Agnico-Eagle reports Q3 2009 results
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Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars unless otherwise noted)
TORONTO, Oct. 28 /PRNewswire-FirstCall/ - Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") today reported a quarterly net loss $17.0 million, or $0.11 per share, for the third quarter of 2009. This result includes a non-cash foreign currency translation loss of $22.9 million, or $0.15 per share, as well as stock option expense of $5.1 million, or $0.03 per share. Additionally, the result included a gain on the sale of marketable securities of $5.9 million, or $0.04 per share. In the third quarter of 2008, the Company reported net income of $14.0 million, or $0.10 per share.
Cash used in operating activities in the third quarter of 2009 was $13.8 million, down from cash provided by operating activities of $17.9 million in the third quarter of 2008. The impact of significantly higher gold production, compared to the third quarter of 2008, was more than offset by changes in working capital largely related to a build-up of material and supplies inventory at Meadowbank over the summer shipping season, in anticipation of the mine startup in the first quarter of 2010. Excluding the large changes in working capital, cash provided by operating activities increased significantly when compared to the third quarter of 2008 due to the large increase in gold revenue.
"Agnico-Eagle's production growth continues as third quarter gold production increased 73% over the third quarter of 2008. However, our production ramp-up has not been as rapid as we had anticipated which has negatively impacted third quarter earnings. We expect a dramatic improvement in fourth quarter production and cash costs with increased output at our Kittila and Lapa mines and the ramp-up of production at our Pinos Altos mine in Mexico", said Sean Boyd, Vice-Chairman and Chief Executive Officer. "Although we have made good progress resolving start-up issues at our new gold mines, 2009 production guidance has been reduced to approximately 500,000 ounces. Additionally, we have decided to build in additional contingency in our 2010 production forecast as we commission our remaining new mines. Our 2010 gold production forecast is now 1.0 million ounces to 1.1 million ounces, while our forecasts for 2011 through 2015 remain unchanged", added Mr. Boyd.
Third quarter 2009 highlights include:
- Solid Cost Control Continues - LaRonde, Goldex and Lapa achieve good
minesite cost performance
- Mill start-up at Pinos Altos - currently commissioning. Now producing
from mill and heap-leach
- Kittila achieving design recoveries - the Kittila mill has achieved
its design recovery rate of 83% periodically and has exceeded its
design capacity of 3,000 tonnes per day ("tpd"). Further optimization
is ongoing
- Meadowbank Remains On Schedule - Meadowbank remains on schedule for
initial production in the first quarter of 2010. All necessary
construction materials and consumables are on site
- LaRonde Extension - shaft sinking almost complete. Underground
development to begin shortly
Payable gold production(1) in the third quarter of 2009 was 118,763 ounces at total cash costs per ounce(2) of $449. This compares with gold production of 68,753 ounces in the third quarter of 2008 at total cash costs per ounce of $135.
The increase in production, relative to the third quarter of 2008, is attributable to significantly higher production from Goldex, as well as production from the Lapa, Kittila and Pinos Altos mines, which were not in production in that quarter.
The higher cash costs are largely due to a stronger Canadian dollar and the fact that several of the mines remain in the start-up/optimization phase and contain no byproduct metals.
For the first nine months of 2009, Agnico-Eagle recorded net income of $38.6 million, or $0.25 per share, down from the $51.3 million, or $0.36 per share, recorded in the first nine months of 2008. Excluding the foreign currency translation gain and loss recorded in the 2008 and 2009 year to date results respectively, year to date net income was significantly higher on the strength of a 76% increase in gold production and stronger gold and base metal prices.
For the first nine months of 2009, Agnico-Eagle had cash provided by operating activities of $61.4 million, down from $164.5 million in the first nine months of 2008. The decrease was entirely due to changes in working capital related to the build-up of gold in inventory at the three new mines and the buildup of materials and supplies at Meadowbank. Excluding these working capital changes, cash provided by operating activities in 2009 increased when compared to the first nine months of 2008 due to increased metals revenues.
Payable gold production in the first nine months of 2009 was a record 329,628 ounces at total cash costs per ounce of $391, up 76% from 187,402 ounces at total cash costs of $15 per ounce in the first nine months of 2008. The increase in production was due to the start-up of the new Kittila, Lapa and Pinos Altos mines, as well as a production ramp up at Goldex. The higher cash costs are largely due to a stronger Canadian dollar and Euro, lower byproduct prices and the fact that several of the mines remain in the start-up/optimization phase and contain no byproduct metals.
Full year production is now expected to be approximately 500,000 ounces of gold. The decrease from previous guidance is due to the slower than expected ramp up of the Kittila mill, the mining of lower grade blocks at Goldex and the higher than expected ore dilution at the start-up of Lapa. The early stages of commissioning the plant, specifically the filter presses in the mill, at Pinos Altos is also taking longer than expected. However, as detailed below, each of these operations made significant progress late in the third quarter of 2009. As these operational improvements continue into the fourth quarter, record quarterly gold production of approximately 170,000 ounces is expected.
