Agnico Eagle reports second quarter 2013 results – Significant capital and operating cost reductions announced – 2013-2015 production guidance maintained

(All amounts expressed in U.S. dollars unless otherwise noted)

Stock Symbol: AEM (NYSE and TSX)

TORONTO, July 24, 2013 /PRNewswire/ – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported a quarterly net loss
of $24.4 million, or $0.14 per share for the second quarter of 2013.
This result includes a non-cash foreign currency translation gain of
$11.1 million ($0.06 per share), non-cash stock option expense of $4.3
million
($0.02 per share), non-cash impairment loss on available for
sale securities and mark-to-market loss on warrants of $20.5 million
($0.12 per share) and other non-recurring expense of $6.1 million
($0.03 per share) mostly relating to the Kittila maintenance shutdown.
Excluding these items would result in an adjusted net loss of $4.6
million
, or $0.03 per share. In the second quarter of 2012, the
Company reported net income of $43.3 million, or $0.25 per share.

The financial results in the current quarter were negatively impacted by
the much lower production from the Kittila mine due to a previously
announced extended maintenance shutdown during the quarter.
Consequently, the costs incurred by Kittila exceeded revenues during
this period. The Company’s quarterly performance was also impacted by
negative settlement adjustments for byproduct metals at LaRonde and
Pinos Altos, mainly due to silver prices that were 35% lower during the
second quarter than in the preceding quarter. Outside of the shutdown
at Kittila, the Company’s operating performance was in line with its
expectations.

For the first six months of 2013, the Company reported a net loss of
$0.5 million, or nil per share. This compares with the first six
months of 2012 when net income was $121.8 million, or $0.71 per share.
Financial results in the 2013 period were negatively impacted by lower
commodity prices and the Kittila shutdown in the second quarter, as
discussed above.

Second quarter 2013 cash provided by operating activities was $75.3
million
($63.6 million before changes in non-cash components of working
capital), compared to cash provided by operating activities of $194.1 million in the second quarter
of 2012 ($142.0 million before changes in non-cash components of
working capital).

For the first six months of 2013, cash provided by operating activities
was $221.4 million ($198.1 million before changes in non-cash
components of working capital), as compared with the first half of 2012
when cash provided by operating activities was $390.6 million ($323.3
million
before changes in non-cash components of working capital).

The lower net income and cash provided by operating activities in 2013
was primarily due to lower realized metal prices and an extended
maintenance shutdown at Kittila, as described above.

“Production for the second quarter was in line with our expectations,
and we anticipate meeting our 2013 guidance with stronger second half
production expected at LaRonde, Kittila and Meadowbank, and the planned
start of production at Goldex,” said Sean Boyd, President and Chief
Executive Officer. “Given the current low gold price environment, we
are in the process of reviewing all aspects of our business. Today we
are announcing capital and other costs reductions of approximately $50
million
for the remainder of 2013. Additionally, we estimate that 2014
capital expenditures at existing mines and projects will be in excess
of $200 million lower than our previous estimate of approximately $600
million
. In spite of these cost reductions and spending deferrals, our
growth profile in 2014 and 2015 remains intact,” added Mr. Boyd.

Operating highlights include:

  • Second quarter 2013 production and costs in line with expectations – Production is expected to be stronger in the second half of the year
    with lower cash costs, and improved cash flow. Production and cost
    performance for the first half of the year has been in line with
    Company expectations, given the previously announced maintenance
    shutdown at Kittila and mine sequencing during the year. 2013
    production guidance remains at between 970,000 and 1,010,000 ounces of
    gold at total cash cost per ounce of $735 to $785.

  • Kittila autoclave restarted after completion of extended maintenance
    program –
    Throughput and recoveries already at normal steady state levels.
    Autoclave modifications are expected to improve availability over time.

  • All aspects of business under review in the context of the current gold
    price environment –
    Focus on reducing exploration spending, mine optimization aimed at
    reducing operating and capital costs, and evaluation of metal price
    assumptions used to calculate reserves and resources.

  • On track to meet production guidance of approximately 1.2 million ounces
    of gold by 2015

  • Capital and cost reductions of approximately $50 million in 2013 and
    $250 million in 2014

  • La India commissioning on track for year-end 2013 – Project remains on schedule and on budget

Payable gold production1 in the second quarter of 2013 was 224,089 ounces, including 5,389
ounces from Kittila, compared to 265,350 ounces in the second quarter
of 2012. The lower level of production in the 2013 period was
primarily due to the extended maintenance shutdown at Kittila. A
description of the production and cost performance for each mine is set
out below.

Given that the Kittila autoclave operated for only 14 days in the second
quarter, the impact of its expenditures is excluded from total cash
costs per ounce calculations. On that basis, total cash costs per
ounce for the second quarter of 2013 were $785 per ounce. This
compares with $660 per ounce in the second quarter of 2012. The higher
cash cost per ounce in 2013 was largely attributable to lower byproduct
revenue at LaRonde and Pinos Altos.

Payable gold production for the first half of 2013 was 461,064 ounces,
including 48,534 ounces from Kittila, compared to payable gold
production of 520,305 ounces in the comparable 2012 period, of which
almost 82,000 ounces were from Kittila.

For the first half of 2013, total cash costs were $762 per ounce,
excluding the second quarter impact of Kittila. This compares with
$628 per ounce in the first six months of 2012 (including the Kittila
operations). The lower production and higher costs in 2013 are due to
the factors that impacted the second quarter, as mentioned above.

Production is expected to be stronger in the second half of 2013 due to
resumption of production at Kittila, increased production at Creston
Mascota, the ongoing ramp up of production from the deeper and richer
levels of LaRonde, higher expected grades at Meadowbank, and the
planned start of production at Goldex.

Agnico Eagle’s production guidance for 2013 remains unchanged at 970,000
to 1,010,000 ounces of gold. Expected total cash costs per ounce are
also unchanged at $735 to $785. For the full year 2013, expected
all-in sustaining costs2 remain approximately $1,100 per ounce.

In 2014, Agnico Eagle expects to have significant production growth from
LaRonde (due to anticipated improvement in grades), Goldex (due to a
planned full year of operations) and La India (due to the expected
start of commercial production in 2014). The Company expects payable
gold production to be in the range of 1,100,000 ounces to 1,140,000
ounces as previously announced in the Company’s February 14, 2013 news
release.

In 2015, further production growth is expected from LaRonde (due to
higher grades) and Pinos Altos (due to anticipated mill optimization)
with payable gold production expected to exceed 1,200,000 ounces, also
as forecasted in the February 14, 2013 news release.

Review of Business Activities – Adjusting to a Lower Gold Price
Environment

Given the recent decline in the gold price, the Company has initiated on
a business review in order to optimize the asset base and enhance
shareholder value. The Company is taking a measured approach to this
process with both immediate and longer term cost reductions under
consideration.

Optimization of Mine Plans

All mine plans are being reviewed with the goal of reducing capital and
operating costs on an ongoing basis. For 2013, capital spending is now
expected to be $597 million, a reduction of $24 million from the amount
announced in the April 25, 2013 news release. This optimization
program is not expected to have an impact on the gold production
guidance for the 2013 to 2015 period.

Strategic Review of Exploration Activities

All regional exploration programs, minesite and joint venture activities
are currently undergoing a process of prioritization. As a result, the
2013 exploration budget of $92 million has been reduced by
approximately 22% to $72 million. Exploration spending for 2014 is
expected to be approximately $50 million (including approximately $20
million
of capitalized exploration expenses), which is a significant
reduction from historical levels of approximately $100 million.

