AGNICO-EAGLE
REPORTS THIRD QUARTER 2011 RESULTS
Agnico-Eagle Mines Limited (AEM (NYSE and
TSX)) ("Agnico-Eagle" or the �Company�) today reported a quarterly net loss of $81.6 million
(or a loss of $0.48 per share) for the third quarter of 2011. This result
includes the $161.1 million ($0.95 per share) after-tax write off of the
Company�s Goldex operation (as announced on October
19, 2011), a $32.7 million closure provision ($0.19 per share), stock option
expense of $7.7 million ($0.05 per share), and the writedown
of available for sale securities of $3.4 million ($0.02 per share), partly
offset by a non-cash foreign currency translation gain of $21.4 million, or
$0.13 per share. Excluding these items would result in adjusted net
income of $101.9 million, or $0.60 per share. In the third quarter of
2010, the Company reported net income of $121.5 million, or $0.73 per
share. The lower net income in 2011 was largely due to the suspension and
write off of the Company�s Goldex operation.
Third
quarter 2011 cash provided by operating activities was a record $197.6 million
($213.5 million before changes in non-cash components of working capital), up
from cash provided by operating activities of $156.8 million in the third quarter
of 2010 ($170.9 million before changes in non-cash components of working
capital).
The
higher cash provided by operating activities in 2011 was primarily due to a 39%
higher realized gold price and significantly higher byproduct metal revenue
when compared to that realized in the third quarter of 2010.
�While
the suspension of production at Goldex, one of our
lowest cost mines, is extremely disappointing to the Agnico-Eagle team, our
strategy remains unchanged and we will continue to focus on improving our
business�, said Sean Boyd, Vice-Chairman and Chief Executive Officer.
�Although we had continued operating improvements in the quarter at Kittila and Meadowbank, there is
still more work to do, particularly at Meadowbank
where realized gold grades are still below plan�, added Mr. Boyd.
Third quarter 2011 highlights include:
- Record
Cash Generation � quarterly cash provided by operating
activities of $198 million, or $1.17 per share
- Record
Nine Month Gold Production � produced 757,668
ounces
- Record
gold production at Low Cost at Pinos Altos �
52,739 ounces at $295 total cash costs per ounce1
- Goldex Operations Suspended
Indefinitely
Payable
gold production2 in the third quarter of 2011 was 265,978 ounces
compared to 285,178 ounces in the third quarter of 2010. A description of
the production and cost performance for each mine is set out further
below.
The lower
level of production in the 2011 period was largely due to the processing of
lower grades at Meadowbank, LaRonde
and Goldex.
Total
cash costs for the third quarter of 2011 were $563 per ounce. This
compares with $423 per ounce in the third quarter of 2010. The higher
cost in 2011 was largely attributable to the 7% lower gold production and also
higher total cash costs per ounce at Meadowbank, Kittila, Lapa and Goldex. Each of these mines processed lower grades
than in the prior year�s period.
For the
first nine months of 2011, the Company produced a record 757,668 ounces of gold
at total cash costs per ounce of $553. This compares with the first nine
months of 2010 when gold production was 731,138 ounces at total cash costs of
$445 per ounce. The higher gold production in 2011 is mainly due to a much
stronger performance at Pinos Altos (much higher mill
throughput following the installation of two more tailings filters, and the start up of the Creston Mascota
mine), combined with better mill performance from Kittila
and Meadowbank. The higher total cash costs are
largely a result of high costs at Meadowbank, Kittila, Lapa and Goldex, as mentioned above.
Mainly
due to the suspension of operations at Goldex,
Agnico-Eagle now expects production of approximately 1.01 million ounces of
gold for the full year 2011 at total cash costs per ounce of approximately
$575. This compares with previous guidance of approximately 1.08 million
ounces at total cash costs per ounce of $495. The higher total cash cost
reflects the loss of the relatively lower cost Goldex
mine combined with high costs which continue to be realized at Meadowbank.
Take-Over Bid for Grayd Resource Corporation
On
October 19, 2011, Agnico-Eagle and Grayd Resource
Corporation ("Grayd") amended the
acquisition agreement dated September 19, 2011 and Agnico-Eagle amended the
offer (the "Offer") dated October 13, 2011 made by Agnico-Eagle for
all of the outstanding shares of Grayd to increase
the maximum amount of cash available under the Offer to approximately C$183
million (from approximately C$92 million). The maximum number of common
shares of Agnico-Eagle available for issuance under the Offer is unchanged at
approximately 2.7 million (based on the number of Grayd
shares outstanding on a fully-diluted basis as at September 19, 2011). A
notice of change and variation of the Offer was mailed to shareholders of Grayd on October 21, 2011. The expiry time of the
Offer remains unchanged at 5:00 p.m. (Toronto time) on November 18, 2011,
unless the Offer is extended or withdrawn.
