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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

FORM 20-F/A
o     REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
o     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                          TO                         
Commission file number: 1-13422

AGNICO-EAGLE MINES LIMITED
  (Exact name of Registrants Specified in its Charter)
Not Applicable
(Translation of Registrant's Name or Organization)
Ontario, Canada
(Jurisdiction of Incorporation or Organization)
145 King Street East, Suite 500
Toronto, Ontario, M5C 2Y7
(Address of Principal Executive Offices)

        Securities registered or to be registered pursuant to Section 12(b) of the Act:

Common Shares without par value
 (Title of Class)	 	The Toronto Stock Exchange and
the New York Stock Exchange
 (Name of exchange on which registered)	
        Securities registered or to be registered pursuant to Section 12(g) of the Act

Share Purchase Warrants
 (Title of Class)	 	The Toronto Stock Exchange and
the Nasdaq National Market
 (Name of exchange on which registered)	
        Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act
Convertible Subordinated Debentures due 2012
 (Title of Class)
        Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.
84,469,804 Common Shares as of December 31, 2003
        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes     ý             No     o
        Indicate by check mark which financial statement item the registrant has elected to follow:
Item 17     o             Item 18     ý

 
 TABLE OF CONTENTS

 	 	Page
	
EXPLANATORY NOTE	 	1	
PRELIMINARY NOTE	 	1	
 	ITEM 1.      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS*	 	2	
 	ITEM 2.      OFFER STATISTICS AND EXPECTED TIMETABLE	 	2	
 	ITEM 3.      KEY INFORMATION	 	2	
 	 	Selected Financial Data	 	2	
 	 	Currency Exchange Rates	 	4	
 	 	Risk Factors	 	4	
 	ITEM 4.      INFORMATION ON THE COMPANY	 	9	
 	 	History and Development of the Company	 	9	
 	 	Business Overview	 	11	
 	 	Mining Legislation and Regulation	 	13	
 	 	Organizational Structure	 	13	
 	 	Property, Plant and Equipment	 	14	
 	 	Mineral Reserve and Mineral Resource	 	21	
 	 	Legal and Regulatory Proceedings	 	29	
 	ITEM 5.      OPERATING AND FINANCIAL REVIEW AND PROSPECTS	 	29	
 	 	Operating Results	 	29	
 	 	Liquidity and Capital Resources	 	30	
 	ITEM 6.      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	 	30	
 	 	Directors and Senior Management	 	30	
 	 	Compensation of Directors and Officers	 	31	
 	 	Board Practices	 	32	
 	 	Employees	 	32	
 	 	Share Ownership	 	32	
 	 	Security Ownership of Directors and Executive Officers	 	32	
 	ITEM 7.      MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	 	33	
 	 	Major Shareholders	 	33	
 	 	Related Party Transactions	 	34	
 	ITEM 8.      FINANCIAL INFORMATION	 	34	
 	ITEM 9.      THE OFFER AND LISTING	 	34	
 	 	Market and Listing Details	 	34	
 	ITEM 10.    ADDITIONAL INFORMATION	 	37	
 	 	Memorandum and Articles of Incorporation	 	37	
 	 	Material Contracts	 	39	
 	 	Exchange Controls	 	39	
 	 	Restrictions on Share Ownership by Non-Canadians	 	39	
 	 	Taxation	 	39	
 	 	Documents on Display	 	40	
 	ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	 	40	
 	 	Metal Price and Foreign Currency	 	40	
 	 	Interest Rate	 	41	
 	ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	 	42	
 	ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	 	42	
 	ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS	 	42	
 	ITEM 15.    CONTROLS AND PROCEDURES	 	42	
 	ITEM 16A — AUDIT COMMITTEE FINANCIAL EXPERT	 	42	
 	ITEM 16B — CODE OF ETHICS	 	43	
 	ITEM 16C — PRINCIPAL ACCOUNTANT FEES AND SERVICES	 	43	
 	ITEM 16D — EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	 	43	
 	ITEM 16E — PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS	 	43	
 	ITEM 17.    RESERVED**	 	43	
 	ITEM 18.    FINANCIAL STATEMENTS	 	43	
 	ITEM 19.    EXHIBITS	 	43	

*
Omitted pursuant to General Instruction E(b) of Form 20-F.

**
Pursuant to General Instruction E(c) of Form 20-F, the registrant has elected to provide the financial statements and related information specified in Item 18.
i

 
 EXPLANATORY NOTE
        This Amendment No. 1 on Form 20-F/A (the "Form 20-F") amends the Annual Report on Form 20-F for the year ended December 31, 2003 filed on May 18, 2004 (the "Original Filing"). Agnico-Eagle Mines Limited has filed this Form 20-F in response to comments received from securities regulators regarding the disclosure in the Original Filing. The Form 20-F has been updated to reflect certain 2004 operating data and 2005 budget information, but does not reflect financial results for the financial year ended December 31, 2004. Accordingly, you should read this Form 20-F together with other documents that we have filed with the Canadian securities regulators and the U.S. Securities and Exchange Commission (the "SEC") subsequent to the date of the Original Filing. Information in such reports and documents updates and supersedes certain information contained in this Form 20-F. The filing of this Form 20-F shall not be deemed an admission that the Original Filing, when made, included any known, untrue statement of material fact or knowingly omitted to state a material fact necessary to make a statement not misleading.
 
 PRELIMINARY NOTE
        Exhibit 99C:     Attached hereto as Exhibit 99C is the Registrant's 2003 Annual Audited Consolidated Financial Statements and Management's Discussion and Analysis (prepared in accordance with US GAAP) containing information incorporated by reference in answer or partial answer to certain items of this Form 20-F including consolidated financial statements as at and for the years ended December 31, 2003 and 2002, and the related notes, together with the auditors' report thereon and the management's discussion and analysis of financial condition and results of operations for the year ended December 31, 2003.
        Exhibit 99D:     Attached hereto as Exhibit 99D is the Registrant's Notice of Annual and Special Meeting of Shareholders and Management Information Circular dated March 31, 2004, used in connection with the annual meeting of shareholders to be held on May 28, 2004 containing information incorporated by reference in answer or partial answer to certain items of this Form 20-F.
        Currencies:     The Registrant presents its consolidated financial statements in United States dollars. All dollar amounts in this Form 20-F (and in Exhibit 99C) are stated in United States dollars (US dollars, $, or US$), except where otherwise indicated. All dollar amounts in Exhibit 99D are stated in Canadian dollars, except where otherwise indicated. See "Item 3: Key Information — Selected Financial Information — Currency Exchange Rates" for a history of exchange rates of Canadian dollars into US dollars.
        Generally Accepted Accounting Principles:     Effective January 1, 2002, the Registrant changed its primary basis of financial reporting from Canadian generally accepted accounting principles ("Canadian GAAP") to United States generally accepted accounting principles ("US GAAP") due to its substantial U.S. shareholder base and to maintain comparability with other gold mining companies. All references to financial results herein are to those calculated under US GAAP. Financial statements and Management's Discussion and Analysis under Canadian GAAP are prepared and distributed to shareholders for statutory reporting purposes.
        Forward-Looking Information:     Certain statements in this Form 20-F and the documents incorporated herein by reference as Exhibits 99C and 99D constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Registrant or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, which will, among other things, impact demand for gold and other metals produced by the Registrant; industry capacity; the ability of the Registrant to implement its business strategy; and changes in, or the failure to comply with, government regulations (especially safety and environmental laws and regulations). See also "Item 3: Key Information — Risk Factors", under the subheadings "Recent Losses", "Dependence on the LaRonde Division", "Metal Price Volatility", "Uncertainty of Production Estimates", "Cost of Exploration and Development Programs", "Total Cash Operating Costs of Gold Production at the LaRonde Mine", "Restrictions in the Bank Credit Facility", "Risk of Acquisitions", "Competition for and Scarcity of Mineral Lands", "Uncertainty of Mineral Reserve and Mineral Resource Estimates", "Mining Risks and Insurance", "Laws and Regulations", "Currency Fluctuations", and "Interest Rate Fluctuations".
1

  
ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
        Pursuant to the instructions to Item 1 of Form 20-F, this information has not been provided.
ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE
        Not applicable.
ITEM 3.    KEY INFORMATION
Selected Financial Data
        The following selected financial data for each of the years in the five-year period ended December 31, 2003 are derived from the consolidated financial statements of Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") audited by Ernst & Young LLP. The selected financial data should be read in conjunction with management's discussion and analysis of the Company's operations and financial condition, the consolidated financial statements and accompanying notes in Exhibit 99C to this Form 20-F and other financial information included elsewhere in this Form 20-F.

 	 	Year ended December 31,
	 	
 	 	2003
	 	2002
	 	2001
	 	2000
	 	1999
	 	
 	 	(in thousands of US dollars, US GAAP basis)
	 	
Income Statement Data	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations (1)	 	126,820	 	108,027	 	96,043	 	63,676	 	23,392	 	
Interest and sundry income	 	2,775	 	1,943	 	5,752	 	2,145	 	(5,519	)	
 	 		 		 		 		 		 	
 	 	129,595	 	109,970	 	101,795	 	65,821	 	17,873	 	
 	 		 		 		 		 		 	
Production costs (1)	 	104,990	 	75,969	 	67,009	 	49,997	 	28,447	 	
Exploration expense	 	5,975	 	3,766	 	6,391	 	3,213	 	3,838	 	
Equity loss in junior exploration company (2)	 	1,626	 	—	 	—	 	—	 	—	 	
Amortization	 	17,504	 	12,998	 	12,658	 	9,220	 	4,479	 	
General and administrative	 	7,121	 	5,530	 	4,461	 	4,223	 	4,044	 	
Provincial capital tax	 	1,240	 	829	 	1,551	 	1,301	 	1,192	 	
Interest	 	9,180	 	7,341	 	12,917	 	5,920	 	5,583	 	
Foreign exchange (gain) loss	 	72	 	(1,074	)	(336	)	890	 	1,401	 	
Write down of mining properties and other (3)	 	—	 	—	 	—	 	—	 	974	 	
 	 		 		 		 		 		 	
Income (loss) before income and mining taxes (recoveries)	 	(18,113	)	4,611	 	(2,856	)	(8,943	)	(32,085	)	
Income and mining taxes (recoveries)	 	(358	)	588	 	2,862	 	(3,906	)	(13,016	)	
 	 		 		 		 		 		 	
Income before cumulative catch-up adjustment	 	(17,755	)	4,023	 	(5,718	)	(5,037	)	(19,069	)	
Cumulative catch-up adjustment (1)(5)	 	(1,743	)	—	 	—	 	(1,831	)	—	 	
 	 		 		 		 		 		 	
Net income (loss)	 	(19,498	)	4,023	 	(5,718	)	(6,868	)	(19,069	)	
 	 		 		 		 		 		 	
Net income (loss) before cumulative catch-up adjustment per share — basic and diluted	 	(0.21	)	0.06	 	(0.09	)	(0.09	)	(0.36	)	
 	 		 		 		 		 		 	
Net income (loss) per share — basic and diluted	 	(0.23	)	0.06	 	(0.09	)	(0.12	)	(0.36	)	
 	 		 		 		 		 		 	
Weighted average number of shares outstanding — basic	 	83,889,115	 	70,821,081	 	61,333,630	 	54,446,693	 	53,331,268	 	
Weighted average number of shares outstanding — diluted	 	83,889,115	 	71,631,263	 	61,333,630	 	54,446,693	 	53,331,268	 	
Total common shares outstanding	 	84,469,804	 	83,636,861	 	67,722,853	 	56,139,480	 	54,216,771	 	
Dividends declared per common share	 	0.03	 	0.03	 	0.02	 	0.02	 	0.02	 	
2

 
 	 	As at December 31,
	
 	 	2003
	 	2002
	 	2001
	 	2000
	 	1999
	
 	 	(in thousands of US dollars, US GAAP basis)
	
Balance Sheet Data (at end of period)	 	 	 	 	 	 	 	 	 	 	
Mining properties (net)	 	399,719	 	353,059	 	301,221	 	281,497	 	221,067	
Total assets	 	637,101	 	593,807	 	393,464	 	364,333	 	297,015	
Long term debt (4)	 	143,750	 	143,750	 	151,081	 	186,261	 	131,458	
Reclamation provision and other liabilities (5)	 	15,377	 	5,043	 	4,055	 	5,567	 	5,433	
Shareholders' equity (6)	 	400,723	 	397,693	 	198,426	 	124,361	 	128,569	

Notes:
(1)
Revenues from mining operations consist of gold and byproduct zinc, silver and copper revenues, net of smelting, refining and transportation costs. Effective 2000, the Company changed its accounting policy with respect to revenue recognition. As a result of the change, revenue from concentrates is recognized when legal title passes to custom smelters and is valued on an estimated net realizable value basis. Periodic adjustments on the final settlement of concentrates previously sold to smelters are included in revenue as soon as the amount can be reasonably determined. Revenue from gold and silver in the form of dore bars is recorded when the refined gold and silver are sold and also included in revenues from mining operations. Prior to this change, the Company recognized revenues from concentrates on a production basis. Under this basis of accounting, revenue was recognized once the ore was extracted and processed at the onsite mill facilities. The accounting change was accounted for as a cumulative catch-up adjustment and resulted in a loss of $1.8 million or $0.03 per share in 2000.

(2)
As a result of issuances of stock by Contact Diamond Corporation (formerly Sudbury Contact Mines Limited) ("Contact Diamond"), the Company's interest in Contact Diamond was diluted to below 50% during 2003. The Company therefore no longer consolidates the results of Contact Diamond but accounts for its investment using the equity method of accounting. The Company now reports its share of losses in Contact Diamond as a separate line item in the consolidated financial statements. The Company began using the equity method to account for its interest in Contact Diamond on September 1, 2003.

(3)
On August 31, 1999, the Company settled a lawsuit commenced by Noranda Inc. ("Noranda") relating to the acquisition of Dumagami Mines Inc. for $1.3 million (C$1.9 million), of which C$950,000 was paid on signing of settlement documentation and the remaining C$950,000 was paid in August 2000. The lawsuit was dismissed without costs.

(4)
On February 15, 2002, Agnico-Eagle issued $143.8 million aggregate principal amount of 4.50% convertible subordinated debentures due February 15, 2012 (the "Convertible Debentures") for net proceeds of $138.5 million after deducting underwriting commissions of $4.3 million. Other costs of issuing the debentures totalled $1.0 million. The debentures bear interest of 4.50% per annum on the principal amount payable in cash semi-annually. The debentures are convertible into common shares of Agnico-Eagle at the option of the holder, at any time on or prior to maturity, at a rate of 71.429 common shares per $1,000 principal amount. The debentures are redeemable by Agnico-Eagle, in whole or in part, at any time on or after February 15, 2006 at a redemption price equal to par plus accrued and unpaid interest. The Company may redeem the debentures in cash or, at the option of the Company, by delivering freely tradeable common shares.

On February 15, 2002, the entire amount of the Company's senior convertible notes due January 27, 2004 (the "Senior Notes") was called for redemption.

For the year ended December 31, 2003, interest expense was $9.2 million (2002 — $7.3 million; 2001 — $12.9 million; 2000 — $5.9 million; 1999 — $5.6 million) and cash interest payments were $8.0 million (2002 — $24.4 million; 2001 — $10.4 million; 2000 — $4.4 million; 1999 — $5.6 million). Approximately $19 million of the cash interest payments in 2002 were in connection with the redemption of the Senior Notes. See Note 4(b) to the consolidated financial statements on page 35 of Exhibit 99C to this Form 20-F.

(5)
Effective January 1, 2003, the Company adopted the provisions of FASB Statement No. 143 ("FAS 143") related to asset retirement obligations. FAS 143 applies to legal obligations resulting from the construction, development and operation of long-lived assets, such as mining assets. This standard requires companies to recognize the present value of reclamation costs as a liability in the period the legal obligation is incurred. The Company estimated the final reclamation provision taking into account current circumstances such as projected mine life at the end of 2003 and current throughput. Subsequent revisions to the final reclamation estimate could result from legislative changes or changes in the underlying assumptions such as life-of-mine.

For periods prior to January 1, 2003, estimated future reclamation costs were based primarily on legal, environmental and regulatory requirements. Future reclamation costs for the Company's inactive mines were accrued based on management's best estimate of the costs at the end of each period, comprising costs expected to be incurred at a site, on an undiscounted basis. Such cost estimates included, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates were reflected in income in the period an estimate was revised.

(6)
For each period ending December 31, 2000 or earlier, these amounts are net of the common shares of the Company held by Mentor Exploration and Development Co., Limited ("Mentor"), a former associate of the Company, which for accounting purposes, was treated as a subsidiary and was consolidated into the Company's financial statements. In October 2001, pursuant to a plan of arrangement, the Company amalgamated with Mentor and issued 369,948 common shares pursuant to that plan.

In 2002, the Company completed a public offering of 13,800,000 units, each unit consisting of one common share and one-half warrant, at $13.90 per unit for net proceeds of $182.9 million, after deducting issue costs of $9.1 million. Each whole share purchase warrant
3

("Share Purchase Warrant") entitles the holder to acquire one common share for a price of $19 at any time on or prior to November 14, 2007. If all outstanding Share Purchase Warrants are exercised, the Company would be required to issue an additional 6,900,000 common shares. See Note 6(c) to the consolidated financial statements on page 39 of Exhibit 99C to this Form 20-F. In 2001, the Company completed a public offering of 10,350,000 common shares at $7.90 per common share for net proceeds of $76.2 million. See Note 6(c) to the consolidated financial statements on page 39 of Exhibit 99C to this Form 20-F.

In 2003, the Company issued 255,768 common shares (2002 — 40,161; 2001 — 200,000; 2000 — 475,000) under a flow-through share private placement for proceeds of $3.6 million (2002 — $0.6 million; 2001 — $2.5 million; 2000 — $3.6 million) net of share issue costs. See Note 6(b) to the consolidated financial statements on page 39 of Exhibit 99C to this Form 20-F.
Currency Exchange Rates
        All dollar amounts in this Form 20-F are in United States dollars, except where otherwise indicated. The following tables present, in Canadian dollars, the exchange rates for the US dollar, based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate"). On January 13, 2005, the Noon Buying Rate was US$1.00 equals C$1.2005.

 	 	Year Ended December 31,
	
 	 	2004
	 	2003
	 	2002
	 	2001
	 	2000
	 	1999
	
High	 	1.3970	 	1.5750	 	1.6128	 	1.6023	 	1.5592	 	1.5302	
Low	 	1.1775	 	1.2923	 	1.5108	 	1.4933	 	1.4350	 	1.4440	
End of Period	 	1.2034	 	1.2923	 	1.5800	 	1.5925	 	1.4995	 	1.4440	
Average	 	1.3017	 	1.4012	 	1.5704	 	1.5519	 	1.4855	 	1.4828	
 	 	2004
	
 	 	December
	 	November
	 	October
	 	September
	 	August
	 	July
	
High	 	1.2401	 	1.2263	 	1.2726	 	1.3071	 	1.3323	 	1.3353	
Low	 	1.1856	 	1.1775	 	1.2194	 	1.2648	 	1.2964	 	1.3082	
End of Period	 	1.2034	 	1.1902	 	1.2209	 	1.2648	 	1.3166	 	1.3296	
Average	 	1.2189	 	1.1968	 	1.2469	 	1.2881	 	1.3127	 	1.3634	
Risk Factors
Recent Losses
        Although the Company reported net income for the nine months ended September 30, 2004 and expects to report net income for the year ended December 31, 2004, it incurred net losses in 2003 and in each of the five years prior to 2002. For a discussion of the factors contributing to the losses, please refer to pages 1 to 22 in Exhibit 99C to this Form 20-F under the caption "Management's Discussion and Analysis of the Company's Financial Condition and Results of Operations." The Company's profitability depends on the price of gold, gold production, total cash operating costs, the prices and production levels of byproduct zinc, silver and copper and other factors discussed in this section of the Form 20-F. Substantially all of these factors are beyond the Company's control and there can be no assurance that the Company will sustain profitability in the future.
Dependence on the LaRonde Division
        The Company's mining and milling operations at the LaRonde Division account for all of the Company's gold production and will continue to account for all of its gold production in the future unless additional properties are acquired or brought into production. Any adverse condition affecting mining or milling conditions at the LaRonde Division could be expected to have a material adverse effect on the Company's financial performance and results of operations until such time as the condition is remedied. In addition, the Company's principal development program is the expansion of the LaRonde Division. This program involves the exploration and extraction of ore from new zones and may present new or different challenges for the Company. In addition, gold production at the LaRonde Mine is expected to begin to decline commencing in 2007. Unless the Company can successfully bring into production the Lapa property, the Goldex property or its other exploration properties or otherwise acquire gold producing assets prior to 2007, the Company's results of operations will be adversely affected. There can be no assurance that the Company's current exploration and
4

development programs at the LaRonde Division will result in any new economically viable mining operations or yield new mineral reserves to replace and expand current mineral reserves.
Metal Price Volatility
        The Company's earnings are directly related to commodity prices as revenues are derived from precious metals (gold and silver), zinc and copper. The Company's policy and practice is not to sell forward its future gold production; however, under the Company's Price Risk Management Policy, approved by its Board of Directors, the Company may review this practice on a project by project basis, making use of hedging strategies where appropriate to ensure an adequate return to shareholders on new projects. In addition, in accordance with the Company's revolving bank credit facility, the Company has purchased put options to ensure projected revenues from sales of gold are sufficient to reasonably ensure that the Company will be in compliance with the financial and other covenants of the facility. See "Management's Discussion and Analysis of the Company's Financial Condition and Results of Operations — Risk Profile" on pages 12 to 15 of Exhibit 99C to this Form 20-F for more details of the Company's hedging activities. Gold prices fluctuate widely and are affected by numerous factors beyond the Company's control, including central bank sales, producer hedging activities, expectations of inflation, the relative exchange rate of the US dollar with other major currencies, global and regional demand and political and economic conditions, and production costs in major gold producing regions. The aggregate effect of these factors is impossible to predict with accuracy. Gold prices are also affected by worldwide production levels. In addition, the price of gold has on occasion been subject to very rapid short-term changes because of speculative activities. Fluctuations in gold prices may adversely affect the Company's financial performance or results of operations. If the market price of gold falls below the Company's total production costs and remains at such a level for any sustained period, the Company may experience losses and may curtail or suspend some or all of its exploration, development and mining activities. The prices received for the Company's byproducts (zinc, silver and copper) affect the Company's ability to meet its targets for total cash operating cost per ounce of gold produced. Byproduct prices fluctuate widely and are affected by numerous factors beyond the Company's control. The Company occasionally implements hedging strategies to mitigate the effects of fluctuating byproduct metal prices.
        The volatility of gold prices is illustrated in the following table which sets forth, for the periods indicated, the high and low afternoon fixing prices for gold on the London Bullion Market (the "London P.M. Fix") and the average gold prices received by the Company.

 	 	2004
	 	2003
	 	2002
	 	2001
	 	2000
	 	1999
	
High price ($ per ounce)	 	454	 	417	 	350	 	293	 	313	 	326	
Low price ($ per ounce)	 	375	 	323	 	278	 	256	 	264	 	253	
Average price received ($ per ounce)	 	—	 	368	 	312	 	273	 	278	 	274	
        On January 13, 2005, the London P.M. Fix was $423.60 per ounce of gold. The average price received by the Company per ounce of gold for 2004 is not currently available. For the nine months ended September 30, 2004, the average price received per ounce of gold was $393.
        Based on 2005 production estimates, the approximate sensitivities of the Company's after-tax income to a 10% change in metal prices from 2004 market average prices are as follows:

 	 	Income per share
	
Gold	 	$	0.09	
Zinc	 	$	0.04	
Silver	 	$	0.03	
Copper	 	$	0.01	
        Sensitivities of the Company's after-tax income to changes in metal prices will increase with increased production.
5

Uncertainty of Production Estimates
        The Company's gold production may fall below estimated levels as a result of mining accidents such as cave-ins, rock falls, rock bursts or flooding. In addition, production may be unexpectedly reduced if, during the course of mining, unfavourable ground conditions or seismic activity are encountered, ore grades are lower than expected, or the physical or metallurgical characteristics of the ore are less amenable than expected to mining or treatment. Accordingly, there can be no assurance that the Company will achieve current or future production estimates.
        A rock fall that occurred in two production stopes during the first quarter of 2003 led to an initial 20% reduction in the Company's 2003 gold production estimate from 375,000 ounces to 300,000 ounces. Production drilling challenges and lower than planned recoveries in the mill in the third quarter of 2003 led to a further reduction in the production estimate by 21%. Final gold production in 2003 was 236,653 ounces.
Cost of Exploration and Development Programs
        The Company's profitability is significantly affected by the costs and results of its exploration and development programs. As mines have limited lives based on proven and probable mineral reserves, the Company actively seeks to replace and expand its reserves, primarily through exploration and development and, from time to time, through strategic acquisitions. Exploration for minerals is highly speculative in nature, involves many risks and frequently is unsuccessful. Among the many uncertainties inherent in any gold exploration and development program are the location of economic ore bodies, the development of appropriate metallurgical processes, the receipt of necessary governmental permits and the construction of mining and processing facilities. In addition, substantial expenditures are required to pursue such exploration and development activities. Assuming discovery of an economic ore body, depending on the type of mining operation involved, several years may elapse from the initial phases of drilling until commercial operations are commenced and during such time the economic feasibility of production may change. Accordingly, there can be no assurance that the Company's current exploration and development programs will result in any new economically viable mining operations or yield new reserves to replace and expand current reserves.
Total Cash Operating Costs of Gold Production at the LaRonde Mine
        The Company's total cash operating costs to produce an ounce of gold are dependent on a number of factors, including primarily the prices and production levels of byproduct zinc, silver and copper, the revenue from which is offset against the cost of gold production, the US dollar/Canadian dollar exchange rate, smelting and refining charges and production royalties, which are affected by all of these factors and the gold price. All these factors are beyond the Company's control.
        Total cash operating cost is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. Management uses this generally accepted industry measure in evaluating operating performance and believes it to be a realistic indication of such performance and useful in allowing year over year comparisons. The data also indicates the Company's ability to generate cash flow and operating income at various gold prices. This additional information should be considered together with other data prepared in accordance with US GAAP and is not necessarily indicative of operating costs or cash flow measures prepared in accordance with US GAAP (See the information set out under the caption "Results of Operations — Production Costs" on pages 4 to 7 of Exhibit C to this 20-F).
Risks of Acquisitions
        The Company regularly evaluates opportunities to acquire shares or assets of other mining businesses. Such acquisitions may be significant in size, may change the scale of the Company's business, and may expose the Company to new geographic, political, operating, financial or geological risks. The Company's success in its acquisition activities depends on its ability to identify suitable acquisition candidates, acquire them on acceptable terms and integrate their operations successfully with those of the Company. Any acquisitions would be accompanied by risks, such as the difficulty of assimilating the operations and personnel of any acquired businesses; the potential disruption of the Company's ongoing business; the inability of management to maximize the financial and strategic position of the Company through the successful integration of acquired assets and businesses; the maintenance of uniform standards, controls, procedures and policies; the impairment of relationships with employees, customers and contractors as a result of any integration of new management
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personnel; and the potential unknown liabilities associated with acquired assets and businesses. In addition, the Company may need additional capital to finance an acquisition. Debt financing related to any acquisition may expose the Company to increased risk of leverage, while equity financing may cause existing shareholders to suffer dilution. The Company is permitted under the terms of its recently amended bank credit facility to raise additional debt financing provided that it complies with certain covenants including that no default under the credit facility has occurred and is continuing, the terms of such indebtedness are no more onerous to the Company than those under the credit facility and the incurrence of such indebtedness would not result in a material adverse change in respect of the Company or the LaRonde Mine. There can be no assurance that the Company would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.
Restrictions in the Bank Credit Facility
        The Company's recently amended $100 million revolving bank credit facility limits, among other things, the Company's ability to incur additional indebtedness, pay dividends or make payments in respect of its common shares, make investments or loans, transfer the Company's assets, or make expenditures relating to property secured under the credit agreement at that time that is not consistent with the mine plan and operating budget delivered pursuant to the credit facility. Further, the bank credit facility requires the Company to maintain specified financial ratios and meet financial condition covenants. Events beyond the Company's control, including changes in general economic and business conditions, may affect the Company's ability to satisfy these covenants, which could result in a default under the bank credit facility. While there are currently no amounts of principal or interest owing under the bank credit facility, if an event of default under the bank credit facility occurs, the Company would be unable to draw down on the facility, or if amounts were drawn down at the time of the default, the lenders could elect to declare all principal amounts outstanding thereunder at such time, together with accrued interest, to be immediately due and payable and to enforce their security interest over substantially all property relating to the LaRonde Mine and the El Coco property. An event of default under the bank credit facility may also give rise to an event of default under existing and future debt agreements and, in such event, the Company may not have sufficient funds to repay amounts owing under such agreements.
Competition for and Scarcity of Mineral Lands
        Many companies and individuals are engaged in the mining business, including large, established mining companies with substantial capabilities and long earnings records. There is a limited supply of desirable mineral lands available for claim staking, lease or other acquisition in the areas where the Company contemplates conducting exploration activities. The Company may be at a competitive disadvantage in acquiring mining properties, as it must compete with these individuals and companies, many of which have greater financial resources and larger technical staffs than the Company. Accordingly, there can be no assurance that the Company will be able to compete successfully for new mining properties.
Uncertainty of Mineral Reserve and Mineral Resource Estimates
        The figures for mineral reserves and mineral resource presented herein are estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery of gold will be realized. The ore grade actually recovered by the Company may differ from the estimated grades of the mineral reserves and mineral resource. Such figures have been determined based on assumed gold prices and operating costs. The Company has estimated proven and probable mineral reserves based on a $325 per ounce gold price. While gold prices have generally been above $325 per ounce since mid 2002, for the four years prior to that the market price of gold has been, on average, below $325 per ounce. Prolonged declines in the market price of gold may render mineral reserves containing relatively lower grades of gold mineralization uneconomic to exploit and could materially reduce the Company's reserves. Should such reductions occur, the Company could be required to take a material write-down of its investment in mining properties or delay or discontinue production or the development of new projects, resulting in increased net losses and reduced cash flow. Market price fluctuations of gold, as well as increased production costs or reduced recovery rates, may render mineral reserves containing relatively lower grades of mineralization uneconomical to recover and may ultimately result in a restatement of mineral resources. Short-term factors relating to mineral reserves, such as the need for orderly development of ore bodies or the processing of new or different grades, may impair the profitability of a mine in any particular accounting period.
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        Mineral resource estimates for properties that have not commenced production are based, in most instances, on very limited and widely spaced drill hole information, which is not necessarily indicative of conditions between and around the drill holes. Accordingly, such mineral resource estimates may require revision as more drilling information becomes available or as actual production experience is gained.
Mining Risks and Insurance
        The business of gold mining is generally subject to certain types of risks and hazards, including environmental hazards, industrial accidents, unusual or unexpected rock formations, changes in the regulatory environment, cave-ins, rock bursts, rock falls and flooding and gold bullion losses. Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. The Company carries insurance to protect itself against certain risks of mining and processing in amounts that it considers to be adequate but which may not provide adequate coverage in certain unforeseen circumstances. The Company may also become subject to liability for pollution, cave-ins or other hazards against which it cannot insure or against which it may elect not to insure because of high premium costs or other reasons or the Company may become subject to liabilities which exceed policy limits. In such case, the Company may be required to incur significant costs that could have a material adverse effect on its financial performance and results of operations.
Laws and Regulations
        The Company's mining and mineral processing operations and exploration activities are subject to extensive Canadian federal and provincial laws and regulations, and local laws and regulations governing prospecting, development, production, exports, taxes, labour standards, occupational health and safety, waste disposal, toxic substances, environmental protection, mine safety and other matters. Compliance with such laws and regulations increases the costs of planning, designing, drilling, developing, constructing, operating, closing, reclaiming and rehabilitating mines and other facilities. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation or interpretation thereof could have a material adverse impact on the Company, cause a reduction in levels of production and delay or prevent the development of new mining properties.
        In January 2003, the Company received a notice of infraction from the Quebec Ministry of the Environment in connection with a controlled discharge of water of excess toxicity, which was carried out over a three-month period in the summer of 2002. The purpose of the discharge was to establish favourable construction conditions for the increase of tailings pond capacity in the autumn of 2002. No fine was payable in respect of the notice of infraction, however, the notice required production of a report detailing the causes of algae proliferation at the LaRonde Mine, which was delivered in 2003.
        Under mine closure plans originally submitted to the Minister of Natural Resources in Quebec in 1996, the estimated current reclamation costs for the LaRonde Division and the Bousquet property are approximately $17 million and $6 million respectively. These reclamation plans are subject to approval by the Minister of Natural Resources and there can be no assurance that the Minister of Natural Resources will not impose additional reclamation obligations with attendant higher costs. In addition, the Minister of Natural Resources may require that the Company provide financial assurances to support such plans. At December 31, 2003, the Company had a total reclamation provision of $11.7 million, with $5.8 million allocated for the LaRonde Division and $5.9 million allocated for Bousquet.
        Prior to January 1, 2003, reclamation costs were accrued on an undiscounted unit-of-production basis, using proven and probable reserves as the base. On this basis, the Company recorded its annual reclamation provision for the LaRonde Division at approximately $5 per ounce of gold produced. Effective January 1, 2003, the Company adopted the provisions of Financial Accounting Standards Board Statement No. 143 relating to asset retirement obligations, which applies to long-lived assets such as mines. (See Note 6 to the table under the caption "Item 3 Key Information — Selected Financial Information" for an explanation of the new standard.) The application of the new provisions resulted in the Company recording a one-time, net of tax, non-cash charge of $1.7 million on January 1, 2003 reflecting the cumulative effect of adopting this standard.
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Currency Fluctuations
        The Company's operating results and cash flow are significantly affected by changes in the US dollar/Canadian dollar exchange rate. Exchange rate movements can have a significant impact as all of the Company's revenues are earned in US dollars but most of its operating and capital costs are in Canadian dollars. The US dollar/Canadian dollar exchange rate has varied significantly over the last several years. During the period from January 1, 1999 to December 31, 2004, the Noon Buying Rate fluctuated from a high of C$1.6128 to a low of C$1.1775. Historical fluctuations in the US dollar/Canadian dollar exchange rate are not necessarily indicative of future exchange rate fluctuations. Based on the Company's anticipated 2005 after-tax operating results, a 10% change in the average annual US dollar/Canadian dollar exchange rate would affect net income by approximately $0.10 per share. To hedge its foreign exchange risk and minimize the impact of exchange rate movements on operating results and cash flow, the Company has periodically used foreign currency options and forward foreign exchange contracts to purchase Canadian dollars. However, there can be no assurance that the Company's foreign exchange hedging strategies will be successful or that foreign exchange fluctuations will not materially adversely affect the Company's financial performance and results of operations.
Interest Rate Fluctuations
        Fluctuations in interest rates can affect the Company's results of operations and cash flows. The Company's 4.50% convertible subordinated debentures due 2012 are at a fixed rate of interest; however both its bank debt and cash balances are subject to variable interest rates.
Potential Unenforceability of Civil Liabilities and Judgments
        The Company is incorporated under the laws of the Province of Ontario, Canada. All but one of the Company's directors and officers and certain of the experts named in this Form 20-F are residents of Canada. Also, almost all of the Company's assets and the assets of these persons are located outside of the United States. As a result, it may be difficult for shareholders to initiate a lawsuit within the United States against these non-United States residents, or to enforce judgments in the United States against the Company or these persons which are obtained in a United States court. Our Canadian counsel has advised us that a monetary judgment of a U.S. court predicated solely upon the civil liability provisions of U.S. federal securities laws would likely be enforceable in Canada if the U.S. court in which the judgment was obtained had a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes. We cannot assure you that this will be the case. It is less certain that an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such laws.
ITEM 4.    INFORMATION ON THE COMPANY
History and Development of the Company
        The Company is an established Canadian gold producer with mining operations located in northwestern Quebec and exploration and development activities in Canada and the western United States (principally Nevada and Idaho). The Company's operating history includes almost three decades of continuous gold production primarily from underground operations. Since its formation in 1972, the Company has produced over 3.5 million ounces of gold. The Company believes it is currently one of the lowest cash cost producers in the North American gold mining industry. In 2004, the Company produced 271,567 ounces of gold at an average cash cost estimated to have been between $75 and $85 per ounce and, in 2003, the Company produced 236,653 ounces of gold at an average cash cost of $269 per ounce, in each case net of revenues received from the sale of zinc, silver and copper byproducts. For 2005, the Company expects total cash operating costs per ounce of gold produced to be between $135 and $145. These expected increased costs are due to an anticipated decline in byproduct metals prices below those realized in 2004 and a reduction in the contribution of foreign exchange hedging activities. The Company has traditionally sold all of its production at the spot price of gold due to its general policy not to sell forward its future gold production. However, the Company has purchased put options that will allow it to set a floor price of $260 per ounce on a portion of its gold production prior to December 31, 2007. For a definition of terms used in the following discussion, see the section entitled "Mineral Reserve and Mineral Resource" on page 21.
        The Company's principal operating divisions are the LaRonde Division and the Exploration Division. The LaRonde Division consists of the LaRonde Mine and the adjacent El Coco and Terrex properties, each of which
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is 100% owned and operated by the Company. The LaRonde Mine, with its single production shaft (the "Penna Shaft"), currently accounts for all of the Company's gold production. Since the commissioning of the mill in 1988, the LaRonde Division has produced over 2.5 million ounces of gold. In March 2000, the Company completed the Penna Shaft at the LaRonde Mine to a depth of 7,380 feet, which the Company believes makes it the deepest single-lift shaft in the Western Hemisphere. Production was expanded at the LaRonde Mine to 7,000 tons of ore treated per day in October 2002. An extensive surface and underground exploratory drilling program to delineate additional mineral reserve began in 1990 and is continuing. The program successfully outlined several ore zones and a large mineral resource to the east of what was, at the time, the main production shaft. As at December 31, 2003, the LaRonde Division had established proven and probable mineral reserves of approximately 5.0 million ounces of contained gold.
        The Company's strategy is to focus on the continued exploration, development and expansion of its properties in the Abitibi region of Quebec in which the LaRonde Mine is situated, with a view to increasing annual gold production and gold mineral reserve. The Company also plans to pursue opportunities for growth in gold production and gold reserves through the acquisition or development of advanced exploration properties, development properties, producing properties and other mining businesses in the Americas or Europe.
        Expenditures on the expansion of the LaRonde Mine and exploration and development in the surrounding region as at September 30, 2004 and the three preceding fiscal years were $32.0 million, $44.1 million, $62.5 million and $37.6 million, respectively. Expenditures for mine expansion, exploration and development for 2004 are expected to have been $55 million. These estimated 2004 expenditures include $27 million of capital expenditures at the LaRonde Mine, $8 million at the LaRonde II project, $13 million for the exploration and development of the Lapa property, $5 million for the exploration and development of the Goldex property, and $2 million for the exploration and development of the Bousquet and Ellison properties. Budgeted 2005 exploration and capital expenditures of $42.0 million consist of $14.1 million of sustaining capital expenditures at the LaRonde Mine, $12.7 million on projects relating to the LaRonde II project, $12.1 million at the Lapa property, $1.5 million on bulk sample and engineering projects at the Goldex property and $1.6 million on drilling at the Bousquet and Ellison properties. The financing for these expenditures is expected to be from internally generated cash flow from operations and from the Company's existing cash balances. Depending on the success of the exploration programs at this and other properties, the Company may be required to make additional capital expenditures for exploration, development and preproduction.
        In addition, the Company continuously evaluates opportunities to make strategic acquisitions. In the second quarter of 2004, the Company acquired an ownership interest in Riddarhyttan Resources AB ("Riddarhyttan"), representing 13.8% of its outstanding shares. In late December 2004, Riddarhyttan concluded a rights offering for 7.5 million shares pursuant to which the Company raised its ownership level to 14% of Riddarhyttan's outstanding shares. In connection with this acquisition, two representatives of the Company were elected to Riddarhyttan's board of directors. Riddarhyttan is a precious and base metals exploration and development company with a focus on the Nordic region of Europe. Its shares are listed on the Stockholm Stock Exchange under the symbol "RHYT". Riddarhyttan is the 100% owner of the Suurikuusikko gold deposit, located approximately 550 miles north of Helsinki near the town of Kittilä in Finnish Lapland. Riddarhyttan's property position in the Suurikuusikko area consists of 22 contiguous claims (approximately 4,261 acres) with similar Precambrian greenstone belt geology and topography to the Company's land package in the Abitibi region of Quebec. The Company also recently signed a non-binding letter of intent pursuant to which it is conducting due diligence on an exploration property in northern Mexico with a view to purchasing an option to acquire the property. The Company has no other commitments or agreements with respect to any other acquisitions.
        The Company, through its Exploration Division, focuses its exploration activities primarily on the identification of new mineral reserve, mineral resource and development opportunities in the proven producing regions of Canada, with a particular emphasis on northwestern Quebec. The Company currently directly manages exploration on 56 properties in central and eastern Canada and the western United States, including properties acquired from Contact Diamond Corporation (formerly Sudbury Contact Mines Limited) ("Contact Diamond") in September 2004. The Company's Reno, Nevada exploration office, acquired in that transaction, is focused on evaluating exploration opportunities in the western United States and northern Mexico.
        The Company was formed by articles of amalgamation under the laws of the Province of Ontario on June 1, 1972 as a result of the amalgamation of Agnico Mines Limited ("Agnico Mines") and Eagle Gold Mines Limited ("Eagle"). Agnico Mines was incorporated under the laws of the Province of Ontario on January 21, 1953 under
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the name "Cobalt Consolidated Mining Corporation Limited". Eagle was incorporated under the laws of the Province of Ontario on August 14, 1945. The Company's executive and registered office is located at Suite 500, 145 King Street East, Toronto, Ontario, Canada M5C 2Y7; telephone number (416) 947-1212; website: http://www.agnico-eagle.com. The information contained on the website is not part of this Form 20-F.
        On December 19, 1989, Agnico-Eagle acquired the remaining 57% interest in Dumagami Mines Limited not already owned by it as a consequence of the amalgamation of Dumagami Mines Limited with a wholly-owned subsidiary of Agnico-Eagle, to continue as one company under the name Dumagami Mines Inc. ("Dumagami"). On December 29, 1992, Dumagami transferred all of its property and assets, including the LaRonde Mine, to Agnico-Eagle and was subsequently dissolved. On December 8, 1993, the Company acquired the remaining 46.3% interest in Goldex Mines Limited not already owned by it, as a consequence of the amalgamation of Goldex Mines Limited with a wholly-owned subsidiary of the Company, to continue as one company under the name Goldex Mines Limited. On January 1, 1996, the Company amalgamated with two wholly-owned subsidiaries, including Goldex Mines Limited.
        In October 2001, pursuant to a plan of arrangement, the Company amalgamated with an associated corporation, Mentor Exploration and Development Co., Limited ("Mentor"). In connection with the arrangement, the Company issued 369,348 common shares in consideration for the acquisition of all of the issued and outstanding shares of Mentor that it did not already own.
        Effective February 11, 1999, two subsidiaries of the Company, Sudbury Contact Mines, Limited and Silver Century Explorations Ltd. ("Silver Century"), amalgamated pursuant to a court-approved plan of arrangement to form Contact Diamond.
        The Company has an approximate 44.2% interest in Contact Diamond. Contact Diamond is a junior exploration and development company with diamond properties in Ontario, Quebec, Nunavut and the Northwest Territories. Contact Diamond is incorporated under the laws of the Province of Ontario and is listed on the Toronto Stock Exchange.
Business Overview
        The Company believes that it has a number of key operating strengths that provide distinct competitive advantages.
        First, the Company and its predecessors have over three decades of continuous gold production, experience and expertise in metals mining. The Company's operations are located in areas that are supportive of the mining industry. These operations are concentrated in areas among North America's principal gold-producing regions.
        Second, the Company believes that it is one of the lowest total cash operating cost producers in the North American gold mining industry. Although total cash operating cost per ounce of gold was $269 for 2003, this increased level resulted, in part, from the rescheduling of stope mining sequencing required as a result of the rock fall that occurred during the first quarter of 2003. For 2004, the Company's total cash operating cost per ounce of gold is estimated to have been between $75 and $85, due principally to higher gold production, higher net byproduct revenue resulting from increased production, higher byproduct metal prices and the elimination of the production royalty on an area of the mine that is mined out. The Company has achieved significant improvements in these measures through the strength of its byproduct revenue, the economies of scale afforded by its large single shaft mine and its dedication to cost-efficient mining operations. In addition, the Company believes its highly motivated work force contributes significantly to continued operational improvements and to the Company's low cost producer status. For 2005, the Company expects total cash operating cost per ounce of gold produced to be between $135 and $145.
        Third, the Company's existing operations at the LaRonde Division provide a sound economic base for additional mineral reserve and production development at the property. The experience gained through building and operating the LaRonde Mine, along with the LaRonde Mine's extensive infrastructure, are expected to support the development of new projects in the region including the Lapa property, the Goldex property and the development project at LaRonde to access the Company's mineral resource base located outside of the Penna Shaft infrastructure (the "LaRonde II" project).
        Fourth, the Company's senior management team has an average of 16 years of operating and exploration experience in the mining industry. Management's significant experience has been instrumental in the Company's historical growth and provides a solid base upon which to expand the Company's operations. The geological knowledge that management has gained through its years of experience in mining and developing the LaRonde Division is expected to benefit the Company's current expansion program in the region.
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         The Company believes it can benefit not only from the existing infrastructure at its mines, but also from geological knowledge that it has gained in mining and developing its properties. The Company's strategy is to capitalize on its mining expertise to exploit fully the potential of its properties. The Company's goal is to apply the proven operating principles of the LaRonde Division to each of its existing and future properties.
        The Company continues to focus its resources and efforts on the exploration and development of its properties in the Abitibi region of Quebec, including LaRonde II, the Lapa property, the Goldex property and the LaRonde Mine with a view to increasing annual gold production and gold mineral reserve. The Company is evaluating these properties as potential growth opportunities in the Abitibi region. In 2003, although LaRonde's proven and probable gold mineral reserves were essentially unchanged on a tonnage basis, on the basis of contained gold ounces the Company added approximately 1.0 million ounces of gold to proven and probable mineral reserve, including replacement of 252,000 ounces of gold mined (before mill recoveries and smelter charges). As a result, the LaRonde Division's current proven and probable mineral reserve is estimated to contain approximately 5.0 million ounces of gold, 68.2 million ounces of silver, 2.2 billion pounds of zinc and almost 271.0 million pounds of copper.
        The underground workings at the Penna Shaft provide a base from which the Company conducted its drilling program of 161,000 feet in 2004 and will conduct an estimated 174,000 feet of drilling in 2005. For 2004, capital expenditures at the LaRonde Mine together with expenditures on regional projects and other exploration and development projects are estimated to have been $55 million, of which $44.1 million had been spent as at September 30, 2004. These 2004 estimates include $27 million of capital expenditures at the LaRonde Mine, $8 million at the LaRonde II project, $13 million for the exploration and development of the Lapa property, $5 million for the exploration and development of the Goldex property and $2 million for the exploration and development of the Bousquet and Ellison properties. Expenditures at LaRonde II in 2004 are estimated to have been $8 million. The regional development team continues to evaluate the LaRonde II, Lapa and Goldex development project. The Company plans to continue to invest in sustaining and project capital expenditures at the LaRonde Mine together with regional projects and other exploration and development projects. Budgeted 2005 exploration and capital expenditures of $42.0 million consist of $14.1 million at the LaRonde Mine, $12.7 million at the LaRonde II project, $12.1 million at the Lapa property, $1.5 million at the Goldex property and $1.6 million at the Bousquet and Ellison properties. There can be no assurance that the Company will not revise its anticipated capital expenditure program.
        In the first quarter of 2003, a rock fall of an estimated 30,000 tons occurred in two production stopes above Level 215 at 7,050 feet below surface during routine operations at the LaRonde Mine. The rock fall did not cause any injuries to employees, damage to equipment or loss of mineral reserves. However, the incident limited the Company's ability to extract ore from the higher grade areas of the mine. Remedial steps were taken, the fallen ore was extracted and the void was backfilled with cemented rock fill. Recovery studies also established that the mining width on four blocks needed to be narrower to establish more quickly the pyramid sequence. This narrowing of stope sizes was a contributing factor to the lower than budget gold production for 2003. In the third quarter of 2003, production drilling challenges further limited the Company's ability to mine higher grade mining blocks in the gold-copper mining areas in the lower part of the mine. As a result, mining activity was concentrated in the zinc-silver rich zones in the upper part of Zone 20 North rather than the higher grade gold stopes in Zone 20 North at depth. This re-sequencing of production resulted in lower than anticipated gold production in 2003 and pushed into future years gold production initially scheduled for 2003.
        The Company's growth strategy has been to pursue the expansion of its development base through the acquisition of additional properties in the Americas and Europe. Historically, the Company's producing properties have resulted from a combination of investments in early-stage exploration companies and primary exploration activities. By investing in early-stage exploration companies, the Company has been able to acquire control of exploration properties at favourable prices. The Company's approach to property acquisition has evolved to include joint ventures and partnerships and the acquisition of producing properties and, more recently, has evolved to include consideration of properties outside of Canada and the United States. The Company is currently considering opportunities to acquire development and producing properties in the Americas and Europe.
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        In the first quarter of 2004, two accidents claimed the lives of an employee and a contract miner. The Commission de la santé et de la sécurité du travail has completed an investigation into these accidents, but has not yet announced a decision as to if it intends to proceed further in respect of the matter. Also, in January 2005, an accident claimed the life of an employee. Other than the investigation discussed above, no regulatory or other action has been initiated against the Company in connection with these industrial accidents. The Company's LaRonde Mine remains one of the safest mines in Quebec with a lower accident frequency index than the provincial mining industry average. Nevertheless, the Company and all of its employees continue with a focused effort to improve workplace safety.
Mining Legislation and Regulation
        The mining industry in Canada operates under both federal and provincial legislation governing the exploration, development, operation and decommissioning of mines and mineral processing facilities. Such legislation relates to the method of acquisition and ownership of mining rights, labour, occupational or worker health and safety standards, royalties, mining, exports, reclamation, closure and rehabilitation of mines, and other matters.
        The mining industry in Canada is also subject to extensive laws and regulations at both the federal and provincial levels concerning the protection of the environment. The primary federal and provincial regulatory authorities with jurisdiction over the Company's mining operations in respect of environmental matters are the Department of Fisheries and Oceans, the Quebec Ministry of the Environment and the Quebec Ministry of Natural Resources. The construction, development and operation of a mine, mill or refinery requires compliance with applicable environmental laws and regulations and/or review processes including the obtaining of land use permits, water permits, air emissions certifications, hazardous substances management and similar authorizations from various governmental agencies. Environmental laws and regulations impose high standards on the mining industry to reduce or eliminate the effects of waste generated by mining and processing operations and subsequently deposited on the ground or emitted into the air or water. Laws and regulations regarding the decommissioning, reclamation and rehabilitation of mines may require approval of reclamation plans, the provision of financial assurance and the long-term management of former mines.
        In Quebec, mining rights are governed by the Mining Act (Quebec). In 1966, the mining concession system set out for Crown lands containing mineralized zones by the Mining Act (Quebec) was replaced by a system of claims and mining leases. A claim entitles its holder to explore for minerals on the subject land. It remains in force for a term of two years from the date it is registered and may be renewed indefinitely subject to continued exploration works in relation thereto. A mining lease entitles its holder to mine and remove valuable mineral substances from the subject land. Leases are granted initially for a term of 20 years and are renewable up to three times, each for a duration of 10 years.
Organizational Structure
        The Company's only significant associate is Contact Diamond (formerly Sudbury Contact Mines Limited), a public company listed on the TSX under the symbol "CO". The Company has an approximate 44.2% interest in Contact Diamond. Contact Diamond is an exploration and development company with diamond properties in Ontario, Quebec, Nunavut and the Northwest Territories. Contact Diamond is a corporation incorporated under the laws of the Province of Ontario. Historically and until August 31, 2003 Contact Diamond had been a subsidiary of the Company. However in 2003, through a series of equity financings, Contact Diamond became more financially independent and the Company's ownership was diluted to less than 50%. Accordingly, Contact Diamond is no longer a subsidiary of the Company and the Company no longer consolidates Contact Diamond's operations with its own. The Company now uses the equity method to account for its interest in Contact Diamond. Each member of Contact Diamond's management team (other than Matthew Manson, its recently appointed President and Chief Operating Officer) is also a member of the management team of the Company, two of its directors are also directors of the Company (including one director of the Company who is also an officer of the Company), and two of its directors are also officers of the Company. The Company does not have any significant subsidiaries.
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Property, Plant and Equipment
LaRonde Division Property
        The Company's LaRonde Division consists of the LaRonde property, currently the Company's only material property, and the adjacent El Coco and Terrex properties (collectively the "LaRonde Mine"), each of which is 100% owned and operated by the Company. The LaRonde Mine is situated approximately 35 miles west of the City of Val d'Or in northwestern Quebec (approximately 400 miles northwest of Montreal, Canada) in the municipalities of Preissac and Cadillac. The LaRonde Mine can be accessed from either Val d'Or or Rouyn- Noranda, which is approximately 35 miles west of the LaRonde Mine, via Quebec provincial highway No. 117. The LaRonde Mine is situated approximately 1.2 miles north of highway No. 117 on Quebec regional highway No. 395. The Company has access to the Canadian National Railway at Cadillac, Quebec, roughly four miles from the LaRonde Mine.
Location Map of Agnico-Eagle LaRonde Division

        The LaRonde Mine is located in the Abitibi region of northwestern Quebec, a region characterized by its availability of experienced mining personnel. The elevation is 1,106 feet above sea level. All of the LaRonde Mine's power requirements are supplied by Hydro-Quebec through connections to its main power transmission grid. Water used in the LaRonde Mine's operations is sourced from Lac Preissac and is transported approximately 2.5 miles to the mine site through a surface pipeline. The climate of the region is continental and the average annual rainfall is 25 inches and the average annual snowfall is 125 inches. The average monthly temperatures range from a minimum of -23 degrees Celsius in January to a maximum of 23 degrees Celsius in July. Under normal circumstances, mining operations are conducted year round without interruption due to weather conditions. However, in 2002 high underground temperatures due to extreme summer heat caused delay in development activity in lower portions of the mine.
        The LaRonde Mine operates under mining leases obtained from the Quebec Ministry of Natural Resources and under certificates of approval granted by the Quebec Ministry of the Environment. The LaRonde property consists of 35 contiguous mining claims and two provincial mining leases and covers in total approximately 2,785
14

acres. The El Coco property consists of 22 contiguous mining claims and a portion of one of the LaRonde provincial mining leases and covers in total approximately 888 acres. The Terrex property consists of 20 mining claims that cover in total approximately 1,009 acres. In Quebec, in order to retain title to mining claims, in addition to paying a small bi-annual rental fee, exploration work (or an equivalent value cash payment) has to be completed in advance (either on the claim or on adjacent claims) and filed with the Quebec Ministry of Natural Resources. The amount of exploration work (and bi-annual rental fee) required bi-annually ranges from $500 to $2,500 per claim (the rate is fixed by Quebec Government regulations). The mining leases on the LaRonde property and on the LaRonde and El Coco properties expire in 2008 and 2021, respectively, and are automatically renewable for three further ten-year terms on payment of a small fee.
        The LaRonde Mine includes underground operations at the LaRonde and El Coco properties that can both be accessed from the Penna Shaft, a mill, treatment plant, secondary crusher building and related facilities. The El Coco property was acquired from Barrick Gold Corporation ("Barrick") in June 1999 and is subject to a 50% net profits interest in future production from approximately 500 meters (1,640 feet) east of the LaRonde property boundary. The remaining 1,500 meters (4,921 feet) is subject to a 4% net smelter return royalty. This area of the property is now substantially mined out and therefore the Company did not pay royalties in 2004 and does not expect to pay royalties in 2005. In 2003, exploration work started to extend outside of the LaRonde property on to the Terrex property where a down plunge extension of the 20 North gold zone was discovered. The Terrex property is subject to a 5% net profits royalty to Delfer Gold Mines Inc., a 1% of the net smelter return royalty to Breakwater Resources Ltd. and a 2% of the net smelter return royalty to Barrick. In addition, the Company owns 100% of the Sphinx property immediately to the east of the El Coco property.
Mining and Milling Facilities
        The LaRonde Mine was originally developed utilizing a 3,961 foot shaft (Shaft #1) and an underground ramp access system. The ramp access system is available down to the 25th Level of Shaft #1 and then continues down to Level 152 at the Penna Shaft. The mineral reserve accessible from Shaft #1 was depleted in September 2000. Shaft #1 is currently being used as a second escape way and provides services for the Penna Shaft (i.e. ventilation, compressed air, water). A second production shaft (Shaft #2), located 4,000 feet to the east of Shaft #1, was completed in 1994 down to a depth of 1,722 feet and was used to mine Zones #6 and #7. Both ore zones were depleted in March 2000 and the workings were allowed to flood up to the 6th Level. A third shaft (Penna Shaft, formerly called Shaft #3) located approximately 1,640 feet to the east of Shaft #1, was completed down to a depth of 7,380 feet in March 2000. The Penna Shaft is used to mine Zones 20 North, 20 South, 7 and 6.
        Four mining methods have historically been used at the LaRonde Mine: open pit for the two surface deposits, sublevel retreat, longitudinal retreat with cemented backfill, and transverse open stoping with both cemented and unconsolidated backfill. The primary source of ore at the LaRonde Mine continues to be from underground mining methods. During 2003, two methods were used: longitudinal retreat with cemented backfill and transverse open stoping with both cemented and unconsolidated backfill. In the underground mine, sublevels are driven at 100 foot and 130 foot intervals, depending on the depth. Stopes are undercut in 45-foot panels. In the longitudinal method, panels are mined in 45-foot sections and backfilled with 100% cemented rock fill or paste fill. In the transverse open stoping method, 50% of the ore is mined in the first pass and filled with cemented rock fill or paste fill from the paste backfill plant completed two years ago located on the surface at the milling facility. On the second pass, the remainder of the ore is mined and filled with unconsolidated waste rock fill or paste fill.
        Currently, water is treated at various facilities at the LaRonde Division. Prior to the water entering the tailings pond system, cyanide is removed at a cyanide destruction facility using a sulphur dioxide (Inco) process. A secondary treatment plant located between the #1 and #2 polishing ponds uses a peroxysilica process to complete the cyanide destruction process. In addition, water with higher than permissible acidity is treated by lime in the mill complex prior to being released to the environment. In the first quarter of 2004, in response to revised Federal mining effluent regulations, the Company completed and commissioned a new water treatment plant that will reduce tailing effluent toxicity immediately prior to discharge. The plant uses a biological treatment process. Prior to the completion of the water treatment plant, the Company retained excess water in its tailing pond complex. At the end of March 2004 treated water released from the plant successfully passed a
15

toxicity test. The flow rate is steadily being increased as the biomass continues to build up. In 2004, high water levels at the tailings pond at LaRonde caused by above average rainfall and overcast conditions were mitigated by a discharge of slightly toxic water into the environment that was permitted by the Quebec Ministere de l'Environnement. Also, the Company installed a coffer dam in the tailings pond to provide extra capacity. In 2004, the Company initiated construction on a second phase expansion of the water treatment plant and to further increase treatment capacity. Estimated expenditures on this second phase expansion are $4.2 million and construction is expected to be completed in the first quarter of 2005.
        Tailings are stored in tailings ponds covering an area of approximately 293 acres and waste rock is stored in two waste rock piles with a combined volume of approximately 50.4 million cubic feet. The Company holds mining claims to the northeast, to the east and to the southeast of the tailings ponds that would allow expansion of the tailings ponds and the establishment of additional waste disposal areas.
        Surface facilities at the LaRonde Mine include a 7,000 tons of ore treated per day milling complex, which has been expanded three times from the original 2,000 tons of ore treated per day rate. The first expansion to 3,600 tons per day was completed at the beginning of 2000 and the second expansion to 5,000 tons per day was completed at the end of the third quarter of 2001. The expansion to 7,000 tons per day was completed in October 2002. This expansion consisted of additions to the grinding and precious metals circuits and modifications to the copper and zinc flotation circuits. A new ore handling system was completed at the end of 1999. It included a truck dump linked by a new conveyor gallery to a 5,000-ton coarse ore bin. The coarse ore bin feeds a semi-autogenous (SAG) mill that was installed at the end of 1999. Ore from the Penna Shaft is transported to the ore handling facility by 35-ton trucks.
        The milling complex consists of a grinding, gravity, copper flotation, zinc flotation, and a precious metals recovery circuit and refinery. A copper concentrate containing approximately 75% of the gold and by product silver and copper is recovered. The zinc flotation circuit produces a zinc concentrate containing approximately 5% of the gold. The remaining 20% is recovered partly by the gravity circuit (5%) and the precious metals circuit including a new refinery using the Merrill Crowe process (15%) and shipped as doré bars. Both the zinc and copper flotation circuits consist of a series of column and mechanical cells that sequentially increase the zinc concentrate and copper concentrate quality. In 2003, zinc recoveries averaged 78.2% with peak monthly recovery rates exceeding 82.5% on a daily basis (83.1% on a monthly basis). Zinc concentrate quality has averaged over 53.28% zinc. Copper recoveries have averaged over 80.3%, however, with peak monthly recovery rates of 86.2% on a monthly basis. Copper concentrate quality averaged 17.1% for the year. In the first three quarters of 2004, zinc recoveries averaged 84.0% with high and low monthly recovery rates approximately 85.1% and 80.7%, respectively, and copper recoveries averaged 78.8%, with high and low monthly recovery rates of 83.1% and 72.3%, respectively. Copper concentrate quality averaged 14.7% for the first three quarters of 2004.
        Since commercial production began in 1988, gold recoveries have averaged over 92%. During 2003 and the first three quarters of 2004, gold recoveries averaged over 91.4% and 91.9%, respectively. In 2003, silver recoveries averaged 82.6%. During 2003 and the first three quarters of 2004, the mill processed approximately 2.4 million and 2.2 million tons of ore, respectively, averaging approximately 6,700 and 8,000 tons of ore treated per day, respectively, and operating over 89.6% and 93.2% of available time in such periods, respectively.
Development
        In the latter half of 2003 and in 2004, development was focused on preparing mining blocks well in advance of their planned production to mitigate the impact of any unforeseen development delays on production. Development also focused on completing ramp development between Level 194 and Level 215. This ramp development was completed in the third quarter of 2003 bringing about additional mining flexibility as mining equipment is no longer captive on mining horizons between these levels. In 2004, the Company initiated ramp development construction between Level 215, the lowest producing level of the LaRonde Mine, and Level 236 in order to establish a new mining horizon for production on this lower level. The Company expects that the first mining blocks on Level 236 should be ready for mining by the end of 2005. Also construction will continue on a ramp between the upper and lower mining horizons of the Penna Shaft that will provide the Company with continuous ramp access from the surface to Level 236. The Company expects to complete this ramp development program in mid 2005.
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        Development along Level 215 continued in 2003 as the Level 215 drift continued toward the western property boundary. This drift is a base for our continued drilling on Zone 20 North at depth. For 2004, development crews focused on continuing the Level 215 drift to the west as drilling from this level is pivotal to the Company's ongoing testing of Zone 20 North at depth and to the west. In 2005, development and exploration activity will continue from the Level 215 Exploration Drift. At September 30, 2004, development activity had reached 200 feet to the west of the boundary between the LaRonde and Bousquet properties. The exploration drift will be extended an additional 2,000 feet by mid 2005. The focus of the development activity will be to define the western limit of Zone 20 North at depth and to acquire additional information on the high grade polymetallic zone of Zone 20 North at depth and to the west.
Geology and Diamond Drilling
        Geologically, the LaRonde Mine property is located near the southern boundary of the Archean-age (2.7 billion years old) Abitibi Sub-Province and the Pontiac Sub-Province within the Superior Province of the Canadian Shield. The most important regional structure is the Cadillac-Larder Lake fault zone marking the contact between the Abitibi and the Pontiac sub-provinces, located approximately 1.2 miles to the south of the LaRonde property.
        The geology that underlies the LaRonde Mine consists of three east-west trending, steeply south dipping and generally southward facing regional lithological units (geological Groups). The units are, from north to south: (i) 1,200 feet of the Kewagama Group which is made up of thick band of interbedded wacke; (ii) 5,000 feet of the Blake River Group, a volcanic assemblage which hosts all the known economic mineralisation on the property; and (iii) 1,800 feet of the Cadillac Group, made up of thick band of wacke interbedded with pelitic schist and minor iron formation.
        Zones of strong sericite and chlorite alterations, which enclose massive to disseminated sulphide mineralization (in which gold, silver, copper and zinc are mined at the LaRonde Mine) follow steeply dipping, east-west trending, anastomosing shear zone structures within the Blake River Group volcanic units from east to west across the property. These shear zones comprise a larger structure, the Doyon-Dumagami Structural Zone, which hosts several important gold occurrences (including the Doyon gold mine and the former Bousquet mines) and has been traced for over 6 miles within the Blake River Group from the LaRonde Division property westward to the Mouska gold mine.
        The gold bearing zones at the LaRonde Division are lens-shaped aggregates of disseminated, stringer through to massive, aggregates of coarse pyrite with a copper, zinc and silver content. Ten zones that vary in size from 50,000 to 40,000,000 tons have been identified, of which eight are believed to be economic. Gold content is not proportional to the total sulphide content but does increase with copper content. Gold values are also enhanced where closely spaced north-south fractures cut the pyrite lenses.
        These historical relationships are maintained at the Penna Shaft zones. The zinc-silver (i.e. Zone 20 North) mineralization, which is common in the upper Penna Shaft area and contains lower gold values, grades into gold-copper mineralization at depth. North-south fractures have been noted in the Penna Shaft underground development along with the associated gold value enhancement.
        The copper mineral that is present at the Penna Shaft is chalcopyrite while the predominant zinc mineral is sphalerite.
        Compared to the mineral reserve estimate as of December 31, 2002, on a tonnage basis, the LaRonde Division's combined proven and probable mineral reserve decreased 0.2% to 41.6 million tons in 2003. The 41.6 million tons of mineral reserves includes the replacement of 2.4 million tons that were mined in 2003. The Company's ability to sustain its level of proven and probable mineral reserve was primarily due to continued successful exploration results at depth.
        In 2003, drilling targeted continued definition of Zone 20 North, delineation and definition drilling of Zone 7, deep exploration testing the extension of Zone 20 North at depth and to the west. The Zone 7 drilling program was largely completed in 2003 with the first production mining block from Zone 7 being mined in January 2004. The testing of Zone 20 North at depth and to the west continued into 2004 as the property boundary constraints were removed with the Company's purchase of the Bousquet property and the Terrex
17

property. In 2004, the focus of the exploration program was to continue the conversion of mineral resource to mineral reserve, to complete the definition of Zone 20 North at depth, to confirm potential higher grade core at depth, and to test for the extension of Zone 20 South at depth and to the west. The results of the exploration program will be incorporated into the deep mining feasibility study that the Company expects to complete by mid 2005. A summary of the diamond drilling completed on the LaRonde Mine property is set out below:

 	 	Number of Holes Drilled
	 	Feet Drilled
	
LaRonde Target for Diamond Drilling
					
	 	2003
	 	2004
	 	2003
	 	2004
	
Production Stope Delineation	 	218	 	180	 	43,285	 	35,880	
Definition	 	84	 	54	 	50,479	 	24,852	
Deep Exploration (Zone 20 North)	 	41	 	41	 	69,171	 	98,749	
 	 		 		 		 		
TOTAL	 	343	 	275	 	162,935	 	159,481	
 	 		 		 		 		
        The combined cost of the diamond drilling at the LaRonde Mine was approximately $5.0 million in 2003 (including $0.5 million in definition drilling expenses charged to operating costs at the LaRonde Mine and also the cost of the Level 215 exploration drift and services) and is estimated to have been $2.0 million in 2004. The total cost of exploration incurred since production started at the LaRonde Mine in 1988 is estimated to be over C$53.9 million. Expenditures on exploration and studies for LaRonde II (Zone 20 North at depth) are estimated to have been $3.8 million in 2004 and is expected to be $12.7 million in 2005. In the first three quarters of 2004, the Company spent $3.0 million on exploration and studies for LaRonde II.
        Zone 20 North has developed into what the Company believes is one of the largest gold bearing massive sulphide mineralized zones known in the world and one of the largest mineralized zones known in the Abitibi region of Ontario and Quebec. The following tables summarize Zone 20 North's contribution to the LaRonde Mine's mineral reserve:

 	 	Proven and Probable Mineral Reserves
	
Total LaRonde Property	 	41,602,000 tons	

Zone 20 North	
 	
39,208,000 tons	

 	
Measured and Indicated Mineral Resources
	
Total LaRonde Property	 	3,716,000 tons	

Zone 20 North	
 	
2,468,000 tons	

 	
Inferred Mineral Resource
	
Total LaRonde Property	 	15,294,000 tons	

Zone 20 North	
 	
14,189,000 tons	
         Zone 20 North initially occurs at a depth of 2,700 feet below surface and has been traced down to a depth of 9,900 feet below surface. With increased access on the lower levels of the mine (i.e., Levels 170, 194, 212, 215 and 220), the transformation from a "zinc/silver" ore body to a "gold/copper" deposit continued during 2003 and 2004. Most of the definition drilling was conducted from Levels 194 and 215. In 2003 and 2004, exploration drilling was also conducted from Level 220, the lowest level of the Penna Shaft.
        Zone 20 North can be divided into an upper zinc/silver-enriched zone and a lower gold/copper-enriched zone. The zinc zone has been traced over a vertical distance of 2,600 feet and a horizontal distance of 1,900 feet, with thicknesses approaching 125 feet. The gold zone has been traced over a vertical distance of over 4,400 feet and a horizontal distance of 2,000 feet, with thicknesses varying from 35 feet to 100 feet. The zinc zone consists of massive zinc/silver mineralization containing 50% to 90% massive pyrite and 10% to 50% massive light brown sphalerite. The gold zone mineralization consists of 30% to 70% finely disseminated to massive pyrite containing 1% to 10% chalcopyrite veinlets, minor disseminated sphalerite and rare specks of visible gold. Gold grades are generally related to the chalcopyrite or copper content. This is the same historical relationship noted at Shaft #1's Main Zone. At depth, the massive sulphide lens becomes richer in gold and copper. During 2003,
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2.1 million tons of ore grading 0.09 ounces of gold per ton, 2.44 ounces of silver per ton, 0.41% copper and 4.06% zinc were mined from Zone 20 North. In the first three quarters of 2004, 2.1 million tons of ore grading 0.10 ounces of gold per ton, 2.62 ounces of silver per ton, 0.55% copper and 4.31% zinc were mined from Zone 20 North.
        Drilling results in 2003 continued to delineate and increase the size of the zone while demonstrating the transformation from a zinc/silver ore body to a gold deposit at depth. One of the most significant results of the year was obtained from drill hole 3215-68A. The drill hole intersected the following values:

 	 	 	 	Interval (ft)
	 	 	 	 	 	 	 	 	
Drill Hole
	 	True
Thickness (ft)
			 	Gold (oz/ton)
Cut (1.5 oz)
	 	 	 	 	 	 	
			 	From
	 	To
			 	Silver (oz/ton)
	 	Copper (%)
	 	Zinc (%)
	
3215-68A (North)	 	45.9	 	4,160.0	 	4,245.0	 	0.19	 	2.21	 	0.61	 	1.87	
        The result is significant because of the reoccurrence of the massive sulphide bands with locally up to 15% chalcopyrite mineralization and the reoccurrence of zinc values. The value was located 4,352 feet to the west of the Penna Shaft, on the recently acquired Terrex property, representing the most westerly drill hole completed on Zone 20 North at depth.
        The 2003 development and drilling results have indicated the following:
•
Existence of a higher grade gold core at depth.

•
Existence of multiple lenses at depth that are open for further exploration.

•
Zone 20 North is open for further expansion at depth and more importantly on the recently acquired Bousquet and Terrex properties to the west and south.

•
The drilling results continue to have major geologic implications for further exploration along the Cadillac Belt.
        In the first nine months of 2004, two additional drill holes were completed which tested the Zone 20 North's polymetallic zone at depth. The results are summarized below:

 	 	 	 	Interval (ft)
	 	 	 	 	 	 	 	 	
Drill Hole
	 	True
Thickness (ft)
			 	Gold (oz/ton)
Cut (1.5 oz)
	 	 	 	 	 	 	
			 	From
	 	To
			 	Silver (oz/ton)
	 	Copper (%)
	 	Zinc (%)
	
3215-85D	 	12.1	 	3,784.1	 	3,800.2	 	0.26	 	1.95	 	0.37	 	9.66	
Uncut	 	12.1	 	3,784.1	 	3,800.2	 	0.59	 	1.95	 	0.37	 	9.66	
3215-95	 	40.7	 	3,103.6	 	3,152.2	 	0.22	 	1.60	 	0.52	 	6.26	
Uncut	 	40.7	 	3,103.6	 	3,152.2	 	0.26	 	1.60	 	0.52	 	6.26	
        These results further confirm the existence of a higher grade polymetallic zone at depth. The most significant result was obtained in drill hole 3215-95, which is the third hole to confirm the existence of a higher grade polymetallic zone at depth. The intercept, located at a depth of 9,339 feet and approximately 3,700 feet to the west of the Penna Shaft, straddles the boundary of the LaRonde and Terrex properties. The intersection consisted of 30% to 90% massive pyrite with occurrences of sphalerite and chalcopyrite hosted by a siliceous matrix. Visible gold was noted in a quartz vein. The vein graded 2.55 ounces of gold (uncut) over an interval of 2.1 feet. With the most recent results, the polymetallic zone has been traced over a length of approximately 1,500 feet and a vertical height of 500 feet. These results will be used in the preparation of the Company's deep mining feasibility study that is expected to be completed in mid 2005.
        Agnico-Eagle currently controls almost 20 miles along this belt both east and west of the LaRonde Mine, much of which remains unexplored. Access to a portion of this property holding provided by the LaRonde Mine's underground infrastructure will facilitate further exploration.
        Historically, increased drill hole density has improved initial mineral reserve and mineral resource estimates based on widely spaced drill holes usually drilled from the shaft stations. Ultimately, development within the ore zones has confirmed or upgraded the original estimates.
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         Zone 20 South is located approximately 400 feet south of Zone 20 North. It consists of at least two known disseminated to massive sulphide gold/copper/zinc-bearing lenses made up of 80% to 90% pyrite, 5% to 10% sphalerite and 1% to 3% chalcopyrite. The Zone 20 South horizon has been traced over a vertical distance of 5,300 feet and a horizontal distance of 400 feet, with a mineralized thickness varying from 10 feet to 40 feet. The El Coco property contains the eastern extension of Zone 20 South. The current mineral reserve position on Zone 20 South on the LaRonde property is 189,600 ounces and on the El Coco property is 3,900 ounces. In 2003, approximately 114,100 tons grading 0.14 ounces of gold per ton were mined from Zone 20 South on the LaRonde property and over 178,800 tons grading 0.17 ounces of gold per ton were mined from Zone 20 South on the El Coco property. In the first three quarters of 2004, approximately 36,100 tons grading 0.14 ounces of gold per ton were mined from Zone 20 South on the LaRonde property and over 22,800 tons grading 0.20 ounces of gold per ton were mined from Zone 20 South on the El Coco property. As at December 31, 2003, the reserves on the El Coco property were substantially depleted.
        Reserves in Zone 20 South in the upper Penna Shaft area are depleting rapidly and have been substantially depleted on the El Coco property. The bulk of the current reserves (almost 193,500 ounces of gold) are located in the lower mine area. Mineralization of Zone 20 South in this lower area of the Penna Shaft appears to be very similar to what was initially encountered in Zone 20 South near Level 146 where the mineralization is narrow, high-grade but more difficult to define. Additional high-grade gold mineralization at depth could have a significant impact on the long-term mine plan. High grade mineralization just above Level 215 has not yet been factored into the long-term mine plan.
        The significance of Zone 20 South production can be summarized as follows:
•
Zone 20 South is characterized by higher-grade mineralization frequently accompanied by coarse visible gold.

•
Reserves on the El Coco property were substantially depleted as at December 31, 2003 and production since then has come from royalty-free areas of Zone 20 South lens production.

•
Unlike the typical LaRonde massive sulphide model, higher gold grades are frequently accompanied by higher-grade silver/zinc mineralization. In the LaRonde geological model, higher-grade gold mineralization is normally accompanied by corresponding higher copper values.

•
Mineralization is continuous down to Level 154 (5,050 feet below surface). Economic mineralization reoccurs at the Level 170 horizon (5,600 feet below surface) and is open at depth. Mineralization has been traced to a depth of 7,800 feet.

•
Zone 20 South will require significantly more delineation drilling. Zone 20 South will be drilled from the Level 215 exploration drift, resulting in shorter drill holes and significantly tighter drill spacing.
        In the first three quarters of 2004, 14 drill holes were completed in Zone 20 South below Level 215. The results were highly erratic and generally poor. While additional drilling will be conducted in 2005, the current results do not justify an economic evaluation.
        The 2004 drilling program continued testing Zone 20 North at depth and to the west and will continue upper and lower mine delineation drilling. In addition to drilling conducted from the LaRonde Mine infrastructure, drilling was also conducted in 2004 using the underground infrastructure available from the Company's recently acquired Bousquet property. For 2004, three main areas of drilling were conducted including testing potential extensions of mineralization at depth on the Ellison property from the 9th Level and drilling from bottom of the Bousquet Shaft to probe the results at depth encountered in Drill Hole 3215-68A, intersected from LaRonde's Level 215 exploration drift.
Capital Projects and Expansion
        Installation of a crushing plant and conveyor system at 7,200 feet below surface was completed in the second quarter of 2003. In addition, the paste backfill distribution network in the lower areas of the mine was completed in the fourth quarter of 2003. The Company also completed the extension of the exhaust system to Level 215 and installed additional cooling systems at depth during the second quarter of 2003.
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        In 2004, the Company commissioned a water treatment plant that reduces tailing effluent toxicity immediately prior to discharge. The Company has initiated construction on a second phase expansion of the water treatment plant to further increase treatment capacity. In 2004, the Company initiated ramp development between Level 215 and Level 236. The Company expects to complete this development and ramp construction between the upper and lower mining horizons at the Penna Shaft in 2005.
        The regional development team will continue to evaluate the development project at LaRonde II, the Company's mineral resource base located outside of the Penna Shaft infrastructure. In 2004, the Company continued the deep drilling program from the Level 215 drift and the bottom of the Bousquet Shaft to incorporate those results into a feasibility study which is expected to be completed in mid 2005. In connection with the preparation of this feasibility study, the development team is also refining studies of the technical issues associated with deep mining.
        The Company initially planned capital expenditures of $31.4 million in 2004, but revised that amount to $55 million, with the increase primarily due to the commencement of underground programs at Lapa and Goldex projects (see "Lapa Project" and "Goldex Project"). Budgeted 2005 exploration and capital expenditures of $42 million consist of $14.1 million of sustaining capital expenditures at the LaRonde Mine, $12.7 million on projects relating to LaRonde II, $12.1 million on the Lapa property, $1.5 million on the bulk sample and engineering projects at the Goldex property and $1.6 million on drilling at the Bousquet and Ellison properties. During 2005, the Company plans exploration expenditures on grassroots exploration projects of approximately $4.8 million.
Mineral Reserve and Mineral Resource
        The information set forth below with respect to the mineral reserves at the LaRonde Division, Bousquet, Ellison, Goldex and Lapa properties has been prepared by the following qualified people in accordance with the Canadian Securities Administrators' National Instrument 43-101 ("National Instrument 43-101"):

Property
	 	Qualified person responsible for mineral reserve estimates
	
LaRonde Division	 	Guy Gosselin, P.Eng., P.Geo., Chief Geologist, LaRonde Division	
Bousquet and Ellison	 	Normand Bedard, P.Geo., Senior Geologist, Regional Project Division	
Lapa and Goldex	 	Marc Legault, P.Eng., Manager, Project Evaluations	
        The qualified person responsible for the LaRonde II, Lapa and Goldex preliminary feasibility studies is Rosaire Emond, P.Eng., Senior Mining Engineer, Regional Project Division.
        The Company's Manager, Project Evaluations, Marc H. Legault, P.Eng., a "qualified person" under National Instrument 43-101, has supervised the preparation of and verified the information that forms the basis for the scientific and technical information in this Form 20-F.
        The criteria set forth in National Instrument 43-101 are similar to the reserve definitions and guidelines for classification of mineral resource used by the United States Securities and Exchange Commission's Industry Guide No. 7. However, the definitions in National Instrument 43-101 differ in certain respects from the definitions set forth in the United States Securities and Exchange Commission's Industry Guide No. 7 concerning mining operations. The Company's mineral reserve estimate was derived from internally generated data or audited reports.
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 Cautionary Note to Investors concerning estimates of Measured and Indicated Resources
        This section uses the terms "measured resources" and "indicated resources." We advise investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.
Cautionary Note to Investors concerning estimates of Inferred Resources
        This section uses the term "inferred resources." We advise investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases . Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.
        A "Mineral Reserve" is the economically mineable part of a measured or indicated resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allows for losses that may occur when the material is mined.
        A "Proven Mineral Reserve" is the economically mineable part of a measured resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit.
        A "Probable Mineral Reserve" is the economically mineable part of an indicated mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.
        A "Mineral Resource" is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.
        A "Measured Mineral Resource" is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
        An "Indicated Mineral Resource" is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
        A "Preliminary Feasibility Study" means a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating,
22

economic factors and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.
        Canadian Securities Administrators' National Instrument 43-101 requires mining companies to disclose reserves and resources using the subcategories of "proven" reserves, "probable" reserves, "measured" resources, "indicated" resources and "inferred" resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
        "Cut-off Grade" means (a) in respect of mineral resources, the lowest grade below which the mineralized rock currently cannot reasonably be expected to be economically extracted, and (b) in respect of mineral reserves, the lowest grade below which the mineralized rock currently cannot be economically extracted as demonstrated by either a preliminary feasibility study or a feasibility study. Cut-off grades vary between deposits depending upon the amenability of ore to gold extraction and upon costs of production and metal prices.

 	 	at December 31,
	
LaRonde Division
			
	 	2003
	 	2002
	 	2001
	
Gold	 	 	 	 	 	 	
 	Proven (1)  — tons	 	4,083,000	 	3,800,000	 	1,900,000	
 	Average grade — gold ounces per ton	 	0.14	 	0.13	 	0.17	
 	Probable (1)  — tons	 	25,893,000	 	22,700,000	 	18,200,000	
 	Average grade — gold ounces per ton	 	0.16	 	0.13	 	0.14	

Zinc	

 	

 	
 	Proven — tons	 	2,764,000	 	4,200,000	 	4,500,000	
 	Average grade — gold ounces per ton	 	0.03	 	0.03	 	0.03	
 	Probable — tons	 	8,862,000	 	11,000,000	 	11,700,000	
 	Average grade — gold ounces per ton	 	0.03	 	0.03	 	0.03	

Total mineral reserve — tons	
 	
41,602,000	
 	
41,700,000	
 	
36,300,000	
Total contained gold ounces (2)	 	5,020,000	 	4,022,000	 	3,267,000	

Tonnage information is rounded to the nearest 100,000 tons.
Notes:
(1)
The proven and probable mineral reserves set forth in the table above are based on net smelter return cut-off value of the ore that varies between C$35.38 per ton and C$54.43 per ton depending on the deposit. (For instance, the C$35.38 cut-off, which is supported by LaRonde engineering reports that demonstrate that economic extraction can be justified, is applied only in respect of the recovery of gold mineralization located in a part of the LaRonde Mine immediately adjacent to zinc mineralization to which the C$54.43 cut-off applies. The zinc mineralization is economic at a cut-off grade of C$54.43 and will be extracted in the ordinary course. When the zinc mineralization is extracted, the access costs for the zinc will have been incurred. To extract the gold mineralization from this area once the adjacent zinc mineralization has been extracted, the Company will not have to incur additional access costs. As a result, the incremental cost of extracting the gold mineralization is low, and a cut-off grade of C$35.38 is appropriate.) The metal grades reported in the mineral reserve estimate represent in-place grades and do not reflect losses in the recovery process, that is, the metallurgical losses associated with processing the extracted ore. The Company's historical metallurgical recovery rates for gold at the LaRonde Mine to December 31, 2003 were 92.0%. The Company's estimated metallurgical recovery rates for the first three quarters of 2004 from the LaRonde Mine were 91.9% for gold, 86.7% for silver, 78.8% for copper and 84.0% for zinc. The mineral reserve figures presented herein are estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized.

The 2004 mineral reserve and mineral resource estimate at LaRonde was calculated using a gold price of $325 per ounce, a silver price of $5.00 per ounce, a copper price of $0.80 per pound, a zinc price of $0.50 per pound and a US$/C$ exchange rate of $1.40. The metal and foreign exchange assumptions were changed in 2003 resulting from changes in the prices for each metal and US$/C$ exchange rate. The impact of the increase in gold price from $300 to $325 was essentially negated by the change in the US$/C$ exchange rate from $1.50 to $1.40. Using a $300 gold price, gold reserves would decrease by approximately 6%, whereas using a gold price of $350 would increase reserves by approximately 6%.
(2)
Represents contained gold ounces and does not include equivalent gold ounces for the byproduct metals contained in mineral reserve.
23

 
Reconciliation of LaRonde Division Mineral Reserve
        The following table shows the reconciliation of mineral reserve (in nearest 100,000 tons) at the LaRonde Division by category as at December 31, 2002 to December 31, 2003.

