(All amounts expressed in U.S. dollars unless otherwise noted. Prepared according to U.S. GAAP) Stock Symbols: AEM (NYSE) AGE (TSX)
TORONTO, May 5, 2005 /PRNewswire-FirstCall via COMTEX/ -- Agnico-Eagle Mines Limited today announced a continuation of its strong financial and operating results as it reported first quarter earnings of $10.4 million, or $0.12 per share. This compares to net earnings of $12.9 million, or $0.15 per share, in the first quarter of 2004. First quarter earnings in 2005 were negatively affected by non-cash mark-to-market losses on byproduct metal derivative contracts of $3.4 million, or $0.04 per share, and non-cash stock option expenses of $1.2 million, or $0.01 per share. Cash flow from operating activities in the quarter was $28.1 million compared to $6.2 million in the prior year's first quarter. Gold production in the first quarter was 55,310 ounces at low total cash costs per ounce of gold of $67(1). This compares with 70,188 ounces at total cash costs of $78 per ounce in the first quarter of 2004. Gold production for 2005 is expected to be approximately 270,000 ounces.
Highlights for the quarter include:
- LaRonde continued to achieve high production rates with nearly
8,000 tons per day processed.
- The bulk sample was completed at Goldex with better than expected
results of 0.081 oz/ton, an improvement of 10% over the previous bulk
sample program. An internal feasibility study was completed and is
undergoing final independent review, with results expected in
June 2005.
- The Lapa project surface infrastructure is complete and shaft sinking
is underway.
- As previously announced, an exploration and purchase option agreement
was finalized for the Pinos Altos property in Mexico. Two rigs are
currently drilling on site, and underground development allowing
further underground drilling targeting additional resource conversion
is complete. A decision on whether the Company will exercise the
option is expected before the end of 2005.
"Agnico-Eagle's operating and financial performance once again reinforces the quality of our low cost LaRonde operation," said Sean Boyd, President and Chief Executive Officer. "Furthermore, our strong balance sheet and technical expertise places us in an excellent position to move our projects forward and to look at new opportunities. We are steadily moving towards our objective of building a multi-mine production base," added Mr. Boyd.
Annual General Meeting and Webcast / Conference Call Tomorrow
The Company's senior management will host the Annual General Meeting and first quarter Results Presentation on Friday May 6, 2005 at 10:30 a.m. (E.S.T.). Management will also provide an update of the Company's exploration and development activities. To listen on the telephone, please dial (416) 640-4127 or 1 (800) 814-4860 toll free, at least five minutes before the scheduled start of the presentation. Additionally, a live audio webcast of the call will be available on the Company's website at agnico-eagle.com. The presentation will be archived on the website until November 6, 2005.
LaRonde Continues Its Strong Ore Production in First Quarter
LaRonde achieved its targeted tonnage of almost 8,000 tons of ore per day in the first quarter, continuing the strong performance seen during 2004. As a result of the excellent ore production, minesite costs per ton were less than C$48(2). On a per ounce basis, net of byproduct credits, LaRonde's total cash costs remained very low at $67 per ounce. This compares favourably with the results of the first quarter of 2004 when minesite costs per ton were C$48 and total cash costs per ounce were $78.
In spite of the targeted tonnage being achieved by the mine, the quarterly gold production of 55,310 oz was 21% lower than the corresponding period in 2004. This reduction is primarily due to the mining of a greater number of stopes from the upper mine (generally zinc rich) than from the lower levels (generally gold rich). Rehabilitation work was required in some areas of the sill pillar, below 194 Level, which resulted in a delay in extracting six of the higher grade gold stopes. It is expected that many of these previously planned gold rich stopes will still be mined in 2005, and the Company is targeting gold production of approximately 270,000 ounces in 2005. Also contributing to the lower first quarter gold output was an increase in dilution at LaRonde's lower levels, in the western portion of the orebody.
Strong Metals Production and High Metals Prices Yield Solid Earnings and
Cash Flows
In spite of the lower than expected gold production, strong metals prices and byproduct production resulted in strong earnings and operating cash flows. First quarter earnings were $10.4 million, or $0.12 per share compared to net earnings of $12.9 million, or $0.15 per share, in the first quarter of 2004. First quarter 2005 earnings were negatively affected by non-cash mark-to- market losses on byproduct metal derivative contracts of $3.4 million, or $0.04 per share, and non-cash stock option expenses of $1.2 million, or $0.01 per share. Cash flow from operating activities in the quarter was $28.1 million compared to $6.2 million in the prior year's corresponding quarter.
