EX-1 2 a12-25195_1ex1.htm EX-1

Exhibit 1

 

GRAPHIC

 

Stock Symbol:

AEM (NYSE and TSX)

For further information:

 

 

Investor Relations

 

 

(416) 947-1212

 

(All amounts expressed in U.S. dollars unless otherwise noted)

 

AGNICO-EAGLE REPORTS RECORD OPERATING AND FINANCIAL RESULTS
FOR THE THIRD QUARTER OF 2012;

INCREASES FULL YEAR 2012 PRODUCTION GUIDANCE

 

Toronto (October 24, 2012) — Agnico-Eagle Mines Limited (NYSE:AEM)(TSX:AEM)  (“Agnico-Eagle” or the “Company”) today reported quarterly net income of $106.3 million, or $0.62 per share, for the third quarter of 2012.  These results include a non-cash foreign currency translation loss of $16.3 million, or $0.10 per share, stock option expense of $7.1 million, or $0.04 per share and other non-recurring items totaling a loss of $1.8 million, or $0.01 per share.  Excluding these items would result in adjusted net income of $131.5 million, or $0.77 per share.  In the third quarter of 2011, the Company reported a net loss of $81.6 million, or a loss of $0.48 per share.

 

For the first nine months of 2012, net income was $228.1 million, or $1.33 per share.  This compares with the first nine months of 2011 when net income was $32.5 million, or $0.19 per share.

 

Cash flow generation was strong as third quarter 2012 cash provided by operating activities was a record $199.5 million ($223.9 million before changes in non-cash components of working capital), essentially unchanged from the cash provided by operating activities of $197.6 million in the third quarter of 2011 ($213.5 million before changes in non-cash components of working capital).

 

For the first nine months of 2012, cash provided by operating activities was a record $590.0 million as compared with the first nine months of 2011, when cash provided by operating activities was $535.2 million.

 

The higher net income and cash provided by operating activities in the 2012 periods were primarily due to significantly stronger gold production and good cost performance at several of the operating mines, in particular at Meadowbank in Nunavut.

 

“Continued strong operating performance during the third quarter has resulted in a further strengthening of our financial position.  In addition to steady production from all of our mines, and in particular record gold output at Meadowbank and Kittila, we are pleased to announce an increase in our full year production forecast with an associated reduction in the total cash cost estimate,” said Sean Boyd, President and Chief Executive Officer.

 



 

Third quarter highlights include:

 

·                  Record Quarterly Production and Improved Costs at Meadowbank — record quarterly gold production of 110,988 ounces at total cash costs(1) per ounce of $734

·                  Record Quarterly Production and Improved Costs at Kittila — record quarterly gold production of 48,619 ounces at total cash costs per ounce of $478

·                  Significant Improvements in Overall Cost Profile — total cash costs per ounce of $556

·                  Record Quarterly Cash Generation — quarterly cash provided by operating activities of $199.5 million, or $1.16 per share

·                  Lower Production in 2013 at Creston Mascota — movement of ore on leach pad results in temporary suspension of production at Creston Mascota.  To begin ramp up in second quarter 2013

 

Payable gold production(1) in the third quarter of 2012 was a record 286,971 ounces compared to 265,978 ounces in the third quarter of 2011.  A description of the production and cost performance for each mine is set out further below.

 

The high level of production in the third quarter of 2012 period was largely due to higher grades at LaRonde, Kittila, Meadowbank and Pinos Altos, as well as record throughput at Meadowbank.

 

In the first nine months of 2012, payable gold production was a record 807,276 ounces.  This compares with the first nine months of 2011 when payable gold production was 757,668 ounces.  Nine month gold production in 2011 included 120,722 ounces from the Goldex mine, where mining operations have been suspended since October 2011.

 

Total cash costs for the third quarter of 2012 were $556 per ounce.  This compares with $563 per ounce in the third quarter of 2011 ($590 per ounce from the currently operating mines).  The improvement in total cash costs at the operating mines in 2012 is largely the result of significant per ounce cost reductions at Meadowbank, Kittila and Pinos Altos, partially offset by higher costs at LaRonde (which are mainly associated with lower by-product revenues, as planned).

 

For the first nine months of 2012, total cash costs were $602 per ounce.  This compares with $553 per ounce in the first nine months of 2011 ($580 per ounce from currently operating mines).  The slight increase in 2012 is primarily due to significantly lower by-product revenues at the LaRonde mine.

 

Given the strong performance through the first nine months of 2012, especially at Meadowbank, Agnico-Eagle is increasing its full year production guidance from 975,000 ounces of gold to approximately 1,025,000 ounces of gold.  Total cash costs per ounce are expected to be approximately $660, down from the previously provided estimate of $690.  This updated forecast, while considering the better than expected operating performance year to date, also includes consideration of fourth quarter scheduled mill maintenance at

 


(1)  Total cash cost per ounce is a non-GAAP measure.  For reconciliation  to production costs, see footnote (ii) to the “Reconciliation of production costs to Total Cash Costs per Ounce and Minesite Costs per Tonne” contained herein.  See also “Note Regarding Certain Measures of Performance”.  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.

 

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Kittila, the operating challenges at LaRonde and Creston Mascota, and the expectation of a lower grade cycle at Meadowbank.

 

Additionally, Agnico-Eagle’s management expects to produce approximately 990,000 ounces of gold in 2013, unchanged from prior forecasts.  In this forecast, the improved operating performance at Meadowbank is expected to continue into 2013 and is expected to offset lower than previously forecast production from LaRonde and Creston Mascota.  A detailed forecast for all the mines is expected to be released in mid-February 2013, following Board approval of the three year plan.

 

In 2014 and 2015, the Company is expected to realize organic production growth from the new La India mine, the restart of Goldex (M and E zones), higher gold grades at LaRonde and continued operating strength at Meadowbank.

 

Third Quarter 2012 Results Conference Call and Webcast Tomorrow

 

The Company’s senior management will host a conference call on Thursday, October 25, 2012 at 11:00 AM (E.D.T.) to discuss financial results and provide an update of the Company’s operations.

 

Via Webcast:

A live audio webcast of the meeting will be available on the Company’s website homepage at www.agnico-eagle.com.

