The Case For Gold And Gold Equities Sean Boyd, President and Chief Executive Officer Agnico-Eagle Mines Limited
The Case For Gold And Gold Equities Sean Boyd, President and Chief Executive Officer Agnico-Eagle Mines Limited
Forward Looking Statements
2
The information in this document has been prepared as at November 5, 2012. Certain statements contained in this document constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward looking information under the provisions of Canadian provincial securities laws. When used in this document, the words “anticipate”, “expect”, “estimate”, “forecast”, “will”, “planned”, and similar expressions are intended to identify forward-looking statements or information.
Such statements include without limitation: statements regarding timing and amounts of capital expenditures and other assumptions; estimates of future reserves, resources, mineral production, optimization efforts and sales; estimates of mine life; estimates of future internal rates of return, mining costs, cash costs, minesite costs and other expenses; estimates of future capital expenditures and other cash needs, and expectations as to the funding thereof; statements and information as to the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs, and estimates of the timing of such exploration, development and production or decisions with respect to such exploration, development and production; estimates of reserves and resources, and statements and information regarding anticipated future exploration; the anticipated timing of events with respect to the Company's mine sites and statements and information regarding the sufficiency of the Company's cash resources. Such statements and information reflect the Company's views as at the date of this document and are subject to certain risks, uncertainties and assumptions, and undue reliance should not be placed on such statements and information. Many factors, known and unknown could cause the actual results to be materially different from those expressed or implied by such forward looking statements and information. Such risks include, but are not limited to: the volatility of prices of gold and other metals; uncertainty of mineral reserves, mineral resources, mineral grades and mineral recovery estimates; uncertainty of future production, capital expenditures, and other costs; currency fluctuations; financing of additional capital requirements; cost of exploration and development programs; mining risks; community protests; risks associated with foreign operations; governmental and environmental regulation; the volatility of the Company's stock price; and risks associated with the Company's byproduct metal derivative strategies. For a more detailed discussion of such risks and other factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements contained in this document, see the Company's Annual Report on Form 20-F for the year ended December 31, 2011, as well as the Company's other filings with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission. The Company does not intend, and does not assume any obligation, to update these forward-looking statements and information. Alain Blackburn, a Qualified Person and the Company’s Senior Vice-President, Exploration, reviewed the technical information disclosed herein. For a detailed breakdown of the Company’s reserve and resource position see the February 15, 2012 press release on the Company’s website. That press release also lists the Qualified Persons for each project.
Notes To Investors
Note Regarding The Use Of Non-GAAP Financial Measures This document presents estimates of future "total cash cost per ounce" and "minesite cost per tonne" that are not recognized measures under United States generally accepted accounting principles ("US GAAP"). This data may not be comparable to data presented by other gold producers. These future estimates are based upon the total cash costs per ounce and minesite costs per tonne that the Company expects to incur to mine gold at the applicable projects and do not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable GAAP measure. A reconciliation of the Company's total cash cost per ounce and minesite cost per tonne to the most comparable financial measures calculated and presented in accordance with US GAAP for the Company's historical results of operations is set forth in the notes to the financial statements included in the Company's Annual Information Form and Annual Report on Form 20-F, for the year ended December 31, 2011, as well as the Company's other filings with the Canadian Securities Administrators and the SEC. Note Regarding Production Guidance The gold production guidance is based on the Company’s mineral reserves but includes contingencies and assumes metal prices and foreign exchange rates that are different from those used in the reserve estimates. These factors and others mean that the gold production guidance presented in this disclosure does not reconcile exactly with the production models used to support these mineral reserves.
