Agnico-Eagle reports third quarter 2011 results
(All amounts expressed in U.S. dollars unless otherwise noted)
Stock Symbol: AEM (NYSE and TSX)
TORONTO, Oct. 26, 2011 /CNW/ - Agnico-Eagle Mines Limited ('Agnico-Eagle' or the 'Company') today reported a quarterly net loss of $81.6 million (or a loss of $0.48 per share) for the third quarter of 2011. This result includes the $161.1 million ($0.95 per share) after-tax write off of the Company's Goldex operation (as announced on October 19, 2011), a $32.7 million closure provision ($0.19 per share), stock option expense of $7.7 million ($0.05 per share), and the writedown of available for sale securities of $3.4 million ($0.02 per share), partly offset by a non-cash foreign currency translation gain of $21.4 million, or $0.13 per share. Excluding these items would result in adjusted net income of $101.9 million, or $0.60 per share. In the third quarter of 2010, the Company reported net income of $121.5 million, or $0.73 per share. The lower net income in 2011 was largely due to the suspension and write off of the Company's Goldex operation.
Third quarter 2011 cash provided by operating activities was a record $197.6 million ($213.5 million before changes in non-cash components of working capital), up from cashprovided by operating activities of $156.8 million in the third quarter of 2010 ($170.9 million before changes in non-cash components of working capital).
The higher cash provided by operating activities in 2011 was primarily due to a 39% higher realized gold price and significantly higher byproduct metal revenue when compared to that realized in the third quarter of 2010.
'While the suspension of production at Goldex, one of our lowest cost mines, is extremely disappointing to the Agnico-Eagle team, our strategy remains unchanged and we will continue to focus on improving our business,' said Sean Boyd, Vice-Chairman and Chief Executive Officer. 'Although we had continued operating improvements in the quarter at Kittila and Meadowbank, there is still more work to do, particularly at Meadowbank where realized gold grades are still below plan,' added Mr. Boyd.
Third quarter 2011 highlights include:
-- Record Cash Generation- quarterly cash provided by operating
activities of $198 million, or $1.17 per share
-- Record Nine Month Gold Production- produced 757,668 ounces
-- Record gold production at Low Cost at Pinos Altos- 52,739
ounces at $295 total cash costs per ounce1
-- Goldex Operations Suspended Indefinitely
Payable gold production(2) in the third quarter of 2011 was 265,978 ounces compared to 285,178 ounces in the third quarter of 2010. A description of the production and cost performance for each mine is set out further below.
The lower level of production in the 2011 period was largely due to the processing of lower grades at Meadowbank, LaRonde and Goldex.
Total cash costs for the third quarter of 2011 were $563 per ounce. This compares with $423 per ounce in the third quarter of 2010. The higher cost in 2011 was largely attributable to the 7% lower gold production and also higher total cash costs per ounce at Meadowbank, Kittila, Lapa and Goldex. Each of these mines processed lower grades than in the prior year's period.
For the first nine months of 2011, the Company produced a record 757,668 ounces of gold at total cash costs per ounce of $553. This compares with the first nine months of 2010 when gold production was 731,138 ounces at total cash costs of $445 per ounce. The higher gold production in 2011 is mainly due to a much stronger performance at Pinos Altos (much higher mill throughput following the installation of two more tailings filters, and the start up of the Creston Mascota mine), combined with better mill performance from Kittila and Meadowbank. The higher total cash costs are largely a result of high costs at Meadowbank, Kittila, Lapa and Goldex, as mentioned above.
Mainly due to the suspension of operations at Goldex, Agnico-Eagle now expects production of approximately 1.01 million ounces of gold for the full year 2011 at total cash costs per ounce of approximately $575. This compares with previous guidance of approximately 1.08 million ounces at total cash costs per ounce of $495. The higher total cash cost reflects the loss of the relatively lower cost Goldex mine combined with high costs which continue to be realized at Meadowbank.
Take-Over Bid for Grayd Resource Corporation
On October 19, 2011, Agnico-Eagle and Grayd Resource Corporation ('Grayd') amended the acquisition agreement dated September 19, 2011 and Agnico-Eagle amended the offer (the 'Offer') dated October 13, 2011 made by Agnico-Eagle for all of the outstanding shares of Grayd to increase the maximum amount of cash available under the Offer to approximately C$183 million (from approximately C$92 million). The maximum number of common shares of Agnico-Eagle available for issuance under the Offer is unchanged at approximately 2.7 million (based on the number of Grayd shares outstanding on a fully-diluted basis as at September 19, 2011). A notice of change and variation of the Offer was mailed to shareholders of Grayd on October 21, 2011. The expiry time of the Offer remains unchanged at 5:00 p.m. (Toronto time) on November 18, 2011, unless the Offer is extended or withdrawn.
Third Quarter 2011 Results Conference Call and Webcast Tomorrow
The Company's senior management will host a conference call on Thursday, October 27, 2011 at 11:00 AM (E.D.T.) to discuss financial results and provide an update of the Company's exploration and development activities.
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 416-644-3415 or Toll-free 800-814-4861. 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 4403803#.
The conference call replay will expire on November 27, 2011.
