AGNICO EAGLE MINES LTD, 6-K filed on 5/12/2011
Report of Foreign Issuer
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands
Mar. 31, 2011
Dec. 31, 2010
Current
 
 
Cash and cash equivalents
$ 108,433 
$ 95,560 
Short-term investments
4,374 
6,575 
Restricted cash
2,018 
2,510 
Trade receivables
71,566 
112,949 
Inventories:
 
 
Ore stockpiles
63,297 
67,764 
Concentrates and dore
60,193 
50,332 
Supplies
160,107 
149,647 
Available-for-sale securities (note 7)
101,985 
99,109 
Other current assets
92,572 
89,776 
Fair value of derivative financial instruments (note 9)
2,036 
 
Total current assets
666,581 
674,222 
Other assets
58,396 
61,502 
Future income and mining tax assets
2,615 
 
Goodwill
200,064 
200,064 
Property, plant and mine development
4,595,545 
4,564,563 
TOTAL ASSETS
5,523,201 
5,500,351 
Current
 
 
Accounts payable and accrued liabilities
157,504 
160,375 
Dividends payable
81,002 
108,009 
Interest payable
20,513 
9,743 
Income taxes payable
1,393 
14,450 
Capital leases
11,000 
10,592 
Fair value of derivative financial instruments (note 9)
 
142 
Total current liabilities
271,412 
303,311 
Long-term debt (note 8)
600,000 
650,000 
Reclamation provision and other liabilities
151,303 
145,536 
Future income and mining tax liabilities
759,023 
736,054 
SHAREHOLDERS' EQUITY
 
 
Common shares (note 5)
3,090,202 
3,078,217 
Stock options (note 6)
95,115 
78,554 
Warrants
24,858 
24,858 
Contributed surplus
15,166 
15,166 
Retained earnings
485,529 
440,265 
Accumulated other comprehensive income
30,593 
28,390 
Total shareholders' equity
3,741,463 
3,665,450 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 5,523,201 
$ 5,500,351 
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $)
In Thousands, except Per Share data
3 Months Ended
Mar. 31,
2011
2010
REVENUES
 
 
Revenues from mining operations
$ 412,068 
$ 237,583 
COSTS, EXPENSES AND OTHER INCOME
 
 
Production
198,567 
118,227 
Exploration and corporate development
16,978 
7,504 
Amortization of plant and mine development
61,929 
30,503 
General and administrative (note 12)
35,152 
28,430 
Provincial capital tax
 
(587)
Interest
14,008 
4,504 
Loss (gain) on derivative financial instruments (note 9)
(1,351)
549 
Interest and sundry income
(248)
(1,376)
Gain on sale of available-for-sale securities (note 7)
(4,394)
(346)
Foreign currency translation loss
14,065 
8,901 
Income before income, mining and federal capital taxes
77,362 
41,274 
Income and mining tax expense
32,098 
18,942 
Net income for the period
45,264 
22,332 
Net income per share - basic (in dollars per share)
0.27 
0.14 
Net income per share - diluted (in dollars per share)
0.26 
0.14 
Weighted average number of common shares outstanding (in thousands)
 
 
Basic (note 5) (in shares)
168,853 
156,692 
Diluted (note 5) (in shares)
172,863 
159,093 
Comprehensive income:
 
 
Net income for the period
45,264 
22,332 
Other comprehensive income:
 
 
Unrealized gain on available-for-sale securities
7,067 
9,628 
Adjustments for realized gain on available-for-sale securities due to dispositions during the period
(4,394)
(346)
Amortization of unrecognized gain on pension liability
110 
(47)
Tax effect of other comprehensive income (loss) items
(580)
12 
Other comprehensive income for the period
2,203 
9,247 
Comprehensive income for the period
$ 47,467 
$ 31,579 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $)
In Thousands
Retained earnings
Accumulated other comprehensive income
Total
Balance at Dec. 31, 2009
216,158 
51,049 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
Net income for the period
22,332 
 
22,332 
Other comprehensive income for the period
 
9,247 
9,247 
Balance at Mar. 31, 2010
238,490 
60,296 
 
Balance at Dec. 31, 2010
440,265 
28,390 
3,665,450 
Increase (Decrease) in Shareholders' Equity
 
 
 
Net income for the period
45,264 
 
45,264 
Other comprehensive income for the period
 
2,203 
2,203 
Balance at Mar. 31, 2011
$ 485,529 
$ 30,593 
$ 3,741,463 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands
3 Months Ended
Mar. 31,
2011
2010
Operating activities
 
 
Net income for the period
$ 45,264 
$ 22,332 
Add (deduct) items not affecting cash:
 
 
Amortization of plant and mine development
61,929 
30,503 
Future income and mining taxes
8,879 
13,095 
Gain on sale of available-for-sale securities and derivative financial instruments
(6,428)
(459)
Stock-based compensation
17,303 
15,168 
Foreign currency translation loss
14,065 
8,901 
Other
5,935 
2,991 
Changes in non-cash working capital balances
 
 
Trade receivables
41,383 
20,390 
Income taxes payable
(13,057)
3,924 
Other taxes recoverable
11,821 
(1,196)
Inventories
(16,595)
(25,542)
Other current assets
(7,355)
(2,686)
Interest payable
10,770 
(339)
Accounts payable and accrued liabilities
(2,871)
(12,591)
Cash provided by operating activities
171,043 
74,491 
Investing activities
 
 
Additions to property, plant and mine development
(96,849)
(112,563)
Increase in short-term investments
2,201 
Net proceeds on sale of available-for-sale securities and other
8,764 
465 
Purchases of available-for-sale securities
(4,565)
(6,107)
Decrease (increase) in restricted cash
492 
(1,132)
Cash used in investing activities
(89,957)
(119,329)
Financing activities
 