Review of Metal Price Assumptions Used to Develop Mine Plans

The Company plans to review the metal price assumptions used to
calculate its cutoff grades and its mine plans. At lower gold prices,
the cutoff grade typically rises. With higher grades expected to be
delivered for processing, the intention is to generate higher profit
margins.

Proven and probable reserves at shorter life assets were calculated
using a gold price of $1,490 per ounce, while longer life mine reserves
were calculated using a gold price of $1,345 per ounce (for further
details see the February 13, 2013 news release). For a 10% change in
the above gold prices (leaving all other assumptions unchanged), the
Company estimates there would be a 4% change in proven and probable
gold reserves.

The Company has analysed its operating mines and development projects
for impairment as of June 30, 2013 and concluded no impairment charges
were required. In the circumstances where the spot price of gold
remains persistently low and the expectations of future realizable gold
prices are lowered from current expectations, there is a possibility of
future impairment charges to the Company’s mining assets.

Dividend Maintained

Agnico Eagle has paid a dividend for 31 consecutive years. The Board of
Directors
has approved the next quarterly dividend of 22 cents per
share to be paid on September 17, 2013 to shareholders of record as of
September 3, 2013.

Other Expected Dividend and Record Dates for 2013

Record Date Payment Date
Dec. 2 Dec. 16

Board of Directors

Agnico Eagle wishes to extend its deepest sympathy to the family of Mr.
Douglas Beaumont, who passed away on June 30, 2013 and was a member of
the Board of Directors since 1997. “Doug was an active and trusted
member of our Board of Directors and served as a great resource to our
technical group on many projects. Doug’s experience, knowledge and
above all, his friendship, will be missed by all of us,” said James
Nasso
, Chairman of the Board.

Second Quarter 2013 Results Conference Call and Webcast Tomorrow

The Company’s senior management will host a conference call on Thursday,
July 25, 2013
at 11:00 AM (E.D.T.) to discuss financial results and
provide an update of the Company’s operating activities.

Via Webcast:
A live audio webcast of the meeting will be available on the Company’s
website homepage at www.agnicoeagle.com.

Via Telephone:
For those preferring to listen by telephone, please dial 416-644-3414 or
Toll-free 1-800-814-4859. 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 Toll-free 1-877-289-8525, access code
4568955#.
The conference call replay will expire on August 26, 2013.

The webcast along with presentation slides will be archived for 180 days on the website.

Capital Expenditures

Capital expenditures in the second quarter of 2013 were $171.8 million,
including $25.2 million at LaRonde, $22.3 million at Meadowbank, $24.8
million
at Kittila, $11.3 million at Pinos Altos, $6.2 million at Lapa,
and $4.8 million at Creston Mascota. Capital expenditures at
development projects included $38.6 million at La India, $18.7 million
at Goldex, and $17.4 million at Meliadine.

Capital expenditures for the first six months of 2013 were $302.4
million
. For 2013, capital expenditures are expected to total
approximately $597 million, representing a $24 million reduction from
the previously announced figures. The majority of the Company’s 2013
growth-related capital expenditure relates to the Goldex and La India
mines, which are expected to be in full production next year.

The Company is in the process of reviewing future capital requirements,
previously estimated at approximately $600 million per year for the
next five or six years. The current estimate for 2014 is expected to
be approximately $200 million lower than the previously announced
figure, or approximately $400 million, and will be refined later this
year during the regular budget process.

Approximately $80 million of the reduction relates to lower spending at
Meliadine, however the project will continue to advance with
approximately $45 million allocated to driving an exploration ramp and
exploration drilling. The project is currently the subject of an
updated technical study with results expected mid-2014. The timing of
capital expenditures on the project beyond 2014 will be subject to
Board approval and prevailing market conditions.

LiquidityBalance Sheet Flexibility Maintained

Cash and cash equivalents totaled $136 million at June 30th, 2013, down
from the March 31, 2013 balance of $264 million. The decline in the
cash balance is largely due to the impact of lower production and lower
metal prices on operating cash flows, which were lower than the level
of capital expenditures. The outstanding balance on the Company’s
credit facility was $50 million at June 30, 2013, with available bank
lines as of June 30, 2013 of approximately $1.15 billion. At current
gold prices and related forecasts, the Company remains well within its
debt covenants. The Company’s debt is comprised of five separate
series of notes, whose maturities are spread out over a seven-year
period, with the earliest maturity being $115 million in 2017.

LaRonde – Cooling Plant Infrastructure Development Progressing Well

The 100% owned LaRonde mine in northwestern Quebec, Canada, began
operation in 1988. Current mine life is estimated to be through 2026.

The LaRonde mill processed an average of 6,143 tonnes per day (“tpd”) in
the second quarter of 2013, compared to an average of 6,294 tpd in the
corresponding period of 2012. The lower mill throughput in the current
period was largely due to five days of scheduled mill maintenance being
advanced from the third quarter of 2013 into the second quarter.

Work on the ventilation and cooling plant infrastructure continues on
schedule with installation still expected to be completed in the fourth
quarter of 2013, which should provide additional mining flexibility. In
the second quarter of 2013, approximately 60% of the ore milled came
from the deeper portion of the LaRonde mine. The proportion of
production from the deeper mine ore is expected to increase over the
course of the year as two higher grade deep pyramids are mined. The
mined grade is expected to continue to increase towards the average
reserve grade over the next several years.

Minesite costs per tonne3 were approximately C$103 in the second quarter of 2013. These costs
are higher than the C$97 per tonne experienced in the second quarter of
2012. The increase in costs is largely due to lower throughput,
additional development work and general inflation during the quarter.

For the first six months of 2013, the LaRonde mill processed an average
of 6,372 tpd, compared to 6,690 tpd in the first six months of 2012.
Minesite costs per tonne were approximately C$100, compared to C$93 per
tonne in the first six months of 2012. Costs were higher due to the
reasons described above.

On a per ounce basis, net of byproduct credits, LaRonde’s total cash
costs per ounce were $927 in the second quarter of 2013 on production
of 46,119 ounces of gold. This compares with the second quarter of
2012 when total cash costs per ounce were $784 on production of 40,206
ounces of gold.

The increase in total cash costs per ounce was mainly due to lower
byproduct metal prices and production volumes (approximate impact of
$184 per ounce) as the mine transitions to more gold-rich ore at depth,
negative settlement adjustments on byproducts (impact of $90 per ounce)
and higher minesite costs per tonne (as previously mentioned). Silver
and zinc production in the second quarter of 2013 was 20% and 64%
lower, respectively, compared to the second quarter of 2012. Realized
silver and zinc prices in the second quarter of 2013 were 29% and 8%
lower, respectively, compared to the second quarter of 2012.

In the first six months of 2013, LaRonde produced 85,192 ounces of gold
at total cash costs per ounce of $831. This is in contrast with the
first half of 2012 when the mine produced 83,487 ounces of gold at
total cash costs of $489 per ounce, with the increased costs due to
significantly lower byproduct prices, as described above.

Production and costs are expected to improve in the second half of 2013
due to increased tonnage and higher grades from the lower mine and
better budgeted recoveries from the installation of the new Carbon In
Pulp circuit in the second quarter of 2013.

