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SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2008
Agnico-Eagle Mines Limited
 (Translation of registrant's name into English)
145 King Street East, Suite 400, Toronto, Ontario M5C 2Y7
 (Address of Principal Executive Offices)
Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F	 	ý	 	Form 40-F	 	o	
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  o
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934

Yes	 	o	 	No	 	ý	
(If "Yes" is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82-                               )

 SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 	 	AGNICO-EAGLE MINES LIMITED	

Date: March 28, 2008	
 	
/s/ R. Gregory Laing
	
 	 	By:	R. Gregory Laing	
 	 	Title:	General Counsel, Senior Vice President,
Legal and Corporate Secretary	

 EXHIBITS

Exhibit No.
	 	Exhibit Description
	
99.1	 	Agnico-Eagle Mines Limited's Notice of Annual and Special Meeting of Shareholders and Management Proxy Circular dated March 14, 2008	
99.2	 	Agnico-Eagle Mines Limited's Management's Discussion and Analysis	
99.3	 	Agnico-Eagle Mines Limited's Annual Audited Consolidated Financial Statements	
99.4	 	Agnico-Eagle Mines Limited's 2007 Annual Report to Shareholders	

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SIGNATURE
EXHIBITS

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Exhibit 99.1
         
Notice of Annual and Special Meeting
of Shareholders
Friday, May 9, 2008
Management Proxy Circular

AGNICO-EAGLE MINES LIMITED
 Suite 400
145 King Street East
Toronto, Ontario
M5C 2Y7

 NOTICE OF 2008 ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

Date:	 	Friday, May 9, 2008	

Time:	
 	
11:00 a.m. (Toronto time)	

Place:	
 	
Sovereign Room, Le Royal Meridien King Edward Hotel, 37 King Street East, Toronto, Ontario	

Business of the Meeting:	
 	
1.	
 	
Receipt of the financial statements of Agnico-Eagle for the year ended December 31, 2007 and the auditors' report on the statements;	

 	
2.	
 	
Election of directors;	

 	
3.	
 	
Appointment of auditors;	

 	
4.	
 	
Consideration of, and if deemed advisable, the passing of an ordinary resolution approving an amendment to Agnico-Eagle's Employee Share Purchase Plan;	

 	
5.	
 	
Consideration of, and if deemed advisable, the passing of an ordinary resolution approving an amendment to Agnico-Eagle's Stock Option Plan;	

 	
6.	
 	
Consideration of, and if deemed advisable, the passing of an ordinary resolution confirming the adoption of the amended and restated by-laws of the Company; and	

 	
7.	
 	
Consideration of any other business which may be properly brought before the Annual and Special Meeting of Shareholders.	

 	
By order of the Board of Directors	

 	

 R. GREGORY LAING 
General Counsel, Senior Vice-President, Legal
and Corporate Secretary
March 14, 2008	
To be effective at the meeting, proxies must be deposited with Computershare Trust Company of Canada no later than 48 hours prior to the commencement of the meeting.

 MANAGEMENT PROXY CIRCULAR
         This Management Proxy Circular is provided in connection with the solicitation by the management of Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") of proxies for the use at its Annual and Special Meeting of Shareholders. Unless otherwise stated, all information in this Circular is given as of March 14, 2008 and all dollar amounts are stated in Canadian dollars.

 TABLE OF CONTENTS

 	 	 	 	Page
	
SECTION 1:	 	VOTING INFORMATION	 	2	

SECTION 2:	
 	
BUSINESS OF THE MEETING	
 	
4	
 	 	Election of Directors	 	4	
 	 	Majority Voting Policy	 	4	
 	 	Appointment of Auditors	 	8	
 	 	Financial Statements	 	9	
 	 	Amendments to Employee Share Purchase Plan	 	9	
 	 	Amendments to Stock Option Plan	 	10	
 	 	Confirmation of Amended and Restated By-Laws	 	11	

SECTION 3:	
 	
COMPENSATION AND OTHER INFORMATION	
 	
11	
 	 	Report on Executive Compensation	 	11	
 	 	Performance Graph	 	15	
 	 	Composition of Compensation Committee	 	16	
 	 	Compensation of Officers	 	16	
 	 	Aggregate option exercises during 2007 and year end option values	 	19	
 	 	Compensation of Directors and Other Information	 	21	
 	 	Indebtedness of Directors, Executive Officers and Senior Officers	 	23	
 	 	Additional Items	 	23	

APPENDIX A	
 	
STATEMENT OF CORPORATE GOVERNANCE PRACTICES	
 	
A-1	

APPENDIX B	
 	
EMPLOYEE SHARE PURCHASE PLAN RESOLUTION	
 	
B-1	

APPENDIX C	
 	
AMENDED AND RESTATED EMPLOYEE SHARE PURCHASE PLAN	
 	
C-1	

APPENDIX D	
 	
STOCK OPTION PLAN RESOLUTION	
 	
D-1	

APPENDIX E	
 	
AMENDED AND RESTATED EMPLOYEE STOCK OPTION PLAN	
 	
E-1	

APPENDIX F	
 	
BY-LAWS RESOLUTION	
 	
F-1	

APPENDIX G	
 	
AMENDED AND RESTATED BY-LAWS OF THE COMPANY	
 	
G-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 Shareholders.
What will I be voting on?
        You will be voting on:
•
election of directors (page 3);

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

•
amending the Employee Share Purchase Plan (page 7);

•
amending the Stock Option Plan (page 7);

•
confirming the Amended and Restated By-Laws of the Company (page 9); 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, 2007 together with the auditors' report on these statements will be presented at 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 Company you own at the close of business on April 4, 2008, 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 Company 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 March 14, 2008 there were 143,507,606 common shares of the Company outstanding. Each common share held at that date entitles you to one vote. To the knowledge of the directors and senior officers of the Company, no 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 (the "Depositary"). You may
2

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, and your shares will be voted accordingly. If you do not indicate how you want your shares to be 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, Ernst & Young LLP, as the auditors and the authorization of the directors to fix the remuneration of the auditors; 

(iii)
for the proposed amendment to the Company's Employee Share Purchase Plan;

(iv)
for the proposed amendment to the Company's Stock Option Plan;

(v)
for the confirmation of the Amended and Restated By-Laws of the Company; and

(vi)
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 Agnico-Eagle'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 Company. The cost of this solicitation will be paid by the Company.
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 a proxyholder, and return the form of proxy to the Depositary. 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 Agnico-Eagle provide for a minimum of five and a maximum of twelve directors. By special resolution of the shareholders of Agnico-Eagle approved at the annual and special meeting of Agnico-Eagle held on June 27, 1996, the shareholders authorized the Board of Directors to determine the number of directors within that minimum and maximum. The number of directors to be elected is nine as determined by the Board of Directors by resolution passed on December 13, 2005. 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 Agnico-Eagle or until their successors are elected or appointed or the position is vacated.
        Effective as of February 21, 2007, the Board of Directors discontinued the mandatory retirement policy for directors based solely on age. Due in part to the recently implemented practice of conducting annual Board, Committee and individual director evaluations, the Board approved and adopted a resignation policy primarily based on the directors' performance, commitment, skills and experience. As set out in greater detail under "Appendix A: Statement of Corporate Governance Practices — Assessment of Directors" below, each of the directors' performances will continue to be evaluated annually.
Majority Voting Policy
        As part of its ongoing review of corporate governance practices, on February 20, 2008 the Board of Directors adopted a policy providing that in an uncontested election of directors, any nominee who receives a greater number of votes "withheld" than votes "for" will tender his or her resignation to the Chairman of the Board of Directors promptly following the shareholders' meeting. The Corporate Governance Committee will consider the offer of resignation and will make a recommendation to the Board of Directors on whether to accept it. In considering whether or not to accept the resignation, the Corporate Governance Committee will consider all factors deemed relevant by members of such Committee. The Corporate Governance Committee will be expected to accept the resignation except in situations where the considerations would warrant the applicable director continuing to serve on the Board of Directors. The Board of Directors will make its final decision and announce it in a press release within 90 days following the shareholders' meeting. A director who tenders his or her resignation pursuant to this policy will not participate in any meeting of the Board of Directors or the Corporate Governance Committee at which the resignation is considered.
         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 Agnico-Eagle unless a shareholder has specified in his or her proxy that his or her common shares are to be withheld from voting for the election of directors. The security ownership amounts presented in the table reflect ownership of common shares and options to purchase common shares ("Options") under the Company's Stock Option Plan (as defined below).
4

The common share ownership amounts set out below do not include common shares underlying immediately exercisable Options.

Nominee	 	Committee Memberships	 	Share Holdings	
	
Dr. Leanne M. Baker , 55, of Mill Valley, California, is an independent director of Agnico-Eagle. Dr. Baker is Managing Director of Investor Resources LLC, consulting to companies in the mining and financial services industries, and is a registered representative with U.S. broker dealer Puplava Securities, Inc., a member of the National Association of Securities Dealers (NASD) and the Securities Investor Protection Corporation (SIPC). 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 Reunion Gold Corporation (a mining exploration company traded on the TSX Venture Exchange) and U.S. Gold Corporation and Kimber Resources Inc. (mining exploration companies traded on the American Stock Exchange and the Toronto Stock Exchange (the "TSX")).	 	Chair of the Compensation Committee and Member of the Audit Committee	 	3,500 common shares
75,000 Options	

Douglas R. Beaumont, P.Eng. , 75, of Toronto, Ontario, is an independent 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 and Construction. Mr. Beaumont is a graduate of Queen's University (B.Sc.). Mr. Beaumont has been a director of Agnico-Eagle since February 25, 1997.	 	Chair of the Corporate Governance Committee and Member of the Compensation Committee	 	7,167 common shares
82,000 Options	

5

Sean Boyd, CA , 49, of Newmarket, Ontario, is the Vice-Chairman and Chief Executive Officer and a director of Agnico-Eagle. Mr. Boyd has been with Agnico-Eagle since 1985. Prior to his appointment as Vice-Chairman and Chief Executive Officer in December 2005, Mr. Boyd served as President and Chief Executive Officer from 1998 to 2005, 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. Prior to joining Agnico-Eagle in 1985, he was a staff accountant with Clarkson Gordon (Ernst & Young). 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 a director and member of the Audit Committee of the World Gold Council.	 	 	 	164,232 common shares
365,000 Options	

Bernard Kraft, CA , 77, of Toronto, Ontario, is an independent director of Agnico-Eagle. Mr. Kraft is recognized as a Designated Specialist in Investigative and Forensic Accounting by the Canadian Institute of Chartered Accountants. Mr. Kraft is a recently retired senior partner of the Toronto accounting firm Kraft, Berger LLP, Chartered Accountants and now serves as a consultant to that firm. He is also a principal in Kraft Yabrov 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), St. Andrews Goldfields Limited (a mining exploration company listed on the TSX) and Kaboose Inc. (an online media company listed on the TSX).	 	Member of the Audit Committee and of the Corporate Governance Committee	 	5,104 common shares
55,625 Options	

Mel Leiderman, CA, TEP, ICD.D , 55, of Toronto, Ontario, is an independent 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.). He has been a director of Agnico-Eagle since January 1, 2003.	 	Chair of the Audit Committee and Member of the Compensation Committee	 	3,000 common shares
65,000 Options	

6

James D. Nasso, ICD.D , 74, of Toronto, Ontario, is Chairman of the Board of Directors and an independent director of Agnico-Eagle. Mr. Nasso, now retired, founded and was the President of Unilac Limited, a manufacturer of infant formula, for 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.	 	Member of the Audit Committee, the Health, Safety and Environment Committee and the Corporate Governance Committee	 	18,131 common shares
91,875 Options	

Eberhard Scherkus, P. Eng. , 56, of Oakville, Ontario, is the President and Chief Operating Officer and a director of Agnico-Eagle. Mr. Scherkus has been with Agnico-Eagle since 1985. Prior to his appointment as President and Chief Operating Officer in December 2005, Mr. Scherkus served as Executive Vice-President and Chief Operating Officer from 1998 to 2005, Vice-President, Operations from 1996 to 1998 and as a manager of Agnico-Eagle LaRonde Division from 1986 to 1996. Mr. Scherkus is a graduate of McGill University (B.Sc.). Mr. Scherkus was appointed a director of Agnico-Eagle on January 17, 2005.	 	Member of the Health, Safety and Environment Committee	 	56,597 common shares
303,000 Options	

Howard R. Stockford, P.Eng. , 66, of Toronto, Ontario, is an independent director of Agnico-Eagle. Mr. Stockford is a retired mining executive and was Executive Vice-President of Aur Resources Inc. ("Aur"), a mining company which was traded on the TSX, from 1989 until his retirement at the end of 2004. He was a director of Aur from 1984 until August 2007, when Aur was taken over by Teck Cominco Limited. From 1983 to 1989, Mr. Stockford was Vice-President of Aur. Mr. Stockford is a member of the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") and has previously served as Chairman of both the Winnipeg and Toronto branches of the CIM and as President of the CIM national body. Mr. Stockford is also a member of the Prospectors and Developers Association of Canada, the Geological Association of Canada and the Society of Economic Geologists. Mr. Stockford is a graduate of the Royal School of Mines, Imperial College, London University (B.Sc.). Mr. Stockford has been a director of Agnico-Eagle since May 6, 2005 and is a director of both Nuinsco Resources Limited ("Nuinsco") and Victory Nickel Inc. which was spun off from Nuinsco effective as of February 1, 2007.	 	Chairman of the Health, Safety and Environment Committee and Member of the Compensation Committee	 	3,529 common shares
72,000 Options	

7

Pertti Voutilainen, M.Sc., M.Eng ., 66, of Espoo, Finland, is an independent director of Agnico-Eagle. Mr. Voutilainen is a mining industry veteran. Most recently, he was the Chairman of the board of directors of Riddarhyttan Resources AB. Previously, Mr. Voutilainen was Chairman of the board of directors and Chief Executive Officer for Kansallis Banking Group and President after its merger with Union Bank of Finland until his retirement in 2000. He was also employed by Outokumpu Corp., Finland's largest mining and metals company, for 26 years, including as Chief Executive Officer for 11 years. During the last five years, Mr. Voutilainen has served as director on the board of directors of each of Metso Oyj (Chairman), Viola Systems Oy (Chairman), Innopoli Oy (Chairman) and Fingrid Oyj. Mr. Voutilainen holds the honorary title of Mining Counsellor (Bergsrad) which was awarded to him by the President of the Republic of Finland in 2003. Mr. Voutilainen holds graduate degrees from Helsinki University of Technology (M.Sc.), Helsinki University of Business Administration (M.Sc.) and Pennsylvania State University (M. Eng.). He has been a director of Agnico-Eagle since December 13, 2005.	 	Member of the Health, Safety and Environment Committee and of the Corporate Governance Committee	 	7,000 common shares
68,000 Options	

Appointment of Auditors
         The persons named in the enclosed form of proxy intend to VOTE FOR the appointment of Ernst & Young LLP as Agnico-Eagle's auditors, and for the directors to fix the remuneration of the auditors unless a shareholder has specified in his or her proxy that his or her common shares are to be withheld from voting for the appointment of Ernst & Young LLP as Agnico-Eagle's 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 Agnico-Eagle's auditors in 1983. Fees paid to Ernst & Young LLP for 2007 and 2006 are set out below.

 	 	Year ended
December 31, 2007
	 	Year ended
December 31, 2006
	
 	 	($ thousands)
	 	($ thousands)
	
Audit fees	 	1,451	 	1,304	
Audit related fees	 	241	 	357	
Tax consulting fees	 	705	 	465	
All other fees	 	42	 	52	
 	 		 		
 	 	2,439	 	2,178	
 	 		 		
        Audit fees were paid for professional services rendered by the auditors for the audit of Agnico-Eagle's annual financial statements and related statutory and regulatory filings and for the quarterly review of Agnico-Eagle's interim financial statements. Audit fees also include prospectus related fees for professional services rendered by the auditors in connection with an acquisition of a public company by Agnico-Eagle during 2007. These services consisted of the audit or review, as required, of financial statements included in the prospectuses,
8

reviewing documents filed with securities regulatory authorities, correspondence with securities regulatory authorities and all other services required by regulatory authorities in connection with the filing of these documents.
        Audit related fees consist of fees paid for assurance and related services performed by the auditors that are reasonably related to the performance of the audit of the Company's financial statements. This includes consultation with respect to financial reporting, accounting standards and compliance with section 404 of the Sarbanes Oxley Act of 2002 .
        Tax consulting fees were paid for professional services relating to tax compliance, tax advice and tax planning. These services included the review of tax returns, assistance with eligibility of expenditures under the Canadian flow-through 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 include fees 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.
        No other fees were paid to auditors in the previous two years.
        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, 2007 have been mailed to Agnico-Eagle shareholders with this Circular.
Amendments to Employee Share Purchase Plan
        The Company's Employee Share Purchase 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 Company's common shares. Details on the Employee Share Purchase Plan can be found on page 19 of this Circular.
        Currently under the Employee Share Purchase Plan, the Company has reserved 2,500,000 common shares for issuance under the Employee Share Purchase Plan. The Compensation Committee considers the Employee Share Purchase 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 Company's business. The need to attract and retain skilled employees will be particularly important during the next few years as the Company grows to a multi-mine operation. Accordingly, the Compensation Committee is recommending to increase the number of common shares reserved for issuance under the Employee Share Purchase Plan by 2,500,000 shares from 2,500,000 to 5,000,000 common shares.
        At the meeting, shareholders will be asked to consider an ordinary resolution (attached to this Circular as Appendix B) to approve the above amendments to the Employee Share Purchase Plan. As at March 14, 2008, 1,907,849 shares had been issued under the Employee Share Purchase Plan. If the resolution is approved, the number of common shares available for future share issuances will be 3,092,151. This amount will represent 2.2% of the 143,507,606 common shares issued and outstanding as of March 14, 2008. A copy of the Employee Share Purchase Plan which has been amended and restated to reflect the proposed amendment is attached to this Circular as Appendix C.
        The TSX requires that this resolution amending the Employee Share Purchase Plan 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 Employee Share Purchase Plan is subject to regulatory approval. If you do not indicate how you want your shares to be voted, the persons named in the proxy intend to vote your shares for the proposed amendment to the Company's Employee Share Purchase Plan .
Amendments to Stock Option Plan
9

        The Company'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 Company's common shares. Details on the Stock Option Plan can be found on page 17 of this Circular.
        Currently under the Stock Option Plan, the Company has reserved 13,000,000 common shares for issuance under the Stock Option Plan. As at March 14, 2008, 12,946,065 options have been granted under the Stock Option Plan leaving 53,935 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 Company's business. The need to attract and retain skilled employees will be particularly important during the next few years as the Company grows to a multi-mine operation. Accordingly, the Compensation Committee is recommending to increase the number of common shares reserved for issuance under the Stock Option Plan by 6,000,000 shares from 13,000,000 to 19,000,000 common shares.
        The Stock Option Plan provides that, subject to any required approval of any stock exchange or other authority, the Board of Directors may amend or revise the terms of the Stock Option Plan or discontinue the Stock Option Plan.
        Under this general amendment provision, the Board of Directors may amend the Stock Option Plan without seeking shareholder approval with respect to, for example, the following matters:
(a)
amendments of a "housekeeping" nature including any amendment for the purpose of curing any ambiguity, error or omission in the Stock Option Plan or to correct or supplement any provision of the Stock Option Plan that is inconsistent with any other provision of the Stock Option Plan;

(b)
amendments necessary to comply with the provisions of applicable law (including, without limitation, the rules, regulations and policies of the TSX);

(c)
amendments respecting administration of the Stock Option Plan;

(d)
any amendment to the vesting provisions of the Stock Option Plan or any Option;

(e)
any amendment to the early termination provisions of the Stock Option Plan or any Option, whether or not such Option is held by an insider, provided such amendment does not entail an extension beyond the original expiry date;

(f)
the addition or modification of a cashless exercise feature, payable in cash or common shares of the Company, which provides for a full deduction of the number of underlying common shares from the Stock Option Plan reserve;

(g)
amendments necessary to suspend or terminate the Stock Option Plan; and

(h)
any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law (including, without limitation, the rules, regulations and policies of the TSX).
        The amendment provisions in section 12 of the Stock Option Plan currently provide that the Board of Directors may not amend the Stock Option Plan to:
(a)
increase the maximum number of Shares reserved for issuance under the Stock Option Plan;

(b)
reduce the exercise price for Options held by insiders of the Company;

(c)
extend the term of the Option held by insiders of the Company; or

(d)
increase any limit on grants of Options to insiders set out in the Stock Option Plan.
        The Board of Directors has determined that it would be advisable to amend the Stock Option Plan to specify that shareholder approval would also be required for any amendment to (a) any of the provisions dealing with the assignment of options to certain eligible persons related to an optionholder in Section 7(e) of the Stock
10

Option Plan or (b) the definitions of "Eligible Assignee", "Eligible Corporation", "Eligible Family Trust" or "Eligible Person" in Section 2 of the Stock Option Plan.
        At the meeting, shareholders will be asked to consider an ordinary resolution (attached to this Circular as Appendix D) to approve the above amendments to the Stock Option Plan. If the resolution is approved, the number of common shares available for future option grants will be 6,053,935 and the Board of Directors will be restricted from amending the provisions of the Stock Option Plan dealing with the assignment of options without the shareholder approval as discussed above.
        As at March 14, 2008, 4,743,200 options granted under the Stock Option Plan were unexercised. The unexercised options together with the shares available for future grants would leave 4,797,135 common shares reserved for issuance under the Stock Option Plan. This amount will represent 3.3% of the 143,507,606 common shares issued and outstanding as of March 14, 2008. In addition, if the resolution is approved, the unexercised options together with the shares available for future grants would leave 10,797,135 common shares reserved for issuance under the Stock Option Plan, representing 7.5% of the 143,507,606 common shares issued and outstanding as of March 14, 2008. A copy of the Stock Option Plan which has been amended and restated to reflect the proposed amendment is attached to this Circular as Appendix E.
        The TSX requires that the resolution amending the Stock Option Plan 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. If you do not indicate how you want your shares to be voted, the persons named in the proxy intend to vote your shares for the proposed amendment to the Company's Stock Option Plan.
Confirmation of Amended and Restated By-Laws
        As part of its ongoing review of its corporate governance practices, the Board of Directors amended the By-Laws of the Company on March 5, 2008 to facilitate the issuance of book based securities through a direct registration system and to make certain other amendments considered appropriate to reflect recent amendments to the Business Corporations Act  (Ontario).
        The proposed amendments to the Company's By-Laws are set out in detail in the ordinary resolution (attached to this Circular as Appendix F) that the shareholders will be asked to consider for approval at the meeting. A copy of the Company's By-Laws which have been amended and restated to reflect the proposed amendments is attached to this Circular as Appendix G.
        The Business Corporations Act (Ontario) requires that any amendment made to the by-laws of a corporation be submitted to the next meeting of shareholders for confirmation by an ordinary resolution of the majority of the shareholders. If an amendment to the by-laws of a corporation is not approved by the majority of the shareholders, the amendment ceases to be effective. If you do not indicate how you want your shares to be voted, the persons named in the proxy intend to vote your shares for the confirmation of the Amended and Restated By-Laws of the Company .

 SECTION 3: COMPENSATION AND OTHER INFORMATION
Report on Executive Compensation
Compensation Philosophy
        The officers of Agnico-Eagle have a significant influence on corporate performance and creating shareholder value. With this in mind, Agnico-Eagle'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 Agnico-Eagle's business;

•
provide a strong incentive to achieve Agnico-Eagle's goals; and

•
ensure that interests of management and Agnico-Eagle's shareholders are aligned.
11

        The compensation paid to Agnico-Eagle's officers has three components:
•
base salary and benefits;

•
annual incentive compensation (bonuses); and

•
long-term incentive compensation in the form of stock options.
        Agnico-Eagle retained Aon Consulting Inc. to provide consulting services on the Company's executive compensation. During the year ended December 31, 2007, Agnico-Eagle paid a total of $47,771 to Aon Consulting Inc. for consulting fees relating to executive compensation.
        The Compensation Committee reviews each component of compensation for each officer and makes compensation recommendations to the Board. In its evaluation of each officer, the Compensation Committee considers, among other things, recommendations by any executive compensation consultant retained by the Company, evaluations prepared by the Vice-Chairman and CEO for each officer other than the Vice-Chairman and CEO, and an evaluation prepared by the Chairman for the Vice-Chairman and CEO. The Board reviews the recommendations and gives final approval on compensation of Agnico-Eagle'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 internal and external surveys of average base salaries paid to officers of other mining companies of similar size as Agnico-Eagle. The Compensation Committee also conducts its own surveys to determine the level of compensation paid to its officers relative to mining companies of similar size to Agnico-Eagle. Base salary levels take into account the officers' individual responsibilities, experience, performance and contribution toward enhancing shareholder value and should be in line with average base salaries paid to officers having comparable responsibilities at other North American mining and gold companies. To retain a competitive, strong and effective management team, Agnico-Eagle has set the base salary target at the 75th percentile of the market.
        On October 24, 2007, the Board determined, upon the recommendation of the Compensation Committee, to increase the 2008 base salaries of Agnico-Eagle's senior officers by an average of approximately 10% in light of Agnico-Eagle's strong financial and operational performance in 2007, its expanded senior management structure and the results of the Compensation Committee's review of internally and externally generated surveys of mining companies similar in size to Agnico-Eagle.
Annual Incentive Compensation
        Annual incentive compensation for Agnico-Eagle's senior officers is based equally on two factors, namely, Agnico-Eagle's performance and the senior officers' contribution to that performance. The evaluation of Agnico-Eagle's performance is based on its achievements of various specific targets such as return on equity and profitability. Agnico-Eagle's compensation policy provides for a limit ("maximum permissible bonus") on the annual incentive compensation as a percentage of base salary to 150% of base salary for the Vice-Chairman and Chief Executive Officer, to 112.5% of base salary for the President and Chief Operating Officer and to 75% of base salary for Senior Vice-Presidents.
        For 2007, the Compensation Committee rated Agnico-Eagle's performance at 100% based on the following achievements:
Operations and Corporate Development
•
achieved a strong operational safety record in a growth environment;

•
improved results from operations with over 7,300 tonnes of ore mined per day while achieving industry leading earnings per share, cash flow per share and cash costs;

•
increased gold reserves by 33%;
12

•
enhanced growth prospects in gold reserves with the Meadowbank acquisition (April 2007) and positive results from exploration activities in Mexico and Finland; and

•
approved a feasibility study leading to a production decision with respect to the Pinos Altos project.
Financial and Investor Relations
•
enhanced financial flexibility for the Company's growth plans by amending the terms of its US$300 million bank facility to make it unsecured and obtaining an extension of its term by two years to December 2013;

•
raised in excess of $130 million through the exercise of 6,873,190 warrants which expired on November 14, 2007;

•
achieved an increase of 30% in Agnico-Eagle's share price (on the NYSE) compared to an increase of 21% in the Amex Gold BUGS Index in 2007;

•
completed the implementation of an integrated financial software package for the Company; and

•
made significant progress with respect to Section 404 of the Sarbanes-Oxley Act of 2002 compliance.
        Accordingly, since 50% of a senior officer's bonus is determined by Agnico-Eagle's performance, each of the senior officers of Agnico-Eagle was awarded a bonus in respect of Agnico-Eagle's performance equal to half of the maximum permissible bonus payable to such officers under the revised executive compensation policy described above.
        The remaining 50% of the bonus for each of the Named Executive Officers (other than the Vice-Chairman and Chief Executive Officer) was determined by the individual performance of such officer as assessed by the Chairman of the Board and the Vice-Chairman and Chief Executive Officer with reference to the achievements noted above, as applicable to each Named Executive Officer. In line with the individual and corporate results for 2007, it was agreed that the entitlement tied to corporate performance for senior management for 2007 be 100% of the targeted entitlement. This reflects the strong operating performance in terms of cash flow generation which was driven by strong ore throughput and metal recoveries and containment of costs at $66 per tonne. This also reflects the share price out-performance compared to the industry peers and the achievement of a higher than budgeted return on equity. In addition, the advancement of the growth strategy through the development of the LaRonde Mine extension, Goldex, Lapa, Kittila and Pinos Altos mine projects and the acquisition of Meadowbank contributed to a strong corporate performance in 2007.
Stock Options
        Stock options tie officers' compensation to increases in the value of the Company'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 Agnico-Eagle; and

•
the number and exercise price of options previously issued to the employee.
        Long-term incentives for officers and key employees are provided through stock options granted under the Stock Option Plan. Absent other circumstances, the Compensation Committee's policy is to recommend to award stock options that vest evenly over a period of 3-5 years in order to maximize their incentive value and to enhance the Company's ability to retain key individuals.
        The Compensation Committee's policy provides for the granting of stock options that vest over a number of years to achieve the objective of aligning management's long-term interests with that of shareholders and to retain key management accountable for executing the Company's operation plan and building a multi-mine gold company by advancing the Company's projects in Canada, Mexico and Finland.
13

Share Ownership
        In order to align the interests of Agnico-Eagle and those of its officers and employees, the Company encourages stock ownership and facilitates this through its employee share purchase plan. Details of this plan can be found on page 19 of this Circular. The Company has also adopted a policy that the Chief Executive Officer is required to own the equivalent of at least two years of his base salary in Agnico-Eagle stock. Mr. Boyd, the current Chief Executive Officer of the Company, meets this share ownership value requirement. A new Chief Executive Officer would have three years after being appointed to that position to comply with this provision.
        Most of the Company's officers own common shares of Agnico-Eagle. The following table summarizes each officer's holdings as at March 14, 2008:

Sean Boyd, Director, Vice-Chairman and Chief Executive Officer	 	164,232	
Eberhard Scherkus, Director, President and Chief Operating Officer	 	56,597	
David Garofalo, Senior Vice-President, Finance and Chief Financial Officer	 	23,191	
Donald G. Allan, Senior Vice-President, Corporate Development	 	6,106	
Alain Blackburn, Senior Vice-President, Exploration	 	1,904	
R. Gregory Laing, General Counsel, Senior Vice-President, Legal and Corporate Secretary	 	2,247	
Patrice Gilbert, Vice-President, Human Resources	 	627	
Louise Grondin, Vice-President, Environment	 	1,468	
Ingmar Haga, Vice-President, Europe	 	923	
Tim Haldane, Vice-President, Latin America	 	2,136	
Marc Legault, Vice-President, Project Development	 	4,893	
Daniel Racine, Vice-President, Operations	 	6,880	
Jean Robitaille, Vice-President, Metallurgy and Marketing	 	3,407	
David Smith, Vice-President, Investor Relations	 	677	
Chief Executive Officer's 2007 Compensation
        Mr. Boyd, the Vice-Chairman and Chief Executive Officer of the Company, received an $825,000 base salary and a bonus of $1,237,000 in 2007. In determining the base salary and bonus of Mr. Boyd, the Compensation Committee reviewed externally prepared industry surveys, 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 Agnico-Eagle's regional growth strategy. His principal responsibilities include selecting and appointing senior officers, establishing and monitoring long-term strategic corporate objectives and supervising Agnico-Eagle's mining exploration and development activities.
        The bonus granted to Mr. Boyd was based on the Compensation Committee's rating of Agnico-Eagle's performance at 100% and of Mr. Boyd's performance at 100%.

Position
	 	Corporate % of Maximum Bonus
	 	Individual % of Maximum Bonus
	 	Overall % Corporate/Individual
	 	Maximum Bonus as % of Base Salary
	 	Cash Bonus Paid
	
Vice-Chairman and Chief Executive Officer	 	100%	 	100%	 	100%	 	150%	 	$	1,237,000	
        In increasing Mr. Boyd's base salary and determining his individual performance, the Compensation Committee considered his contribution to the following achievements of Agnico-Eagle:
•
continued strong operating and share price performance in 2007;

•
30% increase in share price (on the NYSE) in 2007;
14

•
33% increase in gold reserves in 2007;

•
8.4% return on equity in 2007;

•
approval of a feasibility study (Pinos Altos);

•
acquisition of Meadowbank;

•
positioning of the Company to achieve significant production and reserve growth in the next three to four years; and

•
achieving growth while limiting the issuance of equity.
        The foregoing report is submitted by the Compensation Committee of the Board of Directors.
Dr. Leanne Baker, Chair
Douglas R. Beaumont
Mel Leiderman, CA, TEP
Howard Stockford
Performance Graph
        The following graph compares the total cumulative return of $100 invested in the Company's common shares on December 31, 2002 with the cumulative total return for each of The S&P/TSX Composite Index and the Amex Gold Bugs Index over the five-year period ended December 31, 2007 (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, 2002, would be worth in each of the five years following the initial investment.
Agnico-Eagle Mines Limited Stock Price vs. S&P/TSX Indices (1)

Note:
(1)
Assumes reinvestment of dividends of Cdn.$0.04 per common share paid in each 2003, 2004 and 2005, Cdn.$0.035 paid in 2006 and Cdn$0.12 paid in 2007.
15

Composition of Compensation Committee
        The Compensation Committee consists of Leanne Baker (Chair), Doug Beaumont, Mel Leiderman and Howard Stockford. As of March 14, 2008, no additional members had been added to the Committee. None of the members of the Committee is an officer or employee or former officer or employee of the Company or any of its subsidiaries and all of the members are considered to be unrelated to and independent from Agnico-Eagle.
Compensation of Officers
        The officers of Agnico-Eagle are:
•
Sean Boyd, Vice-Chairman and Chief Executive Officer

•
Eberhard Scherkus, President and Chief Operating Officer

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

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

•
Alain Blackburn, Senior Vice-President, Exploration

•
R. Gregory Laing, General Counsel, Senior Vice-President, Legal and Corporate Secretary

•
Patrice Gilbert, Vice-President, Human Resources

•
Louise Grondin, Vice-President, Environment

•
Ingmar Haga, Vice-President, Europe

•
Tim Haldane, Vice-President, Latin America

•
Marc Legault, Vice-President, Project Development

•
Daniel Racine, Vice-President, Operations

•
Jean Robitaille, Vice-President, Metallurgy and Marketing

•
David Smith, Vice-President, Investor Relations
        The following Summary Compensation Table sets out compensation during the three fiscal years ended December 31, 2007 for the Vice-Chairman and Chief Executive Officer, the Senior Vice-President, Finance and Chief Financial Officer and the three other most highly compensated officers (collectively the "Named Executive Officers") of Agnico-Eagle measured by base salary and bonus earned during the fiscal year ended December 31, 2007.
16

Summary Compensation Table — Agnico-Eagle Mines Limited

 	 	Annual Compensation
	 	Long-Term Compensation Award
	 	 	
Name and Principal Position
	 	Year
	 	Salary
($)
	 	Bonus
($) (1)
	 	Securities Under Options
	 	All Other Compensation
($) (2)
	
Sean Boyd	 	2007	 	825,000	 	1,237,000	 	100,000	 	60,765	
Vice-Chairman and	 	2006	 	700,000	 	1,050,000	 	100,000	 	40,265	
Chief Executive Officer	 	2005	 	660,000	 	475,000	 	125,000	 	38,061	

Eberhard Scherkus	
 	
2007	
 	
600,000	
 	
675,000	
 	
75,000	
 	
66,945	
President and	 	2006	 	500,000	 	562,000	 	75,000	 	40,945	
Chief Operating Officer	 	2005	 	475,000	 	270,000	 	100,000	 	38,741	

David Garofalo	
 	
2007	
 	
375,000	
 	
281,000	
 	
50,000	
 	
44,039	
Senior Vice-President, Finance and	 	2006	 	357,096	 	281,000	 	50,000	 	40,936	
Chief Financial Officer	 	2005	 	320,000	 	150,000	 	70,000	 	38,691	

R. Gregory Laing	
 	
2007	
 	
310,000	
 	
232,000	
 	
50,000	
 	
57,445	
General Counsel, Senior Vice-President,	 	2006	 	271,635	 	232,000	 	25,000	 	20,857	
Legal and Corporate Secretary	 	2005	(3)	55,385	 	25,000	 	50,000	 	5,716	

Alain Blackburn	
 	
2007	
 	
310,000	
 	
232,000	
 	
50,000	
 	
54,757	
Senior Vice-President,	 	2006	 	276,750	 	232,000	 	50,000	 	38,944	
Exploration	 	2005	 	220,000	 	85,000	 	40,000	 	33,903	

(1)
Consists of 100% of the maximum permissible bonus calculated on the base salaries of each Named Executive Officer as of the end of 2007.

(2)
Consists of annual contributions made by Agnico-Eagle on behalf of the Named Executive Officers under the Company's defined contribution pension plan (see "Pension Arrangements"), premiums paid for term life insurance and automobile allowances for the Named Executive Officers and education and fitness benefits.

(3)
Mr. Laing joined Agnico-Eagle on September 19, 2005.
Stock Option Plan
        Under the Company's Stock Option Plan, options to purchase common shares may be granted to directors, officers, employees and service providers of the Company. The exercise price of options granted may not be less than the closing market price for the common shares of the Company on the TSX on the day prior to the date of grant. The maximum term of options granted under the Stock Option Plan is five years and the maximum number of stock options that can be issued in any year is 2% of the Company's outstanding common shares. In addition, a maximum of 25% of the options granted in an option grant vest upon the date they are granted with the remaining options vesting equally over the next three anniversaries of the option grant.
        The Stock Option Plan provides for the termination of an option held by an option holder in the following circumstances:
•
the option expires (no later than five years after the option was granted);

•
30 days after the option holder ceases to be an employee, officer, director of or consultant to the Company or any subsidiary of the Company;

•
six months after the death of the option holder; and

•
where such option holder is a director, four years after the date he or she resigns or retires from the Board (provided that in no event will any option expire later than five years after the option was granted).
        An option granted under the Stock Option Plan may only be assigned to eligible assignees, including a spouse, minor child and minor grandchild, a trust governed by a registered retirement savings plan of an eligible participant, a corporation controlled by such participant or a family trust of which the eligible participant is a trustee and of which all beneficiaries are eligible assignees. Assignments must be approved by the Board and any stock exchange or other authority.
17

        In connection with the evaluation of management's performance conducted near the end of each fiscal year, the Compensation Committee makes a recommendation in respect of the number of options to be granted to officers and directors of the Company in mid-December. If such recommendation is deemed acceptable to the Board, the Board approves the grant of the options on the first trading day in the following month of January and such grant becomes effective immediately with an exercise price equal to the closing price of the immediately preceding trading day.
        The Board may amend or revise the terms of the Stock Option Plan as permitted by law and subject to any required approval by any stock exchange or other authority. No amendment or revision to the Stock Option Plan which adversely affects the rights of any option holder under any option granted under the Stock Option Plan can be made without the consent of the option holder whose rights are being affected. In addition, no amendments to the Stock Option Plan to increase the number of common shares reserved for issuance, to change the designation of who is an eligible participant, or to decrease the prices at which options can be exercised can be made without first obtaining the approval of the Company's shareholders. In response to a staff notice regarding amendments to security based compensation arrangements, the Stock Option Plan was amended in 2007 such that where the Company has imposed trading restrictions on directors and officers that fall within ten trading days of the expiry of an Option, such Option's expiry date shall be the tenth day following the termination of such restrictions. The Company has also proposed certain changes to the amendment provision of the Stock Option Plan. See "Business of the Meeting — Amendments to Stock Option Plan". The Stock Option Plan does not expressly entitle participants to convert a stock option into a stock appreciation right.
        Under the Stock Option Plan, only eligible persons who are not directors or officers of the Company are entitled to receive loans, guarantees or other support arrangements from the Company to facilitate option exercises. During 2007, no loans, guarantees or other financial assistance was provided under the plan.
        The number of common shares reserved for issuance under the Stock Option Plan is 4,797,135 common shares (comprised of 4,743,200 common shares relating to options issued but unexercised and 53,935 common shares relating to options available to be issued), being 3.3% of the Company's 143,507,606 common shares outstanding as at March 14, 2008.
        The following table sets out stock option awards received by the Named Executive Officers during the year ended December 31, 2007.
Option grants of Agnico-Eagle during 2007

Name
	 	Securities
Under Options (1)
	 	% of Total Option Grants in Year
	 	Exercise Price
	 	Market Value of Securities Underlying Options on Date of Grant
	 	Expiration Date
	
Sean Boyd	 	100,000	 	8	 	$	48.09	 	NIL	 	January 2, 2012	
Eberhard Scherkus	 	75,000	 	6	 	$	48.09	 	NIL	 	January 2, 2012	
David Garofalo	 	50,000	 	4	 	$	48.09	 	NIL	 	January 2, 2012	
Greg Laing	 	50,000	 	4	 	$	48.09	 	NIL	 	January 2, 2012	
Alain Blackburn	 	50,000	 	4	 	$	48.09	 	NIL	 	January 2, 2012	

(1)
Black-Scholes value of each option on the date of grant (January 2, 2007) was $12.76.
        The following table shows, for each Named Executive Officer, the number of common shares acquired through the exercise of stock options of the Company during the year ended December 31, 2007, the aggregate value realized upon exercise and the number of unexercised options under the Stock Option Plan as at December 31, 2007. The value realized upon exercise is the difference between the market value of common shares on the exercise date and the exercise price of the option. The value of unexercised in-the-money options at December 31, 2007 is the difference between the exercise price of the options and the market value of Agnico-Eagle's common shares on December 31, 2007, which was $54.42 per common share of the Company.
Aggregate option exercises during 2007 and year end option values
18

 	 	 	 	 	 	Unexercised options at December 31, 2007
	 	Value of unexercised in-the-money options at December 31, 2007
($)
	
 	 	Securities acquired at exercise
	 	Aggregate value realized
($)
					
Name
					 	Exerciseable
	 	Unexerciseable
	 	Exerciseable
	 	Unexerciseable
	
Sean Boyd	 	nil	 	nil	 	290,000	 	125,000	 	9,815,200	 	2,044,750	
Eberhard Scherkus	 	50,000	 	2,023,000	 	284,250	 	93,750	 	10,243,448	 	1,533,563	
David Garofalo	 	12,500	 	427,125	 	60,000	 	62,500	 	1,128,400	 	1,679,150	
Greg Laing	 	nil	 	nil	 	50,000	 	87,500	 	1,433,125	 	1,110,625	
Alain Blackburn	 	23,000	 	762,505	 	34,500	 	62,500	 	831,225	 	1,022,375	
        The following table shows, as at December 31, 2007, compensation plans under which equity securities of Agnico-Eagle 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	 	3,609,924	 	$	30.34	 	2,832,250	
Equity compensation plans not approved by shareholders	 	Nil	 	 	Nil	 	Nil	
Employee Share Purchase Plan
        In 1997, the shareholders of Agnico-Eagle approved the Employee Share Purchase Plan to encourage directors, officers and full-time employees of Agnico-Eagle to purchase common shares of Agnico-Eagle. Full-time employees who have been continuously employed by Agnico-Eagle or its subsidiaries for at least twelve months are eligible at the beginning of each fiscal year to elect to participate in the Employee 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. Agnico-Eagle contributes an amount equal to 50% of the individual's contributions and issues shares which have a market value equal to the total contributions (individual and Corporation) under the Employee Share Purchase Plan. Of the 2,500,000 shares approved in 1997 under the Employee Share Purchase Plan, Agnico-Eagle has, as of March 14, 2008, reserved 592,151 common shares for issuance under the plan. The Company has proposed to amend the Employee Share Purchase Plan to increase the number of common shares available for issuance under such plan from 2,500,000 to 5,000,000. See "Business of the Meeting — Amendments to Employee Share Purchase Plan".
Pension Arrangements
        Two individual Retirement Compensation Arrangement Plans (the "RCA Plans") for Mr. Boyd and Mr. Scherkus 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 Company, less the annual pension payable under the Company's basic defined contribution plan. 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. Payments under the RCA Plans are secured by a letter of credit from a Canadian chartered bank.
19

        The following table provides illustrations of the total estimated pension payable from both the RCA Plan and the Basic Plan assuming various current pensionable earnings, current ages and total 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 Company to Age 60 (1)
	
 	 	Current Age
			
Current Earnings
			 	15 years
	 	20 years
	 	25 years
	 	30 years
	 	35 years
	
$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	

$500,000	
 	
45	
 	
$	
220,300	
 	
$	
293,700	
 	
$	
367,100	
 	
$	
440,600	
 	
$	
514,000	
 	 	50	 	 	190,000	 	 	253,400	 	 	316,700	 	 	380,000	 	 	443,400	
 	 	55	 	 	163,900	 	 	218,500	 	 	273,200	 	 	327,800	 	 	382,500	
 	 	60	 	 	141,400	 	 	188,500	 	 	235,600	 	 	282,800	 	 	329,900	

$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	

$800,000	
 	
45	
 	
$	
352,400	
 	
$	
469,900	
 	
$	
587,400	
 	
$	
704,900	
 	
$	
822,400	
 	 	50	 	 	304,000	 	 	405,400	 	 	506,700	 	 	608,000	 	 	709,400	
 	 	55	 	 	262,300	 	 	349,700	 	 	437,100	 	 	524,500	 	 	611,900	
 	 	60	 	 	226,200	 	 	301,600	 	 	377,000	 	 	452,400	 	 	527,900	

$900,000	
 	
45	
 	
$	
396,500	
 	
$	
528,700	
 	
$	
660,800	
 	
$	
793,000	
 	
$	
925,200	
 	 	50	 	 	342,000	 	 	456,000	 	 	570,000	 	 	684,100	 	 	798,100	
 	 	55	 	 	295,000	 	 	393,400	 	 	491,700	 	 	590,100	 	 	688,400	
 	 	60	 	 	254,500	 	 	339,300	 	 	424,200	 	 	509,000	 	 	593,800	

(1)
All amounts are stated in Canadian dollars.
        At December 31, 2007, the two individuals under the RCA Plans had the following years of service:

•	Mr. Boyd	 	22 years	
•	Mr. Scherkus	 	22 years	
        Accordingly, the total projected pension payable at retirement from both the RCA Plan and the Basic Plan for Mr. Boyd and Mr. Scherkus are $767,260 and $355,765 per annum, respectively. The 2007 annual service cost and total accrued pension obligation, respectively, for each of Mr. Boyd and Mr. Scherkus as at December 31, 2007 are as follows: Mr. Boyd — $270,970 and $3,954,630, Mr. Scherkus — $202,380 and $3,231,110. The annual service cost represents the value of the projected pension benefit earned during the year. The total accrued pension obligation represents the value of the projected pension benefit earned for all service to date. The benefits listed in the table are not subject to any deduction for social security or other offset amounts such as Canada Pension Plan amounts.
Employment Contracts/Termination Arrangements
        Agnico-Eagle 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
20

were last updated in December 2005 and, at that time, provided minimum annual base salaries for the Named Executive Officers as follows:

•	Mr. Boyd	 	$	700,000	
•	Mr. Scherkus	 	$	500,000	
•	Mr. Garofalo	 	$	340,000	
•	Mr. Laing	 	$	235,000	
•	Mr. Blackburn	 	$	245,000	
        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 resignation 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 and one-half 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 100 kilometres;

•
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 Company.
        If a severance payment triggering event had occurred on December 31, 2007, the severance payments (excluding the value of the continuing and ancillary benefits) that would be payable to each of the Named Executive Officers would be as follows: Mr. Boyd — $4,921,250; Mr. Scherkus — $3,046,250; Mr. Garofalo — $1,640;000 Mr. Laing — $1,355,000; and Mr. Blackburn — $1,355,000.
Compensation of Directors and Other Information
        Mr. Boyd, who is a director and the Vice-Chairman and Chief Executive Officer of the Company, and Mr. Scherkus, who is a director and the President and Chief Operating Officer of the Company, do not receive any remuneration for their services as directors of the Company.
        The table below summarizes the annual retainers (annual retainers for the Chairs of the Board and other Committees are in addition to the base annual retainer) and attendance fees paid to the other directors during the year ended December 31, 2007.