Lower gold production had a negative impact on reported earnings but was offset by higher gold prices and increased revenue associated with byproduct zinc and copper. In addition, a buildup in metals inventory at the end of 2004 had largely reversed in the first quarter of 2005. As a result, sales volumes for gold, silver, and copper exceeded production.
Agnico-Eagle generated net free cash flow (cash flow from operating activities less cash flow used in investing activities) of over $12 million as cash and equivalents grew to over $117 million at March 31, 2005. Additionally, the Company maintains substantially undrawn bank lines of $100 million.
Additional detail is available in the first quarter Management's Discussion and Analysis contained in Agnico-Eagle's regulatory filings.
Goldex Bulk Sample Delivers Positive Results
As previously disclosed, at the Company's 100% owned Goldex project, located 35 miles east of LaRonde, the assaying related to the bulk sample program was completed. Approximately 10% of the samples taken from the diamond drill holes contained visible gold.
An 18,213 ton bulk sample was processed during January and February, returning a grade of 0.081 ounces of gold per ton, nearly 10% higher than the grade of 0.074 ounces of gold per ton returned from the 113,000 ton bulk sample processed in 1996. Mill recoveries exceeded expectations. Based on the results, it would appear that both muck samples and diamond drilling underestimate the grade, while the chip and channel samples were more representative of the deposit's grade.
A new reserve estimate, at December 31, 2004, was completed resulting in probable reserves of 22.1 million tons grading 0.07 ounces of gold per ton for a total of 1.6 million ounces.
The Company is encouraged by the positive results of the bulk sample, the technical simplicity of the project, and its proximity to LaRonde, which will allow for the use of existing infrastructure and other regional synergies. The internal feasibility study is complete and is undergoing final independent review. Results are expected in June 2005.
Lapa Shaft Sinking In Progress
The Company previously announced a $30 million underground development, drilling and metallurgical program at Lapa.
The first phase of the Lapa underground program includes a 2,700-foot shaft sinking project. The 16-foot diameter, concrete-lined, shaft is expected to be completed in the first half of 2006. The shaft will provide access for an underground diamond drilling program to test the depth potential of the deposit, to confirm the mining method and the 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.
Shaft sinking commenced in mid-March. At the end of March the shaft had attained a depth of 137 feet, and is currently at 270 feet.
Positive results from this first phase program would result in an extension of the shaft to a depth of approximately 4,500 feet below surface. Incremental capital costs for phase two, to bring the project into full production are currently estimated at approximately $80 million. Assuming no further additions to reserves and the current reserve grade, 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 below $200 per ounce.
LaRonde Level 236 Ramp Project Definition Drilling
Definition drilling is ongoing from the Level 218 exploration drift. The purpose is to continue the definition of Zone 20 North in the new mining area between Level 215 and Level 236. The more interesting results have been summarized below:
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Gold
True (oz/ton)
Drill Thickness Cut Silver Copper Zinc
Hole (ft) From To (1.5 oz) (oz/ton) (%) (%)
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3218-01 65.6 347.8 413.4 0.16 2.22 1.36 0.34
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3218-05 60.0 366.5 426.5 0.17 0.87 0.88 0.19
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3218-07 49.2 492.1 545.6 0.21 1.15 0.61 0.33
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3218-08 67.9 253.6 321.5 0.21 1.51 1.24 0.27
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3218-10 43.0 451.8 505.6 0.24 0.68 0.27 0.33
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3218-14 62.7 895.7 993.4 0.15 0.26 0.19 0.05
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These most recent results confirmed previously encountered grades and thicknesses in the original deep exploration drill holes. This area is scheduled to be mined over the next three years.
LaRonde II Pre-feasibility Study to be Completed in Third Quarter
Three drills continue to test Zone 20 North below the bottom of the Penna Shaft from the Level 215 exploration drift. The purpose is to continue to convert additional resources into reserves and to define the polymetallic zone to the west. The more interesting results have been summarized below:
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Gold
True (oz/ton)
Drill Thickness Cut Silver Copper Zinc
Hole (ft) From To (1.5 oz) (oz/ton) (%) (%)
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3215-104B 16.4 4,526.2 4,551.8 0.09 0.39 0.29 0.28
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3215-105C 24.6 3,669.2 3,700.4 0.18 0.74 0.34 0.19
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3215-107 10.5 3,033.0 3,047.0 0.17 3.26 0.21 9.49
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The Level 215 exploration drift is currently being completed. It is now over 1,000 feet into the Bousquet property testing the western extension of Zone 20 North.
