TORONTO, July 26 /CNW-PRN/ - Agnico-Eagle Mines Limited today reported a second quarter net loss of $3.4 million, or $0.06 per share compared to a net loss of $2.9 million, or $0.05 per share in the second quarter of 1999. Operating cash flow declined to a deficit of $2.9 million, or $0.05 per share, compared to a deficit of $0.8 million, or $0.02 per share in 1999.
Highlights for the quarter included:
- Gold production essentially on budget in the second quarter.
- Penna Shaft (formerly known as Shaft No. 3) changeover to production completed as scheduled in June. Daily hoisting rates in excess of 4,500 tons of ore have already been achieved.
- Precious metal recovery circuit in mill reaches 75 percent completion and mill on schedule to achieve 5000 ton per day processing rate by early October.
- Definition drilling identifies higher than average gold grades in Zone 20 North.
"With the new Penna Shaft and hoisting facility now operational, Agnico- Eagle is set to deliver increasing gold production, declining unit costs and rising cash flow", said Sean Boyd, President & CEO. "In addition, exploration is being accelerated as development work on our Level 215 Exploration Drift to explore the open area west of the Penna Shaft has begun. This work will be augmented by an expanded six hole deep drill program that is now in progress from the shaft", added Mr. Boyd.
The Company is hosting a conference call to discuss second quarter results and to provide an update on exploration and development activities at LaRonde on Thursday July 27th, 2000 at 1:30 p.m. To participate in the conference call, please dial (416) 641-6445. To access the rebroadcast, please dial 1-800-558-5253 and enter the reservation number 15700561.
OPERATING RESULTS
Onsite operating costs improved by 10 percent in the second quarter to C$54 per ton of ore milled compared to C$60 per ton in the same quarter of 1999. For the year to date, onsite operating costs improved by 7 percent to C$55 per ton. However, for the six months, cash operating costs to produce an ounce of gold increased to $286 per ounce from $227 per ounce. For the quarter, cash costs were $293 per ounce compared to $241 in 1999. While gold production of 31,114 ounces in the second quarter was essentially on budget and an improvement of 21 percent from a year ago, cash costs for the quarter were slightly above expectations due to lower than budget zinc production and realized zinc prices. The shortfall in zinc production was a function of sequencing of ore stope production and is expected to be made up in the second half of the year. The Company's production and cash cost targets for 2000 of 174,000 ounces at a cash cost of $168 per ounce remain unchanged. A significant improvement in gold production is forecast for the second half of 2000 with 38,000 ounces at a cash cost of $197 per ounce and over 70,000 ounces at a cash cost of below $60 per ounce in the third and fourth quarters, respectively.
STRONG FINANCIAL POSITION
At June 30, 2000 Agnico-Eagle's financial position remained strong with a cash balance, excluding bullion on hand, of $22 million and a working capital position of $27 million. Including the undrawn portion of its bank facility, Agnico-Eagle has $69 million of cash available to complete the expansion of the LaRonde operation and for other corporate activities. Approximately $51 million remains to be spent to complete the expansion to 5,000 tons per day including $24 million during the remainder of 2000 and the balance in the years 2001 and 2002. Over the remaining construction period, the Company anticipates generating approximately $68 million in operating cash flow.
DRILLING AND EXPLORATION
Three drills were in operation at the end of the quarter. One was on delineation drilling in the upper part of the mine while two drills were devoted to exploration drilling. Drilling was restricted during the quarter due to limited underground access as a result of the Penna Shaft changeover. The underground drilling program has been accelerated in July with a total of five drills now in operation. Three drills are conducting exploration drilling while two drills are devoted to definition/delineation drilling.