 	 	Compensation during the year ended December 31, 2007 (1)
	
Annual board retainer (base)	 	$	55,000	
Annual retainer for Chairman of the Board	 	$	70,000	
Annual retainer for Chairman of the Audit Committee	 	$	25,000	
Annual retainer for Chairpersons of other Board Committees	 	$	10,000	
Board/Committee meeting attendance fee	 	$	1,500	
($2,500 maximum per day, if more than one meeting)	 	 	 	

(1)
These amounts became effective as of July 1, 2007
        To align the interests of directors with those of shareholders, directors, other than Mr. Boyd and Mr. Scherkus, are required to own the equivalent of at least three years of their annual retainer fee in Agnico-Eagle's stock. Directors have a period of three years to achieve this ownership level either through open market
21

purchases or through participation in Agnico-Eagle's Employee Share Purchase Plan. In addition, each director is eligible to be granted options under Agnico-Eagle's Stock Option Plan. Individual grants are determined annually by the Compensation Committee based on performance evaluations for each director.
        The table below sets out the fees paid and the options granted to each of the directors of Agnico-Eagle during the year ended December 31, 2007 and the number and the value of common shares held by each director as of March 14, 2008 based on the closing price of the common shares of $79.00 on the TSX on such day:
Director Compensation and Share Ownership

 	 	Directors' fees and stock awards during the year ended December 31, 2007
	 	Aggregate common shares owned by directors and aggregate value thereof as of March 14, 2008
	
Director
	 	Director Fees
($)
	 	Option Grants (1)
	 	Aggregate Common Shares
	 	Aggregate Value of Common Shares
($)
	
Leanne M. Baker	 	79,750	 	25,000	 	3,500	 	276,500	
Douglas R. Beaumont	 	77,750	 	25,000	 	7,167	 	566,193	
Sean Boyd	 	N/A	 	100,000	 	164,232	 	12,974,328	
Bernard Kraft	 	72,000	 	25,000	 	5,104	 	403,216	
Mel Leiderman	 	93,500	 	25,000	 	3,000	 	237,000	
James D. Nasso	 	131,500	 	50,000	 	18,131	 	1,432,349	
Eberhard Scherkus	 	N/A	 	75,000	 	56,597	 	4,471,163	
Howard Stockford	 	73,625	 	25,000	 	3,529	 	278,791	
Pertti Voutilainen	 	71,000	 	25,000	 	7,000	 	553,000	

(1)
Black-Scholes value of each option on the date of grant (January 2, 2007) was $12.76.
        During the year ended December 31, 2007, Agnico-Eagle issued a total of 4,148 common shares under its Employee Share Purchase Plan to the following directors as follows:

•	Mr. Boyd	 	1,318	
•	Mr. Scherkus	 	1,690	
•	Mr. Nasso	 	380	
•	Mr. Beaumont	 	253	
•	Mr. Kraft	 	253	
•	Mr. Stockford	 	254	
        Agnico-Eagle will provide healthcare benefits to Mr. Ernest Sheriff until May 2010, which is the fifth anniversary of his resignation from the Board.
        The following table sets out the attendance of each of the directors to the Board meetings and the Board committee meetings held in 2007.

Director
	 	Board Meetings Attended
	 	Committee Meetings Attended
	
Leanne M. Baker	 	9 of 10	 	9 of 9	
Douglas R. Beaumont	 	10 of 10	 	6 of 6	
Sean Boyd	 	10 of 10	 	N/A	
Bernard Kraft	 	10 of 10	 	11 of 11	
Mel Leiderman	 	10 of 10	 	9 of 9	
James D. Nasso	 	10 of 10	 	11 of 11	
Eberhard Scherkus	 	10 of 10	 	N/A	
Howard Stockford	 	10 of 10	 	5 of 5	
Pertti Voutilainen	 	10 of 10	 	7 of 7	
22

Indebtedness of Directors, Executive Officers and Senior Officers
        There is no outstanding indebtedness to Agnico-Eagle by any of its officers or directors. Agnico-Eagle does not make loans to directors and officers under any circumstances.
Additional Items
Corporate Governance
        Under the rules of the Canadian Securities Regulators (the "CSA"), the Company is required to disclose information relating to its system of corporate governance. The Company's corporate governance disclosure is set out in Appendix C to this Circular. In addition to describing the Company's governance practices with reference to the CSA rules, Appendix C 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 standards of the New York Stock Exchange.
Directors' and Officers' Liability Insurance
        The Company 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 Company. The premium for these policies for the period from December 31, 2007 to December 31, 2008 is $1,028,000. The policies provide coverage of up to $50 million per occurrence to a maximum of $95 million per annum. There is no deductible for directors and officers and a $250,000 deductible for each claim made by the Company ($1 million deductible for securities claims). The insurance applies in circumstances where the Company may not indemnify its directors and officers for their acts or omissions.
Additional Information
        The Company 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, Investor Relations:
•
the Company's most recent Annual Information Form consisting of the Company's Annual Report on Form 20-F under the United States Securities Exchange Act of 1934;

•
the Company's Audited Annual Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2007, which includes the Company's financial information;

•
any interim financial statements of the Company subsequent to the financial statements for the year ended December 31, 2007; and

•
this Management Proxy Circular.
        Alternatively, these documents may be viewed at the Company's website at http://www.agnico-eagle.com or on the SEDAR website at http://www.sedar.com .
        Information concerning the Company's Audit Committee, required to be provided by National Instrument 51-110F1, can be found in the Company's Annual Report on Form 20F under the United States Securities Exchange Act of 1934.
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.
23

Directors' Approval
        The Board of Directors of the Company has approved the content and sending of this Management Proxy Circular.

 	
 	
March 14, 2008	

 		

 	
R. GREGORY LAING 
General Counsel, Senior Vice-President, Legal and Corporate Secretary	
24

 APPENDIX A

STATEMENT OF CORPORATE GOVERNANCE PRACTICES
        The Board 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 Company 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 Company revises, from time to time, the charters for the Audit Committee, the Compensation Committee and the Corporate Governance Committee to reflect the new and evolving corporate governance requirements and best practices standards in Canada and the United States.
        The Board believes that effective corporate governance contributes to improved corporate performance and enhanced shareholder value. The Company's governance practices reflect the Board's assessment of the governance structure and process which can best serve to realize these objectives in the Company's particular circumstance. The Company's governance practices are subject to review and evaluation through the Board's Corporate Governance Committee to ensure that, as the Company's business evolves, changes in structure and process necessary to ensure continued good governance are identified and implemented.
        The Company is required under the rules of the Canadian Securities Administrators (the "CSA") to disclose its corporate governance practices and provide a description of the Company's system of corporate governance. This Statement of Corporate Governance Practices has been prepared by the Board's Corporate Governance Committee and approved by the Board.
Board of Directors
Director Independence
        The Board consists of nine directors. The Board has made an affirmative determination that seven of its nine current members are "independent" within the meaning of the CSA rules and the standards of the New York Stock Exchange (the "NYSE"). With the exception of Mr. Boyd and Mr. Scherkus, 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 Company. In reaching this determination, the Board considered the circumstances and relationships with the Company and its affiliates of each of its directors. In determining that all directors except Mr. Boyd and Mr. Scherkus are independent, the Board took into consideration the fact that none of the remaining directors is an officer or employee of the Company or party to any material contract with the Company and that none receives remuneration from the Company in excess of directors' fees, employee share purchase plan grants and stock option grants. Mr. Boyd and Mr. Scherkus are considered related because they are officers of the Company. All directors, other than Mr. Boyd and Mr. Scherkus, also meet the independence standard as set out in the Sarbanes-Oxley Act of 2002 ("SOX").
        The Board regularly meets independently of management at the request of any director 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. The Board is scheduled to meet without management before or after each Board meeting. In addition, after each Board meeting held to consider interim and annual financial statements, the Board meets without management. In 2007, the Board met without management at each Board meeting, being ten separate occasions, including the four scheduled quarterly meetings.
        To promote the exercise of independent judgment by directors in considering transactions and agreements, any director or officer who has a material interest in the matter being considered would not be present for discussions relating to the matter and would not participate in any vote on the matter.
        Additional information on each director standing for election, including other public company boards on which they serve and their attendance record for all Board and Committee meetings during 2007, can be found on pages 5 to 8 and 22 of this information circular.
A-1

Chairman
        Mr. Nasso is the Chairman of the Board and Mr. Boyd is the Vice-Chairman and Chief Executive Officer of the Company. 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 that the offices of Chairman and Chief Executive Officer will be held by the same person.
        The Board has adopted a position description for the Chairman of the Board. The Chairman's role is to provide leadership to directors in discharging their duties and obligations as set out in the mandate of the Board. The specific responsibilities of the Chairman include providing advice, counsel and mentorship to the CEO, appointing the Chair of each of the Board's committees and promoting the delivery of information to the members of the Board on a timely basis to keep them fully apprised of all matters which are material to them at all times. The Chairman's responsibilities also include scheduling, overseeing and presiding over meetings of the Board and presiding over meetings of the Company's shareholders.
Board Mandate
        The Board's mandate is to provide stewardship of the Company and to oversee the management of the Company's business and affairs, to maintain its strength and integrity, to oversee the Company's strategic direction, its organization structure and succession planning of senior management and to perform any other duties required by law. The Board's strategic planning process consists of an annual review of the Company'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 Chief Executive Officer and advises management in the development of a corporate strategy to achieve those objectives. The Board also reviews the principal risks inherent in the Company's business, including environmental, industrial and financial risks, and assesses the systems to manage these risks. 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 holds management responsible for the development of long-term strategies for the Company. 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 Vice-Chairman and Chief Executive Officer, the President and Chief Operating Officer, the Senior Vice-President, Finance and Chief Financial Officer, Senior Vice-President, Corporate Development, Senior Vice-President, Exploration and Vice-President, Metallurgy and Marketing report to the Board at least every quarter on the Company's progress in the preceding quarter and on the strategic, operational and financial issues facing the Company.
        Management is authorized to act, without Board approval, on all ordinary course matters relating to the Company's business. Management seeks the Board's prior approval for significant changes in the Company's affairs such as major capital expenditures, financing arrangements and significant acquisitions and divestitures. Board approval is required for any venture outside of the Company'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 Company'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 Company 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. The Board, directly and through its Audit Committee, also assesses the integrity of the Company's internal control and management information systems.
        The Board oversees the Company's approach to communications with shareholders and other stakeholders and approves specific communications initiatives from time to time. The Company conducts an active investor relations program. The program involves responding to shareholder inquiries, briefing analysts and fund
A-2

managers with respect to reported financial results and other announcements by the Company, as well as meeting with individual investors and other stakeholders. Senior management reports regularly to the Board on these matters. The Board reviews and approves the Company'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 Mandate is posted on the Company's website at www.agnico-eagle.com .
Position Descriptions
Chief Executive Officer
        The Board has adopted a position description for the Chief Executive Officer who has full responsibility for the day-to-day operation of the Company's business in accordance with the Company's strategic plan and current year operating and capital expenditure budgets as approved by the Board. In discharging his responsibility for the day-to-day operation of Agnico-Eagle's business, subject to the oversight by the Board, the Chief Executive Officer's specific responsibilities include:
•
providing leadership and direction to the other members of Agnico-Eagle's senior management team;

•
fostering a corporate culture that promotes ethical practices and encourages individual integrity;

•
maintaining a positive and ethical work climate that is conducive to attracting, retaining and motivating top-quality employees at all levels;

•
working with the Chairman in determining the matters and materials that should be presented to the Board;

•
together with the Chairman, developing and recommending to the Board a long-term strategy and vision for Agnico-Eagle that leads to enhancement of shareholder value;

•
developing and recommending to the Board annual business plans and budgets that support Agnico-Eagle's long-term strategy;

•
ensuring that the day-to-day business affairs of Agnico-Eagle are appropriately managed;

•
consistently striving to achieve Agnico-Eagle's financial and operating goals and objectives;

•
designing or supervising the design and implementation of effective disclosure and internal controls;

•
maintaining responsibility for the integrity of the financial reporting process;

•
seeking to secure for Agnico-Eagle a satisfactory competitive position within its industry;

•
ensuring that Agnico-Eagle has an effective management team below the level of the Chief Executive Officer and has an active plan for management development and succession;

•
ensuring, in cooperation with the Chairman and the Board, that there is an effective succession plan in place for the position of Chief Executive Officer; and

•
serving as the primary spokesperson for Agnico-Eagle.
        The Chief Executive Officer is to consult with the Chairman on matters of strategic significance to the Company and alert the Chairman on a timely basis of any material changes or events that may impact upon the risk profile, financial affairs or performance of the Company.
Chairs of Board Committees
        The Board has adopted written position descriptions for each of the Chairs of the Board's committees which include the Audit Committee, the Corporate Governance Committee, the Compensation Committee and the Health, Safety and Environment Committee. The role of each of the Chairs is to ensure the effective
A-3

functioning of his or her committee and provide leadership to its members in discharging the mandate as set out in the committee's charter. The responsibilities of each Chair include, among others:
•
establishing procedures to govern his or her committee's work and ensure the full discharge of its duties;

•
chairing every meeting of his or her committee and encourage free and open discussion at such meetings;

•
reporting to the Board on behalf of his or her committee; and

•
attending every meeting of shareholders and responding to such questions from shareholders as may be put to the Chair of his or her committee.
        Each of the Chairs is also responsible for carrying out other duties as requested by the Board, depending on need and circumstances.
Orientation and Continuing Education
        Agnico-Eagle holds annual educational sessions with its directors and legal counsel to review and assess the Board's corporate governance policies. This allows new directors to become familiar with the corporate governance policies of Agnico-Eagle as they relate to its business.
Ethical Business Conduct
        The Board has adopted a Code of Business Conduct and Ethics which provides a framework for directors, officers and employees on the conduct and ethical decision-making integral to their work. In addition, the Board has adopted a Code of Business Conduct and Ethics for Consultants and Contractors. The Audit Committee is responsible for monitoring compliance with these codes of ethics and any waivers or amendments thereto can only be made by the Board or a Board committee. These codes are available on www.sedar.com .
        The Board has also adopted a Confidential Anonymous Complaint Reporting Policy which provides procedures for officers and employees who believe that a violation of the Code of Business Conduct and Ethics has occurred to report this violation on a confidential and anonymous basis. Complaints can be made internally to the General Counsel, Senior Vice-President, Legal and Corporate Secretary or the Senior Vice-President, Finance and Chief Financial Officer. Complaints can also be made anonymously by telephone, e-mail or postal letter through a hotline provided by an independent third party service provider. The General Counsel, Senior Vice-President, Legal and Corporate Secretary periodically prepares a written report to the Audit Committee regarding the complaints, if any, received through these procedures.
        The Board believes that providing a procedure for employees and officers to raise concerns about ethical conduct on an anonymous and confidential basis fosters a culture of ethical conduct within the Company.
Nomination of Directors
        The Corporate Governance Committee, which is comprised entirely of non-management and independent directors, is responsible for participating in the recruitment and recommendation of new nominees for appointment or election to the Board. When considering a potential candidate, the Corporate Governance Committee considers the qualities and skills that the Board, as a whole, should have and assesses the competencies and skills of the current members of the Board. Based on the talent already represented on the Board, the Corporate Governance Committee then identifies the specific skills, personal qualities or experiences that a candidate should possess in light of the opportunities and risks facing the Company. The Corporate Governance Committee maintains a list of potential director candidates for its future consideration and may engage outside advisors to assist in identifying potential candidates. Potential candidates are screened to ensure that they possess the requisite qualities, including integrity, business judgment and experience, business or professional expertise, independence from management, international experience, financial literacy, excellent communications skills and the ability to work well in a team situation. The Corporate Governance Committee also considers the existing commitments of a potential candidate to ensure that such candidate will be able to fulfill his or her duties as a Board member.
A-4

Compensation
        Remuneration is paid to the Company'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. For a summary of remuneration paid to directors, please see "Executive Compensation — Compensation of Directors" and the description of the Compensation Committee below.
Board Committees
        The Board has four Committees: the Audit Committee, the Compensation Committee, the Corporate Governance Committee and the Health, Safety and Environment 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 Company's financial reports and information;

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

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

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

•
the fairness of related party agreements and arrangements between the Company 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 proxy circular in accordance with applicable laws or the rules of applicable securities regulatory authorities.
        The Board has adopted an Audit Committee charter, which provides that each member of the Audit Committee must be unrelated to and independent from the Company as determined by the Board in accordance with the applicable requirements of the laws governing the Company, the applicable stock exchanges on which the Company's securities are listed and applicable securities regulatory authorities. In addition, each member must be financially literate and at least one member of the Audit Committee must be an audit committee financial expert, as the term is defined in SOX. The Audit Committee must pre-approve all audit and permitted non-audit engagements to be provided by the external auditors to the Company.
        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 Company'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 Company's financial statements and any litigation, claim or other contingency that could have a material effect upon the Company'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 Company's accounting and financial systems. The Audit Committee reviews and discusses 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 recommending to the Board the external auditor to be nominated for shareholder approval who will be responsible for preparing audited financial statements and completing other audit, review or attest services. The Audit Committee also recommends to the Board the compensation to be paid to the external auditor and directly oversees its work. The Company's external auditor reports directly to the Audit Committee. The Audit Committee reports directly to the Board of Directors.
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        The Audit Committee is entitled to retain (at the Company's expense) and determine the compensation of any independent counsel, accountants or other advisors to assist the Audit Committee in its oversight responsibilities.
        The Audit Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Mr. Leiderman (Chair), Dr. Baker, Mr. Kraft and Mr. Nasso), each of whom is financially literate, as the term is used in the CSA's Multilateral Instrument 52-110 — Audit Committees. In addition, Mr. Leiderman and Mr. Kraft are chartered accountants; Mr. Leiderman is currently active in private practice and Mr. Kraft is recently retired and, as such, qualify as audit committee financial experts, as the term is used in SOX. The education and experience of each member of the Audit Committee is set out under "Section 2: Business of the Meeting — Election of Directors". Fees paid to the Company's Auditors, Ernst & Young LLP, are set out under "Section 2: Business of the Meeting — Appointment of Auditors". The Audit Committee met six times in 2007.
Compensation Committee
        The Compensation Committee is responsible for:
•
recommending to the Board policies relating to compensation of the Company's executive officers;

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

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

•
administering the Company'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 Company's compensation and benefits programs generally.
        The Compensation Committee reports directly to the Board. The Charter of the Compensation Committee provides that each member of the Compensation Committee must be unrelated and independent.
        The Compensation Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Dr. Baker (Chair), Mr. Beaumont, Mr. Leiderman and Mr. Stockford). The Compensation Committee met three times in 2007.
Corporate Governance Committee
        The Corporate Governance Committee is responsible for:
•
evaluating the Company's governance practices;

•
developing its response to the Company's Statement of Corporate Governance and recommending changes to the Company'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 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 independent directors; and

•
participating in the recruitment and recommendation of new nominees for appointment or election to the Board.
        The Corporate Governance Committee also provides a forum for a discussion of matters not readily discussed in a full Board meeting. The Charter of the Corporate Governance Committee provides that each
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member of the Corporate Governance Committee must be independent, as such term is defined in the CSA rules.
        The Corporate Governance Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Mr. Beaumont (Chair), Mr. Kraft, Mr. Nasso and Mr. Voutilainen). The Corporate Governance Committee met three times in 2007.
Health, Safety and Environment Committee
        The Health, Safety and Environment Committee is responsible for:
•
monitoring and reviewing health, safety and environmental policies, principles, practices and processes;

•
overseeing health, safety and environmental performance; and

•
monitoring and reviewing current and future regulatory issues relating to health, safety and the environment.
        The Health, Safety and Environment Committee reports directly to the Board and provides a forum to review health, safety and environmental issues in a more thorough and detailed manner than could be adopted by the full Board. The Health, Safety and Environment Committee Charter provides that a majority of the members of the Committee be unrelated and independent.
        The Health, Safety and Environment Committee is comprised of three outside directors who are unrelated to and independent from the Company (currently Howard Stockford (Chair), Mr. Nasso and Mr. Voutilainen) and one non-executive director (Mr. Scherkus, President and COO of the Company). The Health, Safety and Environment Committee met two times in 2007.
Assessment of Directors
        The Company's Corporate Governance Committee (see description of Corporate Governance Committee above) 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.
        Each of the directors completes a detailed annual assessment questionnaire on the Board and Board Committees. The assessment addresses performance of the Board, each Board committee and individual directors, including through a peer to peer evaluation. A broad range of topics is covered such as Board and Board committee structure and composition, succession planning, risk management, director competencies and Board processes and effectiveness. The assessments help identify opportunities for continuing Board and director development and also forms the basis of continuing Board participation.
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 APPENDIX B

EMPLOYEE SHARE PURCHASE PLAN RESOLUTION
BE IT RESOLVED THAT:
1.
The Employee Share Purchase Plan be amended by deleting "2,500,000" in the first sentence of the section entitled "Securities to be Offered" and substituting it with "5,000,000".

2.
Any officer or director of the Company is authorized and directed on behalf of the Company 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.
B-1

 APPENDIX C

AMENDED AND RESTATED EMPLOYEE SHARE PURCHASE PLAN

GENERAL PURCHASE PLAN INFORMATION
Title of Purchase Plan and Registrant
        This Prospectus relates to Common Shares of Agnico-Eagle Mines Limited (the "Company") that may be issued pursuant to the Agnico-Eagle Mines Limited Amended and Restated Employee Share Purchase Plan (the "Purchase Plan").
Purpose, Duration, Modification and Termination
        Purpose.     The purpose of the Purchase Plan is to encourage equity ownership in the Company by the Company's directors, officers and employees through the purchase of Common Shares of the Company.
        Duration.     The Purchase Plan does not have a specified term.
        Modification and termination.     The Committee (as defined below) reserves the right to amend, modify, suspend or terminate the Purchase Plan at any time if and when it is deemed advisable by the Committee. Any amendment to any provision of the Purchase Plan shall also be subject to the approval of any regulatory body having jurisdiction over the Company's securities and any shareholder approval requirements of such regulatory body.
ERISA
        The Purchase Plan is not a retirement plan qualified under Section 401 of the Code, and is not subject to any provisions of the Employee Retirement Income Security Act of 1974, as amended.
Additional Information and Purchase Plan Administration
        Administration.     The Purchase Plan is administered by the Compensation Committee of the Board of Directors of the Company (the "Committee") (or such other committee as the Board of Directors has designated). The Compensation Committee consists of four directors who are appointed by the Board of Directors. Vacancies on the Compensation Committee are filled by the Board of Directors of the Company. The Committee has the authority to adopt, amend, or rescind rules and regulations as it deems advisable or required to administer or operate the Purchase Plan. The Committee also has the authority to interpret and construe the Purchase Plan, the rules and regulations and documentation utilized under the Purchase Plan and make any and all determinations deemed necessary or advisable for the administration of the Purchase Plan.
        Additional Information.     Agnico-Eagle Mines Limited is a company organized under the laws of the Province of Ontario, Canada with its executive offices located at 145 King Street West, Suite 400, Toronto, Ontario M5C 2Y7. More information about the Purchase Plan and its administration can be obtained from R. Gregory Laing, General Counsel, Senior Vice-President, Legal and Corporate Secretary, 145 King Street East, Suite 400, Toronto, Ontario M5C 2Y7, 416-947-1212.

 SECURITIES TO BE OFFERED
        A total of 5,000,000 of the Company's Common Shares, no par value, are available for issuance under the Purchase Plan. The number of shares available under the Purchase Plan may only be increased with the approval of the shareholders of the Company.

 ELIGIBLE PARTICIPANTS
        In general, directors and officers and full-time employees who have been continuously employed by the Company or its subsidiaries for at least 12 consecutive months are eligible to participate in the Purchase Plan. The Committee has the right to, in its absolute discretion, waive such 12-month requirement or refuse any person or group of persons the right of participation on continued participation in the Purchase Plan.
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 PURCHASE OF SECURITIES PURSUANT TO THE PURCHASE PLAN
AND PAYMENT FOR SECURITIES OFFERED
Participation, Contributions and Issuance of Shares
        Participation and Contributions.     A Participant may elect to participate in the Purchase Plan during a calendar year ("Purchase Plan Year") by notifying the Company thereof in writing not later than December 10th of the preceding calendar year ("Enrollment Date"). If a Participant elects to participate, the Participant and the Company will make contributions to be used to purchase Common Shares of the Company. Contributions are made as follows:
•
Participant's Contribution ("Participant's Contribution").    The Participant may elect to make contributions by payroll deduction. If this method of contribution is selected, the Company makes payroll deductions from the Participant's basic annual salary from the Company, before deductions and exclusive of any overtime pay, bonuses, or allowance of any kind ("Basic Annual Salary"), in 12 equal installments. Alternatively, a Participant may elect to make the contributions by check payable to the Company. If the Participant has elected to pay by check, he or she shall make payments on a quarterly basis in four equal installments. The amounts so deducted by or paid to the Company will be applied to the purchase of Common Shares pursuant to the Purchase Plan and shall be held by the Company in trust for the purposes of the Purchase Plan. Purchase Plan participation by payroll deduction is not available to Participants who are full-time employees on short-term or long-term disability, workers' compensation or parental leave. Such Participant shall make his or her contribution by check, which shall be paid on a quarterly basis in four equal installments.

•
Company's Contribution ("Company's Contribution" and together with the Participant's Contribution, the "Aggregate Contribution").    Immediately prior to the date any Common Shares are issued to a Participant under the Purchase Plan, the Company will credit the Participant with and thereafter hold in trust for the Participant an amount equal to 50% of the Participant's Contribution then held in trust by the Company.
        Limitation on Participation.     Except in the case of Participants who are directors of the Company, the Participant's Contribution during a Purchase Plan Year shall not exceed 10% of the Participant's Basic Annual Salary for the calendar year in which the Enrollment Date falls. The Participant's Contribution during a Purchase Plan Year of any director of the Company electing to participate in the Purchase Plan shall not exceed such director's annual board and committee retainer fees for the calendar year in which the Enrollment Date falls.
        Share Issuance.     On March 31, June 30, September 30 and December 31 in each Plan Year, or if any such day is not a business day, then on the preceding business day (each an "Issue Date"), the Company will issue to each Participant fully paid and non-assessable shares equal, as nearly as possible, in value to the Aggregate Contribution held in trust on such date by the Company for each such Participant converted into shares at the Market Price (defined below) on the Issue Date. If such conversion would otherwise result in the issue to a Participant of a fraction of a share, the Company will issue only such number of whole Common Shares as may be purchased with the aggregate amount of the Participant's and the Company's Contribution. Until the shares are issued, the Participant shall have none of the rights or obligations of a shareholder with respect to such shares.
        The Market Price of the Common Shares on any Issue Date shall be the simple average of the high and low trading prices of the Common Shares on The Toronto Stock Exchange (the "TSX") for each of the five trading days immediately prior to such Issue Date. If the Common Shares did not trade on the TSX during such five-day period, the Market Price shall be the simple average of the high and low trading prices of the shares on the New York Stock Exchange (the "NYSE") during such five-day period 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 Common Shares did not trade on the TSX or NYSE during such five-day period, the Market Price shall be the simple average of the high and low trading prices of the shares on such stock exchange in Canada on which the Common Shares are listed during such five-day period as may be selected by the Committee for such
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purpose. If the Common Shares do not trade on such day on any such stock exchange, the Market Price shall be the simple average of the bid and ask prices of the shares on the TSX during such five-day period.
        The Company shall hold any unused balance of the Aggregate Contribution in trust for a participant until such balance is utilized in accordance with the Purchase Plan.
Failure by Participant to Make a Contribution
        The failure by a Participant to make any required contributions under the terms of the Purchase Plan shall, at the option of the Company, be deemed to be a cancellation of such Participant's election to participate in the Purchase Plan. The deemed cancellation will be effective at the close of business on the last business day of the month in which the deemed cancellation occurs. The defaulting Participant will be notified of such cancellation by notice in writing mailed to such Participant and any Participant's Contribution held by the Company in trust for such Participant shall be returned to the defaulting Participant. No Common Shares will be issuable to a Participant where his or her Participant's Contribution has not been made in accordance with the terms of the Purchase Plan.

 LOANS TO NON-MANAGEMENT PARTICIPANTS
        No lien on any funds, securities or other property held under the Purchase Plan has been or may be created under the Purchase Plan or pursuant to any contract in connection with the Purchase Plan except as follows:
        Subject to compliance with all applicable laws, the Company may, on the written request by a Participant who is not a director or officer of the Company (a "Non-Management Participant") make one or more loans to the Non-Management Participant in order to assist such Participant to pay the purchase price of any Common Shares acquired under the Purchase Plan. Such loans shall be considered and approved by the Committee. Each loan made to a Non-Management Participant shall be evidenced by a promissory note and shall have a term not exceeding ten years from the date such loan is advanced to the Non-Management Participant. In addition, if such Non-Management Participant should cease to be an employee of the Company for any reason, whether voluntary or involuntary (including, without limitation, by reason of death, resignation, discharge, illness, disability or otherwise), each loan made to such Non-Management Participant which is then outstanding shall become due and payable in full on the date which is the earliest of: (i) the stated maturity date of such loan as set out in the promissory note; (ii) the second anniversary of the date on which such Non-Management Participant so ceased to be an employee of the Company; and (iii) the date the Non-Management Participant becomes a director or officer of the Company. The Committee shall have the right, in its sole discretion, subject to regulatory approval, to change the foregoing provisions relating to the repayment of loans (save and except that the time in which any such loan must be repaid shall not exceed ten years from the date of the advance thereof). The respective terms and conditions pertaining to the repayment of loans from time to time outstanding need not be the same.

 TAX CONSEQUENCES OF THE PURCHASE PLAN
Canadian Tax Consequences
        The following is a summary of the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the "Canadian Tax Act") arising to a Participant with respect to his or her acquisition from the Company of Common Shares under the Purchase Plan. This summary is applicable only to a Participant who at all relevant times deals at arm's length with the Company and its subsidiaries and who participates in the Purchase Plan in the course of his or her employment with the Company or a subsidiary of the Company and upon the acquisition of Common Shares will hold such Common Shares as capital property.
        This summary is based on the current provisions of the Canadian Tax Act and an understanding of the current administrative practices of the Canada Revenue Agency. This summary takes into account all specific proposals to amend the Canadian Tax Act publicly announced by the Minister of Finance (Canada) prior to the date of this summary ("Proposed Amendments") but does not otherwise take into account or anticipate any changes in the law, whether by legislative, governmental or judicial decision or action.
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         This summary is of a general nature only and it is not intended to be, nor should it be construed as, legal or tax advice to any particular Participant. Consequently, Participants should consult their own tax advisors for advice with respect to the income tax consequences to them in respect of their Common Shares having regard to their particular circumstances.
Participants Resident in Canada
        This portion of the summary is applicable to a Participant who for purposes of the Canadian Tax Act and any applicable Income Tax Convention is resident in Canada and who becomes a Participant by virtue of the current or prospective performance of his or her duties as a director, officer or employee of the Company.
Remuneration
        The Company's Contribution credited to the Participant will be included in the computation of the Participant's income from employment for the year in which that amount is applied to acquire Common Shares from the Company. The salary and other remuneration from employment of the Participant (including any directors' fees) will be included in computing his or her income from employment without reduction for payroll deductions made by the Company.
Acquisition of Common Shares
        If at the time the Participant acquires Common Shares pursuant to the Purchase Plan, the fair market value of such shares exceeds the Market Price paid therefor, the amount of that excess will be required to be included in the income of the Participant from employment. The balance of the discussion in this summary assumes that the Market Price will be considered to be equal to the fair market value of the Common Shares at the time of their acquisition by the Participant.
        The cost to a Participant of Common Shares acquired under the Purchase Plan generally will be equal to the Market Price paid to acquire those shares, and must be averaged with the adjusted cost base of all other Common Shares held as capital property by the Participant for the purpose of calculating the adjusted cost base of such shares.
Withholding of Source Deductions
        The remuneration of a Participant from employment by the Company including the Company's Contribution will be subject to the withholding of source deductions as required under the Canadian Tax Act.
Dividends on Common Shares
        Dividends on Common Shares will be subject to the ordinary gross-up and dividend tax credit rules in the Canadian Tax Act applicable to dividends received by individuals from taxable Canadian corporations. Proposed Amendments contemplate that the gross-up and dividend tax credit will be increased for eligible dividends paid after 2005 by the Company.
Dispositions of Common Shares
        Upon a disposition (or a deemed disposition) of Common Shares, a Participant generally will realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of the shares, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of the shares to the Participant. One-half of the amount of any capital gain (a "taxable capital gain") realized by a Participant in a taxation year generally must be included in income in that year and one-half of the amount of any capital loss (an "allowable capital loss") realized in a taxation year must be deducted from taxable capital gains realized by the Participant in that year. Allowable capital losses in excess of taxable capital gains may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any following taxation year from taxable capital gains realized in such years, to the extent and under the circumstances described in the Canadian Tax Act.
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Participants Resident in the United States
        This portion of the summary is applicable to a Participant who, for purposes of the Canadian Tax Act, is at all relevant times not resident in Canada, is at all relevant times a resident of the United States for purposes of the Canada-United States Income Tax Convention (1980) (the "Convention"), becomes a Participant by virtue of the current or prospective performance outside Canada (and not in Canada) of his or her duties as a director, officer or employee of the Company or a subsidiary of the Company, and does not use or hold, and is not deemed to use or hold Common Shares in a business carried on in Canada (such a Participant being hereinafter referred to in this summary as an "Eligible U.S. Participant"). All amounts relevant in computing an Eligible U.S. Participant's liability under the Canadian Tax Act are to be computed in Canadian dollars.
Remuneration
        An Eligible U.S. Participant will not be subject to tax under the Tax Act in respect of the Company's Contribution or other remuneration from duties of employment performed by the Eligible U.S. Participant outside Canada.
Taxation of Dividends on Common Shares
        By virtue of the Tax Act and the Convention, dividends (including stock dividends) paid or credited or deemed to be paid or credited on a Common Share to an Eligible U.S. Participant who is the beneficial owner of such dividends generally will be subject to Canadian non-resident withholding tax at the rate of 15% of the gross amount of such dividends.
Disposition of Common Shares Acquired under the Purchase Plan
        A capital gain realized by an Eligible U.S. Participant from a disposition or deemed disposition of a Common Share will not be subject to tax under the Canadian Tax Act provided that the Common Share is not taxable Canadian property to that Participant.
        Provided the Common Shares are listed on a prescribed Stock Exchange (including the TSX and the NYSE), a Common Share will not constitute taxable Canadian property to an Eligible U.S. Participant unless at any time during the 60-month period immediately preceding the disposition, the Eligible U.S. Participant, persons with whom the Eligible U.S. Participant did not deal at arm's length, or any combination thereof owned 25% or more of the shares of any class (or series) of the Company.
        An Eligible U.S. Participant's cost of the Common Shares acquired under the Purchase Plan generally will be the Market Price paid therefor. The cost of the Common Shares so acquired will be averaged with the adjusted cost base of all other Common Shares owned by the Eligible U.S. Participant for purposes of calculating their adjusted cost base.
U.S. Federal Tax Consequences
        This discussion is a general summary of United States federal income tax considerations applicable to U.S. holders of Common Shares who are not residents of Canada for tax purposes and do not have a "permanent establishment" in Canada ("US persons"). The general tax consequences to holders of Common Shares who are residents of Canada for tax purposes, are organized under Canadian law, or have a "permanent establishment" or a fixed base in Canada are addressed above under "Tax Consequences of the Option Plan — Canadian Tax Consequences".
        The following general discussion of the U.S. Federal income tax consequences of Common Shares purchased under the Purchase Plan is based upon the provisions of the Internal Revenue Code of 1986, as amended and as in effect on the date of this Prospectus ("Code"), current regulations thereunder, and existing public and private administrative rulings of the Internal Revenue Service.
        The Company has not obtained, and does not intend to seek, a private letter ruling from the Internal Revenue Service confirming the tax treatment of the Purchase Plan, as described herein. This discussion is not intended to be a complete discussion of all of the U.S. Federal income tax consequences of the Purchase Plan or
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of all of the requirements that must be met in order to qualify for the tax treatment described herein. Changes in the law and regulations may modify the discussion, and in some cases such changes may be retroactive.
        Because tax consequences may vary, and certain exceptions to the general rules discussed herein may be applicable, depending upon the personal circumstances of individual holders of Common Shares, each Participant should consider his or her personal situation and consult with his or her tax advisor with respect to the specific tax consequences applicable to the Participant. No information is provided as to state tax laws.
        The Participant will recognize ordinary income in each Plan Year equal to the total Company Contribution the Participant has received in such Plan Year. The Company is allowed a compensation deduction in an equal amount, provided that the Company reports the income on a timely provided and filed Form W-2 or 1099, whichever is applicable.
        The Market Price for the shares issued on each applicable Issue Date will be the Participant's tax basis in the Common Shares. When the Participant sells the Common Shares, he or she will recognize short-term or long-term capital gain (or loss) to the extent the sale proceeds exceed (or are exceeded by) the tax basis. The Participant recognizes short-term capital gain if the Common Shares are sold within one year from the date they were issued; and the Participant recognizes long-term capital gain if the Common Shares are sold more than one year from the date they were issued.
         IRS Circular 230 Disclosure: To ensure compliance with U.S. Treasury Regulations governing tax practice, we inform you that any U.S. tax advice contained in this memorandum was not written to be used for and cannot be used for (i) purposes of avoiding any tax related penalties that may be imposed under Federal tax law, or (ii) the promotion, marketing or recommending to another party of any transaction .

 CHANGES IN COMMON SHARES
        In the event of any change in the Common Shares of the Company through subdivision, consolidation, reclassification, or other capital adjustment, or the payment of any stock dividend to holders of Common Shares of the Company, the number of Common Shares authorized to be reserved under the Purchase Plan shall be increased or reduced proportionately and the Committee shall make such other adjustments as may be deemed necessary or equitable. In the event of a change in the Company's authorized Common Shares which is limited to a change in the designation thereof, the Common Shares resulting from any such change shall be deemed to be shares under the Purchase Plan. In the event of any other changes affecting the shares, such adjustment shall be made as may be deemed equitable by the Committee to give proper effect to such event.

 WITHDRAWAL AND TERMINATION
Withdrawal
        In the event that a Participant ceases to be eligible for participation in the Purchase Plan by virtue of the termination of his or her relationship with the Company for any reason, whether voluntary or involuntary, or in the event of the death of the Participant while participating in the Purchase Plan, no further purchases of shares will be made and the Participant's Contribution then held by the Company for the Participant shall be paid to the Participant or his or her estate or otherwise as directed by a court of competent jurisdiction, as the case may be, and the Company's Contribution then held in trust for the Participant shall be paid to the Company. A Participant shall not be entitled to withdraw from the Purchase Plan under any other circumstances during the year for which he or she has elected to participate.
Termination of the Purchase Plan
        Termination of the Purchase Plan shall not affect the rights of the Participants to the shares purchased by them pursuant to the Purchase Plan. In the event of termination of the Purchase Plan, the Company shall pay or cause to be paid to each Participant the Participant's Contribution then held in trust by or on behalf of the Company for such Participant.
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 LIENS
        If a loan is made to a Non-Management Participant for the purchase of Common Shares under the Purchase Plan, as described above, such Non-Management Participant shall create a security interest in, pledge and hypothecate to and in favor of the Company, as continuing security for the repayment of the principal amount of such loan and all interest accruing thereon all of the Common Shares (the "Pledged Shares") purchased by the Participant with part or all of the proceeds of such loan and all proceeds of such Pledged Shares. Certificates representing the Pledged Shares shall be issued to and registered in the name of the Non-Management Participant and held by the Company. Upon payment in full of all loans and all interest due thereon and expenses incurred by the Company in connection therewith, the Company shall deliver to such Non-Management Participant certificates representing the Pledged Shares.
        The occurrence of either of the following events shall constitute an event of default under any loan from the Company to the Non-Management Participant: (a) a Non-Management Participant defaults in the payment of the principal amount of any loan and/or the payment of interest due thereon and such default is not cured within 10 days of the occurrence thereof; or (b) a Non-Management Participant, or any third party in respect of such Non-Management Participant, files, institutes or commences any application, assignment, petition, proposal or proceeding under any bankruptcy, insolvency, liquidation, debt restructuring or similar law now or hereafter in effect seeking bankruptcy, liquidation or readjustment of debt or the appointment of a trustee, custodian, liquidator or similar official.
        Upon an event of default under any loan, the Company, in addition to any other legal or equitable rights it may have, shall at any time thereafter be entitled to: (a) set off any cash dividends or other cash distributions declared and payable by the Company in respect of the Pledged Shares as against and to the extent of the outstanding principal balance of such Non-Management Participant's loan and all interest accrued thereon and the expenses described in (c); (b) sell the Pledged Shares and apply the proceeds of sale to repay the outstanding principal balance of such Non-Management Participant's loan and all interest then accrued thereon and the expenses described below in (c); and (c) retain from the proceeds of such sale all amounts necessary to pay the expenses incurred by the Company in connection with such sale and to repay the outstanding balance of the loan including all interest thereon.
        If there is a sale of any Pledged Shares and the proceeds from the sale of such Pledged Shares are sufficient to repay the expenses of such sale and the outstanding principal balance of any loan and/or interest thereon, the Company shall deliver the balance, if any, of the Pledged Shares and certificates therefor, if any, and/or the balance of the proceeds of such sale, if any, as the case may be, to the Non-Management Participant. If the proceeds from the sale of any Pledged Shares are insufficient to repay the expenses of such sale and the outstanding principal balance of any loan and/or any interest accruing thereon, the Non-Management Participant shall forthwith pay to the Company the amount of the deficiency. If any Pledged Shares which otherwise would be sold by the Company pursuant to the foregoing would be an "odd lot", the Company may in its discretion sell such greater number of Pledged Shares as is necessary to effect a sale consisting of one or more "board lots".