The webcast along with presentation slides will be archived for 180 dayson the website.
Cash Position Remains Strong
Cash and cash equivalents decreased to $116.7 million at September 30, 2011 from the June 30, 2011 balance of $139.0 million as capital expenditures and investing activities exceeded the cash provided by operating activities during the quarter.
Capital expenditures in the third quarter of 2011 were $164.0 million, including $45.0 million at Meliadine, $43.6 million at Meadowbank, $23.3 million at LaRonde, $22.9 million at Kittila, $16.0 million on Goldex, $6.7 million at Pinos Altos and $4.3 million at Lapa.
With its current cash balances, anticipated cash flows and available bank lines, management believes that Agnico-Eagle remains fully funded for the development and exploration of its current pipeline of gold projects in Canada, Finland, Mexico and the USA.
Available bank lines as of September 30, 2011 were approximately $1.12 billion.
LaRonde Mine - Strong Cash Flow Generation Continues
The LaRonde mill processed an average of 6,517 tonnes per day in the third quarter of 2011, compared with an average of 6,872 tpd in the corresponding period of 2010. The lower throughput was largely due to some scheduled maintenance downtime, an unplanned 56 hour shutdown of the concentrate filter press and also due to low ore availability. The low ore availability resulted mainly from the mining of smaller stopes near the higher stress extremities of the orebody.
Minesite costs per tonne(3) were approximately C$88 in the third quarter of 2011. These costs are higher than the C$74 per tonne experienced in the third quarter of 2010. The increase is largely due to the lower throughput in 2011, as discussed above.
On a per ounce basis, net of byproduct credits, LaRonde's total cash costs per ounce were minus $270 in the third quarter of 2011 on payable production of 29,069 ounces of gold. This compares with the third quarter of 2010 when total cash costs per ounce were minus $298 on production of 37,832 ounces of gold. The higher costs and lower gold production in the 2011 period are largely related to the planned mining of lower grade areas for much of the year but also due to higher than expected dilution near the extremities of the orebody (18% lower grade in the 2011 period) and due to the lower third quarter 2011 throughput, as discussed above. Higher grades are scheduled for late in the fourth quarter of 2011 with the first production from the higher grade LaRonde Extension.
Payable production was 93,487 ounces of gold at total cash costs of minus $21 per ounce in the first nine months of 2011. This compares with 124,401 ounces at $69 per ounce in the first nine months of 2010. The lower production is mainly due to the processing of lower grades and throughput in 2011 as discussed above. The lower total cash costs in 2011 are largely the result of the mine focusing on byproduct production and the associated revenues during the year, which reduces the overall total cash cost per ounce for the Company as a whole.
Goldex Mine - Production Suspended Indefinitely on October 19
As discussed in the Company's press release of October 19, 2011, the Goldex mine has been suspended indefinitely due to suspected rock subsidence in the hangingwall above the GEZ orebody. Monitoring, investigation and remediation work will continue with the hope of one day re-opening the mine. However, there is no assurance that this will occur. The Goldex reserves will be reclassified into mineral resources.
The focus of future investigation and remediation work will be in securing the infrastructure in the area, detailed investigation into the mechanisms of the failure and installing further instrumentation for monitoring of the situation.
The Goldex mill processed an average of 8,223 tpd in the third quarter of 2011. During the third quarter of 2010, the plant processed an average of approximately 7,893 tpd.
Minesite costs per tonne at Goldex were approximately C$22 in the third quarter of 2011, essentially unchanged from the C$21 incurred in the third quarter of 2010 as higher throughput helped offset general inflation in the industry.
Payable gold production in the third quarter of 2011 was 40,224 ounces at total cash costs per ounce of $411. This compares to third quarter 2010 gold production of 50,672 ounces at total cash costs per ounce of $288. The decrease in gold production was due to the mining of lower grade material during the 2011 period which also negatively impacted the total cash costs per ounce.
Payable production was 120,722 ounces of gold in the first nine months of 2011 at total cash costs of $408 per ounce. This compares with 141,275 at total cash costs of $325 per ounce in the first nine months of 2010. The lower production and higher costs are mainly due to the processing of lower grades in 2011 as discussed above.
Kittila Mine - Cost Reduction Progressing
The Kittila mill processed an average of 3,196 tpd in the third quarter of 2011. In the third quarter of 2010, the Kittila mill processed 3,067 tpd. The mill is consistently achieving its steady-state design operating rate of 3,000 tpd.
Gold recoveries in the third quarter of 2011 were 83.5%, essentially at the design rate of 83%. This compares with the third quarter of 2010 when the recoveries were approximately 81.1%. This improvement in mill recovery was largely due to improvements in the understanding of the metallurgy and in the operation of the autoclave.
Minesite costs per tonne at Kittila were approximately €66 in the third quarter of 2011, compared to €58 in the third quarter of 2010. The increase in minesite costs was largely due to cost pressure on items such as fuel and electricity costs, material costs underground and high contractor costs. However, the 2011 level is significantly lower than the €79 realized in the second quarter of 2011. Further efforts to reduce the minesite cost per tonne are ongoing.