Delineation drilling on Zone 20 South for production purposes continued during the quarter. The results above the 122 Level continued to be impressive and several spots of visible gold were observed in the drill core. The drill holes were drilled from production draw points into mining blocks that will be mined during the second half of the year. Some of the more recent results have been tabulated below:
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Drill True Gold(oz/ton)
Hole Thickness(ft) Cut(1.5 oz) Silver(oz/ton) Copper(%) Zinc(%)
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11821781 22.3 0.34 2.18 0.48 3.07
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11821782 19.0 0.74 4.66 0.48 5.74
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11821783 22.0 0.55 2.60 0.60 4.92
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12221801 26.6 0.29 1.98 0.43 4.06
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11421743 38.7 0.31 2.57 0.42 3.72
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Zone 20 North delineation drilling above Level 149 continued to confirm the existence of areas of higher than average gold grades within Zone 20 North. These areas will also be mined during the second half of the year. Some of the more recent results are tabulated below:
Drill True Gold(oz/ton)
Hole Thickness(ft) Cut(1.5 oz) Silver(oz/ton) Copper(%) Zinc(%)
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11420721 14.1 (Au) 0.42 5.38 0.38 3.66
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11420722 15.4 (Au) 0.38 3.82 0.81 0.92
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11420723 10.5 (Au) 0.16 2.63 0.94 0.59
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11820733 11.5 (Au) 0.18 2.24 0.78 0.54
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14920592 18.4 (Au) 0.18 1.08 0.21 0.06
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52.5 (Zn) 0.03 4.26 0.11 10.02
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14920593 18.0 (Au) 0.18 1.19 0.18 0.07
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56.4 (Zn) 0.03 6.24 0.09 10.58
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14920594 13.8 (Au) 0.11 1.56 0.12 0.03
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52.5 (Zn) 0.03 4.52 0.08 10.69
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Ore reserve and resource drilling was curtailed during the quarter due to shaft changeover. Drilling resumed during the middle of June on Level 160. A total of six drill holes have been planned to convert the remaining gold resource of 500,000 ounces located above the shaft bottom into ore reserves by the end of the year.
Deep exploration drilling was also curtailed for most of the quarter due to shaft changeover with drilling resuming by the middle of June. A major exploration and development program will commence on the 20th Level Exploration Drift in the fourth quarter across three miles on the El Coco and Sphinx Properties located immediately to the east of the LaRonde Property. This drift will provide the platform for a four year underground drilling program, similar to the one that resulted in the discovery of the Penna Shaft zones. A drill was mobilized at the end of the second quarter on the 20th Level Exploration Drift and this machine is currently extending several previously drilled holes onto the El Coco property.
Development has commenced on the Level 215 Exploration Drift to the western boundary of the LaRonde property. The 3/4 mile drift and deep drill program will take two years to complete. In addition to this program, a six- hole deep drill program has begun from Levels 152 and 206. The purpose of the program is to add to and verify the gold resource potential at depth. Currently, Zone 20 North is known to host 19.1 million tons containing 2.6 million ounces of gold resource below the lowest operating level of the Penna Shaft. The first of the planned six drill holes, DDH 3206-09 is currently in progress. It is targeted to intersect Zone 20 North at a depth of approximately 8,400 feet below surface or approximately 1,000 feet below the mid point between previously reported drill holes 3215-05 and 3215-04.
EXPANSION PROGRAM
The Penna Shaft completed changeover as scheduled in June. This included commissioning the new 19 foot diameter hoist, and head frame modifications. The 27-ton skips were installed. Major underground infrastructure was commissioned during the second quarter including the Level 149 crusher, the Level 146 rock breaker and the Level 152 Load Out facility. The hoist, crushing and Level 152 Load Out facility are currently operating in the fully automated mode and hoisting 3,000 TPD (2,000 tons ore & 1,000 tons waste). Peak rates of over 4,500 tons per day have already been achieved. In the third quarter, the Penna Shaft will be ramped up from its current production rate of approximately 2,000 tons of ore per day to 5,000 tons per day, as planned. Production from Shaft No. 2 ceased early in the second quarter, while production from Shaft No. 1 will be phased out in the third quarter.
Underground, slashing of the 22-foot diameter exhaust raise down to the 20th Level Exploration Drift was completed and the exhaust fan was started, increasing airflow by 100 percent to 650,000 CFM. Slashing the fresh air or down cast system at the end of the quarter was commenced.
Surface work included the commissioning of new 120KV substation, commissioning of the paste backfill plant and the start up of the cyanide destruction plant. The first paste backfill will be poured during the first week of August.
The precious metals circuit was approximately 75 percent complete by the end of the second quarter. By the end of the third quarter, the precious metals recovery circuit in the mill will be commissioned while the other circuits will be ramped up from the current 3,600 ton per day rate to 5,000 tons per day. Mill performance during the second quarter continued to be as expected with recoveries for all metals attaining feasibility level.
Earlier indications of positive gold grade reconciliation continued to be observed especially with respect to the higher-grade gold mineralization encountered in Zone 20 South development. While the results are preliminary, indications were such that the positive reconciliation increased with higher grades. Further confirmation will be obtained when the first high gold-grade stopes will be mined from Zone 20 South during the third quarter. Similar preliminary indications from Zone 20 North will await confirmation in the fourth quarter when higher grade gold stopes are mined from this zone.
This press release contains certain "forward-looking statements" (within the meaning of the United States Private Securities Litigation Reform Act of 1995) that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties are disclosed under the heading "Risk Factors" in the Company's Annual Information Form (AIF) filed with certain Canadian securities regulators (including the Ontario and Quebec Securities Commissions) and with the United States Securities and Exchange Commission (as Form 20-F).