3
The Steady Move From Paper To Gold Continues
Macro environment and economic uncertainty very positive for gold
Central Bank buying will continue to be a major catalyst
Old and new investment products will continue to facilitate demand for gold
Mine supply will remain constrained
Gold price has room to run – not a bubble
4
Macro Environment Remains Bullish For Gold Austerity sounds good, but not an acceptable option
Weak global economic recovery forces governments to continue to borrow/print money to effect monetary stimulus…
5 0
20
40
60
80
100
120
140
160
180
% o
f GDP
2008 2013E
US Portugal SpainGreeceIreland ItalyCanada Germany France UK
Government Gross Debt as % of GDP
Source: Scotia Capital
Macro Environment Remains Bullish For Gold … While keeping real interest rates low to negative
6
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
$1,900
1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Gol
d Pr
ice
(US$
/oz)
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
Rea
l Int
eres
t Rat
es (%
)
Gold Price Real Interest Rates
Shaded areas show periods of negative real interest rates
Real Interest Rates: -1.89%Gold Price: $1,707.00
Source: Scotia Capital
Central Banks Continue To Do Their Part Significant Central Bank gold buying likely to continue as emerging market paper
reserves grow
Over two decades of substantial selling is over
Last two years has seen the largest Central Bank gold buying in over 40 years
Central Banks that own gold want to keep it
Gold is becoming an increasingly important reserve asset
7 (600)
(500)
(400)
(300)
(200)
(100)
0
100
200
300
400
500
600
700
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012E
tonn
es
Sales
Purchases
Central Bank Gold Activity
Source: Scotia Capital
Gold Price and Holdings Continue to Rise
Gold ETF holdings reflect a growing, secular demand for gold as a store of value and an investment vehicle
8
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
Q3/04 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12
Glo
bal G
old
ETF
Dem
and
(tonn
es)
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
Gol
d Pr
ice
(US$
/oz)
Tonnes Gold Price
2,545
Source: Scotia Capital
Gold Equities – An Industry In Transition Over the past few years, equities underperformed gold for several reasons:
Obsession with getting bigger meant share dilution and value destruction
Capital and operating cost blowouts hurt project ROI’s
Operating leverage was non-existent
Investors not adequately compensated for taking on higher operating and execution risk
9
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
Jan-
08
May
-08
Sep-
08
Jan-
09
May
-09
Sep-
09
Jan-
10
May
-10
Sep-
10
Jan-
11
May
-11
Sep-
11
Jan-
12
May
-12
Sep-
12
Perf
orm
ance
(%)
Gold Bullion S&P Gold Index
Performance Gap
Source: RBC CM
Changing Industry Dynamics To Improve Performance 1. Industry-wide theme of protecting expanding margins and free cash flow
10
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012E
(US$
/oz)
Cash Costs Margin Source: Scotia Capital
Changing Industry Dynamics To Improve Performance 2. Moving away from marginal ounces
11
-25%
0%
25%
50%
75%
100%
125%
150%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Head
Gra
de v
s Re
serv
e G
rade
$150
$350
$550
$750
$950
$1,150
$1,350
$1,550
Gol
d Pr
ice
(US$
/oz)
Head Grade vs Reserve Grade Gold Price
High-grading
Lower grade becomes economic
Source: Scotia Capital
Changing Industry Dynamics To Improve Performance 3. Reined-in spending and preference for lower-capex projects
2012 saw multiple large capex projects delayed/re-evaluated (i.e. Hope Bay, Pascua Lama, Conga, etc.)