 

Via Telephone:

For those preferring to listen by telephone, please dial 416-644-3414 or Toll-free 800-814-4859.  To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.

 

Replay archive:

Please dial 416-640-1917 or Toll-free 877-289-8525, access code 4507259#. The webcast, along with presentation slides, will be archived for 180 days on the website.  The conference call replay will expire on November 25, 2012.

 

Financial Position Strengthened Again This Quarter

 

Cash and cash equivalents totaled $320.8 million at September 30, 2012, up from the June 30, 2012 balance of $289.1 million, as strong operating cash flows exceeded capital expenditures and dividend payments.

 

Capital expenditures in the third quarter of 2012 were $113.3 million, including $36.1 million at Meadowbank, $24.4 million at Meliadine, $15.4 million at LaRonde, $14.9 million at Kittila, $9.3 million at Pinos Altos, $8.9 million at La India and $3.3 million at Lapa.

 

Capital expenditures are expected to total approximately $457 million in 2012.  This is up approximately $5 million from the July forecast as a result of the capital added for the development of the new La India mine, as detailed in the news release of September 4, 2012.

 

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Available bank lines under the credit facility, as of September 30, 2012, were approximately $1.2 billion, up from $970 million at June 30, 2012, as $230 million of the drawn amount was repaid in the third quarter.

 

LaRonde — Slower Ramp-up to Higher Grade Lower Mine

 

The 100%-owned LaRonde mine in northwestern Quebec, Canada, began operation in 1988.  Current mine life is estimated to be through 2026.

 

The LaRonde mill processed an average of 6,021 tonnes per day (“tpd”) in the third quarter of 2012, compared with an average of 6,517 tpd in the corresponding period of 2011.   The reduced throughput in the 2012 period was largely due to the transition to the lower mine, where factors such as heat, congestion and lack of operational flexibility underground negatively impacted the mine’s ability to provide the planned tonnage to the mill during the third quarter.  Tonnage milled was more than 10% below budget in the quarter.

 

Minesite costs per tonne(2) were approximately C$99 in the third quarter of 2012.  These costs are higher than the C$88 per tonne experienced in the third quarter of 2011.  The increase is largely due to the slower than expected transition to design mining rates in the deeper, higher grade ore at LaRonde.

 

For the first nine months of 2012, the LaRonde mill processed an average of 6,467 tpd.  Minesite costs per tonne were approximately C$95, higher than the C$90 per tonne estimated for the full year.  Lower than planned throughput is largely responsible for the increase.

 

On a per ounce basis, net of byproduct credits, LaRonde’s total cash costs per ounce were $564 in the third quarter of 2012 on production of 40,477 ounces of gold.  This is in contrast with the third quarter of 2011 when total cash costs per ounce were minus $270 on production of 29,069 ounces of gold.  The increase in total cash costs, period over period, were mainly due to lower byproduct revenues (zinc and silver revenues were down 52% and 26%, respectively).  This was only partly offset by the higher gold ounce production.  As compared with the third quarter of 2011, there was a 48% increase in gold grades in the current period, which resulted from the ongoing ramp up in the lower mine.  Gold grades from the lower mine have reconciled well to the reserve model.

 

In the first nine months of 2012, LaRonde produced 123,964 ounces of gold at total cash costs per ounce of $514.  This is in contrast with the first nine months of 2011, when the mine produced 93,487 ounces of gold at total cash costs of minus $21 per ounce.

 

While the Board-approved budget numbers are not expected until mid-February 2013, it is currently anticipated that LaRonde will produce less than the previously forecast 220,000 ounces in 2013 as the mine is behind in its underground development due to ventilation and congestion issues.  The planned expansion of the ventilation and cooling system, expected to be completed in the fourth quarter of 2013, is expected to mitigate these issues.  As additional underground development continues to improve operational  flexibility

 


(2)  Minesite costs per tonne is a non-GAAP measure.  For reconciliation to production costs, see footnote (v) to the “Reconciliation of production costs to Total Cash Costs per Ounce and Minesite Costs per Tonne” contained herein.  See also “Note Regarding Certain Measures of Performance”.

 

4



 

 

in 2014 and 2015, the mine should begin to move towards its average life of mine rate of approximately 320,000 ounces per year.  Additionally, as a result of the higher grades at depth, the value of the ore expected to be processed over LaRonde’s remaining 15-year life is forecast to be approximately 50% higher than the value of the ore mined in 2012.

 

Kittila Mine — Record Production and Mill Recovery at Lower Costs

 

The 100%-owned Kittila mine in northern Finland achieved commercial production in May 2009.  Current mine life is estimated to be through 2044.

 

The Kittila mill processed an average of 2,948 tpd in the third quarter of 2012, approximately at its design capacity, in spite of an unbudgeted 11-day maintenance shutdown.  In the third quarter of 2011, the Kittila mill processed 3,196 tpd.

 

Minesite costs per tonne at Kittila were approximately €66 in the third quarter of 2012, unchanged from €66 in the third quarter of 2011.  The consistent minesite costs, in spite of slightly lower daily throughput compared to the prior year period, were largely the result of a very low stripping ratio in the Suuri open pit as it nears depletion.

 

For the first nine months of 2012, the Kittila mill processed an average of 2,962 tpd.  Minesite costs per tonne were approximately €69, slightly better than €71 per tonne estimated for the full year.  As the open pits at Kittila are depleted in late 2012, forecast minesite cost per tonne is higher going forward, reflecting an underground-only operation.

 

Third quarter 2012 gold production at Kittila was a record 48,619 ounces at a total cash cost per ounce of $478.  In the third quarter of 2011, the mine produced 37,924 ounces at total cash costs per ounce of $694.  The higher production and lower costs were largely the result of better than budgeted grades and record mill recovery of over 89% in the third quarter of 2012.

 

In the first nine months of 2012, Kittila produced 130,605 ounces of gold at total cash costs per ounce of $564.  This is in contrast to the first nine months of 2011, when the mine produced 109,052 ounces of gold at total cash costs of $736 per ounce.

 

In the fourth quarter of 2012, a total of 13 days of  maintenance shutdowns are scheduled for the mill.  Some days of maintenance from 2012 were postponed into 2013.  As a result, scheduled maintenance days in 2013 are expected to be higher than the “normal” annual amount of approximately 44 days.