Third Quarter 2011 Results Conference Call and Webcast Tomorrow
The
Company�s senior management will host a conference call on Thursday, October
27, 2011 at 11:00 AM (E.D.T.) to discuss financial results and provide an
update of the Company�s exploration and development activities.
Via Webcast:
A live audio webcast of the meeting will be
available on the Company�s website homepage at www.agnico-eagle.com.
Via Telephone:
For those preferring to listen by telephone,
please dial 416-644-3415 or Toll-free 800-814-4861. To ensure your
participation, please call approximately five minutes prior to the scheduled
start of the call.
Replay archive:
Please dial 416-640-1917 or Toll-free 877-289-8525, access code 4403803#.
The conference call replay will expire on November 27, 2011.
The
webcast along with presentation slides will be archived for 180 days on the
website.
Cash Position Remains Strong
Cash and
cash equivalents decreased to $116.7 million at September 30, 2011 from the
June 30, 2011 balance of $139.0 million as capital expenditures and investing
activities exceeded the cash provided by operating activities during the
quarter.
Capital
expenditures in the third quarter of 2011 were $164.0 million, including $45.0
million at Meliadine, $43.6 million at Meadowbank, $23.3 million at LaRonde,
$22.9 million at Kittila, $16.0 million on Goldex, $6.7 million at Pinos
Altos and $4.3 million at Lapa.
With its
current cash balances, anticipated cash flows and available bank lines,
management believes that Agnico-Eagle remains fully funded for the development
and exploration of its current pipeline of gold projects in Canada, Finland,
Mexico and the USA.
Available
bank lines as of September 30, 2011 were approximately $1.12 billion.
LaRonde Mine � Strong Cash Flow Generation Continues
The LaRonde mill processed an average of 6,517 tonnes per day in the third quarter of 2011, compared with
an average of 6,872 tpd in the corresponding period
of 2010. The lower throughput was largely due to some scheduled
maintenance downtime, an unplanned 56 hour shutdown of the concentrate filter
press and also due to low ore availability. The low ore availability
resulted mainly from the mining of smaller stopes
near the higher stress extremities of the orebody.
Minesite costs per tonne3 were approximately C$88 in the third
quarter of 2011. These costs are higher than the C$74 per tonne experienced in the third quarter of 2010. The
increase is largely due to the lower throughput in 2011, as discussed above.
On a per
ounce basis, net of byproduct credits, LaRonde�s
total cash costs per ounce were minus $270 in the third quarter of 2011
on payable production of 29,069 ounces of gold. This compares with the
third quarter of 2010 when total cash costs per ounce were minus
$298 on production of 37,832 ounces of gold. The higher costs and lower
gold production in the 2011 period are largely related to the planned mining of
lower grade areas for much of the year but also due to higher than expected
dilution near the extremities of the orebody (18%
lower grade in the 2011 period) and due to the lower third quarter 2011
throughput, as discussed above. Higher grades are scheduled for late in
the fourth quarter of 2011 with the first production from the higher grade LaRonde Extension.
Payable
production was 93,487 ounces of gold at total cash costs of minus
$21 per ounce in the first nine months of 2011. This compares with
124,401 ounces at $69 per ounce in the first nine months of 2010. The
lower production is mainly due to the processing of lower grades and throughput
in 2011 as discussed above. The lower total cash costs in 2011 are
largely the result of the mine focusing on byproduct production and the
associated revenues during the year, which reduces the overall total cash cost
per ounce for the Company as a whole.
Goldex Mine � Production Suspended Indefinitely on October 19
As
discussed in the Company�s press release of October 19, 2011, the Goldex mine has been suspended indefinitely due to
suspected rock subsidence in the hangingwall above
the GEZ orebody. Monitoring, investigation and
remediation work will continue with the hope of one day re-opening the
mine. However, there is no assurance that this will occur. The Goldex reserves will be reclassified into mineral
resources.
The focus
of future investigation and remediation work will be in securing the
infrastructure in the area, detailed investigation into the mechanisms of the
failure and installing further instrumentation for monitoring of the situation.
