SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For the Month of May 2003
AGNICO-EAGLE MINES LIMITED
(Translation of registrant's name into English)
145 King Street East, Suite 500, Toronto, Ontario M5C 2Y7
[Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.]
Form 20-F ý Form 40-F o
[Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No ý
[If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AGNICO-EAGLE MINES LIMITED | |||
By: /s/ DAVID GAROFALO |
|||
David Garofalo | |||
Vice-President, Finance and Chief Financial Officer |
Date: May 5, 2003
Agnico-Eagle Mines Limited reported a net loss of $6.2 million, or $0.07 per share in the first quarter of 2003 compared to net income of $0.5 million, or $0.01 per share last year. Included in the first quarter 2003 results is a one-time net of tax non-cash charge of $1.7 million, or $0.02 per share, representing the cumulative effect of the adoption of a new US GAAP accounting standard, FAS 143, relating to future reclamation obligations.
First Quarter Results Negatively Impacted by Rock Fall
Gold production in the first quarter was below the Company's expectations with 55,005 ounces produced compared to 60,259 ounces in the first quarter of 2002. Cash operating costs increased from $129 per ounce to $169 per ounce due to lower gold and byproduct zinc production and a stronger Canadian dollar, only partly offset by higher silver and copper production. Total cash operating costs, including the El Coco royalty, increased to $243 per ounce from $161 per ounce.
The main reason for the production shortfall was a previously reported fall of ground at the Company's LaRonde gold mine in Quebec. This event 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.
The key facts behind this incident are as follows:
Impact on 2003 Gold Production and Total Cash Operating Costs
As previously disclosed, the Company expects its 2003 gold production to be approximately 300,000 ounces, or 20% lower than the previous target of 375,000. This revision is a timing issue as opposed to a loss of gold production. As a precaution, the Company decided to delay the extraction of 10 mining blocks in the lower part of the mine into 2004. This higher grade gold tonnage will be replaced with already developed zinc/silver ore in the upper part of the mine. As a result of this gold production shortfall, a stronger than anticipated Canadian dollar and lower than expected silver prices, total cash operating costs to produce an ounce of gold in 2003 are projected to be $180 per ounce, including an estimated El Coco royalty of $21 per ounce, or 44% higher than the Company's previous target of $125 per ounce.
1
A summary of the impact on the metal production and cash operating cost estimates, together with the material assumptions used in the Company's estimates, follows:
|
Revised Estimate |
Prior Estimate |
|||
---|---|---|---|---|---|
Ore processed (000's tons) | 2,700 | 2,800 | |||
Gold grade (oz./t) | 0.12 | 0.14 | |||
Payable metal production: | |||||
Gold (ozs.) | 300,000 | 375,000 | |||
Silver (000's ozs.) | 4,000 | 3,800 | |||
Zinc (000's lbs.) | 94,000 | 84,000 | |||
Copper (000's lbs.) | 26,000 | 31,000 | |||
Total cash operating costs ($/oz.) | 180 | 125 | |||
Assumptions: | |||||
Gold ($/oz.) | 320 | 310 | |||
Silver ($/oz.) | 4.60 | 5.00 | |||
Zinc ($/lb.) | 0.36 | 0.36 | |||
Copper ($/lb.) | 0.75 | 0.75 | |||
US$/C$ exchange rate | 1.47 | 1.53 |
The estimated sensitivity of LaRonde's 2003 total cash operating costs to a 10% change in metal prices and exchange rates follows:
Variable |
Impact on total cash operating costs ($/oz.) |
|
---|---|---|
US$/C$ | 23 | |
Silver | 6 | |
Copper | 6 | |
Zinc | 5 | |
Gold | 2 |
LaRonde Operating Performance Improving
Despite the difficulties stemming from the rock fall in the quarter, the Company continued to optimize the LaRonde operation. Three key performance indicators continued to improve including:
Productivity is expected to steadily improve on the lower levels as the impact of the improved development performance continues to provide more mining blocks. Also impacting future productivity will be the availability of the second underground crusher in May.
2
LaRonde Continues Aggressive Drilling Program
Nine drill rigs were in operation during the quarter, completing nearly 55,000 feet of diamond drilling on the following target areas:
Increased access from lower level haulage drifts and production draw points permitted more emphasis to be placed on Zone 7 which had previously not been definition drilled. Definition and delineation drilling started on Zone 7 from Levels 170, 206 and 215. The results, which are summarized below, were better than expected and have not yet been incorporated in the revised 2003 production target:
Drill Hole |
True Thickness(ft) |
From |
To |
Gold(oz/ton) Cut(1.0 oz) |
Silver(oz/ton) |
Copper(%) |
Zinc(%) |
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
3194-68 | 9.2 | 511.8 | 523.0 | 0.24 | 0.60 | 0.24 | 1.95 | |||||||
3206-17 | 9.2 | 547.6 | 557.4 | 0.34 | 1.12 | 0.35 | 2.32 | |||||||
3206-19 | 9.8 | 508.2 | 518.7 | 0.29 | 0.78 | 0.56 | 1.50 | |||||||
3206-20 | 9.2 | 583.3 | 594.5 | 0.17 | 1.00 | 0.27 | 3.57 | |||||||
3206-24 | 9.2 | 710.6 | 721.4 | 0.15 | 0.79 | 0.62 | 2.39 | |||||||
3215-31 | 9.2 | 493.4 | 502.6 | 0.52 | 1.45 | 0.66 | 2.40 | |||||||
3215-48 | 9.2 | 525.3 | 535.1 | 0.16 | 0.29 | 0.11 | 0.39 | |||||||
3215-49 | 9.2 | 493.4 | 502.9 | 0.34 | 0.55 | 0.25 | 2.02 | |||||||
3215-52 | 9.2 | 540.3 | 549.5 | 0.26 | 0.85 | 0.41 | 0.68 |
Deep drilling tested Zone 20 North below the bottom of the Penna Shaft with the objective of acquiring sufficient drill hole density to continue the conversion of resource to reserve. As previously reported, the program was successful in converting 1.0 million ounces of gold into reserves in 2002. Additional drilling not previously reported follows:
Drill Hole |
True Thickness(ft) |
From |
To |
Gold(oz/ton) Cut(1.5 oz) |
Silver(oz/ton) |
Copper(%) |
Zinc(%) |
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
3215-34A | 72.2 | 2,054.1 | 2,175.8 | 0.12 | 0.89 | 0.71 | 0.04 | |||||||
3215-38Au | 33.8 | 1,467.8 | 1,511.8 | 0.15 | 0.74 | 0.60 | 0.09 | |||||||
3215-38Zn | 23.0 | 1,511.8 | 1,541.3 | 0.06 | 0.90 | 0.14 | 5.46 | |||||||
3215-43 | 32.8 | 1,806.4 | 1,847.7 | 0.16 | 0.52 | 0.72 | 0.10 | |||||||
3215-50 | 45.9 | 1,827.4 | 1,895.3 | 0.11 | 0.38 | 0.39 | 0.02 | |||||||
3215-58 | 29.5 | 1,317.6 | 1,352.7 | 0.19 | 1.55 | 0.65 | 0.13 | |||||||
including | 16.4 | 1,326.4 | 1,347.8 | 0.25 | 1.88 | 0.70 | 0.07 |
The deep drilling program has entered a new phase with increased access provided from the Level 215 exploration drift. This program will provide additional information required in the Deep LaRonde Study. To date, 767 feet of development has been completed to the west.