 

A study is underway examining the possibility of increasing the mill throughput at Kittila by approximately 25% to maintain steady gold production as grades are expected to decline slightly in future years.  This project is expected to be reviewed and presented to the Board of Directors near year end 2012.

 

Additionally, considering the exploration drilling success at Kittila on the Rimpi zone, a larger expansion may be possible in the future.  A program is now underway to accelerate the ramp development and exploration drilling towards the northern end of the Kittila orebody, where the Rimpi zone is located.  Incorporating results from this new drilling

 

5



 

program into a study on a future phased expansion, including various shaft options, is ongoing.

 

Lapa — Steady Operating Results

 

The 100%-owned Lapa mine in northwestern Quebec achieved commercial production in May 2009.  Current mine life is estimated to be into 2016.

 

The Lapa circuit, located at the LaRonde mill, processed an average of 1,773 tpd in the third quarter of 2012.  This compares with an average of 1,859 tpd in the third quarter of 2011 as the Lapa circuit now consistently exceeds its design rate of 1,500 tpd.

 

Minesite costs per tonne were C$115 in the third quarter of 2012, compared to C$107 in the third quarter of 2011.  The higher minesite costs are largely due to the lower throughput.

 

For the first nine months of 2012 the Lapa mill processed an average of 1,751 tpd.  Minesite costs per tonne were approximately C$116, continuing to track below the C$124 per tonne estimated for the full year.

 

Payable production in the third quarter of 2012 was 24,914 ounces of gold at total cash costs per ounce of $760.  This compares with the third quarter of 2011, when production was 27,881 ounces of gold at total cash cost per ounce of $657.  The increase in cash costs is largely due to lower throughput (down approximately 5%) and grades (down approximately 10%) than in the comparable period.

 

In the first nine months of 2012, Lapa produced 81,570 ounces of gold at total cash costs per ounce of $683.  This compares to the first nine months of 2011 when the mine produced 83,347 ounces of gold at total cash costs of $629 per ounce.

 

Exploration continues to focus immediately east of the orebody and at depth where new results suggest the potential to quickly add new gold reserves.  New expenditures of $5.2 million (largely relating to underground mining development and purchases of mobile equipment) were approved in the second quarter of 2012 with the goal being the extension of the mine’s life past 2016.

 

Pinos Altos — Strong Gold Production at Low Costs Continues.  Creston Mascota Leaching Temporarily Suspended

 

The 100%-owned Pinos Altos mine in northern Mexico achieved commercial production in November 2009.    Current mine life is estimated to be through 2029.

 

The Pinos Altos mill processed an average of 4,955 tpd in the third quarter of 2012.  This is essentially unchanged from the 4,959 tonnes per day achieved in the third quarter of 2011.

 

Approximately 685,500 tonnes of ore were stacked on the Pinos Altos and Creston Mascota leach pads during the third quarter of 2012.  In the third quarter of 2011, approximately 702,600 tonnes were stacked on the leach pads.  The slight decrease in tonnes stacked was mainly a result of mining sequence.

 

6



 

Minesite costs per tonne, including the satellite Creston Mascota operation, were $29 in the third quarter of 2012, compared to $27 in the third quarter of 2011.  The higher costs in 2012 are largely a result of moderately higher costs for consumables and energy.

 

For the first nine months of 2012 the Pinos Altos mill processed an average of 4,986 tpd.  Minesite costs per tonne were approximately $29, tracking slightly above the $27 per tonne estimated for the full year as a slightly lower percentage of heap leach tonnage was realized in the quarter.  The heap leach tonnage tends to be lower cost than milled tonnage.

 

Payable production in the third quarter of 2012 was a 61,973 ounces of gold at total cash costs per ounce of $212.  This compares with production of 52,739 ounces at a total cash cost of $295 in the third quarter of 2011.  The increase in production was largely due to the ramp up from Creston Mascota.  The decrease in total cash costs per ounce was due to significantly better grades at both Pinos Altos and Creston Mascota compared to the third quarter of 2011, combined with higher byproduct silver revenues.

 

In the first nine months of 2012, Pinos Altos produced 182,345 ounces of gold at total cash costs per ounce of $284.  This is in contrast to the first nine months of 2011, when the mine produced 151,806 ounces of gold at total cash costs of $302 per ounce.  Production was higher during the 2012 period largely due to the impact of Creston Mascota operating at steady state for the full duration of 2012.

 

On September 30th, a movement of leached ore from the upper lifts of the Creston Mascota Phase One leach pad was observed.  Active leaching on Phase One of the Mascota leach pad has been suspended until the cause of the movement is determined and any necessary mitigation to prevent recurrence is completed.  Concurrent plans are being developed to commence operations on the existing Phase Two area of the leach pad as soon as possible.  The Company estimates that production from the Creston Mascota heap leach operation will remain suspended for the remainder of 2012 and the ramp up of production will resume in the second quarter of 2013.  Production from Creston Mascota had been estimated to be approximately 4,000 ounces of gold per month during this period.

 

La India — The Next New Mine

 

On September 4, 2012, the Company announced the approval of development and construction of La India mine project in Sonora, Mexico.  Commercial production from the open pit, heap leach, operation is expected to be achieved in the second half of 2014.  La India is expected to have a mine life of approximately eight years, with average annual gold production of 90,000 ounces at total cash costs averaging approximately $500 per ounce.  Additional information on the project can be found in the press release dated September 4, 2012 and in the La India technical report, which was filed on SEDAR on October 12, 2012.

 

Initial earthworks for the leach pad, processing facilities and other site infrastructure at La India are underway, while design and procurement are advancing on schedule for mechanical and infrastructure installations.

 

7



 

Meadowbank — Record Mill Throughput and Gold Production

 

The 100%-owned Meadowbank mine is located in Nunavut, northern Canada.  Current mine life is estimated to be through 2017.

 

The Meadowbank mill processed an average of 10,902 tpd in the third quarter of 2012, a quarterly record.  This compares with 9,414 tpd in the third quarter of 2011.  The higher throughput, period over period, is largely due to the optimization of the permanent secondary crushing unit, and improved operating efficiencies at the mine.

