2011-08-18 aem technical update
TRANSCRIPT
Technical Update – August 18th, 2011
Agnico-Eagle Mines Limited
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Forward Looking Statements
The information in this document has been prepared as at August 18, 2011. 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 minesites 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, 2010, 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. Marc Legault, a Qualified Person and the Company’s Vice-President, Project Development, reviewed the technical information disclosed herein. For a detailed breakdown of the Company’s reserve and resource position see the February 16, 2011 press release on the Company’s website. That press release also lists the Qualified Persons for each project.
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Note To Investors
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, 2010, as well as the Company's other filings with the Canadian Securities Administrators and the SEC.
Regarding The Use Of Non-gaap Financial Measures
LaRonde Goldex Kittila Lapa Pinos Altos Meadowbank
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Highlights
■ LaRonde Deep – development project on time and budget
■ Goldex - Record tonnage despite soil subsidence issues – significant exploration results at depth
■ Lapa – Lower grade offset by increased tonnage
■ Meadowbank – plant exceeding tonnage expectations, focused on minimizing dilution
■ Kittila – Production resumed at Suuri Open Pit and excellent exploration results at depth on Rimpi Zone – Solid mill performance, costs improving
■ Pinos Altos – Record quarterly production of 51,067 ounces at a cash cost of $299 per ounce.
■ Meliadine – excellent exploration results – underground bulk sample started; 10 drills on site
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Challenges
■Mining conditions at LaRonde and Lapa – narrow stopes
■Subsidence at Goldex with water inflow
■Equipment availability and high costs at Meadowbank
■High costs at Kittila
LaRonde
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LaRonde YTD Highlights
■ Gold production – 64,000 oz
■ Cost per tonne - $85 vs. budget of $82
■ Cash costs $95/oz
■Mill throughput 6,543 tpd
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LaRonde Extension – Project Update
■ Load out construction almost completed on Level 282
■ Crusher construction – on schedule for Q4
■ First production scheduled for November
■ On schedule – on budget
■ LOM at 6,000 tpd – evaluating possibility of 7,000 tpd
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LaRonde Extension – Production
■ Production Stopes ■ Pyramid from 269 - Q2 2012 ■ Pyramid from 293 – Q3 2013
■ Production Rate Ramp-Up below
the 245 level ■ 2011 => 1 200 tpd (Q-4 2011) ■ 2012 => 2 000 tpd ■ 2013 => 4 200 tpd ■ 2014 => 6 000 tpd
278 282
257
215
269
293
311
194
245
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LaRonde Extension - Crusher
Crusher (July 2011)
General Arrangement
TelSmith Crusher 48 x 52
Capacity >650 t/hr
Excavation completed in April 2011
Commissioning Q4 2011
Transfer Conveyor (July 2011)
Goldex
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Goldex Highlights
■ Grade in line with forecast – over 13 million tonnes of broken ore in stope
■ Record milled tonnage in May-June following addition of 6th Manitou pump, recrushing of surface stock pile – will be maintained for remainder of year; YTD 8,200 tpd
■ Operating costs under budget, additional capital to manage water inflow and soil subsidence
■ Surface overburden subsidence – remediation program underway
■ Exploration results at depth could significantly increase mine life ■ Resource being calculated
■ YTD gold production – 80,500oz; cost per tonne - C$22, on budget; cash costs $408/oz
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Goldex
Aug 15, 2011 Q3 QTD H1/11 YTD
