth. The
intercept, located at a depth of 9,339 feet and approximately 3,700 feet to the
west of the Penna Shaft, straddled the former Terrex-LaRonde property boundary.
The intersection consisted of 30% to 90% massive pyrite with occurrences of
sphalerite and chalcopyrite hosted by a siliceous matrix. Visible gold was
noted in a quartz vein. The vein graded 2.55 ounces of gold (uncut) over an
interval of 2.1 feet. With the most recent result, the polymetallic zone has
been traced over a length of approximately 1,500 feet and a vertical height of
500 feet.
There are several deep drill holes in progress, and planned for the fourth
quarter, that are specifically targeted for this polymetallic area within Zone
20 North. These drill holes are expected to be completed prior to the new
reserve and resource estimate, planned for release in February 2005 along with
year end results. However, it appears that there has been an increase in the
gold grade and a significant increase in the amount of contained zinc at depth.
This is expected to result in a material improvement in the value per ton of
the ore at depth and the LaRonde II project's economics.
Lapa Underground Program Proceeding Well
At the Company's 100% owned Lapa property, located seven miles east of LaRonde,
site leveling is now complete and the shaft collar is currently 70 feet below
surface. Foundation work on the headframe and the hoist room has also
commenced. The hoist was dismantled at LaRonde's Shaft No. 1 site and is
currently being refurbished for future installation at Lapa.
At the end of the quarter, there were two surface drills on the property, both
of which were testing the depth potential below the main deposit. Drill hole
118-04-57C, testing below the eastern portion of the deposit, intersected 0.21
ounces of gold per ton over 19.7 feet, at a depth of 4,987 feet below surface.
Drill hole 118-04-57E returned a preliminary intersection of 0.20 ounces per
ton gold over 12.5 feet at a depth of 4,560 feet below surface. The detailed
results follow:
------------------------------------------------------------
Drill Hole True Gold(oz/ton)
Thickness(ft) From To Cut(1.5 oz)
------------------------------------------------------------
118-04-57C 19.7 6,189.9 6,210.2 0.21
------------------------------------------------------------
118-04-57E 12.5 5,997.0 6,009.8 0.20
------------------------------------------------------------
These two drill intercepts have successfully traced the mineralization 1,100
feet below the previously defined resource envelope. This may have a positive
impact on the resource estimate due in February 2005.
The Company previously announced a $30 million underground development,
drilling and metallurgical program at Lapa. Lapa contains 1.2 million ounces of
proven and probable gold reserves in a deposit traced to a depth of 4,000 feet
below surface over a strike length of 2,000 feet and a vertical extent of 3,000
feet with thicknesses ranging from 10 to 100 feet. The deposit remains open for
expansion at depth.
The Lapa underground program includes a 2,700-foot shaft sinking project. The
16-foot diameter concrete-lined shaft is expected to be completed by the first
half of 2006 providing access for an underground diamond drilling program to
test the depth potential of the deposit, to confirm the mining method,
continuity and estimated dilution factor and to extract a 15,000 ton
metallurgical bulk sample. The objective of the bulk sample is to refine the
metallurgical process and determine whether the frequency of coarse visible
gold is sufficient to justify an increase in the reserve grade closer to the
uncut grade, which would have a positive impact on the project's economics.
Positive results from this program would result in an extension of the shaft to
a depth of approximately 4,500 feet below surface. Incremental capital costs to
bring the project into full production after the bulk sample are currently
estimated at approximately $80 million. Assuming no further additions to
reserves, the Company envisages an eight-year mine life with steady-state
production levels by late 2008 of approximately 125,000 ounces of gold per
annum at cash operating costs of approximately $175 per ounce.
Goldex Bulk Sample Program on Schedule
At the Company's 100% owned Goldex project, located 35 miles east of LaRonde,
all the level rehabilitation has been completed and underground development and
diamond drilling has commenced. The purpose of the current exploration and
development program is to increase the confidence level in the gold grade of
the deposit. The Goldex deposit is an underground bulk mining opportunity that
has probable gold reserves of 1.65 million ounces in 24.0 million tons grading
0.07 oz/ton.