 

Minesite costs per tonne were C$81 in the third quarter of 2012, a significant improvement from C$93 in the third quarter of 2011.  The improvement in costs in the 2012 period was primarily a result of the higher throughput in the quarter.

 

For the first nine months of 2012, the Meadowbank mill processed an average of 10,186 tpd.  Minesite costs per tonne were approximately C$87, continuing to track well below the C$97 per tonne estimated for the full year.

 

Payable production in the third quarter of 2012 was a quarterly record at 110,988 ounces of gold at total cash costs per ounce of $734.  This compares with payable production in the third quarter of 2011 of 78,141 ounces of gold at total cash costs per ounce of $1,033.  The significant improvements in operating results were a result of mined grades being 22% higher than in the comparable period (partly due to success in reducing ore dilution but also due to higher than expected grades in the Goose pit), combined with record throughput and the associated improvement in minesite costs per tonne.

 

In the first nine months of 2012, Meadowbank produced 288,792 ounces of gold at total cash costs per ounce of $836.  This is in contrast to the first nine months of 2011 when the mine produced 199,254 ounces of gold at total cash costs of $969 per ounce.

 

Goldex — Construction Underway on new M and E Zones

 

Construction continues on the previously announced development of the M and E zones at Goldex.  Paste plant engineering and lateral development are underway and first production is expected in 2014.

 

Senior Management Changes

 

Agnico-Eagle’s Board of Directors has approved the following changes to its senior management structure, effective immediately.

 

Mr. David Smith has been promoted to the position of Senior Vice President, Finance and Chief Financial Officer.  David was previously Senior Vice President, Strategic Planning and Investor Relations and has been with the Company for almost 8 years.  He has more than 23 years of experience in the mining industry including approximately 6 years as a mining analyst and approximately 9 years as a mining engineer in a variety of operating and technical positions.

 

Mr. Picklu Datta has been promoted to the position of Senior Vice President, Treasury and Finance.  Picklu was previously Vice President, Treasurer.  He has been with Agnico-Eagle

 

8



 

for approximately 8 years.  Picklu is a Chartered Accountant and has worked for approximately 10 years in the mining industry.  Prior to that, he worked with a multinational manufacturing company and within the technology industry in various financial management roles.

 

Dividend Record and Payment Dates for the Fourth Quarter of 2012

 

Record Date

 

Payment Date

December 3

 

December 17

 

Dividend Reinvestment Program

 

Please follow the link below for information on the Company’s dividend reinvestment program.

 

DividendReinvestmentPlan

 

Additional Disclosure

 

Additional details regarding the Company, its financial and operating history and its ongoing activities are available at www.agnico-eagle.com.

 

About Agnico-Eagle

 

Agnico-Eagle is a long established, Canadian headquartered, gold producer with operations located in Canada, Finland and Mexico, and exploration and/or development activities in Canada, Finland, Mexico and the United States.  The Company has full exposure to higher gold prices consistent with its policy of no forward gold sales and maintains a corporate strategy based on increasing shareholders exposure to gold, on a per share basis.  It has declared a cash dividend for 30 consecutive years.  www.agnico-eagle.com

 

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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
September 30,

 

Nine months ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Operating margin by mine (Note 1):

 

 

 

 

 

 

 

 

 

LaRonde

 

$

45,625

 

$

59,081

 

$

138,233

 

$

154,081

 

Goldex

 

 

48,974

 

 

136,046

 

Lapa

 

25,723

 

28,286

 

79,622

 

75,201

 

Kittila

 

52,655

 

34,751

 

133,193

 

81,516

 

Pinos Altos

 

87,167

 

65,777

 

236,189

 

165,604

 

Meadowbank

 

104,258

 

46,478

 

225,745

 

105,337

 

Total Operating Margin

 

315,428

 

283,347

 

812,982

 

717,785

 

Amortization of property, plant and mine development

 

68,318

 

67,104

 

199,181

 

188,268

 

Loss on Goldex mine

 

 

298,183

 

 

298,183

 

Corporate and other

 

94,763

 

28,644

 

276,768

 

159,790

 

Income (loss) before income and mining taxes

 

152,347

 

(110,584

)

337,033

 

71,544

 

Income and mining taxes

 

46,021

 

(28,970

)

108,887

 

39,069

 

Net income (loss) for the period

 

$

106,326

 

$

(81,614

)

$

228,146

 

$

32,475

 

Net income (loss) per share - basic

 

$

0.62

 

$

(0.48

)

$

1.33

 

$

0.19

 

Cash provided by operating activities

 

$

199,464

 

$

197,570

 

$

590,043

 

$

535,157

 

Realized price per sales volume (US$):

 

 

 

 

 

 

 

 

 

Gold (per ounce)

 

$

1,695

 

$

1,717

 

$

1,661

 

$

1,551

 

Silver (per ounce)

 

$

33.91

 

$

37.37

 

$

31.80

 

$

37.33

 

Zinc (per tonne)

 

$

1,836

 

$

2,166

 

$

1,968

 

$

2,267

 

Copper (per tonne)

 

$

9,046

 

$

8,561

 

$

8,184

 

$

9,105

 

Payable production:

 

 

 

 

 

 

 

 

 

Gold (ounces)

 

 

 

 

 

 

 

 

 

LaRonde

 

40,477

 

29,069

 

123,964

 

93,487

 

Goldex

 

 

40,224

 

 

120,722

 

Lapa

 

24,914

 

27,881

 

81,570

 

83,347

 

Kittila

 

48,619

 

37,924

 

130,605

 

109,052

 

Pinos Altos

 

61,973

 

52,739

 

182,345

 

151,806

 

Meadowbank

 

110,988

 

78,141

 

288,792

 

199,254

 

Total gold (ounces)

 

286,971

 

265,978

 

807,276

 

757,668

 

Silver (000s ounces)

 

 

 

 

 

 

 

 

 

LaRonde

 

475

 

968

 

1,697

 

2,384

 

Pinos Altos

 

639

 

485

 

1,683

 

1,343

 

Meadowbank

 

26

 

16

 

70

 

42

 

Total silver (000s ounces)

 

1,140

 

1,469

 

