Agnico-Eagle doubles credit lines to US$600 million

Shares of Agnico-Eagle Mines (AEM-T, AEM-N) were off $1.35, or 2.43%, to $54.21 apiece yesterday following news that the company has doubled its credit lines to US$600 million.

The Canadian gold producer arranged a new US$300 million revolving credit facility with a syndicate of international banks that matures in September 2010, bringing its total credit lines to US$600 million.

The bank syndicate includes Scotia Capital, Toronto-Dominion Bank, BMO Capital Markets, Commonwealth Bank of Australia, Royal Bank of Canada, Barclays Bank and National Bank of Canada.

Agnico-Eagle’s vice chairman and chief executive, Sean Boyd, described the loan as a “low-cost, non-dilutive source of capital,” which would give the company “additional financial flexibility” as it builds its pipeline and increases its gold reserves.

On that note, Agnico-Eagle announced earlier in the day that it had added 1 million oz. gold to the inferred resource at its Kittila project in Northern Finland.

The additional ounces brings Kittila’s probable reserves to 3 million oz. gold grading 5.1 grams per tonne from 18.2 million tonnes.

Indicated resources total 5.4 million tonnes grading 3 grams gold per tonne, or 0.5 million oz. gold and a further 15.7 million tonnes grading 4.34 grams per tonne, or 2.2 million oz., of inferred.

Agnico-Eagle is now undertaking a scoping study to look at the economics of boosting the planned production rate of the mine. The study is expected to be completed in the first quarter of next year.

In the meantime, six diamond drills, including an underground drill, are turning on the property. Two of the drills are targeting a deep resource expansion program and four drills are focused on converting resources to reserves.

The new gold resources substantiate the extension of the main Suuri deposit to about 1,100 metres below surface, the company noted in a press release.

At the end of July, more than 29,200 metres from 79 drill holes had been completed, including 37 resource conversion drill holes (for about 14,000 metres) and 21 resource exploration holes (making up almost 13,400 metres of drill core).

Despite equipment delivery delays and labor shortages, Agnico-Eagle says it has made progress on the front-end of the process plant. The crusher, ore bin, grinding area and flotation have been essentially completed, it reports, as have the leaching and flotation circuits.

Management expects the front end of the circuit will be commissioned and operational by the end of September and producing gold concentrate. The concentrate will be stockpiled until the autoclave is completed and the company forecasts it will be producing dore in November.

Currently the Kittila mine has 155,000 tonnes of ore grading 4.7 grams gold per tonne stockpiled from the open pit. It is anticipated that an additional 70,000 tonnes will be added to the ore stockpile before the end of the year, which will supply enough stockpile to feed the mill for production this year.

Agnico-Eagle, which has operations in Canada, Finland, Mexico, and the United States, says it expects to raise its total annual gold output to about 1.3 million oz. gold by 2010.