The above mentioned programs and results are being incorporated into the LaRonde II pre-feasibility study which is expected to be completed in the third quarter of 2005.
Bousquet - Ellison Drilling to be Extended
At the end of the quarter three drills were in operation underground. Two of the most interesting results were located on the Ellison Property, 1,000 to 1,200 feet to the west of the Ellison - Bousquet property boundary. Drill hole D05-2805 intersected the zone at a depth of 6,400 feet below surface approximately 1,050 feet to the west of the boundary intersecting 0.34 ounces of gold over a true thickness of 9.5 feet.
A second drill hole, D04-2803 intersected the zone at a depth of 7,870 feet below surface at approximately 1,200 west of the boundary, returning 0.71 ounces of gold per ton over a true thickness of 9.2 feet.
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Gold
True (oz/ton)
Drill Thickness Cut
Hole (ft) From To (1.5 oz)
-----------------------------------------------
D05-2805 9.5 3,264.4 3,279.2 0.34
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D04-2803 9.2 4,749.0 4,760.5 0.71
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At this early stage, it is difficult to correlate the two values as there is a vertical distance of 1,400 feet and a horizontal distance of 150 feet. However, the alteration appears to increase in intensity at depth. The results are sufficiently positive to add an additional four drill holes and extend the drill program by two months to obtain a better picture of the potential in this area.
Drilling Commences on Pinos Altos
An exploration and purchase option agreement was finalized in March for the Pinos Altos property in Mexico.
Under the terms of its option agreement with Industrias Penoles, SA de CV, Agnico-Eagle is required to invest $2.8 million over the next five months on a 55,000-foot diamond drilling program. The components of the program include open pit exploration and resource to reserve conversion, underground resource to reserve conversion and deep exploration drilling. After the five-month exploration program is completed, Agnico-Eagle will have a two-month period to exercise its option to purchase Penoles' 100% interest in the project. If Agnico-Eagle exercises its option, the purchase price will be approximately $65 million, to be satisfied with $39 million in cash and 1,809,350 shares of Agnico-Eagle.
Two rigs are currently drilling on site, and underground development is complete allowing further underground drilling, targeting additional resource conversion. Two additional drill rigs will be added in the near future to facilitate the rapid advancement of the exploration program.
A decision on whether the Company will exercise its option is expected before the end of 2005.
Tour of LaRonde and Regional Projects is Next Week
The Company is planning a tour of the LaRonde Mine and the Company's regional projects on Tuesday May 10, 2005 and Wednesday, May 11, 2005. Visits to Goldex, Lapa and LaRonde will be conducted on those dates. Institutional investors and analysts should register their interest with Hazel Winchester at (416)847-3717 or hwinchester@agnico-eagle.com.
Forward Looking Statements
The information in this press release has been prepared as at May 5, 2005. Certain statements contained in this press release constitute "forward- looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. When used in this document, the words "anticipate", "expect", "estimate," "forecast," "planned" and similar expressions are intended to identify forward-looking statements.
Such statements include, without limitation: estimates of future mineral production and sales; estimates of future production costs and other expenses; estimates of future capital expenditures and other cash needs; statements as to the projected development of certain ore deposits, including estimates of exploration, development and other capital costs, and estimates of the timing of such development or decisions with respect to such development; estimates of reserves, and statements regarding future exploration results; the anticipated timing of events with respect to the Company's exploration and prospective decision in connection with its Pinos Altos option; the ability of the Company to achieve its objective of building a multi-mine production base; and other statements regarding anticipated trends with respect to the Company's capital resources and results of operations. Such statements reflect the Company's views at the time with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors, known and unknown, could cause the actual results to be materially different from those expressed or implied by such forward-looking statements. Such risks include, but are not limited to: the Company's dependence upon its LaRonde mine for all of its current gold production; uncertainty of mineral reserve, mineral resource, mineral grade and mineral recovery estimates; uncertainty of future production and other costs; gold and other metals price volatility; currency fluctuations; mining risks; and governmental and environmental regulation. For a more detailed discussion of such risks and other factors, see Company's Annual Information Form and Annual Report on Form 20-F for the year ended December 31, 2004, as well as the Company's other filings with the Ontario Securities Commission and the U.S. Securities and Exchange Commission. The Company does not intend, and does not assume any obligation, to update these forward-looking statements.