 ADDITIONAL INFORMATION
        The Company has filed with the Securities and Exchange Commission, Washington, DC 20549, a Registration Statement on Form S-8 under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the shares of Common Shares offered under the Purchase Plan. The Registration Statement incorporates by reference: (a) the Company's Annual Report on Form 20-F that contains audited financial statements for our latest fiscal year for which such statements have been filed; (b) all other reports filed by the Company pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act (the "Exchange Act") since the end of the fiscal year covered by the Company's Annual Report referred to in (a) above; (c) the descriptions of the Company's Common Shares contained in the Company's Registration Statements filed under the Exchange Act, including all amendments and reports updating such descriptions; and (d) all other documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act. All of the foregoing documents are incorporated by reference into this Prospectus.
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        The Company will provide without charge to any participant in the Purchase Plan upon written or oral request of such person a copy of any information incorporated by reference in the Registration Statement to which this Prospectus relates. In addition, the Company will provide without charge to any participant in the Purchase Plan upon written or oral request of such person a copy of any documents delivered to participants in the Purchase Plan pursuant to Rule 428(b) promulgated under the Securities Act. Requests for copies of such information, as well as additional information about the Purchase Plan should be directed to the Corporate Secretary, Agnico-Eagle Mines Limited, 145 King Street West, Suite 400, Toronto, Ontario M5C 2Y7. The statements in this Prospectus as to the contents of such Registration Statement are qualified in their entirety by such reference.
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 APPENDIX D

STOCK OPTION PLAN RESOLUTION
BE IT RESOLVED THAT:
1.
The Stock Option Plan of the Company be amended by deleting "13,000,000" in the first sentence in section 4 and substituting it with "19,000,000";

2.
The Stock Option Plan of the Company be amended by deleting section 12 and replacing it with the following:
12.    Amendment and Discontinuance of Plan
The Board of Directors of the Company 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:
(a)
increase the maximum number of Shares reserved for issuance under the Plan;

(b)
reduce the exercise price for any option;

(c)
extend the term of an option held by an insider of the Company;

(d)
increase any limit on grants of options to insiders of the Company set out in the Plan; or

(e)
amend section 7(e) or the definitions of "Eligible Assignee", "Eligible Corporation", "Eligible Family Trust" or "Eligible Person".

3.
Any officer or director of the Company is authorized and directed on behalf of the Company 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.
D-1

 APPENDIX E

AMENDED AND RESTATED EMPLOYEE STOCK OPTION PLAN
1.
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:
" Black Out Period " means any period during which a policy of the Corporation prevents an insider of the Corporation from trading in the Shares;
" 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;
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" 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 the 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 filed 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 19,000,000 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.

(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 or her.
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(c)
Exercise of Options:     The Committee may determine when an option will become exercisable and may determine that the option shall be exercisable in installments 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 installments (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 to 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 the optionee's lifetime only by him or her.

(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 2% of the Outstanding Issue immediately prior to the grant of such options.

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
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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.
Black Out Period
        Notwithstanding anything contained in the Plan or any option issued under the Plan, if the date on which an option expires occurs during, or within 10 days after the last day of a Black Out Period or other trading restriction imposed by the Corporation, in each case, that is applicable to the holder of the option, the date of termination or expiry of such option will be the last day of that 10-day period.
12.
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:
(a)
increase the maximum number of Shares reserved for issuance under the Plan;

(b)
reduce the exercise price for any option held by an insider of the Corporation;

(c)
extend the term of an option;

(d)
increase any limit on grants of options to insiders of the Corporation set out in the Plan; or

(e)
amend section 7(e) or the definitions of "Eligible Assignee", "Eligible Corporation", "Eligible Family Trust" or "Eligible Person".
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 APPENDIX F

BY-LAWS RESOLUTION
BE IT RESOLVED THAT:
1.
Section 4.2 of By-Law No. 1 of the Company be amended by deleting "A majority" in the penultimate sentence of the section and substituting it with "At least 25%";

2.
Section 4.8 of By-Law No. 1 of the Company be deleted in its entirety;

3.
Section 5.1 of By-Law No. 1 of the Company be amended by deleting the final sentence of the section in its entirety;

4.
Section 6.3 of By-Law No. 1 of the Company be amended by deleting current section 6.3 and substituting it with the following:

Managing Director
The board may from time to time also appoint a managing director who shall be a director. If appointed, the managing director shall, subject to the Act and the authority of the board, 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.
5.
Section 6.4 of By-Law No. 1 of the Company be amended by deleting current section 6.4 and substituting it with the following:
President
The president shall have such powers and duties as the board may specify or as are incidental to such office.
6.
Section 8.4 of By-Law No. 1 of the Company be deleted in its entirety;

7.
Section 8.8 of By-Law No. 1 of the Company be deleted in its entirety;

8.
Section 8.9 of By-Law No. 1 of the Company be deleted in its entirety;

9.
Section 8.10 of By-Law No. 1 of the Company be deleted in its entirety;

10.
Section 10.6 of By-Law No. 1 of the Company be amended by deleting "21 and not more than 50" in the first sentence of the section and substituting it with "30 and not more than 60";

11.
Section 10.11 of By-Law No. 1 of the Company be amended by deleting all of the words after the sentence "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.";

12.
Section 10.14 of By-Law No. 1 of the Company be amended by deleting current section 10.14 and substituting it with the following:
10.14    Joint Shareholders
Where two or more persons hold the same share or shares jointly, any one of such persons present at a meeting of shareholders has the right, in the absence of the other or others, to vote in respect of such share or shares, but if more than one of such persons are present or represented by proxy and vote, they shall vote together as one on the share or shares jointly held by them.
13.
Any officer or director of the Company is authorized and directed on behalf of the Company 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.
F-1

 APPENDIX G

AMENDED AND RESTATED BY-LAWS OF THE COMPANY

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 the 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;
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"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.
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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.
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.
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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. At least 25% 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.
4.3    Election and Term — General
        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.
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4.8    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.
4.9    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.
4.10  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.
4.11  Notice of Meeting
        Notice of time and place of each meeting of the board shall be given in the manner provided in Section 11 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.
4.12  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.
4.13  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.
4.14  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.
4.15  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.
4.16  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.
4.17  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.
4.18  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.
4.19  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 its 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.

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.
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
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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 director. If appointed, the managing director shall, subject to the Act and the authority of the board, 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.
6.4    President
        The president shall have such powers and duties as the board may specify or as are incidental to such 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 from 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 from the chairman of the board, the managing director and the president, whose 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.
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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 happens 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.
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.
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 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    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.
8.5    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.
8.6    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.
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8.7    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 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.
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 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 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 11 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 30 and not more than 60 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.
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        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.
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% 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.
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
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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
        Where two or more persons hold the same share or shares jointly, any one of such persons present at a meeting of shareholders has the right, in the absence of the other or others, to vote in respect of such share or shares, but if more than one of such persons are present or represented by proxy and vote, they shall vote together as one on the share or shares jointly held by them.
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.
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
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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, (A) 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 (B) 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 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 11 includes any communication or document) to be given (which term in this Section 11 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 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.
G-15

        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 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
G-16

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, and (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 March 5, 2008.

President	

 	

Secretary	
CONFIRMED by the shareholders in accordance with the Act on May 9, 2008.

Secretary	
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QuickLinks
NOTICE OF 2008 ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
 MANAGEMENT PROXY CIRCULAR
TABLE OF CONTENTS
 SECTION 1: VOTING INFORMATION
SECTION 2: BUSINESS OF THE MEETING
Election of Directors
Majority Voting Policy
Appointment of Auditors
Financial Statements
Amendments to Employee Share Purchase Plan
Amendments to Stock Option Plan
Confirmation of Amended and Restated By-Laws
SECTION 3: COMPENSATION AND OTHER INFORMATION
Report on Executive Compensation
Performance Graph
Composition of Compensation Committee
Compensation of Officers
Aggregate option exercises during 2007 and year end option values
Compensation of Directors and Other Information
Indebtedness of Directors, Executive Officers and Senior Officers
Additional Items
APPENDIX A STATEMENT OF CORPORATE GOVERNANCE PRACTICES
 APPENDIX B EMPLOYEE SHARE PURCHASE PLAN RESOLUTION
 APPENDIX C AMENDED AND RESTATED EMPLOYEE SHARE PURCHASE PLAN GENERAL PURCHASE PLAN INFORMATION
SECURITIES TO BE OFFERED
ELIGIBLE PARTICIPANTS
PURCHASE OF SECURITIES PURSUANT TO THE PURCHASE PLAN AND PAYMENT FOR SECURITIES OFFERED
LOANS TO NON-MANAGEMENT PARTICIPANTS
TAX CONSEQUENCES OF THE PURCHASE PLAN
CHANGES IN COMMON SHARES
WITHDRAWAL AND TERMINATION
LIENS
ADDITIONAL INFORMATION
 APPENDIX D STOCK OPTION PLAN RESOLUTION
 APPENDIX E AMENDED AND RESTATED EMPLOYEE STOCK OPTION PLAN
 APPENDIX F BY-LAWS RESOLUTION
 APPENDIX G AMENDED AND RESTATED BY-LAWS OF THE COMPANY 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 99.2

 Management's Discussion and Analysis
 (Prepared in accordance with United States GAAP)

 Agnico-Eagle Mines Limited

Management's Discussion and Analysis

Table of Contents

 	 	Page
	
Business Overview	 	1	
Results of Operations	 	2	
 	Revenues from Mining Operations	 	2	
 	Interest and Sundry Income	 	3	
 	Gain on Sale of Available-for-sale Securities	 	3	
 	Production Costs	 	3	
 	Loss on Derivative Financial Instruments	 	6	
 	Exploration and Corporate Development Expense	 	6	
 	General and Administrative Expenses	 	7	
 	Provincial and Federal Capital Taxes	 	7	
 	Amortization Expense	 	7	
 	Interest Expense	 	7	
 	Foreign Currency Translation Loss	 	8	
 	Income and Mining Taxes	 	8	
 	Liquidity and Capital Resources	 	8	
 	2008 Liquidity and Capital Resources Analysis	 	9	
Outlook	 	10	
 	Gold Production Growth	 	10	
Risk Profile	 	12	
 	Metal Price and Foreign Currency	 	13	
 	Interest Rate	 	14	
 	Derivatives	 	14	
 	Operational Risk	 	15	
 	Regulatory Risk	 	17	
Outstanding Securities	 	17	
Evaluation of Disclosure Controls and Procedures	 	17	
Critical Accounting Estimates	 	18	
 	Mining Properties	 	18	
 	Revenue Recognition	 	19	
 	Reclamation Obligations	 	19	
 	Future Tax Assets and Liabilities	 	19	
 	Financial Instruments	 	20	
 	Stock-Based Compensation	 	20	
 	Pensions	 	20	
 	Deferred Stripping Costs	 	21	
Other Accounting Developments	 	21	
Mineral Reserve Data	 	23	
Summarized Quarterly Data	 	24	
Five Year Financial and Operating Summary	 	26	
        This Management's Discussion and Analysis ("MD&A") dated March 14, 2008 of Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") should be read in conjunction with the Company's Annual Audited Consolidated Financial Statements for the year ended December 31, 2007 prepared in accordance with generally accepted accounting principles in the United States ("US GAAP"). All dollar amounts are presented in United States dollars ("US dollars", "$" or "US$") unless otherwise specified. Certain information in this MD&A is presented in Canadian dollars ("C$"). Additional information relating to the Company, including the Company's Annual Report on Form 20-F (the "Form 20-F") for the year ended December 31, 2007, is available on the Canadian Securities Administrators' SEDAR website at www.sedar.com.
i

 NOTE TO INVESTORS CONCERNING FORWARD-LOOKING INFORMATION
        Certain statements in this MD&A constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" under the provisions of Canadian provincial securities laws. These statements relate to, among other things, the Company's plans, objectives, expectations, estimates, beliefs, strategies and intentions and can generally be identified by the use of words such as "may", "will", "should", "could", "would", "expect", "anticipate", "believe", "plan", "intend", "likely" or other variations of these terms or comparable terminology. Forward-looking statements and information in this report include, but are not limited to, statements relating to the Company's outlook for 2008 and future periods, statements regarding future earnings, and the sensitivity of earnings to gold and other metal prices, anticipated trends for prices of gold and byproducts mined by the Company, estimates of future mineral production and sales, estimates of future costs, including mining costs, total cash costs per ounce, minesite costs per tonne and other expenses, estimates of future capital expenditure, exploration expenditure and other cash needs, and expectations as to the funding thereof, statements as to the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs and estimates of the timing of such development and production or decisions with respect to such development and production, estimates of mineral reserves, mineral resources and ore grades and statements regarding anticipated future exploration results, statements regarding the outcome and anticipated timing of proposed transactions, the anticipated timing of events with respect to the Company's mine and mine project sites, and estimates of future costs and other liabilities for environmental remediation; and other anticipated trends with respect to the Company's capital resources and results of operations.
        Statements containing forward-looking information are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico-Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions of Agnico-Eagle upon which the statements in this MD&A containing forward-looking information, which may prove to be incorrect, are based on include, but are not limited to, the assumptions set out in this MD&A and the Form 20-F as well as: that there are no significant disruptions affecting the Company's operations, whether due to labour disruptions, supply disruptions, damage to equipment, natural occurrences, political changes, title issues or otherwise; that permitting, development and expansion at each of Agnico-Eagle's development projects proceeds on a basis consistent with current expectations, and that Agnico-Eagle does not change its development plans relating to such projects; that the exchange rate between the Canadian dollar, European Union Euro, Mexican peso and the United States dollar will be approximately consistent with current levels or as set out in this MD&A and the Form 20-F; prices for gold, silver, zinc and copper will be consistent with Agnico-Eagle's expectations; that prices for key mining and construction supplies, including labour costs, remain consistent with Agnico-Eagle's current expectations; that production meets expectations; that Agnico-Eagle's current estimates of mineral reserves, mineral resources, mineral grades and mineral recovery are accurate; that there are no material delays in the timing for completion of the Company's ongoing development projects; and that there are no material variations in the current tax and regulatory environment that affect the Company.
        The forward-looking statements in this MD&A reflect the Company's views as at the date of this Form 20-F and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company 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 risk factors set forth in "Item 3. Key Information — Risk Factors" in the Form 20-F. Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. This MD&A contains information regarding anticipated total cash costs per ounce and minesite costs per tonne at certain of the Company's mines and mine development projects. This information was developed to assist management with its assessment as to what resources to allocate to the
ii

construction and/or expansion of its mine and mine development projects. Investors are cautioned that this information may not be suitable for other purposes.

 NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESOURCES
Cautionary Note to Investors concerning estimates of Measured and Indicated Resources
This document uses the terms "measured resources" and "indicated resources". Investors are advised that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission (the "SEC") 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 document uses the term "inferred resources". Investors are advised that while this term is recognized and required by Canadian regulations, the SEC 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 .

 NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE
        This document presents certain measures, including "total cash cost per ounce" and "minesite cost per tonne", that are not recognized measures under US GAAP ("non-GAAP financial measures"). This data may not be comparable to data presented by other gold producers. For a reconciliation of these measures to the figures presented in the consolidated financial statements prepared in accordance with US GAAP see "Results of Operations — Production Costs". The Company believes that these generally accepted industry measures are realistic indicators of operating performance and useful in allowing year over year comparisons. However, both of these non-GAAP financial measures should be considered together with other data prepared in accordance with US GAAP, and these measures, taken by themselves, are not necessarily indicative of operating costs or cash flow measures prepared in accordance with US GAAP. This MD&A also contains information as to estimated future total cash costs per ounce and minesite cost per tonne for projects under development. These estimates are based upon the total cash costs per ounce and minesite cost per tonne that the Company expects to incur to mine gold at those projects and, consistent with the reconciliation provided, does not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-GAAP financial measures to the most comparable US GAAP measure.
iii

Business Overview
        The Company is an established Canadian gold producer with mining operations located in northwestern Quebec, mine construction projects in northwestern Quebec, northern Finland, Nunavut and northern Mexico and exploration activities in Canada, Finland, Mexico and the United States. The Company's operating history includes over three decades of continuous gold production primarily from underground operations. Since its formation in 1972, the Company has produced over 5.0 million ounces of gold. For definitions of certain technical terms used in the following discussion, see "Item 4. Information on the Company — Property, Plant and Equipment — Mineral Reserve and Mineral Resource" in the Form 20-F.
        The Company believes it is currently one of the lowest total cash costs per ounce producers in the North American gold mining industry. In 2007, the Company produced 230,992 ounces of gold at a total cash cost per ounce of minus $365, that is, net of revenues received from the sale of silver, zinc and copper byproducts. For 2008, the Company expects total cash costs per ounce of gold produced to be approximately $48. These expected higher costs compared to 2007 are due to lower assumed prices for byproduct metals from the LaRonde Mine than those realized in 2007 and higher production costs associated with gold sourced from new mines at the Goldex mine project and the Kittila mine project, which do not contain any byproduct metals. See "Note to Investors Concerning Certain Measures of Performance" for a discussion of the use of the non-US GAAP measure total cash costs per ounce. 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.
        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 and the Goldex and Lapa mine projects are situated, with a view to increasing annual gold production and gold mineral reserves. In addition, the Company will continue exploration, development and construction at its Kittila mine project in northern Finland, Pinos Altos mine project in northern Mexico and Meadowbank mine project in Nunavut. 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.
        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 and exploration and development projects are located in areas that are supportive of the mining industry. The Company's current mine and three of its construction projects are located in northwestern Quebec, one of North America's principal gold-producing regions. The Company's Meadowbank mine project in Nunavut, Kittila mine project in northern Finland and Pinos Altos mine project in northern Mexico are each located in regions which the Company believes are also supportive of the mining industry.
        Second, the Company believes that it is one of the lowest total cash costs per ounce producers in the North American gold mining industry, with total cash costs per ounce of gold produced of minus $365 in 2007. The Company has achieved significant improvements in this measure 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.
        Third, the Company's existing operations at the LaRonde Mine provide a strong economic base for additional mineral reserve and production development at the property and in the Abitibi region of northwestern Quebec and for the development of its projects in Nunavut, Finland and Mexico. The experience gained through building and operating the LaRonde Mine is expected to assist with the Company's development of its other mine projects. In addition, the extensive infrastructure associated with the LaRonde Mine is expected to support the mine construction projects at the nearby Goldex and Lapa properties, and the construction of the LaRonde Mine extension.
        Fourth, the Company's senior management team has an average of approximately 20 years of experience in the mining industry. Management's significant experience has underpinned the Company's historical growth and
1

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 Mine is expected to benefit the Company's current expansion program in Quebec, Nunavut, Finland and Mexico.
        The Company believes it can benefit not only from the existing infrastructure at its mine, 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 Mine 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 Quebec, Nunavut, Finland and Mexico with a view to increasing annual gold production and gold mineral reserves. In 2005, the Company initiated construction of the Goldex mine project. In 2006, the Company accelerated construction of the Lapa mine project and initiated construction of the LaRonde Mine extension and the Kittila mine project in northern Finland. In 2007, the Company began construction of the Pinos Altos mine project in northern Mexico and acquired the Meadowbank mine project in Nunavut.
        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 believes that it 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 development and producing properties.
Results of Operations
Revenues from Mining Operations
        In 2007, revenue from mining operations decreased 7% to $432 million from $465 million in 2006. Production and sales of gold and zinc decreased compared to 2006 production and sales levels. The decrease in the production and sales volumes for these metals was partially offset by an increase in gold and silver prices, however, sharp price decreases for zinc and copper led to the overall decrease.
        In 2007, sales of gold and silver accounted for 56% of revenues, up from 47% in 2006 and down from 66% in 2005. The increase in the percentage of revenues from precious metals when compared to 2006 is largely due to the sharp increase in gold prices and sharp decreases in prices of byproduct zinc and copper. Revenues from mining operations are accounted for net of related smelting, refining, transportation and other charges. The table below sets out net revenue, production volumes and sales volumes by metal:

 	 	2007
	 	2006
	 	2005
	
Revenues from mining operations (thousands):	 	 	 	 	 	 	 	 	 	
Gold	 	$	171,537	 	$	159,815	 	$	117,888	
Silver	 	 	70,028	 	 	58,262	 	 	41,808	
Zinc	 	 	156,340	 	 	211,871	 	 	67,150	
Copper	 	 	34,300	 	 	34,684	 	 	14,492	
 	 		 		 		
 	 	$	432,205	 	$	464,632	 	$	241,338	

Production volumes:	

 	

 	

 	
Gold (ounces)	 	 	230,992	 	 	245,826	 	 	241,807	
Silver (000's ounces)	 	 	4,920	 	 	4,956	 	 	4,831	
Zinc (tonnes)	 	 	71,577	 	 	82,183	 	 	76,545	
Copper (tonnes)	 	 	7,482	 	 	7,289	 	 	7,378	

Sales volumes:	

 	

 	

 	
Gold (ounces)	 	 	229,316	 	 	256,961	 	 	262,429	
Silver (000's ounces)	 	 	5,171	 	 	4,739	 	 	5,221	
Zinc (tonnes)	 	 	72,905	 	 	81,689	 	 	75,722	
Copper (tonnes)	 	 	7,466	 	 	7,302	 	 	8,521	
2

        Revenue from gold sales increased $12 million, or 7%, in 2007. Realized gold prices increased 20% in 2007 to $748 per ounce from $622 per ounce in 2006. Silver revenue increased $12 million, or 20%, in 2007. The $12 million increase was due to higher realized silver prices and increased silver sales volume.
        Revenue from zinc sales decreased $56 million, or 26%, in 2007. The decrease in zinc revenue was due to 20% lower realized prices as well as an 11% decrease in sales volume. Revenue from copper sales remained relatively steady when compared to 2006. A decrease of 15% in the realized sales price of copper was offset by a 29% decrease in copper smelting fees.
        Gold production decreased to 230,992 ounces in 2007, down 6% from 245,826 ounces in 2006. The decrease is mainly attributable to the decrease in the gold grade of the ore processed as a result of the Company's decision to mine additional low-grade zinc ore during the year to capitalize on historically high zinc prices during the first half of the year.
        Total fourth quarter revenue decreased in 2007 compared to 2006 mainly due to the significant decrease in zinc revenue resulting from a significant decline in zinc prices during the quarter.
Interest and Sundry Income
        Interest and sundry income consists mainly of interest on cash balances. Interest and sundry income was $25.1 million in 2007 compared to $21.8 million in 2006. The $3.3 million increase in interest income was attributable to the signicantly higher average cash balance held during 2007 compared to 2006.
Gain on Sale of Available-for-sale Securities
        From time to time, the Company takes minority equity positions in other mining and exploration companies. In 2007, the Company liquidated a portion of its portfolio of available-for-sale securities resulting in a gain before taxes of $4.1 million compared to $24.1 million in 2006. The larger gain in 2006 was a result of the Company liquidating a significant portion of its total portfolio.
Production Costs
        In 2007, production costs increased 15% to $166 million from $144 million in 2006. In 2006, production costs increased 13% to $144 million from $127 million in 2005. The table below presents the components of production costs:

 	 	2007
	 	2006
	 	2005
	 	
 	 	(thousands)
	 	
Definition drilling	 	$	691	 	$	473	 	$	667	 	
Stope development	 	 	12,797	 	 	12,881	 	 	12,499	 	
Mining	 	 	30,686	 	 	26,369	 	 	22,506	 	
Underground services	 	 	52,252	 	 	44,888	 	 	38,236	 	
Milling	 	 	43,326	 	 	40,518	 	 	36,621	 	
Surface services	 	 	4,784	 	 	4,348	 	 	3,198	 	
Administration	 	 	12,446	 	 	10,957	 	 	8,457	 	
 	 		 		 		 	
Minesite production costs	 	$	156,982	 	$	140,434	 	$	122,184	 	
Accretion expense and reclamation costs	 	 	916	 	 	826	 	 	429	 	
Inventory adjustments	 	 	8,206	 	 	2,493	 	 	5,978	 	
Hedging gains	 	 	—	 	 	—	 	 	(1,226	)	
 	 		 		 		 	
Production costs (per Consolidated Statements of Income)	 	$	166,104	 	$	143,753	 	$	127,365	 	
 	 		 		 		 	
        Minesite production costs increased to $157.0 million from $140.4 million in 2006 primarily as a result of a stronger Canadian dollar and higher costs for fuel, chemical reagents used in the mill, mining labour and steel. Increases in the costs of the inputs have been seen throughout the mining industry. Underground services costs increased due to increased preventative maintenance to underground fixed and mobile equipment, increased ground support expenses associated with mining at depth and higher mining labour costs.
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        During 2007, LaRonde processed an average of 7,325 tonnes of ore per day compared to 7,324 tonnes per day recorded during 2006. While the design capacity of the plant is 6,350 tonnes per day, it has now been operating at an average of approximately 7,292 tonnes per day for over three years. Minesite costs per tonne were C$65 in the fourth quarter compared to C$63 in the fourth quarter of 2006. For the full year, the minesite costs per tonne were C$66, as compared with C$62 per tonne recorded for 2006. The fourth quarter increase is largely due to further increases in fuel, reagents, steel and mining labour. The full year increase is attributable to these factors and to the higher cost of processing of the low-grade ore extracted from Bousquet during the second quarter of 2007.
        In 2007, total cash costs per ounce of gold increased to minus $365 from minus $690 in 2006 and $43 in 2005. Total cash costs are comprised of minesite costs reduced by net silver, zinc and copper revenue. Total cash costs per ounce are affected by various factors such as the number of gold ounces produced, operating costs, C$/US$ exchange rates, quantity of byproduct produced and byproduct metal prices. The table below illustrates the variance in total cash costs per ounce attributable to each of these factors. The most significant factor contributing to the increase in total cash costs per ounce in 2007 was lower byproduct revenue which resulted from lower zinc and copper prices.

 	 	2007
	 	2006
	 	
Total cash costs per ounce (prior year)	 	$	(690	)	$	43	 	
Difference in gold production	 	 	40	 	 	11	 	
Stronger Canadian dollar	 	 	49	 	 	38	 	
Costs associated with increased fuel, reagent and steel costs	 	 	45	 	 	60	 	
Byproduct revenue	 	 	191	 	 	(842	)	
 	 		 		 	
Total cash costs per ounce (current year)	 	$	(365	)	$	(690	)	
 	 		 		 	
        Total cash cost per ounce is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. Management believes 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 Consolidated Statements of Income and Comprehensive Income for net byproduct revenues, royalties, inventory adjustments and asset retirement provisions and then dividing by the number of ounces of gold produced. Total cash cost per ounce is intended to provide investors with information about the cash generating capabilities of mining operations. Management uses this measure to monitor the performance of 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 is affected by fluctuations in byproduct metal prices and exchange rates. Management compensates for the limitations inherent in this measure by using it in conjunction with minesite cost per tonne (discussed below) as well as other data prepared in accordance with US GAAP. Management also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and exchange rates.
        Minesite cost per tonne 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 Consolidated Statement of Income and Comprehensive Income for royalties, inventory and hedging adjustments and asset retirement provisions and then dividing by tonnes of ore processed through the mill. Since total cash 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 tonne 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 tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware that this per tonne measure is affected by fluctuations in production levels and thus uses this measure as an evaluation tool in conjunction with production costs prepared in accordance with US GAAP. This measure supplements production cost information prepared in accordance with US GAAP and allows investors to distinguish between
4

changes in production costs resulting from changes in level of production versus changes in operating performance.
        Both of these non-GAAP financial 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 production costs or cash flow measures prepared in accordance with US GAAP. The tables presented below reconcile total cash costs per ounce and minesite costs per tonne to the production costs presented in the consolidated financial statements prepared in accordance with US GAAP.
Reconciliation of Total Cash Costs per Ounce to Production Costs

 	 	2007
	 	2006
	 	2005
	 	
 	 	(thousands, except as noted)
	 	
Production costs per Consolidated Statements of Income and Comprehensive Income	 	$	166,104	 	$	143,753	 	$	127,365	 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	
Byproduct revenues, net of smelting, refining and marketing charges	 	 	(260,668	)	 	(304,817	)	 	(123,450	)	
Inventory adjustments (i)	 	 	11,528	 	 	(7,607	)	 	6,991	 	
Accretion expense and other	 	 	(1,264	)	 	(936	)	 	(429	)	
 	 		 		 		 	
Cash costs	 	$	(84,300	)	$	(169,607	)	$	10,477	 	
Gold production (ounces)	 	 	230,992	 	 	245,826	 	 	241,807	 	
 	 		 		 		 	
Total cash costs (per ounce) (ii)	 	$	(365	)	$	(690	)	$	43	 	
 	 		 		 		 	
Reconciliation of Minesite Costs per Tonne to Production Costs

 	 	2007
	 	2006
	 	2005
	 	
 	 	(thousands, except as noted)
	 	
Production costs per Consolidated Statements of Income and Comprehensive Income	 	$	166,104	 	$	143,753	 	$	127,365	 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	
Inventory adjustments (iii)	 	 	916	 	 	2,494	 	 	(4,752	)	
Accretion expense and other	 	 	(1,264	)	 	(936	)	 	(429	)	
 	 		 		 		 	
Minesite costs ($)	 	$	165,756	 	$	145,311	 	$	122,184	 	
 	 		 		 		 	
Minesite costs (C$)	 	$	177,735	 	$	164,459	 	$	147,834	 	
Tonnes milled (000's tonnes)	 	 	2,673	 	 	2,673	 	 	2,672	 	
 	 		 		 		 	
Minesite costs per tonne (C$) (iv)	 	$	66	 	$	62	 	$	55	 	

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

(ii)
Total cash costs is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. The Company believes 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 above, this measure is calculated by adjusting Production Costs as shown in the Consolidated Statements of Income and Comprehensive Income 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 the Company's mining operations. Management uses this measure to monitor the performance of the Company's 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 minesite costs per tonne 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.
5

(iii)
This inventory adjustment reflects production costs associated with unsold concentrates.

(iv)
Minesite costs per tonne is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. As illustrated in the table above, this measure is calculated by adjusting Production Costs as shown in the Consolidated Statements of Income and Comprehensive Income for inventory and hedging adjustments and asset retirement provisions and then dividing by tonnes processed through the mill. Since total cash costs data can be affected by fluctuations in byproduct metal prices and exchange rates, management believes minesite costs per tonne provides additional information regarding the performance of mining operations and allows management to monitor operating costs on a more consistent basis as the per tonne 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 tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware that this per tonne measure is impacted by fluctuations in production levels and thus uses this evaluation tool in conjunction with production costs prepared in accordance with US GAAP. 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.
        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 costs and a substantial portion of its 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, 2002 to December 31, 2007, the noon buying rate, as certified by the Federal Reserve Bank of New York, fluctuated from a high of $1.6128 to a low of $0.9168. In addition, a significant portion of the Company's expenditures at the Kittila mine project and the Pinos Altos mine project are denominated in Euros and Mexican Pesos, respectively. Each of these currencies has varied significantly against the US dollar over the past several years.
Loss on Derivative Financial Instruments
        During 2007, the Company recorded a $5.8 million loss on derivative financial instruments. This loss consisted entirely of the mark-to-market loss on a gold derivative purchased by the Company during the first quarter of 2007, prior to the full acquisition of Cumberland Resources Ltd. ("Cumberland") to neutralize an existing gold derivative held by Cumberland.
Exploration and Corporate Development Expense
        In 2007, the Company continued its significant exploration and corporate development activities including:
•
Significant Canadian grassroots exploration accounting for $5.3 million in exploration expenditures, a significant portion of the $5.3 million of which was spent on exploration activities in the Nunavut area around the Meadowbank mine project acquired by the Company during the year. Positive drill results have been reported both inside and outside of the current open pit and estimated reserves have increased 20% from 2.9 million ounces to 3.5 million ounces.

•
Extensive exploration activities continued at the Pinos Altos mine project during 2007 accounting for $6.0 million in exploration expenditures compared to $8.0 million in 2006. These expenditures included exploration on the promising Mascota, Santa Nino and Cerro Colorado gold zones. The high potential of these gold zones has resulted in significant planned exploration activities and budgets for 2008.

•
Deep drilling continued throughout the year at the Kittila mine project area and the results are encouraging. Drilling results indicate that the Suurikuusikko main zones continue at depths down to 1,000 metres from surface. A major drill program is being carried out in 2008 to further test grades and dimensions of the Suurikuusikko zones at depth. Exploration outside of the Mining License area has focused on testing targets along the Suurikuusikko trend to the north and south of the mining license area with positive results. In addition, drilling at the Oijärvi property returned several new encouraging gold intersections within the Kylmäkoski zone and on other targets in the area. Follow-up drilling will continue in 2008. In January 2008, the Company purchased Troy Resources NL's 50% interest in the Oijärvi property for $0.9 million and Oijärvi is now 100% owned by Agnico-Eagle.

•
The Company is currently conducting exploration in proven gold-producing areas of Nevada and incurred exploration expenditures of $5.1 million during 2007, an increase of $1.3 million compared to 2006. The
6

increase is attributable to additional drilling of high grade gold intercepts at the West Pequop project. In addition, there was increased drilling in newly discovered areas containing gold mineralization, which required the purchase of additional claims, leases and road building.
•
Agnico-Eagle's corporate development team continued to be active in 2007 evaluating many new properties and possible corporate development opportunities resulting in a $0.2 million increase in corporate development expense compared to 2006.
        The table below illustrates exploration expense by country and corporate development expense:

 	 	2007
	 	2006
	 	2005
	
 	 	(thousands)
	
Finland	 	 	5,719	 	 	9,843	 	 	3,174	
Mexico	 	 	6,047	 	 	8,017	 	 	4,161	
Canada	 	 	5,276	 	 	6,276	 	 	7,963	
United States	 	 	5,084	 	 	3,780	 	 	2,893	
Corporate development expense	 	 	3,381	 	 	3,161	 	 	1,289	
 	 		 		 		
 	 	$	25,507	 	$	31,077	 	$	19,480	
 	 		 		 		
General and Administrative Expenses
        General and administrative expenses increased to $38.2 million in 2007 from $25.9 million in 2006. A number of factors contributed to this increase including an increased stock option expense of $5.8 million, the increased bonus expenses of $2.3 million reflecting a special one-time "Metals Bonus" given to all employees, increased travel expenses of $1.9 million resulting from the Company's new international scope and increased insurance costs of $1.0 million due to increased property and directors' and officers' insurance premiums.
Provincial and Federal Capital Taxes
        Provincial capital taxes were $3.2 million in 2007 compared to $3.8 million in 2006. These taxes are assessed on the Company's capitalization (paid-up capital and debt) less certain allowances and tax credits for exploration expenses incurred.
Amortization Expense
        Amortization expense was $27.8 million in 2007 compared to $25.3 million in 2006. The Company calculates its amortization on a unit-of-production basis using proven and probable reserve tonnage as its amortization base. The amortization base and production units are similar to the prior year. The increase in 2007 is attributable to the additions in sustaining capital at the LaRonde Mine and the commencement of depreciation of newly developed computer systems.
Interest Expense
        In 2007, interest expense increased to $3.3 million from $2.9 million in 2006 and $7.8 million in 2005. The table below shows the components of interest expense.

 	 	2007
	 	2006
	 	2005
	 	
 	 	(thousands)
	 	
Interest on convertible subordinated debentures	 	$	—	 	$	689	 	$	6,286	 	
Stand-by fees on credit facility	 	 	2,289	 	 	1,201	 	 	1,211	 	
Amortization of credit facility and convertible subordinated debenture financing costs	 	 	806	 	 	763	 	 	1,847	 	
Interest rate derivative payments	 	 	—	 	 	442	 	 	916	 	
Other interest expense	 	 	199	 	 	132	 	 	38	 	
Interest capitalized to construction in progress	 	 	—	 	 	(325	)	 	(2,485	)	
 	 		 		 		 	
 	 	$	3,294	 	$	2,902	 	$	7,813	 	
 	 		 		 		 	
7

Foreign Currency Translation Loss
        The foreign currency translation loss was $32.3 million in 2007 compared to $2.1 million in 2006. The significant negative effect of exchange rates is attributable to the strengthening of the Canadian dollar and the Swedish krona against the US dollar during 2007. The loss is mainly due to the impact on the foreign currency future tax liabilities partially offset by the impact on cash balances in Canadian dollars and Euro.
Income and Mining Taxes
        In 2007, the effective accounting income and mining tax expense rate was 12.5% compared to 38.1% in 2006 and an income tax recovery rate of 7.9% in 2005. The Company's effective tax rate was significantly lower in 2007 compared to 2006 because of favourable changes in both federal and Quebec income tax laws enacted in December 2007. In particular, during the fourth quarter of 2007, the Company recognized a $29.8 million reduction in federal deferred taxes resulting from the reduction of the federal tax rate to 15% effective for 2012 onward. The Company also recognized a $7.7 million reduction in Quebec deferred taxes from changes in regulations that now permit the deduction of Quebec mining duties for Quebec income tax purposes retroactive to January 1, 2007.
        Although Agnico-Eagle reported income before income and mining taxes in 2005, tax recoveries were recorded in 2005 due to the utilization of losses carried forward which had previously not been recorded as future tax assets. At the end of 2005, Agnico-Eagle did not have any remaining unrecorded tax assets related to operating loss carryforwards and, as such, recorded income and mining tax in 2006 was much closer to statutory tax rates of 34.6%. The effective income and mining tax rate of 12.5% in 2007 is significantly lower than the statutory tax rate due to the Canadian federal tax rate reduction and the Quebec mining duty relief which represents a combined 39.2% reduction in the effective tax rate.
Liquidity and Capital Resources
        At the end of 2007, the Company's cash and cash equivalents, short-term investments and restricted cash totalled $396.0 million compared to $458.6 million at the end of 2006. In 2007, significant increases in cash were provided by operating and financing activities which were completely offset by investing activities. The investing activities mainly consisted of project capital expenditures for the Meadowbank, Goldex, Kittila, LaRonde Mine extension and Pinos Altos projects. Cash flow provided by operating activities increased to $229.2 million in 2007 from $226.3 million in 2006.
        In 2007, the Company invested $510.9 million of cash in new projects and sustaining capital expenditures. Major expenditures in 2007 included $169.7 million at Meadowbank, $105.0 million at Goldex, $79.6 million at Kittila, $52.8 million for the LaRonde Mine extension, $33.0 million at Pinos Altos, $29.3 million at Lapa and $33.8 million for sustaining capital at the LaRonde Mine. The remaining capital expenditures to complete all of the Company's projects are expected to be funded by cash provided by operating activities, cash on hand and, if required, drawing from the unsecured credit facility. A significant portion of the Company's cash and cash equivalents and short-term investments are denominated in US dollars. The Company believes that its working capital is sufficient for the Company's present requirements.
        On July 9, 2007, the Company completed its 100% acquisition of Cumberland through a share exchange offer. As of July 9, 2007, a total of 13,768,510 of the Company's shares were issued for the acquisition resulting in an increase of $536.6 million in common shares issued and outstanding. As a result of the acquisition, the Company acquired $84.2 million in cash, net of transaction costs. Prior to the acquisition, the Company purchased a gold derivative for $15.9 million to neutralize an existing gold derivative held by Cumberland. Both derivative positions were extinguished in late June 2007.
        In 2007, the Company declared its 26th consecutive annual dividend. The dividend was $0.18 per share, an increase of $0.06 per share from 2006. During the first quarter of 2007, the Company paid out its 2006 dividend amounting to $13.4 million. Although the Company expects to continue paying dividends, future dividends will be at the discretion of the Company's Board of Directors (the "Board") and will be subject to factors such as income, financial condition and capital requirements.
8

        In 2007, the Company issued shares resulting in $144.1 million in proceeds. This was mainly attributable to the exercise of the Company's warrants in 2007 which resulted in the issuance of 6,877,190 shares for proceeds of $130.6 million.
        The effect of exchange rate changes on cash and cash equivalents during 2007 resulted in increased cash balances of $26.5 million. This positive effect on cash was mainly attributable to the strengthening Canadian dollar as the Company holds significant Canadian dollar cash balances.
        The Company entered into a new credit agreement on January 10, 2008 (the "Facility") with a group of financial institutions providing for a $300 million unsecured revolving bank credit facility to replace its previous secured credit facility. The Facility matures on January 10, 2013, but is extendible in certain circumstances. As at March 14, 2008, there were no amounts of principal or interest outstanding under the Facility; however, outstanding letters of credit issued as security for pension and environmental obligations have decreased the amount available for future drawdowns under the Facility to $280 million.
        Agnico-Eagle's contractual obligations as at December 31, 2007 are set out below:

Contractual Obligations
	 	Total
	 	Less than 1 Year
	 	1-3 Years
	 	4-5 Years
	 	More than 5 Years
	
 	 	(millions)
	
Letter of credit obligations	 	6.2	 	—	 	—	 	—	 	6.2	
Reclamation obligations (1)	 	103.4	 	2.2	 	2.2	 	2.2	 	96.8	
Pension obligations (2)	 	4.4	 	0.3	 	0.6	 	0.8	 	2.7	
Total	 	114.0	 	2.5	 	2.8	 	3.0	 	105.7	

Notes:
(1)
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 consolidated financial statements on a discounted basis in accordance with FAS 143. See Note 5(a) to the Company's Audited Consolidated Financial Statements.

(2)
The Company has Retirement Compensation Arrangements ("RCA") with certain executives and a defined benefit pension plan for certain former employees. The RCA provides 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 RCA are secured by letter of credit from a Canadian chartered bank. The figures presented in this table have been actuarially determined.

(3)
The Company's estimated future positive cash flows are expected to be sufficient to satisfy the obligations set out above.