For that purpose, a total of roughly 2,000 feet of raise development are
planned to be excavated through the centre of the gold mineralization at three
separate locations along the 1,500 feet strike length of the deposit. The
raises will be mapped and sampled as development proceeds over the next three
to four months. To date, 373 feet of raising and development have been
completed and 4,700 tons of ore have been extracted and stockpiled on surface
with an average grade of 0.07 ounces per ton. A 20,000 ton bulk sample is
scheduled to be processed at a local milling facility in January 2005. The mill
tests as well as the information from 21,000 feet of diamond drilling and
detailed mapping will be used to refine the current reserve estimate as well as
complete the final feasibility study by the second quarter of 2005. To date,
6,840 feet of diamond drilling has been completed and the preliminary results
are within the predicted grade range. Overall, work on the project is
proceeding on schedule.
Where to Find Maps
The longitudinal illustrations that detail the drill results presented in this
news release can be viewed and downloaded from the Company's website
http://www.agnico-eagle.com/ (Press Release) or :
Longitudinal 20 North
http://ir.thomsonfn.com/IRUploads/10493/FileUpload/LONG20N.pdf
--------------------------------------------------------------
Property Map
http://ir.thomsonfn.com/IRUploads/10493/FileUpload/Property%20Map.pdf
---------------------------------------------------------------------
Lapa Longitudinal
http://ir.thomsonfn.com/IRUploads/10493/FileUpload/Lapa.pdf
-----------------------------------------------------------
Agnico-Eagle to Renew Shelf Prospectus
The Company intends to renew its short form base shelf prospectus with the
securities commissions in each of the provinces of Canada and shelf
registration statement with the United States Securities and Exchange
Commission. Under this prospectus, Agnico-Eagle may from time to time offer by
way of shelf prospectus supplement debt securities, common shares or warrants
to purchase debt securities or common shares in the aggregate amount of up to
$500,000,000. The Company is required to maintain the shelf registration under
the terms of its November 2002 warrant indenture. Each whole warrant entitles
the holder to purchase one common share at a price of $19 per common share at
any time during the remaining term of the warrant, which expires November 14,
2007. The warrants trade in U.S. dollars on both the Toronto Stock Exchange,
under the symbol AGE.WT.U, and on the Nasdaq National Market, under the symbol
AEMLW. Agnico-Eagle has no present intention to offer securities under the
shelf prospectus other than common shares issuable upon the exercise of the
warrants in the United States.
Scientific and Technical Data
A qualified person, Guy Gosselin, P.Eng., P.Geo., LaRonde Division's Chief
Geologist, has verified the LaRonde exploration information disclosed in this
news release. The verification procedures, the quality assurance program and
quality control procedures used in preparing such data may be found in the 2004
Mineral Resource and Mineral Reserve Report, Agnico-Eagle Mines Limited,
LaRonde Division, dated March 26, 2004, filed on SEDAR.
A qualified person, Carl Pelletier, P.Geo., of Innovexplo Geological Services,
has supervised the preparation of and verified the scientific and technical
information regarding the Goldex project, including sampling, analytical and
test data underlying such information.
A qualified person, Dino Lombardi, P.Geo. has supervised the preparation of and
verified the scientific and technical information regarding the Lapa project as
defined under National Instrument 43-101.
Forward Looking Statements
The information in this press release has been prepared as at October 27, 2004.
Certain statements contained in this press release constitute "forward- looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. When used in this document, the words
"anticipate", "expect", "estimate," "forecast," "planned" and similar
expressions are intended to identify forward-looking statements. Such
statements reflect the Company's views at the time with respect to future
events and are subject to certain risks, uncertainties and assumptions. Many
factors could cause the actual results to be materially different from those
expressed or implied by such forward-looking statements, including, among
others, those which are discussed under the heading "Risk Factors" in the
Company's Annual Information Form and Annual Report on Form 20-F for the year
ended December 31, 2003. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements.
About Agnico-Eagle
Agnico-Eagle is a long established Canadian gold producer with operations
located in northwestern Quebec and exploration and development activities in
eastern Canada and the western United States. Agnico-Eagle's LaRonde Mine in
Quebec is Canada's largest gold deposit. The Company has full exposure to
higher gold prices consistent with its policy of no forward gold sales. It has
paid a cash dividend for 24 consecutive years.