Full year 2010 guidance is reduced to between 1.0 million ounces and 1.1 million ounces of gold. The decrease is due to the decision to add a further contingency to the start-up phase of the new mines based on the experience in commissioning three new mines in 2009. However, the long term production forecasts for these mines remain unchanged. Additionally, five internal expansion opportunities have the potential to further increase the Company's gold production by more than 50% from 2010 through 2015.
Conference Call Tomorrow
The Company will host its quarterly conference call on Thursday, October 29, 2009 at 11:00 a.m. (E.D.T.). Management will review the Company's financial results for the third quarter 2009 and provide an update of its exploration and development activities.
Via Webcast:
A live audio webcast of the call 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 416-644-3418 or Toll Free 1-800-731-6941. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.
Replay archive:
Please dial the toll-free access number 1-877-289-8525, passcode 4145037 followed by the number sign.
The conference call will be replayed from Thursday, October 29, 2009 at 1:30 p.m. (E.D.T.) to Thursday, November 5, 2009 11:59 p.m. (E.S.T.).
The webcast along with presentation slides will be archived for 180 days on the Company's website.
Strong Financial Position Maintained
Cash and cash equivalents increased to $239.0 million at September 30, 2009 from the June 30, 2009 balance of $173.9 million as cash flow from operations was reinvested largely in materials, equipment and construction at the Pinos Altos and Meadowbank mine projects. In addition, $200 million was drawn from the Company's credit lines in the quarter to fund capital expenditures. As of September 30, 2009, including undrawn credit lines and cash, the Company's available liquidity stood at $434 million.
Capital expenditures in the quarter were $172.8 million, including $90.7 million at Meadowbank, $24.1 million at Pinos Altos, $21.0 million at Kittila, $20.4 million at LaRonde, $9.9 million at Lapa and $6.3 million at Goldex.
In 2009, full year capital expenditures are expected to total approximately $600 million, up $50 million from previous guidance, reflecting the sharply stronger Canadian dollar and Euro. During the quarter, the Company realized proceeds of $34.7 million from the sale of marketable securities.
Indications are that 2010 capital expenditures will rise from the previous estimate of approximately $250 million due to a stronger Canadian dollar and Euro, accelerated development at several properties, labour and other general cost inflation. Further detail will be provided in the Company's 10 year forecast which will be presented on, or about, December 16, 2009. Included in this update will be production, capital expenditure and total cash cost guidance as well as the dividend announcement.
LaRonde Mine - Continues With Good Cost Control
The 100% owned LaRonde mine in northwestern Quebec, Canada, began operation in 1988. Overall, proven and probable gold reserves at LaRonde total approximately 5.0 million ounces from 35.8 million tonnes grading 4.3 grams per tonne ("g/t"). Life of mine average gold production is expected to be approximately 320,000 ounces per year through 2022. First production from the new internal shaft of the LaRonde Extension remains on schedule for late 2011.
The LaRonde mill processed an average of 6,509 tonnes of ore per day in the third quarter of 2009, compared with an average of 7,105 tonnes per day in the prior-year period. The lower production rate was largely a result of a scheduled seven day shutdown relating to maintenance and upgrades to the service and production hoist systems at LaRonde. With a steady-state operation averaging approximately 7,200 tonnes per day for approximately six years, LaRonde continues to be a consistent, reliable, world class mine.
Net of byproduct credits, LaRonde's total cash costs per ounce were $75 in the third quarter on production of 47,726 ounces of gold. This compares with the results of the third quarter of 2008 when total cash costs per ounce were $135 on production of 51,594 ounces of gold. The lower gold production in the quarter was largely a result of the above noted shutdown.
For the first nine months of 2009, LaRonde's total cash costs per ounce were $158 on gold production of 157,098 ounces, as compared to the prior-year period, when the total cash cost per ounce were minus $41 on production of 161,938 ounces of gold. The year-over-year increase in total cash costs is primarily due to the lower realized prices of byproduct metals. The realized prices for silver, zinc and copper for nine months ending September 30, 2009 were 13%, 21% and 33% lower, respectively, compared to the first nine months of 2008.
Minesite costs per tonne(3) were approximately C$75 in the third quarter, as expected, compared to C$71 in the third quarter of 2008. On a year-to-date basis, 2009 minesite costs per tonne were C$73, which compares to C$68 in the prior-year period. These costs are higher than the comparable periods in 2008 due to ore stockpile adjustments and the impact of general cost inflation.
LaRonde Extension - Shaft Sinking Nearly Completed
During the third quarter of 2009, shaft sinking was nearly completed on the new internal shaft, and is within 10 metres of reaching the final depth of 2,854 metres. Changeover to the production installation is expected to start next month and will be completed before the end of the year. Preproduction development is scheduled to start at the beginning of 2010. The project is on schedule to start production in late 2011.
Goldex Mine - Already Processing More Tonnes Than Expected
The 100% owned Goldex mine in northwestern Quebec began operation in 2008. Proven and probable gold reserves total 1.6 million ounces from 23.8 million tonnes grading 2.1 g/t. Life of mine average annual gold production is expected to be approximately 160,000 ounces per year through 2017.
