Agnico-Eagle keeping costs down

Thanks to high byproduct prices, Agnico-Eagle Mines (AGE-T) produced gold with total cash costs of US$67 per oz. in the first quarter.First quarter earnings totalled US$10.4 million, or US12 per share.

Production came entirely from Agnico’s La Ronde mine in the Abitibi region of Quebec. In addition to 55,310 oz. gold, the mine also produced 1 million oz. silver, 41.1 million lbs. zinc and 3.9 million lbs. copper.

La Ronde processed 648,615 tonnes of ore over the period, at grades of 3.1 grams gold per tonne, 73 grams silver per tonne, 4.13% zinc and 0.39% copper.

Last year during the same period, 625,083 tonnes of ore were milled grading 3.77 grams gold, 78.9 grams silver per tonne, 3.9% zinc and 0.55% copper.

This year, mining focussed on the upper levels, which are more zinc-rich than the lower levels. Gold production was 21% higher last year, 2.7% more silver was produced and 32% more copper. However zinc production was up 12% in 2005.

Realized prices of all metals were higher this year: US$430 per oz. gold, US$6.85 per oz. silver, US60 per lb. zinc and US$1.47 per lb. copper (compared with US$412 per oz. gold, US$6.72 per oz. silver, US47 per lb. zinc and US$1.25 per pound copper last year).

Production costs came in at US$560 per oz., but thanks to byproduct revenues of US$455 per oz. and inventory adjustments, which saw significantly more gold and copper sold than what was produced during the quarter, total cash costs came down to US$67 per oz.

Last year, production costs were US$344 per oz., but byproducts only brought in US$260 per oz. and total cash costs were US$78 per oz. gold produced.

Earnings during the same quarter of last year totalled US$12.9 million. This year earnings were lower because of non-cash losses on byproduct metal derivative contracts, which came in at US$3.4 million and non-cash stock option expenses totalling US$1.2 million.

At the end of March the company had US$117 million in cash and cash equivalents, up from US$106 million a year earlier.