Regional Growth Studies Progressing on Lapa, Goldex and Deep LaRonde
Subsequent to the end of the first quarter, Agnico-Eagle achieved a number of significant positive developments with regard to its regional growth strategy:
3
High-Grade Gold Ounces Acquired and Discovered Economically
Agnico-Eagle has agreed to acquire, subject to the completion of a definitive legal agreement, Breakwater's joint venture interest in the Lapa high-grade gold discovery, located seven miles east of the LaRonde Mine in northwestern Québec. Under the terms of the arrangement, Agnico-Eagle will increase its ownership interest to 100% for consideration of $8.925 million and net smelter royalties ranging from 0.5% to 1.0%. An additional $1 million will be payable to Breakwater if Lapa's published inferred mineral resource reaches 2 million ounces of gold. Of the total potential cash consideration of $9.925 million, $2 million will be creditable against future net smelter royalties.
In the course of earning an 80% interest in the property under an option agreement with Breakwater, Agnico-Eagle outlined a deposit on Lapa in late 2002 that is currently known to host an inferred mineral resource of 3.3 million tons grading 0.25 ounces per ton of gold, containing 816,000 ounces of gold (cut to 1.5 oz./t). Including acquisition costs and exploration spending conducted by Agnico-Eagle to date, the discovery costs to the Company of this deposit is approximately $11 per ounce of gold based on the current inferred mineral resource.
Accelerated Drilling Program on Lapa Expanding High-Grade Zone
Agnico-Eagle is conducting a $2.5 million exploration program on Lapa in 2003 with five drills in operation. Two drills are currently probing the eastern limit as well as at depth (drill holes 118-03-20 & 17A), a third on increasing the drill hole density within the known inferred mineral resource outline (drill hole 118-03-19), a fourth drill obtaining additional samples for metallurgical testing (drill hole TML-01) and the last exploring the deposit at depth (drill hole 118-03-16A).
Two additional results have been obtained since the last public update in February. They have been summarized below:
Drill Hole |
True Thickness(ft) |
From |
To |
Gold(oz/ton) Cut(1.5 oz) |
Uncut |
|||||
---|---|---|---|---|---|---|---|---|---|---|
118-03-16 | 12.1 | 4,186.0 | 4,203.4 | 0.39 | 0.52* | |||||
118-03-18B | 9.2 | 2,046.9 | 2,061.3 | 0.20 | 0.20* | |||||
*preliminary results
The most interesting result was obtained in drill hole 118-03-16, targeted to test the downward eastern extension of drill hole 118-03-04A, which had previously intersected 0.21 ounces of gold over a true thickness of 99.1 feet (cut to 1.5 oz./t). The most recent result intersected the Contact Zone at a depth of 3,800 feet below surface, or 800 feet below and to the east of the deepest previous intersection. The overall mineralized envelope in this latest intersection was 75 feet.
As a result, the Contact Zone has been traced over a vertical distance of 2,800 feet and a horizontal distance of 1,600 feet. Currently drill hole 118-03-16A is in progress to test the area 200 feet above drill hole 118-03-16 between the two deepest intercepts returned to date. Further positive results in this area could have a significant impact on the overall resource estimate of the Contact Zone.
Drill hole 118-03-18B was an infill drill hole drilled in the upper western sector of the deposit. The drill hole essentially confirmed previous drilling results.
Drill hole 118-03-17 (not disclosed above) was drilled at a depth of 3,300 feet below surface to test the eastern and depth extension of the Contact Zone. The drill hole was abandoned due to failure of the drill string. However, the drill hole did encounter erratic gold mineralization with values up to 0.25 ounces of gold per ton. The drill hole did not reach the target area prior to the drill string failure. A wedge cut is currently being drilled 100 feet above drill hole 118-03-17.
Initial metallurgical testing on small drill core samples has yielded favourable results. Test work on a larger sample to be extracted from the current drilling program is expected to be completed by the end of the third
4
quarter. In addition, the Company expects to release an updated mineral resource calculation and further drilling results prior to its Annual General Meeting on June 19.
All Lapa drill core is BQ caliber and is logged at the LaRonde Mine by a senior project geologist for the Company's Exploration Division, who is fully qualified per the standards outlined in National Instrument 43-101. The drill core is sawed in half with one half sent to a commercial laboratory and the other half retained for future reference. Upon reception of the assay results, the pulps and rejects are recovered and submitted to a second laboratory for check-assay purposes. The gold assaying method uses a 30-gram sample by Fire Assays or Metallic Sieve finish as requested by the project geologist. The laboratories used are Bourlamaque Assay Laboratories Ltd., Val d'Or, Québec, and Expert Laboratories Inc., Rouyn-Noranda, Québec.
Strategic Acquisitions of Property on Prolific Belt Continues
In the first quarter, the Company also acquired 100% of the Normand Lake and Chibex North Properties, all located on the same geological trend as Lapa. Chibex North is located immediately south of and adjacent to Lapa. Agnico-Eagle has also agreed to acquire Breakwater's 662/3% interest in the Chibex South Property for $75,000 and a 0.66% net smelter royalty. Chibex South is located south of and adjacent to Chibex North. Agnico-Eagle now controls properties covering 12 miles on the geological contact that hosts the Lapa Contact Zone.
With these property acquisitions, Agnico-Eagle's land package in northwestern Québec has been expanded to 2,467 hectacres and is strategically located along two of the most prolific gold mining trends, the Cadillac-Larder Lake Break hosting most of the vein type deposits from Val d'Or, in Northwestern Québec to the Kirkland Lake District in Northeastern Ontario as well as the Cadillac-Bousquet Belt which hosts the LaRonde deposits. The Cadillac-Larder Lake Break is one of North America's most prolific gold mining trends.
At Goldex, a number of technical studies have been initiated including rock fragmentation and subsidence, hoisting, shaft design, equipment, ventilation, manpower, rock mechanics, mining methods and underground infrastructure, metallurgy and plant design, resource estimate and environmental impact. These will culminate in a feasibility study, the results of which the Company plans to release at its Annual General Meeting on June 19, 2003.
A rock mechanic study was also initiated on the Deep LaRonde project. A scoping study on this project is also expected in time for the Annual General meeting.