2008 Liquidity and Capital Resources Analysis
        The Company believes that it has sufficient capital resources to satisfy its 2008 mandatory expenditure commitments (including future obligations set out above) and discretionary expenditure commitments. The following table sets out expected future capital requirements and resources for 2008:

 	 	Amount
(millions)
	
2008 Mandatory Commitments:	 	 	 	
Contractual obligations (from table above)	 	$	114	
Dividend payable (declared in 2007)	 	$	26	
 	 		
Total 2008 mandatory expenditure commitments	 	$	140	
 	 		
2008 Discretionary Commitments:	 	 	 	
Budgeted capital expenditures	 	$	591	
 	 		
Total 2008 mandatory and discretionary expenditure commitments	 	$	732	
 	 		
2008 Capital Resources:	 	 	 	
Cash, cash equivalents and short term investments (at December 31, 2007)	 	$	394	
Estimated 2008 operating cash flow (based on 2007)	 	$	229	
Working capital (at December 31, 2007) (excluding cash, cash equivalents and short term investments)	 	$	78	
Available under bank credit facility	 	$	280	
 	 		
Total 2008 Capital Resources	 	$	981	
 	 		
9

        The Company believes its capital resources will be sufficient to satisfy all 2008 commitments (mandatory and discretionary). If extremely negative financial circumstances arise in the future, the Company may choose to decrease certain of its discretionary expenditure commitments, which includes its construction projects and future dividends.
Outlook
        The following section contains "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws. Please see "Notice to Investors Concerning Forward-Looking Information" for a discussion of assumptions and risks relating to such statements and information.
Gold Production Growth
        In May 2006, the Company initiated construction to extend the infrastructure at the LaRonde Mine to access the ore below Level 245, referred to as the LaRonde Mine extension. During 2007, construction of the LaRonde Mine extension proceeded, with production from this part of the LaRonde Mine expected to commence in early 2012. Once commenced, production is estimated to be approximately 340,000 ounces per year at total cash costs per ounce of approximately $150, over an estimated mine life of nine years.
        In June 2006, the Company announced that on the basis of the drilling results and a revised feasibility study, it would accelerate construction of the Lapa mine project, located 11 kilometres east of the LaRonde Mine. The Lapa mine is expected to begin production by mid-year 2009 and to produce an average of 125,000 ounces of gold per year over a seven-year mine life with average total cash costs of $300 per ounce. Lateral development commenced in December 2007. In addition, development of the "Lapa Circuit" at the LaRonde mill, where the Lapa ore will be processed, commenced in December 2007.
        The Goldex mine project is expected to commence production during the second quarter of 2008 and gold production during 2008 is expected to be over 90,000 ounces. Over the anticipated ten-year mine life, total cash costs are estimated to be $230 per ounce of gold with average annual gold production of approximately 175,000 ounces.
        On July 9, 2007, the Company completed its 100% acquisition of Cumberland, the developer of the Meadowbank mine project. The Meadowbank mine project is located in Nunavut, Canada, and production is expected to commence in early 2010. A 110 kilometre road to the mine site is now substantially complete. Work completed at the site includes construction of the permanent camp and erection of the fuel tank farm at Baker Lake. The construction of the mill foundation is also underway. At the time of acquisition, the Meadowbank mine project had total gold reserves of approximately 2.9 million ounces. Based on drilling results during the second half of 2007, an additional 600,000 ounces were added to reserves, a 20% increase. Anticipated annual production will be approximately 360,000 ounces with cash costs of $300 per ounce over an estimated nine-year mine life.
        The Kittila mine project is scheduled to begin production during the third quarter of 2008 with initial production of 50,000 ounces in 2008. Over the estimated life of the mine, the cash cost per ounce will be approximately $300 with anticipated average annual gold production of 150,000 ounces. To date, significant progress has been made on the mine, tailings pond and the general site. The office complex was completed during mid-year 2007.
        The Pinos Altos mine project, located in the state of Chihuahua in northern Mexico, is expected to begin production by mid-year 2009. The mine is expected to produce an average of 190,000 ounces of gold per year over a 12-year mine life. The total cash cost per ounce over the mine life is expected to be approximately $210 per ounce.
        With the planned startup of Goldex in April 2008 and the planned startup of Kittila in September 2008, the Company believes its growth objective of achieving steady state gold production is attainable. The ultimate gold production objective is to produce 1.3 million ounces per year over the period of 2010 through 2017 with total cash costs per ounce estimated to be approximately $250 per ounce.
10

        In 2008, the Company expects to diversify its production base with gold production coming from three mines instead of one. The LaRonde Mine is expected to continue to generate strong cash flow as production volumes are expected to remain steady and the Goldex and Kittila mines are expected to be commissioned in the second and third quarters of 2008, respectively. Metal prices will have a large impact on financial results, and although the Company cannot predict the prices that will be realized in 2008, prices in early 2008 have continued to remain strong with gold prices reaching all-time highs of $1,004 per ounce in March of 2008 (up to March 14, 2008).
        The table below sets out actual production for 2007 and estimated production in 2008.

 	 	2008 Estimate
	 	2007 Actual
	
Gold (ounces)	 	358,000	 	230,992	
Silver (000's ounces)	 	4,200	 	4,920	
Zinc (tonnes)	 	72,000	 	71,577	
Copper (tonnes)	 	7,400	 	7,482	
        For 2008, the Company is expecting total cash costs per ounce to be $48 per ounce of gold compared to minus $365 achieved in 2007. Due to the large byproduct production, total cash costs per ounce at LaRonde are expected to be minus $189 in 2008. Net silver, zinc and copper revenue is treated as a reduction of production costs in arriving at estimates of total cash costs per ounce, and therefore production and price assumptions for these metals play an important role in these estimates. Total cash costs per ounce at the Goldex and Kittila mine projects, neither of which has significant byproduct production, are expected to be $230 and $300, respectively. As production costs at the LaRonde Mine and the Goldex mine project are denominated mostly in Canadian dollars, and the production costs at the Kittila mine project will be denominated mostly in Euros, the C$/US$ and €/US$ exchange rates can also affect the estimates. The table below sets out the metal price assumptions and exchange rate assumptions used in deriving the estimated total cash costs per ounce for 2008 (production estimates for each metal are shown in the table above) as well as the year-to-date market average closing prices for each variable for the first two months of 2008.

 	 	Cash Cost
Assumptions
	 	Market
Average
	
Silver (per ounce)	 	$	10.55	 	$	15.71	
Zinc (per tonne)	 	$	2,600	 	$	2,389	
Copper (per tonne)	 	$	5,630	 	$	7,474	
C$/US$ exchange rate	 	$	1.1460	 	$	1.0042	
EUR/US$ exchange rate	 	$	1.2880	 	$	1.4743	
        The estimated sensitivity of the Company's 2008 estimated total cash costs and 2008 estimated operating costs to a 10% change in the metal price and exchange rate assumptions above follows:

Change in variable
	 	Impact on total cash costs
($/oz.)
	 	Impact on operating costs
($ millions)
	
C$/US$	 	$	65	 	$	20.0	
Zinc	 	$	48	 	 	—	
Silver	 	$	13	 	 	—	
Copper	 	$	12	 	 	—	
EUR/US$	 	$	6	 	$	0.4	

Note:
The sensitivities presented are based on production and price assumptions set out above. Operating costs are not affected by fluctuations in byproduct metal prices. The Company uses derivative strategies to limit the downside risk associated with fluctuating byproduct metal prices and enters into forward contracts to lock in exchange rates based on projected Canadian dollar operating and capital needs. Please see "Risk
11

Profile — Metal Price and Foreign Currency" and "Risk Profile — Derivatives". Please see "Results of Operations — Production Costs" for a discussion about the use of the non-GAAP financial measure total cash costs per ounce.
        In 2008, Agnico-Eagle expects expenditure of $29 million on grassroots exploration and corporate development comprised mostly of grassroots exploration in Canada, Mexico, Finland and the United States outside of the Company's currently contemplated mining areas. Exploration is success driven and thus these estimates could change materially based on the success of the various exploration programs.
        General and administrative expenses are not expected to increase materially in 2008. In 2008, provincial capital taxes are expected to be between $2.6 million and $3.0 million as the increased capitalization due to the Cumberland acquisition and warrant exercise is offset by the elimination of capital taxes in some Canadian provincial jurisdictions. Amortization is expected to be approximately $58 million in 2008 due to a higher capital base at LaRonde and the amortization of the new Goldex and Kittila mines as they come into commercial production in the year. Interest expense is expected to increase to between $4.0 and $4.5 million as the Company expects it will draw down its new $300 million, unsecured credit facility to fund capital expenditures in 2008. The Company's effective tax rate is expected to be 35% in 2008 due to recently announced changes in the Canadian federal tax regime. The tax rate is expected to increase from the 12.7% effective rate realized in 2007 primarily due to the fact that the 2007 rate was reduced from statutory rates due to the factors mentioned under the caption "Results of Operations — Income and Mining Taxes".
        In 2008, Agnico-Eagle expects to incur approximately $591 million of capital expenditures, which include:
•
$90 million in capital expenditures related to construction and development at the Kittila mine project;

•
$23 million in capital expenditures related to construction and development at the Goldex mine project;

•
$65 million in capital expenditures at the LaRonde Mine which includes sustaining capital expenditures and construction and development of the LaRonde Mine extension;

•
$78 million relating to shaft sinking and development at the Lapa mine project;

•
$126 million in capital expenditures related to construction and development at the Pinos Altos mine project;

•
$173 million in capital expenditures related to construction and development at the Meadowbank mine project; and

•
$36 million in capital expenditures related to exploration drilling aimed at extending the current ore zones within the Company's various mining areas.
        The Company continues to examine other possible corporate development opportunities which may result in the acquisition of companies or assets with securities, cash or a combination thereof. If cash is used, depending on the size of the acquisition, Agnico-Eagle may be required to borrow money or issue securities to fund such cash requirements.
Risk Profile
        Agnico-Eagle is subject to various risks that it encounters in its day-to-day operations. Agnico-Eagle mitigates the likelihood and potential severity of the various risks it encounters in its day-to-day operations through the application of high standards in the planning, construction and operation of mining 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 efforts to ensure the safety of employees, industrial accidents can occur. In the first quarter of 2008, an accident claimed the life of an employee at the Goldex mine project. Quebec's Commission de la santé et de la sécurité du travail has investigated this accident but has not delivered a report or recommendation to date. The Company's LaRonde Mine is one of the safest mines in Quebec with a lower accident frequency index than the provincial mining industry average. Nevertheless, the Company and its employees continue with a focused effort to improve workplace safety and the Company has placed additional emphasis on safety procedure training for both mining and supervisory employees.
12

        Agnico-Eagle also mitigates some of the Company's normal business risk through the purchase of insurance coverage. An Insurable Risk Management Policy, approved by the Board, governs the 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 the Company, please see "Item 3. Key Information — Risk Factors" in the Form 20-F.
Metal Price and Foreign Currency
        Agnico-Eagle's net income is most sensitive to metal prices and the C$/US$ exchange rate. For the purpose of the sensitivities presented in the table below, Agnico-Eagle used the following metal price and exchange rate assumptions:
•
Gold — $566 per ounce;

•
Silver — $10.55 per ounce;

•
Zinc — $2,596 per tonne;

•
Copper — $5,628 per tonne; and

•
C$/US$ — $1.1461 per $1.00.

        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 C$/US$ exchange rate are due to factors such as supply and demand for Canadian and U.S. currencies and economic conditions in each country. In 2007, the price ranges for metal prices and the C$/US$ exchange rate were:
•
Gold — $602 – $846 per ounce averaging $697 per ounce;

•
Silver — $11.06 – $16.22 per ounce averaging $13.39 per ounce;

•
Zinc — $2,221 – $4,402 per tonne averaging $3,257 per tonne;

•
Copper — $5,301 – $8,375 per tonne averaging $7,139 per tonne; and

•
C$/US$ — C$0.9059 – C$1.1876 per $1.00 averaging C$1.0740 per $1.00.
        The following table shows the estimated impact on budgeted income per share ("EPS") in 2007 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 2007 price ranges shown above, a 10% change in assumed metal prices and exchange rates is reasonably likely in 2008.

Changes in variable
	 	Impact on EPS ($)
	
C$/US$	 	$	0.11	
Gold	 	$	0.09	
Zinc	 	$	0.07	
Silver	 	$	0.02	
Copper	 	$	0.02	
        In order to mitigate the impact of fluctuating precious and base metal prices, the Company occasionally enters into derivative transactions under its Metal Price Risk Management Policy, approved by the Board. 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, Agnico-Eagle has bought put options and forward contracts to protect minimum precious and base metal prices while maintaining full participation to gold price increases. The Company's policy does not allow speculative trading.
        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
13

into currency hedging transactions under the Company's Foreign Exchange Risk Management Policy, approved by the Board, to hedge part of the foreign currency 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. The Company entered into foreign currency derivative transactions in 2007 which were not accounted for as hedges in the income statement. The Company's derivative strategy consisted of writing US dollar call options with short maturities to generate premiums that would, in essence, enhance the spot transaction rate received when exchanging US dollars to Canadian dollars. All the derivative transactions matured prior to the year end such that no derivatives were outstanding on December 31, 2007. Throughout 2007, the Company's foreign currency derivative strategy generated $3.7 million in call option premiums using this strategy.
Interest Rate
        The Company's current exposure to market risk for changes in interest rates relates primarily to its investment portfolio, however the Company anticipates that it will need to draw down on its $300 million unsecured revolving bank credit facility, which currently has no amounts of principal or interest owing, to fund part of the capital expenditures related to its development projects.
        The Company usually invests its cash in investments with short maturities or with frequent interest reset terms with a credit rating of R1-High or better. As a result, the Company's interest income fluctuates with short-term market conditions. As of December 31, 2007, substantially all of our investments in our portfolio were highly liquid investments and consisted primarily of bank notes and short-term corporate notes.
        Amounts drawn under the bank credit facility will be subject to floating interest rates based on benchmark rates available in the United States or Canada or on LIBOR. In the past, the Company has entered into derivative instruments to hedge against unfavourable changes in interest rates. The Company will continue to monitor its interest rate exposure and may enter into such agreements, if and/or when amounts are drawn under the facility, to manage its exposure to fluctuating interest rates. The Company estimates that a one percent change in the interest rate would change its net income per share by $0.02.
Derivatives
        The Company enters into derivative contracts to limit the downside risk associated with fluctuating metal prices. The contracts act as economic hedges of underlying exposures to metal price risk and foreign currency exchange risk and are not held for speculative purposes. Agnico-Eagle does not use complex derivative contracts to hedge exposures. The Company uses simple contracts, such as puts and calls, to mitigate downside risk yet maintain full participation to rising precious metal prices. Agnico-Eagle also enters into forward contracts to lock in exchange rates based on projected Canadian dollar operating and capital needs.
        Using derivative instruments creates various financial risks. Credit risk is the risk that the counterparties to derivative contracts will fail to perform on an obligation to the Company. Credit risk is mitigated by dealing with high quality counterparties such as financial institutions. Market liquidity risk is the risk that a derivative position cannot be liquidated quickly. The Company mitigates market liquidity risk by spreading out the maturity of derivative contracts over time, usually based on projected production levels for the specific metal being 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 metals will affect financial condition. Since derivative contracts are used as economic hedges, for most of the contracts, changes in the mark-to-market value affect income. For a description of the accounting treatment of derivative contracts, please see "Critical Accounting Estimates — Financial Instruments".
        For 2007, Agnico-Eagle recorded a $0.8 million charge in the Consolidated Statements of Income to reflect the maturity of gold put option contracts which were liquidated in 2005. This amount is simply the original cost for gold puts maturing in the year. Since the Company uses only over-the-counter instruments, the fair value of individual hedging instruments is based on readily available market values.
        The Company did not enter in any new derivative contracts in 2006. In 2006, the Company's remaining copper and zinc derivative contracts matured. The Company made aggregate cash payments of $27 million to
14

settle these contracts at their individual maturity dates. These contracts are discussed more fully in Item 18 of the Form 20-F.
        In February 2007, the Company entered into a series of gold derivative transactions in connection with its take-over bid for Cumberland. Prior to the announcement of the take-over bid, Cumberland secured a gold loan facility for up to 420,000 ounces. As a condition to the gold loan facility, Cumberland entered into a series of derivative transactions to secure a minimum monetized value for the gold that was expected to be received under the gold loan. Cumberland entered into a zero-cost collar whereby a gold put option was bought with a strike price of C$605 per ounce. The cost of the put option was financed by the sale of a gold call option with a strike price of $800 per ounce. Cumberland's derivative positions were for 420,000 ounces of gold and matured on September 20, 2007. As Agnico-Eagle's policy is to not sell forward gold production, Agnico-Eagle entered into a series of transactions to neutralize Cumberland's derivative position should the Company's then pending take-over bid be successful. Accordingly, Agnico-Eagle purchased call options and sold put options with the exact same size, strike price and maturity as Cumberland's derivative position for $15.9 million. These contracts were offset against Cumberland's derivative position in April of 2007 once the take-over bid was complete. From February 2007 to April 2007, the Company recorded a charge of $5.0 million in the Consolidated Statements of Income to reflect the change in value of its derivative position prior to offsetting it against the derivative position of Cumberland.
Operational Risk
        The business of gold mining is generally subject to risks and hazards, including environmental hazards, industrial accidents, unusual or unexpected rock formations, changes in the regulatory environment, cave-ins, rock bursts, rock falls, pit wall failures 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 these circumstances, the Company may be required to incur significant costs that could have a material adverse effect on its financial performance and results of operations.
        The Company's mining and milling operations at the LaRonde Mine currently account for all of the Company's gold production and will continue to account for all of its gold production in the future until additional properties are acquired or brought into production. Any adverse condition affecting mining or milling conditions at the LaRonde Mine 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. The Company also anticipates using revenue generated by its operations at the LaRonde Mine to finance a substantial portion of the capital expenditures required at its mine development projects. In addition, one of the Company's major development programs is the extension of the LaRonde Mine below Level 245, referred to as the LaRonde Mine extension. This program involves the construction of infrastructure at depth and extraction of ore from new zones and may present new or different challenges for the Company. Gold production of the LaRonde Mine above Level 245 has started to decline. While the Goldex mine project and the Kittila mine project are both expected to commence operations during 2008, production from these mines will be lower in their initial periods of operation and, if production is subject to unforeseen delays, may not occur until later years. In addition, production from these mine projects may be lower than anticipated. Unless the Company can successfully bring into production the Goldex, Kittila, Lapa, Pinos Altos or Meadowbank mine projects, the LaRonde Mine extension, its other exploration properties, or otherwise acquire gold-producing assets in 2008, the Company's results of operations will be adversely affected. Further, there can be no assurance that the Company's current exploration and development programs at the LaRonde Mine will result in any new economically viable mining operations or yield new mineral reserves to replace and expand current mineral reserves at what is currently the Company's sole active mining operation.
        The Company's gold production may fall below estimated levels as a result of mining accidents such as cave-ins, rock falls, rock bursts, pit wall failures, fires or flooding or as a result of other operational problems
15

such as a failure of the production hoist or the semi-autogenous grinding, or SAG, mill. 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, the physical or metallurgical characteristics of the ore are less amenable than expected to mining or treatment or there is increased dilution. In three of the last five years, as a result of such adverse conditions, the Company has failed to meet production forecasts due to a rock fall, production drilling challenges and lower than planned mill recoveries in 2003, higher than expected dilution in 2004 and increased stress levels in a sill pillar requiring the temporary closure of production sublevels in 2005. Occurrences of this nature in future years may result in the Company's failure to achieve current or future production estimates.
        The Company commenced construction of the Goldex mine project in Quebec in 2005. The Company announced in June 2006 that it would initiate development of the LaRonde Mine extension, accelerate construction at the Lapa mine project in Quebec, and build the Kittila mine project in northern Finland. In April 2007, the Company acquired the development-stage Meadowbank mine project in Nunavut, Canada and in August 2007, the Company announced that it would build the Pinos Altos mine project in northern Mexico. The Company believes that, on completion, the LaRonde Mine extension will be one of the deepest operations in the Western Hemisphere with an expected maximum depth of 3,110 metres. The operations of the LaRonde Mine extension will rely on a series of new systems for the hauling of ore and materials to the surface, including a winze (or internal shaft) and series of ramps linking mining deposits to the Penna Shaft that services current operations at the LaRonde Mine. The depth of the operations could pose significant challenges to the Company such as managing geomechanical risks and ventilation and air conditioning requirements, which may result in difficulties and delays in achieving gold production objectives. The development of the LaRonde Mine extension and the Goldex, Lapa, Kittila and Pinos Altos mine projects require the construction of significant new underground mining operations. The construction of these underground mining facilities is subject to a number of risks, including unforeseen geological formations, implementation of new mining processes, delays in obtaining required construction, environmental or operating permits, and engineering and mine design adjustments. These risks may result in delays in the planned start-up dates and in additional costs being incurred by the Company beyond those budgeted. Moreover, the construction activities at the LaRonde Mine extension will take place concurrently with normal mining operations at LaRonde, which may result in conflicts with, or possible delays to, existing mining operations.
        The figures for mineral reserves and mineral resources published by the Company 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 resources. Such figures have been determined based on assumed metals prices, foreign exchange rates and operating costs. For example, the Company has estimated proven and probable mineral reserves based on, among other things, a $583 per ounce gold price. While monthly average gold prices have been above $583 per ounce since April 2006, for the five years prior to that, the market price of gold was, on average, below $583 per ounce. Prolonged declines in the market price of gold (or other applicable metals prices) 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 may 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 (or other applicable metals prices), 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 the mineral reserve, 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. 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.
        The Company's operations have been expanded to include mine construction projects in Finland and northern Mexico. These operations are exposed to various levels of political, economic and other risks and
16

uncertainties that are different from those encountered at the Company's current operational base in Canada. These risks and uncertainties vary from country to country and may include: extreme fluctuations in currency exchange rates; high rates of inflation; labour unrest; the risks of war or civil unrest; expropriation and nationalization; renegotiation or nullification of existing concessions, licences, permits and contracts; illegal mining; corruption; changes in taxation policies; restrictions on foreign exchange and repatriation; hostage taking; and changing political conditions, currency controls and governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. In addition, the Company will have to comply with multiple and potentially conflicting regulations in Canada, the United States, Europe and Mexico, including export requirements, taxes, tariffs, import duties and other trade barriers, as well as health, safety and environmental requirements.
        The Company's Meadowbank mine project is located in the Kivalliq District of Nunavut in northern Canada, approximately 70 kilometres north of Baker Lake. Though the Company has now substantially completed a 110 kilometre all-weather road from Baker Lake, which provides summer shipping access via Hudson Bay, to the Meadowbank mine project, the Company's operations at the Meadowbank mine project will be constrained by the remoteness of the project, particularly as the port of Baker Lake is only accessible approximately 2.5 months per year. Some of the materials that the Company requires for the construction and operation of the Meadowbank mine project are currently in high demand due to the increased level of activity in the global mining industry and some of these items currently have extended order times. If the Company cannot identify and procure suitable equipment, within such timeframe as would permit transporting such equipment to the Meadowbank mine project, this may result in delays to the construction schedule of the Meadowbank mine project and may also delay the start-up of mining operations and/or increase estimated costs. The remoteness of the Meadowbank mine project also necessitates its operation as a fly-in/fly-out camp operation which may have an impact on the Company's ability to attract and retain qualified mining personnel. If the Company is unable to attract and retain sufficient personnel or sub-contractors on a timely basis, this may have an adverse effect on the Company's future development plans and operations at the Meadowbank mine project.
Regulatory Risk
        The Company's mining and mineral processing operations and exploration activities are subject to the laws and regulations of federal, provincial, state and local governments in the jurisdictions in which the Company operates. These laws and regulations are extensive and govern 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. New laws or regulations, 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.
Outstanding Securities
        The following table presents the maximum number of common shares that would be outstanding if all dilutive instruments outstanding at March 14, 2008 were exercised:

Common shares outstanding at March 14, 2008	 	143,507,606	
Employee stock options	 	4,857,705	
 	 		
 	 	148,365,311	
 	 		
Evaluation of Disclosure Controls and Procedures
        Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Company's Chief Executive Officer
17

and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure.
        As at the end of the period covered by this management's discussion and analysis, management of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as required by Canadian securities laws. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this MD&A, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the Company's annual filings and interim filings (as such terms are defined under the Canadian Securities Administrators' Multilateral Instrument 52-109 — Certification of Disclosure in Issuers' Annual and Interim Filings) and other reports filed or submitted under Canadian securities laws is recorded, processed, summarized and reported within the time periods specified by those laws and that material information is accumulated and communicated to management of the Company, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Critical Accounting Estimates
        The preparation of the consolidated 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 trade receivables, inventories, future tax assets and liabilities, mining properties and asset retirement obligations. 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 consolidated 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 units-of-production method based on 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. Costs for grassroots exploration are charged to income when incurred until an ore body is discovered. Further exploration and development to delineate costs of the ore body are capitalized as mine development costs once a feasibility study is successfully completed and proven and probable reserves are established.
        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.
        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 are capitalized. 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 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 operating mine and development properties include estimates of recoverable ounces of gold based on the proven and probable reserves. To the extent economic value exists beyond the proven and probable reserves of an operating mine or development property, this value is included
18

as part of the estimated future cash flows. Estimated future cash flows also involve estimates regarding 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.
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 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. Agnico-Eagle 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 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 the Company 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. In 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, the Company has made estimates of the final reclamation costs based on mine-closure plans approved by environmental agencies. Agnico-Eagle periodically reviews these estimates and updates reclamation cost estimates if assumptions change. Material assumptions that are made in deriving these estimates include variables such as mine life and inflation rates.
Future Tax Assets and Liabilities
        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 enacted tax rates and laws expected to be in effect when the differences are expected to reverse.
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        Effective January 1, 2007, the Company adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109, or FIN 48. FIN 48 requires the recognition of the effect of uncertain tax positions where it is more likely than not based on technical merits that the position would be sustained. The Company recognizes the amount of the tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in the year of such change. Accrued interest and penalties related to unrecognized tax benefits are recorded in income tax expense in the current year. The impact of the adoption of FIN 48 was to increase the future income tax liability by $4.5 million.
Financial Instruments
        Agnico-Eagle uses derivative financial instruments, primarily option and forward contracts, to manage exposure to fluctuations, metal prices, interest rates and foreign currency exchange rates. Agnico-Eagle does not hold financial instruments or derivative financial instruments for trading purposes.
        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 accumulated other comprehensive income (loss), depending on the nature of the derivative financial instrument and whether it qualifies for hedge accounting. Financial instruments designated as hedges are tested for effectiveness on a quarterly basis. Gains and losses on those contracts that are proven to be effective are reported as a component of the related transaction.
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 term 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 the Company 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 create 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.
        In December 2004, the FASB enacted FAS 123 — revised 2004 ("FAS 123R"), " Share-Based Payment ", which replaces FAS 123 and supersedes APB Opinion No. 25 ("APB 25"), " Accounting for Stock Issued to Employees ". FAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statements of income. The Company was required to adopt FAS 123R in the first quarter of 2006. There was no significant impact on the Company based on the adoption of the new requirements under FAS 123R.
Pensions
        As of December 31, 2006, the Company adopted the provisions of FASB Statement No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)" ("FAS 158"). FAS 158 required employers that sponsor one or more defined benefit plans to (i) recognize the funded status of a benefit plan in its statement of financial position, (ii) recognize the gains or losses and prior service costs or credits that arise during the period as a component of
20

other comprehensive income, net of tax, (iii) measure the defined benefit plan assets and obligations as of the date of the employer's fiscal year-end statement of financial position, and (iv) disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The impact of adopting FAS 158 on the Consolidated Balance Sheets was as follows:

 	 	Before
Application of
FAS 158
	 	Adjustment
	 	After
Application of
FAS 158
	 	
Reclamation provision and other liabilities	 	$	26,051	 	$	1,406	 	$	27,457	 	
Deferred income tax liability	 	$	170,087	 	$	(396	)	$	169,691	 	
Accumulated other comprehensive loss	 	$	(16,989	)	$	(1,010	)	$	(17,999	)	
Total stockholders' equity	 	$	1,253,415	 	$	(1,010	)	$	1,252,405	 	
Deferred Stripping Costs
        In the mining industry, companies may be required to remove overburden and other mine waste materials to access mineral deposits. During the development of a mine (before production begins), it is generally accepted practice that such costs are capitalized as part of the depreciable cost of building, developing and constructing the mine. The capitalized costs are typically amortized over the productive life of the mine using the units-of-production method. A mining company may continue to remove overburden and waste materials, and therefore incur stripping costs, during the production phase of the mine.
        In March 2005, the FASB ratified Emerging Issues Task Force Issue No. 04-6 ("EITF 04-6") which addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in costs applicable to sales in the same period as the revenue from the sale of inventory. As a result, capitalization of costs is appropriate only to the extent product inventory exists at the end of a reporting period. Agnico-Eagle adopted the provisions of EITF 04-6 on January 1, 2006. The impact of adoption resulted in the decrease of ore stockpile inventory by $5.1 million, net of tax. Adoption of EITF 04-6 had no impact on the Company's cash position or earnings.
Other Accounting Developments
        Under the SEC Staff Accounting Bulletin 74 ("SAB 74"), the Company is required to disclose information related to new accounting standards that have not yet been adopted.
        In September 2006, the FASB issued FASB Statement No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions for FAS 157 are effective for the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
        In February 2007, FASB issued FASB Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"), which allows entities to voluntarily choose, at specified election dates, to measure many financial assets and financial liabilities (as well as certain non-financial instruments that are similar to financial instruments) at fair value with changes in fair value reported in earnings. The election is made on an instrument-by-instrument basis and is irrevocable. The provisions for FAS 159 are effective for the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
        In December 2007, the FASB issued FASB Statement No. 160, "Non-controlling Interests in Consolidated Financial Statements" ("FAS 160"). FAS 160 establishes accounting and reporting standards for entities that have equity investments that are not attributable directly to the parent, called non-controlling interests or minority interests. Specifically, FAS 160 states where and how to report non-controlling interests in the consolidated
21

statements of financial position and operations, how to account for changes in non-controlling interests and provides disclosure requirements. The provisions of FAS 160 are effective for the Company beginning January 1, 2009. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations and disclosures.
        In December 2007, the FASB issued FASB Statement No. 141(R), "Business Combinations" ("FAS 141(R)"). FAS 141(R) establishes how an entity accounts for the identifiable assets acquired, liabilities assumed, and any non-controlling interests acquired, how to account for goodwill acquired and determines what disclosures are required as part of a business combination. FAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, early adoption is prohibited. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations and disclosures.
        In June 2007, the EITF reached consensus on Issue No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards." EITF Issue No. 06-11 requires that the tax benefit related to dividend and dividend equivalents paid on equity-classifed nonvested shares and nonvested share units, which are expected to vest, be recorded as an increase to additional paid-in capital. EITF Issue No. 06-11 is to be applied prospectively for tax benefits on dividends declared in the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
22

Mineral Reserve Data
        The information set forth below with respect to the mineral reserves at the LaRonde Mine (which includes mineral reserves at the LaRonde Mine extension), the Lapa, Goldex, Meadowbank, Kittila and Pinos Altos mine projects, and the Bousquet and Ellison properties has been prepared by the qualified people set out below in accordance with the Canadian Securities Administrators' National Instrument 43-101 Standards of Disclosure for Mineral Projects ("National Instrument 43-101"). The Company's Vice President, Project Development, Marc 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 MD&A. The Company's mineral reserve estimate was derived from internally generated data or audited reports.

Property
	 	Qualified person responsible for mineral reserve estimates
	
LaRonde Mine	 	Francois Blanchet, Ing., Superintendent of Geology, LaRonde Mine	
Goldex	 	Dyane Duquette, P. Geo., Assistant Superintendent, Technical Services, Goldex mine project	
Lapa	 	Normand Bédard, P. Geo., Geology Superintendent, Lapa mine project	
Meadowbank	 	Daniel Doucet, Ing., Principal Engineer, Technical Services Group	
Kittila	 	Marc Legault, P. Eng., Vice President, Project Development	
Pinos Altos	 	Daniel Douchet, Ing., Principal Engineer, Technical Services Group	
Bousquet and Ellison	 	Francois Blanchet, Ing., Superintendent of Geology, LaRonde Mine	
        The assumptions used for the mineral reserves and resources estimate reported by the Company in this MD&A were based on three-year average prices for the period ending December 31, 2007 of $583 per ounce gold, $10.77 per ounce silver, $1.19 per pound zinc, $2.65 per pound copper and exchange rates of C$1.14 per $1.00, 10.91 Mexican pesos per $1.00 and $1.29 per €1.00.

Property
	 	Tonnes
	 	Grade
(g/t)
	 	Contained
Gold (oz)
	
Proven Reserve	 	 	 	 	 	 	
Goldex	 	250,000	 	2.23	 	18,000	
Lapa	 	3,000	 	10.63	 	1,000	
LaRonde	 	4,672,000	 	2.77	 	416,000	
Total Proven Reserve	 	4,924,000	 	 	 	435,000	

Probable Reserve	

 	

 	
Goldex	 	22,849,000	 	2.20	 	1,616,000	
Lapa	 	3,756,000	 	8.86	 	1,070,000	
LaRonde	 	30,225,000	 	4.67	 	4,542,000	
Kittila	 	18,206,000	 	5.12	 	2,996,000	
Meadowbank	 	29,261,000	 	3.67	 	3,453,000	
Pinos Altos	 	24,657,000	 	3.21	 	2,547,000	
Total Probable Reserve	 	128,952,000	 	 	 	16,224,000	
Total Proven and Probable Reserve	 	133,877,000	 	 	 	16,659,000	

Notes:
(1)
Total contained gold ounces does not include equivalent gold ounces for the byproduct metals contained in the mineral reserve; tonnage and contained gold quantities are rounded to the nearest thousand.

(2)
Complete information on the verification procedures, the quality assurance program, quality control procedures, operating and capital cost assumptions, parameters and methods and other factors that may materially affect scientific and technical information presented in this MD&A and definition of certain terms used herein may be found in the Form 20-F under the caption "Item 4. Information on the Company — Property, Plant and Equipment — Mineral Reserve and Resource", the 2005 LaRonde Mineral Resource & Mineral Reserve Estimate filed with Canadian securities regulatory authorities on SEDAR March 23, 2005, the Technical Report on the Lapa Gold Project filed with Canadian securities regulatory authorities on SEDAR June 8, 2006, the Technical Report on the Estimation of Mineral Resource and Reserves for the Goldex Extension Zone filed with the Canadian securities regulatory authorities on SEDAR October 27, 2005, the Technical Report on the Estimation of Mineral Resource and Reserves on the Surrikuusikko Gold Project, Northern Finland filed with the Canadian securities regulatory authorities on SEDAR March 14, 2006, the Technical Report on the Meadowbank Gold Project, Nunavut filed with Canadian securities regulatory authorities by Cumberland, a predecessor to the Company, on SEDAR March 31, 2005 and Pinos Altos Gold-Silver Project, Chihuahua State, Mexico, 2007 Technical Report on Mineral Resources and Reserves filed with Canadian securities regulatory authorities September 24, 2007.
23

Summarized Quarterly Data
Consolidated Financial Data
(thousands of United States dollars, except where noted)

 	 	March 31, 2006
	 	June 30, 2006
	 	September 30, 2006
	 	December 31, 2006
	 	Total
2006
	 	
Income and cash flows	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LaRonde Mine	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations	 	$	90,581	 	$	126,872	 	$	108,798	 	$	138,381	 	$	464,632	 	
Production costs	 	 	33,187	 	 	35,567	 	 	36,456	 	 	38,543	 	 	143,753	 	
 	 		 		 		 		 		 	
Gross profit (exclusive of amortization shown below)	 	 	57,394	 	 	91,305	 	 	72,342	 	 	99,838	 	 	320,879	 	
Amortization	 	 	5,997	 	 	6,108	 	 	6,119	 	 	7,031	 	 	25,255	 	
 	 		 		 		 		 		 	
Gross profit	 	$	51,397	 	$	85,197	 	$	66,223	 	$	92,807	 	$	295,624	 	
 	 		 		 		 		 		 	
Net income for the period	 	$	37,190	 	$	37,092	 	$	45,203	 	$	41,852	 	$	161,337	 	
Net income per share — basic	 	$	0.35	 	$	0.32	 	$	0.38	 	$	0.35	 	$	1.40	 	
Net income per share — diluted	 	$	0.34	 	$	0.31	 	$	0.37	 	$	0.34	 	$	1.35	 	
Operating cash flow	 	$	19,711	 	$	48,095	 	$	73,945	 	$	84,501	 	$	226,252	 	
Investing cash flow	 	$	(50,969	)	$	(5,578	)	$	(185,498	)	$	(57,678	)	$	(299,723	)	
Financing cash flow	 	$	45,456	 	$	246,449	 	$	2,268	 	$	4,406	 	$	298,579	 	
Weighted average number of common shares outstanding (in thousands)	 	 	106,127	 	 	114,434	 	 	120,386	 	 	120,897	 	 	115,461	 	
Tonnes of ore milled	 	 	661,528	 	 	656,902	 	 	669,026	 	 	685,624	 	 	2,673,080	 	

Head grades:	

 	

 	

 	

 	

 	
 	
Gold (grams per tonne)	 	 	3.30	 	 	2.89	 	 	3.01	 	 	3.31	 	 	3.13	 	
Silver (grams per tonne)	 	 	77.00	 	 	78.20	 	 	75.90	 	 	75.26	 	 	76.58	 	
Zinc	 	 	3.79%	 	 	4.27%	 	 	4.43%	 	 	4.06%	 	 	4.13%	 	
Copper	 	 	0.41%	 	 	0.33%	 	 	0.39%	 	 	0.34%	 	 	0.39%	 	

Recovery rates:	

 	

 	

 	

 	

 	
 	
Gold	 	 	91.91%	 	 	91.35%	 	 	92.34%	 	 	90.51%	 	 	91.51%	 	
Silver	 	 	86.50%	 	 	87.70%	 	 	88.30%	 	 	87.30%	 	 	87.53%	 	
Zinc	 	 	86.70%	 	 	87.20%	 	 	87.70%	 	 	88.50%	 	 	87.60%	 	
Copper	 	 	83.80%	 	 	81.10%	 	 	81.70%	 	 	83.00%	 	 	82.40%	 	

Payable production: (1)	

 	

 	

 	

 	

 	
 	
Gold (ounces)	 	 	64,235	 	 	55,966	 	 	59,603	 	 	66,022	 	 	245,826	 	
Silver (thousands of ounces)	 	 	1,227	 	 	1,247	 	 	1,233	 	 	1,249	 	 	4,956	 	
Zinc (tonnes)	 	 	18,462	 	 	20,787	 	 	22,068	 	 	20,866	 	 	82,183	 	
Copper (tonnes)	 	 	2,053	 	 	1,590	 	 	1,884	 	 	1,762	 	 	7,289	 	

Realized prices:	

 	

 	

 	

 	

 	
 	
Gold (per ounce)	 	$	611	 	$	687	 	$	600	 	$	594	 	$	622	 	
Silver (per ounce)	 	$	10.83	 	$	13.06	 	$	12.39	 	$	13.38	 	$	12.42	 	
Zinc (per tonne)	 	$	2,640	 	$	3,786	 	$	3,525	 	$	4,640	 	$	3,699	 	
Copper (per tonne)	 	$	5,812	 	$	14,901	 	$	6,843	 	$	6,059	 	$	8,186	 	

Total cash costs (per ounce):	

 	

 	

 	

 	

 	
 	
Production costs	 	$	517	 	$	636	 	$	612	 	$	584	 	$	585	 	
Less: Net byproduct revenues	 	 	(748	)	 	(1,523	)	 	(1,340	)	 	(1,475	)	 	(1,240	)	
 	Inventory adjustments	 	 	(8	)	 	(86	)	 	21	 	 	33	 	 	(31	)	
 	Accretion expense and other	 	 	(2	)	 	(2	)	 	(2	)	 	(10	)	 	(4	)	
 	 		 		 		 		 		 	
Total cash costs (per ounce) (2)	 	$	(241	)	$	(975	)	$	(709	)	$	(868	)	$	(690	)	
 	 		 		 		 		 		 	
Minesite costs per tonne milled (2)	 	C$	57	 	C$	61	 	C$	63	 	C$	63	 	C$	62	 	

Notes:
(1)
Payable mineral production means the quantity of mineral produced during a period contained in products that are or will be sold by the Company, whether such products are sold during the period or held as inventory at the end of the period.