Investors’ intolerance for multi-billion dollar capex blowouts has impacted producers’ strategy
4. Moderate, low-risk growth
Growth has taken a back seat to execution in investor preferences
Best performing gold equities have been those that have been able to deliver on operating results
5. New management teams to adopt lower risk strategies
Several large producers (Barrick, Goldcorp, Kinross, etc.) under new leadership – likely to implement steady, measured approaches aimed at delivering return on invested capital (ROIC)
12
The Case for Gold Equities
Tier 1 October 29 Gold Price Discounted
in Share Price Barrick Gold $1,507 Goldcorp 1,910 Kinross Gold 1,410 Newmont 1,553 Average $1,595
Tier 2 October 29 Gold Price Discounted
in Share Price Agnico Eagle $1,599 Alacer Gold 1,399 Eldorado Gold 1,656 IAMGOLD 1,348 New Gold 1,714 Osisko 1,580 Semafo 1,422 Yamana 1,981 Average $1,587
At current share prices, Tier I gold producers discount a $1,595 gold price; Tier II gold producers discount at $1,587 gold price (per RBC Gold Research)
13 * Source: RBC Capital Markets
The Case for Gold Equities
Tier 1 October 29 P / NAV
Barrick Gold 1.23x Goldcorp 1.32 Kinross Gold 0.84 Newmont 1.10 Average 1.12x
Newmont 2.6%
Barrick Gold 2.0
IAMGOLD 1.6
Newcrest 1.5
Kinross 1.7
Agnico Eagle 1.4
Yamana 1.4
Goldcorp 1.2
(1) Gold price assumptions: 2012 = $1675 2013=$1700 2014=$1700 2015=$1600 2016=$1500 2017+=$1400
Tier 2 October 29 P / NAV
Agnico Eagle 1.16x Alacer Gold 0.83 Eldorado Gold 1.23 IAMGOLD 0.84
New Gold 1.35 Osisko 1.10 Semafo .95 Yamana 1.23 Average 1.09x
Gold Equities are trading at or near net asset value (1) – a historic low
Many gold equities have reasonable and growing yields:
14 * Source: RBC Capital Markets
The Case for Gold Equities
Gold Equities are the cheapest way to participate in the gold bull market
Significant underperformance relative to bullion
Valued at or near net asset value at reasonable gold price assumptions
Most senior/intermediate producers have taken concrete steps to focus on execution, operating and capital cost containment
Provide investors with yield as you await value convergence
15
AEM Update
Agnico-Eagle Mines Limited Strong Cash Generation With Measured, Focused Growth and Attractive Dividend Yield
Portfolio of quality, long-life mines that continue to perform well
Low risk production growth from existing assets
Significant exploration upside and reserve growth demonstrated at existing 100%-owned assets
Political risk profile expected to remain low
Strong cash flow funds dividend, exploration, capital reinvestment programs and enhances financial position
17
Q3 2012 Operating Highlights
Record quarterly gold production – 286,971 oz
Record gold production and throughput at Meadowbank – 110,988 oz / 10,902 tpd
Record gold production at low cash costs from Kittila – 48,619 oz @ $478/oz
Strong gold production at record low cash costs from Mexico – 61,973 oz @ $212/oz
Record cash flow generation
Record quarterly and nine-month cash provided by operating activities of $199M and $590M, respectively
Increased 2012E gold production guidance to approximately 1,025,000 oz
Lowered 2012E total cash cost guidance to approximately $660 / oz
18
Operating Results Record production with improved costs
Q3 2012 YTD 2012 Production
(Gold oz) Total Cash Cost
($/oz) Production
(Gold oz) Total Cash Cost
($/oz)
LaRonde 40,477 564 123,964 514
Kittila 48,619 478 130,605 564
Lapa 24,914 760 81,570 683
Pinos Altos1 61,973 212 182,345 284
Meadowbank 110,988 734 288,792 836
Total 286,971 556 807,276 602
1. Pinos Altos figures include Creston Mascota 2. Adjusted forecast 19
Q3 2012 YTD 2012
2012 Forecast
Gold (oz) 286,971 807,276 1,025,0002
Silver (000’s oz) 1,140 3,450 4,150
Zinc (t) 7,379 29,915 33,000
Copper (t) 982 3,312 4,800
Total cash costs ($/oz) 556 602 6602
Gold 90%
Silver 7%
Base Metals 3%
Q3 2012 Revenue By Metal
Financial Results Strong earnings and cash flow
Q3 2012
Q3 2011
YTD 2012
YTD 2011
YTD Y/Y Change