The longitudinal illustrations that detail the LaRonde and Lapa drill results presented in this report can be viewed and downloaded from the Company's website www.agnico-eagle.com (Press Release) or:
http://files.newswire.ca/3/Zone7.pdf
http://files.newswire.ca/3/0423Laronde20N.pdf
http://files.newswire.ca/3/geology.pdf
http://files.newswire.ca/3/longitudinal.pdf
Scientific and Technical Data
A qualified person, Marc. H. Legault, P.Eng., Agnico-Eagle's Manager, Project Evaluation, has verified the data disclosed in this report. The verification procedures, the quality assurance program, and quality control procedures may be found in the 2001 Ore Reserve Report, Agnico-Eagle Mines Limited, LaRonde Division, dated February 25, 2001, filed on SEDAR.
Forward Looking Statements
This report contains certain "forward-looking statements" (within the meaning of the United States Private Securities Litigation Reform Act of 1995) that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties are disclosed under the heading "Risk Factors" in the Company's Annual Information Form (AIF) filed with certain Canadian securities regulators
5
(including the Ontario and Quebec Securities Commissions) and with the United States Securities and Exchange Commission (as Form 20-F).
Agnico-Eagle is a long established Canadian gold producer with operations located in northwestern Québec and exploration and development activities in eastern Canada and the southwestern United States. Agnico-Eagle's operating history includes over three decades of continuous gold production, primarily from underground mining operations. Agnico-Eagle's LaRonde Mine in Québec is Canada's largest gold deposit. The Company has full exposure to higher gold prices consistent with its policy of no forward gold sales. It has paid a cash dividend for 23 consecutive years.
April 24, 2003
Sean
Boyd
President & Chief Executive Officer
6
QUARTERLY MANAGEMENT DISCUSSION AND ANALYSIS UNITED STATES GAAP
(all figures are expressed in US dollars unless otherwise noted)
Results of Operations
Agnico-Eagle reported a first quarter net loss of $6.2 million, or $0.07 cents per share, compared to net income of $0.5 million, or $0.01 cent per share, in the first quarter of 2002. Gold production in the first quarter of 2003 was below the Company's expectations with 55,005 ounces produced compared to 60,259 ounces in the first quarter of 2002. The first quarter production shortfall is due to a previously reported rock fall at the Company's LaRonde Mine. This event 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.
The first quarter of 2003 included a non-cash charge of $1.7 million (net of tax), or $0.02 per share, representing the cumulative effect of adopting Financial Accounting Standards Board Statement No. 143, "Accounting for Asset Retirement Obligations" ("FAS 143"). For a full description of the accounting change, please see the Company's 2002 Management Discussion and Analysis of Operations and Financial Condition under the caption "Critical Accounting Policies Reclamation Costs."
The table below summarizes the key variances in net loss for the first quarter of 2003 from the net income reported for the same period in 2002.
(millions of dollars) |
First Quarter |
|||
---|---|---|---|---|
Increase in gold price | $ | 3.0 | ||
Increase in copper production | 2.0 | |||
Increase in silver production and price | 1.6 | |||
Increase in operating costs | (4.0 | ) | ||
Increase in El Coco royalty | (2.2 | ) | ||
Cumulative effect of adopting FAS 143 | (1.7 | ) | ||
Decrease in gold production | (1.7 | ) | ||
Increase in depreciation & amortization | (1.3 | ) | ||
Decrease in zinc production | (1.0 | ) | ||
Stronger Canadian dollar | (0.8 | ) | ||
Other | (0.6 | ) | ||
Net negative variance | $ | (6.7 | ) | |
The increase in operating costs was attributable to the LaRonde Mine operating at 7,000 tons of ore treated per day compared to the 5,000 ton per day rate in the first quarter of 2002. Operating at the expanded rate, the mill processed a record 602,633 tons of ore in the first quarter of 2003 leaving onsite operating costs per ton unchanged over the first quarter of 2002 at C$52 per ton.
In the first quarter of 2003 cash operating costs per ounce, excluding the El Coco royalty, increased to $169 per ounce from $129 per ounce in 2002. Total cash operating costs to produce an ounce of gold were $243 compared to $161 in the same quarter of 2002. Although onsite operating costs remained unchanged at $52 per ton, total cash operating costs increased over 2002 due to lower gold production, a higher El Coco royalty, lower byproduct zinc production and a stronger Canadian dollar. As illustrated by the table above, these negative impacts on total cash operating costs were only partially offset by increases in byproduct copper and silver production.
7
The following table provides a reconciliation of the total cash operating costs per ounce of gold produced to the financial statements:
(thousands of dollars, except where noted) |
Q1 2003 |
Q1 2002 |
|||||||
---|---|---|---|---|---|---|---|---|---|
Cost of production per Consolidated Statements | |||||||||
of Income (Loss) | $ | 24,347 | $ | 17,603 | |||||
Adjustments: | |||||||||
Byproduct revenues | (11,379 | ) | (7,535 | ) | |||||
El-Coco royalty | (4,075 | ) | (1,908 | ) | |||||
Revenue recognition adjustment(i) | 508 | (57 | ) | ||||||
Non cash reclamation provision | (105 | ) | (303 | ) | |||||
Cash operating costs | $ | 9,296 | $ | 7,800 | |||||
Gold production (ounces) | 55,005 | 60,529 | |||||||
Cash operating cost (per ounce) | $ | 169 | $ | 129 | |||||
El-Coco royalty (per ounce) | 74 | 32 | |||||||
Total cash operating costs (per ounce)(ii) | $ | 243 | $ | 161 | |||||
Notes:
Amortization expense increased 39% to $4.5 million in the first quarter of 2003 from $3.2 million in the first quarter of 2002. The increase in amortization is attributable to the increased mill throughput of 26% and increased capital base resulting from the Company's expansion of the LaRonde Mine to 7,000 tons of ore treated per day.
Income and mining taxes increased to $0.6 million in the first quarter of 2003 from nil in the first quarter of 2002. The Company does not expect to pay cash income and mining taxes in 2003 however accrues deferred income and mining taxes to reflect the drawdown of tax pools.
Liquidity and Capital Resources
At March 31 2003, Agnico-Eagle's consolidated cash and cash equivalents were $141 million while working capital was $174 million. At December 31, 2002, the Company had $153 million in cash and cash equivalents and $185 million in working capital. Including the undrawn portion of its bank credit facility, the Company had $241 million of available cash resources at March 31, 2003 compared to $253 million at December 31, 2002. The Company currently has $100 million in undrawn credit and expects to have an additional $25 million available in the fourth quarter of 2003 once certain completion tests are satisfied in connection with the LaRonde expansion to 7,000 tons per day.
Cash flow from operating activities, before working capital changes, was $(0.6) million in the first quarter of 2003 compared to $5.0 million in the first quarter of 2002. Operating cash flow was impacted by lower gold production, a higher El Coco royalty, lower byproduct zinc production and a stronger Canadian dollar offset partially by higher byproduct copper and silver production.