The Goldex mine has exceeded the 6,900 tonne per day design capacity for the plant in the third quarter of 2009, with an average of 7,342 tonnes of ore milled daily.
Third quarter 2009 gold production at Goldex was 31,169 ounces at total cash costs per ounce of $440. In the prior-year period, gold production was 17,159 ounces, at total cash costs per ounce of $620, as the mine was ramping up production.
For the nine month period ending September 30, 2009, total cash costs at Goldex were $379 per ounce on gold production of 102,774 ounces. There is no corresponding period in 2008, as the mine achieved commercial production in August 2008.
Cost control was very good at Goldex as minesite costs per tonne were C$22 in the third quarter, compared to C$34 in the third quarter of 2008. For the first nine months of 2009, minesite costs per tonne were C$23. There is no corresponding period in 2008, as the mine achieved commercial production in August 2008.
The Goldex mine gold production is below expectations for the year due to a decision to focus the mining on the eastern and central mining blocks, which are lower grade than the overall reserve grade. In the meantime, a very large blast is being prepared for the higher grade western stope. It was decided to delay mucking this block and keep it full of broken ore due to rock mechanics considerations. Normal stope sequencing has resumed with higher grade ore currently being extracted from the central mining block in October and, accordingly, gold production is expected to rise in the fourth quarter of 2009.
At the present mining and blasting rate, it is expected that the Goldex orebody will be totally blasted approximately 1.5 years ahead of schedule.
In the second quarter of 2009, an expansion was announced at Goldex, which is expected to increase the design production rate from 6,900 tonnes per day to 8,000 tonnes per day. This project is underway and the new rate is expected to be achieved by late 2011.
Even with a plan to expand gold production, Agnico-Eagle expects to extend the mine life of Goldex. There are several nearby zones underground that are likely to be mined. They are currently in the resource category and are not included in reserves. For example, it is expected that the nearby "M" zone will contribute approximately 250,000 ounces of gold to the overall reserves at Goldex as early as year end 2009, thus increasing the mine life in spite of the higher planned production rate.
Exploration is also focused on potentially extending the Goldex orebody to the east and also on the "S" zone located approximately 100 metres above the current mining area.
Kittila Mine - Mill Throughput and Metallurgical Recovery Rates Achieving Design
The 100% owned Kittila mine in northern Finland poured its first gold in January 2009. Proven and probable gold reserves total 3.2 million ounces from 21.4 million tonnes grading 4.7 g/t. Life of mine average gold production is expected to be approximately 150,000 ounces per year through 2023.
Third quarter 2009 gold production at Kittila was 18,284 ounces at total cash costs per ounce of $1080. Minesite costs per tonne at Kittila were approximately (euro)78 in the third quarter. These costs are expected to decline significantly in the fourth quarter of 2009 as the mine and mill achieve their design rates.
During the third quarter of 2009, the Kittila mill continued to increase recovery rates and processed an average of 1,958 tonnes per day, versus a design rate of 3,000 tonnes per day, reflecting the process of optimization. The mill had been shut down for 22 days in the quarter, and into early October, largely due to the replacement of the SAG mill liners, modifications to the CIP circuit and repairs and maintenance on the autoclave.
Overall gold recoveries were 64% in the third quarter of 2009 and 70% in September. During the third quarter 2009, overall gold recoveries periodically achieved design rates of 83%. Recently in October, the mill has been processing up to 3,300 tonnes per day and is averaging a 72% recovery rate with some days also achieving 83% recovery.
The open pit mine has been consistently producing at reserve grade and at a consistent 3,000 tpd over the past two months, as per design.
A scoping study is underway examining the possibility of expanding operations at Kittila. This plan involves sinking a shaft on the property combined with an increase in milling capacity. Results of the study are expected to be reviewed later this year and will incorporate the most recent exploration drilling.
Lapa - Optimizing Mining Cycle
The 100% owned Lapa mine in northwestern Quebec began production in April 2009. Proven and probable gold reserves total 1.1 million ounces from 3.8 million tonnes grading 8.8 g/t. Life of mine average gold production is expected to be approximately 115,000 ounces per year through 2015.
Production from the Lapa mine (all of which is processed at the LaRonde processing plant) has averaged 1,179 tonnes per day in the third quarter and continues to progress towards planned design parameters. The expected production rate over the life of the mine is 1,500 tonnes per day and is anticipated to be achieved in the fourth quarter of 2009.
Third quarter 2009 gold production at Lapa was 18,409 ounces at total cash costs per ounce of $804, largely as a result of higher than expected ore dilution in the mining blocks. These costs are expected to decline significantly as the mine continues to ramp up towards full production capacity and the drilling, blasting, excavation and filling cycle are optimized for the orebody. Minesite costs per tonne at Lapa were approximately C$146 in the third quarter, reflecting the higher than average start-up unit costs often realized in this phase of mining.