 
Dividends paid
(25,820)
(26,830)
Repayment of capital lease obligations
(3,053)
(1,539)
Proceeds from long-term debt
 
100,000 
Repayment of long-term debt
(50,000)
(80,000)
Sale-leaseback financing
 
3,005 
Proceeds from common shares issued
10,031 
3,718 
Cash used in financing activities
(68,842)
(1,646)
Effect of exchange rate changes on cash and cash equivalents
629 
(181)
Net increase (decrease) in cash and cash equivalents during the period
12,873 
(46,665)
Cash and cash equivalents, beginning of period
95,560 
160,280 
Cash and cash equivalents, end of period
108,433 
113,615 
Other operating cash flow information:
 
 
Interest paid during the period
3,229 
8,722 
Income, mining and capital taxes paid during the period
$ 35,219 
$ 1,497 
BASIS OF PRESENTATION
BASIS OF PRESENTATION

1.     BASIS OF PRESENTATION

  • The accompanying unaudited interim consolidated financial statements of Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") have been prepared in accordance with United States generally accepted accounting principles ("GAAP") in US dollars. They do not include all of the disclosures required by GAAP for annual financial statements. Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the fiscal 2010 annual consolidated financial statements, including the accounting policies and notes thereto, included in the Annual Report and Annual Information Form/Form 20-F for the year ended December 31, 2010. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, which consist only of normal and recurring adjustments necessary to present fairly the financial position as at March 31, 2011 and the results of operations and cash flows for the three months ended March 31, 2011 and 2010.

    Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2011.

USE OF ESTIMATES
USE OF ESTIMATES

2.     USE OF ESTIMATES

  • The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the interim consolidated financial statements and accompanying notes. Management believes that the estimates used in the preparation of the interim consolidated financial statements are reasonable and prudent; however, actual results could differ from these estimates.

ACCOUNTING POLICIES
ACCOUNTING POLICIES

3.     ACCOUNTING POLICIES

  • These interim consolidated financial statements follow the same accounting policies and methods of their application as the December 31, 2010 audited annual consolidated financial statements except for the changes discussed below.

    Recently Adopted Accounting Pronouncement

    Fair Value Accounting

    In January 2010, the FASB guidance for fair value measurements and disclosures was updated to require additional disclosures. The updated guidance was effective for the Company's fiscal year beginning January 1, 2010, with the exception of the level 3 disaggregation which was effective for the Company's fiscal year beginning January 1, 2011. Adoption of this updated guidance had no impact on the Company's consolidated financial position, results of operation or cash flows. See Note 4 for details regarding the Company's assets and liabilities measured at fair value.

    Business Combinations

    In December 2010, the Accounting Standards Codification ("ASC") guidance for business combinations was updated to clarify existing guidance which requires a public entity to disclose pro forma revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual period only. The update also expands the supplemental pro forma disclosures required to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. Adoption this updated guidance, effective for the Company's fiscal year beginning January 1, 2011, had no impact on the Company's consolidated financial position, results of operations and cash flows.

    Revenue Recognition — Multiple-Deliverable Revenue Arrangements

    In October 2009, the FASB issued an amendment to its guidance on multiple-deliverable revenue arrangements which is effective for fiscal years beginning on or after June 15, 2010. This updated guidance addresses accounting and reporting for arrangements under which the vendor will perform multiple revenue-generating activities, including how to separate deliverables and measure and allocate the arrangement consideration. This amendment also significantly expands the disclosure requirements related to a vendor's multiple-deliverable revenue arrangement. Based on the Company's assessment, these changes do not have an impact on our current accounting for revenue or required disclosures.

FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT

4.     FAIR VALUE MEASUREMENT

  • Accounting Standards Codification ("ASC") 820 — Fair Value Measurement and Disclosure defines fair value, establishes a framework for measuring fair value under GAAP, and requires expanded disclosures about fair value measurements. The three levels of the fair value hierarchy under the Fair Value Measurements and Disclosure Topic of the FASB Accounting Standards Codification are:

    • Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

      Level 2 — Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

      Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

    Fair value is the value at which a financial instrument could be closed out or sold in a transaction with a willing and knowledgeable counterparty over a period of time consistent with the Company's investment strategy. Fair value is based on quoted market prices, where available. If market quotes are not available, fair value is based on internally developed models that use market-based or independent information as inputs. These models could produce a fair value that may not be reflective of future fair value.

    The following table sets forth the Company's financial assets and liabilities measured at fair value within the fair value hierarchy.

   
  Total   Level 1   Level 2   Level 3  
 

Financial assets:

                         
 

Cash equivalents and short-term investments(1)

    5,633         5,633      
 

Available-for-sale securities(2)(3)

    101,985     93,849     8,136      
 

Trade receivables(4)

    71,566         71,566      
 

Derivative assets(3)

    2,036         2,036      
                     
 

 

    181,220     93,849     87,371      
                     
 

Financial liabilities:

                         
 

Derivative liabilities(3)

                 
                     


  • (1)
    Fair value approximates the carrying amounts due to the short-term nature.

    (2)
    Recorded at fair value using quoted market prices.

    (3)
    Recorded at fair value based on broker-dealer quotations.

    (4)
    Trade receivables from provisional invoices for concentrate sales are included within Level 2 as they are valued using quoted forward rates derived from observable market data based on the month of expected settlement.
  • Both the Company's cash equivalents and short-term investments are classified within Level 2 of the fair value hierarchy because they are valued using interest rates observable at commonly quoted intervals. Cash equivalents are market securities with remaining maturities of three months or less at the date of purchase. The short-term investments are market securities with remaining maturities of over three months at the date of purchase.

