Investor Relations Agnico -Eagle Reports Fourth Quarter and Full Year 2011 Results; Record Full Year Operating C Ash Flows; Dividend Increased 25% - Declared for 30 Th Consecutive Year ; Provides Three Year Production Guidance ;
Stock Symbol: AEM (NYSE and TSX) For further information:
Investor Relations (416) 947-1212
(All amounts expressed in U.S. dollars unless otherwise noted)
AGNICO-EAGLE REPORTS FOURTH QUARTER AND FULL YEAR 2011 RESULTS; RECORD FULL YEAR OPERATING CASH FLOWS;
DIVIDEND INCREASED 25% - DECLARED FOR 30TH CONSECUTIVE YEAR; PROVIDES THREE YEAR PRODUCTION GUIDANCE;
MEADOWBANK PARTIALLY WRITTEN DOWN – OPTIMIZED MINE PLAN
Toronto (February 15, 2012) – Agnico-Eagle Mines Limited ("Agnico-Eagle" or the “Company”) today reported a quarterly net loss of $601.4 million, or a loss of $3.53 per share for the fourth quarter of 2011. This result includes a $644.9 million partial writedown of the Meadowbank mine ($3.79 per share), a non-cash foreign currency translation loss of $3.6 million ($0.02 per share), stock option expense of $8.1 million ($0.05 per share), nonrecurring tax audit expenses of $11.1 million ($0.07 per share), and other non-recurring expense items of $10.0 million ($0.06 per share). Excluding these items would result in normalized net income of $76.2 million ($0.45 per share) in the fourth quarter of 2011. In the fourth quarter of 2010, the Company reported net income of $88.0 million ($0.53 per share).
Fourth quarter 2011 cash provided by operating activities was $132.0 million ($171.6 million before changes in non-cash components of working capital) up from cash provided by operating activities of $90.6 million in the fourth quarter of 2010 ($179.4 million before changes in non-cash components of working capital), due primarily to a smaller increase in working capital in 2011.
“While 2011 was a very difficult year for our company, we look forward to 2012 as we expect most of our mines to produce more gold. We also anticipate further growth in gold output in 2013 and 2014 from our existing mines while we advance our development projects at La India and Meliadine”, said Sean Boyd, President and Chief Executive Officer. “In 2012, Agnico-Eagle anticipates meeting its targets, increasing profitability and growing the shareholders’ exposure to gold on a per share basis” added Mr. Boyd.
Fourth quarter and full year 2011 highlights include:
- Record operating cash flows – cash provided by operating activities up 46%, year over year
- Record annual gold production at Pinos Altos – strong quarterly (52,574 ounces) and record full year gold production (204,380 ounces) at total cash costs1 of $299 per ounce for the year
1 Total cash costs per ounce is a non-GAAP measure. For a reconciliation to production costs, see Note 1 to the financial statements contained herein. See also “Note Regarding Certain Measures of Performance”.
- Record annual gold production at Kittila – record gold production in 2011 of 143,560 ounces at total cash costs of $739 per ounce
- LaRonde Extension – achieves commercial production in November 2011
- Quarterly dividend up 25% to $0.20 per share - Company has declared a dividend for 30 consecutive years
- Grayd Resources Acquired – advanced La India property and Tarachi exploration property in Mexico key assets
- Meadowbank partially written down, Goldex operations suspended – Meadowbank value reduced to approximately $762 million. Goldex investigation and remediation underway
Agnico-Eagle is pleased to announce that its Board of Directors has approved the payment of a quarterly cash dividend of $0.20 per common share. The next dividend will be paid on March 15, 2012 to shareholders of record as of March 1, 2012. Agnico-Eagle has now declared a cash dividend to its shareholders for 30 consecutive years.
For the full year 2011, the Company recorded a net loss of $568.9 million, or a loss of $3.36 per share. In 2010, Agnico-Eagle recorded net income of $332.1 million, or $2.05 per share. Compared with the prior year, 2011 earnings were negatively impacted by the writedowns of the Goldex (mining operations suspended October 2011) and Meadowbank mines ($302.9 million and $907.7 million respectively, before taxes).