Third quarter 2011 gold production at Kittila was 37,924 ounces with a total cash cost per ounce of $694. In the third quarter of 2010 the mine produced 40,344 ounces at total cash costs per ounce of $519. The lower gold production was due to the mining of lower grades. The higher costs were largely the result of the cost issues mentioned above. Total cash costs per ounce were also unfavorably impacted by a weaker US dollar (US dollar per Euro of 1.29 in Q3 2010 versus 1.41 in Q3 2011).
The third quarter 2011 total cash cost per ounce of $694 was a significant improvement over the second quarter 2011 level of $850. Further efforts to reduce the total cash cost per ounce are underway.
For the first nine months of 2011, payable gold production was 109,052 at total cash costs per ounce of $736. This compares with 96,484 ounces at total cash costs of $603 in the corresponding period in 2010. The higher gold production in 2011 was not able to fully offset the cost pressure at the mine, resulting in the higher total cash costs. Additionally, the relative strength of the Euro negatively impacted the total cash costs in the first nine months of 2011, as discussed above.
Lapa - Record Quarterly Throughput
The Lapa circuit at the LaRonde mill processed an average of 1,858 tpd, a quarterly record, in the third quarter of 2011. This compares with an average of 1,573 tonnes per day in the third quarter of 2010 as Lapa continues to exceed its design throughput of 1,500 tpd.
Minesite costs per tonne were C$107 in the third quarter of 2011, compared to C$105 in the third quarter of 2010. The lower cost is largely due to the increased throughput.
Payable production in the third quarter of 2011 was 27,881 ounces of gold at total cash costs per ounce of $657. This compares with the third quarter of 2010, when production was 27,688 ounces of gold at total cash costs per ounce of $509. The increase in costs is largely due to a decrease in grade due to higher than planned dilution (difficult ground in the western side of the deposit) which largely offset the positive impact of the higher throughput. Additionally, higher than expected concentrations of antimony and arsenic in the ore reduced mill recoveries below plan.
For the first nine months of 2011, payable gold production was 83,347 at total cash costs per ounce of $629. This compares with 88,168 ounces at total cash costs of $517 in the corresponding period in 2010. The lower gold production in 2011 and the higher total cash costs were largely the result of processing lower grades, as discussed above.
Pinos Altos - Record Gold Production
The Pinos Altos mill processed a record average of 4,959 tpd in the third quarter of 2011. This compares with 3,863 tonnes per day in the third quarter of 2010. The mill is now routinely performing at process rates above the initial design capacity of 4,000 tpd following the installation of two additional tailings filters in the third and fourth quarters of 2010.
Minesite costs per tonne were $27 in the third quarter of 2011, compared to $42 in the third quarter of 2010. These lower costs were largely the result of the higher tonnage mined and milled combined with the higher proportions of heap leach ore being processed due to the onset of operations at Creston Mascota.
Payable production in the third quarter of 2011 was a record 52,739 ounces of gold at total cash costs per ounce of $295, including the satellite Creston Mascota operation. This compares with production of 35,248 ounces at a total cash cost of $558 in the third quarter of 2010. The higher gold production and lower costs are largely due to the ramp up of Creston Mascota and the increased mill throughput.
The first gold production from Creston Mascota occurred during the fourth quarter of 2010. In the third quarter of 2011, payable gold production from this heap leach operation was 11,741 ounces (included in the Pinos Altos total above). Commercial production at Creston Mascota was achieved on March 1, 2011.
For the first nine months of 2011, payable gold production was a record 151,806 at total cash costs per ounce of $302. This compares with 91,141 ounces at total cash costs of $451 for the corresponding period in 2010. The higher gold production and lower costs are largely a result of the increased mill throughput and contributions from Creston Mascota.
The underground mine at Pinos Altos operated at approximately 3,300 tonnes per day during the third quarter of 2011, the first such period with underground mine production in excess of its initial design capacity of approximately 3,000 tpd. Due to this performance, the improved mill capacity and the increased underground ore reserve tonnage at Pinos Altos, the Company is evaluating alternatives with respect to increasing the underground mine capacity either through an additional production ramp or via a production shaft. The study is expected to be completed near the end of 2011.
Meadowbank - Record Mill Throughput, But Dilution and Cost Issues Remain
The Meadowbank mill processed a record average of 9,414 tpd in the third quarter of 2011. This compares with the third quarter of 2010 when the mine processed approximately 6,918 tpd. The increase in throughput was largely due to the commissioning of the permanent secondary crusher in June 2011.
Minesite costs per tonne were C$93 in the third quarter of 2011 as compared to the third quarter of 2010 when minesite costs per tonne were C$102. The lower costs in the 2011 period are largely due to the increase in the mill throughput and increased productivity in the pit. However, the minesite costs remain above budget. Initiatives to reduce these unit costs include improvements in equipment maintenance. Equipment availabilities have improved to approximately 60% towards the target of 80%. The mine is incurring additional costs to catch up on maintenance and winterizing the fleet to minimize the issues experienced last winter.