    The Company's available-for-sale equity securities are recorded at fair value using quoted market prices or broker-dealer quotations. The Company's available-for-sale equity securities that are valued using quoted market prices in active markets are classified as Level 1 of the fair value hierarchy. The Company's available-for-sale securities classified as Level 2 of the fair value hierarchy consist of equity warrants, which are recorded at fair value based broker-dealer quotations.

    In the event that a decline in the fair value of an investment occurs and the decline in value is considered to be other-than-temporary, an impairment charge is recorded in the interim consolidated statements of income and a new cost basis for the investment is established. The Company assesses whether a decline in value is considered to be other-than-temporary by considering available evidence, including changes in general market conditions, specific industry and individual company data, the length of time and the extent to which the fair value has been less than cost, the financial condition and the near-term prospects of the individual investment. New evidence could become available in future periods which would affect this assessment and thus could result in material impairment charges with respect to those investments for which the cost basis exceeds its fair value.

SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY

5.     SHAREHOLDERS' EQUITY

  • For the three months ended March 31, 2011 and 2010, the Company's warrants were dilutive and were included in the calculation of diluted net income per share.

    The following table presents the maximum number of common shares that would be outstanding if all instruments outstanding at March 31, 2011 were exercised:

 

Common shares outstanding at March 31, 2011

    169,017,306  
 

Employees' stock options

    9,081,520  
 

Warrants

    8,600,000  
         
 

 

    186,698,826  
         
  • During the three months ended March 31, 2011, 2,574,785 (2010 — 2,755,080) options were granted with an exercise price of C$76.56 (2010 — C$56.95), 164,219 (2010 — 59,325) employee stock options were exercised for cash of $6.9 million (2010 — $1.3 million), and 91,750 (2010 — 10,550) options were forfeited with a weighted average exercise price of C$66.87 (2010 — C$49.88).

    The following table illustrates the changes in common shares for the three months ended March 31, 2011:

   
  Shares   Amount  
 

Common shares, beginning of period

    168,720,355     3,078,217  
 

Shares issued under Employee Stock Option Plan

    164,219     8,806  
 

Shares issued under Incentive Share Purchase Plan

    71,141     4,734  
 

Shares issued under Dividend Reinvestment Plan

    18,450     1,232  
 

Restricted Share unit plan

    (38,349 )   (2,787 )
             
 

Common shares, end of period

    168,935,816     3,090,202  
             
  • The following table provides the reconciliation for the weighted average number of common shares in the calculation of basic and diluted income per share:

   
  Three months ended
March 31,
 
   
  2011   2010  
 

Net income

    45,264   $ 22,332  
 

Weighted average number of common shares outstanding — basic

    168,853     156,692  
   

Add: Dilutive impact of employee stock options

    1,155     907  
     

Dilutive impact of warrants

    2,773     1,449  
     

Dilutive impact of treasury shares related to restricted share unit plan

    82     45  
             
 

Weighted average number of common shares outstanding — diluted

    172,863     159,093  
             
 

Net income per share — basic

  $ 0.27   $ 0.14  
             
 

Net income per share — diluted

  $ 0.26   $ 0.14  
             
  • The calculation of diluted income per common share has been computed using the treasury stock method.

STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION

6.     STOCK-BASED COMPENSATION

  • The following summary sets out the activity with respect to the Company's outstanding stock options:

   
  Three months ended
March 31, 2011
 
   
  # of Options   Weighted average
exercise price
 
   
   
  (C$)
 
 

Outstanding, beginning of period

    6,762,704     56.94  
 

Granted

    2,574,785     76.56  
 

Exercised

    (164,219 )   41.47  
 

Forfeited

    (91,750 )   66.87  
               
 

Outstanding, end of period

    9,081,520     62.88  
               
 

Options exercisable at end of period

    5,527,416     66.25  
               
  • For the three months ended March 31, 2011 and 2010, the Company estimated the fair value of options under the Black-Scholes option pricing model using the following weighted average assumptions:

   
  2011   2010  
 

Risk-free interest rate

    1.96%     1.86%  
 

Expected life of options (in years)

    2.5     2.5  
 

Expected volatility of the Company's share price

    34.6%     44.4%  
 

Expected dividend yield

    0.88%     0.43%  
AVAILABLE-FOR-SALE SECURITIES
AVAILABLE-FOR-SALE SECURITIES

7.     AVAILABLE-FOR-SALE SECURITIES

  • During the three months ended March 31, 2011, the Company received proceeds of $8.8 million (2010 — $0.5 million) from the sale of certain available-for-sale securities and recognized a gain before taxes of $4.4 million (2010 — $0.4 million).

    The cost of an available-for-sale security was determined based on the average cost. Available-for-sale securities are carried at fair value and comprise the following:

   
  As at
March 31, 2011
  As at
December 31, 2010
 
 

Available-for-sale securities in an unrealized gain position

             
 

Cost

  $ 51,153   $ 50,958  
 

Unrealized gains in other comprehensive income

    50,832     48,151  
             
 

Estimated fair value

    101,985   $ 99,109  
             
 

Available-for-sale securities in an unrealized loss position

             
 

Cost

         
 

Unrealized losses in other comprehensive income

         
             
 

Estimated fair value

         
             
 

Total estimated fair value of available-for-sale securities

  $ 101,985   $ 99,109  
             
LONG-TERM DEBT
LONG-TERM DEBT

8.     LONG-TERM DEBT

  • During the three months ended March 31, 2011, the Company repaid $50 million, net, on the credit facilities (2010 — ($20.0) million). At March 31, 2011, the credit facilities were drawn down by a total of $nil million (December 31, 2010 — $50 million).