The Meadowbank mine previously had a property, plant and mine development book value of approximately $1.7 billion. As a result of persistently high operating costs, the latest optimized mine plan for Meadowbank resulted in a shorter mine life and an associated reduction in the carrying value of the operation was necessary. However, it is believed that the new life of mine (“LOM”) mine plan, while expected to produce a similar return, is a lower risk option as approximately 73 million tonnes, or 36%, of the previously budgeted ore and waste tonnes will not be mined under this plan.
For 2011, the Company realized a record amount of cash provided by operating activities of $663.5 million ($693.7 million before changes in non-cash components of working capital). This is significantly higher than 2010, when cash provided by operating activities totaled $483.5 million ($581.7 million before changes in non-cash components of working capital). The increase was primarily due to significant increases in realized prices for gold and silver in 2011 which more than offset lower realized prices for zinc and copper.
Payable gold production2 in the fourth quarter of 2011 was 227,792 ounces (Goldex produced through October only) compared to 256,471 ounces in the fourth quarter of 2010. A detailed description of the production and cost performance by mine may be found in the respective sections later in this document.
Total cash costs for the fourth quarter of 2011 were $671 per ounce (versus $462 per ounce for fourth quarter 2010). The increase in total cash costs per ounce in the fourth quarter of 2011 is mainly due to higher costs at LaRonde, Meadowbank and Lapa. The October suspension of the low cost Goldex mine also negatively impacted total cash costs.
2 Payable production of a mineral means the quantity of mineral produced during a period contained in products that are sold by the Company whether such products are shipped during the period or held as inventory at the end of the period.
The Company’s payable gold production for the full year 2011 was 985,460 ounces at total cash costs per ounce of $580. The full year production is 13% below the bottom end of the range of guidance provided in December 2010. The lower than anticipated gold production in the year is largely due to the October closure of Goldex and lower than expected grades at Meadowbank and LaRonde. The 2011 production compares to the full year 2010 level of 987,609 ounces at total cash costs per ounce of $451. The higher total cash costs per ounce in 2011 were primarily due to the impact of Meadowbank, the loss of Goldex and general cost escalation in the industry.
Conference Call Tomorrow
The Company’s senior management will host a conference call on Thursday, February 16, 2012 at 11:00 AM (E.S.T.) to discuss financial results and provide an update of the Company’s exploration and development activities.
Via Webcast:
A live audio webcast of the meeting will be available on the Company’s website homepage at www.agnico-eagle.com.
Via Telephone:
For those preferring to listen by telephone, please dial 416-644-3414 or Toll-free 800-814- 4859. To ensure your participation, please call approximately five minutes prior to the scheduled start of the call.
Replay archive:
Please dial 416-640-1917 or the Toll-free access number 877-289-8525, passcode 4507250#.
The conference call replay will expire on Friday, March 16, 2012.
The webcast along with presentation slides will be archived for 180 days on the website.
Senior Management Changes
Agnico-Eagle’s Board of Directors has approved the following changes to its senior management structure.
After 26 years with Agnico-Eagle, President and Chief Operating Officer Eberhard Scherkus will be leaving the Company. Under Ebe’s operating leadership, Agnico-Eagle has grown dramatically over the past several years.
“All of us at Agnico-Eagle want to thank Ebe for his friendship and leadership in helping to build, grow and transform the Company from a single asset producer into a multi-mine international gold company”, said President and CEO, Sean Boyd. “Ebe’s achievements have been widely recognized in the mining industry and Agnico-Eagle will continue to benefit from his extensive experience as he will act as a consultant to the Company” added Mr. Boyd.
Agnico-Eagle also announces that Paul–Henri Girard, Vice-President, Canada will be leaving the Company after 25 years of service. Paul–Henri was instrumental in the development of the world-class LaRonde mine and in building the Company’s Canadian mining base. He will also continue to serve the Company as an advisor to senior management.