After 2013, LaRonde is expected to ramp up production over the next
several years to an average life of mine production of more than
300,000 ounces of gold per year, reflecting the higher gold grades
expected at depth. As a result of the higher grades, the value of the
ore expected to be processed over LaRonde’s remaining 14-year life is
approximately 50% higher than the value of the ore mined in 2012
(assuming the same metals prices).

Lapa – Zulapa Drilling Could Have a Positive Impact on Production and
Grades

The 100% owned Lapa mine in northwestern Quebec achieved commercial
production in May 2009. Current mine life is estimated to be through
2016.

The Lapa circuit at the LaRonde mill processed an average of 1,745 tpd
in the second quarter of 2013, essentially unchanged from 1,741 tpd in
the second quarter of 2012.

Minesite costs per tonne were C$110 in the second quarter of 2013,
compared to C$113 in the second quarter of 2012. The lower minesite
cost in the current period is due to lower cement consumption (due to a
higher ratio of unconsolidated backfill), productivity improvements,
and cost reductions versus the comparable period last year.

For the first six months of 2013, the Lapa mill processed an average of
1,761 tpd, compared to 1,740 tpd in the first six months of 2012.
Minesite costs per tonne were approximately C$112, slightly below the
C$116 per tonne in the first six months of 2012 due to reasons
explained above.

Payable production in the second quarter of 2013 was 23,178 ounces of
gold at total cash costs per ounce of $720. This compares with the
second quarter of 2012, when production was 28,157 ounces of gold at
total cash cost per ounce of $634. In the current period, the decrease
in gold production and higher total cash costs per ounce were generally
due to the processing of lower gold grades compared to the same quarter
last year.

In the first six months of 2013, Lapa produced 50,046 ounces of gold at
total cash costs per ounce of $699. This compares to the first half of
2012 when the mine produced 56,656 ounces of gold at total cash costs
of $650 per ounce.

Recent exploration drilling in the Zulapa area (a parallel zone
approximately 150 metres from the Lapa deposits) from an exploration
drift at a depth of about 1,000 metres has yielded some of the best
results ever seen at the Lapa mine. Highlights include values up to
19.3 g/t gold over 6.5 metres, and 28.9 g/t gold over 2.8 metres.
Additional information on these drill intersections is included in the
tables below.

Highlights from 2013 Zulapa Exploration Drilling
Drill hole ID From
(metres)
To (metres) Estimated
true width
(metres)
Gold grade
(g/t)
uncapped
Gold grade
(capped at
50 g/t)
LA12-125-42 379.9 384.3 2.8 210.6 20.3
D13-128-43D 192.0 196.3 4.0 7.8 7.8
LA13-101-107 321.7 329.2 6.5 39.3 19.3
LA13-110-1 208.2 211.2 2.8 31.2 28.9
Drill collar coordinates
Drill hole ID UTM North UTM East Elevation
(metres
below
sea level)
Azimuth Dip
(degrees)
Length
(metres)
LA12-125-42 5345184.2 701889.2 855 147.0 -59 446.3
D13-128-43D 5345148.3 701885.9 907 150.7 -26 225.0
LA13-101-107 5344707.1 702123.1 634 11.9 -28.1 524.2
LA13-110-1 5345131.3 702325.7 710 167.8 -34.7 250.0
* Coordinate System UTM NAD83-Z17

Although it is too early to determine the full impact of these results,
these zones are close to existing workings and the grades compare
favorably to the current reserve grade of 5.95 g/t gold. Additional
drilling is planned for these sectors in 2013.

Kittila Mine – Autoclave Successfully Re-started After Extended
Maintenance

The 100% owned Kittila mine in northern Finland achieved commercial
production in May 2009. Current mine life is estimated to be through
2037.

As a result of only operating for 14 days in the second quarter of 2013,
the mill processed an average of approximately 568 tpd. In the second
quarter of 2012, the Kittila mill processed 2,758 tpd. The shutdown to
re-brick the entire autoclave started on April 14 and production
operations resumed at the end of June. In addition to re-bricking,
further modifications were made to the autoclave, which are expected to
result in more robust operating performance over time. Following the
re-start of the autoclave, throughput and recoveries are back to levels
seen prior to the scheduled shutdown.

For the first six months of 2013, the Kittila mill processed an average
of 1,761 tpd, compared to 2,969 tpd in the first six months of 2012.
The lower throughput in 2013 is due to the maintenance shutdown in the
second quarter.

Second quarter 2013 gold production at Kittila was 5,389 ounces. In the
second quarter of 2012 the mine produced 35,228 ounces. Lower
production in the 2013 period was largely due to the extended mill
shutdown compared to the second quarter of 2012. Operating costs
during normal operating days at Kittila in the second quarter of 2013
were similar to those incurred in the preceding quarter, which was
considered its normal steady state.

In the first six months of 2013, Kittila produced 48,534 ounces of
gold. This is in contrast to the first half of 2012, when the mine
produced 81,986 ounces of gold.

In February 2013, the Company’s Board of Directors approved a 750 tpd
expansion at Kittila, which is expected to increase the capacity at the
mine to 3,750 tpd starting in the second half of 2015. To date, the
engineering, procurement, and construction management contract has been
awarded, detailed engineering has commenced and the procurement of long
lead items is underway. The expansion is expected to reduce total cash
costs per ounce and to offset the production impact of a gradual
reduction in realized grade towards the reserve grade over the next
several years.

Pinos Altos – Steady Production and Operating Cost Control

The 100% owned Pinos Altos mine in northern Mexico achieved commercial
production in November 2009. Current mine life is estimated to be
through 2029.

The Pinos Altos mill processed an average of 5,024 tpd in the second
quarter of 2013, essentially in line with 5,036 tpd per day processed
in the second quarter of 2012. During the second quarter of 2013,
approximately 209,000 tonnes of ore were stacked on the heap leach at
Pinos Altos, compared to 277,000 tonnes in the comparable 2012 period.
The smaller proportion of the lower cost heap leach tonnes in the
current period resulted in a higher minesite cost per tonne of $50 in
the second quarter of 2013, compared to $41 per tonne in the second
quarter of 2012. In spite of the increase in per tonne costs,
production costs at Pinos Altos were largely in line with the
comparable period in 2012.

For the first six months of 2013 the Pinos Altos mill processed an
average of 5,136 tpd, slightly higher than 5,002 tpd processed in the
first half of 2012. Minesite costs per tonne were approximately $45,
above the $39 per tonne in the first half of 2012 due to lower
proportion of heap leach tonnes in the current period.

Payable production in the second quarter of 2013 was 47,383 ounces of
gold at a total cash cost per ounce of $496. This compares with
production of 45,307 ounces at a total cash cost of $366 in the second
quarter of 2012. The increase in year over year cash cost per ounce is
due to a 29% decline in realized silver price compared to the prior
year period as well as stockpile movements and a stronger Mexican peso.
The decline in realized silver price is estimated to account for
approximately $65 per ounce of the increase in total cash costs.

In the first six months of 2013, Pinos Altos produced 91,547 ounces of
gold at total cash costs per ounce of $402. This is in contrast to the
first half of 2012 when the mine produced 88,599 ounces of gold at
total cash costs of $310 per ounce. The increase in the total cash
costs per ounce is due to the same reasons discussed above, while
production costs over the same period are essentially unchanged.