3,450

 

3,769

 

Zinc (tonnes)

 

7,379

 

15,684

 

29,915

 

42,303

 

Copper (tonnes)

 

982

 

731

 

3,312

 

2,214

 

Payable metal sold:

 

 

 

 

 

 

 

 

 

Gold (ounces — LaRonde)

 

37,466

 

26,729

 

121,097

 

92,777

 

Gold (ounces — Goldex)

 

 

37,380

 

 

120,839

 

Gold (ounces — Lapa)

 

24,772

 

27,955

 

80,462

 

83,480

 

Gold (ounces — Kittila)

 

45,155

 

36,745

 

123,858

 

107,237

 

Gold (ounces — Pinos Altos)

 

61,265

 

54,297

 

179,783

 

148,628

 

Gold (ounces — Meadowbank)

 

116,341

 

74,416

 

284,254

 

195,111

 

Total gold (ounces)

 

284,999

 

257,522

 

789,454

 

748,072

 

Silver (000s ounces — LaRonde)

 

467

 

901

 

1,667

 

2,306

 

Silver (000s ounces — Pinos Altos)

 

635

 

475

 

1,653

 

1,312

 

Silver (000s ounces — Meadowbank)

 

26

 

7

 

68

 

42

 

Total silver (000s ounces)

 

1,128

 

1,383

 

3,388

 

3,660

 

Zinc (tonnes)

 

10,120

 

18,032

 

33,531

 

42,983

 

Copper (tonnes)

 

937

 

738

 

3,315

 

2,216

 

Total cash costs per ounce of gold produced (US$) (Note 2):

 

 

 

 

 

 

 

 

 

LaRonde

 

$

564

 

$

(270

)

$

514

 

$

(21

)

Goldex

 

 

$

411

 

 

$

408

 

Lapa

 

$

760

 

$

657

 

$

683

 

$

629

 

Kittila

 

$

478

 

$

694

 

$

564

 

$

736

 

Pinos Altos

 

$

212

 

$

295

 

$

284

 

$

302

 

Meadowbank

 

$

734

 

$

1,033

 

$

836

 

$

969

 

Weighted average total cash costs per ounce

 

$

556

 

$

563

 

$

602

 

$

553

 

 

10



 

Note 1

 

Operating margin by mine is calculated as total revenues from all metals, by mine, minus total production costs, by mine.

 

Note 2

 

Total cash costs per ounce of gold produced is calculated net of silver, copper, zinc and other byproduct revenue credits. The weighted average total cash costs per ounce is based on commercial production ounces.  Total cash costs per ounce of gold produced is a non-GAAP measure.  See “reconciliation of production costs to total cash costs per ounce of gold produced and minesite costs per tonne” contained herein for details.

 

11



 

AGNICO-EAGLE MINES LIMITED

CONSOLIDATED BALANCE SHEETS

(thousands of United States dollars, US GAAP basis)

(Unaudited)

 

 

 

As at
September 30, 2012

 

As at
December 31, 2011

 

ASSETS

 

 

 

 

 

Current

 

 

 

 

 

Cash and cash equivalents

 

$

320,807

 

$

221,458

 

Trade receivables

 

77,044

 

75,899

 

Inventories:

 

 

 

 

 

Ore stockpiles

 

66,390

 

28,155

 

Concentrates and dore bars

 

67,656

 

57,528

 

Supplies

 

227,095

 

182,389

 

Income taxes recoverable

 

 

371

 

Available-for-sale securities

 

92,150

 

145,411

 

Fair value of derivative financial instruments

 

3,613

 

 

Other current assets

 

99,227

 

110,369

 

Total current assets

 

953,982

 

821,580

 

Other assets

 

49,458

 

88,048

 

Goodwill

 

229,279

 

229,279

 

Property, plant and mine development

 

3,985,906

 

3,895,355

 

 

 

$

5,218,625

 

$

5,034,262

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

232,673

 

$

203,547

 

Environmental remediation liability

 

9,275

 

26,069

 

Interest payable

 

20,982

 

9,356

 

Income taxes payable

 

20,806

 

 

Capital lease obligations

 

12,225

 

11,068

 

Fair value of derivative financial instruments

 

 

4,404

 

Total current liabilities

 

295,961

 

254,444

 

Long-term debt

 

800,000

 

920,095

 

Reclamation provision and other liabilities

 

145,485

 

145,988

 

Deferred income and mining tax liabilities

 

587,127

 

498,572

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

Common shares

 

 

 

 

 

Authorized - unlimited

 

 

 

 

 

Issued -171,812,793 (December 31, 2011 - 170,859,604)

 

3,213,756

 

3,181,381

 

Stock options

 

144,130

 

117,694

 

Warrants

 

24,858

 

24,858

 

Contributed surplus

 

15,665

 

15,166

 

Deficit

 

(3,450

)

(129,021

)

Accumulated other comprehensive loss

 

(4,907

)

(7,106

)

 

 

3,390,052

 

3,202,972

 

Non-controlling interest

 

 

12,191

 

Total shareholders’ equity

 

3,390,052

 

3,215,163

 

 

 

$

5,218,625

 

$

5,034,262

 

 

12



 

AGNICO-EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF INCOME

(thousands of United States dollars except share and per share amounts, US GAAP basis)

(Unaudited)

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

Revenues from mining operations

 

$

535,836

 

$

520,537

 

$

1,468,331

 

$

1,366,296

 

Interest and sundry income (expense) and other

 

2,540

 

(1,724

)

(640

)

632

 

Gain (loss) on sale and impairment loss on available-for-sale securities

 

(600

)

(3,402

)

(18,912

)

1,412

 

 

 

537,776

 

515,411

 

1,448,779

 

1,368,340

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

Production

 

220,408

 

237,190

 

655,349

 

648,511

 

Exploration and corporate development

 

36,023

 

9,610

 

93,417

 

43,877

 

Environmental remediation

 

4,066

 

 

4,066

 

 

Amortization of property, plant and mine development

 

68,318

 

67,104

 

199,181

 

188,268

 

General and administrative

 

25,416

 

20,410

 

91,359

 

79,684

 

Provincial capital tax

 

 

 

4,001

 

 

Interest expense

 