Several other additions and changes have been made to Agnico-Eagle’s senior management team.
Jean-Luk Pellerin, Senior Vice-President, Human Resources was added to the team in January 2012. Mr. Pellerin brings a wealth of senior HR experience most recently with Transat A.T., Mercer Consulting and Bombardier.
Yvon Sylvestre has been appointed Senior Vice-President, Operations. With more than 30 years of mining industry experience, Yvon has held several senior positions within Agnico- Eagle, including General Manager, Goldex Division and most recently Vice-President, Technical Services and Construction.
Daniel Racine will move into a new role as Senior Vice-President, Mining. Daniel will work with the operating group and will focus on optimizing mining operations, engineering, maintenance and health and safety activities. He will also continue to be responsible for the Information Technology function.
Marc Legault has been promoted to Senior Vice-President, Project Evaluations. In this role Marc will continue to manage Agnico-Eagle’s project evaluation team. He is leading an expanded effort in this area and he will work closely with the corporate development and exploration groups.
Mathew Cook has been promoted to Vice-President, Corporate Controller. In this role, Mathew will continue to lead and oversee all aspects the Company’s corporate accounting function. He has been with the Company since 2004 and has held several senior positions including Corporate Controller and Corporate Director, Financial Reporting.
The Company has also added three new Vice-Presidents within Agnico-Eagle’s operating team. Pierre Bureau has been appointed Vice-President, Construction, Michel Leclerc has been appointed Vice-President, Project Evaluations and Christian Provencher has been appointed Vice-President, Canada.
In Pierre’s new role, he will be responsible for major project construction. He has been with Agnico-Eagle since 1997 and has held several senior positions including General Manager of Construction for our Pinos Altos mine in Mexico. Most recently, Pierre was Corporate Director, Construction.
In Michel’s new role, he will work closely with Marc Legault to expand the activities of the project evaluations team. He has been with Agnico–Eagle since 2001 and has held several senior positions including Mine Manager at the LaRonde Mine. Most recently Michel was Corporate Director, Technical Evaluations.
In Christian’s new role, he will be responsible for the management of Agnico-Eagle’s Canadian mining operations. Christian has been with Agnico-Eagle since 2002 and has held many key positions including General Manager of the LaRonde mine. Most recently he was Corporate Director, Mining and Performance Standards.
Cash Position Remains Strong
Cash and cash equivalents increased to $221.5 million at December 31, 2011, from the September 30, 2011 balance of $116.7 million, as the Company drew on its bank facilities during the quarter during the normal course of inter-Company fund flows. The bank facilities were also used for the cash portion of the acquisition of Grayd Resource Corporation during the quarter.
Capital expenditures in the fourth quarter were $107.6 million including $25.1 million at LaRonde, $21.8 million at Meadowbank, $21.8 million at Kittila, $7.6 million at Pinos Altos and $4.6 million at Lapa. For the full year 2011, capital expenditures totaled $482.8 million.
With its cash balances, anticipated cash flows and available bank lines, management believes that Agnico-Eagle remains fully funded for the development and exploration of its current pipeline of gold projects in Canada, Finland, Mexico and the USA.
Available credit lines as of December 31, 2011 were approximately $880 million.
Three Year Plan Outlines Further Production Growth
The Company is announcing its production and cost guidance for the three-year period of 2012 through 2014.
In 2012, payable gold production is expected to be in the range of 875,000 ounces to 950,000 ounces. Total cash costs per ounce in 2012 are expected to be in the range of $690 to $750.
In 2013, Agnico-Eagle expects to have payable gold production of approximately 990,000 ounces, growing to 1,055,000 ounces in 2014. Total cash costs per ounce are expected to be at similar levels to those now forecast for 2012.