 	 	Proven
	 	Probable
	 	Total
	 	
December 31, 2002	 	8,000,000	 	33,700,000	 	41,700,000	 	
Mined	 	(2,410,000	)	—	 	(2,410,000	)	
Revision	 	1,258,000	 	1,054,000	 	2,312,000	 	
 	 		 		 		 	
December 31, 2003	 	6,848,000	 	34,754,000	 	41,602,000	 	
 	 		 		 		 	
Preparation of Scientific and Technical Data
        The personnel at the LaRonde Division utilize quality assurance procedures and assay protocols in connection with drilling and sampling that conform to industry-accepted quality control procedures. Exploration drilling is carried out on approximately a 400-foot by 400-foot pattern, whereas reserve drilling is carried out on approximately a 130-foot by 130-foot pattern. Samples are taken at regular (one foot to five feet) intervals and assayed for gold using the fire assay method. Drill hole collar, survey and assay information used in modelling and resource estimation are manually verified by on-site geologic staff and all core sample metal grades are verified by independent assay laboratories. Factors that could affect the accuracy or reliability of the results of the sampling and assaying carried out at the LaRonde Division include uncleanliness of the coreshack area, a dirty coresaw, the lack of an unobstructed drain for water and rock cuttings during the cutting process, the inability to collect uniform representative samples of adequate size, as well as an ore core recovery of less than 100%. In cases of irregular mineralization, representative samples are sometimes chosen in order to avoid introducing a sampling bias during cutting.
        Complete information on the verification procedures, the quality assurance program, quality control procedures, operating and capital cost assumptions, parameters and methods and a full discussion of the factors that may materially affect mineral reserve and mineral resource estimates may be found in the 2004 LaRonde Mineral Resource and Mineral Reserve Estimate, Agnico-Eagle Mines Limited, LaRonde Division dated November 15, 2004, filed with Canadian Securities Administrators on SEDAR.
Lapa Project
        The Lapa Project is an advanced stage exploration property located approximately seven miles east of the LaRonde Mine near Cadillac, Quebec and is accessible by provincial highway. The Lapa property, which contains the Contact Zone deposit, is made up of the Tonawanda property, which consists of 42 mining claims totalling approximately 1,912 acres, and the Zulapa property, which consists of one mining concession totalling approximately 231 acres. In 2003, the Company purchased the Lapa property from Breakwater Resources for a payment of $8.925 million, a 1% net smelter return royalty on the Tonawanda property and a 0.5% net smelter return royalty on the Zulapa property. An additional $1 million is payable to Breakwater if the published inferred mineral resource at the Lapa property reaches 2.0 million ounces of gold. Of the total potential cash consideration of $9.925 million, $2.0 million may be used by the Company as a credit to offset net smelter return royalties payable.
        In the first quarter of 2003, the Company completed a mineral reserve and mineral resource estimate on the Contact Zone deposit conforming to National Instrument 43-101. In February 2003, the mineral resource estimate was 3,270,546 tons grading 0.249 ounces per ton of gold. Most of the mineralized drill holes contain visible gold. For this mineral resource estimate, high assay values were capped at 1.50 ounces per ton. Drilling throughout 2003 also confirmed a potentially new zone, the Contact South Zone, immediately adjacent to the west of the Contact Zone. The 2003 drilling program also focused on infill drilling that resulted in the resource to reserve conversion at year end.
        Throughout 2003, the Company also focused on collecting material to be used in conducting metallurgical testing and preliminary engineering and baseline environmental studies have been initiated. Drilling in 2004 concentrated on expanding the known orebodies (Contact Zone and Contact South Zone) as well as drilling
24

untested portions of the volcano-sedimentary contact in the eastern portion of the property. Preliminary engineering throughout 2004 was focused on providing various options for the development of the property. In 2004 the Company initiated a project to sink a 2,700 foot deep shaft at the Lapa property. Completion of the shaft is expected to occur in 2006. The shaft will provide access for underground diamond drilling to test the depth potential of the deposit, confirm appropriate mining methods and initiate a bulk sampling program. Activity at the Lapa property in 2005 will focus on the construction of the shaft and initiating the underground drilling program.
        As of December 31, 2003, a mineral reserve estimate was conducted on the Lapa property which, when it was incorporated into a preliminary feasibility study, led to the following results.

 	 	December 31, 2003
	
Gold	 	 	
 	Probable — tons	 	4,661,000	
 	Average grade — gold ounces per ton	 	0.25	
Total mineral reserve — tons	 	4,661,000	
Total contained gold ounces	 	1,187,000	

Tonnage information is rounded to the nearest 100,000 tons.
Notes:
(1)
The 2003 mineral reserve and mineral resource estimate was calculated using a gold price of $325 per ounce and a US$/C$ exchange rate of $1.40. In estimating the Lapa probable mineral reserve and mineral resource, cut-off grades of 0.19 and 0.15 ounces per ton, respectively, were used to evaluate drill intercepts that have been adjusted to respect a minimum mining width of 9.2 feet. Separate cut-off grades are used for the estimation of mineral reserves and mineral resources. The cut-off grade used for the estimate of mineral reserves is based on the grades used in the preliminary feasibility study or feasibility study that supports the estimate of mineral reserves whereas the cut-off grade used for the estimation of mineral resources is determined by the Company based on the minimum grade of ore that has reasonable prospects for economic extraction. The estimate was derived using a three dimensional block model of the deposit; the grades were interpolated using the inverse distance power squared method. The metal grades reported in the mineral reserve estimate represent in-place grades and do not reflect losses in the recovery process, that is, the metallurgical losses associated with processing the extracted ore. The mineral reserve figures presented herein are estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized. In addition to the mineral reserves set out above, the Lapa property contained 0.7 million tons of measured and indicated mineral resource grading 0.16 ounces of gold per ton and 0.3 million tons of inferred mineral resource grading 0.18 ounces of gold per ton.

(2)
For the 2004 mineral reserve and mineral resource estimate, high assay values were capped at 1.5 and 2.0 ounces of gold per ton, respectively, for the Contact and Contact South Zones.
Preparation of Scientific and Technical Data
        All Lapa drill core has been logged and the results have been verified by Dino Lombardi, P.Geo., Senior Geologist, Exploration Division, who is fully qualified per the standards outlined in National Instrument 43-101. The Exploration Division personnel utilize quality assurance and assay protocols that conform to industry accepted quality control procedures. Exploration drilling at Lapa is carried out on approximately a 400-foot by 400-foot pattern, whereas probable reserve drilling is carried out on approximately a 260-foot by 260-foot pattern. Samples are taken consecutively at one foot to five feet intervals. The drill core selected for analysis is sawed in half with one half sent to a commercial laboratory and the other half retained for future reference. Upon reception of the assay results, the pulps and rejects are recovered and submitted to a second laboratory for check-assay purposes. The gold assaying method uses a 30-gram sample by Fire Assay or Metallic Sieve finish as requested by the project geologist. The laboratories used are Bourlamaque Assay Laboratories Ltd., Val d'Or, Quebec, and Expert Laboratories Inc., Rouyn-Noranda, Quebec.
Goldex Project
        The Goldex Project is an exploration property held under 22 claims, totalling approximately 661.7 acres. The Goldex property is located in Val d'Or, Quebec and is accessible by provincial highway. The claims are renewable every second year upon payment of a small fee. The Company has a 100% working interest in the Goldex property. The Goldex property is made of three claim blocks: the Probe block (ten claims, 302.4 acres); the Dalton block (one claim, 25.7 acres); and the Goldex Extension block (11 claims, 333.6 acres). The Goldex
25

Extension Zone, which is the gold deposit on which the Company is currently focusing its exploration and development efforts, was discovered in 1989 on the Goldex Extension claim block (although a small portion of the deposit is interpreted to occur on both the Dalton and Probe claim blocks). Probe Mines Ltd. holds a 5% net smelter return royalty interest on the Probe claim block. Should commercial production commence on the Dalton claim, 18,000 shares of the Company will be issued to the estate of John Michael Dalton Jr. The Goldex Extension block claims are subject to a 20% net profits royalty interest in favour of Explorations Ormico Ltée and a 1% net smelter return royalty interest in favour of Denis, Donald, Bernard, Marlin and Christine Charlebois.
        The surface facilities at the Goldex Project include a headframe, a surface building containing a mechanical shop, a warehouse, an office and a 2,600-foot shaft, which provides underground access. Since 1989, the Company has undertaken a major exploration program on the Goldex Extension Zone. This program included deepening the shaft from 1,500 feet to its current 2,600-foot depth, over 158,700 feet of drilling, over 6,833 feet of horizontal development, 146,500 cubic feet of slashing, 476.2 feet of raising and the extraction and milling of two bulk samples (36,743 tons in 1995 and 113,395 tons in 1996). Underground exploration drilling in 1997 confirmed earlier results that outlined a large zone of low-grade mineralization. A mineral resource estimate was calculated which returned 22.6 million tons, grading 0.068 ounces of gold per ton, using a cutting factor of one ounce per ton.
        In 1997, a mining study showed that the deposit was not economically viable to mine using the mining approach chosen and drill-hole indicated grade. Results from the bulk sampling suggested, however, that the estimation method used may have underestimated the realized grade for the Goldex Extension Zone. However, in late 1997, in view of the then-prevailing market price of gold, the property was placed on a care and maintenance basis. In September 1998, the workings were allowed to flood. The carrying value of the Goldex Project was written down to nil in 1997.
        In January 2003, a new mineral resource estimate was completed conforming with National Instrument 43-101. The indicated mineral resource of the Goldex Extension Zone was estimated to be approximately 13.7 million tons at 0.073 ounces of gold per ton with an additional 5.6 million tons grading 0.075 ounces of gold per ton in the inferred mineral resource category. The estimate was based on a $300 per ounce gold price, a cut-off grade of 0.045 ounces per ton and 0.03 ounces per ton for internal dilution (or sloughing), and a US$/C$ rate of $1.50.
        Throughout 2003, the Company re-evaluated the Goldex project reviewing mining methods and grade estimation methods. In February 2004, a new reserve and resource estimate was completed for the Goldex Extension Zone conforming to National Instrument 43-101 which, coupled with a new preliminary feasibility study, led to a resource to reserve conversion of 1.6 million ounces of gold.
        Dewatering of the underground workings was completed in 2004 in preparation for a bulk sample. The shaft bottom is at a depth of 2,610 feet. Shaft rehabilitation was completed to a depth of 750 feet.
        In 2004, a total of 2,000 feet of raise development was excavated through the center of the gold mineralization at three separate locations along the 1,500 feet strike length of the Goldex deposit. Mapping and sampling of these raises started in 2004 and are expected to be completed in early 2005. During the first three quarters of 2004, 373 feet of raise development and other development have been completed and 4,700 tons of ore have been extracted with an average grade of 0.07 ounces of gold per ton. A 20,000-ton bulk sample of the rock extracted from the deposit during development is scheduled to be processed at a local milling facility in January 2005. The mill tests, the information from a 21,000-foot diamond drilling program and detailed mapping will be used to refine the current mineral reserve estimate and for the final feasibility study, expected to be completed in the second quarter of 2005. During the first three quarters of 2004, 6,840 feet of diamond drilling was completed and the preliminary results are within the predicted grade range. Work on projects at the Goldex
26

property is currently proceeding on schedule. The following table shows the Goldex property reserves as of December 31, 2003.

 	 	December 31, 2003
	
Gold	 	 	
 	Probable — tons	 	23,983,000	
 	Average grade — gold ounces per ton	 	0.069	
Total mineral reserve (1) — tons	 	23,983,000	
Total contained gold ounces	 	1,647,000	

Tonnage information is rounded to the nearest 100,000 tons.
Notes:
(1)
The 2003 mineral reserve and mineral resource estimate was calculated using a gold price of $325 per ounce and a US$/C$ exchange rate of $1.40. The cut-off grade used to evaluate drill intercepts at Goldex was 0.04 ounces per ton over a minimum true thickness of 50 feet. The reserve was derived by evaluating a three-dimensional model of the Goldex Extension Zone, whose gold grade was estimated using a 95% confidence interval grade calculation method, and then adjusting the model envelope to only include sectors with a high probability of exceeding the cut-off grade. The metal grades reported in the mineral reserve estimate represent in-place grades and do not reflect losses in the recovery process, that is, the metallurgical losses associated with processing the extracted ore. The mineral reserve figures presented herein are estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized. In addition to the mineral reserves set out above, the Goldex property contained 1.2 million tons of measured and indicated resource grading 0.08 ounces of gold per ton and 2.8 million tons of inferred mineral resource grading 0.06 ounces per ton.
Preparation of Scientific and Technical Data
        At Goldex, exploration drilling was carried out on approximately a 300-foot by 600-foot pattern whereas probable reserve drilling was carried out on approximately a 100-foot by 100-foot pattern. Core samples were taken consecutively at one foot to five feet intervals. The core selected for analysis was cut or sawed in half with one half sent to a commercial assay laboratory. Upon reception of the assay results, at least 10% of the pulps and rejects were sent to another laboratory for check assay purposes. The gold assaying method was 30-gram sample by either a Fire Assay or Metallic Sieve finish. The principal laboratory used was Abilab Laboratories, Val d'Or Quebec.
Bousquet and Ellison Properties
        The Bousquet property is located immediately west of the LaRonde property and consists of two mining leases (180.6 acres) and 31 claims (951.0 acres). The property, along with various equipment and other mining properties, was acquired from Barrick in September 2003 for $3.9 million in cash (including transaction costs), $1.5 million in common shares of the Company, and the assumption of specific reclamation and other obligations related to the Bousquet property. The property is subject to a 2% net smelter return royalty interest in favour of Barrick.
        The Ellison property is located immediately west of the Bousquet property and consists of eight claims (249.8 acres). The property was acquired in August 2002 for C$0.5 million in cash and a commitment to spend C$0.5 million in exploration over four years. The property is subject to a net smelter return royalty interest in favour of Yorbeau Resources Inc. that varies between 1.5% and 2.5% depending on the price of gold. Should commercial production commence, Yorbeau Resources will receive an additional C$0.5 million in cash.
        In the first quarter of 2003, a mineral resource was estimated for the A Zone on the Ellison property conforming to National Instrument 43-101. The estimate, which used a gold price of $300 per ounce and 0.09 ounce per ton cut-off grade, revealed an indicated mineral resource of 249,000 tons grading 0.16 ounces of gold per ton. With the underground exploration access provided by the Bousquet II infrastructure, an exploration program was initiated in 2004 to test the potential of both the Ellison and Bousquet properties.
        In addition, in 2003, the mineral resources at the Bousquet and Ellison properties were reviewed with the possibility of mining resource blocks which could become potentially economic given the proximity of the mill facility at LaRonde. The result was the definition of a small proven mineral reserve (104,000 tons grading 0.09
27

ounces of gold per ton) associated with a possible open pit at the Bousquet property. The 2003 measured and indicated mineral resource at the Bousquet property is approximately 1.6 million tons grading 0.16 ounces of gold per ton and the inferred mineral resource is 2.4 million tons grading 0.27 ounces of gold per ton. The December 31, 2003 measured and indicated mineral resource at Ellison is 0.2 million tons grading 0.16 ounces of gold per ton, unchanged from December 31, 2002, but the inferred resource increased to 1.7 million tons grading 0.29 ounces of gold per ton.
Preparation of Scientific and Technical Data
        In estimating the Bousquet and Ellison 2003 mineral reserve and mineral resource, a minimum gold cut-off grade of 0.09 ounces of gold per ton was used to evaluate drill intercepts that have been adjusted to respect a minimum mining width of 9.8 feet. The estimate was derived using a combination of three dimensional block modelling (grades were interpolated using the inverse distance power squared method) for certain zones and for the other zones, by the polygonal method on longitudinal sections. A portion of the resource estimate is based on estimates reported when the Bousquet I mine closed in 1996. A portion of the resource estimate is based on estimates reported when the Bousquet I mine closed in 1996. The resource was reviewed and reclassified using the CIM definitions and guidelines. This information is of a good quality and is considered reliable.
Joutel Project
        The Joutel properties consist of the Eagle Mine (including the Eagle West Zone) and the Telbel Mine, in Joutel Township, Quebec. The Eagle Mine and Telbel Mine are held under two adjoining provincial mining leases, totalling approximately 911 acres. Dismantling of the Eagle Mine and Telbel Mine facilities was completed in 2000. Mining and milling operations at the Eagle and Telbel Mines in Joutel ceased in December 1993 and the Company began the restoration of the Joutel mining and milling site in 1998. The carrying value of the Joutel mine site was written down to nil in 1997.
        During 1996, the Company submitted a mine closure plan for the Joutel Project to the Minister of Natural Resources in Quebec. Based on this closure plan, the estimated current reclamation cost is $0.3 million. Expenditures on reclamation at the Joutel Project under this closure plan were $0.1 million in 2003 and $0.1 million in 2002. As of December 31, 2003, the Company's reclamation provision for the Joutel Project was $0.8 million.
        All decommissioning and rehabilitation of the Joutel property has been completed except for re-vegetation of the tailings area. In 2002, the Company submitted a modelling study with respect to the tailings area to the Ministry of Environment in Quebec. The Company is currently monitoring the site and will commence contouring and re-vegetation of the tailings area once the Ministry of Environment has made a ruling with respect to the Company's modelling study.
Vezza Project
        The Company's Vezza Project is located approximately 38 miles from the Joutel properties and consists of the Vezza deposit located in Vezza Township, Quebec and a number of properties in the Vezza, Noyon and Cavalier Townships in Quebec. The Vezza Project currently comprises ten exploration properties held under 578 mining claims, totalling approximately 22,152 acres. The Company owns 100% of the Vezza deposit free of royalty interests. The carrying value of the Vezza Project was written down to nil in 1997. The Company has submitted a closure plan to the Ministry of Environment in Quebec which was accepted. Rehabilitation will be carried out after the Company has made a decision on the future exploration potential of the property.
Agnico-Eagle's Exploration Activities
        Agnico-Eagle continued to actively explore in Quebec, Newfoundland, Nevada and Idaho. At the end of December 2004, the land holdings of Agnico-Eagle consisted of 3,162 mineral titles (claims, mining leases, etc.) covering 139,123 acres. During 2003 and 2004, Agnico-Eagle's exploration activities were focused mainly on the Lapa property and acquiring additional property along the Cortez sector of the Battle Mountain trend in Nevada.
28

 Riddarhyttan
        In May 2004, the Company acquired 12.7 million common shares in Riddarhyttan from its then largest shareholder, Swedish private company, Dunross & Co. AB, bringing its total ownership interest in Riddarhyttan to 13.8%. Together with an additional 800,000 shares of Riddarhyttan purchased by the Company in the second quarter of the year and transaction costs, total cash consideration of $11.8 million was paid by the Company. In late December 2004, Riddarhyttan concluded a rights offering for 7.5 million shares pursuant to which the Company raised its ownership level in Riddarhyttan to 14.0% of the outstanding shares. In connection with this acquisition, two representatives of the Company were elected to Riddarhyttan's board of directors.
        Riddarhyttan is a precious and base metals exploration and development company with a focus on the Nordic region of Europe. Its shares are listed on the Stockholm Stock Exchange under the symbol "RHYT". Riddarhyttan is the 100% owner of the Suurikuusikko gold deposit, located approximately 550 miles north of Helsinki near the town of Kittilä in Finnish Lapland. Riddarhyttan's property position in the Suurikuusikko area consists of 22 contiguous claims (approximately 4,261 acres) with similar Precambrian greenstone belt geology and topography to the Company's land package in the Abitibi region of Quebec.
        Riddarhyttan has reported an indicated mineral resource at Suurikuusikko, made up of several zones that occur over a 2.5 mile structure, of 7.2 million tons grading 0.18 ounces of gold per ton and an additional inferred gold resource, consisting of 5.5 million tons grading 0.13 ounces of gold per ton.
        The mineral resource estimate for Suurikuusikko was prepared for Riddarhyttan in accordance with the Australasian Code for Reporting Mineral Resources and Ore Reserves, September 1999 (JORC Code). Mineral resources that have been disclosed herein were estimated using a minimum gold grade cut-off of approximately 0.064 ounces of gold per ton. Mineral resources estimates prepared under reporting codes other than National Instrument 43-101 should not be relied upon as they may not conform to National Instrument 43-101 standards and definitions. However, reserve and resource categories in the JORC Code are substantially similar to the corresponding categories of mineral reserves and resources required under National Instrument 43-101. To the best of the Company's knowledge, the Riddarhyttan estimate is relevant and reliable.
Legal and Regulatory Proceedings
        As disclosed by the Company on March 18, 2004, the staff of the Ontario Securities Commission had been investigating the Company in relation to the timing and content of the Company's disclosure concerning a rock fall that occurred at the LaRonde Mine in the first quarter of 2003. The Company is currently in discussions with Ontario Securities Commission staff concerning this matter and the timing of the Company's disclosure of a production shortfall prior to its earnings announcement in the third quarter of 2003. The Company believes it is unlikely that there will be any material financial impact resulting from this matter.
        In addition, on November 4, 2004, the Company was advised that Ontario Securities Commission staff were investigating an officer of the Company for potential insider trading violations. On November 5, 2004, the Company suspended the officer with pay pending the outcome of an internal investigation into the allegations. On November 8, 2004 the Board of Directors met and appointed an independent director to conduct, with the assistance of the Company's external counsel, an investigation into the matter and to report back to the Board. The Board of Directors met again on November 15, December 1, December 3 and December 7, 2004 in connection with the investigation. On December 7, 2004, the Company terminated the officer. The Company is cooperating with the Ontario Securities Commission in its investigation.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Operating Results
        See "Management's Discussion and Analysis of the Company's Operations and Financial Condition — Results of Operations" on pages 3 to 10 of Exhibit 99C to this Form 20-F for information about operations and production, which should be read in conjunction with the consolidated financial statements and accompanying notes, and in conjunction with "Item 3: Key Information — Risk Factors" on pages 4 to 9 of this Form 20-F.
29

Liquidity and Capital Resources
        See "Management's Discussion and Analysis of Operations and Financial Condition — Liquidity and Capital Resources" on pages 10 to 11 of Exhibit 99C to this Form 20-F for information about the Company's liquidity. In the opinion of the Company, its working capital is sufficient for its present requirements.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Directors and Senior Management
        The information under "Election of Directors" on pages 4 to 6 of Exhibit 99D to this Form 20-F is incorporated herein by reference.
        The by-laws of the Company provide that directors shall hold office for a term expiring at the next annual meeting of shareholders after such directors' election or appointment or until their successors are elected or appointed. The Board of Directors annually appoints the officers of the Company, who are subject to removal by resolution of the Board at any time, with or without cause (in the absence of a written agreement to the contrary). For information relating to employment agreements between the Company and certain of its senior officers, see "Compensation of Officers — Employment Contracts /Termination Arrangements" on pages 13 to 14 of Exhibit 99D to this Form 20-F.
        The following is a brief biography of each of Agnico-Eagle's directors and senior officers:
         Leanne M. Baker , 52, is a director of Agnico-Eagle. Dr. Baker currently acts as a consultant to companies in the mining and financial services industries, and recently joined Investor Resources Limited (IRL) as Managing Director, North America. IRL provides client services for capital raising and financial structuring; acquisitions, joint ventures and divestitures, and project assessment and improvement, almost exclusively in the resources industry. Previously, Dr. Baker was employed by Salomon Smith Barney where she was one of the top-ranked mining sector equity analysts in the United States. Dr. Baker is a graduate of the Colorado School of Mines (M.S. and Ph.D. in mineral economics). Dr. Baker has been a director of Agnico-Eagle since January 1, 2003, and is also a director of New Sleeper Gold Corporation. Dr. Baker resides in Tiburon, California.
         Douglas R. Beaumont, P.Eng. , 72, is a director of Agnico-Eagle. Mr. Beaumont, now retired, is a former Senior Vice-President, Process Technology with SNC Lavalin. Prior to that he was Executive Vice-President of Kilborn Engineering & Construction Ltd. Mr. Beaumont is a graduate of Queen's University (B.Sc.). Mr. Beaumont has been a director of Agnico-Eagle since February 25, 1997. Mr. Beaumont is also a director of Blackhawk Mining Inc., a gold mining company traded on the TSX. Mr. Beaumont resides in Mississauga, Ontario.
         Sean Boyd, C.A. , 46, is the President and Chief Executive Officer and a director of Agnico-Eagle. Mr. Boyd has been with Agnico-Eagle since 1985. Prior to his appointment as President and Chief Executive Officer in 1998, Mr. Boyd served as Vice-President and Chief Financial Officer from 1996 to 1998, Treasurer and Chief Financial Officer from 1990 to 1996, Secretary-Treasurer during a portion of 1990, and Comptroller from 1985 to 1990 and prior to that was a chartered accountant with Clarkson Gordon. Mr. Boyd is a graduate of the University of Toronto (B.Comm.). Mr. Boyd has been a director of Agnico-Eagle since April 14, 1998, and is also Vice Chair and Chief Executive Officer of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 44.2% interest. Mr. Boyd is also a director of Golden Goliath Resources Ltd., a junior exploration company, and a director of the Mining Association of Canada. Mr. Boyd resides in Newmarket, Ontario.
         Dr. Alan Green , 70, is a director of Agnico-Eagle. Dr. Green is currently a self-employed dentist. Dr. Green is a graduate of the University of Toronto (D.D.S.). Dr. Green has been a director of Agnico-Eagle since August 8, 1995. Dr. Green resides in Toronto, Ontario.
         Bernard Kraft, C.A. , 74, is a director of Agnico-Eagle. Mr. Kraft is a senior partner of the Toronto accounting firm Kraft, Berger, Grill, Schwartz, Cohen & March LLP, Chartered Accountants and a principal in Kraft Yabov Valuations Inc. Mr. Kraft is a member of the Canadian Institute of Chartered Business Valuators, the Association of Certified Fraud Examiners and the American Society of Appraisers. Mr. Kraft has been a director of Agnico-Eagle since March 12, 1992. Mr. Kraft is also a director of Canadian Shield Resources Inc., a mining exploration company traded on the TSX Venture Exchange. Mr. Kraft resides in Toronto, Ontario.
30

         Mel Leiderman, C.A. , TEP, 52, is a director of Agnico-Eagle. Mr. Leiderman is the managing partner of the Toronto accounting firm Lipton, Wiseman, Altbaum & Partners LLP. Mr. Leiderman is a graduate of the University of Windsor (B.A.). Mr. Leiderman was appointed director effective January 1, 2003. Mr. Leiderman resides in Toronto, Ontario.
         James D. Nasso , 71, is Chairman of the Board of Directors and a director of Agnico-Eagle. Mr. Nasso founded and was the President of Unilac Limited, a manufacturer of infant formula, for the past 35 years. Mr. Nasso is a graduate of St. Francis Xavier University (B.Comm.). Mr. Nasso has been a director of Agnico-Eagle since June 27, 1986. Mr. Nasso is also a director of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 44.2% interest. Mr. Nasso resides in Toronto, Ontario.
         Ernest Sheriff , 59, is a director of Agnico-Eagle, a position he has held since March 29, 1996. Mr. Sheriff is a self-employed prospector. Mr. Sheriff resides in Toronto, Ontario.
         Donald G. Allan , 48, is Vice-President, Corporate Development of Agnico-Eagle, a position he has held since May 6, 2002. Prior to his appointment as Vice-President, Corporate Development, Mr. Allan spent 16 years as an investment banker covering the mining and natural resources sectors with the firms Salomon Smith Barney and Merrill Lynch. Mr. Allan is a graduate of the Amos Tuck School, Dartmouth College (M.B.A.) and the University of Toronto (B.Comm.). Mr. Allan is also qualified as a Chartered Accountant. Mr. Allan also serves as Vice-President, Corporate Development of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 44.2% interest. Mr. Allan resides in Toronto, Ontario.
         Alain Blackburn, P.Eng. , 48, is Vice-President, Exploration of Agnico-Eagle, a position he has held since October 1, 2002. Prior to his appointment as Vice-President, Exploration, Mr. Blackburn served as Manager, Corporate Development of Agnico-Eagle from January 1999 and as Agnico-Eagle's Exploration Manager from September 1996 to January 1999. Mr. Blackburn is a graduate of Université du Québec de Chicoutimi (P.Eng.) and Université du Québec en Abitibi-Temiscamingue (M.Sc.). Mr. Blackburn also serves as a director of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 44.2% interest, and Riddarhyttan Resources AB, a Stockholm Stock Exchange listed company in which Agnico-Eagle holds a 13.8% interest. Mr. Blackburn resides in Oakville, Ontario.
         David Garofalo, C.A. , 39, is Vice-President, Finance and Chief Financial Officer of Agnico-Eagle, a position he has held since January 1, 1999, prior to which he served as Treasurer of Agnico-Eagle from June 8, 1998. Prior to joining Agnico-Eagle, Mr. Garofalo served as Treasurer of Inmet Mining Corporation, an international mining company. Mr. Garofalo is a graduate of the University of Toronto (B.Comm.). Mr. Garofalo also serves as Vice-President, Finance and Chief Financial Officer of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 44.2% interest. Mr. Garofalo resides in Richmond Hill, Ontario.
         Eberhard Scherkus, P.Eng. , 52, is Executive Vice-President and Chief Operating Officer of Agnico-Eagle, a position he has held since February 6, 1998. Prior to his appointment as Executive Vice-President and Chief Operating Officer, Mr. Scherkus served as Vice-President, Operations from September 19, 1996 and prior to that as a manager of the Company's LaRonde Division. Mr. Scherkus is a graduate of McGill University (B.Sc.). Mr. Scherkus also serves as director of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 44.2% interest, and Riddarhyttan Resources AB, a Stockholm Stock Exchange listed company in which Agnico-Eagle holds a 13.8% interest. Mr. Scherkus resides in Oakville, Ontario.
        There are no arrangements or understandings between any director or executive officer and any other person pursuant to which such director or executive officer was selected to serve, nor are there any family relationships between any such persons.
Compensation of Directors and Officers
        The information set forth under the caption "Compensation and other Information" starting on page 8 of Exhibit 99D to this Form 20-F (excluding the sections entitled "Composition of Compensation Committee", "Report on Executive Compensation" and "Performance Graph" contained therein) is incorporated herein by reference.
31

Board Practices
        See "Election of Directors" on pages 4 to 6 of Exhibit 99D to this Form 20-F, "Compensation and other Information — Compensation of Directors" on pages 14 to 15 of Exhibit 99D to this Form 20-F and "Statement of Corporate Governance Practices" on pages 19 to 23 of Exhibit 99D to this Form 20-F.
Employees
        As of December 31, 2004, the LaRonde Division employed 574 persons. The employees are not unionized. As of December 31, 2004, the Executive Office, Exploration Division and Regional Project Division employed 14, 12 and 28 persons, respectively.
        The number of employees employed by the Company at the end of 2004, 2003, 2002 and 2001 were 610, 549, 457, and 397, respectively.
Share Ownership
        As of December 31, 2004, officers and directors as a group (12 persons) beneficially owned or controlled (excluding options to purchase 1,743,900 common shares, of which 1,186,575 are currently exercisable and 557,325 are currently unexercisable) an aggregate of 301,530 common shares or about 0.35% of the 86,072,777 issued and outstanding common shares. See also "Compensation and other Information — Compensation of Officers" on pages 10 to 14 of Exhibit 99D to this Form 20-F.
Security Ownership of Directors and Executive Officers
        See "Election of Directors" on pages 4 to 6 of Exhibit 99D to this Form 20-F, "Compensation and other Information — Compensation of Officers" on pages 10 to 14 of Exhibit 99D to this Form 20-F.
        The following table sets forth certain information concerning the direct and beneficial ownership as at December 31, 2004 by each director and executive officer of the Company of common shares of the Company and options to purchase common shares of the Company. Unless otherwise noted, exercise prices are in Canadian dollars.

Beneficial Owner
	 	Share
Ownership (1)
	 	Total Common
Shares under
Option (2)
	 	Common
Shares under
Option
	 	Exercise Price
	 	Expiry Date
	
Leanne M. Baker
Director	 	3,500	 	25,500	 	18,000
7,500	 	C$21.84/US$14.06
C$16.89/US$13.72	 	12/18/2007
12/13/2009	

Douglas R. Beaumont
Director	
 	
5,976	
 	
44,500	
 	
12,000
25,000
7,500	
 	
  8.25
10.40
16.89	
 	
3/6/2008
1/5/2010
12/13/2009	

Sean Boyd
Director, President and Chief Executive Officer	
 	
94,162	
 	
539,900	
 	
225,000
90,000
125,000
79,900
20,000	
 	
15.93
16.69
16.89
10.40
  9.20	
 	
1/10/2007
1/12/2009
12/13/2009
1/5/2010
1/3/2011	

Alan Green
Director	
 	
82,177	
(2)	
59,000	
 	
4,500
12,000
10,000
7,500
25,000	
 	
23.87
  8.25
11.40
16.89
10.40	
 	
3/11/2006
3/6/2008
9/29/2009
12/13/2009
1/5/2010	

Bernard Kraft
Director	
 	
5,976	
 	
42,500	
 	
10,000
7,500
25,000	
 	
11.40
16.89
10.40	
 	
9/29/2009
12/13/2009
1/5/2010	

Mel Leiderman
Director	
 	
2,000	
 	
25,500	
 	
18,000
7,500	
 	
21.84
16.89	
 	
12/18/2007
12/13/2009	
 	 	 	 	 	 	 	 	 	 	 	
32

 

James Nasso
Director and Chairman of the Board	
 	
17,751	
 	
32,500	
 	
25,000
7,500	
 	
10.40
16.89	
 	
1/5/2010
12/13/2009	

Ernest Sheriff
Director	
 	
10,967	
(3)	
50,500	
 	
18,000
10,000
7,500
15,000	
 	
24.87
11.40
16.89
10.40	
 	
3/29/2006
9/29/2009
12/13/2009
1/5/2010	

Eberhard Scherkus
Executive Vice-President and Chief Operating Officer	
 	
49,303	
 	
413,000	
 	
135,000
70,000
100,000
108,000	
 	
15.93
16.69
16.89
10.40	
 	
1/10/2007
1/12/2009
12/13/2009
1/5/2010	

David Garofalo
Vice-President, Finance and Chief Financial Officer	
 	
22,834	
 	
208,000	
 	
75,000
50,000
70,000
13,000	
 	
15.93
16.69
16.89
10.40	
 	
1/10/2007
1/12/2009
12/13/2009
1/5/2010	

Donald G. Allan
Vice-President, Corporate Development	
 	
3,287	
 	
130,000	
 	
50,000
40,000
40,000	
 	
21.82
16.89
16.69	
 	
5/6/2007
12/13/2009
1/12/2009	

Alain Blackburn
Vice-President, Exploration	
 	
3,588	
 	
173,000	
 	
25,000
25,000
25,000
4,000
50,000
4,000
40,000	
 	
18.75
15.93
21.84
  6.55
16.69
10.40
16.89	
 	
12/6/2006
1/10/2007
12/18/2007
1/4/2009
1/12/2009
1/5/2010
12/13/2009	

Notes:
(1)
As of December 31, 2004. In each case, shareholdings constitute less than one percent of the issued and outstanding common shares of the Company. The total number of common shares held by directors and executive officers constitutes 0.35% of the issued and outstanding common shares of the Company.

(2)
As of December 31, 2004.

(3)
Including 18,804 common shares held by Bonaventure Uranium Mines Limited, over which Dr. Green exercises direction.

(4)
Including 5,000 common shares held by Tower Financial Corporation Limited, a corporation wholly-owned by Mr. Sheriff.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major Shareholders
        Fidelity Management & Research Company, Fidelity Management Trust Company and Fidelity International Limited have filed reports with securities regulators stating that they collectively have control over 8,998,466 common shares of the Company (10.5%) and that FMR Corp. may be deemed a joint actor with each of the above entities as certain officers of FMR Corp. are trustees of certain of such entities. To the knowledge of the directors and senior officers of the Company, as of December 31, 2004, no other person or corporation beneficially owns or exercises control or direction over common shares of the Company carrying more than 5% of the voting rights attached to all common shares of the Company.
        As of December 31, 2004, there were: (i) 4,469 holders of record of Agnico-Eagle's 84,603,432 outstanding common shares, of which 3,905 holders of record were in the United States and held 34,967,930 common shares or about 41.33% of the outstanding common shares, (ii) three holders of record of Agnico-Eagle's 6,900,000 outstanding Share Purchase Warrants, of which two holders of record were in the United States and held
33

4,423,500 Share Purchase Warrants or about 64.11% of the outstanding Share Purchase Warrants, and (iii) two holders of record of Agnico-Eagle's Convertible Debentures neither of whom was in the United States.
        The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change in control of the Company. To the best knowledge of the Company, it is not directly or indirectly owned or controlled by another corporation, by any government or by any natural or legal person severally or jointly.
Related Party Transactions
        The information set forth under the captions "Indebtedness of Directors, Executive Officers, and Senior Officers" on page 15 of Exhibit 99D to this Form 20-F is incorporated herein by reference.
        For the years ended December 31, of 2001 and 2002, the Company loaned C$4,271,708 and C$4,034,406 to Contact Diamond to fund ongoing exploration and operating activity. For the years ended December 31, 2003 and 2004, Contact Diamond repaid C$329,915 and nil, respectively, to the Company. The largest amount outstanding under this loan was C$24,438,565 in 2001, C$25,640,785 in 2002, C$5,307,643 in 2003 and C$3,901,809 in 2004. The total indebtedness of Contact Diamond to the Company at December 31, 2004 is C$3,901,809, including accrued interest to December 31, 2004 of nil. The loan is repayable on demand. The rate of interest on the loan is 8% per annum. The Company waived the interest on this loan commencing May 13, 2002 and has no intention of charging any interest or demanding repayment until Contact Diamond has the ability to repay. The book value of the loan on the Company's consolidated financial statements was nil at December 31, 2004.
        On May 13, 2002, the Company completed a transaction with Contact Diamond which resulted in the elimination of $25,640,785 of the outstanding amount owed by Contact Diamond to the Company. In connection with a public offering by Contact Diamond in July 2003, the Company committed to fund Contact Diamond if and to the extent that Contact Diamond was unable to raise an additional C$4.8 million of gross proceeds in equity capital prior to the public offering and December 31, 2003. In August 2003 Contact Diamond raised aggregate cash proceeds of approximately C$5.2 million in a private offering of flow-through shares and therefore is no longer subject to this commitment.
        On September 20, 2004, the Company purchased all of Contact Diamond's interests in ten gold and other precious metals exploration properties located in Canada and the United States for cash consideration of C$3.290 million. The purchase price was based on a valuation prepared by Watts, Griffis and McOuat Limited of Toronto, Canada, consulting geologists and engineers.
        The Company provides Contact Diamond with all of its executives, employees and administrative support (other than Contact Diamond's recently appointed President and Chief Operating Officer) at no cost to Contact Diamond. Of the nine current directors of Contact Diamond, two are also directors of the Company (including one officer of the Company who is a director of the Company), two are officers of the Company and four of the remaining directors of Contact Diamond are former directors of the Company.
ITEM 8. FINANCIAL INFORMATION
        The consolidated financial statements furnished pursuant to Item 18 are presented in accordance with US GAAP. Consolidated financial statements under Canadian GAAP are prepared and separately delivered to shareholders for statutory reporting purposes.
        The information set forth under the caption "Management's Discussion and Analysis" on pages 1 to 22 of Exhibit 99C to this Form 20-F is incorporated herein by reference.
        During the period under review, inflation has not had a significant impact on the Company's operations.
ITEM 9. THE OFFER AND LISTING
Market and Listing Details
        Agnico-Eagle's common shares are listed and traded in Canada on the Toronto Stock Exchange (the "TSX") and in the United States on the New York Stock Exchange (the "NYSE"). Agnico-Eagle's 4.5%
34

convertible subordinated debentures due 2012 (the "Convertible Debentures") trade on the TSX under the symbol "AGE.DB.U". The Company's share purchase warrants (the "Share Purchase Warrants") trade on the TSX and the Nasdaq National Market (the "Nasdaq").
        The following table sets forth the high and low sale prices for Agnico-Eagle's common shares on the TSX and the NYSE for each of the six fiscal years ended December 31, 2004 and for each quarter during the two fiscal years ended December 31, 2004.

 	 	TSX (C$)
	 	NYSE (US$)
	
 	 	High
	 	Low
	 	Average
Daily Volume
	 	High
	 	Low
	 	Average
Daily Volume
	
1999	 	14.25	 	6.20	 	105,078	 	9.69	 	4.00	 	102,518	
2000	 	11.75	 	7.30	 	78,171	 	7.94	 	4.88	 	104,811	
2001	 	18.50	 	7.97	 	184,068	 	11.75	 	5.21	 	244,817	
2002	 	27.59	 	15.65	 	420,820	 	17.98	 	9.83	 	740,528	
2003	 	24.94	 	13.40	 	558,512	 	16.47	 	9.72	 	986,285	
2004	 	19.95	 	15.50	 	382,875	 	16.73	 	11.96	 	730,352	
2003	 	 	 	 	 	 	 	 	 	 	 	 	
 	First Quarter	 	24.94	 	16.42	 	539,986	 	16.47	 	11.11	 	990,498	
 	Second Quarter	 	16.89	 	14.14	 	582,544	 	12.51	 	9.72	 	897,052	
 	Third Quarter	 	20.77	 	14.60	 	567,081	 	14.90	 	10.32	 	903,395	
 	Fourth Quarter	 	18.56	 	13.40	 	544,436	 	14.20	 	10.11	 	1,152,995	
2004	 	 	 	 	 	 	 	 	 	 	 	 	
 	First Quarter	 	19.76	 	15.50	 	490,874	 	15.07	 	11.96	 	1,028,974	
 	Second Quarter	 	19.80	 	15.86	 	384,843	 	15.07	 	11.47	 	679,561	
 	Third Quarter	 	19.30	 	16.45	 	257,437	 	14.68	 	12.47	 	482,805	
 	Fourth Quarter	 	19.95	 	16.40	 	398,346	 	16.73	 	13.16	 	730,069	
        The following table sets forth the high and low sale prices for the Company's common shares on the TSX and the NYSE for the last nine months.

 	 	TSX (C$)
	 	NYSE (US$)
	
 	 	High
	 	Low
	 	Average
Daily Volume
	 	High
	 	Low
	 	Average
Daily Volume
	
2004	 	 	 	 	 	 	 	 	 	 	 	 	
 	April	 	19.80	 	15.94	 	387,002	 	15.07	 	11.66	 	831,919	
 	May	 	19.15	 	15.86	 	268,452	 	14.08	 	11.47	 	719,445	
 	June	 	19.25	 	17.36	 	164,575	 	14.13	 	12.67	 	489,219	
 	July	 	19.30	 	17.05	 	187,132	 	14.68	 	12.76	 	451,910	
 	August	 	18.07	 	16.45	 	325,043	 	13.89	 	12.47	 	553,873	
 	September	 	18.18	 	16.49	 	260,136	 	14.36	 	12.68	 	439,248	
 	October	 	19.35	 	16.97	 	351,908	 	15.87	 	13.51	 	671,262	
 	November	 	19.95	 	17.60	 	388,028	 	16.73	 	14.33	 	774,414	
 	December	 	18.80	 	16.40	 	453,382	 	15.88	 	13.16	 	743,873	
        On December 31, 2004, the closing price of the common shares was C$16.52 on the TSX and $13.75 on the NYSE. The registrar and transfer agent for the common shares is Computershare Trust Company of Canada.
35

        The following table sets forth the high and low sale prices for the Share Purchase Warrants on the TSX and Nasdaq since trading began on November 14, 2002 and November 7, 2002 respectively ("Trading Start") and for each quarter during the two fiscal years ended December 31, 2004.

 	 	TSX (C$)
	 	Nasdaq (US$)
	
 	 	High
	 	Low
	 	Average
Daily Volume
	 	High
	 	Low
	 	Average
Daily Volume
	
2002 (from Trading Start)	 	5.55	 	2.85	 	93,921	 	5.50	 	3.10	 	22,183	
2003	 	5.80	 	2.11	 	19,022	 	5.96	 	2.20	 	17,888	
2004	 	4.00	 	2.50	 	16,608	 	3.99	 	2.50	 	13,729	
2003	 	 	 	 	 	 	 	 	 	 	 	 	
 	First Quarter	 	5.80	 	3.18	 	30,878	 	5.96	 	3.39	 	16,983	
 	Second Quarter	 	3.50	 	2.70	 	22,921	 	3.70	 	2.64	 	14,700	
 	Third Quarter	 	4.59	 	2.40	 	4,802	 	4.60	 	2.40	 	12,098	
 	Fourth Quarter	 	3.80	 	2.11	 	15,579	 	3.95	 	2.20	 	27,214	
2004	 	 	 	 	 	 	 	 	 	 	 	 	
 	First Quarter	 	4.00	 	2.55	 	17,229	 	4.00	 	2.94	 	17,138	
 	Second Quarter	 	3.98	 	2.5	 	25,872	 	4.00	 	2.50	 	6,704	
 	Third Quarter	 	3.36	 	2.6	 	44,650	 	3.38	 	2.45	 	24,400	
 	Fourth Quarter	 	4.00	 	2.55	 	35,713	 	3.94	 	2.50	 	7,265	
        The following table sets forth the high and low sales prices for the Share Purchase Warrants on the TSX and the Nasdaq for the last nine months.

 	 	TSX (C$)
	 	Nasdaq (US$)
	
 	 	High
	 	Low
	 	Average
Daily Volume
	 	High
	 	Low
	 	Average
Daily Volume
	
2004	 	 	 	 	 	 	 	 	 	 	 	 	
 	April	 	3.98	 	2.88	 	1,933	 	4.00	 	2.61	 	10,345	
 	May	 	3.27	 	2.5	 	4,968	 	3.25	 	2.42	 	5,906	
 	June	 	3.25	 	2.8	 	4,875	 	3.27	 	2.53	 	3,750	
 	July	 	3.36	 	2.65	 	5,250	 	3.28	 	2.50	 	3,658	
 	August	 	3.04	 	2.6	 	2,900	 	3.16	 	2.45	 	4,717	
 	September	 	3.15	 	2.85	 	14,296	 	3.18	 	2.65	 	57,911	
 	October	 	3.61	 	2.95	 	4,257	 	3.68	 	2.60	 	6,259	
 	November	 	4.0	 	3.5	 	1,341	 	4.00	 	3.20	 	5,385	
 	December	 	3.8	 	2.55	 	4,887	 	3.85	 	2.50	 	6,850	
        On December 31, 2004, the closing price of the Share Purchase Warrants was C$2.76 on the TSX and $2.88 on the Nasdaq. The registrar and transfer agent for the Share Purchase Warrants is Computershare Trust Company of Canada.
36

        The following table sets forth the high and low sales prices for the Convertible Debentures, which commenced trading on February 15, 2002, on the TSX for each of the three fiscal years ended December 31, 2004 and for each quarter during the two fiscal years ended December 31, 2004.

 	 	TSX (US$)
	
  	 	High
	 	Low
	 	Average
Daily Volume
	
2002 (from February 15)	 	142.00	 	95.30	 	228,997	
2003	 	133.00	 	100.50	 	150,884	
2004	 	129.95	 	105.02	 	696,138	
2003	 	 	 	 	 	 	
 	First Quarter	 	133.00	 	107.00	 	247,711	
 	Second Quarter	 	114.00	 	102.00	 	123,191	
 	Third Quarter	 	125.00	 	106.00	 	106,268	
 	Fourth Quarter	 	120.00	 	100.50	 	120,225	
2004	 	 	 	 	 	 	
 	First Quarter	 	129.95	 	105.02	 	877,620	
 	Second Quarter	 	121.00	 	109.00	 	742,875	
 	Third Quarter	 	118.00	 	111.00	 	324,667	
 	Fourth Quarter	 	127.00	 	112.00	 	746,212	
        The following table sets forth the high and low sales prices for the Convertible Debentures for the past nine months.

 	 	TSX (US$)
	
  	 	High
	 	Low
	 	Average
Daily Volume
	
2004	 	 	 	 	 	 	
 	April	 	121.00	 	110.00	 	46,031	
 	May	 	119.00	 	109.00	 	10,278	
 	June	 	119.00	 	110.15	 	87,333	
 	July	 	118.00	 	115.00	 	168.00	
 	August	 	115.00	 	111.00	 	40,071	
 	September	 	116.00	 	112.00	 	29,909	
 	October	 	122.99	 	114.00	 	86,111	
 	November	 	127.00	 	116.15	 	57,278	
 	December	 	120.00	 	112.00	 	78,133	
        On December 31, 2004, the closing price of the Convertible Debentures was $113.50 on the TSX. The registrar and transfer agent for the Convertible Debentures is Computershare Trust Company of Canada.
ITEM 10.    ADDITIONAL INFORMATION
Memorandum and Articles of Incorporation
Articles of Amendment
        The Company's articles of incorporation do not place any restrictions on the Company's objects and purposes.
Certain Powers of Directors
        The Business Corporations Act (Ontario) (the "OBCA") requires that every director who is a party to a material contract or transaction or a proposed material contract or transaction with a corporation, or who is a director or officer of, or has a material interest in, any person who is a party to a material contract or transaction or a proposed material contract or transaction with the corporation, shall disclose in writing to the corporation or request to have entered in the minutes of the meetings of directors the nature and extent of his or her
37

interest, and shall refrain from voting in respect of the material contract or transaction or proposed material contract or transaction unless the contract or transaction is: (a) an arrangement by way of security for money lent to or obligations undertaken by the director for the benefit of the corporation or an affiliate; (b) one relating primarily to his or her remuneration as a director, officer, employee or agent of the corporation or an affiliate; (c) one for indemnity of or insurance for directors as contemplated under the OBCA; or (d) one with an affiliate. However, a director who is prohibited by the OBCA from voting on a material contract or proposed material contract may be counted in determining whether a quorum is present for the purpose of the resolution, if the director disclosed his or her interest in accordance with the OBCA and the contract or transaction was reasonable and fair to the corporation at the time it was approved.
        The Company's by-laws provide that the directors shall from time to time determine by resolution the remuneration to be paid to the directors, which shall be in addition to the salary paid to any officer or employee of the Company who is also a director. The directors may also by resolution award special remuneration to any director in undertaking any special services on the Company's behalf other than the normal work ordinarily required of a director of the Company. The by-laws provide that confirmation of any such resolution by the Company's shareholders is not required.
        The Company's by-laws also provide that the directors may: (a) borrow money upon the credit of the Company; (b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantee of the Company, whether secured or unsecured; (c) to the extent permitted by the OBCA, give directly or indirectly financial assistance to any person by means of a loan, a guarantee on behalf of the Company to secure performance of any present or future indebtedness, liability or other obligation of any person, or otherwise; and (d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real or personal, movable or immovable, tangible or intangible, property of the Company to secure any such bonds, debentures, notes or other evidences of indebtedness or guarantee or any other present or future indebtedness, liability or other obligation of the Company.
        The directors may, by resolution, amend or repeal any by-laws that regulate the business or affairs of the Company. The OBCA requires the directors to submit any such amendment or repeal to the Company's shareholders at the next meeting of shareholders, and the shareholders may confirm, reject or amend the amendment or repeal.
Meetings of Shareholders
        The OBCA requires the Company to call an annual shareholders' meeting not later than 15 months after holding the last preceding annual meeting and permits the Company to call a special shareholders' meeting at any time. In addition, in accordance with the OBCA, the holders of not less than 5% of the Company's shares carrying the right to vote at a meeting sought to be held may requisition our directors to call a special shareholders' meeting for the purposes stated in the requisition. The Company is required to mail a notice of meeting and management information circular to registered shareholders not less than 21 days and not more than 50 days prior to the date of any annual or special shareholders' meeting. These materials also are filed with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (the "SEC"). The Company's by-laws provide that a quorum of two shareholders in person or represented by proxy holding or representing by proxy not less than 10% of the Company's issued shares carrying the right to vote at the meeting is required to transact business at a shareholders' meeting. Shareholders, and their duly appointed proxies and corporate representatives, as well as the Company's auditors, are entitled to be admitted to the Company's annual and special shareholders' meetings.
Authorized Capital
        The Company's authorized capital consists of an unlimited number of shares of one class designated as common shares. The Company may not create any class or series of shares or make any modification to the provisions attaching to the Company's common shares without the affirmative vote of two-thirds of the votes cast by the holders of the common shares. The Company's common shares do not have pre-emptive rights to purchase additional shares.
38

Material Contracts
        The following is the material contract entered into by the Company during the two years preceding the date of this Annual Report.
        The Company entered into an amended and restated credit agreement on December 23, 2004 with a group of financial institutions providing for a revolving bank credit facility of up to $100 million. The facility matures and all indebtedness thereunder is due and payable on December 23, 2007. The Company, with the consent of lenders representing 66 2 / 3 % of the aggregate commitments under the facility, has the option to extend the term of the facility for three additional one-year terms to December 23, 2010. The credit facility is available in multiple currencies through prime rate, base rate and LIBOR advances and through bankers' acceptances, priced at the applicable rate plus an applicable margin. The lenders under the facility are each paid a commitment fee at a rate that ranges from 0.875% to 0.50%, depending on the financial ratios. Payment and performance of the Company's obligations under the facility are secured by substantially all property relating to the LaRonde Mine and the El Coco property.
        The facility limits, among other things, the Company's ability to incur additional indebtedness, pay dividends or make payments in respect of its common shares, make investments or loans, transfer the Company's assets or make expenditures relating to property secured under the credit agreement at that time that are not consistent with the mine plan and operating budget delivered pursuant to the credit facility. Further, the agreement requires the Company to maintain specified financial ratios and meet financial condition covenants. Under the terms of the facility, the Company has entered into hedge agreements to ensure that projected revenues from sales of metals are sufficient to reasonably ensure that the Company will be in compliance with financial and other covenants of the credit agreement.
Exchange Controls
        Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Company's securities, except as discussed in "Item 10: Additional Information — Taxation" below.
Restrictions on Share Ownership by Non-Canadians
        There are no limitations under the laws of Canada or in the constating documents of the Company on the right of foreigners to hold or vote securities of the Company, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of the Company by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company. "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.
Taxation
        The following is a brief summary of some of the principal Canadian federal income tax consequences to a holder of common shares of the Company (a "U.S. holder") who deals at arm's length with the Company, holds the shares as capital property and who, for the purposes of the Income Tax Act (Canada) (the "Act") and the Canada — United States Income Tax Convention (the "Treaty"), is at all relevant times resident in the United States, is not and is not deemed to be resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a business in Canada. Special rules, which are not discussed below, may apply to a U.S. holder which is an insurer that carries on business in Canada and elsewhere. Limited liability companies (LLCs) do not qualify as resident in the United States for purposes of the Treaty.
        This summary is of a general nature only and is not, and should not be interpreted as, legal or tax advice to any particular U.S. holder and no representation is made with respect to the Canadian income tax consequences
39

to any particular person. Accordingly, U.S. holders are advised to consult their own tax advisors with respect to their particular circumstances.
        Under the Act and the Treaty, a U.S. holder of common shares will generally be subject to a 15% withholding tax on dividends paid or credited or deemed by the Act to have been paid or credited on such shares. The withholding tax rate is 5% where the U.S. holder is a corporation that beneficially owns at least 10% of the voting shares of the Company and the dividends may be exempt from such withholding in the case of some U.S. holders such as qualifying pension funds and charities.
        In general, a U.S. holder will not be subject to Canadian income tax on capital gains arising on the disposition of shares of the Company unless at a time that the Company's shares are listed on the TSX or the NYSE (i) at any time in the five-year period immediately preceding the disposition, 25% or more of the shares of any class or series of the capital stock of the Company was owned by the U.S. holder or persons with whom the U.S. holder did not deal at arm's length, and (ii) the value of the common shares of the Company at the time of the disposition derives principally from real property (as defined in the Treaty) situated in Canada. For this purpose, the Treaty defines real property situated in Canada to include rights to explore for or exploit mineral deposits and other natural resources situated in Canada, rights to amounts computed by reference to the amount or value of production from such resources, certain other rights in respect of natural resources situated in Canada and shares of a corporation the value of whose shares is derived principally from real property situated in Canada.
        The payment by the Company of principal, or interest on the principal, of the Convertible Debentures to holders who deal at arm's length with the Company within the meaning of the Act is exempt from Canadian withholding tax.
Documents on Display
        The Company's Annual Report 2003 and Notice of Annual Meeting of Shareholders and Management Information Circular dated March 31, 2004, which are exhibits to this Form 20-F, are available at the Company's executive and registered office.
        The Company's filings with the SEC, including exhibits and schedules filed with this Annual Report, may be reviewed at the SEC's public reference facilities in Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such materials may be obtained from the Public Reference Section of the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Further information on the public reference rooms may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. Agnico-Eagle began to file electronically with the SEC in August 2002.
        Any reports, statements or other information that the Company files with the SEC may be read at the addresses indicated above and some of them may also be accessed electronically at the web site set forth above. These SEC filings are also available to the public from commercial document retrieval services.
        The Company also files reports, statements and other information with the Canadian Securities Administrators and these can be accessed electronically at the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval web site at (http://www.sedar.com).
ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Metal Price and Foreign Currency
        The Company's net income is sensitive to metal prices and the US$/C$ exchange rate. For the purpose of the sensitivities presented in the graph below, the Company used the following metal price and exchange rate assumptions:
•
Gold — $340;
•
Silver — $5.00;
•
Zinc — $0.40;
40

•
Copper — $0.85; and
•
US$/C$ — $1.30.
        Changes in the market price of gold are due to numerous factors such as demand, global mine production levels, forward selling by producers, central bank sales and investor sentiment. Changes in the market prices of other metals are due to factors such as demand and global mine production levels. Changes in the US$/C$ exchange rate are due to factors such as supply and demand for Canadian and U.S. currencies and economic conditions in each country. In 2003, the price ranges for metal prices and the US$/C$ exchange rate were:
•
Gold — $323-$416;
•
Silver — $4.35-$5.97;
•
Zinc — $0.34-$0.46;
•
Copper — $0.70-$1.05; and
•
US$/C$ — $1.29-$1.57.

        The following graph shows the estimated impact on budgeted income per share in 2004 of a 10% change in assumed metal prices and exchange rates. A 10% change in each variable was considered in isolation while holding all other assumptions constant. Based on historical market data and 2003 price ranges shown above, a 10% change in assumed metal prices and exchange rates is reasonably likely in 2004.

        In order to mitigate the impact of fluctuating precious and base metal prices, the Company enters into hedging transactions under its Metal Price Risk Management Policy, approved by the Board of Directors. The Company's policy and practice is not to sell forward its gold production. The Policy does allow the Company to review this to use hedging strategies where appropriate to ensure an adequate return on new projects. In the past, the Company has purchased put options to protect a minimum gold price while maintaining full participation to gold price increases. The Company's policy does not allow speculative trading. At the end of 2003, the Company's only metal hedges are gold puts with a strike price of $260. These gold puts protect a minimum gold price of $260 for 44% to 64% of anticipated gold production between 2004 and 2007. Gold puts are exercised at the Company's option therefore they do not limit its benefits from a rising gold price.
        The Company receives payment for all of its metal sales in US dollars and pays most of its operating and capital costs in Canadian dollars. This gives rise to significant currency risk exposure. The Company has entered into currency hedging transactions under the Company's Foreign Exchange Risk Management Policy, approved by the Board of Directors, to hedge part of its exposure. The policy does not permit hedging of translation exposure (that is, the gains and losses that arise from the accounting translation of Canadian dollar assets and liabilities into US dollars) as these do not give rise to cash exposure. For 2004, the Company hedged approximately 40% of its Canadian dollar operating cost requirement at a US$/C$ exchange rate level well above the prevailing exchange rates that are in effect when the hedges expire. As shown in the chart above, a 10% increase in budget exchange rates would increase income per share by $0.11. Due to the 2004 foreign currency hedges, a 10% decrease in exchange rates would decrease income per share by only $0.05.
Interest Rate
        Fluctuations in interest rates can also affect the Company's income and cash flows. In the fourth quarter of 2003, the Company entered into an interest rate swap whereby it exchanged its fixed rate payments on its Convertible Debentures for variable rate payments. The notional amount under the swap exactly matches the
41

$144 million face value of the Convertible Debentures and the swap agreement terminates on February 15, 2006, which is the earliest date that the debentures can be called for redemption. Under the terms of the swap agreement, the Company makes interest payments at a rate equal to the three-month LIBOR plus a spread of 2.37% and receives fixed interest payments of 4.50% which completely offsets the interest payments the Company must make under the Convertible Debentures. The three-month LIBOR rate was capped at 3.38% such that total variable interest payments will not exceed 5.75%.
        The Company has a Short-Term Investment Risk Management Policy, approved by the Board of Directors, which only permits investment of excess cash balances in short-term money market instruments of the highest credit quality.
ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
        Pursuant to the instructions to Item 12 of Form 20-F, this information is inapplicable and has not been provided.
ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
        None / not applicable.
ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
        None / not applicable.
ITEM 15.    CONTROLS AND PROCEDURES
        (a)      Disclosure Controls and Procedures .    Based on their evaluation of the Company's disclosure controls and procedures as of the end of the period covered by this Annual Report, and pursuant to Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, Sean Boyd, President and Chief Executive Officer, and David Garofalo, Vice-President, Finance and Chief Financial Officer, have concluded that the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e)) are designed to ensure that information required to be disclosed by the Company in the reports that it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and are operating in an effective manner.
        (b)      Management's Annual Report on Internal Control Over Financial Reporting .    
        Not applicable.
        (c)      Attestation Report of the Registered Public Accounting Firm .    
        Not applicable.
        (d)      Changes in Internal Control Over Financial Reporting .    During the period covered by this Annual Report, there have been no changes identified, in connection with the evaluation required by Rule 13(a)-15(d) or Rule 15d-15(d), in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f)) that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
ITEM 16A — AUDIT COMMITTEE FINANCIAL EXPERT
        The Company's Board of Directors has determined that the Company shall have at least one audit committee financial expert (as defined in Item 16A of Form 20-F) and that Messrs. Bernie Kraft and Mel Leiderman are the Company's "audit committee financial experts" serving on the Audit Committee of the Board of Directors.
42

ITEM 16B — CODE OF ETHICS
        The Company has adopted a code of ethics (as defined in Item 16B of Form 20-F) that applies to its Chief Executive Officer, Chief Financial Officer, principal accounting officer, controller and persons performing similar functions. A copy of this code of ethics has been filed as Exhibit 99E to this Annual Report on Form 20-F.
ITEM 16C — PRINCIPAL ACCOUNTANT FEES AND SERVICES
        The Audit Committee establishes the independent auditors' compensation. In 2003, the Audit Committee also established a policy to pre-approve all services provided the Company's independent public accountant, Ernst & Young LLP. The Audit Committee determines which non-audit services the independent auditors are prohibited from providing and authorizes permitted non-audit services to be performed by the independent auditors to the extent those services are permitted by the Sarbanes-Oxley Act and other applicable legislation. A summary of all fees paid to Ernst & Young LLP for the fiscal years ended December 31, 2003 and 2002 can be found on under "Appointment of Auditors" on pages 6 to 7 of Exhibit 99D to this Form 20-F. All fees paid to Ernst & Young LLP in 2003 were pre-approved by the Audit Committee. Ernst & Young LLP has served as the Company's independent public accountant for each of the fiscal years in the three-year period ended December 31, 2003 for which audited financial statements appear in this Annual Report on Form 20-F.
ITEM 16D — EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
        Not applicable.
ITEM 16E — PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
        Not applicable.
ITEM 17.    RESERVED
ITEM 18.    FINANCIAL STATEMENTS
        Pursuant to General Instruction E(c) of Form 20-F, the registrant has elected to provide the financial statements and related information specified in Item 18.
ITEM 19.    EXHIBITS
        The following auditors' report and consolidated financial statements set forth in Exhibit 99C are incorporated herein by reference:

 	 	Exhibit 99C
Page Number
	
Auditors' Report	 	24	
Consolidated Balance Sheet as at December 31, 2003 and 2002	 	30	
Consolidated Statement of Income (Loss) and Comprehensive Income (Loss) for the years ended December 31, 2003, 2002 and 2001	 	31	
Consolidated Statement of Shareholders' Equity for the years ended December 31, 2003, 2002 and 2001	 	32	
Consolidated Statement of Cash Flows for the years ended December 31, 2003, 2002 and 2001	 	33	
Notes to Consolidated Financial Statements	 	34	
        Financial Statements.     The consolidated financial statements under Item 18 herein are filed as part of this Annual Report.
        Exhibits and Exhibit Index.     The following Exhibits are filed as part of this Annual Report and incorporated herein by reference to the extent applicable.
43

Exhibit Index

Exhibit No.
	 	Description
	 	Sequential
Page Number

  4  	
 	
Credit Agreement	
 	
*	

99A	
 	
Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Sean Boyd)	
 	
*	

99B	
 	
Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (David Garofalo)	
 	
*	

99C	
 	
2003 Audited Annual Financial Statements and Management's Discussion and Analysis (prepared in accordance with US GAAP)	
 	
*	

99D	
 	
Notice of Annual and Special Meeting of Common Shareholders and Management Proxy Circular dated March 31, 2004	
 	
*	

99E	
 	
Code of Business Conduct and Ethics	
 	
*	

99F	
 	
Articles and By-Laws	
 	
*	

99G	
 	
Consent of Independent Auditors	
 	
*	

99H	
 	
Consent of Independent Chartered Accountants	
 	
*	
*Such exhibits and other information filed by the Company with the SEC are available to shareholders upon request at the SEC's public reference section or may be inspected and copied at prescribed rates at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, U.S.A.
44

 
 
 SIGNATURES
        The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

 	 	AGNICO-EAGLE MINES LIMITED	

TORONTO, CANADA
JANUARY 14, 2005	

 	

 	
by:	
/s/   DAVID GAROFALO       

David Garofalo
 Vice-President, Finance and
Chief Financial Officer	
45

 
 CERTIFICATION
I, Sean Boyd, President and Chief Executive Officer of Agnico-Eagle Mines Limited ("Agnico-Eagle"), certify that:
1.
I have reviewed this Annual Report on Form 20-F/A of Agnico-Eagle;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.
The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted] for the company and have:

(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
[omitted]

(c)
evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.

5.
The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 	 	by	/s/   SEAN BOYD       	
 	 	 	
President and Chief Executive Officer	
Toronto, Canada
January 14, 2005	 	 	 	
46

 
 
 CERTIFICATION
I, David Garofalo, Vice-President, Finance and Chief Financial Officer of Agnico-Eagle Mines Limited ("Agnico-Eagle"), certify that:
1.
I have reviewed this Annual Report on Form 20-F/A of Agnico-Eagle;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.
The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted] for the company and have:

(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
[omitted]

(c)
evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.

5.
The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 	 	by	/s/   DAVID GAROFALO       	
 	 	 	
David Garofalo
 Vice President, Finance and
Chief Financial Officer	
Toronto, Canada
January 14, 2005	 	 	 	
47

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Exhibit 4

EXECUTION COPY
December 23, 2004
AGNICO-EAGLE MINES LIMITED
 – and – 
EACH BANK AND FINANCIAL
INSTITUTION NOW OR HEREAFTER
PARTY HERETO
 – and – 
THE BANK OF NOVA SCOTIA, AS
CO-ARRANGER, ADMINISTRATIVE
AGENT AND TECHNICAL AGENT
 – and – 
SOCIÉTÉ GÉNÉRALE (CANADA), AS
CO-ARRANGER AND SYNDICATION
AGENT
 – and – 
N M ROTHSCHILD & SONS LIMITED,
AS CO-ARRANGER AND
DOCUMENTATION AGENT

SECOND AMENDED AND RESTATED CREDIT AGREEMENT	

 
 TABLE OF CONTENTS

 	 	 	 	Page
	
ARTICLE 1 – INTERPRETATION	 	1	
1.1	 	Certain Defined Terms.	 	1	
1.2	 	Accounting Terms.	 	19	
1.3	 	Headings, etc.	 	20	
1.4	 	Provisions Reference.	 	20	
1.5	 	Amendment and Restatement.	 	20	
1.6	 	Schedules, etc.	 	20	

ARTICLE 2 – CREDIT FACILITY	
 	
21	
2.1	 	Creation of the Credit Facility.	 	21	
2.2	 	Amount, Availability and Purpose.	 	21	
2.3	 	Termination of Credit Facility.	 	21	

ARTICLE 3 – ADVANCES	
 	
21	
3.1	 	Drawdown Procedures.	 	21	
3.2	 	Prime Rate, Base Rate and LIBOR Advances.	 	23	
3.3	 	LIBOR Tranches.	 	23	
3.4	 	Overdraft Facility.	 	23	
3.5	 	Conversions.	 	23	
3.6	 	Execution of Bankers' Acceptances.	 	23	
3.7	 	Sale of Bankers' Acceptances.	 	24	
3.8	 	Size and Maturity of Bankers' Acceptances and Rollovers.	 	24	
3.9	 	Co-ordination of BA Advances.	 	24	
3.10	 	Payment of Bankers' Acceptances.	 	25	
3.11	 	Deemed Advance — Bankers' Acceptances.	 	25	
3.12	 	Waiver.	 	25	
3.13	 	Degree of Care.	 	25	
3.14	 	Indemnity.	 	26	
3.15	 	Obligations Absolute.	 	26	
3.16	 	Shortfall on Drawdowns, Rollovers and Conversions.	 	26	
3.17	 	Prohibited Use of L/Cs and Bankers' Acceptances.	 	26	
3.18	 	Issuance and Maturity of L/Cs.	 	26	
3.19	 	Payment of L/Cs.	 	26	
3.20	 	Cash Collateral.	 	27	
3.21	 	Deemed Advance — L/Cs.	 	27	
3.22	 	Lenders' Obligations Relating to Overdraft Facility and L/Cs.	 	27	
3.23	 	Adjustment of Applicable Percentages.	 	28	
3.24	 	Evidence of Indebtedness.	 	28	

i

 

ARTICLE 4 – INTEREST RATES AND FEES	
 	
28	
4.1	 	Interest Rate and Payment Dates.	 	28	
4.2	 	Computation and Determination of Interest and Fees.	 	29	
4.3	 	Provisions Reference.	 	29	
4.4	 	Interest Act.	 	29	
4.5	 	Prohibited Rates of Interest.	 	29	
4.6	 	Commitment Fee.	 	30	
4.7	 	L/C Fees.	 	30	
4.8	 	Interest under Overdraft Facility.	 	30	
4.9	 	Amendment Fee.	 	30	

ARTICLE 5 – REDUCTIONS AND PAYMENTS	
 	
30	
5.1	 	General Rule Regarding Repayments.	 	30	
5.2	 	Term and Repayments.	 	30	
5.3	 	Termination and Reduction of Commitments.	 	32	
5.4	 	Mandatory Prepayments.	 	32	
5.5	 	Indemnity.	 	32	
5.6	 	Exchange Rate Fluctuations.	 	33	
5.7	 	Payments.	 	33	
5.8	 	Authorized Transfer.	 	33	
5.9	 	Provisions Reference.	 	33	

ARTICLE 6 – CLOSING AND DRAWDOWN CONDITIONS	
 	
33	
6.1	 	Conditions Precedent to First Additional Advance.	 	33	
6.2	 	Conditions Precedent to All Advances.	 	35	
6.3	 	Place of Closings and Waiver of Conditions.	 	36	

ARTICLE 7 – SECURITY	
 	
36	
7.1	 	Security.	 	36	
7.2	 	Release.	 	37	
7.3	 	Registration.	 	37	
7.4	 	Bank Act Security.	 	37	
7.5	 	Change of Law and Further Assurances.	 	38	
7.6	 	Security for Hedge Indebtedness.	 	38	
7.7	 	Reaffirmation of Existing Security.	 	39	

ARTICLE 8 – REPRESENTATIONS AND WARRANTIES	
 	
39	
8.1	 	Representations and Warranties.	 	39	
8.2	 	Disclosure Schedules.	 	45	
 	 	 	 	 	
ii

 

ARTICLE 9 – REPORTING COVENANTS AND PROCEDURES	
 	
45	
9.1	 	General Reporting Requirements.	 	45	
9.2	 	Mine Plan.	 	47	
9.3	 	Operating Budgets.	 	47	
9.4	 	Additional Procedures for Updating Mine Plan and Operating Budgets.	 	48	
9.5	 	Review of Monthly Operating Report, Mine Plan and Operating Budgets.	 	48	

ARTICLE 10 – COVENANTS OF THE BORROWER	
 	
48	
10.1	 	Financial Covenants.	 	48	
10.2	 	Positive Covenants.	 	49	
10.3	 	Negative Covenants.	 	53	

ARTICLE 11 – EVENTS OF DEFAULT	
 	
60	
11.1	 	Events of Default.	 	60	
11.2	 	Remedies.	 	62	
11.3	 	Cash Collateral.	 	63	
11.4	 	Rights Cumulative.	 	63	
11.5	 	Proofs of Claim, Etc.	 	63	
11.6	 	Priority of Payments.	 	63	

ARTICLE 12 – THE ADMINISTRATIVE AGENT AND THE SECURED PARTIES	
 	
64	
12.1	 	Provisions Reference.	 	64	
12.2	 	Specific Provisions Relating to Hedge Counterparties.	 	64	

ARTICLE 13 – MISCELLANEOUS	
 	
65	
13.1	 	Amendments, Waivers, Etc.	 	65	
13.2	 	Amendments (Subsidiaries), Etc.	 	66	
13.3	 	Lenders' Obligations Several.	 	66	
13.4	 	Reproduction of Documents, etc.	 	66	
13.5	 	No Merger on Judgment.	 	66	
13.6	 	Independent Engineer and Other Advisers.	 	67	
13.7	 	Survival of Representations, Warranties and Covenants.	 	67	
13.8	 	Further Assurances.	 	67	
13.9	 	Severability.	 	67	
13.10	 	Conflicts.	 	67	
13.11	 	Time of Essence.	 	67	
13.12	 	English Language.	 	67	
13.13	 	Judgment Currency.	 	67	
13.14	 	Exculpation Provisions.	 	68	
13.15	 	Permitted Liens.	 	68	
13.16	 	Provisions Reference.	 	68	
13.17	 	Indemnification.	 	68	
13.18	 	Environmental Indemnity.	 	69	
iii

 
 SECOND AMENDED AND RESTATED CREDIT AGREEMENT
        THIS AGREEMENT made as of the 23rd day of December, 2004.
        B E T W E E N:
AGNICO-EAGLE MINES LIMITED
OF THE FIRST PART
– and –
EACH BANK AND FINANCIAL
INSTITUTION NOW OR HEREAFTER
PARTY HERETO
OF THE SECOND PART
– and –
THE BANK OF NOVA SCOTIA, AS
CO-ARRANGER, ADMINISTRATIVE
AGENT AND TECHNICAL AGENT
– and –
OF THE THIRD PART
SOCIÉTÉ GÉNÉRALE (CANADA), AS
CO-ARRANGER AND SYNDICATION
AGENT
– and –
OF THE FOURTH PART
N M ROTHSCHILD & SONS LIMITED,
AS CO-ARRANGER AND
DOCUMENTATION AGENT
OF THE FIFTH PART
        WHEREAS the parties to this Agreement are also parties to an amended and restated credit agreement dated as of March 20, 2003, as further amended by Amendment No. 1 to Amended and Restated Credit Agreement dated October 30, 2003, Amendment No. 2 to Amended and Restated Credit Agreement dated December 31, 2003 and Amendment No. 3 to Amended and Restated Credit Agreement dated January 31, 2004 (as so amended, the " Existing Credit Agreement ");
        AND WHEREAS the Borrower has requested certain amendments to the Existing Credit Agreement, and the parties are entering into this Agreement to amend and restate the Existing Credit Agreement to provide for amended terms on which credits under the Existing Credit Agreement will be continued;
        AND WHEREAS the Arrangers (as defined below) have made arrangements with the Borrower relating to certain of the amendments set out herein;
        AND WHEREAS the Lenders desire to have the Administrative Agent continue to act on their behalf with regard to certain matters associated with the Credit Facility and certain of their rights and obligations set forth herein;
        AND WHEREAS the Lenders also desire to have The Bank of Nova Scotia act as "Technical Agent", Société Générale (Canada) as "Syndication Agent" and N M Rothschild & Sons Limited act as "Documentation Agent", with regard to this Credit Facility.
        NOW THEREFORE in consideration of the mutual covenants and premises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Existing Credit Agreement is hereby amended and restated so that, as amended and restated, it reads as follows:
 
 ARTICLE 1

INTERPRETATION
        1.1     Certain Defined Terms.     In this Agreement, where the context does not otherwise require, capitalized terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms

of the terms defined unless otherwise specified and words importing gender shall include the masculine, feminine and neuter genders):
        " Administrative Agent " means BNS, in its capacity as administrative agent hereunder (including pursuant to Section 12.2(e)), and its successors in such capacity.
        " Administrative Questionnaire " has the meaning ascribed to that term in the Provisions.
        " Advances " means a Loan, as defined in the Provisions.
        " Affiliate " has the meaning ascribed to that term in the Business Corporations Act (Ontario) on the date hereof.
        " Agency Fee Letter " means the letter agreement dated December 23, 2004 between the Administrative Agent and the Borrower providing for the payment by the Borrower of certain fees in connection with this Credit Facility, as such letter agreement is amended, supplemented, restated or replaced from time to time.
        " Aggregate Net Hedge Indebtedness " at any date means (a) in respect of the amounts owing by the Borrower to any Hedge Counterparty, the amount, if any, by which the aggregate amount of all Hedge Indebtedness owing by the Borrower to such Hedge Counterparty under Permitted Hedge Agreements with such Hedge Counterparty as at such date exceeds the aggregate amount, if any, of all Hedge Indebtedness owing by such Hedge Counterparty to the Borrower under such Permitted Hedge Agreements; and (b) in respect of amounts owing by the Borrower to all Hedge Counterparties, the amount, if any, by which the aggregate amount of all Hedge Indebtedness owing by the Borrower to each Hedge Counterparty under Permitted Hedge Agreements exceeds the aggregate amount of all Hedge Indebtedness owing by each Hedge Counterparty to the Borrower under Permitted Hedge Agreements with each Hedge Counterparty.
        " Agreement " has the meaning ascribed to that term in the Provisions.
        " Applicable Margin " means, for each type of Advance or Commitment Fee Rate listed below, the corresponding annual percentage rate for each listed level of Credit Facility Indebtedness to Free Cash Flow from Included Property Ratio set forth below:

Level
	 	Credit Facility Indebtedness to Free Cash Flow from Included Property Ratio
	 	U.S. $ LIBOR or C$ BA
	 	L/C commission
	 	US$ Base Rate or C$ Prime
	 	Commitment Fee Rate
	
I	 	<3.25X	 	2.25%	 	2.25%	 	1.25%	 	0.875%	
II	 	< 2.5X	 	2.00%	 	2.00%	 	1.00%	 	0.75%	
III	 	< 2.0X	 	1.75%	 	1.75%	 	0.75%	 	0.60%	
IV	 	< 1.5X	 	1.50%	 	1.50%	 	0.50%	 	0.50%	
        Increases or decreases in the Applicable Margin resulting from a change in the Credit Facility Indebtedness to Free Cash Flow from Included Property Ratio shall be based on the applicable Compliance Certificate delivered by the Borrower pursuant to Section 9.1(a); provided that, from the Restatement Date to the Effective Date (as defined below) in respect of the two full fiscal quarters of the Borrower immediately following the Restatement Date, the Applicable Margin shall be set at no less than "Level II " of the foregoing matrix. After completion of such two fiscal quarters of the Borrower following the Restatement Date, the Credit Facility Indebtedness to Free Cash Flow from Included Property Ratio shall be determined on a rolling four-quarter basis, except that until the Borrower has completed four fiscal quarters after the Restatement Date, such ratio shall be determined on the basis of the fiscal quarters of the Borrower which have been completed since the Restatement Date on an annualized basis. Notwithstanding the foregoing, if the average daily sum of the Lenders' Available Commitment during each month is greater than 50% of the total Commitments, the Commitment Fee Rate shall be based on "Level I" of the foregoing matrix. Changes in the Applicable Margin shall be effective as of the earlier of two Business Days following the day upon which such Compliance Certificate is delivered to the Administrative Agent and the day upon which such Compliance Certificate could be delivered on time (the " Effective Date "). For greater certainty, changes in L/C fees and Bankers' Acceptance Fees shall be effective for that portion of the term of any L/Cs or Bankers' Acceptances on or after the Effective
2

Date, and any amount owing by the Borrower to the Lenders with respect to L/Cs or Bankers' Acceptances shall be paid on the next Drawdown Date. Without waiving the requirement of the Borrower to deliver the Compliance Certificate by no later than the last date which it could be delivered on time (the " Due Date "), if any Compliance Certificate required to be delivered by the Borrower is delivered after the Due Date, the then prevailing Applicable Margin shall continue until such Compliance Certificate is, in fact, delivered. Upon receipt of any Compliance Certificate which is delivered after the relevant Due Date, the Administrative Agent shall determine the amount of any overpayment or underpayment of interest, L/C fees and Bankers' Acceptance Fees during the period from the Due Date to and including the date of actual delivery thereof by the Borrower and notify the Borrower and the Lenders of such amounts. Such determination by the Administrative Agent shall constitute, in the absence of manifest error, prima facie evidence of the amount of such overpayment or underpayment, as the case may be. In the event of an underpayment, the Borrower shall, upon receipt of such notice, pay to the Administrative Agent, for the benefit of the Lenders, the amount of such underpayment. In the event of an overpayment, the amount of such overpayment shall be credited and applied to succeeding payments by the Borrower of interest, L/C fees and Bankers' Acceptance Fees as they become due until such amount has been fully applied. Should the Administrative Agent, acting reasonably, determine that the calculation of the Credit Facility Indebtedness to Free Cash Flow from Included Property Ratio in any Compliance Certificate is incorrect, the Administrative Agent shall advise the Borrower of such error and the Borrower and the Administrative Agent agree that, absent manifest error, the Applicable Margin shall be adjusted in accordance with the determination by the Administrative Agent, acting reasonably, and the Borrower shall pay the amount owing commencing as of the date when the adjustment would otherwise be effective in accordance with this provision.
        " Applicable Percentage " has the meaning ascribed to that term in the Provisions.
        " Arranger Fee Letter " means the letter agreement dated December 23, 2004 between the Arrangers and the Borrower providing for the payment by the Borrower of certain fees in connection with this Credit Facility, as such letter agreement is amended, supplemented, restated or replaced from time to time.
        " Arrangers " means, collectively, BNS, Société Générale (Canada) and N M Rothschild & Sons Limited, in their respective capacities as co-arrangers of the credit facilities set forth in this Agreement.
        " Assignment and Assumption " has the meaning ascribed to that term in the Provisions.
        " Assignment of Metal Hedge Agreements " has the meaning ascribed to that term in Section 7.1(l).
        " Available Commitment " means at any time, in respect of all Lenders, the amount, if any, by which the aggregate of the Lenders' Commitments exceeds the amount of the Outstanding Advances at that time and means at any time, in respect of any particular Lender, the amount, if any, by which the Commitment of such Lender exceeds the amount of the Outstanding Advances made by such Lender. For greater certainty, the Available Commitment shall not at any time exceed the Maximum Facility Amount.
        " Bank Act Security " means the Notice of Intention to Give Security Under Section 427 of the Bank Act granted to each Lender on November 9, 2001, the Application for Credit and Promise to Give Security Under Section 427 of the Bank Act granted to each Lender on November 16, 2001, the Agreement as to Loans and Advances and Security Therefor. Section 426 and 427 of the Bank Act granted to each Lender on November 16, 2001, the Security Under Section 427 on All Property of Specified Kinds granted to each Lender on November 16, 2001 and the security under Section 426 of the Bank Act granted to each Lender on November 13, 2001, and such additional security documents pursuant to the Bank Act (Canada) required by Section 6.1(d)(vi) and as is contemplated by Section 7.4, as each may be amended, restated or otherwise modified from time to time.
        " BA Discount Proceeds " means, in respect of any Bankers' Acceptance, an amount calculated on the applicable Drawdown Date which is (rounded to the nearest full cent, with one-half of one cent being rounded up) equal to the face amount of such Bankers' Acceptance multiplied by the price, where the price is calculated by dividing one by the sum of one plus the product of (i) the BA Discount Rate applicable thereto expressed as a decimal fraction multiplied by (ii) a fraction, the numerator of which is the term of such Bankers' Acceptance and the denominator of which is 365, which calculated price will be rounded to the nearest multiple of 0.001%.
3

        " BA Discount Rate " means, (a) with respect to any Bankers' Acceptance accepted by a Lender named on Schedule I to the Bank Act (Canada) , the rate determined by the Administrative Agent as being the arithmetic average (rounded upward to the nearest multiple of 0.01%) of the discount rates, calculated on the basis of a year of 365 days and determined in accordance with normal market practice at or about 10:00 a.m. (Toronto time) on the applicable Drawdown Date, for bankers' acceptances of those Lenders having a comparable face amount and identical maturity date to the face amount and maturity date of such Bankers' Acceptance, and (b) with respect to any Bankers' Acceptance accepted by any other Lender, the rate determined by the Administrative Agent in accordance with (a) above plus 0.15% per annum.
        " BA Equivalent Advance " has the meaning ascribed to it in Section 3.9(e).
        " Bankers' Acceptance " means a depository bill as defined in the Depository Bills and Notes Act (Canada) in Canadian Dollars that is in the form of an order signed by the Borrower and accepted by a Lender pursuant to this Agreement or, for Lenders not participating in clearing services contemplated in that Act, a draft or bill of exchange in Canadian Dollars that is drawn by the Borrower and accepted by a Lender pursuant to this Agreement. Orders that become depository bills, drafts and bills of exchange are sometimes collectively referred to in this Agreement as "orders."
        " Bankers' Acceptance Fee " means the amount calculated by multiplying the face amount of each Bankers' Acceptance by the Applicable Margin and then multiplying the result by a fraction, the numerator of which is the duration of its term on the basis of the actual number of days to elapse from and including the date of acceptance of a Bankers' Acceptance by the Lender up to but excluding the maturity date of the Bankers' Acceptance and the denominator of which is the number of days in the calendar year in question.
        " Banking Day " means any Business Day on which dealings in foreign currencies and exchange between lenders may be carried on in London, England and New York, New York.
        " Base Rate " means, on any date, a fluctuating rate of interest per annum (expressed on the basis of a year of 360 days rounded upward, if necessary, to the next highest 1 / 16 of 1%) equal to the higher of:
(a)
the reference rate of interest (however designated) of the Administrative Agent in effect on such day for determining interest chargeable by it on US Dollar commercial loans made in Canada; and

(b)
the Federal Funds Rate in effect on such day plus 0.5% per annum.
        Changes in the rate of interest on that portion of any Advances maintained as Base Rate Advances will take effect simultaneously with each change in the Base Rate. The Administrative Agent will give notice promptly to the Borrower and the Lenders of changes in the Base Rate; provided that the failure to give such notice shall not affect the Base Rate in effect after such change.
        " Base Rate Advance " means an Advance in US Dollars bearing interest at a fluctuating rate determined by reference to the Base Rate plus the Applicable Margin.
        " Base Rate Loan " (as used in the Provisions) means a Base Rate Advance.
        " BNS " means The Bank of Nova Scotia, a bank to which the Bank Act (Canada) applies. BNS shall be the "Issuing Bank" referred to in the Provisions.
        " Bond " has the meaning ascribed to it in Section 7.1(e).
        " Borrower " means Agnico-Eagle Mines Limited, a corporation existing under the laws of the Province of Ontario and its successors.
        " Branch of Account " means the Wholesale Banking Operations — Loan Operations department of BNS at 720 King Street West, Third Floor, Toronto, Ontario, M5V 2T3 or such other branch as is designated by the Administrative Agent from time to time.
        " Business Day " means each day that is not a Saturday, Sunday or a day on which commercial banks are not open for normal banking business in Toronto, Ontario.
        " Canadian Dollars ", " Cdn. Dollars " and " Cdn $ " mean lawful money of Canada.
4

