Agnico-Eagle posts mixed results for ’01

As a result of the first full year of production at the expanded LaRonde mine in Rouyn-Noranda, Que., Agnico-Eagle Mines (AGE-T) enjoyed solid operating results in 2001. However, the higher output did not prevent Agnico from ending the year with a net loss.

Operating cash flow increased more than 150% to US$12.4 million during the year, thanks to increased gold production.

The yearly loss amounted to US$7.7 million (or 12 per share), more than twice the amount of the previous year’s loss. The 2001 loss is attributed to increased non-cash expenses plus a non-cash, third-quarter writedown of US$1.6 million on an exploration property. Revenue between the two years rose to US$93.7 million from US$67 million.

Earnings in the last three months of 2001 were also poor. The quarterly loss amounted to US$1.5 million (2 per share), compared with year-earlier earnings of US$3.1 million (6 per share). Revenue slipped to US$25.1 million from US$28.4 million, while operating cash flow dropped by US$7.7 million to US$1.4 million.

Fourth-quarter production from LaRonde fell to 66,372 oz. from 71,008 oz. the final three months of 2000. With significantly lower byproduct prices and increased gold production from zone 20 (resulting in higher royalty payments), total cash costs climbed to US$181, compared with US$95 per oz. in the fourth quarter of 2000.

For all of 2001, gold production soared to a record 234,860 oz. at a total cash cost of US$155 per oz., compared with 173,852 oz. produced at US$188 per oz. in 2000. The company realized US$273 for each ounce produced in 2001, off US$5 per oz. from the previous year. Prices for its byproduct metals were lower across the board.

“In the past year, we’ve increased production and expanded our already large gold deposit,” says Agnico President Sean Boyd. “The LaRonde mine performed very well in its first full year at 5,000 tons of ore per day, setting the stage for the expansion to 7,000 tons by the fourth quarter of 2002.”

Construction contracts have been awarded for the mill expansion, and additions to the grinding bay have already begun.

In 2002, the company will spend US$44.8 million to expand underground workings in the Penna shaft. As a result, output is expected to reach 340,000 oz. at a cash cost of US$130 per oz. By the second half of 2003, when the lower gold-copper-rich portions of the orebody are developed, production should reach 400,000 oz. annually, mined at a cash cost below US$100 per oz.

The company is preparing to step up exploration work by sinking 265,000 ft. of diamond drill holes in 2002. The work will attempt to delineate stopes, test the western margins of zones 20 North and South (with an eye toward converting resources above the bottom of the Penna shaft into reserves), and expand resources below the Penna shaft from the level 215 exploration drift.

Reserves and resources at LaRonde now total 70 million tons grading 0.12 oz. gold (8.9 million contained ounces) plus 1.52 oz. silver per ton, 0.44% copper and 2.31% zinc. Mineralization remains open in all directions.

At the end of 2001, the company had cash and equivalents of US$21.2 million, up from $13.9 million at the end of 2000.

Agnico recently issued US$144 million of 4.5% convertible, unsecured subordinated debentures that are due 2012. Of the US$138.7 million in net proceeds, $120.9 million is being used to redeem existing convertible notes, due 2004.

The company now has $130 million in cash.