Daily throughput (tpd) 8,485 8,204
Grade (g/t) 1.85 1.82
Mill recoveries (%) 94.6% 92.8%
Q3 QTD Performance Unaffected By Subsidence Issues
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Overburden subsidence
5m of overburden settling over center of GEZ
Cement injection program ongoing, expected to be completed by year end
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Level 38
Stope outline
Vertical Cross Section
Shear zone
Diorite
Komatiite
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Drilling – Level 38
Infiltration Zone – Eastern Mining Block
Diamond drilling and proposed grouting program
Diamond drill holes
Infiltration Zone
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Remediation of overburden subsidence
■ Shear zones have been characterized and defined
■ Reduce water inflow into the mine ■ Grouting from surface and underground
■ Stabilize the water table ■ Inject mine inflow back into the water table ■ Water table defined
■ Increase underground pumping capacity to secure the mine ■ Additional capacity installed in excess of inflow
■ Initial results encouraging ■ Reduction in inflow noted with increased surface injection ■ Water table rising in eastern section ■ Grouting to continue westward until end of year ■ $6.0 million of total $19 million has been spent
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2011 Exploration Budget Actual Exploration (January-June 2011)
$8.4 million $3.1 million 70,200 metres DDH 26,482 metres DDH
D zone Au
(M oz) Tonnes (000s)
Gold Grade (g/t)
Inferred resources
0.75 14,361 1.62
3.02 g/t Au / 117.0 m
1.84 g/t Au / 112.5 m
1.48 g/t Au / 76.5 m
1.70 g/t Au / 69.0 m
1.50 g/t Au / 120.0 m incl. 2.40 g/t Au / 61.5 m
2.47 g/t Au / 240.0 m
2.17 g/t Au / 192.0 m
1.70 g/t Au / 192.0 m
2011 Exploration Program $8.4 million budgeted D Zone
50 to 100 m thick
Traced 350 m wide and 500+ m depth (open in all directions)
Initial inferred resource 0.75 Moz
Exploration ramp initiated
Resource conversion drilling underway
Resource expansion drilling successful at depth
Grade and thickness higher at depth
Initial mining study by end of 2011
Potential to add to reserves in 2013
Goldex - D Zone Growing at Depth
Lapa
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Lapa Update
■ Steady state performance exceeding tonnes hoisted and tonnes milled
■ Steady state performance for development – targets exceeded despite difficult mining conditions
■ Cost per tonne below budget - C$110
■ Unit development cost below budget
■ Overall excellent performance: YTD gold production 55,500oz
Meadowbank
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Meadowbank Update
■ Secondary crushing plant running according to plan
■ Significant improvements in mining performance although dilution still an issue
■ Declining costs per tonne over the past quarter – should see continued improvement
■ Operating staff positions are being filled
Turn around in progress but more work to do
August 15th Mill Sheet Day Month CRUSHING
Ore Tonnage (dmt) 8756 128866 Utilisation (%) 55.56
FEED Tonnage 10737 136319 Head Grade - Au (g/t) 2.58 2.69
GRINDING
Availability (%) 100.00 90.42 GRAVITY
Recovery (%) 14.27% 8.99% LEACH / CIP
Gold Leach / C.I.P. Recovery (%) 79.86% 84.96%
SUMMARY Gravity Gold Recovery (oz) 127 1061 CIP Gold Recovery (oz.) 710 10025 Mill Gold Recovery (%) 94.13% 93.95% Gold Production (oz) 837 11086
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Q3 QTD Throughput Significantly Above H1 Levels
Aug 15, 2011 Q3 QTD H1/11 YTD
Daily throughput (tpd) 9,143 7,160
Grade (g/t) 2.80 3.11
Mill recoveries (%) 94.0% 93.7%
Meadowbank
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Higher mill tonnage after secondary crusher start up
50 000
100 000
150 000
200 000
250 000
300 000
Mill
Tonn
es (t
/mon
th)
Meadowbank Mill_Monthly Tonnes
Realized
After Secondary Crusher Before Secondary Crusher