For the three months ended March 31, 2003, capital expenditures were $10.8 million compared to $14.3 million in the first quarter of 2002. The decrease is due to the Company having substantially completed the expansion of the LaRonde Mine to 7,000 tons per day. For the full year 2003, capital expenditures are expected to be $39 million, including $36 million at LaRonde and $3 million on other properties. The Company expects to fund these expenditures from operating cash flow and existing cash balances.
8
AGNICO-EAGLE MINES LIMITED
SUMMARIZED QUARTERLY DATA
(Unaudited)
|
Three months ended March 31, |
||||||||
---|---|---|---|---|---|---|---|---|---|
|
2003 |
2002 |
|||||||
|
(thousands of United States dollars, except where noted, US GAAP basis) |
||||||||
Consolidated Financial Data | |||||||||
Income and cash flow |
|||||||||
LaRonde Division |
|||||||||
Revenues from mining operations | $ | 30,112 | $ | 25,547 | |||||
Mine operating costs | 24,347 | 17,603 | |||||||
Mine operating profit | $ | 5,765 | $ | 7,944 | |||||
Net income (loss) for period | $ | (6,237 | ) | $ | 477 | ||||
Net income (loss) per share | $ | (0.07 | ) | $ | 0.01 | ||||
Operating cash flow (before non-cash working capital) | $ | (577 | ) | $ | 4,972 | ||||
Weighted average number of shares basic (in thousands) | 83,725 | 68,006 | |||||||
Tons of ore milled | 602,633 | 477,333 | |||||||
Head grades: | |||||||||
Gold | 0.10 | 0.14 | |||||||
Silver | 2.44 | 2.52 | |||||||
Zinc | 3.55% | 5.24% | |||||||
Copper | 0.45% | 0.22% | |||||||
Recovery rates: | |||||||||
Gold | 91.66% | 94.54% | |||||||
Silver | 83.80% | 83.70% | |||||||
Zinc | 78.20% | 84.90% | |||||||
Copper | 79.10% | 60.30% | |||||||
Payable production: | |||||||||
Gold (ounces) | 55,005 | 60,259 | |||||||
Silver (ounces in thousands) | 1,036 | 724 | |||||||
Zinc (pounds in thousands) | 27,964 | 35,997 | |||||||
Copper (pounds in thousands) | 3,956 | 1,131 | |||||||
Realized prices per unit of production: | |||||||||
Gold (per ounce) | $ | 350 | $ | 300 | |||||
Silver (per ounce) | $ | 4.70 | $ | 4.48 | |||||
Zinc (per pound) | $ | 0.35 | $ | 0.36 | |||||
Copper (per pound) | $ | 0.76 | $ | 0.72 | |||||
Onsite operating costs per ton milled (Canadian dollars) | $ | 52 | $ | 52 | |||||
Operating costs per gold ounce produced: |
|||||||||
Onsite operating costs (including asset retirement expenses) | $ | 378 | $ | 258 | |||||
Less: Non-cash asset retirement expenses | (2 | ) | (5 | ) | |||||
Net byproduct revenues | (207 | ) | (124 | ) | |||||
Cash operating costs | $ | 169 | $ | 129 | |||||
Accrued El Coco royalties | 74 | 32 | |||||||
Total cash costs | $ | 243 | $ | 161 | |||||
Non-cash costs: | |||||||||
Reclamation provision | 2 | 5 | |||||||
Amortization | 82 | 54 | |||||||
Total operating costs | $ | 327 | $ | 220 | |||||
9
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars, US GAAP basis)
|
March 31, 2003 |
December 31, 2002 |
||||||
---|---|---|---|---|---|---|---|---|
|
(Unaudited) |
|
||||||
ASSETS | ||||||||
Current | ||||||||
Cash and cash equivalents | $ | 141,238 | $ | 152,934 | ||||
Metals awaiting settlement | 25,465 | 29,749 | ||||||
Income taxes recoverable | 2,341 | 2,900 | ||||||
Inventories: | ||||||||
Ore stockpiles | 5,116 | 4,604 | ||||||
In-process concentrates | 1,411 | 1,008 | ||||||
Supplies | 4,916 | 5,008 | ||||||
Prepaid expenses and other | 9,027 | 10,025 | ||||||
Total current assets | 189,514 | 206,228 | ||||||
Fair value of derivative financial instruments | 2,437 | 1,835 | ||||||
Investments and other assets | 9,514 | 8,795 | ||||||
Future income and mining tax assets | 23,664 | 23,890 | ||||||
Mining properties | 361,289 | 353,059 | ||||||
$ | 586,418 | $ | 593,807 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Current | ||||||||
Accounts payable and accrued liabilities | $ | 14,576 | $ | 15,246 | ||||
Dividends payable | 706 | 3,013 | ||||||
Income and mining taxes payable | | 954 | ||||||
Interest payable | 260 | 1,873 | ||||||
Total current liabilities | 15,542 | 21,086 | ||||||
Long-term debt | 143,750 | 143,750 | ||||||
Fair value of derivative financial instruments | | 5,346 | ||||||
Asset retirement obligation and other liabilities | 8,846 | 5,043 | ||||||
Future income and mining tax liabilities | 22,215 | 20,889 | ||||||
Shareholders' Equity |
||||||||
Common shares | ||||||||
Authorized unlimited | ||||||||
Issued 83,767,794 (2002 83,636,861) | 593,216 | 591,969 | ||||||
Warrants | 15,732 | 15,732 | ||||||
Contributed surplus | 7,181 | 7,181 | ||||||
Deficit | (202,260 | ) | (196,023 | ) | ||||
Accumulated other comprehensive loss | (17,804 | ) | (21,166 | ) | ||||
Total shareholders' equity | 396,065 | 397,693 | ||||||
$ | 586,418 | $ | 593,807 | |||||
Note: Certain items have been reclassified from financial statements previously presented to conform to the current presentation.