Gold (ounces in thousands) 287 266 807 758 7%
Total cash costs ($ per ounce) $556 $563 $602 $553 9%
Revenues from mining operations (millions) $536 $521 $1,468 $1,366 7%
Net income (millions) $106 ($82) $228 $32 603%
Net income per share (basic) $0.62 ($0.48) $1.33 $0.19 600%
Cash provided by operating activities (millions) $199 $198 $590 $535 10%
Laronde 17%
Lapa 10%
Kittila 16%
Pinos Altos 29% Meadowbank
28%
YTD 2012 Total Operating Margin - $813M
20
Financial Position Net free cash flow expected to enhance balance sheet strength
21
ALL AMOUNTS ARE IN US$, unless otherwise indicated
Sep. 30, 2012
CASH AND CASH EQUIVALENTS (millions) $321
LONG TERM DEBT (millions) $800
AVAILABLE CREDIT FACILITIES $1.2 Billion
COMMON SHARES OUTSTANDING, BASIC (Q3’12 Weighted average, millions) 171
COMMON SHARES OUTSTANDING, FULLY DILUTED (Q3’12 Weighted average, millions) 172
Generating Net Free Cash Flow Cash flow to fund dividend and growth plans
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
2007A 2008A 2009A 2010A 2011A 2012E 2013 2014
Actual Estimate
Approximate Average EBITDA*
* Approximate average EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) estimate for illustrative purposes using $1700/oz gold, $32/oz silver, $2000/t zinc, C$/US$ 1.00, 1.35USD/€
Capital Expenditures (US$ 000's)
Illustrative Ongoing Re-Investment
22
Operations
LaRonde Transition period to lower mine extended
YTD gold production of 123,964 oz at total cash costs of $514 per ounce
Q3 gold grade 2.5 g/t vs. 1.7 g/t in Q3’11 Heat, congestion and lack of flexibility
extend production ramp-up period through 2015; Life of mine profile remains unchanged
Value of ore per tonne approximately 50% higher over life of mine versus 2012
24
P&P GOLD RESERVES (million oz) 4.7
AVERAGE GOLD RESERVE GRADE (g/t) 4.4
Indicated resource (million oz) 0.4
Inferred resource (million oz) 1.3
Estimated LOM (years) 15
2012 exploration budget (LaRonde & regional) $1M
See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources.
$0M
$15M
$30M
$45M
$60M
$75M
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Cash Operating Margin
Lapa Stable production and cost control continues
YTD gold production of 81,570 oz at total cash costs per ounce of $683
Anticipated life of mine extended into 2016
Underground exploration drifts to east and west will provide access to drill targets that could extend mine life
25
P&P GOLD RESERVES (million oz) 0.5
AVERAGE GOLD RESERVE GRADE (g/t) 6.5
Indicated resource (million oz) 0.3
Inferred resource (million oz) 0.1
Est. LOM (years) 4
2012 exploration budget $5M
See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources.
$0M
$20M
$40M
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Cash Operating Margin
Kittila Record quarterly production at low costs
Q3 gold production a record 48,619 oz at total cash costs of $478 per ounce
Initial 25% expansion study expected in late 2012
Good exploration results at Rimpi suggest potential for ongoing phased expansions
Transitioning fully to underground operations in 2013; Expecting higher unit costs
26
P&P GOLD RESERVES (million oz) 5.2
AVERAGE GOLD RESERVE GRADE (g/t) 4.7
Indicated resource (million oz) 1.0
Inferred resource (million oz) 1.2
Estimated LOM (years) 33
2012 exploration budget $17M
See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources.
$10M
$25M
$40M
$55M
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Cash Operating Margin
Mexico - Pinos Altos & Creston Mascota Strong Q3 production at record low cash costs
Q3 gold production of 61,973 oz at record low total cash costs per ounce of $212
La India to add to production profile in 2014
Production delays at Creston Mascota; Ramp-up to resume in Q2 2013
27
P&P GOLD RESERVES (million oz) 3.1
AVERAGE GOLD RESERVE GRADE (g/t) 2.1
Indicated resource (million oz) 0.8
Inferred resource (million oz) 0.8
Estimated LOM (years) 18
2012 exploration budget $6M
See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources.