Dilution is currently averaging 57%. A total of 20 stopes have been extracted from a total of 750 planned. Efforts to improve dilution include the implementation of one shot blasting which was found to be very successful at LaRonde in reducing the mining cycle time. A total of four stopes have been mined using this method to date. Improvements are expected as additional ground control improvements are implemented and the overall cycle time in each stope is reduced. Also, further optimizations in the Lapa milling circuit are expected to improve recoveries.
Pinos Altos - Plant Commissioning in Progress
The 100% owned Pinos Altos mine in northern Mexico is now pouring gold from the heap leach and milling operations. Proven and probable gold reserves, including the stand-alone Creston Mascota deposit, total 4.0 million ounces and 104 million ounces of silver from 41.8 million tonnes grading 2.6 g/t of gold and 72.6 g/t silver.
Life of mine average gold production is expected to be approximately 170,000 ounces per year through 2028, including production from Creston Mascota. Over this period, annual silver production is expected to average 2.5 million ounces. Since the last production guidance of December 11, 2008, the mine life is expected to be increased by five years due to increased tonnage from drilling, and also from higher gold and silver prices, which have resulted in additional ore.
The first ore was placed on the leach pads during May 2009 and the first gold bar was poured in July. Once the project is in full operation, heap leaching of low grade ores is expected to contribute approximately 5-10% of the total planned gold production from Pinos Altos. Gold production in the third quarter of 2009 was 3,175 ounces.
Construction of the mill at Pinos Altos is now complete and commissioning of the milling circuit began in September as planned, with ramp up to commercial operations and design capacity of 4,000 tonnes per day expected in the fourth quarter of 2009.
While commissioning of the tailings filter presses has taken longer than expected, the mill has already operated at 90% of its designed capacity on some days. Recoveries have been according to plan.
During the quarter, 369,320 tonnes of ore containing 19,729 ounces of gold and 335,074 ounces of silver were mined from the Santo Nino and Oberon de Weber pits and 4.54 million tonnes of overburden was also mined during the period. The current ore stockpile contains 690,555 tonnes of ore grading 1.70 g/t of gold and 25.4 g/t of silver, including 211,723 tons of mill grade ore at 3.74 g/t of gold and 52.6 g/t of silver.
In the underground mine, the two principal ramps were connected on schedule during August, allowing the development of key infrastructure, production drifts, and draw points to begin during the fourth quarter. Nearly eight kilometres of lateral underground development had been completed at Pinos Altos by the end of the third quarter.
Approximately 37,000 metres of diamond drilling were completed at the Pinos Altos mine site and on property-wide exploration in the first half of 2009. Two surface and two underground diamond drills were testing deep mine exploration targets at Santo Nino and Cerro Colorado and expanding the resource on strike and at depth at San Eligio. Outside the mine-site, three other drills were exploring the main northern Reyna de Plata structure at El Sinter (where the Company is contemplating development), testing the Cubiro gold showing in the western portion of the property, and exploring for extensions of the Creston Mascota deposit. Results will be presented in an upcoming exploration update.
Potential Mill Expansion Being Considered
The Company is studying the possibility of increasing the milled production rate at the main Pinos Altos deposits from 4,000 tonnes per day to 6,000 tonnes per day, reflecting the 125% increase in reserve tonnage since 2007. Results of the scoping study are expected by the third quarter of 2010.
Creston Mascota Approved for Construction - First gold expected early 2011
In July 2009, Board approval was received to begin development of Creston Mascota as a stand-alone satellite heap leach operation. This deposit is located approximately 12 kilometres from the main Pinos Altos complex. Probable reserves at Creston Mascota total approximately 6.7 million tonnes grading 1.65 g/t gold and 17.1 g/t silver, or approximately 357,000 ounces of gold and 3.7 million ounces of silver.
Basic engineering and initial site preparations will begin in the fourth quarter of 2009 and are expected to take approximately 18 months to complete. Production is planned for early 2011 with annual average production of approximately 48,000 ounces of gold for a mine life of five years.
Meadowbank Project Remains on Schedule for Q1, 2010 Start-Up
The 100% owned Meadowbank mine project in Nunavut, northern Canada, is expected to begin production in the first quarter of 2010. Probable gold reserves total 3.6 million ounces from 32.8 million tonnes grading 3.5 g/t. Life of mine average annual gold production is expected to be approximately 350,000 ounces through 2019.
Construction of the new Meadowbank mine project is well advanced. Mining from the Portage Pit has been better than expected with a total of 2.3 million tonnes mined versus 2.0 million planned.
The waste material from the Portage pit was used as the main building material in the critical dikes around the property. Construction of these dikes proceeded according to plan.
Approximately 66,500 tonnes of ore grading 3.0 g/t are stockpiled.
All of the material necessary for the next nine months of operation has now been delivered to the mine site, including approximately 41,000 tonnes of chemical products and 47 million litres of fuel.
Approximately 1,050 workers were on the site during the third quarter of 2009, including 819 construction workers.
