Agnico’s recovery stutters slightly

Agnico-Eagle Mines‘ (AGE-T) financial recovery has stumbled slightly and the company has posted a loss of US$300,000 (or nil per share) on revenue of US$20.8 million during the first three months of 2001.

During the same period in 2000, the company lost US$3.5 million (6 per share) on revenue of US$11.5 million. Operating cash flow increased to US$5.9 million this year, up from a year-ago negative cash flow of US$2.8 million.

In 2000, the company lost US$5.2 million (9 per share) on mining revenue of US$67 million, compared with a 1999 loss of US$16.5 million (31 per share) on revenue of US$25.6 million. Things looked a bit brighter at the end of 2000, when the company (at long last) posted a profit of US$3.1 million (6 per share) on revenue of US$28.4 million in the fourth quarter.

During the latest quarter, Agnico-Eagle’s LaRonde mine in Quebec produced 56,623 oz. gold (an increase of more than 74% on 32,500 oz. a year earlier,), 634 oz. silver (141 oz. a year earlier), 33.3 million lbs. zinc (5.2 million lbs.) and 927,000 lbs. copper (1.3 million lbs.). Cash costs fell 55% to US$127 per oz. gold. Year-2001 production is pegged at just less than 230,000 oz. gold at less than US$150 per oz.

LaRonde is now running at the newly expanded design rate of 5,000 tons per day. Shafts 1 and 2 have been closed and all ore is now mined from the new, 7,380-ft. Penna shaft. The company expects to wrap up a study of the feasibility of ramping up to a rate of 7,000 tons per day in May. A decision will follow by mid-year.

“The successful expansion at LaRonde has resulted in a dramatic improvement in the fundamentals of our business in the last year,” says Sean Boyd, Agnico’s president and CEO. “Although we have clearly demonstrated LaRonde’s solid operating credentials, we are not yet finished building value at LaRonde. We are now focused on optimizing the LaRonde operations and moving forward on a further expansion of our daily production rate.”

On the exploration front, four drills were running in the Penna shaft at the end of the recent quarter. One rig was focussed on delineation drilling in the upper part of the mine, while the other continued with exploration.

On level 152, drilling focussed on resource conversion to the west. On level 170, drilling aimed at defining the eastern limit of the deposit. On level 160, the deep drill program continued.

Exploration drilling and development resumed on the adjoining El Coco property from the original level-20 exploration drift. Previous holes are being extended on to El Coco and underground holes are planned to test unexplored areas of the property. A five-hole, 6,900-ft. surface program has also begun on El Coco. The holes are aimed at the volcanic-sedimentary contact that hosts the LaRonde mine’s Zone 20 South.

Initial results include 3 ft. averaging 0.08 oz. gold per ton. This hole cut quartz veining and sulphide mineralization with a small speck of visible gold at a depth of 750 ft. below surface. Agnico says the hole confirms the potential of for an extension of the Zone 20 South horizon.

LaRonde’s proven and probable reserves now stand 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 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 gold. These resources have been calculated to 9,900 ft. below surface, where the deposit remains open in all directions (T.N.M. Mar., 5-11).

As planned, US$7.5 million was drawn under the company’s revolving bank facility in the first quarter and a dividend of $0.02 per share was paid to the company’s shareholders in March.

At the end of March, Agnico-Eagle had cash and equivalents of US$14.1 million. This was unchanged from the end of 2000. Working capital increased to US$23.4 million from $18.9 million.