$40M
$60M
$80M
$100M
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Cash Operating Margin
Meadowbank Record production and operating profit
Another gold production record in Q3 of 110,988 oz at total cash costs per ounce of $734
De-risked mine plan continuing to hit/exceed targets on throughput (10,902 tpd in Q3) and grade (3.7 g/t in Q3)
28
P&P GOLD RESERVES (million oz) 2.2
AVERAGE GOLD RESERVE GRADE (g/t) 2.8
Indicated resource (million oz) 1.3
Inferred resource (million oz) 0.5
Est. LOM (years) 6
2012 exploration budget $7M
See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources.
$20M
$40M
$60M
$80M
$100M
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Cash Operating Margin
Upcoming News Flow
November 2012 – Exploration update
December 2012 – Annual dividend announcement
February 2013
Q4 Results
New reserve/resource estimates
Updated three year production and cost guidance
29
Sound Business Continues To Deliver No change in strategy or focus
AEM is among industry leaders in per share production, reserves, cash flows and dividends
Meaningful near-term production growth driven by LaRonde, La India and Goldex, with manageable, fully funded capex
Solid, achievable production and cost guidance
Expecting growth in reserves through exploration of existing assets
Business generating strong cash flows in regions of low political risk
Allocated to dividends, exploration and reinvesting in our core assets
30
Appendix
31
Operating Metrics
$0/t
$20/t
$40/t
$60/t
$80/t
$100/t
$120/t
$140/t
4,000tpd
4,500tpd
5,000tpd
5,500tpd
6,000tpd
6,500tpd
7,000tpd
7,500tpd
Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
LaRonde - Ore milled ('000 tonnes) LaRonde - Minesite costs per tonne (C$)
$50/t
$70/t
$90/t
$110/t
$130/t
$150/t
$170/t
0tpd
200tpd
400tpd
600tpd
800tpd
1,000tpd
1,200tpd
1,400tpd
1,600tpd
1,800tpd
2,000tpd
Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Lapa - Ore milled ('000 tonnes)
Lapa - Minesite costs per tonne (C$)Lapa
LaRonde
32
Operating Metrics
€40/t €45/t €50/t €55/t €60/t €65/t €70/t €75/t €80/t €85/t
0tpd
500tpd
1,000tpd
1,500tpd
2,000tpd
2,500tpd
3,000tpd
3,500tpd
Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Kittila - Ore milled('000 tonnes) Kittila - Minesite costs per tonne (EUR)
$0/t
$20/t
$40/t
$60/t
$80/t
$100/t
$120/t
$140/t
0tpd
2,000tpd
4,000tpd
6,000tpd
8,000tpd
10,000tpd
12,000tpd
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Meadowbank - Ore milled ('000 tonnes) Meadowbank - Minesite costs per tonne (C$)
Pinos Altos Meadowbank
Kittila
33
$0/t
$10/t
$20/t
$30/t
$40/t
$50/t
$60/t
0tpd
1,000tpd
2,000tpd
3,000tpd
4,000tpd
5,000tpd
6,000tpd
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Pinos Altos - Ore milled ('000 tonnes) Pinos Altos - Minesite costs per tonne (USD$)
Gold and Silver Reserves and Resources December 31, 2011
Gold Tonnes (000’s)
Gold (g/t)
Gold (ounces)
(000’s)
Proven 11,029 2.80 994
Probable 146,057 3.78 17,757
Total Reserves 157,086 3.71 18,750
Measured & Indicated 168,336 1.78 9,633
Inferred 131,216 2.30 9,712
Silver Tonnes (000’s)
Silver (g/t)
Silver (ounces)
(000’s)
Proven 7,318 45.35 10,670
Probable 72,693 45.06 105,319
Total Reserves 80,011 45.09 115,989
Measured & Indicated 27,801 27.24 24,344
Inferred 34,513 19.00 21,082
See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. Reserves are not a subset of resources.