The power plant has largely been completed and pre-commissioning has started. Mechanical installation of both the SAG and ball mills is nearing completion. All leach tanks were completed and mechanical installation is underway. The remaining process equipment has been largely installed. Piping and electrical installation is approximately 60% complete and will be the focus of remaining work to be completed prior to start up.
Approximately 27,000 metres of diamond drilling were completed on the Meadowbank minesite. An additional 20,500 metres were completed on exploration targets on the Meadowbank Property. Results will be featured in an upcoming exploration press release.
A scoping study is underway which is considering an increase in the average daily production rate from 8,500 tonnes per day to 10,000 tonnes per day. This would increase the average annual gold production to more than 400,000 ounces. The study is currently being reviewed with Board review expected in the first quarter of 2010.
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. Agnico-Eagle's LaRonde mine is Canada's largest operating gold mine in terms of reserves. The Company has full exposure to higher gold prices consistent with its policy of no forward gold sales. It has paid a cash dividend for 27 consecutive years.
-----------------------
(1) 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 sold during the period or held as
inventory at the end of the period.
(2) Total cash costs per ounce 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.
(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
SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS
(thousands of United States dollars, except where noted, US GAAP basis)
(Unaudited)
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Gross profit (exclusive of
amortization shown below)
LaRonde...................... $ 40,276 $ 37,190 $ 128,575 $ 152,030
Goldex....................... 16,687 3,456 54,260 3,456
Lapa......................... 2,751 - 1,918 -
Kittila...................... 884 - 4,029 -
---------- ---------- ---------- ----------
Operating margin............. 60,598 40,646 188,782 155,486
Amortization................. 23,200 9,049 50,800 23,595
Corporate.................... 44,007 10,929 96,670 46,696
---------- ---------- ---------- ----------
Income before tax............ (6,609) 20,668 41,312 85,195
Tax provision................ 10,357 6,630 2,710 33,902
---------- ---------- ---------- ----------
Net earnings (loss) $ (16,966) $ 14,038 $ 38,602 $ 51,293
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net earning (loss)
per share................... $ (0.11) $ 0.10 $ 0.25 $ 0.36
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Operating cash flow.......... $ (13,787) $ 17,908 $ 61,405 $ 164,524
Realized price per sales
volume (US$):
Gold (per ounce)........... $ 939 $ 903 $ 957 $ 926
Silver (per ounce)......... $ 15.59 $ 13.87 $ 14.48 $ 16.72
Zinc (per tonne)........... $ 1,932 $ 1,667 $ 1,589 $ 2,005
Copper (per tonne)......... $ 7,580 $ 6,732 $ 5,745 $ 8,598
Payable production:
Gold (ounces)
LaRonde.................... 47,726 51,594 157,098 161,938
Goldex..................... 31,169 17,159 102,774 25,464
Lapa (Note 1).............. 18,409 - 30,013 -
Kittila (Note 2)........... 18,284 - 36,568 -
Pinos Altos (Note 3)....... 3,175 - 3,175 -
---------- ---------- ---------- ----------
Total gold (ounces)........ 118,763 68,753 329,628 187,402
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Silver (000s ounces)
LaRonde.................... 995 1,167 3,058 3,149
Pinos Altos (Note 3)....... 16 - 16 -
---------- ---------- ---------- ----------
Total silver
(000s ounces)............. 1,011 1,167 3,074 3,149
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Zinc (tonnes).............. 12,516 18,040 40,735 51,731
Copper (tonnes)............ 1,400 1,567 5,148 5,185
Payable metal sold:
Gold (ounces - LaRonde).... 48,959 48,517 160,381 156,763
Gold (ounces - Goldex)..... 32,572 13,860 98,007 13,860
Gold (ounces - Lapa)
(Note 1).................. 14,669 - 17,836 -
Gold (ounces - Kittila)
(Note 2).................. 21,946 - 28,726 -
Gold (ounces - Pinos Altos)
(Note 3).................. 594 - 594 -
Silver (000s ounces
- LaRonde)................ 1,009 1,085 3,033 3,058
Silver (000s ounces
- Pinos Altos) (Note 3)... 1 - 1 -
Zinc (tonnes).............. 14,579 16,541 44,440 50,512
Copper (tonnes)............ 1,405 1,421 5,157 4,950
Total cash costs per ounce
(Note 4):
Gold
LaRonde...................... $ 75 $ 135 $ 158 ($41)
Goldex....................... $ 440 $ 620 $ 379 $ 620
Lapa (Note 1)................ $ 804 - $ 859 -
Kittila (Note 2)............. $ 1,080 - $ 1,041 -
---------- ---------- ---------- ----------
Weighted average total cash
costs per ounce............. $ 449 $ 240 $ 391 $ 15
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Note 1
------
Lapa achieved commercial production as of May 1, 2009. Payable production
includes commercial production ounces of 30,013 since May 1, 2009; non-
commercial production ounces were nil.