The Goldex mill processed an average of 8,223 tpd in the third quarter of 2011. During the third
quarter of 2010, the plant processed an average of approximately 7,893 tpd.
Minesite costs per tonne at Goldex
were approximately C$22 in the third quarter of 2011, essentially unchanged
from the C$21 incurred in the third quarter of 2010 as higher throughput helped
offset general inflation in the industry.
Payable
gold production in the third quarter of 2011 was 40,224 ounces at total cash
costs per ounce of $411. This compares to third quarter 2010 gold production
of 50,672 ounces at total cash costs per ounce of $288. The decrease in
gold production was due to the mining of lower grade material during the 2011
period which also negatively impacted the total cash costs per ounce.
Payable
production was 120,722 ounces of gold in the first nine months of 2011 at total
cash costs of $408 per ounce. This compares with 141,275 at total cash
costs of $325 per ounce in the first nine months of 2010. The lower
production and higher costs are mainly due to the processing of lower grades in
2011 as discussed above.
Kittila Mine � Cost Reduction Progressing
The Kittila mill processed an average of 3,196 tpd in the third quarter of 2011. In the third
quarter of 2010, the Kittila mill processed 3,067 tpd. The mill is consistently achieving its
steady-state design operating rate of 3,000 tpd.
Gold
recoveries in the third quarter of 2011 were 83.5%, essentially at the design
rate of 83%. This compares with the third quarter of 2010 when the
recoveries were approximately 81.1%. This improvement in mill recovery
was largely due to improvements in the understanding of the metallurgy and in
the operation of the autoclave.
Minesite costs per tonne at Kittila
were approximately �66 in the third quarter of 2011, compared to �58 in the
third quarter of 2010. The increase in minesite
costs was largely due to cost pressure on items such as fuel and electricity
costs, material costs underground and high contractor costs. However, the
2011 level is significantly lower than the �79 realized in the second quarter
of 2011. Further efforts to reduce the minesite
cost per tonne are ongoing.
Third
quarter 2011 gold production at Kittila was 37,924
ounces with a total cash cost per ounce of $694. In the third quarter of
2010 the mine produced 40,344 ounces at total cash costs per ounce of
$519. The lower gold production was due to the mining of lower
grades. The higher costs were largely the result of the cost issues
mentioned above. Total cash costs per ounce were also unfavorably
impacted by a weaker US dollar (US dollar per Euro of 1.29 in Q3 2010 versus
1.41 in Q3 2011).
The third
quarter 2011 total cash cost per ounce of $694 was a significant improvement
over the second quarter 2011 level of $850. Further efforts to reduce the
total cash cost per ounce are underway.
For the
first nine months of 2011, payable gold production was 109,052 at total cash
costs per ounce of $736. This compares with 96,484 ounces at total cash
costs of $603 in the corresponding period in 2010. The higher gold
production in 2011 was not able to fully offset the cost pressure at the mine,
resulting in the higher total cash costs. Additionally, the relative
strength of the Euro negatively impacted the total cash costs in the first nine
months of 2011, as discussed above.
Lapa � Record Quarterly Throughput
The Lapa circuit at the LaRonde mill
processed an average of 1,858 tpd, a quarterly
record, in the third quarter of 2011. This compares with an average of
1,573 tonnes per day in the third quarter of 2010 as Lapa continues to exceed its design throughput of 1,500 tpd.
Minesite costs per tonne were C$107 in the third
quarter of 2011, compared to C$105 in the third quarter of 2010. The
lower cost is largely due to the increased throughput.
Payable
production in the third quarter of 2011 was 27,881 ounces of gold at total cash
costs per ounce of $657. This compares with the third quarter of 2010,
when production was 27,688 ounces of gold at total cash costs per ounce of
$509. The increase in costs is largely due to a decrease in grade due to
higher than planned dilution (difficult ground in the western side of the
deposit) which largely offset the positive impact of the higher
throughput. Additionally, higher than expected concentrations of antimony
and arsenic in the ore reduced mill recoveries below plan.
For the
first nine months of 2011, payable gold production was 83,347 at total cash
costs per ounce of $629. This compares with 88,168 ounces at total cash costs
of $517 in the corresponding period in 2010. The lower gold production in
2011 and the higher total cash costs were largely the result of processing
lower grades, as discussed above.