Payable production in the third quarter of 2011 was 78,141 ounces of gold at total cash costs per ounce of gold of $1033. This compares with payable production of 93,395 ounces at total cash costs of $671 per ounce in the third quarter of 2010. The decrease in gold ounces and increase in cost was largely due to the higher than expected minesite costs per tonne and the mining of 38% lower grades in the 2011 period. The main reason for lower grades was ongoing dilution issues first identified during the second quarter of 2011.However, delays in waste removal also postponed access to higher grade ore.
For the first nine months of 2011, payable gold production was a record 199,254 at total cash costs per ounce of $969. This compares with 189,669 ounces at total cash costs of $664 in the corresponding period in 2010. The higher gold production in 2011 was mainly due to higher mill throughput, but partly offset by the mining of 32% lower grades in 2011. The higher total cash costs were partly due to the low grades, but also due to the high minesite costs, as discussed above.
Dividend Record and Payment Dates for the Remainder of 2011
____________________________
|Record Date |Payment Date |
|_____________|______________|
|December 1 |December 15 |
|_____________|______________|
Dividend Reinvestment Program
Please follow the link below for information on the Company's dividend reinvestment program.
About Agnico-Eagle
Agnico-Eagle is a long established, Canadian headquartered, gold producer with operations located in Canada, Finland and Mexico, and exploration and 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 shareholder's exposure to gold, on a per share basis. It has paid a cash dividend for 29 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,
Unaudited)
Three monthsended Nine monthsended
September 30, September 30,
2011 2010 2011 2010
Gross mine
profit
(exclusive of
amortization
shown below)
(Note 1)
LaRonde $59,081 $48,722 $154,081 $137,723
Goldex 48,974 44,349 136,046 113,408
Lapa 28,286 17,764 75,201 59,241
Kittila 34,751 26,838 81,516 54,933
Pinos Altos 65,777 15,089 165,604 50,346
(Note 2)
Meadowbank 46,478 49,042 105,337 86,392
Total gross 283,347 201,804 717,785 502,043
mine profit
Amortization 67,104 48,145 188,268 122,651
Loss on Goldex 298,183 - 298,183 -
Mine
Corporate 28,644 (9,818) 159,790 66,092
Income before (110,584) 163,477 71,544 313,300
tax
Tax provision (28,970) 42,016 39,069 69,147
Net earnings $(81,614) $121,461 $32,475 $244,153
Net earning $(0.48) $0.73 $0.19 $1.52
per share
Operating cash $197,570 $156,829 $531,434 $392,894
flow
Realized price
per sales
volume (US$):
Gold (per $1,717 $1,235 $1,551 $1,192
ounce)
Silver (per $37.37 $20.53 $37.33 $19.27
ounce)
Zinc (per $2,166 $2,151 $2,267 $2,088
tonne)
Copper (per $8,561 $8,689 $9,105 $7,572
tonne)
Payable
production:
Gold
(ounces)
LaRonde 29,069 37,832 93,487 124,401
Goldex 40,224 50,672 120,722 141,275
Lapa 27,881 27,688 83,347 88,168
Kittila 37,924 40,344 109,052 96,484
Pinos Altos 52,739 35,248 151,806 91,141
(Note 2)
Meadowbank 78,141 93,395 199,254 189,669
Total gold 265,978 285,178 757,668 731,138
(ounces)
Silver (000s
ounces)
LaRonde 968 1,080 2,384 2,815
Pinos Altos 485 290 1,343 760
(Note 2)
Meadowbank 16 18 42 32
Total silver 1,469 1,388 3,769 3,607
(000s
ounces)
Zinc 15,684 14,915 42,303 47,604
(tonnes)
Copper 731 1,181 2,214 3,289
(tonnes)
Payable metal
sold:
Gold (ounces 26,729 36,979 92,777 123,885
- LaRonde)
Gold (ounces 37,380 49,117 120,839 135,290
- Goldex)
Gold (ounces 27,955 25,846 83,480 91,959
- Lapa)
Gold (ounces 36,745 41,655 107,237 100,917
- Kittila)
Gold (ounces 54,297 31,759 148,628 83,358
- Pinos
Altos) (Note
2)
Gold (ounces 74,416 93,495 195,111 170,780
-
Meadowbank)
Total gold 257,522 278,851 748,072 706,189
(ounces)
Silver (000s 901 1,052 2,306 2,711
ounces -
LaRonde)
Silver (000s 475 244 1,312 731
ounces -
Pinos Altos)
(Note 2)
Silver (000s 7 18 42 32
ounces -
Meadowbank)
Total silver 1,383 1,314 3,660 3,474
(ounces)
Zinc 18,032 14,388 42,983 44,354
(tonnes)
Copper 738 1,193 2,216 3,283
(tonnes)
Total cash
costs per
ounce of gold
(Note 3):
LaRonde ($270) ($298) ($21) $69
Goldex $411 $288 $408 $325
Lapa $657 $509 $629 $517
Kittila $694 $519 $736 $603
Pinos Altos $295 $558 $302 $451
Meadowbank $1,033 $671 $969 $664
Weighted $563 $423 $553 $445
average total
cash costs per
ounce
Note 1
Gross mine profit is calculated as total revenues from all metals, by mine, minus total production costs, by mine.