Copper, Zinc and Lead Reserves and Resources December 31, 2011
Copper Tonnes (000’s)
Copper (%)
Copper (tonnes)
Proven 5,331 0.28 15,025
Probable 27,901 0.27 76,160
Total Reserves 33,232 0.27 91,184
Indicated 7,225 0.12 8,629
Inferred 11,400 0.26 29,664
Zinc Tonnes (000’s)
Zinc (%)
Zinc (tonnes)
Proven 5,331 2.04 108,626
Probable 27,901 0.77 215,522
Total Reserves 33,232 0.98 324,149
Indicated 7,225 1.49 107,338
Inferred 11,400 0.44 49,745
Lead Tonnes (000’s)
Lead (%)
Lead (tonnes)
Proven 5,331 0.23 12,391
Probable 27,901 0.05 13,441
Total Reserves 33,232 0.08 25,832
Indicated 7,225 0.15 11,127
Inferred 11,400 0.05 5,138
35 See AEM Feb 15, 2012 press release for detailed breakdown of reserves and resources. Reserves are not a subset of resources
Notes to Investors Regarding the Use of Resources
Cautionary Note to Investors Concerning Estimates of Measured and Indicated Resources This document uses the terms "measured resources" and "indicated resources". We advise investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. Cautionary Note to Investors Concerning Estimates of Inferred Resources This document also uses the term "inferred resources". We advise investors that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. Scientific and Technical Data Agnico-Eagle Mines Limited is reporting mineral resource and reserve estimates in accordance with the CIM guidelines for the estimation, classification and reporting of resources and reserves. Cautionary Note To U.S. Investors - The SEC permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Agnico-Eagle uses certain terms in this press release, such as “measured”, “indicated”, and “inferred”, and “resources” that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 20-F, which may be obtained from us, or from the SEC’s website at: http://sec.gov/edgar.shtml. A “final” or “bankable” feasibility study is required to meet the requirements to designate reserves under Industry Guide 7. Estimates for all properties were calculated using historic three-year average metals prices and foreign exchange rates in accordance with the SEC Industry Guide 7. Industry Guide 7 requires the use of prices that reflect current economic conditions at the time of reserve determination, which the Staff of the SEC has interpreted to mean historic three-year average prices. The assumptions used for the mineral reserves and resources estimates reported by the Company on February 15, 2012 were based on three-year average prices for the period ending December 31, 2011 of $1,255 per ounce gold, $23.00 per ounce silver, $0.91 per pound zinc, $3.25 per pound copper, $0.95 per pound lead and C$/US$, US$/Euro and MXP/US$ exchange rates of 1.05, 1.37 and 12.86, respectively. The Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”) requires mining companies to disclose reserves and resources using the subcategories of “proven” reserves, “probable” reserves, “measured” resources, “indicated” resources and “inferred” resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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Notes to Investors Regarding the Use of Resources A mineral reserve is the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allows for losses that may occur when the material is mined. A proven mineral reserve is the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. A probable mineral reserve is the economically mineable part of an indicated, and in some circumstances, a measured mineral resource demonstrated by at least a preliminary feasibility study. A mineral resource is a concentration or occurrence of natural, solid, inorganic material, or natural solid fossilized organic material including base and precious metals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Mineral resources which are not mineral reserves do not have demonstrated economic viability. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. A Feasibility Study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study. The effective date for all of the Company’s mineral resource and reserve estimates in this document is December 31, 2011. Additional information about each of the mineral projects that is required by NI 43-101, sections 3.2 and 3.3 and paragraphs 3.4 (a), (c) and (d) can be found in Technical Reports, which may be found at www.sedar.com. Other important operating information can be found in the Company’s Form 20-F and its news release dated February 15, 2012. Alain Blackburn, a Qualified Person and the Company’s Senior Vice-President, Exploration, reviewed the technical information disclosed herein.
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A solid financial position, well-funded growth projects in regions of low political risk, and a focused, consistent strategy put Agnico-Eagle in a strong position to continue creating exceptional per share value.
Sean Boyd President and Chief Executive Officer
David Smith SVP Finance and Chief Financial Officer
Trading Symbol: AEM on TSX & NYSE
Investor Relations: 416-847-8665 [email protected]
Executive and Registered Office: 145 King Street East, Suite 400 Toronto, Ontario, Canada, M5C 2Y7 Tel: 416-947-1212 Toll-Free: 888-822-6714 Fax: 416-367-4681
agnico-eagle.com