SUMMARY QUARTERLY MANAGEMENT DISCUSSION AND ANALYSIS
UNITED STATES GAAP
(all figures are expressed in US dollars unless otherwise noted)
Results of Operations
Agnico-Eagle reported third quarter net income of $10.6 million, or $0.12 per
share, compared to a net loss of $11.9 million, or $(0.14) per share, in the
third quarter of 2003. Gold production in the third quarter of 2004 was 67,237
ounces, an increase of 31% over 51,192 ounces in the third quarter of 2003. For
the year to date, Agnico-Eagle reported net income of $32.3 million, or $0.38
per share, compared to a net loss of $21.9 million, or $(0.26) per share, in
the first nine months of 2003. Gold production increased 22% in the first nine
months of 2004 to 202,658 ounces from 166,354 ounces in 2003.
As disclosed last quarter, production continued to increase as LaRonde
benefited from operational improvements, a more focused mining plan, and
increased ore throughput. Year to date tonnage processed increased 20% to
2,184,383 tons in the first nine months of 2004 compared to 1,821,585 tons in
the same period in 2003.
The table below summarizes the key variances in net income for the third
quarter and year to date of 2004 from the net loss reported for the same
periods in 2003.
(millions of dollars) Third Quarter Year to Date
-------------------------------------------------------------------------
Increase in gold production $ 6.0 $ 13.1
Elimination of production royalty 3.0 10.1
Increase in gold price 1.9 10.0
Increase in net copper revenue 0.9 8.5
Increase in net zinc revenue 8.1 12.7
Increase in net silver revenue 6.2 13.0
Stronger Canadian dollar, net of hedges (0.1) (2.0)
Increased amortization (1.4) (3.5)
Cost of increased ore throughput (3.1) (9.3)
Corporate costs and other 0.9 1.6
------- -------
Net positive variance $ 22.4 $ 54.2
------- -------
------- -------
As shown in the table above, revenues from all metals benefited from increased
production and increased metal prices in both the third quarter and year to
date. The summarized quarterly data presented later in this MD&A shows the
increases in unit realized prices for all metals for both the third quarter and
year to date. Net copper and zinc revenues benefited from increased production
and metal prices but these benefits were partially offset by increased smelting
and refining charges attributable to the increase in production of these metals
and increasing costs associated with shipping these metals to overseas
smelters. In all, revenues from mining operations increased 93% and 67%
respectively in the third quarter and first nine months of 2004. Net income was
also positively affected by the elimination of the production royalty on an
area of the mine that is essentially mined out.
For the second consecutive quarter, LaRonde processed over 8,000 tons of ore
per day as over 741,000 tons of ore was put through the mill. The surface
stockpile at LaRonde has increased to approximately 84,000 tons of ore,
sufficient for 10 days of production. In addition, 60,000 tons of ore from the
Bousquet stockpile remain on surface representing another seven days of mill
production. As a result of the increased ore production, minesite operating
costs improved by 11% to C$50 per ton, when compared to the third quarter of
2003. Although improved over the prior year, minesite operating costs per ton
in the third quarter were above target due to non-recurring repairs to the
coarse ore bin and filter press in the mill and to the Level 122 underground
pumping station. Operating costs and gold production in the lower level mining
horizon were also negatively affected by unscheduled repairs of the ventilation
and hoisting systems and higher than budgeted dilution, predominantly from
backfill from adjacent primary stopes mined in 2003. However, as byproduct
production exceeded expectations, net metals revenue per ton amounted to nearly
C$88 resulting in a gross profit margin of approximately C$38 per ton mined and
processed in the third quarter.
In the third quarter of 2004 total cash operating costs per ounce decreased
significantly to $77 per ounce of gold produced from $368 per ounce in the
third quarter of 2003. For the year to date 2004, total cash operating costs
decreased to $77 from $287 in the same period of 2003. The main drivers leading
to the decrease in total cash operating costs, for both the quarter and year to
date, were higher gold production, higher net byproduct revenue resulting from
increased production and higher byproduct metal prices, and the elimination of
the production royalty. Operating costs per ton decreased to C$50 in the third
quarter of 2004 compared to C$56 in the third quarter of 2003 due mainly to the
mill processing more tons of ore in the third quarter. Similarly, operating
cost per ton decreased to C$48 in the first nine months of 2004 compared to
C$52 in the first nine months of 2003 due mainly to a 30% increase in mill
throughput and improved underground productivity for the year to date 2004
compared to the same period in 2003.