    Total long-term debt interest costs incurred during the three months ended March 31, 2011 was $10 million (2010 — $7.0 million). Total interest costs capitalized to property, plant and mine development for the three months ended March 31, 2011 was nil (2010 — $4.6 million). The outstanding long-term debt balance as at March 31, 2011 relates to the notes entered into in April 2010.

FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS

9.     FINANCIAL INSTRUMENTS

  • In the first quarter of 2011, to mitigate the risks associated with fluctuating zinc prices, the Company entered into a zero-cost collar to hedge the price on a portion of zinc associated with the LaRonde Mine's 2011 production. The purchase of zinc put options has been financed through selling zinc call options at a higher level such that the net premium payable to the counterparty by the Company is nil.

    A total of 20,000 metric tonnes (2010 — 15,000 metric tonnes) of zinc call options were written at a strike price of $2,500 (2010 — $2,500) per metric tonne with 2,000 metric tonnes (2010 — 1,500 metric tonnes) expiring each month beginning February 28, 2011 (2010 — March 31, 2010). A total of 20,000 metric tonnes (2010 — 15,000 metric tonnes) of zinc put options were purchased at a strike price of $2,200 (2010 — $2,200) per metric tonne with 2,000 metric tonnes (2010 — 1,500 metric tonnes) expiring each month beginning February 28, 2011 (2010 — March 31, 2010). While setting a minimum price, the zero-cost collar strategy also limits participation to zinc prices above $2,500 (2010 — $2,500) per metric tonne. These contracts did not qualify for hedge accounting under ASC 815 — Derivatives and Hedging. Gains or losses, along with mark-to-market adjustments are recognized in the gain on derivative financial instruments component of the consolidated statements of income. The options that expired during the first quarter of 2011 and 2010 expired out of the money. As at March 31, 2011, the Company had an unrealized mark-to-market gain of $0.5 million (2010 — $0.5 million).

    In March 2011, the Company entered into a foreign exchange forward contract at a rate of C$0.99 per US dollar. The risk hedged in 2011 was the variability in expected future cash flows arising from changes in foreign currency exchange. The hedged items represent a portion of the unhedged forecast Canadian dollar denominated cash outflows arising from Canadian dollar denominated expenditures in 2011. In 2011, the forward contract hedged $90 million of 2011 expenditures. $10 million will expire each month starting in April 2011 and will be completely expired by December 31, 2011. As of March 31, 2011 the Company recognized a mark-to-market gain $1.5 million in the "Loss (gain) on derivative financial instruments" line item of the Consolidated Statements of Income and Comprehensive Income. The cash flow hedging relationship did not meet the requirements to be perfectly effective and did not therefore, qualify for hedge accounting.

    There were no foreign exchange hedges during the first quarter of 2011 and 2010.

    In addition, the Company recognized a loss of $2.1 million on intra-quarter silver financial instruments associated with timing of sales of silver products. There were no silver financial instruments during the first quarter of 2010.

COMMITMENTS, CONTINGENCIES, AND GUARANTEES
COMMITMENTS, CONTINGENCIES, AND GUARANTEES

10.   COMMITMENTS, CONTINGENCIES, AND GUARANTEES

  • As part of its ongoing business and operations, the Company has been required to provide assurance in the form of letters of credit for environmental and site restoration costs, custom credits, government grants and other general corporate purposes. As at March 31, 2011, the total amount of these guarantees was $115.8 million.

SEGMENTED INFORMATION
SEGMENTED INFORMATION

11.   SEGMENTED INFORMATION

  • Agnico-Eagle operates in a single industry, namely exploration for and production of gold. The Company's primary operations are in Canada, Mexico and Finland. The Company identifies its reportable segments as those operations whose operating results are reviewed by the Chief Executive Officer and Chief Operating Officer, and that represent more than 10% of the combined revenue, profit or loss or total assets of all reported operating segments. The following are the reporting segments of the Company and reflect how the Company manages its business and how it classifies its operations for planning and measuring performance:

  Canada:   LaRonde Mine, Lapa Mine, Goldex Mine, Meadowbank Mine, and the Regional Office
  Europe:   Kittila Mine
  Latin America:   Pinos Altos Mine and the Creston Mascota deposit at Pinos Altos
  Exploration:   USA Exploration office, Europe Exploration office, Canada Exploration office, Meliadine Mine Project, and the Latin America Exploration office
  • The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies. There are no transactions between the reported segments affecting revenue. Production costs for the reported segments are net of intercompany transactions. The goodwill of $200.1 million on the Consolidated Balance Sheets relates to the Meliadine Mine Project that is a component of the Exploration segment.

    Corporate Head Office assets are included in the Canada category and specific corporate income and expense items are noted separately below.

    The Meadowbank Mine achieved commercial production March 1, 2010. The Creston Mascota deposit at Pinos Altos achieved commercial production March 1, 2011.

