Agnico-Eagle buoyed by Q1 profits

Agnico-Eagle Mines (AGE-T) returned to profitability in the first quarter of 2002, after finishing 2001 with a loss of US$7.7 million.

Net earnings in the recent quarter totalled US$477,000 (or 1 per share), off slightly from year-earlier earnings of US$498,000 (or 1 per share). Revenue climbed to US$25.5 million from US$21.1 million between the two periods.

Cash flow from operations climbed to US$5 million from US$4.3 million (excluding a 1-time tax refund of US$1.5 million in the first quarter of 2001). The improvement reflects an increase in the price of gold plus higher production.

Agnico-Eagle produced 60,259 oz. gold at LaRonde, up more than 6% from the 56,623 oz. produced in the year-earlier period. Higher cash costs — US$161 per oz., compared with US$127 — are due to royalties of US$32 per oz. payable on the El Coco property; the royalties were not paid in the first quarter of 2001.

The company realized US$300 for each ounce of gold produced during the latest quarter — US$31 per oz. better than a year ago. Prices for byproduct zinc and copper fell US10 to US36 per lb. and US$12 to US72 per lb., respectively. The company’s realized silver price was unchanged at US$4.48 per oz.

Agnico-Eagle expects to boost LaRonde’s production to 80,000 oz. during the second quarter as it begins sourcing ore from the lower section of the reserve.

Full production for 2002 is expected to total 340,000 oz. at a cash cost of about US$130 per oz.

Capital expenditures, including shaft work and mill refurbishing, climbed to US$14.3 million, compared with US$9.6 million a year earlier.

In 2003, the company expects to produce 375,000 oz. at US$100 per oz.

Meanwhile, exploration drilling on various levels returned higher-than-expected gold, copper and silver grades. One hole, drilled beneath the shaft bottom, returned 0.24 oz. gold per ton over 87 ft. The hole cut visible gold and encountered Zone 20 North at a depth of 9,050 ft. below surface. The intersection represents the highest-grade continuous interval encountered at depth so far, confirming the trend of increasing thickness at depth.

Also, 12 holes were sunk from the level 20 exploration drift, and another 10 from surface. The surface holes indicated a 450-ft.-long mineralized envelope beginning at 1,300 ft. below surface. The zone remains open at depth and to the east. The holes failed to cut economic grades but did cut encouraging geology. Assays are pending from the underground holes. During the second quarter, drilling will test for down-plunge extensions.

Also planned for this summer is a wedge hole off the latest deep hole, and two drills will test above, below and west of the deep interval.

At last report, LaRonde had reserves and resources of 70 million tons grading 0.12 oz. gold per ton (8.9 million contained ounces) and 1.52 oz. silver per ton, plus 0.44% copper and 2.31% zinc. Mineralization remains open in all directions.

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

At the end of March, Agnico-Eagle had US$20.3 million in cash and equivalents. Working capital amounted to US$53.3 million, compared with US$40.9 million at the end of 2001.