About Agnico-Eagle
Agnico-Eagle is a long established Canadian gold producer with operations located in northwestern Quebec and exploration and development activities in Canada, the United States, and Mexico. 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 25 consecutive years.
Scientific and Technical Data
A qualified person, Guy Gosselin, Ing., 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 November 15, 2004, filed on SEDAR.
Normand Bedard Geo., the Regional Division's Senior Geologist has verified the Bousquet and Ellison exploration information disclosed in this news release.
The qualified person responsible for the Lapa mineral reserve and mineral resource estimate is Christian D'Amours, Geo., of Service Conseil Geopointcom. In estimating the Lapa resource and reserve, a minimum gold grade cut-off of 0.15 and 0.19 oz/ton, respectively was used to evaluate drill intercepts that have been adjusted to respect a minimum mining width of 9.2 ft. The estimate was derived using a three dimensional block model of the deposit; the grades were interpolated using the inverse distance power squared method.
A qualified person Carl Pelletier, Geo., of Innovexplo Geological Services, supervised the preparation of and verified the scientific and technical information regarding the Goldex project including sampling, analytical and test data underlying the mineral reserve and resource estimate. A qualified person, R. Mohan Srivastava, P.Geo., of Froidevaux, Srivastava & Schofield Consultants, was responsible for the mineral estimate process at Goldex.
(1) Total cash costs per ounce is a non-GAAP measure. For a
reconciliation of this measure to the financial statements, see note
1 following the financial statements
(2) Minesite costs per ton is a non-GAAP measure. For a reconciliation of
this measure to the financial statements, see note 1 following the
financial statements
Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines Limited
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(thousands of United States dollars, Three months ended March 31,
except where noted, US GAAP basis) 2005 2004
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Income and cash flow
LaRonde Division
Revenues from mining operations $ 61,766 $ 48,604
Production costs 30,973 24,141
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Gross profit (exclusive of amortization
shown below) $ 30,793 $ 24,463
Amortization 7,211 5,582
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Gross profit $ 23,582 $ 18,881
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Net income for the period $ 10,449 $ 12,909
Net income per share (basic and fully diluted) $ 0.12 $ 0.15
Cash flow provided by operating activities $ 28,105 $ 6,219
Cash flow used in investing activities $ (15,904) $ (9,381)
Cash flow used in financing activities $ (1,095) $ (1,068)
Weighted average number of common shares
outstanding - basic (in thousands) 86,131 84,525
Tons of ore milled 715,121 689,176
Head grades:
Gold (oz. per ton) 0.09 0.11
Silver (oz. per ton) 2.13 2.30
Zinc 4.13% 3.90%
Copper 0.39% 0.55%
Recovery rates:
Gold 90.56% 92.19%
Silver 83.60% 84.93%
Zinc 77.10% 81.81%
Copper 81.70% 79.94%
Payable metal produced:
Gold (ounces) 55,310 70,188
Silver (ounces in thousands) 1,097 1,128
Zinc (pounds in thousands) 41,141 36,647
Copper (pounds in thousands) 3,989 5,840
Payable metal sold:
Gold (ounces) 70,137 70,470
Silver (ounces in thousands) 1,398 1,128
Zinc (pounds in thousands) 37,454 36,804
Copper (pounds in thousands) 6,216 5,855
Realized prices per unit of production:
Gold (per ounce) $ 430 $ 412
Silver (per ounce) $ 6.85 $ 6.72
Zinc (per pound) $ 0.60 $ 0.47
Copper (per pound) $ 1.47 $ 1.25
Total cash costs (per ounce):
Production costs $ 560 $ 344
Less: Net byproduct revenues (455) (260)
Inventory adjustments (36) (4)
Accretion expense and other (2) (2)
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Total cash costs (per ounce) $ 67 $ 78
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Minesite costs per ton milled
(Canadian dollars) $ 48 $ 48
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Consolidated Balance Sheets Agnico-Eagle Mines Limited
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(thousands of United States dollars, March 31, December 31,
US GAAP basis - Unaudited) 2005 2004
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ASSETS
Current
Cash and cash equivalents $ 117,114 $ 106,014
Metals awaiting settlement 41,689 43,442
Income taxes recoverable 13,154 16,105
Inventories:
Ore stockpiles 10,451 9,036
Concentrates 4,136 9,065
Supplies 8,564 8,292
Other current assets 19,659 19,843
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Total current assets 214,767 211,797
Fair value of derivative financial instruments 2,525 2,689
Other assets 23,818 25,234
Future income and mining tax assets 52,952 51,407
Mining properties 436,402 427,037
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$ 730,464 $ 718,164
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 28,200 $ 28,667
Dividends payable 841 3,399
Interest payable 809 2,426
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Total current liabilities 29,850 34,492
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Fair value of derivative financial instruments 3,439 -