10
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(thousands of United States dollars, except per share amounts, US GAAP
basis)
|
Three months ended March 31, |
|||||||
---|---|---|---|---|---|---|---|---|
|
2003 |
2002 |
||||||
REVENUES | ||||||||
Revenues from mining operations | $ | 30,112 | $ | 25,547 | ||||
Interest and sundry income | 641 | 36 | ||||||
30,753 | 25,583 | |||||||
COSTS AND EXPENSES | ||||||||
Production | 24,347 | 17,603 | ||||||
Exploration and corporate development | 1,472 | 749 | ||||||
Amortization | 4,517 | 3,251 | ||||||
General and administrative | 1,467 | 1,001 | ||||||
Provincial capital tax | 489 | 380 | ||||||
Interest | 2,217 | 1,916 | ||||||
Foreign currency gain | (217 | ) | | |||||
Income (loss) before income, mining and federal capital taxes | (3,539 | ) | 683 | |||||
Federal capital tax |
325 |
206 |
||||||
Income and mining tax expense | 630 | | ||||||
Income (loss) before cumulative catch-up adjustment | (4,494 | ) | 477 | |||||
Cumulative catch-up adjustment relating to asset retirement obligations | (1,743 | ) | | |||||
Net income (loss) for the period | $ | (6,237 | ) | $ | 477 | |||
Net income (loss) before cumulative catch-up adjustment per share basic and diluted | $ | (0.05 | ) | $ | 0.01 | |||
Cumulative catch-up adjustment per share basic and diluted | (0.02 | ) | | |||||
Net income (loss) per share basic and diluted | $ | (0.07 | ) | $ | 0.01 | |||
Weighted average number of shares (in thousands) (note 3) | ||||||||
basic | 83,725 | 68,006 | ||||||
diluted | 83,725 | 79,283 | ||||||
Comprehensive income (loss): |
||||||||
Net Income (loss) for the period | $ | (6,237 | ) | $ | 477 | |||
Other comprehensive income (loss): | ||||||||
Unrealized gain (loss) on hedging activities | 3,227 | (1,833 | ) | |||||
Unrealized gain on available for sale securities | 135 | | ||||||
Other comprehensive income (loss) | 3,362 | (1,833 | ) | |||||
Comprehensive income (loss) for the period | $ | (2,875 | ) | $ | (1,356 | ) | ||
Note: Certain items have been reclassified from financial statements previously presented to conform to the current presentation.
11
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS
(Unaudited)
(thousands of United States dollars, except per share amounts, US GAAP
basis)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2003 |
2002 |
|||||
Deficit | |||||||
Balance, beginning of period | $ | (196,023 | ) | $ | (197,220 | ) | |
Net income (loss) for the period | (6,237 | ) | 477 | ||||
Balance, end of period | $ | (202,260 | ) | $ | (196,743 | ) | |
Accumulated other comprehensive loss |
|||||||
Balance, beginning of period | $ | (21,166 | ) | $ | (15,576 | ) | |
Other comprehensive income (loss) for the period | 3,362 | (1,833 | ) | ||||
Balance, end of period | $ | (17,804 | ) | $ | (17,409 | ) | |
Note: Certain items have been reclassified from financial statements previously presented to conform to the current presentation.
12
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(thousands of United States dollars, US GAAP basis)
|
Three months ended March 31, |
|||||||
---|---|---|---|---|---|---|---|---|
|
2003 |
2002 |
||||||
Operating activities | ||||||||
Net income (loss) for the period | $ | (6,237 | ) | $ | 477 | |||
Add (deduct) items not affecting cash from operating activities: | ||||||||
Amortization | 4,517 | 3,251 | ||||||
Provision for (recoveries of) future income and mining taxes | 1,326 | | ||||||
Unrealized (gain) loss on derivative contracts | (2,270 | ) | | |||||
Cumulative catch-up adjustment related to asset retirement obligations | 1,743 | | ||||||
Amortization of deferred costs and other | 344 | 1,244 | ||||||
Cash flow from operations, before working capital changes | (577 | ) | 4,972 | |||||
Change in non-cash working capital balances | ||||||||
Metals awaiting settlement | 4,119 | (9,153 | ) | |||||
Income taxes recoverable | (395 | ) | (594 | ) | ||||
Inventories | (823 | ) | 229 | |||||
Prepaid expenses and other | 571 | (2,174 | ) | |||||
Accounts payable and accrued liabilities | (670 | ) | 1,330 | |||||
Interest payable | (1,613 | ) | (1,667 | ) | ||||
Cash flows from (used in) operating activities | 612 | (7,057 | ) | |||||
Investing activities |
||||||||
Additions to mining properties | (10,837 | ) | (14,252 | ) | ||||
Increase in investments and other | (188 | ) | (9 | ) | ||||
Cash flows used in investing activities | (11,025 | ) | (14,261 | ) | ||||
Financing activities |
||||||||
Dividends paid | (2,431 | ) | (1,289 | ) | ||||
Common shares issued | 1,195 | 5,226 | ||||||
Proceeds from long-term debt | | 143,750 | ||||||
Financing costs | | (5,266 | ) | |||||
Repayment of the Company's senior convertible notes | | (121,971 | ) | |||||
Cash flows from (used in) financing activities | (1,236 | ) | 20,450 | |||||
Effect of exchange rate changes on cash and cash equivalents |
(47 |
) |
(17 |
) |
||||
Net decrease in cash and cash equivalents |
(11,696 |
) |
(885 |
) |
||||
Cash and cash equivalents, beginning of period | 152,934 | 21,180 | ||||||
Cash and cash equivalents, end of period | $ | 141,238 | $ | 20,295 | ||||
Other operating cash flow information: |
||||||||
Interest paid during the period | $ | 3,602 | $ | 19,397 | ||||
Taxes paid (recovered) during the period | $ | | $ | 3,329 | ||||
Note: Certain items have been reclassified from financial statements previously presented to conform to the current presentation.
13
AGNICO-EAGLE MINES LIMITED
Notes to Interim Consolidated Financial Statements
US GAAP basis (Unaudited)
1. Basis of Presentation
The Company's primary basis of financial reporting is United States generally accepted accounting principles. Financial statements under Canadian generally accepted accounting principles are also prepared for statutory reporting purposes in Canada and sent to shareholders.
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with US GAAP in US dollars. They do not include all of the disclosures required by generally accepted accounting principles for annual financial statements. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, which consist only of normal and recurring adjustments, necessary to present fairly the financial position at March 31, 2003 and the results of operations and cash flows for the three month periods ended March 31, 2003 and 2002.
Operating results for the three month period ended March 31, 2003 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2003. Accordingly, these unaudited interim financial statements should be read in conjunction with the fiscal 2002 annual consolidated financial statements, including the accounting policies and notes thereto, included in the Annual Report and Annual Information Form/Form 20-F for the year ended December 31, 2002.
2. Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates used in the preparation of the consolidated financial statements are reasonable and prudent; however, actual results could differ from these estimates.
3. Change in Accounting Policies
Except for the items outlined below, these interim consolidated financial statements follow the same accounting policies and methods of their application as the December 31, 2002 audited annual financial statements.
(a) Reclamation Costs
Estimated reclamation costs are based on legal, environmental and regulatory requirements. Prior to January 1, 2003, reclamation costs were accrued on an undiscounted unit-of-production basis, using proven and probable reserves as the base. Effective January 1, 2003, the Company adopted the provisions of Financial Accounting Standards Board Statement No. 143 relating to asset retirement obligations, which applies to long-lived assets such as mines. The new standard requires companies to recognize the present value of mine reclamation costs as a liability in the period the obligation is incurred and then to periodically re-evaluate the liability. At inception, an amount equal to the liability is recorded as an increase to the carrying value of the related long-lived asset. Each period, an accretion amount is charged to income to adjust the liability to the estimated future value. The initial liability, which is included in the carrying value of the asset, is also depreciated each period based on the depreciation method used for that asset.