        " Canadian Lender " has the meaning ascribed to it in Section 7.4(a).
        " Capital Expenditures " shall mean, with respect to any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including expenditures for capitalized lease obligations) by the Borrower during such period that are required by GAAP to be included in or reflected by the property, plant or equipment or similar fixed asset accounts (or in intangible asset accounts subject to amortization) in the balance sheet of the Borrower.
        " Capital Stock " means any and all shares, interests, participations, warrants, options or other equivalents (however designated) of capital stock of a corporation, any securities convertible into such capital stock or any and all equivalent ownership interests in a Person.
        " Cash Collateral " means Collateral consisting of cash (in Canadian Dollars or US Dollars) or Cash Equivalents on which the Administrative Agent has a first priority Lien.
        " Cash Equivalents " means:
(a)
investments in direct obligations of Canada or the United States of America, including Canadian or United States of America federal, provincial or state obligations, with maturities of one year or less from the date of acquisition of the investment;

(b)
investments in certificates of deposit of maturities less than one year, issued by commercial banks in Canada or the United States of America having capital and surplus in excess of US $500,000,000 and having short-term credit ratings of at least A1 by Standard & Poor's Ratings Group, P1 by Moody's Investors Service, Inc. or R1 by Dominion Bond Rating Service Limited;

(c)
investments in commercial paper issued by issuers resident in Canada or the United States of America of maturities of not more than 270 days rated at least A1 by Standard & Poor's Ratings Group, P1 by Moody's Investors Service, Inc. or R1 by Dominion Bond Rating Service Limited;

(d)
investments in securities that are obligations of Canada or the United States of America purchased by the Borrower or any Subsidiary of the Borrower under repurchase agreements pursuant to which arrangements are made with selling financial institutions (being a financial institution having unimpaired capital and surplus of not less than US $500,000,000 and with short-term credit ratings of at least A1 by Standard & Poor's Ratings Group, P1 by Moody's Investors Service, Inc. or R1 by Dominion Bond Rating Service Limited) for such financial institutions to repurchase such securities within 30 days from the date of purchase by the Borrower or such Subsidiary, and other similar short-term investments made in connection with the Borrower's or any of its Subsidiary's cash management practices; provided that the Borrower shall take possession of all securities purchased by the Borrower or any such Subsidiary under repurchase agreements and shall adhere to customary margin and mark-to-market procedures with respect to fluctuations in value; or

(e)
investments in any security issued by an investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8) that is a money market fund in compliance with all applicable requirements of SEC Rule 2a-7 (17 CFR 270.2a-7).
        " Change of Control " means:
(a)
the acquisition, directly or indirectly by any means whatsoever, by any Person, or group of Persons acting jointly or in concert, (collectively, an "offeror") of beneficial ownership of, or the power to exercise control or direction over, or securities convertible or exchangeable into, any securities of the Borrower carrying in aggregate (assuming the exercise of all such conversion or exchange rights in favour of the offeror) more than 50% of the aggregate votes represented by the Voting Stock then issued and outstanding or otherwise entitling the offeror to elect a majority of the board of directors of the Borrower;

(b)
the occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) directors on the Closing Date nor (ii) nominated or appointed by a majority vote of the board of directors of the Borrower in circumstances where such nomination or appointment is made other than as a result of a dissident proxy solicitation, whether actual or threatened; or
5

(c)
the consummation of any amalgamation, statutory arrangement (involving a business combination) or other reorganization of or involving the Borrower (i) in which the Borrower is not the continuing corporation or (ii) pursuant to which any Voting Stock of the Borrower would be reclassified, changed or converted into or exchanged for cash, securities or other property; other than (in each case) an amalgamation, statutory arrangement or other reorganization of or involving the Borrower in which the holders of the Voting Stock of the Borrower on the Closing Date continue to have, directly or indirectly, more than 50% of the Voting Stock of the continuing corporation immediately after such transaction and in respect of which neither of the events described in (a) or (b) of this definition shall have occurred.
        " Closing Date " means November 23, 2001.
        " Collateral " means the property and interests in property subject to or to be subject to the Liens of the Security Documents.
        " Commitment " means, in respect of each Lender, at any time, the commitment of such Lender to provide the amount of Advances set opposite its name on Annex 2, as modified from time to time in accordance with the terms hereof. If a Lender has more than one Commitment hereunder, each Commitment shall be deemed to be a separate Commitment for purposes of this Agreement.
        " Commitment Fee Rate " means the applicable percentage per annum set forth in the pricing matrix under the "Commitment Fee Rate" column in the definition of Applicable Margin.
        " Compliance Certificate " means a compliance certificate of the Borrower, in the form of Exhibit E, delivered by the Borrower to the Administrative Agent pursuant to Section 9.1(a) and certified (without personal liability) by the chief financial officer or chief executive officer of the Borrower.
        " Constating Documents " means a Person's articles or certificate of incorporation, amendment, amalgamation or continuance, memorandum of association, by-laws, declaration of trust, partnership agreement, limited liability company agreement or other similar document, as applicable, and all unanimous shareholder agreements, other shareholder agreements, voting trust agreements and similar arrangements applicable to such Person's Capital Stock.
        " Contractual Obligation " means as to any Person, any provision of any security issued by such Person or any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound and, for greater certainty, shall include in the case of the Borrower, the Material Contracts and contracts and agreements relating to Indebtedness of the Restricted Parties.
        " Control " has the meaning ascribed to that term in the Provisions.
        " Convertible Notes " means the convertible notes of the Borrower which have been issued under the Trust Indenture.
        " Copper " means metal which contains 0.999 cathode copper, which is registered or registrable, and is in conformity in all respects with the requirements for good delivery, on the London Metals Exchange.
        " Credit Facility " means the credit facility which the Lenders have agreed to establish in favour of the Borrower pursuant to, and on the terms and conditions set out in, this Agreement in the amount of the Maximum Facility Amount.
        " Credit Facility Indebtedness " means all present and future indebtedness, liabilities and obligations owing by the Borrower to the Administrative Agent and the Lenders for Advances and other credit made available and outstanding by any Lender to the Borrower under this Agreement and interest on such Advances and credit, together with all fees, costs, charges and expenses, of or incurred by, the Administrative Agent or any of the Lenders under this Agreement.
        " Credit Facility Indebtedness to Free Cash Flow from Included Property Ratio " means the ratio of the Credit Facility Indebtedness to Free Cash Flow from Included Property.
        " Current Ratio " means, in respect of the Borrower, at the date of determination, the ratio calculated by dividing the Borrower's then current assets by its then current liabilities (excluding the then current portion of
6

the principal amount owing on the Convertible Notes, if any) as the same would be shown on a balance sheet of the Borrower prepared on a consolidated basis in accordance with GAAP consistently applied.
        " Default " has the meaning ascribed to that term in the Provisions.
        " Demand " has the meaning ascribed to it in Section 3.19(b).
        " Designated Account " means, in respect of any Advance, the account or accounts (including in Cdn. Dollars and US Dollars) maintained by the Borrower at a branch of the Administrative Agent in Toronto, Ontario that the Borrower designates in writing from time to time.
        " Development Plan " means, collectively, the Mine Plan and the Operating Budget, as updated from time to time in accordance with Sections 9.2 and 9.3; and, to the extent of any inconsistency between such documents, the document having the later date shall govern.
        " Documents " means the Financing Documents and the other documents delivered under Articles 6 and 7 hereof and all instruments, agreements, certificates and other documents delivered to the Administrative Agent and/or Lenders pursuant to or in connection with any of the foregoing.
        " Drawdown Date " means the date on which an Advance is made to the Borrower pursuant to the terms hereof and which shall be a Banking Day.
        " Drawdown Notice " means a notice delivered by the Borrower pursuant to Section 3.1 and substantially in the form of Exhibit A.
        " Due Date " has the meaning specified in the definition for Applicable Margin.
        " EBITDA " means, for any period, on a consolidated basis, an amount equal to the Borrower's revenue from the sale of Product from Mines, less:
(a)
onsite and offsite cash operating costs for such period;

(b)
general and administrative expenses for such period;

(c)
cash capital taxes for such period; and

(d)
cash reclamation expenditures for such period;
        each component of which is to be calculated in accordance with GAAP consistently applied.
        " Effective Date " has the meaning specified in the definition for Applicable Margin.
        " El Coco Documents " means (a) the Net Smelter Royalty Agreement dated as of June 21, 1999 among Barrick Gold Corporation, Lac Exploration Inc. and the Borrower and (b) the Net Profits Royalty Agreement dated as of June 21, 1999 among Barrick Gold Corporation, Lac Exploration Inc. and the Borrower, true and complete copies of which (together with all amendments, supplements and restatements thereof or thereto) have been delivered to the Administrative Agent.
        " Eligible Assignee " has the meaning ascribed to that term in the Provisions.
        " Environmental Liability " means any claim (including sums paid in settlement of claims), action, administrative proceeding, judgment, lien, damages, penalty, fine, cost, liability, interest or loss, including reasonable legal fees and expenses and all other costs and expenses of any kind or nature that are incurred or arise directly or indirectly from or in connection with any Requirement of Environmental Law, or any failure or breach in respect thereof, or any Release of Hazardous Materials, that, in either case, is or allegedly is applicable to the Borrower or any other Subsidiary, or its respective properties or operations.
        " Equivalent Amount " means, on any day, for the purpose of calculations under this Agreement, the amount of Canadian Dollars into which US Dollars may be converted or the amount of US Dollars into which Canadian Dollars may be converted, using the Administrative Agent's mid-rate (i.e. the average of the Administrative Agent's spot buying and selling rates) for converting the first currency to the other currency at the relevant time on that day.
        " Event of Default " means any event specified in Section 11.1.
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        " Exchange Rate Hedge Agreement " shall mean any contract for the sale, purchase or exchange or for future delivery of foreign currency (whether or not the subject currency is to be delivered or exchanged), or any currency swap agreements, option contracts, futures contracts, options on futures contracts, spot or forward contracts or other agreements to purchase or sell currency or any other arrangements entered into by a Person related to movements in the rates of exchange of currencies or other similar derivatives transactions entered into by such Person or any other contract or arrangement having the same economic effect as the foregoing, whether at, above or below current market prices.
        " Existing Credit Agreement " has the meaning defined in the first recital to this Agreement.
        " Exploration Expenditures " shall mean, with respect to any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including expenditures for capitalized lease obligations) made by the Borrower during such period in respect of prospecting, sampling, drilling and other work involved in searching for gold doré, copper concentrate and zinc concentrate and any other base or precious metal (whether in concentrate, doré or other form).
        " Facility Indebtedness " means all (a) Credit Facility Indebtedness and (b) without duplication, all other present and future indebtedness, liabilities and obligations of the Borrower to the Administrative Agent and the Lenders under or in connection with the Financing Documents, including but not limited to all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by the Borrower to the Administrative Agent or the Lenders in any currency or remaining unpaid by the Borrower to the Administrative Agent or the Lenders under or in connection with the Financing Documents, and whether incurred by the Borrower alone or with another or others and whether as principal or surety, and all interest, fees, legal and other costs, charges and expenses of or incurred by the Administrative Agent or the Lenders under or in connection with the Financing Documents, but in any event excluding Hedge Indebtedness.
        " Federal Funds Rate " means for any day, an annual interest rate equal to the weighted average of the rates on overnight United States federal funds transactions with members of the Federal Reserve System arranged by United States federal funds brokers, as published for such day (or if such day is not a Banking Day, for the next preceding Banking Day) by the Federal Reserve Bank of New York or for any Banking Day on which such rate is not so published, the arithmetic average of the quotations for such day on such transactions received by the Administrative Agent from three United States federal funds brokers of recognized standing selected by it.
        " Final Permitted Hedge Counterparties " means each Permitted Hedge Counterparty which has outstanding Hedge Agreements with the Borrower at the time that the Facility Indebtedness is indefeasibly paid in full and all Commitments are terminated.
        " Financial Parameters " means the "Financial Parameters" set forth on Annex 3.
        " Financing Documents " means this Agreement, the Security Documents, all other agreements, undertakings or commitments entered into by any Restricted Party pursuant to or in connection with this Agreement and the transactions contemplated hereby including agreements with the Administrative Agent in connection with consolidation and electronic fund transfer arrangements and credit cards and the Hedge Agreements entered into with each Permitted Hedge Counterparty.
        " Financing Lease " means (a) any lease, including by way of sale and leaseback, of property, including real (including immoveable) or personal (including moveable), if the then present value of the minimum rental commitment thereunder should, in accordance with GAAP, be capitalized on a balance sheet of the lessee and (b) any other such lease the obligations under which are capitalized on the balance sheet of the lessee.
        " First Additional Advance " means the first Advance made by the Lenders pursuant to this Agreement following the Restatement Date.
        " Free Cash Flow " means, for any period, EBITDA less Maintenance Capital Expenditures.
        " Free Cash Flow from Included Property " means, for any period, EBITDA (relating only to Included Property) less Maintenance Capital Expenditures (relating only to Included Property); provided that, for purposes of the financial covenant ratio set out in Section 10.1(h), administrative and other costs not directly related to Mines held directly or indirectly by the Borrower which consist of Included Property (as determined in
8

accordance with GAAP consistently applied) shall be added to EBITDA as otherwise determined in accordance with this Agreement.
        " Free Cash Flow from Recourse Assets " means, for any period, EBITDA (relating only to Recourse Assets) less Maintenance Capital Expenditures (relating only to Recourse Assets); provided that, for purposes of the financial covenant ratio set out in Section 10.1(g), administrative and other costs not directly related to Mines held directly or indirectly by the Borrower which are Recourse Assets (as determined in accordance with GAAP consistently applied) shall be added to EBITDA as otherwise determined in accordance with this Agreement.
        " GAAP " means generally accepted accounting principles in effect from time to time in the United States of America.
        " Gold " means gold having a minimum fineness of 0.995 and which is registered or registrable, and is in conformity in all respects with the requirements for good delivery, on the London Bullion Market.
        " Gold Equivalent " means a quantity of a Metal having an economic value expressed in ounces of Gold and calculated by multiplying the quantity of the Metal by an assumed price for that Metal and dividing the product by an assumed price for Gold, where such prices are determined using the Financial Parameters.
        " Gold Equivalent Proven and Probable Reserves " means the sum of (a) Proven Reserves and Probable Reserves of Gold at the Mines which are Included Property and (b) Proven Reserves and Probable Reserves of Silver, Zinc and Copper at such Mines multiplied by the applicable price for the relevant metal as determined using the Financial Parameters, divided by the relevant Gold price as determined using the Financial Parameters.
        " Governmental Authority " has the meaning ascribed to that term in the Provisions.
        " Gross Senior Debt " means Total Debt, excluding Indebtedness under the Convertible Notes and Subordinated Indebtedness and any other part of Total Debt which is unsecured and not ranking, or capable of ranking, senior to or pari passu with Total Debt.
        " Guarantee Obligation " means, as to any Person, (a) any obligation of such Person guaranteeing any obligations, contingent or otherwise, or indebtedness of third Persons, and (b) any other contingent obligations of such Person in respect of, or obligations to purchase or otherwise acquire or to assure payment or satisfaction of, any indebtedness or obligations of any other Person, directly or indirectly.
        " Hedge Agreements " means all Metal Hedge Agreements, Exchange Rate Hedge Agreements, Interest Rate Hedge Agreements, and all other derivative transactions, at any time entered into by the Borrower including without limitation the Hedge Agreements identified in Section 8.1(cc).
        " Hedge Counterparty " means a Permitted Hedge Counterparty or an Unsecured Hedge Counterparty.
        " Hedge Indebtedness " means with respect to the indebtedness or obligations of any Person under or pursuant to any Permitted Hedge Agreement on any date, the aggregate amount, if any, determined on such date which would have to be paid on such date by such Person to the counterparty under any such Hedge Agreement so as to preserve the economic equivalent of all payments or deliveries (whether the underlying obligation was absolute or contingent) to be made by both parties in respect of the hedging transactions under such Permitted Hedge Agreements.
        " Hypothec " has the meaning ascribed to it in Section 7.1(f).
        " Included Property " means (a) the LaRonde Mine and (b) (i) any other Mine located in a Permitted Jurisdiction, (ii) which Mine is operating to the satisfaction of the Majority Lenders in consultation with their independent consultants, (iii) which Mine is wholly owned, controlled and operated by a Restricted Party, (iv) on which Mine the Administrative Agent, for and on behalf of the Secured Parties, has been granted an exclusive Lien to secure the Senior Secured Indebtedness pursuant to Section 10.2(n), and (v) for which the Administrative Agent has provided the Borrower written notice that such Mine is Included Property pursuant to Section 10.2(n). For purposes of calculating any financial covenant in Section 10.1, Included Property shall be included in the relevant calculations commencing the first full fiscal quarter of the Borrower following such property being determined to be Included Property. Thereafter, the completed fiscal quarters shall be
9

annualized for the relevant property that was determined to be Included Property until four full fiscal quarters have been completed since such property was determined to be Included Property, and then calculations shall be made as otherwise required hereunder.
        " Indebtedness " of a Person means, at a particular date, the sum (without duplication) of:
(a)
all obligations of such Person for borrowed money and obligations evidenced by bonds, debentures, notes or other similar instruments;

(b)
all obligations of such Person (whether contingent or otherwise) in respect of bankers' acceptances, letters of credit, surety or other bonds and similar instruments;

(c)
all obligations of such Person to pay the deferred purchase price of property or services (other than for borrowed money);

(d)
all obligations of such Person under Financing Leases in respect of which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person otherwise assures a creditor against loss;

(e)
all Guarantee Obligations;

(f)
indebtedness of others secured by any Lien upon Property owned by such Person, whether or not assumed;

(g)
all obligations or undertakings of such Person to maintain or cause to be maintained the financial position or financial covenants of other Persons;

(h)
all obligations to deliver goods or services in consideration of advance payments; and

(i)
all Hedge Indebtedness;
        provided that trade payables and accrued liabilities that are current liabilities incurred in the ordinary course of business do not constitute Indebtedness.
        " Indemnified Party " has the meaning ascribed to it in Section 13.17.
        " Independent Engineer " means the current Independent Engineer, Roscoe Postle Associates Inc. together with Hatch Associates Inc., or such other independent engineer as may be selected by the Majority Lenders pursuant to Section 13.6.
        " Indicated Resource " means that portion of a mineral resource expressed as tons and grade which has been designated as such by the Borrower, audited and approved by the Independent Engineer, after consultation with the Administrative Agent, on the basis of drill holes, underground openings or other sampling procedures spaced closely enough to give a reasonable indication of continuity and where geological data is reasonably well known.
        " Initial Model and Budget " means the mine plan for the Life of Mine and the annual operating budget for the LaRonde Mine, delivered by the Borrower to the Lenders in connection with "Project Completion" (as defined in the Existing Credit Agreement), reviewed and approved by the Independent Engineer and accepted by the Lenders, attached as Annex 7.
        " Instrument of Adhesion " means an instrument of adhesion on the terms and in the form of Exhibit B.
        " Intellectual Property " shall have the meaning ascribed to it in Section 8.1(o).
        " Interest Coverage Ratio " means, for any period, the ratio of Free Cash Flow for such period to Total Interest Expense for such period.
        " Interest Period " means, with respect to any LIBOR Advance:
(a)
the period commencing on and including the applicable Drawdown Date with respect to such LIBOR Advance and, subject as hereinafter provided, ending on but excluding the date which is one, two, three or six months thereafter, as selected by the Borrower in its Drawdown Notice; and
10

(b)
thereafter, each period commencing on the last day of the last preceding Interest Period applicable to such LIBOR Advance and, subject as hereinafter provided, ending on but excluding the date which is one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than 3 Banking Days prior to the last day of the then current Interest Period with respect to such Advance;
        provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:
(c)
if any Interest Period would otherwise end on a day which is not a Banking Day, that Interest Period shall be extended to the next succeeding Banking Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Banking Day;

(d)
any Interest Period that would otherwise extend beyond the Maturity Date, shall end on the Maturity Date; and

(e)
any Interest Period that begins on the last Banking Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Banking Day of a calendar month.

        " Interest Rate Hedge Agreements " shall mean any interest rate swap, option contract, futures contract, option on futures contract, cap, floor, collar, or any other similar arrangement entered into by a Person related to movements in interest rates or any other similar derivatives transaction entered into by such Person or any other contract or arrangement having the same economic effect, whether at, above or below current market prices.
        " Investment " means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock or debt or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee Obligation or assumption of Indebtedness of, or purchase or other acquisition of any other Indebtedness or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
        " Investment Conditions " means, with respect to any Investment that: (a) no Default has occurred and is continuing or would result therefrom (without duplicating subsection (e) below); (b) any Person in which such Investment is made is in the business of mining or mining related activities or the asset acquired is a mining or mining related asset; (c) immediately after giving effect to any such Investment no Material Adverse Change would be reasonably expected to occur (without duplicating subsection (e) below); (d) such Investment does not breach, conflict with or violate any Requirements of Law; and (e) immediately after giving effect to such Investment, the Borrower shall be in compliance with all covenants set forth in Section 10.1 on a pro forma basis.
        " Issuing Bank " has the meaning ascribed to that term in the Provisions.
        " LaRonde Mine " means the Borrower's LaRonde mining operations and property located in or around Cadillac and Bousquet, Quebec, as presently constituted and as the same may be developed or expanded from time to time in accordance with the Development Plan or otherwise (which property and operations currently include (a) the Mining Assets relating to the LaRonde mine, (b) the property covered by the LaRonde Mining Leases as described in surveys dated January 23, 1998 and November 11, 1999 prepared by Jean-Luc Corriveau, which surveys have been made available by the Borrower to the Administrative Agent and to Lenders' Counsel, (c) the 22 mining claims constituting the "El Coco Property" which claims are described in the El Coco Documents and (d) the 34 mining claims located adjacent to the LaRonde mine comprising the LaRonde mine tailings dam), and any replacements, substitutions and modifications thereof, together with all applications, surveys, easements, rights of way, rights, titles or interests of every kind and description which the Borrower or
11

its Affiliates have rights to, otherwise own or control, relating to or acquired in connection with one or more of said operations, properties and claims.
        " LaRonde Mining Leases " means those certain mining leases number BM796 entered into between Les Mines Dumagami Ltée on March 12, 1991 and the Government of Quebec on April 19, 1991, as the same was transferred to the Borrower on December 29, 1992, and number BM854 entered into between the Borrower on April 26, 2001 and the Government of Quebec on June 5, 2001, and as the same may be renewed, amended, supplemented or restated in accordance with the terms of this Agreement from time to time.
        " Lenders " means the Lenders listed on Annex 2 hereof and their respective successors and assigns, and any other Eligible Assignee which becomes party to this Agreement pursuant to Sections 3.3(b) or 10 of the Provisions, and "Lender" means any one of them.
        " Lenders' Counsel " means Borden Ladner Gervais LLP.
        " Lending Office " means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.
        " L/C " means a standby letter of credit, letter of guarantee or commercial letter of credit, in US Dollars or Canadian Dollars, and in a form satisfactory to BNS issued by BNS at the request of the Borrower in favour of a third party to secure the payment or performance of an obligation of the Borrower or a Subsidiary to the third party. For purposes of the Provisions, " Letter of Credit " shall mean "L/C".
        " LIBO Rate " means, with respect to any Advance for any Interest Period, the product of (a) (i) the interest rate per annum shown on Telerate Page 3750 or any successor page as the composite offered rate for London interbank deposits with a period comparable to the Interest Period for such Advance as shown under the heading "USD" at 11:00 a.m. (London time) on the LIBO Rate Determination Date for such Interest Period, or (ii) if the rate in clause (i) of this definition is not shown for any particular day, the average (rounded upwards to the nearest whole multiple of one sixteenth of one percent) of the respective rates notified to the Administrative Agent by the Reference Banks at which deposits in US Dollars are offered by such Reference Banks to prime banks in the London interbank market at approximately 11:00 a.m. (London time) on the LIBO Rate Determination Date for such Interest Period for delivery on the first day of such Interest Period for a period identical to such Interest Period and in an amount comparable to the amount of such Advance, times (b) Statutory Reserves (if greater than one).
        " LIBO Rate Determination Date " means a day which is two Banking Days prior to the first day of an Interest Period.
        " LIBO Rate Loan " (as used in the Provisions) means a LIBOR Advance.
        " LIBOR Advance " means an Advance in US Dollars bearing interest at a fluctuating rate determined by reference to the LIBO Rate plus the Applicable Margin.
        " LIBOR Tranche " means a LIBOR Advance or LIBOR Advances having the same Interest Period (whether or not originally made on the same day).
        " Lien " shall mean any interest in property securing or intended to secure payment or performance of an obligation owed to a Person other than the owner of the property, whether such interest is based on contract, common law or statutory law, and including but not limited to the lien or security interest arising from a mortgage, hypothec, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights of way, liens, prior claims and other statutory or common law rights of landlords, leases and other title exceptions affecting property, and the filing or registering of any financing statement or other registration document under the Civil Code of Quebec , the Ontario Personal Property Security Act or any other comparable law of any jurisdiction for the purpose of protecting or perfecting such Lien to the extent that the mere filing of the same has the effect in and of itself of giving the beneficiary thereof an interest in property.
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         " Life of Mine " means the period during which all Reserves at the Mines constituting Included Property are projected to be extracted through planned mining activities (for the LaRonde Mine, currently through to the year 2016).
        " Loan Documents " (as used in the Provisions) means Financing Documents.
        " London Bullion Market " means the London Bullion Market Association, London, England.
        " London Metals Exchange " means the London Metals Exchange, London, England.
        " Maintenance Capital Expenditures " means, for any period, the sum of all Capital Expenditures made during such period on commercially operating mines held directly or indirectly by the Borrower, which Capital Expenditures are required or anticipated to be required in accordance with customary and prudent mining industry practice to maintain the operations of such mines at the unit operating cost, design capacity and utilization levels contemplated in the Operating Budget provided by the Borrower to the Lenders from time to time. For greater certainty, as of the Restatement Date, there are no Maintenance Capital Expenditures allocated to the contemplated development of a new mine shaft from surface or internal winze to below the existing Penna Shaft infrastructure at the LaRonde Mine.
        " Majority Lenders " means, at any time, Lenders, the Commitments of which are in the aggregate not less than 51% of the aggregate Commitments of all Lenders.
        " Material Adverse Change " means any material adverse change in the business, assets, liabilities, condition (financial or otherwise), properties or prospects of the Restricted Parties on a consolidated basis, or of their Mines that constitute Included Property.
        " Material Adverse Effect " means (a) any Material Adverse Change or (b) any material and adverse effect on (i) the ability or prospects of the Borrower on an individual basis to carry out its business, including the operation of the Mines that constitute Included Property, (ii) the ability of the Restricted Parties, on a consolidated basis, to perform their obligations under the Financing Documents in accordance with their respective terms or (iii) the rights and remedies of the Administrative Agent or the Lenders under the Financing Documents, provided that for the purposes of Section 6.1(e) and Articles 9, 10 and 11, a "Material Adverse Effect" shall be any of the foregoing events as determined by the Administrative Agent and the Majority Lenders, acting reasonably.
        " Material Contracts " means the contracts listed on Schedule 8.1(p) relating to Included Property to which each Restricted Party is a party, the Mining Leases and the Hedge Agreements, true and complete copies of which (together with all amendments, supplements and restatements thereof or thereto) have been delivered to the Administrative Agent.
        " Material Subsidiary " means a Subsidiary of the Borrower the consolidated total assets of which, at any time, have a book value of US $5,000,000 or more or the consolidated total revenues of which, at any time, are US $2,500,000 or more (on an annual basis); provided that, once a Subsidiary of the Borrower has become a Material Subsidiary, it shall not cease to be a Material Subsidiary until either the Administrative Agent, with the consent of the Majority Lenders, or the Majority Lenders, have consented in writing; and provided further that, notwithstanding any of the foregoing, if any Restricted Party (excluding the Borrower) is not a "Material Subsidiary" pursuant to the foregoing part of this definition, such Restricted Party shall be deemed for all purposes of this Agreement to be a "Material Subsidiary" and, for greater certainty, such Person shall not cease to be a "Material Subsidiary" as long as such Person is a Restricted Party.
        " Maturity Date " means December 23, 2007, or if such date has been extended in accordance with the terms of Section 5.2, such extended date.
        " Maximum Facility Amount " means US $100,000,000, as the same is reduced in accordance with the terms of this Agreement.
        " Measured Resource " means that portion of a mineral resource expressed as tons and grade which has been designated as such by the Borrower, audited and approved by the Independent Engineer, after consultation with the Administrative Agent, on the basis of drill holes, underground openings or other sampling procedures
13

spaced closely enough to confirm continuity to a high degree of confidence, and where geological data is reliably known.
        " Metal " means Gold, Silver, Copper or Zinc derived from Product, together with any other base or precious metal produced by the Mines which are registered or registrable, and is in conformity in all respects with the requirements for good delivery, on the London Metals Exchange or London Bullion Market.
        " Metal Hedge Agreement " shall mean any contract or commitment for or representing the sale or purchase for future delivery of a Metal (whether or not the subject Metal is to be delivered) and any option, put option, synthetic put option, call option, collar, spot, spot deferred, fixed forward and floating lease rate forward or other similar contract or arrangement entered into by a Person in respect of Metal prices or other similar derivatives transactions entered into by such Person or other contract or arrangement having the same economic effect as any of the foregoing, whether at, below or above the current market price of such Metal.
        " Mine " means the LaRonde Mine or any other Mining Assets directly or indirectly owned, controlled or operated by the Borrower or its Subsidiaries; and " Mines " means all such mines.
        " Mine Plan " means the Initial Model and Budget and each subsequent "Mine Plan", as updated and modified from time to time in accordance with the procedures set out in Section 9.2 and as updated in accordance with Section 9.4 to include reference to any additional Mines constituting Included Property acquired by the Borrower or its Subsidiaries in accordance with this Agreement.
        " Mining Assets " means the Mining Properties and all other present and after-acquired property and assets used in connection with or relating to an operating mine or facility for the extraction or processing of ore (including all corresponding underground and surface facilities and infrastructure and all related plant, buildings, fixtures, equipment, chattels and machinery), together with all inventory and accounts receivable thereof, whether situate on or off such mine or facility, and all replacements, substitutions and additions thereto made in accordance with the terms of this Agreement.
        " Mining Leases " means the LaRonde Mining Leases and any other mining leases as the same may be renewed, amended, supplemented or restated in accordance with the terms of this Agreement from time to time.
        " Mining Properties " means the lands, premises, Mining Leases, surface leases and rights, mining rights and claims, mining concessions and other interests in real or immoveable property rights to extract surface minerals, now owned or hereafter acquired, which relate to a mine.
        " Monthly Operating Report " means a report as to the operations of the LaRonde Mine and any additional Mines constituting Included Property acquired by the Borrower or its Subsidiaries in accordance with this Agreement, and certain other required information, in the form or substantially in the form last delivered to the "Administrative Agent" under the Existing Credit Agreement.
        " Net Cash Proceeds " means with respect to any sale or other disposition of any asset (other than Product) by any Person (a) the gross amount of cash or cash equivalent received by such Person in connection with such transaction minus (b) the amount, if any, of all taxes (including the amount, if any, estimated by such Person in good faith at the time of such sale or other disposition for taxes payable by such Person on or measured by net income or gain resulting from such transaction), fees, commissions, costs and other expenses which are incurred by such Person in connection with such transaction, but only to the extent not already deducted in arriving at the amount referred to in clause (a) above.
        " Non BA Lender " has the meaning ascribed to it in Section 3.9(e).
        " Non-Bank Act Security " has the meaning ascribed to it in Section 7.4(c).
        " Operating Budget " means the Initial Model and Budget and each of the Borrower's subsequent annual operating budgets, in the form or substantially in the form of the Operating Budget last delivered to the Administrative Agent under the Existing Credit Agreement and as updated in accordance with Section 9.5 to include reference to any additional Mines constituting Included Property, acquired by the Borrower or its Subsidiaries in accordance with this Agreement.
        " Original Currency " shall have the meaning ascribed to it in Section 13.13.
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        " Other Senior Indebtedness " shall have the meaning ascribed thereto in Section 10.3(c)(vi).
        " Outstanding Advances " means, at any time, the aggregate of the outstanding balance of all Advances which remain outstanding and have not been repaid to zero at such time together with the undrawn face amount of outstanding L/Cs and the face amount of outstanding Bankers' Acceptances.
        " Overdraft Facility " shall have the meaning ascribed thereto in Section 2.2(c).
        " Permits " shall mean all permits, consents, waivers, licences, certificates, approvals, authorizations, registrations, franchises, rights, privileges and exemptions or any item with similar effect as the foregoing issued or granted by any applicable Governmental Authority or by any other third party, including, without limitation, environmental permits.
        " Permitted Acquisition " shall mean any Investment which is permitted under Sections 10.3(b)(vi), (vii), (viii) and (ix).
        " Permitted Hedge Agreements " shall mean any Hedge Agreements, in the case of a Permitted Hedge Counterparty, and any Metal Hedge Agreements, in the case of an Unsecured Hedge Counterparty.
        " Permitted Hedge Counterparty " means, at any time, (a) any Lender or Affiliate of a Lender which was a "Permitted Hedge Counterparty" under the Existing Credit Agreement, provided that if such Person is an Affiliate of a Lender, such Person provides written notice to the Administrative Agent in the form of Exhibit J on the Restatement Date confirming that all Hedge Agreements it has entered into with the Borrower include the provisions set out in Annex 6 of the Existing Credit Agreement, that such Affiliate agrees to be bound by the restrictions pertaining to "Permitted Hedge Counterparties" in this Agreement and that such Affiliate acknowledges and agrees to the terms of Annex 5 hereof and (b) any Lender or Affiliate of a Lender which was not a "Permitted Hedge Counterparty" under the Existing Credit Agreement, if such Person has executed and delivered an Instrument of Adhesion to the Administrative Agent and has provided to the Administrative Agent copies of all Hedge Agreements such Person has entered into with the Borrower, which Hedge Agreements must include the provisions set out in Annex 6 hereof. If, at any time, a "Permitted Hedge Counterparty" is not in compliance with the applicable terms and conditions set out in this definition or the relevant "Instrument of Adhesion" (as defined in the Existing Credit Agreement) or Instrument of Adhesion, as applicable, it shall cease to be a "Permitted Hedge Counterparty". For purposes of this definition, after the indefeasible payment in full of the Facility Indebtedness and termination of all Commitments, "Lender", "Person" and "Affiliate" shall have the meanings given to them immediately prior to the indefeasible payment of the Facility Indebtedness and termination of all Commitments.
        " Permitted Jurisdiction " means Canada, the United States of America, Mexico, Chile, Panama, Costa Rica, Australia, New Zealand or the European Union.
        " Permitted Liens " in respect of any Person means the following Liens from time to time:
(a)
Liens for taxes, duties or other governmental charges not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of such Person, in conformity with GAAP;

(b)
carriers', warehousemen's, mechanics', materialmen's, repairmen's, or other like Liens arising in the ordinary course of business and not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings provided that adequate reserves with respect thereto are maintained on the books of such Person, in conformity with GAAP;

(c)
pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation and other obligations of a like nature incurred in the ordinary course of business;

(d)
deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
15

(e)
easements, servitudes, rights-of-way, restrictions, exceptions and other similar encumbrances (including for public utilities) which, in the aggregate, are not substantial in amount and which do not in any case materially interfere with such Person or business or the use of the affected property by such Person;

(f)
reservations, limitations, provisos and conditions in any original grant from the Crown or any freehold lessor of any of the properties of such Person and statutory exceptions to title or reservations of rights which do not in any case materially interfere with such Person or business or the use of the affected property by such Person;

(g)
any obligations or duties affecting any of the Property of such Person or its Subsidiaries to any municipality or other Governmental Authority with respect to any franchise, grant, licence or permit which do not materially impair the use of such property for the purposes for which it is held;

(h)
Liens created pursuant to the Security Documents;

(i)
Liens created in connection with Financing Leases permitted by Section 10.3(c)(ii);

(j)
any Liens for unpaid royalties or duties not yet due pursuant to Mining Leases, claims or other mining rights running in favour of any Governmental Authority;

(k)
Liens on equipment and the proceeds thereof (and on no other property) created or assumed to finance the acquisition or secure the unpaid purchase price of such equipment (including the principal amount of any Financing Lease) to the extent permitted by Section 10.3(c);

(l)
Liens that (i) exist at the time such Person is, or the assets subject to such Liens are, acquired by a Restricted Party, (ii) extend only to the assets acquired or the assets of the Person acquired, as applicable, and (iii) are discharged as soon as possible upon or after, and in any event within 60 days after, such acquisition;

(m)
royalty agreements or other rights or claims to royalties on or affecting any property acquired by a Restricted Party pursuant to Section 10.3(b)(vi), (vii), (viii) or (ix) which royalty agreements or other such rights or claims are in existence at the time of such acquisition;

(n)
pledges or deposits of cash or cash equivalent instruments for purposes of securing obligations to financial institutions issuing letters of credit to secure obligations under retirement plans or for government reclamation costs, or pledges or deposits of cash or cash equivalent instruments to other issuers of letters of credit in the ordinary course of such Person's business provided that such pledging or deposit does not result in a Default under any provision of this Agreement (without reference to Section 10.3(a));

(o)
Liens in existence on the Restatement Date and listed on Schedule 8.1(m) hereto and any extensions, renewals or replacements of any such Lien provided that the principal amount of the Indebtedness or obligations secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally encumbered thereby; and

(p)
Liens securing Other Senior Indebtedness to the extent permitted by Section 10.3(c)(vi), but for greater certainty, not including any Liens in any present or after acquired Included Property.
        " Person " has the meaning ascribed to that term in the Provisions.
        " Plan " shall mean any pension plan within the meaning of the Pension Benefits Act (Ontario), the Supplemental Pension Plans Act (Quebec) or any other similar legislation pursuant to which the Borrower or any of its Subsidiaries makes contributions in respect of its employees.
        " Prime Rate " means, on any day, a fluctuating rate of interest (rounded upwards if necessary to the next highest 1/16 th of 1%) equal to the greater of:
(a)
the annual rate of interest expressed as a percentage per annum announced by BNS on that day as its reference rate for commercial loans made by it in Canada in Canadian Dollars; and

(b)
the average rate for 30 day Canadian Dollar bankers' acceptances that appears on the Reuters Screen CDOR Page at 10:00 a.m. Toronto time on that day, plus 0.50% per annum.
16

        " Prime Rate Advance " means an Advance in Canadian Dollars bearing interest at a fluctuating rate determined by reference to the Prime Rate plus the Applicable Margin.
        " Probable Reserve " means that portion of an Indicated Resource which has been adjusted for mining dilution and mining recovery which has been designated as such by the Borrower, audited and approved by the Independent Engineer, after consultation with the Administrative Agent, to be technically and economically mineable under current economic and operating conditions, all in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum standard therefor.
        " Proceeding " shall have the meaning ascribed thereto in Section 9.1(j).
        " Product " means gold doré, copper concentrate and zinc concentrate and any other base or precious metal (whether in concentrate, doré or other form) derived from or produced at a Mine.
        " Proven Reserve " means that portion of a Measured Resource which has been adjusted for mining dilution and mining recovery and which has been designated as such by the Borrower, audited and approved by the Independent Engineer, after consultation with the Administrative Agent, to be technically and economically mineable under current economic and operating conditions, all in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum standard therefor.
        " Provisions " means the model credit agreement provisions attached as Annex 1.
        " Recourse Assets " means entities or properties (i) which are located in Permitted Jurisdictions, and (ii) to which any part of Gross Senior Debt has direct recourse, whether as primary or secondary obligor, contingent or otherwise, secured or unsecured.
        " Reference Banks " means BNS and any Lender or Lenders designated by the Administrative Agent, together with any replacement Lender or Lenders determined in accordance with Section 4.2(d), so that there are at least two Reference Banks.
        " Release of Hazardous Materials " means any release, discharge, spill, emission, leakage, disposal, leaching or removal, in the indoor or outdoor environment, including through or in the air, soil, surface water, ground water or property, of any substance, product, waste, residue, pollutant, material, chemical, contaminant, dangerous good, constituent or other material which is or becomes listed, regulated, defined or addressed under or subject to any Requirements of Environmental Law or any applicable Permit.
        " Required Lenders " (as used in the Provisions) means Majority Lenders.
        " Requirements of Environmental Law " means duties under any Requirements of Law to the extent that such are intended in any way to prevent, limit, control or otherwise regulate any effects or risks or perceived effects or risks on human health, the environment or property, including such Requirements of Law relating to: (a) the use, storage, presence, generation, discharge, emission, release, disposal, arrangement for disposal, remediation, or removal of any substance (including heat or radiation), or (b) the placement, construction, modification, maintenance, use, or removal of any structure, or (c) the modification, maintenance, use, or removal of any land, wetland or waterway (including anything beneath the surfaces thereof); and any amendments to or regulations promulgated thereunder.
        " Requirements of Law " means (a) any domestic or foreign statute, law (including common and civil law), treaty, code, ordinance, rule, regulation, restriction or by-law (zoning or otherwise); (b) any judgement, order, writ, injunction, decision, ruling, decree or award; (c) any regulatory policy, practice, guideline or directive; in each case, applicable to and binding upon such Person or any of its property or to which such Person is subject as a legally enforceable requirement; or (d), as to any Person, its Constating Documents.
        " Reserves " means Proven Reserves and Probable Reserves.
        " Restatement Date " means December 23, 2004.
        " Restricted Party " means (a) the Borrower, (b) each wholly-owned Subsidiary which directly or indirectly wholly owns, controls and operates an Included Property and (c) each wholly-owned Subsidiary which directly or indirectly owns a wholly-owned Subsidiary which directly or indirectly wholly owns, controls and operates an
17

Included Property; where the Mine directly or indirectly owned by each such Person has been determined to be Included Property pursuant to Section 10.2(n).
        " Restricted Payment " shall have the meaning ascribed to it in Section 10.3(d).
        " Second Currency " shall have the meaning ascribed to it in Section 13.13.
        " Secured Parties " means, collectively, the Administrative Agent, the Lenders and each Permitted Hedge Counterparty, and in each case, each of their permitted successors and assigns.
        " Security " means all security now held or to be held pursuant to this Agreement (including, without limitation the security described in Article 7 hereof) or hereafter received by the Administrative Agent (or by the Trustee for and on behalf of the Administrative Agent) for and on behalf of the Secured Parties for any Indebtedness of the Borrower (whether Indebtedness of the Borrower itself or Indebtedness of any other Person directly or indirectly liable for the Indebtedness of the Borrower) to the Secured Parties or any of them hereunder or under Hedge Agreements to which they are a party in accordance with the terms hereof and thereof (as the same may be amended, restated or otherwise modified from time to time). For greater certainty, prior to the indefeasible payment of all Facility Indebtedness and the termination of all Commitments, to the maximum extent permitted by law, each Permitted Hedge Counterparty shall be permitted to share the benefit of the Bank Act Security, as part of the Security; and after the indefeasible payment of all Facility Indebtedness and the termination of the Commitments, the Final Permitted Hedge Counterparties shall not be entitled to the benefit of the Bank Act Security and the Security shall not include the Bank Act Security.
        " Security Documents " means all mortgages, security agreements, hypothecs, pledge agreements, guarantees and other documents, instruments and agreements constituting or evidencing the Security, as the same may be amended, restated or otherwise modified from time to time.
        " Senior Secured Indebtedness " means the Facility Indebtedness and, without duplication, the Hedge Indebtedness owed to each Permitted Hedge Counterparty.
        " Silver " means silver having a minimum fineness of 0.999 and which is registered or registrable, and is in conformity in all respects with the requirements for good delivery, on the London Bullion Market.
        " Statutory Reserves " shall mean a number (expressed as a decimal), determined by dividing the number one by the number one minus the aggregate of the maximum applicable reserve percentages, including any marginal, special, emergency or supplemental reserves, (expressed as a decimal) to the extent established by any banking authority to which any Lender is subject for LIBOR Advances or any other category of deposits or liabilities by reference to which the LIBO Rate is determined. LIBOR Advances shall be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
        " Subordinated Indebtedness " shall have the meaning ascribed thereto in Section 10.3(c)(vii).
        " Subsidiary " with respect to a corporation, has the meaning ascribed to such term in the Business Corporations Act (Ontario) on the date hereof, and with respect to a partnership, joint venture or other entity, a partnership, joint venture or other entity of which more than fifty percent (50%) of the outstanding equity interests having voting power to elect a majority of the board of directors or equivalent thereof of such partnership, joint venture or other entity are, directly or indirectly, owned by the relevant Person. Unless otherwise specified, references to a "Subsidiary" shall mean a Subsidiary of the Borrower.
        " Super Majority Lenders " means, at any time, Lenders, the Commitments of which are in the aggregate not less than 66 2 / 3 % of the aggregate Commitments of all Lenders; provided that, if a Lender does not consent to an extension of the Maturity Date which is requested by the Borrower pursuant to Section 5.2, such Lender (if still a Lender at the relevant time) shall not be entitled to vote on any subsequent extension request made by the Borrower pursuant to Section 5.2, and for the purpose of any such subsequent vote such Lender's Commitment shall not be included in the denominator of "Super Majority Lenders".
        " Tangible Net Worth " means, at the date of determination, the aggregate value of the Borrower's then stated share capital, other paid-in capital and contributed surplus (but excluding any deficit or shares of the
18

Borrower held by any of its Subsidiaries) less the aggregate value of all intangibles (including, without limitation, goodwill) all as determined on a consolidated basis in accordance with GAAP consistently applied.
        " Total Debt " means all Indebtedness of the Borrower on a consolidated basis, but excluding Indebtedness of the Borrower on a consolidated basis that does not have direct recourse (as primary or secondary obligor, whether contingent or otherwise) to any Restricted Party or any property of any Restricted Party.
        " Total Interest Expense " means, for any period, without duplication, the aggregate expense incurred by the Borrower on a consolidated basis during such period for interest, other financing charges and equivalent costs under or in connection with Indebtedness, including but not limited to (i) interest, (ii) cash expenditures for interest whether expensed or capitalized, (iii) commissions, (iv) discounts, (v) the interest or time value of money component of costs related to factoring or securitizing receivables or monetizing inventory, (vi) bankers' acceptance fees, if any, (vii) discounts on bankers' acceptances, if any, (viii) fees and charges payable with respect to letters of credit and letters of guarantee, (ix) the interest portion of any capital lease, (x) net payments, if any, pursuant to Hedge Agreements and (xi) all fees and other compensation paid to any Person that has extended credit to the Borrower, all calculated in accordance with GAAP consistently applied.
        " Total Net Debt " means Total Debt less Unencumbered Cash.
        " Total Net Debt to Free Cash Flow Ratio " means, for any period, the ratio of Total Net Debt to Free Cash Flow.
        " Trust Indenture " means the trust indenture dated as of February 15, 2002 between the Borrower and Computershare Trust Company of Canada, as trustee.
        " Trustee " means Computershare Trust Company of Canada in its capacity as the fondé de pouvoir under the Hypothec.
        " Unanimous Lenders " means, at any time, all Lenders.
        " Unencumbered Cash " means all cash and Cash Equivalents held by the Borrower in OECD countries that are not subject to any Lien by any Person other than the Administrative Agent. For the avoidance of doubt, any cash or Cash Equivalents held by any joint ventures that is proportionately consolidated into the Borrower's balance sheet shall not constitute Unencumbered Cash.
        " Unencumbered Liquidity " means the sum of (a) Unencumbered Cash and (b) the maximum amount of the Available Commitment (of all Lenders) which, if drawn by the Borrower, would not breach any of the financial covenants set out in Section 10.1 (other than Section 10.1(f)).
        " United States Dollars ", " US Dollars " and " US $ " mean lawful money of the United States of America.
        " Unsecured Hedge Counterparty " means, in respect of any Metal Hedge Agreements entered into by the Borrower, the Persons listed on Annex 4, as such Annex is amended from time to time at the request of the Borrower and with the consent of the Majority Lenders, acting reasonably; provided that, there shall be no more than two Persons listed on Annex 4 at any time; provided further, that each such Person listed on Annex 4 has executed the "Consent" to the Assignment of Metal Hedge Agreement (in substantially the form of such Consent) and the Borrower has delivered such executed consent to the Administrative Agent.
        " Voting Stock " of any Person shall mean capital stock of such Person which ordinarily has voting power for the election of directors (or Persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency.
        " Zinc " means zinc metal of a minimum 0.99995 purity which is registered or registrable, and is in conformity in all respects with the requirements for good delivery, on the London Metals Exchange.
        1.2     Accounting Terms.     All accounting terms used herein but not specifically defined herein, shall be construed in accordance with GAAP consistently applied and all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles.
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        1.3     Headings, etc.     The headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement. All text included in sections or subsections entitled, "Provisions Reference", in this Agreement are also inserted for convenience only and shall not affect the meaning or interpretation of this Agreement.
        1.4     Provisions Reference.     Reference is made to Section 2 of the Provisions for other definitional and interpretative principles applicable to this Agreement.
        1.5     Amendment and Restatement.     This Agreement is and shall for all purposes be a further amendment and a restatement of the provisions of the Existing Credit Agreement. This Agreement shall supersede the Existing Credit Agreement insofar as it constitutes the entire agreement between the parties concerning the subject matter of this Agreement, but does not constitute a novation of the Existing Credit Agreement, the Security held under the Existing Credit Agreement or any of the indebtedness, liabilities or obligations of the Borrower thereunder. All Advances (as defined in the Existing Credit Agreement) shall be Advances under this Agreement, and all of the Facility Indebtedness (as defined in the Existing Credit Agreement) shall be Facility Indebtedness under this Agreement. Without in any way limiting the terms of the Existing Credit Agreement, the Borrower confirms that the existing Security shall continue to secure all of the Facility Indebtedness and Hedge Indebtedness, including but not limited to that arising under this Agreement and the other Financing Documents and the Hedge Agreements to which each Permitted Hedge Counterparty is a party.
        1.6     Schedules, etc.     The following Schedules, Annexes and Exhibits are deemed to be part of this Agreement:

Annex 1	 	—	 	Model Credit Agreement Provisions	
Annex 2	 	—	 	Commitments	
Annex 3	 	—	 	Financial Parameters	
Annex 4	 	 	 	Unsecured Hedge Counterparties	
Annex 5	 	—	 	Table of Concordance	
Annex 6	 	—	 	Hedge Agreement Terms	
Annex 7	 	—	 	Initial Model and Budget	
Schedule 8.1(h)	 	—	 	Litigation	
Schedule 8.1(l)	 	—	 	Mining Properties	
Schedule 8.1(m)	 	—	 	Certain Permitted Liens	
Schedule 8.1(p)	 	—	 	Certain Contracts	
Schedule 8.1(q)	 	—	 	Permits	
Schedule 8.1(t)	 	—	 	Subsidiaries and Capital Stock	
Schedule 8.1(u)	 	—	 	Environmental	
Schedule 8.1(v)	 	—	 	Labour	
Schedule 8.1(w)	 	—	 	Employee Matters	
Schedule 8.1(y)	 	 	 	Partnerships and Other Associations	
Schedule 8.1(z)	 	—	 	Investments and Indebtedness	
Schedule 8.1(cc)	 	—	 	Hedge Information	
Schedule 8.1(dd)	 	—	 	Royalties	
Exhibit A	 	—	 	Drawdown Notice	
Exhibit B	 	—	 	Instrument of Adhesion	
Exhibit C	 	—	 	Assignment of Metal Hedge Agreement	
Exhibit D	 	—	 	Assignment of Contracts	
Exhibit E	 	—	 	Compliance Certificate	
Exhibit F	 	—	 	Investment Certificate (Majority Holding)	
Exhibit G	 	—	 	Investment Certificate (Asset Acquisition (US $20,000,000 or more)	
Exhibit H	 	—	 	Indebtedness Certificate (Other Senior Indebtedness)	
Exhibit I	 	 	 	Indebtedness Certificate (Subordinated Indebtedness)	
Exhibit J	 	 	 	Permitted Hedge Counterparty Confirmation Letter	
20

 
 ARTICLE 2

CREDIT FACILITY
        2.1     Creation of the Credit Facility.     Each Lender hereby severally, but not jointly, agrees to make available to the Borrower, upon and subject to the terms and conditions hereof, such Lender's Applicable Percentage of the Credit Facility.
2.2   Amount, Availability and Purpose.
(a)
The Outstanding Advances expressed as an Equivalent Amount in US Dollars shall not exceed at any time the Maximum Facility Amount, and shall reduce in accordance with the terms and conditions of this Agreement. The Credit Facility shall be available by way of Prime Rate Advances, Base Rate Advances, LIBOR Advances, the issuance of L/Cs and/or by presenting orders to a Lender for acceptance as Bankers' Acceptances.

(b)
The aggregate face amount of L/Cs outstanding at any time under the Credit Facility (calculated by reference to the face amount of each L/C at its time of issuance) expressed as an Equivalent Amount in US Dollars shall not exceed US $40,000,000.

(c)
At the option of the Borrower, up to US $5,000,000 of the Credit Facility may be used, subject to the terms hereof, by incurring overdrafts in the Designated Account with BNS, which shall be deemed to be Prime Rate Advances (if made in Canadian Dollars) and Base Rate Advances (if made in US Dollars) (the "Overdraft Facility" ).

(d)
Upon and subject to the terms hereof, each Lender shall severally make Advances to the Borrower from time to time prior to the Maturity Date in an amount equal to its Applicable Percentage of the Maximum Facility Amount; provided that the aggregate amount of Advances made by each Lender shall not exceed such Lender's Commitment and provided further that the Advances by way of the Overdraft Facility shall be made solely by BNS.

(e)
Prior to the Maturity Date, the principal amount of any Advance which is prepaid other than pursuant to Sections 5.3 and 5.4 may, subject to the terms hereof, be reborrowed.

(f)
All Advances shall be applied by the Borrower for general corporate purposes, including for acquisitions, to meet working capital needs and for Capital Expenditures on existing and new projects, to the extent permitted by this Agreement.
        2.3     Termination of Credit Facility .    Unless otherwise accelerated and terminated in accordance with Section 11.2, or unless terminated in accordance with Section 5.3, all outstanding Facility Indebtedness shall be repaid in full, and the Commitments and Credit Facility terminated, on the Maturity Date.
 
 ARTICLE 3

ADVANCES
3.1   Drawdown Procedure.
(a)
Unless otherwise specified herein, the Borrower may obtain Advances under the Credit Facility, subject to the provisions hereof, by delivering to the Administrative Agent at the Branch of Account not less than four Banking Days' prior to each proposed Drawdown Date for LIBOR Advances, four Business Days' prior to each proposed Drawdown Date for Advances by way of Bankers' Acceptances, two Business Days' prior to each proposed Drawdown Date for Advances by way of Prime Rate Advances and Base Rate Advances, and such notice period in respect of Advances by way of L/Cs as BNS may reasonably require so that it has sufficient time to review the proposed form of L/C, a Drawdown Notice, specifying among other things, the type of Advance, the amount to be borrowed, the requested Drawdown Date and, if applicable, the length of the Interest Period (for LIBOR Advances) or term (for Bankers' Acceptances); provided that, if the Borrower fails to give such notice with respect to the roll-over of any outstanding LIBOR Advances or Advances by way of Bankers' Acceptances prior to any applicable Interest Period or maturity date, as the case may be, such
21

Advances shall be deemed to be Base Rate Advances, in the case of LIBOR Advances, and Prime Rate Advances, in the case of Bankers' Acceptance, and shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin or the Prime Rate plus the Applicable Margin, as the case may be (provided that at any time thereafter the Borrower may, provided no Default has occurred and is continuing, convert such Advances into LIBOR Advances or request the issuance of Bankers' Acceptances upon giving notice as set forth in this Section 3.1(a)).
(b)
Upon receipt of each Drawdown Notice for a Prime Rate Advance, Base Rate Advance and LIBOR Advance, the Administrative Agent shall forthwith notify the Lenders thereof specifying the amount of the Advance being requested, the proposed Drawdown Date, each Lender's Applicable Percentage of the proposed Advance and, if applicable, the Interest Period thereof.

(c)
Each Lender shall make available to the Administrative Agent such Lender's Applicable Percentage of the relevant Prime Rate Advance, Base Rate Advance or LIBOR Advance before 11:00 a.m. (Toronto time) on the relevant Drawdown Date, by transfer through the interbank payment system in immediately available funds, to the account designated by the Administrative Agent at the Branch of Account.

(d)
Provided that the applicable conditions set forth in Article 6 have been fulfilled after receipt by the Administrative Agent of the funds transferred to it pursuant to Section 3.1(c), the Administrative Agent shall forthwith make such funds available to the Borrower by debiting the account(s) referred to in Section 3.1(c) and by crediting the Designated Account or by paying the Borrower, as the Borrower shall otherwise direct, like funds in the aggregate of such funds received by the Administrative Agent from the Lenders prior to 2:00 p.m. (Toronto time) on the Drawdown Date, but if the conditions precedent to the Advance are not met by 2:00 p.m. (Toronto time) on the Drawdown Date, the Administrative Agent shall return such funds to the Lenders or invest them in an overnight investment as orally instructed by each Lender until such time as the Advance is made.

(e)
Each Drawdown Notice shall be irrevocable and binding on the Borrower. In respect of the Advance specified in any Drawdown Notice, the Borrower shall indemnify the Administrative Agent and each Lender and hold the Administrative Agent and each Lender harmless from any and all loss or expense incurred or sustained by the Administrative Agent and such Lender as a result of (i) failure by the Borrower to borrow such Advance in accordance with the terms hereof and the relevant Drawdown Notice after giving a Drawdown Notice in respect thereof or (ii) the Advance not occurring on a Drawdown Date due to the failure by the Borrower to fulfil any of the applicable conditions set forth in Article 6 or the occurrence of a Default; which loss or expense shall include, without limitation, any loss or expense incurred by reason of the liquidation or re-employment of deposits or other funds obtained by the Administrative Agent or any Lender to fund the requested Advance, but shall not include any compensation for loss of the amount of the Applicable Margin which would otherwise have been earned by the Lenders if such Advance had been made or if such Advance had been made on the requested Drawdown Date. The Borrower shall, on demand from the Administrative Agent, pay to the Administrative Agent for or on behalf of itself or any Lender the amount of such loss or expense and the certificate of the Administrative Agent or each such Lender setting out the amount of such loss or expense shall, in the absence of manifest error, be prima facie evidence thereof. The indemnity set out in this Section shall survive the termination of the Commitments and the repayment of all amounts outstanding hereunder and under the Financing Documents.

(f)
Provisions Reference: Reference is made to Section 6(a) of the Provisions regarding "Funding by Lenders" and "Presumption by Administrative Agent".

(g)
The failure of any Lender to make its Applicable Percentage of an Advance to be made by it shall not relieve any other Lender of its obligation, if any, hereunder to make its Applicable Percentage of an Advance on the relevant Drawdown Date, but no Lender shall be responsible for the failure of any other Lender to make an Advance to be made by the defaulting Lender on such Drawdown Date.

(h)
If any Lender shall fail to advance its Applicable Percentage of an Advance, the Administrative Agent shall, if requested in writing by the Borrower, for 20 days after such request, invite other Eligible
22

Assignees to assume thenceforth all of the obligations of such Lender under the Credit Facility in accordance with the procedures set out in Section 3.3(b) of the Provisions. In accordance with such procedures, if such Eligible Assignee is a Lender or an Affiliate of a Lender, no consent of the Borrower shall be required. If such invitee is an Eligible Assignee which is not a Lender or an Affiliate of a Lender, the consent of the Borrower as to the replacement Lender shall be required, which consent shall not be unreasonably withheld; provided that the Borrower's consent shall not be required if a Default has occurred and is continuing. Such defaulting Lender shall reimburse the Administrative Agent for all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent in connection therewith. If such defaulting Lender fails to so reimburse the Administrative Agent within three Business Days after demand therefor, the Borrower shall reimburse the Administrative Agent for all such costs and expenses, without limiting the rights of the Borrower against the defaulting Lender. The defaulting Lender and any Affiliate of such Lender which is a Permitted Hedge Counterparty shall, effective as of the assignment to the replacement Lender, assign, at price determined in a reasonable manner from market quotations in accordance with customary market practices, all Hedge Agreements it or they hold with the Borrower to such replacement Lender or to another Lender or Permitted Hedge Counterparty.
        3.2     Prime Rate, Base Rate and LIBOR Advances.     Each Prime Rate Advance shall be in an aggregate minimum amount of Cdn. $1,000,000 and in a whole multiple of Cdn. $1,000,000. Each LIBOR Advance or Base Rate Advance shall be in minimum amount of US $1,000,000 and a whole multiple of US $1,000,000. The Borrower shall pay interest to the Administrative Agent for the account of the Lenders at the Branch of Account on any such Advances outstanding to it from time to time hereunder at the applicable rate of interest specified in Article 4.
        3.3     LIBOR Tranches.     There shall not at any time be more than six different LIBOR Tranches.
        3.4     Overdraft Facility.     All Advances under the Overdraft Facility shall be made solely by BNS and records concerning Advances under the Overdraft Facility shall be maintained solely by BNS. All payments of principal, interest, fees and other amounts relating to the Overdraft Facility shall be made solely to BNS at the Branch of Account. Any notices by the Borrower in connection with the Overdraft Facility shall be made to BNS. Neither the notice periods set out in Section 3.1(a) nor minimum amount requirements for Advances shall apply to Advances by way of overdraft under the Overdraft Facility. In addition, in respect of Advances by way of overdraft under the Overdraft Facility, the Borrower shall not be required to deliver a Drawdown Notice pursuant to Section 6.2(c). In connection with Advances under the Overdraft Facility, BNS shall ascertain the position or net position of the Borrower's Designated Account at the close of business daily. If the Canadian Dollar position or net position is a debit in favour of BNS, the debit will (if the Borrower is entitled to an Advance) be deemed to be a Prime Rate Advance under the Overdraft Facility in the amount of the debit. If the US Dollar position or net position is a debit in favour of BNS, the debit will (if the Borrower is entitled to an Advance) be deemed to be a Base Rate Advance under the Overdraft Facility in the amount of the debit. If a position or net position is a credit in favour of the Borrower, the credit will be deemed to be a repayment of a Prime Rate Advance or Base Rate Advance, as the case may be, under the Overdraft Facility in the amount of the credit to the extent of any principal amounts owing in respect thereof.
        3.5     Conversions.     Subject to the other terms of this Agreement, the Borrower may from time to time convert all or any part of the outstanding amount of any Advance into another form of Advance permitted by this Agreement.
3.6   Execution of Bankers' Acceptances.
(a)
To facilitate the acceptance of Bankers' Acceptances hereunder, the Borrower hereby appoints each Lender as its attorney to sign and endorse on its behalf, as and when considered necessary by the Lender, an appropriate number of orders in the form prescribed by that Lender.

(b)
Each Lender may, at its option, execute any order in handwriting or by the facsimile or mechanical signature of any of its authorized officers, and the Lenders are hereby authorized to accept or pay, as the case may be, any order of the Borrower which purports to bear such a signature notwithstanding that any such individual has ceased to be an authorized officer of the Lender. Any such order or
23

Bankers' Acceptance shall be as valid as if such officer were an authorized officer at the date of issue of the order or Bankers' Acceptance.
(c)
Any order or Bankers' Acceptance signed by a Lender as attorney for the Borrower, whether signed in handwriting or by the facsimile or mechanical signature of an authorized officer of a Lender may be dealt with by the Administrative Agent or any Lender to all intents and purposes and shall bind the Borrower as if duly signed and issued by the Borrower.

(d)
The receipt by the Administrative Agent of a request for an Advance by way of Bankers' Acceptances shall be each Lender's sufficient authority to execute, and each Lender shall, subject to the terms and conditions of this Agreement, execute orders in accordance with such request and the advice of the Administrative Agent given pursuant to Section 3.9, and the orders so executed shall thereupon be deemed to have been presented for acceptance.

3.7   Sale of Bankers' Acceptances.
(a)
It shall be the responsibility of each Lender to arrange, in accordance with normal market practice, for the sale on each Drawdown Date of the Bankers' Acceptances issued by the Borrower and to be accepted by that Lender, failing which the Lender shall purchase its Bankers' Acceptances.

(b)
In accordance with the procedures set forth in Section 3.9, the Administrative Agent will make the net proceeds of the requested Advance by way of Bankers' Acceptances received by it from the Lenders available to the Borrower on the Drawdown Date by crediting the Designated Account with such amount.
        3.8     Size and Maturity of Bankers' Acceptances and Rollovers.     Each Advance of Bankers' Acceptances shall be in a minimum amount of Cdn. $1,000,000. Each Bankers' Acceptance shall have a term of 30 to 180 days after the date of acceptance of the order by a Lender, but no Bankers' Acceptance may mature on a date which is not a Business Day or on a date after the Maturity Date. The face amount at maturity of a Bankers' Acceptance may be renewed as a Bankers' Acceptance or converted into another form of Advance permitted by this Agreement.
        3.9     Co-ordination of BA Advances.     Each Lender shall advance its Applicable Percentage of each Advance by way of Bankers' Acceptances in accordance with the provisions set forth below.
(a)
The Administrative Agent, promptly following receipt of a notice from the Borrower pursuant to Section 3.1(a) requesting an Advance by way of Bankers' Acceptances, shall advise each Lender of the aggregate face amount and term(s) of the Bankers' Acceptances to be accepted by it, which term(s) shall be identical for all Lenders. The aggregate face amount of Bankers' Acceptances to be accepted by a Lender shall be determined by the Administrative Agent by reference to the respective Commitments of the Lenders, except that, if the face amount of a Bankers' Acceptance would not be a whole multiple of Cdn. $1,000, the face amount shall be increased or decreased by the Administrative Agent in its sole discretion to the nearest whole multiple of Cdn. $1,000.

(b)
Each Lender shall transfer to the Administrative Agent at the Branch of Account for value on each Drawdown Date immediately available Cdn. Dollars in an aggregate amount equal to the BA Discount Proceeds of all Bankers' Acceptances accepted and sold or purchased by the Lender on such Drawdown Date net of the applicable Bankers' Acceptance Fee and net of the amount required to pay any of its previously accepted Bankers' Acceptances that are maturing on the Drawdown Date or any of its other Advances that are being converted to Bankers' Acceptances on the Drawdown Date.

(c)
If the Administrative Agent determines that all the conditions precedent to an Advance specified in this Agreement have been met, it shall advance to the Borrower the amount delivered by each Lender by crediting the Designated Account or by paying the Borrower, as the Borrower shall otherwise direct, prior to 2:00 p.m. (Toronto time) on the Drawdown Date, but if the conditions precedent to the Advance are not met by 2:00 p.m. (Toronto time) on the Drawdown Date, the Administrative Agent shall return the funds to the Lenders or invest them in an overnight investment as orally instructed by each Lender until such time as the Advance is made.
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(d)
Notwithstanding any other provision hereof, for the purpose of determining the amount to be transferred by a Lender to the Administrative Agent for the account of the Borrower in respect of the sale of any Bankers' Acceptance issued by the Borrower and accepted by such Lender, the proceeds of sale thereof shall be deemed to be an amount equal to the BA Discount Proceeds calculated with respect thereto. Accordingly, in respect of any particular Bankers' Acceptance accepted by it, a Lender, in addition to its entitlement to retain the applicable Bankers' Acceptance Fee for its own account, shall be entitled to retain for its own account the amount, if any, by which the actual proceeds of sale thereof exceed the BA Discount Proceeds calculated with respect thereto, and shall be required to pay out of its own funds the amount, if any, by which the actual proceeds of sale thereof are less than the BA Discount Proceeds calculated with respect thereto.

(e)
Whenever the Borrower requests an Advance that includes Bankers' Acceptances, each Lender that is not permitted by any Requirements of Law or by customary market practice to accept a Bankers' Acceptance (a " Non BA Lender ") shall, in lieu of accepting its pro rata amount of such Bankers' Acceptances, make available to the Borrower on the Drawdown Date an Advance (a " BA Equivalent Advance ") in Canadian Dollars and in an amount equal to the BA Discount Proceeds of the Bankers' Acceptances that the Non BA Lender would have been required to accept on the Drawdown Date if it were able to accept Bankers' Acceptances. Each Non BA Lender shall also be entitled to deduct from the BA Equivalent Advance an amount equal to the Bankers' Acceptance Fee that would have been applicable had it been able to accept Bankers' Acceptances. The BA Equivalent Advance shall have a term equal to the term of the Bankers' Acceptances that the Non BA Lender would otherwise have accepted and the Borrower shall, at the end of that term, be obligated to pay the Non BA Lender an amount equal to the aggregate face amount of the Bankers' Acceptances that it would otherwise have accepted. All provisions of this Agreement applicable to Bankers' Acceptances and Lenders that accept Bankers' Acceptances shall apply mutatis mutandis to BA Equivalent Advances and Non BA Lenders and, without limiting the foregoing, Advances shall include BA Equivalent Advances.
        3.10     Payment of Bankers' Acceptances.     The Borrower shall provide for the payment to the Administrative Agent at the Branch of Account for the account of the applicable Lenders of the full face amount of each Bankers' Acceptance accepted for its account on the earlier of (a) the date of maturity of a Bankers' Acceptance and (b) the date on which any Facility Indebtedness becomes due and payable hereunder. Any amount payment of which has not been provided for by the Borrower in accordance with this Section shall be automatically converted to Prime Rate Advances in accordance with Section 3.1(a).
        3.11     Deemed Advance — Bankers' Acceptances.     Except for amounts which are paid from the proceeds of a rollover of a Bankers' Acceptance or for which payment has otherwise been funded by the Borrower (including by way of automatic conversion in accordance with Section 3.1(a)), any amount which a Lender pays to any third party on or after the date of maturity of a Bankers' Acceptance in satisfaction of the face amount thereof or which is owing to the Lender in respect of such a Bankers' Acceptance on or after the date of maturity of such a Bankers' Acceptance resulting from such Lender paying an amount in satisfaction of the face amount of such Bankers' Acceptance to the holder thereof, shall be deemed to be a Prime Rate Advance to the Borrower. Each Lender shall forthwith give notice to the Administrative Agent of the making of such a payment and the Administrative Agent shall promptly give similar notice to the other Lenders and to the Borrower. Interest shall be payable on such Prime Rate Advance in accordance with the terms applicable to Prime Rate Advances.
        3.12     Waiver.     The Borrower shall not claim from a Lender any days of grace for the payment at maturity of any Bankers' Acceptances presented and accepted by the Lender pursuant to this Agreement. The Borrower waives any defence to payment which might otherwise exist if for any reason a Bankers' Acceptance shall be held by a Lender in its own right at the maturity thereof, and the doctrine of merger shall not apply to any Bankers' Acceptance that is at any time held by a Lender in its own right.
        3.13     Degree of Care.     Any executed orders to be used as Bankers' Acceptances shall be held in safekeeping with the same degree of care as if they were the Lender's own property, and shall be kept at the place at which such orders are ordinarily held by such Lender.
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        3.14     Indemnity.     The Borrower shall indemnify and hold the Lenders, and each of them, harmless from any loss, cost, damage or expense with respect to any Bankers' Acceptance dealt with by the Lenders for the Borrower's account, but shall not be obliged to indemnify a Lender for any loss, cost, damage or expense caused by the gross negligence or wilful misconduct of that Lender.
        3.15     Obligations Absolute.     The obligations of the Borrower with respect to Bankers' Acceptances under this Agreement shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances:
(a)
any lack of validity or enforceability of any order accepted by a Lender as a Bankers' Acceptance; or

(b)
the existence of any claim, set-off, defence or other right which the Borrower may have at any time against the holder of a Bankers' Acceptance, a Lender or any other Person, whether in connection with this Agreement or otherwise.
        3.16     Shortfall on Drawdowns, Rollovers and Conversions.     The Borrower agrees that:
(a)
the difference between the amount of an Advance requested by the Borrower by way of Bankers' Acceptances and the actual proceeds of the Bankers' Acceptances;

(b)
the difference between the actual proceeds of a Bankers' Acceptance and the amount required to pay a maturing Bankers' Acceptance, if a Bankers' Acceptance is being rolled over; and

(c)
the difference between the actual proceeds of a Bankers' Acceptance and the amount required to repay any Advance which is being converted to a Bankers' Acceptance;
shall be funded and paid by the Borrower from its own resources, by 11:00 a.m. on the applicable Drawdown Date or may be advanced as a Prime Rate Advance if the Borrower is otherwise entitled to such an Advance.
        3.17     Prohibited Use of L/Cs and Bankers' Acceptances.     The Borrower shall not enter into any agreement or arrangement of any kind with any Person to whom Bankers' Acceptances have been delivered whereby the Borrower undertakes to replace such Bankers' Acceptances on a continuing basis with other Bankers' Acceptances, nor shall the Borrower directly or indirectly take, use or provide Bankers' Acceptances or L/Cs as security for funds loaned or advanced from any other Person. For greater certainty, L/Cs may be used as security for deferred amounts and purchase price adjustments owing in connection with acquisitions permitted by this Agreement.
3.18    Issuance and Maturity of L/Cs.
(a)
A request for an Advance by way of L/C shall be made by the Borrower in accordance with Section 3.1(a) except that a request shall be made to BNS. A request shall include the details of the L/C to be issued. BNS shall promptly notify the Borrower of any comment concerning the form of the L/C requested by the Borrower and shall, if the Borrower is otherwise entitled to an Advance, issue the L/C to the Borrower on the Drawdown Date or as soon thereafter as BNS is satisfied with the form of L/C to be issued.

(b)
Each L/C issued under this Agreement shall have a term which is not more than one year after its issuance date or renewal date. An L/C may be renewed by the Borrower subject to complying with the terms of this Agreement applicable to an Advance by way of L/C.
3.19    Payment of L/Cs.
(a)
The Borrower shall provide for the payment to BNS at the Branch of Account of the full face amount of each L/C (or the amount actually paid in the case of a partial payment) on the earlier of (i) the date on which BNS makes a payment to the beneficiary of an L/C, and (ii) the date on which any Facility Indebtedness becomes due and payable hereunder, provided that any amount paid by the Borrower under this clause (ii) shall for all purposes be deemed to be Cash Collateral under Section 3.20. Any amount payment of which has not been provided for by the Borrower in accordance with this Section
26

shall be automatically converted to a Prime Rate Advance or Base Rate Advance as set out in Section 3.21.
(b)
The obligation of the Borrower to reimburse BNS for a payment to a beneficiary of an L/C shall be absolute and unconditional (without prejudice to the Borrower's right, if applicable, after reimbursing BNS, to claim damages for matters directly resulting from BNS's gross negligence or wilful misconduct) and shall not be reduced by any demand or other request for payment of an L/C (a " Demand "), which is paid or acted upon in good faith and in conformity with laws, regulations or customs applicable thereto, being invalid, insufficient, fraudulent or forged, nor shall the Borrower's obligation be subject to any defence or be affected by any right of set-off, counter-claim or recoupment which the Borrower may now or hereafter have against the beneficiary, BNS or any other Person for any reason whatsoever, including the fact that BNS paid a Demand or Demands (if applicable) aggregating up to the amount of the L/C notwithstanding any contrary instructions from the Borrower to BNS (other than instructions contained in the L/C, which instructions need be complied with only to the same extent and in accordance with the same standards set forth above) or the occurrence of any event including, but not limited to, the commencement of legal proceedings to prohibit payment by BNS of a Demand. Any action, inaction or omission taken or suffered by BNS under or in connection with an L/C or any Demand, if in good faith and in conformity with laws, regulations or customs applicable thereto, shall be binding on the Borrower and shall not place BNS under any resulting liability to the Borrower. Without limiting the generality of the foregoing, BNS may receive, accept, or pay as complying with the terms of the L/C, any Demand otherwise in order which may be signed by, or issued to, any administrator, executor, trustee in bankruptcy, receiver or other Person or entity acting as the representative or in place of, the beneficiary.
        3.20     Cash Collateral .    Except where any amounts under this Agreement have become immediately due and payable, if any L/C is outstanding on the Maturity Date or on any other date that all Commitments are terminated, then on the Maturity Date or such other date, the Borrower shall, promptly on demand by the Administrative Agent, deposit with the Administrative Agent for the benefit of the Secured Parties Cash Collateral in an amount equal to the full undrawn principal amount at maturity of all L/Cs then outstanding. Such Cash Collateral shall be held by the Administrative Agent, as security for, and to provide for the payment of, the Borrower's obligations in respect of such outstanding L/Cs. The Administrative Agent may at any time after the Maturity Date apply any or all of such Cash Collateral to the payment of any or all of the Borrower's obligations in respect of such L/Cs which become due and payable. At the Borrower's request, but subject to the Administrative Agent's reasonable approval, the Administrative Agent shall invest any Cash Collateral consisting of cash and any proceeds of Cash Collateral consisting of cash in Cash Equivalents, and any commissions, expenses and penalties incurred by the Administrative Agent in connection with any investment and redemption of such Cash Collateral shall be payable by the Borrower on demand, shall bear interest at the rates provided herein for in Section 4.1(c) on the basis of the Prime Rate in effect from time to time, and shall be charged to any accounts of the Borrower, or, at the Administrative Agent's option, shall be paid out of the proceeds of any earnings received by the Administrative Agent from the investment of such Cash Collateral provided herein or out of such cash itself. Neither the Administrative Agent nor the Secured Parties make any representation or warranty as to, and shall not be responsible for, the rate of return, if any, earned on any Cash Collateral. Any earnings on Cash Collateral shall be held as additional Cash Collateral on the terms set forth in this Section 3.20.
        3.21     Deemed Advance — L/Cs.     Except for amounts which have been funded by the Borrower, any amount which BNS pays to any third party in respect of an L/C in satisfaction or partial satisfaction thereof shall also be deemed to be a Prime Rate Advance in the case of Canadian Dollar L/Cs or a Base Rate Advance in the case of US Dollar L/Cs. BNS shall forthwith give notice of the making of such an Advance to the Borrower and to the Lenders. Interest shall be payable on such Advances in accordance with the terms applicable to such Advances.
        3.22     Lenders' Obligations Relating to Overdraft Facility and L/Cs.     Notwithstanding that Advances under the Overdraft Facility and Advances made by way of L/Cs are for the time being made by BNS, it is the intention of the parties that the ultimate credit risk and exposure of any Lender in respect of all Advances be in accordance with its Applicable Percentage. Accordingly, immediately upon the issuance of an L/C or the making of Advance under the Overdraft Facility in accordance with this Agreement, each Lender shall be deemed to
27

have irrevocably and unconditionally purchased and received from BNS, without recourse or warranty, an undivided interest and participation therein to the extent of such Lender's Applicable Percentage. Each Lender shall, on the date a draft or demand under any L/C is honoured, from time to time as requested by the Administrative Agent or otherwise upon the occurrence of a Default, without regard to any other provision of this Agreement or any of the other Financing Documents, or any defence any Lender may have in connection with such payment or any defence any Lender may have in connection with such participation, pay its Applicable Percentage of the amount paid by BNS with respect to an L/C and not reimbursed by the Borrower, and pay its Applicable Percentage by way of Overdraft Facility, by payment to the Administrative Agent for reimbursement of BNS on such day in immediately available funds. If and to the extent such Lender shall not make such payment available to the Administrative Agent, such Lender and the Borrower severally agree to pay to the Administrative Agent for reimbursement of BNS forthwith on demand such amount together with interest thereon, for each day from the date such amount was paid or credited by BNS until such amount is made available to the Administrative Agent at a per annum rate equal to the Prime Rate plus the Applicable Margin or the Base Rate plus the Applicable Margin, as the case may be. The failure of any Lender to pay its Applicable Percentage of any such amount shall not relieve any other Lender of its obligation to make available any amount required to be paid by it under this Section, but no Lender shall be responsible for the failure of any other Lender to make such payment. Any such action on the part of the Lenders shall be binding on the Borrower. If any Lender fails to take the actions required under this Section, the Administrative Agent may, without prejudice to the Borrower's obligation to pay the Administrative Agent for reimbursement of BNS as contemplated in Section 3.19 and this Section 3.22, and until the required action has been taken by such Lender, make appropriate adjustments to the payments to the defaulting Lender of amounts otherwise required to be made to such Lender under this Agreement.
        3.23     Adjustment of Applicable Percentages.     While BNS is the sole Lender making Advances under the Overdraft Facility and issuing L/Cs, its participation in Advances and payments (including standby fees) under the other Advances hereunder shall be reduced and shall be adjusted by the Administrative Agent from time to time, so that the aggregate of the Advances it has made or committed to make under those other Advances reflects as closely as reasonably possible its overall Applicable Percentage of those other Advances.
        3.24     Evidence of Indebtedness.     The Advances made by the Lenders shall be evidenced by records maintained by the Administrative Agent and by each Lender concerning those Advances it has made. The Administrative Agent shall also maintain records of Advances by way of Bankers' Acceptances and L/Cs, and each Lender shall also maintain records relating to Bankers' Acceptances that it has accepted. BNS shall also maintain records relating to L/Cs that it has issued. The records maintained by the Administrative Agent, and by BNS relating to L/Cs, shall constitute, in the absence of manifest error, prima facie evidence of the Facility Indebtedness and all details relating thereto. The failure of the Administrative Agent or any Lender to correctly record any such amount or date shall not, however, adversely affect the obligation of the Borrower to pay the Facility Indebtedness in accordance with this Agreement.
 
 ARTICLE 4

INTEREST RATES AND FEES
4.1   Interest Rate and Payment Dates.
(a)
Subject to Sections 4.1(c) and 4.4, (i) LIBOR Advances shall bear interest for each day during each Interest Period with respect thereto on the unpaid principal amount thereof at a rate per annum equal to the LIBO Rate determined for such day plus the Applicable Margin, (ii) Prime Rate Advances shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Prime Rate plus the Applicable Margin, (iii) Base Rate Advances shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Base Rate plus the Applicable Margin and (iv) the rate per annum for calculating the Bankers' Acceptance Fee shall be the Applicable Margin therefor.

(b)
All interest payable in respect of an Advance shall accrue from the date of each Advance and shall, with respect to LIBOR Advances, become due and payable in arrears on the last day of each Interest Period in respect thereof and, if the Interest Period is longer than three months, every three months
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after the date of the relevant LIBOR Advance and, in the case of all other Advances (other than Advances by way of Bankers' Acceptances and L/Cs), on the last Business Day of each calendar month.
(c)
If all or a portion of the principal amount or interest of any of the Advances shall not be paid when due (whether at the stated maturity, by acceleration or otherwise) such overdue amount shall, to the extent permitted by all applicable Requirements of Law, bear interest at a rate which is 2% greater than the rate which would otherwise be applicable pursuant to Section 4.1(a) (in the case of LIBOR Advances, based on the existing LIBO Rate until the expiry of the then applicable Interest Period and thereafter based on successive Interest Periods of one month) from the date of such non-payment until paid in full (as well after, as before Default, maturity or judgment) with interest on overdue interest bearing interest at the same rate.
4.2   Computation and Determination of Interest and Fees.
(a)
Interest in respect of LIBOR Advances shall be calculated on the basis of a 360 day year for the actual number of days elapsed in each Interest Period. Interest in respect of Base Rate Advances shall be calculated on the basis of a 360 day year. Interest in respect of Prime Rate Advances shall be calculated on the basis of a 365 or 366 day year, as the case may be.

(b)
Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the basis used by the Administrative Agent in determining any interest rate pursuant to Article 4.

(c)
When requested by the Administrative Agent in the event that Telerate Page 3750 or any successor page is not functioning or available, each Reference Bank shall use its best efforts to furnish quotations of LIBO Rates to the Administrative Agent as contemplated hereby. If any Reference Bank shall in such case be unable or otherwise fail to supply such rates to the Administrative Agent upon its request, the LIBO Rate shall be determined on the basis of the quotations of the remaining Reference Bank.

(d)
If any Reference Bank's Commitment shall terminate (otherwise than on termination of all the Commitments), or all of its Advances are assigned for any reason whatsoever, such Reference Bank shall thereupon cease to be a Reference Bank, and if, as a result of the foregoing, there shall only be one Reference Bank remaining, then the Administrative Agent (after consultation with the Borrower and the Lenders) may, by notice to the Borrower and the Lenders, designate another Lender that is a bank as a Reference Bank.

        4.3     Provisions Reference.     Reference is made to Section 3.5 of the Provisions regarding "Inability to Determine Rates".
        4.4     Interest Act.     Each rate of interest which is calculated with reference to a period (the "deemed interest period") that is less than the actual number of days in the calendar year of calculation is, for the purposes of the Interest Act (Canada), equivalent to a rate based on a calendar year calculated by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing by the number of days in the deemed interest period.
        4.5     Prohibited Rates of Interest.     Notwithstanding any other provision of this Agreement or any other Financing Documents, the Borrower shall not be obliged to make any payment of interest or other amounts payable to the Administrative Agent or Lenders in an amount or at a rate that would be prohibited by law or would result in the receipt of interest at a criminal rate, as the terms "interest" and "criminal rate" are defined under the Criminal Code (Canada), or that would contravene any usury laws which may be applicable to any obligations of the Borrower in connection with this Agreement or the other Financing Documents. In any such case, any payment, collection or demand for interest in excess of the maximum permitted rate shall, notwithstanding such provision, be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the Administrative Agent or Lender of "interest" at a "criminal rate".
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        4.6     Commitment Fee.     The Borrower shall pay to the Administrative Agent on the last Business Day of each month, commencing on the last Business Day of the month in which the Restatement Date occurs, for the account of each Lender, a commitment fee calculated on the average daily sum of each Lender's Available Commitment during each month (or such shorter period with respect to the first such payment date) at the Commitment Fee Rate, payable in arrears and calculated on the basis of a 365 or 366 day year, as applicable. Such commitment fee shall be distributed by the Administrative Agent to the Lenders based on their Applicable Percentage.
        4.7     L/C Fees.     Payment of L/C fees shall be made by the Borrower to BNS at the Branch of Account. The L/C fees which accrue during each calendar quarter shall be paid in arrears one Business Day after such calendar quarter. L/C fees shall be calculated at the annual rate of the then Applicable Margin on the face amount of each L/C for the duration of its term on the basis of the actual number of days to elapse from and including the date of issuance or renewal by BNS to but not including the expiry date of the L/C. Such L/C fees shall be distributed by the Administrative Agent to the Lenders based on their Applicable Percentage. An additional L/C fronting fee shall be payable by the Borrower to BNS, for BNS's sole benefit, at the Branch of Account. The L/C fronting fee which accrues during each calendar quarter shall be paid in arrears one Business Day after such calendar quarter. The L/C fronting fee shall be calculated at the annual rate of 0.15% per annum on the face amount of each L/C for the duration of its term on the basis of the actual number of days to elapse from and including the date of issuance or renewal by BNS to but not including the expiry date of the L/C. L/C fees shall be calculated on the basis of a 365 or 366 day year, as applicable.
        4.8     Interest under Overdraft Facility .    All payments of interest and any other amount with respect to the Overdraft Facility shall be payable by the Borrower to the Administrative Agent at the Branch of Account for the account of the Lenders. Such interest and other amounts shall be distributed by the Administrative Agent to the Lenders based on their Applicable Percentage, upon the Administrative Agent making adjustments to its participation in Advances under Section 3.23.
        4.9     Amendment Fee.     On the Restatement Date, the Borrower shall pay to the Administrative Agent an amendment fee of US $350,000, which is fully earned, non-refundable and payable in full on the Restatement Date. Such fee shall be distributed by the Administrative Agent to the Lenders based on their Applicable Percentage of the Commitments.
 