The following tables provide a reconciliation of the total cash operating costs
per ounce of gold produced and operating cost per ton to the financial
statements:
(thousands of dollars,
except where noted) Q3 2004 Q3 2003 YTD 2004 YTD 2003
-------------------------------------------------------------------------
Cost of production per
Statement of Income
(Loss) $ 26,172 $ 25,909 $ 75,993 $ 74,837
Adjustments:
Byproduct revenues (21,639) (7,150) (59,815) (28,017)
Production royalty - (3,000) - (10,074)
Inventory adjustment (i) 795 132 (103) 1,165
Non-cash reclamation
provision (176) (85) (437) (302)
---------- ---------- ---------- ----------
Cash operating costs $ 5,152 $ 15,806 $ 15,638 $ 37,609
Gold production (ounces) 67,236 51,192 202,657 166,384
---------- ---------- ---------- ----------
Cash operating cost
(per ounce) $ 77 $ 309 $ 77 $ 226
Production royalty
(per ounce) - 59 - 61
---------- ---------- ---------- ----------
Total cash operating
costs (per ounce) (iii) $ 77 $ 368 $ 77 $ 287
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
(thousands of dollars,
except where noted) Q3 2004 Q3 2003 YTD 2004 YTD 2003
-------------------------------------------------------------------------
Cost of production per
Statement of Income
(Loss) $ 26,172 $ 25,909 $ 75,993 $ 74,837
Adjustments:
Production royalty - (3,000) - (10,074)
Inventory adjustment (i)
and hedging
adjustments (ii) 2,127 277 3,338 1,575
Non-cash reclamation
provision (176) (85) (437) (302)
---------- ---------- ---------- ----------
Minesite operating
costs (US$) $ 28,123 $ 23,101 $ 78,894 $ 66,036
---------- ---------- ---------- ----------
Minesite operating
costs (C$) $ 36,834 $ 31,887 $ 104,824 $ 94,234
Tons milled (000's tons) 741 571 2,184 1,822
---------- ---------- ---------- ----------
Operating costs per ton
(C$) (iii) $ 50 $ 56 $ 48 $ 52
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Notes:
(i) Under the Company's revenue recognition policy, revenue is
recognized on concentrates when legal title passes. Since total
cash operating costs are calculated on a production basis, this
adjustment reflects the portion of concentrate production for
which revenue has not been recognized in the period.
(ii) Hedging adjustments reflect gains and losses on the Company's
derivative positions entered into to hedge the effects of foreign
exchange fluctuations on production costs. These items are not
reflective of operating performance and thus have been eliminated
when calculating operating costs per ton.
(iii) Total cash operating cost and operating cost per ton data are not
recognized measures under US GAAP. Management uses these
generally accepted industry measures in evaluating operating
performance and believes them to be realistic indications of such
performance. The data also indicate the Company's ability to
generate cash flow and operating earnings at various gold prices.
This additional information should be considered together with
other data prepared in accordance with US GAAP.
Taking into consideration year to date performance, the Company's latest
targets for all metals production as compared to the previous forecast for
production and operating costs follows:
-------------------------------------------------------------------------
New Forecast Previous Forecast
-------------------------------------------------------------------------
Ore processed (000's tons) 2,963 2,900
Daily throughput rate (tons) 8,096 7,945
Grades:
Gold (oz./t) 0.11 0.11
Silver (oz./t) 2.36 2.43
Zinc (%) 3.95 3.87
Copper (%) 0.53 0.54
Payable metal production:
Gold (ozs.) 280,000 293,000
Silver (000's ozs.) 5,600 5,500
Zinc (000's lbs.) 162,000 155,000
Copper (000's lbs.) 22,600 23,200
Minesite operating costs (C$/ton) 46-48 45-47
Total cash operating costs ($/oz.) 75-80 70-80
-------------------------------------------------------------------------
LaRonde's total cash operating costs are expected to remain essentially on
target in a range of $75 to $80 per ounce, as lower gold production is offset
by higher byproduct production and metal prices. The target for total cash
operating costs is based on a balance of year silver price of $5.75 per ounce,
zinc price of $0.45 per pound, copper price of $1.20 per pound and C$/US$
exchange rate of 1.30. Given that the year is three quarters complete, the
sensitivity to changes in metal prices and exchange rates is not expected to be
material.