In order to calculate the initial liability on January 1, 2003, the Company made estimates of the final reclamation costs based on mine-closure plans approved by environmental agencies. The Company periodically reviews these cost estimates and updates them if assumptions change, such as life-of-mine.
The adoption of FAS 143 negatively impacted income in the first quarter of 2003 as the Company recorded a non-cash charge of approximately $1.7 million, or $0.02 per share, representing the past cumulative effect of adopting this standard.
14
(b) Stock-based compensation
The Company has an Employee Stock Option Plan ("ESOP") which is described fully in note 7 to the Company's December 31, 2002 annual audited consolidated financial statements. Prior to 2003, the company accounted for those plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. No stock-based employee compensation cost is reflected in income prior to January 31, 2003 as all options granted under the ESOP had an exercise price equal to the market value of the underlying common stock on the date of grant. Effective January 1, 2003, the Company adopted the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation,"("FAS 123") as amended by FASB Statement No. 148 "Accounting for Stock-Based Compensation Transition and Disclosure." The Company has adopted the provisions of FAS 123 prospectively to all employee awards granted, modified, or settled after January 1, 2003. No options were granted in the first quarter ended March 31, 2003 and accordingly no compensation expense has been recognized in the interim consolidated financial statements.
4. Capital Stock
For the three month period ended March 31, 2003, the Company's 2012 convertible debentures, warrants and employee stock options were all anti-dilutive and thus were excluded from the calculation of diluted net loss per share.
The following table presents the maximum number of common shares that would be outstanding if all dilutive instruments outstanding at March 31, 2003 were exercised:
Common shares outstanding at March 31, 2003 | 83,767,794 | |
Convertible debenture [based on debenture holders' option] | 10,267,919 | |
Employees' stock options | 2,985,200 | |
Warrants | 6,900,000 | |
103,920,913 | ||
During the three-month period ended March 31, 2003, 75,150 (2002 520,550) employee stock options were exercised for cash of $0.5 million (2002 $3.3 million).
15
QUARTERLY MANAGEMENT DISCUSSION AND ANALYSIS CANADIAN GAAP
(all figures are expressed in US dollars unless otherwise noted)
Results of Operations
Agnico-Eagle reported a first quarter net loss of $3.6 million, or $0.06 cents per share, compared to net income of $5.8 million, or $0.12 cents per share, in the first quarter of 2002. Gold production in the first quarter of 2003 was below the Company's expectations with 55,005 ounces produced compared to 60,259 ounces in the first quarter of 2002. The first quarter production shortfall is due to a previously reported rock fall at the Company's LaRonde Mine. This event 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.
The table below summarizes the key variances in net loss for the first quarter of 2003 from the net income reported for the same period in 2002.
|
First Quarter |
|||
---|---|---|---|---|
|
(millions of dollars) |
|||
Increase in gold price | $ | 3.0 | ||
Increase in copper production | 2.0 | |||
Increase in silver production and price | 1.6 | |||
Increase in operating costs | (4.0 | ) | ||
Increase in El Coco royalty | (2.2 | ) | ||
Decrease in gold production | (1.7 | ) | ||
Increase in depreciation & amortization | (1.3 | ) | ||
Decrease in zinc production | (1.0 | ) | ||
Stronger Canadian dollar | (0.8 | ) | ||
Gain on settlement of convertible notes in Q1 2002 | (6.2 | ) | ||
Other | 1.2 | |||
Net negative variance | $ | (9.4 | ) | |
The increase in operating costs was attributable to the LaRonde Mine operating at 7,000 tons of ore treated per day compared to the 5,000 ton per day rate in the first quarter of 2002. Operating at the expanded rate, the mill processed a record 602,633 tons of ore in the first quarter of 2003 leaving onsite operating costs per ton unchanged over the first quarter of 2002 at C$52 per ton.
In the first quarter of 2003 cash operating costs per ounce, excluding the El Coco royalty, increased to $169 per ounce from $129 per ounce in 2002. Total cash operating costs to produce an ounce of gold were $243 compared to $161 in the same quarter of 2002. Although onsite operating costs remained unchanged at $52 per ton, total cash operating costs increased over 2002 due to lower gold production, a higher El Coco royalty, lower byproduct zinc production and a stronger Canadian dollar. As illustrated by the table above, these negative impacts on total cash operating costs were only partially offset by increases in byproduct copper and silver production.
16
The following table provides a reconciliation of the total cash operating costs per ounce of gold produced to the financial statements:
|
Q1 2003 |
Q1 2002 |
||||||
---|---|---|---|---|---|---|---|---|
|
(thousands of dollars, except where noted) |
|||||||
Cost of production per Consolidated Statements of Income (Loss) | $ | 24,517 | $ | 17,352 | ||||
Adjustments: | ||||||||
Byproduct revenues | (11,379 | ) | (7,284 | ) | ||||
El-Coco royalty | (4,075 | ) | (1,908 | ) | ||||
Revenue recognition adjustment(i) | 508 | (57 | ) | |||||
Non cash reclamation provision | (275 | ) | (303 | ) | ||||
Cash operating costs | $ | 9,296 | $ | 7,800 | ||||
Gold production (ounces) | 55,005 | 60,529 | ||||||
Cash operating cost (per ounce) | $ | 169 | $ | 129 | ||||
El-Coco royalty (per ounce) | 74 | 32 | ||||||
Total cash operating costs (per ounce)(ii) | $ | 243 | $ | 161 | ||||
Notes:
Amortization expense increased 61% to $4.5 million in the first quarter of 2003 from $2.8 million in the first quarter of 2002. The increase in amortization is attributable to the increased mill throughput of 26% and increased capital base resulting from the Company's expansion of the LaRonde Mine to 7,000 tons of ore treated per day.
Income and mining taxes increased to $0.6 million in the first quarter of 2003 from nil in the first quarter of 2002. The Company does not expect to pay cash income and mining taxes in 2003 however accrues deferred income and mining taxes to reflect the drawdown of tax pools.
Liquidity and Capital Resources
At March 31 2003, Agnico-Eagle's consolidated cash and cash equivalents were $141 million while working capital was $172 million. At December 31, 2002, the Company had $153 million in cash and cash equivalents and $185 million in working capital. Including the undrawn portion of its bank credit facility, the Company had $241 million of available cash resources at March 31, 2003 compared to $253 million at December 31, 2002. The Company currently has $100 million in undrawn credit and expects to have an additional $25 million available in the fourth quarter of 2003 once certain completion tests are satisfied in connection with the LaRonde expansion to 7,000 tons per day.
17
Cash flow from operating activities, before working capital changes, was $1.2 million in the first quarter of 2003 compared to $5.1 million in the first quarter of 2002. Operating cash flow was impacted by lower gold production, a higher El Coco royalty, lower byproduct zinc production and a stronger Canadian dollar offset partially by higher byproduct copper and silver production.