(2)
Minesite costs per tonne milled and total cash costs per ounce are non-GAAP financial measures of performance that the Company uses to monitor the performance of its operations. See "Results of Operations — Production Costs".
24

 Consolidated Financial Data
(thousands of United States dollars, except where noted)

 	 	March 31, 2007
	 	June 30, 2007
	 	September 30, 2007
	 	December 31, 2007
	 	Total
2007
	 	
Income and cash flows	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LaRonde Mine	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations	 	$	100,730	 	$	117,935	 	$	104,812	 	$	108,728	 	$	432,205	 	
Production costs	 	 	36,178	 	 	42,810	 	 	44,936	 	 	42,180	 	 	166,104	 	
 	 		 		 		 		 		 	
Gross profit (exclusive of amortization shown below)	 	 	64,552	 	 	75,125	 	 	59,876	 	 	66,548	 	 	266,101	 	
Amortization	 	 	6,928	 	 	7,094	 	 	7,578	 	 	6,157	 	 	27,757	 	
 	 		 		 		 		 		 	
Gross profit	 	$	57,624	 	$	68,031	 	$	52,298	 	$	60,391	 	$	238,344	 	
 	 		 		 		 		 		 	
Net income for the period	 	$	24,922	 	$	37,809	 	$	11,452	 	$	65,162	 	$	139,345	 	
Net income per share — basic	 	$	0.21	 	$	0.28	 	$	0.08	 	$	0.46	 	$	1.05	 	
Net income per share — diluted	 	$	0.20	 	$	0.27	 	$	0.08	 	$	0.46	 	$	1.04	 	
Operating cash flow	 	$	56,066	 	$	79,832	 	$	49,946	 	$	43,345	 	$	229,189	 	
Investing cash flow	 	$	90,748	 	$	(25,242	)	$	(213,119	)	$	(212,570	)	$	(360,183	)	
Financing cash flow	 	$	(10,663	)	$	1,853	 	$	15,361	 	$	124,181	 	$	130,732	 	
Weighted average number of common shares outstanding (in thousands)	 	 	121,159	 	 	133,788	 	 	135,509	 	 	140,618	 	 	132,768	 	
Tonnes of ore milled	 	 	671,484	 	 	679,765	 	 	667,238	 	 	654,976	 	 	2,673,463	 	

Head grades:	

 	

 	

 	

 	

 	
 	
Gold (grams per tonne)	 	 	3.00	 	 	2.82	 	 	2.85	 	 	3.14	 	 	2.95	 	
Silver (grams per tonne)	 	 	84.40	 	 	68.60	 	 	75.00	 	 	73.50	 	 	75.40	 	
Zinc	 	 	3.71%	 	 	3.44%	 	 	3.80%	 	 	3.59%	 	 	3.63%	 	
Copper	 	 	0.39%	 	 	0.32%	 	 	0.32%	 	 	0.40%	 	 	0.36%	 	

Recovery rates:	

 	

 	

 	

 	

 	
 	
Gold	 	 	90.66%	 	 	91.54%	 	 	91.58%	 	 	91.11%	 	 	91.21%	 	
Silver	 	 	87.40%	 	 	87.40%	 	 	88.10%	 	 	86.70%	 	 	87.51%	 	
Zinc	 	 	85.30%	 	 	87.60%	 	 	86.20%	 	 	88.20%	 	 	86.80%	 	
Copper	 	 	84.80%	 	 	86.40%	 	 	84.90%	 	 	88.40%	 	 	86.20%	 	

Payable production: (1)	

 	

 	

 	

 	

 	
 	
Gold (ounces)	 	 	58,588	 	 	56,392	 	 	55,830	 	 	60,182	 	 	230,992	 	
Silver (ounces in thousands)	 	 	1,397	 	 	1,135	 	 	1,222	 	 	1,166	 	 	4,920	 	
Zinc (tonnes)	 	 	17,944	 	 	17,462	 	 	18,609	 	 	17,562	 	 	71,577	 	
Copper (tonnes)	 	 	1,990	 	 	1,689	 	 	1,647	 	 	2,156	 	 	7,482	 	

Realized prices:	

 	

 	

 	

 	

 	
 	
Gold (per ounce)	 	$	669	 	$	683	 	$	748	 	$	895	 	$	748	 	
Silver (per ounce)	 	$	13.82	 	$	13.28	 	$	12.79	 	$	14.40	 	$	13.63	 	
Zinc (per tonne)	 	$	2,798	 	$	3,950	 	$	2,838	 	$	2,313	 	$	2,941	 	
Copper (per tonne)	 	$	6,090	 	$	7,008	 	$	7,910	 	$	6,134	 	$	6,994	 	

Total cash costs (per ounce):	

 	

 	

 	

 	

 	
 	
Production costs	 	$	617	 	$	759	 	$	804	 	$	701	 	$	719	 	
Less: Net byproduct revenues	 	 	(1,071	)	 	(1,396	)	 	(1,131	)	 	(850	)	 	(1,082	)	
 	Inventory adjustments	 	 	(126	)	 	(57	)	 	25	 	 	(28	)	 	4	 	
 	Accretion expense and other	 	 	(4	)	 	(5	)	 	(5	)	 	(7	)	 	(6	)	
 	 		 		 		 		 		 	
Total cash costs (per ounce) (2)	 	$	(584	)	$	(699	)	$	(307	)	$	(184	)	$	(365	)	
 	 		 		 		 		 		 	
Minesite costs per tonne milled (2)	 	C$	64	 	C$	71	 	C$	66	 	C$	65	 	C$	66	 	
 	 		 		 		 		 		 	
25

Five Year Financial and Operating Summary
Financial Data
(thousands of United States dollars, except where noted)

 	 	2007
	 	2006
	 	2005
	 	2004
	 	2003
	 	
Revenues from mining operations	 	$	432,205	 	$	464,632	 	$	241,338	 	$	188,049	 	$	126,820	 	
Interest, sundry income and gain on available-for-sale securities	 	 	29,230	 	 	45,915	 	 	4,996	 	 	655	 	 	2,775	 	
 	 		 		 		 		 		 	
 	 	 	461,435	 	 	510,547	 	 	246,334	 	 	188,704	 	 	129,595	 	
Costs and expenses	 	 	302,157	 	 	249,904	 	 	211,055	 	 	142,671	 	 	147,708	 	
 	 		 		 		 		 		 	
Income (loss) before income taxes	 	 	159,278	 	 	260,643	 	 	35,279	 	 	46,033	 	 	(18,113	)	
Income and mining taxes expense (recovery)	 	 	19,933	 	 	99,306	 	 	(1,715	)	 	(1,846	)	 	(358	)	
 	 		 		 		 		 		 	
Income (loss) before cumulative catch-up adjustment	 	 	139,345	 	 	161,337	 	 	36,994	 	 	47,879	 	 	(17,755	)	
Cumulative catch-up adjustment relating to FAS 143	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(1,743	)	
 	 		 		 		 		 		 	
Net income (loss)	 	$	139,345	 	$	161,337	 	$	36,994	 	$	47,879	 	$	(19,498	)	
 	 		 		 		 		 		 	
Net income (loss) per share — basic	 	$	1.05	 	$	1.40	 	$	0.42	 	$	0.56	 	$	(0.23	)	
Net income (loss) per share — diluted	 	 	1.04	 	 	1.35	 	 	0.42	 	 	0.56	 	 	(0.23	)	
Operating cash flow	 	$	229,189	 	$	226,252	 	$	82,980	 	$	49,525	 	$	4,253	 	
Investing cash flow	 	$	(360,183	)	$	(299,723	)	$	(66,539	)	$	(94,832	)	$	(105,907	)	
Financing cash flow	 	$	130,732	 	$	298,579	 	$	11,689	 	$	21,173	 	$	5,439	 	
Dividends declared per share	 	$	0.18	 	$	0.12	 	$	0.03	 	$	0.03	 	$	0.03	 	
Capital expenditures	 	$	510,877	 	$	149,185	 	$	70,270	 	$	53,318	 	$	42,038	 	
Average gold price per ounce realized	 	$	748	 	$	622	 	$	449	 	$	418	 	$	368	 	
Average exchange rate — C$ per $	 	C$	1.0738	 	C$	1.1344	 	C$	1.2115	 	C$	1.3017	 	C$	1.4011	 	
Weighted average number of common shares outstanding (in thousands)	 	 	132,768	 	 	115,461	 	 	89,030	 	 	85,157	 	 	83,889	 	
Working capital (including undrawn credit lines)	 	$	751,587	 	$	839,898	 	$	338,490	 	$	266,305	 	$	240,613	 	
Total assets	 	$	2,735,498	 	$	1,521,488	 	$	976,069	 	$	718,164	 	$	637,101	 	
Long-term debt	 	$	—	 	$	—	 	$	131,056	 	$	141,495	 	$	143,750	 	
Shareholders' equity	 	$	2,058,934	 	$	1,252,405	 	$	655,067	 	$	470,226	 	$	400,723	 	

Operating Summary (thousands of United States dollars, except where noted)	

 	

 	

 	

 	

 	

LaRonde Mine	

 	

 	

 	

 	

 	
 	
Revenues from mining operations	 	$	432,205	 	$	464,632	 	$	241,338	 	$	188,049	 	$	126,820	 	
Production costs	 	 	166,104	 	 	143,753	 	 	127,365	 	 	98,168	 	 	104,990	 	
 	 		 		 		 		 		 	
Gross profit (exclusive of amortization shown below)	 	$	266,101	 	$	320,879	 	$	113,973	 	$	89,881	 	$	21,830	 	
Amortization	 	 	27,757	 	 	25,255	 	 	26,062	 	 	21,763	 	 	17,504	 	
 	 		 		 		 		 		 	
Gross profit	 	$	238,344	 	$	295,624	 	$	87,911	 	$	68,118	 	 	4,326	 	
 	 		 		 		 		 		 	
Tonnes of ore milled	 	 	2,673,463	 	 	2,673,080	 	 	2,671,811	 	 	2,700,650	 	 	2,221,337	 	
Gold — grams per tonne	 	 	2.95	 	 	3.13	 	 	3.11	 	 	3.41	 	 	3.77	 	
Gold production — ounces	 	 	230,992	 	 	245,826	 	 	241,807	 	 	271,567	 	 	236,653	 	
Silver production — ounces (in thousands)	 	 	4,920	 	 	4,956	 	 	4,831	 	 	5,699	 	 	3,953	 	
Zinc production — tonnes	 	 	71,577	 	 	82,183	 	 	76,545	 	 	75,879	 	 	45,513	 	
Copper production — tonnes	 	 	7,482	 	 	7,289	 	 	7,378	 	 	10,349	 	 	9,131	 	

Total cash costs (per ounce):	

 	

 	

 	

 	

 	
 	
Production costs	 	$	719	 	$	585	 	$	527	 	$	362	 	$	390	 	
Less: Net byproduct revenues	 	 	(1,082	)	 	(1,240	)	 	(511	)	 	(304	)	 	(173	)	
 	Inventory adjustments	 	 	4	 	 	(31	)	 	29	 	 	—	 	 	—	 	
 	El Coco royalty	 	 	—	 	 	—	 	 	—	 	 	—	 	 	54	 	
 	Accretion expense and other	 	 	(6	)	 	(4	)	 	(2	)	 	(2	)	 	(2	)	
 	 		 		 		 		 		 	
Total cash costs (per ounce) (1)	 	$	(365	)	$	(690	)	$	43	 	$	56	 	$	269	 	
 	 		 		 		 		 		 	
Minesite costs per tonne milled	 	C$	66	 	C$	62	 	C$	55	 	C$	53	 	C$	57	 	

Note:
(1)
Minesite costs per tonne milled and total cash costs per ounce is a non-GAAP financial measure of performance that the Company uses to monitor the performance of its operations. See "Results of Operations — Production Costs".
26

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 Agnico-Eagle Mines Limited Management's Discussion and Analysis Table of Contents
NOTE TO INVESTORS CONCERNING FORWARD-LOOKING INFORMATION
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 Consolidated Financial Data (thousands of United States dollars, except where noted)
Consolidated Financial Data (thousands of United States dollars, except where noted)
Financial Data (thousands of United States dollars, except where noted)

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 Exhibit 99.3

 Annual Audited Consolidated Financial Statements
 (Prepared in accordance with United States GAAP)

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Agnico-Eagle Mines Limited:
        We have audited the effectiveness of Agnico-Eagle Mines Limited's internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Agnico-Eagle Mines Limited's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's report on internal control over financial reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.
        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
        As indicated in the accompanying Management's report on internal control over financial reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Cumberland Resources Ltd., which is included in the 2007 consolidated financial statements of Agnico-Eagle Mines Limited and constituted 13% and 0.8% of total and net assets, respectively, as of December 31, 2007 and 0% of revenues for the year then ended. The net loss of Cumberland Resources Ltd. included in Agnico-Eagle Mines Limited's consolidated net income was 5% for the year ended December 31, 2007. Our audit of internal control over financial reporting of Agnico-Eagle Mines Limited also did not include an evaluation of the internal control over financial reporting of Cumberland Resources Ltd.
        In our opinion, Agnico-Eagle Mines Limited maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the COSO criteria.
        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Agnico-Eagle Mines Limited as of December 31, 2007 and 2006, and the related consolidated statements of income and comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2007, and our report dated March 14, 2008, expressed an unqualified opinion thereon.

Toronto, Canada	 	ERNST & YOUNG LLP	
March 14, 2008	 	Chartered Accountants
Licensed Public Accountants	
2

 Management Certification
        Agnico-Eagle Mines Limited (the "Company") will file with the New York Stock Exchange ("NYSE") on March 19, 2008, the annual written affirmation by its Chief Executive Officer, certifying that, as of the date of such affirmation, he was not aware of any violation by Agnico-Eagle Mines Limited of the NYSE's corporate governance listing standards. The Company has also filed the required certifications under Section 302 of the Sarbanes-Oxley Act of 2002 regarding the quality of its public disclosures as Exhibits 12.01 and 12.02 to its annual report on Form 20-F for the year ended December 31, 2007.
        Management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2007.
        Management concluded that, as of December 31, 2007, the Company's internal control over financial reporting is effective as more fully described in "Item 15. Controls and Procedures" of the Company's Annual Report on Form 20-F.
        The effectiveness of the Company's internal control over financial reporting as of December 31, 2007, has been audited by Ernst & Young, LLP, an independent registered public accounting firm, as stated in their report which appears herein.
3

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Agnico-Eagle Mines Limited:
        We have audited the accompanying consolidated balance sheets of Agnico-Eagle Mines Limited as of December 31, 2007 and 2006, and the related consolidated statements of income and comprehensive income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2007. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis for our opinion.
        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Agnico-Eagle Mines Limited at December 31, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with United States generally accepted accounting principles.
        As described in the "Summary of Significant Accounting Policies", the Company changed its method of accounting for uncertain tax positions as of January 1, 2007 and, on January 1, 2006, the Company changed its method of accounting for stockpiles inventory.
        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Agnico-Eagle Mines Limited's internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2008 expressed an unqualified opinion thereon.

Toronto, Canada	 	ERNST & YOUNG LLP	
March 14, 2008	 	Chartered Accountants
Licensed Public Accountants	
4

 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"). Since a precise determination of assets and liabilities depends on future events, the preparation 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 its wholly-owned subsidiaries and entities in which it has a controlling financial interest after the elimination of intercompany accounts and transactions. The Company has a controlling financial interest if it owns a majority of the outstanding voting common stock or has significant control over an entity through contractual or economic interests of which the Company is the primary beneficiary.
        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 contributed surplus.
Cash and cash equivalents
        Cash and cash equivalents include cash on hand and short-term investments in money market instruments with remaining maturities of three months or less at the date of purchase. Short-term investments are designated as held to maturity for accounting purposes and are carried at amortized cost, which approximates market value. Agnico-Eagle places its cash and cash equivalents 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.
Inventories
        Inventories consist of ore stockpiles, concentrates 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.
        Mining costs include all costs associated with mining operations and are allocated to each tonne of stockpile. Fully absorbed costs include direct and indirect materials and consumables, direct labour, utilities and amortization of mining assets incurred up to the point of stockpiling the ore. 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 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 tonne 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 practice in the future. Stockpiled ore on the surface is exposed to the elements, but the Company does not expect its condition to deteriorate significantly.
5

        In addition, companies in the mining industry may be required to remove overburden and other mine waste materials to access mineral deposits. During the development of a mine (before production begins), it is generally accepted practice that such costs are capitalized as part of the depreciable cost of building, developing and constructing the mine. The capitalized costs are typically amortized over the productive life of the mine using the units-of-production method. A mining company may continue to remove overburden and waste materials, and therefore incur stripping costs, during the production phase of the mine.
        In March 2005, the Financial Accounting Standards Board ratified Emerging Issues Task Force Issue No. 04-6 ("EITF 04-6") which addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in costs applicable to sales in the same period as the revenue from the sale of inventory. As a result, capitalization of costs is appropriate only to the extent product inventory exists at the end of a reporting period. Agnico-Eagle adopted the provisions of EITF 04-6 on January 1, 2006. The impact of adoption was to decrease ore stockpile inventory by $8.4 million and increase future income and mining tax assets by $3.3 million. Adoption of EITF 04-6 had no impact on the Company's cash position or earnings.
Concentrates
        Concentrates inventories consist of concentrates for which legal title has not yet passed to custom smelters. Concentrates 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 sheets and relate to the issuance of the Company's 4.50% convertible subordinated debentures due February 15, 2012 ("Convertible Debentures"), that were fully redeemed in February 2007 and the Company's revolving credit facility, are being amortized to income over the term of the related obligations. When the holders of the Company's Convertible Debentures exercised their conversion option, the common shares issued on such conversion were 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. The same principles were applied upon redemption of the Convertible Debentures by the Company.
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 for the construction of projects 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. The unit-of-production method defines the denominator as the total proven and probable tonnes of reserves.
6

        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.
        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 ore body 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. To the extent economic value exists beyond the proven and probable reserves of an operating mine or development property, this value is included as part of the estimated future cash flows. Estimated future cash flows also involve estimates regarding metal 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 uses derivative financial instruments, primarily option and forward contracts, to manage exposure to fluctuations, metal prices, interest rates and foreign currency exchange rates. Agnico-Eagle does not hold financial instruments or derivative financial instruments for trading purposes.
        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 accumulated other comprehensive income (loss), depending on the nature of the derivative financial instrument and whether it qualifies for hedge accounting. Financial instruments designated as hedges are tested for effectiveness on a quarterly basis. Gains and losses on those contracts that are proven to be effective are reported as a component of the related transaction.
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 doré bars is recorded when the refined gold and silver is sold. Generally all the gold and silver in the form of doré bars 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 metals contained 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 the
7

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, transportation and other marketing charges. Revenues from byproduct 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 the US dollar 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
        Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The amount of the liability is subject to re-measurement at each reporting period. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value and amortized over the estimated life of the mine. The key assumptions on which the fair value of the asset retirement obligations is based includes the estimated future cash flows, the timing of those cash flows and the credit-adjusted risk-free rate or rates on which the estimated cash flows have been discounted.
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 enacted tax rates and laws expected to be in effect when the differences are expected to reverse.
        Effective January 1, 2007, the Company adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109, or FIN 48. FIN 48 requires the recognition of the effect of uncertain tax positions where it is more likely than not based on technical merits that the position would be sustained. The Company recognizes the amount of the tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in the year of such change. Accrued interest and penalties related to unrecognized tax benefits are recorded in income tax expense in the current year. The impact of the adoption of FIN 48 was to increase the future income tax liability by $4.5 million.
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.
        The fair value of stock options granted by the Company is recognized 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.
        In December 2004, the FASB enacted FAS 123 — revised 2004 ("FAS 123R"), " Share-Based Payment ", which replaced FAS 123 and superseded APB Opinion No. 25 ("APB 25"), " Accounting for Stock Issued to Employees ". FAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statement of income. The Company was required to adopt FAS 123R in the first quarter of 2006. There was no impact on the Company based on the adoption of the new requirements under FAS 123R.
8

Income per share
        Basic income per share is calculated on net income for the year using the weighted average number of common shares outstanding during the year. For years in which the Convertible Debentures were oustanding, diluted income per share was calculated on the weighted average number of common shares that would have been outstanding during such year had all Convertible Debentures been converted at the beginning of the year into common shares, if such conversions were dilutive. In addition, the weighted average number of common shares used to determine diluted income per share includes an adjustment for stock options outstanding and warrants outstanding using the treasury stock method. Under the treasury stock method:
•
the exercise of options or warrants is assumed to be at the beginning of the period (or date of issuance, if later);

•
the proceeds from the exercise of options or warrants, plus in the case of options the future period compensation expense on options granted on or after January 1, 2003, are assumed to be used to purchase common shares at the average market price during the period; and

•
the incremental number of common shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) is included in the denominator of the diluted earnings per share computation.
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 other post-retirement benefits to its employees.
        As of December 31, 2006, the Company adopted the provisions of FASB Statement No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)" ("FAS 158"). FAS 158 required employers that sponsor one or more defined benefit plans to (i) recognize the funded status of a benefit plan in its statement of financial position, (ii) recognize the gains or losses and prior service costs or credits that arise during the period as a component of other comprehensive income, net of tax, (iii) measure the defined benefit plan assets and obligations as of the date of the employer's fiscal year-end statement of financial position, and (iv) disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The impact of adopting FAS 158 on the Consolidated Balance Sheets was as follows:

As of December 31, 2006
	 	Before Application of FAS 158
	 	Adjustment
	 	After Application of FAS 158
	 	
Reclamation provision and other liabilities	 	$	26,051	 	$	1,406	 	$	27,457	 	
Deferred income tax liability	 	$	170,087	 	$	(396	)	$	169,691	 	
Accumulated other comprehensive loss	 	$	(16,989	)	$	(1,010	)	$	(17,999	)	
Total stockholders' equity	 	$	1,253,415	 	$	(1,010	)	$	1,252,405	 	
9

Impact of recently issued accounting pronouncements
        Under the U.S. Securities and Exchange Commission Staff Accounting Bulletin 74 ("SAB 74"), the Company is required to disclose information related to new accounting standards that have not yet been adopted.
Fair Value Measurements
        In September 2006, the FASB issued FASB Statement No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions for FAS 157 are effective for the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
The Fair Value Option for Financial Assets and Financial Liabilities
        In February 2007, FASB issued FASB Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"), which allows entities to voluntary choose, at specified election dates, to measure many financial assets and financial liabilities (as well as certain non-financial instruments that are similar to financial instruments) at fair value with changes in fair value reported in earnings. The election is made on an instrument-by-instrument basis and is irrevocable. The provisions for FAS 159 are effective for the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
Non-controlling Interests in Consolidated Financial Statements
        In December 2007, the FASB issued FASB Statement No. 160, "Non-controlling Interests in Consolidated Financial Statements" ("FAS 160"). FAS 160 establishes accounting and reporting standards for entities that have equity investments that are not attributable directly to the parent, called non-controlling interests or minority interests. Specifically, FAS 160 states where and how to report non-controlling interests in the consolidated statements of financial position and operations, how to account for changes in non-controlling interests and provides disclosure requirements. The provisions of FAS 160 are effective for the Company beginning January 1, 2009. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations and disclosures.
Business Combinations
        In December 2007, the FASB issued FASB Statement No. 141(R), "Business Combinations" ("FAS 141(R)"). FAS 141(R) establishes how an entity accounts for the identifiable assets acquired, liabilities assumed, and any non-controlling interests acquired, how to account for goodwill acquired and determines what disclosures are required as part of a business combination. FAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, early adoption is prohibited. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations and disclosures.
Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
        In June 2007, the EITF reached consensus on Issue No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards." EITF Issue No. 06-11 requires that the tax benefit related to dividend and dividend equivalents paid on equity-classifed nonvested shares and nonvested share units, which are expected to vest, be recorded as an increase to additional paid-in capital. EITF Issue No. 06-11 is to be applied prospectively for tax benefits on dividends declared in the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
Comparative figures
        Certain items in the comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the 2007 consolidated financial statements.
10

 AGNICO-EAGLE MINES LIMITED

CONSOLIDATED BALANCE SHEETS

(thousands of United States dollars, US GAAP basis)

 	 	As at December 31,
	 	
 	 	2007
	 	2006
	 	
ASSETS	 	 	 	 	 	 	 	
Current	 	 	 	 	 	 	 	
 	Cash and cash equivalents	 	$	314,794	 	$	288,575	 	
 	Short-term investments	 	 	78,770	 	 	170,042	 	
 	Restricted cash (note 14)	 	 	2,455	 	 	—	 	
 	Trade receivables (note 1)	 	 	79,419	 	 	84,987	 	
 	Inventories:	 	 	 	 	 	 	 	
 	 	Ore stockpiles	 	 	5,647	 	 	2,330	 	
 	 	Concentrates	 	 	1,913	 	 	3,794	 	
 	 	Supplies	 	 	15,637	 	 	11,152	 	
 	Available-for-sale securities (note 2(a))	 	 	38,006	 	 	38,760	 	
 	Other current assets (note 2(a))	 	 	69,453	 	 	23,193	 	
 	 		 		 	
Total current assets	 	 	606,094	 	 	622,833	 	
Other assets (notes 2(b))	 	 	16,436	 	 	7,737	 	
Future income and mining tax assets (note 8)	 	 	5,905	 	 	31,059	 	
Property, plant and mine development, net (note 3)	 	 	2,107,063	 	 	859,859	 	
 	 		 		 	
 	 	$	2,735,498	 	$	1,521,488	 	

LIABILITIES AND SHAREHOLDERS' EQUITY	

 	

 	
 	
Current	 	 	 	 	 	 	 	
 	Accounts payable and accrued liabilities (note 10)	 	$	108,227	 	$	42,538	 	
 	Dividends payable	 	 	26,280	 	 	15,166	 	
 	Income taxes payable (note 8)	 	 	—	 	 	14,231	 	
 	 		 		 	
Total current liabilities	 	 	134,507	 	 	71,935	 	
 	 		 		 	
Reclamation provision and other liabilities (note 5)	 	 	57,941	 	 	27,457	 	
 	 		 		 	
Future income and mining tax liabilities (note 8)	 	 	484,116	 	 	169,691	 	

SHAREHOLDERS' EQUITY	

 	

 	
 	
Common shares (note 6(a))	 	 	 	 	 	 	 	
 	Authorized — unlimited	 	 	 	 	 	 	 	
 	Issued — 142,403,379 (2006 — 121,025,635)	 	 	1,931,667	 	 	1,230,654	 	
Stock options	 	 	23,573	 	 	5,884	 	
Warrants (note 6(c))	 	 	—	 	 	15,723	 	
Contributed surplus	 	 	15,166	 	 	15,128	 	
Retained earnings	 	 	112,240	 	 	3,015	 	
Accumulated other comprehensive loss (note 6(d))	 	 	(23,712	)	 	(17,999	)	
 	 		 		 	
Total shareholders' equity	 	 	2,058,934	 	 	1,252,405	 	
 	 		 		 	
 	 	$	2,735,498	 	$	1,521,488	 	
 	 		 		 	
Contingencies and commitments (note 12)	 	 	 	 	 	 	 	
On behalf of the Board:

Sean Boyd C.A., Director	
 	
Mel Leiderman C.A., Director	
See accompanying notes
11

 AGNICO-EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(thousands of United States dollars except per share amounts, US GAAP basis)

 	 	Years ended December 31,
	 	
 	 	2007
	 	2006
	 	2005
	 	
REVENUES	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations (note 1)	 	$	432,205	 	$	464,632	 	$	241,338	 	
Interest and sundry income (note 11)	 	 	25,142	 	 	21,797	 	 	4,535	 	
Gain on sale of available-for-sale securities (note 2(a))	 	 	4,088	 	 	24,118	 	 	461	 	
 	 		 		 		 	
 	 	 	461,435	 	 	510,547	 	 	246,334	 	

COSTS AND EXPENSES	

 	

 	

 	
 	
Production	 	 	166,104	 	 	143,753	 	 	127,365	 	
Exploration and corporate development	 	 	25,507	 	 	30,414	 	 	16,581	 	
Equity loss in junior exploration companies (note 2(b))	 	 	—	 	 	663	 	 	2,899	 	
Amortization of plant and mine development	 	 	27,757	 	 	25,255	 	 	26,062	 	
General and administrative	 	 	38,167	 	 	25,884	 	 	11,727	 	
Loss on derivative financial instruments	 	 	5,829	 	 	15,148	 	 	15,396	 	
Provincial capital tax	 	 	3,202	 	 	3,758	 	 	1,352	 	
Interest (note 4)	 	 	3,294	 	 	2,902	 	 	7,813	 	
Foreign currency translation loss (note 8)	 	 	32,297	 	 	2,127	 	 	1,860	 	
 	 		 		 		 	
Income before income, mining and federal capital taxes	 	 	159,278	 	 	260,643	 	 	35,279	 	
Federal capital tax	 	 	—	 	 	—	 	 	1,062	 	
Income and mining tax (recovery) (note 8)	 	 	19,933	 	 	99,306	 	 	(2,777	)	
 	 		 		 		 	
Net income for the year	 	$	139,345	 	$	161,337	 	$	36,994	 	
 	 		 		 		 	
Net income per share — basic (note 6(e))	 	$	1.05	 	$	1.40	 	$	0.42	 	
 	 		 		 		 	
Net income per share — diluted (note 6(e))	 	$	1.04	 	$	1.35	 	$	0.42	 	

Comprehensive income:	

 	

 	

 	
 	
Net income for the year	 	$	139,345	 	$	161,337	 	$	36,994	 	

Other comprehensive income (loss):	

 	

 	

 	
 	
 	Unrealized gain on hedging activities	 	 	—	 	 	—	 	 	1,135	 	
 	Unrealized gain (loss) on available-for-sale securities	 	 	(5,436	)	 	1,067	 	 	10,228	 	
 	Cumulative translation adjustments	 	 	—	 	 	—	 	 	(2,236	)	
 	Adjustments for derivative instruments maturing during the year	 	 	1,653	 	 	(2,167	)	 	(3,398	)	
 	Adjustments for realized gains on available-for-sale securities due to dispositions during the year	 	 	(1,918	)	 	(12,506	)	 	(65	)	
 	Amortization of unrecognized loss on pension liability	 	 	(16	)	 	—	 	 	—	 	
 	Tax effect of other comprehensive income (loss) items	 	 	4	 	 	1,241	 	 	(1,241	)	
 	 		 		 		 	
Other comprehensive income (loss) for the year	 	 	(5,713	)	 	(12,365	)	 	4,423	 	
 	 		 		 		 	
Comprehensive income for the year	 	$	133,632	 	$	148,972	 	$	41,417	 	
 	 		 		 		 	
See accompanying notes
12

 AGNICO-EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(thousands of United States dollars, US GAAP basis)

 	 	Common Shares
	 	 	 	 	 	 	 	 	 	 	 	
 			 	Stock Options Outstanding
	 	 	 	Contributed Surplus
	 	Retained Earnings (Deficit)
	 	Accumulated Other Comprehensive Loss
	 	
 	 	Shares
	 	Amount
			 	Warrants
							 	
Balance December 31, 2004	 	86,072,779	 	$	620,704	 	$	465	 	$	15,732	 	$	15,128	 	$	(172,756	)	$	(9,047	)	
Shares issued under Employee Stock Option Plan (note 7(a))	 	214,725	 	 	2,264	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Stock options	 	—	 	 	—	 	 	2,404	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Incentive Share Purchase Plan (note 7(b))	 	245,494	 	 	3,646	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under flow-through share private placement (note 6(b))	 	500,000	 	 	6,387	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	4,715	 	 	15	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for holder conversions of convertible debentures (note 4)	 	775,359	 	 	10,855	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for purchase of Riddarhyttan Resources AB (note 9)	 	10,023,882	 	 	120,788	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Net income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	36,994	 	 	—	 	
Dividends declared ($0.03 per share) (note 6(a))	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(2,935	)	 	—	 	
Other comprehensive income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	4,423	 	
 	 		 		 		 		 		 		 		 	
Balance December 31, 2005	 	97,836,954	 	$	764,659	 	$	2,869	 	$	15,732	 	$	15,128	 	$	(138,697	)	$	(4,624	)	
Shares issued under Employee Stock Option Plan (note 7(a))	 	1,805,085	 	 	28,217	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Stock options	 	—	 	 	—	 	 	3,015	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Incentive Share Purchase Plan (note 7(b))	 	146,249	 	 	4,711	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under flow-through share private placement (note 6(b))	 	1,226,000	 	 	30,749	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	5,003	 	 	22	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for holder conversions of convertible debentures (note 4)	 	9,483,709	 	 	129,910	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued on exercise of warrants	 	4,000	 	 	85	 	 	—	 	 	(9	)	 	—	 	 	—	 	 	—	 	
Shares issued for purchase of Pinos Altos project (note 9)	 	2,063,635	 	 	34,310	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under public offering	 	8,455,000	 	 	237,991	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Net income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	161,337	 	 	—	 	
Dividends declared ($0.12 per share) (note 6(a))	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(14,523	)	 	—	 	
Stockpile inventory adjustment, net of tax (EITF 04-6)	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(5,102	)	 	—	 	
Other comprehensive loss for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(12,365	)	
Adjustment for unrecognized loss on pension liability upon application of FASB Statement No. 158 (note 5(b))	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(1,010	)	
 	 		 		 		 		 		 		 		 	
Balance December 31, 2006	 	121,025,635	 	$	1,230,654	 	$	5,884	 	$	15,723	 	$	15,128	 	$	3,015	 	$	(17,999	)	
 	 		 		 		 		 		 		 		 	
Shares issued under Employee Stock Option Plan (note 7(a))	 	536,116	 	 	10,232	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options	 	—	 	 	—	 	 	17,689	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Incentive Share Purchase Plan (note 7(b))	 	167,378	 	 	7,100	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for purchase of Cumberland Resources Ltd (note 9)	 	13,768,510	 	 	536,556	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	32,550	 	 	812	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued on exercise of warrants	 	6,873,190	 	 	146,313	 	 	—	 	 	(15,723	)	 	38	 	 	—	 	 	—	 	
Net income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	139,345	 	 	—	 	
Dividends declared ($0.18 per share) (note 6(a))	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(25,633	)	 	—	 	
Future tax asset adjustment upon the adoption of FIN 48 (note 8)	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(4,487	)	 	—	 	
Other comprehensive loss for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(5,713	)	
 	 		 		 		 		 		 		 		 	
Balance December 31, 2007	 	142,403,379	 	 	1,931,667	 	 	23,573	 	 	—	 	 	15,166	 	 	112,240	 	 	(23,712	)	
 	 		 		 		 		 		 		 		 	
See accompanying notes
13

 AGNICO-EAGLE MINES LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands of United States dollars, US GAAP basis)

 	 	Years ended December 31,
	 	
 	 	2007
	 	2006
	 	2005
	 	
Operating activities	 	 	 	 	 	 	 	 	 	 	
Net income for the year	 	$	139,345	 	$	161,337	 	$	36,994	 	
Add (deduct) items not affecting cash:	 	 	 	 	 	 	 	 	 	 	
 	Amortization of plant and mine development	 	 	27,757	 	 	25,255	 	 	26,062	 	
 	Future income and mining taxes	 	 	16,380	 	 	81,993	 	 	(2,777	)	
 	Unrealized loss on derivative contracts	 	 	—	 	 	—	 	 	8,335	 	
 	Gain on sale of available-for-sale securities	 	 	(4,088	)	 	(24,118	)	 	(461	)	
 	Gain on Contact Diamond Corporation	 	 	—	 	 	(7,361	)	 	—	 	
 	Stock option expense	 	 	12,155	 	 	5,391	 	 	2,553	 	
 	Foreign currency translation loss	 	 	32,297	 	 	2,127	 	 	1,860	 	
 	Other	 	 	14,921	 	 	(7,230	)	 	3,062	 	
Changes in non-cash working capital balances	 	 	 	 	 	 	 	 	 	 	
 	Trade receivables	 	 	5,568	 	 	(28,683	)	 	(12,862	)	
 	Income (taxes payable)/recoverable	 	 	(14,231	)	 	21,954	 	 	8,382	 	
 	Inventories	 	 	(1,187	)	 	(2,493	)	 	2,550	 	
 	Other current assets	 	 	(55,389	)	 	(4,422	)	 	(1,054	)	
 	Accounts payable and accrued liabilities	 	 	55,661	 	 	4,745	 	 	10,519	 	
 	Interest payable	 	 	—	 	 	(2,243	)	 	(183	)	
 	 		 		 		 	
Cash provided by operating activities	 	 	229,189	 	 	226,252	 	 	82,980	 	

Investing activities	

 	

 	

 	
 	
Additions to property, plant and mine development	 	 	(510,877	)	 	(149,185	)	 	(70,270	)	
Purchase of gold derivatives (note 9(c))	 	 	(15,875	)	 	—	 	 	—	 	
Cash acquired on acquisition of Cumberland Resources Ltd. net of transaction costs (note 9(c))	 	 	84,207	 	 	—	 	 	—	 	
Acquisition of Pinos Altos property (note 9(b))	 	 	—	 	 	(32,500	)	 	—	 	
Recoverable value added tax on acquisition of Pinos Altos property	 	 	9,750	 	 	(9,750	)	 	—	 	
Purchase of Stornoway Diamond Corporation debentures	 	 	(8,519	)	 	—	 	 	—	 	
Investment in Stornoway Diamond Corporation	 	 	—	 	 	(19,784	)	 	—	 	
Decrease (increase) in short-term investments	 	 	91,272	 	 	(110,215	)	 	5,009	 	
Net proceeds on available-for-sale securities	 	 	5,393	 	 	34,034	 	 	(7,089	)	
Purchase of available-for-sale securities	 	 	(13,079	)	 	(12,323	)	 	(2,362	)	
Decrease (increase) in restricted cash	 	 	(2,455	)	 	—	 	 	8,173	 	
 	 		 		 		 	
Cash used in investing activities	 	 	(360,183	)	 	(299,723	)	 	(66,539	)	

Financing activities	

 	

 	

 	
 	
Dividends paid	 	 	(13,406	)	 	(3,166	)	 	(2,525	)	
Common shares issued	 	 	144,138	 	 	315,160	 	 	14,243	 	
Share issue costs	 	 	—	 	 	(13,415	)	 	(29	)	
 	 		 		 		 	
Cash provided by financing activities	 	 	130,732	 	 	298,579	 	 	11,689	 	
 	 		 		 		 	
Effect of exchange rate changes on cash and cash equivalents	 	 	26,481	 	 	2,312	 	 	20	 	
 	 		 		 		 	
Net increase in cash and cash equivalents during the year	 	 	26,219	 	 	227,420	 	 	28,150	 	
Cash and cash equivalents, beginning of year	 	 	288,575	 	 	61,155	 	 	33,005	 	
 	 		 		 		 	
Cash and cash equivalents, end of year	 	$	314,794	 	$	288,575	 	$	61,155	 	

Other operating cash flow information:	

 	

 	

 	
 	
Interest paid during the year	 	$	2,406	 	$	4,214	 	$	8,304	 	
 	 		 		 		 	
Income, mining and capital taxes paid (recovered) during the year	 	$	22,138	 	$	1,405	 	$	(6,259	)	
 	 		 		 		 	
See accompanying notes
14

 AGNICO-EAGLE MINES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(thousands of United States dollars except per share amounts, unless otherwise indicated)
December 31, 2007
1.     TRADE RECEIVABLES AND REVENUES FROM MINING OPERATIONS
        Trade receivables are recognized once the transfer of ownership for the metals sold has occurred and reflect the amounts owing to the Company in respect of its sales of bullion or concentrates to third parties prior to the satisfaction in full of payment obligations of the third parties.

 	 	2007
	 	2006
	
Bullion awaiting settlement	 	$	122	 	$	2,520	
Concentrates awaiting settlement	 	 	79,297	 	 	82,467	
 	 		 		
 	 	$	79,419	 	$	84,987	
 	 		 		
 	 	2007
	 	2006
	 	2005
	
Revenues from mining operations (thousands):	 	 	 	 	 	 	 	 	 	
Gold	 	$	171,537	 	$	159,815	 	$	117,888	
Silver	 	 	70,028	 	 	58,262	 	 	41,808	
Zinc	 	 	156,340	 	 	211,871	 	 	67,150	
Copper	 	 	34,300	 	 	34,684	 	 	14,492	
 	 		 		 		
 	 	$	432,205	 	$	464,632	 	$	241,338	
 	 		 		 		
        In 2007, precious metals accounted for 56% of Agnico-Eagle's revenues from mining operations (2006 — 47%; 2005 — 66%). The remaining revenues from mining operations consisted of net byproduct revenues. In 2007, these net byproduct revenues as a percentage of total revenues from mining operations consisted of 36% zinc (2006 — 45%; 2005 — 28%) and 8% copper (2006 — 8%; 2005 — 6%):
2.     OTHER ASSETS
(a)
Other current assets

 	 	2007
	 	2006
	
Federal, provincial and other sales taxes receivable	 	 	24,369	 	 	16,327	
Interest receivable	 	 	2,140	 	 	4,453	
Prepaid expenses	 	 	13,556	 	 	733	
Employee loans receivable	 	 	926	 	 	626	
Government refundables	 	 	17,776	 	 	—	
Advances to suppliers	 	 	4,284	 	 	—	
Other	 	 	6,402	 	 	1,054	
 	 		 		
 	 	$	69,453	 	$	23,193	
 	 		 		
        In 2007, the Company realized $5.4 million (2006 — $35.9 million; 2005 — $1.4 million) in proceeds and recorded a gain of $4.1 million (2006 — $24.1 million; 2005 — $0.5 million) in income on the sale of available-for-sale securities. Available-for-sale securities consist of equity securities whose cost basis is determined using the average cost method. Available-for-sale securities are carried at fair value and comprise the following:

 	 	2007
	 	2006
	 	
Cost	 	$	44,401	 	$	37,890	 	
Unrealized gains	 	 	4,933	 	 	5,258	 	
Unrealized losses	 	 	(11,328	)	 	(4,388	)	
 	 		 		 	
Estimated fair value of available-for-sale securities	 	$	38,006	 	$	38,760	 	
 	 		 		 	
15

(b)
Other assets

 	 	2007
	 	2006
	
Deferred financing costs, less accumulated amortization of $960 (2006 — $154)	 	$	3,224	 	$	3,709	
Stornoway Diamond Corporation debentures (note 11)	 	 	10,120	 	 	—	
Loan to Contact Diamond Corporation (note 11)	 	 	—	 	 	3,422	
Finnish Government Grants	 	 	2,643	 	 	—	
Other	 	 	449	 	 	606	
 	 		 		
 	 	$	16,436	 	$	7,737	
 	 		 		
        The Company has a commitment to repay parts of the grant to the Finnish Government, should the Kittila mine not be in operation by 2013. Management currently expects that Kittila will commence production in the second half of 2008.
        The fair value of the Stornoway Diamond Corporation debentures approximates their carrying amounts.
3.     PROPERTY, PLANT AND MINE DEVELOPMENT

 	 	2007
	 	2006
	
 	 	Cost
	 	Accumulated Amortization
	 	Net Book Value
	 	Cost
	 	Accumulated Amortization
	 	Net Book Value
	
Mining properties	 	$	1,108,449	 	$	20,197	 	$	1,088,252	 	$	340,308	 	$	17,751	 	$	322,557	
Plant and equipment	 	 	351,663	 	 	116,862	 	 	234,801	 	 	322,660	 	 	104,350	 	 	218,310	
Mine development costs	 	 	261,613	 	 	80,792	 	 	180,821	 	 	241,275	 	 	67,986	 	 	173,289	
Construction in process:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Goldex mine project	 	 	186,302	 	 	—	 	 	186,302	 	 	80,777	 	 	—	 	 	80,777	
 	LaRonde Mine extension	 	 	46,716	 	 	—	 	 	46,716	 	 	9,780	 	 	—	 	 	9,780	
 	Pinos Altos mine project	 	 	37,065	 	 	—	 	 	37,065	 	 	—	 	 	—	 	 	—	
 	Meadowbank mine project	 	 	168,374	 	 	—	 	 	168,374	 	 	—	 	 	—	 	 	—	
 	Kittila mine project	 	 	101,966	 	 	—	 	 	101,966	 	 	21,982	 	 	—	 	 	21,982	
 	Lapa mine project	 	 	62,766	 	 	—	 	 	62,766	 	 	33,164	 	 	—	 	 	33,164	
 	 		 		 		 		 		 		
 	 	$	2,324,914	 	$	217,851	 	$	2,107,063	 	$	1,049,946	 	$	190,087	 	$	859,859	
 	 		 		 		 		 		 		
Geographic Information

 	 	Net Book Value
2007
	 	Net Book Value
2006
	
Canada	 	$	1,705,212	 	$	574,949	
Finland	 	 	292,300	 	 	212,363	
Mexico	 	 	107,346	 	 	70,342	
U.S.A	 	 	2,205	 	 	2,205	
 	 		 		
Total	 	$	2,107,063	 	$	859,859	
 	 		 		
In 2007, Agnico-Eagle capitalized $0.8 million of costs (2006 — $3.1 million) and recognized $0.5 million of amortization expense (2006 — $0.2 million) related to computer software. The unamortized capitalized cost for computer software at the end of 2007 was $5.4 million (2006 — $5.1 million).
4.     LONG-TERM DEBT
(a)
Convertible subordinated debentures
        The Company's $143.75 million principal amount convertible subordinated debentures bore interest at 4.50% per annum, payable semi-annually in cash or, at the option of the Company, common shares of the Company. The debentures were 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 US dollar principal amount. The debentures were 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 had the option to redeem the debentures in cash or by delivering freely tradeable common shares.
16

        The original principal amount of the Convertible Debentures was $143.8 million. In 2005, there were aggregate conversions of $10.9 million.
        In 2006, interest on the Convertible Debentures of $0.1 million (2005 — $1.8 million) was capitalized for the construction of the Lapa and Goldex mine projects as well as certain construction programs at the LaRonde mine.
        In late 2003, the Company entered into an interest rate swap whereby fixed rate payments on the Convertible Debentures were swapped for variable rate payments. The notional amount under the swap exactly matched the original $143.8 million face value of the debentures and the swap agreement terminated on February 15, 2006, which was the earliest date that the debentures could be called for redemption. Under the terms of the swap agreement, the Company made interest payments of three-month LIBOR plus a spread of 2.37% and received fixed interest payments of 4.50%, which completely offset the interest payments the Company made on the Convertible Debentures. The three-month LIBOR was also capped at 3.38% such that total variable interest payments would not exceed 5.75%. In 2005, the Company made $0.9 million in swap payments such that net interest on the Convertible Debentures was $6.3 million.
        Between January 1, 2006 and February 15, 2006, holders representing $131.8 million aggregate principal amount converted their debentures into 9,413,189 common shares. On February 15, 2006, the Company redeemed the remaining $1.1 million aggregate principal amount, at par plus accrued interest, by exercising its redemption option and delivering 70,520 freely tradeable common shares.
        Also in 2006, the Company's interest rate swap matured. The Company made net interest payments of $1.4 million under the terms of the swap at maturity such that net interest on the Convertible Debentures in 2006 was $2.1 million.
(b)
Revolving credit facility
        In October 2006, the Company executed an amendment with its bank syndicate to increase the limit of its revolving credit facility from $150 million to $300 million, and to extend its term by two years to December 2011. At December 31, 2007, the facility was completely undrawn however outstanding letters of credit decreased the amounts available under the facility such that $280 million was available for future drawdowns at December 31, 2007.
        The Company entered into a new $300 million unsecured revolving credit agreement on January 10, 2008 (the "New Facility") with a group of financial institutions and the secured facility has been terminated. The New Facility matures on January 10, 2013, however, 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 additional one-year terms. Payment and performance of the Company's obligations under the New Facility are guaranteed by certain material subsidiaries of the Company.
        The New Facility contains covenants that restrict, among other things, the ability of the Company to incur additional indebtedness, make distributions in certain circumstances, sell material assets and carry on a business other than a mining business. The Company is also required to maintain certain financial ratios as well as a minimum tangible net worth.
        For the year ended December 31, 2007, interest expense was $3.3 million (2006 — $2.9 million; 2005 — $7.8 million), of which cash payments were $2.4 million (2006 — $4.2 million; 2005 — $8.3 million). In 2007, cash interest on the facility was nil (2006 — nil; 2005 — nil) and cash standby fees on the facility were $2.3 million (2006 — $1.3 million; 2005 — $1.2 million). In 2007, no interest (2006 — $0.3 million; 2005 — $2.5 million) was capitalized to construction in progress. The Company's weighted average interest rate on all of its debt as at December 31, 2007 was nil (2006 — nil; 2005 — 7.9%).
5.     RECLAMATION PROVISION AND OTHER LIABILITIES
        Reclamation provision and other liabilities consist of the following:

 	 	2007
	 	2006
	
Reclamation and closure costs (note 5(a))	 	$	44,690	 	$	22,073	
Pension benefits (note 5(b))	 	 	6,786	 	 	5,384	
Long term portion of capital lease obligations (note 13)	 	 	6,465	 	 	—	
 	 		 		
 	 	$	57,941	 	$	27,457	
 	 		 		
(a)
Reclamation and closure costs
        Reclamation estimates are based on current legislation, third party estimates and feasibility study calculations. 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.
17

        The following table reconciles the beginning and ending carrying amounts of the asset retirement obligations.