The $106 million Pinos Altos shaft sinking project remains on budget
with approximately 50% of the total budget committed to date. Activity
in the second quarter included preparation of the headframe foundation,
construction of the hoist building and Galloway assembly. This project
will allow better matching of the mill capacity with the future mining
capacity at Pinos Altos when the open pit mining operation begins to
wind down as planned in the next several years.

Creston Mascota – Restart Progressing Well

The Creston Mascota heap leach has been operating as a satellite
operation to the Pinos Altos mine since late 2010.

Approximately 386,000 tonnes of ore were stacked on the Creston Mascota
leach pad during the second quarter of 2013, compared to approximately
476,000 tonnes stacked in the second quarter of 2012. The decrease in
tonnes stacked was mainly a result of the previously announced
temporary suspension of activities at the Creston Mascota mine.
Leaching resumed on the Phase 2 pad at Creston Mascota in March 2013.
The ramp up of production is in line with expectations. Minesite costs
per tonne at Creston Mascota were $14 in the second quarter of 2013,
unchanged from the second quarter of 2012.

For the first six months of 2013, mine site costs per tonne at Creston
Mascota were $14, compared to $12 per tonne in the first six months of
2012. Production at Creston Mascota is expected to increase in the
second half of 2013.

Payable gold production at Creston Mascota in the second quarter of 2013
was 10,147 ounces at a total cash cost per ounce of $498. This compares
to 18,049 ounces at a total cash cost per ounce of $339 during the
second quarter of 2012. The decline in production and higher costs per
ounce are reflective of the ramp up schedule of the Creston Mascota
operation as described above. Payable gold production for the first
six months of 2013 totaled 12,054 ounces, compared to 31,773 ounces in
the first six months of 2012. Production at Creston Mascota is
expected to increase during the remainder of 2013.

Meadowbank – Production Expected to Increase Further in Second Half of
2013

The 100% owned Meadowbank mine is located in Nunavut, Canada. Current
mine life is estimated to be through 2018.

The Meadowbank mill processed an average of 11,303 tpd in the second
quarter of 2013. This compares with 9,901 tpd in the second quarter of
2012. The higher throughput, period over period, is largely due to the
continued strong operating performance of the permanent secondary
crushing unit that was commissioned in July 2011. The secondary
crusher has consistently exceeded the initial design rate of 8,500 tpd
since startup.

Minesite costs per tonne were C$83 in the second quarter of 2013,
compared with C$90 per tonne in the second quarter of 2012. Costs are
lower in the 2013 period due to more tonnes of ore processed in 2013
versus 2012, improved productivity, as well as multiple cost reduction
initiatives.

For the first six months of 2013, the Meadowbank mill processed an
average of 11,311 tpd, compared to 9,825 tpd in the first six months of
2012. Minesite costs per tonne were approximately C$85 in the first
six months of 2013, below the C$91 per tonne in the comparable 2012
period due to reasons described above.

Payable production in the second quarter of 2013 was 91,873 ounces of
gold at total cash costs per ounce of $912. This compares with payable
production in the second quarter of 2012 of 98,403 ounces of gold at
total cash costs per ounce of $804. The decline in year over year
production and change in total cash costs reflects a 17% decline in
realized grade compared to the second quarter of 2012 due to mine
sequencing. The grade profile is expected to improve during the
remainder of 2013, which should result in higher production at lower
costs.

In the first six months of 2013, Meadowbank produced 173,691 ounces of
gold at total cash costs per ounce of $986. In the first half of 2012
the mine produced 177,804 ounces of gold at total cash costs of $901
per ounce. Despite higher total cash costs per ounce that were
associated with a lower budgeted gold grade in the first half of 2013,
Meadowbank’s minesite costs per tonne were 7% lower than in the 2012
period due to the higher throughput and cost saving initiatives
outlined above.

Goldex Mine – Commercial Production Expected in Q4 2013

The 100% owned Goldex mine in northwestern Quebec began operation in
2008 but mining in the original GEZ orebody was suspended in October
2011
(see October 19, 2011 release). In 2012, the M and E satellite
zones were approved for construction, while the mining operations at
GEZ remain suspended.

The Goldex mine is expected to commence operations in the M and E zones,
with an anticipated commercial production of approximately 15,000
ounces of gold in the fourth quarter of 2013. Development activities
at the mine have proceeded well to date with construction of the paste
plant and ore pass systems being on schedule.

The Company expects to be able to evaluate technical studies on several
other satellite zones at the mine by the end of 2013.

La India – Development on Schedule and Budget for Commissioning in Q4
2013

The La India project in Sonora, Mexico, was acquired in November 2011.
La India remains on schedule and budget for commissioning in the fourth
quarter of 2013, with commercial production anticipated in the first
quarter 2014.

During the quarter, work advanced on the installation of the plant,
crushing system and leach pads. In addition, power generators were
installed and are now operational. Metallurgical testing continues on
the La India sulphides and Tarachi ores, with results expected later
this year.

The Company is planning to conduct site visits for analysts and
investors to the La India project in the third week of September to
coincide with the Denver Gold Forum in Denver, Colorado.

Meliadine – 2013 and 2014 Expenditures Reduced by $10 million and $80
million
, respectively

Located near Rankin Inlet, Nunavut, Canada, the Meliadine project was
acquired in July 2010, and is one of Agnico Eagle’s largest gold
projects in terms of resources.

At the end of the second quarter, approximately 70,000 metres of
drilling had been completed, with an additional 10,000 metres
anticipated to be completed by the end of July. Most of the drilling
was carried out to infill and expand the reserve and resource base.
Encouraging results have been returned from the Tiriganiaq, Wesmeg,
Normeg, Pump South, and F zones. These results will be incorporated
into an updated technical study that is expected to be completed in the
second quarter of 2014.

Construction is continuing on the permanent all-season road linking the
project with the community of Rankin Inlet, 24 kilometres away. The
road was connected to the Meliadine camp in March and is functional,
with full completion expected this August.

The original budget for the Meliadine project in 2013 was approximately
$90 million. Given the current gold price environment, the 2013 work
program has been prioritized and as a result, the budget has been
reduced by approximately $10 million.

In 2014, the proposed capital budget for Meliadine is now expected to be
approximately $45 million, reduced by approximately $80 million from
previous estimates. Permitting activities are on-going and work in
2014 will primarily focus on continued exploration ramp development and
exploration drilling. The timing of capital expenditures on the project
beyond 2014 will be subject to Board approval and prevailing market
conditions.

Dividend Reinvestment Program

Please follow the link below for information on the Company’s dividend
reinvestment program.

Dividend Reinvestment Plan

About Agnico Eagle

Agnico Eagle is a long established, Canadian headquartered, gold
producer with operations located in Canada, Finland and Mexico, and
exploration and/or development activities in Canada, Finland, Mexico
and the United States. The Company has full exposure to higher gold
prices consistent with its policy of no forward gold sales and
maintains a corporate strategy based on increasing shareholder exposure
to gold, on a per share basis. It has declared a cash dividend for 31
consecutive years.