Note 2
------
Kittila achieved commercial production as of May 1, 2009. Payable
production includes commercial production ounces of 30,301 since May 1,
2009. Non-commercial production was 6,267 ounces.
Note 3
------
Pinos Altos was not in commercial production as of September 30, 2009.
Note 4
------
Total cash costs per ounce is calculated net of copper, zinc and other
byproduct credits. The weighted average is based on commercial production
ounces. Total cash costs per ounce is a non-GAAP measure. For a
reconciliation to the financial statements, 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
September 30, December 31,
-------------- --------------
2009 2008
-------------- --------------
ASSETS
Current
Cash and cash equivalents................ $ 239,032 $ 99,381
Trade receivables........................ 71,647 45,640
Inventories:
Ore stockpiles......................... 33,772 24,869
Concentrates........................... 22,926 5,013
Supplies............................... 113,702 40,014
Other current assets..................... 125,554 136,377
-------------- --------------
Total current assets....................... 606,633 351,294
Fair value of derivative financial
instruments............................... 2,699 -
Other assets............................... 23,944 8,383
Future income and mining tax assets........ 28,004 21,647
Property, plant and mine development....... 3,450,584 2,997,500
-------------- --------------
$ 4,111,864 $ 3,378,824
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued
liabilities............................. $ 170,202 $ 139,795
Dividends payable........................ 277 28,304
Interest payable......................... 1,469 146
Income taxes payable..................... 5,774 4,814
-------------- --------------
Total current liabilities.................. 177,722 173,059
-------------- --------------
Bank debt.................................. 685,000 200,000
Fair value of derivative financial
instruments............................... - 12,823
Reclamation provision and other
liabilities............................... 88,442 71,770
Future income and mining tax liabilities... 474,012 403,416
Shareholders' equity
Common shares
Authorized - unlimited
Issued - 156,486,528 (December 31, 2008
- 154,808,918).......................... 2,370,970 2,299,747
Stock options.............................. 60,385 41,052
Warrants................................... 24,858 24,858
Contributed surplus........................ 15,166 15,166
Retained earnings.......................... 196,143 157,541
Accumulated other comprehensive income
(loss).................................... 19,166 (20,608)
-------------- --------------
Total shareholders' equity................. 2,686,688 2,517,756
-------------- --------------
$ 4,111,864 $ 3,378,824
-------------- --------------
-------------- --------------
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(thousands of United States dollars except share and per share amounts,
US GAAP basis)
(Unaudited)
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
REVENUES
Revenues from mining
operations.................. $ 149,250 $ 91,171 $ 388,165 $ 295,703
Interest and sundry income 3,664 2,568 13,460 9,326
Write-down on sale of
available-for-sale-
securities.................. - (35,588) - (35,588)
Gain on sale of available-
for-sale securities......... 5,939 25,219 6,474 25,626
---------- ---------- ---------- ----------
158,853 83,370 408,099 295,067
COSTS AND EXPENSES
Production................... 88,652 50,525 199,383 140,217
Exploration and corporate
development................. 11,846 8,325 28,718 26,163
Amortization................. 23,200 9,049 50,800 23,595
General and administrative... 14,658 10,829 45,823 40,456
Provincial capital tax....... 1,583 1,439 4,165 3,314
Interest..................... 2,648 1,038 5,852 2,356
Foreign currency loss
(gain)...................... 22,875 (18,503) 32,046 (26,229)
---------- ---------- ---------- ----------
Income before income,
mining and federal capital
taxes....................... (6,609) 20,668 41,312 85,195
Income and mining tax expense
(recovery).................. 10,357 6,630 2,710 33,902
---------- ---------- ---------- ----------
Net income (loss) for the
period...................... $ (16,966) $ 14,038 $ 38,602 $ 51,293
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (loss) per share
- basic..................... $ (0.11) $ 0.10 $ 0.25 $ 0.36
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (loss) per share
- diluted................... $ (0.11) $ 0.10 $ 0.25 $ 0.35
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of
shares outstanding
(in thousands)
Basic...................... 156,157 143,831 155,718 143,641
Diluted.................... 157,963 144,975 157,501 144,785
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of United States dollars, US GAAP basis)
(Unaudited)
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Operating activities
Net income (loss) for the
period...................... $ (16,966) $ 14,038 $ 38,602 $ 51,293
Add (deduct) items not
affecting cash:
Amortization............... 23,200 9,049 50,800 23,595
Future income and mining
taxes..................... 9,816 6,468 1,887 33,342
Gain on sale of available-
for-sale securities....... (5,939) 10,369 (6,474) 9,962
Amortization of deferred
costs and other........... 28,440 (17,325) 48,670 (8,736)
Changes in non-cash working
capital balances
Trade receivables.......... 6,504 20,453 (26,007) 18,608
Income taxes payable....... (1,017) - 960 -
Inventories................ (79,994) (39,885) (91,999) (43,248)
Other current assets....... (15,442) (5,265) 5,982 7,501
Interest payable........... 983 458 1,323 458