Estimated Payable Gold Production and Total Cash Costs per 2011 2012 Estimated 2012 Estimated Ounce Actual Range - Low Range - High
Payable Gold Production
| LaRonde | 124,173 | 150,000 | 165,000 |
| Goldex | 135,478 | - | - |
| Lapa | 107,068 | 95,000 | 105,000 |
| Kittila | 143,560 | 150,000 | 160,000 |
| Pinos Altos | 204,380 | 200,000 | 210,000 |
| Meadowbank | 270,801 | 280,000 | 310,000 |
| 985,460 | 875,000 | 950,000 |
Total cash costs 2011
| per ounce | Actual 2012 Estimated | |
|---|---|---|
| LaRonde | $77 | $570 |
| Goldex | 401 | - |
| Lapa | 650 | 750 |
| Kittila | 739 | 650 |
| Pinos Altos | 299 | 415 |
| Meadowbank | 1,000 | 1,040 |
$580 $720
At the forecast assumptions (see below), LaRonde’s byproduct revenue is expected to be approximately $80 million lower than that realized in 2011 (about two thirds of this is due to lower byproduct grades and approximately one third due to lower metals price assumptions). This byproduct revenue is netted off against the cost of operating. Hence, in spite of the higher value of the ore expected to be mined in 2012 (higher gold grades), the total cash costs per ounce at LaRonde are expected to rise, as set out above. The loss of the low cost Goldex mine (total cash cost of $401 per ounce through October 2011) also skews the Company average cost higher in 2012.
Total cash costs per ounce for 2012 were calculated using the following metals prices and exchange rates (royalties included where applicable):
Assumptions 2012
Gold (US$/oz) $1,500 Silver (US$/oz) $30.00 Copper (US$/tonne) $7,000 Zinc (US$/tonne) $1,800 C$/US$ 1.00 US$/Euro 1.35 Changes in the assumptions would be expected to have the following effects on total cash costs per ounce.
Impact on Total Cash Costs per Ounce 2012
$1/oz change in price of Silver $5 $100/dry metric tonne change in price of Copper $1 $100/ dry metric tonne change in price of Zinc $3 1% change in C$/US$ $7 1% change in US$/Euro $1
Comparison With Prior Gold Production Guidance
There has been considerable change in the production forecast for 2012 through 2014 since the prior guidance of December 15, 2010. Descriptions of the major factors that contributed to these changes are detailed below.
| LaRonde Forecast | 2012 | 2013 | 2014 |
| Previous (oz) | 212,800 | 280,100 | 333,100 |
| Current (oz) | 157,500 | 220,000 | 280,000 |
| LaRonde 2012 | Ore Milled (‘000 tonnes) | Gold (g/t), Mill Recovery | Silver (g/t), Mill Recovery | Zinc (%), Mill Recovery | Copper (%), Mill Recovery | Minesite Cost Per Tonne3 |
|---|---|---|---|---|---|---|
| 2,300 | 2.3, 91% | 31, 88% | 1.5, 86% | 0.25, 84% | C$90 |
At LaRonde, over the next three years new gold production guidance is down approximately 21% annually, on average, from the prior guidance. This is partly due to a 21% higher gold price used in the current LOM plan versus the 2011 plan (a higher gold price results in lower cut off grades and lowers the expected grade of ore to the mill). The lower production forecast is also due to a shift in planning practices and changes in stope sequencing (which resulted in lower grade stopes in this three year plan). Additionally, as the mine is transitioning into the deeper LaRonde Extension over the next several years, a decision was made to be more conservative through this transition period.
| Lapa Forecast | 2012 | 2013 | 2014 |
| Previous (oz) | 118,700 | 107,500 | 125,100 |
| Current (oz) | 100,000 | 100,000 | 105,000 |
| Lapa 2012 | Ore Milled (‘000 tonnes) | Gold (g/t) | Mill Recovery | Minesite Cost Per Tonne |
|---|---|---|---|---|
| 600 | 6.4 | 81% | C$124 |
At Lapa, over the next three years new gold production guidance is down approximately 13% annually, on average. The new forecast considers the experience to date at the mine,
3 Minesite costs per tonne is a non-GAAP measure. For reconciliation of this measure to production costs, as reported in the financial statements, see Note 1 to the financial statements at the end of this news release.