Long-term debt 141,083 141,495
Asset retirement obligations and other
liabilities 14,979 14,815
Future income and mining tax liabilities 58,228 57,136
Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 86,192,939 (2004 - 86,072,779) 622,167 620,704
Stock options 1,988 465
Warrants 15,732 15,732
Contributed surplus 7,181 7,181
Deficit (162,307) (172,756)
Accumulated other comprehensive loss (1,876) (1,100)
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Total shareholders' equity 482,885 470,226
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$ 730,464 $ 718,164
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Consolidated Statements of Income
and Comprehensive Income Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars,
except per share amounts, Three months ended March 31,
US GAAP basis - Unaudited) 2005 2004
-------------------------------------------------------------------------
REVENUES
Revenues from mining operations $ 61,766 $ 48,604
Interest and sundry 648 421
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62,414 49,025
COSTS AND EXPENSES
Production 30,973 24,141
Fair value of derivative financial instruments 3,439 216
Exploration and corporate development 2,763 290
Equity loss in junior exploration companies 1,134 289
Amortization 7,211 5,582
General and administrative 3,749 1,799
Provincial capital tax 599 455
Interest 2,552 1,757
Foreign currency (gain) loss (384) 139
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Income before income, mining and federal
capital taxes 10,378 14,357
Federal capital tax 248 266
Income and mining tax expense (recovery) (319) 1,182
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Net income for the period $ 10,449 $ 12,909
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Net income per share - basic and diluted $ 0.12 $ 0.15
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Weighted average number of shares
(in thousands)
Basic 86,131 84,525
Diluted 86,545 85,051
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Comprehensive income:
Net income for the period $ 10,449 $ 12,909
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Other comprehensive loss, net of tax:
Unrealized gain on hedging activities 93 185
Unrealized loss on available-for-sale
securities (154) (442)
Cumulative translation adjustment on equity
investee (696) -
Adjustments for derivative instruments
maturing during the period (19) (784)
Adjustments for realized gains on
available-for-sale securities due to
dispositions in the period - (508)
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Other comprehensive loss for the period (776) (1,549)
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Comprehensive income for the period $ 9,673 $ 11,360
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Consolidated Statement of
Shareholders' Equity Agnico-Eagle Mines Limited
-------------------------------------------------------------------------
(thousands of United States dollars, Three months ended March 31,
US GAAP basis - Unaudited) 2005 2004
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Deficit
Balance, beginning of period $ (172,756) $ (218,055)
Net income for the period 10,449 12,909
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Balance, end of period $ 162,307) $ (205,146)
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Accumulated other comprehensive loss
Balance, beginning of period $ (1,100) $ (5,440)
Other comprehensive loss for the period (776) (1,549)
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Balance, end of period $ (1,876) $ (6,989)
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Consolidated Statements of Cash Flows Agnico-Eagle Mines Limited
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(thousands of United States dollars, Three months ended March 31,
US GAAP basis - Unaudited) 2005 2004
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Operating activities
Net income for the period $ 10,449 $ 12,909
Add (deduct) items not affecting cash from
operating activities:
Amortization 7,211 5,582
Future income and mining taxes (recoveries) (319) 1,957
Unrealized loss on derivative contracts 3,439 216
Amortization of deferred costs and other 2,681 158
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23,461 20,822
Change in non-cash working capital balances
Metals awaiting settlement 1,753 (7,847)
Income taxes recoverable 2,951 (1,116)
Inventories 1,703 (1,671)
Prepaid expenses and other 337 1,700
Accounts payable and accrued liabilities (483) (3,306)
Interest payable (1,617) (2,363)
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Cash flows provided by operating activities 28,105 6,219
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Investing activities
Additions to mining properties (15,182) (10,223)
Increase in investments and other (722) 842
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Cash flows used in investing activities (15,904) (9,381)
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Financing activities
Dividends paid (2,542) (2,480)
Common shares issued 1,447 1,412
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Cash flows used in financing activities (1,095) (1,068)
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Effect of exchange rate changes on cash and