Accounts payable and
accrued liabilities....... 36,628 19,548 37,661 71,749
---------- ---------- ---------- ----------
Cash provided by (used in)
operating activities........ (13,787) 17,908 61,405 164,524
---------- ---------- ---------- ----------
Investing activities
Additions to property, plant
and mine development........ (172,832) (253,684) (483,181) (678,307)
Acquisition, investments
and other................... 31,281 (8,119) 34,697 (60,333)
---------- ---------- ---------- ----------
Cash used in investing
activities.................. (141,551) (261,803) (448,484) (738,640)
---------- ---------- ---------- ----------
Financing activities
Dividends paid............... - - (27,132) (23,779)
Repayment of capital lease
and other................... (1,231) (15,423) (8,113) (15,423)
Bank debt.................... 200,000 225,000 485,000 300,000
Sales-leaseback financing.... 2,640 - 13,528 -
Credit facility financing
cost........................ (203) - (4,775) -
Proceeds from common shares
issued...................... 16,384 4,597 63,776 38,353
---------- ---------- ---------- ----------
Cash provided by financing
activities.................. 217,590 214,174 522,284 299,151
---------- ---------- ---------- ----------
Effect of exchange rate
changes on cash and cash
equivalents................. 2,875 (8,023) 4,446 (8,845)
---------- ---------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents
during the period........... 65,127 (37,744) 139,651 (283,810)
Cash and cash equivalents,
beginning of period......... 173,905 149,953 99,381 396,019
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period............... $ 239,032 $ 112,209 $ 239,032 $ 112,209
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Other operating cash flow
information:
Interest paid during the
period...................... $ 6,216 $ 2,667 $ 9,725 $ 3,369
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Income, mining and capital
taxes paid during the
period...................... $ 4,884 $ 3,854 $ 7,743 $ 3,854
---------- ---------- ---------- ----------
Note 1 The following tables provide a reconciliation 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
-----------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
(thousands of dollars, September September September September
except where noted) 30, 2009 30, 2008 30, 2009 30, 2008
----------------------------- ---------- ---------- ---------- ----------
Total Production costs per
Consolidated Statements
of Income................... $ 88,652 $ 50,525 $ 199,383 $ 140,217
Attributable to LaRonde 43,331 42,393 123,104 132,085
Attributable to Goldex 13,930 8,132 37,880 8,132
Attributable to Lapa 11,404 - 15,222 -
Attributable to Kittila 19,987 - 23,177 -
---------- ----------
Total $ 88,652 $ 50,525 $ 199,383 $ 140,217
-------------------------------------------
-------------------------------------------
LaRonde Cash Costs per Ounce
----------------------------
Production costs............. $ 43,331 $ 42,393 $ 123,104 $ 132,085
Adjustments:
Byproduct revenues (38,404) (34,939) (96,385) (137,743)
Inventory adjustment(i) (1,025) (195) (972) (60)
Non-cash reclamation
provision (311) (293) (878) (906)
---------- ---------- ---------- ----------
Cash operating costs $ 3,590 $ 6,966 $ 24,869 $ (6,624)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Gold production (ounces) 47,726 51,594 157,098 161,938
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total cash costs (per
ounce)(ii) $ 75 $ 135 $ 158 $ (41)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Goldex Cash Costs per Ounce
---------------------------
Production costs............. $ 13,930 $ 8,132 $ 37,880 $ 8,132
Adjustments:
Inventory adjustment(i) (177) 1,434 1,214 1,434
Non-cash reclamation
provision (53) (33) (149) (33)
---------- ---------- ---------- ----------
Cash operating costs $ 13,700 $ 9,533 $ 38,945 $ 9,533
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Gold production (ounces) 31,169 15,375 102,774 15,375
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total cash costs (per
ounce)(ii) $ 440 $ 620 $ 379 $ 620
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Lapa Cash Costs per Ounce
-------------------------
Production costs............. $ 11,404 $ - $ 15,222 $ -
Adjustments:
Inventory adjustment(i) 3,395 - 10,586 -
Non-cash reclamation
provision (7) - (14) -
---------- ---------- ---------- ----------
Cash operating costs $ 14,792 $ - $ 25,794 $ -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Gold production (ounces) 18,409 - 30,013 -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total cash costs (per
ounce)(ii) $ 804 $ - $ 859 $ -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Kittila Cash Costs per Ounce
----------------------------
Production costs............. $ 19,987 $ - $ 23,177 $ -
Adjustments:
Inventory adjustment(i) (141) - 8,497 -
Non-cash reclamation
provision (99) - (161) -
---------- ---------- ---------- ----------
Cash operating costs $ 19,747 $ - $ 31,513 $ -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Gold production (ounces) 18,284 - 30,277 -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total cash costs (per
ounce)(ii) $ 1,080 $ - $ 1,041 $ -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite Cost per Tonne
-----------------------
Three Three Nine Nine
months months months months
ended ended ended ended
(thousands of dollars, September September September September
except where noted) 30, 2009 30, 2008 30, 2009 30, 2008
----------------------------- ---------- ---------- ---------- ----------
LaRonde Cost per Tonne
----------------------
Production costs $ 43,331 $ 42,393 $ 123,104 $ 132,085