 
Three Months Ended
March 31, 2011
  Revenues
from
Mining
Operations
  Production
Costs
  Amortization   Exploration
& Corporate
Development
  Foreign Currency
Translation Loss
(Gain)
  Segment
Income
(Loss)
 
 

Canada

  $ 277,571   $ 139,160   $ 47,101   $   $ 10,305   $ 81,005  
 

Europe

    56,331     28,500     7,268         3,863     16,700  
 

Latin America

    78,166     30,907     7,560         (103 )   39,802  
 

Exploration

                16,978         (16,978 )
                             
 

 

  $ 412,068   $ 198,567   $ 61,929   $ 16,978   $ 14,065   $ 120,529  
                             
 

Segment income

  $ 120,529  
 

Corporate and Other

                                     
 

    Interest and sundry income

    248  
 

    Gain on sale of available-for-sale securities

    4,394  
 

    Gain on derivative financial instruments

    1,351  
 

    General and administrative

    (35,152 )
 

    Interest expense

    (14,008 )
                                       
 

Income before income, mining and federal capital taxes

    77,362  
                                       

 

 
Three Months Ended
March 31, 2010
  Revenues
from
Mining
Operations
  Production
Costs
  Amortization   Exploration
& Corporate
Development
  Foreign Currency
Translation Loss
(Gain)
  Segment
Income
(Loss)
 
 

Canada

  $ 176,615   $ 81,360   $ 20,361   $   $ 10,159   $ 64,735  
 

Europe

    34,488     23,018     7,114         (662 )   5,018  
 

Latin America

    26,480     13,849     3,028         (596 )   10,199  
 

Exploration

                7,504         (7,504 )
                             
 

 

  $ 237,583   $ 118,227   $ 30,503   $ 7,504   $ 8,901   $ 72,448  
                             
 

Segment income

  $ 72,448  
 

Corporate and Other

                                     
 

    Interest and sundry income

    1,376  
 

    General and administrative

    (28,430 )
 

    Gain on sale of available-for-sale securities

    346  
 

    Loss on derivative financial instruments

    (549 )
 

    Provincial capital tax

    587  
 

    Interest expense

    (4,504 )
                                       
 

Income before income, mining and federal capital taxes

  $ 41,274  
                                       

 

   
  Total Assets as at  
   
  March 31, 2011   December 31, 2010  
 

Canada

  $ 4,137,892   $ 4,172,997  
 

Europe

    702,200     679,258  
 

Mexico

    654,319     619,263  
 

Exploration

    28,790     28,833  
             
 

 

  $ 5,523,201   $ 5,500,351  
             
GENERAL AND ADMINISTRATIVE
GENERAL AND ADMINISTRATIVE

12.   GENERAL AND ADMINISTRATIVE

  • Due to a kitchen fire at the Meadowbank Mine in March 2011, the Company recognized a loss on disposal of the kitchen of $6.9 million, incurred related costs of $5.3 million during the quarter, and recognized an insurance receivable for $9.1 million. The difference of $3.1 million is recognized in the General and Administrative line item of the Consolidated Statements of Income during the first quarter of 2011. The Company's exposure to insurance losses related to this claim is limited to the $3.1 million exposure through its captive insurance company.

ACCOUNTING POLICIES (Policies)

In January 2010, the FASB guidance for fair value measurements and disclosures was updated to require additional disclosures. The updated guidance was effective for the Company's fiscal year beginning January 1, 2010, with the exception of the level 3 disaggregation which was effective for the Company's fiscal year beginning January 1, 2011. Adoption of this updated guidance had no impact on the Company's consolidated financial position, results of operation or cash flows. See Note 4 for details regarding the Company's assets and liabilities measured at fair value.

In December 2010, the Accounting Standards Codification ("ASC") guidance for business combinations was updated to clarify existing guidance which requires a public entity to disclose pro forma revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual period only. The update also expands the supplemental pro forma disclosures required to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. Adoption this updated guidance, effective for the Company's fiscal year beginning January 1, 2011, had no impact on the Company's consolidated financial position, results of operations and cash flows.

In October 2009, the FASB issued an amendment to its guidance on multiple-deliverable revenue arrangements which is effective for fiscal years beginning on or after June 15, 2010. This updated guidance addresses accounting and reporting for arrangements under which the vendor will perform multiple revenue-generating activities, including how to separate deliverables and measure and allocate the arrangement consideration. This amendment also significantly expands the disclosure requirements related to a vendor's multiple-deliverable revenue arrangement. Based on the Company's assessment, these changes do not have an impact on our current accounting for revenue or required disclosures.

FAIR VALUE MEASUREMENT (Tables)
Financial assets and liabilities measured at fair value within the fair value hierarchy
  Total   Level 1   Level 2   Level 3  
 

Financial assets:

                         
 

Cash equivalents and short-term investments(1)

    5,633         5,633      
 

Available-for-sale securities(2)(3)

    101,985     93,849     8,136      
 

Trade receivables(4)

    71,566         71,566      
 

Derivative assets(3)

    2,036         2,036      
                     
 

 

    181,220     93,849     87,371      
                     
 

Financial liabilities:

                         
 

Derivative liabilities(3)

                 
                     


  • (1)
    Fair value approximates the carrying amounts due to the short-term nature.

    (2)
    Recorded at fair value using quoted market prices.

    (3)
    Recorded at fair value based on broker-dealer quotations.