•Design capacity attained in August •More stable operation downstream
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Mine Production
0
10 000
20 000
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40 000
50 000
60 000
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80 000
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100 000
110 000
120 000
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Tm/d
ay
Meadowbank Mine Performances Tonnes moved per day
Realized Realized Forecast Budget
2010 2011
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Blast Movement Control – Improving Dilution
Agnico-Eagle Mines Limited
■ Staggered pattern has been successfully implemented in South Portage
■ Blast design is now optimized so that the movement of the muck is becoming more predictable
■ Improvements have been made to the QA/QC process, resulting in more consistent drilling and loading operations
■ Floor quality & fragmentation has improved while keeping movement under control
■ Groundwater in South Portage is still locally hindering drilling and blasting operations; a variance was obtained from the Mine Inspector to allow immediate loading of the holes as they are drilled, a practice that reduces the impact of water in the holes
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Blast Movement Control – Improving Dilution
Agnico-Eagle Mines Limited
■ Dilution in flatter zones averaged 30% to 40% earlier this year – now approximately 20%
■ Objective is 12% - 15% - reserve model contains an average of 12%
■ Currently mining narrower zones in North Portage
■ Expansion into South Portage and Goose pits will provide more flexibility and higher grades
Goose Island Pit
Portage Pit
North Pit
South Pit
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Blast movement monitoring
Agnico-Eagle Mines Limited
Significant reduction in blast displacement
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Cost control initiatives
Agnico-Eagle Mines Limited
■ Improve equipment availability – utilization
■ Improved facilities, filling vacant positions ■ Prepare for coming winter – complete modifications
■ Higher, consistent mill throughput
■ Reduce rehandling of ore
■ Train local employees – reduce logistics costs
■ Reduce reliance on contract labour
■ Reduce fuel consumption, stockpile lower cost fuel, reduce energy consumption
■ Optimize mill (i.e. mill liners, reagents)
Portage Pit
North Pit
South Pit
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Mine Manager’s Comment – Aug 15th, 2011
“Wow nice week team!!
Tonnes moved average of 87 851 t/d
More consistent direction of the blasts at an average of 5.2 meters displacement (down from 13 metres)
Mill tonnage average of 427 t/h (10,250 tpd)
Coffer dam construction ahead of schedule
We are going in the right direction! Keep it up and stay on the top of the wave
Thanks, Merci, Matna
Dominique”
Kittila
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Kittila Highlights – H1 2011
■ Unplanned shutdowns related to scaling problems in the Autoclave – mill availability 77%
■ Total mill throughput of 233,121 dmt or 90% of design capacity despite mill availability
■ Good underground development and waste stripping performance
■ Underground ore production on plan
■ High unit costs per tonne and per ounce
■ Contractor reduction in progress
■ Excellent exploration results on Rimpi
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Gold Brick no 400
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Q3 QTD Throughput Significantly Above H1 Levels
Aug 15, 2011 Q3 QTD H1/11 YTD
Daily throughput (tpd) 3,187 2,734
Grade (g/t) 4.60 5.25
Mill recoveries (%) 84.7% 84.5%
Kittila
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Kittila Open Pit
■ Ore production resumed in the Suuri pit after 2 month stop
■ Eastern wall rock stability issues addressed and Suuri ore production re-started in early June