Adjustments:
Inventory adjustments(iii) (2,065) 2,364 (1,136) 1,462
Non-cash reclamation
provision (311) (293) (878) (906)
---------- ---------- ---------- ----------
Minesite operating
costs (US$) $ 40,955 $ 44,464 $ 121,090 $ 132,641
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite operating costs (C$) $ 44,681 $ 46,592 $ 139,778 $ 135,374
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Tonnes of ore milled (000s) 599 654 1,903 1,992
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite cost per tonne
(C$)(iv) $ 75 $ 71 $ 73 $ 68
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Goldex Cost per Tonne
---------------------
Production costs $ 13,930 $ 8,132 $ 37,880 $ 8,132
Adjustments:
Inventory adjustments(iii) (177) 1,434 1,214 1,434
Non-cash reclamation
provision (53) (33) (149) (33)
---------- ---------- ---------- ----------
Minesite operating
costs (US$) $ 13,700 $ 9,533 $ 38,945 $ 9,533
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite operating costs (C$) $ 14,797 $ 9,761 $ 44,877 $ 9,761
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Tonnes of ore milled (000s) 676 286 1,911 286
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite cost per tonne
(C$)(iv) $ 22 $ 34 $ 23 $ 34
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Lapa Cost per Tonne
-------------------
Production costs $ 11,404 $ - $ 15,222 $ -
Adjustments:
Inventory adjustments(iii) 3,395 - 10,586 -
Non-cash reclamation
provision (7) - (14) -
---------- ---------- ---------- ----------
Minesite operating
costs (US$) $ 14,792 $ - $ 25,794 $ -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite operating costs (C$) $ 15,811 $ - $ 27,956 $ -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Tonnes of ore milled (000s) 109 - 190 -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite cost per tonne
(C$)(iv) $ 146 $ - $ 147 $ -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Kittila Cost per Tonne
----------------------
Production costs $ 19,987 $ - $ 23,177 $ -
Adjustments:
Inventory adjustments(iii) (141) - 8,497 -
Non-cash reclamation
provision (99) - (161) -
---------- ---------- ---------- ----------
Minesite operating
costs (US$) $ 19,747 $ - $ 31,513 $ -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite operating costs (EUR) (euro) (euro) (euro) (euro)
14,012 - 22,074 -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Tonnes of ore milled (000s) 180 - 312 -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Minesite cost per tonne
(EUR)(iv) (euro) 78 (euro) - (euro) 71 (euro) -
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
(i) Under the Company's revenue recognition policy, revenue is
recognized on concentrates when legal title passes. Since total
cash costs are calculated on a production basis, this inventory
adjustment reflects the sales margin on the portion of concentrate
production for which revenue has not been recognized in the period.
(ii) Total cash costs 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.
(iii) This inventory adjustment reflects production costs associated with
unsold concentrates.
(iv) Minesite costs per tonne is not a recognized measure under US GAAP
and this data may not be comparable to data presented by other gold
producers. As illustrated in the table above, this measure is
calculated by adjusting Production Costs as shown in the
Consolidated Statements of Income and Comprehensive Income for
inventory and 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.
Detailed Mineral Reserve and Resource Data (as at December 31, 2008)
-------------------------------------------------------------------------
Category Au
and Au Ag Cu Zn Pb (000s Tonnes
Operation (g/t) (g/t) (%) (%) (%) oz.) (000s)
-------------------------------------------------------------------------
Proven Mineral
Reserve
-------------------------------------------------------------------------
Goldex 1.95 27 434
-------------------------------------------------------------------------
Kittila 4.84 31 199
-------------------------------------------------------------------------
Lapa 7.53 6 23
-------------------------------------------------------------------------
LaRonde 2.76 67.87 0.33 3.27 0.37 362 4,075
-------------------------------------------------------------------------
Pinos Altos 1.35 19.08 4 97
-------------------------------------------------------------------------
Subtotal Proven
Mineral Reserves 2.77 430 4,828
-------------------------------------------------------------------------
Probable Mineral
Reserves
-------------------------------------------------------------------------
Goldex 2.05 1,544 23,391
-------------------------------------------------------------------------
Kittila 4.69 3,193 21,171
-------------------------------------------------------------------------
Lapa 8.80 1,055 3,730
-------------------------------------------------------------------------
LaRonde 4.52 31.18 0.28 1.42 0.12 4,612 31,735
-------------------------------------------------------------------------
Meadowbank 3.45 3,638 32,773
-------------------------------------------------------------------------
Pinos Altos 2.68 74.61 3,589 41,669
-------------------------------------------------------------------------
Subtotal Probable
Mineral Reserves 3.55 17,631 154,469
-------------------------------------------------------------------------
Total Proven and
Probable Mineral
Reserves 3.53 18,061 159,297
-------------------------------------------------------------------------
----------------------------------------------------------------
Category
and Au Ag Cu Zn Pb Tonnes
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