 ARTICLE 5

REDUCTIONS AND PAYMENTS
        5.1     General Rule Regarding Repayments.     Subject to Section 11.6 hereof and Section 5 of the Provisions, repayment of an outstanding Advance made by the Borrower shall be applied by the Administrative Agent among all Lenders on the basis of their Applicable Percentage.
5.2   Term and Repayments.
(a)
Unless due and payable sooner in accordance with this Agreement, all Facility Indebtedness shall be due and payable on December 23, 2007, unless this Agreement is extended, upon the irrevocable request of the Borrower (which request may be made at its option), with the consent of the Super Majority Lenders, in their sole discretion, for three additional one year terms in accordance with this Section 5.2.

(b)
Each request for an extension of this Agreement must be made by the Borrower (if it wishes to exercise its option to make such request) providing the Administrative Agent with irrevocable written notice of such request at least 60, but not more than 90, days before each of the applicable first three anniversary dates of the Restatement Date. If the Super Majority Lenders consent to a request for an extension made before the first anniversary of the Restatement Date, then unless due and payable sooner in accordance with this Agreement, all Facility Indebtedness shall be due and payable on December 23, 2008 and all remaining Commitments shall be cancelled at such time. In that case, and if the Super Majority Lenders consent to a request by the Borrower for an extension made at least 60, but not more than 90, days before the second anniversary of the Restatement Date, then unless due and payable
30

sooner in accordance with this Agreement, all Facility Indebtedness shall be due and payable on December 23, 2009 and all remaining Commitments shall be cancelled at such time. In that case, and if the Super Majority Lenders consent to a request by the Borrower for an extension made at least 60, but not more than, 90 days before the third anniversary of the Restatement Date, then unless due and payable sooner in accordance with this Agreement, all Facility Indebtedness shall be due and payable on December 23, 2010 and all remaining Commitments shall be cancelled at such time.
(c)
Notwithstanding Section 5.2(b), if the Borrower has not requested an extension of this Agreement before the first anniversary of the Restatement Date, the Borrower can (if it wishes to exercise its option to make such request) provide the Administrative Agent with irrevocable written notice of a request for an extension of this Agreement at least 60, but not more than 90, days before the second anniversary of the Restatement Date. If the Super Majority Lenders consent to such a request for an extension, then unless due and payable sooner in accordance with this Agreement, all Facility Indebtedness shall be due and payable on December 23, 2008 and all remaining Commitments shall be cancelled at such time. In that case, the Borrower can (if it wishes to exercise its option to make such request) provide the Administrative Agent with irrevocable written notice of a request at least 60, but not more than 90, days before the third anniversary of the Restatement Date. If the Super Majority Lenders consent to such a request for an extension, then unless due and payable sooner in accordance with this Agreement, all Facility Indebtedness shall be due and payable on December 23, 2009 and all remaining Commitments shall be cancelled at such time.

(d)
Notwithstanding Sections 5.2(b) and (c), if the Borrower has not requested an extension of this Agreement before the first or the second anniversary dates of the Restatement Date, the Borrower can (if it wishes to exercise its option to make such request) provide the Administrative Agent with irrevocable written notice of a request for an extension of this Agreement at least 60, but not more than 90, days before the third anniversary of the Restatement Date. If the Super Majority Lenders consent to such a request for an extension, then unless due and payable sooner in accordance with this Agreement, all Facility Indebtedness shall be due and payable on December 23, 2008 and all remaining Commitments shall be cancelled at such time.

(e)
Upon receipt by the Administrative Agent of any such request by the Borrower for an extension of this Agreement, the Administrative Agent shall provide prompt written notice of such request to each Lender. Each Lender's determination of whether or not it consents to such extension shall be made in such Lender's sole discretion. If a Lender has not provided the Administrative Agent with written notice of whether or not such Lender consents to such requested extension 30 days after written notice of such request has been provided by the Administrative Agent to such Lender, such Lender shall be irrevocably deemed to have not consented to such extension.

(f)
If the Super Majority Lenders consent to any extension requested by the Borrower pursuant to this Section 5.2, but any Lender does not so consent, that dissenting Lender (if it is still a Lender at the relevant time) shall not be entitled to vote on any extensions subsequently requested by the Borrower pursuant to this Section 5.2 (and the denominator in the definition of Super Majority Lender shall, for such purpose, be reduced by such Lender's Commitment).

(g)
If the Super Majority Lenders consent to any requested extension of this Agreement pursuant to this Section 5.2, but any Lender does not so consent, the Borrower may require that:

(i)
any such dissenting Lender assign its Commitment in accordance with Section 3.3(b) of the Provisions;

(ii)
the Commitment of any such dissenting Lender be permitted to terminate at the end of the then current term of this Agreement (with the Maximum Facility Amount reducing by the amount of such Lender's Commitment at that time); or

(iii)
such dissenting Lender's Commitments immediately terminate.
In the case of clause (iii), the Borrower shall immediately repay such Lender its pro rata share of all outstanding Advances, together with all other amounts owing by the Borrower to that Lender under
31

Section 5.5, and upon receipt by such Lender of such amount such Lender's Commitment shall be cancelled (with the Maximum Facility Amount reducing by the amount of such Lender's Commitment at that time). Any assigning Lender or any Lender whose Commitments terminate before the Maturity Date (if extended in accordance with the foregoing provisions) shall, upon such assignment or termination, assign, or cause any of its Affiliates which is a Permitted Hedge Counterparty, to assign, at a price determined in a reasonable manner from market quotations in accordance with customary market practices, all Hedge Agreements it or they hold with the Borrower to the applicable Eligible Assignee or to another Lender or Permitted Hedge Counterparty.
(h)
If the Super Majority Lenders do not consent to any extension requested by the Borrower pursuant to the foregoing procedures, all Facility Indebtedness shall, unless due and payable sooner in accordance with this Agreement, be due and payable on the Maturity Date then in effect and all remaining Commitments shall be cancelled at such time.
        5.3     Termination and Reduction of Commitments.     The Borrower may at any time, upon at least five (5) Business Days' irrevocable written notice provided to the Administrative Agent, without penalty, terminate entirely at any time, or partially reduce on a permanent basis from time to time, by an aggregate amount of US $1,000,000 or the Equivalent Amount in Canadian Dollars or multiples thereof, the Commitments of all Lenders; and any such termination or reduction shall reduce each Lender's Commitment on the basis of its Applicable Percentage; provided that, prepayments of LIBOR Advances may not occur during an Interest Period unless the Borrower pays the required amount under Section 5.5. Upon receipt of such notice the Administrative Agent shall promptly notify each Lender thereof. Any such reduction shall also reduce the Maximum Facility Amount by that amount. If the Maximum Facility Amount and the Commitments of all Lenders are reduced to zero and the Credit Facility is terminated in its entirety, all Facility Indebtedness, together with all other amounts owing by the Borrower under Section 5.5, shall be due and payable by the Borrower on the effective date of such termination. If the Maximum Facility Amount and the Commitments of all Lenders are partially reduced, the outstanding Advances (including, for greater certainty, the face amount of all Bankers' Acceptances) which, if not repaid, would be in excess of the Maximum Facility Amount and the Commitments of all Lenders, together with all other amounts owing by the Borrower under Section 5.5, shall be due and payable by the Borrower on the effective date of such reduction.
5.4   Mandatory Prepayments.
(a)
If at any time the Borrower or any Subsidiary receives any insurance proceeds relating to Included Property, except for insurance proceeds which the Borrower or any Subsidiary is permitted to retain pursuant to Section 10.2(j)(ii) or which the Borrower has remitted to the Administrative Agent to be held as part of the Security in accordance with Section 10.2(j)(ii), the Borrower shall remit such proceeds to the Administrative Agent to prepay or repay the outstanding Advances.

(b)
If at any time the Borrower or any Subsidiary, in one or more transactions, sells, transfers, leases, assigns or otherwise disposes of any assets not permitted to be sold, transferred, leased, assigned or otherwise disposed, or in excess of the amounts permitted, under Section 10.3(e), the Borrower shall remit the aggregate Net Cash Proceeds received therefrom which relate to Included Property to the Administrative Agent to prepay or repay the outstanding Advances.

(c)
If at any time the Borrower or any Subsidiary receives any proceeds of expropriation relating to any Included Property, the Borrower or such Subsidiary shall remit such proceeds to the Administrative Agent to prepay or repay outstanding Advances.

(d)
Without limiting the other rights and remedies of the Administrative Agent and the Lenders under the Financing Documents, the Commitments and the Maximum Facility Amount shall be reduced by any amounts received by the Administrative Agent pursuant to Sections 5.4(a), (b) and (c).
        5.5     Indemnity.     The Borrower agrees to indemnify each Lender and the Administrative Agent and to hold each Lender and the Administrative Agent harmless from any loss or expense which such Lender or the Administrative Agent may sustain or incur as a consequence of (a) default by the Borrower in payment when due of the principal amount of or interest on any Advances, (b) default by the Borrower in making any
32

prepayment after the Borrower has given a notice in accordance with Section 5.3 resulting in the making of a prepayment of a LIBOR Advance on a day which is not the last day of an Interest Period with respect thereto, including without limitation, in each case any such loss or expense arising from the re-employment of funds obtained by it to maintain its Advances hereunder or from fees payable to terminate the deposits from which such funds were obtained to the extent not recovered in connection with such re-employment of funds if applicable (but in any event excluding any loss of profits or other consequential damages and the Applicable Margin applicable to such Advances). This covenant shall survive termination of all Commitments and payment of the outstanding Facility Indebtedness.
        5.6     Exchange Rate Fluctuations.     If fluctuations in rates of exchange in effect between US Dollars and Cdn. Dollars cause the amount of outstanding Advances (expressed in US Dollars based on the Equivalent Amount from time to time) to exceed the Maximum Facility Amount then in effect by five percent or more at any time, the Borrower shall pay the Administrative Agent for the benefit of the Lenders immediately on demand such amount as is necessary to repay the excess. If the Borrower is unable to immediately pay that amount because Interest Periods have not ended, Bankers' Acceptances have not matured or L/Cs (or any portion thereof) have not been drawn, the Borrower shall, immediately on demand, post Cash Collateral with the Administrative Agent in the amount of the excess, which shall form part of the Security and be held until the amount of the excess is paid in full or is less than five percent. If, on the date of any Advance (whether by rollover, conversion or otherwise), the amount of Advances (expressed as described above) exceeds the maximum amount permitted herein because of fluctuations in rates of exchange, the Borrower shall immediately pay the Lenders the excess and shall not be entitled to any Advance that would result in the amount permitted hereunder being exceeded.
        5.7     Payments.     All payments (including prepayments) made by the Borrower on account of principal, interest and fees hereunder shall be made without set-off or counterclaim including, without limitation, any set-off or counterclaim based on any law, rule or policy or, any governmental authorization or order which is now or hereafter promulgated by any Governmental Authority and which may adversely affect the Borrower's obligation to make, or the right of any Lender to receive, such payments. All such payments shall be made to the Administrative Agent, for the account of the Lenders, at the Branch of Account, in the same currency as the relevant Advance, and, in each case, in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders entitled thereto promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Advances) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal and interest thereon, shall be payable at the then applicable interest rate(s) hereunder during such extension. If any payment on an Advance becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month in which event such payment shall be made on the immediately preceding Business Day (and such reduction or extension of time shall in such case be included in computing interest in connection with such payment).
        5.8     Authorized Transfer.     The Borrower hereby irrevocably authorizes the Administrative Agent to effect the making of all payments whether of principal, interest, fees or any other charges whatsoever hereunder which the Borrower is required to pay the Lenders, the Administrative Agent or any other Person by charging any designated bank account maintained by the Borrower with the Administrative Agent. Nothing herein limits or restricts the right of the Lenders and/or the Administrative Agent under Section 4 of the Provisions. Payment by the Borrower to the Administrative Agent of any amount owed by the Borrower to the Lenders hereunder shall discharge the Borrower's obligation to pay such amount to the Lenders.
        5.9     Provisions Reference.     Reference is made to Sections 3.1, 3.2, 3.3 and 3.4 of the Provisions regarding "Increased Costs", "Taxes", "Mitigation Obligations; Replacement of Lenders" and "Illegality", respectively.
 
 ARTICLE 6

CLOSING AND DRAWDOWN CONDITIONS
        6.1     Conditions Precedent to First Additional Advance.     The conditions to making the Initial Advance (as defined in the Existing Credit Agreement) and the conditions to the amendment and restatement resulting in
33

the Existing Credit Agreement have been satisfied (on the required dates as specified in the Existing Credit Agreement), and the obligations of the Lenders hereunder, including the several obligations of the Lenders to make the First Additional Advance, shall be subject (in addition to the conditions set out in Sections 6.2) to the satisfaction, on or prior to the Restatement Date, of the following conditions:
(a)
Each Person which was a Lender (as defined in the Existing Credit Agreement) and which is not a Lender under this Agreement shall have, by way of an Assignment and Acceptance Agreement (as defined in the Existing Credit Agreement), assigned its Commitments under the Existing Credit Agreement to a Lender or Lenders under this Agreement, and each other Person required to execute each such Assignment and Acceptance Agreement shall have so executed it.

(b)
Each Person which was a Canadian Lender (as defined in the Existing Credit Agreement) and which is not a Lender under this Agreement shall have released its Bank Act Security.

(c)
Each Participant (as defined in the Existing Credit Agreement) shall have terminated its arrangements under the Existing Credit Agreement as a Participant thereunder

(d)
The following Documents shall have been executed by a duly authorized officer or duly authorized Person of each of the parties thereto and delivered to the Administrative Agent, in sufficient number as the Administrative Agent shall reasonably require, all in form and substance satisfactory to the Administrative Agent:

(i)
a certified copy of the articles, by-laws, authorizing resolutions and certificate of incumbency of each Restricted Party, certified by a senior officer of such party as being true, complete and correct copies thereof, as well as a copy of certificates dated as of a recent date from the appropriate Governmental Authority evidencing the existence of such Person in its jurisdiction of incorporation and, where required by any Requirements of Law, its qualification to conduct its business in each jurisdiction where the ownership, lease or operation of property or the conduct of business requires such qualification;

(ii)
this Agreement;

(iii)
the Arranger Fee Letter;

(iv)
the Agency Fee Letter;

(v)
the executed legal opinions of Borrower's legal counsel;

(vi)
to the extent not previously delivered to the Administrative Agent, the Security Documents set forth in Article 7, including a new deed of movable hypothec on a specific claim between the Borrower and the Administrative Agent, an Assignment of Metal Hedge Agreements consented to by each Unsecured Hedge Counterparty and new Bank Act Security under Section 427 of the Bank Act (Canada);

(vii)
true, complete and correct copies of all consents, authorizations and filings, and any documents or instruments relating thereto, required or advisable under any Requirements of Law applicable to, or by any Contractual Obligation of, the Borrower in connection with the execution, delivery, performance, validity or enforceability of this Agreement (to the extent not delivered under the Existing Credit Agreement), together with a certificate of a senior officer of the Borrower, stating that the foregoing are true copies and are all the consents, authorizations and filings, and any documents or instruments relating thereto, so required, and such consents, authorizations, and filings, and any documents or instruments relating thereto, shall be satisfactory in form and substance to the Administrative Agent and be in full force and effect; and

(viii)
such other Documents reasonably required by the Administrative Agent.

(e)
Since September 30, 2004, no event shall have occurred which has had or could reasonably be expected to have a Material Adverse Effect.

(f)
No suit, action, investigation, inquiry or other proceeding (including, without limitation, the enactment or promulgation of a statute or rule) by or before any arbitrator or any Governmental Authority shall
34

be pending and no preliminary or permanent injunction or order by a provincial, state, federal or other court shall have been entered (i) in connection with any Document, or any of the transactions contemplated hereby or thereby or (ii) which could reasonably be expected to have a Material Adverse Effect.
(g)
The Borrower shall have provided evidence of the Borrower's compliance with Section 10.3(h)(ii) to the Administrative Agent as the Administrative Agent shall reasonably require, including having provided copies of any applicable Instruments of Adhesion and Permitted Hedge Agreements which were not entered into under the Existing Credit Agreement.

(h)
The Borrower shall have paid in full all fees and expenses payable by it to the Administrative Agent, the Arrangers and the Lenders and all other Persons in connection with this Agreement and the transaction contemplated herein that are payable by it on or before the Restatement Date pursuant to written agreements with each such Person.
        Unless otherwise required by the Administrative Agent, as determined by the Administrative Agent acting reasonably, Documents delivered in connection with the Existing Credit Agreement need not be delivered again in connection with this Agreement.
        6.2     Conditions Precedent to All Advances.     The obligations of the Lenders to make any Advances under this Agreement shall be subject to the fulfilment of the conditions precedent set out in Sections 6.1 (when required as specified therein) and the following conditions precedent on or prior to each Drawdown Date:
(a)
All Documents and other documents delivered pursuant to Section 6.1 shall be in full force and effect and the Borrower and all other parties shall be in good standing under them.

(b)
After the making of the requested Advance, the outstanding Advances expressed as an Equivalent Amount in US Dollars would not be greater than the Maximum Facility Amount.

(c)
The Administrative Agent shall have received a Drawdown Notice in accordance with the terms of this Agreement.

(d)
No request by Canada Revenue Agency for payment pursuant to Section 224(1.1) or any successor section of the Income Tax Act (Canada) or any comparable provision of any other taxing statute shall have been received by any Person in respect of the Borrower.

(e)
Each of the statements set forth in clauses (i), (ii) and (iii) below shall be true and correct on the Drawdown Date (both before and after the making of each such Advance (excluding rollovers and conversions)):

(i)
each representation and warranty of each Restricted Party contained in the Financing Documents is true and correct on the Drawdown Date (where such representation or warranty is qualified by "Material Adverse Effect" or any other "materiality" concept), and in all other cases true and correct in all material respects on the Drawdown Date, as though such representation and warranty had been made on and as of the Drawdown Date (unless such representation and warranty is expressly limited to an earlier date or is no longer true and correct solely as a result of transactions not prohibited by the Financing Documents);

(ii)
no Material Adverse Change has occurred since the Restatement Date (in the case of the First Additional Advance) or since the effective date of the last financial statements of the Borrower delivered to the Administrative Agent pursuant to Section 9.1(b) or (c) (in the case of each subsequent Advance); and

(iii)
no Default has occurred and is continuing.
Notwithstanding the foregoing, the acceptance by the Borrower of each Advance shall be deemed to be a statement by the Borrower that each of the statements referred to in this Section 6.2(e) above are true and correct in the manner described in this Section 6.2(e) as at such date as though made on and as of such date.
35

(f)
There is no reasonable expectation that the Borrower will not be in compliance with all covenants contained in Section 10.1 at the end of its current fiscal quarter and was not in compliance with those covenants at the end of its immediately preceding fiscal quarter if it has not yet delivered its Compliance Certificate for that quarter.
6.3   Place of Closings and Waiver of Conditions.
(a)
The delivery of the Documents and satisfaction of the conditions precedent set forth in Section 6.1 shall occur at the offices of Lenders' Counsel in Toronto, Ontario, and the delivery of the Documents and satisfaction of the conditions precedent set forth in Section 6.2 shall occur at such place or places as the Administrative Agent may designate, acting reasonably.

(b)
The conditions precedent set forth in Sections 6.1 and 6.2 are included in this Agreement solely for the benefit of the Lenders and may be waived or varied in whole or in part only by the consent of the Majority Lenders.
 
 ARTICLE 7

SECURITY
        7.1     Security.     The Borrower shall execute and deliver (or, with respect to Security Documents executed and delivered prior to or at the time of the Restatement Date, shall have executed and delivered) to the Administrative Agent or as otherwise specified in this Section 7.1, for and on behalf of the Secured Parties, or as otherwise directed by the Administrative Agent, as continuing collateral security for the payment and performance by the Borrower of its indebtedness, liabilities and obligations hereunder or under any of the Financing Documents to which it is a party and for any of its indebtedness, liabilities and obligations to the Secured Parties or any of them under the Hedge Agreements to which they are a party, the following security, all in form and substance satisfactory to the Administrative Agent, providing the Administrative Agent (or the Trustee for and on behalf of the Administrative Agent) for and on behalf of the Secured Parties with a first priority Lien, subject only to Permitted Liens, in the Collateral charged thereunder, as applicable:
(a)
a security agreement dated as of November 13, 2001 granted by the Borrower in favour of the Administrative Agent;

(b)
an assignment of the "Indemnity regarding Encumbrances on El Coco Property" dated June 21, 1999 by Barrick Gold Corporation and Lac Exploration Inc., dated November 16, 2001 granted by the Borrower to the Administrative Agent;

(c)
a letter dated November 13, 2001 by the Administrative Agent appointing Computershare Trust Company of Canada as Trustee;

(d)
a delivery order dated November 22, 2001 by the Borrower to the Trustee;

(e)
a collateral mortgage demand bond dated November 21, 2001 granted by the Borrower to the Administrative Agent and certified by the Trustee (the " Bond ");

(f)
a deed of hypothec dated November 13, 2001 between the Borrower and the Trustee (the " Hypothec ");

(g)
a deed of movable hypothec on a specific claim dated November 22, 2001 between the Borrower and the Administrative Agent;

(h)
a deed of movable hypothec on a specific claim to be dated December 23, 2004 between the Borrower and the Administrative Agent;

(i)
such consents, assignments and assurances as the Administrative Agent may require from the Borrower, any applicable Governmental Authority or other third party in order to obtain or evidence a valid first mortgage, charge, hypothec and/or security interest in and to the Included Property and Restricted Parties, subject to Permitted Liens, and to be able to practically realize on all such assets after the occurrence of any Event of Default;
36

(j)
an assignment of insurance dated November 13, 2001 granted by the Borrower in favour of the Administrative Agent;

(k)
an assignment of accounts agreement dated as of March 20, 2003 granted by the Borrower in favour of the Administrative Agent;

(l)
an assignment of metal hedge agreements entered into by the Borrower with each Unsecured Hedge Counterparty executed and delivered by the Borrower in favour of the Administrative Agent substantially in the form of Exhibit C (the " Assignment of Metal Hedge Agreements ") whereby the Borrower charges a security interest in such Metal Hedge Agreements and proceeds thereof, consented to by each such Unsecured Hedge Counterparty; and

(m)
such other security documents granting Liens on the property of the Borrower as the Administrative Agent may reasonably request, together with all such other agreements, documents and instruments required by the Administrative Agent to provide the Secured Parties with continuing collateral security for the performance by the Borrower of all obligations hereunder or under any of the Financing Documents.
        7.2     Release .    On the Restatement Date, the Administrative Agent shall, and the Lenders hereby authorize the Administrative Agent to, provide the Borrower with a release of the securities pledge agreement dated March 20, 2003 granted by the Borrower in favour of the Administrative Agent and the securities pledge agreement (ULC) dated March 20, 2003 granted by the Borrower in favour of the Administrative Agent.
        7.3     Registration.     All Security Documents shall, at the Borrower's expense, be registered, filed or recorded in all offices in such jurisdictions as the Administrative Agent, after consultation with Lenders' Counsel, may from time to time reasonably require, where such registration, filing or recording is, in the opinion of the Administrative Agent, necessary or desirable to the creation, perfection and preservation of the Security including, without limitation, at any land registry or land title offices.
7.4   Bank Act Security.
(a)
On the date hereof, the Borrower shall have executed and delivered, and following the date hereof, each other Restricted Party, shall, to the extent permitted by all applicable Requirements of Law, have executed and delivered as required by Sections 6.1(d)(vi) and 10.2(n), to each Lender that is a bank incorporated under the Bank Act (Canada) (each, a " Canadian Lender "), or as otherwise directed by the Administrative Agent, as continuing collateral security for the Facility Indebtedness, the Bank Act Security, providing the Lenders with a first priority Lien, subject only to Permitted Liens, in the Collateral charged thereunder.

(b)
Subject to Section 5 of the Provisions and Section 11.6, each Canadian Lender irrevocably designates and appoints the Administrative Agent as the collateral agent of such Canadian Lender in respect of Bank Act Security, and each such Canadian Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the Bank Act Security and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and as are expressly set out in such Bank Act Security, together with such other powers that are reasonably incidental thereto. The Administrative Agent may perform any of its duties hereunder or thereunder by or through its agents, officers or employees, its Affiliates or its Affiliates' agents, officers or employees. In addition, without limiting the foregoing, each Canadian Lender grants to the Administrative Agent a power of attorney, for the purposes of laws applicable to the Bank Act Security from time to time, to sign documents comprising the Bank Act Security from time to time, and also grants to the Administrative Agent the right to delegate its authority as attorney to any other Person, whether or not an officer or employee of the Administrative Agent. Notwithstanding any provision to the contrary elsewhere in this Agreement or the Bank Act Security, the Administrative Agent shall not have any duties or responsibilities except those expressly set forth herein or therein, or any fiduciary relationship with any Canadian Lender or other Secured Party, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the Bank Act Security or otherwise exist against the Administrative Agent in such capacity.
37

(c)
The parties acknowledge that, subject to Section 5 of the Provisions and Section 11.6, the Bank Act Security shall secure all Facility Indebtedness, including all loans and advances made by the Canadian Lenders, but that all payments or other recoveries under the Bank Act Security shall, to the maximum extent permitted by law, be shared by the Secured Parties in accordance with Section 11.6 and Section 5 of the Provisions. To the extent practicable, the Administrative Agent will make every reasonable effort to, and each other party hereto shall permit the Administrative Agent (and the Trustee) to, realize on all security granted by the Restricted Parties to the Administrative Agent (or the Trustee) pursuant to this Agreement or any other Document (the " Non-Bank Act Security ") prior to the Administrative Agent realizing on the Bank Act Security. Notwithstanding the foregoing, the Borrower, for itself and for all other Restricted Parties, acknowledges that any Security granted by or pursuant to this Agreement may be enforced or realized in any order, whether sequentially, concurrently or otherwise, and the Borrower, for itself and for all other Restricted Parties, waives any defence it may have in respect thereof. If the Bank Act Security is enforced concurrently with the Non-Bank Act Security, any recoveries or payments thereon which are not specifically realized from the Bank Act Security and identified as such shall be deemed to have been realized under the Non-Bank Act Security. Nothing contained in this Section 7.4 shall prohibit or restrict the right or ability of the Administrative Agent or, subject to Sections 11.6 and 12.2 hereof and Section 5 of the Provisions, the Canadian Lenders, to take at any time such actions as are necessary or desirable to preserve or protect the Bank Act Security or to realize thereon in respect of assets not effectively charged under the Non-Bank Act Security or in the event that the Non-Bank Act Security is determined to be invalid or unenforceable or to not constitute a valid prior charge on all or any of the assets of the Borrower or any other Restricted Party which are subject to the Bank Act Security. In the event that it shall not be lawful for amounts realized on the Bank Act Security to be shared among the Secured Parties in accordance with Sections 11.6 and 12.2 hereof and Section 5 of the Provisions, then, to the maximum extent permitted by all applicable Requirements of Law, the amounts the Canadian Lenders receive from the Non-Bank Act Security shall be reduced to the extent of amounts received by the Canadian Lenders from the Bank Act Security.

(d)
The provisions set out in this Section 7.4 are solely for the benefit of the Administrative Agent and the Secured Parties, and the Borrower shall not have any rights as a third party beneficiary in respect thereof.
        7.5     Change of Law and Further Assurances.     The Borrower acknowledges that the laws and regulations relating to the Security and its registration may change. The Borrower agrees that the Administrative Agent shall have the right to require that such documentation and/or registrations be amended or supplemented from time to time to reflect any changes in such laws, whether arising as a result of statutory amendments, court decisions or otherwise, in order to grant to the Administrative Agent on behalf of the Secured Parties the Liens on all Included Property or as otherwise intended to be created and perfected thereby. In addition, the Borrower shall, from time to time, upon request of the Administrative Agent, execute and deliver, or cause to be executed and delivered by any other applicable Restricted Party, all such further instruments of hypothecation, assignment, transfer, mortgage, pledge or charge as the Administrative Agent may reasonably request to grant the Administrative Agent on behalf of the Secured Parties valid Liens intended to be created and perfected thereby, including, without limitation, assignments of all Material Contracts and Metal Hedge Agreements, now or hereafter entered into by any Restricted Party, substantially in the form of Exhibit D and the Assignment of Metal Hedge Agreements, or in such other form reasonably requested by the Administrative Agent, acknowledged and consented to on terms satisfactory to the Administrative Agent by each counterparty thereto, as well as pledges by the Restricted Parties of all securities and other equity interests now or hereafter held by a Restricted Party in any other Restricted Party, pledges of all indebtedness now or hereafter owing by any Restricted Party to any other Restricted Party and a first priority Lien, subject to Permitted Liens, on any Included Property now owned or hereafter acquired by the Borrower or any other Restricted Party.
        7.6     Security for Hedge Indebtedness.     The Borrower acknowledges and agrees that the Security shall, without limitation, secure all obligations and liabilities of the Borrower to each Permitted Hedge Counterparty under Hedge Agreements entered into with them and, so long as any such Hedge Agreements are outstanding with any Permitted Hedge Counterparty, unless otherwise agreed by the applicable Permitted Hedge
38

Counterparty, the Security shall not be discharged, released or terminated as a result of the termination of the Commitments and/or the repayment or satisfaction of all Facility Indebtedness, but shall, upon such termination and/or repayment or satisfaction continue, to the maximum extent permitted by all applicable Requirements of Law, in full force and effect for the benefit of the Final Permitted Hedge Counterparties in accordance with Section 12.2(e).
        7.7     Reaffirmation of Existing Security.     Without in any way limiting any other provision of Article 7, and notwithstanding any other provision which may be to the contrary in any Financing Document, the Borrower hereby irrevocably (a) reaffirms and ratifies the continuing effectiveness of all Security granted by the Borrower prior to the Restatement Date (except the securities pledge agreement dated March 20, 2003 granted by the Borrower in favour of the Administrative Agent and the securities pledge agreement (ULC) dated March 20, 2003 granted by the Borrower in favour of the Administrative Agent), (b) confirms that all such Security remains in full force and effect, unamended and (c) confirms that all such Security secures all Facility Indebtedness and Hedge Indebtedness.
 
 ARTICLE 8

REPRESENTATIONS AND WARRANTIES
        8.1     Representations and Warranties.     To induce the Lenders and the Administrative Agent to enter into this Agreement and to induce the Lenders to make Advances, the Borrower represents, warrants and, where applicable, covenants to the Administrative Agent and the Lenders as follows:
(a)
Authority to Carry on Business .    Each of the Borrower and each Material Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, amalgamation or formation, has the corporate (or other required) power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct its business, and is duly qualified to carry on its business and is in good standing under the laws of each jurisdiction where the conduct of its business requires such qualification, except where the failure to so qualify could not be reasonably expected to have a Material Adverse Effect.

(b)
Corporate Power and Authority .    Each Restricted Party has the corporate (or other required) power and authority, and the legal right, to execute and deliver the Financing Documents to which it is a party and to perform its obligations thereunder. Each Restricted Party has taken all necessary corporate (or other required) action to authorize the execution and delivery of the Financing Documents to which it is a party and the performance by it of its respective obligations thereunder.

(c)
Consents, No Restriction, etc .    No consent or authorization of, filing with or other act by or in respect of any Governmental Authority or pursuant to any Requirements of Law is required except those obtained or made or where the failure to do so could not reasonably be expected to have a Material Adverse Effect, in order to permit the borrowings under this Agreement by the Borrower, the execution, delivery and performance of the Financing Documents by each Restricted Party party thereto, and the creation or perfection of the Liens under the Security Documents.

(d)
Burdensome Provisions .    There is no provision in the articles or by-laws of any Restricted Party, nor is there any statute, rule or regulation, or any judgment, decree or order of any court or agency binding on any Restricted Party which would be contravened by the execution, delivery and performance by such Restricted Party of the Financing Documents to which it is a party, other than those contraventions, if any, that could not reasonably be expected to have a Material Adverse Effect.

(e)
Enforceability of Financing Documents .    Each Document to which each Restricted Party is a party has been or will be duly executed and delivered by such Restricted Party, as the case may be. Each Document to which such Restricted Party is a party constitutes, or when executed and delivered, will constitute, a legal, valid and binding obligation of such Restricted Party, as the case may be, enforceable against such Restricted Party, as the case may be, in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles.
39

(f)
No Violation of Law or Contractual Obligation .    The execution, delivery and performance of the Financing Documents to which each Restricted Party is a party, the borrowings by the Borrower under this Agreement, the use of the proceeds thereof and the granting of the Liens pursuant to the Security Documents will not violate any Requirements of Law or any Contractual Obligation of the Borrower or any Material Subsidiary, will not be restricted or prohibited by any Governmental Authority, except to the extent that the same, if any, could not reasonably be expected to have a Material Adverse Effect, and will not result in, or require, the creation or imposition of any Lien on any properties or revenues of the Borrower or Material Subsidiary pursuant to any Requirements of Law or Contractual Obligation (other than the Liens created by the Financing Documents or contemplated hereby).

(g)
No Default under Contractual Obligations .    Neither the Borrower nor any Material Subsidiary is in default under or with respect to any Contractual Obligation in any respect which could, with the giving of notice, the lapse of time, or both, reasonably be expected to have a Material Adverse Effect.

(h)
Absence of Litigation .    Except as set forth in Schedule 8.1(h), there is no litigation, action, suit, inquiry, investigation, claim, proceeding, arbitration or dispute in each case pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower, any Subsidiaries of the Borrower, or against their revenues or property, the adverse determination of which could reasonably be expected to have a Material Adverse Effect.

(i)
Financial Statements .    The Borrower's 2003 annual audited, consolidated financial statements and the Borrower's third quarter 2004 unaudited, consolidated financial statements contained in the Borrower's report to its shareholders, copies of which have been furnished to the Administrative Agent and Lenders, are complete and correct in all material respects in accordance with GAAP and present fairly the consolidated financial condition of the Borrower, as at such dates, and the results of its operations and changes in financial position for each period then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as disclosed therein, if applicable). The Borrower and its Subsidiaries had, at the date of the most recent balance sheets referred to above, no material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto. During the period from September 30, 2004 to and including the date of this Agreement, there has not been any sale, transfer or other disposition by the Borrower of any material part of its business or property and there has been no purchase or agreement to purchase (other than pursuant to any Material Contracts) or other acquisition of any business or property (including any Capital Stock of any other Person) which is material in relation to the financial condition of the Borrower since September 30, 2004.

(j)
No Material Adverse Change .    Since the later of September 30, 2004 and the effective date of the last financial statements of the Borrower delivered to the Administrative Agent pursuant to Sections 9.1(b) and (c), there has been no Material Adverse Change.

(k)
No Default .    No Default has occurred and is continuing.

(l)
Ownership of Mining Properties .    Schedule 8.1(l) is a complete and accurate list of all Mining Properties in which the Borrower and each Material Subsidiary has an interest. Schedule 8.1(l) discloses the nature of the Borrower's and each Material Subsidiary's interests in respect thereof (whether owned, leased, licenced, etc.), together with a description of each applicable lease or licence, as the case may be. All Mining Properties are owned, leased or licenced by the Borrower or such Material Subsidiary, as the case may be, subject only to Permitted Liens. Except as set forth on Schedule 8.1(l) and except for any applicable Permitted Liens, the Borrower and each Material Subsidiary enjoy peaceful and undisturbed possession under all leases or licences comprising the Mining Properties. Except as set forth on Schedule 8.1(l) and except for any applicable Permitted Liens, all of such leases or licences are valid and subsisting leases or licences and no default exists under any of them that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
40

(m)
Collateral and Security .    The Restricted Parties own good and marketable title to all Mines constituting Included Property and the other Collateral, free and clear of all Liens, other than Permitted Liens. The Security provides the Administrative Agent with a first priority Lien in the Mines constituting Included Property and the other Collateral, subject only to Permitted Liens, and secures the Senior Secured Indebtedness.

(n)
No Other Commitments, etc .    Except for sales of Product or agreements to sell Product in the ordinary course of business, no Person has any direct or indirect agreement, right or option to acquire any interest in any Mine, and no commitment has been made to any such Person with respect thereto.

(o)
Intellectual Property .    Each of the Borrower and each Material Subsidiary owns, or is licenced to use, all trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted that are material to its condition (financial or otherwise), business, or operations (" Intellectual Property "). To the best of the Borrower's knowledge, no claim has been asserted or is pending by any Person with respect to the use of any such Intellectual Property, or challenging or questioning the validity or effectiveness of any such Intellectual Property. To the best of the Borrower's knowledge, the use of such Intellectual Property by the Borrower or such Material Subsidiary does not infringe the rights of any Person.

(p)
Material Contracts .    The Borrower is not a party to or bound by any outstanding or executory agreement, contract or commitment, whether written or oral, relating to the ownership or operations of any Mine or the marketing and sale of the Product, except for: (i) the Financing Documents, the Material Contracts, the Convertible Notes and the Trust Indenture; and (ii) any contract, lease or agreement, whether or not made in the ordinary course of business (including construction contracts) under which the Borrower has a financial obligation of less than US $1,000,000 or which can be terminated by the Borrower without payment of any damages, penalty or other amount by giving not more than 30 days' notice. No other Restricted Party is a party to or bound by any outstanding or executory agreement, contract or commitment, whether written or oral, relating to the ownership or operations of any mining properties, or the marketing and sale of Product except for (iii) the Financing Documents and the Material Contracts; and (iv) any contract, lease or agreement, whether or not made in the ordinary course of business (including construction contracts) under which such Restricted Party has a financial obligation of less than US $1,000,000 or which can be terminated by such Restricted Party without payment of any damages, penalty or other amount by giving not more than 30 days' notice. None of the Material Contracts has been amended, varied, terminated or rescinded in any way as at the date hereof, and each is enforceable in accordance with its terms and is in full force and effect, and no default, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, event or act has been satisfied, has occurred and is continuing, except to the extent that such default could not reasonably be expected to have a Material Adverse Effect. No Restricted Party has assigned, granted an interest in, or entered into any agreement to assign or grant an interest in, the Material Contracts to which it is a party, except, with respect to the Borrower, pursuant to the Financing Documents, and each Restricted Party's interests in the Material Contracts is, to the best of the Borrower's knowledge, free and clear of any adverse claim.

(q)
Licences, Permits, etc .    Each of the Borrower and each Material Subsidiary holds, maintains in effect and complies with all Permits which are required by any applicable Governmental Authority or Requirements of Law to be held by it other than Permits the absence of which (either individually or in the aggregate) could not reasonably be expected to have a Material Adverse Effect, and complies with all Requirements of Law applicable to it or to the conduct of its business in all applicable jurisdictions except to the extent any such non-compliance (either individually or in aggregate) could not reasonably be expected to have a Material Adverse Effect; and neither the Borrower nor any Material Subsidiary is the subject of, or has received notice which could result in, any audit or investigation in respect of any Permits or Requirements of Law other than any audit or investigations the results of which, individually or in aggregate, could not reasonably be expected to have a Material Adverse Effect. Schedule 8.1(q) sets forth a list of the material Permits currently held by the Borrower and each Material Subsidiary.
41

(r)
Development Plan .    The Development Plan fully reflects the understanding of the Borrower as to the nature and scope of the Mines constituting Included Property, the anticipated production of Product and gold doré, copper concentrate, zinc concentrate or other base or precious metal (whether in concentrate, doré or other form) by the Restricted Parties for each applicable period of time referred to in the Development Plan and the financial performance of the Mines constituting Included Property, as at the date of the Development Plan. The Restricted Parties' interest in the Mines constituting Included Property is sufficient to allow the Restricted Parties to mine, process and sell the Product and such other product in the amounts and in the manner contemplated by the Development Plan.

(s)
Taxes .    Each of the Borrower and each Material Subsidiary has filed or caused to be filed with all applicable Governmental Authorities all tax returns required to be filed by it and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority and no tax Lien has been filed and, to the knowledge of the Borrower, no claim has or is being asserted with respect to any such tax, fee or other charge; other than, in each case, any taxes, fees or other charges (i) the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves where required by GAAP have been provided on the books of the Borrower or (ii) the failure of which to pay could not be reasonably expected to have a Material Adverse Effect.

(t)
Subsidiaries, etc .    The Borrower has no Subsidiaries except as listed on Schedule 8.1(t). All Material Subsidiaries are identified as such on Schedule 8.1(t). Schedule 8.1(t) also lists the authorized Capital Stock and the number or amount of issued and outstanding Capital Stock of the Borrower and each Material Subsidiary. All issued and outstanding shares of each Restricted Party which becomes a Subsidiary after the date of this Agreement are free and clear of all Liens except Liens granted to the Administrative Agent.

(u)
Environmental .    Except as disclosed on Schedule 8.1(u), each of the Borrower and each Material Subsidiary is in compliance in all material respects with, has not violated, has not done or suffered any act which could give rise to liability under, and is not otherwise exposed to any liability under, any Requirements of Environmental Law. Except as disclosed on Schedule 8.1(u), neither the Borrower nor any Material Subsidiary has received any notice, claim, demand, suit, or request for information of any kind from any Governmental Authority or private entity of any failure or alleged failure to comply with, or any liability or alleged liability under, any Requirement of Environmental Law which would reasonably be expected to have a Material Adverse Effect, nor, to the best knowledge of the Borrower, has any other entity whose liability therefor, in whole or in part, may be attributed to the Borrower or any Material Subsidiary, received such notice, claim, demand, suit, or request for information except as disclosed on Schedule 8.1(u). Neither the Borrower nor any Material Subsidiary has notified any Governmental Authority under any Requirement of Environmental Law regarding the presence or suspected presence at, on, above, beneath, near, or within its property or the release by it in any way of any substance which may require treatment or remediation of any kind under any Requirement of Environmental Law except as disclosed on Schedule 8.1(u) and except to the extent that the same, either individually or in aggregate, could not reasonably be expected to have a Material Adverse Effect. Except as disclosed on Schedule 8.1(u) and except for substances the existence of which could not reasonably be expected to have a Material Adverse Effect, there exists no substance at, on, above, beneath, near, or within any facilities, properties previously used for the disposal of waste, or lands owned or operated by the Borrower or any Material Subsidiary or any entity whose liability in whole or in part may be attributed to such party or Material Subsidiary thereof the investigation, clean-up, removal, or remediation of which may be required under any Requirement of Environmental Law. Except as disclosed on Schedule 8.1(u) and except for those which could not reasonably be expected to have a Material Adverse Effect, neither the Borrower nor any Material Subsidiary is subject to any agreements, consent orders, licences, permits, or other final orders or directives of any applicable Governmental Authority which relates to or has arisen from any Requirement of Environmental Law. Without limiting the foregoing, the information contained in the documents and instruments referred
42

to in Schedule 8.1(u) with respect to any matter that does not pertain to the LaRonde Mine, could not reasonably be expected to have a Material Adverse Effect.
(v)
Labour, etc .    Except as set out in Schedule 8.1(v), to the best knowledge of the Borrower, no labour or employee disturbance exists with its employees or with the employees of its Subsidiaries or is imminent that could reasonably be expected to have a Material Adverse Effect, and the Borrower has not been advised by (i) its principal suppliers, contractors or customers, (ii) its Material Subsidiaries or (iii) its Material Subsidiaries' principal suppliers, contractors or customers of any existing or imminent labour disturbance by the employees of any of the foregoing that could reasonably be expected to have a Material Adverse Effect. Except as set out in Schedule 8.1(v), there are no complaints, claims or charges outstanding, or to the Borrower's knowledge, threatened, nor are there any orders, decisions, directions or convictions currently registered or outstanding by any tribunal or agency against or in respect of the Borrower or any of its Material Subsidiaries, under any Requirements of Law relating to labour or employment matters, other than those which could not reasonably be expected to have a Material Adverse Effect.

(w)
Employee Benefits .

(i)
Except as could not reasonably be expected to have a Material Adverse Effect, (A) the Borrower and its Material Subsidiaries have complied in all respects with all applicable Requirements of Laws regarding each Plan (including, where applicable, the Pension Benefits Act (Ontario), the Supplemental Pension Plans Act (Quebec) and the Income Tax Act (Canada)); and (B) each Plan is, and has been, maintained and administered in substantial compliance with its terms, applicable collective bargaining agreements, and all applicable Requirements of Laws (including, where applicable, the Pension Benefits Act (Ontario), the Supplemental Pension Plans Act (Quebec) and the Income Tax Act (Canada)).

(ii)
There exists no material outstanding liability of the Borrower or any of its Material Subsidiaries with respect to any Plan that has been terminated.

(iii)
Except as could not reasonably be expected to have a Material Adverse Effect, full payment when due has been made of all amounts which the Borrower or any of its Material Subsidiaries is required under the terms of each Plan or all applicable Requirements of Law to have paid as contributions to such Plan.

(iv)
Except as set out in Schedule 8.1(w), each Plan is fully funded, on a going concern basis, in accordance with its terms and regulatory requirements as outlined by the Pension Benefits Act (Ontario) or the Supplemental Pension Plans Act (Quebec), administrative requirements of the Financial Services Commission of Ontario or the Regie des Rentes du Québec and the most recent actuarial report filed with the Financial Services Commission of Ontario or the Regie des Rentes du Québec in respect of such Plan, as and to the extent applicable, except to the extent that any such funding deficiency could not reasonably be expected to have a Material Adverse Effect.

(v)
Except as expressly permitted pursuant to Section 10.3(m)(iii), neither the Borrower nor any Material Subsidiary of the Borrower sponsors, maintains or contributes to, or has at any time in the preceding six-year period sponsored, maintained or contributed to any "multi-employer pension plan" (as defined in the Pension Benefits Act (Ontario)).

(x)
Convertible Notes, etc .    (i) Neither the Convertible Notes nor the Trust Indenture has been amended, varied, terminated or rescinded in any way, each is enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles) and is in full force and effect; (ii) all filings, recordings, consents and authorizations have been made or obtained under all applicable Requirements of Law with respect to the Convertible Notes and the Trust Indenture; and (iii) no default or event of default, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, event or act has been satisfied, has occurred and is continuing under or with respect to the Convertible Notes or the Trust Indenture. The
43

repayment of any amount under the Convertible Notes has not been accelerated and no notice has been provided to the Borrower in respect thereof.
(y)
Partnerships or Other Associations .    Except for the El Coco Documents and as set forth in Schedule 8.1(y), the Borrower is not, a partner or participant in any partnership, joint venture, profit-sharing arrangement or other association of any kind and is not party to any agreement under which the Borrower agrees to carry on any part of its business in such manner or by which the Borrower agrees to share any revenue or profit of its business with any other Person. No Material Subsidiary is, in relation to any Mine constituting Included Property or Mining Properties constituting Included Property owned or held by it or any Product derived from such properties, a partner or participant in any partnership, joint venture, profit-sharing arrangement or other association of any kind and is not party to any agreement under which it agrees to carry on any part of its business in such manner or by which it agrees to share any revenue or profit of its business with any other Person.

(z)
Investments and Indebtedness .    On the date hereof, none of the Borrower nor its Material Subsidiaries has made any investments in or advances to any Person, nor has entered into, nor is bound by any Indebtedness or Guarantee Obligations, except as disclosed in Schedule 8.1(z).

(aa)
Casualties; Taking of Properties .    Neither the business or properties of the Restricted Parties, nor any Mine constituting Included Property, has been affected in a manner that has had or could reasonably be expected to have a Material Adverse Effect as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, embargo, requisition or taking of property or cancellation of contracts, Permits or concessions by any domestic or foreign government or any agency thereof, riot, activities of armed forces or acts of God or of any public enemy.

(bb)
Insurance .    All policies of fire, liability, worker's compensation, casualty, flood, business interruption and other forms of insurance owned or held by the Borrower and each of its Material Subsidiaries are sufficient for compliance with all applicable Requirements of Law and of all agreements to which the Borrower or any of its Material Subsidiaries is a party, are valid, unexpired and enforceable policies, provide adequate insurance coverage in at least such amounts and against at least such risks (but including in any event public liability) as are usually insured against in the same general area by companies engaged in the same or a similar business for the assets and operations of the Borrower and each of its Material Subsidiaries, and will not in any way be affected by, or terminate or lapse by reason of, the transactions contemplated by this Agreement. All such material policies are in full force and effect, all premiums with respect thereto have been paid in accordance with their respective terms, and no notice of cancellation or termination has been received with respect to any such policy. Neither the Borrower nor any of its Material Subsidiaries maintains any formalized self-insurance program with respect to its assets or operations or material risks with respect thereto in excess of US $1,000,000 in the aggregate. The certificate of insurance delivered to the Lenders pursuant to Section 10.2(j)(i) contains an accurate and complete description of all material policies of insurance owned or held by the Restricted Parties with respect to Included Property on the Restatement Date.

(cc)
Hedge Agreements .    On the Restatement Date, the Borrower and its Subsidiaries were not party to any Hedge Agreement with any counterparty, except for the Borrower which was a party to Hedge Agreements with the counterparties listed in Schedule 8.1(cc). Schedule 8.1(cc) lists on the Restatement Date, the aggregate net Hedge Indebtedness with each such counterparty.

(dd)
Royalties .    Except as set out in Schedule 8.1(dd), there are no registered or unregistered royalty agreements or other rights or claims to royalties of or effecting the Mining Properties constituting Included Property of the Restricted Parties.

(ee)
Accuracy and Completeness of Information .    All written information, reports and other papers and data with respect to the Borrower, the Subsidiaries of the Borrower or the Mines that have been furnished by the Borrower to the Administrative Agent and the Lenders were and are, at the time the same were so furnished to the Administrative Agent and the Lenders, complete and correct in all material respects, or have been subsequently supplemented in writing to the extent necessary to make the information contained therein complete and accurate in all material respects. At the date hereof,
44

no fact, circumstance or event is known to the Borrower which constitutes a Material Adverse Effect or which is reasonably likely (so far as can be reasonably foreseen) to have a Material Adverse Effect, in each case, which has not been set forth in the audited, consolidated financial statements most recently delivered to the Administrative Agent or otherwise disclosed in writing to the Administrative Agent and the Lenders by the Borrower. No document furnished or statement made in writing to the Administrative Agent and the Lenders by the Borrower in connection with the negotiation, preparation or execution of the Financing Documents contains any untrue statement of a material fact or omits to state a material fact which is necessary to make the statements contained in such documents true and accurate in all material respects which has not been corrected, supplemented or remedied by subsequent documents furnished or statements made in writing to the Administrative Agent and the Lenders.
        8.2     Disclosure Schedules.     The Borrower may from time to time supplement each Schedule hereto with respect to any matter arising after the date hereof which, if existing or occurring at the date hereof, would have been required to be set forth or described in such Schedule or which is necessary to correct any information in such Schedule which has been rendered inaccurate thereby (and, in the case of any supplements to any Schedule, such Schedule shall be appropriately marked to show the changes made therein). No such supplement to any such Schedule shall be or be deemed a waiver of any Default arising as a result of the information disclosed in such supplement, except as consented to by the Majority Lenders or, with the written consent of the Majority Lenders, the Administrative Agent. No supplement shall be permitted as to representations and warranties that relate solely to the date hereof. For the purpose of any requirement under the Financing Documents that the Borrower or one of its officers confirms, repeats or is deemed to have repeated, the accuracy of a representation and warranty which relies upon a Schedule for disclosure of information as at any time after the date hereof, the Schedule referred to in that representation and warranty shall, if so consented to by the Majority Lenders or if applicable the Administrative Agent (but only to the extent such consent is required to waive any Default), be deemed to be a reference to the most recent amended or supplemented Schedule.
 
 ARTICLE 9

REPORTING COVENANTS AND PROCEDURES
        9.1     General Reporting Requirements.     The Borrower covenants and agrees that during the term of this Agreement, it shall deliver to the Administrative Agent, for the use of the Administrative Agent and the Lenders (excepting therefrom those terms which are stated to survive the termination of this Agreement), in such number as the Administrative Agent may reasonably require:
(a)
as soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of the Borrower, and as soon as available and in any event within 90 days after the end of each of the last fiscal quarter of the Borrower, a Compliance Certificate, stating that (i) no Default has occurred and is continuing, or if a Default has occurred and is continuing, a detailed description of same, (ii) the Borrower has complied in all material respects with all covenants set forth in this Agreement on its part to be performed or complied with including, without limitation, the covenants set forth in Sections 10.1, 10.2(j)(ii), 10.2(q), 10.3(a), 10.3(b), 10.3(c), 10.3(d), 10.3(e) and 10.3(h)(vi) in accordance with the terms thereof, (iii) no Material Adverse Change has occurred since the last fiscal quarter of the Borrower and (iv) setting out the Aggregate Net Hedge Indebtedness of the Borrower to all Hedge Counterparties;

(b)
as soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of the Borrower's fiscal year, unaudited consolidated financial statements of the Borrower for such fiscal quarter, including a balance sheet and statement of profit and loss, all in reasonable detail, such statements to be prepared in accordance with GAAP (except for changes accompanied by a reconciliation statement);

(c)
as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, the audited consolidated financial statements of the Borrower for such fiscal year, including a balance sheet, statements of profit and loss and surplus and changes in financial condition for each such year,
45

together with notes thereto, all prepared in accordance with GAAP (except for changes which are accompanied by a reconciliation statement) in reasonable detail and accompanied by a report thereon of auditors of national standing, which report shall state that such consolidated financial statements present fairly in all material respects the consolidated financial condition as at the end of such fiscal year of the Borrower in accordance with GAAP applied on a consistent basis (provided that such report may be qualified to the extent only that there are changes in accounting policies which changes are in accordance with GAAP);
(d)
as soon as available and in any event within 30 days after the end of each fiscal year of the Borrower, a summary prepared by the Borrower of the terms and conditions of each contract, or commitment to enter into a contract, including details of treatment/refining charges and tonnages, with buyers of Product;

(e)
as soon as available and in any event within 25 days after the end of each month, deliver to the Administrative Agent, in sufficient copies for the Administrative Agent and the Lenders, a Monthly Operating Report as of the last day of such month;

(f)
forthwith and in any event within 5 Business Days after the mailing, filing, or making thereof, copies of all registration statements, periodic reports and other documents (excluding the related exhibits except to the extent expressly requested by the Administrative Agent) filed by the Borrower with the Ontario Securities Commission, The Toronto Stock Exchange or the Securities and Exchange Commission of the United States of America (or any successor thereto) or any other national securities exchange in the United States of America;

(g)
forthwith and in any event within 5 Business Days after any senior officer or director of the Borrower obtains knowledge of the occurrence of a Default which is continuing, a statement of an officer of the Borrower setting forth details of such Default and the action which the Borrower has taken and proposes to take with respect thereto;

(h)
forthwith and in any event within 5 days after any officer or director of the Borrower becomes aware of the same, the Borrower shall notify the Administrative Agent of any event or condition that constitutes a Material Adverse Effect;

(i)
forthwith and in any event within 3 Business Days after any senior officer or director of the Borrower obtains knowledge of the occurrence of a default or event of default under any agreement evidencing or relating to any Other Senior Indebtedness or Subordinated Indebtedness, or the Convertible Notes, or any "Event of Default", "Termination Event" or "Additional Termination Event" under any Hedge Agreement, a statement of an officer of the Borrower setting forth details thereof and the action which the Borrower has taken and proposes to take with respect thereto;

(j)
forthwith and in any event within 5 Business Days after any officer or director of the Borrower becomes aware of the same, give notice to the Administrative Agent of any action, suit, inquiry, litigation, claim, proceeding or dispute (each a, " Proceeding ") commenced or threatened against or affecting the Borrower or any Subsidiary or any of their properties by or before any court, tribunal, governmental authority or agency or any other board or authority in which, individually or in the aggregate (where more than one Proceeding is threatened or commenced in connection with the same subject matter), the amount claimed thereunder (including any general, special and punitive damages) exceeds US $500,000 or where the adverse determination of such Proceeding could have a Material Adverse Effect; and the Borrower shall energetically defend and contest all such Proceedings;

(k)
forthwith and in any event within 5 Business Days after any Person becomes a Subsidiary or a Material Subsidiary, or any Subsidiary ceases to be a Subsidiary, or the consolidated total assets of any Material Subsidiary, at any time, have a book value of less than US $5,000,000 or the consolidated total revenues, at any time, are less than US $2,500,000 (on an annual basis), the Borrower shall provide written notice thereof to the Administrative Agent;

(l)
forthwith, and in any event within 5 Business Days after entering into any Hedge Agreement or any amendment to a Permitted Hedge Agreement, deliver a true and complete copy of such Hedge
46

Agreement or amendment to the Administrative Agent (except for copies of Hedge Agreements and amendments thereof which will have been delivered by the Borrower to the Administrative Agent pursuant to Sections 6.1), and if the Hedge Agreement entered into is with a Hedge Counterparty that is required to execute an Instrument of Adhesion, the fully-executed Instrument of Adhesion; and
(m)
upon request, such other information as the Administrative Agent and the Lenders may from time to time reasonably request.
        9.2     Mine Plan.     The Borrower shall deliver each year to the Administrative Agent, with sufficient copies for the Lenders, no later than May 31 each year a Mine Plan, which has been approved by the board of directors of the Borrower. Each such Mine Plan shall:
(a)
save as may be otherwise agreed by the Administrative Agent, be in substantially the form of, and contain the same type of data, projections, forecasts, calculations and other information as, the Initial Model and Budget;

(b)
include an explanation of any deviation in the amount attributed to any line item specified in the Mine Plan where such deviation is 10% or more of the amount attributed to the same line item in the Initial Model and Budget; and

(c)
include such other information as the Administrative Agent may reasonably request with respect to any Mine Plan.
        If the Mine Plan is in compliance with the foregoing requirements and the Independent Engineer (and, as applicable, other independent consultant) is not required to review the Mine Plan pursuant to Section 9.5, the Mine Plan shall be deemed to be accepted by the Administrative Agent and the Lenders upon such delivery to the Administrative Agent. In all other cases, the Mine Plan shall not be considered accepted. If the Mine Plan does not comply with the requirements in subparagraphs (a), (b) and (c) above, the Borrower shall within 5 Business Days after consultation with the Administrative Agent, submit an appropriately revised Mine Plan which is otherwise in accordance with this Section 9.2. If the Independent Engineer (and, as applicable, other independent consultant) is required to review the Mine Plan pursuant to Section 9.5, the Borrower shall, following completion of the Independent Engineer's (and, as applicable, other independent consultant's) review, within 5 Business Days after consultation with the Administrative Agent, submit an appropriately revised Mine Plan which is otherwise in accordance with this Section 9.2.
        9.3     Operating Budgets.     The Borrower shall deliver each year to the Administrative Agent, with sufficient copies for the Lenders, no later than January 31 of each year, a monthly Operating Budget for that fiscal year, which has been approved by the board of directors of the Borrower. Each such Operating Budget shall:
(a)
save as may be otherwise agreed by the Administrative Agent, be in substantially the form of, and contain the same type of data, projections, forecasts, calculations and other information as, the Initial Model and Budget;

(b)
set out a line item comparison, comparing the actual results for the previous twelve month period of the year ending against the Operating Budget in respect of such year covered by the Operating Budget; and

(c)
include such other information as the Administrative Agent may reasonably request with respect to any Operating Budget.
        If the Operating Budget is in compliance with the foregoing requirements and the Independent Engineer (and, as applicable, other independent consultant) is not required to review the Operating Budget pursuant to Section 9.5, the Operating Budget shall be deemed to be accepted by the Administrative Agent and the Lenders upon such delivery to the Administrative Agent. In all other cases, the Operating Budget shall not be considered accepted. If the Operating Budget does not comply with the requirements in subparagraphs (a), (b) and (c) above, the Borrower shall within 5 Business Days after consultation with the Administrative Agent, submit an appropriately revised Operating Budget which is otherwise in accordance with this Section 9.3. If the Independent Engineer (and, as applicable, other independent consultant) is required to review the Operating Budget pursuant to Section 9.5, the Borrower shall, following completion of the Independent Engineer's (and, as
47

applicable, other independent consultant's) review, within 5 Business Days after consultation with the Administrative Agent, submit an appropriately revised Operating Budget which is otherwise in accordance with this Section 9.3.
        9.4     Additional Procedures for Updating Mine Plan and Operating Budgets.     If any Person which is a Restricted Party acquires any Mines constituting Included Property or other Mining Properties or other Persons as permitted by this Agreement, within 60 Business Days of such acquisition, the Borrower shall, in accordance with the requirements set out in Sections 9.2 and 9.3 (except for the date of delivery thereof, which shall be governed by this Section 9.4), submit an updated Mine Plan and Operating Budget to the Administrative Agent together with the supporting documents required by those Sections.
        9.5     Review of Monthly Operating Report, Mine Plan and Operating Budgets.     If there has been any adverse variation in actual ore processed, Gold Equivalent produced or operating costs per ton of ore at the Mines constituting Included Property as reported in the December Monthly Operating Report or in any publicly- filed documents referred to in Section 9.1(f) in respect of the previous year by 15% or more as compared to the projections for such items set out in the previous year's Mine Plan, the Administrative Agent shall arrange for the Monthly Operating Report in respect of the months of March, June, September and December for the current year, the Mine Plan for the current year and the Operating Budgets for the current year, to be reviewed by the Independent Engineer on behalf of the Lenders. In such case, the Administrative Agent may also, if reasonably considered appropriate, consult with (and arrange for reviews by) any other independent consultant who is competent to advise on the relevant matter, in reviewing the Mine Plan and the Operating Budgets.
 
 ARTICLE 10

COVENANTS OF THE BORROWER
        10.1     Financial Covenants .    During the term of this Agreement (excepting therefrom those terms which are stated to survive the termination of this Agreement):
(a)
Total Net Debt to Free Cash Flow Ratio .    The Borrower shall, at all times, maintain a Total Net Debt to Free Cash Flow Ratio of not more than 5.00:1.00, on a rolling four quarter basis.

(b)
Interest Coverage Ratio .    The Borrower shall, at all times, maintain an Interest Coverage Ratio of not less than 2.00:1.00, on a rolling four-quarter basis.

(c)
Current Ratio .    The Borrower shall, at all times, maintain a Current Ratio of not less than 1.10:1.00, on quarterly basis.

(d)
Reserve Tail .    The Borrower shall, at all times, ensure that the Gold Equivalent Proven and Probable Reserves calculated in the Mine Plan forecast to exist on the day immediately following the Maturity Date (based on forecast production of Product from the Maturity Date through the remainder of the Life of Mine as set forth in the Mine Plan using the Financial Parameters) shall, at all times, equal no less than 35% of the Reserves of Product as of January 1, 2004 as calculated in the Initial Mine Plan using the Financial Parameters. For the purposes of this Section 10.1(d), Gold Equivalent Proven and Probable Reserves shall be calculated in the manner set forth in the Initial Mine Plan using the Financial Parameters as verified and accepted by the Independent Engineer.

(e)
Tangible Net Worth .    The Borrower shall, at all times, maintain a Tangible Net Worth in an amount of not less than US $300,000,000, plus 50% of the Borrower's consolidated net income for each of the Borrower's fiscal quarters, on a cumulative basis, commencing with its fiscal quarter ending December 31, 2004 (excluding any fiscal quarters in which the Borrower incurs a net loss) (all as determined on a consolidated basis in accordance with GAAP consistently applied), plus 50% of the net proceeds of any public offerings of Capital Stock of the Borrower received during such fiscal quarters, on a cumulative basis.

(f)
Unencumbered Liquidity .    The Borrower shall, at all times, maintain Unencumbered Liquidity of not less than US $10,000,000.
48

(g)
Gross Senior Debt to Free Cash Flow from Recourse Assets .    The Borrower shall, at all times, maintain Gross Senior Debt to Free Cash Flow from Recourse Assets of not more than 4.25:1.00, on a rolling four quarter basis.

(h)
Credit Facility Indebtedness to Free Cash Flow from Included Property Ratio .    The Borrower shall, at all times, maintain the Credit Facility Indebtedness to Free Cash Flow from Included Property Ratio at not more than 3.25:1.00, on a rolling four quarter basis.
        10.2     Positive Covenants .    During the term of this Agreement (excepting therefrom those terms which are stated to survive the termination of this Agreement):
(a)
Status and Power .    Each of the Borrower and each Material Subsidiary shall at all times maintain in good standing its corporate (or other) existence, power, capacity and authority, and the rights, privileges and franchises under each jurisdiction where it owns properties or carries on business. Each of the Borrower and each Material Subsidiary shall remain duly qualified to do business and own property in each such jurisdiction in which such qualification is necessary or desirable in the normal conduct of its business, except to the extent that not doing so would not have a Material Adverse Effect.

(b)
Business .    The Borrower and each Material Subsidiary shall conduct business in a businesslike manner and in accordance with good business and mining practice, including operating the Mines in accordance with good mining practice and the Development Plan. Each of the Borrower and each Material Subsidiary shall maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order, repair and condition, ordinary wear and tear excepted and casualty or expropriation excepted, and make all necessary renewals, replacements, modifications, improvements, upgrades, extensions and additions thereof or thereto in accordance with prudent industry practice.

(c)
Records, etc .    Each of the Borrower and each Material Subsidiary shall keep or cause to be kept proper books of account in conformity with GAAP and sound accounting practice and all applicable Requirements of Law and, on reasonable notice, shall make such books of account and all records, ledgers, reports, contracts and other documents and computer files (including records relating to its assets) in connection with its business available to the Administrative Agent or Lenders (or their respective advisers or representatives) on reasonable notice during regular business hours for the purpose of inspecting or auditing the same, and shall permit them to make extracts of the same and to have access to its computer and management system to inspect such documents and computer files.

(d)
Payment Obligations .    Each of the Borrower and each Material Subsidiary shall pay, discharge or otherwise satisfy as the same shall become due and payable (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Material Subsidiary; and (b) all lawful claims which, if unpaid, would by any Requirements of Law become a Lien upon its property, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Material Subsidiary; and except, in each case, to the extent the failure to pay or discharge the same would not have a Material Adverse Effect.

(e)
Licences, etc .    Each of the Borrower and each Material Subsidiary shall (i) obtain, hold and maintain in full force and good standing all Permits applicable to it or necessary to own its assets and to carry on its business and (ii) duly observe, conform and comply in all material respects with all valid requirements of all Permits, except, in each case, to the extent that not doing so would not have a Material Adverse Effect.

(f)
Compliance with Law .    The Borrower and its Material Subsidiaries shall operate the Mines and generally conduct their business in compliance with all applicable Requirements of Law and maintain such authorizations as are required to operate the Mines and conduct their business in compliance therewith, except to the extent that not doing so would not have a Material Adverse Effect.
49

(g)
Environmental .    Except as described on Schedule 8.1(u), each of the Borrower and each Material Subsidiary shall generate, treat, store or dispose of any hazardous substance or hazardous waste only in the ordinary course of its business, and then only if done so in compliance with all applicable Requirements of Environmental Law. Each of the Borrower and each Material Subsidiary shall at all times be in compliance with all Requirements of Environmental Law applicable to it and to the Mines, except where such non-compliance would not have a Material Adverse Effect and where appropriate remedial action acceptable to the applicable Governmental Authority is being diligently undertaken. The Borrower shall diligently mitigate any violations of applicable Requirements of Environmental Law which relate to the LaRonde Mine resulting from the discharge of ammonia and other toxic effluent as described on Schedule 8.1(u) pursuant to and in accordance with the terms of such Requirements of Environmental Law.

(h)
Contractual Obligations/Material Contracts .    Each Restricted Party shall at all times, observe and comply in all respects with all of the material terms, conditions and covenants of all Contractual Obligations under all Material Contracts (and any material documents or instruments delivered pursuant thereto) and shall ensure that there is no termination, rescission or material amendment, modification, waiver or variation of the Material Contracts (or any material documents or instruments delivered pursuant thereto) without the prior written consent of the Majority Lenders, acting reasonably and without unreasonable delay. Each Restricted Party shall, at all times, ensure that there is no default in the observance or performance of any Contractual Obligations under any Material Contract (or contained in any material instrument or agreement evidencing, securing or relating thereto) and that no event occurs or condition exists, the effect of which is:

(i)
to permit the other party or parties thereto to terminate such Contractual Obligations; or

(ii)
to create additional liabilities or obligations on the part of any Restricted Party;
which either individually or in the aggregate with other terminations and/or creations of additional liabilities or obligations, as applicable, would have a Material Adverse Effect.
(i)
Mining Leases .    Without limiting Section 10.2(h), the Borrower and each Material Subsidiary shall keep the Mining Leases which relate to Recourse Assets to which it is a party in full force and effect at all times, including, without limiting the generality of the foregoing, paying all fees and other charges required to be paid under or in connection with such Mining Leases, and each of the Borrower and each Material Subsidiary shall defend its respective right, title and interest in, to and under such Mining Leases against any adverse or competing claim. Each of the Borrower and each Material Subsidiary shall renew, and take all steps necessary to renew such Mining Leases, on or before each renewal date of such Mining Leases. Each of the Borrower and each Material Subsidiary shall keep the other rights and concessions necessary for the operation of the Mines constituting Recourse Assets owned or held by it in full force and effect.

(j)
Insurance.

(i)
The Borrower and its Material Subsidiaries shall, at all times, maintain in force insurance policies against such perils and in such amounts as is customarily maintained by companies similarly geographically situated and conducting the same or similar businesses and in accordance with any Requirements of Law, and with such insurers as are rated "A" or higher by A.M. Best Company, or an equivalent rating by such other insurance rating agency selected by the Administrative Agent (except in the case of marine cargo insurance in which case the insurer hereof shall be rated BBBpi or higher by Standard & Poor's Ratings Group or an equivalent rating); all such insurance relating to Included Property shall name the Administrative Agent, the Trustee and, if required by the Administrative Agent, the Secured Parties, as additional insureds and/or first loss payees (as the Administrative Agent may determine) and shall provide that no cancellation or termination thereof shall, for any reason whatsoever, take effect unless the insurer has given the Administrative Agent not less than 30 days' prior written notice thereof and all insurance proceeds for property damage or loss or for business interruption shall be payable to the Administrative Agent and the Trustee for the benefit of the Secured Parties, and the Borrower shall provide such
50

evidence as is satisfactory to the Administrative Agent, as and when requested by the Administrative Agent, confirming that such insurance policies are in full force and effect.
(ii)
Unless otherwise specified in this Section 10.2(j)(ii), all proceeds of insurance maintained by the Restricted Parties relating to Included Property shall be paid to the Administrative Agent to be applied by it to reduce the principal amount of the Facility Indebtedness. Any insured claim, judgment, settlement or money compromise and any insured expenses associated with its defence or investigation payable by commercial general liability insurance shall be paid first to any Person entitled to payment of such unpaid insured claim, judgment, settlement or money compromise and entitled to payment of such unpaid insured expenses and thereafter to the Borrower. If no Default has occurred and is continuing, proceeds of insurance covering loss or damage to Included Property in an amount of less than US $5,000,000 per claim may be paid by the insurer directly to the Borrower or other affected Restricted Party to be applied by the Borrower or such Restricted Party to repair the damage or replace the loss; but nothing herein shall affect the rights of any Person holding a Permitted Lien in respect of such Included Property which has priority over the Security. If the Borrower or such other Restricted Party fails to commence such repair or replacement of such lost or damaged property within 3 months of such casualty, loss or damage, or having commenced such repair or replacement during such period, does not diligently pursue the same until such repair or replacement is completed, or if the Borrower, for itself or on behalf of such other Restricted Party, otherwise elects by notice to the Administrative Agent, not to effect such repairs or replacement, such insurance proceeds shall be applied by it to reduce the principal amount of the Facility Indebtedness. Subject to the rights of any holder of a Permitted Lien that has priority over the Security, proceeds of insurance covering loss of or damage to Included Property in an amount of US $5,000,000 or more but less than US $10,000,000 per claim shall be paid to the Administrative Agent and shall be disbursed by the Administrative Agent to the Borrower or the affected Restricted Party on conditions appropriate to a construction credit, to fund the repair or replacement of the Included Property in respect of which the insurance proceeds are payable, provided that:

(A)
no Default has occurred and is continuing; and

(B)
the Majority Lenders are satisfied, acting reasonably, that the proceeds of such insurance together with other resources available to the Borrower or such other Restricted Party (the use of which would not contravene this Agreement) are sufficient to repair or replace the Included Property in respect of which the insurance proceeds are payable within a reasonable period of time, and in any event not later than the Maturity Date then in effect, such that the affected Included Property is returned to as good or better condition than it was in before the event occurred that caused the insurance proceeds to be paid.
If either of clause (A) or (B) above is not satisfied, such insurance proceeds shall be applied to reduce the principal amount of the Facility Indebtedness. All insurance proceeds held by the Administrative Agent shall, unless and until the same are applied to payment of the principal amount of the Facility Indebtedness or released to the Borrower, be held as part of the Security.
(k)
Inspection of Properties .    At all reasonable times and on reasonable notice, the Restricted Parties shall allow the Administrative Agent and its representatives and, if the Independent Engineer is conducting a review of a Monthly Operating Report, the Mine Plan or the Operating Budget pursuant to Article 9, the Independent Engineer or its representatives, to visit and inspect (without any invasive or intrusive testing) all or any of the properties relating to the Included Property and to discuss the operations, affairs, finances and accounts of the Restricted Parties with any of the Restricted Parties' senior employees or senior officers all at the cost of the Borrower. One time during each calendar quarter and on reasonable notice, the Restricted Parties shall allow the Lenders and their respective representatives to visit and inspect (without any invasive or intrusive testing) all or any of the properties relating to the Included Property and to discuss the operations, affairs, finances and accounts of the Restricted Parties with any of the Restricted Parties' senior employees or senior officers all at the cost of the Borrower. If a Default has occurred and is continuing, at all reasonable times and
51

on reasonable notice, the Borrower and each Material Subsidiary shall allow the Administrative Agent and its representatives and the Independent Engineer and its representatives, to visit and inspect any or all of the properties of the Borrower and its Material Subsidiaries and to discuss the operations, affairs, finances and accounts of the Borrower and its Material Subsidiaries with any of the Borrower's and such Material Subsidiaries' senior employees or senior officers all at the cost of the Borrower.
(l)
Compliance with Development Plan .    The Borrower shall carry on its business at, and operate and manage, the Mines constituting Included Property in a manner consistent with the Development Plan, as updated from time to time in accordance with this Agreement, and, where applicable, proceed diligently with the development and maintenance of the Mines constituting Included Property in accordance with the Development Plan as so updated from time to time.

(m)
Use of Proceeds .    The Borrower shall apply all Advances for the purposes herein set out.

(n)
Included Property .    If the Borrower provides a written request to the Administrative Agent requesting that any Mine held or acquired pursuant to Section 10.3(b)(vi), (vii), (viii) or (ix) be Included Property, the Administrative Agent shall deliver a copy of such request to the Lenders. If the Majority Lenders, following receipt of such request and consultation with its independent consultants (including the Independent Engineer), agree that such Mine is eligible to be Included Property, the Administrative Agent shall provide notice of such determination to the Borrower. The Borrower shall then execute and deliver, or cause to be executed and delivered by each wholly-owned Subsidiary which wholly owns, controls and operates such Mine and each other wholly-owned Subsidiary, if any, which indirectly, through such first-mentioned Subsidiary, wholly owns, controls and operates such Mine, all guarantees, security agreements, hypothecations, assignments, transfers, mortgages, pledges, charges or other applicable security documents as the Administrative Agent may request, in form and substance satisfactory to the Administrative Agent, acting reasonably, to grant the Administrative Agent (or if required by any Requirements of Law, a trustee or other similar Person) on behalf of the Secured Parties valid and effective first-priority Liens, subject only to Permitted Liens, on such Mine, in the case of Persons which wholly own, control and operate Mines, and on all of its present and after-acquired property, in the case of Persons (other than the Borrower) which own Capital Stock of other Persons which directly or indirectly wholly own, control and operate such Mine, in each case to secure the Senior Secured Indebtedness, together with such additional documentation, insurance certificates and opinions which the Administrative Agent requests in support thereof (including, without limitation, all documentation and opinions that would have been required to have been delivered under Sections 6.1 and 7.5 if the Included Property had been Included Property at any relevant time specified therein), in form and substance satisfactory to the Administrative Agent, acting reasonably. An insurance advisor shall also, at the election of the Majority Lenders, conduct a review of the insurance policies of the Borrower or its Subsidiaries relating to the proposed Included Property, which review must be satisfactory to the Majority Lenders, in their sole discretion. Where applicable, the Borrower shall also execute and deliver, or cause to be executed and delivered by each wholly-owned Subsidiary which indirectly wholly owns, controls and operates such Mine, a pledge agreement, in form and substance satisfactory to the Administrative Agent, pledging to the Administrative Agent on behalf of the Secured Parties all present and after-acquired Capital Stock and Indebtedness held by each such pledgor in any Subsidiary held by it as security for the Senior Secured Indebtedness. Upon all of the applicable foregoing requirements and (without duplication) the other requirements specified in the definition of Included Property being met to the satisfaction of the Majority Lenders, in their sole discretion, the Administrative Agent shall provide written notice to the Borrower that such Mine constitutes Included Property, and upon the delivery of such notice to the Borrower such Mine shall constitute Included Property.

(o)
Control of Mines .    The Borrower shall maintain active operating, management and financial control of the LaRonde Mine, shall use commercially reasonable efforts to protect its interest in and to the LaRonde Mine, and shall take no steps to dispose of its rights in and to the LaRonde Mine or any part thereof. Each of the Borrower and each Material Subsidiary which acquires any other Mine which is a Recourse Asset shall maintain active operating, management and financial control of such Mine, shall use commercially reasonable efforts to protect its interest in and to such Mine and shall take no steps to dispose of its rights in and to such Mine or any part thereof.
52

(p)
Instruments of Adhesion .    The Borrower shall execute and deliver to the Administrative Agent the "Specific Acknowledgement Regarding Security" contained in each Instrument of Adhesion within 15 Business Days of being requested to do so by the Administrative Agent; provided that, failure to so execute and deliver the "Specific Acknowledgement Regarding Security" contained in each such Instrument of Adhesion shall not affect the validity of such Instrument of Adhesion, and the Borrower shall, upon the execution and delivery of the Instrument of Adhesion by the applicable Permitted Hedge Counterparty, be deemed to have made the statements contained in the "Specific Acknowledgement Regarding Security".

(q)
Concentrate Levels .    The Borrower and its Material Subsidiaries shall at all times be party to contracts, or commitments to enter into contracts, with creditworthy buyers so that at least 50% of anticipated Product, as set out in the Development Plan for any 12 month period will be sold.

(r)
Plan Compliance.     The Borrower shall make, and cause each Material Subsidiary to make, to the extent required by any Requirements of Law, full payment when due of all amounts which, under the provisions of any Plan, the Borrower or any Material Subsidiary, is required to pay as contributions to such Plan, except where the failure to make such payments would not have a Material Adverse Effect.

(s)
Covenants of Subsidiaries.     The Borrower shall cause the Subsidiaries of the Borrower to comply with all covenants and agreements of or relating to such Subsidiaries herein and in the Financing Documents.

(t)
Expenditures.     The Borrower shall ensure that any Capital Expenditures or Exploration Expenditures relating to any Included Property are made in a manner which is consistent with the Development Plan and in accordance with good mining practice.
        10.3     Negative Covenants .    During the term of this Agreement (excepting therefrom those terms which are stated to survive the termination of this Agreement):
(a)
Negative Pledge.     Neither the Borrower, nor any Material Subsidiary, shall create or assume, have outstanding or suffer to permit, any Lien on any of its present or after-acquired undertaking, property or assets except for Permitted Liens. Neither the Borrower, nor any Material Subsidiary, shall create or assume, have outstanding or suffer to permit, any royalties, including royalty agreements and rights or claims to royalties or royalty agreements, on any of its present or after-acquired undertaking, property or assets except for those listed on Schedule 8.1(dd) and those permitted by subparagraph (m) of the definition of Permitted Liens.

(b)
Investments.     The Borrower shall not make, whether in one transaction or in a series of transactions, or hold any Investments in any Person or permit any of its Subsidiaries to make, whether in one transaction or in a series of transactions, any Investments in any Person, or hold any Investments in any Person, other than:

(i)
loans, advances or capital contributions the material details of which have been set forth in the financial statements referred to in Section 8.1(i);

(ii)
without duplicating Section 10.3(b)(i), any Subsidiary may make loans or advances to any Restricted Party on an unsecured basis; provided that, if the Subsidiary making such loan or advance is not a Restricted Party, that Subsidiary must subordinate and postpone such indebtedness owed to it to the Senior Secured Indebtedness;

(iii)
without duplicating Section 10.3(b)(i), the Borrower may make loans or advances to, or capital contributions in, any Subsidiary, and any Subsidiary may make loans or advances to, or capital contributions in, any other Subsidiary; provided that, the Investment Conditions shall have been satisfied and such loan or capital contribution to, or in, any such Subsidiary is used by such Subsidiary for the purposes out in Section 10.3(b)(vi), (vii), (viii) or (ix);

(iv)
investments in Cash Equivalents;

(v)
investments in readily marketable securities of companies which trade on any senior nationally-recognized securities exchange in any Permitted Jurisdiction;
53

(vi)
Investments by way of purchase of securities or other ownership interests in any Person which is not an Affiliate of the Borrower or any Subsidiary of the Borrower, where following the Investment, the Borrower or Subsidiary, as the case may be, does not Control the Person acquired or hold, directly or indirectly, more than 50% of the Capital Stock of the Person in which the Investment is made and the amount of such Investment does not, for all such Investments, exceed US $20,000,000 per annum (such amount to be increased in each subsequent year by the amount of any unused portion of the US $20,000,000 in the current year and by the amount of any Restricted Payments permitted but not made under Section 10.3(d) in the current year); provided that the Investment Conditions shall have been satisfied;

(vii)
Investments by way of purchase of securities of any Person which is not an Affiliate of the Borrower or any Subsidiary of the Borrower, where the consideration paid therefor is (a) Capital Stock of the Borrower (if the acquiring Person is the Borrower) or Capital Stock of an acquiring Subsidiary (if the acquiring Person is a Subsidiary) or (b) cash, if following the Investment the Borrower or the acquiring Subsidiary, as the case may be, Controls the Person acquired (and such Control permits the acquiror to elect the majority of the board of directors of the Person acquired) and holds, directly or indirectly, more than 50% of the Capital Stock of the Person acquired; provided that:

(A)
if any Indebtedness is assumed as a result of such Investment it must comply with Section 10.3(c);

(B)
if proceeds of any Advance are used to make such Investment or used to refinance other funding of any such Investment, any such Investment is not hostile;

(C)
the Investment Conditions shall have been satisfied; and

(D)
in reasonably sufficient time prior to the completion of the transaction pursuant to which the Investment is to be made, the Borrower has delivered a certificate to the Administrative Agent in the form of Exhibit F, providing information on the proposed Investment, in detail reasonably satisfactory to the Administrative Agent, and evidencing compliance with the requirements set out in subparagraphs (A) to (C) above;

(viii)
Investments by way of the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person (which is not an Affiliate of the Borrower or any Subsidiary of the Borrower) or assets constituting a business unit, line of business or division of such Person (which is not an Affiliate of the Borrower or any Subsidiary of the Borrower) where the consideration paid therefor is less than US $20,000,000 per Investment (whether in one transaction or a series of transactions) and is paid by way of (a) Capital Stock of the Borrower (if the acquiring Person is the Borrower) or Capital Stock of an acquiring Subsidiary (if the acquiring Person is a Subsidiary) or (b) cash; provided that:

(A)
if any Indebtedness is assumed as a result of such Investment it must comply with Section 10.3(c); and

(B)
the Investment Conditions shall have been satisfied;

(ix)
Investments by way of the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person (which is not an Affiliate of the Borrower or any Subsidiary of the Borrower) or assets constituting a business unit, line of business or division of such Person (which is not an Affiliate of the Borrower or any Subsidiary of the Borrower) where the consideration paid therefor is US $20,000,000 or more per Investment (whether in one transaction or a series of transactions) and is paid by way of (a) Capital Stock of the Borrower (if the acquiring Person is the Borrower)
54

or Capital Stock of an acquiring Subsidiary (if the acquiring Person is a Subsidiary) or (b) cash; provided that:
(A)
if any Indebtedness is assumed as a result of such Investment it must comply with Section 10.3(c);

(B)
the Investment Conditions shall have been satisfied; and

(C)
in reasonably sufficient time prior to the completion of the transaction pursuant to which the Investment is to be made, the Borrower has delivered a certificate to the Administrative Agent in the form of Exhibit G, providing information on the proposed Investment, in detail reasonably satisfactory to the Administrative Agent, and evidencing compliance with the requirements set out in subparagraphs (A) and (B) above; and

(x)
to the extent permitted by all applicable Requirements of Law, loans or advances to employees of the Borrower and its Subsidiaries not to exceed US $2,000,000 in the aggregate at any time outstanding.