Note 2
The Creston Mascota operation at Pinos Altos achieved commercial production as of March 1, 2011. All payable production ounces are post commercial production as they were sold after March 1, 2011.
Note 3
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. For a reconciliation to production costs, see Note 1 to the financial statements. See also 'Note Regarding Certain Measures of Performance'.
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars, US GAAP basis)
(Unaudited)
As at As at
September30, December 31,
2011 2010
ASSETS
Current
Cash and cash $116,670 $104,645
equivalents
Trade receivables 83,095 112,949
Inventories:
Ore stockpiles 52,277 67,764
Concentrates 77,969 50,332
Supplies 206,096 149,647
Other current 261,427 188,885
assets
Total current 797,534 674,222
assets
Other assets 52,604 61,502
Goodwill 200,064 200,064
Property, plant and 4,493,849 4,564,563
mine development
$5,544,051 $5,500,351
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current
Accounts payable $237,076 $170,967
and accrued
liabilities
Dividends payable 26,929 108,009
Interest payable 19,855 9,743
Income taxes 9,927 14,450
payable
Fair value of 17,308 142
derivative
financial
instruments
Total current 311,095 303,311
liabilities
Long term debt 650,000 650,000
Reclamation 183,120 145,536
provision and other
liabilities
Future income and 677,072 736,054
mining tax
liabilities
Shareholders' equity
Common shares
Authorized —
unlimited
Issued — 3,117,067 3,078,217
169,428,365
(December 31,
2010 —
168,763,496)
Stock options 110,127 78,554
Warrants 24,858 24,858
Contributed surplus 15,164 15,166
Retained earnings 472,740 440,265
Accumulated other (17,192) 28,390
comprehensive income
Total shareholders' 3,722,764 3,665,450
equity
$5,544,051 $5,500,351
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(thousands of United States dollars except share andper share
amounts,USGAAPbasis)
(Unaudited)
Three monthsended Ninemonthsended
September 30, September 30,
2011 2010 2011 2010
REVENUES
Revenues from $520,537 $398,478 $1,366,296 $983,517
mining operations
Interest and (1,724) 66,868 632 74,183
sundry income
Gain (loss) on (3,402) 7,839 1,412 8,185
sale and
write-down of
available-for-sale
securities
515,411 473,185 1,368,340 1,065,885
COSTS AND EXPENSES
Production 237,190 196,674 648,511 481,474
Exploration 9,610 19,491 43,877 39,950
and corporate
development
Amortization 67,104 48,145 188,268 122,651
Loss on Goldex 298,183 - 298,183 -
mine
General and 20,410 19,925 79,684 71,595
administrative
Provincial capital - (6,934) - (6,779)
tax
Interest 14,918 14,722 42,915 34,535
Foreign currency (21,420) 17,685 (4,642) 9,159
(gain) loss
Income (loss) (110,584) 163,477 71,544 313,300
before income,
mining and federal
capital taxes
Income and mining (28,970) 42,016 39,069 69,147
tax (benefit)
expense
Net income (loss) $(81,614) $121,461 $32,475 $244,153
for the period
Net income (loss) $(0.48) $0.73 $0.19 $1.52
per share —
basic
Net income (loss) $(0.47) $0.71 $0.19 $1.49
per share —
diluted
Weighted average
number of shares
outstanding
(in thousands)
Basic 169,238 167,461 169,055 160,353
Diluted 172,654 170,679 172,646 163,342
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASHFLOWS
(thousands of United States dollars, US GAAP basis)
(Unaudited)
Three monthsended Nine monthsended
September 30, September 30,
2011 2010 2011 2010
Operating activities
Net income (loss) $(81,614) $121,461 $32,475 $244,153
for the period
Add (deduct) items
not affecting cash:
Amortization 67,104 48,145 188,268 122,651
Future income and (73,348) 33,176 (47,434) 46,702
mining taxes
(Gain) loss on
sale and
write-down of
available-for-sale
securities
and derivative
financial
instruments 6,062 (5,407) (900) (9,582)
Reversal of MTM - (64,508) - (64,508)
gain - Comaplex
Loss on Goldex 298,183 - 298,183 -
mine
Amortization of (2,862) 38,011 51,576 62,892
deferred costs and
other
Changes in non-cash
working capital
balances
Trade receivables (18,274) (18,459) 29,854 9,757
Income taxes 6,971 (14,443) (5,536) 252
payable
Inventories (12,631) (30,303) (66,893) (71,912)
Other current (19,251) (5,179) (24,310) (25,964)
assets
Interest payable 10,047 9,692 10,112 17,915
Accounts payable 17,183 44,643 66,039 60,538
and accrued
liabilities
Cash provided by 197,570 156,829 $531,434 392,894
operating
activities
Investing activities
Additions to (164,003) (174,058) (375,254) (403,638)
property, plant and
mine development
Acquisition, (83,533) 12,205 (81,488) 7,296
investments and
other
Cash used in (247,536) (161,853) (456,742) (396,342)
investing
activities
Financing activities
Dividends paid (23,571) - (72,704) (26,830)
Repayment of capital (2,564) (2,664) (9,803) (12,776)
lease and other