    (4)
    Trade receivables from provisional invoices for concentrate sales are included within Level 2 as they are valued using quoted forward rates derived from observable market data based on the month of expected settlement.
SHAREHOLDERS' EQUITY (Tables)
 

Common shares outstanding at March 31, 2011

    169,017,306  
 

Employees' stock options

    9,081,520  
 

Warrants

    8,600,000  
         
 

 

    186,698,826  
         
  • The following table illustrates the changes in common shares for the three months ended March 31, 2011:

   
  Shares   Amount  
 

Common shares, beginning of period

    168,720,355     3,078,217  
 

Shares issued under Employee Stock Option Plan

    164,219     8,806  
 

Shares issued under Incentive Share Purchase Plan

    71,141     4,734  
 

Shares issued under Dividend Reinvestment Plan

    18,450     1,232  
 

Restricted Share unit plan

    (38,349 )   (2,787 )
             
 

Common shares, end of period

    168,935,816     3,090,202  
             
  •  

 
   
  Three months ended
March 31,
 
   
  2011   2010  
 

Net income

    45,264   $ 22,332  
 

Weighted average number of common shares outstanding — basic

    168,853     156,692  
   

Add: Dilutive impact of employee stock options

    1,155     907  
     

Dilutive impact of warrants

    2,773     1,449  
     

Dilutive impact of treasury shares related to restricted share unit plan

    82     45  
             
 

Weighted average number of common shares outstanding — diluted

    172,863     159,093  
             
 

Net income per share — basic

  $ 0.27   $ 0.14  
             
 

Net income per share — diluted

  $ 0.26   $ 0.14  
             
STOCK-BASED COMPENSATION (Tables)
  •  

   
  Three months ended
March 31, 2011
 
   
  # of Options   Weighted average
exercise price
 
   
   
  (C$)
 
 

Outstanding, beginning of period

    6,762,704     56.94  
 

Granted

    2,574,785     76.56  
 

Exercised

    (164,219 )   41.47  
 

Forfeited

    (91,750 )   66.87  
               
 

Outstanding, end of period

    9,081,520     62.88  
               
 

Options exercisable at end of period

    5,527,416     66.25  
               
  •  

   
  2011   2010  
 

Risk-free interest rate

    1.96%     1.86%  
 

Expected life of options (in years)

    2.5     2.5  
 

Expected volatility of the Company's share price

    34.6%     44.4%  
 

Expected dividend yield

    0.88%     0.43%  
AVAILABLE-FOR-SALE SECURITIES (Tables)
Available-for-sale securities roll forward from cost to fair value
  •  

   
  As at
March 31, 2011
  As at
December 31, 2010
 
 

Available-for-sale securities in an unrealized gain position

             
 

Cost

  $ 51,153   $ 50,958  
 

Unrealized gains in other comprehensive income

    50,832     48,151  
             
 

Estimated fair value

    101,985   $ 99,109  
             
 

Available-for-sale securities in an unrealized loss position

             
 

Cost

         
 

Unrealized losses in other comprehensive income

         
             
 

Estimated fair value

         
             
 

Total estimated fair value of available-for-sale securities

  $ 101,985   $ 99,109  
             
SEGMENTED INFORMATION (Tables)
 
Three Months Ended
March 31, 2011
  Revenues
from
Mining
Operations
  Production
Costs
  Amortization   Exploration
& Corporate
Development
  Foreign Currency
Translation Loss
(Gain)
  Segment
Income
(Loss)
 
 

Canada

  $ 277,571   $ 139,160   $ 47,101   $   $ 10,305   $ 81,005  
 

Europe

    56,331     28,500     7,268         3,863     16,700  
 

Latin America

    78,166     30,907     7,560         (103 )   39,802  
 

Exploration

                16,978         (16,978 )
                             
 

 

  $ 412,068   $ 198,567   $ 61,929   $ 16,978   $ 14,065   $ 120,529  
                             
 

Segment income

  $ 120,529  
 

Corporate and Other

                                     
 

    Interest and sundry income

    248  
 

    Gain on sale of available-for-sale securities

    4,394  
 

    Gain on derivative financial instruments

    1,351  
 

    General and administrative

    (35,152 )
 

    Interest expense

    (14,008 )
                                       
 

Income before income, mining and federal capital taxes

    77,362  
                                       


 

 
Three Months Ended
March 31, 2010
  Revenues
from
Mining
Operations
  Production
Costs
  Amortization   Exploration
& Corporate
Development
  Foreign Currency
Translation Loss
(Gain)
  Segment
Income
(Loss)
 
 

Canada

  $ 176,615   $ 81,360   $ 20,361   $   $ 10,159   $ 64,735  
 

Europe

    34,488     23,018     7,114         (662 )   5,018  
 

Latin America

    26,480     13,849     3,028         (596 )   10,199  
 

Exploration

                7,504         (7,504 )
                             
 

 

  $ 237,583   $ 118,227   $ 30,503   $ 7,504   $ 8,901   $ 72,448  
                             
 

Segment income

  $ 72,448  
 

Corporate and Other

                                     
 

    Interest and sundry income

    1,376  
 

    General and administrative

    (28,430 )
 

    Gain on sale of available-for-sale securities

    346  
 

    Loss on derivative financial instruments

    (549 )
 

    Provincial capital tax

    587  
 

    Interest expense

    (4,504 )
                                       
 

Income before income, mining and federal capital taxes

  $ 41,274  
                                       


 

   
  Total Assets as at  
   
  March 31, 2011   December 31, 2010  
 

Canada

  $ 4,137,892   $ 4,172,997  
 

Europe

    702,200     679,258  
 

Mexico

    654,319     619,263  
 

Exploration

    28,790     28,833  
             
 

 

  $ 5,523,201   $ 5,500,351  
             
FAIR VALUE MEASUREMENT (Details) (USD $)
In Thousands
Mar. 31, 2011
Financial assets:
 
Available-for-sale securities
$ 101,985 
Fair value measured on recurring basis | Level 1
 
Financial assets:
 
Available-for-sale securities
93,849 
Total financial assets
93,849 
Fair value measured on recurring basis | Level 2
 
Financial assets:
 
Cash equivalents and short-term investments
5,633 
Available-for-sale securities
8,136 
Trade receivables
71,566 
Derivative assets
2,036 
Total financial assets
87,371 
Fair value measured on recurring basis | Total
 
Financial assets:
 