AGNICO EAGLE MINES LIMITED
SUMMARY OF OPERATIONS KEY PERFORMANCE INDICATORS
(thousands of United States dollars, except where noted) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Operating margin by mine(i)
LaRonde mine $14,372 $29,342 $47,667 $92,608
Lapa mine 16,643 26,222 38,431 53,899
Kittila mine (112) 31,489 44,844 80,538
Pinos Altos mine(ii) 47,188 79,887 101,015 149,022
Meadowbank mine 32,382 72,715 68,885 121,487
Total operating margin 110,473 239,655 300,842 497,554
Amortization of property, plant and mine development 70,128 66,310 140,199 130,863
Exploration, corporate and other 63,805 96,169 135,495 182,005
Income (loss) before income and mining taxes (23,460) 77,176 25,148 184,686
Income and mining taxes 920 33,904 25,669 62,866
Net income (loss) for the period ($24,380) $43,272 ($521) $121,820
Net income (loss) per share — basic (US$) ($0.14) $0.25 $0.00 $0.71
Cash provided by operating activities $75,298 $194,082 $221,370 $390,579
Realized prices (US$)
Gold (per ounce) $1,336 $1,602 $1,474 $1,642
Silver (per ounce) $18.72 $26.33 $23.77 $30.75
Zinc (per tonne) $1,753 $1,901 $1,895 $2,026
Copper (per tonne) $6,551 $6,455 $7,012 $7,842
Payable production(iii)
Gold (ounces)
LaRonde mine 46,119 40,206 85,192 83,487
Lapa mine 23,178 28,157 50,046 56,656
Kittila mine 5,389 35,228 48,534 81,986
Pinos Altos mine(ii) 57,530 63,356 103,601 120,372
Meadowbank mine 91,873 98,403 173,691 177,804
Total gold (ounces) 224,089 265,350 461,064 520,305
Silver (thousands of ounces)
LaRonde mine 424 532 1,035 1,222
Kittila mine 2
Pinos Altos mine(ii) 619 537 1,235 1,044
Meadowbank mine 23 26 45 44
Total silver (thousands of ounces) 1,066 1,095 2,317 2,310
Zinc (tonnes) 3,455 9,558 11,694 22,536
Copper (tonnes) 1,280 1,004 2,362 2,330
Payable metal sold
Gold (ounces)
LaRonde mine 46,953 39,886 86,541 83,631
Lapa mine 25,644 27,793 49,583 55,690
Kittila mine 12,752 34,476 57,092 78,703
Pinos Altos mine(ii) 56,882 66,373 101,992 118,518
Meadowbank mine 87,798 93,299 167,810 167,913
Total gold (ounces) 230,029 261,827 463,018 504,455
Silver (thousands of ounces)
LaRonde mine 487 482 1,070 1,200
Kittila mine 2 3
Pinos Altos mine(ii) 654 525 1,240 1018
Meadowbank mine 23 24 45 42
Total silver (thousands of ounces) 1,166 1,031 2,358 2,260
Zinc (tonnes) 5,280 10,379 12,279 23,411
Copper (tonnes) 1,291 1,085 2,358 2,378
Total cash costs per ounce of gold produced (US$)(iv)
LaRonde mine $927 $784 $831 $489
Lapa mine 720 634 699 650
Kittila mine(v) 681 624 615
Pinos Altos mine(ii) 496 358 411 320
Meadowbank mine 912 804 986 901
Weighted average total cash costs per ounce of gold produced $785 $660 $762 $628
(i) Operating margin is calculated as revenues from mining operations less
production costs.
(ii) Includes the Creston Mascota deposit at Pinos Altos, except for total
cash costs per ounce of gold produced in
the first quarter of 2013 due to the temporary suspension of active
leaching at the Creston Mascota deposit a
Pinos Altos between October 1, 2012 and March 13, 2013.
(iii) Payable production is the quantity of mineral produced during a period
contained in products that are or will be
sold by the Company, whether such products are sold during the period or
held as inventory at the end of the period.
(iv) Total cash costs per ounce of gold produced is calculated net of silver,
copper, zinc and other byproduct revenue
credits. The weighted average total cash costs per ounce of gold
produced is based on commercial production
ounces. Total cash costs per ounce of gold produced is a non-GAAP
measure that the Company uses to monitor
the performance of its operations. See “Reconciliation of Production
Costs to Total Cash Costs per Ounce of Gold
Produced by Mine” and “Reconciliation of Production Costs to Minesite
Costs per Tonne by Mine” contained
herein for details.
(v) Excludes the Kittila mine’s results for the second quarter of 2013. Due
to scheduled maintenance, the Kittila mine
only operated for 16 days during the second quarter of 2013.
AGNICO EAGLE MINES LIMITED
CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars, US GAAP basis)
(Unaudited)
As at

June 30, 2013
As at

December 31, 2012
ASSETS
Current
Cash and cash equivalents $ 136,363 $ 332,008
Trade receivables 60,001 67,750
Inventories:
Ore stockpiles 69,012 52,342
Concentrates and dore bars 59,646 69,695
Supplies 192,870 222,630
Income taxes recoverable 21,804 19,313
Available-for-sale securities 68,805 44,719
Fair value of derivative financial instruments 7,135 1,835
Other current assets 115,242 92,977
Total current assets 730,878 903,269
Other assets 43,401 55,838
Goodwill 235,414 229,279
Property, plant and mine development 4,241,107 4,067,456
$ 5,250,800 $ 5,255,842
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities $ 207,539 $ 185,329
Reclamation provision 11,022 16,816
Dividends payable 37,905
Interest payable 13,383 13,602
Income taxes payable 4,445 10,061
Capital lease obligations 10,959 12,955
Fair value of derivative financial instruments 1,968
Total current liabilities 249,316 276,668
Long-term debt 850,000 830,000
Reclamation provision and other liabilities 119,894 127,735
Deferred income and mining tax liabilities 614,764 611,227
SHAREHOLDERS’ EQUITY
Common shares
Authorized – unlimited
Issued – 173,311,379 (December 31, 2012 – 172,296,610) 3,265,068 3,241,922
Stock options 163,835 148,032
Warrants 24,858 24,858
Contributed surplus 15,665 15,665
Retained earnings (deficit) (31,468) 7,046
Accumulated other comprehensive loss (21,132) (27,311)
Total shareholders’ equity 3,416,826 3,410,212
$ 5,250,800 $ 5,255,842
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(thousands of United States dollars, except share and per share amounts,
US GAAP basis)

