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November 06, 2014 --- Vol. 08, No. 45November 2014

Strong performance boosts 2014 results, outlook for 2015

Agnico Eagle Mines Oct. 29 reported a loss of US$15.1 million for the third quarter of 2014, and attributed the poor result on a non-cash foreign currency translation loss on deferred tax liabilities of US$11.3 million, other non-recurring losses of US$4.9 million, various mark-to-market adjustment losses of US$4.3 million, non-cash stock option expense of US$3.5 million and non-cash foreign currency translation gains of US$4.7 million. Excluding these items would result in an adjusted net income of US$4.2 million, or US2 cents per share, the company said. By comparison, Agnico Eagle reported net income of US$74.9 million, or US43 cents per share, for the third quarter of 2013.

The latest results also were affected by additional amortization expenses resulting from the increase in the net book value of depreciable assets under International Financial Reporting Standards; increased exploration expenses at the new Amaruq project and at the Canadian Malartic Partnership; and lower realized gold prices on timing of sales (about 3 percent lower than the average London PM gold fix for the quarter).

The Company adopted IFRS as of July 1, 2014 and all financial results herein, including those for prior periods, have been calculated in accordance with IFRS.

For the first nine months of 2014, Agnico Eagle reported net income of US$104.3 million, or US55 cents per share. This compares with the first nine months of 2013 when net income was US$93.6 million, or US54 cents per share. Financial results in the 2014 period were positively affected by significantly higher gold production (1,041,753 ounces as opposed to 776,892 ounces) due primarily to higher grades at Meadowbank, the acquisition of Canadian Malartic and contributions from commercial production at Goldex and La India.

Third quarter 2014 cash provided by operating activities was US$71.2 million (US$129.2 million before changes in non-cash components of working capital), compared to cash provided by operating activities of US$88.4 million in the third quarter of 2013 (US$176.1 million before changes in non-cash components of working capital).

For the first nine months of 2014, cash provided by operating activities was US$504.4 million (US$472.8 million before changes in non-cash components of working capital), as compared with the first nine months of 2013 when cash provided by operating activities was US$340.3 million (US$415.2 million before changes in non-cash components of working capital).

The higher net income and cash provided by operating activities in the first nine months of 2014 resulted despite lower realized metal prices and is a result of significantly higher gold production.

“In 2014, we have strengthened our businesses in each of our four principal operating regions, and we anticipate continued strong production performance in the fourth quarter of 2014 and for 2015 as a number of our key mines continue to expand and ramp up their output. As such, we are pleased to provide increased production guidance of about 1.6 million ounces for 2015,” said Agnico Eagle President and CEO Sean Boyd. “With the pending closure of the Cayden acquisition and a maiden resource expected at Amaruq by early next year, Agnico is well-positioned to drive further growth on both our Northern and Southern business platforms well into the future,” Boyd added.

Third-quarter 2014 highlights include:

• Upper end of 2014 guidance projected to be exceeded – Production for 2014 is expected to be approximately 1.4 million ounces with total cash costs on a by-product basis of US$650 to US$675 per ounce;

• Updated 2015 guidance – Production for 2015 is now expected to be roughly 1.6 million ounces as a result of expected increased production at Meadowbank, Kittila and the Mexican operations;

• Initial resource expected at Amaruq project by early 2015 – 31,400-meter drill program completed in October 2014, final assays are being compiled, resource estimation in progress; and,

• Continued strong operating performance in the third quarter 2014 – Payable production of 349,273 ounces at total cash costs per ounce on a by-product basis of US$716 (including 64,761 ounces from the Canadian Malartic mine), compared with 315,828 ounces (including 1,505 ounces of pre-commercial production from Goldex) at total cash costs per ounce of US$591 in the third quarter of 2013.

The higher cash costs per ounce in the 2014 period were due primarily to lower production of gold at Meadowbank with the completion of mining in the higher grade Goose Pit, scheduled and unscheduled shutdowns at the LaRonde mill to upgrade the production and service hoist drives, and a two week tie-in shutdown for the mill expansion at Kittila.

Payable gold production for the first nine months of 2014 was 1,041,753 ounces (including 76,639 ounces from the Canadian Malartic mine) compared to payable gold production of 776,892 ounces (including 8,801 ounces of production from Kittila, Creston Mascota, and Goldex that were not included in the total cash cost calculation) in the comparable 2013 period.

For the first nine months of 2014, total cash costs on a by-product basis were US$627 per ounce. This compares with total cash costs of US$659 per ounce on a by-product basis in the first nine months of 2013. The higher production and lower total cash costs in 2014 are due to a strong first-half contribution (higher production and lower costs) from Meadowbank and reflects contributions from Goldex, La India and Canadian Malartic.

Given its strong mill and mine performance, Meadowbank is on track for a record production year in 2014. These operating efficiencies are expected to continue to drive strong production in 2015 as well.