Cash equivalents and short-term investments
5,633 
Available-for-sale securities
101,985 
Trade receivables
71,566 
Derivative assets
2,036 
Total financial assets
$ 181,220 
SHAREHOLDERS' EQUITY (Details)
3 Months Ended
Mar. 31,
2011
2011
2010
2010
SHAREHOLDERS' EQUITY
 
 
 
 
Common shares outstanding at March 31, 2011 (in shares)
 
169,017,306 
 
 
Employees' stock options (in shares)
 
9,081,520 
 
 
Warrants (in shares)
 
8,600,000 
 
 
Maximum number of shares common shares (in shares)
 
186,698,826 
 
 
Stock options granted (in shares)
 
2,574,785 
 
2,755,080 
Stock options granted - exercise price (in Canadian dollars per share)
76.56 
 
56.95 
 
Stock options exercised (in shares)
 
164,219 
 
59,325 
Cash received from exercise of stock options
 
6,900,000 
 
1,300,000 
Stock options cancelled (in shares)
 
91,750 
 
10,550 
Stock options forfeited - weighted-average exercise price (in Canadian dollars per share)
66.87 
 
49.88 
 
Common Stock Shares Outstanding
 
 
 
 
Common shares, beginning of period, amount (in U.S. dollars)
 
3,078,217,000 
 
 
Common shares, beginning of period (in shares)
 
168,720,355 
 
 
Shares issued under Employee Stock Option Plan, amount (in U.S. dollars)
 
8,806,000 
 
 
Shares issued under Employee Stock Option Plan (in shares)
 
164,219 
 
 
Shares issued under Incentive Share Purchase Plan, amount (in U.S. dollars)
 
4,734,000 
 
 
Shares issued under Incentive Share Purchase Plan (in shares)
 
71,141 
 
 
Shares issued under Dividend Reinvestment Plan, amount (in U.S. dollars)
 
1,232,000 
 
 
Shares issued under Dividend Reinvestment Plan (in shares)
 
18,450 
 
 
Restricted share unit plan, amount (in U.S. dollars)
 
(2,787,000)
 
 
Restricted share unit plan (in shares)
 
(38,349)
 
 
Common shares, end of period, amount (in U.S. dollars)
 
3,090,202,000 
 
 
Common shares, end of period (in shares)
 
168,935,816 
 
 
Net income per share
 
 
 
 
Net income
 
45,264,000 
 
22,332,000 
Weighted average number of common shares outstanding - basic (in shares)
 
168,853,000 
 
156,692,000 
Add : Dilutive impact of employee stock options (in shares)
 
1,155,000 
 
907,000 
Dilutive impact of warrants (in shares)
 
2,773,000 
 
1,449,000 
Dilutive impact of treasury shares related to restricted share unit plan (in shares)
 
82,000 
 
45,000 
Weighted average number of common shares outstanding - Diluted (in shares)
 
172,863,000 
 
159,093,000 
Net income per share - basic (in dollars per share)
 
0.27 
 
0.14 
Net income per share - diluted (in dollars per share)
 
0.26 
 
0.14 
STOCK-BASED COMPENSATION (Details)( Stock options)
3 Months Ended
Mar. 31,
2011
2010
Stock options activity
 
 
Options outstanding, beginning of year (in shares)
6,762,704 
 
Options granted (in shares)
2,574,785 
 
Options exercised (in shares)
(164,219)
 
Options cancelled (in shares)
(91,750)
 
Options outstanding, end of year (in shares)
9,081,520 
 
Options exercisable at end of period (in shares)
5,527,416 
 
Weighted average exercise price
 
 
Outstanding, beginning of year, weighted average exercise price (in Canadian dollars per share)
56.94 
 
Granted, weighted average exercise price (in Canadian dollars per share)
76.56 
 
Exercised, weighted average exercise price (in Canadian dollars per share)
41.47 
 
Cancelled, weighted average exercise price (in Canadian dollars per share)
66.87 
 
Outstanding, end of year, weighted average exercise price (in Canadian dollars per share)
62.88 
 
Options exercisable at end of period (in Canadian dollars per share)
66.25 
 
Fair value of options weighted average assumptions:
 
 
Pricing model used for valuation of options
Black-Scholes 
Black-Scholes 
Risk-free interest rate (as a percent)
0.0196 
0.0186 
Expected life of options (in years)
2.5 
2.5 
Expected volatility of the Company's share price (as a percent)
0.346 
0.444 
Expected dividend yield (as a percent)
0.0088 
0.0043 
AVAILABLE-FOR-SALE SECURITIES (Details) (USD $)
In Thousands
3 Months Ended
Mar. 31, 2011
Dec. 31, 2010
AVAILABLE-FOR-SALE SECURITIES
 
 
Proceeds from sale of available-for-sale securities
8,764 
 
Gain on sale of available-for-sale securities
4,394 
 
Schedule of Available-for-sale Securities
 
 
Estimated fair value
101,985 
99,109 
Available-for-sale securities in an unrealized gain position
 
 
Schedule of Available-for-sale Securities
 
 
Cost
51,153 
50,958 
Unrealized gains (losses) in other comprehensive income
50,832 
48,151 
Estimated fair value
$ 101,985 
$ 99,109 
LONG-TERM DEBT (Details)
In Millions
3 Months Ended
Mar. 31,
2011
2010
2011
2010
Dec. 31, 2010
Debt instrument
 
 
 
 
 
Amount drew down on the credit facility during the period
 
 
50 
20 
 
Amount drawn down on the credit facility
 
 
 
 
50 
Long-term debt interest costs
10 
 
 
 
Interest costs capitalized for property, plant and mine development
 
 
 
