Agnico-Eagle posts losses

When gold prices are high, Agnico-Eagle Mines (AGE-T) soars likes an eagle. But when prices are low, the unhedged producer is more earthbound than its peers and invariably pays the piper in red ink.

The Toronto-based company posted a net loss of US$3.4 million in the quarter ended June 30, compared with a net loss of US$2.9 million a year earlier. The loss for the first half of 2000 reached US$6.9 million, up from US$4.6 million lost in the first six months of 1999.

The company’s LaRonde mine, in northwestern Quebec, produced 31,114 oz. gold in the latest quarter, along with 134,000 oz. silver, 6.3 million lbs. zinc, and 1.2 million lbs. copper. These results were improved from the comparable period of 1999, when 25,794 oz. gold, 69,000 oz. silver, 1.7 million lbs. zinc and 979,000 lbs. copper were produced. Cash operating costs in the latest quarter stood at US$293 per oz., while total costs reached US$339 per oz.

Agnico-Eagle is nearing completion of a major expansion program to gain access to higher-grade reserves and resources at LaRonde. The Penna shaft is already in operation, hoisting more than 4,500 tonnes per day. The mill is scheduled to reach its targeted 5,000-tonne-per-day rate in early October.

Analysts expect this program to deliver lower cash costs and better production results. Brian Christie and Johan Aler of Canaccord Capital note that, so far, the company has been able to deliver the program on schedule and on budget. “The company is on-track to produce about 174,000 ounces this year at a cash cost of US$168 per oz.,” they note in a recent report. “Production and costs are expected to improve further. Ultimately, Agnico-Eagle will likely rival Goldcorp and Meridian as one of the lowest-cost intermediate gold producers in North America.”

Meanwhile, at LaRonde, five drills are in operation — three for delineation work and two for exploration. During the last quarter, drilling on Zone 20 South (for production purposes) yielded impressive assays, including (all true thicknesses):

– 22.3 ft. of 0.34 oz. gold and 2.18 oz. silver per tonne, plus 0.48% copper and 3.07% zinc;

– 19 ft. of 0.74 oz. gold, 4.66 oz. silver, 0.48% copper and 5.74% zinc; and

– 22 ft. of 0.55 oz. gold, 2.60 oz. silver, 0.6% copper and 4.92% zinc.

Zone 20 North drilling, above Level 149, confirmed the existence of higher gold grades, as well as high zinc values (including 52.5 ft. of 10% zinc and 56.4 ft. of 10.5% zinc).

LaRonde hosts 3.1 million oz. gold in proven and probable reserves, plus an additional 3.1 million oz. in the resource category.