(c)
Limitation on Indebtedness.     Neither the Borrower nor any Material Subsidiary shall create, incur, assume or suffer to exist any Indebtedness, except:

(i)
the Senior Secured Indebtedness;

(ii)
Indebtedness under Financing Leases in an aggregate principal amount not exceeding US $10,000,000 at any one time outstanding;

(iii)
Indebtedness secured by Permitted Liens (other than Financing Leases and other than Permitted Liens described in subparagraph (l) of the definition of "Permitted Liens" in an amount greater than US $5,000,000);

(iv)
Indebtedness under the Convertible Notes;

(v)
any Guarantee Obligation by the Borrower or any Material Subsidiary of the Borrower entered into in the ordinary course of its business provided that the aggregate liability, contingent or otherwise, of the Borrower and its Material Subsidiaries under all outstanding Guarantee Obligations, together with all amounts paid after the Closing Date under Guarantee Obligations, does not at any time exceed US $5,000,000;

(vi)
any other Indebtedness of the types referred to in subsections (a), (b), (d) or (e) of the definition of Indebtedness, so long as no Default has occurred and is continuing, the creation, incurrence, assumption or existence of such Indebtedness would not result in a Material Adverse Change or breach, conflict with or violate any Requirements of Law, or result in the Borrower breaching any covenant set out in Section 10.1 on a pro forma basis; provided that:

(A)
the terms and conditions of such Indebtedness shall be no more onerous to the debtor(s) thereunder than any terms and conditions hereunder (with the exception of pricing and fees);

(B)
such Indebtedness shall be subject to an intercreditor agreement in form and substance satisfactory to the Lenders, addressing, among other issues, mutual acknowledgement by the holders of such Indebtedness and the Administrative Agent of priority claims of assets, agreement by the holders of such Indebtedness and the Administrative Agent to provide notice of covenant breach by the Borrower or its Affiliates, mutual stand-still by the holders of such Indebtedness and the Administrative Agent of enforcement rights in the event of default and agreement by the holders of such Indebtedness and the Administrative Agent to vote as separate classes in bankruptcy or insolvency proceedings;

(C)
such Indebtedness shall not be secured by any Lien on any Included Property;

(D)
such Indebtedness shall be used for the development of a Recourse Asset acquired by the Borrower or any Material Subsidiary after the Restatement Date or, if a Recourse Asset has
55

been acquired by the Borrower or any Material Subsidiary before the Restatement Date, such Recourse Asset was not in commercial production on the Restatement Date;
(E)
the terms of which Indebtedness do not require repayment of any principal prior to the Maturity Date then in effect; and

(F)
in reasonably sufficient time prior to the completion of the transaction pursuant to which the creation, incurrence, or assumption of such Indebtedness is to be made, the Borrower shall have delivered a certificate to the Administrative Agent in the form of Exhibit H, providing information on the proposed Indebtedness, in detail reasonably satisfactory to the Administrative Agent, and evidencing compliance with the applicable requirements set forth in this Section 10.3(c)(vi);
(such Indebtedness, if all requirements set out in this Section 10.3(c)(vi) have been complied with, is referred to herein as " Other Senior Indebtedness ");
(vii)
any other Indebtedness of the types referred to in subsections (a), (b) or (e) of the definition of Indebtedness, so long as no Default has occurred and is continuing, the creation, incurrence, assumption or existence of such Indebtedness would not result in a Material Adverse Change or breach, conflict with or violate any Requirements of Law, or result in the Borrower breaching any covenant set out in Section 10.1 on a pro forma basis; provided that:

(A)
the terms and conditions thereof shall be no more onerous to the debtor(s) thereunder than any terms and conditions under the Convertible Notes or the Trust Indenture (with the exception of pricing and fees);

(B)
neither the Borrower nor any Material Subsidiary shall grant any Lien in its property to secure such Indebtedness;

(C)
the terms of such Indebtedness do not require the repayment of principal thereof prior to February 15, 2012; and

(D)
in reasonably sufficient time prior to the completion of the transaction pursuant to which the creation, incurrence, or assumption of such Indebtedness is to be made, the Borrower shall have delivered a certificate to the Administrative Agent in the form of Exhibit I, providing information on the proposed Indebtedness, in detail reasonably satisfactory to the Administrative Agent, and evidencing compliance with the applicable requirements set forth in this Section 10.3(c)(vii);
(such Indebtedness, if all requirements set out in this Section 10.3(c)(vii) have been complied with, is referred to herein as " Subordinated Indebtedness "); and
(viii)
Restricted Parties may incur, assume or suffer to exist Indebtedness owing to Subsidiaries to the extent permitted by, and on the terms and conditions set out in, Section 10.3(b)(ii).
No Subsidiary (excluding Material Subsidiaries) shall create, incur, assume or suffer to exist any Indebtedness if the outstanding Indebtedness of all Subsidiaries (excluding Material Subsidiaries), in the aggregate, would exceed US $10,000,000.
(d)
Restricted Payments.     Neither the Borrower nor any Material Subsidiary shall make, pay or declare any distributions or dividends (other than distributions or payments of additional shares of the Borrower or any Material Subsidiary or rights or warrants to acquire additional shares of the Borrower or any Material Subsidiary) on any shares of its Capital Stock, or redeem or purchase or otherwise acquire any of its shares of its Capital Stock, reduce or repay capital, make any payments or prepayments of principal on, or redeem, the Convertible Notes prior to the Maturity Date then in effect, make any payments or prepayments of, or redeem, principal on any Subordinated Indebtedness prior to the Maturity Date then in effect, or in each case, set aside any funds for any such purpose, (collectively, " Restricted Payments "), if at such time a Default has occurred and is continuing or if, upon the making of such Restricted Payment, a Default or Material Adverse Effect would occur; provided that, the aggregate amount of Restricted Payments in any fiscal year of the Borrower shall not
56

exceed US $20,000,000 (excluding therefrom Restricted Payments made by a Restricted Party to another Restricted Party). Neither the redemption of the Convertible Notes on or after February 15, 2006, if in accordance with their terms, nor the redemption of any Subordinated Indebtedness, if in accordance with its terms, shall be included in such monetary cap if the consideration paid therefor to the holder thereof on the exercise of such respective redemption right by the Borrower is common shares of the Borrower. The Borrower shall not make any voluntary prepayments of principal of the Other Senior Indebtedness prior to the Maturity Date then in effect if at such time a Default has occurred and is continuing or if, upon the making such payment, a Default or Material Adverse Effect would occur.
(e)
Sale of Assets.     No Restricted Party shall (whether in one transaction or in a series of transactions) sell, transfer, lease, assign or otherwise dispose of (or commit to same) all or any of its assets whether now owned or hereafter acquired except:

(i)
as permitted under Section 10.3(f);

(ii)
for the sale of redundant, obsolete, damaged and worn out assets provided that they are replaced to the extent the same are used at the time of disposition in the operation of the Mines or the other Mining Properties owned or controlled by the Borrower or such Subsidiary, or for the sale of Product or product derived from such Mines or other Mining Properties in the ordinary course of its business; or

(iii)
if doing so will not directly or indirectly result in a Default or restrict or impair the Restricted Parties' ability, on a consolidated basis, to perform their obligations under any Financing Documents and the aggregate book or market value (whichever shall be higher) of all such additional assets sold, transferred, assigned or disposed of under this clause (iii) in any calendar year does not exceed US $2,000,000.

(f)
Fundamental Changes.     Neither the Borrower nor any Material Subsidiary shall (whether in one transaction or in a series of transactions) amalgamate, merge or consolidate with any Person, or become a party to any transaction whereby all or substantially all of its property or assets becomes the property or assets of any other Person, except if no Default has occurred and is continuing or would result therefrom, if no Material Adverse Effect has occurred or would result therefrom and if such transaction does not breach any Requirements of Law:

(i)
any Subsidiary may amalgamate with the Borrower, and any Subsidiary which is a Restricted Party may amalgamate or merge with, or acquire all or substantially all of the property and assets of, any other Subsidiary;

(ii)
the Borrower may amalgamate with, or acquire all or substantially all of the property and assets of, any Subsidiary;

(iii)
any Subsidiary which is not a Restricted Party may amalgamate or merge with any other Subsidiary which is not a Restricted Party, or acquire all or substantially all of the property and assets of, any other Subsidiary which is not a Restricted Party; and

(iv)
the Borrower or any Subsidiary which is a Restricted Party may merge, amalgamate or consolidate with any Person in order to effect an Investment permitted under Section 10.3(b)(vi), (vii), (viii) or (ix);
provided that in the case of a merger, amalgamation or consolidation permitted by Sections 10.3(f)(i), (ii) and (iv):
(A)
the surviving or resulting Person is a Restricted Party;

(B)
the Administrative Agent has a first priority Lien on all property which constitutes Included Property of such surviving or resulting Person, subject only to Permitted Liens;

(C)
if any holder of Other Senior Indebtedness has a Lien on the property of such surviving or resulting Person that holder shall have provided an acknowledgement to the Administrative
57

Agent, in form satisfactory to the Administrative Agent, acting reasonably, that such holder has no interest in any Included Property of such surviving or resulting Person; and
(D)
the surviving or resulting Person shall have executed and delivered to the Administrative Agent an assumption agreement, whereby such Person acknowledges that it is bound by all obligations of the applicable predecessor Persons, in a form acceptable to the Administrative Agent, acting reasonably.

(g)
Nature of Business.     Neither the Borrower, nor any Material Subsidiary, shall permit any material change to be made in the nature of its business or the business of any Material Subsidiary as carried on at the date hereof, which business shall at all times be mining or mining related activities.

(h)
Restriction on Hedge Agreements.
(i)
The Borrower shall not enter into or maintain any Hedge Agreements with Persons other than Hedge Counterparties and shall only enter into Permitted Hedge Agreements in the ordinary course of the Borrower's business and not for the purposes of speculation. No Subsidiary shall enter into any Metal Hedge Agreement, Exchange Rate Hedge Agreement or Interest Rate Hedge Agreement, except that a Subsidiary which is not a Restricted Party may enter into Metal Hedge Agreements, Exchange Rate Hedge Agreements or Interest Rate Hedge Agreements if doing so is required as a condition of creating or incurring Indebtedness which is permitted hereunder, is for the purpose of financing the acquisition or development of property as permitted hereunder and is not for speculative purposes; and, if any such Metal Hedge Agreements, Exchange Rate Hedge Agreements or Interest Rate Hedge Agreements are guaranteed by any Restricted Party, any negative mark-to-market position thereunder shall be included in Indebtedness for purposes of calculating all applicable covenants in Section 10.1.

(ii)
The Borrower shall not on or after the Restatement Date enter into or maintain any Hedge Agreement with any Permitted Hedge Counterparty that does not contain the provisions described in Annex 6 hereof; provided that, the Borrower shall be permitted to maintain Hedge Agreements with any "Permitted Hedge Counterparty" (as defined in the Existing Credit Agreement) which were entered into prior to the Restatement Date and which contain the provisions set out in Annex 6 of the Existing Credit Agreement if such Person is a Permitted Hedge Counterparty (that is, if such Person has complied with the applicable requirements set out in the definition of "Permitted Hedge Counterparty" hereunder). The Borrower shall not, with respect to all Hedge Agreements that comply with the provisions of Annex 6 of the Existing Credit Agreement or Annex 6 hereof, as applicable, amend, modify or agree to any waiver of any of the terms described therein.

(iii)
The Borrower shall not grant to, or permit any Hedge Counterparty to have, any security (including margin deposited with or held by or for the benefit of a Hedge Counterparty), except, in the case of each Permitted Hedge Counterparty, as it forms part of the Security held by the Administrative Agent or the Trustee for the benefit of all Secured Parties. For greater security, the Borrower shall not permit any Unsecured Hedge Counterparty to hold or have the benefit of any security (including margin deposited with or held by or for the benefit of an Unsecured Hedge Counterparty) or otherwise. Neither shall the Borrower enter into any Hedge Agreement which, by its terms, could result in any requirement for the Borrower to grant any Hedge Counterparty any security, except as expressly permitted in the first sentence of this clause (iii).

(iv)
The Borrower shall not permit the any material representations, warranties or covenants, or any termination events (including additional termination events), in any Metal Hedge Agreement entered into with an Unsecured Hedge Counterparty to be more onerous to the Borrower than the material representations, warranties and covenants, and termination events (including additional termination events), in any Hedge Agreement entered into with any Permitted Hedge Counterparty.

(v)
The Borrower shall not enter into (I) any leveraged option transactions or other Hedge Agreements that could require the delivery of any amount over the notional amount of the subject
58

matter of the Hedge Agreement (whether metal, currency, interest rates or otherwise) or (II) any "knock-down" option or put or any other Hedge Agreement in which the obligation to deliver (by physical delivery or cash settlement) or the pricing of the subject matter of the Hedge Agreement (whether metal, currency, interest rates or otherwise) is subject to any contingency.
(vi)
The Borrower shall at no time permit the maximum quantity of Gold, Copper, Silver or Zinc or other metal which the Borrower is obligated (contingently or otherwise) to deliver (or that could be called for delivery or cash settlement) for any future 12-month period under all Metal Hedge Agreements to which the Borrower is a party under any circumstances, conditions or outcomes, whether or not then existing (including, for greater certainty (A) all quantities of metal subject to spot, spot deferred, fixed forwards and floating lease rate forward contracts, (B) the total face value of any quantity of metal sold under call options, and (C) any other arrangements that have the economic effect of a sale or a sold call option or other similar derivative transactions) to exceed 75% of the Borrower's projected production of that Metal for such 12-month period. The Borrower shall at no time permit the maximum quantity of Gold, Copper, Silver or Zinc or other metal which any Subsidiary is obligated (contingently or otherwise) to deliver (or that could be called for delivery or cash settlement) for any future 12-month period under all Metal Hedge Agreements to which such Subsidiary is a party under any circumstances, conditions or outcomes, whether or not then existing (including, for greater certainty (A) all quantities of metal subject to spot, spot deferred, fixed forwards and floating lease rate forward contracts, (B) the total face value of any quantity of metal sold under call options, and (C) any other arrangements that have the economic effect of a sale or a sold call option or other similar derivative transactions) to exceed 75% of such Subsidiary's projected production of that Metal for such 12-month period.

(i)
Corporate Documents, etc.     No Restricted Party shall change its name, restrict its corporate (or other) powers or move its registered or executive office without giving the Administrative Agent five days prior written notice of such change.

(j)
Fiscal Year.     The Borrower shall not change its fiscal year-end to end on a day other than December 31 of each year without the prior written consent of the Majority Lenders, such consent not to be unreasonably withheld.

(k)
Conflicting Agreements.     Neither the Borrower nor any other Restricted Party shall enter into, become subject to or be bound by any Contractual Obligation which in any case or in the aggregate when combined with other Contractual Obligations in Material Contracts or otherwise, materially restricts or impairs the ability of the Borrower or any such Restricted Party to perform its obligations under, or conflicts with any material provision of, any of the Financing Documents to which it is a party, or constitutes, or the performance of which will constitute, a Default.

(l)
Transactions with Affiliates.     Neither the Borrower nor any Material Subsidiary shall enter into or conduct any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate of the Borrower or such Material Subsidiary or any holder of 1% or more of any class of such Person's Capital Stock unless any such transaction is upon fair and reasonable terms no less favourable to the Borrower or such Material Subsidiary than it would obtain in a comparable arm's length transaction with a Person not an Affiliate or a holder of 1% or more of any class of its Capital Stock and is otherwise not restricted or prohibited, and is permitted, under this Agreement.

(m)
Plan Compliance.     The Borrower shall not:

(i)
permit to exist, or allow a Material Subsidiary of the Borrower to permit to exist, any accumulated funding deficiency, whether or not waived, with respect to any Plan in an amount which would cause a Material Adverse Effect;

(ii)
contribute to or assume an obligation to contribute to, or permit a Material Subsidiary of the Borrower to contribute to or assume an obligation to contribute to, any "multi-employer pension plan" as such term is defined in the Pension Benefits Act (Ontario) or Supplemental Pension Plan Act (Quebec);
59

(iii)
acquire, or permit a Subsidiary of the Borrower to acquire, an interest in any Person if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to any "multi-employer pension plan" as such term is defined in the Pension Benefits Act (Ontario) or Supplemental Pension Plan Act (Quebec); provided that, the Borrower or a Material Subsidiary of the Borrower may acquire an interest in any such Person if (A) such Person is acquired as a Permitted Acquisition and (B) neither the Borrower nor any of its other Material Subsidiaries has any legal liability to perform such Person's obligations or assume such Person's liabilities;

(iv)
permit, or allow a Material Subsidiary of the Borrower to permit, the actuarial present value of the benefit liabilities (computed on an accumulated benefit obligation basis in accordance with GAAP) under all Plans in the aggregate to exceed the current value of the assets of all Plans in the aggregate that are allocable to such benefit liabilities, in each case only to the extent such liabilities and assets relate to benefits to be paid to employees of the Borrower or its Subsidiaries, by an amount that would cause a Material Adverse Effect.

(n)
Sale or Discount of Receivables.     No Restricted Party shall discount or sell (with or without recourse) any of its notes receivable or accounts receivable.

(o)
Margin Calls.     No Restricted Party shall purchase or carry any margin securities.
 
 ARTICLE 11

EVENTS OF DEFAULT
        11.1     Events of Default.     Each of the following events shall constitute an event of default (" Event of Default "):
(a)
the Borrower fails to pay any principal amount of any Advance when due and payable;

(b)
the Borrower fails to pay any interest, fees or other amounts payable in respect of the Facility Indebtedness (including fees payable to the Administrative Agent in its capacity as agent hereunder) within 3 Business Days of such amount becoming due and payable;

(c)
any representation or warranty made by the Borrower or deemed to have been made by the Borrower pursuant to Section 6.2(e), or any representation or warranty made by an officer of any Restricted Party in any Document or in any certificate, agreement, instrument or written statement delivered by any Restricted Party or by an officer of any Restricted Party pursuant thereto was, at the time the same was made, incorrect (where such representation or warranty was qualified by "Material Adverse Effect" or any other "materiality" concept), or in all other cases incorrect in any material respect;

(d)
any Restricted Party fails to perform or observe or shall be in breach of any term, covenant or agreement contained in this Agreement or any other Financing Document on its part to be performed or observed (other than as provided in subsections (a), (b) or (c) above and subsection (e) below, and other than in respect of events otherwise specifically provided for elsewhere in this Section 11.1), and such failure or breach remains unremedied for 15 Business Days after written notice thereof has been given by the Administrative Agent to the Borrower;

(e)
the Borrower fails to perform or observe or shall be in breach of any term, covenant or agreement contained in Sections 9.1(g), (h) and (i) or in Section 10.1 of this Agreement;

(f)
any Restricted Party shall be in default on any date in any payment of principal or interest on any Indebtedness (whether in connection with the same or similar events or occurrences or more than one event or occurrence), including any Indebtedness or payment due under any Hedge Agreement, or in the payment when due under any Guarantee Obligation, in an aggregate cumulative amount (when combined, if applicable, with the amount of any other Indebtedness subject to acceleration under Sections 11.1(r) and (s)) greater than US $10,000,000, or default in the observance or performance of any other agreement or condition relating to any such Indebtedness or Guarantee Obligation (or contained in any instrument or agreement evidencing, securing or relating thereto), or any other event shall occur or condition exist, the effect of which is to cause, or permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee Obligation to cause, such Indebtedness to become in any manner due prior to its stated maturity or such Guarantee Obligation to become payable;
60

(g)
any Restricted Party commits an act of bankruptcy or becomes bankrupt or insolvent, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due generally, or makes an assignment for the benefit of creditors or files a petition in bankruptcy; or petitions or applies to any tribunal for, or consents to, the appointment of any receiver, receiver-manager, trustee or similar officer for it or for all or any substantial part of its property; or admits the material allegations of a petition or application filed with respect to it in any proceeding commenced in respect of it under any Requirements of Law relating to bankruptcy, insolvency, reorganization, arrangement, proposal, readjustment of debt, dissolution, winding-up or liquidation; or takes any corporate action for the purpose of effecting any of the foregoing;

(h)
there shall occur registration of any prior notice of exercise of hypothecary right affecting the Collateral in favour of any creditor (other than under the Security Documents) which shall continue uncancelled for a period of 20 days from its respective publication or registration;

(i)
any bankruptcy, insolvency, reorganization, arrangement, proposal, readjustment of debt, dissolution, winding-up, liquidation or similar proceeding relating to a Restricted Party under any existing or future legislation or otherwise of any jurisdiction, domestic or foreign, respecting such matters or any such proceeding shall be instituted (by petition, application or otherwise) by or against a Restricted Party which results in any order for any relief or any such appointment or adjudication with respect to such matters, which, if brought against such Restricted Party and if contested diligently and in good faith by it, remains undismissed for a period of 30 days from the date of such order, appointment or adjudication;

(j)
any Restricted Party ceases or threatens to cease to carry on its business or a resolution is passed authorizing or approving such action; or a petition is filed or an order is made or resolution passed for the winding-up, liquidation or dissolution of such Restricted Party or if, without the consent of the Administrative Agent, a resolution is passed authorizing the sale, transfer or assignment of all or substantially all of the assets of a Restricted Party;

(k)
there shall be commenced against any Restricted Party one or more proceedings or other actions seeking issuance of a warrant of attachment, execution, distraint or similar process against its assets in an aggregate amount of US $2,500,000 or more which remains undismissed or unstayed for a period of 30 days; or any Restricted Party shall take any action in furtherance of, or indicate its consent to, approval of, or acquiescence in, any such act or proceeding;

(l)
one or more judgments or decrees is entered against any Restricted Party involving in the aggregate a liability of US $2,500,000 or more and (i) such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days of entry thereof or (ii) such Restricted Party is not contesting such judgments or decrees in good faith and by appropriate proceedings and adequate reserves in accordance with GAAP have not been set aside on its books;

(m)
any Financing Document, or any material provision thereof, shall at any time after its execution and delivery, for any reason, be determined to be (or is contested by any Restricted Party to be or to have ceased to be) or ceases to be a legal, valid and binding obligation of any Restricted Party, enforceable against it in accordance with its terms (subject only to applicable bankruptcy, insolvency, moratorium or similar laws affecting the rights of creditors generally and to any equitable remedies available in the discretion of a court) or if the Security Documents fail, for any reason, to provide the Administrative Agent (or the Trustee) for and on behalf of the Secured Parties with a first priority Lien, subject only to Permitted Liens, in and to the Collateral (excluding Collateral which is disposed of in accordance with the terms of this Agreement), unless such invalidity or failure can be cured and such invalidity or failure is cured within 30 days of notice thereof being given by the Administrative Agent to the Borrower of the occurrence of such invalidity or failure, unless such invalidity or failure occurred as a result of a contest initiated, acquiesced in or consented to by a Restricted Party or otherwise could reasonably be expected to have a Material Adverse Effect;

(n)
any Included Property or any material Recourse Asset, or any material part thereof, is expropriated;
61

(o)
there occurs any "Event of Default", " Termination Event" or "Additional Termination Event" (as defined in the relevant Hedge Agreement) under any Hedge Agreement which has continued for 3 Business Days and the same has not been waived;

(p)
any Borrower or Subsidiary (i) abandons, or permits to be abandoned, any Recourse Asset or (ii) suspends or materially reduces, or permits the suspension or material reduction, of operations at any Included Property or any material Recourse Asset for 14 consecutive Business Days;

(q)
the Borrower fails to observe or perform any covenant or agreement contained in the Convertible Notes or the Trust Indenture within any applicable grace period provided for therein, if the effect of such failure or other event is to accelerate, or to permit the holders of the Convertible Notes or any other Person to accelerate, the maturity thereof; or, without the written consent of the Majority Lenders, any material provision of the Convertible Notes or the Trust Indenture is amended, varied or rescinded;

(r)
the Borrower or any Subsidiary fails to observe or perform any covenant or agreement contained in any instrument evidencing Subordinated Indebtedness within any applicable grace period provided for therein, if the effect of such failure or other event is to accelerate, or to permit the holders of such Subordinated Indebtedness or any other Person to accelerate, the maturity thereof, where the aggregate cumulative amount of such Indebtedness where the creditor thereof has direct recourse (as primary or secondary obligor, whether contingent or otherwise) to a Restricted Party or its property (when combined, if applicable, with the amount of any other Indebtedness subject to acceleration under Sections 11.1(f) and (s)) is greater than US $10,000,000; or, without the written consent of the Majority Lenders, any material provision of any instrument evidencing Subordinated Indebtedness is amended, varied or rescinded so that such Subordinated Indebtedness fails to comply with the requirements set out in Section 10.3(c)(vii);

(s)
the Borrower or any Subsidiary fails to observe or perform any covenant or agreement contained in any instrument evidencing Other Senior Indebtedness within any applicable grace period provided for therein, if the effect of such failure or other event is to accelerate, or to permit the holders of such Other Senior Indebtedness or any other Person to accelerate, the maturity thereof, where the aggregate cumulative amount of such Indebtedness where the creditor thereof has direct recourse (as primary or secondary obligor, whether contingent or otherwise) to a Restricted Party or its property (when combined, if applicable, with the amount of any other Indebtedness subject to acceleration under Sections 11.1(f) and (r)) is greater than US $10,000,000; or, without the written consent of the Majority Lenders, any material provision of any instrument evidencing Other Senior Indebtedness is amended, varied or rescinded so that such Other Senior Indebtedness fails to comply with the requirements set out in Section 10.3(c)(vi);

(t)
there occurs any Change of Control of the Borrower; and

(u)
if, at any time after the First Additional Advance, (A) subject to the proviso set out in Section 10.3(h)(ii), a Person (other than the Borrower) which is not a Hedge Counterparty is a party to a Hedge Agreement with the Borrower, or (B) an Unsecured Hedge Counterparty is a party to a Hedge Agreement with the Borrower which is not a Metal Hedge Agreement; and, in either case, such Person continues to be a party to such a Hedge Agreement for 3 " Local Business Days " (as defined in the relevant Hedge Agreement).
        11.2     Remedies.     If an Event of Default occurs and is continuing, the Administrative Agent may, and at the request of the Majority Lenders, the Administrative Agent shall, for and on behalf of the Secured Parties, take any one or more of the following actions:
(a)
declare the Commitments terminated, whereupon the same shall immediately terminate and the Lenders shall be under no obligation to make any further Advances;

(b)
by notice to the Borrower, declare the whole of the unpaid principal amount of all Facility Indebtedness to be immediately due and payable, whereupon the same shall become immediately due
62

and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;
(c)
realize on and/or enforce the Security; or

(d)
take any other action, exercise any other right, pursue any other remedy or proceed by action, suit, remedy or other proceeding to enforce the rights and/or remedies of the Administrative Agent and the Secured Parties whether arising or accruing under the Financing Documents, by law, in equity or otherwise.
        Notwithstanding the foregoing, upon the occurrence of an Event of Default specified in Section 11.1(g), (h) or (i), the Commitments shall automatically and immediately terminate and the outstanding Advances, all accrued interest thereon and all other amounts payable hereunder, shall immediately become due and payable.
        11.3     Cash Collateral.     Immediately upon any amounts becoming due and payable under Section 11.2, the Borrower shall, without necessity of further act or evidence, be and become thereby unconditionally obligated to deposit forthwith with the Administrative Agent for the Secured Parties' benefit Cash Collateral equal to the full undrawn principal amount at maturity of all L/Cs and Bankers' Acceptances then outstanding for its account and the Borrower hereby unconditionally promises and agrees to deposit with the Administrative Agent immediately upon such demand Cash Collateral in the amount so demanded. The Borrower authorizes the Lenders, or any of them, to debit its accounts with the amount required to pay such L/Cs and to pay such Bankers' Acceptances, notwithstanding that such Bankers' Acceptances may be held by the Lenders, or any of them, in their own right at maturity. Amounts paid to the Administrative Agent pursuant to such a demand in respect of Bankers' Acceptances and L/Cs shall, subject to Section 11.6, be applied against, and shall reduce, pro rata among the Lenders, to the extent of the amounts paid to the Administrative Agent in respect of Bankers' Acceptances and L/Cs, respectively, the obligations of the Borrower to pay amounts then or thereafter payable under Bankers' Acceptances and L/Cs, respectively, at the times amounts become payable thereunder.
        11.4     Rights Cumulative.     The rights and remedies of the Administrative Agent and the Secured Parties hereunder shall be in addition to, and not in substitution for, any other rights or remedies available to them, at law, in equity or otherwise. No remedy for the enforcement of the rights of the Administrative Agent and the Secured Parties shall be exclusive of any other rights or remedies provided hereunder, under any other Document, by law, in equity or otherwise or dependent upon any other such right or remedy and any one or more of such rights or remedies may from time to time be exercised independently or in combination. No failure to exercise, and no delay in exercising, on the part of the Administrative Agent or Secured Party, any right or remedy shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law or otherwise.
        11.5     Proofs of Claim, Etc.     In addition to their rights under Section 11.2, the Administrative Agent or the Secured Parties may file such proofs of claim and other papers and documents as may be necessary or desirable to have the claims of the Administrative Agent or the Secured Parties lodged in any bankruptcy, winding-up or other judicial proceeding relating to the Borrower.
        11.6     Priority of Payments.     Upon any acceleration pursuant to Section 11.2 of the Facility Indebtedness, all payments made by the Borrower and all amounts, if any, obtained by the Administrative Agent or Secured Parties on the enforcement of any Security shall be applied as follows:
(a)
firstly, to pay all amounts owing to the Administrative Agent in its capacity as Administrative Agent and to the Trustee and all other expenses incurred by the Administrative Agent and the Trustee on behalf of the Secured Parties and payable by the Borrower hereunder, under the Agency Fee Letter and under the other Documents, together with all amounts owing to BNS in respect of L/C fronting fees payable by the Borrower hereunder;

(b)
secondly, to pay, on a pro rata basis in accordance with the amounts owing to the Secured Parties, all Senior Secured Indebtedness; and

(c)
thirdly, to pay the balance, if any, to the Borrower or as otherwise required by all applicable Requirements of Law;
63

and the Borrower shall have no right to require any inconsistent appropriation.
ARTICLE 12
THE ADMINISTRATIVE AGENT AND THE SECURED PARTIES
        12.1     Provisions Reference.     Reference is made to Section 4 of the Provisions regarding "Right of Setoff", Section 5 of the Provisions regarding "Sharing of Payments by Lenders" and Section 7 of the Provisions regarding "Agency" matters.
        12.2     Specific Provisions Relating to Hedge Counterparties.     
(a)
Notwithstanding anything contained herein to the contrary, upon the occurrence of any "Event of Default", "Termination Event" or "Additional Termination Event" (as defined in any relevant Hedge Agreement) under any Permitted Hedge Agreement to which a Hedge Counterparty is a party, such Hedge Counterparty may, to the extent permitted under such Permitted Hedge Agreement, and in addition to any other rights hereunder, take any one or more of the following actions:

(i)
"close out" any or all transactions entered into by the Borrower under any Permitted Hedge Agreement with the Hedge Counterparty;

(ii)
set off all indebtedness or obligations owing by the Hedge Counterparty to the Borrower under Permitted Hedge Agreements with the Borrower against all indebtedness or obligations owing by the Borrower to the Hedge Counterparty under Permitted Hedge Agreements with such Hedge Counterparty; provided that, for purposes of this clause (ii), any Lender and Affiliate of such Lender which are each a Permitted Hedge Counterparty may consolidate their indebtedness and obligations owing to the Borrower under their Permitted Hedge Agreements with the Borrower and set off all such consolidated indebtedness and obligations against all indebtedness and obligations owing by the Borrower to such Permitted Hedge Counterparties under Permitted Hedge Agreements with such Permitted Hedge Counterparties;

(iii)
sue or bring action against the Borrower for any such indebtedness owing under Permitted Hedge Agreements.

(b)
(i) Notwithstanding any other provision hereof, no Permitted Hedge Counterparty shall have any claim to any Hedge Indebtedness except for the Aggregate Net Hedge Indebtedness owed to such Permitted Hedge Counterparty; provided that, for purposes of calculating the Aggregate Net Hedge Indebtedness of a Lender and an Affiliate of such Lender which are each a Permitted Hedge Counterparty their indebtedness and obligations owing to the Borrower under their Permitted Hedge Agreements with the Borrower shall be consolidated, and such consolidated indebtedness and obligations owing by such Permitted Hedge Counterparties to the Borrower shall be netted against the indebtedness and obligations owing by the Borrower to such Permitted Hedge Counterparties under their Permitted Hedge Agreements with the Borrower. (ii) No Permitted Hedge Counterparty shall set off or net any amount of Aggregate Net Hedge Indebtedness owing by such Hedge Counterparty against Facility Indebtedness or other indebtedness payable to it by the Borrower, unless such Permitted Hedge Counterparty shares such amount with the other Secured Parties in accordance with Section 5 of the Provisions. Except as set out in Section 12.2(a)(ii), no Unsecured Hedge Counterparty shall set off or net any amount of Hedge Indebtedness owing by such Unsecured Hedge Counterparty against any Indebtedness or other indebtedness payable to it by the Borrower.

(c)
The Aggregate Net Hedge Indebtedness owed to each Permitted Hedge Counterparty shall at all times be secured by the Security unless a Permitted Hedge Counterparty has otherwise agreed in writing to forego the benefit of such Security. No Hedge Indebtedness owed to any Hedge Counterparty may be secured by margin deposited with or held by or for the benefit of a Hedge Counterparty or by any other security (except, in the case of each Permitted Hedge Counterparty, as it forms part of the Security held by the Administrative Agent or the Trustee for the benefit of all Secured Parties).

(d)
Notwithstanding that the Security secures the Aggregate Net Hedge Indebtedness owing to each Permitted Hedge Counterparty, all decisions concerning the Security and its enforcement or realization
64

(so long as any Facility Indebtedness has not been indefeasibly paid in full and all Commitments have not been terminated) shall be made by the Administrative Agent or by the required Lenders as specified in this Agreement. No Hedge Counterparty shall have any right to vote on, or otherwise influence, any matters involving the realization of the Security or the enforcement thereof, or any matter under or relating to this Agreement or any other Financing Document, as long as any Facility Indebtedness is outstanding and all Commitments have not been terminated.
(e)
Upon the Facility Indebtedness being indefeasibly paid in full and all Commitments being terminated, (i) the Lenders shall release their interests in the Security and (ii) the Security shall continue to be held by the Administrative Agent for the benefit of the Final Permitted Hedge Counterparties and shall continue to secure any Aggregate Net Hedge Indebtedness owed from time to time to the Final Permitted Hedge Counterparties. Without limiting any other provisions of this Agreement which survive termination of all Commitments all provisions of this Agreement required to make this Section 12.2(e) operational, shall for purposes of the Security survive, mutatis mutandis , the indefeasible payment of the Facility Indebtedness and termination of all Commitments. All references in such provisions to "Majority Lenders", "Super Majority Lenders", "Unanimous Lenders" and such other terms used by reference to the Lenders and the Secured Parties shall, unless otherwise provided in writing by all Final Permitted Hedge Counterparties, be deemed to mean all Final Permitted Hedge Counterparties. For greater certainty, and notwithstanding any other provision hereof, at no time following repayment of the Facility Indebtedness in full and the termination of all Commitments, shall the Security (excluding the Bank Act Security) be discharged or amended, or shall any Person be granted the benefit of the Security except for the Final Permitted Hedge Counterparties, in each case unless each Final Permitted Hedge Counterparties, as well as the Borrower, has given its prior written consent. In addition, the defined terms which are incorporated in the Security Documents by reference shall continue to have the same meanings notwithstanding the indefeasible payment of all Facility Indebtedness and termination of all Commitments, except for any necessary changes resulting from the indefeasible payment of all Facility Indebtedness and termination of all Commitments, mutatis mutandis .

(f)
The provisions of this Section 12 are solely for the benefit of the Secured Parties and neither the Borrower nor any Subsidiary shall have rights as a third party beneficiary of such provisions.
ARTICLE 13
MISCELLANEOUS
        13.1     Amendments, Waivers, Etc.     Neither this Agreement nor any other Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section. Unless otherwise specified in this Agreement, the Majority Lenders may, or, with the written consent of the Majority Lenders, the Administrative Agent shall, from time to time, (X) enter into with the Borrower, written amendments, supplements or modifications hereto and to the other Financing Documents for the purpose of amending, adding, remaining or replacing any provisions to this Agreement or to the other Financing Documents or changing in any manner the rights or obligations of the Lenders or the Borrower hereunder or thereunder or (Y) waive, at the Borrower's request, on such terms and conditions as the Majority Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Documents or any Default and its consequences; provided, however, that, subject to Section 5.2, no such waiver and no such amendment, supplement or modification shall:
(a)
reduce the amount or extend the scheduled date of maturity of any Advance or any other obligation or of any scheduled installment thereof; or reduce the stated rate of any interest or fees payable hereunder; or extend the scheduled date of any payment thereof or modify any provision that provides for the sharing by the Lenders of any payment or prepayment of indebtedness to provide for a non-ratable sharing thereof; or increase the amount or extend the expiration date of any Commitments; or change the currency in which any Advance is payable; or amend, modify or waive any provision of this Section 13.1; or reduce the required percentages of Majority Lenders, Super Majority
65

Lenders or Unanimous Lenders as specified in this Agreement; in each case, without the prior written consent of the Unanimous Lenders;
(b)
release the Borrower from its obligations under the Financing Documents or any of the Collateral, without the written consent of the Unanimous Lenders; provided that the Administrative Agent shall release (without consent from the Lenders) any Collateral sold, transferred or otherwise disposed of which is permitted by Section 10.3(e);

(c)
amend, modify or waive any provision of Section 7 of the Provisions or any other provision dealing with the rights and duties of the Administrative Agent without the written consent of the Administrative Agent;

(d)
amend, modify or waive any provision dealing with the rights and duties of the Issuing Bank without the written consent of the Issuing Bank; or

(e)
amend, modify or waive any provision of Sections 11.6 or 12.2 hereof or Section 5 of the Provisions without the written consent of the Administrative Agent and the Unanimous Lenders.
        Any waiver and any amendment, supplement or modification pursuant to this Section 13.1 shall apply to each Lender and shall be binding upon the Borrower, the Lenders, the Secured Parties and the Administrative Agent and all future holders of the Advances. In the case of any waiver, the Borrower, the Lenders, the Secured Parties, the Administrative Agent shall be restored to their former position and rights hereunder and under the other Financing Documents, and any Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default, or impair any right consequent thereon. Notwithstanding anything contained in this Section 13.1 to the contrary, the foregoing provisions do not apply to Hedge Agreements, nor to any amendment, supplement, modification or waiver of any of the terms thereof.
        13.2     Amendments (Subsidiaries), Etc.     Notwithstanding Section 13.1, no Document to which a Subsidiary is a party, nor any terms thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section. Unless otherwise specified in this Agreement, the Majority Lenders may, or, with the written consent of the Majority Lenders, the Administrative Agent shall, from time to time, enter into with any Subsidiary, written amendments, supplements or modifications of the Documents to which any such Subsidiary is a party for the purpose of adding any provisions to the Documents or changing in any manner the rights or obligations of the Lenders or any Subsidiary thereunder; provided, however, that, subject to Section 5.2, no such amendment, supplement or modification shall reduce the amount or extend the scheduled date of maturity of any obligation; or extend the scheduled date of any payment thereof or modify any provision that provides for the sharing by the Lenders of any payment or prepayment of indebtedness to provide for a non-ratable sharing thereof, in each case, without the prior written consent of the Unanimous Lenders. Any amendment, supplement or modification pursuant to this Section 13.2 shall apply to each Lender and shall be binding upon the Borrower, the applicable Subsidiary, the Lenders, the Secured Parties and the Administrative Agent and all future holders of the Advances. Notwithstanding anything contained in this Section 13.2 to the contrary, the foregoing provisions do not apply to Hedge Agreements, nor to any amendment, supplement, modification or waiver of any of the terms thereof.
        13.3     Lenders' Obligations Several.     The obligations of the Lenders hereunder, including those relating to the making of any Advances, are several and not joint with respect to the other Lenders.
        13.4     Reproduction of Documents, etc.     This Agreement, all other Documents and all documents relating hereto and thereto may be reproduced by the Lenders or by the Administrative Agent by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process and the Lenders or the Administrative Agent may destroy any original documents so reproduced. The Borrower agrees that any such reproduction shall be as admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Administrative Agent or the Lenders in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
        13.5     No Merger on Judgment.     The taking of any judgment shall not operate as a merger of any Facility Indebtedness or other liability of the Borrower to the Administrative Agent or the Secured Parties or any part
66

thereof or in any way suspend payment or affect or prejudice the rights, remedies and powers, legal or equitable, which the Administrative Agent or the Secured Parties may have in connection with such Indebtedness or other liability.
        13.6     Independent Engineer and Other Advisers.     
(a)
The Majority Lenders shall have the right at any time and from time to time to appoint an Independent Engineer to act on behalf of the Administrative Agent and the Lenders for such purposes as the Administrative Agent or the Lenders may determine including the following: (i) conduct a technical and environmental review of the Mines constituting Included Property, (ii) on an annual basis, review and, if appropriate, recommend the then current Development Plan (including Reserves for use in the Mine Plan) in accordance with Article 9, as applicable, (iii) carry out such other duties as may be set forth in this Agreement or as may be required by the Administrative Agent or the Lenders from time to time.

(b)
The Administrative Agent and the Lenders may consult and retain any other independent consultants determined by them to be appropriate to: (i) advise them on whether property which is proposed by the Borrower as Included Property is eligible to be Included Property in accordance with Section 10.2(n) and (ii) carry out such other duties as may be set forth in this Agreement.

(c)
The Majority Lenders may at any time and from time to time replace the Independent Engineer or such other consultants. The Administrative Agent shall provide the Borrower with reasonable notice of such replacement Independent Engineer or other consultants following such replacement being made. All rights and remedies of any such replacement Independent Engineer or other consultants under this Agreement shall be the same as the rights and remedies of such replaced Independent Engineer or other consultants.
        13.7     Survival of Representations, Warranties and Covenants.     All agreements, representations, warranties, covenants and indemnities made by or on behalf of the Borrower herein or in any other Document or any certificate or document delivered pursuant hereto, shall be considered to have been relied on by the Administrative Agent and the Lenders and shall survive the execution and delivery of this Agreement, the execution and delivery of each other Document, and the making of each Advance, notwithstanding any investigation made at any time by or on behalf of the Administrative Agent or Lender.
        13.8     Further Assurances.     The Borrower shall execute and deliver or cause to be done, executed and delivered, all such further acts, documents and things as the Administrative Agent and the Lenders may reasonably request for the purpose of giving effect to this Agreement and the other Documents or for the purpose of establishing compliance with the representations, warranties, covenants and conditions of same.
        13.9     Severability.     Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
        13.10     Conflicts.     In the event of any conflict or inconsistency between the provisions of this Agreement and any other Financing Documents, the provisions of this Agreement shall prevail.
        13.11     Time of Essence.     Time shall, in all respects, be of the essence hereof.
        13.12     English Language.     The Financing Documents have been negotiated in English and will be or have been executed in the English language. Les soussignés ont expressément demandé que ce document soit rédigé en langue anglaise. All paper writings given or delivered pursuant to this Agreement and the other Financing Documents shall, if requested by the Administrative Agent, be in the English language or, if not, shall be accompanied by a certified English translation thereof. The English language version of any document shall, absent manifest error, control the meaning and interpretation of the matters set forth therein.
        13.13     Judgment Currency.     If for the purpose of obtaining judgment in any court it is necessary to convert an amount due under any Document from the currency in which it is due (the " Original Currency ") into another currency (the " Second Currency "), the rate of exchange applied shall be that at which, in accordance with normal banking procedures, the Administrative Agent could purchase, in the Toronto foreign exchange
67

market, the Original Currency with the Second Currency two Business Days preceding that on which judgment is given. The Borrower agrees that its obligation in respect of any Original Currency due hereunder shall, notwithstanding any judgment or payment in such other currency, be discharged only to the extent that, on the Business Day following the date the Administrative Agent receives payment of any sum so adjudged to be due hereunder in the Second Currency, the Administrative Agent may, in accordance with normal banking procedures, purchase, in the Toronto foreign exchange market the Original Currency with the amount of the Second Currency so paid. If the amount of the Original Currency so purchased or that could have been so purchased is less than the amount originally due in the Original Currency, the Borrower agrees as a separate obligation and notwithstanding any such payment or judgment to indemnify the Administrative Agent and Lenders against such loss. The term "rate of exchange " means the spot rate at which the Administrative Agent in accordance with normal practices is able on the relevant date to purchase the Original Currency with the Second Currency and includes any premium and costs of exchange payable in connection with such purchase.
        13.14     Exculpation Provisions.     Each of the parties hereto specifically agrees that it has read this Agreement and the other Documents and agrees that it is charged with notice and knowledge of the terms of this Agreement and the other Documents; that it is fully informed and has full notice and knowledge of the terms, conditions and effects of this Agreement; that it has been represented by legal counsel of its choice throughout the negotiations preceding its execution of this Agreement and the other Documents; and has received the advice of its legal counsel in entering into this Agreement and the other Documents; and that it recognizes that certain of the terms of this Agreement and the other Documents result in one party assuming liability inherent in some aspects of the transaction and relieving other parties of responsibility for such liability. Each party hereto agrees and covenants that it will not contest the validity or enforceability of any exculpatory provision of this Agreement and the other Documents on the basis that the party had no notice or knowledge of such provision or that the provision is not "conspicuous."
        13.15     Permitted Liens.     The designation of a Lien as a Permitted Lien is not, and shall not be deemed to be, an acknowledgment by the Administrative Agent or the Lenders to any Person that the Lien shall have priority over the Security.
        13.16     Provisions Reference.     Reference is made to Section 8 of the Provisions regarding "Notices; Effectiveness; Electronic Communications", Section 9 of the Provisions regarding "Expenses; Indemnity; Damage Waivers", Section 10 of the Provisions regarding "Successors and Assigns", Section 11 of the Provisions regarding "Governing Law; Jurisdictions; etc.", Section 12 of the Provisions regarding "Waiver of Jury Trials ", Section 13 of the Provisions regarding "Counterparts; Integration; Effectiveness; Electronic Execution" and Section 14 of the Provisions regarding "Confidentiality".
        13.17     Indemnification.     The Borrower shall indemnify and hold harmless the Administrative Agent and each Secured Party and each of their Affiliates and their officers, directors, employees, agents and advisers (each, an " Indemnified Party ") from and against any and all claims, damages, losses, liabilities, costs and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of, the preparation for the defence of, any investigation, litigation or proceeding arising out of, related to or in connection with:
(a)
this Agreement and the other Financing Documents; or

(b)
any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Advances;
whether or not such investigation, litigation or proceeding is brought by any Restricted Party, its directors, shareholders or creditors or by an Indemnified Party or by any other Person, or any Indemnified Party is otherwise a party thereto, and whether or not the transactions contemplated hereby are consummated; except to the extent such claim, damage, loss, liability or expense results from such Indemnified Party's gross negligence or willful misconduct. The Borrower agrees not to assert any claim against any Indemnified Party, and, without in any way limiting any of their other rights or remedies hereunder or at law, each Lender and the Administrative Agent, also agrees not to assert any claim against any Restricted Party, its officers, directors, employees, agents or advisors, on any theory of liability for special, indirect, consequential or punitive damages arising out of or
68

otherwise relating to this Agreement and the other Financing Documents and any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Advances. The agreements in this Section 13.17 shall survive the termination of the Commitments and the repayment of all other amounts outstanding hereunder and under the other Financing Documents.
        13.18     Environmental Indemnity.     The Borrower shall exonerate, indemnify, pay and protect, defend and hold each Indemnified Party harmless from and against, and reimburse said Persons for, any claims (including, without limitation, third party claims, whether for personal injury or real (or immoveable) or personal property damage or otherwise), actions, administrative proceedings (including informal proceedings), judgments, liens, damages, punitive damages, penalties, fines, costs, liabilities (including sums paid in settlement of claims), interest or losses, including reasonable legal fees and expenses (including any such fees and expenses incurred in enforcing the Documents or collecting any sums due under same), consultant fees, and expert fees, together with all other costs and expenses of any kind or nature that arise directly or indirectly from or in connection with any Requirements of Environmental Law, or any failure or breach in respect thereof, that is or allegedly is applicable to any Restricted Party, its respective properties, operations or actions to the extent the same arose out of the relationships and arrangements created and contemplated hereby. The agreements in this Section 13.18 shall survive the termination of the Commitments and the repayment of all other amounts outstanding hereunder and under the other Financing Documents.
[Execution Pages Follow]
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         IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

THE BORROWER	 	 	 	AGNICO-EAGLE MINES LIMITED	

Address:	
 	
By:	
 	
(signed) David Garofalo
	
 	 	Name:	 	David Garofalo
	
145 King Street East, Suite 500	 	Title:	 	Vice President, Finance and Chief Financial Officer
	
Toronto, Ontario
M5C 2Y7	 	 	 	 	

Attention: David Garofalo	

 	

Telecopier: (416) 367-4681	

 	
 	
S-1

        IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

CO-ARRANGER AND ADMINISTRATIVE AGENT	 	 	 	THE BANK OF NOVA SCOTIA, as Co-Arranger, Administrative Agent and Technical Agent	

Address:	
 	
By:	
 	
(signed) Ray Clarke
	
 	 	Name:	 	Ray Clarke
	
40 King Street West	 	Title:	 	Director
	
Scotia Plaza, 62 nd Floor
Toronto, Ontario
M5W 2X6	 	 	 	 	
 	 	By:	 	(signed) Ram Kalicharan
	
Attention: Robert Hosie	 	Name:	 	Ram Kalicharan
	
 	 	Title:	 	Associate Director
	
Telecopier: (416) 866-3329	 	 	 	 	
S-2

        IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

CO-ARRANGER AND SYNDICATION AGENT	 	 	 	SOCIÉTÉ GÉNÉRALE (CANADA), as Co-Arranger and Syndication Agent	

Address:	
 	
By:	
 	
(signed) François Laliberté
	
 	 	Name:	 	François Laliberté
	
1501 McGill College Avenue	 	Title:	 	Managing Director Risk
	
Suite 1800
Montreal, Quebec
H3A 3M8	 	 	 	 	
 	 	By:	 	(signed) David Baldoni
	
Attention: Francois Laliberte	 	Name:	 	David Baldoni
	
 	 	Title:	 	Director
	
Telecopier: (514) 841-6257	 	 	 	 	

with a copy to	

 	

1221 Avenue of the Americas
New York, New York
U.S.A. 10020	

 	

Attention: Chris Henstock	

 	

Telecopier: (212) 278-5675	

 	
 	
S-3

        IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

CO-ARRANGER AND DOCUMENTATION AGENT	 	 	 	N M ROTHSCHILD & SONS LIMITED, as Co-Arranger and Documentation Agent	

Address:	
 	
By:	
 	
(signed) David Street
	
 	 	Name:	 	David Street
	
1700 Lincoln Street	 	Title:	 	Director
	
Suite 3990
Denver, Colorado
U.S.A. 80203	 	 	 	 	
 	 	By:	 	(signed) Christopher Coleman
	
Attention: Bill Heissenbuttel	 	Name:	 	Christopher Coleman
	
 	 	Title:	 	Managing Director
	
Telecopier: (303) 607-0998	 	 	 	 	

with a copy to:	

 	

New Court
St. Swithin's Lane
London, England
EC4P 4DU	

 	

Attention: David McCarthy/Barry Leonard	

 	

Telecopier: +44 20 7280 5451	

 	
 	
S-4

        IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

LENDER	 	 	 	THE BANK OF NOVA SCOTIA	

Address:	
 	
By:	
 	
(signed) Ray Clarke
	
 	 	Name:	 	Ray Clarke
	
40 King Street West	 	Title:	 	Director
	
Scotia Plaza, 62 nd Floor
Toronto, Ontario
M5W 2X6	 	 	 	 	
 	 	By:	 	(signed) Ram Kalicharan
	
Attention: Ray Clarke	 	Name:	 	Ram Kalicharan
	
 	 	Title:	 	Associate Director
	
Telecopier: (416) 866-2010	 	 	 	 	
S-5

        IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

LENDER	 	 	 	SOCIÉTÉ GÉNÉRALE (CANADA)	

Address:	
 	
By:	
 	
(signed) François Laliberté
	
 	 	Name:	 	François Laliberté
	
1501 McGill College Avenue	 	Title:	 	Managing Director Risk
	
Suite 1800
Montreal, Quebec
H3A 3M8	 	 	 	 	
 	 	By:	 	(signed) David Baldoni
	
Attention: Francois Laliberte	 	Name:	 	David Baldoni
	
 	 	Title:	 	Director
	
Telecopier: (514) 841-6257	 	 	 	 	

with a copy to	

 	

1221 Avenue of the Americas
New York, New York
U.S.A. 10020	

 	

Attention: Chris Henstock	

 	

Telecopier: (212) 278-5675	

 	
 	
S-6

        IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

LENDER	 	 	 	N M ROTHSCHILD & SONS LIMITED	

Address:	
 	
By:	
 	
(signed) David Street
	
 	 	Name:	 	David Street
	
1700 Lincoln Street	 	Title:	 	Director
	
Suite 3990
Denver, Colorado
U.S.A. 80203	 	 	 	 	
 	 	By:	 	(signed) Christopher Coleman
	
Attention: Bill Heissenbuttel	 	Name:	 	Christopher Coleman
	
 	 	Title:	 	Managing Director
	
Telecopier: (303) 607-0998	 	 	 	 	

with a copy to:	

 	

New Court
St. Swithin's Lane
London, England
EC4P 4DU	

 	

Attention: David McCarthy/Barry Leonard	

 	

Telecopier: +44 20 7280 5451	

 	
 	
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        IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

LENDER	 	 	 	NATIONAL BANK OF CANADA	

Address:	
 	
By:	
 	
(signed) Réjean Guévremont
	
 	 	Name:	 	Réjean Guévremont
	
1155 Metcalfe Street	 	Title:	 	Managing Director
	
5 th Floor
Montreal, Quebec
H3B 4S9	 	 	 	 	
 	 	By:	 	(signed) Pierre Pichette
	
Attention: Pierre Pichette	 	Name:	 	Pierre Pichette
	
 	 	Title:	 	Vice-President
	
Telecopier: (514) 390-7840	 	 	 	 	
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        IN WITNESS WHEREOF each of the undersigned has caused this Agreement to be executed by its respective duly authorized officer(s).

LENDER	 	 	 	THE TORONTO-DOMINION BANK	

Address:	
 	
By:	
 	
(signed) Rohan Appadurai
	
 	 	Name:	 	Rohan Appadurai
	
66 Wellington Street West	 	Title:	 	Vice President & Director
	
TD Tower, 8 th Floor
Toronto, Ontario
M5K 1A2	 	 	 	 	
 	 	By:	 		
Attention: Rohan Appadurai	 	Name:	 		
 	 	Title:	 		
Telecopier: (416) 944-5164	 	 	 	 	
S-9

QuickLinks
 TABLE OF CONTENTS
 SECOND AMENDED AND RESTATED CREDIT AGREEMENT
ARTICLE 1 INTERPRETATION
 ARTICLE 2 CREDIT FACILITY
ARTICLE 3 ADVANCES
 ARTICLE 4 INTEREST RATES AND FEES
ARTICLE 5 REDUCTIONS AND PAYMENTS
ARTICLE 6 CLOSING AND DRAWDOWN CONDITIONS
ARTICLE 7 SECURITY
 ARTICLE 8 REPRESENTATIONS AND WARRANTIES
ARTICLE 9 REPORTING COVENANTS AND PROCEDURES
ARTICLE 10 COVENANTS OF THE BORROWER
 ARTICLE 11 EVENTS OF DEFAULT
 
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Exhibit 99A
 
 Certification of Chief Executive Officer pursuant to
Title 18, United States Code, Section 1350, as adopted pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002
I, Sean Boyd, President and Chief Executive Officer of Agnico-Eagle Mines Limited ("Agnico-Eagle"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to the best of my knowledge:
        The Annual Report on Form 20-F/A of Agnico-Eagle for the year ended December 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Agnico-Eagle.

 	
 	
by	
/s/   SEAN BOYD       	
 	 	 	
Sean Boyd
 President and Chief Executive Officer	
Toronto, Canada
January 14, 2005	 	 	 	
        A signed original of this written statement required by Section 906 has been provided to Agnico-Eagle and will be retained by Agnico-Eagle and furnished to the Securities and Exchange Commission or its staff upon request.

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 Certification of Chief Executive Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
 
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Exhibit 99B
 
 Certification of Chief Financial Officer pursuant to
Title 18, United States Code, Section 1350, as adopted pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002
I, David Garofalo, Vice-President, Finance and Chief Financial Officer of Agnico-Eagle Mines Limited ("Agnico-Eagle"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to the best of my knowledge:
        The Annual Report on Form 20-F/A of Agnico-Eagle for the year ended December 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Agnico-Eagle.

 	
 	
by	
/s/   DAVID GAROFALO       	
 	 	 	
David Garofalo
 Vice President, Finance and
Chief Financial Officer	
Toronto, Canada
January 14, 2005	 	 	 	
        A signed original of this written statement required by Section 906 has been provided to Agnico-Eagle and will be retained by Agnico-Eagle and furnished to the Securities and Exchange Commission or its staff upon request.

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 Certification of Chief Financial Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
 
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Exhibit 99C
         
Annual Audited Consolidated Financial Statements
and Management's Discussion and Analysis
 (Prepared in accordance with US GAAP)

 
 ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
        Management's Discussion and Analysis should be read in conjunction with the accompanying annual audited consolidated financial statements. These consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles. All dollar amounts are presented in US dollars unless otherwise specified.
 
 Table of Contents

MANAGEMENT'S DISCUSSION AND ANALYSIS	 	1	
 	Overview	 	1	
 	Highlights	 	1	
 	Outlook	 	2	
 	Results of Operations	 	3	
 	Liquidity and Capital Resources	 	10	
 	Risk Profile	 	12	
 	Outstanding Securities	 	15	
 	Critical Accounting Estimates	 	15	
 	Future Tax Assets and Liabilities	 	17	
 	Stock-Based Compensation	 	17	
 	Forward-Looking Statements	 	17	
 	Summarized Quarterly Data	 	18	
 	Five Year Financial and Operating Summary	 	20	
 	Agnico-Eagle Mineral Reserve & Mineral Resource Data	 	21	

ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS	
 	
23	
 	Management's Responsibility for Financial Reporting	 	23	
 	Auditors' Report	 	24	
 	Summary Of Significant Accounting Policies	 	25	
 	Consolidated Balance Sheet	 	30	
 	Consolidated Statement Of Income (Loss) And Comprehensive Income (Loss)	 	31	
 	Consolidated Statement Of Shareholders' Equity	 	32	
 	Consolidated Statement Of Cash Flows	 	33	
 	Notes To Consolidated Financial Statements	 	34	
i

 
 Management's Discussion And Analysis
Overview
        Agnico-Eagle Mines Limited is an intermediate-sized gold producer centered in one of the mining industry's most favorable political and regulatory environments in the world: Quebec, Canada. In its over 30 year history, Agnico-Eagle has never hedged away increases in the price of gold. Our LaRonde Mine is a proven gold producer with a long reserve life. We have amassed a large land position in one of the most prolific gold producing regions and we have the cash resources and experience to grow reserves and create a multi-mine platform.
        The most important driver of financial performance for Agnico-Eagle is the spot price of gold. As we have never sold gold forward, we are positioned to benefit from rising gold prices. Due to the poly-metallic nature of the LaRonde orebody, spot prices of silver, copper and zinc are also key drivers of financial performance. Since the sale of these byproduct metals is important to both revenue and production costs per ounce, we occasionally implement hedging strategies to mitigate the effects of fluctuating prices. We have never sold gold forward because we believe that low-cost production is the best protection against decreasing gold prices. The US$/C$ exchange rate is an important financial driver to achieving low-cost production as practically all our operating costs are paid in Canadian dollars. As such, we also use hedging strategies to mitigate the impact of fluctuating exchange rates on our per ounce production costs.
        In 2002 and 2003, we encountered some operational challenges at LaRonde. We fell short of our production targets due to expansion related problems in 2002 and a rock fall and production drilling challenges in 2003. However, with the expansion now complete and the implementation of a more focused and more conservative mining plan, we believe we have reduced mining risk and are well positioned to profit from higher gold and byproduct metal prices. The production challenges of the past few years have accentuated the risks of reliance on the LaRonde Mine. Our strategy over the next few years will be to reduce our dependence on LaRonde as our sole source of production while still taking advantage of the mine's personnel and infrastructure. Our strategy envisions the development of multiple mines within a short distance of LaRonde with growing reserves and increasing production in one of the most mining friendly areas of the world. With our Lapa property only 7 miles away, and our Goldex property only 35 miles away, and with over 2.8 million ounces of cumulative gold reserves on these properties, we feel we can achieve long term-growth while capitalizing on internal synergies. Our strategy is to capitalize on these opportunities by using the expertise of the LaRonde team, the mine's large processing capacity and the Company's large pool of available tax deductions.
        While regional expansion represents the core of our strategy, we continue to seek growth opportunities elsewhere. Our focus will be on politically stable regions and on situations where the expertise developed at LaRonde can add value.
        We anticipate that LaRonde will generate strong cash flow in 2004 and, coupled with our strong working capital position and completely undrawn credit facility, we are in a strong position to achieve our growth strategy. With a world class mine and promising properties in a mining friendly environment, we believe we can build per share value by focusing on these assets while retaining full leverage to rising gold prices.
Highlights
        In 2003, an operationally challenging year, we produced 236,653 ounces of gold which was well below our original production target of 375,000 ounces. In the first quarter of 2003, we experienced a rock fall at the LaRonde Mine in Quebec which forced us to change our mining sequence, resulting in a delay in the extraction of higher grade gold mining blocks from the lower part of the mine. The effects of the rock fall continued to adversely affect production in the second quarter. In the third quarter we faced production drilling challenges and realized lower than planned recoveries in the mill.
        Despite these challenges, we achieved significant improvements in operating performance in the fourth quarter of 2003 as 73% of ore production came from the lower level mining horizon. This mining horizon contains ore that has substantially higher gold grades than that of the upper mine and is also substantially richer in copper. Onsite operating costs showed a steady improvement during the quarter and we were also able to
1

begin accumulating a surface ore stockpile which will mitigate the inherent risks associated with mining and will act as a source of ore should unforeseen events, such as those we faced in 2003, affect mining operations.
        The operational challenges in 2003 led to a net loss of $19.5 million or $0.23 per share compared to income of $4.0 million or $0.06 per share in 2002. Total cash operating costs to produce an ounce of gold were $269 for 2003 which was above our original estimate of $125 per ounce and above 2002 total cash operating costs of $182 per ounce. Total cash operating costs is a non-GAAP measure and is explained in "Results of Operations — Production Costs." Lower production, higher operating costs, and the stronger Canadian dollar were the major contributors to the increased cost per ounce. Other factors that contributed to the 2003 net loss were increased exploration expenditures resulting from the work conducted on the Lapa property, increased amortization, increased interest expense as no interest was capitalized in the current year, increased administrative expenditures and a one time charge related to the adoption of a new accounting standard.
        In the fourth quarter, as a result of operational improvements, we achieved net earnings of $2.4 million or $0.03 per share compared to earnings of $0.8 million or $0.01 per share in the fourth quarter of 2002. Compared to 2002, we produced 7% fewer ounces in the fourth quarter of 2003, however revenue increased 32% driven by increased gold and byproduct metal prices. Fourth quarter 2003 earnings also reflected a higher tax recovery than the fourth quarter of 2002. Total cash operating costs in the fourth quarter of 2003 increased to $220 per ounce of gold produced from $198 in the same period of 2002 due to lower gold production and a stronger Canadian dollar, offset by higher byproduct revenue.
        We ended the year with over $140 million in working capital, which includes $110 million in cash. Despite the production difficulties, stronger gold and byproduct prices helped the Company generate positive operating cash flow (before working capital changes) of $4 million in 2003. Operating cash flow was well below 2002 levels of $20 million due mainly to the operational challenges and stronger Canadian dollar, offset by increased metal prices. In the fourth quarter of 2003, we generated $10 million of operating cash flow compared to $5 million in the fourth quarter of 2002. The increase was mainly due to increased metal prices offset somewhat by the stronger Canadian dollar.
        2003 brought exploration success which culminated in record year-end gold reserves of 7.9 million ounces. At LaRonde, not only did we replace 2003 production, but we also increased gold reserves by an additional one million ounces from four to five million ounces of gold. At Lapa, located only 7 miles east of LaRonde, the 2003 drilling program led to a conversion of 1.2 million ounces of gold resource into reserves. At Goldex, located 35 miles east of LaRonde, a new geological model and an independent engineering review led to a year end reserve of 1.6 million ounces of gold. A summary of our year end mineral reserve position can be found on page 21. Driven by this exploration success, the Company also acquired more property along the prolific Cadillac-Bousquet gold belt and the Cadillac-Larder Lake Break immediately to the south.
        By the end of 2003, we had addressed LaRonde's operational problems. By the end of the year, we implemented a focused, more conservative mining plan and we ended the year with available cash resources of $210 million, which includes $100 million available under our revolving bank facility. We now look forward to 2004 and 2005 with a renewed focus on implementing our growth strategy.
Outlook
         For 2004, we produced 271,567 ounces of gold at an estimated total cash operating cost per ounce between $75 and $85. The estimated decline from 2003 to 2004 in total cash operating costs is due to the elimination of the El Coco royalty, an increase in gold and byproduct metal production and an increase in by product metal prices. Our silver and byproduct copper and zinc production can be found in "Results of Operations — Production costs".
         For 2005, we expect to produce 280,000 ounces of gold at total cash operating costs per ounce between $135 and $145. The estimated increase in total cash operating costs compared to the 2004 estimate is due to an anticipated decline in byproduct metals prices below those realized in 2004 and a reduction in the contribution of foreign exchange hedging activities. Our estimated silver and byproduct copper and zinc production, along with metal price assumptions and sensitivities, can be found in "Results of Operations — Production costs". We expect to generate strong operating cash flow which we will use to fund capital additions at LaRonde (including LaRonde II) and the continued development of our promising Lapa and Goldex properties.
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Results of Operations
Revenues from Mining Operations
        In 2003, revenue from mining operations increased 17% to $127 million from $108 million in 2002. The majority of our revenue is derived from precious metal sales. Sales of gold and silver typically account for more than 80% of the Company's revenue. Revenues from mining operations are accounted for net of related smelting, refining and other charges. In 2003, precious metal sales accounted for 84% of revenue, down slightly from 87% in 2002. This slight decrease over 2002 was due to surging metal prices in the latter half of the year for byproduct copper and zinc. In 2004, we anticipate precious metal sales to account for 80% of overall revenue. The table below summarizes net revenue by metal:

 	 	2003
	 	2002
	 	% Change
	 	
 	 	(thousands)
	 	
Gold	 	$	85,566	 	$	80,177	 	7	%	
Silver	 	 	20,584	 	 	14,115	 	46	%	
Copper	 	 	6,452	 	 	(1,027	)	728	%	
Zinc	 	 	14,218	 	 	14,762	 	(4	)%	
 	 		 		 	 	 	
 	 	$	126,820	 	$	108,027	 	17	%	
 	 		 		 	 	 	
        The increase in gold revenue was due to an 18% increase in realized prices offset by a 9% decrease in gold production. Revenues benefited from a 28% increase in silver production and a 10% increase in realized silver prices. Copper production increased by 126% while copper prices realized increased 17%. In 2002, net copper revenue had a negative effect on total revenue due to historically low copper prices not being sufficient to recover the smelting, refining and transportation charges. However, since a majority of the gold ounces we recover is contained in our copper concentrate, this negative net revenue represents a necessary cost of producing gold. Finally, zinc production declined 7% while realized zinc prices increased 12% leaving net zinc revenue essentially unchanged.
        Decreased gold production in 2003 was due to a number of factors. In the first quarter of 2003, we experienced a rock fall which delayed extraction of higher grade gold mining blocks from the lower part of the mine. The affected area stabilized on its own and we were able to recover and process most of the ore. We filled the affected area with cemented rock fill and paste fill to further stabilize the area, and reduced the widths of certain mining blocks to accelerate the establishment of the pyramidal mining sequence. Due to the remedial work conducted in this area, we reduced tonnage from the gold/copper rich lower levels and replaced it with tonnage from the upper zinc/silver rich areas of the mine. This resequencing of production led to increased silver production for 2003. For 2004, most of the production will come from secondary, de-stressed mining blocks which should reduce the risk of such an event reoccurring.
        In the third quarter of 2003, we encountered production drilling challenges. Squeezing drill holes slowed down the planned extraction time of mining blocks from the lower part of the mine. These drilling challenges resulted in shortages of ore which lead to numerous "stop-start" cycles in the mill but were resolved in the third and fourth quarters and did not affect production in 2004. To address these drilling challenges, we added two production drills, increased drill hole diameter and changed our blasting method. The new blasting method has been successful in decreasing dilution and improving fragmentation and, coupled with the completion of the Level 219 crushing plant, has improved ore flow and increased productivity.
        Although more ore was being mined from the upper areas of the mine, zinc production declined and copper production increased over 2002 as we were able to steadily increase tonnage from the lower levels throughout the year. In the fourth quarter, LaRonde delivered record quarterly production from the lower gold/copper rich levels with 73% of total tonnage processed coming from these levels. This led to fourth quarter production of 70,299 ounces which was 7% lower than the same quarter in 2002 but in line with our expectations.
        In light of the operational challenges encountered in 2003, in the fourth quarter, the Company undertook a comprehensive review of short-term and long-term production targets. Based on recent experience, we implemented a more conservative mining plan. We have also taken a number of measures to reduce our exposure to normal mining risk such as increasing our surface ore stockpile. This stockpile will ensure that the
3

mill can temporarily continue to process ore in the event of production stoppages due to unforeseen circumstances such as those encountered in 2003.
        Outlook:      Revenues from mining operations are estimated to have increased significantly in 2004 due to increased production levels for all metals and higher realized metals prices. In 2005, revenues from mining operations are expected to be largely unchanged as slightly higher production levels for all metals are offset by anticipated lower metals prices. The table below summarizes our production for 2004 and our estimated production in 2005.

 	 	2005 Estimate
	 	2004 Actual
	 	2003 Actual
	 	% Change (1)
	
Gold (ounces)	 	280,000	 	271,567	 	236,653	 	14.8%	
Silver (000's ounces)	 	5,500	 	5,699	 	3,953	 	44.2%	
Copper (000's pounds)	 	18,000	 	22,816	 	20,131	 	13.3%	
Zinc (000's pounds)	 	160,000	 	167,283	 	100,337	 	66.7%	

(1)
Indicates percentage change between 2003 actual production and our 2004 actual production.
         Estimated production levels for gold and byproduct metals in 2006 are expected to be in line with 2005 estimates.
Interest and Sundry Income
        Interest and sundry income consists of interest on cash balances, realized gains on the disposition of available-for-sale securities, and amortization related to our gold put option contracts expiring in the year. Interest and sundry income was $2.8 million in 2003 compared to $1.9 million in 2002. The $0.9 million increase was due to a number of factors. While interest on cash balances remained relatively unchanged over 2002, in 2003, we realized approximately $2.5 million in gains on the disposition of available-for-sale securities. This gain was offset by a $1.8 million charge relating to the cost of gold puts purchased in 1999.
        Outlook:      Interest and sundry income is estimated to have been essentially nil in 2004 and projected not to change in 2005 as interest income on our cash balance is expected to be offset by the non-cash amortization of the cost of our gold put option contracts.
Production Costs
        In 2003, production costs increased 38% to $105 million from $76 million. Operating costs per ton milled remained essentially unchanged compared to 2002 at C$52 per ton. (Operating costs per ton is a non-GAAP measure and is explained below.) The following table summarizes the components of production costs.

 	 	2003
	 	2002
	 	
Definition Drilling	 	$	511	 	$	437	 	
Stope Development	 	 	11,832	 	 	8,625	 	
Mining	 	 	17,263	 	 	10,961	 	
Underground Services	 	 	25,836	 	 	16,591	 	
Milling	 	 	27,478	 	 	20,603	 	
Surface Services	 	 	2,245	 	 	1,928	 	
Administration	 	 	6,472	 	 	5,367	 	
El Coco Royalty	 	 	12,888	 	 	10,764	 	
Reclamation provision	 	 	519	 	 	1,301	 	
Inventory adjustments	 	 	(368	)	 	1,072	 	
Hedging losses (gains)	 	 	314	 	 	(1,680	)	
 	 		 		 	
Total Production Costs	 	$	104,990	 	$	75,969	 	
 	 		 		 	
        The rock fall in the first quarter and the production drilling challenges encountered in the third quarter caused mining and underground service costs to increase in 2003. However, we addressed the production drilling challenges in the third quarter and steadily ramped up tonnage milled in the fourth quarter. Milling costs increased due to increased mill throughput during 2003 and the increase in stope development costs was also attributable to the drilling challenges encountered at depth. Of the overall cost increase of $29 million in 2003 compared to 2002, the strengthening Canadian dollar accounted for $10 million, or 35%.
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        In the fourth quarter of 2003, we milled 627,000 tons, which represents a 17% increase over the same quarter of 2002. Fourth quarter gold production was 7% lower than 2002 due to decreased gold grades as a result of the implementation of a more conservative mining plan. Onsite operating costs per ton in the fourth quarter were C$54 per ton compared to C$53 per ton in the prior year; however, steady improvement was made throughout the quarter as our operating costs decreased to C$48 per ton in December.
        For 2004 we expect a slight increase in operating costs to be offset by an estimated 4% increase in total tons milled. Therefore, we expect operating costs per ton to decrease to between C$49 and C$51 per ton.
        In 2003, total cash operating costs to produce an ounce of gold increased 48% to $269 from $182. In 2002, total cash operating costs increased 17% over the prior year from $155 to $182. Total cash operating costs are comprised of onsite operating costs reduced by net silver, zinc and copper revenue. Total cash operating costs are affected by various factors such as the number of gold ounces produced, operating costs, US$/C$ exchange rates, production royalties and byproduct metal prices. The table below illustrates the change in total cash operating costs attributable to each of the variables which affected it for 2003 and 2002. The most significant factors contributing to the increase in total cash operating costs in 2003 were increased operating costs and the stronger Canadian dollar. Total cash operating costs per ounce is not a recognized measure under US GAAP and is described more fully below.

 	 	2003
	 	2002
	 	
Total cash operating costs (prior year)	 	$	182	 	$	155	 	
Lower (higher) gold production	 	 	19	 	 	(15	)	
Stronger (weaker) Canadian dollar	 	 	30	 	 	(3	)	
Higher El Coco royalty	 	 	13	 	 	20	 	
Increased operating costs	 	 	77	 	 	24	 	
(Higher) lower byproduct revenue	 	 	(52	)	 	1	 	
 	 		 		 	
Total cash operating costs (current year)	 	$	269	 	$	182	 	
 	 		 		 	
        Increased operating costs for both the fourth quarter and year to date were a result of increased tonnage mined and processed coupled with increased mining and underground services costs resulting from the first quarter rock fall and the production drilling challenges encountered in the third quarter. Increasing byproduct metal prices had a more significant effect in the fourth quarter than on the entire year as most of the yearly increase in metal prices occurred in the fourth quarter. Copper and zinc prices increased 8% and 2%, respectively in the first nine months of 2003 and increased 22% and 17%, respectively in the fourth quarter. For 2004, we expect the El Coco royalty to be completely eliminated as that area of the mine is essentially mined out. As byproduct metal prices increased throughout the year, we took the opportunity to liquidate our hedges of byproduct production. Therefore, at the end of the year, we had full leverage to increasing byproduct metal prices.
        Total cash operating cost is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. We believe that this generally accepted industry measure is a realistic indication of operating performance and is useful in allowing year over year comparisons. As illustrated in the table below, this measure is calculated by adjusting Production Costs as shown in the Statement of Income (Loss) and Comprehensive Income (Loss) for net byproduct revenues, royalties, inventory adjustments and asset retirement provisions. This measure is intended to provide investors with information about the cash generating capabilities of our mining operations. Management uses this measure to monitor the performance of our mining operations. Since market prices for gold are quoted on a per ounce basis, using this per ounce measure allows management to assess the 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 the limitation inherent with this measure by using it in conjunction with the cost per ton measure (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.
        Operating cost per ton is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. As illustrated in the table below, this measure is calculated by adjusting Production Costs as shown in the Statement of Income (Loss) and Comprehensive Income (Loss) for
5

royalties, inventory and hedging adjustments and asset retirement provisions and then dividing by tons processed through the mill. Since total cash operating cost data can be affected by fluctuations in byproduct metal prices and exchange rates, management believes this measure provides additional information regarding the performance of mining operations and allows management to monitor operating costs on a more consistent basis as the per ton measure eliminates the cost variability associated with 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 ton mined, in order to be economically viable the estimated revenue on a per ton basis must be in excess of the operating cost per ton. This measure supplements production cost information prepared in accordance with US GAAP and allows investors to distinguish between changes in production costs resulting from changes in production versus changes in operating performance.
        Both of these non-GAAP measures used should be considered together with other data prepared in accordance with US GAAP, and none of the measures taken by themselves is necessarily indicative of operating costs or cash flow measures prepared in accordance with US GAAP. The tables presented below reconcile total cash operating costs and operating costs per ton to the figures presented in the financial statements prepared in accordance with US GAAP.
Reconciliation of Total Cash Operating Costs per ounce

 	 	2003
	 	2002
	 	2001
	 	
 	 	(thousands, except as noted)
	 	
Production costs per Consolidated Statement of Income (Loss)	 	$	104,990	 	$	75,969	 	$	67,009	 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	
 	Inventory adjustments (i)	 	 	368	 	 	593	 	 	(1,139	)	
 	Byproduct revenues, net of smelting, refining and marketing charges	 	 	(41,254	)	 	(27,850	)	 	(28,383	)	
 	El Coco royalty	 	 	(12,888	)	 	(10,764	)	 	(5,424	)	
 	Reclamation provision	 	 	(519	)	 	(1,301	)	 	(1,155	)	

Cash operating costs	
 	
$	
50,697	
 	
$	
36,647	
 	
$	
30,908	
 	
Gold production (ounces)	 	 	236,653	 	 	260,183	 	 	234,860	 	
 	 		 		 		 	
Cash operating costs (per ounce)	 	$	215	 	$	141	 	$	132	 	
El Coco royalty	 	 	54	 	 	41	 	 	23	 	
 	 		 		 		 	
Total cash operating costs	 	$	269	 	$	182	 	$	155	 	
 	 		 		 		 	
Reconciliation of Operating Costs per ton

 	 	2003
	 	2002
	 	2001
	 	
 	 	(thousands, except as noted)
	 	
Production costs per Consolidated Statement of Income (Loss)	 	$	104,990	 	$	75,969	 	$	67,009	 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	
 	Inventory (i) and hedging (ii) adjustments	 	 	54	 	 	609	 	 	(1,163	)	
 	El Coco royalty	 	 	(12,888	)	 	(10,764	)	 	(5,424	)	
 	Reclamation provision	 	 	(519	)	 	(1,301	)	 	(1,155	)	
 	 		 		 		 	
Minesite operating costs (US$)	 	$	91,637	 	$	64,513	 	$	59,267	 	
 	 		 		 		 	
Minesite operating costs (C$)	 	$	127,931	 	$	101,289	 	$	91,752	 	
Tons milled (000's tons)	 	 	2,449	 	 	1,963	 	 	1,805	 	
 	 		 		 		 	
Operating costs per ton (C$)	 	$	52	 	$	52	 	$	51	 	

Notes:
(i)
Under the Company's revenue recognition policy, revenue is recognized on concentrates when legal title passes. Since total cash operating costs and operating costs per ton are calculated on a production basis, this adjustment reflects the portion of concentrate production for which revenue has not been recognized in the year.
6

(ii)
Hedging adjustments reflect gains and losses on the Company's derivative positions entered into to hedge the effects of foreign exchange fluctuations on production costs. These items are not reflective of operating performance and thus have been eliminated when calculating operating costs per ton.
        Outlook:      For 2004, our total cash operating costs are estimated to have been between $75 and $85 per ounce of gold. For 2005, we expect our total cash operating costs to be in the range of $135 to $145 per ounce of gold. The estimated increase in total cash operating costs compared to the 2004 estimate is due to an anticipated decline in byproduct metal prices below those realized in 2004 and a reduction in the contribution of foreign exchange hedging activities. As net silver, zinc and copper revenue are treated as a reduction of operating costs in arriving at total cash operating costs per ounce, production and price assumptions play an important role in our estimates. As our operating costs are denominated in Canadian dollars, the US$/C$ exchange rate can also affect our estimate. The table below summarizes the metal price assumptions and exchange rate assumptions used in deriving our 2005 estimate. 2005 production estimates for each metal are shown in the section entitled "Revenues from mining operations".

Silver	 	$	6.00	
Zinc	 	$	0.45	
Copper	 	$	1.15	
US$/C$ exchange rate	 	$	1.27	
         Estimated total cash operating costs for 2006 are expected to be in line with 2005 estimates, assuming no change in the Company's metals price assumptions or exchange rate assumptions from those set out for 2005 above and assuming no change in the contribution of foreign hedging activities from that expected in 2005.
         As we have currently not hedged any of the above production, changes in the prices of these metals will impact our total cash operating cost estimate. We currently have hedges in place to protect the downside risk associated with a strengthening Canadian dollar. For 2005, we have hedged approximately 15% of our estimated Canadian dollar operating costs at exchange rates well above the prevailing exchange rates that are in effect when the hedges expire. The chart below shows the impact on total cash operating costs per ounce of changes in the variables discussed above. The sensitivities presented for the changes in the US$/C$ exchange rate take into account the above hedges.