 
FINANCIAL INSTRUMENTS (Details)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31,
3 Months Ended
Mar. 31,
2011
2010
2011
2010
2011
Dec. 31, 2010
3 Months Ended
Mar. 31, 2011
Mar. 30, 2011
2011
2010
2010
Derivative
 
 
 
 
 
 
 
 
 
 
 
Net premium payable to counterparty
 
 
 
 
 
 
 
 
 
 
 
Zinc options (in metric tonnes)
20,000 
15,000 
20,000 
15,000 
 
 
 
 
 
 
 
Strike price for option (per metric tonne)
2,500 
2,500 
2,200 
2,200 
 
 
 
 
 
 
 
Options expiring each month, beginning from March 31, 2010 (in metric tonnes)
2,000 
1,500 
2,000 
1,500 
 
 
 
 
 
 
 
Limit for participation, zinc prices set by zero-cost collar strategy (per metric tonne)
 
 
 
 
 
 
 
 
2,500 
2,500 
 
Gain (loss) recognized in consolidated statement of income and comprehensive income
 
 
 
 
 
 
 
 
 
(2)
Unrealized mark-to-market gain
 
 
 
 
 
 
 
 
 
Extension period to counterparty under extendible foreign exchange flat forward contract (in months)
 
 
 
 
 
 
 
 
 
 
Exchange rate under foreign exchange forward contract
 
 
 
 
 
 
 
0.99 
 
 
 
Amount of expenditures hedged
 
 
 
 
 
 
90 
 
 
 
 
Amount of expenditures hedged, expiring each month, beginning from April 2010
 
 
 
 
 
 
10 
 
 
 
 
COMMITMENTS, CONTINGENCIES, AND GUARANTEES (Details) (USD $)
In Millions
Mar. 31, 2011
COMMITMENTS, CONTINGENCIES, AND GUARANTEES
 
Guarantees provided in the form of letters of credit
$ 116 
SEGMENTED INFORMATION (Details)
In Thousands
3 Months Ended
Mar. 31,
2011
2010
SEGMENTED INFORMATION
 
 
Minimum required percentage of combined revenue, profit or loss or total assets of reported operating segments (as a percent)
0.10 
 
Segment reporting Information
 
 
Goodwill
200,064 
 
Revenues from Mining Operations
412,068 
237,583 
Production Costs
198,567 
118,227 
Amortization
61,929 
30,503 
Exploration and Corporate Development
16,978 
7,504 
Foreign currency translation loss
14,065 
8,901 
Segment Income (Loss)
120,529 
72,448 
Interest and sundry income
248 
1,376 
Gain on sale of available-for-sale securities
4,394 
346 
Gain (Loss) on derivative financial instruments
1,351 
(549)
General and administrative
(35,152)
(28,430)
Provincial capital tax
 
587 
Interest expense
(14,008)
(4,504)
Income before income, mining and federal capital taxes
77,362 
41,274 
Total Assets
5,523,201 
 
Canada
 
 
Segment reporting Information
 
 
Revenues from Mining Operations
277,571 
176,615 
Production Costs
139,160 
81,360 
Amortization
47,101 
20,361 
Foreign currency translation loss
10,305 
10,159 
Segment Income (Loss)
81,005 
64,735 
Total Assets
4,137,892 
 
Europe
 
 
Segment reporting Information
 
 
Revenues from Mining Operations
56,331 
34,488 
Production Costs
28,500 
23,018 
Amortization
7,268 
7,114 
Foreign currency translation loss
3,863 
(662)
Segment Income (Loss)
16,700 
5,018 
Total Assets
702,200 
 
Latin America
 
 
Segment reporting Information
 
 
Revenues from Mining Operations
78,166 
26,480 
Production Costs
30,907 
13,849 
Amortization
7,560 
3,028 
Foreign currency translation loss
(103)
(596)
Segment Income (Loss)
39,802 
10,199 
Mexico
 
 
Segment reporting Information
 
 
Total Assets
654,319 
 
Exploration
 
 
Segment reporting Information
 
 
Exploration and Corporate Development
16,978 
7,504 
Segment Income (Loss)
(16,978)
(7,504)
Total Assets
28,790 
 
Corporate and Other
 
 
Segment reporting Information
 
 
Interest and sundry income
248 
1,376 
Gain on sale of available-for-sale securities
4,394 
346 
Gain (Loss) on derivative financial instruments
1,351 
(549)
General and administrative
(35,152)
(28,430)
Provincial capital tax
 
587 
Interest expense
(14,008)
(4,504)
Income before income, mining and federal capital taxes
77,362 
41,274 
Meliadine Mine Project
 
 
Segment reporting Information
 
 
Goodwill
200,064 
 
GENERAL AND ADMINISTRATIVE (Details) (Meadowbank Mine Fire, USD $)
In Millions
3 Months Ended
Mar. 31, 2011
GENERAL AND ADMINISTRATIVE
 
Loss on disposal due to kitchen fire at Meadowbank Mine
$ 7 
Costs related to disposal of property
Insurance receivable
Loss due to fire recognized in the General and Administrative
Maximum exposure to insurance losses
$ 3 
Document and Entity Information
3 Months Ended
Mar. 31, 2011
Document and Entity Information
 
Entity Registrant Name
AGNICO EAGLE MINES LTD 
Entity Central Index Key
0000002809 
Document Type
6-K 
Document Period End Date
2011-03-31 
Amendment Flag
FALSE 
Current Fiscal Year End Date
12/31 
Entity Current Reporting Status
Yes 
Entity Filer Category
Large Accelerated Filer 
Document Fiscal Year Focus
2011 
Document Fiscal Period Focus
Q1