(Unaudited)
Three months ended Six months ended
June 30, June 30,
2013 2012 2013 2012
REVENUES
Revenues from mining operations $ 336,424 $ 459,561 $ 756,846 $ 932,495
COSTS AND EXPENSES
Production (exclusive of amortization shown seperately below) 225,951 219,906 456,004 434,941
Exploration and corporate development 11,326 34,286 19,897 57,394
Amortization of property, plant and mine development 70,128 66,310 140,199 130,863
General and administrative 28,385 32,015 65,705 65,943
Impairment loss on available-for-sale securities 17,313 11,581 28,308 11,581
Provincial capital tax (1,504) 4,001 (1,504) 4,001
Interest expense 13,735 14,220 27,651 28,667
Interest and sundry expense and other 5,670 4,344 2,900 3,180
Loss on sale of available-for-sale securities 6,731 6,731
Foreign currency translation (gain) loss (11,120) (11,009) (7,462) 4,508
Income (loss) before income and mining taxes (23,460) 77,176 25,148 184,686
Income and mining taxes 920 33,904 25,669 62,866
Net income (loss) for the period $ (24,380) $ 43,272 $ (521) $ 121,820
Net income (loss) per share – basic ($0.14) $0.25 $0.00 $0.71
Net income (loss) per share – diluted ($0.14) $0.25 $0.00 $0.71
Weighted average number of common shares outstanding (in thousands):
Basic 172,572 170,985 172,426 170,937
Diluted 172,572 171,279 172,426 171,148
AGNICO EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of United States dollars, US GAAP basis)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2013 2012 2013 2012
OPERATING ACTIVITIES
Net income (loss) for the period $ (24,380) $ 43,272 $ (521) $ 121,820
Add (deduct) items not affecting cash:
Amortization of property, plant and mine development 70,128 66,310 140,199 130,863
Deferred income and mining taxes (562) 15,069 6,464 25,389
Stock-based compensation 9,332 11,296 25,609 27,068
Loss on sale of available-for-sale securities 6,731 6,731
Impairment loss on available-for-sale securities 17,313 11,581 28,308 11,581
Foreign currency translation (gain) loss (11,120) (11,009) (7,462) 4,508
Other 5,877 4,811 11,008 7,610
Adjustment for settlement of environmental remediation (2,990) (6,059) (5,542) (12,291)
Changes in non-cash working capital balances:
Trade receivables 10,525 15,000 7,749 7
Income taxes (4,199) 24,013 (8,107) 43,882
Inventories 3,789 (9,295) 31,781 2,254
Other current assets (15,091) (8,955) (20,856) 9,855
Accounts payable and accrued liabilities 24,283 41,209 14,181 11,357
Interest payable (7,607) (9,892) (1,441) (55)
Cash provided by operating activities 75,298 194,082 221,370 390,579
INVESTING ACTIVITIES
Additions to property, plant and mine development (171,773) (104,368) (302,407) (180,363)
Acquisitions and investments (49,635) (62,310) (11,325)
Net proceeds from available-for-sale securities 30,732 30,732
Cash used in investing activities (221,408) (73,636) (364,717) (160,956)
FINANCING ACTIVITIES
Dividends paid (31,759) (30,283) (61,649) (60,798)
Repayment of capital lease obligations (3,509) (2,744) (6,062) (5,856)
Proceeds from long-term debt 50,000 255,000 90,000 255,000
Repayment of long-term debt (255,000) (70,000) (345,000)
Long-term debt financing costs (327) (327)
Repurchase of common shares for restricted share unit plan (19,000) (12,031)
Common shares issued 3,945 4,096 15,884 7,676
Cash provided by (used in) financing activities 18,677 (29,258) (50,827) (161,336)
Effect of exchange rate changes on cash and cash equivalents (599) (1,211) (1,471) (693)
Net (decrease) increase in cash and cash equivalents during the period (128,032) 89,977 (195,645) 67,594
Cash and cash equivalents, beginning of period 264,395 199,075 332,008 221,458
Cash and cash equivalents, end of period $ 136,363 $ 289,052 $ 136,363 $ 289,052
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 21,715 $ 23,887 $ 28,547 $ 27,980
Income and mining taxes paid $ 9,367 $ 1,286 $ 31,000 $ 5,591

AGNICO EAGLE MINES LIMITED
RECONCILIATION OF PRODUCTION COSTS TO TOTAL CASH COSTS
PER OUNCE OF GOLD PRODUCED AND MINESITE COSTS PER TONNE (Unaudited)