 	 	2007
	 	2006
	 	
Asset retirement obligations, beginning of year	 	$	22,073	 	$	12,569	 	
Current year additions	 	 	21,298	 	 	8,696	 	
Current year accretion	 	 	1,319	 	 	825	 	
Other	 	 	—	 	 	(17	)	
 	 		 		 	
Asset retirement obligations, end of year	 	$	44,690	 	$	22,073	 	
 	 		 		 	
        The assumptions used for the calculation of the provision are as follows:

 	 	2007
	 	2006
	
Cash flows to settle the obligation (undiscounted)	 	$103,356	 	$61,897	
Timing range for settling the obligation for all active projects	 	2020 - 2027	 	2027	
Credit-adjusted risk-free interest rate range for all active projects	 	5.80% - 6.60%	 	6.60%	
(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 who retired prior to that date remain in the Employees Plan ("Employees Plan"). In addition, Agnico-Eagle provides a non-registered executive supplementary defined benefit plan for certain senior officers. The funded status of the Employees Plan is based on an actuarial valuation as of January 1, 2006 and projected to December 31, 2007. The funded status of the executive supplementary defined benefit plan is based on actuarial valuations as of July 1, 2007 and projected to December 31, 2007. The components of Agnico-Eagle's net pension plan expense are as follows:

 	 	2007
	 	2006
	 	2005
	 	
Service cost — benefits earned during the year	 	$	429	 	$	399	 	$	274	 	
Gain due to settlement	 	 	—	 	 	(16	)	 	(124	)	
Prior service cost	 	 	24	 	 	23	 	 	21	 	
Interest cost on projected benefit obligation	 	 	466	 	 	384	 	 	352	 	
Return on plan assets	 	 	(171	)	 	(166	)	 	(157	)	
Amortization of net transition asset, past service liability and net experience gains	 	 	(25	)	 	(22	)	 	(34	)	
 	 		 		 		 	
Net pension plan expense	 	$	723	 	$	602	 	$	332	 	
 	 		 		 		 	
        Agnico-Eagle contributes 5% of its Canadian payroll expense to a defined contribution plan. The expense in 2007 was $4.3 million (2006 — $3.0 million; 2005 — $2.2 million).
        Assets of the Employees Plan are comprised of pooled Canadian and U.S. equity funds and pooled bond funds. As of the measurement date, the plan's assets are allocated 60% to equity securities and 40% to fixed income securities. 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.
18

        As of December 31, 2006, the Company adopted the provisions of FASB Statement No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)" ("FAS 158"). FAS 158 requires employers that sponsor one or more defined benefit plans to (i) recognize the funded status of a benefit plan in its statement of financial position, (ii) recognize the gains or losses and prior service costs or credits that arise during the period as a component of other comprehensive income, net of tax, (iii) measure the defined benefit plan assets and obligations as of the date of the employer's fiscal year-end statement of financial position, and (iv) disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The impact of adopting FAS 158 on the 2006 Consolidated Balance Sheets was as follows:

 	 	Before Application of FAS 158
	 	Adjustment
	 	After Application of FAS 158
	 	
Reclamation provision and other liabilities	 	$	26,051	 	$	1,406	 	$	27,457	 	
Deferred income tax liability	 	$	170,087	 	$	(396	)	$	169,691	 	
Accumulated other comprehensive loss	 	$	(16,989	)	$	(1,010	)	$	(17,999	)	
Total stockholders' equity	 	$	1,253,415	 	$	(1,010	)	$	1,252,405	 	
        Assets for the executives' retirement plan ("Executives Plan") 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, 2007 was $6.8 million (2006 — $5.4 million). At the end of 2007, the remaining unamortized net transition obligation was $1.0 million (2006 — $1.2 million) for the Executives Plan and the net transition asset was $0.2 million (2006 — $0.4 million) for the Employees Plan.
        The following table provides the net amounts recognized in the consolidated balance sheets as of December 31:

 	 	Pension Benefits
2007
	 	Pension Benefits
2006
	 	
 	 	Employees
	 	Executives
	 	Employees
	 	Executives
	 	
Intangible liability (asset)	 	$	(495	)	$	—	 	$	(363	)	$	—	 	
Accrued employee benefit liability	 	 	—	 	 	5,624	 	 	—	 	 	4,071	 	
Accumulated other comprehensive income (loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Initial transition obligation (asset)	 	 	(186	)	 	1,017	 	 	(372	)	 	1,162	 	
 	Past service liability	 	 	—	 	 	140	 	 	—	 	 	177	 	
 	Net experience (gains) losses	 	 	446	 	 	5	 	 	466	 	 	(26	)	
 	 		 		 		 		 	
Net liability (asset)	 	$	(235	)	$	6,786	 	$	(269	)	$	5,384	 	
 	 		 		 		 		 	
        The following table provides the components of the expected recognition in 2008 of amounts in accumulated other comprehensive loss:

 	 	Employees
	 	Executives
	
Initial transition obligation (asset)	 	$	(186	)	$	171	
Past service liability	 	 	—	 	 	26	
Net experience losses	 	 	21	 	 	—	
 	 		 		
 	 	$	(165	)	$	197	
 	 		 		
19

        The funded status of the Employees Plan and the Executives Plan for 2007 and 2006 is as follows:

 	 	2007
	 	2006
	 	
 	 	Employees
	 	Executives
	 	Employees
	 	Executives
	 	
Reconciliation of the market value of plan assets	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value of plan assets, beginning of year	 	$	2,341	 	$	897	 	$	2,243	 	$	747	 	
Agnico-Eagle's contribution	 	 	—	 	 	310	 	 	—	 	 	153	 	
Actual return on plan assets	 	 	(67	)	 	—	 	 	272	 	 	—	 	
Benefit payments	 	 	(185	)	 	(155	)	 	(172	)	 	(153	)	
Other	 	 	—	 	 	—	 	 	—	 	 	153	 	
Divestitures	 	 	—	 	 	—	 	 	—	 	 	—	 	
Effect of exchange rate changes	 	 	398	 	 	174	 	 	(2	)	 	(3	)	
 	 		 		 		 		 	
Fair value of plan assets, end of year	 	$	2,487	 	$	1,226	 	$	2,341	 	$	897	 	

Reconciliation of projected benefit obligation	

 	

 	

 	

 	
 	
Projected benefit obligation, beginning of year	 	$	2,072	 	$	6,280	 	$	2,013	 	$	5,237	 	
Service costs	 	 	—	 	 	429	 	 	—	 	 	399	 	
Interest costs	 	 	108	 	 	358	 	 	99	 	 	285	 	
Actuarial losses (gains)	 	 	(98	)	 	34	 	 	133	 	 	641	 	
Benefit payments	 	 	(185	)	 	(264	)	 	(172	)	 	(256	)	
Effect of exchange rate changes	 	 	355	 	 	1,175	 	 	(1	)	 	(26	)	
 	 		 		 		 		 	
Projected benefit obligation, end of year	 	$	2,252	 	$	8,012	 	$	2,072	 	$	6,280	 	
 	 		 		 		 		 	
Excess (deficiency) of plan assets over projected benefit obligation	 	$	235	 	$	(6,786	)	$	269	 	$	(5,383	)	

Comprised of:	

 	

 	

 	

 	
 	
Unamortized transition asset (liability)	 	$	186	 	$	(1,017	)	$	372	 	$	(1,162	)	
Unamortized net experience loss	 	 	(446	)	 	(145	)	 	(466	)	 	(150	)	
Accrued assets (liabilities)	 	 	495	 	 	(5,624	)	 	363	 	 	(4,071	)	
 	 		 		 		 		 	
 	 	$	235	 	$	(6,786	)	$	269	 	$	(5,383	)	
 	 		 		 		 		 	
Weighted average discount rate (i)	 	 	5.50%	 	 	5.50%	 	 	5.00%	 	 	5.00%	 	
Weighted average expected long-term rate of return	 	 	7.00%	(ii)	 	n.a.	 	 	7.50%	(ii)	 	n.a.	 	
Weighted average rate of compensation increase	 	 	n.a.	 	 	3.00%	 	 	n.a.	 	 	3.00%	 	
Estimated average remaining service life for the plan (in years)	 	 	12.0	 	 	7.0	(iii)	 	13.0	 	 	8.0	(iii)	

Notes:
(i)
Discount rates used for the Executives Plan and Employees Plans 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 are presented below:

 	 	Employees
	 	Executives
	 	Total
	
2008	 	$	178	 	$	109	 	$	287	
2009	 	$	172	 	$	109	 	$	281	
2010	 	$	167	 	$	109	 	$	276	
2011	 	$	160	 	$	109	 	$	269	
2012	 	$	154	 	$	373	 	$	527	
2013 - 2017	 	$	652	 	$	2,133	 	$	2,785	
20

6.     SHAREHOLDERS' EQUITY
(a)
Common shares
        In February 2006, the Convertible Debentures were redeemed in full (see note 4(a)) and there are no longer shares reserved for future issuances related to the Convertible Debentures.
        In 2007, the Company declared dividends on its common shares of $0.18 per share (2006 — $0.12 per share; 2005 — $0.03 per share).
(b)
Flow-through share private placements

        In 2007, Agnico-Eagle issued nil (2006 — 1,226,000; 2005 — 500,000) common shares under flow-through share private placements for total proceeds of nil (2006 — $35.3 million; 2005 — $8.3 million), net of share issue costs. Proceeds from previous private placements were used by Agnico-Eagle for the purpose of incurring Canadian exploration expenditures in connection with its 2007 and 2008 exploration activities. Effective December 31, 2007, the Company renounced to its investors C$10.1 million (2006 — C$40.2 million; 2005 — C$10.0 million) of such expenses for income tax purposes. The Company has no further obligations to incur exploration expenditures related to the expenditures previously renounced.
        The difference between the flow-through share issuance price and the market price of Agnico-Eagle's 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 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 6,900,000 warrants. Each whole warrant entitled the holder to purchase one common share at a price of $19.00, subject to certain adjustments summarized in the prospectus relating to the issuance of the warrants. During 2007, 6,873,190 warrants were exercised (2006 — 4,000). The warrants were exercisable at any time prior to November 14, 2007, at which time 22,810 warrants expired.
        In 2006 the Company closed a public offering of 8,455,000 common shares for total proceeds of $238.0 million net of share issue costs.
(d)
Accumulated other comprehensive loss
        The opening balance of the cumulative translation adjustment in accumulated other comprehensive loss in 2007 and 2006 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 periods' 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 deficit in the cumulative translation adjustment account within accumulated other comprehensive loss as at December 31, 2007 and 2006.
        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 certain foreign exchange derivative 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 accumulated other comprehensive loss, net of related tax effects:

 	 	2007
	 	2006
	 	
Cumulative translation adjustment from adopting US dollar as principal reporting currency	 	$	(15,907	)	$	(15,907	)	
Unrealized gain (loss) on available-for-sale securities	 	 	(6,484	)	 	870	 	
Unrealized loss on gold put option contracts	 	 	—	 	 	(1,653	)	
Cumulative translation adjustments	 	 	(299	)	 	(299	)	
Unrealized loss on pension liability upon application of FASB Statement No. 158	 	 	(1,422	)	 	(1,406	)	
Tax effect of accumulated other comprehensive loss items	 	 	400	 	 	396	 	
 	 		 		 	
 	 	$	(23,712	)	$	(17,999	)	
 	 		 		 	
21

        In 2007, a $1.7 million (2006 — $2.0 million) 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 2007. Also in 2007, a $1.9 million gain (2006 — $16.6 million gain) 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 per share
        The following table provides the weighted average number of common shares used in the calculation of basic and diluted income per share:

 	 	2007
	 	2006
	 	2005
	
Weighted average number of common shares outstanding — basic	 	132,768,049	 	115,461,046	 	89,029,754	
Add: Dilutive impact of employee stock options	 	1,189,820	 	786,358	 	483,045	
 	Dilutive impact of warrants	 	—	 	2,862,891	 	—	
 	 		 		 		
Weighted average number of common shares outstanding — diluted	 	133,957,869	 	119,110,295	 	89,512,799	
 	 		 		 		
        The calculation of diluted income per share has been computed using the treasury stock method. In applying the treasury stock method, options and warrants with an exercise price greater than the average quoted market price of the common shares are not included in the calculation of diluted income per share as the effect is anti-dilutive.
        In 2005, the Convertible Debentures and warrants were anti-dilutive and thus were not included in the calculation of diluted income per share.
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.
        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. In 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. In 2004 and 2006, the shareholders approved a further 2,000,000 and 3,000,000 common shares for issuance under the ESOP, respectively.
        Of the 1,380,000 options granted under the ESOP in 2007, 345,000 options granted vested immediately and expire in 2012. The remaining options expire in 2012 and vest in equal installments, on each anniversary date of the grant, over a three-year period. As a result of the Cumberland acquisition, 326,250 options in Cumberland were converted to options in the Company. All these options vested immediately. Of the 1,232,000 options granted under the ESOP in 2006, 308,000 options granted vested immediately and expire in 2011. The remaining options expire in 2011 and vest in equal installments, on each anniversary date of the grant, over a three-year period. Of the 982,000 options granted under the ESOP in 2005, 245,500 options granted vested immediately and expire in 2010. The remaining options expire in 2010 and vest in equal installments, on each anniversary date of the grant, over a three-year period.
22

        The following summary sets out the activity with respect to Agnico-Eagle's outstanding stock options:

 	 	2007
	 	2006
	 	2005
	
 	 	Options
	 	Weighted average
exercise price
	 	Options
	 	Weighted average
exercise price
	 	Options
	 	Weighted average
exercise price
	
Outstanding, beginning of year	 	2,478,790	 	C$	19.55	 	3,071,625	 	C$	15.78	 	2,383,150	 	C$	15.16	
Granted	 	1,706,250	 	 	41.74	 	1,232,000	 	 	24.52	 	982,000	 	 	16.61	
Exercised	 	(536,116	)	 	17.56	 	(1,805,085	)	 	16.49	 	(214,725	)	 	12.44	
Cancelled	 	(39,000	)	 	19.16	 	(19,750	)	 	19.28	 	(78,800	)	 	16.33	
 	 		 		 		 		 		 		
Outstanding, end of year	 	3,609,924	 	C$	30.34	 	2,478,790	 	C$	19.55	 	3,071,625	 	C$	15.78	
 	 		 		 		 		 		 		
Options exercisable at end of year	 	1,908,049	 	 	 	 	1,137,103	 	 	 	 	2,257,250	 	 	 	
 	 		 	 	 	 		 	 	 	 		 	 	 	
        Cash received for options exercised in 2007 was $8.8 million (2006 — $26.0 million).
        The weighted average grant-date fair value of options granted in 2007 was C$12.53 (2006 — C$8.17; 2005 — C$4.17). The following table summarizes information about Agnico-Eagle's stock options outstanding at December 31, 2007:

 	 	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$9.20	 	40,573	 	2.1 years	 	C$7.52	 	40,573	 	C$7.52	
C$10.40 — C$14.67	 	212,275	 	2.0 years	 	C$10.75	 	207,775	 	C$10.66	
C$15.60 — C$19.14	 	914,150	 	1.8 years	 	C$16.71	 	860,775	 	C$16.77	
C$19.24 — C$25.60	 	772,600	 	3.0 years	 	C$23.02	 	285,100	 	C$23.02	
C$25.62 — C$31.70	 	276,176	 	3.3 years	 	C$29.06	 	154,676	 	C$27.90	
C$36.23 — C$47.95	 	186,650	 	4.4 years	 	C$41.39	 	59,150	 	C$42.77	
C$48.09 — C$52.88	 	1,207,500	 	4.0 years	 	C$48.15	 	300,000	 	C$48.15	
 	 		 		 		 		 		
C$6.55 — C$52.88	 	3,609,924	 	3.1 years	 	C$30.34	 	1,908,049	 	C$23.48	
 	 		 		 		 		 		
        The Company has reserved for issuance 3,609,924 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, 2007, 2006 and 2005 was 2,832,250, 4,212,250 and 1,943,285, respectively.
        On January 2, 2008, 2,385,000 options were granted under the ESOP, of which 596,250 options vested immediately and expire in the year 2013. The remaining options expire in 2013 and vest in equal installments on each anniversary date of the grant, over a three-year period.
        Agnico-Eagle estimated the fair value of options under the Black-Scholes option pricing model using the following weighted average assumptions:

 	 	2007
	 	2006
	 	2005
	
Risk-free interest rate	 	4.02%	 	3.91%	 	3.1%	
Expected life of options (in years)	 	2.5	 	2.5	 	2.5	
Expected volatility of Agnico-Eagle's share price	 	37.6%	 	48.7%	 	35.6%	
Expected dividend yield	 	0.29%	 	0.12%	 	0.24%	
        The Company uses historical volatility in estimating the expected volatility of Agnico-Eagle's share price.
        The total compensation cost for the ESOP recognized in the consolidated statements of income (loss) for the current year was $9.8 million (2006 — $5.2 million; 2005 — $2.4 million). The total compensation cost related to nonvested options not yet recognized was $9.9 million as of December 31, 2007.
23

(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 2007, 167,378 common shares were issued under the Purchase Plan (2006 — 146,249; 2005 — 245,494) for proceeds of $7.1 million (2006 — $4.7 million; 2005 — $3.6 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 592,151 common shares (2006 — 759,529; 2005 — 905,778) under the Purchase Plan.
8.     INCOME AND MINING TAXES
        Income and mining taxes recovery is made up of the following geographic components:

 	 	2007
	 	2006
	 	2005
	 	
Current provision	 	 	 	 	 	 	 	 	 	 	
 	Canada	 	$	3,272	 	$	20,266	 	$	—	 	
Future provision	 	 	 	 	 	 	 	 	 	 	
 	Canada	 	 	20,363	 	 	69,645	 	 	(13,323	)	
 	Finland	 	 	(3,702	)	 	11,522	 	 	10,546	 	
 	Other	 	 	—	 	 	(2,127	)	 	—	 	
 	 		 		 		 	
 	 	$	19,933	 	$	99,306	 	$	(2,777	)	
 	 		 		 		 	
        Cash income and mining taxes paid in 2007 were $22.1 million (2006 — $1.4 million expense; 2005 — $6.2 million recovery).
        The income and mining taxes 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:

 	 	2007
	 	2006
	 	2005
	 	
Combined federal and composite provincial tax rates	 	32.6%	 	34.6%	 	34.8%	 	
Increase (decrease) in taxes resulting from:	 	 	 	 	 	 	 	
Provincial mining duties	 	12.3	 	12.3	 	19.2	 	
Resource allowances	 	—	 	(3.5	)	(17.8	)	
Impact of foreign tax rates	 	(2.3	)	1.1	 	—	 	
Permanent and other differences	 	(0.9	)	0.8	 	0.8	 	
Utilization of temporary differences for which no benefit was previously recognized	 	—	 	—	 	(10.4	)	
Utilization of losses for which no benefit was previously recognized	 	—	 	(4.5	)	(34.5	)	
Effect of changes in Canadian income tax legislation	 	(29.2	)	(2.7	)	—	 	
 	 		 		 		 	
Actual rate as a percentage of pre-tax income	 	12.5%	 	38.1%	 	(7.9%	)	
 	 		 		 		 	
24

        As at December 31, 2007 and 2006, Agnico-Eagle's future income and mining tax assets and liabilities are as follows:

 	 	2007
	 	2006
	 	
 	 	Assets
	 	Liabilities
	 	Assets
	 	Liabilities
	 	
Non-current:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income taxes:	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Plant and equipment	 	 	—	 	 	—	 	$	3,374	 	$	—	 	
 	Mine development costs	 	 	—	 	 	—	 	 	—	 	 	29,787	 	
 	Mining properties	 	 	—	 	 	565,613	 	 	435	 	 	142,340	 	
 	Net operating and capital loss carryforwards	 	 	17,805	 	 	—	 	 	16,029	 	 	—	 	
 	Unrealized foreign exchange gain on Convertible Debentures	 	 	—	 	 	—	 	 	—	 	 	—	 	
 	Mining duties	 	 	—	 	 	(55,998	)	 	15,867	 	 	—	 	
 	Reclamation provisions	 	 	—	 	 	(25,499	)	 	6,298	 	 	(2,436	)	
 	Other	 	 	—	 	 	—	 	 	916	 	 	—	 	
Valuation allowance	 	 	(11,900	)	 	—	 	 	(11,860	)	 	—	 	
 	 		 		 		 		 	
Non-current future income and mining tax assets and liabilities	 	$	5,905	 	$	484,116	 	$	31,059	 	$	169,691	 	
 	 		 		 		 		 	
        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 due in part to the weaker US dollar in relation to the Canadian dollar and the Swedish krona throughout 2007. In addition, upon the Cumberland acquisition, an additional $279.8 million future tax liability was recognized attributable to the purchase price. At December 31, 2007, asset and liability amounts were translated into US dollars at an exchange rate of C$0.9881 per $1.00, and at an exchange rate of SEK 6.4568 per $1.00, whereas at December 31, 2006, asset and liability amounts were translated at an exchange rate of C$1.1652 per $1.00, and at an exchange rate of SEK 6.8342 per $1.00. A future income tax liability was also recorded on the acquisition of Riddarhyttan (see note 9 (a)).
        The Company operates in different jurisdictions and accordingly it is subject to income and other taxes under the various tax regimes in the countries in which it operates. The tax rules and regulations in many countries are highly complex and subject to interpretation. The Company may be subject in the future to a review of its historic income and other tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules and regulations to the Company's business conducted within the country involved. The Company has not accrued any taxes associated with any such reviews of its income tax filing as no such losses are considered to be probable.
        The capital loss carryforwards do not expire.
        In June 2006, the Financial Accounting Standards Board (FASB) issued FIN 48 to create a single model to address accounting for uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006.
        The Company adopted the provision of FIN 48 effective January 1, 2007. As a result of the implementation of FIN 48, the Company reported a $4,487 reduction to the January 1, 2007, balance of retained earnings.
        A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows:

Balance at January 1, 2007	 	$	4,487	 	
Reductions for foreign exchange	 	 	(1,097	)	
 	 		 	
Balance at December 31, 2007	 	$	3,390	 	
 	 		 	
        The full amount of unrecognized tax liability of $3,390, if recognized, would reduce our annual effective tax rate. We do not expect our unrecognized tax liability to change significantly over the next 12 months.
        The Company is subject to taxes in the following significant jurisdictions: Canada, Mexico and Finland, each with varying statutes of limitations. The 1998 through 2007 tax years generally remain subject to examination.
25

9.     ACQUISITIONS
(a)
Riddarhyttan Resources AB
        Riddarhyttan was a precious and base metals exploration and development company with a focus on the Nordic region of Europe. Riddarhyttan was the 100% owner of the Suurikuusikko gold deposit in Finland on which the Kittila mine project is located. In the second quarter of 2004, the Company acquired a 13.8% ownership interest in Riddarhyttan. In connection with this acquisition, two representatives of the Company were elected to Riddarhyttan's Board of Directors. Through the subscription for shares in Riddarhyttan's rights issue in December 2004, the Company increased its ownership level to approximately 14%.
        On November 14, 2005, the Company completed its tender offer for all the shares of Riddarhyttan. As of December 31, 2005, the Company owned an aggregate of 102,880,951 shares, or approximately 97.3% of the outstanding shares and voting rights of Riddarhyttan. In 2006, the Company completed the acquisition of the remaining 2.7% of the Riddarhyttan shares that it did not already own under the compulsory acquisition procedures under Swedish law by obtaining advanced possession of these shares in the second half of 2006. Advance possession means that the Company is entitled to be registered as owner of these shares and thereby entitled to exercise all rights relating to these shares that vest in a shareholder. Payment of the redemption price was made in February 2007.
        The results of operations of Riddarhyttan are included in the consolidated statements of income from October 18, 2005.
        The purchase price, before transaction costs, was $125.9 million which was paid through the issuance of 10,023,882 shares of the Company and a cash payment amounting to $5.1 million:

 	 	Shares Issued
	
Total Issuance of the Company's Shares for Riddarhyttan Acquisition:	 	 	
October 18, 2005	 	9,104,542	
October 26, 2005	 	666,905	
November 14, 2005	 	252,435	
 	 		
Total shares issued	 	10,023,882	
 	 		
        The allocation of the total purchase price to the fair values of assets acquired is set forth in the table below:

Total Purchase Price:	 	 	 	 	
Purchase price	 	$	125,908	 	
Balance of equity investment	 	 	11,123	 	
Transaction costs	 	 	7,725	 	
 	 		 	
Total purchase price to allocate	 	$	144,756	 	

Fair Value of Assets Acquired:	

 	
 	
Suurrikuusikko property	 	$	194,465	 	
Net future tax liability	 	 	(52,688	)	
Iso-Kuotko property	 	 	2,335	 	
Oijarvi property	 	 	609	 	
Other	 	 	35	 	
 	 		 	
Total fair value of assets acquired	 	$	144,756	 	
 	 		 	
(b)
Pinos Altos Project
        In March 2005, the Company entered into an agreement with Industrias Penoles S.A. de C.V. ("Penoles") to acquire the Pinos Altos project in Chihuahua, Mexico. The Pinos Altos project is located in the Sierra Madre gold belt, 225 kilometres west of the city of Chihuahua.
        Under the terms of the agreement, Agnico-Eagle had the option to purchase the Pinos Altos project for cash and share consideration. In March 2006, Agnico-Eagle paid Penoles $32.5 million in cash and issued 2,063,635 common shares to Penoles to obtain 100% ownership of the Pinos Altos project. In addition, the Company incurred $0.2 million in transaction costs associated with the property acquisition.
26

        The allocation of the total purchase price to the fair values of assets acquired is set forth in the table below:

	 	 	
Total Purchase Price:	 	 	 	
Purchase price	 	$	66,809	
Transaction costs	 	 	167	
 	 		
Total purchase price to allocate	 	$	66,976	

Fair Value of Assets Acquired:	

 	
Pinos Altos mining property	 	$	66,976	
 	 		
(c)
Cumberland Resources Ltd.
        On February 14, 2007, the Company and Agnico-Eagle Acquisition Corporation ("Agnico Acquisition"), a wholly-owned subsidiary of the Company, signed an agreement with Cumberland under which the Company and Agnico Acquisition (the "Offeror") agreed to make an exchange offer (the "Offer") for all of the outstanding common shares of Cumberland not already owned by the Company. At the time, the Company owned 2,037,000 or 2.6% of the outstanding shares of Cumberland on a fully diluted basis. Under the terms of the Offer, each Cumberland share was to be exchanged for 0.185 common share of Agnico-Eagle. At the time, Cumberland owned 100% of the Meadowbank gold project, located in Nunavut, Canada. As of July 9, 2007, all common shares of Cumberland were acquired pursuant to the Offer. As of July 9, 2007, a total of 13,768,510 of the Company's shares were issued for the acquisition resulting in an increase of $536.6 million in common shares issued. The total purchase price as of July 9, 2007 amounted to $577.0 million which was allocated to various balance sheet accounts, mainly mining properties. On August 1, 2007, the Agnico Acquisition, Cumberland and a wholly-owned subsidiary of Cumberland were amalgamated with Agnico-Eagle.
        The results of operations of Cumberland are included in the income statement for the combined entity from April 17, 2007.
        The purchase price paid through the issuance of 13,768,510 shares of the Company is summarized as follows.

 	 	Shares Issued
	
Total Issuance of the Company's Shares for Cumberland Acquisition:	 	 	
April 16, 2007	 	11,610,074	
April 30, 2007	 	932,958	
July 9, 2007	 	1,225,478	
 	 		
Total shares issued	 	13,768,510	
 	 		
        In addition, the Company entered into a series of gold derivative transactions in connection with the take-over bid for Cumberland in February 2007. Prior to announcement of the take-over bid by Agnico-Eagle, Cumberland secured a gold loan facility for up to 420,000 ounces. As part of the condition of the gold loan, Cumberland entered into a series of derivative transactions to secure a minimum monetized value for the gold that was expected to be received under the gold loan. Cumberland entered into a zero-cost collar whereby a gold put option was bought with a strike price of C$605 per ounce. The cost of the put option was financed by the sale of a gold call option with a strike price of $800 per ounce. Both of Cumberland's derivative positions were for 420,000 ounces of gold and matured on September 20, 2007, the expected drawdown date of the loan. As Agnico-Eagle's policy is to not sell forward gold production, Agnico-Eagle entered into a series of transactions to neutralize Cumberland's derivative position. Accordingly, Agnico-Eagle purchased call options and sold put options with the exact same size, strike price and maturity as Cumberland's derivative position for $15.9 million. All derivative positions were extinguished in late June 2007.
27

        The allocation of the total purchase price for the 100% owned by the Company to the fair values of assets acquired is set forth in the table below:

Total Purchase Price:	 	 	 	 	
Purchase price	 	$	536,556	 	
Share of Cumberland previously acquired for cash	 	 	9,637	 	
Fair value of options and warrants acquired	 	 	18,956	 	
Transaction costs	 	 	11,836	 	
 	 		 	
Total purchase price to allocate	 	$	576,985	 	

Fair Value of Assets Acquired:	

 	
 	
Net working capital acquired (including cash of $96,043)	 	$	81,704	 	
Plant and equipment	 	 	40,238	 	
Other net liabilities	 	 	(1,399	)	
Mining properties	 	 	736,197	 	
Future income tax liability	 	 	(279,755	)	
 	 		 	
Total purchase price	 	$	576,985	 	
 	 		 	
        Pro forma results of operations for Agnico-Eagle assuming the acquisition of Cumberland described above had occurred as of January 1, 2006 are shown below. On a pro forma basis, there would have been no effect on Agnico-Eagle's consolidated revenues.

 	 	Unaudited
	
 	 	2007
	 	2006
	
Pro forma net income	 	$	124,393	 	$	167,435	
Pro forma income per share — basic	 	$	0.96	 	$	1.30	
10.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 	 	2007
	 	2006
	
Trade payables	 	$	58,438	 	$	28,243	
Wages payable	 	 	7,043	 	 	3,450	
Accrued liabilities	 	 	33,040	 	 	10,845	
Current portion of capital lease obligation	 	 	9,706	 	 	—	
 	 		 		
 	 	$	108,227	 	$	42,538	
 	 		 		
11.   RELATED PARTY TRANSACTIONS
        As at December 31, 2007, the total indebtedness of Contact to the Company was nil (2006 — $3.5 million) including accrued interest to December 31, 2007 of nil (2006 — $0.1 million).
        Contact was a consolidated entity of the Company for the year ended December 31, 2002. As of August 2003, the Company ceased consolidating 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 was 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.
        In 2006, the Company tendered its 13.8 million Contact shares in conjunction with Stornoway's offer to acquire all of the outstanding shares of Contact. Under the terms of the offer, each share of Contact was exchanged for 0.36 of a Stornoway share resulting in the receipt by the Company of 4,968,747 Stornoway shares.
        A $4.4 million gain on the exchange of shares was recognized and a gain of $2.9 million was recognized on the write-up of the loan to Contact during 2006. In addition, Agnico-Eagle subscribed to a private placement of subscription receipts by Stornoway for a total cost of $19.8 million.
28

        On January 26, 2007, the Company entered into a note assignment agreement with Stornoway. The agreement resulted in Stornoway acquiring the debt in full by way of assignment of the note in consideration for the issuance to the Company of 3,207,861 common shares of Stornoway at a deemed value of C$1.25 per share on February 12, 2007.
        In addition, on March 16, 2007, the Company purchased from Stornoway C$5 million in unsecured Series A Convertible Debentures and C$5 million in unsecured Series B Convertible Debentures. Both series of debentures mature two years after their date of issue and interest is payable under the debentures quarterly at 12% per annum. At the option of Stornoway, interest payments may be paid in cash or in shares of Stornoway. On the maturity date, the principal amount of the Series A Debentures may be repaid in cash or shares at Stornoway's election and the Series B Debentures must be repaid in cash or shares at the Company's election. During 2007, the interest payments to the Company consisted of $0.6 million in cash and 302,450 shares in Stornoway.
12.   COMMITMENTS AND CONTINGENCIES
        The Company was served with a Statement of Claim on April 30, 2007 from a former employee, alleging, among other things, wrongful dismissal and seeking damages of approximately C$13.1 million. The Company believes this claim is frivolous and without merit and will vigorously defend the matter, and therefore, no provision for this contingency has been recorded.
        The Company is involved in a legal proceeding in Sweden relating to the compulsory acquisition procedures under Swedish law (note 9(a)); and the Company has been required to provide financial assurance in the form of a bank guarantee. As of December 31, 2007, the amount of this guarantee was $3.2 million.
        As part of its ongoing business and operations, the Company has been required to provide assurance in the form of letters of credit for environmental and site restoration costs, custom credits, government grants and other general corporate purposes. As at December 31, 2007, the total amount of these guarantees was $23.0 million.
        The Company has a royalty agreement with the Finnish Government relating to the Kittila mining operation. Starting 12 months after the mining operations commence, the Company has to pay 2% on net smelter return, defined as revenue less processing costs. The royalty is paid on a yearly basis the following year.
13.   LEASES
(a)
Capital Leases

        The Company has agreements with third-party providers of mobile equipment for the development of the mines in Meadowbank, Canada, and in Kittila, Finland. These arrangements represent capital leases in accordance with the guidance in FAS 13. The leases for mobile equipment in Finland are for five years and the leases for mobile equipment in Canada are for three years. The effective annual interest rate on the lease for mobile equipment in Canada is 5.80%. The effective annual interest rate on the lease for mobile equipment in Finland is 4.99%. Amortization of capital lease expenses will start when mining commences.
        The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of December 31, 2007.

Year ending December 31:	 	 	 	 	
2008	 	$	9,706	 	
2009	 	 	4,914	 	
2010	 	 	620	 	
2011	 	 	620	 	
2012	 	 	1,664	 	
Later years	 	 	—	 	
 	 		 	
Total minimum lease payments	 	 	17,524	 	
Less amount representing interest	 	 	(1,353	)	
 	 		 	
Present value of net minimum lease payments	 	 	16,171	 	
 	 		 	
29

        The Company's capital lease obligation at December 31 is comprised as follows:

 	 	2007
	 	2006
	
Total future lease payments	 	$	17,524	 	$	—	
Less: Interest	 	 	(1,353	)	 	—	
 	 		 		
 	 	 	16,171	 	 	—	
 	 		 		
Less: Current portion	 	 	9,706	 	 	—	
 	 		 		
Long-term portion of capital leases	 	 	6,465	 	 	—	
 	 		 		
(b)
Operating Leases
        The Company has a number of operating lease agreements involving office space. Some of the leases for office facilities contain escalation clauses for increases in operating costs and property taxes. Future minimum lease payments required to meet obligations that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2007 are as follows:
        Minimum lease payments:

2008	 	1.2	
2009	 	1.2	
2010	 	1.2	
2011	 	1.2	
2012	 	1.2	
Thereafter	 	9.3	
 	 		
Total	 	15.3	
 	 		
14.   RESTRICTED CASH
        The Company has provided security to support an outstanding letter of credit made available to the Company for the purchase of mining equipment. The letter of credit to expires in April, 2008.
15.   FINANCIAL INSTRUMENTS
        Agnico-Eagle has in the past entered into financial instruments with a number of financial institutions in order to hedge underlying revenue, cost and fair value exposures arising from commodity prices, interest rates and foreign currency exchange rates.
        In 2007, financial instruments which have subjected Agnico-Eagle to market risk and concentration of credit risk consisted primarily of cash, cash equivalents and short-term investments. Agnico-Eagle places its cash and cash equivalents 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 has attempted to mitigate the risks associated with fluctuating metal prices and foreign exchange rates. Agnico-Eagle has used 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 were straightforward contracts and involve limited complexity. Agnico-Eagle was exposed to credit risk in the event of non-performance by counterparties in connection with its currency and metal option contracts. Agnico-Eagle did not obtain any security to support financial instruments subject to credit risk, but mitigated 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 expired monthly based on planned production volumes. These instruments had 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 complied with the new documentation requirements of FAS 133. As a result, these option contracts qualified for hedge accounting and from 2002 onwards, changes in the fair value of these option contracts were recognized as part of other comprehensive income (loss).
30

        Gains and losses on gold put option contracts are reclassified from accumulated other comprehensive income (loss) to income in the same period the forecasted transaction affects income. Although the gold put option contracts were liquidated in 2005, the accumulated loss on these contracts remained in accumulated other comprehensive income (loss) and have been reclassified to income based on the original maturities of these contracts. In 2007, the Company reclassified a loss of $1.7 million relating to its gold put option contracts to income resulting in a $nil balance in accumulated other comprehensive loss at year-end.
        Silver and base metal option contracts
        In January 2005, the Company purchased silver put options with a strike price of $7.00 per ounce and also sold copper call options with a strike price of $3,310 per tonne. The Company sold forward zinc production at a weighted average price of $1,263 per tonne and entered into a zero-cost collar to set a minimum zinc price of $1,215. While setting a minimum price, the zero-cost collar strategy also limits participation to zinc prices above $1,480. In December 2005, the entire 2006 zinc collar position was collapsed at a cost of $3.5 million. These contracts did not qualify for hedge accounting under FAS 133.
        Foreign exchange, metals, and interest rate hedging program
        Agnico-Eagle generates almost all of its revenues in US dollars. The Company's Canadian operations, which include the LaRonde Mine and the Goldex and Lapa mine projects, have Canadian dollar requirements for capital, operating and exploration 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. The Company's written put options did not qualify for hedge accounting and thus were not designated as hedging instruments. As such, changes in fair value for these instruments were recorded in net income. These instruments were entered into to set a range for the US dollar, along with the zero-cost collar of purchased put options and written call options.
        In December 2005, the Company's entire foreign exchange derivative position was collapsed generating cash flow of $4.1 million. As a result of this transaction, Agnico-Eagle had no foreign exchange derivative positions at December 31, 2005. In 2006 however, the Company reclassified a gain of $4.1 million relating to its foreign exchange derivative contracts to income. As at December 31, 2006 the remaining balance in accumulated other comprehensive income was $nil.
        As at December 31, 2007, there were no metal or foreign exchange derivative positions.
        Other required derivative disclosures can be found in note 6(d), "Accumulated other comprehensive income (loss)", and information regarding the Company's interest rate derivatives can be found in note 4(a), "Convertible subordinated debentures".
        Agnico-Eagle's exposure to interest rate risk at December 31, 2007 relates to its cash, cash equivalents and short term investments of $396 million (2006 — $459 million). The Company's short-term investments and cash equivalents have a fixed weighted average interest rate of 5.14% (2006 — 4.89%).
        The fair values of Agnico-Eagle's current financial assets and liabilities approximate their carrying values as at December 31, 2007.
31

QuickLinks
Exhibit 99.3
Annual Audited Consolidated Financial Statements (Prepared in accordance with United States GAAP)
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Management Certification
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
 NOTES TO CONSOLIDATED FINANCIAL STATMENTS

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Exhibit 99.4

 
“The most important thing about money is to maintain its stability, so that a
dollar will buy as much a year hence, or ten years hence, or fifty years hence as
today, and no less. With paper money, this stability has to be maintained by the
government. With a gold currency, it tends to maintain itself even when the
natural supply of gold is increased by the discovery of new deposits, because
of the curious fact that the demand for gold in the world is practically infinite.
 
You have to choose (as a voter) between trusting the natural stability of
gold, and the natural stability, and honesty, and intelligence of the members
of the government. And, with due respect to those gentlemen,
I advise you, as long as the capitalist system lasts, to vote for gold.”

 	GEORGE BERNARD SHAW, dramatist, critic and essayist, 1928	
 
2007 OVERVIEW

 
HIGHLIGHTS

ALL DOLLAR AMOUNTS ARE IN US$ UNLESS OTHERWISE INDICATED	 	2007	 	2006	 	2005	 	
 	 	 	 	 	 	 	 	
OPERATING	 	 	 	 	 	 	 	
Ore milled (millions of tonnes)	 	2.7	 	2.7	 	2.7	 	
Gold production (ounces)	 	230,992	 	245,826	 	241,807	 	
Total cash cost per ounce	 	$	(365	)  	$	(690	) 	$	43	 	
Average realized gold price	 	$	748	 	$	622	 	$	449	 	
 	 	 	 	 	 	 	 	
FINANCIAL (millions except per share amounts)	 	 	 	 	 	 	 	
Revenue	 	$	432.2	 	$	464.6	 	$	241.3	 	
Net income	 	139.3	 	161.3	 	37.0	 	
Net income per share	 	1.05	 	1.40	 	0.42	 	
Dividends per share	 	$	0.18	 	$	0.12	 	$	0.03	 	
 
TOTAL CASH COST PER OUNCE IS A NON-GAAP MEASURE. A RECONCILIATION IS INCLUDED IN THE ATTACHED FORM 20-F.
THIS DOCUMENT MAY USE THE TERMS “MEASURED RESOURCES,” “INDICATED RESOURCES,” AND “INFERRED RESOURCES.” THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT RECOGNIZE THEM. A MORE DETAILED DISCUSSION IS INCLUDED IN THE ATTACHED FORM 20-F.

 
With its emphasis on building value by ADDING QUALITY GOLD OUNCES through exploration, by ACHIEVING PRODUCTION GROWTH and cost targets, and by maintaining a low number of shares outstanding, Agnico-Eagle is setting a NEW STANDARD FOR GOLD COMPANIES.
 
While many gold companies are currently benefiting from soaring gold prices, we take a BALANCED, DISCIPLINED APPROACH that offers significant leverage to rising prices, but can also GENERATE SUPERIOR RETURNS for our shareholders in a lower gold price environment.

2007 ANNUAL REPORT   01
 
2007 OPERATIONS AT-A-GLANCE

Agnico-Eagle is on track to bring five new mines
into production, extend the mine life of LaRonde,
and accelerate gold reserve growth.

	 		 		
 	 	 	 	 	
LaRONDE
QUEBEC, CANADA
 
The LaRonde mine is our consistent engine of earnings and cash flow with mine life expected to extend through 2021.	 	GOLDEX
QUEBEC, CANADA
 
The most advanced project in our pipeline is expected to begin production in April 2008, two months ahead of schedule.	 	KITTILA
KITTILA, FINLAND
 
With production expected to start in September 2008, Kittila is set to become Europe’s largest producing gold mine.	

 	 	 	 	 	
LAPA
QUEBEC, CANADA
 
The ore extracted from the high-grade Lapa deposit will be processed at the nearby LaRonde facility.	 	PINOS ALTOS 
 CHIHUAHUA, MEXICO
 
Pinos Altos boasts a growing gold and silver resource in a highly prospective precious metals camp.	 	MEADOWBANK 
 NUNAVUT, CANADA
 
Meadowbank’s near-term gold production and exploration potential made it an important 2007 acquisition.	