For the three months ended March 31, 2003, capital expenditures were $10.8 million compared to $14.3 million in the first quarter of 2002. The decrease is due to the Company having substantially completed the expansion of the LaRonde Mine to 7,000 tons per day. For the full year 2003, capital expenditures are expected to be $39 million, including $36 million at LaRonde and $3 million on other properties. The Company expects to fund these expenditures from operating cash flow and existing cash balances.
18
AGNICO-EAGLE MINES LIMITED
SUMMARIZED QUARTERLY DATA
(Unaudited)
(thousands of United States dollars, except where noted, CDN GAAP basis)
|
Three months ended March 31, |
||||||||
---|---|---|---|---|---|---|---|---|---|
|
2003 |
2002 |
|||||||
Consolidated Financial Data | |||||||||
Income and cash flow |
|||||||||
LaRonde Division | |||||||||
Revenues from mining operations | $ | 30,112 | $ | 25,092 | |||||
Mine operating costs | 24,517 | 17,352 | |||||||
Mine operating profit | $ | 5,595 | $ | 7,740 | |||||
Net income (loss) for period | $ | (3,564 | ) | $ | 5,778 | ||||
Net income (loss) per share | $ | (0.08 | ) | $ | 0.12 | ||||
Operating cash flow (before non-cash working capital) | $ | 1,159 | $ | 5,129 | |||||
Weighted average number of shares basic (in thousands) | 83,725 | 68,006 | |||||||
Tons of ore milled |
602,633 |
477,333 |
|||||||
Head grades: | |||||||||
Gold | 0.10 | 0.14 | |||||||
Silver | 2.44 | 2.52 | |||||||
Zinc | 3.55 | % | 5.24 | % | |||||
Copper | 0.45 | % | 0.22 | % | |||||
Recovery rates: | |||||||||
Gold | 91.66 | % | 94.54 | % | |||||
Silver | 83.80 | % | 83.70 | % | |||||
Zinc | 78.20 | % | 84.90 | % | |||||
Copper | 79.10 | % | 60.30 | % | |||||
Payable production: | |||||||||
Gold (ounces) | 55,005 | 60,259 | |||||||
Silver (ounces in thousands) | 1,036 | 724 | |||||||
Zinc (pounds in thousands) | 27,964 | 35,997 | |||||||
Copper (pounds in thousands) | 3,956 | 1,131 | |||||||
Realized prices per unit of production: | |||||||||
Gold (per ounce) | $ | 350 | $ | 300 | |||||
Silver (per ounce) | $ | 4.70 | $ | 4.48 | |||||
Zinc (per pound) | $ | 0.35 | $ | 0.36 | |||||
Copper (per pound) | $ | 0.76 | $ | 0.72 | |||||
Onsite operating costs per ton milled (Canadian dollars) |
$ |
52 |
$ |
52 |
|||||
Operating costs per gold ounce produced: |
|||||||||
Onsite operating costs (including asset retirement expenses) | $ | 378 | $ | 258 | |||||
Less: Non-cash asset retirement expenses | (2 | ) | (5 | ) | |||||
Net byproduct revenues | (207 | ) | (124 | ) | |||||
Cash operating costs | $ | 169 | $ | 129 | |||||
Accrued El Coco royalties | 74 | 32 | |||||||
Total cash costs | $ | 243 | $ | 161 | |||||
Non-cash costs: | |||||||||
Reclamation provision | 2 | 5 | |||||||
Amortization | 82 | 54 | |||||||
Total operating costs | $ | 327 | $ | 220 | |||||
19
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars, CDN GAAP basis)
|
March 31, 2003 |
December 31, 2002 |
||||||
---|---|---|---|---|---|---|---|---|
|
(Unaudited) |
|
||||||
ASSETS | ||||||||
Current | ||||||||
Cash and cash equivalents | $ | 141,238 | $ | 152,934 | ||||
Metals awaiting settlement | 25,465 | 29,749 | ||||||
Income taxes recoverable | 2,341 | 2,900 | ||||||
Inventories: | ||||||||
Ore stockpiles | 5,116 | 4,604 | ||||||
In-process concentrates | 1,411 | 1,008 | ||||||
Supplies | 4,916 | 5,008 | ||||||
Prepaid expenses and other | 7,334 | 7,576 | ||||||
Total current assets | 187,821 | 203,779 | ||||||
Investments and other assets | 10,834 | 8,951 | ||||||
Future income and mining tax assets | 22,929 | 22,929 | ||||||
Mining properties | 362,729 | 356,409 | ||||||
$ | 584,313 | $ | 592,068 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Current | ||||||||
Accounts payable and accrued liabilities | $ | 14,576 | $ | 15,246 | ||||
Dividends payable | 706 | 3,013 | ||||||
Income and mining taxes payable | | 954 | ||||||
Interest payable | 260 | 1,873 | ||||||
Total current liabilities | 15,542 | 21,086 | ||||||
Reclamation provision and other liabilities | 4,686 | 4,314 | ||||||
Future income and mining tax liabilities | 25,141 | 23,819 | ||||||
Shareholders' Equity |
||||||||
Common shares | ||||||||
Authorized unlimited | ||||||||
Issued 83,767,794 (2002 83,636,861) | 442,617 | 441,363 | ||||||
Convertible debenture | 92,351 | 91,465 | ||||||
Other paid in capital | 55,028 | 55,028 | ||||||
Warrants | 15,732 | 15,732 | ||||||
Contributed surplus | 5,560 | 5,560 | ||||||
Deficit | (72,344 | ) | (66,299 | ) | ||||
Total shareholders' equity | 538,944 | 542,849 | ||||||
$ | 584,313 | $ | 592,068 | |||||
Note: Certain items have been reclassified from financial statements previously presented to conform to the current presentation.
20
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(thousands of United States dollars, except per share amounts, CDN GAAP basis)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
|
2003 |
2002 |
|||||
REVENUES | |||||||
Revenues from mining operations | $ | 30,112 | $ | 25,092 | |||
Interest and sundry income | 146 | 228 | |||||
30,258 | 25,320 | ||||||
COSTS AND EXPENSES |
|||||||
Production | 24,517 | 17,352 | |||||
Exploration and corporate development | 1,472 | 749 | |||||
Amortization | 4,517 | 2,812 | |||||
General and administrative | 1,467 | 1,001 | |||||
Provincial capital tax | 489 | 380 | |||||
Interest | 622 | 1,925 | |||||
Foreign currency gain | (217 | ) | | ||||
Income (loss) before undernoted | (2,609 | ) | 1,101 | ||||
Gain on settlement of Company's senior convertible notes | | 6,184 | |||||
Income (loss) before income, mining and federal capital taxes | 7,285 | ||||||
Federal capital tax |
325 |
207 |
|||||
Income and mining tax expense | 630 | 1,300 | |||||
Net income (loss) for the period | $ | (3,564 | ) | $ | 5,778 | ||
Net income (loss) per share basic (note 3) | $ | (0.06 | ) | $ | 0.13 | ||
Net income (loss) per share diluted (note 3) | $ | (0.06 | ) | $ | 0.12 | ||
Weighted average number of shares (in thousands) (note 3) | |||||||
basic | 83,725 | 68,006 | |||||
diluted | 83,725 | 79,283 | |||||
Note: Certain items have been reclassified from financial statements previously presented to conform to the current presentation.