Total Production Costs by Mine
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
(thousands of United States dollars)
Production costs per the interim unaudited consolidated
statements of income (loss) and comprehensive income (loss) $ 225,951 $ 219,906 $ 456,004 $ 434,941
LaRonde mine 60,624 55,483 118,527 113,663
Lapa mine 18,094 18,450 34,704 37,107
Kittila mine(i) 23,515 27,182 49,545
Pinos Altos mine 34,511 33,050 66,163 63,711
Creston Mascota deposit at Pinos Altos(ii) 4,427 7,769 4,427 12,269
Meadowbank mine 90,136 81,639 183,725 158,646
Total $ 207,792 $ 219,906 $ 434,728 $ 434,941
Reconciliation of Production Costs to Total Cash Costs per Ounce of Gold
Produced by Mine
LaRonde Mine – Total Cash Costs per Ounce of Gold Produced
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 60,624 $ 55,483 $ 118,527 $ 113,663
Adjustments:
Byproduct metal revenues, net of smelting, refining and marketing
charges
(12,663) (23,334) (42,219) (70,852)
Inventory and other adjustments(iii) (4,696) (42) (4,434) (757)
Non-cash reclamation provision (534) (599) (1,076) (1,203)
Cash operating costs $ 42,731 $ 31,508 $ 70,798 $ 40,851
Gold production (ounces) 46,119 40,206 85,192 83,487
Total cash costs per ounce of gold produced ($ per ounce)(iv) $ 927 $ 784 $ 831 $ 489
Lapa Mine – Total Cash Costs per Ounce of Gold Produced
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 18,094 $ 18,450 $ 34,704 $ 37,107
Adjustments:
Byproduct metal revenues, net of smelting, refining and marketing
charges
92 115 169 176
Inventory and other adjustments(iii) (1,491) (685) 119 (702)
Non-cash reclamation provision (17) (15) (34) 221
Cash operating costs $ 16,678 $ 17,865 $ 34,958 $ 36,802
Gold production (ounces) 23,178 28,157 50,046 56,656
Total cash costs per ounce of gold produced ($ per ounce)(iv) $ 720 $ 634 $ 699 $ 650
Kittila Mine – Total Cash Costs per Ounce of Gold Produced(i)
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ $ 23,515 $ 27,182 $ 49,545
Adjustments:
Byproduct metal revenues, net of smelting, refining and marketing
charges
134 157 253
Inventory and other adjustments(iii) 446 (294) 886
Non-cash reclamation provision (99) (120) (256)
Cash operating costs $ $ 23,996 $ 26,925 $ 50,428
Gold production (ounces) 35,228 43,145 81,986
Total cash costs per ounce of gold produced ($ per ounce)(iv) $ $ 681 $ 624 $ 615
Pinos Altos Mine – Total Cash Costs per Ounce of Gold Produced
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 34,511 $ 33,050 $ 66,163 $ 63,711
Adjustments:
Byproduct metal revenues, net of smelting, refining and marketing
charges
(9,486) (13,274) (26,052) (29,403)
Inventory and other adjustments(iii) (200) (118) (630) 494
Non-cash reclamation provision (74) (52) (148) (103)
Stripping costs(v) (1,251) (3,017) (2,570) (7,197)
Cash operating costs $ 23,500 $ 16,589 $ 36,763 $ 27,502
Gold production (ounces) 47,383 45,307 91,547 88,599
Total cash costs per ounce of gold produced ($ per ounce)(iv) $ 496 $ 366 $ 402 $ 310
Creston Mascota deposit at Pinos Altos – Total Cash Costs per Ounce of
Gold Produced(ii)
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 4,427 $ 7,769 $ 4,427 $ 12,269
Adjustments:
Byproduct metal revenues, net of smelting, refining and marketing
charges
(136) (476) (136) (796)
Inventory and other adjustments(iii) 1,127 (1,031) 1,127 111
Non-cash reclamation provision (37) (143) (37) (525)
Stripping costs(v) (332) (332)
Cash operating costs $ 5,049 $ 6,119 $ 5,049 $ 11,059
Gold production (ounces) 10,147 18,049 10,147 31,773
Total cash costs per ounce of gold produced ($ per ounce)(iv) $ 498 $ 339 $ 498 $ 348
Meadowbank Mine – Total Cash Costs per Ounce of Gold Produced
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 90,136 $ 81,639 $ 183,725 $ 158,646
Adjustments:
Byproduct metal revenues, net of smelting, refining and marketing
charges
(345) (484) (908) (1,118)
Inventory and other adjustments(iii) 1,344 (186) 2,336 5,068
Non-cash reclamation provision (387) (395) (780) (789)
Stripping costs(v) (6,921) (1,441) (13,045) (1,663)
Cash operating costs $ 83,827 $ 79,133 $ 171,328 $ 160,144
Gold production (ounces) 91,873 98,403 173,691 177,804
Total cash costs per ounce of gold produced ($ per ounce)(iv) $ 912 $ 804 $ 986 $ 901
Reconciliation of Production Costs to Minesite Costs per Tonne by Mine
LaRonde Mine – Minesite Costs per Tonne
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 60,624 $ 55,483 $ 118,527 $ 113,663
Adjustments:
Inventory adjustment(vi) (4,540) 113 (4,106) (12)
Non-cash reclamation provision (534) (599) (1,076) (1,203)
Minesite operating costs $ 55,550 $ 54,997 $ 113,345 $ 112,448
Minesite operating costs (thousands of C$) C$ 57,334 C$ 55,524 C$ 115,754 C$ 113,254
Tonnes of ore milled (thousands of tonnes) 559 573 1,153 1,218
Minesite costs per tonne (C$)(vii) C$ 103 C$ 97 C$ 100 C$ 93
Lapa Mine – Minesite Costs per Tonne
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 18,094 $ 18,450 $ 34,704 $ 37,107
Adjustments:
Inventory adjustment(vi) (1,434) (635) 237 (615)
Non-cash reclamation provision (17) (15) (34) 221
Minesite operating costs $ 16,643 $ 17,800 $ 34,907 $ 36,713
Minesite operating costs (thousands of C$) C$ 17,398 C$ 17,968 C$ 35,843 C$ 36,872
Tonnes of ore milled (thousands of tonnes) 159 159 319 317
Minesite costs per tonne (C$)(vii) C$ 110 C$ 113 C$ 112 C$ 116
Kittila Mine – Minesite Costs per Tonne(i)
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ $ 23,515 $ 27,182 $ 49,545
Adjustments:
Inventory adjustment(vi) 451 (294) 891
Non-cash reclamation provision (99) (120) (256)
Minesite operating costs $ $ 23,867 $ 26,768 $ 50,180
Minesite operating costs (thousands of €) 18,729 20,580 38,187
Tonnes of ore milled (thousands of tonnes) 251 267 540
Minesite costs per tonne (€)(vii) 75 77 71
Pinos Altos Mine – Minesite Costs per Tonne
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 34,511 $ 33,050 $ 66,163 $ 63,711
Adjustments:
Inventory adjustment(vi) (103) (77) (506) 535
Non-cash reclamation provision (74) (52) (148) (103)
Stripping costs(v) (1,251) (3,017) (2,570) (7,197)
Minesite operating costs $ 33,083 $ 29,904 $ 62,939 $ 56,946
Tonnes of ore processed (thousands of tonnes) 665 735 1,391 1,457
Minesite costs per tonne (US$)(vii) $ 50 $ 41 $ 45 $ 39
Creston Mascota deposit at Pinos Altos – Minesite Costs per Tonne(ii)
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 4,427 $ 7,769 $ 4,427 $ 12,269
Adjustments:
Inventory adjustment(vi) 1,125 (1,031) 1,125 111
Non-cash reclamation provision (37) (143) (37) (525)
Stripping costs(v) (332) (332)
Minesite operating costs $ 5,183 $ 6,595 $ 5,183 $ 11,855
Tonnes of ore processed (thousands of tonnes) 363 476 363 988
Minesite costs per tonne (US$)(vii) $ 14 $ 14 $ 14 $ 12
Meadowbank Mine – Minesite Costs per Tonne
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
(thousands of United States dollars, except as noted) June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Production costs $ 90,136 $ 81,639 $ 183,725 $ 158,646
Adjustments:
Inventory adjustment(vi) 1,227 51 2,129 5,480
Non-cash reclamation provision (387) (395) (780) (789)
Stripping costs(v) (6,921) (1,441) (13,045) (1,663)
Minesite operating costs $ 84,055 $ 79,854 $ 172,029 $ 161,674
Minesite operating costs (thousands of C$) C$ 85,752 C$ 80,678 C$ 174,353 C$ 162,408
Tonnes of ore milled (thousands of tonnes) 1,029 901 2,048 1,788
Minesite costs per tonne (C$)(vii) C$ 83 C$ 90 C$ 85 C$ 91
(i) Excludes the Kittila mine’s results for the second quarter of 2013. Due
to scheduled maintenance, the Kittila mine only operated for 16 days
during the second quarter of 2013.
(ii) Excludes results for the first quarter of 2013 due to the temporary
suspension of active leaching at the Creston Mascota deposit at Pinos
Altos between October 1, 2012 and March 13, 2013.
(iii) Under the Company’s revenue recognition policy, revenue is recognized on
concentrates when legal title passes. As total cash costs per ounce of
gold produced are calculated on a production basis, this inventory
adjustment reflects the sales margin on the portion of concentrate
production not yet recognized as revenue.
(iv) Total cash costs per ounce of gold produced is not a recognized measure
under US GAAP and this data may not be comparable to data presented by
other gold producers. This measure is calculated by adjusting
production costs as recorded in the interim unaudited consolidated
statements of income (loss) and comprehensive income (loss) for
byproduct revenues, unsold concentrate inventory production costs,
non-cash reclamation provisions, deferred stripping costs and other
adjustments, and then dividing by the number of ounces of gold
produced. The Company believes that this generally accepted industry
measure is a realistic indication of operating performance and is a
useful comparison point between periods. Total cash costs per ounce of
gold produced is intended to provide investors with information about
the cash generating capabilities of the Company’s mining operations.
Management also uses this measure to monitor the performance of the
Company’s mining operations. As market prices for gold are quoted on a
per ounce basis, using this per ounce measure allows management to
assess a mine’s cash generating capabilities at various gold prices.
Management is aware that this per ounce measure of performance can be
impacted by fluctuations in byproduct metal prices and exchange rates.
Management compensates for these inherent limitations by using this
measure in conjunction with minesite costs per tonne (discussed below)
as well as other data prepared in accordance with US GAAP. Management
also performs sensitivity analyses in order to quantify the effects of
fluctuating metal prices and exchange rates.
(v) The Company reports total cash costs per ounce of gold produced and
minesite costs per tonne using a common industry practice of deferring
certain stripping costs that can be attributed to future production.
The purpose of adjusting for these stripping costs is to enhance the
comparability of total cash costs per ounce of gold produced and
minesite costs per tonne to the Company’s peers within the mining
industry.
(vi) This inventory adjustment reflects production costs associated with
unsold concentrates.
(vii) Minesite costs per tonne is not a recognized measure under US GAAP and
this data may not be comparable to data presented by other gold
producers. This measure is calculated by adjusting production costs as
shown in the interim unaudited consolidated statements of income (loss)
and comprehensive income (loss) for unsold concentrate inventory
production costs, non-cash reclamation provisions, deferred stripping
costs and other adjustments, and then dividing by tonnes of ore milled.
As the total cash costs per ounce of gold produced measure can be
impacted by fluctuations in byproduct metal prices and exchange rates,
management believes that the minesite costs per tonne measure provides
additional information regarding the performance of mining operations,
eliminating the impact of varying production levels. Management also
uses this measure to determine the economic viability of mining blocks.
As each mining block is evaluated based on the net realizable value of
each tonne mined, in order to be economically viable the estimated
revenue on a per tonne basis must be in excess of the minesite costs
per tonne. Management is aware that this per tonne measure of
performance can be impacted by fluctuations in processing levels and
compensates for this inherent limitation by using this measure in
conjunction with production costs prepared in accordance with US GAAP.