■ Ore production from Roura good, cost adjustment for stripping
■ Ore stockpile > 300,000 tonnes
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Roura pit
Suuri pit
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Kittila Underground
■ UG development advance very good at 111% of budget – new lateral development record at 610 m in May
■ Good UG ore production -- 102% of budget ■ 350 m Service Level complete – UG
warehouse, cafeteria and shops functional
■ Cost reduction opportunities have been identified and action plans instigated ■ Contractor reduction ■ Control overtime ■ Renegotiate reagent, explosive contracts ■ Reduce company housing
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Kittila – Growing Reserves & Resources
2011 Exploration Budget Actual Exploration (January-June 2011)
$15.6 million $7.0 million 56,200 metres DDH 28,415 metres DDH
7.10 g/t Au / 21.0 m
9.93 g/t Au / 6.2 m
5.98 g/t Au / 7.8 m
9.32 g/t Au / 11.2 m
9.50 g/t Au / 6.0 m
2011 Exploration Program $15.6 million budgeted Suuri – Roura Deep exploration ramp initiated
Resource expansion and resource to reserve conversion drilling underway
Production expansion feasibility expected in Q4, 2011
Suuri – Roura Deep exploration shaft project under evaluation
Exploration success Rimpi and Suuri - Roura Deep
Potential to enhance economics of Kittila expansion and shaft projects
Pinos Altos
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Pinos Altos H1 Highlights
■ YTD production 99,000oz at, $28/t – significantly below budget
■ Mascota continued ramp up better than expected
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-
10,000
20,000
30,000
40,000
50,000
60,000
Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011
Mexico Division Au Ounces Production (Oz)
Actual
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UG Ore Production
■ 3,000 TPD ore production was reached in June
■ Total cost per tonne was $34.96 vs. $32.47 budget
■ Q2 Meters of lateral development 1,476 m vs.1,457 m budget & unit cost of US$2,210 vs. US$2,587 budget
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0
10
20
30
40
50
60
70
80
90
100
-
10
20
30
40
50
60
70
80
90
100
Oct2010
Nov2010
Dec2010
Jan2011
Feb2011
Mar2011
Apr2011
May2011
June2011
Tonnes USD/tonne
Ore Production & Cost per tonne performance
tonn
es
US
D/to
nne
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Pinos Altos Open Pit
■ Total Open pit ore production was 783,948 tonnes at 1.065 g/t Au vs. 671,531 at 1.192 g/t. planned
■ Total Open pit unit cost was $1.33 per tonne vs. $1.29 per tonne planned
40
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Mascota Operation
■ Ramp up production
■ Heap Leach Au-Oz Production 9,449 Oz vs. 6,462 Oz budget. (payable gold)
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-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Jan Feb Mar Apr May Jun
Au Ounces Production 2011 (Oz)
Actual
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40
60
80
100
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160
180
Jan Feb Mar Apr May Jun
Ore Placed 2011 (000 tonnes)
tonnes placed
Exploration Upside
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Meliadine Exploration Upside - 80km Strike Length
Pump Au (Moz)
Tonnes ('000)
Au (g/t)
Inferred Resources 0.10 495 6.29
Tiriganiaq Au (Moz)
Tonnes ('000)
Au (g/t)
Probable Reserves 2.60 9,467 8.54 Indicated Resources 0.81 5,407 4.66 Inferred Resources 1.91 7,883 7.55
Discovery Au (Moz)
Tonnes ('000)
Au (g/t)
Indicated Resources 0.32 1,323 7.41 Inferred Resources 0.14 498 8.97
Wolf Au (Moz)
Tonnes ('000)
Au (g/t)
Indicated Resources 0.02 183 3.79 Inferred Resources 0.16 947 5.24
F zone Au (Moz)
Tonnes ('000)
Au (g/t)
Indicated Resources 0.33 1,895 5.39 Inferred Resources 0.18 1,010 5.62
Wesmeg Au (Moz)
Tonnes ('000)
Au (g/t)
Inferred Resources 0.14 1,000 4.45
