Included in the deal are Bousquet’s used machinery and equipment from the now-closed Bousquet mines, such as underground rolling stock and Bousquet 2’s headframe.
Agnico will pay C$5 million in cash and C$2 million in Agnico shares and assume certain reclamation obligations at the property.
Barrick will retain a 2% net smelter return royalty on all the properties acquired by Agnico-Eagle.
Meanwhile, Agnico is boosting to 100% its stake in the Bruce property, situated 1 mile east of LaRonde. The company is also considering acquiring some of Barrick’s exploration properties in the region, including Orion B-1, Orion B-2, Joannes North, Orion South and Norgold, all of which are south and west of Cambior’s Doyon mine.
For the second quarter, Agnico posted a net loss of US$3.8 million (US5 per share), compared with net income of US$3.4 million in the corresponding period of last year. Mining revenue was virtually unchanged at US$30 million.
From its sole producing asset, LaRonde, Agnico-Eagle mined 60,157 oz. gold in the second quarter, compared with 74,617 oz. gold a year earlier. For the year to date, Agnico produced 115,162 oz. gold, compared with 134,876 oz. gold in the first six months of 2002.
The company attributes the declines to a first-quarter rock fall at LaRonde, which delayed the extraction of gold-copper mining blocks in March and caused higher-than-planned dilution in the mining blocks affected by the rock fall.
Although gold output was down, second-quarter on-site operating costs actually improved to C$48 per ton from C$52 per ton in the corresponding quarter last year, even in the face of a stronger loonie (against the greenback). For the first six months of 2003, on-site operating costs improved to C$50 per ton, compared with C$52 per ton a year earlier.
“The production level obviously is not satisfactory for us,” says President Sean Boyd. “Despite these poor operating results for the first half, we do continue to make good progress in meeting both our development and construction objectives. That’s the kind of groundwork that will open up the lower portion of the orebody, and which in turn will lead to much better performance and operating results as we move forward into the second half.”
For all of 2003, the company expects to produce about 300,000 oz. gold at a total cash cost of US$180 per oz.
Agnico continued its aggressive exploration program at LaRonde during the quarter. Eight diamond drill rigs completed almost 32,000 ft. on three tasks: delineation drilling on the upper part of the mine and on levels 194 and 215; the testing of zone 7 between levels 170 and 215; and exploration drilling on Zone 20 North at depth from the level 215 drift.
Meanwhile, 7 miles east of LaRonde at the Lapa gold property, Agnico expects to have completed a prefeasibility study by year-end.
The company has five additional drills probing Lapa’s key Contact zone, and hole 118-03-25, the deepest intersection to date of Contact, has returned 0.24 oz. gold per ton at a depth of 3,815 ft. below the surface. This hole is 215 ft. east of previously announced hole 118-03-16, which cut 0.39 oz. gold over 12.1 ft.
At June 30, 2003, Agnico-Eagle’s consolidated cash and cash equivalents stood at US$121 million, whereas working capital was US$156 million.
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