Note Regarding Certain Measures of Performance

This press release presents financial performance measures, including
“total cash costs per ounce of gold produced”, “minesite costs per
tonne” and “all-in sustaining costs”, that are not recognized measures
under US GAAP. This data may not be comparable to data presented by
other gold producers. The Company believes that these generally
accepted industry measures are realistic indicators of operating
performance and useful in allowing year-over-year comparisons. However,
each of these non-US GAAP measures should be considered together with
other data prepared in accordance with US GAAP. These measures, taken
by themselves, are not necessarily indicative of operating costs or
cash flow measures prepared in accordance with US GAAP. Reconciliations
of the Company’s total cash costs per ounce of gold produced and
minesite costs per tonne financial performance measures to comparable
financial measures calculated and presented in accordance with US GAAP
are detailed above.

Forward-Looking Statements

The information in this news release has been prepared as at July 24,
2013
. Certain statements contained in this news release 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 and are referred to herein as “forward-looking statements”. When
used in this document, words such as “anticipate”, “expect”,
“estimate”, “forecast”, “planned”, “possible”, “will”, “likely”,
“schedule” and similar expressions are intended to identify
forward-looking statements.

Such statements include without limitation: the Company’s
forward-looking production guidance, including estimated ore grades,
project timelines, drilling results, orebody configurations, metal
production, life of mine estimates, production estimates, total cash
costs per ounce, minesite costs per tonne and all-in sustaining costs
estimates, cash flows, the estimated timing of scoping and other
studies, the methods by which ore will be extracted or processed,
expansion projects, recovery rates, mill throughput, and projected
exploration and capital expenditures, including costs and other
estimates upon which such projections are based; the Company’s ability
to fund its current pipeline of projects; the impact of maintenance
shutdowns; the Company’s goal to build a mine at Meliadine; the
Company’s ability to complete construction and bring into production
mines at Goldex or La India; and other statements and information
regarding anticipated trends with respect to the Company’s operations,
exploration and the funding thereof. Such statements reflect the
Company’s views as at the date of this news release and are subject to
certain risks, uncertainties and assumptions. Forward-looking
statements are necessarily based upon a number of factors and
assumptions that, while considered reasonable by Agnico Eagle as of the
date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. The
factors and assumptions of Agnico Eagle contained in this news release,
which may prove to be incorrect include, but are not limited to the
assumptions set forth herein and in management’s discussion and
analysis and the Company’s Annual Report on Form 20-F for the year
ended December 31, 2012 (“Form 20-F”) as well as: that there are no
significant disruptions affecting operations, whether due to labour
disruptions, supply disruptions, damage to equipment, natural
occurrences, equipment failures, accidents, political changes, title
issues or otherwise; that permitting, production and expansion at each
of Agnico Eagle’s mines and growth projects proceeds on a basis
consistent with current expectations, and that Agnico Eagle does not
change its plans relating to such projects; that the exchange rate
between the Canadian dollar, European Union euro, Mexican peso and the
United States
dollar will be approximately consistent with current
levels or as set out in this news release; that prices for gold,
silver, zinc, copper and lead will be consistent with Agnico Eagle’s
expectations; that prices for key mining and construction supplies,
including labour costs, remain consistent with Agnico Eagle’s current
expectations; that Agnico Eagle’s current estimates of mineral
reserves, mineral resources, mineral grades and metal recovery are
accurate; that there are no material delays in the timing for
completion of ongoing growth projects; that the Company’s current plans
to optimize production are successful; and that there are no material
variations in the current tax and regulatory environment. Many
factors, known and unknown, could cause the actual results to be
materially different from those expressed or implied by such
forward-looking statements. 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 metal 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; 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 the assumptions set forth herein and in management’s
discussion and analysis and the Company’s Annual Report on Form 20-F
for the year ended December 31, 2012 (“Form 20-F”) as well as: that
there are no significant disruptions affecting operations, whether due
to labour disruptions, supply disruptions, damage to equipment, natural
occurrences, equipment failures, accidents, political changes, title
issues or otherwise; that permitting, production and expansion at each
of Agnico Eagle’s mines and growth projects proceeds on a basis
consistent with current expectations, and that Agnico Eagle does not
change its plans relating to such projects; that the exchange rate
between the Canadian dollar, European Union euro, Mexican peso and the
United States
dollar will be approximately consistent with current
levels or as set out in this news release; that prices for gold,
silver, zinc, copper and lead will be consistent with Agnico Eagle’s
expectations; that prices for key mining and construction supplies,
including labour costs, remain consistent with Agnico Eagle’s current
expectations; that Agnico Eagle’s current estimates of mineral
reserves, mineral resources, mineral grades and metal recovery are
accurate; that there are no material delays in the timing for
completion of ongoing growth projects; that the Company’s current plans
to optimize production are successful; and that there are no material
variations in the current tax and regulatory environment. Many
factors, known and unknown, could cause the actual results to be
materially different from those expressed or implied by such
forward-looking statements. 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 metal 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; 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, see the Form 20-F, as well as the Company’s other filings with
the Canadian Securities Administrators and the U.S. Securities and
Exchange Commission
(the “SEC”). The Company does not intend, and does
not assume any obligation, to update these forward-looking statements
and information, except as required by law. Accordingly, readers are
advised not to place undue reliance on forward-looking statements.
Certain of the foregoing statements, primarily related to projects, are
based on preliminary views of the Company with respect to, among other
things, grade, tonnage, processing, recoveries, mining methods, capital
costs, total cash costs, minesite costs, and location of surface
infrastructure. Actual results and final decisions may be materially
different from those currently anticipated.

Scientific and Technical Information

The geological content of this press release has been prepared under the
supervision of, and reviewed by, Alain Blackburn, Ing., Senior
Vice-President, Exploration and a “Qualified Person” for the purposes
of NI 43-101.

Additional information about the Lapa mine that is required by NI
43-101, sections 3.2 and 3.3 and paragraphs 3.4 (a), (c) and (d) can be
found in the Technical Reports in respect of the Lapa mine filed on
June 8, 2006, which may be found at www.sedar.com. Other important operating information can be found in the Company’s
Form 20-F.

_____________________________

1 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.

2 All-in sustaining cost is a non-GAAP measure. The Company calculates
all-in sustaining costs as the sum of total cash costs (net of
byproduct credits), sustaining capital expense, corporate, general and
administrative expense (net of stock option expense) and exploration
expense. The Company’s methodology for calculating all-in sustaining
costs may not be similar to methodology used by other gold producers
that disclose all-in sustaining cost. The Company may change the
methodology it uses to calculate all-in sustaining costs in the future,
including in circumstances where the World Gold Council adopts formal
industry guidelines regarding this measure.

3 Minesite costs per tonne is a non-GAAP measure. For reconciliation to
production costs, see footnote (vii) to the “Reconciliation of
Production Costs to Total Cash Costs per Ounce and Minesite Costs per
Tonne” contained herein. See also “Note Regarding Certain Measures of
Performance”.

SOURCE Agnico Eagle Mines Limited

Investor Relations
(416) 947-1212

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