21
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF DEFICIT
(Unaudited)
|
Three months ended March 31, |
||||||
---|---|---|---|---|---|---|---|
(thousands of United States dollars, except per share amounts, CDN GAAP basis) |
|||||||
2003 |
2002 |
||||||
Deficit | |||||||
Balance, beginning of period | $ | (66,299 | ) | $ | (56,731 | ) | |
Net income (loss) for the period | (3,564 | ) | 5,778 | ||||
(69,863 | ) | (50,953 | ) | ||||
Interest costs associated with the Company's convertible debentures | (2,481 | ) | (474 | ) | |||
Gain on settlement of conversion option related to the Company's senior convertible notes, net of related income taxes | | 3,833 | |||||
Share issue costs | | (5,266 | ) | ||||
Balance, end of period | $ | (72,344 | ) | $ | (52,860 | ) |
Note: Certain items have been reclassified from financial statements previously presented to conform to the current presentation.
22
AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Three months ended March 31, |
|||||||
---|---|---|---|---|---|---|---|---|
(thousands of United States dollars, except per share amounts, CDN GAAP basis) |
||||||||
2003 |
2002 |
|||||||
Operating activities | ||||||||
Net income (loss) for the period | $ | (3,564 | ) | $ | 5,778 | |||
Add (deduct) items not affecting cash from operating activities: | ||||||||
Amortization | 4,517 | 2,812 | ||||||
Provision for future income and mining taxes | 1,326 | 1,300 | ||||||
Gain on liquidation of written call option derivative contracts | (1,861 | ) | ||||||
Gain on settlement of the Company's senior convertible notes | | (6,184 | ) | |||||
Amortization of deferred costs and other | 741 | 1,423 | ||||||
Cash flow from operations, before working capital changes | 1,159 | 5,129 | ||||||
Change in non-cash working capital balances | ||||||||
Metals awaiting settlement | 4,119 | (9,098 | ) | |||||
Income taxes recoverable | (395 | ) | (594 | ) | ||||
Inventories | (823 | ) | (21 | ) | ||||
Prepaid expenses and other | 430 | (2,136 | ) | |||||
Accounts payable and accrued liabilities | (670 | ) | 1,330 | |||||
Interest payable | (1,613 | ) | (1,667 | ) | ||||
Cash flows from (used in) operating activities | 2,207 | (7,057 | ) | |||||
Investing activities |
||||||||
Additions to mining properties | (10,837 | ) | (14,252 | ) | ||||
Increase in investments and other | (188 | ) | (9 | ) | ||||
Cash flows used in investing activities | (11,025 | ) | (14,261 | ) | ||||
Financing activities |
||||||||
Dividends paid | (2,431 | ) | (1,289 | ) | ||||
Common shares issued | 1,195 | 5,226 | ||||||
Interest on convertible debentures | (1,595 | ) | | |||||
Proceeds from long-term debt | | 143,750 | ||||||
Financing costs | | (5,266 | ) | |||||
Repayment of the Company's senior convertible notes | | (121,971 | ) | |||||
Cash flows from (used in) financing activities | (2,831 | ) | 20,450 | |||||
Effect of exchange rate changes on cash and cash equivalents | (47 | ) | (17 | ) | ||||
Net decrease in cash and cash equivalents | (11,696 | ) | (885 | ) | ||||
Cash and cash equivalents, beginning of period | 152,934 | 21,180 | ||||||
Cash and cash equivalents, end of period | $ | 141,238 | $ | 20,295 | ||||
Other operating cash flow information: |
||||||||
Interest paid during the period | $ | 3,602 | $ | 19,397 | ||||
Taxes paid (recovered) during the period | | $ | 3,329 | |||||
Note: Certain items have been reclassified from financial statements previously presented to conform to the current presentation.
23
AGNICO-EAGLE MINES LIMITED
Notes to Interim Consolidated Financial Statements
CDN GAAP basis (Unaudited)
1. Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared by the Company in US dollars in accordance with Canadian GAAP with respect to the preparation of interim financial information. Accordingly, they do not include all information and footnotes as required in the preparation of annual financial statements and should be read in conjunction with the audited financial statements and notes included in the Audited Annual Consolidated Financial Statements (CDN GAAP basis) for the year ended December 31, 2002.
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates used in the preparation of the consolidated financial statements are reasonable and prudent; however, actual results could differ from these estimates.
Operating results for the three month period ended March 31, 2003 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2003. Accordingly, these unaudited interim financial statements should be read in conjunction with the fiscal 2002 Audited Annual Consolidated Financial Statements (CDN GAAP basis), including the accounting policies and notes thereto. These interim consolidated financial statements follow the same accounting policies and methods of their application as the December 31, 2002 Audited Annual Consolidated Financial Statements (CDN GAAP basis).
2. Use of Estimates
The preparation of the interim consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the interim consolidated financial statements and accompanying notes. Management believes that the estimates used in the preparation of the interim consolidated financial statements are reasonable and prudent; however, actual results could differ from these estimates.
3. Net income per share
For the purposes of calculating earnings per share, the Company uses net income after deducting interest charges on the Company's 2012 convertible debentures. The 2012 convertible debenture issued in 2002 is presented, in its entirety, as an equity instrument and as such the interest is recorded as a direct charge to retained earnings. Below is a reconciliation of net income per financial statements to the net income used in computing net income per share.
|
Nine months ended September 30, 2002 |
|||
---|---|---|---|---|
Net income, per financial statements | $ | (3,564 | ) | |
Less: Interest on 2012 convertible debenture charged directly to retained earnings | (1,595 | ) | ||
Net income used in the computation of net income per share | $ | (5,160 | ) | |
The Company's 2012 convertible debentures are anti-dilutive and thus have not been included in the computation of fully-diluted net income per share.
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4. Capital Stock
For the three month period ended March 31, 2003, the Company's 2012 convertible debentures, warrants and employee stock options were all anti-dilutive and thus were excluded from the calculation of diluted net loss per share.
The following table presents the maximum number of common shares that would be outstanding if all dilutive instruments outstanding at March 31, 2003 were exercised:
Common shares outstanding at March 31, 2003 | 83,767,794 | |
Convertible debenture [based on debenture holders' option] | 10,267,919 | |
Employees' stock options | 2,985,200 | |
Warrants | 6,900,000 | |
103,920,913 | ||
During the three-month period ended March 31, 2003, 75,150 (2002 520,550) employee stock options were exercised for cash of $0.5 million (2002 $3.3 million).
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