Exploration and Corporate Development Expense
        In 2003, our exploration team continued to focus on the Lapa property which is located only 7 miles east of LaRonde. Their efforts resulted in a resource to probable reserve conversion of 1.2 million ounces of gold. The property did not have reserves in 2002. In conjunction with our exploration success, our corporate development team was active in acquiring a 100% interest in the Lapa property, a transaction completed late in the second quarter of 2003. We also acquired the Bousquet property adjacent to the LaRonde Mine, expanding our property interests along the gold belt which hosts our LaRonde Mine. The former Bousquet mine office is now being used by a dedicated regional development team to evaluate and prioritize the Company's exploration and development projects in the region.
        In 2003, we re-evaluated our Goldex project. A new reserve and resource model was estimated which showed positive economics and led to a resource to probable reserve conversion of 1.6 million ounces of gold. The property did not have reserves in 2002. We decided to undertake an underground program to provide additional geological information. Over the course of 2004, we expect to complete three vertical slot raises through the orebody. We expect to process this material early in 2005. The objective of this bulk sample and additional drilling planned for 2004 is to attempt to increase the level of confidence in the gold grade. Although our current focus is growth in our own backyard, we continue to evaluate corporate development opportunities which could potentially increase returns for our shareholders.
7

         Total exploration and corporate development expense, including equity losses of Sudbury, increased 102% in 2003 to $7.6 from $3.8 million in 2002. The table below summarizes exploration and corporate development expense (thousands):

 	 	2003
	 	2002
	
Lapa property	 	$	1,751	 	$	246	
Other regional properties	 	 	465	 	 	976	
Exploration conducted by Sudbury Contact Mines Limited	 	 	4,216	 	 	2,271	
Corporate development expense	 	 	1,169	 	 	273	
 	 		 		
 	 	$	7,601	 	$	3,766	
 	 		 		
        Exploration is only conducted if warranted by drilling results and project economics. Therefore, the increase in expenses over 2002 reflects the success of our exploration and development work during 2003. The 2003 gross exploration expenses on the Lapa property were approximately $3.0 million. However, these expenses were reduced by exploration investment tax credits received from the provincial government of Quebec. In 2003, our equity investee, Contact Diamond Corporation (formerly Sudbury Contact Mines Limited) ("Contact Diamond"), conducted more exploration due to the encouraging results on the Timiskaming diamond project. In 2002, we owned approximately 64% of Contact Diamond and were fully consolidating its exploration expenses as we were providing full funding for its projects. In 2003, through a series of equity financings, Contact Diamond became more financially independent and our ownership interest was diluted to less than 50%. Therefore, as of August 31, 2003, we are no longer required to consolidate Contact Diamond's operations with our own. Our 2003 exploration expenses reflect 100% of Contact Diamond's exploration expenses up to that time and a 49.9% share of exploration expenses subsequent to de-consolidation.
        In 2003 the Company issued flow-through shares to take advantage of its large undeducted exploration tax pools. Issuing flow-through shares is common practice in the mining industry for companies with large pools of available tax deductions. Under the terms of the flow-through share agreements, the Company is required to spend the proceeds of the offering on eligible Canadian exploration expenses and renounce the tax deductions associated with those exploration expenses to the initial purchasers of the flow-through shares. Since investors are receiving tax deductions for the exploration expenses incurred by the Company, these flow-through shares typically command a premium to the market price of the Company's stock on the date of issuance. Should the Company fail to spend the proceeds of the flow-through share offering on eligible Canadian exploration expenses, the investors would lose their tax deductions, which would create the potential for shareholder lawsuits and penalties imposed by the Canada Revenue Agency. In its history, the Company has never failed to spend flow-through share proceeds on eligible exploration nor has it ever failed to renounce those exploration expenditures to investors. To comply with flow-through share purchase agreements, the Company must spend $3.5 million on eligible Canadian exploration expenses in 2004 relating to the expenditures renounced effective in 2003.
        Outlook:      Exploration and corporate development expense, including our share of Contact Diamond's exploration expenses, are expected to decrease in 2004 as we have met the criteria for capitalization at the Lapa and Goldex properties and exploration expenditures related to these properties will not be recorded in the income statement in 2004 or 2005. However, our acquisition of shares of Riddarhyttan will result in an increased amount of exploration expense in 2005. We expect to record $3.2 million of exploration expense on our income statement in 2004 which includes $1.2 million in non-cash expenses representing our share of Contact Diamond's exploration expenses. We expect to record $7.2 million of exploration expense on our income statement in 2005 which includes $2.4 million in non-cash expenses representing our share of the exploration expenses of Contact Diamond and Riddarhyttan. However, these estimates could increase materially if we have success on our various exploration properties .
General and Administrative Expenses
        General and administrative expenses increased to $7.1 million in 2003 from $5.5 million in 2002. Of the $1.6 million increase, 42% is attributable to the stronger Canadian dollar as general and administrative expenses are almost entirely denominated in Canadian dollars. An additional 30% is attributable to compliance with new
8

financial reporting and securities law requirements. The remainder of the increase is attributable to increased corporate activities.
        Outlook:      General and administrative expenses are not expected to increase materially in 2004 or 2005.
Provincial and Federal Capital Taxes
        Provincial capital taxes were $1.2 million in 2003 compared to $0.8 million in 2002. These taxes are assessed on the Company's capitalization (paid-up capital and debt) less certain allowances. The increase in 2003 was attributable to less exploration expenses being eligible for provincial tax credits that decrease capital taxes otherwise payable. We estimate 2004 capital taxes to be $1.9 million due to increases in capitalization and less exploration expenses eligible for the provincial tax credits.
        Federal capital taxes are assessed on essentially the same capitalization base as provincial capital taxes. The increase in 2003 to $1.1 million from $0.9 million in 2002 represents increases in capitalization throughout the year. New legislation introduced in 2003 will completely eliminate federal capital taxes by 2008. These changes will be phased in gradually with rate reductions each year. Based on new legislation, we estimate federal capital taxes to be $0.9 million in 2004.
        Outlook:      Provincial capital taxes are expected to be $1.7 to $2.0 million in 2004 and, based on new legislation, we estimate federal capital taxes to be $0.9 million in 2004. In 2005, we expect these amounts to be $1.6 million and $0.8 million, respectively.
Amortization Expense
        Amortization expense was $17.5 million in 2003 compared to $13.0 million in 2002. The Company calculates its amortization on a unit-of-production basis using proven and probable reserve tonnage as its amortization base. A 25% increase in tons processed coupled with an increased capital base due to the recently completed LaRonde expansion more than offset the year end increase in reserves.
        Outlook:      Amortization is expected to increase as milled throughput increases in 2004 and 2005. On a per ton basis, amortization is expected to remain unchanged in 2004 at $8 per ton as the increased capital base was offset by the year end increase in reserves and to increase to $9 per ton in 2005.
Interest Expense
        In 2003, interest expense increased 25% to $9.2 million from $7.3 million in 2002 as no interest was capitalized in 2003. In 2002, $2.3 million in interest on our revolving bank facility was capitalized as the facility was used to fund the expansion at LaRonde. Of the $9.2 million interest expense in 2003, approximately $6.5 million relates to cash interest on the 2012 convertible subordinated debentures, $1.5 million relates to cash standby fees and other costs associated with the revolving bank facility, and the remaining $1.2 million represents non-cash amortization of the financing costs associated with the 2012 convertible subordinated debentures and revolving bank facility.
        In the fourth quarter of 2003, we entered into an interest rate swap whereby we swapped our fixed rate payments on the convertible subordinated debentures for variable rate payments. The notional amount under the swap exactly matches the $144 million face value of the debentures and the swap agreement terminates on February 15, 2006, which is the earliest date that the debentures can be called for redemption. Under the terms of the swap agreement, we make interest payments of three-month LIBOR plus a spread of 2.37% and receive fixed interest payments of 4.50% which completely offsets the interest payments we make on the subordinated convertible debentures. The three-month LIBOR rate was also capped at 3.38% such that total variable interest payments will not exceed 5.75%. Based on the current three-month LIBOR rate of 1.12%, we estimate that this transaction will save approximately $1.5 million in debenture interest annually.
        Outlook:          Interest expense is expected to decrease by approximately $1.5 million as we realize the benefits of our interest rate swap, assuming variable LIBOR rates remain at current levels throughout the year. In 2005, interest expense is expected to decrease by a further $1.0 million as a result of the same factors.
9

Income and Mining Taxes
        In 2003, the effective accounting income tax recovery rate was 8.0% compared to an income tax recovery rate of 7.8% in 2002. Although we reported a loss before income and mining taxes of $18.1 million, we did not record a tax recovery due the uncertainty surrounding the realization of the benefit of these losses. The loss we incurred in 2003 can be carried forward to reduce taxable income of future years and expires, if not used, within a legislated time period. Normally, the benefits of being able to utilize these losses against future taxable income would be recorded as a future tax asset. However, due to the uncertainty surrounding the realization of this and other limited life tax assets, we have provided a full valuation allowance against these tax assets thereby reducing their value in our financial statements to nil. The effect of not recognizing the benefits of these potential future deductions reduces the tax recovery that we would have otherwise recorded against the current year's loss.
        In 2002, we recorded income before income and mining taxes of $4.6 million yet recorded a tax recovery of 7.8%. The recovery was due to the utilization of previously unrecognized losses carried forward. In prior years, just as in 2003, when the Company incurred losses, the benefit of the future tax deduction was not recorded as a future tax asset. In 2002, when the Company used these prior losses to reduce taxable income, the tax that would have otherwise been recorded against 2002 income was reduced.
        Outlook:      We expect our effective income tax rate for accounting purposes to be approximately 10% in 2004 and to be between 35% and 40% in 2005 (in each case, including provincial mining duties). These effective tax rates could decrease if we are able to realize unrecognized tax assets. Due to uncertainty surrounding the realization of certain tax assets, we have provided a full valuation allowance against limited life tax assets and, as such, the possible benefit of these future tax deductions is not recorded as an asset in the financial statements. Due to rising metal prices, we expect to be able to realize some of these assets before they expire thus leading to corresponding tax credits in income representing the decrease in valuation allowance attached to these tax assets.
Liquidity and Capital Resources
        As a result of the operating challenges encountered in 2003, we ended 2003 with less capital resources than 2002. Including $100 million of undrawn credit under our revolving bank facility, we ended 2004 with available cash resources of approximately $210 million, unchanged from those available at the end of 2003 and to $253 million at the end of 2002. In 2004 we amended our revolving bank facility with a syndicate of international banks. Under the amended facility, the Company will have a $100 million line of credit on a revolving basis for at least three years. In 2003, we used $43 million in cash compared to 2002 when we added $132 million to our cash position. The largest components of the cash used in 2003 were:
•
$42 million in capital expenditures at LaRonde; and

•
$10 million net investment and acquisition expenditures including $9 million for Lapa and $4 million for Bousquet offset by $3 million generated from the sale of available-for-sale securities.
        These cash outflows were offset by $4 million in operating cash flow and $6 million of financing cash flows. Despite the production difficulties, we still managed to generate positive operating cash flow due in large part to the increase in metal prices. The metal price increases were offset somewhat by the strengthening Canadian dollar and our increased exploration activities driven by our success at Lapa. The $6 million in financing cash flows included $5 million of employee stock purchases under our share purchase and stock option plans. In 2003, working capital changes had a negligible effect on cash flow.
        In 2003, the Company declared its 24th consecutive annual dividend of $0.03 per share, unchanged from 2002. Although the Company expects to continue paying dividends, future dividends will be at the discretion of the Company's Board of Directors and will be subject to factors such as income, financial condition, and capital requirements.
10

        Agnico-Eagle's contractual obligations as at December 31, 2003 are summarized as follows:

Contractual Obligations
	 	Total
	 	Less than 1 Year
	 	1-3 Years
	 	3-5 Years
	 	More than 5 Years
	
Long-term debt (1)	 	$	143.8	 	$	—	 	$	—	 	$	—	 	$	143.8	
Capital lease obligations	 	 	0.7	 	 	0.7	 	 	—	 	 	—	 	 	—	
Reclamation obligations (2)	 	 	23.2	 	 	0.9	 	 	2.7	 	 	0.8	 	 	18.8	
Pension obligations (3)	 	 	5.9	 	 	0.1	 	 	0.2	 	 	0.2	 	 	5.4	
 	 	$	173.6	 	$	1.7	 	$	2.9	 	$	1.0	 	$	168.0	

Notes:
(1)
The Company's convertible subordinated debentures in aggregate principal amount of $143.8 million mature on February 15, 2012. The Company may redeem the debentures on or after February 15, 2006, in cash, or at the option of the Company, be delivering freely tradeable common shares.

(2)
Mining operations are subject to environmental regulations which require companies to reclaim and remediate land disturbed by mining operations. The Company has submitted closure plans to the appropriate governmental agencies which estimate the nature, extent and costs of reclamation for each of its mining properties. The estimated undiscounted cash outflows of these reclamation obligations are presented here. These estimated costs are recorded in the Company's financial statements on a discounted basis in accordance with FAS 143. See Note 5(a) to the Audited Annual Financial Statements.

(3)
The Company has entered into Retirement Compensation Arrangements ("RCA") with certain executives. The RCAs provide pension benefits to the executives equal to 2% of the executive's final three-year average pensionable earnings for each year of service with the Company less the annual pension payable under the Company's basic defined contribution plan. Payments under the RCAs are secured by letter of credit from a Canadian chartered bank. The figures presented in this table have been actuarially determined.
        In 2003, the Company was unable to achieve its completion test and was in default of its interest coverage covenants under its revolving bank facility. Given that the facility was completely undrawn throughout 2003, these were technical violations which were waived by all the banks in the lending syndicate for the third and fourth quarters of 2003. The syndicate also extended the deadline for achieving the completion test to September 30, 2004. This completion test was satisfied in the third quarter of 2004.
        Outlook:      In 2004 sustaining and project capital expenditures are estimated to have been approximately $23 million at LaRonde and approximately $30 million on other projects, including Lapa, Goldex and LaRonde II. At Lapa, we will continue construction of the shaft with underground diamond drilling scheduled to start in late 2005. At Goldex, we have conducted a bulk sampling program to obtain an increased level of confidence in the gold grade. The bulk sample consisted of three vertical slot raises through the orebody and we expect to process this material early in 2005. At LaRonde II, we expect a detailed feasibility study to be completed in mid 2005.
         In 2005 we expect to incur approximately $14.1 million in sustaining capital expenditures at LaRonde, $12.7 million in sustaining capital expenditures on projects relating to LaRonde II, $12.1 million on the underground program at the Lapa property, $1.5 million on the bulk sample and engineering at the Goldex property and $1.6 million on drilling at the Bousquet and Ellison properties. We expect all these capital expenditures to be completely funded out of operating cash flow.
         The following table provides a summary of our revised 2004 estimated and 2005 estimated capital and exploration expenditures. The grassroots exploration amount is the cash component of our exploration expense and does not include our share of Contact Diamond's or Riddarhyttan's exploration expense.

 	 	2005
	 	2004
	
Project
					
	 	Capitalized
	 	Expensed
	 	Total
	 	Capitalized
	 	Expensed
	 	Total
	
 	 	 	 	 	 	(millions)
	 	 	 	 	
LaRonde I projects & sustaining	 	$	14,100	 	$	—	 	$	14,100	 	$	23,000	 	$	—	 	$	23,000	
LaRonde II drilling & feasibility	 	 	12,700	 	 	—	 	 	12,700	 	 	13,000	 	 	—	 	 	13,000	
Goldex bulk sample & engineering	 	 	1,500	 	 	—	 	 	1,500	 	 	5,000	 	 	—	 	 	5,000	
Lapa drilling & engineering	 	 	12,100	 	 	—	 	 	12,100	 	 	10,000	 	 	—	 	 	10,000	
Bousquet/Ellison drilling	 	 	1,600	 	 	—	 	 	1,600	 	 	2,000	 	 	—	 	 	2,000	
Grassroots exploration	 	 	—	 	 	4,800	 	 	4,800	 	 	—	 	 	2,000	 	 	2,000	
 	 		 		 		 		 		 		
 	 	$	42,000	 	$	4,800	 	$	46,800	 	$	53,000	 	$	2,000	 	$	55,000	
 	 		 		 		 		 		 		
11

Risk Profile
        Agnico-Eagle is subject to various risks that it encounters in its day-to-day operations. We mitigate the likelihood and potential severity of these risks through the application of the highest standards in the planning, construction and operation of our facilities. In addition, emphasis is placed on hiring and retaining competent personnel and developing their skills through training in safety and loss control. Agnico-Eagle's operating and technical personnel have a solid track record of developing and operating precious metal mines and the LaRonde Mine has been recognized for its excellence in this regard with various safety and development awards. Unfortunately, in spite of our extensive efforts to ensure the safety of our employees, industrial accidents can occur. In February 2004, an underground explosion claimed the life of a contract miner, and in March 2004, an accident in a storage area claimed the life of an employee.
        We also mitigate some of the Company's normal business risk through the purchase of insurance coverage. An Insurable Risk Management Policy, approved by the Board of Directors, governs our purchase of insurance coverage and only permits the purchase of coverage from insurance companies of the highest credit quality. For a more complete list of the risk factors affecting Agnico-Eagle, please see the Company's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission.
        As disclosed by the Company on March 18, 2004, the staff of the Ontario Securities Commission had been investigating the Company in relation to the timing and content of the Company's disclosure concerning a rock fall that occurred at the LaRonde Mine in the first quarter of 2003. The Company is currently in discussions with Ontario Securities Commission staff concerning this matter and the timing of the Company's disclosure of a production shortfall prior to its earnings announcement in the third quarter of 2003. The Company believes it is unlikely that there will be any material financial impact resulting from this matter.
Financial Risk
        Agnico-Eagle's net income is most sensitive to metal prices and the US$/C$ exchange rate. For the purpose of the sensitivities presented in the graph below, Agnico-Eagle used the following metal price and exchange rate assumptions:
•
Gold — $340;

•
Silver — $5.00;

•
Zinc — $0.40;

•
Copper — $0.85; and

•
US$/C$ — $1.30
        Changes in the market prices of gold are due to numerous factors such as demand, global mine production levels, forward selling by producers, central bank sales and investor sentiment. Changes in the market prices of other metals are due to factors such as demand and global mine production levels. Changes in the US$/C$ exchange rate are due to factors such as supply and demand for Canadian and U.S. currencies and economic conditions in each country. In 2003, the price ranges for metal prices and the US$/C$ exchange rate were:
•
Gold — $323-$416;

•
Silver — $4.35-$5.97;

•
Zinc — $0.34-$0.46;

•
Copper — $0.70-$1.05; and

•
US$/C$ — $1.29-$1.57.

        The following graph shows the estimated impact on budgeted income per share ("EPS") in 2004 of a 10% change in assumed metal prices and exchange rates. A 10% change in each variable was considered in isolation
12

while holding all other assumptions constant. Based on historical market data and 2003 price ranges shown above, a 10% change in assumed metal prices and exchange rates is reasonably likely in 2004.

        In order to mitigate the impact of fluctuating precious and base metal prices, Agnico-Eagle enters into hedging transactions under its Metal Price Risk Management Policy, approved by the Board of Directors. The Company's policy and practice is not to sell forward its gold production. The Policy does allow the Company to review this to use hedging strategies where appropriate to ensure an adequate return on new projects. In the past, we have bought put options to protect a minimum gold price while maintaining full participation to gold price increases. The Company's policy does not allow speculative trading. At the end of 2003, the Company's only metal hedges are gold puts with a strike price of $260. These gold puts protect a minimum gold price of $260 for 44% to 64% of anticipated gold production between 2004 and 2007. Gold puts are exercised at our option therefore they do not limit participation to rising gold prices.
        The Company receives payment for all of its metal sales in US dollars and pays most of its operating and capital costs in Canadian dollars. This gives rise to significant currency risk exposure. We have entered into currency hedging transactions under the Company's Foreign Exchange Risk Management Policy, approved by the Board of Directors, to hedge part of our exposure. The policy does not permit the hedging of translation exposure (that is, the gains and losses that arise from the accounting translation of Canadian dollar assets and liabilities into US dollars) as these do not give rise to cash exposure. In 2004, we hedged approximately 40% of our Canadian dollar operating cost requirement at a level well above the prevailing exchange rates that are in effect when the hedges expire. As shown in the chart above, a 10% increase in budget exchange rates would increase EPS by $0.11. Due to the 2004 foreign currency hedges, a 10% decrease in exchange rates would decrease EPS by only $0.05.
        Fluctuations in interest rates can also affect income and cash flows. Due to the interest rate swap entered into in 2003, increases in LIBOR rates will increase interest expense. The maximum interest rate payable under the swap transaction is 5.75% thus, based on this maximum rate, the maximum exposure from rising interest rates is $0.02 per share. The Company has a Short-Term Investment Risk Management Policy, approved by the Board of Directors, which only permits investment of excess cash balances in short-term money market instruments of the highest credit quality.
Operational Risk
        The business of gold mining is generally subject to certain types of risks and hazards such as environmental hazards, industrial accidents such as cave-ins, rock bursts, rock falls and flooding, unusual or unexpected rock formations, changes in the regulatory environment and metal losses. Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. As a result, the Company may be required to incur significant costs that could have a material adverse effect on its financial performance, liquidity and results of operations.
        The Company's LaRonde Mine and milling operations account for all of our gold production and will continue to account for all of our gold production in the future unless additional properties are acquired or
13

brought into production. Any adverse condition affecting mining or milling conditions at LaRonde could have a material adverse effect on our financial performance, liquidity and results of operations. At current reserves and mining rates, LaRonde has a mine life of approximately 15 years.
        Our gold production estimates for subsequent years may fall below estimated levels as a result of the general mining risks summarized above. Furthermore, production may be unexpectedly reduced if, during the course of mining, unfavorable ground conditions or seismic activity are encountered or grades are lower than expected. Production estimates may also be affected if the physical or metallurgical characteristics of ore are less amenable than expected to mining or treatment. Therefore, there can be no assurance that the Company will achieve current or future production estimates.
        Our reported proven and probable mineral reserves are estimates and there can be no assurance that anticipated tonnage and grade can be achieved. Reserve figures have been determined based on assumed gold prices and operating costs. We have estimated mineral reserves based on a $325 per ounce gold price. Though the gold price is higher than the $300 per ounce assumption used in last year's reserve estimate, this impact was essentially negated by the change in the US$/C$ exchange rate assumed from $1.50 to $1.40. While gold prices were generally above $325 for 2003, the average gold price over the past three years has been below $325 per ounce. If gold prices of $300 and $350 were assumed, our gold reserve position would change by 6%. Substantial prolonged decreases in the price of gold, silver, copper and zinc and the US$/C$ exchange rate could have a material adverse effect on our financial performance, liquidity and results of operations. To help maintain or grow production levels over the long term, Agnico-Eagle must continually replace mineral reserves depleted by production by reclassifying mineral resources to reserves, expanding known orebodies or locating new ones. Success in gold exploration is highly uncertain and there is a risk that future depletion of mineral reserves through normal mining operations will not be adequately replaced.
Environmental Risk
        Agnico-Eagle's activities are subject to extensive federal and local laws and regulations governing environmental protection and employee health and safety. Agnico-Eagle is required to obtain governmental permits and comply with mine reclamation rules. Although Agnico-Eagle makes provisions for reclamation costs, there can be no assurance that these provisions will be adequate to discharge the obligations associated with these regulations. Failure to comply with applicable environmental and health and safety laws can result in injunctions, damages or revocation of permits and imposition of penalties. There can be no assurance that Agnico-Eagle has been or will be at all times in complete compliance with such laws and regulations or that the costs of complying will not have a material adverse effect on our financial performance, liquidity and results of operations.
        Environmental laws and regulations are complex and have become more stringent over time. Any changes in such laws or environmental conditions could have a material adverse effect on Agnico-Eagle's financial condition, liquidity or results of operations. Agnico-Eagle is not able to estimate the impact of future changes in laws and regulations due to the uncertainty surrounding the ultimate form these changes may take. At December 31, 2003, Agnico-Eagle has accrued approximately $6 million for each of its reclamation obligations on its LaRonde and Bousquet properties.
Derivatives Risk
        Management enters into derivative contracts to limit the downside risk associated with fluctuating metal prices. The contracts act as economic hedges of our underlying exposures to metal price risk and foreign currency exchange risk and are not held for speculative purposes. We do not use complex derivative contracts to hedge our exposures. We use simple contracts, such as puts and calls, to mitigate downside risk yet maintain full participation to rising metal prices. We also enter into forward contracts to lock in exchange rates based on our projected Canadian dollar operating and capital needs.
        By using derivative instruments, we have various financial risks. Credit risk is the risk that the counterparties to our derivative contracts will fail to perform on an obligation to us. We mitigate this risk by dealing with high quality counterparties such as financial institutions. Market liquidity risk is the risk that a derivative position cannot be liquidated quickly. We mitigate market liquidity risk by spreading out the maturity of derivative contracts over time, usually based on our projected production levels for the specific metal being
14

hedged, such that the relevant markets will be able to absorb the contracts. Mark-to-market risk is the risk that an adverse change in market prices for our metals will affect our financial condition. Since we use derivative contracts as economic hedges, for most of the contracts, changes in the mark-to-market value do no affect income. For a description of the accounting treatment of our derivative contracts, please see "Critical Accounting Estimates — Financial Instruments."
        For 2003, we have recorded a $1.8 million charge against our total revenue to reflect the maturity of our gold put option contracts purchased in 1999. This amount is simply the original cost for gold puts maturing in the year. Mark-to-market losses on the 2003 gold put option contracts had originally been recorded as part of accumulated other comprehensive income and these amounts were reclassified to earnings for the current year and are included as part of the $1.8 million charge. Also for 2003, we recorded a $1.9 million gain on our byproduct metal derivative contracts which was recorded as revenue for the specific metal being hedged and a $0.5 million gain on our foreign currency derivative contracts maturing in 2003 which was recorded as part of our production costs. Since the Company uses only over-the-counter instruments, the fair value of individual hedging instruments is based on readily available market values.
Outstanding Securities
        The following table presents the maximum number of common shares that would be outstanding if all dilutive instruments outstanding at March 31, 2004 were exercised:

Common shares outstanding at March 31, 2004	 	84,956,333	
Convertible debentures (based on debenture holders' option)	 	10,267,919	
Employee stock options	 	3,301,400	
Warrants	 	6,900,000	
 	 		
 	 	105,425,652	
 	 		
        The convertible debentures are convertible into common shares, at the option of the holder, at any time prior to maturity, at a conversion rate of 71.429 common shares per $1,000 principal amount of debentures. The debentures mature on February 15, 2012 but may be redeemed at the option of the Company on or after February 15, 2006 in cash or, at the option of the Company, by delivering freely tradable common shares.
        Each warrant entitles the holder to purchase one common share at a price of US$19.00. The warrants expire on November 6, 2007.
Critical Accounting Estimates
        The preparation of the financial statements in accordance with US GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company evaluates the estimates periodically, including those relating to metals awaiting settlement, inventories, future tax assets and liabilities, and mining properties. In making judgments about the carrying value of assets and liabilities, the Company uses estimates based on historical experience and various assumptions that are considered reasonable in the circumstances. Actual results may differ from these estimates.
        The Company believes the following critical accounting policies relate to its more significant judgments and estimates used in the preparation of its financial statements. Management has discussed the development and selection of the following critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the Company's disclosure in this MD&A.
Mining Properties
        The Company capitalizes the cost of acquiring land and mineral rights. If a mineable ore body is discovered, such costs are amortized when production begins, using the unit-of-production method based on proven and probable reserves. If no mineable orebody is discovered, such costs are expensed in the period in which it is determined the property has no future economic value. Costs for grassroots exploration are charged to income when incurred until an orebody is discovered. Further exploration and development to delineate costs of the orebody are capitalized as mine development costs once a feasibility study is successfully completed and proven and probable reserves established.
15

        Mine development costs incurred after the commencement of production are capitalized or deferred to the extent that these costs benefit the entire ore body. Costs incurred to access single ore blocks are expensed as incurred; otherwise, such vertical and horizontal developments are classified as mine development costs.
        Construction costs, including interest costs for projects specifically financed by debt, are capitalized at cost and are not depreciated until commercial production begins. Amortization is based on the unit-of-production method over the estimated proven and probable reserves of the mine.
        Subsequent capital expenditures which benefit future periods, such as the construction of underground infrastructure, are capitalized at cost and depreciated as mentioned above.
        The carrying values of mining properties, plant and equipment and mining development costs are periodically reviewed for impairment. Impairment testing is based on the future undiscounted net cash flows of the operating mine or development property. If it is determined that the estimated net recoverable amount is less than the carrying value, the asset is written down to its fair value with a charge to income. Estimated future cash flows include estimates of recoverable metals in proven and probable reserves. Metals price assumptions are determined considering current and historical prices, price trends and other market-related factors. Estimated future cash flows also consider ongoing capital requirements, reclamation costs, and related income and mining taxes, and are based on detailed engineering life-of-mine plans.
Revenue Recognition
        Revenue is recognized when the following conditions are met:
(a)
persuasive evidence of an arrangement to purchase exists;

(b)
the price is determinable;

(c)
the product has been delivered; and

(d)
collection of the sales price is reasonably assured.
        Revenue from gold and silver in the form of dore bars is recorded when the refined gold and silver is sold. Generally all the gold and silver in the form of dore bars recovered in the Company's milling process is sold in the period in which it is produced.
        Under the terms of our concentrate sales contracts with third-party smelters, final prices for the gold, silver, zinc and copper in the concentrate are set based on the prevailing spot market metal prices on a specified future date based on the date that the concentrate is delivered to the smelter. We record revenues under these contracts based on forward prices at the time of delivery, which is when transfer of legal title to concentrate passes to the third-party smelters. The terms of the contracts result in differences between the recorded estimated price at delivery and the final settlement price. These differences are adjusted through revenue at each subsequent financial statement date.
        Revenues from mining operations consist of gold revenues, net of smelting, refining and other marketing charges. Revenues from byproduct sales are shown net of smelter charges as part of Revenues from mining operations.
Reclamation Obligations
        Estimated reclamation costs are based on legal, environmental and regulatory requirements. Current accounting standards require us to recognize the present value of mine reclamation costs as a liability in the period the obligation is incurred and to periodically re-evaluate the liability. At the date a reclamation liability is incurred, an amount equal to the present value of the final liability is recorded as an increase to the carrying value of the related long-lived asset. Each period, an accretion amount is charged to income to adjust the liability to the estimated future value. The initial liability, which is included in the carrying value of the asset, is also depreciated each period based on the depreciation method used for that asset. In order to calculate the present value of mine reclamation costs, we have made estimates of the final reclamation costs based on mine-closure plans approved by environmental agencies. We periodically review these estimates and update our reclamation cost estimates if assumptions change. Material assumptions that are made in deriving these estimates include variables such as mine life and inflation rates.
16

Future Tax Assets and Liabilities
        The Company uses the liability method of tax allocation for accounting for income taxes. Under the liability method, future tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities. Future tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the future tax asset will not be realized. The Company evaluates the carrying value of its future tax assets quarterly by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are forecasts of future taxable income and available tax planning strategies that could be implemented to realize future tax assets.
Financial Instruments
        We use derivative financial instruments, primarily option contracts, to manage exposure to fluctuations in metal prices and foreign currency exchange rates. Under the Company's treasury management system which complies with Statement of Financial Accounting Standard ("FAS") 133 requirements for hedge accounting, unrealized mark-to-market losses on our gold put option contracts are originally recorded in equity as a component of accumulated other comprehensive loss. On the contracts' scheduled maturity dates, the realization of losses on these contracts is reflected by removing the accumulated mark-to-market losses from accumulated other comprehensive loss and recording these losses as part of normal income. The Company's other derivative contracts hedging byproduct silver, copper and zinc production do not qualify for hedge accounting under FAS 133 and thus changes in the market value of these contracts are recorded in income as part of the hedged transactions. All the Company's hedging contracts on byproduct production were liquidated in 2003 with a corresponding charge being recorded in income. Effective January 1, 2003, our foreign currency hedges also qualified for hedge accounting and as such are now being accounted for in the same manner as the gold puts. Unrealized mark-to-market gains and losses on these hedges are recorded in accumulated other comprehensive loss and realized gains and losses are recorded in income in the same period the hedged transaction affects income, or on the scheduled maturity dates. Prior to 2003, unrealized mark-to-market gains and losses on our foreign currency hedges were recorded in income.
Stock-Based Compensation
        In 2003, the Company prospectively adopted FAS 123, "Accounting for Stock-Based Compensation" as amended by FAS 148, "Accounting for Stock-Based Compensation — Transition and Disclosure". These accounting standards recommend the expensing of stock option grants after January 1, 2003. The standards recommend that the fair value of stock options be recognized in income over the applicable vesting period as a compensation expense.
        The Company's existing stock-based compensation plan provides for the granting of options to directors, officers, employees and service providers to purchase common shares. Share options have exercise prices equal to market price at the grant date or over the life of the applicable vesting period depending on the terms of the option agreements. The fair value of these stock options is recorded as an expense on the date of grant. Fair value is determined using the Black-Scholes option valuation model which requires us to estimate the expected volatility of the Company's share price and the expected life of the stock options. Limitations with existing option valuation models and the inherent difficulties associated with estimating these variables creates difficulties in determining a reliable single measure of the fair value of stock option grants. The dilutive impact of stock option grants is currently factored into the Company's reported diluted income (loss) per share.
Forward-Looking Statements
        The information in this report has been prepared as at February 24, 2004. Certain statements contained in this annual report constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. When used in this document, the words "anticipate", "expect", "estimate," "forecast," "planned" and similar expressions are intended to identify forward-looking statements. Such statements reflect the Company's views at the time with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results to be materially different from those expressed or implied by such forward-looking statements, including, among others, those which are discussed under the heading "Risk Factors" in the Company's Annual Information Form and Annual Report on Form 20-F for the year ended December 31, 2003. The Company does not intend, and does not assume any obligation, to update these forward-looking statements.
17

 
 AGNICO-EAGLE MINES LIMITED

Summarized Quarterly Data

(thousands of United States dollars, except where noted)

 	 	March 31,
2003
	 	June 30,
2003
	 	September 30,
2003
	 	December 31,
2003
	 	Total
2003
	 	
Consolidated Financial Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

Income and cash flows	

 	

 	

 	

 	

 	
 	
LaRonde Division	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operation	 	$	30,112	 	$	30,014	 	$	24,845	 	$	41,849	 	$	126,820	 	
Production costs	 	 	24,347	 	 	24,581	 	 	25,909	 	 	30,153	 	 	104,990	 	
 	 		 		 		 		 		 	
Gross profit (exclusive of amortization shown below)	 	$	5,765	 	$	5,433	 	$	(1,064	)	$	11,696	 	$	21,830	 	
Amortization	 	$	4,517	 	$	4,787	 	$	4,471	 	$	3,729	 	$	17,504	 	
 	 		 		 		 		 		 	
Gross profit	 	$	1,248	 	$	646	 	$	(5,535	)	$	7,967	 	$	4,326	 	
 	 		 		 		 		 		 	
Net income (loss) for the period	 	$	(6,237	)	$	(3,779	)	$	(11,869	)	$	2,387	 	$	(19,498	)	
Net income (loss) per share (basic and fully diluted)	 	$	(0.07	)	$	(0.05	)	$	(0.14	)	$	0.03	 	$	(0.23	)	
Operating cash flow	 	$	612	 	$	(2,823	)	$	761	 	$	5,703	 	$	4,253	 	
Operating cash flow (before non-cash working capital)*	 	$	(577	)	$	632	 	$	(6,580	)	$	10,477	 	$	3,952	 	
Weighted average number of common shares outstanding (in thousands)	 	 	83,725	 	 	83,836	 	 	83,954	 	 	84,424	 	 	83,889	 	
Tons of ore milled	 	 	602,633	 	 	648,292	 	 	570,661	 	 	626,994	 	 	2,448,580	 	
Head grades:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Gold (ounces per ton)	 	 	0.10	 	 	0.10	 	 	0.10	 	 	0.12	 	 	0.11	 	
 	Silver (ounces per ton)	 	 	2.44	 	 	2.24	 	 	1.69	 	 	2.22	 	 	2.16	 	
 	Zinc	 	 	3.55	%	 	3.14	%	 	2.71	%	 	2.87	%	 	3.10	%	
 	Copper	 	 	0.45	%	 	0.52	%	 	0.62	%	 	06.60	%	 	0.55	%	
Recovery rates:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Gold	 	 	91.66	%	 	90.62	%	 	91.60	%	 	91.79	%	 	91.41	%	
 	Silver	 	 	83.80	%	 	80.80	%	 	79.79	%	 	85.80	%	 	82.60	%	
 	Zinc	 	 	78.20	%	 	77.80	%	 	75.00	%	 	81.60	%	 	78.20	%	
 	Copper	 	 	79.10	%	 	79.20	%	 	79.90	%	 	82.50	%	 	80.30	%	
Payable production:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Gold (ounces)	 	 	55,005	 	 	60,157	 	 	51,192	 	 	70,299	 	 	236,653	 	
 	Silver (ounces in thousands)	 	 	1,036	 	 	1,049	 	 	648	 	 	1,220	 	 	3,953	 	
 	Zinc (pounds in thousands)	 	 	27,964	 	 	27,080	 	 	20,561	 	 	24,732	 	 	100,337	 	
 	Copper (pounds in thousands)	 	 	3,956	 	 	5,015	 	 	5,411	 	 	5,749	 	 	20,131	 	
Realized prices (US$):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Gold (per ounce)	 	$	350	 	$	349	 	$	365	 	$	395	 	$	368	 	
 	Silver (per ounce)	 	$	4.70	 	$	4.57	 	$	5.04	 	$	5.27	 	$	5.07	 	
 	Zinc (per pound)	 	$	0.35	 	$	0.35	 	$	0.37	 	$	0.43	 	$	0.38	 	
 	Copper (per pound)	 	$	0.76	 	$	0.73	 	$	0.80	 	$	0.94	 	$	0.82	 	
Total production costs per gold ounce produced (US$):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Onsite operating costs (including reclamation provision)	 	$	378	 	$	371	 	$	451	 	$	372	 	$	390	 	
Less: Reclamation provision	 	 	(2	)	 	(2	)	 	(2	)	 	(3	)	 	(2	)	
 	Net byproduct revenues	 	 	(207	)	 	(161	)	 	(140	)	 	(189	)	 	(173	)	

Cash operating costs	

169	

208	

309	

180	

215	
 	
El Coco royalty	 	 	74	 	 	50	 	 	59	 	 	40	 	 	54	 	

Total cash operating costs	
 	
$	
243	

258	
 	
$	
368	
 	
$	
220	
 	
$	
269	
 	
Other costs:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Reclamation provision	 	 	2	 	 	2	 	 	2	 	 	3	 	 	2	 	
 	Amortization	 	 	82	 	 	80	 	 	87	 	 	53	 	 	74	 	
 	 		 		 		 		 		 	
Total production costs	 	$	327	 	$	340	 	$	457	 	$	276	 	$	345	 	
 	 		 		 		 		 		 	
Onsite operating costs per ton milled (Canadian dollars)	 	$	52	 	$	48	 	$	56	 	$	54	 	$	52	 	

*
Operating cash flow (before non-cash working capital) is not a recognized measure under US GAAP and this data may not be comparable to data presented by other companies. This measure is calculated by subtracting changes in non-cash working capital balances from cash provided by operating activities as shown on the Statement of Cash Flows. This measure is intended to provide investors with information about the cash generating capabilities of the Company's mining operations. Management uses this measure for the same purpose and for monitoring whether its operations are generating sufficient cash flows to fund current and future growth initiatives. Management believes this measure is helpful disclosure for investors as it removes the period-to-period fluctuations inherent in working capital changes. Changes in non-cash working capital balances for the three months ended March 31, 2003, June 30, 2003, September 30, 2003 and December 31, 2003 and the year ended December 31, 2003 were $(1,189), $3,455, $(7,341), $4,774 and $(301), respectively.
18

 
 
 AGNICO-EAGLE MINES LIMITED

Summarized Quarterly Data

(thousands of United States dollars, except where noted)

 	 	March 31,
2002
	 	June 30,
2002
	 	September 30,
2002
	 	December 31,
2002
	 	Total
2002
	 	
Consolidated Financial Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

Income and cash flows	

 	

 	

 	

 	

 	
 	
LaRonde Division	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations	 	$	25,547	 	$	30,616	 	$	20,224	 	$	31,640	 	$	108,027	 	
Production costs	 	 	17,603	 	 	19,613	 	 	15,460	 	 	23,293	 	 	75,969	 	
 	 		 		 		 		 		 	
Gross profit (exclusive of amortization shown below)	 	$	7,944	 	$	11,003	 	$	4,764	 	$	8,347	 	$	32,058	 	
Amortization	 	 	3,251	 	 	3,678	 	 	3,313	 	 	2,756	 	 	12,998	 	
 	 		 		 		 		 		 	
Gross profit	 	 	4,693	 	 	7,325	 	 	1,451	 	 	5,591	 	 	19,060	 	
 	 		 		 		 		 		 	
Net income (loss) for the period	 	$	477	 	$	3,360	 	$	(630	)	$	816	 	$	4,023	 	
Net income (loss) per share (basic and fully diluted)	 	$	0.01	 	$	0.05	 	$	(0.01	)	$	0.01	 	$	0.06	 	
Operating cash flow	 	$	(7,057	)	$	15,867	 	$	8,301	 	$	(3,999	)	$	13,112	 	
Operating cash flow (before non-cash working capital)*	 	$	4,972	 	$	7,633	 	$	2,343	 	$	5,416	 	$	20,364	 	
Weighted average number of common shares outstanding (in thousands)	 	 	68,006	 	 	69,050	 	 	69,549	 	 	76,676	 	 	70,821	 	
Tons of ore milled	 	 	477,333	 	 	491,083	 	 	456,818	 	 	537,895	 	 	1,963,129	 	
Head grades:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Gold (ounces per ton)	 	 	0.14	 	 	0.17	 	 	0.13	 	 	0.14	 	 	0.14	 	
 	Silver (ounces per ton)	 	 	2.52	 	 	2.28	 	 	2.25	 	 	2.32	 	 	2.35	 	
 	Zinc	 	 	5.24	%	 	3.64	%	 	4.01	%	 	3.74	%	 	4.14	%	
 	Copper	 	 	0.22	%	 	0.30	%	 	0.31	%	 	0.50	%	 	0.34	%	
Recovery rates:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Gold	 	 	94.54	%	 	92.92	%	 	92.43	%	 	92.97	%	 	93.14	%	
 	Silver	 	 	83.70	%	 	80.10	%	 	77.60	%	 	80.60	%	 	80.60	%	
 	Zinc	 	 	84.90	%	 	81.40	%	 	67.20	%	 	78.00	%	 	78.40	%	
 	Copper	 	 	60.30	%	 	74.40	%	 	63.60	%	 	80.30	%	 	71.40	%	
Payable production:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Gold (ounces)	 	 	60,259	 	 	74,617	 	 	50,073	 	 	75,235	 	 	260,184	 	
 	Silver (ounces in thousands)	 	 	724	 	 	709	 	 	547	 	 	1,104	 	 	3,084	 	
 	Zinc (pounds in thousands)	 	 	35,997	 	 	24,740	 	 	20,713	 	 	26,610	 	 	108,060	 	
 	Copper (pounds in thousands)	 	 	1,131	 	 	2,084	 	 	1,728	 	 	3,984	 	 	8,927	 	
Realized prices (US$):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Gold (per ounce)	 	$	300	 	$	310	 	$	314	 	$	318	 	$	312	 	
 	Silver (per ounce)	 	$	4.48	 	$	4.67	 	$	4.73	 	$	4.51	 	$	4.61	 	
 	Zinc (per pound)	 	$	0.36	 	$	0.36	 	$	0.37	 	$	0.34	 	$	0.34	 	
 	Copper (per pound)	 	$	0.72	 	$	0.78	 	$	0.74	 	$	0.71	 	$	0.70	 	
Total production costs per gold ounce produced (US$):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Onsite operating costs (including reclamation provision)	 	$	258	 	$	219	 	$	304	 	$	244	 	$	253	 	
Less: Reclamation provision	 	 	(5	)	 	(5	)	 	(5	)	 	(5	)	 	(5	)	
Net byproduct revenues	 	 	(124	)	 	(90	)	 	(102	)	 	(111	)	 	(107	)	

Cash operating costs	

129	

124	

197	

128	

141	
 	
El Coco royalty	 	 	32	 	 	40	 	 	11	 	 	70	 	 	41	 	
 	 		 		 		 		 		 	
Total cash operating costs	 	$	161	 	$	164	 	$	208	 	$	198	 	$	182	 	
Other costs:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Reclamation provision	 	 	5	 	 	5	 	 	5	 	 	5	 	 	5	 	
 	Amortization	 	 	54	 	 	49	 	 	66	 	 	37	 	 	50	 	
 	 		 		 		 		 		 	
Total production costs	 	$	220	 	$	218	 	$	279	 	$	240	 	$	237	 	
 	 		 		 		 		 		 	
Onsite operating costs per ton milled (Canadian dollars)	 	$	52	 	$	52	 	$	51	 	$	53	 	$	52	 	

*
Operating cash flow (before non-cash working capital) is not a recognized measure under US GAAP and this data may not be comparable to data presented by other companies. This measure is calculated by subtracting changes in non-cash working capital balances from cash provided by operating activities as shown on the Statement of Cash Flows. This measure is intended to provide investors with information about the cash generating capabilities of the Company's mining operations. Management uses this measure for the same purpose and for monitoring whether its operations are generating sufficient cash flows to fund current and future growth initiatives. Management believes this measure is helpful disclosure for investors as it removes the period-to-period fluctuations inherent in working capital changes. Changes in non-cash working capital balances for the three months ended March 31, 2002, June 30, 2002, September 30, 2002 and December 31, 2002 and the year ended December 31, 2003 were $12,029, $(8,234), $(5,958), $9,415 and $7,252, respectively.
19

 
 AGNICO-EAGLE MINES LIMITED

Five Year Financial and Operating Summary

(thousands of United States dollars, except where noted)

 	 	2003
	 	2002
	 	2001
	 	2000
	 	1999
	 	
Financial Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations	 	$	126,820	 	$	108,027	 	$	96,043	 	$	63,676	 	$	23,392	 	
Interest and sundry income	 	 	2,775	 	 	1,943	 	 	5,752	 	 	2,145	 	 	(5,519	)	

 	

129,595	

109,970	

101,795	

65,821	

17,873	
 	
Costs and expenses	 	 	147,708	 	 	105,359	 	 	104,651	 	 	76,595	 	 	49,958	 	

Income (loss) before income taxes	

(18,113	
)	
 	
4,611	

(2,856	
)	
 	
(10,774	
)	
 	
(32,085	
)	
Income and mining taxes expense (recovery)	 	 	(358	)	 	(588	)	 	2,862	 	 	(3,906	)	 	(13,016	)	

Income (loss) before cumulative catch-up adjustment	

(17,755	
)	
 	
4,023	

(5,718	
)	
 	
(6,868	
)	
 	
(19,069	
)	
Cumulative catch-up adjustment relating to FAS 143	 	 	(1,743	)	 	—	 	 	—	 	 	—	 	 	—	 	

Net income (loss)	
 	
$	
(19,498	
)	
$	
4,023	
 	
$	
(5,718	
)	
$	
(6,868	
)	
$	
(19,069	
)	

Net income (loss) per share	
 	
$	
(0.23	
)	
$	
0.06	
 	
$	
(0.09	
)	
$	
(0.12	
)	
$	
(0.36	
)	
Operating cash flow (before non-cash working capital)*	 	$	3,952	 	$	20,364	 	$	12,424	 	$	6,530	 	$	13,570	 	
Operating cash flow	 	$	4,253	 	$	13,112	 	$	(4,179	)	$	2,587	 	$	(1,473	)	
Dividends declared per share	 	$	0.03	 	$	0.03	 	$	0.02	 	$	0.02	 	$	0.02	 	
Capital expenditures	 	$	42,038	 	$	64,836	 	$	36,278	 	$	69,640	 	$	68,892	 	
Average gold price per ounce realized	 	$	368	 	$	312	 	$	273	 	$	278	 	$	274	 	
Average exchange rate — US$ per C$	 	$	0.7137	 	$	0.6368	 	$	0.6458	 	$	0.6723	 	$	0.6725	 	
Weighted average number of common shares outstanding (in thousands)	 	 	83,889	 	 	70,821	 	 	61,334	 	 	54,447	 	 	53,331	 	
Working capital (including undrawn credit lines)	 	$	240,613	 	$	285,142	 	$	135,908	 	$	49,733	 	$	106,941	 	
Total assets	 	$	637,101	 	$	593,807	 	$	393,464	 	$	64,333	 	$	297,015	 	
Long-term debt	 	$	143,750	 	$	143,750	 	$	151,081	 	$	186,261	 	$	131,458	 	
Shareholders' equity	 	$	400,723	 	$	397,693	 	$	198,426	 	$	118,585	 	$	118,658	 	

Operating Summary	

 	

 	

 	

 	

 	

LaRonde Division	

 	

 	

 	

 	

 	
 	
Revenues from mining operations	 	$	126,820	 	$	108,027	 	$	96,043	 	$	63,676	 	$	21,561	 	
Production costs	 	 	104,990	 	 	75,969	 	 	67,009	 	 	49,997	 	 	28,447	 	

Gross profit (loss) (exclusive of amortization shown below)	
 	
$	
21,830	
 	
$	
32,058	
 	
$	
29,034	
 	
$	
13,679	
 	
$	
(6,886	
)	
Amortization	 	 	17,504	 	 	12,998	 	 	12,658	 	 	9,220	 	 	5,463	 	
 	 		 		 		 		 		 	
Gross profit (loss)	 	 	4,326	 	 	19,060	 	 	16,376	 	 	4,459	 	 	12,349	 	
 	 		 		 		 		 		 	
Tons of ore milled	 	 	2,448,580	 	 	1,963,129	 	 	1,805,249	 	 	1,415,888	 	 	798,396	 	
Gold — ounces per ton	 	 	0.11	 	 	0.14	 	 	0.15	 	 	0.14	 	 	0.13	 	
Gold production — ounces	 	 	236,653	 	 	260,184	 	 	234,860	 	 	173,852	 	 	90,035	 	
Silver production — ounces (in thousands)	 	 	3,953	 	 	3,084	 	 	2,524	 	 	1,128	 	 	277	 	
Zinc production — pounds (in thousands)	 	 	100,337	 	 	108,060	 	 	126,275	 	 	50,681	 	 	9,778	 	
Copper production — pounds (in thousands)	 	 	20,131	 	 	8,927	 	 	4,097	 	 	4,943	 	 	3,282	 	

Total production costs per gold ounce produced (US$):	

 	

 	

 	

 	

 	
 	
Onsite operating costs (including reclamation provision)	 	$	390	 	$	253	 	$	257	 	$	294	 	$	334	 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Reclamation provision	 	 	(2	)	 	(5	)	 	(5	)	 	(3	)	 	(4	)	
 	Net byproduct revenues	 	 	(173	)	 	(107	)	 	(120	)	 	(103	)	 	(53	)	

Cash operating costs	

215	

141	

132	

188	

277	
 	
El Coco royalty	 	 	54	 	 	41	 	 	23	 	 	—	 	 	—	 	

Total cash operating costs	
 	
$	
269	
 	
$	
182	
 	
$	
155	
 	
$	
188	
 	
$	
277	
 	
Other costs:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Reclamation provision	 	 	2	 	 	5	 	 	5	 	 	3	 	 	4	 	
 	Amortization	 	 	74	 	 	50	 	 	45	 	 	33	 	 	61	 	

Total production costs	
 	
$	
345	
 	
$	
237	
 	
$	
205	
 	
$	
224	
 	
$	
342	

Onsite operating costs per ton milled (Canadian dollars)	 	$	52	 	$	52	 	$	52	 	$	54	 	$	56	 	

Gold reserves and resources:	

 	

 	

 	

 	

 	
 	
Total Proven and Probable Reserves (thousands, ounces of gold)	 	 	7,864	 	 	4,022	 	 	3,267	 	 	3,256	 	 	3,016	 	

*
Operating cash flow (before non-cash working capital) is not a recognized measure under US GAAP and this data may not be comparable to data presented by other companies. This measure is calculated by subtracting changes in non-cash working capital balances from cash provided by operating activities as shown on the Statement of Cash Flows. This measure is intended to provide investors with information about the cash generating capabilities of the Company's mining operations. Management uses this measure for the same purpose and for monitoring whether its operations are generating sufficient cash flows to fund current and future growth initiatives. Management believes this measure is helpful disclosure for investors as it removes the period-to-period fluctuations inherent in working capital changes. Changes in non-cash working capital balances for the years ended December 31, 1999, 2000, 2001, 2002 and 2003 was $(301), $7,252, $16,603, $3,943 and $(12,097), respectively.
20

 Agnico-Eagle Mineral Reserve & Mineral Resource Data

Category and Zone
	 	Au(oz/t)
	 	Ag(oz/t)
	 	Cu(%)
	 	Zn(%)
	 	Au (000's oz.)
	 	Tons (000's)
	
Proven Mineral Reserve	 	 	 	 	 	 	 	 	 	 	 	 	
LaRonde	 	0.09	 	2.49	 	0.42	 	4.24	 	638	 	6,848	
Bousquet	 	0.09	 	 	 	 	 	 	 	9	 	104	
 	 	 	 	 	 	 	 	 	 		 		
Subtotal Proven Mineral Reserve	 	0.09	 	 	 	 	 	 	 	647	 	6,952	
 	 	 	 	 	 	 	 	 	 		 		
Probable Mineral Reserve	 	 	 	 	 	 	 	 	 	 	 	 	
LaRonde	 	0.13	 	1.47	 	0.31	 	2.32	 	4,383	 	34,754	
Lapa	 	0.25	 	 	 	 	 	 	 	1,187	 	4,661	
Goldex	 	0.07	 	 	 	 	 	 	 	1,647	 	23,983	
 	 	 	 	 	 	 	 	 	 		 		
Subtotal Probable Mineral Reserve	 	0.11	 	 	 	 	 	 	 	7,217	 	63,938	
 	 	 	 	 	 	 	 	 	 		 		
Total Proven and Probable Mineral Reserves	 	0.11	 	 	 	 	 	 	 	7,864	 	70,350	

Category and Zone

Au(oz/t)

Ag(oz/t)

Cu(%)

Zn(%)

Tons (000's)
	
Measured & Indicated Mineral Resource	 	 	 	 	 	 	 	 	 	 	
LaRonde	 	0.09	 	0.70	 	0.27	 	1.10	 	3,716	
Goldex	 	0.08	 	 	 	 	 	 	 	1,174	
Lapa	 	0.16	 	 	 	 	 	 	 	705	
Bousquet	 	0.16	 	 	 	 	 	 	 	1,608	
Ellison	 	0.16	 	 	 	 	 	 	 	249	
 	 	 	 	 	 	 	 	 	 		
Total Measured & Indicated Resource	 	0.11	 	 	 	 	 	 	 	7,452	

Category and Zone

Au(oz/t)

Ag(oz/t)

Cu(%)

Zn(%)

Tons (000's)
	
Inferred Mineral Resource	 	 	 	 	 	 	 	 	 	 	
LaRonde	 	0.19	 	1.15	 	0.35	 	0.94	 	15,294	
Bousquet	 	0.27	 	 	 	 	 	 	 	2,445	
Goldex	 	0.06	 	 	 	 	 	 	 	2,797	
Lapa	 	0.18	 	 	 	 	 	 	 	324	
Ellison	 	0.29	 	 	 	 	 	 	 	1,692	
 	 	 	 	 	 	 	 	 	 		
Total Inferred Resource	 	0.19	 	 	 	 	 	 	 	22,552	
 	 	 	 	 	 	 	 	 	 		
        A qualified person, Guy Gosselin, P.Eng., P.Geo., LaRonde Division's Chief Geologist, has verified the LaRonde exploration information disclosed above. The verification procedures, the quality assurance program and quality control procedures used in preparing such data may be found in the 2004 Mineral Resource and Mineral Reserve Report, Agnico-Eagle Mines Limited, LaRonde Division, dated November 15, 2004, filed on SEDAR.
        Agnico-Eagle Mines Limited is reporting mineral resource and reserve estimates in accordance with the CIM guidelines for the estimation, classification and reporting of resources and reserves. The effective date of each estimate is December 31, 2003. More recent information on exploration, mining, processing, metallurgy and other economic factors has also been used. The estimates disclosed in this report are based on the following key metal price assumptions and foreign exchange rates: gold, $325/oz; silver, $5.00/oz; copper $0.80/lb; zinc $0.50/lb; US$/C$=1.40. There are no known relevant issues that would materially affect the estimates. No independent verification of the data has been published.
        Tonnage amounts and contained metal amounts presented in the tables in this report have been rounded to the nearest 1,000.
        A mineral reserve is the economically mineable part of a measured or indicated resource demonstrated by a preliminary feasibility study or a feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allows for losses that may occur when the material is mined. A proven mineral reserve is the economically mineable part of a measured
21

resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. A probable mineral reserve is the economically mineable part of an indicated mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.
        A mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonable assumed. An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
        The qualified person responsible for the LaRonde II, Lapa and Goldex pre-feasibility studies is Rosaire Émond P.Eng., Regional Project Division's Senior Mining Engineer.
        The qualified person responsible for the LaRonde mineral reserve and resource estimate is Guy Gosselin, P.Eng, P.Geo., LaRonde Division's Chief Geologist. A description of the operating and capital cost assumptions, parameters and methods used to estimate the Penna shaft can be found in the LaRonde Division SEDAR disclosure cited above. Recently disclosed probable reserves, located between 9,200 ft and 9,850 ft depth, are estimated using a grade cut-off equivalent to a minimum net smelter return of $42.90/ton.
        The qualified person responsible for the Lapa and Goldex mineral reserve and resource estimates is Marc H. Legault, P.Eng., Manager, Project Evaluations of Agnico-Eagle.
        The minimum gold grade cut-off used to evaluate drill intercepts at Goldex was 0.04 oz/ton over a minimum true thickness of 50 feet. The reserve was derived by evaluating a three-dimensional model of the Goldex Extension zone, whose gold grade was estimated using a 95% confidence interval grade calculation method, and then adjusting the model envelope to only include sectors with a high probability of exceeding the cut-off grade.
        In estimating the Lapa resource and reserve, a minimum gold grade cut-off of 0.15 and 0.19 oz/ton, respectively was used to evaluate drill intercepts that have been adjusted to respect a minimum mining width of 9.2 ft. The estimate was derived using a three dimensional block model of the deposit; the grades were interpolated using the inverse distance power squared method.
        The qualified person responsible for the Bousquet and Ellison mineral reserve and resource estimates is Normand Bédard P.Geo., Regional Project Division's Senior Geologist. In estimating the Bousquet and Ellison mineral resource and reserve, a minimum gold grade cut-off of 0.09 oz/ton was used to evaluate drill intercepts that have been adjusted to respect a minimum mining width of 9.8 ft. The estimate was derived using a combination of three dimensional block modeling (grades were interpolated using the inverse distance power squared method) for certain zones and for the other zones, by the polygonal method on longitudinal sections. A portion of the resource estimate is based on estimates reported when the Bousquet I mine closed in 1996. The resource was reviewed and reclassified using the CIM definitions and guidelines. This information is of a good quality and is considered reliable.
22

 
 ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Management's Responsibility for Financial Reporting

AGNICO-EAGLE MINES LIMITED
        The accompanying financial statements of Agnico-Eagle Mines Limited and all the information in this annual report are the responsibility of management and have been approved by the Board of Directors.
        The consolidated financial statements have been prepared by management in accordance with United States generally accepted accounting principles. Where alternative accounting methods exist, management has selected those it considered to be the most appropriate in the circumstances. The consolidated financial statements are not precise, since they include amounts based on estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the consolidated financial statements are presented fairly, in all material respects. Management has prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with that in the consolidated financial statements.
        Agnico-Eagle Mines Limited maintains systems of internal accounting and administrative controls of high quality, consistent with reasonable cost. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the Company's assets are appropriately accounted for and adequately safeguarded.
        The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board of Directors carries out this responsibility principally through its Audit Committee.
        The Audit Committee is appointed by the Board of Directors and all of its members are independent directors. The Audit Committee meets periodically with management, as well as the external auditors, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues, to satisfy itself that each party is properly discharging its responsibilities, and to review the annual report, the consolidated financial statements and the external auditors' report. The Audit Committee reports its findings to the Board of Directors for consideration when approving the consolidated financial statements for issuance to the shareholders.
        The Audit Committee also considers, for review by the Board of Directors and approval by the shareholders, the engagement or re-appointment of the external auditors.
        The consolidated financial statements have been audited by Ernst & Young LLP, the external auditors, in accordance with Canadian generally accepted auditing standards and United States generally accepted auditing standards on behalf of the shareholders. Ernst & Young LLP has full and free access to the Audit Committee.

Sean Boyd, C.A.	 	David Garofalo, C.A.	
President and
Chief Executive Officer	 	Vice President, Finance and
Chief Financial Officer	
Toronto, Canada,
February 24, 2004.
23

 
 Auditors' Report
To the Shareholders of Agnico-Eagle Mines Limited:
        We have audited the consolidated balance sheet of Agnico-Eagle Mines Limited as at December 31, 2003 and 2002 and the consolidated statements of income (loss) and comprehensive income (loss), shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
        We conducted our audits in accordance with Canadian generally accepted auditing standards and United States generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
        In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2003 and 2002 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2003 in accordance with United States generally accepted accounting principles.
        We also reported separately on February 24, 2004 to the shareholders of Agnico-Eagle Mines Limited on our audit conducted in accordance with Canadian generally accepted auditing standards and United States generally accepted auditing standards, where we expressed an opinion without reservation on the December 31, 2003 and 2002 consolidated financial statements, prepared in accordance with Canadian generally accepted accounting principles.
        As described in the "Summary of Significant Accounting Policies — Reclamation costs and Stock-based compensation", the Company changed its method of (i) accounting for reclamation costs effective January 1, 2003; and (ii) accounting for stock-based compensation effective January 1, 2003.

Ernst & Young LLP
Chartered Accountants
Toronto, Canada,
February 24, 2004.
24

 
 AGNICO-EAGLE MINES LIMITED
Summary Of Significant Accounting Policies
        These consolidated financial statements of Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") are expressed in thousands of United States dollars ("US dollars"), except where noted, and have been prepared in accordance with United States generally accepted accounting principles ("US GAAP"). We have also prepared consolidated financial statements in accordance with Canadian generally accepted accounting principles. Since a precise determination of assets and liabilities depends on future events, the presentation of consolidated financial statements for a period necessarily involves the use of estimates and approximations. Actual results may differ from such estimates and approximations. The consolidated financial statements have, in management's opinion, been prepared within reasonable limits of materiality and within the framework of the significant accounting policies referred to below.
Basis of consolidation
        These consolidated financial statements include the accounts of the Company and all its subsidiaries. Prior to October 15, 2001, Agnico-Eagle consolidated its 49.5% direct and indirect ownership interest in Mentor Exploration and Development Co., Limited ("Mentor") on the basis of the Company's ability to determine its strategic operating, investing and financing policies. Effective October 15, 2001, Mentor was amalgamated with the Company under a court approved plan of arrangement to continue as Agnico-Eagle Mines Limited.
        The cost of the Company's own shares held by Mentor had been presented in the consolidated balance sheets as a reduction of shareholders' equity. Changes in the Company's own shares held by a subsidiary company resulted from purchases and sales of Agnico-Eagle shares by Mentor.
        Agnico-Eagle recognizes gains and losses on the effective disposition of interests in associated companies arising when such associated companies issue treasury shares to third parties. Gains are recognized in income only if there is reasonable assurance of realization, otherwise they are recorded within accumulated other comprehensive loss.
        As a result of issuances of stock by its subsidiary company, Sudbury Contact Mines Limited ("Sudbury Contact"), the Company's interest in Sudbury Contact has been diluted to below 50% during the year. The Company therefore no longer consolidates the results of Sudbury but accounts for its investment using the equity method of accounting. The Company reports its share of losses in Sudbury Contact as a separate line item in the consolidated financial statements. The Company began using the equity method to account for its interest in Sudbury Contact on September 1, 2003.
Cash and cash equivalents
        Cash and cash equivalents include cash on hand and short-term investments in money market instruments with original maturities of three months or less at the date of purchase. Short-term investments are carried at cost, which approximates market value.
Inventories
        Inventories consist of ore stockpiles, in-process inventories and supplies.
Stockpiles
        Stockpiles consist of coarse ore that has been mined and hoisted from underground and is available for further processing and in-stope ore inventory in the form of drilled and blasted stopes ready to be mucked and hoisted to the surface. The stockpiles are measured by estimating the number of tons, contained ounces (based on assays) and recovery percentages (based on actual recovery rates achieved for processing similar ore). Specific tonnages are verified and compared to original estimates once the stockpile is milled. The ore stockpile is valued at the lower of net realizable value and mining costs incurred up to the point of stockpiling the ore. The net realizable value of stockpiled ore is assessed by comparing the sum of the carrying value plus future processing and selling costs to the expected revenue to be earned, which is based on the estimated volume and grade of stockpiled material.
25

        Mining costs include all costs associated with underground mining operations and are allocated to each ton of stockpile. Fully absorbed costs include direct and indirect materials and consumables; direct labor; repairs and maintenance; utilities; amortization of mining assets incurred up to the point of stockpiling the ore; and local mine administrative expenses. Royalty expenses and production taxes are included in production costs, but are not capitalized into inventory. Stockpiles are not intended to be long-term inventory items and therefore are generally processed within twelve months of extraction. The decision to process stockpiled ore is based on a net smelter return analysis. The Company processes its stockpiled ore if its estimated revenue, on a per ton basis and net of estimated smelting and refining costs, is greater than the related mining and milling costs. The Company has never elected to not process stockpiled ore and does not anticipate departing from this practise in the future. Stockpiled ore on the surface is exposed to the elements, but the Company does not expect its condition to deteriorate significantly.
In-Process Inventories
        In-process inventories consist of concentrates for which legal title has not yet passed to custom smelters. In-process inventories are measured based on assays of the processed concentrates and are valued based on the lower of net realizable value and the fully absorbed mining and milling costs associated with extracting and processing the ore.
Supplies
        Supplies, consisting of mine stores inventory, are valued at the lower of average cost and replacement cost.
Deferred financing costs
        Deferred financing costs, which are included in other assets on the consolidated balance sheet and relate to the issuance of the senior convertible debentures and the Company's revolving credit facility, are being amortized to income over the term of the related obligations. If the holders of the Company's convertible debentures exercise their conversion option, the common shares issued on such conversion will be recorded at an amount equal to the aggregate of the carrying value of the long-term liability, net of the associated financing costs, with no gain or loss being recognized in income.
Mining properties, plant and equipment and mine development costs
        Significant payments related to the acquisition of land and mineral rights are capitalized as mining properties at cost. If a mineable ore body is discovered, such costs are amortized to income when production begins, using the unit-of-production method, based on estimated proven and probable reserves. If no mineable ore body is discovered, such costs are expensed in the period in which it is determined the property has no future economic value.
        Expenditures for new facilities and improvements that can extend the useful lives of existing facilities are capitalized as plant and equipment at cost. Interest costs incurred prior to the commencement of commercial production for projects specifically financed by debt are capitalized.
        Mine development costs incurred after the commencement of production are capitalized or deferred to the extent that these costs benefit the entire ore body. Costs incurred to access single ore blocks are expensed as incurred; otherwise, such vertical and horizontal developments are classified as mine development costs.
        Agnico-Eagle records depreciation on both plant and equipment and mine development costs used in commercial production on a unit-of-production basis based on the estimated proven and probable ore reserves of the mine, which does not exceed 20 years. The unit-of-production method defines the denominator as the total proven and probable tons of reserves. A unit for the purposes of the unit-of-production method is a ton of ore. A unit is considered "produced" for the purposes of recording amortization when the ton of ore has been mined.
        Repairs and maintenance expenditures are charged to income as production costs. Assets under construction are not depreciated until the end of the construction period. Upon commencement of commercial production, the capitalized construction costs are transferred to the various categories of plant and equipment.
26

        Mineral exploration costs are charged to income in the year in which they are incurred. When it is determined that a mining property can be economically developed as a result of established proven and probable reserves, the costs of further exploration and development to further delineate the orebody on such property are capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies, which indicate whether a property is economically feasible. Upon commencement of the commercial production of a development project, these costs are transferred to the appropriate asset category and are amortized to income using the unit-of-production method mentioned above. Mine development costs, net of salvage values, relating to a property which is abandoned or considered uneconomic for the foreseeable future, are written off.
        The carrying values of mining properties, plant and equipment and mine development costs are reviewed periodically, when impairment factors exist, for possible impairment, based on the future undiscounted net cash flows of the operating mine and development property. If it is determined that the estimated net recoverable amount is less than the carrying value, then a write down to the estimated fair value amount is made with a charge to income. Estimated future cash flows of an operating mine and development properties include estimates of recoverable ounces of gold based on the proven and probable reserves of the mine, gold prices (considering current and historical prices, price trends and related factors), production levels, capital and reclamation costs, and related income and mining taxes, all based on detailed engineering life-of-mine plans. Cash flows are subject to risks and uncertainties and changes in the estimates of the cash flows could affect the recoverability of long-lived assets.
Financial Instruments
        Agnico-Eagle employs derivative financial instruments, primarily option contracts, to manage exposure to fluctuations in metal prices and foreign currency exchange rates. Agnico-Eagle does not hold financial instruments or derivative financial instruments for trading purposes.
        As a result of adopting United States Financial Accounting Standards Board ("FASB") Statement No. 133, " Accounting for Derivative Instruments and Hedging Activities " ("FAS 133"), the Company recognizes all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are either recognized periodically in income or in shareholders' equity as a component of other comprehensive loss depending on whether the derivative financial instrument qualifies for hedge accounting. Currently, the Company's gold put option and foreign exchange contracts qualify for hedge accounting and changes in the fair value of these derivative financial instruments are recognized as a component of accumulated other comprehensive loss. Changes in the fair value of all other derivative financial instruments are recognized in income.
Revenue recognition
        Revenue is recognized when the following conditions are met:
(a)
persuasive evidence of an arrangement to purchase exists;

(b)
the price is determinable;

(c)
the product has been delivered; and

(d)
collection of the sales price is reasonably assured.
        Revenue from gold and silver in the form of dore bars is recorded when the refined gold and silver is sold. Generally all the gold and silver in the form of dore bars recovered in the Company's milling process is sold in the period in which it is produced.
        Under the terms of the Company's concentrate sales contracts with third-party smelters, final prices for the gold, silver, zinc and copper in the concentrate are set based on the prevailing spot market metal prices on a specified future date based on the date that the concentrate is delivered to the smelter. The Company records revenues under these contracts based on forward prices at the time of delivery, which is when transfer of legal title to concentrate passes to the third-party smelters. The terms of the contracts result in differences between
27

the recorded estimated price at delivery and the final settlement price. These differences are adjusted through revenue at each subsequent financial statement date.
        Revenues from mining operations consist of gold revenues, net of smelting, refining and other marketing charges. Revenues from by-product sales are shown net of smelter charges as part of Revenues from mining operations.
Foreign currency translation
        The functional currency for the Company's operations is the US dollar. Monetary assets and liabilities of Agnico-Eagle's operations denominated in a currency other than US dollars are translated into US dollars using the exchange rate in effect at the year end. Non-monetary assets and liabilities are translated at historical exchange rates while revenues and expenses are translated at the average exchange rate during the year, with the exception of amortization, which is translated at historical exchange rates. Exchange gains and losses are included in income except for gains and losses on foreign currency contracts used to hedge specific future commitments in foreign currencies. Gains and losses on these contracts are accounted for as a component of the related hedged transactions.
Reclamation costs
        Effective January 1, 2003, the Company adopted the provisions of FASB Statement No. 143 ("FAS 143") related to asset retirement obligations. FAS 143 applies to legal obligations resulting from the construction, development and operation of long-lived assets, such as mining assets. This standard requires companies to recognize the present value of reclamation costs as a liability in the period the legal obligation is incurred. The Company estimated the final reclamation provision taking into account current circumstances such as projected mine life at the end of 2003 and current throughput. Subsequent revisions to the final reclamation estimate could result from legislative changes or changes in the underlying assumptions — such as life-of-mine.
        For periods prior to January 1, 2003, estimated future reclamation costs were based primarily on legal, environmental and regulatory requirements. Future reclamation costs for the Company's inactive mines were accrued based on management's best estimate of the costs at the end of each period, comprising costs expected to be incurred at a site, on an undiscounted basis. Such cost estimates included, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates were reflected in income in the period an estimate was revised.
Income and mining taxes
        Agnico-Eagle follows the liability method of tax allocation for accounting for income taxes. Under this method of tax allocation, future income and mining tax bases of assets and liabilities are measured using the substantively enacted tax rates and laws expected to be in effect when the differences are expected to reverse.
        From time to time, the Company issues flow-through shares to finance some of its exploration activities. Common shares of the Company are issued for cash at the market price in exchange for Agnico-Eagle giving up the tax benefits arising from the exploration activities. Agnico-Eagle records such common share issuances by crediting share capital for the full value of cash consideration received. The cost of the future income and mining tax benefits arising at the time Agnico-Eagle renounces the income and mining tax deductibility of the eligible expenditures to the investors are accounted for as a share issue cost.
Stock-based compensation
        Agnico-Eagle has two stock-based compensation plans. The Employee Stock Option Plan is described in note 7(a) and the Incentive Share Purchase Plan is described in note 7(b) to the consolidated financial statements.
        In 2003, the Company prospectively adopted Statement of Financial Accounting Standard ("FAS") 123, "Accounting for Stock-Based Compensation" as amended by FAS 148, "Accounting for Stock-Based Compensation — Transition and Disclosure". These accounting standards recommend the expensing of stock option grants after January 1, 2003. The standards recommend that the fair value of stock options be recognized
28

in income over the applicable vesting period as a compensation expense. Any consideration paid by employees on exercise of stock options or purchase of stock is credited to share capital.
        Prior to 2003, the Company accounted for its stock option grants based on the recognition and measurement principles of Accounting Principles Board Opinion No. 25 and related interpretations. The application of Opinion No. 25 resulted in no compensation expense being recorded, in Agnico-Eagle's circumstances, as all options granted had an exercise price equal to the market value of the underlying stock on the date of grant (intrinsic value method). Pro forma fair value disclosures assumed that the estimated fair value of options would be amortized to expense over the options' vesting period.
Pension costs and obligations and post-retirement benefits
        Prior to July 1, 1997, Agnico-Eagle had a defined benefit plan for its salaried employees, which was substantially converted to a defined contribution plan. In addition, Agnico-Eagle provides a non-registered supplementary executive retirement defined benefit plan for its senior officers. The executive retirement plan benefits are generally based on the employees' years of service and level of compensation. Pension expense related to the defined benefit plan is the net of the cost of benefits provided, the interest cost of projected benefits, return on plan assets and amortization of experience gains and losses. Pension fund assets are measured at current fair values. Actuarially determined plan surpluses or deficits, experience gains or losses and the cost of pension plan improvements are amortized on a straight-line basis over the expected average remaining service life of the employee group.
        Agnico-Eagle maintains a defined contribution plan covering all of its employees. The plan is funded by Company contributions based on a percentage of income for services rendered by employees.
        The Company does not offer any post-retirement benefits to its employees.
Comparative figures
        Certain items in the comparative financial statements have been reclassified from statements previously presented to conform to the presentation of the 2003 consolidated financial statements.
29

 
 AGNICO-EAGLE MINES LIMITED

Consolidated Balance Sheet

(thousands of United States dollars, US GAAP basis)

 	 	As at December 31,
	 	
 	 	2003
	 	2002
	 	
ASSETS	 	 	 	 	 	 	 	
Current	 	 	 	 	 	 	 	
 	Cash and cash equivalents	 	$	110,365	 	$	152,934	 	
 	Metals awaiting settlement (note 1)	 	 	34,570	 	 	29,749	 	
 	Income taxes recoverable	 	 	7,539	 	 	2,900	 	
Inventories:	 	 	 	 	 	 	 	
 	Ore stockpiles	 	 	6,557	 	 	4,604	 	
 	In-process concentrates	 	 	1,346	 	 	1,008	 	
 	Supplies	 	 	6,276	 	 	5,008	 	
Prepaid expenses and other (note 2(a))	 	 	10,363	 	 	10,025	 	

Total current assets	

177,016	

206,228	
 	
Fair value of derivative financial instruments (note 9)	 	 	7,573	 	 	1,835	 	
Other assets (notes 2(b) and 12)	 	 	11,214	 	 	8,795	 	
Future income and mining tax assets (note 8)	 	 	41,579	 	 	23,890	 	
Mining properties (note 3)	 	 	399,719	 	 	353,059	 	

 	
 	
$	
637,101	
 	
$	
593,807	

LIABILITIES AND SHAREHOLDERS' EQUITY	

 	

 	
 	
Current	 	 	 	 	 	 	 	
 	Accounts payable and accrued liabilities (note 11)	 	$	29,915	 	$	15,246	 	
 	Dividends payable	 	 	3,327	 	 	3,013	 	
 	Income and mining taxes payable	 	 	—	 	 	954	 	
 	Interest payable	 	 	3,161	 	 	1,873	 	

Total current liabilities	

36,403	

21,086	

Long-term debt (note 4)	

143,750	

143,750	

Reclamation provision and other liabilities (note 5)	

15,377	

5,043	

Fair value of derivative financial instruments (note 9)	

—	

5,346	

Future income and mining tax liabilities (note 8)	

40,848	

20,889	

Shareholders' Equity	

 	

 	
 	
 	Common shares (note 6(a))	 	 	 	 	 	 	 	
 	Authorized — unlimited	 	 	 	 	 	 	 	
Issued — 84,469,804 (2002 — 83,636,861)	 	 	601,305	 	 	591,969	 	
Warrants (note 6(c))	 	 	15,732	 	 	15,732	 	
Contributed surplus	 	 	7,181	 	 	7,181	 	
Deficit	 	 	(218,055	)	 	(196,023	)	
Accumulated other comprehensive loss (note 6(d))	 	 	(5,440	)	 	(21,166	)	

Total shareholders' equity	

400,723	

397,693	

 	
 	
$	
637,101	
 	
$	
593,807	

On behalf of the Board:

Sean Boyd C.A., Director	 	Bernard Kraft C.A., Director	
See accompanying notes
30

 
 
 AGNICO-EAGLE MINES LIMITED

Consolidated Statements Of Income (Loss) And Comprehensive Income (Loss)

(thousands of United States dollars, US GAAP basis)

 	 	Years ended December 31,
	 	
 	 	2003
	 	2002
	 	2001
	 	
REVENUES	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations	 	$	126,820	 	$	108,027	 	$	96,043	 	
Interest and sundry income	 	 	2,775	 	 	1,943	 	 	5,752	 	
 	 		 		 		 	
 	 	 	129,595	 	 	109,970	 	 	101,795	 	

COSTS AND EXPENSES	

 	

 	

 	
 	
Production (note 3)	 	 	104,990	 	 	75,969	 	 	67,009	 	
Exploration and corporate development (note 3)	 	 	5,975	 	 	3,766	 	 	6,391	 	
Equity loss in junior exploration company	 	 	1,626	 	 	—	 	 	—	 	
Amortization	 	 	17,504	 	 	12,998	 	 	12,658	 	
General and administrative	 	 	7,121	 	 	5,530	 	 	4,461	 	
Provincial capital tax	 	 	1,240	 	 	829	 	 	1,551	 	
Interest (note 4)	 	 	9,180	 	 	7,341	 	 	12,917	 	
Foreign currency loss (gain)	 	 	72	 	 	(1,074	)	 	(336	)	

Income (loss) before income, mining and federal capital taxes	

(18,113	
)	
 	
4,611	

(2,856	
)	
Federal capital tax	 	 	1,090	 	 	949	 	 	723	 	
Income and mining taxes expense (recovery) (note 8)	 	 	(1,448	)	 	(361	)	 	2,139	 	
 	 		 		 		 	
Net income (loss) before cumulative catch-up adjustment	 	 	(17,755	)	 	4,023	 	 	(5,718	)	
Cumulative catch-up adjustment relating to FAS 143	 	 	(1,743	)	 	—	 	 	—	 	

Net income (loss) for the year	
 	
$	
(19,498	
)	
$	
4,023	
 	
$	
(5,718	
)	

Net income (loss) before cumulative catch-up adjustment per share — basic and diluted (note 6(e))	
 	
$	
(0.21	
)	
$	
0.06	
 	
$	
(0.09	
)	
Cumulative catch-up adjustment per share — basic and diluted	 	 	(0.02	)	 	—	 	 	—	 	

Net income (loss) per share — basic and diluted (note 6(e))	
 	
$	
(0.23	
)	
$	
0.06	
 	
$	
(0.09	
)	
 	 		 		 		 	
Comprehensive income (loss):	 	 	 	 	 	 	 	 	 	 	
Net income (loss) for the year	 	$	(19,498	)	$	4,023	 	$	(5,718	)	

Other comprehensive income (loss), net of tax:	

 	

 	

 	
 	
 	Unrealized gain (loss) on hedging activities	 	 	8,807	 	 	(5,512	)	 	—	 	
 	Unrealized gain on available-for-sale securities	 	 	2,258	 	 	1,558	 	 	—	 	
 	Dilution gain on issuance of securities by subsidiary company	 	 	4,500	 	 	1,610	 	 	—	 	
 	Minimum pension liability	 	 	—	 	 	(980	)	 	—	 	
 	Cumulative transitional adjustment upon the adoption of FAS 133 related to the accounting for derivative instruments and hedging activities	 	 	—	 	 	—	 	 	(2,810	)	
 	Adjustments for derivative instruments, maturing during the year, included in the cumulative adjustment at January 1, 2001	 	 	1,801	 	 	723	 	 	152	 	
 	Adjustments for realized gains on available-for-sale securities due to dispositions during the year	 	 	(1,640	)	 	—	 	 	—	 	

Other comprehensive income (loss) for the year	

15,726	

(2,601	
)	
 	
(2,658	
)	

Total comprehensive income (loss) for the year	
 	
$	
(3,772	
)	
$	
1,422	
 	
$	
(8,376	
)	
 	 		 		 		 	
See accompanying notes
31

 
 AGNICO-EAGLE MINES LIMITED

Consolidated Statement Of Shareholders' Equity

(thousands of United States dollars, US GAAP basis)

 	 	Years ended December 31, 2003, 2002 and 2001
	 	
 	 	Common Shares
	 	 	 	 	 	 	 	Accumulated
Other
Comprehensive
Loss
	 	
 			 	 	 	Contributed
Surplus
	 	 			 	
 	 	Shares
	 	Amount
	 	Warrants
			 	Deficit
			 	
Balance December 31, 2000	 	56,139,480	 	$	323,552	 	$	—	 	$	7,181	 	$	(190,465	)	$	(15,907	)	
 	 		 		 		 		 		 		 	
Shares issued under Employee Stock Option Plan (note 7(a))	 	426,100	 	 	2,100	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Share Incentive Plan (note 7(b))	 	209,826	 	 	1,783	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under flow-through share private placement (note 6(b))	 	200,000	 	 	2,513	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued by public offering, net of share issue costs (note 6(c))	 	10,350,000	 	 	75,450	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued on the conversion of the Company's senior convertible notes	 	6,691	 	 	113	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued to acquire Mentor	 	369,348	 	 	1,719	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	21,408	 	 	117	 	 	—	 	 	—	 	 	—	 	 	—	 	
Net loss for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	(5,718	)	 	—	 	
Dividends declared ($0.02 per share)	 	—	 	 	—	 	 	—	 	 	—	 	 	(1,354	)	 	—	 	
Other comprehensive loss for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(2,658	)	
 	 		 		 		 		 		 		 	
Balance December 31, 2001	 	67,722,853	 	$	407,347	 	$	—	 	$	7,181	 	$	(197,537	)	$	(18,565	)	
Shares issued under Employee Stock Option Plan (note 7(a))	 	1,927,500	 	 	14,580	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Share Incentive Plan (note 7(b))	 	138,747	 	 	2,061	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under flow-through share private placement (note 6(b))	 	40,161	 	 	617	 	 	—	 	 	—	 	 	—	 	 	—	 	
Units issued by public offering, net of issue costs (note 6(c))	 	13,800,000	 	 	167,246	 	 	15,732	 	 	—	 	 	—	 	 	—	 	
Shares issued on the conversion of the Company's senior convertible notes	 	4,460	 	 	80	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	3,140	 	 	38	 	 	—	 	 	—	 	 	—	 	 	—	 	
Net income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	4,023	 	 	—	 	
Dividends declared ($0.03 per share)	 	—	 	 	—	 	 	—	 	 	—	 	 	(2,509	)	 	—	 	
Other comprehensive loss for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(2,601	)	
 	 		 		 		 		 		 		 	
Balance December 31, 2002	 	83,636,861	 	$	591,969	 	$	15,732	 	$	7,181	 	$	(196,023	)	$	(21,166	)	
Shares issued under Employee Stock Option Plan (note 7(a))	 	229,100	 	 	1,636	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Share Incentive Plan (note 7(b))	 	217,855	 	 	2,605	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under flow-through share private placement (note 6(b))	 	255,768	 	 	3,570	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	4,608	 	 	59	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for acquisition (note 10)	 	125,612	 	 	1,466	 	 	—	 	 	—	 	 	—	 	 	—	 	
Net loss for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	(19,498	)	 	—	 	
Dividends declared ($0.03 per share)	 	—	 	 	—	 	 	—	 	 	—	 	 	(2,534	)	 	—	 	
Other comprehensive income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	15,726	 	
 	 		 		 		 		 		 		 	
Balance December 31, 2003	 	84,469,804	 	$	601,305	 	$	15,732	 	$	7,181	 	$	(218,055	)	$	(5,440	)	
 	 		 		 		 		 		 		 	
See accompanying notes
32

 
 
 AGNICO-EAGLE MINES LIMITED

Consolidated Statement Of Cash Flows

(thousands of United States dollars, US GAAP basis)

 	 	Years ended December 31,
	 	
 	 	2003
	 	2002
	 	2001
	 	
Operating activities	 	 	 	 	 	 	 	 	 	 	
Net income (loss) for the year	 	$	(19,498	)	$	4,023	 	$	(5,718	)	
Add (deduct) items not affecting cash:	 	 	 	 	 	 	 	 	 	 	
 	Amortization	 	 	17,504	 	 	12,998	 	 	12,658	 	
 	Future income and mining taxes	 	 	1,090	 	 	1,183	 	 	3,150	 	
 	Unrealized gain on derivative contracts	 	 	(2,265	)	 	(1,680	)	 	(4,249	)	
 	Cumulative catch-up adjustment relating to FAS 143	 	 	1,743	 	 	—	 	 	—	 	
 	Amortization of deferred costs and other	 	 	5,378	 	 	3,840	 	 	6,583	 	
Changes in non-cash working capital balances	 	 	 	 	 	 	 	 	 	 	
 	Metals awaiting settlement	 	 	(4,821	)	 	(9,669	)	 	(8,140	)	
 	Income taxes recoverable	 	 	(4,639	)	 	(2,549	)	 	429	 	
 	Inventories	 	 	(3,559	)	 	(863	)	 	(1,332	)	
 	Prepaid expenses and other	 	 	(5,382	)	 	(2,319	)	 	999	 	
 	Accounts payable and accrued liabilities	 	 	17,414	 	 	8,327	 	 	(7,765	)	
 	Interest payable	 	 	1,288	 	 	(179	)	 	(794	)	
 	 		 		 		 	
Cash provided by (used in) operating activities	 	 	4,253	 	 	13,112	 	 	(4,179	)	
 	 		 		 		 	
Investing activities	 	 	 	 	 	 	 	 	 	 	
Additions to mining properties	 	 	(42,038	)	 	(64,836	)	 	(36,278	)	
Acquisitions and additions to available-for-sale securities	 	 	(10,438	)	 	(1,773	)	 	(278	)	
 	 		 		 		 	
Cash used in investing activities	 	 	(52,476	)	 	(66,609	)	 	(36,556	)	
 	 		 		 		 	
Financing activities	 	 	 	 	 	 	 	 	 	 	
Dividends paid	 	 	(2,431	)	 	(1,344	)	 	(1,114	)	
Common shares issued	 	 	8,141	 	 	193,784	 	 	87,416	 	
Warrants issued	 	 	—	 	 	15,732	 	 	—	 	
Share and warrant issue costs	 	 	(271	)	 	(9,162	)	 	(5,209	)	
Proceeds from long-term debt (note 4)	 	 	—	 	 	143,750	 	 	—	 	
Financing costs	 	 	—	 	 	(5,266	)	 	—	 	
Repayment of the Company's senior convertible debentures (note 4)	 	 	—	 	 	(122,169	)	 	—	 	
Bank debt	 	 	—	 	 	(30,000	)	 	(37,500	)	
Resale of the Company's own shares by a subsidiary company and other	 	 	—	 	 	—	 	 	4,974	 	
 	 		 		 		 	
Cash provided by financing activities	 	 	5,439	 	 	185,325	 	 	48,567	 	
 	 		 		 		 	
Effect of exchange rate changes on cash and cash equivalents	 	 	215	 	 	(74	)	 	(558	)	
 	 		 		 		 	
Net increase (decrease) in cash and cash equivalents during the year	 	 	(42,569	)	 	131,754	 	 	7,274	 	
Cash and cash equivalents, beginning of year	 	 	152,934	 	 	21,180	 	 	13,906	 	
 	 		 		 		 	
Cash and cash equivalents, end of year	 	$	110,365	 	$	152,934	 	$	21,180	 	
 	 		 		 		 	
See notes 4, 8 and 10 for supplemental cash flow information
See accompanying notes
33

 
 AGNICO-EAGLE MINES LIMITED

Notes To Consolidated Financial Statements

(In thousands of United States dollars, unless otherwise indicated)
December 31, 2003
1.     METALS AWAITING SETTLEMENT

 	 	2003
	 	2002
	
Precious metals	 	$	1,327	 	$	2,856	
Concentrates awaiting settlement	 	 	33,243	 	 	26,893	
 	 		 		
 	 	$	34,570	 	$	29,749	
 	 		 		
        In 2003, precious metals (gold and silver) accounted for 83.7% (2002 — 87.7%; 2001 — 79.8%) of Agnico-Eagle's revenues from mining operations. Other net byproduct revenues in 2003 consisted of 11.2% zinc (2002 — 12.3%; 2001 — 20.2%) and 5.1% copper (2002 — nil; 2001 — nil).
2.     OTHER ASSETS
(a)  Prepaid expenses and other

 	 	2003
	 	2002
	
Available-for-sale securities (at market value)	 	$	4,426	 	$	3,886	
Prepaid expenses	 	 	1,269	 	 	824	
Loans receivable	 	 	540	 	 	465	
Federal and provincial sales taxes receivable	 	 	3,499	 	 	3,716	
Other	 	 	629	 	 	1,134	
 	 		 		
 	 	$	10,363	 	$	10,025	
 	 		 		
        In 2003, the Company realized $3,692 (2002 — $352) in proceeds and recorded a gain of $2,507 (2002 — $186) in income on the sale of available-for-sale securities. The cost basis of available-for-sale securities is determined using the average cost method.
(b)  Other assets

 	 	2003
	 	2002
	
Deferred financing costs, less accumulated amortization of $2,321 (2002 — $1,313)	 	$	8,080	 	$	8,577	
Loan to Sudbury Contact Mines Limited	 	 	2,739	 	 	—	
Other	 	 	395	 	 	218	
 	 		 		
 	 	$	11,214	 	$	8,795	
 	 		 		
3.     MINING PROPERTIES

 	 	2003
	 	2002
	
 	 	Cost
	 	Accumulated
Amortization
	 	Net Book
Value
	 	Cost
	 	Accumulated
Amortization
	 	Net Book
Value
	
Mining properties	 	$	60,362	 	$	10,289	 	$	50,073	 	$	45,734	 	$	8,335	 	$	37,399	
Plant and equipment	 	 	274,725	 	 	72,290	 	 	202,435	 	 	244,659	 	 	63,348	 	 	181,311	
Mine development costs	 	 	181,761	 	 	34,550	 	 	147,211	 	 	161,167	 	 	26,818	 	 	134,349	
 	 		 		 		 		 		 		
 	 	$	516,848	 	$	117,129	 	$	399,719	 	$	451,560	 	$	98,501	 	$	353,059	
 	 		 		 		 		 		 		
34

        Included in exploration expense in 2001 is the Company's write-off of its investment in the Tonkin Springs project of $1.6 million and the payment of $0.7 million for environmental restoration costs. On March 1, 1999, Sudbury Contact acquired a 60% interest in Tonkin Springs, an advanced exploration property on the Battle Mountain-Cortez Gold Trend in Nevada, for $1.6 million. The remaining 40% ownership interest was owned and controlled by U.S. Gold Corporation, an unrelated gold exploration company based in the United States. Effective October 18, 2001, management determined that this project was not viable under the current gold price environment and elected, under the management and operating agreement with U.S. Gold Corporation, to exit the Tonkin Springs project as the project manager and relinquish its entire ownership interest in Tonkin Springs. The Company's obligation with respect to environmental and regulatory requirements was fully satisfied by the payment of $0.5 million in additional environmental bonding and $0.2 million to an independent consultant under an escrow agreement for future environmental restoration work.
        The Company's El Coco property ("El Coco"), located adjacent to and immediately east of the Company's LaRonde Mine, is subject to a royalty interest payable to Barrick Gold Corporation. The El Coco royalty, on production from an area that extends 500 metres from the property boundary with the LaRonde Mine, consists of a 50% net profits interest ("NPI"), which is defined as net revenues from the sale of minerals produced from the property less the pro-rated portion of the production costs and allowable direct and common capital expenditures related to the exploration and development of the property. The remaining area of the El Coco property is subject to a 4% net smelter return royalty (defined as gross revenues from the sales of minerals less applicable refining, selling and delivery costs and applicable taxes). During 2003, the Company made NPI royalty payments of $8.9 million (2002 — $12.0 million; 2001 — $5.4 million).
4.     LONG-TERM DEBT
(a)  Convertible subordinated debentures
        The Company's convertible subordinated debentures bear interest of 4.50% per annum, payable in cash semi-annually, on the principal amount of $143,750. The debentures are convertible into common shares of Agnico-Eagle at the option of the holder, at any time on or prior to maturity, at a rate of 71.429 common shares per $1,000 principal amount. The debentures are redeemable by Agnico-Eagle, in whole or in part, at any time on or after February 15, 2006 at a redemption price equal to par plus accrued and unpaid interest. The Company may redeem the debentures in cash or, at the option of the Company, by delivering freely tradable common shares.
(b)  Revolving credit facility
        The revolving credit facility (the "Facility") with a syndicate of banks provides the Company with up to $125 million of revolving debt. Under the terms of the Facility, which is primarily secured by a first charge on the Company's LaRonde Mine and the El Coco property, an initial tranche of $100 million is currently available and a second tranche of $25 million will also be made available upon satisfaction of certain completion tests in connection with the LaRonde Mine expansion to 7,000 tons of ore per day. The Facility is fully revolving until the end of 2004, at which time the drawn portion of the Facility will begin to amortize at annual rates of 25%, 32.5%, 20%, 12.5% and 10% in the years 2004 to 2008, respectively. The interest rate under the Facility currently is LIBOR plus 2.25% per annum and a standby fee of 1% per annum on any undrawn portion of the Facility. At the end of 2003 and 2002, the Facility was completely undrawn.
        For the year ended December 31, 2003, interest expense was $9.2 million (2002 — $7.3 million; 2001 — $12.9 million) of which cash payments were $8.0 million (2002 — $24.4 million; 2001 — $10.4 million). Approximately $19 million of the cash interest payments in 2002 were in connection with the redemption of the Company's January 27, 2004 senior convertible notes. In 2003, cash interest on the Facility was nil (2002 — $1.3 million; 2001 — $9.1 million) and cash standby fees on the Facility were $1.2 million (2002 — $1.0 million; 2001 — $1.0 million). In 2003, cash interest on the Facility of nil (2002 — $2.3 million; 2001 — nil) was capitalized in construction in progress. Weighted average interest rate for the year ended December 31, 2003 was 6.4% (2002 — 7.6%; 2001 — 6.1%).
35

        In 2003, the Company was unable to achieve its completion test and was in default of its interest coverage covenants. Given that the Facility was completely undrawn throughout 2003, these were technical violations which were waived by all the banks in the lending syndicate for the third and fourth quarters of 2003.
5.     RECLAMATION PROVISION AND OTHER LIABILITIES
        Reclamation provision and other liabilities consist of the following:

 	 	2003
	 	2002
	
Reclamation and closure costs (note 5(a))	 	$	11,629	 	$	2,066	
Pension benefits (note 5(b))	 	 	3,748	 	 	2,977	
 	 		 		
 	 	$	15,377	 	$	5,043	
 	 		 		
(a)  Reclamation and closure costs
        Under mine closure plans submitted to the Minister of Natural Resources in Quebec, the estimated future reclamation costs for the LaRonde and Bousquet mines are approximately $17.0 million and $2.7 million, respectively. These reclamation estimates are based on current legislation and there can be no assurance that the Minister of Natural Resources will not impose additional reclamation obligations with higher costs. All of the accrued reclamation and closure costs are long-term in nature and thus no portion of these costs has been reclassified to current liabilities. The Company does not currently have assets that are restricted for the purposes of settling these obligations.
        The following table reconciles the beginning and ending carrying amount of asset retirement obligations. The amounts for 2002 are pro-forma amounts which present the liability for asset retirement obligations as if FAS 143 had been applied throughout 2002. Had FAS 143 been applied for all periods presented in the Consolidated Statement of Income (Loss), net income (loss) would not have been materially different from the amounts reported.