	 		 		

 

 
    2007 HIGHLIGHTS
 
> Record proven and probable gold reserves of 16.7 million ounces
 
> Acquisition of the Meadowbank project in Nunavut, Canada
 
> Positive development decision for the Pinos Altos mine
 
> Low total cash costs per ounce of minus $365 due in part to byproduct revenues
 
> Strong earnings and cash flow contribute to fully-funded growth

 
KEY PERFORMANCE DRIVERS

 

DRIVER	2007 PERFORMANCE	

Spot price of gold	Gold prices reached 27-year highs during the year; peak of $841.10 per ounce in November	

Spot prices of silver,
zinc, and copper	Silver prices rose throughout the year, reaching $15.82 per ounce in November	
 	Copper and zinc prices continued at historically high prices, with copper reaching a yearly high in October and zinc in January 2007	

C$/US$
exchange rate	The Canadian dollar has weakened since peaking in November. This is a benefit to AEM as the earnings are sensitive to the Canadian dollar which has provided an offset to somewhat lower base metals prices	

Production volumes	Ore production of 2.7 million tonnes, or a daily average of 7,325 tonnes. The LaRonde mine has operated at essentially steady-state for more than four years	

Production costs	Total cash cost per ounce of gold was minus $365 from minus $690 in 2006 and $43 in 2005, fluctuating primarily as a result of variable byproduct revenue	
 	 	
 	Good cost control as minesite costs per tonne rose only 6% in 2007 in an otherwise strongly inflationary environment for the industry	

 

 	OPERATIONS AT-A-GLANCE	

 

ACHIEVING CONSTRUCTION TARGETS
With five new gold mines under construction and the extension of the existing LaRonde mine well underway, we have carefully pursued our ambitious mine development objectives. While mine-building is rarely easy and we have a lot of hard work ahead, I am pleased to report that strong project management, excellent cost control and exceptional technical expertise enabled us to meet interim targets and, in some cases, exceed them.
 
At Goldex in Quebec, we are poised to begin gold production in April 2008, approximately two months ahead of schedule. The Kittila mine in northern Finland is on track to start up in September 2008. Together, production from these two new mines is expected to boost total gold production in 2008 by approximately 50% to more than 350,000 ounces.
 
In August, we made the decision to proceed with the construction of a mine at Pinos Altos in northern Mexico and began work immediately. This mine is expected to produce an average of 190,000 ounces of gold and 2.9 million ounces of silver per year over an 11-year mine life, with total cash costs averaging $210 per ounce of gold.
 
Both the Pinos Altos mine and the mine under construction at Lapa, in Quebec, are scheduled to start up in mid-2009. Gold production at our recently acquired Meadowbank project is slated to begin in January 2010. As we achieve each target, we are moving closer to our goal of increasing annual payable gold production to approximately 1.3 million ounces by 2010, a fivefold increase over 2007 levels.
 
Our confidence in our ability to deliver these projects lies in our proven track record, financial capacity and the low-risk nature of the projects themselves. We have approximately $400 million in cash and equivalents, no long-term debt, substantially undrawn bank lines of $300 million and strong cash flows to fund growth without the need for equity financing. Because the projects are manageable in size, located in pro-mining regions, and have relatively short development timelines, our execution risk is diminished.
 
ADDING QUALITY GOLD RESERVES
In 2007, we continued to expand our gold reserve base through exploration. At year-end, Agnico-Eagle’s proven and probable gold reserves rose to a record 16.7 million ounces, from 12.5 million in 2006, further enhancing our exceptional record of growing gold reserves per share. Agnico-Eagle’s gold reserves have increased almost thirteen fold since 1998, while the number of shares outstanding has grown only 2.6 times.
 
With our largest-ever exploration budget of $45 million in 2007, we increased drilling activity on all properties and maintained our focus on upgrading resources to reserves. More than half of our budget was spent in northern Mexico, where we have a large land position of approximately 46,000 hectares. Significant drill results at Pinos Altos resulted in a 21% increase in gold ounces in reserves and a 18% increase in silver ounces. We also began drilling on a shallow deposit just seven kilometres away from the main Santo Nino deposit. We have reason to believe that this new Creston/Mascota area could support a future stand-alone mining operation.
 
Upon acquiring the Meadowbank project in Nunavut, Canada, in April 2007, we embarked on an aggressive exploration program which resulted in a 20% increase in probable gold reserves at the property to 3.5 million ounces.

 
02  AGNICO-EAGLE MINES LIMITED 

 

This past year’s exploration results position us to meet our gold reserve target of 18 to 20 million ounces by year-end 2008. In fact, we see potential for several five-million ounce gold deposits and a total gold reserve in excess of 20 million ounces within the not-so-distant future as we continue to encounter potentially ore-grade mineralization outside of the currently defined gold reserve and resource envelopes at our development projects.
 
ACQUIRING NEW PROPERTIES
While not critical to our success at this time, we are always looking to add relatively small projects or assets that can significantly strengthen our business. The search for new, quality growth opportunities continues to be restricted to mining-friendly regions with political stability. As we have done in each of the past few years, we acquired another quality project well matched to our skills and abilities in 2007. With the takeover of Cumberland Resources, we gained 100% control of the Meadowbank gold project in Nunavut, adding substantial gold reserves and near-term gold production. The Meadowbank mine is projected to produce an average of 360,000 ounces of gold per year over a nine-year mine life, with total cash costs averaging $300 per ounce. Our Quebec-based technical team has lent support to the project, enabling us to accelerate the development timeline by six months.
 
LOOKING AHEAD
We remain very positive on the gold price and believe gold is in a long-term bull trend. There are several factors that we believe will push the gold price significantly higher including curtailed mine supply combined with much stronger investment demand driven by inflation concerns, a weak US dollar and traditional safe haven buying given the ongoing uncertainty in world financial markets.
 
In the near term, our focus will remain on executing our mine building plans. Our priorities are two-fold: bring our five new gold mines into production on plan over the next two years and add to our sizable gold reserves through an expanded program of aggressive exploration on our existing development projects. A larger, low-cost gold production base and bigger reserve base will enable us to provide our shareholders with enhanced leverage to gold prices, strengthen earnings and cash flows, and reduce overall mining risk.
 
In appreciation of the support I have received in my 10 years as CEO, I would like to thank all of our employees for their hard work and dedication to building a stronger gold company. Agnico-Eagle is better positioned than ever to take advantage of new opportunities. I am truly grateful for the management team and workforce we have in place. Together, we will move forward and continue to set a new standard for gold companies. We have the people, assets and strategy in place to build even more value for you, our shareholders.

 

Sincerely,	

	
 	
Sean Boyd	
 	
Vice-Chairman and Chief Executive Officer	

March 14, 2008	

 
2007 ANNUAL REPORT   03

 
 
1.
PRODUCE MORE GOLD

Our goal is to increase annual gold production more than fivefold, from 230,992 ounces in 2007 to 1.4 million ounces by 2011, by building and exploring our own mines. With the planned start-ups of the Goldex mine in spring 2008 and the Kittila mine later in the year, we will be on our way to having six operating gold mines. The Lapa and Pinos Altos mines are scheduled to begin production in 2009. The Meadowbank mine is slated to come on-stream in early 2010 and the LaRonde mine extension is to be completed by 2011, both of which will significantly boost gold output. Over the period from 2010 to 2017, we are targeting steady-state gold production averaging 1.3 million ounces. Total cash operating costs are expected to be approximately $250 per ounce, which would enable Agnico-Eagle to remain among the lowest-cost gold producers in the world.
GOLD PRODUCTION
(ANNUAL TARGET FROM EXISTING PROJECTS)

 

 

 photo above
KITTILA
KITTILA, FINLAND
Surface overburden stripping for the
main Suuri pit is well underway.

04   AGNICO-EAGLE MINES LIMITED

 

2.
GROW GOLD RESERVES

From 16.7 million ounces of gold at year-end 2007, we aim to grow gold mineral reserves to between 18 and 20 million ounces by year-end 2008 through aggressive exploration on our 100%-owned properties. Agnico-Eagle has active exploration programs in Canada (Ontario, Quebec, the Yukon and Nunavut), the United States (Nevada), Finland and Mexico (Chihuahua), in regions that are politically stable, mining friendly and have excellent nearby infrastructure. Over the past several years, we have established our ability to find gold and grow reserves faster than most other intermediate gold producers. We intend to continue this pace and, for 2008, have allocated more than $65 million – the largest exploration budget in our history – towards 275,000 metres of drilling, primarily at Pinos Altos, Kittila and Meadowbank. We see the potential for several five-million ounce gold deposits at our existing properties.
GOLD RESERVES
(MILLIONS OF OUNCES)

 

 
2007 ANNUAL REPORT  05
 
GROWTH STRATEG Y

3.
ACQUIRE SMALL, THINK BIG	4.
BE A LOW-COST LEADER	
. 

We continuously look to add quality projects and assets to our portfolio. Agnico-Eagle is positioned to act if an opportunity is well-matched to our technical skills and abilities, and can significantly strengthen the business. Our focus is on smaller companies or projects, which can typically be acquired at favourable prices and whose operations can be quickly and easily integrated into our company. Within six months of the 2007 acquisition of Cumberland Resources, and its large Meadowbank project, we were able to accelerate the mine development timeline and grow gold reserves at the property by 20%, increasing the projected mine life by one year. In the same way, the Pinos Altos and Kittila projects – and even the LaRonde mine – started with small investments that have grown to show tremendous potential.

Agnico-Eagle is one of the lowest-cost producers in the gold industry with total cash cost per ounce of gold produced at minus $365 in 2007. We consider low-cost production to be an important competitive advantage that helps position the company to deliver value. At LaRonde, strong byproduct revenues, economies of scale afforded by the high-tonnage mine and a highly skilled and motivated workforce enable us to uphold our low-cost producer status. As we build new mines, we have implemented rigorous cost-control measures and monitoring programs, including the use of existing infrastructure and equipment wherever possible, to ensure that project budgets remain on track.

 
“Never in my 20 years with Agnico-Eagle has the exploration
potential on our properties been more obvious. While
LaRonde’s reserves already exceed 5 million ounces, the
potential exists for Meadowbank, Kittila and even Pinos Altos
to grow to this same level. This would place Agnico-Eagle
in a unique position among mid-tier gold producers.”
 
ALAIN BLACKBURN, Senior Vice-President, Exploration

 
 
06   AGNICO-EAGLE MINES LIMITED

GROWTH STRATEG Y
 
5.
MAINTAIN A SOLID FINANCIAL POSITION

 

A conservative and strong balance sheet gives us the financial resources to fund growth projects while maintaining our longstanding policy of never selling away the price upside on our gold reserves. Despite ambitious exploration and capital development programs, we maintained our cash position near $400 million. We have no long-term debt and available bank lines of approximately $300 million that were recently extended to December 31, 2012. As we open the new gold mines, growing cash flow should allow us to execute on opportunities, and reward our shareholders, while maintaining a solid financial position.

 

 

 
 
2007 ANNUAL REPORT  07

 
 
Our home base is in Canada, where we have operated the LaRonde Mine for
some 20 years, producing more than THREE MILLION OUNCES OF GOLD as well
as lucrative BYPRODUCT METALS. More than 70% of Agnico-Eagle’s
current gold reserves are located in Canada.

In Canada, Agnico-Eagle enjoys political stability, mining- friendly governments and a low-cost structure. It is here that we have honed our ability to discover additional gold reserves and mine deep and complex ores efficiently. Our 1,000-strong workforce in Quebec is second to none, with many employees having been with the company since mining operations began.
 
Agnico-Eagle owns a long chain of properties in the gold-rich Abitibi region of northwestern Quebec, which we are exploring and developing. At LaRonde, we have continued to mine the world-class orebody since initial production began in 1988.
In 2006, we commenced construction of a deep extension that will lengthen the life of the LaRonde operation. Over the next year and a half, we intend to add low-cost production from the new Goldex and Lapa mines, situated within 50 kilometres of LaRonde.
 
In 2007, we expanded our Canadian presence with the acquisition of the Meadowbank project in Nunavut. Meadowbank gives us substantial and growing gold reserves and additional near-term gold production. Over the long term, we currently expect that as much as 75% of our gold production will be in Canada.

 photo above
 
LaRONDE
QUEBEC, CANADA
 
LaRonde has undergone four expansions.
Since the final expansion in 2003, the mine has
operated at essentially steady-state.

08   AGINO-EAGLE MINES LIMITED

 

 LaRONDE
 
>   Proven and probable gold reserves of 5.0 million ounces
 
>   Estimated life of mine gold production averaging 340,000 ounces per year
 
>   Life of mine total cash costs expected to average $150 per ounce
 
>   $55 million invested in extension project to year-end 2007, estimated $170 million more to completion in 2012
 
LARONDE PRODUCTION SUMMARY
In 2007, the LaRonde mill processed 7,325 tonnes of ore per day, approximately the same level as in the past four years.
 
Payable gold production of 230,992 ounces was 6% lower than in 2006. In order to capitalize on historically high zinc prices, we mined additional tonnes of low-grade zinc ore. As a result, gold, silver and zinc production declined in 2007. However, this decision enables us to maximize the value of the orebody and extend the upper mine life by two years. This lower-grade zinc ore was not included in the original mining plan. Silver production in 2007 was 4.9 million ounces compared to 5.0 million ounces in 2006, and zinc production declined to 71,577 tonnes from 82,183 tonnes in the previous year. Copper production rose to 7,482 tonnes, from 7,289 tonnes in 2006.

TOTAL CASH COST PER OUNCE
 
(FROM LaRONDE, 2007)

Strong cost control performance continued throughout 2007. Minesite costs per tonne were approximately C$66, only 6% higher than in 2006, despite accelerated underground development and industry-wide cost escalation.
 
Net of byproduct revenues, LaRonde’s total cash costs per ounce of gold produced remained very low by industry standards, at minus $365 for the year, from minus $690 in 2006 and $43 in 2005. This change was primarily the result of variable byproduct revenue.

 
2007 ANNUAL REPORT   09

 

 
“I could not be more proud of our technical and operating teams.
At the current operations, cost control has been excellent, as has
been progress on the development projects. This success has
been in spite of intense cost pressure industry-wide. Even after
23 years with Agnico-Eagle, I find reason to smile every day.”
 
              EBERHARD SCHERKUS, President and Chief Operating Officer

The LaRonde extension project will lengthen the life of the LaRonde complex by at least eight years, to 2021. It will enable us to reach the deeper ore at our current operation which is not accessible by the existing Penna Shaft. Construction commenced in 2006, and work continued on underground infrastructure construction and detailed engineering throughout 2007. Shaft sinking for the new internal shaft has begun, led by the same crews that successfully developed Lapa and Goldex.

$3 MILLION ALLOCATED TO EXPLORATION IN 2008 FOCUSED ON THE MASSIVE SULPHIDE STRUCTURE WEST OF THE OREBODY

RESUMING DRILLING ON THE EL COCO PROPERTY TO THE EAST

 
 
10   AGINO-EAGLE MINES LIMITED

 

  GOLDEX
 
>         Proven and probable gold reserves of 1.6 million ounces
>         Estimated gold production averaging 175,000 ounces per year over a nine-year mine life
>         Expected total cash costs averaging $230 per ounce
>         $160 million invested to year-end 2007, estimated $23 million more to completion in 2008
 
The Goldex mine is ahead of schedule for start-up in 2008. It will be a low-cost, high-tonnage operation, processing nearly 7,000 tonnes of ore per day. Goldex benefits significantly from its proximity to LaRonde in terms of operating synergies and technical expertise. Shaft sinking was completed in 2007 and the processing plant was completed in early 2008.

 

2008 EXPLORATION BUDGET OF MORE THAN $2 MILLION
 
FOCUSED ON ZONE OF GOLD MINERALIZATION
BENEATH THE OREBODY
 
SMALL DRILLING CAMPAIGN AT A WESTERN ZONE THAT
HAS HISTORICALLY YIELDED HIGH-GRADE GOLD ASSAYS

 
 
2007 ANNUAL REPORT   11

 

  LAPA
 
>         Probable gold reserves of 1.1 million ounces
>         Estimated gold production averaging 125,000 ounces per year over a seven-year mine life
>         Expected total cash costs averaging $300 per ounce
>         $45 million invested to year-end 2007, estimated $120 million more to completion in 2009
 
The Lapa project is located just 11 kilometres from LaRonde. With an anticipated start-up in mid-2009, shaft sinking has been completed to a final depth of 1,370 metres and lateral mine development work is underway. Ore from Lapa will be trucked to the LaRonde processing facility, which is being modified to treat the ore, recover the gold and store the tailings.

 

 
ONGOING EXPLORATION IN THE DEEPER
REGIONS OF THE OREBODY

 
 
12   AGNICO-EAGLE MINES LIMITED

 

  MEADOWBANK
 
>         Probable gold reserves of 3.5 million ounces
>         Estimated gold production averaging 360,000 ounces per year over a nine-year mine life
>         Expected total cash costs averaging $300 per ounce
>         $145 million invested to year-end 2007, estimated $245 million more to completion in 2010
 
Agnico-Eagle acquired the Meadowbank project in 2007, recognizing its significant exploration upside and mining camp potential, and the opportunity to ramp up to production quickly with straightforward mining and processing plans. At Meadowbank, the construction timeline matches the availability of our mine-building team.
 
At year-end 2007, construction of the mine was underway and a substantial portion of a 110-kilometre all-season road to the site was completed. Gold production is scheduled for early 2010, approximately six months earlier than previously planned. We anticipate a long-term, mutually beneficial relationship with the citizens and government of Nunavut, much like our experience in Quebec.

 

APPROXIMATELY 600,000 OUNCES CONVERTED FROM
RESOURCE TO RESERVE IN 2007, RESULTING IN A 20%
INCREASE IN PROBABLE GOLD RESERVES
 
2008 EXPLORATION BUDGET OF $10 MILLION
 
FOCUSED ON CONVERTING LARGE GOLD RESOURCE,
EXTENDING ZONES AND TESTING NEW TARGETS

2007 ANNUAL REPORT   13

 
 
In northern Finland, we are LEVERAGING OUR TECHNICAL SKILLS and
working to replicate our success in extracting gold and adding value, in a region
that is strikingly similar to our base in northwestern Quebec.

The company has been active in northern Finland since 2004, when we took an equity position in the company that owned the 15-kilometre long property containing the Kittila gold deposit. In 2005, we gained 100% ownership. In addition to having similar climate, topography and geology to that of the Abitibi region of Quebec, the Kittila region boasts existing infrastructure including an international airport, a qualified labour pool and a supportive local government.
 
Construction of the Kittila mine began in 2006. We expect to achieve production using conventional milling technology and
drawing on the combined expertise of local and long-term employees. We fully anticipate that Kittila will become one of the largest producing gold mines in Europe.
 
We are also looking for new opportunities in the region. From day one, we have pursued an aggressive exploration program and will continue to do so. Our expansive property in Finland is still in the early stages of exploration, with numerous targets of interest outside of the current gold reserve and resource envelopes. We are confident in the reserve growth potential of the property and will work hard to realize it.

 

 photo above
 
KITTILA
KITTILA, FINLAND
 
The gold ore will be processed at Kittila
with proven pressure-oxidation technology.

14   AGNICO-EAGLE MINES LIMITED

 

 

  KITTILA

>         Probable gold reserves of 3.0 million ounces
>         Estimated gold production averaging 150,000 ounces per year over a 13-year mine life
>         Expected total cash costs averaging $300 per ounce
>         $100 million invested to year-end 2007, estimated $90 million more to completion in 2008

Scheduled to begin production in late 2008, the mine will initially source its ore by way of open pit followed by underground mining via ramp access. The operation will feed a 3,000-tonne-per-day surface processing plant. In 2007, we continued construction on a two-kilometre underground ramp that will enable us to accelerate exploration at greater depths.

 

 
KITTILA DEPOSIT OPEN AT DEPTH AND ALONG STRIKE
 
2008 EXPLORATION BUDGET OF $7 MILLION
 
FOCUSED ON DEEPER DRILLING BELOW THE MAIN ZONE
FROM THE NEW UNDERGROUND RAMP
 
ONGOING SURFACE DRILLING TO CONVERT RESOURCES
TO RESERVES AND EXTEND THE OVERALL ENVELOPE

 
 
2007 ANNUAL REPORT   15

 

 
With our EXTENSIVE LAND POSITION in the prolific Sierra Madre gold
and silver region, we have a strong foothold in northern Mexico offering
significant exploration and long-term MINING CAMP POTENTIAL.

Given its rich geology, low operating costs, political stability and pro-mining regulatory structure, northern Mexico is an ideal place for Agnico-Eagle to grow. We acquired the Pinos Altos property in 2006 upon receiving encouraging results from a drilling campaign we conducted under an option agreement in place at the time. Since initiating exploration, we have significantly increased gold grades and reserves, and expanded gold zones at the property. In August 2007, a favourable feasibility study led to our decision to commence construction of the Pinos Altos mine.
 
Recognizing the potential in northern Mexico, more than 50% of Agnico-Eagle’s exploration budget is focused in the region. In 2007, we drilled more than 52,000 metres. In addition to the main gold zones, we began drilling at the new Creston/Mascota area. We believe that this zone has the potential to support a future, stand-alone mining operation, and are building new roads to allow better access for exploration.
 
At the same time, we are investigating attractive land acquisitions and option agreements similar to our Pinos Altos acquisition. We have also made several strategic investments in junior exploration companies active in Mexico.

 photo above
 
PINOS ALTOS
CHIHUAHUA, MEXICO
 
The underground access established
in 2007 is expected to facilitate exploration
along strike and at depth in 2008 .

16   AGNICO-EAGLE MINES LIMITED

 

 
  PINOS ALTOS

>          Probable reserves of 2.5 million ounces of gold and 73.1 million ounces of silver
>          Estimated gold production averaging 190,000 ounces per year over an 11-year mine life
>          Expected total cash costs averaging $210 per ounce
>          $30 million invested to year-end 2007, estimated $200 million more to completion

Initial production at Pinos Altos is scheduled for mid-2009, beginning with ore from the open pit. Underground mining will be phased in over four years. The gold will be processed by conventional milling although a heap leach option is also being contemplated. In 2007, development work began on the underground production ramp. Agnico-Eagle is quickly establishing itself as an employer of choice in the region with its high-quality facilities, good community relations and local hiring and purchases.

 

2007 ACTIVITY RESULTED IN A 21% INCREASE IN GOLD OUNCES IN RESERVES
AND AN 18% INCREASE IN SILVER
 
$14-MILLION EXPLORATION PROGRAM FOCUSED ON DEEPER TARGETS
IN THE MAIN SANTO NINO AND CERRO COLORADO ZONES
 
INFERRED RESOURCE OUTLINED AT THE NEW CRESTON/MASCOTA AREA CURRENTLY HOLDS
0.4 MILLION OUNCES OF GOLD FROM 7.7 MILLION TONNES GRADING 1.4 GRAMS PER TONNE.

 
 
2007 ANNUAL REPORT   17

 

 
ENVIRONMENTAL
STEWARDSHIP
 
Agnico-Eagle depends on the natural environment to achieve financial success and deliver societal value. It is our policy to preserve and protect our natural resources by implementing sound environmental management systems and processes at all stages of our business activities, and by pursuing continuous improvement in our environmental performance.
 
ENERGY EFFICIENCY
In 2007, the LaRonde division was honoured for its participation in Hydro-Québec’s energy efficiency program which resulted in a 6% reduction in energy consumption – exceeding our 5% reduction target – and savings of approximately $700,000. The main savings were achieved through improvements to the underground ventilation system so that it automatically shuts off at the end of each shift, and a more efficient water intake system.
 
ENVIRONMENTAL PROTECTION IN NUNAVUT
As we explore and build at our recently-acquired Meadowbank project, we have tailored our approaches to protect the unique environment and wildlife of this region located within the eastern Arctic. We have redirected road construction so as not to disturb the nesting habits of migratory birds. We are taking precautions to protect the fragile tundra such as using helicopters to move drills between sites. In addition, we are leveraging the expertise of our team that has operated for decades in northwestern Quebec in difficult climactic conditions.

	

 photo above
 
KITTILA
KITTILA, FINLAND
 
Baseline testing and subsequent monitoring are part of our ongoing water quality program.		

18   AGNICO-EAGLE MINES LIMITED

 

ENVIRONMENTAL PROTECTION IN KITTILA
At Kittila, in northern Finland, we are contributing to the long-term maintenance of the local fisheries through an annual seeding of fries in the river, conducted with the help of a local sport-fishing organization. We are including waste-rock modelling in the open-pit planning, to ensure that each type of waste rock is managed to achieve the best environmental results. We have constructed a starter dam to contain the process tailings and are preparing a thorough tailings characterization program for the first three years of operation to further optimize tailings management.
 
CONTINUOUS IMPROVEMENT IN QUEBEC
In 2007, we improved the efficiency of our water treatment plant and made further process improvements. This biological treatment facility represents the final stage in a series of treatments designed to ensure that water released back into the environment meets all applicable water quality standards. We also embarked on the first phase of a partnership program with the Quebec government which will see the rehabilitation of an orphaned acid-generating tailings site through the use of neutralizing tailings from our Goldex mine. This phase comprised the construction of ditches to divert water away from the contaminated tailings and of dikes to contain them.

 

IN 2007, WE REDUCED LaRONDE ENERGY CONSUMPTION BY 6%.
THIS AMOUNTED TO A $700,000 COST SAVINGS.

 

2007 ANNUAL REPORT   19

 
CARE AND CONCERN
FOR PEOPLE
 
As an employer of approximately 2,500 people and a corporate neighbour in regions around the world, Agnico-Eagle strives to build stakeholder relationships based on trust, open dialogue, mutual respect and understanding. We are committed to enriching the lives of our employees and their families and to benefiting the communities in which we operate.

 
SAFETY FIRST
The health, safety and well-being of our employees and contractors are of primary concern at Agnico-Eagle. Our proactive safety programs are designed to prepare people for any situation they may encounter in the course of operations. In 2007, supervisor safety training was a priority. This past year, we also achieved a safety record of 35 consecutive months without a single lost-time injury underground at LaRonde. This translates into more than one million injury-free hours worked by our underground employees. We are also proud of our mine rescue team who, for the third consecutive year, won the prestigious Quebec Mine Rescue competition.

	
 photo above
 
PINOS ALTOS
CHIHUAHUA, MEXICO
 
The Pinos Altos camp was built largely by local builders using local materials .

 
 
20   AGNICO-EAGLE MINES LIMITED

 

PAUL PENNA AWARD
In 2007, we introduced the Paul Penna Award Program to recognize employees who make extraordinary contributions to their local communities. This program is named after the company’s late founder and designed to keep his legacy alive and cultivate the values he brought to the organization. Each year, there will be one global award winner and winners from each of five geographic regions. Awards will include a major financial contribution to the community initiative embraced by the recipient.
 
PINOS ALTOS CAMP
Our Pinos Altos project in Mexico is quickly establishing itself as an employer of choice in the region, in part because of its high-quality facilities and benefits. Rather than setting up trailers during exploration and construction, we chose to build distinctly Mexican cottages, which are permanent structures made by local contractors using local wood and materials. The cottages will accommodate up to 300 people. Once the Pinos Altos operation is up and running, we expect that virtually all of the 200 people
employed at the mine will be Mexican, with approximately 50% from neighbouring communities. We are working to establish strong community relations and are pleased to be the first foreign mining company to have received certification as a socially responsible company from the Centro Mexicano para la Filantropia.
 
COMMUNITY OUTREACH
We aim to maintain broad-based, ongoing community support for our activities and devote time and resources to nurturing dialogue and building relationships with local citizens. At Goldex, where we are poised to open a new mine located right in the town of Val d’Or, we held an open house and conducted site tours for the community in 2007. Shortly after our arrival at Meadowbank, we held a barbecue and event that attracted more than 500 local people. We also publish newsletters in both Val d’Or and Baker Lake to keep the communities informed of the activities at the sites.

 

 
2007 ANNUAL REPORT  21

 

The Board of Directors is ultimately responsible for overseeing the management of the business and affairs of the company and, in doing so, is required to act in the best interest of the company. The Board generally discharges its responsibilities either directly or through the four committees outlined below.
 
The Corporate Governance Committee advises and makes recommendations to the Board on corporate governance matters, the effectiveness of the Board and its committees, the contributions of individual directors, and the identification and selection of director nominees.
 
The Audit Committee assists the Board in its oversight responsibilities with respect to, among other things, the integrity of the company’s financial statements, compliance with legal and regulatory requirements, external auditor qualifications and independence, and performance of the company’s internal and external audit functions.
 
The Compensation Committee advises and makes recommendations to the Board on company strategy, policies and programs for compensating and developing senior management and directors.
 
All three of the above Committees are composed entirely of outside directors who are unrelated to, and independent from, the company.
 
The Health, Safety and Environment (HSE) Committee, comprised of a majority of independant directors, advises and
makes recommendations to the Board with respect to monitoring and reviewing HSE policies, principles, practices and processes; HSE performance; and regulatory issues relating to health, safety and the environment.
 
The charter for each of these committees is posted on our corporate website for easy access by shareholders and the general public. Other key components of the company’s governance structures and processes are outlined below.
 
DIRECTOR INDEPENDENCE
The Board of Directors consists of nine directors. All but two of the directors are independent of management and all are free from any interest or business that could materially interfere with their ability to act in the company’s best interest.
 
CODE OF ETHICS
Agnico-Eagle has adopted a Code of Business Conduct and Ethics that is applicable to all directors, officers and employees. The Code embodies the commitment of Agnico-Eagle and its subsidiaries to conduct their business in accordance with all applicable laws, rules and regulations, and the highest ethical standards. The Code is posted on our corporate website.
 
In conjunction with the Code, Agnico-Eagle has established a toll-free compliance hotline to allow for anonymous reporting of any suspected Code violations, including concerns regarding accounting, internal accounting controls or other auditing matters.

 
22   AGNICO-EAGLE MINES LIMITED
 
BOARD OF DIRECTORS

JAMES D. NASSO
Chairman of the Board
(Director since 1986) 1,3,4	 	LEANNE M. BAKER
(Director since 2003) 1,2	 	DOUGLAS R. BEAUMONT
(Director since 1997) 2,3	 	SEAN BOYD
(Director since 1998)	 	BERNARD KRAFT
(Director since 1992) 1,3	

 
Mr. Nasso is the retired founder and President of Unilac Limited, a manufacturer of infant formula, a position he held for 35 years. He is a graduate of St. Francis Xavier University (B.Comm.).	 	 
Dr. Baker is a consultant to companies in the mining and financial services industries. Previously, she was employed by Salomon Smith Barney, where she was one of the top-ranked U.S. mining analysts. Dr. Baker is a graduate of the Colorado School of Mines (M.S. and Ph.D. in mineral economics).	 	 
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. Mr. Beaumont is a graduate of Queen’s University (B.Sc.).	 	 
Mr. Boyd is Vice-Chairman and CEO of Agnico-Eagle Mines Limited and has been with the company since 1985. He was appointed CEO in 1998 and became Vice-Chairman in 2005. Prior to that, Mr. Boyd held various senior management positions in the company, most recently as President and CEO. Mr. Boyd is a graduate of the University of Toronto (B.Comm.).	 	 
Mr. Kraft recently retired as a senior partner of Kraft, Berger, Grill, Schwartz, Cohen & March, Chartered Accountants and is a consultant to that firm, and a principal in Kraft Yabrov Valuations Inc. Mr. Kraftis a member of the Canadian Institute of Chartered Business Valuators, the Association of Certified Fraud Examiners, and the American Society of Appraisers.	
 	 	 	 	 	 	 	 	 	
MEL LEIDERMAN
(Director since 2003) 1,2	 	EBERHARD SCHERKUS
(Director since 2005) 4	 	HOWARD STOCKFORD
(Director since 2005) 2,4	 	PERTTI VOUTILAINEN
(Director since 2005) 3,4	 	 	

 
Mr. Leiderman is the managing partner of the Toronto accounting firm Lipton, Wiseman, Altbaum & Partners and is a graduate of the University of Windsor (B.A.).	 	 
Mr. Scherkus is President and Chief Operating Officer of Agnico-Eagle Mines Limited and has been with the company since 1985. He was appointed COO in 1998 and as President in 2005. Prior to that,
Mr. Scherkus held various senior management positions, most recently as Executive Vice-President and COO, and was manager of the company’s LaRonde Division.
Mr. Scherkus is a graduate of McGill University (B.Sc.).	 	 
Mr. Stockford, now retired, is a former Executive Vice-President of Aur Resources Inc., and sits on several mining company boards. He has been involved in the mining business for more than 40 years. He is a graduate of the Royal School of Mines, Imperial College, London University.	 	 
Mr. Voutilainen is a mining industry veteran, most recently the Chairman of the Board of Riddarhyttan Resources AB. Previously, Mr. Voutilainen was Chairman of the Board and CEO for Kansallis Banking Group and President after its merger with Union Bank of Finland. He was also the CEO of Outokumpu Corp., Finland’s largest mining and metals company.	 	 
1 Audit Committee
2 Compensation Committee
3  Corporate Governance Committee
4  Health, Safety and Environment Committee	

2007 ANNUAL REPORT  23

 
FORWARD-LOOKING STATEMENT

The information in this annual report has been prepared as at March 14, 2008. 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 and forward-looking information under Canadian provincial securities laws. When used in this document, the words “anticipate”, “expect”, “estimate”, “forecast”, “planned”, and similar expressions are intended to identify forward-looking statements and information.
 
Such statements include, without limitation: estimates of future mineral production and sales; estimates of future production costs, cash costs, minesite costs and other expenses; estimates of future capital expenditures and other cash needs; statements as to the projected development of certain ore deposits, including estimates of exploration, development, and other capital costs, and estimates of the timing of such development or decisions with respect to such development; estimates of reserves and resources, anticipated future exploration and feasibility study results; the anticipated timing of events with respect to the company’s minesites; and other statements regarding anticipated trends with respect to
the company’s capital resources and results of operations. Such statements reflect the company’s views as at the date this annual report was prepared and are subject to certain risks, uncertainties, and assumptions. Many factors, known and unknown, could cause the actual results to be materially different from those expressed or implied by such forward-looking statements. Such risks include, but are not limited to: the company’s dependence upon its LaRonde mine for all of its current gold production; uncertainty of mineral reserve, mineral resource, mineral grade, and mineral recovery estimates; uncertainty of future production, capital expenditures, and other costs; gold and other metals price volatility; currency fluctuations; mining risks; and governmental and environmental regulation. For a more detailed discussion of such risks and other factors, see company’s Annual Information Form and Annual Report on Form 20-F for the year ended December 31, 2007 attached to this annual report, as well as the company’s other filings with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission. The company does not intend, and does not assume any obligation, to update these forward-looking statements.

 
24   AGNICO-EAGLE MINES LIMITED

 TABLE OF CONTENTS

 	 	 	 	Page
	 	
PRELIMINARY NOTE	 	1	 	
NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESOURCES	 	2	 	
 	 	Cautionary Note to Investors Concerning Estimates of Measured and Indicated Resources	 	2	 	
 	 	Cautionary Note to Investors Concerning Estimates of Inferred Resources	 	2	 	
NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE	 	2	 	
 	ITEM 1.	 	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	 	3	*	
 	ITEM 2.	 	OFFER STATISTICS AND EXPECTED TIMETABLE	 	3	*	
 	ITEM 3.	 	KEY INFORMATION	 	3	 	
 	 	Selected Financial Data	 	3	 	
 	 	Currency Exchange Rates	 	4	 	
 	 	Risk Factors	 	4	 	
 	ITEM 4.	 	INFORMATION ON THE COMPANY	 	13	 	
 	 	History and Development of the Company	 	13	 	
 	 	Business Overview	 	16	 	
 	 	Mining Legislation and Regulation	 	17	 	
 	 	Organizational Structure	 	19	 	
 	 	Property, Plant and Equipment	 	20	 	
 	ITEM 4A.	 	UNRESOLVED STAFF COMMENTS	 	57	 	
 	ITEM 5.	 	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	 	58	 	
 	ITEM 6.	 	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	 	76	 	
 	ITEM 7.	 	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	 	95	 	
 	 	Major Shareholders	 	95	 	
 	 	Related Party Transactions	 	95	 	
 	ITEM 8.	 	FINANCIAL INFORMATION	 	96	 	
 	ITEM 9.	 	THE OFFER AND LISTING	 	96	 	
 	 	Market and Listing Details	 	96	 	
 	ITEM 10.	 	ADDITIONAL INFORMATION	 	98	 	
 	 	Memorandum and Articles of Incorporation	 	98	 	
 	 	Disclosure of Share Ownership	 	100	 	
 	 	Material Contracts	 	101	 	
 	 	Exchange Controls	 	102	 	
 	 	Restrictions on Share Ownership by Non-Canadians	 	102	 	
 	 	Corporate Governance	 	102	 	
 	 	Canadian Federal Income Tax Considerations	 	103	 	
 	 	United States Federal Income Tax Considerations	 	103	 	
 	 	Audit Fees	 	106	 	
 	 	Documents on Display	 	107	 	

i

 	ITEM 11.	 	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	 	107	 	
 	 	Metal Price and Foreign Currency	 	107	 	
 	 	Interest Rate	 	108	 	
 	 	Derivatives	 	109	 	
 	ITEM 12.	 	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	 	110	 	
 	ITEM 13.	 	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	 	110	 	
 	ITEM 14.	 	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	 	110	 	
 	ITEM 15.	 	CONTROLS AND PROCEDURES	 	110	 	
 	ITEM 16A.	 	AUDIT COMMITTEE FINANCIAL EXPERT	 	111	 	
 	ITEM 16B.	 	CODE OF ETHICS	 	111	 	
 	ITEM 16C.	 	PRINCIPAL ACCOUNTANT FEES AND SERVICES	 	111	 	
 	ITEM 16D.	 	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	 	112	 	
 	ITEM 16E.	 	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	 	112	 	
 	ITEM 17.	 	RESERVED	 	112	**	
 	ITEM 18.	 	FINANCIAL STATEMENTS	 	112	 	
 	ITEM 19.	 	EXHIBITS	 	143	 	
 	Exhibit Index	 	143	 	
 	SIGNATURES	 	144	 	

*
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.
ii

 PRELIMINARY NOTE
        Currencies:     Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") presents its consolidated financial statements in United States dollars. All dollar amounts in this Annual Report on Form 20-F ("Form 20-F") are stated in United States dollars ("US dollars", "$", or "US$"), except where otherwise indicated. Certain information in this Form 20-F is presented in Canadian dollars ("C$"). See "Item 3. Key Information — Currency Exchange Rates" for a history of exchange rates of Canadian dollars into US dollars.
        Generally Accepted Accounting Principles:     Agnico-Eagle reports its financial results using 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. Unless otherwise specified, all references to financial results herein are to those calculated under US GAAP.
        Forward-Looking Information:     Certain statements in this Form 20-F constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" under the provisions of Canadian provincial securities laws. These statements relate to, among other things, the Company's plans, objectives, expectations, estimates, beliefs, strategies and intentions and can generally be identified by the use of words such as "may", "will", "should", "could", "would", "expect", "anticipate", "believe", "plan", "intend", "likely" or other variations of these terms or comparable terminology. Forward-looking statements and information in this report include, but are not limited to, the following:
•
the Company's outlook for 2008 and future periods;

•
statements regarding future earnings, and the sensitivity of earnings to gold and other metal prices;

•
anticipated trends for prices of gold and byproducts mined by the Company;

•
estimates of future mineral production and sales;

•
estimates of future costs, including mining costs, total cash costs per ounce, minesite costs per tonne and other expenses;

•
estimates of future capital expenditure, exploration expenditure and other cash needs, and expectations as to the funding thereof;

•
statements as to the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs and estimates of the timing of such development and production or decisions with respect to such development and production;

•
estimates of mineral reserves, mineral resources and ore grades and statements regarding anticipated future exploration results;

•
statements regarding the outcome and anticipated timing of proposed transactions;

•
the anticipated timing of events with respect to the Company's mine and mine project sites; and

•
estimates of future costs and other liabilities for environmental remediation; and other anticipated trends with respect to the Company's capital resources and results of operations.

        Statements containing forward-looking information are necessarily based upon a number of factors and assumptions that, while considered reasonable by Agnico-Eagle as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions of Agnico-Eagle upon which the statements in this Form-20F containing forward-looking information, which may prove to be incorrect, are based on include, but are not limited to, the assumptions set out in this Form 20-F as well as: that there are no significant disruptions affecting the Company's operations, whether due to labour disruptions, supply disruptions, damage to equipment, natural occurrences, political changes, title issues or otherwise; that permitting, development and expansion at each of Agnico-Eagle's development projects proceeds on a basis consistent with current expectations, and that Agnico-Eagle does not change its development plans relating to such projects; that the exchange rate between the Canadian dollar, European Union Euro, Mexican peso and the United States dollar will be approximately consistent with current levels or as set out in this Form 20-F; prices for gold, silver, zinc and copper will be consistent with Agnico-
1

Eagle's expectations; that prices for key mining and construction supplies, including labour costs, remain consistent with Agnico-Eagle's current expectations; that production meets expectations; that Agnico-Eagle's current estimates of mineral reserves, mineral resources, mineral grades and mineral recovery are accurate; that there are no material delays in the timing for completion of the Company's ongoing development projects; and that there are no material variations in the current tax and regulatory environment that affect the Company.
        The forward-looking statements in this Form 20-F reflect the Company's views as at the date of this Form 20-F and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company 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 Risk Factors set forth in "Item 3. Key Information — Risk Factors". Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. This Form 20-F contains information regarding anticipated total cash costs per ounce and minesite costs per tonne at certain of the Company's mines and mine development projects. This information was developed to assist management with its assessment as to what resources to allocate to the construction and/or expansion of its mine and mine development projects. Investors are cautioned that this information may not be suitable for other purposes.

 NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESOURCES
Cautionary Note to Investors Concerning Estimates of Measured and Indicated Resources
        This document uses the terms "measured resources" and "indicated resources". Investors are advised that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission (the "SEC") 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 document uses the term "inferred resources". Investors are advised that while this term is recognized and required by Canadian regulations, the SEC 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 .

 NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE
        This document presents certain measures, including "total cash cost per ounce" and "minesite cost per tonne", that are not recognized measures under US GAAP. This data may not be comparable to data presented by other gold producers. For a reconciliation of these measures to the figures presented in the consolidated financial statements prepared in accordance with US GAAP see "Item 5. Operating and Financial Review and Prospects — Results of Operations — Production Costs". The Company believes that these generally accepted industry measures are realistic indicators of operating performance and useful in allowing year over year comparisons. However, both of these non-GAAP measures should be considered together with other data prepared in accordance with US GAAP, and these measures, taken by themselves, are not necessarily indicative of operating costs or cash flow measures prepared in accordance with US GAAP. This Form 20-F also contains information as to estimated future total cash costs per ounce and minesite cost per tonne for projects under development. These estimates are based upon the total cash costs per ounce and minesite cost per tonne that the Company expects to incur to mine gold at those projects and, consistent with the reconciliation provided, does not include production costs attributable to accretion expense and other asset retirement costs, which will vary over time as each project is developed and mined. It is therefore not practicable to reconcile these forward-looking non-US GAAP financial measures to the most comparable US GAAP measure.
2

 PART I
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, 2007 are derived from the consolidated financial statements of Agnico-Eagle audited by Ernst & Young LLP. The selected financial data should be read in conjunction with the Company's operating and financial review and prospects set out in Item 5 of this Form 20-F, the consolidated financial statements and the notes thereto set out in Item 18 of this Form 20-F and other financial information included elsewhere in this Form 20-F.