Proceeds from long 125,000 70,000 205,000 1,271,000
term debt
Repayment of long (75,000) (90,000) (205,000) (1,271,000)
term debt
Sales-leaseback - 3,856 - 6,861
financing
Credit facility (2,494) (187) (2,494) (12,675)
financing cost
Proceeds from common 7,735 19,526 23,085 33,883
shares issued
Cash provided by 29,106 531 (61,916) (11,537)
(used in) financing
activities
Effect of exchange (1,429) (177) (751) (492)
rate changes on cash
and cash
equivalents
Net increase (22,289) (4,670) 12,025 (15,477)
(decrease) in cash
and cash equivalents
during the period
Cash and cash 138,959 152,786 104,645 163,593
equivalents,
beginning of period
Cash and cash $116,670 $148,116 $116,670 $148,116
equivalents, end of
period
Other operating
cashflow
information:
Interest paid during $5,439 $3,534 $31,743 $16,964
the period
Income, mining and $39,720 $16,028 $89,476 $17,525
capital taxes paid
during the period
Note 1 The following tables provide a reconciliation, on an individual mine basis, of the total cash costs per ounce of gold produced and minesite costs per tonne to production costs as set out the interim consolidated financial statements:
Total Cash
Costs per
Ounce of Gold
By Mine
(thousands of Three months Three months Nine months Nine months
dollars, ended ended ended ended
except where September 30, September 30, September 30, September 30,
noted) 2011 2010 2011 2010
Total
Production
costs per
Consolidated
Statements of
Income $237,190 $196,674 $648,511 $481,474
Attributable
to LaRonde 55,125 47,320 157,467 139,407
Attributable
to Goldex 15,029 14,518 49,260 44,787
Attributable
to Lapa 17,681 14,298 51,765 48,507
Attributable
to Kittila 27,414 24,387 81,875 65,505
Attributable
to Pinos Altos 40,081 28,701 109,073 61,087
Attributable
to Meadowbank 81,860 67,450 199,071 122,181
Total $237,190 $196,674 $648,511 $481,474
LaRonde
(thousands of Three months Three months Nine months Nine months
dollars, ended ended ended ended
exceptwhere September 30, September 30, September 30, September 30,
noted) 2011 2010 2011 2010
Production
costs $55,125 $47,320 $157,467 $139,407
Adjustments:
Byproduct
revenues (61,206) (56,911) (159,701) (132,779)
Inventory
adjustment
(i) (637) (1,352) 2,816 2,915
Non-cash
reclamation
provision (1,132) (334) (2,516) (1,006)
Cash operating
costs ($7,850) ($11,277) ($1,934) $8,537
Gold
production
(ounces) 29,069 37,832 93,487 124,401
Total cash
costs
(per ounce)
(iii) ($270) ($298) ($21) $69
Goldex
(thousands of Three months Three months Nine months Nine months
dollars, ended ended ended ended
except where September 30, September 30, September 30, September 30,
noted) 2011 2010 2011 2010
Production
costs $15,029 $14,518 $49,260 $44,787
Adjustments:
Byproduct
revenues (68) (7) 126 (22)
Inventory
adjustment
(i) 1,591 155 58 1,266
Non-cash
reclamation
provision (24) (54) (137) (162)
Cash operating
costs $16,528 $14,612 $49,307 $45,869
Gold
production
(ounces) 40,224 50,672 120,722 141,275
Total cash
costs
(per ounce)
(iii) $411 $288 $408 $325
Lapa
(thousands of Three months Three months Nine months Nine months
dollars, ended ended ended ended
exceptwhere September 30, September 30, September 30, September 30,
noted) 2011 2010 2011 2010
Production
costs $17,681 $14,298 $51,765 $48,507
Adjustments:
Byproduct
revenues 91 (11) 314 (38)
Inventory
adjustment
(i) 556 (189) 348 (2,853)
Non-cash
reclamation
provision (6) (14) (36) (43)
Cash operating
costs $18,322 $14,084 $52,391 $45,573
Gold
production
(ounces) 27,881 27,688 83,347 88,168
Total cash
costs
(per ounce)
(iii) $657 $509 $629 $517
Kittila
Three months Three months Nine months Nine months
(thousandsof ended ended ended ended
dollars,except September 30, September 30, September 30, September 30,
where noted) 2011 2010 2011 2010
Production
costs $27,414 $24,387 $81,875 $65,505
Adjustments:
Byproduct
revenues 22 (50) 114 (80)
Inventory
adjustment
(i) (696) (3,323) 1,381 (7,026)
Non-cash
reclamation
provision (35) (93) (140) (257)
Stripping
(capitalized
vs expensed)
(ii) (375) - (3,018) -
Cash operating
costs $26,330 $20,921 $80,212 $58,142
Gold
production
(ounces) 37,924 40,344 109,052 96,484
Total cash
costs
(per ounce)
(iii) $694 $519 $736 $603
Pinos Altos
(includes
Creston
Mascota)
(thousands of Three months Three months Ninemonths Nine months
dollars, ended ended ended ended
except where September 30, September 30, September 30, September 30,
noted) 2011 2010 2011 2010
Production
costs $40,081 $28,701 $109,073 $61,087
Adjustments:
Byproduct
revenues (16,105) (6,426) (47,094) (14,998)
Inventory
adjustment
(i) (2,339) 2,252 3,650 2,629
Non-cash
reclamation
provision (356) (214) (986) (643)
Stripping
(capitalized
vs expensed)
(ii) (5,698) (4,650) (18,788) (6,936)
Cash operating