cash equivalents (6) 52
Net increase (decrease) in cash and cash
equivalents during the period 11,100 (4,178)
Cash and cash equivalents, beginning of period 106,014 110,365
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Cash and cash equivalents, end of period $ 117,114 $ 106,187
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Other operating cash flow information:
Interest paid during the period $ 4,012 $ 3,113
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Income, mining and capital taxes paid
(recovered) during the period $ (2,527) $ 1,161
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Note 1
Reconciliation of Total Cash Costs Per Ounce and Total Minesite Costs
Per Ton
Total cash cost is not a recognized measure under US GAAP and this data
may not be comparable to data presented by other gold producers. We
believe that this generally accepted industry measure is a realistic
indication of operating performance and is useful in allowing year over
year comparisons. As illustrated in the table below, this measure is
calculated by adjusting Production Costs as shown in the Statement of
Income and Comprehensive Income for net byproduct revenues, royalties,
inventory adjustments and asset retirement provisions. This measure is
intended to provide investors with information about the cash generating
capabilities of our mining operations. Management uses this measure to
monitor the performance of our mining operations. Since market prices for
gold are quoted on a per ounce basis, using this per ounce measure allows
management to assess the mine's cash generating capabilities at various
gold prices. Management is aware that this per ounce measure of
performance can be impacted by fluctuations in byproduct metal prices and
exchange rates. Management compensates for the limitation inherent with
this measure by using it in conjunction with the minesite cost per ton
measure (discussed below) as well as other data prepared in accordance
with US GAAP. Management also performs sensitivity analyses in order to
quantify the effects of fluctuating metal prices and exchange rates.
Minesite cost per ton is not a recognized measure under US GAAP and this
data may not be comparable to data presented by other gold producers. As
illustrated in the table below, this measure is calculated by adjusting
Production Costs as shown in the Statement of Income and Comprehensive
Income for inventory and hedging adjustments and asset retirement
provisions and then dividing by tons processed through the mill. Since
total cash cost data can be affected by fluctuations in byproduct metal
prices and exchange rates, management believes this measure provides
additional information regarding the performance of mining operations and
allows management to monitor operating costs on a more consistent basis
as the per ton 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 ton mined, in order
to be economically viable the estimated revenue on a per ton basis must
be in excess of the minesite cost per ton. Management is aware that this
per ton measure is impacted by fluctuations in production levels and thus
uses this evaluation tool in conjunction with production costs prepared
in accordance with US GAAP. This measure supplements production cost
information prepared in accordance with US GAAP and allows investors to
distinguish between changes in production costs resulting from changes in
production versus changes in operating performance.
The following tables provide a reconciliation of the total cash operating
costs per ounce of gold produced and operating cost per ton to the
financial statements:
(thousands of dollars, except where noted) Q1 2005 Q1 2004
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Cost of production per Consolidated
Statements of Income $ 30,973 $ 24,141
Adjustments:
Byproduct revenues (25,261) (18,210)
Production royalty -
Inventory adjustment(i) (1,894) (294)
Non-cash reclamation provision (107) (131)
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Cash operating costs $ 3,711 $ 5,506
Gold production (ounces) 55,310 70,188
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Total cash costs (per ounce) $ 67 $ 78
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--------- ---------
(thousands of dollars, except where noted) Q1 2005 Q1 2004
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Cost of production per Consolidated
Statements of Income $ 30,973 $ 24,141
Adjustments:
Inventory adjustment(i) and
hedging adjustments(ii) (3,220) 865
Non-cash reclamation provision (107) (131)
--------- ---------
Minesite operating costs (US$) $ 27,646 $ 24,875
--------- ---------
Minesite operating costs (C$) $ 33,918 $ 32,790
Tons milled (000's tons) 649 689
--------- ---------
Minesite costs per ton (C$)(iii) $ 48 $ 48
--------- ---------
--------- ---------
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 costs 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 indicates the Company's ability to generate cash flow and
operating earnings at various gold prices. This additional
information should be considered together with other data prepared
in accordance with US GAAP.
SOURCE Agnico-Eagle Mines Limited
David Smith, Director, Investor Relations,
(416) 947-1212
http://www.prnewswire.com