14,933

 

14,918

 

43,600

 

42,915

 

Loss on Goldex mine

 

 

298,183

 

 

298,183

 

Foreign currency translation loss (gain)

 

16,265

 

(21,420

)

20,773

 

(4,642

)

Income (loss) before income and mining taxes

 

152,347

 

(110,584

)

337,033

 

71,544

 

Income and mining taxes

 

46,021

 

(28,970

)

108,887

 

39,069

 

Net income (loss) for the period

 

$

106,326

 

$

(81,614

)

$

228,146

 

$

32,475

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic

 

$

0.62

 

$

(0.48

)

$

1.33

 

$

0.19

 

Net income (loss) per share - diluted

 

$

0.62

 

$

(0.48

)

$

1.33

 

$

0.19

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (in thousands)

 

 

 

 

 

 

 

 

 

Basic

 

171,341

 

169,238

 

171,055

 

169,055

 

Diluted

 

171,596

 

169,238

 

171,297

 

172,646

 

 

13



 

AGNICO-EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands of United States dollars, US GAAP basis)

(Unaudited)

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net income (loss) for the period

 

$

106,326

 

$

(81,614

)

$

228,146

 

$

32,475

 

Add (deduct) items not affecting cash:

 

 

 

 

 

 

 

 

 

Amortization of property, plant and mine development

 

68,318

 

67,104

 

199,181

 

188,268

 

Deferred income and mining taxes

 

21,398

 

(73,348

)

46,787

 

(47,434

)

Loss on Goldex mine

 

 

298,183

 

 

298,183

 

Loss (gain) on sale of available-for-sale securities and derivative financial instruments

 

(2,424

)

6,865

 

20,820

 

(97

)

Stock-based compensation, foreign currency translation and other

 

33,731

 

(3,665

)

67,985

 

54,496

 

Adjustment for settlement of environmental remediation

 

(3,476

)

 

(15,767

)

 

Changes in non-cash working capital balances:

 

 

 

 

 

 

 

 

 

Trade receivables

 

(1,152

)

(13,958

)

(1,145

)

34,170

 

Income taxes (payable) recoverable

 

(891

)

6,971

 

42,991

 

(5,536

)

Inventories

 

(53,210

)

(12,631

)

(50,956

)

(66,893

)

Other current assets

 

1,898

 

(23,567

)

11,753

 

(28,626

)

Accounts payable and accrued liabilities

 

17,265

 

17,183

 

28,622

 

66,039

 

Interest payable

 

11,681

 

10,047

 

11,626

 

10,112

 

Cash provided by operating activities

 

199,464

 

197,570

 

590,043

 

535,157

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Additions to property, plant and mine development

 

(113,344

)

(164,003

)

(293,707

)

(375,254

)

Acquisitions, investments and other

 

(710

)

(83,533

)

18,697

 

(81,488

)

Cash used in investing activities

 

(114,054

)

(247,536

)

(275,010

)

(456,742

)

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Dividends paid

 

(27,992

)

(23,571

)

(88,790

)

(72,704

)

Repayment of capital lease obligations

 

(2,933

)

(2,564

)

(8,789

)

(9,803

)

Proceeds from long-term debt

 

 

125,000

 

255,000

 

205,000

 

Repayment of long-term debt

 

(230,000

)

(75,000

)

(575,000

)

(205,000

)

Notes Issuance

 

200,000

 

 

200,000

 

 

Long-term debt financing costs

 

(2,806

)

(2,494

)

(3,133

)

(2,494

)

Repurchase of common shares for restricted share unit plan

 

 

 

(12,031

)

(3,723

)

Common shares issued

 

8,325

 

7,735

 

16,001

 

23,085

 

Cash provided by (used in) financing activities

 

(55,406

)

29,106

 

(216,742

)

(65,639

)

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

1,751

 

(1,429

)

1,058

 

(751

)

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents during the period

 

31,755

 

(22,289

)

99,349

 

12,025

 

Cash and cash equivalents, beginning of period

 

289,052

 

138,959

 

221,458

 

104,645

 

Cash and cash equivalents, end of period

 

$

320,807

 

$

116,670

 

$

320,807

 

$

116,670

 

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

Interest paid

 

$

2,344

 

$

5,439

 

$

30,324

 

$

31,743

 

Income and mining taxes paid

 

$

21,398

 

$

39,720

 

$

26,989

 

$

89,476

 

 

14



 

AGNICO-EAGLE MINES LIMITED

RECONCILIATION OF PRODUCTION COSTS TO TOTAL CASH COSTS

PER OUNCE OF GOLD PRODUCED AND MINESITE COSTS PER TONNE

(Unaudited)

 

Total Cash Costs per Ounce of Gold Produced
(thousands of United States dollars, except where noted)

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

 

 

 

 

 

 

 

 

 

 

Total Production costs per Consolidated Statements of Income

 

$

220,408

 

$

237,190

 

$

655,349

 

$

648,511

 

 

 

 

 

 

 

 

 

 

 

Attributable to LaRonde

 

53,878

 

55,125

 

167,541

 

157,467

 

Attributable to Goldex

 

 

15,029

 

 

49,260

 

Attributable to Lapa

 

16,787

 

17,681

 

53,894

 

51,765

 

Attributable to Kittila

 

23,086

 

27,414

 

72,631

 

81,875

 

Attributable to Pinos Altos

 

36,917

 

40,081

 

112,897

 

109,073

 

Attributable to Meadowbank

 

89,740

 

81,860

 

248,386

 

199,071

 

Total

 

$

220,408

 

$

237,190

 

$

655,349

 

$

648,511

 

 

LaRonde

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

53,878

 

$

55,125

 

$

167,541

 

$

157,467

 

Adjustments:

 

 

 

 

 

 

 

 

 

Byproduct revenues

 

(31,684

)

(61,206

)

(102,536

)

(159,701

)

Inventory and other adjustments(i)

 

1,231

 

(637

)

474

 

2,816

 

Non-cash reclamation provision

 

(608

)

(1,132

)

(1,811

)

(2,516

)

Cash operating costs

 

$

22,817

 

$

(7,850

)

$

63,668

 

$

(1,934

)

Gold production (ounces)

 