Agnico-Eagle Mines Limited is an established Canadian gold producer with operations located principally in Northwestern Quebec and exploration and development activities in Quebec, Ontario and Nevada. Agnico-Eagle's operating history includes 25 years of continuous gold production primarily from underground mining operations. Current proven and probable reserves stand at 3.0 million contained ounces, with an additional 3.1 million ounces in the mineral resource category at its LaRonde Mine. Agnico-Eagle is currently focused on a development and expansion program at its LaRonde Division that is expected to result in increased gold production and expanded gold reserves.
Summarized Quarterly Data (Unaudited) Agnico-Eagle Mines Limited
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(thousands of United States Three months ended Six months ended
dollars, except where noted) June 30, June 30,
2000 1999 2000 1999
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Consolidated Financial Data
Income and cash flow
Revenues from mining operations $ 11,737 $ 7,210 $ 23,278 $ 17,316
Net loss for period $ (3,425) $ (2,890) $ (6,910) $ (4,635)
Loss per share $ (0.06) $ (0.05) $ (0.13) $ (0.09)
Operating cash flow (Note 1) $ (2,919) $ (838) $ (5,751) $ (1,600)
Operating cash flow per share $ (0.05) $ (0.02) $ (0.11) $ (0.03)
Weighted average number of
shares - basic (in thousands) 54,320 53,285 54,284 53,258
Operating and Financial Summary
LaRonde Division
Revenues from mining operations $ 11,737 $ 7,210 $ 23,278 $ 17,316
Mine operating costs 11,999 7,425 23,633 15,408
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Mine operating profit (loss) $ (262) $ (215) $ (355) $ 1,908
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Tons of ore milled 328,828 183,708 631,767 387,578
Head grades:
Gold 0.11 0.15 0.12 0.17
Silver 0.90 0.74 0.94 0.69
Zinc 1.73% 0.95% 1.70% 0.88%
Copper 0.30% 0.37% 0.33% 0.39%
Recovery rates:
Gold 91.23% 94.90% 90.91% 94.33%
Silver 59.20% 64.50% 60.40% 64.60%
Zinc 70.50% 62.70% 66.20% 57.80%
Copper 67.10% 75.70% 66.80% 76.70%
Payable production:
Gold (ounces) 31,114 25,794 63,614 58,800
Silver (ounces in thousands) 134 69 275 145
Zinc (pounds in thousands) 6,358 1,784 11,565 3,348
Copper (pounds in thousands) 1,238 979 2,527 2,203
Realized prices (US$):
Gold (per ounce) $ 287 $ 277 $ 288 $ 282
Silver (per ounce) $ 5.19 $ 5.40 $ 5.20 $ 5.33
Zinc (per pound) $ 0.51 $ 0.47 $ 0.53 $ 0.48
Copper (per pound) $ 0.80 $ 0.66 $ 0.81 $ 0.66
Onsite operating costs per
ton milled (Canadian dollars) $ 54 $ 60 $ 55 $ 59
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Operating costs per gold ounce
produced (US$):
Onsite operating costs
(including reclamation
provision) $ 386 $ 288 $ 372 $ 262
Less: Non-cash reclamation
provision (3) (4) (5) (4)
Net by-product revenues (90) (43) (81) (31)
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Cash operating costs $ 293 $ 241 $ 286 $ 227
Non cash costs:
Reclamation provision 3 4 5 4
Depreciation and amortization 43 53 41 45
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Total operating costs $ 339 $ 298 $ 332 $ 276
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(1) Before non-cash working capital
Consolidated Balance Sheets Agnico-Eagle Mines Limited
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(thousands of United States dollars) June 30, December 31,
2000 1999
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(Unaudited)
ASSETS
Current
Cash and cash equivalents $ 21,690 $ 22,588
Metals awaiting settlement and gold bullion 11,048 5,857
Income taxes recoverable 738 2,353
Inventories:
In-process 1,090 2,390
Supplies 3,035 3,739
Prepaid expenses and other 3,654 3,857
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Total current assets 41,255 40,784
Investments, loans, advances and other assets 20,926 21,605
Future income and mining tax assets 15,553 12,022
Mining properties 249,092 219,817
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$ 326,826 $ 294,228
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 9,773 $ 9,770
Dividends payable 553 1,682
Income and mining taxes payable 2,219 2,913
Current interest due on senior convertible
notes 1,896 1,896
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Total current liabilities 14,441 16,261
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Long-term debt 163,623 124,122
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Reclamation provision and other liabilities 5,661 5,061
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Future income and mining tax liabilities 10,038 9,695
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Minority interest 3,291 3,291
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Shareholders' Equity
Common shares
Authorized - unlimited
Issued - 55,536,870 (1999 - 55,391,451) 153,860 152,992