and the location of the stopes expected to be mined over the next several years, and results in new estimates of overall ore dilution of 74% in the reserves as compared with the prior estimates of 54%. This results in the forecast of lower grades to the mill.
| Kittila Forecast | 2012 | 2013 | 2014 |
| Previous (oz) | 178,200 | 176,500 | 168,200 |
| Current (oz) | 155,000 | 155,000 | 170,000 |
| Kittila 2012 | Ore Milled (‘000 tonnes) | Gold (g/t), | Mill Recovery | Minesite Cost Per Tonne |
|---|---|---|---|---|
| 1,045 | 5.5 | 84% | €71 |
At Kittila, over the next three years new guidance is down approximately 8% annually, on average. This is largely due to the experience to date with the autoclave. The reliability, and associated availability, to date has been less than expected with average overall mill availability of 84% in 2011 versus the budget of 89%.
| Meadowbank Forecast | 2012 | 2013 | 2014 |
| Previous (oz) | 369,500 | 415,300 | 470,300 |
| Current (oz) | 295,000 | 305,000 | 310,000 |
| Meadowbank 2012 | Ore Milled (‘000 tonnes) | Gold (g/t), | Mill Recovery | Minesite Cost Per Tonne |
|---|---|---|---|---|
| 3,150 | 3.2 | 92% | C$97 |
At Meadowbank, over the next three years, new guidance is down approximately 27% annually, on average. The mine has experienced a number of issues during its startup over the past two years. While the mill throughput is now exceeding the original design rate, the grades to the mill continue to be lower than expected (orebody geometry has been more complex making selective mining difficult and more costly). This, combined with the unexpected rise in minesite costs (C$98/t in Q4, 2011 versus the December 15, 2010 LOM forecast of $59/t) has resulted in a new mine plan which forecasts lower gold production over a shorter mine life. The mine life now extends to 2017 rather than 2020. Compared with the 2010 LOM plan, the new LOM grade is now forecast to be down approximately 1%, tonnes milled are down 28% and ounces are forecast to be reduced by 29%.
| Pinos Altos Forecast | 2012 | 2013 | 2014 |
| Previous (oz) | 236,900 | 227,500 | 223,500 |
| Current (oz) | 205,000 | 210,000 | 190,000 |
| Pinos Altos 2012 | Total Ore (‘000 tonnes) | Gold (g/t) | Recovery (incl. heap leach) | Minesite Cost Per Tonne |
|---|---|---|---|---|
| 4,200 | 1.9 | 81% | $27 |
Over the next three years, new guidance at Pinos Altos is down approximately 12% annually, on average. This is largely the result of a lower cut-off due to higher gold and silver prices and increased dilution estimates.
Capex Fully-Funded – Free Cash Flow Expected To Increase
The Company’s balance sheet is well positioned to fund the Company’s growth initiatives. The cash balance at December 31, 2011 was approximately $221 million. Additionally, the Company had approximately $880 million available under its credit facilities and expects to generate significant cash flows from its operations in 2012 and beyond. At current spot prices, Agnico-Eagle expects to generate free cash flow in 2012, after capital expenditures which are expected to total approximately $382 million in 2012. It is a goal of the Company to increase its dividend to shareholders, over time, on a sustainable basis.
The forecast capital expenditures include approximately $257 million at the mines and $80 million on new projects, as broken out in the table below. Additionally, approximately $45 million is expected to be spent on capitalized exploration.