40,477

 

29,069

 

123,964

 

93,487

 

Total cash costs ($ per ounce)(ii)

 

$

564

 

$

(270

)

$

514

 

$

(21

)

 

Goldex

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

 

15,029

 

 

$

49,260

 

Adjustments:

 

 

 

 

 

 

 

 

 

Byproduct revenues

 

 

(68

)

 

126

 

Inventory and other adjustments(i)

 

 

1,591

 

 

58

 

Non-cash reclamation provision

 

 

(24

)

 

(137

)

Cash operating costs

 

 

$

16,528

 

 

$

49,307

 

Gold production (ounces)

 

 

40,224

 

 

120,722

 

Total cash costs ($ per ounce)(ii)

 

 

$

411

 

 

$

408

 

 

Lapa

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

16,787

 

$

17,681

 

$

53,894

 

$

51,765

 

Adjustments:

 

 

 

 

 

 

 

 

 

Byproduct revenues

 

170

 

91

 

346

 

314

 

Inventory and other adjustments(i) 

 

1,996

 

556

 

1,294

 

348

 

Non-cash reclamation provision

 

(15

)

(6

)

206

 

(36

)

Cash operating costs

 

$

18,938

 

$

18,322

 

$

55,740

 

$

52,391

 

Gold production (ounces)

 

24,914

 

27,881

 

81,570

 

83,347

 

Total cash costs ($ per ounce)(ii) 

 

$

760

 

$

657

 

$

683

 

$

629

 

 

15



 

Kittila

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

23,086

 

$

27,414

 

$

72,631

 

$

81,875

 

Adjustments:

 

 

 

 

 

 

 

 

 

Byproduct revenues

 

73

 

22

 

326

 

114

 

Inventory and other adjustments(i) 

 

246

 

(696

)

1,132

 

1,381

 

Non-cash reclamation provision

 

(147

)

(35

)

(403

)

(140

)

Stripping (capitalized vs expensed)(iii) 

 

 

(375

)

 

(3,018

)

Cash operating costs

 

$

23,258

 

$

26,330

 

$

73,686

 

$

80,212

 

Gold production (ounces)

 

48,619

 

37,924

 

130,605

 

109,052

 

Total cash costs ($ per ounce)(ii) 

 

$

478

 

$

694

 

$

564

 

$

736

 

 

Pinos Altos (includes Creston Mascota)

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

36,917

 

$

40,081

 

$

112,897

 

$

109,073

 

Adjustments:

 

 

 

 

 

 

 

 

 

Byproduct revenues

 

(20,273

)

(16,105

)

(50,472

)

(47,094

)

Inventory and other adjustments(i) 

 

(139

)

(2,339

)

466

 

3,650

 

Non-cash reclamation provision

 

(85

)

(356

)

(713

)

(986

)

Stripping (capitalized vs expensed)(iii) 

 

(3,274

)

(5,698

)

(10,471

)

(18,788

)

Cash operating costs

 

$

13,146

 

$

15,583

 

$

51,707

 

$

45,855

 

Gold production (ounces)

 

61,973

 

52,739

 

182,345

 

151,806

 

Total cash costs ($ per ounce)(ii) 

 

$

212

 

$

295

 

$

284

 

$

302

 

 

Meadowbank

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

89,740

 

$

81,860

 

$

248,386

 

$

199,071

 

Adjustments:

 

 

 

 

 

 

 

 

 

Byproduct revenues

 

(527

)

(420

)

(1,645

)

(1,264

)

Inventory and other adjustments(i) 

 

(2,570

)

2,905

 

2,498

 

5,591

 

Non-cash reclamation provision

 

(416

)

(426

)

(1,205

)

(1,265

)

Stripping (capitalized vs expensed)(iii)

 

(4,802

)

(3,190

)

(6,465

)

(9,140

)

Cash operating costs

 

$

81,425

 

$

80,729

 

$

241,569

 

$

192,993

 

Gold production (ounces)

 

110,988

 

78,141

 

288,792

 

199,254

 

Total cash costs ($ per ounce)(ii) 

 

$

734

 

$

1,033

 

$

836

 

$

969

 

 

16



 

Minesite Costs per Tonne
(thousands of United States dollars, except where noted)

 

LaRonde

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

53,878

 

$

55,125

 

$

167,541

 

$

157,467

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustments(iv) 

 

1,278

 

(289

)

1,266

 

2,173

 

Non-cash reclamation provision

 

(608

)

(1,132

)

(1,811

)

(2,516

)

Minesite operating costs

 

$

54,548

 

$

53,704

 

$

166,996

 

$

157,124

 

Minesite operating costs (C$)

 

$

54,625

 

$

52,969

 

$

167,879

 

$

153,585

 

Tonnes of ore milled (000s)

 

554

 

600

 

1,772

 

1,784

 

Minesite costs per tonne (C$)(v)

 

$

99

 

$

88

 

$

95

 

$

86

 

 

Goldex

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

 

$

15,029

 

 

$

49,260

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustments(iv) 

 

 

1,610

 

 

429

 

Non-cash reclamation provision

 

 

(24

)

 

(137

)

Minesite operating costs

 

 

$

16,615

 

 

$

49,552

 

Minesite operating costs (C$)

 

 

$

16,320

 

 

$

48,305

 

Tonnes of ore milled (000s)

 

 

756

 

 

2,240

 

Minesite costs per tonne (C$)(v)

 

 

$

22

 

 

$

22

 

 

Lapa

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

16,787

 

$

17,681

 

$

53,894

 

$

51,765

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustments(iv) 

 

2,012

 

645

 

1,397

 

677

 

Non-cash reclamation provision

 

(15

)

(6

)

206

 

(36

)

Minesite operating costs

 

$

18,784

 

$

18,320

 

$

55,497

 

$

52,406

 

Minesite operating costs (C$)

 

$

18,799

 

$

18,322

 

$

55,671

 

$

51,251

 

Tonnes of ore milled (000s)

 

163

 

171

 

480

 

473

 

Minesite costs per tonne (C$)(v)

 

$

115

 

$

107

 

$

116

 

$

108

 

 

Kittila

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

23,086

 

$

27,414

 

$

72,631

 