Impressive exploration results from an expanded 2014 exploration program at the new Amaruq discovery (located about 50 kilometers (31 miles) from Meadowbank) appears to have the potential to extend its current mine life. A maiden resource is expected in early 2015 (just over a year from the time of the initial discovery at Amaruq) and studies are currently underway to evaluate how Amaruq can be incorporated into the Meadowbank mine plan with possible synergies to the Meliadine project.

Given the strong operating results over the first nine months, Agnico Eagle’s 2014 production forecast has been increased for a second time and is now expected to total about 1.4 million ounces, exceeding the previously announced second-quarter 2014 guidance range of 1.35 million to 1.37 million ounces, while total cash costs on a by-product basis are expected to remain in the range of US$650 to US$675 per ounce. Expected all-in sustaining cost guidance calculated on a by-product basis for 2014 is unchanged at US$990 per ounce.

Given the favorable developments in the company’s four principal operating regions, production for 2015 is now expected to be approximately 1.6 million ounces as a result of increased production forecasts at Meadowbank, Kittila and the Mexican operations. Prior 2015 guidance (see the news release dated February 12, 2014) was 1.25 million ounces (excluding Canadian Malartic). Detailed guidance for 2015, 2016 and 2017 will be included in Agnico Eagle’s regular three-year guidance statement to be provided in February 2015.

The Meadowbank mill processed an average of 11,492 metric tons per day in the third quarter of 2014. This compares with 11,379 tpd in the third quarter of 2013. The slight increase in the 2014 period is largely due to the continued optimization of the mine plan and improved equipment availability.

Minesite costs per metric ton were C$74 in the third quarter of 2014, compared with C$81/t in the third quarter of 2013. Costs were lower in the 2014 period due to higher throughput in 2014 versus 2013, ongoing cost reduction initiatives, better fuel management and the positive currency impact from the weakening of the Canadian dollar.

For the first nine months of 2014, the Meadowbank mill processed an average of 11,365 tpd, compared with 11,334 tpd in the first nine months of 2013. Minesite costs per metric ton totaled about C$73 in the first nine months of 2014, less than the C$78/t in the comparable 2013 period for the same reasons described above.

Payable production in the third quarter of 2014 was 91,557 ounces of gold at total cash costs per ounce of US$777 on a by-product basis. This compares with payable production in the third quarter of 2013 of 133,489 ounces of gold at total cash costs per ounce of US$610 on a by-product basis. The decrease in year-over-year production and higher total cash costs is due to the expected decrease in the grade (roughly 31 percent) compared to the previous period resulting from the mining sequence.

In the first nine months of 2014, Meadowbank produced 366,162 ounces of gold at total cash costs per ounce of US$561 on a by-product basis. In the first nine months of 2013, the mine produced 307,180 ounces of gold at total cash costs per ounce of US$761 on a by-product basis. The stronger 2014 results are due to the mining of higher grade ore in the Goose pit during first half of 2014, slightly better recoveries and considerably lower mine site costs per metric ton.

Gold production at Meadowbank in the fourth quarter is expected to be in line with the third quarter of 2014, while production in 2015 is expected to significantly exceed prior guidance (375,000 ounces as presented Feb. 12) due to the expectation of a strong grade cycle in the Portage pit. Current mine life at Meadowbank is estimated to be through 2017.

Exploration at the Amaruq project in September and October focused on drilling the Whale Tail gold zone, which was discovered this summer. The US$9 million exploration program (144 drill holes totaling 31,623 meters) concluded in mid-October. This represents a significant increase from the US$1.5 million program initially budgeted, due to the impressive results obtained from geophysics, field work and drilling as the year progressed. Exploration expenditures during the quarter were US$7.4 million.

Assay results have been received for more than 95 percent of this year’s drilling, with the rest expected in early November. The Amaruq property is about 50 kilometers (31 miles) northwest of the Meadowbank mine in Nunavut. The latest drill intercepts are expected in November.

Work is already underway on an initial Amaruq mineral resource estimate, which is anticipated in early 2015. The current plan is to re-open the Amaruq exploration camp in late February 2015 and begin a winter drilling program in March, completing the camp expansion to accommodate 60 personnel by late March. Permitting and preliminary engineering activities continue for the possible construction of an all-weather exploration road linking the Amaruq exploration site to the Meadowbank mine for the transport of fuel, equipment and personnel.

Given the size and scope of the discovery, studies are currently under way to evaluate how Amaruq might be incorporated into the Meadowbank operational plan and possibly linked with the Meliadine project.

At the Meliadine project located near Rankin Inlet in Nunavut, underground development, exploration drilling, technical studies and permitting continued in the third quarter of 2014. Meliadine is one of Agnico Eagle’s largest gold projects in terms of reserves and resources.

In the first nine months of 2014, 148 exploration and conversion drill holes totaling 36,547 meters were completed. Year-to-date, the exploration ramp has been extended in length by 789 meters, and remains on track to reach the targeted depth of 225 meters by year-end. Recent drill results are expected to expand gold resources at the Pump, Wesmeg/Normeg and Wolf deposits. An updated technical study is expected in early 2015.

Final public hearings for Meliadine were successfully completed in late August, with the Nunavut Impact Review Board granting conditional approval of the project.


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