Other paid in capital 14,535 14,535
Contributed surplus 4,058 4,058
Deficit (34,181) (27,271)
Company's own shares held by subsidiary
company (8,500) (8,516)
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Total shareholders' equity 129,772 135,798
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$ 326,826 $ 294,228
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Interim Consolidated Statements of Loss (Unaudited)
Agnico-Eagle Mines Limited
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(thousands of United States Three months ended Six months ended
dollars, except per share June 30, June 30,
amounts) 2000 1999 2000 1999
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REVENUES
Revenues from mining operations $ 11,737 $ 7,210 $ 23,278 $ 17,316
Interest and sundry income 358 1,085 653 1,732
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12,095 8,295 23,931 19,048
COSTS AND EXPENSES
Production 11,859 7,346 23,633 15,533
Exploration 678 961 1,347 1,363
Depreciation and amortization 1,331 1,378 2,605 2,709
General and administrative 976 1,131 1,929 2,111
Capital tax 326 190 554 538
Interest 2,230 2,152 4,422 4,301
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Loss before the undernoted (5,305) (4,863) (10,559) (7,507)
Foreign currency gain (loss) (560) 1,490 (908) 1,811
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Loss before income and mining tax
recoveries (5,865) (3,373) (11,467) (5,696)
Income and mining tax recoveries (2,440) (483) (4,557) (1,061)
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Net loss for the period $ (3,425) $ (2,890) $ (6,910) $ (4,635)
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Loss per share $ (0.06) $ (0.05) $ (0.13) $ (0.09)
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Interim Consolidated Statements
of Cash Flows (Unaudited) Agnico-Eagle Mines Limited
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(thousands of United States Three months ended Six months ended
dollars) June 30, June 30,
2000 1999 2000 1999
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Operating activities
Net loss for the period $ (3,425) $ (2,890) $ (6,910) $ (4,635)
Add (deduct) items not affecting
cash from operating activities:
Depreciation and amortization 1,331 1,378 2,605 2,709
Recoveries of future income and
mining recoveries (2,569) (641) (4,877) (1,385)
Foreign currency translation gain
(loss) 543 (92) 839 (824)
Amortization of deferred interest
and financing costs on senior
convertible 1,169 1,044 2,330 2,066
Other 32 363 262 469
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(2,919) (838) (5,751) (1,600)
Net premiums paid on metals,
foreign currency and interest
rate option contracts (106) - (284) -
Net change in non-cash working
capital balances related to operations
Metals awaiting settlement and
gold bullion (751) 4,098 (5,191) 4,809
Inventories 970 40 2,004 151
Prepaid expenses and other (35) (227) 203 363
Income and mining taxes
recoverable and payable 3,191 20 2,875 (196)
Accounts payable and accrued
liabilities (822) (665) 3 (2,333)
Current interest due on
senior convertible notes 1,107 1,105 - (1)
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Cash flows from (used in)
operating activities 635 3,533 (6,141) 1,193
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Investing activities
Additions to mining properties (16,889) (20,437) (31,880) (35,072)
Purchase of shares of subsidiary
companies and other (28) 61 10 62
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Cash flows used in investing
activities (16,917) (20,376) (31,870) (35,010)
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Financing activities
Dividends paid (1) (4) (1,100) (1,020)
Shares issued under employee plans 276 276 729 549
Proceeds from long-term debt 20,000 - 37,500 -
Purchase of the Company's own
shares held by subsidiary
company and other - - 189 -
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Cash flows from (used in)
financing activities 20,275 272 37,318 (471)
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Effect of exchange rate changes
on cash and cash equivalents (297) 666 (205) 1,811
Net increase (decrease) in
cash and cash equivalents 3,696 (15,905) (898) (32,477)
Cash and cash equivalents,
beginning of period 17,994 59,690 22,588 76,262
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Cash and cash equivalents,
end of period $ 21,690 $ 43,785 $ 21,690 $ 43,785
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Other operating cash flow
information:
Interest paid during the period $ 1,797 $ 38 $ 3,411 $ 2,270
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Taxes paid (recovered) during
the period $ (2,245) $ 402 $ (2,975) $ 1,165
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SOURCE Agnico-Eagle Mines Limited
CONTACT: Sean Boyd, President and CEO, Agnico-Eagle