$

81,875

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustments(iv) 

 

246

 

(696

)

1,137

 

1,381

 

Non-cash reclamation provision

 

(147

)

(35

)

(403

)

(140

)

Stripping (capitalized vs expensed)(iii)

 

 

(375

)

 

(3,018

)

Minesite operating costs

 

$

23,185

 

$

26,308

 

$

73,365

 

$

80,098

 

Minesite operating costs (EUR)

 

17,970

 

19,329

 

56,157

 

57,434

 

Tonnes of ore milled (000s)

 

271

 

294

 

811

 

789

 

Minesite costs per tonne (EUR)(v)

 

66

 

66

 

69

 

73

 

 

17



 

Pinos Altos (includes Creston Mascota)

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

36,917

 

$

40,081

 

$

112,897

 

$

109,073

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustments(iv) 

 

(139

)

(3,348

)

507

 

1,535

 

Non-cash reclamation provision

 

(85

)

(356

)

(713

)

(986

)

Stripping (capitalized vs expensed)(iii)

 

(3,274

)

(5,698

)

(10,471

)

(18,788

)

Minesite operating costs

 

$

33,419

 

$

30,679

 

$

102,220

 

$

90,834

 

Tonnes of ore processed (000s)

 

1,141

 

1,159

 

3,586

 

3,306

 

Minesite costs per tonne (US$)(v)

 

$

29

 

$

27

 

$

29

 

$

28

 

 

Meadowbank

 

 

 

Three months
ended

 

Three months
ended

 

Nine months
ended

 

Nine months
ended

 

 

 

September 30, 2012

 

September 30, 2011

 

September 30, 2012

 

September 30, 2011

 

Production costs

 

$

89,740

 

$

81,860

 

$

248,386

 

$

199,071

 

Adjustments:

 

 

 

 

 

 

 

 

 

Inventory adjustments(iv) 

 

(2,879

)

3,061

 

2,601

 

7,026

 

Non-cash reclamation provision

 

(415

)

(426

)

(1,204

)

(1,265

)

Stripping (capitalized vs expensed)(iii)

 

(4,802

)

(3,190

)

(6,465

)

(9,140

)

Minesite operating costs

 

$

81,644

 

$

81,305

 

$

243,318

 

$

195,692

 

Minesite operating costs (C$)

 

$

81,552

 

$

80,333

 

$

243,960

 

$

192,514

 

Tonnes of ore milled (000s)

 

1,003

 

866

 

2,791

 

2,162

 

Minesite costs per tonne (C$)(v)

 

$

81

 

$

93

 

$

87

 

$

89

 

 


(i)          Under the Company’s revenue recognition policy, revenue is recognized on concentrates when legal title passes. As total cash costs are calculated on a production basis, this inventory adjustment reflects the sales margin on the portion of concentrate production not yet recognized as revenue.

 

(ii)       Total cash cost per ounce of gold produced is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. The Company believes that this generally accepted industry measure is a realistic indication of operating performance and is useful in allowing year over year comparisons. As illustrated in the tables above, this measure is calculated by adjusting production costs as shown in the Consolidated Statements of Income for net byproduct revenues, inventory adjustments, non-cash reclamation provisions, deferred stripping costs (as described in iii below) and other adjustments. 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. As market prices for gold are quoted on a per ounce basis, using this per ounce measure allows management to assess the mine’s cash generating capabilities at various gold prices. Management is aware that this per ounce measure of performance can be impacted by fluctuations in byproduct metal prices and exchange rates. Management compensates for the limitation inherent with this measure by using it in conjunction with the minesite costs per tonne measure (discussed below) as well as other data prepared in accordance with US GAAP. Management also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and exchange rates.

 

(iii)    The Company reports total cash costs using the 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 stripping costs is to enhance the comparability of total cash costs to the majority of the Company’s peers within the mining industry.

 

(iv)   This inventory adjustment reflects production costs associated with unsold concentrates.

 

(v)      Minesite costs per tonne is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. As illustrated in the tables above, this measure is calculated by adjusting production costs as shown in the Consolidated Statements of Income for inventory, non-cash reclamation provisions and deferred stripping costs (as described in iii above), and then dividing by tonnes of ore processed. As 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.

 

18



 

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.  Reconciliations of the Company’s total cash costs per ounce and minesite costs per tonne to the most comparable financial measures calculated and presented in accordance with US GAAP for the Company’s historical results of operations are set out above.

 

The contents of this press release, concerning exploration information and mineral reserves have been prepared under the supervision of, and reviewed by, Alain Blackburn, Ing., Senior Vice-President Exploration 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 October 24, 2012. Certain statements contained in this news release constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward looking information” under the provisions of Canadian provincial securities laws and are referred to herein as “forward-looking statements”. When used in this document, words such as “anticipate”, “expect”, “estimate”, “forecast”, “planned”, “will”, “likely”, “schedule” and similar expressions are intended to identify forward-looking statements.

 

Such statements include without limitation: the Company’s forward-looking production guidance, including estimated ore grades, project timelines, drilling programs, drilling results, orebody configurations, metal production, life of mine estimates, total cash costs per ounce estimates, cash flows, the estimated timing of scoping and other studies, the methods by which ore will be extracted or processed, expansion projects and potential expansion projects, recovery rates, mill throughput, and projected exploration and capital expenditures, including costs, ability to obtain permits and other estimates upon which such projections are based; the Company’s ability to fund its current pipeline of projects; the impact of maintenance shutdowns at Kittila; the Company’s goal to build a mine at Meliadine and La India; the Company’s ability to develop new zones at Goldex; the Company’s ability to increase resources and convert resources to reserves, and other statements and information regarding anticipated trends with respect to the Company’s operations, proposed expansions, exploration and the funding thereof. Such statements reflect the Company’s views as at the date of this news release and are subject to certain risks, uncertainties and assumptions. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico-Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions of Agnico-Eagle contained in this news release, which may prove to be incorrect, include, but are not limited to, the assumptions set forth herein and in the Company’s Annual Report on Form 20-F for the year ended December 31, 2011 (“Form 20-F”) as well as: that there are no significant disruptions affecting operations, whether due to labour disruptions, supply

 

19



 

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 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.

 

20