Capital Expenditure Budget
($, millions) Sustaining New Projects Capitalized Exploration
| LaRonde | 74.8 | 0.7 |
| Lapa | 10.2 | 0.3 |
| Meadowbank | 88.5 | 6.2 |
| Kittila | 51.9 | 12.2 |
| Pinos Altos | 31.5 11.4 | 4.4 |
La India 3.5
| Meliadine | 52.0 | 20.7 |
| Other | 0.5 13.5 | |
| Total | 257.4 80.4 | 44.5 |
Grand Total Capital Expenditures 382.3
Several Projects Not Yet Considered in Production and Capital Investment Plan
The current three year plan shows annual gold production rising each year through 2014 to almost 1.1 million ounces. However, these forecasts do not currently include the following expansion and development projects:
| Project | Project Status | Next News | Potential Production | |
|---|---|---|---|---|
| La India | New Mine | Permitting, Feasibility | Construction Permit | 2014 |
| Kittila | 25% Expansion | Feasibility Underway | Q4, 2012 Review | 2015 |
| Meliadine | New Mine | Permitting, Updated Feasibility | Road Permit | 2017 |
La India – Next New Mine
The La India deposit, acquired in late 2011, is currently undergoing drilling with the goal of converting the current resources into reserves. Additionally, the Company is advancing the engineering study and permitting process with the goal of initial production from a low cost open pit, heap leach mine with first production by late 2014.
Kittila – 25% Expansion
By year end 2012, it is expected that a study on a 25% throughput expansion at Kittila will be completed. Considering the rapid expansion of the Kittila orebody at depth, and particularly to the north, it is now believed that a smaller initial expansion followed by the possibility of a larger expansion at a later date would be prudent. The initial expansion could be supported by the current reserve at Kittila and the higher throughput could be realized in 2015.
Meliadine – High Grade Project Continues To Grow
The Meliadine project, acquired in 2010, is currently one of Agnico-Eagle’s largest gold deposits in terms of reserves and resources. It is currently in the permitting phase with first production expected in 2017. With the expectation of mining multi-million ounces of gold, Meliadine is considered to be a long-term cornerstone asset for the Company.
As the main deposit at Tiriganiaq continues to develop at depth, the Company believes that more emphasis on underground extraction would be prudent to control dilution, reduce the impact of a harsh environment and optimize the value of this high grade deposit.
As announced in today’s separate exploration news release, the proven and probable gold reserves at Meliadine have grown. The deposits remain wide open for further expansion. The property covers 80 km of strike length and multiple favourable targets will be tested in the next two years.
First production is anticipated for 2017 with capital expenditures expected to be distributed over the 2012 to 2016 period.
Several Longer Term Projects Developing
Additionally, other advanced exploration and development projects may eventually contribute to expansion, or extensions of the lives of the mines. The most significant are presented in the table below.
| Project | Project Status | Next News | |
|---|---|---|---|
| Kittila | Larger Expansion | Drilling | 2012 Drill Results |
| Pinos Altos | Various Satellite Zones | Drilling | 2012 Drill Results |
| Tarachi | Exploration | Drilling | 2012 Drill Results |
| Goldex | M and D Zones | Drilling | 2012 Drill Results |
While the studies are not yet completed on any of these projects, and in some cases remain early stage, several have a currently defined resource. A brief description of the larger, and most advanced, potential growth projects follows.
Kittila - Larger Expansion
Reflecting the continued growth of the Kittila orebody, a feasibility study is underway regarding an initial 25% expansion, as mentioned above. However, the orebody appears to be significantly richer and thicker beneath the Rimpi zone (as further discussed in today’s separate exploration news release). This zone is approximately two kilometres north of the main Suuri deposit, which is currently being mined.
It is anticipated that the Kittila reserves will continue to grow as the deposit is drilled over the next several years (partly via more efficient underground drilling which is expected to begin in 2012). With this expectation of a growing reserve, the Company is considering an even larger expansion. This larger expansion could involve the sinking of a shaft and an appropriate increase in milling capacity, possibly in the form of a new separate mill. A prefeasibility study on the larger expansion would be initiated, pending positive exploration results in the interim.
Pinos Altos – Bravo and Sinter Zones
The Bravo deposit is adjacent to, and southwest of the Creston Mascota mine. In fact, it may be an extension of the same orebody and will be a focus of the exploration activity in 2012.