 	 	2003
	 	2002
(pro forma)
	
Asset retirement obligations, beginning of year	 	$	5,520	 	$	5,282	
Current year accretion	 	 	424	 	 	238	
Reclamation payments relating to non-operating properties	 	 	(44	)	 	—	
Liabilities incurred on the purchase of the Bousquet mine	 	 	5,729	 	 	—	
 	 		 		
Asset retirement obligations, end of year	 	$	11,629	 	$	5,520	
 	 		 		
(b)  Pension benefits
        Effective July 1, 1997, Agnico-Eagle's defined benefit pension plan for active employees was converted to a defined contribution plan. Employees retired prior to that date remain in the defined benefit pension plan. In addition, Agnico-Eagle also provides a non-registered executive supplementary defined benefit plan for certain senior officers. The funded status of Agnico-Eagle's defined benefit employees' pension plan is based on an actuarial valuation as of December 31, 2002 and projected to December 31, 2003. The funded status of the
36

executive supplementary defined benefit plan is based on an actuarial valuation as of July 1, 2003 and projected to December 31, 2003. The components of Agnico-Eagle's net pension plan expense are as follows:

 	 	2003
	 	2002
	 	2001
	 	
Service cost — benefits earned during the year	 	$	263	 	$	210	 	$	194	 	
Actuarial losses	 	 	26	 	 	—	 	 	—	 	
Interest cost on projected benefit obligation	 	 	419	 	 	348	 	 	312	 	
Return on plan assets	 	 	(127	)	 	(125	)	 	(162	)	
Amortization of net transition asset, past service liability and net experience gains	 	 	58	 	 	(138	)	 	52	 	
 	 		 		 		 	
Net pension plan expense	 	$	639	 	$	295	 	$	396	 	
 	 		 		 		 	
        Agnico-Eagle contributes 5% of its payroll expense to a defined contribution plan. The expense in 2003 was $1.4 million (2002 — $1.1 million; 2001 — $0.8 million).
        Assets of the defined benefit employees' pension plan ("Employees") are comprised of pooled Canadian and US equity funds and pooled bond funds. As of the measurement date, the plan's assets are allocated 65% to equity securities, 34% to fixed income securities, and 1% to cash and short-term investments. The Employees plan is relatively mature with a substantial portion of the projected benefit obligation liability attributable to pensioners and there are no contributions being made to the plan. Since benefit payments are completely funded from plan assets and investment returns, the plan assets are managed to achieve a moderate degree of risk in terms of short-term variability of returns. The major categories of plan assets along with minimum, maximum and target allocations are presented below:

 	 	Minimum
	 	Maximum
	 	Target
	
Cash and short-term investments	 	0%	 	35%	 	5%	
Fixed income securities	 	25%	 	75%	 	35%	
Equity securities	 	25%	 	65%	 	60%	
Real estate	 	0%	 	10%	 	0%	
        Fixed income securities must meet quality constraints in the form of minimum investment ratings. Equity securities also have quality constraints in the form of maximum allocations to any one security and maximum exposure to any one industry group. The accumulated benefit obligation for the Employees plan is equal to the projected benefit obligation and no amount was included in accumulated other comprehensive loss for this plan in 2003 or 2002.
        Assets for the executives' retirement plan ("Executives") consist of deposits on hand with regulatory authorities which are refundable when benefit payments are made or on the ultimate wind-up of the plan. The accumulated benefit obligation for this plan at December 31, 2003 was $3.7 (2002 — $2.9 million) and nil (2002 — $1.0 million) was recorded in other comprehensive income (loss) arising from a change in the additional minimum pension liability.
37

        The funded status of the Employees and the Executives plans for 2003 and 2002 are as follows:

 	 	2003
	 	2002
	 	
 	 	Employees
	 	Executives
	 	Employees
	 	Executives
	 	
Reconciliation of the market value of plan assets	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value of plan assets, beginning of year	 	$	1,576	 	$	200	 	$	1,704	 	$	176	 	
Agnico-Eagle's contribution	 	 	—	 	 	56	 	 	—	 	 	44	 	
Actual return on plan assets	 	 	321	 	 	—	 	 	(31	)	 	—	 	
Benefit payments	 	 	(132	)	 	(28	)	 	(111	)	 	(22	)	
Effect of exchange rate changes	 	 	367	 	 	47	 	 	14	 	 	2	 	
 	 		 		 		 		 	
Fair value of plan assets, end of year	 	$	2,132	 	$	275	 	$	1,576	 	$	200	 	
 	 		 		 		 		 	
Reconciliation of projected benefit obligation	 	 	 	 	 	 	 	 	 	 	 	 	 	
Projected benefit obligation, beginning of year	 	$	1,468	 	$	4,081	 	$	1,439	 	$	3,241	 	
Service costs	 	 	—	 	 	263	 	 	—	 	 	210	 	
Interest costs	 	 	101	 	 	318	 	 	95	 	 	253	 	
Actuarial losses	 	 	35	 	 	188	 	 	34	 	 	377	 	
Benefit payments	 	 	(132	)	 	(28	)	 	(111	)	 	(22	)	
Plan amendments	 	 	(29	)	 	92	 	 	—	 	 	—	 	
Effect of exchange rate changes	 	 	325	 	 	979	 	 	11	 	 	22	 	
 	 		 		 		 		 	
Projected benefit obligation, end of year	 	$	1,768	 	$	5,893	 	$	1,468	 	$	4,081	 	
 	 		 		 		 		 	
Excess (deficiency) of plan assets over projected benefit obligation	 	$	364	 	$	(5,618	)	$	108	 	$	(3,881	)	
 	 		 		 		 		 	
Comprised of:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unamortized transition asset (liability)	 	$	839	 	$	(1,271	)	$	823	 	$	(1,568	)	
Unamortized net experience (loss)	 	 	(167	)	 	(599	)	 	(324	)	 	(242	)	
Accrued liabilities	 	 	(308	)	 	(3,748	)	 	(391	)	 	(2,071	)	
 	 		 		 		 		 	
 	 	$	364	 	$	(5,618	)	$	108	 	$	(3,881	)	
 	 		 		 		 		 	
Weighted average discount rate (i)	 	 	6.50	%	 	6.50	%	 	6.50	%	 	6.50	%	
Weighted average expected long-term rate of return	 	 	7.50	% (ii)	 	n.a	 	 	7.50	% (ii)	 	n.a	 	
Weighted average rate of compensation increase	 	 	n.a.	 	 	3.0	%	 	n.a.	 	 	3.0	%	
Estimated average remaining service life for the plan (in years)	 	 	5.0	 	 	8.0	(iii)	 	8.0	 	 	9.0	(iii)	

Notes:
(i)
Discount rates used for the Executives plan are after-tax rates.

(ii)
Long-term rates of return were determined using, as a basis, rates for high quality debt instruments adjusted for historical rates of return actually achieved.

(iii)
Estimated average remaining service life for the Executives plan was developed for individual senior officers.
        The estimated benefits to be paid from each plan in the next ten years is presented below:

 	 	Employees
	 	Executives
	 	Total
	
2004	 	$	75	 	$	92	 	$	167	
2005	 	 	90	 	 	77	 	 	167	
2006	 	 	90	 	 	77	 	 	167	
2007	 	 	90	 	 	84	 	 	174	
2008	 	 	90	 	 	84	 	 	174	
2009 - 2013	 	 	450	 	 	435	 	 	885	
38

6.     SHAREHOLDERS' EQUITY
(a)  Common shares
        The Company's common shares are covered by a Shareholder Rights Plan whereby each shareholder, in the event of certain takeover bids or other change-in-control transactions involving the acquisition of 20% or more of Agnico-Eagle's outstanding voting shares, has the right ("Rights") to purchase from Agnico-Eagle for an exercise price of C$80.00 that number of shares of Agnico-Eagle having an aggregate market price equal to twice the exercise price. Until such time as a triggering bid for control occurs, the Rights trade together with the existing common shares and will expire on May 10, 2009.
        The Company has reserved for issuance 10,267,919 common shares in the event that the senior convertible debentures are converted into common shares and 6,900,000 common shares in the event that the warrants are exercised.
        In 2003 the Company declared dividends on its common shares of $0.03 per share (2002 — $0.03 per share; 2001 — $0.02 per share). Under the terms of the Company's revolving credit facility, the Company's dividend payments are restricted to an aggregate of $16 million per year.
(b)  Flow-through share private placements
        In 2003, Agnico-Eagle issued 255,768 (2002 — 40,161; 2001 — 200,000) common shares under a flow-through share private placement for proceeds of $3.6 million (2002 — $0.6 million; 2001 — $2.5 million) net of share issue costs. Agnico-Eagle has agreed to use such proceeds for the purpose of incurring Canadian exploration expenditures in connection with its 2003 and 2004 exploration activities. In 2003, the Company renounced to its investors C$5.3 million (2002 — C$1.0 million; 2001 — C$4.0million) of such expenses for income tax purposes. To comply with the flow-through share agreement, the Company must incur $3.5 million of exploration expenditures in 2004 related to the expenditures renounced in 2003.
        The difference between the flow-through share issuance price and the market price of Agnico-Eagle stock at the time of purchase is recorded as a liability at the time the flow-through shares are issued. This liability is extinguished at the time the exploration expenditures are renounced to investors. The difference between the flow-through share issuance price and market price reduces the future tax expense charged to income (loss) as this difference represents proceeds received by the Company for the sale of future tax deductions to investors in the flow-through shares.
(c)  Public offering
        In 2002, Agnico-Eagle issued 13,800,000 units, each unit consisting of one common share and one-half warrant, at $13.90 per unit for net proceeds of $182.9 million, after deducting share issue costs of $9.1 million (no related income tax effect). $167.2 million of the net proceeds was allocated to common shares and the remaining $15.7 million was allocated to the warrants. Each whole warrant entitles the holder to purchase one common share at a price of $19.00, subject to certain adjustments summarized in the prospectus. Warrants are exercisable at any time prior to November 14, 2007, after which time the warrants will expire and be of no value. The Company will inform warrant holders, through a press release, of pending expiry at least 90 days prior to the expiry date. If all outstanding warrants are exercised, the Company would issue an additional 6,900,000 common shares.
        In 2001, Agnico-Eagle issued 10,350,000 common shares at $7.90 per share for net proceeds of $76.2 million, after deducting share issue costs of $5.6 million (no related income tax effect).
(d)  Accumulated other comprehensive loss
        The opening balance in accumulated other comprehensive loss in 2000 of $(15.9) million resulted from Agnico-Eagle adopting the US dollar as its principal currency of measurement. Prior to this change, the Canadian dollar had been used as the reporting currency. Prior period's consolidated financial statements were translated into US dollars by the current rate method using the year end or the annual average exchange rate where appropriate. This translation approach was applied from January 1, 1994. This translation gave rise to a
39

deficit in the cumulative translation adjustment account within accumulated other comprehensive loss as at December 31, 2003, 2002 and 2001.
        Effective January 1, 2001, the Company prospectively adopted the new accounting recommendations made under FAS 133 and FAS 138 on accounting for derivative financial instruments and hedging. Upon the adoption of FAS 133, the Company recorded a cumulative translation adjustment to accumulated other comprehensive loss of $2.8 million. The Company has designated its gold put contracts and foreign exchange forward contracts as cash flow hedges and, as such, unrealized gains and losses on these contracts are recorded in accumulated other comprehensive loss.
        The following table presents the components of the accumulated other comprehensive loss.

 	 	2003
	 	2002
	 	
Cumulative translation adjustment from adopting US dollar as principal reporting currency	 	$	(15,907	)	$	(15,907	)	
Unrealized gain on available-for-sale securities	 	 	2,176	 	 	1,559	 	
Dilution gain on equity issuances of subsidiary	 	 	6,110	 	 	1,610	 	
Unrealized gain on foreign exchange derivative contracts	 	 	9,973	 	 	—	 	
Unrealized loss on gold put option contracts	 	 	(6,812	)	 	(7,448	)	
Minimum pension liability	 	 	(980	)	 	(980	)	
 	 		 		 	
 	 	$	(5,440	)	$	(21,166	)	
 	 		 		 	
        In 2003, a $1.8 million (2002 — nil) loss was reclassified from accumulated other comprehensive loss to income to reflect the amortization of gold put option contract premiums for contracts originally scheduled to mature in 2003. Also in 2003, a $1.6 million gain (2002 — nil) was reclassified from accumulated other comprehensive loss to income to reflect the realization of gains on available-for-sale securities due to the disposition of those securities.
(e)  Net income (loss) per share
        The following table provides the weighted average number of common shares used in the calculation of basic and diluted income (loss) per share:

 	 	2003
	 	2002
	 	2001
	
Weighted average number of common shares outstanding — basic	 	83,889,115	 	70,821,081	 	61,333,630	
Add: Dilutive impact of employee stock options	 	—	 	810,182	 	—	
 	 		 		 		
Weighted average number of common shares outstanding — diluted	 	83,889,115	 	71,631,263	 	61,333,630	
 	 		 		 		
        In 2003, the employee stock options, convertible debentures and warrants were anti-dilutive and thus were not included in the calculation of diluted weighted average number of common shares outstanding. In 2002, the convertible debentures and warrants were anti-dilutive and thus were excluded from the calculation of diluted weighted average number of common shares outstanding. In 2001, the employee stock options and convertible debentures were anti-dilutive and thus were not included in the calculation of diluted weighted average number of common shares outstanding.
7.     STOCK-BASED COMPENSATION
(a)  Employee Stock Option Plan ("ESOP")
        The Company's ESOP provides for the granting of options to directors, officers, employees and service providers to purchase common shares. Under this plan, options are granted at the fair market value of the underlying shares on the date of grant. The number of shares subject to option for any one person may not exceed 5% of the Company's common shares issued and outstanding at the date of grant.
40

         Up to May 31, 2001, the number of common shares reserved for issuance under the ESOP was 6,000,000 and options granted under the ESOP had a maximum term of ten years. On April 24, 2001, the Compensation Committee of the Board of Directors adopted a policy pursuant to which options granted after that date shall have a maximum term of five years. On May 31, 2001, the shareholders approved a resolution to increase the number of common shares reserved for issuance under the ESOP by 2,000,000 to 8,000,000.
        Of the 40,000 options granted under the ESOP in 2003, 37,000 options granted vest immediately and expire in the year 2008. The remaining options expire in 2008 and have a vesting period of three years, in which 33% or 1,000 vest immediately and are exercisable on the date of the grant, while the remaining 67% or 2,000 options are exercisable in equal instalments, on each anniversary date of the grant, over a three-year term. Of the 1,358,500 options granted in 2002, 1,299,500 options granted vest immediately and expire in the year 2007. The remaining options vest over periods ranging from two to five years and expire between 2007 and 2012. Of the total options granted in 2001, 181,250 have a vesting period of four years, in which 20% or 36,250 vest immediately and are exercisable on the date of the grant, while the remaining 80% or 145,000 options are exercisable in equal instalments, on each anniversary date of the grant, over a four-year term. The remaining 10,000 options granted in 2001 were for a term of five years and are exercisable on the date of grant.
        The following summary sets out the activity with respect to Agnico-Eagle's outstanding stock options:

 	 	2003
	 	2002
	 	2001
	
 	 	Options
	 	Weighted average exercise price
	 	Options
	 	Weighted average exercise price
	 	Options
	 	Weighted average exercise price
	
Outstanding, beginning of year	 	3,060,350	 	C$	14.47	 	3,660,200	 	C$	12.04	 	3,895,050	 	C$	11.73	
Granted	 	40,000	 	 	18.49	 	1,358,500	 	 	17.07	 	191,250	 	 	9.49	
Exercised	 	(229,100	)	 	10.23	 	(1,927,500	)	 	11.82	 	(426,100	)	 	8.31	
Cancelled	 	(26,100	)	 	16.01	 	(30,850	)	 	12.06	 	—	 	 	—	
 	 		 		 		 		 		 		
Outstanding, end of year	 	2,845,150	 	C$	14.85	 	3,060,350	 	C$	14.47	 	3,660,200	 	C$	12.04	
 	 		 		 		 		 		 		
Options exercisable at end of year	 	2,697,950	 	 	 	 	2,682,500	 	 	 	 	3,049,300	 	 	 	
 	 		 	 	 	 		 	 	 	 		 	 	 	
        The weighted average grant-date fair value of options granted in 2003 was C$3.33. The following table summarizes information about Agnico-Eagle's stock options outstanding at December 31, 2003:

 	 	Options outstanding
	 	Options exercisable
	
Range of exercise prices
	 	Number
outstanding
	 	Weighted average
remaining
contractual life
	 	Weighted average
exercise price
	 	Number
exercisable
	 	Weighted average
exercise price
	
C$6.55 – C$9.30	 	242,800	 	5.1 years	 	C$	8.12	 	236,500	 	C$	8.09	
C$10.20 – C$15.75	 	801,200	 	5.9 years	 	C$	10.54	 	689,300	 	C$	10.57	
C$15.93 – C$19.94	 	1,545,650	 	2.1 years	 	C$	16.85	 	1,543,650	 	C$	16.85	
C$21.72 – C$25.60	 	255,500	 	3.2 years	 	C$	22.66	 	228,500	 	C$	22.75	
 	 		 		 		 		 		
C$6.55 – C$25.60	 	2,845,150	 	3.5 years	 	C$	14.85	 	2,697,950	 	C$	14.98	
 	 		 		 		 		 		
        The Company has reserved for issuance 2,845,150 common shares in the event that these options are exercised.
        The number of un-optioned shares available for granting of options as at December 31, 2003, 2002 and 2001 was 776,010, 789,910 and 2,117,560, respectively.
        In 2003, the Company prospectively adopted FAS 123, "Accounting for Stock-Based Compensation" as amended by FAS 148, "Accounting for Stock-Based Compensation — Transition and Disclosure". These accounting standards recommend the expensing of stock options granted after January 1, 2003. The standards recommend that the fair value of stock options be recognized in income over the applicable vesting period as a
41

compensation expense. Prior to 2003, the Company accounted for its stock option grants based on the recognition and measurement principles of Accounting Principles Board Opinion No. 25 and related interpretations. The application of Opinion No. 25 resulted in no compensation expense being recorded in Agnico-Eagle's circumstances as all options granted had an exercise price equal to the market value of the underlying stock on the date of grant. The following table illustrates the effect on net income (loss) and net income (loss) per share for 2003, 2002 and 2001 as if the Company had applied the fair value recognition provisions of FAS 123 to account for all its stock option grants. The 2003 pro-forma compensation expense includes option grants made prior to the adoption of FAS 123/FAS 148 which vest in the current year.

 	 	2003
	 	2002
	 	2001
	 	
Net income (loss) for the year, as reported	 	$	(19,498	)	$	4,023	 	$	(5,718	)	
Add: Stock-based employee compensation included in reported net income (loss)	 	 	95	 	 	—	 	 	—	 	
Deduct: Total stock-based employee compensation determined under fair value based method for all awards	 	 	(263	)	 	(2,621	)	 	(624	)	
 	 		 		 		 	
Pro forma net income (loss)	 	$	(19,666	)	$	1,402	 	$	(6,342	)	
 	 		 		 		 	
Net income (loss) per share:	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted, as reported	 	$	(0.23	)	$	0.06	 	$	(0.09	)	
 	 		 		 		 	
Basic and diluted, pro forma	 	$	(0.23	)	$	0.02	 	$	(0.10	)	
 	 		 		 		 	
        Agnico-Eagle estimated the fair value of options under the Black-Scholes option pricing model and the following weighted average assumptions:

 	 	2003
	 	2002
	 	2001
	 	
Risk-free interest rate	 	2.9	%	2.6	%	5.5	%	
Expected life of options (in years)	 	2.5	 	2.1	 	7.5	 	
Expected volatility of Agnico-Eagle's share price	 	43.5	%	36.9	%	46.2	%	
Expected dividend yield	 	0.25	%	0.19	%	0.46	%	
        The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. As the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions, such as expected stock market price volatility, can materially affect the fair value estimate, in management's opinion, the existing pricing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
(b) Incentive Share Purchase Plan
        On June 26, 1997, the shareholders approved an Incentive Share Purchase Plan (the "Purchase Plan") to encourage directors, officers and employees ("Participants") to purchase Agnico-Eagle's common shares at market values.
        Under the Purchase Plan, eligible employees may contribute up to 10% of their basic annual salaries and directors may contribute up to 100% of their annual board and committee retainer fees. For both employees and directors, Agnico-Eagle contributes an amount equal to 50% of each Participant's contribution.
        In 2003, 217,855 common shares were issued under the Purchase Plan (2002 — 138,747; 2001 — 209,826) for proceeds of $2.6 million (2002 — $2.1 million; 2001 — $1.8 million). In June 2002, shareholders approved an increase in the maximum amount of shares reserved for issuance under the Purchase Plan to 2,500,000 from 1,000,000. Agnico-Eagle has reserved for issuance 1,349,659 common shares (2002 — 1,567,514; 2001 — 206,261) under the Purchase Plan.
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8.     FUTURE INCOME AND MINING TAXES
        Income and mining taxes expense (recovery) is made up of the following components:

 	 	2003
	 	2002
	 	2001
	 	
Current provision	 	 	 	 	 	 	 	 	 	 	
 	Provincial mining duties	 	$	(2,538	)	$	(2,779	)	$	(2,201	)	
 	 		 		 		 	
Future provision	 	 	 	 	 	 	 	 	 	 	
 	Federal income taxes	 	 	—	 	 	—	 	 	1,405	 	
 	Provincial income taxes	 	 	—	 	 	—	 	 	332	 	
 	Provincial mining duties	 	 	1,090	 	 	2,418	 	 	2,603	 	
 	 		 		 		 	
 	 	 	1,090	 	 	2,418	 	 	4,340	 	
 	 		 		 		 	
 	 	$	(1,448	)	$	(361	)	$	2,139	 	
 	 		 		 		 	
        Mining taxes are assessed at the rate of 12% on income from mining operations. Income from mining operations is calculated as revenue from mined metals less production costs directly attributable to mining. Income from mining operations is reduced by depreciation allowances on mine construction and development as well as certain exploration costs. The mining taxes are paid to the government agency which grants the mining lease and/or mining concession required in order to extract ore in the particular jurisdiction.
        Cash income and mining taxes recovered in 2003 was $0.6 million (2002 — $0.8 million; 2001 — $0.6 million).
        Future income and mining taxes expense (recovery) has been provided on temporary differences which consist of the following:

 	 	2003
	 	2002
	 	2001
	 	
Amortization	 	$	(11	)	$	(587	)	$	(265	)	
Exploration and development	 	 	2,910	 	 	3,152	 	 	2,676	 	
Other	 	 	(1,809	)	 	(147	)	 	1,929	 	
 	 		 		 		 	
 	 	$	1,090	 	$	2,418	 	$	4,340	 	
 	 		 		 		 	
        The income and mining taxes expense (recovery) is different from the amount that would have been computed by applying the Canadian statutory income tax rate as a result of the following:

 	 	2003
	 	2002
	 	2001
	 	
Combined federal and composite provincial tax rates	 	(38.3	)%	39.9	%	(41.3	)%	
Increase (decrease) in taxes resulting from:	 	 	 	 	 	 	 	
Provincial mining duties	 	20.1	 	(7.8	)	14.5	 	
Resource allowances	 	(8.4	)	(101.7	)	(25.2	)	
Non-deductible expenses	 	14.0	 	6.5	 	24.6	 	
Temporary differences for which no benefit was recognized	 	20.5	 	78.7	 	83.0	 	
Unrecognized benefit of non-capital losses	 	22.7	 	(23.4	)	19.3	 	
Effect of changes in Canadian income tax legislation	 	(38.6	)	—	 	—	 	
 	 		 		 		 	
Actual rate as a percentage of pre-tax income (loss)	 	(8.0	)%	(7.8	)%	74.9	%	
 	 		 		 		 	
43

        Agnico-Eagle and its subsidiaries have non-capital tax loss carryforwards of approximately C$55 million, which may be carried forward to reduce future years' taxable income. These losses expire as follows:

2004	 	C$	8,188	
 2005	 	 	17,487	
2006	 	 	6,084	
2007	 	 	46	
2009	 	 	8,733	
2010	 	 	14,883	
 	 		
 	 	C$	55,421	
 	 		
        Agnico-Eagle has approximately C$372 million of cumulative Canadian exploration and development expenses and C$363 million of unamortized capital pools available indefinitely to reduce future years' taxable income.
        As at December 31, 2003 and 2002, Agnico-Eagle's future income and mining tax assets and liabilities are as follows:

 	 	2003
	 	2002
	 	
 	 	Assets
	 	Liabilities
	 	Assets
	 	Liabilities
	 	
Non-current:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income taxes:	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Plant and equipment	 	$	14,655	 	$	—	 	$	8,563	 	$	—	 	
 	Mine development costs	 	 	19,746	 	 	—	 	 	14,200	 	 	—	 	
 	Net operating and capital loss carryforwards	 	 	26,022	 	 	—	 	 	11,126	 	 	—	 	
 	Mining duties	 	 	6,992	 	 	—	 	 	—	 	 	—	 	
 	Other	 	 	3,542	 	 	—	 	 	4,480	 	 	—	 	
Valuation allowance	 	 	(29,378	)	 	—	 	 	(14,479	)	 	—	 	
 	 		 		 		 		 	
Total non-current	 	$	41,579	 	$	—	 	$	23,890	 	$	—	 	
 	 		 		 		 		 	
Mining duties:	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Plant and equipment	 	$	440	 	$	18,192	 	$	360	 	$	6,374	 	
 	Mine development costs	 	 	344	 	 	23,548	 	 	3,869	 	 	14,897	 	
 	Other	 	 	—	 	 	(892	)	 	—	 	 	(382	)	
Valuation allowance	 	 	(784	)	 	—	 	 	(4,229	)	 	—	 	
 	 		 		 		 		 	
Total non-current	 	$	—	 	$	40,848	 	$	—	 	$	20,889	 	
 	 		 		 		 		 	
Non-current future income and mining tax assets and liabilities	 	$	41,579	 	$	40,848	 	$	23,890	 	$	20,889	 	
 	 		 		 		 		 	
        All of Agnico-Eagle's future income tax assets and liabilities are denominated in local currency based on the jurisdiction in which the Company pays taxes and are translated into US dollars using the exchange rate in effect at the consolidated balance sheet date. The increase in the gross amounts of the future tax assets and liabilities was impacted by the weaker US dollar in relation to the Canadian dollar throughout 2003. At December 31, 2002, asset and liability amounts were translated into US dollars at an exchange rate of $1.58 whereas at December 31, 2003, asset and liability amounts were translated at an exchange rate of $1.29. The additional increase in future tax assets and liabilities was due to increases in capital pools resulting from the LaRonde Mine capital expenditures and the purchase of the Lapa and Bousquet properties. At January 1, 2003, the valuation allowance, a reserve against future income tax assets recorded in the accounts, was $14.5 million. In 2003, the valuation allowance increased by $14.9 million due to the impact of a weaker US dollar and the recognition of a full valuation allowance against current year's losses. The change in mining duty tax assets and the respective valuation allowance against those assets decreased by $3.4 million due to the Company no longer consolidating Sudbury Contact.
        In 2003, tax legislation changes gave rise to additional future income tax assets. As provincial mining duties are now deductible in computing Canadian federal income taxes payable, the Company has recorded an asset
44

representing the future deductions that will be available at the federal level arising from the payment of provincial mining duties. As this mining duty tax asset is long-term in nature and does not have a set expiry date, the Company has not provided a valuation allowance against this future tax asset.
9.     FINANCIAL INSTRUMENTS
        Agnico-Eagle enters into financial instruments with a number of financial institutions in order to hedge underlying revenue and cost exposures arising from commodity prices, interest rates and foreign currency exchange rates. Financial instruments which subject Agnico-Eagle to market risk and concentration of credit risk consist primarily of cash and short-term investments and derivative contracts for currencies, interest rates and precious and base metals. Agnico-Eagle places its cash and short-term investments in high quality securities issued by government agencies, financial institutions and major corporations and limits the amount of credit exposure by diversifying its holdings.
        Agnico-Eagle's risk management policy attempts to mitigate the risks associated with fluctuating metal prices and foreign exchange rates. Agnico- Eagle uses over-the-counter put and call option metals and foreign exchange contracts to hedge its net revenues from mining operations and costs of production, respectively. These instruments are straight forward contracts and involve little complexity. Agnico-Eagle is exposed to credit risk in the event of non-performance by counterparties in connection with its currency and metal option contracts. Agnico-Eagle does not obtain any security to support financial instruments subject to credit risk, but mitigates the risk by dealing with a diverse group of creditworthy counterparties and, accordingly, does not anticipate loss for non-performance. The Company continually monitors the market risk of its hedging activities.
Gold put option contracts
        Agnico-Eagle's portfolio of gold put option contracts was entered into to establish a minimum price which the Company will receive from the sale of its gold production. The contracts expire monthly based on planned production volumes. These instruments have been designated as hedges under the criteria established by FAS 133 and FAS 138 on accounting for derivative financial instruments and hedging. At December 31, 2001, these option contracts did not qualify as a designated hedge under FAS 133. Accordingly, changes in fair value were recognized as part of the Company's net loss. On January 1, 2002, the Company implemented a new treasury management system that complies with the new documentation requirements of FAS 133. As a result, these option contracts now qualify for hedge accounting. In 2002 and 2003, changes in the fair value of these option contracts were recognized as part of other comprehensive loss.
        Gains and losses on gold put option contracts are reclassified from accumulated other comprehensive loss to income in the same period the forecasted transaction affects income. In 2004, the Company expects to reclassify an unrealized loss of $1.5 million relating to its gold put option contracts to income. Due to the nature and structure of the Company's gold put option contracts, the Company does not record amounts for ineffectiveness in income.
Silver and base metal option contracts
        Agnico-Eagle's silver and base metal derivatives portfolio was unwound during 2003 at a net cost of nil.
        As at December 31, 2003, Agnico-Eagle's derivative financial instruments relating to metals consisted of the following:

 	 	Expected Maturity
	
 	 	2004
	 	2005
	 	2006
	 	2007
	
Gold	 	 	 	 	 	 	 	 	 	 	 	 	
 	Put options purchased	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Amount hedged (ounces)	 	 	136,644	 	 	190,020	 	 	152,340	 	 	131,280	
 	 	Average price ($/ounce)	 	$	260	 	$	260	 	$	260	 	$	260	
        Subsequent to year end, the Company entered into derivative contracts to eliminate the negative effects of price fluctuations on a portion of its 2004 copper production. The Company purchased put option contracts
45

which hedge 2.9 million pounds of copper production in 2004 and establish a minimum price of $1.04 per pound. The maximum premium payable under these derivative contracts is $0.4 million.
Foreign currency hedging program
        Agnico-Eagle generates almost all of its revenues in US dollars. The Company's LaRonde Mine and Exploration Division both have Canadian dollar requirements for capital and operating expenditures. Agnico-Eagle entered into a series of put and call option contracts to hedge a monthly sum of Canadian dollar expenditures based on forecasted Canadian dollar requirements. In 2004, the Company expects to reclassify an unrealized gain of $2.4 million relating to its foreign exchange derivative contracts to income. Due to the nature and structure of the Company's foreign currency hedge contracts, the Company does not record amounts for ineffectiveness in income.
        At December 31, 2003, Agnico-Eagle's foreign currency hedging program consisted of the following:

 	 	Expected Maturity
	
 	 	2004
	 	2005
	 	2006
	
US$ call options sold	 	 	 	 	 	 	 	 	 	
Amount (thousands)	 	$	24,000	 	$	12,000	 	$	12,000	
US$/C$ weighted average exchange rate	 	 	1.6390	 	 	1.6050	 	 	1.6475	

US$ put options purchased	

 	

 	

 	
Amount (thousands)	 	$	24,000	 	$	12,000	 	$	12,000	
US$/C$ weighted average exchange rate	 	 	1.5900	 	 	1.5000	 	 	1.5600	

US$ put options sold	

 	

 	

 	
Amount (thousands)	 	 	—	 	$	12,000	 	 	—	
US$/C$ weighted average exchange rate	 	 	—	 	 	1.3700	 	 	—	
        Subsequent to year end, the Company entered into forward contracts to hedge additional Canadian dollar expenditures forecasted for 2004. These contracts hedge $10 million at a US$/C$ exchange rate of $1.35. These contracts were entered into at a cost of nil.
        At December 31, 2003, the aggregate unrealized loss of the net market value of Agnico-Eagle's metals derivative position amounted to $6.8 million (2002 — nil). The Company's unrealized gain (loss) on its foreign exchange hedge position at December 31, 2003 was $10.0 million (2002 — $(3.5) million). Since the Company uses only over-the-counter instruments, the fair value of individual hedging instruments is based on readily available market values.
        The following table shows the changes in the fair values of derivative instruments recorded in the consolidated financial statements. The fair values of recorded derivative related assets and liabilities reflect the netting of the fair values of individual derivative financial instruments. Other required derivative disclosures can be found in note 6(d), "Accumulated other comprehensive loss."

 	 	Metals
	 	Foreign Exchange
	 	
 	 	2003
	 	2002
	 	2003
	 	2002
	 	
Fair value, beginning of year	 	$	(26	)	$	4,633	 	$	(3,477	)	$	(4,312	)	
Instruments entered into or settled	 	 	1,861	 	 	(1,602	)	 	2,807	 	 	(473	)	
Changes in fair value	 	 	(1,166	)	 	(3,057	)	 	7,574	 	 	1,308	 	
 	 		 		 		 		 	
Fair value, end of year	 	$	669	 	$	(26	)	$	6,904	 	$	(3,477	)	
 	 		 		 		 		 	
        Agnico-Eagle's exposure to interest rate risk at December 31, 2003 relates to its short-term investments of $106.6 million (2002 — $144.7 million). The Company's short-term investments have a fixed weighted average interest rate of 0.90% (2002 — 2.29%) for a period of 17 days (2002 — 37 days).
46

        In addition, Agnico-Eagle has outstanding letters of credit amounting to C$11.8 million relating to the Executives Plan (2002 — C$11.8 million) for which fees vary up to 2.25% per annum.
        The fair values of Agnico-Eagle's current financial assets and liabilities approximate their carrying values as at December 31, 2003. The fair value of Agnico-Eagle's senior convertible debentures at December 31, 2003 is $152.4 million (2002 — $178.3 million).
10.   ACQUISITIONS
        In the third quarter of 2003, the Company purchased from Barrick Gold Corporation a 100% interest in Barrick's Bousquet property, immediately to the west and south of Agnico-Eagle's 100% owned LaRonde Mine in northwestern Quebec. Agnico-Eagle also acquired used machinery and equipment from the now closed Bousquet Mines including underground rolling stock and the headframe at Bousquet 2. In addition to the Bousquet Mine assets, Agnico-Eagle also purchased certain of Barrick's regional exploration properties.
        The primary reason for the acquisition was to enhance the Company's regional development. With this acquisition, the Company now controls 100% of over 14 miles of contiguous favorable geology along the prolific Cadillac-Bousquet Gold Belt which hosts the Company's 100% owned LaRonde Mine. With this transaction, the Company also has the dominant land position on the Cadillac-Larder Lake Break immediately to the south which hosts the Company's 100% owned Lapa property.
        The Company's consolidated financial statements do not include pro-forma results of operations from this acquisition as there are currently no mining activities on any of the acquired properties.
        The following represents the purchase price allocation for the acquisition:

Cash	 	$	3,665	 	
125,612 Agnico-Eagle shares (valued at $11.67 per share)	 	 	1,466	 	
Transaction costs	 	 	225	 	
 	 		 	
 	 	$	5,356	 	

Allocation of purchase price:	

 	
 	
Buildings and property	 	$	843	 	
Production equipment	 	 	1,499	 	
Head-frame and related infrastructure	 	 	3,463	 	
Mining properties	 	 	5,280	 	
Liabilities assumed	 	 	(5,729	)	
 	 		 	
 	 	$	5,356	 	
 	 		 	
        Also in 2003, the Company purchased a 100% interest in the Lapa property from Breakwater Resources Inc. for $9.1 million (including $0.2 million of transaction costs). The entire purchase price has been classified as mining properties. Under the terms of the agreement, the Company will have to pay contingent consideration of $1 million if the published Inferred Mineral Resource on the property reaches 2,000,000 ounces of gold. This payment would reduce any future royalties payable should the property reach commercial production.
11.   OTHER FINANCIAL INFORMATION

 	 	2003
	 	2002
	 	2001
	
Wages payable	 	$	1,467	 	$	775	 	$	923	
 	 		 		 		
Accrued liabilities	 	$	3,818	 	$	1,335	 	$	1,889	
 	 		 		 		
47

12.   RELATED PARTY TRANSACTIONS
        As at December 31, 2003, the total indebtedness of Sudbury Contact to the Company was $2.739 million (2002 — $2.678 million) including accrued interest to December 31, 2003 of nil (2002 — nil).
        Sudbury Contact was a consolidated entity of the Company for the year ended December 31, 2002. As of August 2003, the Company ceased consolidating Sudbury Contact as the Company's investment no longer represented a "controlling financial interest".
        The loan was originally advanced for the purpose of funding ongoing exploration and operating activities. The loan is repayable on demand with a rate of interest on the loan of 8% per annum. The Company, however, waived the interest on this loan commencing May 13, 2002 and has no intention of charging any interest or demanding repayment in the next year.
        On May 13, 2002, the Company completed a transaction with Sudbury Contact which resulted in the elimination of $25,640,785 of the outstanding amount owed by Sudbury Contact to the Company.
        In addition, the Company provides Sudbury Contact with all of its executives, employees and administrative support at no cost to Sudbury Contact. Two of the seven current directors of Sudbury Contact are also directors of the Company.
48

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 AGNICO-EAGLE MINES LIMITED Notes To Consolidated Financial Statements (In thousands of United States dollars, unless otherwise indicated) December 31, 2003
 
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Exhibit 99D
         
Notice of Annual and Special Meeting
of Common Shareholders
Friday, May 28, 2004
Management Proxy Circular

AGNICO-EAGLE MINES LIMITED
Suite 500
145 King Street East
 Toronto, Ontario
M5C 2Y7
 
 2004 ANNUAL AND SPECIAL MEETING OF COMMON SHAREHOLDERS

Date:	 	Friday, May 28, 2004	

Time:	
 	
10:00 a.m. (Toronto time)	

Place:	
 	
Toronto Hilton
Toronto I Room
145 Richmond Street West
Toronto, Ontario	
Business of the Meeting:	 	(1)	 	Approval of amendments to the Corporation's Stock Option Plan;	

 	
(2)	
 	
Receipt of the financial statements of the Corporation for the year ended December 31, 2003 and the auditors' report on the statements;	

 	
(3)	
 	
Election of directors;	

 	
(4)	
 	
Appointment of auditors;	

 	
(5)	
 	
Consideration of any other business, which may be properly brought before the Annual and Special Meeting of Common Shareholders.	
By order of the Board of Directors

DAVID GAROFALO 
Vice-President, Finance & Chief Financial Officer
March 31, 2004

 
 MANAGEMENT PROXY CIRCULAR
         This Management Proxy Circular is furnished in connection with the solicitation by the management of Agnico-Eagle Mines Limited of proxies for the use at the Corporation's Annual and Special Meeting of Common Shareholders. Unless otherwise stated, all information in this Circular is given as of March 31, 2004 and all dollar amounts are stated in Canadian dollars .
 
 Table of Contents

 	 	 	 	Page
	
Section 1:	 	Voting Information	 	2	

Section 2:	
 	
Business of the Meeting 
Election of Directors	
 	
4	
 	 	Appointment of Auditors	 	6	
 	 	Financial Statements	 	7	
 	 	Amendment to Stock Option Plan	 	7	

Section 3:	
 	
Compensation and Other Information	

 	 	Report on Executive Compensation	 	8	
 	 	Composition of Compensation Committee	 	10	
 	 	Compensation of Officers	 	10	
 	 	Aggregate option exercises during the year ended December 31, 2003 and year end option values	 	12	
 	 	Compensation of Directors	 	14	
 	 	Indebtedness of Directors, Executive Officers and Senior Officers	 	15	
 	 	Performance Graph	 	15	
 	 	Additional Items	 	16	

Appendix A:	
 	
Record of Attendance by Directors	
 	
18	

Appendix B:	
 	
Statement of Corporate Governance Practices	
 	
19	

Appendix C:	
 	
Stock Option Plan Resolution	
 	
24	

Appendix D:	
 	
Amended and Restated Stock Option Plan	
 	
25	
1

 
 SECTION 1: VOTING INFORMATION
Who is soliciting my proxy?
         The management of Agnico-Eagle Mines Limited is soliciting your proxy for use at the Annual and Special Meeting of Common Shareholders.
What will I be voting on?
        You will be voting on:
•
election of directors (page 4);

•
appointment of Ernst & Young LLP as the Corporation's auditors (page 6);

•
amending the Stock Option Plan (page 7); and

•
other business brought before the meeting if any other matter is put to a vote.
What else will happen at the meeting?
        The financial statements for the year ended December 31, 2003 together with the auditors' report on these statements will be presented to the meeting.
How will these matters be decided at the meeting?
        A majority of votes cast, by proxy or in person, will constitute approval of each of the matters specified in this Circular.
How many votes do I have?
        You will have one vote for every common share of the Corporation you own at the close of business on April 12, 2004, the record date for the meeting. To vote shares that you acquired after the record date, you must, no later than the commencement of the meeting:
•
request that the Corporation add your name to the list of voters; and

•
properly establish ownership of the common shares or produce properly endorsed share certificates evidencing that the common shares have been transferred.
How many shares are eligible to vote?
        At the close of business on April 12, 2004, the record date for this meeting, there were 84,602,233 common shares of the Corporation outstanding. Each common share held at that date entitles you to one vote. Fidelity Management & Research Company, Fidelity Management Trust Company and Fidelity International Limited have filed reports with securities regulators stating that they collectively have control over 12,823,221 common shares of the Corporation (15%). To the knowledge of the directors and senior officers of the Corporation, no other person or corporation owns or exercises control or direction over 10% or more of the outstanding common shares.
How do I vote?
        If you are eligible to vote and your shares are registered in your name, you can vote your shares in person at the meeting or by proxy, as explained below. If your shares are registered in the name of an intermediary, such as a bank, trust company, or securities broker, please see the instructions below under the heading "How can a non-registered shareholder vote?"
Voting by proxy
        In addition to voting in person at the meeting, you may vote by mail by completing the form of proxy and returning it in the enclosed envelope to Computershare Trust Company of Canada or the Corporation's address
2

as listed in this Circular. You may also appoint a person (who need not be a shareholder), other than one of the directors or officers named in the proxy, to represent you at the meeting by inserting the person's name in the blank space provided in the proxy, striking out the other names, and returning the proxy no later than 48 hours prior to the commencement of the meeting.
        You may also vote by phone or via the Internet. To vote by phone, in Canada and the United States only, call the toll-free number listed on the proxy from a touch tone phone. When prompted, enter your Holder Account Number and Proxy Access Number listed on the proxy and follow the voting instructions. To vote via the Internet, go to the website specified on the proxy and enter your Holder Account Number and Proxy Access Number listed on the proxy and follow the voting instructions on the screen. If you vote by telephone or via the Internet, do not complete or return the proxy form.
How will my proxy be voted?
        On the form of proxy, you can indicate how you would like your proxyholder to vote your shares for any matter put to a vote at the meeting and on any ballot, your shares will be voted accordingly. If you do not indicate how you want your shares to by voted, the persons named in the proxy intend to vote your shares in the following manner:
(i)
for the election of management's nominees as directors; 

(ii)
for the appointment of management's nominees as the auditors and the authorization of the directors to fix the remuneration of the auditors; 

(iii)
for the proposed amendments to the Corporation's Stock Option Plan; and 

(iv)
for management's proposals generally.
What if I want to revoke my proxy?
        You can revoke your proxy at any time prior to its use. You may revoke your proxy by requesting, or having your authorized attorney request, in writing to revoke your proxy. This request must be delivered to the Corporation's address (as listed in this Circular) before the last business day preceding the day of the meeting or to the Chairman of the meeting on the day of the meeting or any adjournment.
How are proxies solicited?
        The solicitation of proxies will be primarily by mail; however, proxies may be solicited personally or by telephone by directors, officers and regular employees of the Corporation. The cost of this solicitation will be paid by the Corporation.
How can a non-registered shareholder vote?
        If your common shares are not registered in your name, they will be held by an intermediary such as a trust corporation, securities broker or other financial institution. Each intermediary has its own procedures which should be carefully followed by non-registered shareholders to ensure that their shares are voted at the meeting. If you are a non-registered shareholder, you should have received this Circular, together with the proxy from your intermediary. To vote in person at the meeting, follow the instructions set out on the form of proxy, appoint yourself proxyholder, and return the form of proxy. Do not otherwise complete the proxy or voting instruction form sent to you as you will be voting at the meeting.
3

 
 SECTION 2: BUSINESS OF THE MEETING
         Election of Directors
        The articles of the Corporation provide for a minimum of five and a maximum of twelve directors. The number of directors to be elected is eight as determined by the Board of Directors by resolution passed on April 23, 2003. The names of the proposed nominees for election as directors are listed below. Each director will hold office until the next annual meeting of shareholders of the Corporation or until their successors are elected or appointed or the position is vacated. Under the Corporation's retirement policy, directors elected or appointed before April 14, 1998 are required to retire at the age of 75 and directors elected or appointed on or after April 14, 1998 are required to retire at the age of 70. The persons named on the enclosed form of proxy intend to vote for the election of the proposed nominees whose names are set out below and who are all currently directors of the Corporation unless a shareholder has specified in his proxy that his or her common shares are to be withheld from voting for the election of directors. The common share ownership amounts presented in the table do not include common shares underlying immediately exercisable options.

 Dr. Leanne M. Baker , 51, of San Francisco, California, is a director of Agnico-Eagle. Dr. Baker currently acts as a consultant to companies in the mining and financial services industries. Previously, Dr. Baker was employed by Salomon Smith Barney where she was one of the top-ranked mining sector equity analysts in the United States. Dr. Baker has an M.S. and a Ph.D. in mineral economics from the Colorado School of Mines. Dr. Baker was appointed director of Agnico-Eagle effective January 1, 2003. Dr. Baker is also a director of New Sleeper Gold Corporation, a mining exploration corporation which trades on the TSX Venture Exchange.	 	Member of the Audit Committee	 	2,500 common shares
18,000 Options	

 	

 	
Douglas R. Beaumont, P.Eng. , 71, of Toronto, Ontario, is a director of Agnico-Eagle. Mr. Beaumont, now retired, is a former Senior Vice-President, Process Technology with SNC Lavalin. Mr. Beaumont is a graduate of Queen's University (B.Sc.). Mr. Beaumont has been a director of Agnico-Eagle since February 25, 1997.	 	Member of the Compensation and Corporate Governance Committees	 	5,497 common shares
37,000 Options	

 	

 	
 	 	 	 	 	
4

 
Sean Boyd, CA , 45, of Newmarket, Ontario, is the President and Chief Executive Officer and a director of Agnico-Eagle. Mr. Boyd has been with Agnico-Eagle since 1985. Prior to his appointment as President and Chief Executive Officer in 1998, Mr. Boyd served as Vice-President and Chief Financial Officer from 1996 to 1998, Treasurer and Chief Financial Officer from 1990 to 1996, Secretary-Treasurer during a portion of 1990, and Comptroller from 1985 to 1990 and prior to that was a chartered accountant with Clarkson Gordon. Mr. Boyd is a graduate of the University of Toronto (B.Comm.). Mr. Boyd has been a director of Agnico-Eagle since April 14, 1998, and is also President and Chief Executive Officer of Sudbury Contact Mines Limited ("Sudbury Contact"), a 49.9% equity investee of Agnico-Eagle traded on the TSX. Mr. Boyd is also a director of Golden Goliath Resources Ltd., a junior exploration corporation which trades on the TSX Venture Exchange, and a director of the Mining Association of Canada.	 	 	 	166,860 common shares
470,000 Options	

 	

 	
Dr. Alan Green , 69, of Toronto, Ontario, is a director of Agnico-Eagle. Dr. Green is currently a self-employed dentist. Dr. Green is a graduate of the University of Toronto (D.D.S.). Dr. Green has been a director of Agnico-Eagle since August 8, 1995. Dr. Green is also a director of Spruce Ridge Resources Limited, a mining exploration corporation which trades on the TSX Venture Exchange.	 	Member of the Compensation Committee and Chairman of the Corporate Governance Committee	 	81,698 common shares (1)
51,500 Options	

 	

 	
Bernard Kraft, CA·IFA, C.B.V., A.S.A., C.F.E. , 73, of Toronto, Ontario, is a director of Agnico-Eagle. Mr. Kraft is a senior partner of the Toronto accounting firm Kraft, Berger, Grill, Schwartz, Cohen & March LLP, Chartered Accountants and a principal in Kraft Yabov Valuations Inc. Mr. Kraft is a member of the Canadian Institute of Chartered Business Valuators, the Association of Certified Fraud Examiners and the American Society of Appraisers. Mr. Kraft has been a director of Agnico-Eagle since March 12, 1992. Mr. Kraft is also a director of Canadian Shield Resources Inc., a mining exploration corporation which trades on the TSX Venture Exchange.	 	Chairman of the Audit Committee and Member of the Compensation Committee	 	5,497 common shares
35,000 Options	

 	

 	
Mel Leiderman, CA, TEP , 52, of Toronto, Ontario, is a director of Agnico-Eagle. Mr. Leiderman is the managing partner of the Toronto accounting firm Lipton, Wiseman, Altbaum & Partners LLP. Mr. Leiderman is a graduate of the University of Windsor (B.A.). Mr. Leiderman was appointed director effective January 1, 2003.	 	Chairman of the Compensation Committee and Member of the Audit Committee	 	1,000 common shares
18,000 Options	

 	

 	

5

 
James D. Nasso , 70, of Toronto, Ontario, is Chairman of the Board of Directors and a director of Agnico-Eagle. Mr. Nasso, recently retired, founded and was the President of Unilac Limited, a manufacturer of infant formula, for the past 35 years. Mr. Nasso is a graduate of St. Francis Xavier University (B. Comm.). Mr. Nasso has been a director of Agnico-Eagle since June 27, 1986. Mr. Nasso is also a director of Sudbury Contact, a 49.9% equity investee of Agnico-Eagle traded on the TSX.	 	Member of the Audit Committee	 	17,751 common shares
25,000 Options	

 	

 	
Ernest Sheriff , 59, of Toronto, Ontario, is a director of Agnico-Eagle, a position he has held since March 29, 1996. Mr. Sheriff is a self-employed prospector.	 	Member of the Corporate Governance Committee	 	10,497 common shares (2)
43,000 Options	

 	

 	
(1)
Including 18,804 common shares held by Bonaventure Uranium Mines Limited, over which Dr. Green exercises direction.

(2)
Including 5,000 common shares held by Tower Financial Corporation Limited, a corporation wholly-owned by Ernest Sheriff. 
Appointment of Auditors
        The persons named on the enclosed form of proxy intend to vote for the appointment of Ernst & Young LLP as the Corporation's auditors, and for the directors to fix the remuneration of the auditors. Representatives of Ernst & Young LLP are expected to be present at the meeting to respond to appropriate questions and make a statement if they wish to do so. Ernst & Young LLP became the Corporation's auditors in 1983. Fees paid to Ernst & Young LLP for 2003 and 2002 are detailed below.

($ thousands)
	 	Year ended December 31, 2003
	 	Year ended December 31, 2002
	
Audit fees	 	$	230	 	$	234	
Employee benefit plan	 	 	11	 	 	11	
Prospectus-related fees	 	 	—	 	 	383	
French translation fees	 	 	24	 	 	19	
Tax fees	 	 	152	 	 	266	
All other fees	 	 	—	 	 	19	
 	 		 		
 	 	$	417	 	$	932	
 	 		 		
        Audit fees were paid for professional services rendered by the auditors for the audit of the Corporation's annual financial statements and related statutory and regulatory filings.
        Employee benefit plan fees were paid for professional services rendered by the auditors for the audit of the financial statements of the Corporation's employee benefit plans and the related statutory and regulatory filings.
        Prospectus-related fees were paid for professional services rendered by the auditors in connection with the Corporation's November 2002 unit offering of common shares and warrants and the February 2002 offering of Convertible Subordinated Debentures. These services consisted of the audit or review, as required, of financial statements included in the prospectuses, reviewing documents filed with securities regulatory authorities, correspondence with securities regulatory authorities and all other services required by regulatory authorities in connection with the offerings.
        French translation fees were paid for professional services rendered by the auditors in connection with the translation of securities regulatory filings required to comply with securities laws in certain Canadian jurisdictions.
        Tax fees were paid for tax compliance, tax advice and tax planning professional services. These services included the review of tax returns, assistance with eligibility of expenditures under the Canadian flow-through
6

share tax regime, and tax planning and advisory services in connection with international and domestic taxation issues.
        All other fees were paid for services other than the fees listed above and included fees for access to Ernst & Young LLP publications and due diligence assistance for proposed transactions.
        The audit committee has adopted a policy that requires the pre-approval of all fees paid to Ernst & Young LLP prior to the commencement of the specific engagement.
 
 Financial Statements
        The audited annual financial statements for the year ended December 31, 2003 have been mailed to shareholders with this Circular.
Amendment to Stock Option Plan
        The Corporation's Stock Option Plan provides participants with an incentive to enhance shareholder value by providing a form of compensation which is tied to increases in the market value of the Corporation's common shares. Options are granted by the Compensation Committee to eligible employees, directors, officers, and service providers. The exercise price of options granted may not be less than the closing market price of the common shares on the Toronto Stock Exchange on the date of grant. All options granted under the plan expire ten years from the date of grant.
        Currently under the plan, the Corporation has reserved 8,000,000 common shares for issuance under the Stock Option Plan. As at March 31, 2004, 7,746,240 options have been granted under the plan leaving 253,760 options available for future grants. The Compensation Committee considers the Stock Option Plan to be an integral part of overall compensation in order to attract and retain employees with the skills and commitment needed to lead and grow the Corporation's business. The Compensation Committee believes that options should have minimum vesting requirements to provide incentives for meeting long-term goals. Therefore, the Compensation Committee is recommending the following changes to the Corporation's Stock Option Plan:
1.
Increase the number of common shares reserved for issuance under the Stock Option Plan by 2,000,000 shares from 8,000,000 to 10,000,000 common shares;

2.
Shorten the maximum term of options from 10 to 5 years after the date of grant;

3.
Introduce mandatory delayed vesting of options; and

4.
Limit the number of stock options issued in any one year to 1% of the Corporation's outstanding shares.
        At the meeting, shareholders will be asked to consider an ordinary resolution (attached to this Circular as Appendix C) to approve the above amendments to the Corporation's Stock Option Plan. If the resolution is approved, the number of common shares available for future option grants will be 2,253,760. As at March 31, 2004, 3,301,400 options granted under the plan were unexercised. The unexercised options together with the shares available for future grants would leave 5,555,160 common shares reserved for issuance under the plan as at March 31, 2004. This amount will represent 6.6% of the 84,596,533 common shares issued and outstanding as of March 31, 2004.
        The Toronto Stock Exchange requires that this resolution be passed by the affirmative vote of at least a majority of the votes cast, by proxy or in person. In addition to shareholder approval, the increase in shares available for future grants under the Stock Option Plan is subject to regulatory approval.
7

 
 SECTION 3: COMPENSATION AND OTHER INFORMATION
         Report on Executive Compensation
Compensation Philosophy
        The Corporation's officers have a significant influence on corporate performance and creating shareholder value. With this in mind, the Corporation's philosophy regarding compensation is that it must:
•
be competitive in order to attract and retain employees with the skills and commitment needed to lead and grow the Corporation's business;

•
provide a strong incentive to achieve the Corporation's goals; and

•
ensure that interests of management and the Corporation's shareholders are aligned.
        The compensation paid to the Corporation's officers has three components:
•
Base salary and benefits;

•
Annual incentive compensation; and

•
Long-term incentive compensation in the form of stock options.
        The Compensation Committee reviews each component of compensation for each officer and makes compensation recommendations to the Board of Directors. The Board reviews the recommendations and gives final approval on compensation of the Corporation's officers. The Board has complete discretion over the amount and composition of each officer's compensation.
Base Salary
        Base salary is the principal component of an executive officer's compensation package. Annual base salaries are established using external surveys of average base salaries paid to officers of other mining companies of similar size as the Corporation. Base salary levels take into account the officers' individual responsibility, experience, performance and contribution toward enhancing shareholder value.
Annual Incentive Compensation
        Annual incentive compensation for the Corporation's officers is equally contingent on the Corporation's performance and the individual's contribution to that performance. Annual incentive awards are contingent on achieving various Corporation specific targets such as return on equity and profitability. Annual incentive compensation is capped at 50% of base salary for Mr. Boyd, 40% of base salary for Mr. Scherkus and 35% of base salary for all other vice-presidents of the Corporation. In certain circumstances, the Board my also consider paying bonuses in excess of these caps as was the case in 2003 for Alain Blackburn. For 2003, Mr. Blackburn, was the only officer to receive an annual incentive award. His incentive award of $75,000 was in excess of the 35% cap in recognition of his leadership in the drilling program at the Corporation's Lapa property which culminated with year end gold reserves being reported on that property.
Stock Options
        Stock options tie officers' compensation to increases in the value of the Corporation's common shares and therefore provide an incentive to enhance shareholder value. Grants of stock options are based on three factors:
•
the employee's performance;

•
the employee's level of responsibility within the Corporation; and

•
the number and exercise price of options previously issued to the employee.
8

        Under the proposed amendments to the Corporation's Stock Option Plan to be considered at the meeting, stock option awards will be subject to mandatory delayed vesting and have a maximum term of five years.
Share Ownership
        In order to align the interests of the Corporation and its officers and employees, the Corporation encourages stock ownership and facilitates this through its incentive share purchase plan. Details of this plan can be found on page 12 of this Circular.
        All of the Corporation's officers own common shares of the Corporation. The following table summarizes each officer's holdings as at March 31, 2004:

Sean Boyd, Director, President and Chief Executive Officer	 	166,860	
Eberhard Scherkus, Executive Vice-President and Chief Operating Officer	 	46,525	
David Garofalo, Vice-President, Finance and Chief Financial Officer	 	22,834	
Barry Landen, Vice-President, Corporate Affairs	 	68,207	
Donald G. Allan, Vice-President, Corporate Development	 	2,308	
Alain Blackburn, Vice-President, Exploration	 	2,630	
Chief Executive Officer's 2003 Compensation
        Mr. Boyd served as President and Chief Executive Officer of the Corporation and received a $600,000 base salary in 2003. In determining the base salary of Mr. Boyd, the Compensation Committee reviewed industry surveys prepared by independent consultants, an internally generated industry survey and public information regarding base salaries paid to chief executive officers of public mining companies of comparable size and complexity. The Committee also considered other factors such as Mr. Boyd's responsibilities and contribution to business performance such as his leadership in connection with the continued pursuit of the Corporation's regional growth strategy. The principal responsibilities of the President and Chief Executive Officer include selecting and appointing senior officers, establishing and monitoring long-term strategic corporate objectives and supervising the Corporation's mining exploration and development activities.
        In setting Mr. Boyd's base salary, the Committee considered the following performance highlights:
•
continued leadership in defining regional strategy which led to the acquisition of various properties including Lapa, which reported year end gold reserves for the first time in 2003, and Bousquet which now serves as the Corporation's regional development hub;

•
steering Agnico-Eagle through operating challenges and the re-evaluation of the Corporation's mining plan in order to reduce mining risk;

•
the successful increase of reserves at the LaRonde Mine; and

•
continued rationalization of the Corporation's structure including the implementation of plans to increase Sudbury Contact's independence from the Corporation.
        Despite the individual contributions of Mr. Boyd, given the Corporation's net loss for the year ended December 31, 2003, the Committee decided not to award Mr. Boyd any annual incentive compensation for 2003.
        The foregoing report is submitted by the Compensation Committee of the Board of Directors.
Mel Leiderman, CA, TEP, Chairman
Bernard Kraft, CA·IFA, C.B.V., A.S.A., C.F.E.
Douglas R. Beaumont
Dr. Alan Green
9

 Composition of Compensation Committee
        The Compensation Committee consists of Mel Leiderman, Bernard Kraft, Doug Beaumont and Dr. Alan Green. Mr. Leiderman joined the Committee in June 2003. None of the members of the Committee is an officer or employee or former officer or employee of the Corporation or any of its subsidiaries and all of the members are considered to be unrelated to and independent from the Corporation.
Compensation of Officers
        The executive officers of the Corporation are:
•
Sean Boyd, President and Chief Executive Officer

•
Eberhard Scherkus, Executive Vice-President and Chief Operating Officer

•
David Garofalo, Vice-President, Finance and Chief Financial Officer

•
Barry Landen, Vice-President, Corporate Affairs

•
Donald G. Allan, Vice-President, Corporate Development

•
Alain Blackburn, Vice-President, Exploration
        Anton Adamcik was the Vice-President, Environment of the Corporation until his retirement on March 1, 2004. Mr. Adamcik continues to provide services to the Corporation as a consultant and has entered into a consulting agreement with the Corporation in consideration of enhanced pension and other benefits.
        The Summary Compensation Table details compensation during the three fiscal years ended December 31, 2003 for the President and Chief Executive Officer and the four other most highly compensated officers (collectively the "Named Executive Officers") of the Corporation measured by base salary and bonus earned during the fiscal year ended December 31, 2003.
Summary Compensation Table — Agnico-Eagle Mines Limited

 	 	Annual Compensation
	 	Long-Term Compensation Awards
	 	 	
Name and Principal Position
	 	Year
	 	Salary ($)
	 	Bonus ($)
	 	Securities Under Options
	 	All Other Compensation (1)
	
Sean Boyd 
President and
Chief Executive Officer	 	2003
2002
2001	 	600,000
555,481
455,000	 	—

275,000
225,000	 	—

225,000
63,750	 	30,574
27,701
27,480	
Eberhard Scherkus 
Executive Vice-President and
Chief Operating Officer	 	2003
2002
2001	 	435,000
402,596
330,000	 	—

150,000
175,000	 	—

135,000
37,000	 	23,074
22,430
21,420	
David Garofalo 
Vice-President, Finance and
Chief Financial Officer	 	2003
2002
2001	 	290,000
270,096
220,000	 	—

88,000
73,000	 	—
75,000
18,000	 	3,324
15,896
13,060	
Donald G. Allan 
Vice-President,
Corporate Development	 	2003
2002
2001	 	220,000
200,000
—	
(2)	—

45,000
—	 	—

50,000
—	 	13,376
6,250
—	
Alain Blackburn 
Vice-President,
Exploration	 	2003
2002
2001	 	175,000
152,885
135,000	 	75,000
36,000
20,000	 	—

25,000
—	 	13,376
13,830
13,642	
(1)
Consists of annual contributions made by the Corporation on behalf of the Named Executive Officers under the Corporation's defined contribution pension plan (see "Pension Arrangements") and premiums paid for term life insurance for the Named Executive Officers.

(2)
Mr. Allan joined the Corporation in May 2002. This amount represents his annualized salary as if he had been employed for the full year.

        Each of the Named Executive Officers also serves as an executive officer of Sudbury Contact, a 49.9% equity investee of the Corporation. None of the executive officers receives separate or additional remuneration
10

from Sudbury Contact as it is understood that their positions in the Corporation include the provision of services to Sudbury Contact. The executive officers are entitled to receive option grants as determined by the Board of Directors of Sudbury Contact.
Stock Option Plan
        Under the Corporation's Stock Option Plan, options to purchase common shares may be granted to directors, officers, employees, and service providers of the Corporation. The exercise price of options granted may not be less than the closing market price for the common shares of the Corporation on The Toronto Stock Exchange on the day prior to the date of grant. Shareholders are being asked to vote at this meeting on amendments to the Stock Option Plan recommended by the Compensation Committee to reduce the maximum term of options from ten to five years; to limit the number of stock options issued in any one year to 1% of the Corporation's shares outstanding; and to introduce mandatory delayed vesting of options.
        As discussed on page 7, the Compensation Committee is also recommending an increase of 2,000,000 common shares reserved for issuance under the Stock Option Plan from 8,000,000 to 10,000,000 common shares. Should shareholders approve this recommendation, the maximum amount of shares issuable under the Stock Option Plan (which includes options available for future grants and unexercised options) would be 6.6% of the Corporation's 84,596,533 common shares outstanding as at March 31, 2004.
        In July, 2003, the Corporation's Stock Option Plan was amended to restrict the entitlement to loans, guarantees or other support arrangements to facilitate option exercises to eligible persons who are not directors or officers of the Corporation. During 2003, no loans, guarantees or other financial assistance was provided under the plan.
        During 2003, no options were granted to the Named Executive Officers under the Corporation's Stock Option Plan. The Named Executive Officers were granted options under Sudbury Contact's Stock Option Plan. The following table details stock option awards received by the Named Executive Officers from Sudbury Contact during December 31, 2003.
Option grants of Sudbury Contact Mines Limited during the most recently completed financial year

Name
	 	Securities Under Options
	 	% of Total Option Grants in Year
	 	Exercise Price
	 	Market Value of Underlying Options on Date of Grant
	 	Expiration Date
	
Sean Boyd	 	82,000	 	14.44%	 	2.67	 	2.67	 	February 14, 2013	
Eberhard Scherkus	 	60,000	 	10.56%	 	2.67	 	2.67	 	February 14, 2013	
David Garofalo	 	35,000	 	6.16%	 	2.67	 	2.67	 	February 14, 2013	
Donald G. Allan	 	35,000	 	6.16%	 	2.67	 	2.67	 	February 14, 2013	
Alain Blackburn	 	50,000	 	8.80%	 	2.67	 	2.67	 	February 14, 2013	
        The following tables show, for each Named Executive Officer, the number of common shares acquired through the exercise of stock options of the Corporation and Sudbury Contact during the year ended December 31, 2003, the aggregate value realized upon exercise and the number of unexercised options under the Stock Option Plan as at December 31, 2003. The value realized upon exercise is the difference between the market value of the Corporation's common shares on the exercise date and the exercise price of the option. The value of unexercised in-the-money options at December 31, 2003 is the difference between the exercise price of the options and the market value of the Corporation's common shares on December 31, 2003, which was $15.63 per share of the Corporation's common stock and $1.90 per share of Sudbury Contact common stock.
11

Aggregate option exercises during the year ended December 31, 2003 and year end option values

 	 	 	 	 	 	Unexercised options at December 31, 2003
	 	Value of unexercised in the money options at December 31, 2003 ($)
	
Name
	 	Securities acquired at exercise
	 	Aggregate value realized
($)
					
					 	Exerciseable
	 	Unexerciseable
	 	Exerciseable
	 	Unexerciseable
	
Agnico-Eagle Mines Limited	 	 	 	 	 	 	 	 	 	 	 	 	
Sean Boyd	 	33,950	 	214,859	 	455,000	 	15,000	 	913,100	 	78,450	
Eberhard Scherkus	 	Nil	 	Nil	 	351,200	 	10,000	 	942,946	 	52,300	
David Garofalo	 	Nil	 	Nil	 	98,000	 	5,000	 	139,450	 	26,150	
Donald G. Allan	 	Nil	 	Nil	 	50,000	 	Nil	 	Nil	 	n/a	
Alain Blackburn	 	Nil	 	Nil	 	106,000	 	2,000	 	46,780	 	10,460	

Sudbury Contact Mines Limited	

 	

 	

 	

 	
Sean Boyd	 	Nil	 	Nil	 	400,000	 	Nil	 	180,000	 	Nil	
Eberhard Scherkus	 	Nil	 	Nil	 	260,000	 	Nil	 	112,500	 	Nil	
David Garofalo	 	Nil	 	Nil	 	145,000	 	Nil	 	54,000	 	Nil	
Donald G. Allan	 	Nil	 	Nil	 	65,000	 	Nil	 	Nil	 	Nil	
Alain Blackburn	 	Nil	 	Nil	 	150,000	 	Nil	 	45,000	 	Nil	
        The following table shows as at December 31, 2003, compensation plans under which equity securities of the Corporation are authorized for issuance from treasury. The information has been aggregated by plans approved by shareholders and plans not approved by shareholders, of which there are none.

Plan Category
	 	Number of securities to be issued on exercise of outstanding options
	 	Weighted average exercise price of outstanding options
	 	Number of securities remaining available for future issuances under equity compensation plans
	
Equity compensation plans approved by shareholders	 	2,845,150	 	$	14.85	 	279,000	
Equity compensation plans not approved by shareholders	 	0	 	 	0	 	0	
Incentive Share Purchase Plan
        In 1997, the shareholders of the Corporation approved the Share Purchase Plan to encourage directors, officers and full-time employees of the Corporation to purchase common shares of the Corporation. Full-time employees who have been continuously employed by the Corporation or its subsidiaries for at least twelve months are eligible each January 1 to participate in the Share Purchase Plan. Eligible employees may contribute up to 10% of their basic annual salary through monthly payroll deductions or quarterly payments by cheque. Directors may contribute up to 100% of their annual Board and committee retainer fees. The Corporation contributes an amount equal to 50% of the individual's contributions and issues shares which have a market value equal to the aggregate (individual and Corporation) contributions. The Corporation has reserved 1,349,659 common shares for issuance under the plan.
Pension Arrangements
        The four individual Retirement Compensation Arrangement Plans (RCA Plans) for Mr. Boyd, Mr. Scherkus, Mr. Adamcik and Mr. Landen provide pension benefits which are generally equal (on an after-tax basis) to what the pension benefits would be if they were provided directly from a registered pension plan. There are no pension benefit limits under the RCA Plans. The RCA Plans provide an annual pension at age 60 equal to 2% of the executive's final three-year average pensionable earnings for each year of continuous service with the Corporation, less the annual pension payable under the Corporation's basic defined contribution plan. Payments under the RCA Plans are secured by a letter of credit from a Canadian chartered bank.
        The following chart provides illustrations of the total estimated pension payable from both the RCA Plans and the basic defined contribution plan assuming various current pensionable earnings, current ages and total
12

years of service to retirement at age 60. In all cases, it was assumed that current pensionable earnings would increase at the rate of 3% per annum, compounded annually.

 	 	 	 	Total Years of Service with the Corporation to Age 60 (1)(2)
	
Current Earnings
	 	Current Age
			
			 	15 years
	 	20 years
	 	25 years
	 	30 years
	 	35 years
	
$150,000	 	45	 	$	66,100	 	$	88,100	 	$	110,100	 	$	132,200	 	$	154,200	
 	 	50	 	 	57,000	 	 	76,000	 	 	95,000	 	 	114,000	 	 	133,000	
 	 	55	 	 	49,200	 	 	65,600	 	 	82,000	 	 	98,300	 	 	114,700	
 	 	60	 	 	42,400	 	 	56,600	 	 	70,700	 	 	84,800	 	 	99,000	
$200,000	 	45	 	$	88,100	 	$	117,500	 	$	146,900	 	$	176,200	 	$	205,600	
 	 	50	 	 	76,000	 	 	101,300	 	 	126,700	 	 	152,000	 	 	177,300	
 	 	55	 	 	65,600	 	 	87,400	 	 	109,300	 	 	131,100	 	 	153,000	
 	 	60	 	 	56,600	 	 	75,400	 	 	94,300	 	 	113,100	 	 	132,000	
$300,000	 	45	 	$	132,200	 	$	176,200	 	$	220,300	 	$	264,300	 	$	308,400	
 	 	50	 	 	114,000	 	 	152,000	 	 	190,000	 	 	228,000	 	 	266,000	
 	 	55	 	 	98,300	 	 	131,100	 	 	163,900	 	 	196,700	 	 	229,500	
 	 	60	 	 	84,800	 	 	113,100	 	 	141,400	 	 	169,700	 	 	197,900	
$400,000	 	45	 	$	176,200	 	$	235,000	 	$	293,700	 	$	352,400	 	$	411,200	
 	 	50	 	 	152,000	 	 	202,700	 	 	253,400	 	 	304,000	 	 	354,700	
 	 	55	 	 	131,100	 	 	174,800	 	 	218,500	 	 	262,300	 	 	306,000	
 	 	60	 	 	113,100	 	 	150,800	 	 	188,500	 	 	226,200	 	 	263,900	
$450,000	 	45	 	$	198,300	 	$	264,300	 	$	330,400	 	$	396,500	 	$	462,600	
 	 	50	 	 	171,000	 	 	228,000	 	 	285,000	 	 	342,000	 	 	399,000	
 	 	55	 	 	147,500	 	 	196,700	 	 	245,900	 	 	295,000	 	 	344,200	
 	 	60	 	 	127,300	 	 	169,700	 	 	212,100	 	 	254,500	 	 	296,900	
$550,000	 	45	 	$	242,300	 	$	323,100	 	$	403,800	 	$	484,600	 	$	565,400	
 	 	50	 	 	209,000	 	 	278,700	 	 	348,400	 	 	418,000	 	 	487,700	
 	 	55	 	 	180,300	 	 	240,400	 	 	300,500	 	 	360,600	 	 	420,700	
 	 	60	 	 	155,500	 	 	207,400	 	 	259,200	 	 	311,100	 	 	362,900	
$600,000	 	45	 	$	264,300	 	$	352,400	 	$	440,600	 	$	528,700	 	$	616,800	
 	 	50	 	 	228,000	 	 	304,000	 	 	380,000	 	 	456,000	 	 	532,000	
 	 	55	 	 	196,700	 	 	262,300	 	 	327,800	 	 	393,400	 	 	458,900	
 	 	60	 	 	169,700	 	 	226,200	 	 	282,800	 	 	339,300	 	 	395,900	
$700,000	 	45	 	$	308,400	 	$	411,200	 	$	514,000	 	$	616,800	 	$	719,600	
 	 	50	 	 	266,000	 	 	354,700	 	 	443,400	 	 	532,000	 	 	620,700	
 	 	55	 	 	229,500	 	 	306,000	 	 	382,500	 	 	458,900	 	 	535,400	
 	 	60	 	 	197,900	 	 	263,900	 	 	329,900	 	 	395,900	 	 	461,900	
        At December 31, 2003, the four individuals under the RCA Plans had the following years of service:

•	 	Mr. Boyd	 	18 years	
•	 	Mr. Scherkus	 	18 years	
•	 	Mr. Landen	 	23 years	
•	 	Mr. Adamcik	 	30 years	
        The pensionable earnings for the purposes of the RCA Plans consist of all basic remuneration and do not include benefits, bonuses, automobile or other allowances, and unusual payments. Mr. Adamcik retired on March 1, 2004.
Employment Contracts/Termination Arrangements
        The Corporation has employment agreements with all executive officers which provide for an annual base salary, bonus and certain pension, health, dental and other insurance and automobile benefits. The agreements
13

were amended in December 2002 and provide minimum annual base salaries for the Named Executive Officers as follows:

•	 	Mr. Boyd	 	$600,000	
•	 	Mr. Scherkus	 	$435,000	
•	 	Mr. Garofalo	 	$290,000	
•	 	Mr. Allan	 	$220,000	
•	 	Mr. Blackburn	 	$175,000	
        These amounts may be increased at the discretion of the Board of Directors upon the recommendation of the Compensation Committee. If the individual agreements are terminated other than for cause, death or disability, or upon their resignations following certain events, all of the above named individuals would be entitled to a payment equal to two and one-half times the annual base salary at the date of termination plus an amount equal to two and one-half times the annual bonus (averaged over the preceding two years) and a continuation of benefits for up to two years or until the individual commences new employment. Certain events that would trigger a severance payment are:
•
a substantial alteration of responsibilities;

•
a reduction of base salary or benefits;

•
an office relocation of greater than 50 miles;

•
a failure to obtain a satisfactory agreement from any successor to assume the individual's employment agreement or provide the individual with a comparable position, duties, salary and benefits; or

•
any change in control of the Corporation.
Compensation of Directors
        Mr. Boyd, who is a director, and is also the President and Chief Executive Officer of the Corporation, receives no remuneration for his services as a director.
        The table below summarizes the annual retainers and attendance fees paid to the other directors during the year ended December 31, 2003. On March 17, 2004, the Compensation Committee decided to implement changes to the directors' compensation structure to improve corporate governance practices and to compensate directors for the increased risk, workload and responsibilities demanded by their positions.

 	 	Compensation paid during the year ended December 31, 2003
	 	New compensation effective July 1, 2004
	
Annual board retainer	 	$	18,000	 	$	20,000	
Annual retainer for Chairman of the Board	 	$	50,000	 	$	50,000	
Annual retainer for Chairman of the Audit Committee	 	$	3,000	 	$	7,500	
Annual retainer for chairpersons of other Board committees	 	$	3,000	 	$	5,000	
Board meeting attendance fee	 	$	1,000	 	$	1,500	
Long-distance Board meeting attendance fee	 	$	1,500	 	$	2,000	
Board meeting phone attendance fee	 	$	1,000	 	$	750	
        In addition to the changes made to the annual retainers and attendance fees, on March 17, 2004, the Compensation Committee also implemented the following changes related to director compensation.
•
To align the interests of directors with those of shareholders, directors, other than Mr. Boyd, are now required to own the equivalent of at least three years of their annual retainer fee in the Corporation's stock. Directors have a period of three years to achieve this ownership level either through open market purchases or through participation in the Corporation's Incentive Share Purchase Plan.
14

•
Each director, other than Mr. Boyd, will be eligible to be granted a maximum of 7,500 options per year under the Corporation's Stock Option Plan. Individual grants will be determined annually by the Compensation Committee based on performance evaluations for each director.
        During the year ended December 31, 2003, the Corporation issued a total of 8,732 common shares under the Corporation's Incentive Share Purchase Plan to directors.
        Mr. Nasso and Mr. Boyd are also directors of Sudbury Contact, a 49.9% equity investee of the Corporation. Sudbury Contact pays its directors a board meeting attendance fee of $300 per meeting. Mr. Boyd is also the President and Chief Executive Officer of Sudbury Contact and therefore does not receive remuneration for his services as a director. During the year ended December 31, 2003, Mr. Nasso, in his capacity as chairman and a director of Sudbury Contact, was awarded 25,000 options to purchase common shares of Sudbury Contact under Sudbury Contact's Stock Option Plan.
Indebtedness of Directors, Executive Officers and Senior Officers
        Throughout the year ended December 31, 2003, there was no outstanding indebtedness to the Corporation by any of its officers or directors made in connection with the purchase of securities of the Corporation. Throughout the year ended December 31, 2003 and as at March 31, 2004, the only officer indebted to the Corporation was Alain Blackburn, Vice-President, Exploration. The loan advanced by the Corporation to Mr. Blackburn was for the purchase of a residence as a relocation incentive. The loan is secured by a second mortgage on the residence of Mr. Blackburn which provides for full recourse against the assets of Mr. Blackburn. As at December 31, 2003, the amount outstanding under this loan was $102,500. As at March 31, 2004, the amount outstanding under this loan was $101,250. The highest aggregate amount of indebtedness outstanding under the loan in 2003 was $107,500. The Corporation will no longer make loans to officers under any circumstances.
Performance Graph
        The following graph compares the total cumulative return of $100 invested in the Corporation's common shares on December 31, 1998 with the cumulative total return for each of The S&P/TSX Composite Index and The Toronto Stock Exchange Gold and Precious Minerals Total Return Index (the "TSX Gold Index") over the five-year period ended December 31, 2003 (in each case, assuming reinvestment of dividends). The table shows what a $100 investment in each of the above mentioned indices and in Agnico-Eagle common shares, made at December 31, 1998, would be worth in each of the five years following the initial investment.