Liquidity and Capital Resources
At September 30 2004, Agnico-Eagle's cash and short term investments were
$120.3 million while working capital was $172.3 million. At December 31, 2003,
the Company had $110.4 million in cash and short term investments and $140.6
million in working capital. The Company currently has $125 million in undrawn
credit lines and is currently negotiating a refinancing of its credit facility.
Cash flow from operating activities, before working capital changes, was $18.9
million in the third quarter of 2004 compared to $(6.6) million in the third
quarter of 2003. For the year to date, operating cash flow, before working
capital changes, was $56.8 million compared to $(6.5) million in the first nine
months of 2003. Operating cash flow was positively impacted by higher gold
production and increased gold and byproduct metal prices partially offset by a
stronger Canadian dollar. For the year to date, positive operating cash flow
was partially offset by a buildup in metal settlements receivable and ore
inventories, due to the sharp increase in metals production and revenues.
For the three months ended September 30, 2004, capital expenditures were $11.8
million compared to $7.5 million in the third quarter of 2003. Capital
expenditures at the LaRonde mine decreased to $7.2 million from $8.7 million in
the third quarter of 2003. Although capital expenditures at LaRonde decreased
in the third quarter of 2004, total capital expenditures increased $4.1 million
compared to the third quarter of 2003. This increase is primarily attributable
to project expenditures for Lapa and Goldex and the purchase of gold properties
from Contact Diamond Corporation (an equity investee of Agnico-Eagle). For the
year to date September 30, 2004, capital expenditures were $33.8 million
compared to $29.0 million in the first nine months of 2003. Capital
expenditures at the LaRonde mine decreased to $23.4 million from $29.0 million
in the first nine months of 2003. The capital expenditures in 2004 represent
sustaining capital and the final construction costs for Phase I of LaRonde's
water treatment facility and bulk air cooling plant. The remainder of the
capital expenditures in 2004 represents continued expenditures for the
Company's regional projects, namely Lapa, Goldex and LaRonde II, all of which
have met the requirement for capitalization under US GAAP, and the purchase of
gold properties from Contact Diamond. For the full year, capital expenditures
are now forecast to be $54.9 million compared to the original budget of $31.4
million. The increase is primarily due to the commencement of the underground
programs at Lapa and Goldex.
In the third quarter of 2004, Agnico-Eagle generated net free cash flow (before
financing activities) of $2.5 million. Before investment purchases of $2.4
million and project expenditures of $4.6 million, third quarter net free cash
flow was $9.5 million. In addition, during the third quarter, the Company
realized proceeds of $18.5 million from the issuance of common equity. The
third quarter of 2004 marks the first time the Company has generated net free
cash flow since beginning the expansion at LaRonde, and shows the Company's
ability to fund project expenditures with internally generated funds. The
Company's ability to continue generating net free cash flow is dependent on
continued strength in gold and byproduct metal prices and continued cost
savings generated from economies of scale at LaRonde as the mill processes more
tons of ore.
In the second quarter of 2004, Agnico-Eagle purchased 12.7 million common
shares in Riddarhyttan Resources AB ("Riddarhyttan") from its then largest
shareholder, Swedish private company Dunross & Co. AB. Along with a further 0.8
million shares purchased in the second quarter and transaction costs, total
cash consideration of $11.8 million was paid by Agnico-Eagle. The Company's
ownership in Riddarhyttan currently represents 13.8% of the outstanding shares.
In the third quarter of 2004, cash spent on investments and other assets was
$2.4 million. This represents mostly purchases of available-for-sale
securities. In the first nine months of 2003, cash spent on investments and
other assets included $9.0 million in the second quarter for the purchase of
the Lapa property and $4.2 million in the third quarter for the purchase of the
Bousquet property offset by cash inflows generated from sales of
available-for-sale securities.
Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United
States Dollars Three months ended Nine months ended
except where noted, September 30, September 30,
US GAAP basis) 2004 2003 2004 2003
-------------------------------------------------------------------------
Financial Data
Income and cash
flow
LaRonde Division
Revenues from
mining operations $ 47,986 $ 24,845 $ 142,254 $ 84,971
Mine operating
costs 26,172 25,909 75,993 74,837
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Mine operating
profit (loss) $ 21,814 $ (1,064) $ 66,261 $ 10,134
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income (loss)
for period $ 10,556 $ (11,869) $ 32,270 $ (21,885)
Net income (loss)
per share $ 0.12 $ (0.14) $ 0.38 $ (0.26)
Operating cash
flow (before
non-cash working
capital) $ 18,873 $ (6,580) $ 56,819 $ (6,525)
Weighted average
number of shares
- basic (in
thousands) 84,658 83,954 84,791 83,838
Tons of ore milled 741,483 570,661 2,184,383 1,821,585
Head grades:
Gold (oz. per ton) 0.10 0.10 0.10 0.10
Silver (oz. per
ton) 2.70 1.69 2.49 2.14
Zinc 4.53% 2.71% 4.04% 3.18%
Copper 0.54% 0.62% 0.54% 0.53%
Recovery rates:
Gold 92.09% 91.60% 91.87% 91.26%
Silver 88.10% 79.79% 86.60% 81.43%
Zinc 84.70% 75.00% 84.00% 77.10%
Copper 78.10% 79.90% 78.80% 79.40%
Payable production:
Gold (ounces) 67,237 51,192 202,658 166,354
Silver (ounces
in thousands) 1,501 648 4,187 2,733
Zinc (pounds
in thousands) 48,349 20,561 122,479 75,605
Copper (pounds
in thousands) 5,814 5,411 16,729 14,382
Realized prices
per unit of
production:
Gold (per ounce) $ 409 $ 340 $ 393 $ 349
Silver
(per ounce) $ 6.45 $ 5.00 $ 6.22 $ 4.57
Zinc (per pound) $ 0.44 $ 0.40 $ 0.47 $ 0.35
Copper
(per pound) $ 1.29 $ 0.85 $ 1.26 $ 0.73
Onsite operating
costs per ton
milled (Canadian
dollars) $ 50 $ 56 $ 48 $ 52
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-------------------------------------------------------------------------
Operating costs
per gold ounce
produced:
Onsite operating
costs (including
asset retirement
expenses) $ 440 $ 451 $ 392 $ 396
Less:
Non-cash asset
retirement
expenses (5) (2) (2) (2)
Foreign exchange
and byproduct
metals hedge
gains (24) - (18) -
Net byproduct
revenues (334) (140) (295) (168)
-------------------------------------------------------------------------
Cash operating
costs $ 77 $ 309 $ 77 $ 226
Accrued El Coco
royalties - 59 - 61
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Total cash
operating costs $ 77 $ 368 $ 77 $ 287
Non-cash costs:
Reclamation
provision 2 2 2 2
Amortization 87 87 85 83
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Total operating
costs $ 166 $ 457 $ 164 $ 372
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance Sheet Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, September 30, December 31,
US GAAP basis) 2004 2003
-------------------------------------------------------------------------
(Unaudited)
ASSETS
Current
Cash and short term investments $ 120,342 $ 110,365
Metals awaiting settlement 41,529 34,570
Inventories:
Ore stockpiles 9,394 6,557
In-process concentrates 1,244 1,346
Supplies 6,978 6,276
Income taxes recoverable 11,006 7,539
Prepaid expenses and other 9,585 10,363
-------------------------------------------------------------------------
Total current assets 200,078 177,016
Fair value of derivative financial instruments 3,989 7,573
Investments, loans, advances and other assets 23,846 11,214
Future income and mining tax assets 43,506 41,579
Mining properties 416,104 399,719
-------------------------------------------------------------------------
$ 687,523 $ 637,101
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 26,221 $ 29,915
Dividends payable 777 3,327
Interest payable 809 3,161
-------------------------------------------------------------------------
Total current liabilities 27,807 36,403
-------------------------------------------------------------------------
Long-term debt 143,750 143,750
-------------------------------------------------------------------------
Asset retirement obligation and other
liabilities 15,886 15,377
-------------------------------------------------------------------------
Future income and mining tax liabilities 51,345 40,848
-------------------------------------------------------------------------
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 85,828,481 (2003 - 84,469,804) 618,436 601,305
Warrants 15,732 15,732
Contributed surplus 7,181 7,181
Employee stock options 418 -
Deficit (185,785) (218,055)
Accumulated other comprehensive loss (7,247) (5,440)
-------------------------------------------------------------------------
Total shareholders' equity 448,735 400,723
-------------------------------------------------------------------------
$ 687,523 $ 637,101
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Note: Certain items have been reclassified from financial statements
previously presented to conform to the current presentation.