2011 Exploration Budget Actual Exploration (January-June 2011)
$64.8 million $11.7 million 90,000 metres DDH 44,173 metres DDH
Discovery
F Zone
Tiriganiaq Wesmeg Wolf
Pump
2011 Exploration budget $64.8 million for drilling, feasibility and camp Resource to reserve conversion and expansion
underway at Tiriganiaq /Wesmeg
Permitting and preparations for access road construction
Wesmeg exploration success should increase resources
Aggressive regional exploration initiated (plans to build new exploration base at Discovery)
6,000 -10,000 tpd feasibility expected 2013 10 km
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Meliadine Exploration - Tiriganiaq
Tiriganiaq Longitudinal Section
Largest deposit at Meliadine Resource expansion and resource to
reserve conversion drilling underway Underground bulk sampling initiated
Ramp project to test for deeper extensions Potential to add reserves and resources
at Tiriganiaq in 2011
8.62 g/t Au / 19.3 m
10.9 g/t Au / 7.0 m
5.33 g/t Au / 4.2 m
15.14 g/t Au / 5.8 m 16.64 g/t Au / 7.4 m
7.98 g/t Au / 39.3 m
Tiriganiaq Au (Moz)
Tonnes ('000)
Au (g/t)
Probable Reserves 2.60 9,467 8.54 Indicated Resources 0.81 5,407 4.66 Inferred Resources 1.91 7,883 7.55
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Tiriganiaq Schematic Cross Section
2011 Exploration Program at Tiriganiaq
Underground bulk sampling and grade confirmation drilling underway to refine feasibility resource model
Resource to reserve conversion drilling
Resource expansion drilling
Exploration ramp proposed to follow up and extend Tiriganiaq and Wesmeg (both wide open at depth)
Bulk Sample Area
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Wesmeg – The most recent discovery at Meliadine
Wesmeg Longitudinal Section
Wesmeg zone Au
(M oz) Tonnes (000s)
Gold Grade (g/t)
Inferred resources
0.14 1,000 4.45
6.87 g/t Au / 4.7 m
7.02 g/t Au / 10.6 m 4.78 g/t Au / 13.5 m
5.72 g/t Au / 9.4 m
8.17 g/t Au / 5.4 m
7.02 g/t Au / 10.6 m
Initial resource in Dec’ 2010 (Wesmeg North only)
Exploration success extends Wesmeg North open pit potential more than 2.1 kilometres; Underground potential also developing
New Wesmeg South trend currently traced for 600 metres and extending at depth below 160 metres
Potential to significantly expand Wesmeg resource in 2011 and enhance feasibility
Appendix
48
Gold and Silver Reserves and Resources December 31, 2010
Tonnes (000’s)
Gold (g/t)
Gold (ounces)
(000’s)
Proven 24,869 2.29 1,832
Probable 160,944 3.76 19,467
Total Reserves 185,813 3.57 21,299
Indicated 95,135 2.10 6,437
Inferred 118,111 2.59 9,839
Tonnes (000’s)
Silver (g/t)*
Silver (ounces)
(000’s)
Proven 7,702 54.75 13,558
Probable 71,190 48.09 110,061
Total Reserves 78,892 48.74 123,620
Indicated 32,554 21.90 22,918
Inferred 37,183 19.98 23,883
*Calculated grades
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Copper, Zinc and Lead Reserves and Resources
*Calculated grades
Tonnes (000’s)
Copper (%)
Copper (tonnes)
Proven 4,838 0.26 12,433
Probable 29,892 0.28 82,360
Total Reserves 34,730 0.27 94,793
Indicated 6,933 0.12 8,462
Inferred 11,526 0.27 30,820
Tonnes (000’s)
Zinc (%)
Zinc (tonnes)
Proven 4,838 2.78 134,651
Probable 29,892 0.90 269,581
Total Reserves 34,730 1.16 404,232
Indicated 6,933 1.36 94,457
Inferred 11,526 0.48 55,556
Tonnes (000’s)
Lead (%)
Lead (tonnes)
Proven 4,838 0.32 15,572
Probable 29,892 0.07 19,463
Total Reserves 34,730 0.10 35,035
Indicated 6,933 0.13 8,942
Inferred 11,526 0.05 5,463
December 31, 2010
A solid financial position, low-cost structure, 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.
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
Sean Boyd Vice-Chairman and
Chief Executive Officer
Ebe Scherkus President and
Chief Operating Officer
Ammar Al-Joundi SVP Finance and
Chief Financial Officer
David Smith SVP Investor Relations
Trading Symbol: AEM on TSX & NYSE
Investor Relations: 416-947-1212