costs $15,583 $19,663) $45,855 $41,139
Gold
production
(ounces) 52,739 35,248 151,806 91,141
Total cash
costs
(per ounce)
(iii) $295 $558 $302 $451
Meadowbank
(thousands Threemonths Three months Nine months Nine months
ofdollars, ended ended ended ended
except where September 30, September 30, September 30, September 30,
noted) 2011 2010 2011 2010
Production
costs $81,860 $67,450 $199,071 $122,181
Adjustments:
Byproduct
revenues (420) (334) (1,264) (592)
Inventory
adjustment
(i) 2,905 (3,526) 5,591 7,965
Non-cash
reclamation
provision (426) (384) (1,265) (878)
Stripping
(capitalized
vs expensed)
(ii) (3,190) (512) (9,140) (3,478)
Cash operating
costs $80,729 $62,694 $192,993 $125,198
Gold
production
(ounces) 78,141 93,395 199,254 188,586
Total cash
costs
(per ounce)
(iii) $1,033 $671 $969 $664
Minesite Cost per
Tonne
LaRonde
(thousands of Three months Three months Nine months Nine months
dollars, ended ended ended ended
exceptwhere September 30, September 30, September 30, September 30,
noted) 2011 2010 2011 2010
Production costs $55,125 $47,320 $157,467 $139,407
Adjustments:
Inventory
adjustments(iv) (289) (1,352) 2,173 2,915
Non-cash
reclamation
provision (1,132) (334) (2,516) (1,006)
Minesite
operating costs
(US$) $53,704 $45,634 $157,124 $141,316
Minesite
operating costs
(C$) $52,969 $46,592 $153,585 $145,432
Tonnes of ore
milled (000s) 600 632 1,784 1,956
Minesite cost per
tonne (C$)(v) $88 $74 $86 $74
Goldex
Threemonths Three months Nine months Nine months
(thousands of ended ended ended ended
dollars, except September 30, September 30, September 30, September 30,
where noted) 2011 2010 2011 2010
Production costs $15,029 $14,518 $49,260 $44,787
Adjustments:
Inventory
adjustments(iv) 1,610 155 429 1,266
Non-cash
reclamation
provision (24) (54) (137) (162)
Minesite
operating costs
(US$) $16,615 $14,619 $49,552 $45,891
Minesite
operating costs
(C$) $16,320 $15,178 $48,305 $47,379
Tonnes of ore
milled (000s) 756 726 2,240 2,060
Minesite cost per
tonne (C$)(v) $22 $21 $22 $23
Lapa
Three months Threemonths Nine months Nine months
(thousands of ended ended ended ended
dollars, September 30, September 30, September 30, September 30,
exceptwherenoted) 2011 2010 2011 2010
Production costs $17,681 $14,298 $51,765 $48,508
Adjustments:
Inventory
adjustments(iv) 645 (189) 677 (2,853)
Non-cash
reclamation
provision (6) (14) (36) (43)
Minesite
operating costs
(US$) $18,320 $14,095 $52,406 $45,611
Minesite
operating costs
(C$) $18,322 $15,131 $51,251 $47,000
Tonnes of ore
milled (000s) 171 145 473 412
Minesite cost per
tonne (C$)(v) $107 $105 $108 $114
Kittila
(thousands of Three months Threemonths Nine months Nine months
dollars, ended ended ended ended
exceptwhere September 30, September 30, September 30, September 30,
noted) 2011 2010 2011 2010
Production costs $27,414 $24,387 $81,875 $65,505
Adjustments:
Inventory
adjustments(iv) (696) (3,323) 1,381 (7,026)
Non-cash
reclamation
provision (35) (93) (140) (257)
Stripping
(capitalized vs
expensed)(ii) (375) - (3,018) -
Minesite
operating costs
(US$) $26,308 $20,971 $80,098 $58,222
Minesite
operating costs
(EUR) €19,329 €16,402 €57,434 €44,428
Tonnes of ore
milled (000s) 294 282 789 719
Minesite cost per
tonne (EUR)(v) €66 €58 €73 €62
Pinos Altos
(includes Creston
Mascota)
Three months Three months Nine months Nine months
(thousands of ended ended ended ended
dollars, except September 30, September 30, September 30, September 30,
wherenoted) 2011 2010 2011 2010
Production costs $40,081 $28,701 $109,073 $61,087
Adjustments:
Inventory
adjustments(iv) (3,348) 2,252 1,535 2,629
Non-cash
reclamation
provision (356) (214) (986) (643)
Stripping
(capitalized vs
expensed)(ii) (5,698) (4,650) (18,788) (6,936)
Minesite
operating costs
(US$) $30,679 $26,089 $90,834 $56,137
Tonnes of ore
processed (000s) 1,159 616 3,306 1,620
Minesite cost per
tonne (US$)(v) $27 $42 $28 $35
Meadowbank
Three months Three months Nine months Nine months
(thousands of ended ended ended ended
dollars, September 30, September 30, September 30, September 30,
exceptwherenoted) 2011 2010 2011 2010
Production costs $81,860 $67,450 $199,071 $122,181
Adjustments:
Inventory
adjustments(iv) 3,061 (3,526) 7,026 7,965
Non-cash
reclamation
provision (426) (384) (1,265) (878)
Stripping
(capitalized vs
expensed)(ii) (3,190) (512) (9,140) (3,479)
Minesite
operating costs
(US$) $81,305 $63,028 $195,692 $125,789
Minesite
operating costs
(C$) $80,333 $65,064 $192,514 $130,050
Tonnes of ore
milled (000s) 866 636 2,162 1,370
Minesite cost per
tonne (C$)(v) $93 $102 $89 $95
(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) 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. The
previous period's cash costs have been adjusted accordingly
also.