Statement of Income (Loss) and
Comprehensive Income (Loss) (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United
States Dollars, Three months ended Nine months ended
except per share September 30, September 30,
amounts, US GAAP basis) 2004 2003 2004 2003
-------------------------------------------------------------------------
REVENUES
Revenues from
mining operations $ 47,986 $ 24,845 $ 142,254 $ 84,971
Interest and
sundry income 59 489 422 3,252
-------------------------------------------------------------------------
48,045 25,334 142,676 88,223
COSTS AND EXPENSES
Production 26,172 25,909 75,993 74,837
Exploration and
corporate
development 581 2,199 1,323 4,637
Equity loss in
junior
exploration
companies 517 - 1,415 -
Amortization 5,861 4,471 17,302 13,775
General and
administrative 1,895 1,594 5,706 5,301
Provincial capital
tax (191) 408 1,003 1,182
Interest 1,742 2,236 5,771 6,694
Foreign currency
loss (gain) 38 (17) (341) (41)
-------------------------------------------------------------------------
Income (loss)
before taxes 11,430 (11,466) 34,504 (18,162)
Federal capital tax 253 309 794 898
Income and mining
tax expense 621 94 1,440 1,082
-------------------------------------------------------------------------
Income (loss)
before cumulative
catch-up
adjustment 10,556 (11,869) 32,270 (20,142)
Cumulative
catch-up
adjustment
relating to
SFAS 143 - - - (1,743)
-------------------------------------------------------------------------
Net income (loss)
for the period $ 10,556 $ (11,869) $ 32,270 $ (21,885)
-------------------------------------------------------------------------
Net income (loss)
before cumulative
catch-up
adjustment per
share - basic
and diluted $ 0.12 $ (0.14) $ 0.38 $ (0.24)
Cumulative
catch-up
adjustment
per share - - - (0.02)
-------------------------------------------------------------------------
Net income (loss)
per share - basic
and diluted $ 0.12 $ (0.14) $ 0.38 $ (0.26)
-------------------------------------------------------------------------
Weighted average
number of shares
(in thousands)
basic 84,791 83,954 84,658 83,838
diluted 85,278 83,954 85,145 83,838
-------------------------------------------------------------------------
Comprehensive
income (loss):
Net income (loss)
for the period $ 10,556 $ (11,869) $ 32,270 $ (21,885)
Other
comprehensive
income (loss):
Unrealized gain
(loss) on
hedging
activities 937 (901) (125) 7,099
Dilution gain on
issuance of
shares by
subsidiary,
net of tax 1,837 4,500 1,837 4,500
Unrealized gain
(loss) on
available-for-
sale securities 555 1,649 (613) 1,633
Adjustments for
derivative
instruments
maturing during
the period 657 - (2,274) -
Adjustments for
realized gains on
available-for-
sale securities
due to
dispositions
in the period - - (632) (1,485)
-------------------------------------------------------------------------
Other comprehensive
income (loss) 3,986 5,248 (1,807) 11,747
-------------------------------------------------------------------------
Comprehensive
income (loss)
for the period $ 14,542 $ (6,621) $ 30,463 $ (10,138)
-------------------------------------------------------------------------
Note: Certain items have been reclassified from financial statements
previously presented to conform to the current presentation.