The Sinter deposit is located approximately two kilometres north of the main Santo Nino zone at Pinos Altos. It is being examined as a possible source of open pit ore for the mill at Pinos Altos. This would effectively extend the mine life of Pinos Altos.
Tarachi – New Zone Showing Large Scale Mineralization
This gold deposit is approximately 10 kilometres to the northwest of the La India deposit in Sonora State, Mexico. Initial drilling and sampling suggest that the mineralized structure extends over several kilometres. The property is expected to be a focus of exploration drilling in 2012 and an initial resource is likely to be announced in 2013.
Goldex – M and E Zones
Although the mining operations at Goldex were suspended indefinitely in October 2011, the Company continues to evaluate production options during the ongoing investigation and remediation phase. While speculative at the moment, these projects are considered to be of interest due to the existing infrastructure and availability of a highly skilled workforce.
The M and E Zones have promise with the viability dependant on the results of the investigation into the stability of the crown pillar at Goldex. Successful production from these zones may provide sufficient cash flow to help fund the exploration of the deeper, but promising D Zone.
Goldex - D Zone Growing
The Company is currently drilling the deeper mineralization at Goldex. The D zone is located approximately 150 metres below the mine workings of the GEZ deposit. Although not yet fully defined and recognizing that it would be a longer term project, the D zone is very similar in geology and style of mineralization as that of the GEZ.
To date, the D zone mineralization (currently in the indicated and inferred categories) has been traced over a length of almost 400 metres, with a vertical height of at least 400 metres and with an estimated thickness of up to 100 metres (which are similar dimensions to the GEZ deposit). The zone has been followed down to a depth of approximately 1300 metres below surface (where it remains open for expansion in all directions).
Operating Review
LaRonde Mine – Sequence Results In Lower Grades Than Expected
The 100% owned LaRonde mine in northwestern Quebec achieved commercial production in 1988.
The LaRonde mill processed an average of 6,767 tonnes per day (“tpd”) in the fourth quarter of 2011, compared with an average of 6,918 tpd in the corresponding period of 2010. Milling performance for the full year 2011 was approximately 6,592 tpd versus 7,102 tpd in 2010. The lower throughput was largely due to issues with sequencing and dilution. Additionally, due to a forecast reduction in the specific gravity of the ore in the LaRonde Extension, the tonnage processed through the mill will naturally decrease even though the gold grades are expected to increase as the mine progresses deeper.
Minesite costs per tonne were approximately C$79 in the fourth quarter of 2011. These costs are the same as the C$79 per tonne experienced in the fourth quarter of 2010. The cost control is in spite of the aforementioned issues with throughput, a higher proportion of ore from the lower levels (higher haulage costs) and the November declaration of commercial production at the LaRonde Extension that also meant that many costs began to be expensed.
Minesite costs per tonne for the full year 2011 were approximately C$84, approximately 12% higher than in 2010 (C$75) mainly due to the lower throughput and cost increases as discussed above.
On a per ounce basis, net of byproduct credits, LaRonde’s total cash costs per ounce were $375 in the fourth quarter of 2011 on production of 30,686 ounces of gold. This compares with the fourth quarter of 2010 when total cash costs per ounce were minus $250 on production of 38,405 ounces of gold. The increase in total cash costs is largely due to lower ounce production from lower grade, lower byproduct revenue and lower throughput, as discussed above.
For the full year 2011, LaRonde’s total cash costs per ounce were $77 on gold production of 124,173 ounces. This compares to total cash costs per ounce of minus $7 on gold production of 162,806 in 2010, as lower gold production in 2011 (lower grades and throughput, as mentioned above) was accompanied by weaker byproduct metals prices in 2011.
In 2011, the LaRonde mine also produced approximately 55,000 tonnes of zinc, 3.2 million ounces of silver and 3,200 tonnes of copper, as byproduct to the gold production.
Goldex Mine – Investigation and Remediation Ongoing