Pinos Altos � Record Gold Production
The Pinos Altos mill processed a record average of 4,959 tpd in the third quarter of 2011. This compares with
3,863 tonnes per day in the third quarter of
2010. The mill is now routinely performing at process rates above the
initial design capacity of 4,000 tpd following the
installation of two additional tailings filters in the third and fourth
quarters of 2010.
Minesite costs per tonne were $27 in the third quarter
of 2011, compared to $42 in the third quarter of 2010. These lower costs
were largely the result of the higher tonnage mined and milled combined with
the higher proportions of heap leach ore being processed due to the onset of
operations at Creston Mascota.
Payable
production in the third quarter of 2011 was a record 52,739 ounces of gold at
total cash costs per ounce of $295, including the satellite Creston Mascota operation. This compares with production of
35,248 ounces at a total cash cost of $558 in the third quarter of 2010.
The higher gold production and lower costs are largely due to the ramp up of
Creston Mascota and the increased mill throughput.
The first
gold production from Creston Mascota occurred during
the fourth quarter of 2010. In the third quarter of 2011, payable gold
production from this heap leach operation was 11,741 ounces (included in the Pinos Altos total above). Commercial production at
Creston Mascota was achieved on March 1, 2011.
For the
first nine months of 2011, payable gold production was a record 151,806 at
total cash costs per ounce of $302. This compares with 91,141 ounces at
total cash costs of $451 for the corresponding period in 2010. The higher
gold production and lower costs are largely a result of the increased mill
throughput and contributions from Creston Mascota.
The
underground mine at Pinos Altos operated at
approximately 3,300 tonnes per day during the third
quarter of 2011, the first such period with underground mine production in
excess of its initial design capacity of approximately 3,000 tpd. Due to this performance, the improved mill
capacity and the increased underground ore reserve tonnage at Pinos Altos, the Company is evaluating alternatives with
respect to increasing the underground mine capacity either through an
additional production ramp or via a production shaft. The
study is expected to be completed near the end of 2011.
Meadowbank � Record Mill Throughput, But Dilution and Cost
Issues Remain
The Meadowbank mill processed a record average of 9,414 tpd in the third quarter of 2011. This compares with
the third quarter of 2010 when the mine processed approximately 6,918 tpd. The increase in throughput was largely due to
the commissioning of the permanent secondary crusher in June 2011.
Minesite costs per tonne were C$93 in the third
quarter of 2011 as compared to the third quarter of 2010 when minesite costs per tonne were
C$102. The lower costs in the 2011 period are largely due to the increase
in the mill throughput and increased productivity in the pit. However,
the minesite costs remain above budget.
Initiatives to reduce these unit costs include improvements in equipment
maintenance. Equipment availabilities have improved to approximately 60%
towards the target of 80%. The mine is incurring additional costs to
catch up on maintenance and winterizing the fleet to minimize the issues experienced
last winter.
Payable
production in the third quarter of 2011 was 78,141 ounces of gold at total cash
costs per ounce of gold of $1033. This compares with payable production
of 93,395 ounces at total cash costs of $671 per ounce in the third quarter of
2010. The decrease in gold ounces and increase in cost was largely due to
the higher than expected minesite costs per tonne and the mining of 38% lower grades in the 2011
period. The main reason for lower grades was ongoing dilution issues
first identified during the second quarter of 2011. However, delays in waste
removal also postponed access to higher grade ore.
For the
first nine months of 2011, payable gold production was a record 199,254 at
total cash costs per ounce of $969. This compares with 189,669 ounces at
total cash costs of $664 in the corresponding period in 2010. The higher
gold production in 2011 was mainly due to higher mill throughput, but partly
offset by the mining of 32% lower grades in 2011. The higher total cash
costs were partly due to the low grades, but also due to the high minesite costs, as discussed above.
Dividend Record and Payment Dates for the Remainder of 2011
|
Record Date
|
Payment Date
|
|
December 1
|
December 15
|
Dividend Reinvestment Program
Please
follow the link below for information on the Company�s dividend reinvestment
program.
DividendReinvestmentPlan
About Agnico-Eagle
Agnico-Eagle Mines Limited is a long established, Canadian headquartered, gold producer with
operations located in Canada, Finland and Mexico, and exploration and
development activities in Canada, Finland, Mexico and the United States.
The Company has full exposure to higher gold prices consistent with its policy
of no forward gold sales and maintains a corporate strategy based on increasing
shareholder�s exposure to gold, on a per share basis. It has paid a cash
dividend for 29 consecutive years. www.agnico-eagle.com