Statement of Deficit and Accumulated
Other Comprehensive Loss (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United
States Dollars, Three months ended Nine months ended
except where noted September 30, September 30,
US GAAP basis) 2004 2003 2004 2003
-------------------------------------------------------------------------
Deficit
Balance, beginning
of period $ (196,341) $ (206,039) $ (218,055) $ (196,023)
Net income (loss)
for the period 10,556 (11,869) 32,270 (21,885)
-------------------------------------------------------------------------
Balance, end of
period $ (185,785) $ (217,908) $ (185,785) $ (217,908)
-------------------------------------------------------------------------
Accumulated other
comprehensive loss
Balance, beginning
of period $ (11,233) $ (14,667) $ (5,440) $ (21,166)
Other
comprehensive
income (loss)
for the period 3,986 5,248 (1,807) 11,747
-------------------------------------------------------------------------
Balance, end of
period $ (7,247) $ (9,419) $ (7,247) $ (9,419)
-------------------------------------------------------------------------
Note: Certain items have been reclassified from financial statements
previously presented to conform to the current presentation.
Statement of Cash Flows (Unaudited) Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United Three months ended Nine months ended
States Dollars, September 30, September 30,
US GAAP basis) 2004 2003 2004 2003
-------------------------------------------------------------------------
Operating
activities
Net income (loss)
for the period $ 10,556 $ (11,869) $ 32,270 $ (21,885)
Add (deduct) items
not affecting
cash from
operating
activities:
Amortization 5,861 4,471 17,302 13,775
Provision for
future income
and mining taxes 1,739 187 4,228 2,251
Unrealized (gain)
loss on
derivative
contracts (38) (171) 136 (2,677)
Cumulative
catch-up
adjustment
related to
SFAS 143 - - - 1,743
Amortization of
deferred costs
and other 755 802 2,883 268
-------------------------------------------------------------------------
Cash flow from
operations, before
working capital
changes 18,873 (6,580) 56,819 (6,525)
Change in non-cash
working capital
balances
Metals awaiting
settlement 551 10,375 (6,959) 10,888
Income taxes
recoverable (1,157) (977) (3,467) (1,848)
Inventories (2,366) (908) (3,437) (3,264)
Prepaid expenses
and other (1,598) (2,802) 778 (1,109)
Accounts payable
and accrued
liabilities 3,997 3,289 (3,579) 1,971
Interest payable (1,617) (1,636) (2,352) (1,563)
-------------------------------------------------------------------------
Cash flows from
(used in) operating
activities 16,683 761 37,803 (1,450)
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Investing activities
Additions to mining
properties (11,780) (7,468) (33,777) (28,976)
Investments and
other (2,404) (4,192) (13,281) (12,079)
-------------------------------------------------------------------------
Cash flows used in
investing
activities (14,184) (11,660) (47,058) (41,055)
-------------------------------------------------------------------------
Financing activities
Dividends paid - - (2,480) (2,431)
Common shares
issued 18,540 4,640 21,504 6,960
-------------------------------------------------------------------------
Cash flows provided
by financing
activities 18,540 4,640 19,024 4,529
-------------------------------------------------------------------------
Effect of exchange
rate changes on
cash and cash
equivalents 46 54 208 (85)
Net decrease in
cash and cash
equivalents 21,085 (6,205) 9,977 (38,061)
Cash and short term
investments,
beginning of period 99,257 121,078 110,365 152,934
-------------------------------------------------------------------------
Cash and short term
investments, end
of period $ 120,342 $ 114,873 $ 120,342 $ 114,873
-------------------------------------------------------------------------
Other operating
cash flow
information:
Interest paid
during the period $ 3,023 $ 3,477 $ 6,489 $ 7,401
-------------------------------------------------------------------------
Capital taxes paid
during the period $ (271) $ 1,065 $ 2,259 $ 2,234
-------------------------------------------------------------------------
Note: Certain items have been reclassified from financial statements
previously presented to conform to the current presentation.
DATASOURCE: Agnico-Eagle Mines Limited
CONTACT: Barry Landen, V.P. Corporate Affairs, Agnico-Eagle Mines
Limited, (416) 947-1212