(iii) 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 table above, this measure
is calculated by adjusting production costs as shown in the
Consolidated Statements of Income and Comprehensive Income for
net byproduct revenues, royalties, inventory adjustments and
asset retirement provisions. This measure is intended to
provide investors with information about the cash generating
capabilities of the Company's mining operations. Management
uses this measure to monitor the performance of the Company's
mining operations. Since market prices for gold are quoted on
a per ounce basis, using this per ounce measure allows
management to assess the mine's cash generating capabilities
at various gold prices. Management is aware that this per
ounce measure of performance can be impacted by fluctuations
in byproduct metal prices and exchange rates. Management
compensates for the limitation inherent with this measure by
using it in conjunction with the minesite costs per tonne
measure (discussed below) as well as other data prepared in
accordance with US GAAP. Management also performs sensitivity
analyses in order to quantify the effects of fluctuating metal
prices and exchange rates.
(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 table above, this
measure is calculated by adjusting production costs as shown
in the Consolidated Statements of Income and Comprehensive
Income for inventory and asset retirement provisions and then
dividing by tonnes processed through the mill. Since total
cash costs data can be affected by fluctuations in byproduct
metal prices and exchange rates, management believes 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 cost per ounce and minesite cost per tonne to the most comparable financial measures calculated and presented in accordance with US GAAP for the Company's historical results of operations is set out in Note 1 to the financial statements of the Company for the period ended December 31, 2010 contained herein.
The contents of this press release have been prepared under the supervision of, and reviewed by, Marc Legault P.Eng., Vice-President Project Development and a 'Qualified Person' for the purposes of NI 43-101.
Forward-Looking Statements
The information in this news release has been prepared as at July 27, 2011. Certain statements contained in this press release constitute 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995 and 'forward looking information' under the provisions of Canadian provincial securities laws 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 statements.
Such statements include without limitation: the Company's forward-looking production guidance, including estimated ore grades, project timelines, drilling results, orebody configurations, metal production, life of mine trends, production estimates, the estimated timing of scoping and other studies, the methods by which ore will be extracted or processed, recovery rates, mill throughput, and projected exploration and capital expenditures, including costs and other estimates upon which such projections are based; the Company's goal to increase its mineral reserves and resources; and other statements and information regarding anticipated trends with respect to the Company's operations, exploration and the funding thereof. Such statements reflect the Company's views as at the date of this press 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, 2010 ('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.
U.S. Investors
This news release does not constitute an offer to purchase or sell or a solicitation of an offer to sell or purchase shares of Grayd or Agnico-Eagle made to any person in the United States of America, its possessions and other areas subject to its jurisdiction or to, or for the account or benefit of, a U.S. person (as defined in Regulation S under the United States Securities Act of 1933, as amended). On October 13, 2011, Agnico-Eagle filed with the 'SEC' a Registration Statement on Form F-80, which includes the Offer and take-over bid circular and other Offer documents, and on October 21, 2011, Agnico-Eagle filed with the SEC an amendment to the Form F-80 containing a notice of change and variation to the Offer. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DISCLOSURE DOCUMENTS FILED BY AGNICO-EAGLE FROM TIME TO TIME WITH THE SEC REGARDING THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION. The Offer and take-over bid circular and the notice of change and variation have been sent to shareholders of Grayd. Investors may also obtain a free copy of the Offer documents filed by Agnico-Eagle from time to time with the SEC at the SEC's website at www.sec.gov. INVESTORS AND SECURITY HOLDERS SHOULD READ THE OFFER DOCUMENTS CAREFULLY BEFORE MAKING A DECISION CONCERNING THE OFFER.
__________________________________
(1) Total cash costs per ounce is a non-GAAP measure. For a reconciliation to production costs, see Note 1 to the financial statements. See also 'Note Regarding Certain Measures of Performance'.
(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.
(3) Minesite costs per tonne is a non-GAAP measure. For reconciliation of this measure to production costs, as reported in the financial statements, see Note 1 to the financial statements at the end of this news release.
Agnico-Eagle Mines Limited
CONTACT: Investor Relations
(416) 947-1212