15

Additional Items
Corporate Governance
        Under the rules of the Toronto Stock Exchange, the Corporation is required to disclose information relating to its system of corporate governance. The Corporation's corporate governance disclosure is set out in Appendix B to this Circular under the heading "Corporate Governance". In addition to describing the Corporation's governance practices with reference to the rules of the Toronto Stock Exchange, Appendix B to this Circular indicates how these governance practices align with the requirements and U.S. Securities and Exchange Commission regulations under the Sarbanes-Oxley Act of 2002 and the proposed amendments under the rules of the Toronto Stock Exchange and the New York Stock Exchange.
        The Board of Directors and management have been following the developments in corporate governance requirements and best practices standards in both Canada and the United States. As these requirements and practices have evolved, the Corporation has responded in a positive and proactive way by assessing its practices against these requirements and modifying, or targeting for modification, practices to bring them into compliance with these corporate governance requirements and best practices standards. The Corporation has also revised the charters for the Audit Committee, the Compensation Committee and the Governance Committee to reflect the new and evolving corporate governance requirements and best practices standards in Canada and the United States.
Directors' and Officers' Liability Insurance
        The Corporation has purchased, at its expense, directors' and officers' liability insurance policies to provide insurance against possible liabilities incurred by them in their capacity as directors and officers of the Corporation. The premium for these policies for the period from December 31, 2003 to December 31, 2004 is $477,330. The policies provide coverage of up to $25 million per occurrence, to a maximum of $25 million per annum. There is no deductible for directors and officers and a $250,000 deductible for each claim made by the Corporation ($1 million deductible for securities claims). The insurance applies in circumstances where the Corporation may not indemnify its directors and officers for their acts or omissions.
Additional Information
        The Corporation is a reporting issuer under the securities acts of all the provinces of Canada and a registrant under the United States Securities Exchange Act of 1934 and is therefore required to file certain documents with various securities commissions. To obtain a copy of any of the following documents, please contact the Vice-President, Corporate Affairs:
•
the Corporation's most recent Annual Information Form consisting of the Corporation's Annual Report on Form 20-F under the United States Securities Exchange Act of 1934;

•
the Corporation's Audited Annual Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2003, which includes the Corporation's financial information;

•
any interim financial statements of the Corporation subsequent to the financial statements for the year ended December 31, 2003; and

•
Management Proxy Circular.
        Alternatively, these documents may be viewed at the Corporation's website at http://www.agnico-eagle.com or on the SEDAR website at http://www.sedar.com.
General
        Management knows of no matters to come before the meeting other than matters referred to in the Notice. However, if any other matters which are not now known to management should properly come before the meeting, the proxy will be voted on such matters in accordance with the best judgment of the person or persons voting the proxy.
16

Directors' Approval
        The Board of Directors of the Corporation has approved the content and sending of this Management Proxy Circular.
March 31, 2004

DAVID GAROFALO 
Vice-President, Finance & Chief Financial Officer
17

 
 APPENDIX A:

RECORD OF ATTENDANCE BY DIRECTORS

Director
	 	Board Meetings Attended
	 	Committee Meetings Attended
	 	
Leanne M. Baker	 	9 of 9	 	2 of 2	(1)	

Douglas R. Beaumont, P.Eng .	
 	
9 of 9	
 	
4 of 4	

Sean Boyd, CA	
 	
9 of 9	
 	
N/A	

Dr. Alan Green	
 	
8 of 9	
 	
4 of 4	

Bernard Kraft, CA	
 	
8 of 9	
 	
6 of 6	

Mel Leiderman, CA , TEP	
 	
8 of 9	
 	
6 of 6	

James D. Nasso	
 	
9 of 9	
 	
4 of 4	

Ernest Sheriff	
 	
8 of 9	
 	
2 of 2	

John T. Clement, Q.C .	
 	
4 of 4	
(2)	
N/A	

(1)
Ms. Baker was appointed to the Audit Committee in July of 2003.

(2)
Mr. Clement retired from the Board in June of 2003.
18

 
 APPENDIX B:

STATEMENT OF CORPORATE GOVERNANCE PRACTICES
        The Corporation is required under the By-laws of the Toronto Stock Exchange ("TSX") to make disclosure of its corporate governance practices and provide a description of the Corporation's system of corporate governance with specific reference to the guidelines (the "TSX Guidelines") set out in the TSX Company Manual. Where the Corporation's system is different from any of those guidelines or where the guidelines do not apply, the Corporation must provide an explanation of the differences or their inapplicability.
        The following Statement of Corporate Governance Practices has been prepared by the Board's Governance Committee and approved by the Board of Directors.
        The Board of Directors believes that effective corporate governance contributes to improved corporate performance and enhanced shareholder value. The Corporation's governance practices reflect the Board's assessment of the governance structure and process which can best serve to realize these objectives in the Corporation's particular circumstance. The Corporation's governance practices are subject to review and evaluation through the Board's Governance Committee to ensure that, as the Corporation's business evolves, changes in structure and process necessary to ensure continued good governance are identified and implemented.
        The Board of Directors and management have been following the developments in corporate governance requirements and best practices standards in both Canada and the United States. As these requirements and practices have evolved, the Corporation has responded in a positive and proactive way by assessing its practices against these requirements and modifying, or targeting for modification, practices to bring them into compliance with these corporate governance requirements and best practices standards. The Corporation has also revised the charters for the Audit Committee, the Compensation Committee and the Governance Committee to reflect the new and evolving corporate governance requirements and best practices standards in Canada and the United States.
        Details of the Corporation's corporate governance practices and the responsibilities of the Board, with reference to the enumerated TSX Guidelines, are addressed below.
1.    The Board should explicitly assume responsibility for stewardship of the Corporation, and specifically should assume responsibility for the following matters: (i) adoption of a strategic planning process, (ii) identification of principal risks of the business and implementation of systems of risk management, (iii) provision for succession planning, including appointment, training and monitoring of senior management, (iv) establishment of a communications policy and (v) the integrity of the Corporation's internal control and management information systems.
        The Board's responsibility is to supervise the management of the business and affairs of the Corporation and to act with a view to the best interests of the Corporation.
        In discharging this responsibility, the Board oversees and monitors significant corporate plans and strategic initiatives. The Board's strategic planning process consists of an annual review of the Corporation's three-year business plan and, from time to time (at least annually), a meeting focused on strategic planning matters. As part of this process, the Board reviews and approves the corporate objectives proposed by the President and advises management in the development of a corporate strategy to achieve those objectives.
        The Board also monitors the performance of senior management against the business plan through a periodic review process (at least every quarter) and reviews and approves promotion and succession matters. The Board reviews the principal risks inherent in the Corporation's business, including environmental, industrial and financial risks, and assesses the systems to manage these risks.
        The Board considers the Corporation's approach to communications with shareholders and other stakeholders and approves specific communications initiatives from time to time. The Corporation conducts an active investor relations program. The program involves responding to shareholder inquiries, briefing analysts and fund managers with respect to reported financial results and other announcements by the Corporation, as well as meeting with individual investors and other stakeholders. Senior management reports regularly to the
19

Board on these matters. The Board reviews and approves the Corporation's major communications with shareholders and the public, including quarterly and annual financial results, the annual report and management information circular. The Board has a Disclosure Policy which establishes standards and procedures relating to contacts with analysts and investors, news releases, conference calls, disclosure of material information, trading restrictions and blackout periods.
        The Board, directly and through its Audit Committee, also assesses the integrity of the Corporation's internal control and management information systems.
        The Board meets at least six times a year and more frequently if required. In 2003, the Board held nine meetings.
2.    The Board should be constituted with a majority of individuals who qualify as unrelated directors.
        The Board currently consists of eight directors. The Board believes that seven of its eight current members are "unrelated" within the meaning of the TSX Guidelines. With the exception of Mr. Boyd, all directors are independent of management and free from any interest and any business which could materially interfere with their ability to act as a director with a view to the best interests of the Corporation. In reaching this determination, the Board considered the circumstances and relationships with the Corporation and its affiliates of each of its directors. In determining that all directors except Mr. Boyd are independent, the Board took into consideration the fact that none of the remaining directors is an officer or employee of the Corporation or party to any material contract with the Corporation and that none receives remuneration from the Corporation in excess of directors' fees, grants and grants of stock options.
        Mr. Boyd is considered related because he is an officer of the Corporation. All directors, other than Mr. Boyd, also meet the independence standard as set out in the Sarbanes-Oxley Act of 2002 ("SOX").
3.    The Board, in the case of a corporation with a significant shareholder, should disclose whether the Board is constituted with the appropriate number of directors which are not related to either the Corporation or the significant shareholder.
        The Corporation's common shares are widely held and it has no "significant shareholder" with the ability to exercise a majority of the votes for the election of directors to the Board.
4.    The Board should appoint a committee of directors composed exclusively of non-management directors and unrelated directors, that is responsible for the appointment and assessment of directors.
        The Corporation's Governance Committee (see description of Governance Committee under guideline number 9) is responsible for the assessment of the effectiveness of the Board as a whole and participates in the recruitment and recommendation of new nominees for appointment or election to the Board of Directors.
5.    The Board should implement a process for assessing the effectiveness of the Board, its committees and individual directors.
        See description of Governance Committee under guideline number 9.
6.    The Board should provide an orientation and education program for new directors.
        The Corporation does not have a formal orientation and education program for new directors. However, all but two of the current directors have been members of the Board for several years and are well versed in the business of the Corporation. In addition, the two new members of the Board have attended orientation sessions and have been provided with all documentation relating to the policies and procedures of the Corporation.
7.    The Board should examine the size of the Board, with specific reference to its effectiveness.
        The size and composition of the Board is subject to periodic review by the Governance Committee.
8.    The Board should review compensation of directors in light of risks and responsibilities.
        Remuneration is paid to the Corporation's directors based on several factors, including time commitments, risk workload, and responsibility demanded by their positions. The Compensation Committee periodically reviews and fixes the amount and composition of the compensation of directors. On March 17, 2004, due to
20

increased risk and workload, the Compensation Committee decided to amend the compensation of directors. For a summary of these changes, please see "Executive Compensation — Compensation of Directors" and the description of the Compensation Committee under guideline number 9.
9.    The Board should ensure that its committees are generally composed of only outside directors, a majority of whom are unrelated directors.
        The Board has three Committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee.
Audit Committee
        The Audit Committee has two primary objectives. The first is to advise the Board of Directors in its oversight responsibilities regarding:
•
the quality and integrity of the Corporation's financial reports and information;

•
the Corporation's compliance with legal and regulatory requirements;

•
the effectiveness of the Corporation's internal controls for finance, accounting, internal audit, ethics and legal and regulatory compliance;

•
the performance of the Corporation's auditing, accounting and financial reporting functions;

•
the fairness of related party agreements and arrangements between the Corporation and related parties; and

•
the independent auditors' performance, qualifications and independence.
        The second primary objective of the Audit Committee is to prepare the reports required to be included in the management information circular in accordance with applicable laws or the rules of applicable securities regulatory authorities.
        On April 23, 2003, the Corporation amended and restated the Audit Committee charter to incorporate the requirements of SOX, the new TSX Listing Standards, the TSX and NYSE Amendments. The amended Charter provides that each member of the Audit Committee must be unrelated to and independent from the Corporation, as these terms are defined in the Proposed TSX and NYSE Amendments. In addition, each member must be financially literate and at least one member of the Audit Committee must be a financial expert, as the term is defined in SOX.
        The Audit Committee is responsible for reviewing all financial statements prior to approval by the Board, all other disclosures containing financial information and all management reports which accompany any financial statements. The Audit Committee is also responsible for all internal and external audit plans, any recommendation affecting the Corporation's internal controls, the results of internal and external audits and any changes in accounting practices or policies. The Audit Committee reviews any accruals, provisions, estimates or related party transactions that have a significant impact on the Corporation's financial statements and any litigation, claim or other contingency that could have a material effect upon the Corporation's financial statements. In addition, the Audit Committee is responsible for assessing management's programs and policies relating to the adequacy and effectiveness of internal controls over the Corporation's accounting and financial systems. The Audit Committee reviews and discuses with the Chief Executive Officer and Chief Financial Officer the procedures undertaken in connection with their certifications for annual filings in accordance with the requirements of applicable securities regulatory authorities. The Audit Committee is also responsible for considering the appointment and remuneration of external auditors. The Audit Committee reports directly to the Board of Directors.
        The Audit Committee is composed entirely of outside directors who are unrelated to and independent from the Corporation (currently, Mr. Nasso, Mr. Leiderman, Mr. Kraft and Ms. Baker), each of whom is financially literate. In addition, both Mr. Kraft and Mr. Leiderman are chartered accountants currently active in private practice and, as such, qualify as financial experts. The Audit Committee met four times in 2003.
21

Compensation Committee
        The Compensation Committee is responsible for:
•
recommending to the Board policies relating to compensation of the Corporation's executive officers;

•
recommending to the Board the amount and composition of annual compensation to be paid to the Corporation's executive officers;

•
matters relating to pension, stock option and other incentive plans for the benefit of executive officers;

•
administering the Corporation's Stock Option Plan;

•
reviewing and fixing the amount and composition of annual compensation to be paid to members of the Board and committees; and

•
reviewing and assessing the design and competitiveness of the Corporation's compensation and benefits programs generally.
        The Compensation Committee reports directly to the Board. The Charter of the Compensation Committee was amended and restated on April 23, 2003 to incorporate the requirements of SOX, the TSX Listing Standards, the new TSX and NYSE Amendments. The amended Charter provides that each member of the Compensation Committee must be unrelated and independent, as these terms are defined in the TSX and NYSE Amendments.
        The Compensation Committee is composed entirely of outside directors who are unrelated to and independent from the Corporation (currently, Mr. Leiderman, Mr. Beaumont, Mr. Kraft and Dr. Green). The Compensation Committee met twice in 2003.
Governance Committee
        The Governance Committee is responsible for:
•
evaluating the Corporation's governance practices;

•
developing its response to the TSX Guidelines and recommending changes to the Corporation's governance structures or processes as it may from time to time consider necessary or desirable;

•
reviewing on an annual basis the charters of the Board of Directors and of each committee of the Board and recommending any changes;

•
assessing annually the effectiveness of the Board as a whole and recommending any changes;

•
reviewing on a periodic basis the composition of the Board to ensure that there remain an appropriate number of unrelated directors; and

•
participating in the recruitment and recommendation of new nominees for appointment or election to the Board.
        The Governance Committee also provides a forum for a discussion of matters not readily discussed in a full Board meeting. The Governance Committee charter was amended and restated on April 23, 2003 to incorporate the requirements of SOX, the TSX Listing Standards, and the TSX and NYSE Amendments. The amended Charter provides that each member of the Compensation Committee must be unrelated and independent, as these terms are defined in the TSX and NYSE Amendments.
        The Governance Committee is composed entirely of outside directors who are unrelated to and independent from the Corporation (currently, Mr. Sheriff, Mr. Beaumont and Dr. Green). The Governance Committee met twice in 2003.
10.    The Board should assume or assign responsibility for corporate governance issues.
        See description of Governance Committee under guideline number 9.
22

11.    The Board should define management's responsibilities and approve corporate objectives to be met by the Chief Executive Officer.
        The Board holds management responsible for the development of long-term strategies for the Corporation. The role of the Board is to review, question, validate and ultimately approve the strategies and policies proposed by management. The Board relies on management to perform the data gathering, analysis and reporting functions which are critical to the Board for effective corporate governance. In addition, the President and Chief Executive Officer, the Vice-President, Finance and Chief Financial Officer, Vice-President, Corporate Development and the Executive Vice-President and Chief Operating Officer report to the Board at least every quarter on the Corporation's progress in the preceding quarter and on the strategic, operational and financial issues facing the Corporation.
        Management is authorized to act, without Board approval, on all ordinary course matters relating to the Corporation's business. Management seeks the Board's prior approval for significant changes in the Corporation's affairs such as major capital expenditures, financing arrangements and significant acquisitions and divestitures. Board approval is required for any venture outside of the Corporation's existing businesses and for any change in senior management. Recommendations of committees of the Board require the approval of the full Board before being implemented. In addition, the Board oversees and reviews significant corporate plans and initiatives, including the annual three-year business plan and budget and significant matters of corporate strategy or policy. The Corporation's authorization policy and risk management policy ensure compliance with good corporate governance practices. Both policies formalize controls over the management or other employees of the Corporation by stipulating internal approval processes for transactions, investments, commitments and expenditures and, in the case of the risk management policy, establishing objectives and guidelines for metal price hedging, foreign exchange and short-term investment risk management and insurance.
12.    The Board should establish structures and procedures to enable the Board to function independently of management. An appropriate structure would be to appoint a chairman who is not a member of management.
        Mr. Nasso is the Chairman of the Board of Directors and Mr. Boyd is the President and Chief Executive Officer of the Corporation. Mr. Nasso is not a member of management. The Board believes that the separation of the offices of Chairman and Chief Executive Officer enhances the ability of the Board to function independently of management and does not foresee the offices of Chairman and Chief Executive Officer will be held by the same person. The Board may also meet independently of management and the related directors or may excuse such persons from all or a portion of any meeting where a potential conflict of interest arises or where otherwise appropriate.
13.    The Board should ensure that the Audit Committee is composed of outside directors and that the role of the Audit Committee is specifically defined.
        See description of Audit Committee under guideline number 9.
14.    The Board should implement a system to enable individual directors to engage outside advisors at the Corporation's expense.
        The Board has a policy of permitting individual directors, subject to the approval of the Board, to engage outside legal, financial or other expert advisors at the Corporation's expense in the appropriate circumstances.
23

 
 APPENDIX C:

STOCK OPTION PLAN RESOLUTION
BE IT RESOLVED THAT:
1.
The Stock Option Plan of the Corporation be amended as follows:

(a)
by deleting "8,000,000" in the first sentence of section 4 and substituting it with "10,000,000";

(b)
by deleting "ten" and substituting it with "five" in each of section 5 and subsections 7(d)(i) and (iv);

(c)
by adding the following words after the first sentence of Section 7(c): "provided that options granted under the Plan shall vest and become exerciseable not more quickly than, in equal instalments (computed in each case to the nearest full share) on each of the date of grant of the Option and each anniversary of the date of grant of the Option up to and including the second last anniversary date of the grant; and

(d)
by adding the following subsection after subsection 7(f):

"(g)    Maximum of Options Granted Per Fiscal Year. The maximum number of options which may be granted under the Plan in any fiscal year of the Corporation shall not exceed 1% of the Outstanding Issue immediately prior to the grant of such options."
2.
Any officer or director of the Corporation is authorized and directed on behalf of the Corporation to execute and deliver all such documents and to do all such acts as may be necessary or desirable to give effect to this resolution.
24

 
 APPENDIX D:

AMENDED AND RESTATED EMPLOYEE STOCK OPTION PLAN
1.    The Purpose
        The Purpose of this stock option plan ("Plan") is to encourage ownership of common shares (the "Shares") of Agnico-Eagle Mines Limited (the "Corporation") by directors, officers, employees and service providers, being those persons who are primarily responsible for the management and profitable growth of the Corporation's business, by providing additional incentive for superior performance by such persons and to enable the Corporation to attract and retain valued directors, officers, employees and service providers.
2.    Interpretation
        For the purpose of this Plan, the following terms shall have the following meanings:
"Committee" means the Compensation Committee appointed by the Board of Directors of the Corporation;
"Consultant" means an individual (including an individual whose services are contracted through a personal holding corporation) engaged to provide ongoing management or consulting services for the Corporation or a subsidiary of the Corporation;
"Eligible Assignee" means, in respect of any Eligible Person, such person's Spouse, minor children and minor grandchildren, a trust governed by a registered retirement savings plan of an Eligible Person, an Eligible Corporation or an Eligible Family Trust;
"Eligible Corporation" means a corporation controlled by an Eligible Person and of which all other shareholders are Eligible Assignees;
"Eligible Family Trust" means a trust of which the Eligible Person is a trustee and of which all beneficiaries are Eligible Assignees;
"Eligible Person" means, subject to all applicable laws, any employee, officer, director of or Consultant to the Corporation or any subsidiary of the Corporation;
"Market Price" shall have the following meaning:
(a)
"Market Price" , in respect of options to be granted with an Exercise Price denominated in Canadian dollars, shall mean, at any date, the closing sale price for board lots of the Shares on the TSX on such day. If the Shares did not trade on the TSX on such day, Market Price shall be the closing sale price for board lots of the Shares on the NYSE on such day converted into Canadian dollars at the rate at which United States dollars may be exchanged into Canadian dollars using the inverse Noon Buying Rate. If the Shares did not trade on the TSX or NYSE on such day, Market Price shall be the closing sale price for board lots of the Shares on such stock exchange in Canada on which the Shares are listed on such day as may be selected by the Committee for such purpose. If the Shares do not trade on such day on any such stock exchange, the Market Price shall be the average of the bid and ask prices for board lots of the Shares at the close of trading on the TSX on such date; or

(b)
"Market Price" , in respect of options to be granted with an Exercise Price denominated in United States dollars, shall mean, at any date, the closing sale price for board lots of the Shares on the NYSE on such day. If the Shares did not trade on the NYSE on such day, Market Price shall be the closing sale price for board lots of the Shares on the TSX on such day converted into United States dollars at the rate at which Canadian dollars may be exchanged into United States dollars using the Noon Buying Rate. If the Shares do not trade on such day on either such stock exchange, the Market Price shall be the average of the bid and ask prices for board lots of the Shares at the close of trading on the NYSE on such day.
If such Shares are not listed and posted for trading on any stock exchange, the Market Price in respect thereof shall be the fair market value of such Shares as determined by the Committee in its sole discretion.
25

"Non-Management Eligible Person" shall have the meaning ascribed thereto in section 8;
"Noon Buying Rate" means the noon buying rate in the City of New York for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York, or, in the event such rate is not quoted or published by the Federal Reserve Bank of New York, shall be the exchange rate determined by reference to such other publicly available service for displaying exchange rates as may be determined by the Committee;
"NYSE" means the New York Stock Exchange;
"OBCA" means Business Corporations Act (Ontario), as amended from time to time;
"Outstanding Issue" shall have the meaning specified in section 627 of the TSX Company Manual;
"Spouse" shall have the meaning given to it in the Income Tax Act (Canada);
"subsidiary" shall have the meaning given to it in the Securities Act (Ontario); and
"TSX" means The Toronto Stock Exchange.
3.    Administration
        The Plan shall be administered by the Committee, which shall consist of not fewer than three directors of the Corporation. Vacancies on the Committee, howsoever caused, shall be filled by the Board of Directors of the Corporation. The Committee shall have full authority to interpret the Plan and to make any such rules and regulations and establish such procedures as it deems appropriate for the administration of the Plan, taking into consideration the recommendations of management. The decisions of the Committee shall be binding and conclusive for all purposes and upon all persons.
4.    Number of Shares Reserved
        The maximum number of Shares which may be reserved for issuance under the Plan shall be 10,000,000 Shares, subject to adjustment in accordance with section 10 which number may only be increased with the approval of the shareholders of the Corporation. The maximum number of Shares which may be reserved for issuance to any one person pursuant to options (under the Plan or otherwise) warrants, share purchase plans or other compensation arrangements shall not exceed 5% of the Outstanding Issue. Any Shares subject to an option granted under the Plan which for any reason is cancelled or terminated without having been exercised shall again be available to be granted under the Plan. All Shares issued pursuant to the exercise of options granted under the Plan will be so issued as fully paid common shares of the Corporation.
5.    Expiry Date
        Options granted under the Plan must expire not later than five years after the date the option was granted. Each option shall be subject to earlier termination as provided in paragraph 7(d) of the Plan.
6.    Participation
        Options shall be granted under the Plan only to Eligible Persons as shall be designated from time to time by the Committee, Eligible Corporations and Eligible Family Trusts and shall be subject to the rules and regulations of any stock exchange upon which the Shares are listed for trading.
7.    Terms and Conditions of Options
        The terms and conditions of options granted under the Plan shall be set forth in written option agreements between the Corporation and the optionees. Such terms and conditions shall include the following and such other provisions, not inconsistent with the Plan, as may be deemed advisable by the Committee:
(a)
Exercise Price: The exercise price of an option granted under the Plan shall be fixed by the Committee, which price shall not be less than the Market Price of the Shares on the trading day immediately preceding the date of the grant. The Committee may also determine that the exercise price per Share may escalate at a specified rate dependent upon the year in which any option to purchase Shares may be exercised by the optionee.
26

(b)
Payment: The full purchase price of Shares purchased under the option shall be paid in cash upon the exercise thereof in the currency in which the Exercise Price is denominated. A holder of an option shall have none of the rights of a shareholder until the Shares are issued to him.

(c)
Exercise of Options: The Committee may determine when an option will become exercisable and may determine that the option shall be exercisable in instalments on such terms as to timing of vesting or otherwise as the Committee deems advisable provided that options granted under the Plan shall vest not more quickly than, in equal instalments (computed in each case to the nearest full share), on each of the date of grant of the Option and each anniversary of the date of grant of the Option up to and including the second last anniversary date of the grant. Except as provided in paragraph 7(d) hereof, no option may be exercised unless that optionee is then an Eligible Person. The Plan shall not confer upon the optionee any right with respect to continuation of employment by the Corporation.

(d)
Termination of Options: Any option granted pursuant hereto, to the extent not validly exercised, will terminate on the earliest of the following dates:

(i)
the date of expiration specified in the option agreement, being not later than five years after the date the option was granted;

(ii)
subject to subparagraph (d)(iv) below, 30 days after the date an optionee ceases to be an Eligible Person for any reason whatsoever other than death;

(iii)
six months after the date of the optionee's death during which period the option may be exercised only by the optionee's legal representative or the person or persons to whom the deceased optionee's rights under the option shall pass by will or the applicable laws of descent and distribution, and only to the extent that the optionee would have been entitled to exercise it at the time of his death; and

(iv)
where the optionee is a director of the Corporation and ceases to be an Eligible Person by reason of his or her retirement or resignation from the Board of Directors of the Corporation, four years from the date of such retirement or resignation, subject to any resolution that may be passed by the Board of Directors of the Corporation on the recommendation of the Committee shortening such term, and provided that in no event shall any option granted pursuant hereto expire later than five years after the date the option was granted.

(e)
Assignment to Eligible Assignees: Subject to obtaining approval in advance from the Corporation and from each stock exchange on which shares of the Corporation are listed and which reserves the right to approve such assignments, Eligible Persons may assign options granted to them under the Plan to Eligible Assignees and Eligible Assignees may, in turn, assign such options to other Eligible Assignees or the original optionee. The original optionee under the Plan must be an Eligible Person at the time of the assignment. Notwithstanding any such assignment, all options granted under the Plan shall be deemed to be the option of the original optionee for the purposes of applying the rules and policies of the stock exchanges on which shares of the Corporation are listed. No consideration may be given by any assignee in connection with any assignment of options granted under the Plan. Subject to the foregoing, no options shall be transferable by the optionee other than by will or the laws of descent and distribution and shall be exercisable during his lifetime only by him.

(f)
Applicable Laws or Regulations: The Corporation's obligation to sell and deliver Shares under each option is subject to the compliance by the Corporation and any optionee with applicable securities laws and the requirements of regulatory authorities having jurisdiction and is also subject to the acceptance for listing of the Shares which may be issued in exercise thereof by each stock exchange upon which Shares of the Corporation are listed for trading.

(g)
Maximum Number of Options Granted Per Fiscal Year: The maximum number of options which may be granted under the Plan in any fiscal year of the Corporation may not exceed 1% of the Outstanding Issue immediately prior to the grant of such options.
27

8.    Loans to Non-Management Eligible Persons
        Subject to Section 20 of the OBCA or any successor or similar legislation and other applicable laws, the Corporation may, at any time and from time to time, lend money (on a non-recourse or limited recourse basis or otherwise) or provide guarantees or other support arrangements to assist an Eligible Person who is not a director or officer of the Corporation (a "Non-Management Eligible Person") to fund all or a part of the purchase price for Shares being purchased pursuant to an option granted to a Non-Management Eligible Person under the Plan on such terms and conditions as the Corporation may determine, provided that each loan made to such Non-Management Eligible Person shall become due and payable in full on the date a Non-Management Eligible Person becomes a director or officer of the Corporation.
9.    Compulsory Acquisition or Going Private Transaction
        If and whenever there shall be a compulsory acquisition of the Shares of the Corporation following a takeover bid or issuer bid pursuant to Part XV of the OBCA or any successor or similar legislation, then following the date upon which the takeover bid or issuer bid expires, an optionee shall be entitled to receive, and shall accept, for the same exercise price, in lieu of the number of Shares to which such optionee was theretofore entitled to purchase upon the exercise of his or her options, the aggregate amount of cash, shares, other securities or other property which such optionee would have been entitled to receive as a result of such bid if he or she had tendered such number of Shares to this bidder.
10.    Certain Adjustments. In the event:
(a)
of any change in the Shares through subdivision, consolidation, reclassification, amalgamation, merger or otherwise;

(b)
of any stock dividend to holders of Shares;

(c)
that any rights are granted to all holders of Shares to purchase Shares at prices substantially below fair market value;

(d)
of any distribution of evidences of indebtedness or assets of the Corporation (excluding dividends paid in the ordinary course) to all holders of Shares; or

(e)
that as a result of any recapitalization, merger, consolidation or otherwise, the Shares are converted into or exchangeable for any other securities;
then in any such case, subject to prior approval of the relevant stock exchanges, the number or kind of shares reserved for issuance and available for options under the Plan, the number or kind of shares subject to outstanding options and the exercise price per option shall be proportionally adjusted by the Committee to prevent substantial dilution or enlargement of the rights granted to, or available for, holders of options as compared to holders of Shares.
11.  Amendment and Discontinuance of Plan
        The Board of Directors of the Corporation may, insofar as permitted by law and subject to any required approval of any stock exchange or other authority, from time to time amend or revise the terms of the Plan or discontinue the Plan at any time, provided, however, that no amendment or revisions may, without the consent of the optionee, in any manner adversely affect the rights of the optionee under any option theretofore granted under the Plan. Notwithstanding the foregoing, without approval of the shareholders, no such amendment or revision shall increase the number of Shares issuable under the Plan, change the designation of the class of Eligible Persons or decrease the price at which options may be exercised.
28

QuickLinks
 2004 ANNUAL AND SPECIAL MEETING OF COMMON SHAREHOLDERS
 MANAGEMENT PROXY CIRCULAR
Table of Contents
 SECTION 1: VOTING INFORMATION
SECTION 2: BUSINESS OF THE MEETING
Financial Statements
SECTION 3: COMPENSATION AND OTHER INFORMATION
 APPENDIX A: RECORD OF ATTENDANCE BY DIRECTORS
 APPENDIX B: STATEMENT OF CORPORATE GOVERNANCE PRACTICES
 APPENDIX C: STOCK OPTION PLAN RESOLUTION
 APPENDIX D: AMENDED AND RESTATED EMPLOYEE STOCK OPTION PLAN
 
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Exhibit 99E
 
 AGNICO-EAGLE MINES LIMITED
 
 CODE OF BUSINESS CONDUCT AND ETHICS
Introduction
        The Code of Business Conduct and Ethics (the "Code of Ethics") embodies the commitment of Agnico-Eagle Mines Limited (the "Corporation") and its subsidiaries to conduct our business in accordance with all applicable laws, rules and regulations and the highest ethical standards. All employees and members of our Board of Directors are expected to adhere to those principles and procedures of the Code of Ethics that apply to them.
Compliance and Reporting
        Any employee or director who becomes aware of any existing or potential violation of the Code of Ethics should promptly notify, in the case of employees, the Vice-President, Finance and Chief Financial Officer ("Primary Ethics Contact"). In the case of directors, the Chief Executive Officer, the Chief Financial Officer and the principal accounting officer (the "Senior Financial Officers"), any such situation should be reported to the Chair of the Board of Directors ("Secondary Ethics Contacts"). An employee or director who is unsure of whether a violation has occurred should discuss the situation with the Primary or Secondary Ethics Contact. All reports will be treated confidentiality and it is the Corporation's policy not to allow retaliation against anyone for reports of misconduct made in good faith.
Conflicts of Interest
        A "conflict of interest" occurs when an individual's personal interest improperly interferes with the interests of the Corporation. Conflicts of interest are prohibited as a matter of policy, unless they have been approved by the Corporation. In particular, an employee or director must never use or attempt to use his or her position at the Corporation to obtain any improper personal benefit for himself or herself, for his or her family members or for any other person.
        Any employee or director who is aware of any situation that is or could reasonably be expected to give rise to a conflict of interest must discuss the matter promptly with the Primary or Secondary Ethics Contact.
Public Disclosure
        Information in the Corporation's public communications, including securities commission filings and communications with shareholders, must be full, fair, accurate, timely and understandable. All employees and directors who are involved in the Corporation's disclosure process, including the Senior Financial Officers, are expected to act in furtherance of this policy. In particular, these individuals are required to be familiar with the disclosure requirements for the Corporation and are prohibited from knowingly misrepresenting, omitting, or causing others to misrepresent or omit, material facts about the Corporation to others, whether within or outside the Corporation, including the Corporation's independent auditors. Additionally, any employee or director with a supervisory role in the Corporation's disclosure process is required to discharge his or her responsibilities diligently. For further guidance, employees and directors should refer to the Corporation's statement of Disclosure Controls, Procedures and Policies.
Compliance with Laws, Rules and Regulations
        Compliance with all applicable governmental laws, rules and regulations is essential to conducting our business. Each employee and director is expected to adhere to the standards and restrictions imposed by those laws, rules and regulations.
Accountability
        Employees and directors will be held accountable for their adherence to the Code of Ethics. Failure to observe the terms of the Code of Ethics may result in disciplinary action, including termination of employment or removal from the Board of Directors. Violations of the Code of Ethics may also constitute violations of law and may result in civil or criminal penalties for employees, directors and the Corporation.

Corporate Opportunities
        Employees and directors are expected to advance the Corporation's legitimate business interests when the opportunity to do so arises. Employees and directors may not take for themselves (or direct to a third party) a business opportunity that is discovered through the use of the Corporation's property, information or position, unless the Corporation has already been offered the opportunity and turned it down. More generally, employees and directors are prohibited from using corporate property, information or position to compete with the Corporation.
        The line between personal benefits and those of the Corporation is often difficult to draw and sometimes both personal and benefits to the Corporation may be derived from certain activities. If an employee or director has any questions that a personal use of the Corporation's property or services may not solely be for the benefit of the Corporation, he or she should discuss the matter with the Primary or Secondary Ethics Contact.
Confidentiality
        In carrying out the Corporation's business, employees and directors often learn confidential or proprietary information about the Corporation, its customers, suppliers, business partners, or other third parties. Employees and directors must respect and support the confidentiality of such information, except when disclosure is authorized or legally mandated. Confidential or proprietary information includes, among other things, any non-public information concerning the Corporation, including its businesses, financial performance, results or prospects, and any non-public information provided by a third party with the expectation that the information will be kept confidential and used solely for the business purpose for which it was conveyed. Employees and directors should refer to the policies set forth in the Corporation's statement of Disclosure Controls, Procedures and Policies under "Disclosure of Material Information", "Rumours", "Quiet Periods" and "Maintaining Confidentiality" for more detailed guidance on this topic.
Giving Gifts or Benefits
        Employees must not offer or give on behalf of the Corporation extravagant gifts or excessive entertainment or benefits to others.
        Modest gifts and reasonable entertainment may be given for business purposes by appropriate employees, where legally permitted and in accordance with local business practices, to persons or entities doing business or seeking to do business with the Corporation. No gift or entertainment should be of such value as to constitute a real personal enrichment of the recipient or to be perceived as such. Cash or cash value vouchers are not to be given. Gifts or entertainment given on behalf of the Corporation should be of a nature and amount that avoid embarrassment and would not reflect unfavourably on the Corporation or the recipient, if subjected to public scrutiny.
Receiving Gifts or Benefits
        Employees must not use their position to obtain personal gain or benefit from those doing or seeking to do business with the Corporation. Employees must not seek any gifts, payments, services, loans, or other benefits.
        Employees are required to select and deal with suppliers, customers and others doing or seeking to do business with the Corporation in a completely impartial manner and be perceived by others to be acting in an impartial manner, without favour or preference based upon any considerations other than the best interests of the Corporation. Modest gifts and reasonable entertainment may be received from business associates of the Corporation. No gift, favour or entertainment shall be of such a nature as might affect, or reasonably be perceived to affect, an employee's judgment or conduct in matters involving the Corporation. Cash or cash value vouchers are not to be accepted. Gifts or benefits of a more substantial nature from customers or suppliers are not encouraged. However, occasionally there are special circumstances that may apply and, in such cases, permission must be obtained from the Primary or Secondary Ethics Contact.
2

Fair Dealing
        We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through illegal or unethical business practices. Stealing proprietary information, possessing or using trade secrets obtained without the owners consent, or inducing such disclosures by past or present employees of other companies is prohibited.
        Each employee and director is expected to deal fairly with the Corporation's service providers, suppliers, competitors and employees. No employee or director should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.
Equal Employment Opportunity and Harassment
        Our personnel decisions are made on the basis of merit and contribution to the Corporation's success. Concern for the personal dignity and individual worth of every person is an indispensable element in our standard of conduct. The Corporation affords equal employment opportunity to all qualified persons without regard to any impermissible criterion or circumstance. This means equal opportunity in regard to each individual's terms and conditions of employment and in regard to any other matter that affects in any way the working environment of the employee. We do not tolerate or condone any type of discrimination prohibited by law, including harassment. Employees who experience or observe work-related discrimination, harassment or similar problems are urged to report them to the Primary or Secondary Ethics Contact.
Insider Trading
        Securities legislation in Canada requires the Corporation to disclose material information in a timely manner. It also seeks to protect the public from abuse of material information by insiders of the Corporation before it is generally disclosed by imposing sanctions for such abuse. These sanctions may be imposed on directors and senior officers of the Corporation and other persons who have access to undisclosed material information about the Corporation as a result of that person's relationship with the Corporation (or an insider of the Corporation). They could, for example, be imposed on employees, family members of the Corporation's employees and on other persons who learn of undisclosed material information through the Corporation's employees.
        It is both illegal and against policy for any employee or director who is aware of material non-public information relating to the Corporation, any of its customers, suppliers, service providers or other business partners, or any other company to buy or sell any securities of those issuers or to pass on the information to anyone else under circumstances that suggest the other person may buy or sell securities based on the information. Accordingly, insiders and employees with knowledge of confidential or material information about the Corporation, or counter-parties in negotiations of material potential transactions, are prohibited from trading shares in the Corporation or any counter-party until the confidential or material information has been fully disclosed and a reasonable period of time has passed for such information to be widely disseminated.
        Material information is information that would reasonably be expected to result in a significant change in, or to have a significant effect on, the market price or the value of a corporation's securities or which could affect the decision of a reasonable investor to invest in a corporation's securities. Examples include:
•
a major acquisition or disposition;

•
a significant change in capital or corporate structure;

•
anticipated significant changes in earnings or production;

•
change in dividends;

•
significant litigation;

•
entering into or loss of significant contracts;

•
disputes with major contractors or suppliers; and
3

•
public or private sale of additional securities.
        This is not an exhaustive list and other information may also constitute material information.
        To prevent insider trading violations and avoid embarrassing situations both for the Corporation and employees and directors, all employees, officers or directors of the Corporation are prohibited from selling or buying securities of the Corporation at frequent intervals or selling such securities short at any time. Purchases of the Corporation's securities should be made for long term investment rather than for speculative purposes. In addition, management-level employees, officers or directors of the Corporation must consult in writing with and obtain clearance in writing from the Primary or Secondary Ethics Contact before buying or selling securities of the Corporation or exercising any of the Corporation's options. Unless it is clear that there is no undisclosed material information concerning the Corporation, clearance to complete a proposed trade will be denied. The Corporation's policy is to err on the side of caution in granting or denying trading clearance in recognition of the fact that trades that create notoriety, even if they are ultimately found to be proper, tarnish the Corporation's goodwill and reputation, especially among its shareholders and analysts. Approvals for a proposed transaction will be effective for three days, unless revoked prior to that time. No shares of the Corporation may be purchased or sold or options exercised after that three day period ends unless the approval is renewed.
        Trading blackout periods will apply to those directors, officers and management-level employees during periods when financial statements are being prepared but results have not yet been publicly disclosed. The blackout period commences on the first day of the month following the end of an interim quarter and ends on the second business day following the issuance of a news release disclosing quarterly results. At December 31 st only, the blackout period will commence on January 15 th of the following year, and end on the second business day following the issuance of a news release disclosing the audited year end results.
        Blackout periods may be prescribed from time to time by the Disclosure Committee as a result of special circumstances relating to the Corporation pursuant to which insiders of the Corporation would be precluded from trading in securities of the Corporation. All parties with knowledge of such special circumstances should be covered by the blackout. Such parties may include external advisors such as legal counsel, investment bankers and counter-parties in negotiations of material potential transactions. The trading blackout periods do not apply to purchases and sales made pursuant to the Corporation's Dividend Reinvestment Plan or Incentive Share Purchase Plan.
        Transactions that may be necessary or justifiable for independent reasons, including emergency expenditures and transactions planned before the employee or director learned the material information, are not exceptions to the foregoing trading restrictions. Even the appearance of an improper transaction must be avoided to prevent any potential risk to the Corporation or the individual. Violations of insider trading laws may be punishable by fines or imprisonment.
        Certain "insiders" are obliged to file reports for all trades made by them in the Corporation's securities. The persons subject to this obligation include:
•
directors or senior officers of the Corporation;

•
directors and senior officers of the Corporation's subsidiaries; and

•
beneficial owners of more than 10% of the votes attached to the voting securities of the Corporation as well as the directors and senior officers of such shareholders.
        These insiders must file reports with various securities commissions in Canada. In order to ensure that insider trading reports are filed on a timely basis in all applicable jurisdictions, all approved transactions once completed must be reported immediately by insiders to Virginia Delacruz at head office who will co-ordinate with such insiders the preparation and filing of all necessary insider trading reports.
Waivers Of The Code Of Ethics
        The Corporation may waive certain provisions of the Code of Ethics when deemed absolutely appropriate under the circumstances. Any employee or director who believes that a waiver may be called for should discuss the matter with the Primary or Secondary Ethics Contact. Waivers for executive officers (including Senior Financial Officers) or directors of the Corporation may be made only by the Board of Directors or a committee of the Board. Waivers will be disclosed as required under applicable securities commission and stock exchange rules.
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Exhibit 99F
 
 AGNICO-EAGLE MINES LIMITED

BY-LAW NO. 1 (AS AMENDED)
        This by-law relates generally to the transaction of the business and affairs of Agnico-Eagle Mines Limited.
 
 Contents

One	 	—	 	Interpretation	
Two	 	—	 	Business of the Corporation	
Three	 	—	 	Borrowing and Security	
Four	 	—	 	Directors	
Five	 	—	 	Committees	
Six	 	—	 	Officers	
Seven	 	—	 	Protection of Directors, Officers and Others	
Eight	 	—	 	Shares	
Nine	 	—	 	Dividends and Rights	
Ten	 	—	 	Meetings of Shareholders	
Eleven	 	—	 	Notices	
Twelve	 	—	 	Effective Date	
        The following by-law is enacted as a by-law of the Corporation.
 
 SECTION 1
INTERPRETATION
1.1     Definitions
        In this by-law and in all other by-laws of the Corporation the following terms shall have meanings set out below:
"Act" means the Business Corporations Act (Ontario), including the regulations made thereunder, as amended from time to time, or any statute or regulations that may be substituted therefore and, in the case of such substitution, any references in the by-laws to provisions in the Act or regulations shall be read as references to the substituted provisions therefore in the new statute or regulations, as amended from time to time;
"appoint" includes "elect" and vice versa ;
"board" means the board of directors of the Corporation;
"by-laws" means this by-law and all other by-laws of the Corporation from time to time in force;
"cheque" includes a bank draft and a money order;
"committee" means a committee of directors appointed by the board;
"Corporation" means Agnico-Eagle Mines Limited;
"director" means a member of the board, except as otherwise expressly provided;
"meeting of shareholders" means an annual meeting of shareholders or a special meeting of shareholders;
"non-business day" means any day that is a Saturday, Sunday or any other day that is a holiday as defined in the Retail Business Holidays Act (Ontario), and in any statute that may be substituted therefore, as amended from time to time;
"officer" means an officer of the Corporation, except as otherwise expressly provided;
"recorded address" means:
(a)
in the case of a shareholder, such person's latest address as shown in the records of the Corporation or its transfer agent, and in the case of joint shareholders, the address appearing in the securities register in respect of the joint holding or the first address so appearing, if there is more than one;

(b)
in the case of an officer or auditor of the Corporation, such person's address as shown in the records of the Corporation; and

(c)
in the case of a director, such individual's latest address shown in the records of the Corporation or in the most recent notice filed by the Corporation under the Corporations Information Act (Ontario), and any statute that may be substituted therefore, as amended from time to time, whichever is the more current;
"shareholder" means a shareholder of the Corporation, except as otherwise expressly provided; and
"special meeting of shareholders" includes a meeting of any class or classes of shareholders and a special meeting of all shareholders entitled to vote at an annual meeting of shareholders.
1.2     Principles of Interpretation
        Except for the terms defined in section 1.1, terms defined in the Act have the same meaning when used in this by-law.
        Words importing the singular number include the plural and vice versa. Words importing gender include the masculine, feminine and neuter genders.
 
 SECTION 2
BUSINESS OF THE CORPORATION
2.1     Registered Office
        The registered office of the Corporation shall be in the municipality or geographic township within Ontario initially specified in the Corporation's articles and thereafter as the shareholders may from time to time determine by special resolution. The location of the registered office in such municipality or geographic township shall be the location determined from time to time by the board.
2.2     Corporate Seal
        The Corporation may have a corporate seal. If a seal is adopted it shall be in a form approved from time to time by the board.
2.3     Financial Year
        Until changed by the board, the financial year of the Corporation shall end on December 31 in each year.
2.4     Execution of Instruments
        Deeds, transfers, assignments, contracts, obligations, certificates and other instruments shall be signed on behalf of the Corporation by two signing authorities. One signing authority shall be a director, the president, or a vice-president of the Corporation. The other signing authority shall be a director, the president, a vice-president, the secretary, the treasurer, an assistant secretary or an assistant treasurer of the Corporation, or any other officer appointed by the board.
        The board or the two signing authorities may from time to time direct the manner in which, and the person or persons by whom, any particular instrument or class of instruments may or shall be signed. Any signing authority may affix the corporate seal to any instrument requiring the seal.
2.5     Banking Arrangements
        The banking business of the Corporation including, without limitation, the borrowing of money and the giving of security therefore, shall be transacted with such banks, trust companies and/or other persons as may from time to time be designated by, or under the authority of, the board. Such banking business, or any part thereof, shall be transacted under such agreements, instructions and delegations of powers as the board may from time to time prescribe.
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2.6     Voting Rights in Other Bodies Corporate
        The signing authorities of the Corporation described in section 2.4 may execute and deliver proxies, and arrange for the issuance of voting certificates or other evidence of the right to exercise the voting rights, attaching to any securities held by the Corporation. Such instruments shall be in favour of such persons as may be determined by the signing authorities executing or arranging for the same. In addition, the board may from time to time direct the manner in which, and the persons by whom, any particular voting rights, or class of voting rights, may or shall be exercised.
 
 SECTION 3
BORROWING AND SECURITY
3.1     Borrowing Power
        Without limiting the borrowing powers of the Corporation as set forth in section 184 of the Act, but subject to the Corporation's articles, the board may from time to time on behalf of the Corporation, without authorization of the shareholders:
(a)
borrow money upon the credit of the Corporation;

(b)
issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantee of the Corporation, whether secured or unsecured;

(c)
to the extent permitted by the Act, give directly or indirectly financial assistance to any person by means of a loan, a guarantee on behalf of the Corporation to secure performance of any present or future indebtedness, liability or other obligation of any person, or otherwise; and

(d)
mortgage, hypothecate, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real or personal, movable or immovable, tangible or intangible, property of the Corporation to secure any such bonds, debentures, notes or other evidences of indebtedness or guarantee or any other present or future indebtedness, liability or other obligation of the Corporation.
        Nothing in this section 3.1 limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by, or on behalf of, the Corporation.
3.2     Delegation
        Subject to the Act and the Corporation's articles, the board may from time to time delegate to a committee, a director, an officer or any other person as may be designated by the board, all or any of the powers conferred on the board by section 3.1 or by the Act, to such extent and in such manner, as the board may determine at the time of such delegation.
 
 SECTION 4
DIRECTORS
4.1     Number of Directors
        Until changed in accordance with the Act, the board shall consist of not fewer than the minimum number of directors, which shall not be fewer than three, and not more than the maximum number of directors set out in the Corporation's articles.
4.2     Qualification
        No individual shall be qualified for election or appointment as a director if the individual, (i) is less than 18 years of age, (ii) is of unsound mind and has been so found by a court in Canada or elsewhere, (iii) is not an individual, or (iv) has the status of a bankrupt. A director need not be a shareholder. A majority of the directors shall be resident Canadians. At least one-third of the directors shall not be officers or employees of the Corporation or any of its affiliates.
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4.3     Election and Term — General
(a)
An election of directors shall take place at each annual meeting of shareholders. A director's term of office (subject to the provisions, if any, of the Corporation's articles, and subject to such director's election for a stated term) shall be from the date of the meeting at which such director is elected or appointed until the close of the annual meeting of shareholders next following such election or appointment or until a successor is elected or appointed.
4.4     Removal of Directors
        Subject to the Act, the shareholders may, by ordinary resolution passed at a meeting of shareholders, remove any director from office and may, at that meeting, elect a qualified individual in place of that director for the unexpired term of that director. If such vacancy is not filled, a quorum of directors may fill the vacancy in accordance with the procedure set out in Section 4.6
4.5     Vacation of Office
        A director ceases to hold office when the director, (i) dies, (ii) is removed from office by the shareholders, (iii) ceases to be qualified for election as a director, as described in Section 4.2, or (iv) subject to subsection 119(2) of the Act (concerning the resignation of directors named in the articles), delivers the director's written resignation and it is received by the Corporation, or, if a time is specified in such resignation, at the time so specified, whichever is later.
4.6     Vacancies
        Subject to the Act, a quorum of directors (whether or not the majority of such quorum are resident Canadians) may appoint an individual to fill a vacancy among the directors, except a vacancy resulting from:
(a)
an increase in the number of directors otherwise than an increase in the number of directors in accordance with a special resolution empowering the board to determine the number of directors within a range set out in the articles, provided that such quorum of directors may not appoint any director to fill a vacancy if the total number of directors, after such appointment, is greater than one and one-third times the number of directors required to have been elected at the last annual meeting of shareholders;

(b)
an increase in the maximum number of directors set out in the articles; or

(c)
a failure to elect the number of directors required to be elected at any meeting of shareholders.
        A director appointed or elected by a quorum of directors to fill a vacancy holds office for the unexpired term of such new director's predecessor.
4.7     Action by the Board
        The board shall manage or supervise the management of the business and affairs of the Corporation. The powers of the board may be exercised at a meeting (subject to Sections 4.8 and 4.9) at which a quorum of directors is present or by resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the board. If there is a vacancy in the board, the remaining directors may exercise all the powers of the board so long as a quorum of directors remains in office.
4.8     Canadian Majority at Meetings
        The board shall not transact business at a meeting unless a majority of the directors present are resident Canadians, except where a resident Canadian director who is unable to be present approves in writing or by telephone or other communications facilities the business transacted at the meeting, and a majority of resident Canadian directors would have been present had that director been present at the meeting.
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4.9     Meeting by Telephone
        If all the directors consent thereto generally or in respect of a particular meeting, a director may participate in a meeting of the board or of a committee by means of such telephone, electronic or other communications facilities as permit all individuals participating in the meeting to communicate with each other simultaneously and instantaneously. A director participating in such a meeting by such means is deemed to be present at the meeting. Any such consent shall be effective whether given before or after the meeting to which the consent relates and may be given with respect to all meetings of the board and of committees.
4.10     Place of Meetings
        Meetings of the board may be held at any place in or outside Ontario and in any financial year of the Corporation. A majority of the meetings need not be held in Ontario.
4.11     Calling of Meetings
        Meetings of the board shall be held from time to time at such time and at such place as the board, the chairman of the board, the managing director, the president or any two directors may determine.
4.12     Notice of Meeting
        Notice of time and place of each meeting of the board shall be given in the manner provided in Section Eleven to each director not fewer than 48 hours before the time when the meeting is to be held. A notice of a meeting of directors need not specify the purpose of, or the business to be transacted at, the meeting except where the Act requires such purpose or business or the general nature thereof to be specified.
4.13     First Meeting of the New Board
        Provided a quorum of directors is present, each board containing newly elected directors may without notice hold a meeting immediately following the meeting of shareholders at which such directors were elected.
4.14     Regular Meetings
        The board may appoint a day or days in any month or months for regular meetings of the board at a place and hour to be named. A copy of any resolution of the board fixing the place and time of such regular meetings shall be sent to each director forthwith after being passed. No other notice shall be required for any such regular meeting except where the Act requires the purpose thereof, or the business to be transacted thereat, to be specified.
4.15     Chairman and Secretary
        The chairman of any meeting of the board shall be the first mentioned of such of the following officers as have been appointed and who is a director and is present at the meeting: chairman of the board, managing director or president. If no such individual is present, the directors present shall choose one of their number to be chairman of the meeting. If the secretary of the Corporation is absent from any meeting of the board, the chairman of the meeting shall appoint an individual, who need not be a director, to act as secretary of the meeting.
4.16     Quorum
        Subject to section 4.8, the quorum of directors for the transaction of business at any meeting of the board shall be two-fifths of the number of directors holding office at the beginning of such meeting, or such greater number of directors as the board may from time to time determine.
4.17     Votes to Govern
        At all meetings of the board every question shall be decided by a majority of the votes cast on the question. In case of an equality of votes the chairman of the meeting shall be entitled to a second or casting vote. Any
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question at a meeting of the board shall be decided by a show of hands unless a ballot is requested by any director present.
4.18     Adjournment
        Any meeting of directors, or of any committee, may be adjourned from time to time by the chairman of the meeting, with the consent of the meeting, to a fixed time and place. No notice of the time and place for the holding of the adjourned meeting need be given to any director if the time and place of the adjourned meeting is announced at the original meeting.
        Any adjourned meeting shall be duly constituted if held in accordance with the terms of the adjournment and a quorum of directors is present thereat. The directors who formed a quorum at the original meeting are not required to form the quorum at the adjourned meeting. If there is no quorum of directors present at the adjourned meeting, the original meeting shall be deemed to have terminated at its adjournment.
4.19     Conflict of Interest
        A director who (i) is a party to, (ii) is a director or officer of a body corporate (other than the Corporation) who is a party to, or (iii) has a material interest in any person who is a party to, a material contract or transaction, or proposed material contract or transaction, with the Corporation shall disclose to the Corporation the nature and extent of such director's interest at the time and in the manner provided by the Act. Such a director shall not vote on any resolution to approve the same except as permitted by the Act.
4.20     Remuneration and Expenses
        The directors shall be paid such remuneration for their services as the board may from time to time determine. Such remuneration shall be in addition to the salary paid to any officer or employee of the Corporation who is also a director.
        The directors may also by resolution award special remuneration to any director for undertaking any special services on the Corporation's behalf, other than the normal work ordinarily required of a director of the Corporation. The confirmation of any such resolution or resolutions by the shareholders is not required.
        The directors are also entitled to be reimbursed for travelling and other expenses properly incurred by such directors in attending meetings of the board or any committee. The directors may fix the remuneration of any officers and/or employees of the Corporation.
 
 SECTION 5
COMMITTEES
5.1     Committees
        The board may appoint from their number one or more committees, however designated, and delegate to any such committee any of the powers of the board except that no such committee shall have the authority to:
(a)
submit to the shareholders any question or matter requiring the approval of the shareholders;

(b)
fill a vacancy among the directors or in the office of auditor or appoint or remove any of the chief executive officer, however designated, the chief financial officer, however designated, the chairman or the president of the Corporation;

(c)
subject to section 184 of the Act, issue securities except in the manner and on the terms authorized by the directors;

(d)
declare dividends;

(e)
purchase, redeem or otherwise acquire shares issued by the Corporation;

(f)
pay a commission referred to in section 37 of the Act;

(g)
approve a management information circular referred to in Part VIII of the Act;
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(h)
approve a take-over bid circular, directors' circular or issuer bid circular referred to in Part XX of the Securities Act (Ontario);

(i)
approve any financial statements referred to in clause 154(1)(b) of the Act and Part XVIII of the Securities Act (Ontario); or

(j)
adopt, amend or repeal by-laws.
A majority of the members of any such committee shall be resident Canadians.
5.2     Transaction of Business
        The powers of a committee may be exercised by a meeting at which a quorum of the members of the committee is present or by resolution in writing signed by all members of such committee who would have been entitled to vote on that resolution at a meeting of the committee. Meetings of each committee may be held at any place in or outside Ontario.
5.3     Audit Committee
        The board shall elect annually from among its number an audit committee to be composed of not fewer than three directors of whom a majority shall not be officers or employees of the Corporation or its affiliates, to hold office until the next annual meeting of the shareholders. Each member of the audit committee shall serve at the pleasure of the board. Each member of the audit committee immediately ceases to be such a member when the individual ceases to be a director. The board may fill vacancies in the audit committee by election from among their number.
        The audit committee shall review the financial statements of the Corporation and shall report thereon to the board prior to approval thereof by the board. The audit committee shall have such other powers and duties as may from time to time be assigned to the audit committee by the board.
        Any member of the audit committee or the auditor of the Corporation may call a meeting of the audit committee.
        The auditor of the Corporation is entitled to receive notice of every meeting of the audit committee and, at the expense of the Corporation, to attend and be heard thereat. The auditor shall attend every meeting of the audit committee held during the term of office of the auditor if so requested by a member of the audit committee.
5.4     Advisory Bodies
        The board may from time to time appoint such advisory bodies as the board deems advisable.
5.5     Procedure
        Unless otherwise determined by the board, each committee and advisory body shall have power to fix a quorum at not less than a majority of such committee's or body's members, to elect a chairman and to regulate procedure.
 
 SECTION 6
OFFICERS
6.1     Appointment
        The board may from time to time appoint a president, one or more vice-presidents (to which title may be added words indicating seniority or function) secretary, a treasurer and such other officers as the board may determine, including one or more assistants to any of the officers so appointed. One individual may hold more than one office. Subject to sections 6.2 and 6.3, an officer may, but need not be, a director.
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6.2     Chairman of the Board
        The board may from time to time also appoint a chairman of the board who shall be a director. If appointed, the board may assign to the chairman of the board any of the powers and duties that are by any provisions of this by-law assigned to the managing director or to the president. Subject to the Act, the chairman of the board shall have such other powers and duties as the board may specify or as are incidental to such office.
6.3     Managing Director
        The board may from time to time also appoint a managing director who shall be a resident Canadian and a director. If appointed, the managing director shall be the chief executive officer and, subject to the Act and the authority of the board, shall have general supervision of the business and affairs of the Corporation. Subject to the Act, the managing director shall have such other powers and duties as the board may specify or as are incidental to such office. During the absence or disability of the president, or if no president has been appointed, the managing director shall also have the powers and duties of that office, except to the extent that such powers and duties have been assigned to the chairman of the board.
6.4     President
        The president shall be the chief operating officer. Subject to the Act, the president shall have such other powers and duties as the board may specify or as are incidental to such office. During the absence or disability of the managing director, or if no managing director has been appointed, the president shall also have the powers and duties of that office.
6.5     Vice-President
        A vice-president shall have such powers and duties as the board may specify or as are incidental to such office.
6.6     Secretary
        Unless otherwise determined by the board, the secretary shall be the secretary of all meetings of the board, shareholders and committees that the secretary attends. The secretary shall enter, or cause to be entered, in records kept for that purpose minutes of all proceedings at meetings of the board, shareholders and committees, whether or not the secretary attends such meetings.
        The secretary shall give, or cause to be given, as and when instructed, all notices to shareholders, directors, officers, auditors and members of committees. The secretary shall be the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Corporation and of all books, records and instruments belonging to the Corporation, except when some other officer or agent has been appointed for that purpose. The secretary shall have such other powers and duties as the board may specify or as are incidental to such office.
6.7     Treasurer
        The treasurer shall keep proper accounting records in compliance with the Act and shall be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of the Corporation. The treasurer shall render to the board whenever required an account of all the treasurer's transactions as treasurer and of the financial position of the Corporation. The treasurer shall have such other powers and duties as the board may specify or as are incidental to such office.
6.8     Powers and Duties of Officers
        Subject to the Act, the powers and duties of all officers (aside form the chairman of the board, the managing director and the president, whose powers and duties are to be specified only by the board) shall be such as the terms of their engagement call for or as the board or chief executive officer may specify. The board or the chief executive officer may, from time to time and subject to the Act, vary, add to or limit the powers and duties of any officer (aside form the chairman of the board, the managing director and the president, whose
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powers and duties are to be varied, added to or limited only by the board). Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant, unless the board or the chief executive officer otherwise directs.
6.9     Term of Office
        The board, in its discretion, or the president, in the president's discretion, may remove any officer. Otherwise each officer appointed by the board shall hold office until such officer's successor is appointed or until such officer's earlier resignation.
6.10     Agents and Attorneys
        Subject to the Act, the board may from time to time appoint agents or attorneys for the Corporation in or outside Ontario with such powers of management, administration or otherwise (including the power to sub-delegate) as the board may determine.
6.11     Conflict of Interest
        Each officer is subject to the disclosure requirements for directors provided in section 4.19.
 
 SECTION 7
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.1     Standard of Care
        Every director and officer in exercising the powers and discharging the duties of such director or officer shall, (i) act honestly and in good faith with a view to the best interests of the Corporation, and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
7.2     Limitation of Liability
        Subject to section 7.1, and provided that nothing in this section 7.2 shall relieve any director or officer from the duty to act in accordance with the Act or from liability for any breach thereof, no director or officer shall be liable, (i) for the acts, receipts, neglects or defaults of any other director, officer or employee, (ii) for joining in any receipt or other act for conformity, (iii) for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired for or on behalf of the Corporation, (iv) for the insufficiency or deficiency of any security in or upon which any of the moneys of the Corporation are invested, (v) for any loss or damage arising from the bankruptcy, insolvency or tortious acts of any person with whom any of the moneys, securities or effects of the Corporation are deposited, (vi) for any loss occasioned by any error of judgment or oversight on such director's or officer's part, or (vii) for any other loss, damage or misfortune which happen in the execution of the duties of the office or in relation thereto.
7.3     Indemnity
        Subject to section 136 of the Act, the Corporation shall indemnify a director or officer, a former director or officer, or an individual who acts or acted at the Corporation's request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor, and such individual's heirs and legal representatives. The indemnification shall be against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by such individual in respect of any civil, criminal or administrative action or proceeding to which such individual is made a party by reason of being or having been a director or officer of the Corporation or body corporate. The Corporation shall provide such indemnification only if:
(a)
such individual acted honestly and in good faith with a view to the best interests of the Corporation; and

(b)
in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, such individual had reasonable grounds for believing that the impugned conduct was lawful.
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        The Corporation shall also indemnify such individual in such other circumstances as the Act or law permits or requires. Nothing in this by-law shall limit the right of any individual entitled to indemnity to claim indemnity, apart from under this section 7.3, to the extent permitted by the Act or law.
7.4     Insurance
        Subject to the Act, the Corporation may purchase and maintain such insurance for the benefit of any individual referred to in section 7.3 as the board may from time to time determine.
 
 SECTION 8
SHARES
8.1     Issuance
        Subject to the Act and the Corporation's articles, the board may from time to time issue or grant options to purchase, or rights to acquire, the whole or any part of the authorized and unissued shares of the Corporation at such times and to such persons and for such consideration as the board shall determine, provided that no share shall be issued until it is fully paid.
8.2     Commissions
        The board may from time to time authorize the Corporation to pay a reasonable commission to any person in consideration of that person's purchasing, or agreeing to purchase, shares of the Corporation, whether from the Corporation or from any other person, or procuring or agreeing to procure purchasers for any such shares.
8.3     Register of Transfer
        The Corporation shall cause to be kept a register of transfers in which all transfers of securities issued by the Corporation in registered form, and the date and other particulars of each transfer, shall be set out.
8.4     Registration of Transfers
        Subject to the Act, the Corporation shall only register the transfer of a share which is presented for transfer in registered form if, (i) the share is endorsed by the appropriate person as provided by the Act, (ii) reasonable assurance is given that the endorsement is genuine and effective as the board may from time to time prescribe, (iii) the Corporation has no duty to inquire into adverse claims or the Corporation has discharged any such duty, (iv) any applicable law of Canada or a province relating to the collection of taxes has been complied with, (v) the transfer is rightful or is to a good faith purchaser, and (vi) any fee charged by the Corporation for a share certificate issued in respect of the transfer has been paid.
8.5     Securities Records
        The Corporation shall prepare and maintain, at its registered office or at any other place in Ontario designated by the board, a securities register in which the Corporation records the securities issued by the Corporation in registered form, showing with respect to each class or series of securities:
(a)
the names, alphabetically arranged, of persons who, (i) are or have been within six years registered as shareholders of the Corporation, the address including the street and number, if any, of every such person while a holder, and the number and class or series of shares registered in the name of such holder, (ii) are or have been within six years registered as holders of debt obligations of the Corporation, the address including the street and number, if any, of every such person while a holder, and the class or series and principal amount of the debt obligations registered in the name of such holder, or (iii) are or have been within six years registered as holders of warrants of the Corporation, other than warrants exercisable within one year from the date of issue, the address including the street and number, if any, of every such person while a registered holder, and the class or series and number of warrants registered in the name of such holder; and

(b)
the date and particulars of the issue of each security and warrant.
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8.6     Transfer Agents
        For each class of securities and warrants issued by the Corporation, the directors may from time to time by resolution appoint or remove,
(a)
a trustee, transfer agent or other agent to keep the securities register and the register of transfers and one or more persons or agents to keep branch registers; and

(b)
a registrar, trustee or agent to maintain a record of issued security certificates and warrants.
Subject to section 48 of the Act (concerning conflict of interest), one person may be appointed for the purposes of both sections 8.6(a) and 8.6(b) in respect of all securities and warrants of the Corporation or any class or classes thereof.
8.7     Non-recognition of Trusts
        Subject to the Act, the Corporation may treat the registered holder of any share as the person exclusively entitled to vote, to receive notices, to receive any dividend or other payment in respect of the share, and otherwise to exercise all the rights and powers of an owner of the share.
8.8     Share Certificates
        Every holder of one or more shares of the Corporation shall be entitled, at such holder's option, to a share certificate evidencing the shares held by that holder, or to a non-transferable written acknowledgement of that holder's right to obtain a share certificate, stating the number and class or series of shares held by that holder as shown on the securities register. The certificates and such acknowledgements shall be in such form as the board may from time to time approve. Subject to subsection 55(3) of the Act (concerning the signing of a share certificate), any such certificate shall be signed manually by at least one director or officer or by, or on behalf of, a registrar, transfer agent, branch transfer agent or issuing or other authenticating agent of the Corporation, or by a trustee who certifies such certificate in accordance with a trust indenture. Any additional signatures required on a certificate may be printed or otherwise mechanically reproduced thereon. If a certificate contains a printed or mechanically reproduced signature of an individual, the Corporation may issue the certificate even though the individual has ceased to be a director or an officer, and the certificate is as valid as if the individual were a director or an officer at the date of such certificate's issue. No share certificate need be issued under the corporate seal.
8.9     Replacement of Share Certificates
        Subject to the Act, the board or any officer or agent designated by the board may in the board's or such person's discretion direct the issue of a new share certificate in lieu of and on cancellation of a certificate that has been mutilated or in substitution for a certificate claimed to have been lost, apparently destroyed or wrongfully taken, on payment of such reasonable fee and on such terms as to indemnity, reimbursement of expenses and evidence of loss and of title as the board may from time to time prescribe, whether generally or in any particular case.
8.10     Joint Shareholders
        If two or more persons are registered as joint holders of any share, the Corporation shall not be bound to issue more than one certificate in respect of that share. Delivery of the certificate to one of those persons shall be sufficient delivery to all of them. Any one of those persons may give valid receipts for the certificate issued in respect of that share or for any dividend, bonus, return of capital or other money payable or right issuable in respect of that share.
8.11     Deceased Shareholders
        In the event of the death of a holder, or of one of the joint holders, of any share, the Corporation shall not be required to make any entry in the securities register in respect of the death or to make any dividend or other
11

payments in respect of the share except on production of all such documents as may be required by law and on compliance with the reasonable requirements of the Corporation and its transfer agents.
 
 SECTION 9
DIVIDENDS AND RIGHTS
9.1     Dividends
        Subject to the Act and the Corporation's articles, the board may from time to time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation. Dividends may be paid in money or property or by issuing fully paid shares of the Corporation or options or rights to acquire fully paid shares of the Corporation.
9.2     Dividend Cheques
        A dividend payable in money may be paid in Canadian dollars or in any equivalent amount in any other currency, at the discretion of the board, and shall be paid by cheque to the order of each registered holder of shares of the class or series in respect of which the dividend has been declared. The cheque shall be mailed by prepaid ordinary mail to the registered holder at such holder's recorded address, unless the holder otherwise directs.
        In the case of joint holders the cheque shall, unless the joint holders otherwise direct, be made payable to the order of all the joint holders and, if more than one address is recorded in the Corporation's securities register in respect of such joint holding, the cheque shall be mailed to the first address so appearing.
        The mailing of a dividend cheque, unless the cheque is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to, and does, withhold.
9.3     Non-Receipt or Loss of Cheque
        In the event of non-receipt of any dividend cheque by the person to whom the cheque is sent, the Corporation shall issue a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the board may from time to time prescribe, whether generally or in any particular case.
9.4     Record Date for Dividends and Rights
        The board may fix in advance a date, preceding by not more than 50 days the date for the payment of any dividend or the date for the issue of any right to subscribe for securities of the Corporation, as a record date for the determination of the persons entitled to receive payment of the dividend or to exercise the right to subscribe for those securities.
        Notice of any such record date shall be given not fewer than seven days before the record date in the manner provided by the Act. If no such record date is so fixed, such record date shall be at the close of business on the day on which the resolution relating to the dividend or right to subscribe is passed by the board.
9.5     Unclaimed Dividends
        Any dividend unclaimed after a period of six years from the date on which the dividend was declared to be payable shall be forfeited and shall revert to the Corporation.
 
 SECTION 10
MEETINGS OF SHAREHOLDERS
10.1     Annual Meetings
        The board or any director may call the annual meeting of shareholders and, subject to section 10.2, at such place as the board may from time to time determine, for the purpose of considering the financial statements and
12

reports required by the Act to be placed before an annual meeting, electing directors, appointing auditors and for the transaction of such other business as may properly be brought before the meeting.
10.2     Special Meetings
        The board or any director may call a special meeting of shareholders at any time.
10.3     Place of Meetings
        Subject to the Corporation's articles, each meeting of shareholders shall be held at such place in or outside Ontario as the directors determine or, in the absence of such a determination, at the place where the registered office of the Corporation is located.
10.4     Notice of Meetings
        Notice of the time and place of each meeting of shareholders shall be given in the manner provided in Section Eleven not fewer than 21 nor more than 50 days before the date of the meeting to each director, to the auditor of the Corporation, and to each shareholder entitled to vote at the meeting.
        All business transacted at a special meeting of shareholders and all business transacted at an annual meeting of shareholders, except consideration of the minutes of an earlier meeting, the financial statements and auditor's report, election of directors and reappointment of the incumbent auditor, is deemed to be special business. Notice of a meeting of shareholders at which special business is to be transacted shall state or be accompanied by a statement of:
(a)
the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon, and

(b)
the text of any special resolution or by-law to be submitted to the meeting.
10.5     List of Shareholders Entitled to Notice
        For every meeting of shareholders, the Corporation shall prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order and showing the number of shares held by each shareholder.
        If a record date for the meeting is fixed pursuant to section 10.6, such list shall be prepared as of such record date and not later than 10 days after such record date. If no record date is fixed, the shareholders listed shall be those registered at the close of business on the day immediately preceding the day on which notice of the meeting is given. If no such notice is given, the shareholders listed shall be those registered at the opening of business on the day on which the meeting is held.
        The list shall be available for examination by any shareholder during usual business hours at the registered office of the Corporation or at the place where the central securities register is maintained and at the meeting for which the list was prepared.
10.6     Record Date for Notice
        The board may fix in advance a date preceding the date of any meeting of shareholders, by not fewer than 21 and not more than 50 days, as a record date for the determination of the shareholders entitled to notice of the meeting. Notice of any such record date shall be given not fewer than seven days before the record date in accordance with the Act.
        If no such record date is so fixed, the record date for the determination of the shareholders entitled to receive notice of the meeting of shareholders shall be at the close of business on the day preceding the day on which the notice is given. If no such notice is given, the shareholders entitled to notice are those registered as shareholders at the opening of business on the day on which the meeting is held.
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10.7     Meetings Without Notice
        A meeting of shareholders may be held without notice at any time and place permitted by the Act:
(a)
if all the shareholders entitled to vote at the meeting are present in person or duly represented or if those not present or represented waive notice of, or otherwise consent to, the meeting being held; and

(b)
if the auditors and the directors are present in person or waive notice of, or otherwise consent to, the meeting being held.
        At such a meeting any business may be transacted which the Corporation may transact at a meeting of shareholders.
10.8     Chairman, Secretary and Scrutineers
        The chairman of any meeting of shareholders shall be the first mentioned of such of the following officers as have been appointed and present at the meeting: chairman of the board, managing director, president, or a vice-president. If no such officer is present within 15 minutes from the time fixed for holding the meeting, the persons present and entitled to vote shall choose one of their number to be chairman. If the secretary of the Corporation is absent from any meeting of the shareholders, the chairman of the meeting shall appoint an individual, who need not be a shareholder, to act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chairman of the meeting, with the consent of the meeting.
10.9     Persons Entitled to be Present
        The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote at the meeting, the directors and auditor of the Corporation and others who, although not entitled to vote, are entitled or required under the Act or the Corporation's articles or by-laws to be present at the meeting. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting.
10.10     Quorum
        A quorum for the transaction of business at any meeting of shareholders shall be two individuals present in person, each being a shareholder or a proxyholder entitled to vote at the meeting, holding or representing, in the aggregate, not less than 10 percent of the issued shares of the Corporation enjoying voting rights at such meeting.
        If a quorum is present at the opening of any meeting of shareholders, the shareholders and proxyholders present may proceed with the business of the meeting even if a quorum is not present throughout the meeting.
        If a quorum is not present at the time appointed for the meeting of shareholders, or within such reasonable time after that as the shareholders and proxyholders present may determine, the shareholders and proxyholders present may adjourn the meeting to a fixed time and place, but may not transact any other business.
10.11     Right to Vote
        Every person named in the list referred to in section 10.5 shall be entitled to vote the shares shown on the list opposite such person's name at the meeting to which the list relates, except to the extent that:
(a)
If the Corporation has fixed a record date in respect of the meeting, the person has transferred any of such person's shares after the record date or, if the Corporation has not fixed a record date in respect of the meeting, the person has transferred any of such person's shares after the date on which the list is prepared; and

(b)
the transferee, having produced property endorsed certificates evidencing the shares or having otherwise established that such transferee owns such shares, has demanded not later than, (i) the time at which the meeting commences, or (ii) such number of days before the meeting (not exceeding 10 days) as the board may determine, that such transferee's name be included in the list.
        In any such excepted case the transferee shall be entitled to vote the transferred shares at the meeting.
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10.12     Proxyholders and Representatives
        Every shareholder entitled to vote at a meeting of shareholders may by means of a proxy appoint a proxyholder, or one or more alternate proxyholders, who need not be shareholders, as such shareholder's nominee to attend and act at the meeting in the manner, to the extent and with the authority conferred by the proxy.
        A proxy shall be in written or printed format or a format generated by telephonic or electronic means and becomes a proxy when completed and signed in writing or by electronic signature by the shareholder or his attorney authorized by a document that is signed in writing or by electronic signature or, if the shareholder is a body corporate, by an officer or attorney thereof duly authorized.
        The authority of such officer or attorney shall be established by depositing with the Corporation a certified copy of the instrument of the body corporate authorizing such officer or attorney to sign such proxy, or in such other manner as may be satisfactory to the secretary of the meeting or the chairman of the meeting. If a proxy or document authorizing an attorney is signed by electronic signature, the means of electronic signature shall permit a reliable determination that the proxy or document was created or communicated by or on behalf of the shareholder or the attorney, as the case may be.
        In the case of a proxy appointing a proxyholder to attend and act at a meeting of shareholders, the proxy ceases to be valid one year from the date of the proxy.
        Alternatively, if the shareholder is a body corporate or association, the Corporation shall recognize any individual authorized by a resolution of the directors or governing body of the body corporate or association to represent such body corporate or association at the meeting of shareholders. For the purpose of this by-law, such authorized individual will be considered to be a proxyholder.
        The authority of such authorized representative shall be established by depositing with the Corporation a certified copy of the body corporate's authorizing resolution, or in such other manner as may be satisfactory to the secretary of the meeting or the chairman of the meeting.
        The Corporation shall, concurrently with or prior to sending notice of a meeting of shareholders, send a form of proxy to each shareholder who is entitled to receive notice of the meeting.
10.13     Time for Deposit of Proxies
        The board may fix a time not exceeding 48 hours, excluding non-business days, preceding any meeting or adjourned meeting of shareholders before which time proxies to be used at the meeting must be deposited with the Corporation or its agent. Any time so fixed shall be specified in the notice calling the meeting.
        A proxy may be acted on only if, (i) before the time so specified, the proxy was deposited with the Corporation, or its agent specified in the notice, or (ii) no such time was specified in the notice and the proxy was delivered to the secretary of the meeting or the chairman of the meeting before the time of voting.
10.14     Joint Shareholders
        If two or more persons are registered as joint holders of any share, any one of them present in person or duly represented by a proxyholder at a meeting of shareholders may, in the absence of the other or others, vote the share. If two or more of those persons are present in person or duly represented by proxyholder, then such person whose name stands first on the securities register of the Corporation, or that person's proxyholder, shall alone be entitled to vote such shares.
10.15     Votes to Govern
        At any meeting of shareholders every question shall, unless otherwise required by the Corporation's articles or by-laws or by law, be determined by a majority of the votes cast on the question. In case of an equality of votes either on a show of hands or on a ballot, the chairman of the meeting shall be entitled to a second or casting vote.
15

10.16     Show of Hands
        Subject to the Act, any question at a meeting of shareholders shall be decided by a show of hands, unless a ballot is demanded in accordance with section 10.17. On a show of hands every person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands has been taken on a question, unless a ballot is demanded in accordance with section 10.17, a declaration by the chairman of the meeting that the vote on the question, (i) has been carried, (ii) has been carried by a particular majority, or (iii) has not been carried, and an entry to that effect in the minutes of the meeting shall be prima facie evidence, (i) as proof of the fact of the number, or proportion of, the votes recorded in favour of, or against, any resolution or other proceeding in respect of the question, and (ii) that the result of the vote so taken is the decision of the shareholders on the question.
10.17     Ballots
        On any question proposed for consideration at a meeting of shareholders, and whether or not a show of hands has been taken, the chairman of the meeting, or any person who is present and entitled to vote on the question at the meeting, may demand a ballot. A ballot so demanded shall be taken in such manner as the chairman of the meeting shall direct. A demand for a ballot may be withdrawn at any time before the taking of the ballot. If a ballot is taken, each shareholder and proxyholder present shall be entitled, in the respect of the shares which such person is entitled to vote at the meeting on the question, to that number of votes provided by the Act or the Corporation's articles. The result of the ballot so taken shall be the decision of the shareholders on the question.
10.18     Adjournment
        The chairman of a meeting of shareholders may, with the consent of the meeting and subject to such conditions as the meeting may decide, adjourn the meeting from time to time and from place to place. No notice of such adjournment need be given to the shareholders unless the meeting is adjourned by one or more adjournments for an aggregate of 30 days or more, in which case, subject to the Act, notice of the adjourned meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for an aggregate or more than 90 days, section 111 of the Act (concerning the mandatory solicitation of proxies) does not apply.
        Any adjourned meeting shall be duly constituted if held in accordance with the terms of the adjournment and a quorum of shareholders and/or proxyholders is present thereat. The shareholders and/or proxyholders who formed a quorum at the original meeting are not required to form a quorum at the adjourned meeting. If there is no quorum of shareholders and/or proxyholders present at the adjourned meeting, the original meeting shall be deemed to have terminated at its adjournment.
        Any business may be brought before or dealt with at any adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same.
 
 SECTION 11
NOTICES
11.1     Method of Giving Notices
        Any notice (which term in this Section Eleven includes any communication or document) to be given (which term in this Section Eleven includes sent, delivered or served) pursuant to the Act, the Corporation's articles, the by-laws or otherwise to a shareholder, director, officer or auditor of the Corporation shall be sufficiently given if, (i) delivered personally to such person, (ii) mailed by prepaid mail to such person at such person's recorded address, (iii) sent to such person at such person's recorded address by any means of prepaid transmitted or recorded communication, or (iv) transmitted by facsimile to such person at such person's recorded address.
        A notice which is delivered personally is deemed to be given when received. A notice which is mailed is deemed to have been given on the fifth day after the notice is deposited in a post office or public letter box. A notice which is sent by means of transmitted or recorded communication is deemed to have been given when
16

dispatched or delivered to the appropriate communications company or agency or its representative for dispatch. A notice transmitted by facsimile is deemed to have been given when the Corporation generates a facsimile confirmation slip which discloses that the notice was transmitted to a number known by the Corporation to be used by the person to whom the facsimile is transmitted.
        The secretary may change, or cause to be changed, the recorded address or facsimile number of any shareholder, director, officer or auditor in accordance with any information believed by the secretary to be reliable.
        A certificate of any officer, in office at the time of making the certificate, or agent of the Corporation, as to the facts in relation to the giving of any notice or the publication of any notice shall be conclusive evidence thereof and shall be binding on every shareholder, director, officer and auditor of the Corporation.
        The signature of any director or officer to any notice may be written, printed or otherwise mechanically reproduced.
11.2     Notice to Joint Shareholders
        If two or more persons are registered as joint holders of any share, any notice may be addressed to all such joint holders, but notice addressed to one of those persons shall be sufficient notice to all such persons.
11.3     Computation of Time
        In computing the period of days when notice must be given under any section of this by-law requiring a specified number of days' notice of any meeting or other event, the period shall commence on the day following the sending of such notice and shall terminate at midnight of the last day of the period, except that if the last day of the period falls on a non-business day, the period shall terminate at midnight on the day next following that is not a non-business day.
11.4     Undelivered Notices
        If any notice given to a shareholder pursuant to section 11.1 is returned on three consecutive occasions because the shareholder cannot be found, the Corporation shall not be required to give any further notices to that shareholder until the Corporation is informed in writing of the shareholder's new address.
11.5     Omissions and Errors
        The accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee or the non-receipt of any notice by any such person or any error in any notice not affecting the substance of the notice shall not invalidate any action taken at any meeting held pursuant to the notice, or otherwise founded thereon.
11.6     Persons Entitled by Death or Operation of Law
        Every person who, by operation of law, transfer, death of a shareholder or any other means whatsoever, becomes entitled to any share, shall be bound by every notice in respect of the share which has been duly given to the shareholder from whom the person derives title to such share before that person's name and address was entered on the securities register (whether the notice was given before or after the happening of the event on which that person became so entitled) and before that person furnished the Corporation with the proof of authority or evidence of entitlement prescribed by the Act.
11.7     Waiver of Notice
        Any shareholder, proxyholder, other person entitled to attend a meeting of shareholders, director, officer, auditor or member of a committee may at any time waive any notice, or waive or abridge the time for any notice, required to be given to that person under the Act, the Corporation's articles, the by-laws or otherwise. Any such waiver or abridgement, whether given before or after the meeting or other event of which notice is required to be given, shall cure any default in the giving or in the time of the notice, as the case may be. Any such waiver or
17

abridgement shall be in writing, except a waiver of notice of a meeting of shareholders, the board or a committee, which may be given in any manner.
        Attendance of a director at a meeting of directors or attendance of a shareholder, proxyholder, or any other person entitled to attend a meeting of shareholders, at a meeting of shareholders is a waiver of notice of the meeting except where such director, shareholder, proxyholder or other person, as the case may be, attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
 
 SECTION 12
EFFECTIVE DATE
12.1     Effective Date
        This by-law shall come into force when made by the board in accordance with the Act.
12.2     Repeal
        All previous by-laws of the Corporation are repealed as of the coming into force of this by-law. The repeal shall not affect, (i) the previous operation of any by-law so repealed, (ii) the validity of any act done or right, privilege, obligation or liability acquired or incurred under, (iii) the validity of any contract or agreement made pursuant to, (iv) the validity of any articles (as defined in the Act) or predecessor charter documents of the Corporation obtained pursuant to, any such by-law before its repeal. All officers and other persons acting under any by-law so repealed shall continue to act as if appointed under this by-law and all resolutions of the shareholders or the board or a committee with continuing effect passed under any repealed by-law shall continue to be good and valid except to the extent inconsistent with this by-law and until amended or repealed.
MADE by the board on October 28, 1993.

 	

/s/   PAUL PENNA       

Paul Penna
 President	

 	
 	
/s/   BARRY LANDEN       

Barry Landen
 Secretary	
CONFIRMED by the shareholders in accordance with the Act on this 30 th day of November, 1993.

 	

/s/   BARRY LANDEN       

Barry Landen
 Secretary	
ADOPTED by the Board of Directors this 1 st day of January, 1996.

 	

/s/   PAUL PENNA       

Paul Penna
 President	

 	
 	
/s/   BARRY LANDEN       

Barry Landen
 Secretary	
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 AGNICO-EAGLE MINES LIMITED BY-LAW NO. 1 (AS AMENDED)
Contents
SECTION 1 INTERPRETATION
SECTION 2 BUSINESS OF THE CORPORATION
SECTION 3 BORROWING AND SECURITY
SECTION 4 DIRECTORS
SECTION 5 COMMITTEES
SECTION 6 OFFICERS
SECTION 7 PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 8 SHARES
SECTION 9 DIVIDENDS AND RIGHTS
SECTION 10 MEETINGS OF SHAREHOLDERS
SECTION 11 NOTICES
SECTION 12 EFFECTIVE DATE
 
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Exhibit 99G
 
 CONSENT OF INDEPENDENT AUDITORS
        We consent to the incorporation by reference, in the Registration Statement (Form F-10/A No. 333-120043), of our report dated February 24, 2004 with respect to the consolidated financial statements of Agnico-Eagle Mines Limited as at December 31, 2003 and 2002, and for each of the years in the three-year period ended December 31, 2003, included in the Annual Report (Form 20-F/A) for 2003 filed with the Securities and Exchange Commission.

Toronto, Canada
January 14, 2005	
 	
(signed) Ernst & Young LLP 
Chartered Accountants	

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 CONSENT OF INDEPENDENT AUDITORS
 
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Exhibit 99H
 
 CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
        We consent to the incorporation by reference in this Annual Report on Form 20-F/A of Agnico-Eagle Mines Limited of our report dated February 24, 2004, with respect to the consolidated financial statements of Agnico-Eagle Mines Limited included in the 2003 Annual Report to Shareholders of Agnico-Eagle Mines Limited.

 	

Toronto, Canada
February 24, 2004	
Ernst & Young LLP
Chartered Accountants	

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 CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS