Agnico-Eagle eyes $108 million

Mid-tier gold producer Agnico-Eagle Mines (AGE-T) plans to raise up to $108 million by offering up 9 million common shares for public sale.

Led by Merrill Lynch Canada and TD Securities, a syndicate of underwriters is underwriting the offering. For 30 days following the final prospectus, the group has the option to purchase up to 1.35 million additional shares to cover over-allotments. The offering is slated to close around June 19.

The net proceeds will be used to fund the expansion of the LaRonde gold-copper mine and for general corporate purposes.

In late May, Agnico-Eagle gave the green light for an increase in the amount of ore treated per day to 7,000 tons from 5,000 tons at the LaRonde mine, near Val d’Or, Que. The plan envisages an increase in gold production to 341,000 oz. in 2002, 373,000 oz. in 2003 and 396,000 oz. in 2004, up from an estimated 229,000 oz. at about US$150 per oz. in 2001. At a gold price of $280 per oz., the rate of return on the US$40-million investment is more than 20%, with a payback period of about three years.

A total of US$10 million is earmarked for the expansion of surface facilities. Another US$30 million worth of previously planned underground development will be accelerated into 2002 and 2003.

In another expansion last October, underground production was ramped up to 5,000 tons per day and the mill was modified to accommodate the increase.

At last report, LaRonde’s proven and probable reserves stood at 33.7 million tons grading 0.1 oz. gold per ton (or 30.6 tonnes of 3.43 grams gold per tonne), 2.34 oz. silver, 0.32% copper and 4.4% zinc, equivalent to 3.3 million contained ounces of gold.

Additional resources below these reserves total 25.4 million tons of 0.18 oz. gold, 0.85 oz. silver, 0.73% copper and 0.41% zinc, for 4.5 million contained ounces of gold. These resources have been calculated to 9,900 ft. below surface, where the deposit remains open in all directions.