 	 	Year Ended December 31,
	 	
 	 	2007
	 	2006
	 	2005
	 	2004
	 	2003
	 	
 	 	(in thousands of US dollars, US GAAP basis,
other than share and per share information)
	 	
Income Statement Data	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations	 	432,205	 	464,632	 	241,338	 	188,049	 	126,820	 	
Interest and sundry income	 	29,230	 	45,915	 	4,996	 	655	 	2,775	 	
 	 		 		 		 		 		 	
 	 	461,435	 	510,547	 	246,334	 	188,704	 	129,595	 	
 	 		 		 		 		 		 	
Production costs	 	166,104	 	143,753	 	127,365	 	98,168	 	104,990	 	
Loss on derivative financial instruments	 	5,829	 	15,148	 	15,396	 	—	 	—	 	
Exploration and corporate development	 	25,507	 	30,414	 	16,581	 	3,584	 	5,975	 	
Equity loss in junior exploration company	 	—	 	663	 	2,899	 	2,224	 	1,626	 	
Amortization	 	27,757	 	25,255	 	26,062	 	21,763	 	17,504	 	
General and administrative	 	38,167	 	25,884	 	11,727	 	6,864	 	7,121	 	
Provincial capital tax	 	3,202	 	3,758	 	1,352	 	423	 	1,240	 	
Interest	 	3,294	 	2,902	 	7,813	 	8,205	 	9,180	 	
Foreign exchange (gain) loss	 	32,297	 	2,127	 	1,860	 	1,440	 	72	 	
 	 		 		 		 		 		 	
Income (loss) before income and mining taxes (recoveries)	 	159,278	 	260,643	 	35,279	 	46,033	 	(18,113	)	
Income and mining taxes (recoveries)	 	19,933	 	99,306	 	(1,715	)	(1,846	)	(358	)	
 	 		 		 		 		 		 	
Income before cumulative catch-up adjustment	 	139,345	 	161,337	 	36,994	 	47,879	 	(17,755	)	
Cumulative catch-up adjustment related to asset retirement obligations	 	—	 	—	 	—	 	—	 	(1,743	)	
 	 		 		 		 		 		 	
Net income (loss)	 	139,345	 	161,337	 	36,994	 	47,879	 	(19,498	)	
 	 		 		 		 		 		 	
Net income (loss) before cumulative catch-up adjustment per share — basic	 	1.05	 	1.40	 	0.42	 	0.56	 	(0.21	)	
 	 		 		 		 		 		 	
Net income (loss) per share — basic	 	1.05	 	1.40	 	0.42	 	0.56	 	(0.23	)	
 	 		 		 		 		 		 	
Net income (loss) per share — diluted	 	1.04	 	1.35	 	0.42	 	0.56	 	(0.23	)	
 	 		 		 		 		 		 	
Weighted average number of shares outstanding — basic	 	132,768,049	 	115,461,046	 	89,029,754	 	85,157,476	 	83,889,115	 	
Weighted average number of shares outstanding — diluted	 	133,957,869	 	119,110,295	 	89,512,799	 	85,572,031	 	83,889,115	 	
Dividends declared per common share	 	0.18	 	0.12	 	0.03	 	0.03	 	0.03	 	

3

Balance Sheet Data (at end of period)	

 	

 	

 	

Mining properties (net)	 	2,107,063	 	859,859	 	661,196	 	427,037	 	399,719	 	
Total assets	 	2,735,498	 	1,521,488	 	976,069	 	718,164	 	637,101	 	
Long-term debt	 	—	 	—	 	131,056	 	141,495	 	143,750	 	
Reclamation provision and other liabilities	 	57,941	 	27,457	 	16,220	 	14,815	 	15,377	 	
Net assets	 	2,058,934	 	1,252,405	 	655,067	 	470,226	 	400,723	 	
Common shares	 	1,931,667	 	1,230,654	 	764,659	 	620,704	 	601,305	 	
Shareholders' equity	 	2,058,934	 	1,252,405	 	655,067	 	470,226	 	400,723	 	
Total common shares outstanding	 	142,403,379	 	121,025,635	 	97,836,954	 	86,072,779	 	84,469,804	 	
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 March 14, 2008, the Noon Buying Rate was US$1.00 equals C$0.9867.

 	 	Year Ended December 31,
	
 	 	2007
	 	2006
	 	2005
	 	2004
	 	2003
	
High	 	1.1876	 	1.1797	 	1.2703	 	1.3970	 	1.5750	
Low	 	0.9059	 	1.0932	 	1.1507	 	1.1775	 	1.2923	
End of Period	 	0.9881	 	1.1652	 	1.1656	 	1.2034	 	1.2923	
Average	 	1.0734	 	1.1340	 	1.2115	 	1.3017	 	1.4012	
 	
 	 	2008
	 	2007
	
 	 	March
(to March 14)
	 	February
	 	January
	 	December
	 	November
	 	October
	 	September
	
High	 	0.9975	 	1.0188	 	1.0379	 	1.0249	 	1.0019	 	1.0017	 	1.0591	
Low	 	0.9841	 	0.9717	 	0.9842	 	0.9758	 	0.9758	 	0.9420	 	0.9915	
End of Period	 	0.9867	 	0.9796	 	1.0018	 	0.9881	 	1.0007	 	0.9496	 	0.9959	
Average	 	0.9901	 	0.9986	 	1.0099	 	0.9672	 	1.0021	 	0.9754	 	1.0267	
Risk Factors
The Company is currently dependent upon its mining and milling operations at the LaRonde Mine and any adverse condition affecting those operations may have a material adverse effect on the Company.
        The Company's mining and milling operations at the LaRonde Mine currently account for all of the Company's gold production and will continue to account for all of its gold production in the future until additional properties are acquired or brought into production. Any adverse condition affecting mining or milling conditions at the LaRonde Mine 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. The Company also anticipates using revenue generated by its operations at the LaRonde Mine to finance a substantial portion of the capital expenditures required at its mine development projects. In addition, one of the Company's major development programs is the extension of the LaRonde Mine below Level 245, referred to as the LaRonde Mine extension. This program involves the construction of infrastructure at depth and extraction of ore from new zones and may present new or different challenges for the Company. Gold production of the LaRonde Mine above Level 245 has started to decline. While the Goldex mine project and the Kittila mine project are both expected to commence operations during 2008, production from these mines will be lower in their initial periods of operation and, if production is subject to unforeseen delays, may not occur until later years. In addition, production from these mine projects may be lower than anticipated. Unless the Company can successfully bring into production the Goldex, Kittila, Lapa, Pinos Altos or Meadowbank mine projects, the LaRonde Mine
4

extension, its other exploration properties, or otherwise acquire gold producing assets in 2008, the Company's results of operations will be adversely affected. Further, there can be no assurance that the Company's current exploration and development programs at the LaRonde Mine will result in any new economically viable mining operations or yield new mineral reserves to replace and expand current mineral reserves at what is currently the Company's sole active mining operation.
The Company's financial performance and results may fluctuate widely due to volatile and unpredictable commodity prices.
        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 the Company's board of directors (the "Board"), the Company may review this practice on a project by project basis. See "Item 11. Quantitative and Qualitative Disclosures About Market Risk — Derivatives" for more details on the Company's use of derivative instruments. 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, political and economic conditions, production costs in major gold producing regions and worldwide production levels. The aggregate effect of these factors is impossible to predict with accuracy. 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 materially adversely affect the Company's financial performance or results of operations. If the market price of gold falls below the Company's total cash costs of production at one or more of its projects at that time and remains so for any sustained period, the Company may experience losses and/or may curtail or suspend some or all of its exploration, development and mining activities at such projects or at other projects. Also, the Company's decisions to proceed with its current mine development projects have been based on a market price of gold between $400 and $450 per ounce. If the market price of gold falls below this level, the mine development projects may be rendered uneconomic and the development of the mine projects may be suspended or delayed. The prices received for the Company's byproducts (zinc, silver and copper) produced at its LaRonde Mine 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 uses derivative instruments to mitigate the effects of fluctuating byproduct metal prices, however, these measures may not be successful.
        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.

 	 	2008
(to March 14)
	 	2007
	 	2006
	 	2005
	 	2004
	 	2003
	
High price ($ per ounce)	 	1,004	 	841	 	730	 	538	 	454	 	417	
Low price ($ per ounce)	 	847	 	608	 	517	 	411	 	375	 	323	
Average price received ($ per ounce)	 	920	 	748	 	622	 	449	 	418	 	368	
        On March 14, 2008, the London P.M. Fix was $1,004 per ounce of gold.
        Based on 2008 production estimates, the approximate sensitivities of the Company's after-tax income to a 10% change in metal prices from 2007 market average prices are as follows:

 	 	Income per share
	
Gold	 	$	0.09	
Zinc	 	$	0.07	
Silver	 	$	0.02	
Copper	 	$	0.02	
5

        The assumptions that underlie the estimate of future operating results and the strategies used to mitigate the effects of risks of metals price fluctuations are set out in "Item 5. Operating and Financial Review and Prospects — Outlook — Gold Production Growth" of this Form 20-F.
        Sensitivities of the Company's after-tax income to changes in metal prices will increase with increased production.
If the Company experiences mining accidents or other adverse conditions, the Company's mining operations may yield less gold than indicated by its estimated gold production.
        The Company's gold production may fall below estimated levels as a result of mining accidents such as cave-ins, rock falls, rock bursts, pit wall failures, fires or flooding or as a result of other operational problems such as a failure of the production hoist or the semi-autogenous grinding, or SAG, mill. 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, the physical or metallurgical characteristics of the ore are less amenable than expected to mining or treatment or there is increased dilution. In three of the last five years, as a result of such adverse conditions, the Company has failed to meet production forecasts due to a rock fall, production drilling challenges and lower than planned mill recoveries in 2003, higher than expected dilution in 2004 and increased stress levels in a sill pillar requiring the temporary closure of production sublevels in 2005. Occurrences of this nature in future years may result in the Company's failure to achieve current or future production estimates.
The Company may experience operational difficulties at its projects in Finland and Mexico.
        The Company's operations have been expanded to include mine construction projects in Finland and northern Mexico. These operations are exposed to various levels of political, economic and other risks and uncertainties that are different from those encountered at the Company's current operational base in Canada. These risks and uncertainties vary from country to country and may include: extreme fluctuations in currency exchange rates; high rates of inflation; labour unrest; the risks of war or civil unrest; expropriation and nationalization; renegotiation or nullification of existing concessions, licences, permits and contracts; illegal mining; corruption; changes in taxation policies; restrictions on foreign exchange and repatriation; hostage taking; and changing political conditions, currency controls and governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. In addition, the Company will have to comply with multiple and potentially conflicting regulations in Canada, the United States, Europe and Mexico, including export requirements, taxes, tariffs, import duties and other trade barriers, as well as health, safety and environmental requirements.
        Changes, if any, in mining or investment policies or shifts in political attitude in Finland or Mexico may adversely affect the Company's operations or profitability. Operations may be affected in varying degrees by government regulations with respect to matters including restrictions on production, price controls, export controls, currency remittance, income and other taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or other interests.
        In addition, the Company has no significant operating experience in Finland, Mexico or internationally. Finland and Mexico operate under significantly different laws and regulations and there exist cultural and language differences between these countries and Canada. Also, the Company will face challenges inherent in efficiently managing an increased number of employees over large geographical distances, including the challenges of staffing and managing operations in multiple locations and implementing appropriate systems, policies, benefits and compliance programs. These challenges may divert management's attention to the detriment of the Company's operations in Quebec. There can be no assurance that difficulties associated with the Company's expanded foreign operations can be successfully managed.
6

The Company may experience problems in executing acquisitions or managing and integrating any completed acquisitions with its existing operations.
        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 acquisition 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 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 the risks related to increased leverage, while equity financing may cause existing shareholders to suffer dilution. The Company is permitted under the terms of its new unsecured revolving bank credit facility to incur additional unsecured indebtedness provided that it complies with certain covenants, including, that no default under the credit facility has occurred and is continuing, or would occur as a result of the incurrence or assumption of such indebtedness, the terms of such indebtedness are no more onerous to the Company than those under the credit facility and such indebtedness does not require principal payments until at least 12 months following the then existing maturity date of the credit facility. 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.
The Company's mine construction projects are subject to risks associated with new mine development, which may result in delays in the start-up of mining operations, delays in existing operations and unanticipated costs.
        The Company commenced construction of the Goldex mine project in Quebec in 2005. The Company announced in June 2006 that it would initiate development of the LaRonde Mine extension, accelerate construction at the Lapa mine project in Quebec, and build the Kittila mine project in northern Finland. In April 2007, the Company acquired the development-stage Meadowbank mine project in Nunavut, Canada and in August 2007, the Company announced that it would build the Pinos Altos mine project in northern Mexico.
        The Company believes that, on completion, the LaRonde Mine extension will be one of the deepest operations in the Western Hemisphere with an expected maximum depth of 3,110 metres. The operations of the LaRonde Mine extension will rely on a series of new systems for the hauling of ore and materials to the surface, including a winze (or internal shaft) and series of ramps linking mining deposits to the Penna Shaft that services current operations at the LaRonde Mine. The depth of the operations could pose significant challenges to the Company such as managing geomechanical risks and ventilation and air conditioning requirements, which may result in difficulties and delays in achieving gold production objectives.
        The development of the LaRonde Mine extension and the Goldex, Lapa, Kittila and Pinos Altos mine projects require the construction of significant new underground mining operations. The construction of these underground mining facilities is subject to a number of risks, including unforeseen geological formations, implementation of new mining processes, delays in obtaining required construction, environmental or operating permits, and engineering and mine design adjustments. These risks may result in delays in the planned start up dates and in additional costs being incurred by the Company beyond those budgeted. Moreover, the construction activities at the LaRonde Mine extension will take place concurrently with normal mining operations at LaRonde, which may result in conflicts with, or possible delays to, existing mining operations.
The Company may experience difficulties in developing or operating its recently acquired Meadowbank mine project as a result of the project's remote location.
        The Company's Meadowbank mine project is located in the Kivalliq District of Nunavut in northern Canada, approximately 70 kilometres north of Baker Lake. Though the Company has now substantially completed a 110 kilometre all-weather road from Baker Lake, which provides summer shipping access via
7

Hudson Bay, to the Meadowbank mine project, the Company's operations at the Meadowbank mine project will be constrained by the remoteness of the project, particularly as the port of Baker Lake is only accessible approximately 2.5 months per year. Some of the materials that the Company requires for the construction and operation of the Meadowbank mine project are currently in high demand due to the increased level of activity in the global mining industry and some of these items currently have extended order times. If the Company cannot identify and procure suitable equipment, within such timeframe as would permit transporting such equipment to the Meadowbank mine project, this may result in delays to the construction schedule of the Meadowbank mine project and may also delay the start-up of mining operations and/or increase estimated costs.
        The remoteness of the Meadowbank mine project also necessitates its operation as a fly-in/fly-out camp operation which may have an impact on the Company's ability to attract and retain qualified mining personnel. If the Company is unable to attract and retain sufficient personnel or sub-contractors on a timely basis, this may have an adverse effect on the Company's future development plans and operations at the Meadowbank mine project.
The Company's total cash costs per ounce of gold production depend, in part, on external factors that are subject to fluctuation and, if such costs increase, some or all of the Company's activities may become unprofitable.
        The Company's total cash costs per 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 these factors and the gold price. Total cash costs per ounce from the Company's operations outside Canada will be affected by the exchange rates between the European Union Euro or the Mexican peso and the US dollar. All of these factors are beyond the Company's control. If the Company's total cash costs per ounce of gold rise above the market price of gold and remain so for any sustained period, the Company may experience losses and may curtail or suspend some or all of its exploration, development and mining activities.
        Total cash costs per ounce 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 "Item 5. Operating and Financial Review and Prospects — Results of Operations — Production Costs" for reconciliation of total cash costs per ounce and minesite costs per tonne to figures presented in the consolidated financial statements prepared in accordance with US GAAP.
The exploration of mineral properties is highly speculative, involves substantial expenditures and is frequently unproductive.
        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 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.
8

Mineral reserve and mineral resource estimates are only estimates and such estimates may not accurately reflect future mineral recovery.
        The figures for mineral reserves and mineral resources published by the Company 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 resources. Such figures have been determined based on assumed metals prices, foreign exchange rates and operating costs. For example, the Company has estimated proven and probable mineral reserves based on, among other things, a $583 per ounce gold price. While monthly average gold prices have been above $583 per ounce since April 2006, for the five years prior to that, the market price of gold was, on average, below $583 per ounce. Prolonged declines in the market price of gold (or other applicable metals prices) 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 may 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 (or other applicable metals prices), 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 the mineral reserve, 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.
        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.
The Company may have difficulty financing its additional capital requirements for its planned mine construction, exploration and development.
        The exploration and development of the Company's properties, including continuing exploration and development projects in Quebec, Nunavut, Finland, Mexico and Nevada and the construction of mining facilities and commencement of mining operations at the LaRonde Mine extension and the Goldex, Kittila, Lapa, Pinos Altos and Meadowbank mine projects will require substantial capital expenditures. In addition, the Company will have further capital requirements to the extent that it decides to expand its present operations and exploration activities or construct additional new mining and processing operations at any of its properties or take advantage of opportunities for acquisitions, joint ventures or other business opportunities that may arise. Also, the Company may incur major unanticipated expenses related to exploration, development or mine construction or maintenance on its properties. Failure to obtain any financing necessary for the Company's capital expenditure plans may result in a delay or indefinite postponement of exploration, development or production on any or all of the Company's properties. Historically, the Company has financed its expenditures through a combination of offerings of equity and debt securities, bank borrowing and cash flow generated from operations at the LaRonde Mine, and the Company expects to use such sources of funds to finance its anticipated expenditures. However, additional financing may not be available when needed or, if available, the terms of such financing may not be favourable to the Company and, if raised by offering equity securities, any additional financing may involve substantial dilution to existing shareholders. Failure to raise capital when needed or on reasonable terms may have a material adverse effect on the Company's business, financial condition and results of operations.
If the Company fails to comply with restrictive covenants in its bank credit agreement, the Company's loan availability could be limited and the Company may be in default under other debt agreements, which could harm the Company's business.
        The Company's new unsecured $300 million revolving bank credit facility limits, among other things, the Company's ability to incur additional indebtedness, permit the creation of certain liens, make investments in a business, or carry on business, unrelated to mining, dispose of the Company's material assets or, in certain circumstances, pay dividends. Further, the bank credit facility requires the Company to maintain specified
9

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, the Company anticipates that it will draw on the bank credit facility to fund part of the capital expenditures required in connection with its current development projects. 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. 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.
The mining industry is highly competitive and the Company may not be successful in competing for new mining properties.
        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, leasing or other acquisitions 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 staff than the Company. Accordingly, there can be no assurance that the Company will be able to compete successfully for new mining properties.
Due to the nature of the Company's mining operations, the Company may face liability, delays and increased production costs from environmental and industrial accidents and pollution, and the Company's insurance coverage may prove inadequate to satisfy future claims against the Company.
        The business of gold mining is generally subject to risks and hazards, including environmental hazards, industrial accidents, unusual or unexpected rock formations, changes in the regulatory environment, cave-ins, rock bursts, rock falls, pit wall failures 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 these circumstances, the Company may be required to incur significant costs that could have a material adverse effect on its financial performance and results of operations.
The Company's operations are subject to numerous laws and extensive government regulations, which may cause a reduction in levels of production, delay or the prevention of the development of new mining properties or otherwise cause the Company to incur costs that adversely affect the Company's results of operations.
        The Company's mining and mineral processing operations and exploration activities are subject to the laws and regulations of federal, provincial, state and local governments in the jurisdictions in which the Company operates. These laws and regulations are extensive and govern 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. New laws or regulations, 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.
        Under mine closure plans originally submitted to the Minister of Natural Resources in Quebec in 1996, the estimated reclamation costs for the LaRonde Mine and the adjacent Bousquet property are approximately $44 million and $3 million, respectively. Every five years mine closure plans must be amended to reflect any
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changes in circumstances surrounding a property and resubmitted to the Minister of Natural Resources. These amended 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, 2007, the Company had recorded an asset retirement obligation in its financial statements of $45 million, including $15.2 million allocated for the LaRonde Mine and $7.4 million allocated for the Bousquet property.
Fluctuations in foreign currency exchange rates in relation to the US dollar may adversely affect the Company's results of operations.
        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 costs and a substantial portion of its 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, 2003 to December 31, 2007, the Noon Buying Rate fluctuated from a high of $1.5750 to a low of $0.9059. 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 2008 after-tax operating results, a 10% change in the US dollar/Canadian dollar exchange rate from the 2007 market average exchange rate would affect net income by approximately $0.11 per share. To attempt to mitigate 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. See "Item 5. Operating and Financial Review and Prospects — Outlook — Gold Production Growth" for a description of the assumptions underlying this sensitivity and the strategies used to mitigate the effects of risks. In addition, a significant portion of the Company's expenditures at the Kittila mine project and the Pinos Altos mine project will be denominated in European Union Euros and Mexican Pesos, respectively. Each of these currencies has varied significantly against the US dollar over the past several years. There can be no assurance that the Company's foreign exchange derivatives strategies will be successful or that foreign exchange fluctuations will not materially adversely affect the Company's financial performance and results of operations.
The use of derivative instruments for the Company's byproduct metal production may prevent gains from being realized from subsequent byproduct metal price increases.
        While the Company's general policy is not to sell forward its future gold production, the Company has used, and may in the future use, various byproduct metal derivative strategies, such as selling future contracts or purchasing put options. The Company continually evaluates the potential short and long-term benefits of engaging in such derivative strategies based upon current market conditions. No assurance can be given, however, that the use of byproduct metal derivative strategies will benefit the Company in the future. There is a possibility that the Company could lock in forward deliveries at prices lower than the market price at the time of delivery. In addition, the Company could fail to produce enough byproduct metals to offset its forward delivery obligations, causing the Company to purchase the metal in the spot market at higher prices to fulfill its delivery obligations or, for cash settled contracts, make cash payments to counterparties in excess of byproduct revenue. If the Company is locked into a lower than market price forward contract or has to buy additional quantities at higher prices, its net income could be adversely affected. None of the current contracts establishing the byproduct metal derivatives positions qualified for hedge accounting treatment under US GAAP. See "Item 11. Quantitative and Qualitative Disclosures About Market Risk — Derivatives".
The trading price for Agnico-Eagle shares is volatile.
        The trading price of the Company's common shares has been and may continue to be subject to large fluctuations and, therefore, the trading price of securities convertible into or exchangeable for the Company's common shares may also fluctuate significantly, which may result in losses to investors. The trading price of the Company's common shares may increase or decrease in response to a number of events and factors, including:
•
current events affecting the economic situation in Canada, the United States and elsewhere;
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•
trends in the mining industry and the markets in which the Company operates;

•
changes in the market price of the commodities the Company sells;

•
changes in financial estimates and recommendations by securities analysts;

•
acquisitions and financings;

•
quarterly variations in operating results;

•
the operating and share price performance of other companies that investors may deem comparable; and

•
purchases or sales of blocks of the Company's common shares or securities convertible into or exchangeable for the Company's common shares.
        Wide price swings are currently common in the stock market. This volatility may adversely affect the prices of the Company's common shares and the securities convertible into or exchangeable for the Company's common shares regardless of the Company's operating performance.
The Company may not be able to comply with the requirements of the Sarbanes Oxley Act.
        In 2007, the Company documented and tested its internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX"). As of December 31, 2006, SOX requires an annual assessment by management of the effectiveness of the Company's internal control over financial reporting. In addition, as of December 31, 2007, SOX also requires an annual attestation report by the Company's independent auditors addressing the effectiveness of the Company's internal control over financial reporting. The Company has successfully completed its Section 404 assessment and received the auditors' attestation as of December 31, 2007.
        If the Company fails to maintain the adequacy of its internal control over financial reporting, as such standards are modified, supplemented, or amended from time to time, the Company may not be able to ensure that it can conclude on an ongoing basis that it has effective internal controls over financial reporting in accordance with Section 404 of SOX. The Company's failure to satisfy the requirements of Section 404 of SOX on an ongoing, timely basis could result in the loss of investor confidence in the reliability of its financial statements, which in turn could harm the Company's business and negatively impact the trading price of its common shares. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company's operating results or cause it to fail to meet its reporting obligations. Future acquisitions of companies may provide the Company with challenges in implementing the required processes, procedures and controls in its acquired operations. Acquired companies may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those required by securities laws currently applicable to the Company.
        No evaluation can provide complete assurance that the Company's internal control over financial reporting will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be reported. The effectiveness of the Company's controls and procedures could also be limited by simple errors or faulty judgments. In addition, as the Company continues to expand, the challenges involved in implementing appropriate internal controls over financial reporting will increase and will require that the Company continue to improve its internal control over financial reporting. Although the Company intends to devote substantial time and incur substantial costs, as necessary, to ensure ongoing compliance, the Company cannot be certain that it will be successful in continuing to comply with Section 404 of SOX.
Potential unenforceability of civil liabilities and judgments.
        The Company is incorporated under the laws of the Province of Ontario, Canada. The majority 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. The Company's Canadian counsel has advised the Company 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. The Company cannot provide assurance 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.
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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, mine construction projects in northwestern Quebec, northern Finland, Nunavut and northern Mexico and exploration activities in Canada, Finland, Mexico and the United States. The Company's operating history includes over three decades of continuous gold production primarily from underground operations. Since its formation in 1972, the Company has produced over 5.0 million ounces of gold. For definitions of certain technical terms used in the following discussion, see "— Property, Plant and Equipment — Mineral Reserve and Mineral Resource".
        The Company believes it is currently one of the lowest total cash costs per ounce producers in the North American gold mining industry. In 2007, the Company produced 230,992 ounces of gold at a total cash costs per ounce of minus $365, that is, net of revenues received from the sale of silver, zinc and copper byproducts. For 2008, the Company expects total cash costs per ounce of gold produced to be approximately $48. These expected higher costs compared to 2007 are due to lower assumed prices for byproduct metals from the LaRonde Mine than those realized in 2007 and higher production costs associated with gold sourced from new mines at the Goldex mine project and the Kittila mine project, which do not contain any byproduct metals. See "Note to Investors Concerning Certain Measures of Performance" for a discussion of the use of the non-US GAAP measure total cash costs per ounce. 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.
        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 and the Goldex and Lapa mine projects are situated, with a view to increasing annual gold production and gold mineral reserves. In addition, the Company will continue exploration, development and construction at its Kittila mine project in northern Finland, Pinos Altos mine project in northern Mexico and Meadowbank mine project in Nunavut. 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.
        The Company operates through four regional units: the Quebec Region, the European Region, the Mexican Region and the Nunavut Region. The Quebec region includes the LaRonde Mine, the LaRonde Mine extension project and the Goldex and Lapa mine projects, each of which is held directly by the Company. The Company's operations in the European Region are conducted through its indirect subsidiary, Riddarhyttan Resources AB ("Riddarhyttan"), which indirectly owns the Kittila mine project in Finland. The Company's operations in the Mexican Region are conducted through its subsidiary, Agnico Eagle Mexico S.A. de C.V., which owns the Pinos Altos mine project. The Nunavut Region is comprised of the Meadowbank mine project, which is administered from an office in Vancouver, British Columbia and is held directly by the Company. In addition, the Company has an international exploration office in Reno, Nevada.
        The LaRonde Mine currently accounts for all of the Company's gold production, though production from mines at the Goldex mine project and the Kittila mine project is expected to commence in April 2008 and September 2008, respectively. Since the commissioning of the mill in 1988, the LaRonde Mine has produced over 4.0 million ounces of gold. In March 2000, the Company completed the Penna Shaft at the LaRonde Mine to a depth of 2,250 metres. Production was expanded at the LaRonde Mine to 6,350 tonnes of ore treated per day in October 2002 and the milling complex has been operating well above this level for the last four years. In May 2006, the Company initiated construction of the LaRonde Mine extension, additional infrastructure to extend the LaRonde Mine below Level 245 (previously referred to as the LaRonde II project).
        The Company expects production from the LaRonde Mine extension to commence in 2011. The Company has initiated several other additional projects anticipated to begin production over the next three years. In July 2005, the Company began construction at the Goldex mine project, where initial production is expected to commence in April 2008. In June 2006, the Company initiated construction of the Kittila mine project and announced on June 5, 2006 that it would accelerate construction of the Lapa mine project, with the Kittila mine project expected to commence production in September 2008 and the Lapa mine project in 2009. In April 2007,
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the Company acquired Cumberland Resources Ltd. ("Cumberland"), which owned the development-stage Meadowbank mine project, which is expected to commence production in 2010. In March 2006, the Company acquired the Pinos Altos property in northern Mexico and in August 2007, the construction of a mine at Pinos Altos was approved. Production from the Pinos Altos mine project is expected to begin in 2009.
        The Company's exploration program focuses primarily on the identification of new mineral reserve, mineral resource and development opportunities in proven gold producing regions. Current exploration activities are concentrated in northwestern Quebec, Nunavut, northern Finland, northern Mexico and Nevada. Several other projects were evaluated during the year in different countries where the Company believes the potential for gold occurrences is excellent and which the Company believes to be politically stable and supportive of the mining industry. The Company currently manages several projects which it owns or has an interest in. Currently, the Company manages exploration on 80 properties in central and eastern Canada, seven properties in Nevada and Idaho in the United States, two properties in Finland, and two properties in Mexico. In 2006, the Company opened administrative offices in Chihuahua, Mexico and in Helsinki and Kittila, Finland and, in 2007, in Vancouver, Canada.
        In addition, the Company continuously evaluates opportunities to make strategic acquisitions. In the second quarter of 2004, the Company acquired an approximate 14% ownership interest in Riddarhyttan, a Swedish precious and base metals exploration and development company that was at the time listed on the Stockholm Stock Exchange. In November 2005, the Company completed a tender offer (the "Riddarhyttan Offer") for all of the issued and outstanding shares of Riddarhyttan that it did not own. The Company issued 10,023,882 of its shares and paid and committed an aggregate of $5.1 million cash as consideration to Riddarhyttan shareholders in connection with the Riddarhyttan Offer. The Company, through wholly-owned subsidiaries, currently holds 100% of Riddarhyttan. Riddarhyttan, through its wholly-owned subsidiary, Agnico-Eagle AB, is the 100% owner of the Kittila mine project, located approximately 900 kilometres north of Helsinki near the town of Kittila in Finnish Lapland.
        In the first quarter of 2005, the Company entered into an exploration and option agreement with Industrias Penoles S.A. de C.V. ("Penoles") to acquire the Pinos Altos project in northern Mexico. The Pinos Altos property is comprised of approximately 11,000 hectares in the Sierra Madre gold belt, approximately 225 kilometres west of the city of Chihuahua in the state of Chihuahua in northern Mexico. In February 2006, the Company exercised the option and the Company acquired the Pinos Altos property on March 15, 2006. Under the terms of the exploration and option agreement, the purchase price of $66.8 million was comprised of $32.5 million in cash and 2,063,635 shares of the Company.
        In February 2007, the Company announced that it and its wholly-owned subsidiary, Agnico-Eagle Acquisition Corporation ("Agnico Acquisition") had signed an agreement with Cumberland, a pre-production development stage company listed on the Toronto Stock Exchange (the "TSX") and American Stock Exchange, under which the Company and Agnico Acquisition agreed to make an exchange offer (the "Cumberland Offer") for all of the outstanding shares of Cumberland not already owned by the Company. In May 2007, the Company announced that it had acquired over 92% of the issued and outstanding shares of Cumberland that it did not previously own and in July 2007, the Company completed the acquisition of all Cumberland shares by way of a compulsory acquisition. The Company issued 13,768,510 of its shares and paid $8.6 million cash as consideration to Cumberland shareholders in connection with the Cumberland Offer.
        In 2007, the Company's capital expenditures were $511 million. The 2007 capital expenditures included $87 million at the LaRonde Mine (which was comprised of $34 million of sustaining capital expenditure and $53 million comprised mostly of expenditures on the LaRonde Mine extension and the ramp below Level 215), $105 million at the Goldex mine project, $29 million at the Lapa mine project, $82 million at the Kittila mine project and $170 million at the Meadowbank mine project. In addition, the Company spent $26 million on exploration activities at the Company's grassroots exploration properties. Budgeted 2008 exploration and capital expenditures of $591 million include $68 million at the LaRonde Mine (including $33 million on sustaining capital expenditures and $35 million on the LaRonde Mine extension), $25 million at the Goldex mine project, $78 million at the Lapa mine project, $96 million at the Kittila mine project, $184 million at the Meadowbank mine project and $140 million at the Pinos Altos project. In addition, the Company plans exploration expenditures on grassroots exploration projects of approximately $29 million. The financing for these
14

expenditures is expected to be from internally generated cash flow from operations, from the Company's existing cash balances and from drawdowns of the Company's new bank credit facility. Depending on the success of the exploration programs at these and other properties, the Company may be required to make additional capital expenditures for exploration, development and preproduction.
        Capital expenditures by the Company in 2006 and 2005 were $149 million and $70 million, respectively. In 2006, these capital expenditures included $47 million at the LaRonde Mine (including the LaRonde Mine extension), $62 million at the Goldex mine project and $14 million at the Lapa mine project. Capital expenditures in 2005 were comprised of $43 million at the LaRonde Mine (including the LaRonde Mine extension), $14 million at the Goldex mine project and $13 million at the Lapa mine project.
        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 the name "Cobalt Consolidated Mining Corporation Limited". Eagle was incorporated under the laws of the Province of Ontario on August 14, 1945.
        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.
        On August 1, 2007, the Company, Agnico Acquisition, Cumberland and a wholly-owned subsidiary of Cumberland, Meadowbank Mining Corporation, amalgamated under the laws of the Province of Ontario and continued under the name of Agnico-Eagle Mines Limited.
        The Company has an approximately 13.1% interest in Stornoway Diamond Corporation ("Stornoway"), a public company listed on the TSX under the symbol "SWY". Stornoway is a diamond exploration company with an extensive property portfolio in northern Canada and Botswana. Stornoway is incorporated under the laws of the Province of British Columbia. The Company acquired a portion of its interest in Stornoway in connection with a share exchange take-over bid made by Stornoway for Contact Diamond Corporation ("Contact"), which was at the time a TSX-listed exploration and development company with diamond properties in Ontario, Quebec and the Northwest Territories. The Company acquired 4,968,747 common shares of Stornoway through the tender of its entire interest (approximately 31%) in Contact to this offer. The rest of the Company's interest in Stornoway was obtained through the purchase of subscription receipts of Stornoway for $22.5 million through which the Company acquired an additional 17,629,084 common shares of Stornoway on September 19, 2006, pursuant to a note assignment agreement dated February 12, 2007 between the Company, Stornoway and Contact whereby the C$4,009,825 debt owed to the Company was satisfied by the issuance to the Company of 3,207,861 common shares of Stornoway and the remainder were issued to the Company in satisfaction of interest payment obligations of Stornoway under convertible debentures held by the Company. On January 17, 2007, Stornoway completed its acquisition of Contact by way of a compulsory acquisition.
        The Company's executive and registered office is located at Suite 400, 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. The Company's principal place of business in the United States is located at 5470 Louie Lane, Suite 102, Reno, Nevada 89511.
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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 and exploration and development projects are located in areas that are supportive of the mining industry. The Company's current mine and three of its construction projects are located in northwestern Quebec, one of North America's principal gold-producing regions. The Company's Meadowbank mine project in Nunavut, Kittila mine project in northern Finland and Pinos Altos mine project in northern Mexico are each located in regions which the Company believes are also supportive of the mining industry.
        Second, the Company believes that it is one of the lowest total cash costs per ounce producers in the North American gold mining industry, with total cash costs per ounce of gold produced of minus $365 in 2007. The Company has achieved significant improvements in this measure 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.
        Third, the Company's existing operations at the LaRonde Mine provide a strong economic base for additional mineral reserve and production development at the property and in the Abitibi region of northwestern Quebec and for the development of its projects in Nunavut, Finland and Mexico. The experience gained through building and operating the LaRonde Mine is expected to assist with the Company's development of its other mine projects. In addition, the extensive infrastructure associated with the LaRonde Mine is expected to support the mine construction projects at the nearby Goldex and Lapa properties, and the construction of the LaRonde Mine extension.
        Fourth, the Company's senior management team has an average of approximately 20 years of experience in the mining industry. Management's significant experience has underpinned 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 Mine is expected to benefit the Company's current expansion program in Quebec, Nunavut, Finland and Mexico.
        The Company believes it can benefit not only from the existing infrastructure at its mine, 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 Mine 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 Quebec, Nunavut, Finland and Mexico with a view to increasing annual gold production and gold mineral reserves. In 2005, the Company initiated construction of the Goldex mine project. In 2006, the Company accelerated construction of the Lapa mine project and initiated construction of the LaRonde Mine extension and the Kittila mine project in northern Finland. In 2007, the Company began construction of the Pinos Altos mine project in northern Mexico and acquired the Meadowbank mine project in Nunavut.
        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 believes that it 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 development and producing properties.
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Mining Legislation and Regulation
Canada
        The mining industry in Canada operates under both federal and provincial or territorial legislation governing prospecting and 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 or territorial levels concerning the protection of the environment. The primary federal regulatory authorities with jurisdiction over the Company's mining operations in respect of environmental matters is the Department of Fisheries and Oceans (Canada) and Environment Canada. The construction, development and operation of a mine, mill or refinery requires compliance with applicable environmental laws and regulations and/or review processes including obtaining land use permits, water permits, air emissions certifications, industrial depollution attestations, 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 affecting 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 guarantees and the long-term management of closed mines.
Quebec
        In Quebec, mining rights are governed by the Mining Act (Quebec). 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. 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 mining claims, concessions or leases) and filed with the Ministry of Natural Resources and Wildlife (Quebec). The amount of exploration work (and bi-annual rental fee) required bi-annually currently ranges from C$48 to C$3,600 per claim depending on its location, area and period of validity (the rate is fixed by Quebec Government regulations). In 1966, the mining concession system set out for lands containing mineralized zones by the Mining Act (Quebec) was replaced by a system of mining leases but the mining concessions sold prior to such replacement remained in force. A mining lease entitles its holder to mine and remove valuable mineral substances from the subject land, providing it pays the annual rental set by Quebec government regulations, which currently range from C$19 (on land privately held) to C$39 (on land within the domain of the State) per hectare. Leases are granted initially for a term of 20 years and are renewable up to three times, each for a duration of 10 years. After the third renewal, the Minister of Natural Resources and Wildlife may grant an extension thereof on the conditions, for the rental and for the term he determines.
        In Quebec, the primary provincial regulatory authorities with jurisdiction over the Company's mining operations in respect of environmental matters are the Ministry of Sustainable Development, Environment and Parks (Quebec) and the Ministry of Natural Resources and Wildlife (Quebec).
Nunavut
        As a result of the Nunavut Land Claims Agreement (the "Land Claims Agreement") of July 1993, ownership of large tracts of land was granted to the Inuit. These Inuit owned lands ("IOL") include areas with high mineral potential. Further, as a result of other rights granted to the Inuit in the Land Claims Agreement, managerial responsibility with respect to natural resources and environment in the Nunavut Territory is shared between the federal government and Inuit organizations. Under the Land Claims Agreement, the Inuit own surface rights to certain lands representing approximately 16% of Nunavut. For a portion of the Inuit owned lands representing approximately 2% of Nunavut, the Inuit also own mineral (subsurface) rights in addition to the surface rights.
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        In Nunavut, the Crown's mineral rights are administered by the Department of Indian and Northern Affairs (Canada) in accordance with the Northwest Territories and Nunavut Mining Regulations (the "Territorial Mining Regulations") under the Territorial Lands Act (Canada). The Inuit mineral rights in subsurface Inuit owned lands are owned and administered by Nunavut Tunngavik Incorporated ("Nunavut Tunngavik"), an Inuit birthright corporation.
        Future production from Nunavut Tunngavik-administered mineral claims is subject to production leases which includes a 12% net profits interest royalty from which annual deductions are limited to 85% of gross revenue. Production from Crown mining leases is subject to a royalty of up to 14% of adjusted net profits, as defined in the Territorial Mining Regulations.
        The Kivalliq Inuit Association (the "KIA") is the Inuit organization that holds surface rights to the Inuit owned lands in the Kivalliq region and is responsible for administering surface rights on these lands on behalf of the Inuit of the region. In order to conduct exploration work on Inuit owned lands, the Company is required to submit a project proposal or work plan. Such a proposal is subject to KIA approval for surface land tenure and to review by other boards established by the Land Claims Agreement to determine environmental effects and, if needed, to grant water rights. Federal and territorial government departments participate in the reviews conducted by these boards. For mine development, the Company will require a surface lease and water compensation agreement with the KIA and a licence for the use of water, including the deposit of waste.
        During mine construction and operations, the Company will be subject to additional Nunavut and federal government regulations related to environmental, safety, fire and other operational matters.
Finland
        Mining legislation in Finland consists of the Mining Act and the Mining Decree , which are currently being reformed. The reform is still in its early stages, and the eventual draft for a Government proposal will be circulated widely for comment before being passed on to the Parliament. In Finland, any individual, corporation, or foundation having its principal place of business or central administration within the European Economic Area is entitled to the same rights to carry out prospecting, to stake a claim and to exploit a deposit as any Finnish citizen or corporation.
        The Ministry of Employment and the Economy ("MEE") is primarily responsible for mining legislation and administration as well as granting concessions. If there are no impediments to granting a claim, the MEE is obliged to grant the applicant a prospecting licence. The MEE has no power of discretion as to the material merits of the mining operation. A prospecting licence, which is in force for one to five years, depending on the scope of the search for mineable minerals, gives the holder the right to examine the area in order to determine the size and scope of the deposit. In order to obtain the rights to the mineable minerals located on the claim, the claimant must apply to the MEE for the appropriation of a mining patent. When the mining patent procedure has become final (i.e., unappealable) regarding all matters other than compensation, the MEE must issue the mining operator a mining certificate which gives the holder the right to fully exploit all mineable minerals found in the mining patent.
        Mining operations must be carried out in accordance with a number of laws and regulations concerning conservation and environmental protection issues. Under the Environmental Protection Act , mining activities require an environmental permit which is issued either for a definite, or for an indefinite, period of time. The Act is based on the principles of prevention and minimising of damages and hazards, application of the best available technology, application of the best environmental practice and "polluter pays".
        The Act on Compensation for Environmental Damage includes provisions on the compensation for damage to a person or property resulting from pollution of water, air or soil, noise, vibration, radiation, light, heat or smell, or other similar nuisance caused by an activity carried out at a fixed location. This Act is based on the principle of strict liability, that is liability without fault if the causal relation between the activity and the damage can be established.
        In addition to the environmental permit, mining operators require several other permits and obligations under environmental protection legislation.
18

        According to the Land Use and Building Act , the buildings and constructions required in mining will require building permits. Furthermore, according to the Act on Environmental Impact Assessment Procedure , certain projects always require compliance with an environmental impact assessment procedure. These include major projects with a considerable impact on the environment, such as the excavation, enrichment and handling of metals and other minerals in cases where the excavated material is estimated to exceed 550,000 tonnes annually. A permit authority may not give its approval to an activity covered by the scope of the Act on the Environmental Impact Assessment Procedure without having taken an environmental impact assessment report into consideration.
Mexico
        Mining in Mexico is subject to the Mining Law , a federal law. Under the Mexican Constitution, all minerals belong to the Mexican Nation. Private parties may explore and extract them pursuant to mining concessions granted by the executive branch of the Mexican Federal Government, as a general rule to whoever first claims them. While the Mining Law touches briefly upon labour, occupational or worker health and safety standards, these are primarily dealt with by the Federal Labour Law , also a federal statute. The Mining Law also briefly addresses environmental matters, which are primarily regulated by the General Law of Ecological Balance and Protection of the Environment , also of federal jurisdiction.
        The primary agencies with jurisdiction over mining activities are the Ministry of the Economy, the Ministry of Labor and Social Welfare and the Ministry of the Environment and Natural Resources. The National Water Commission has jurisdiction regarding the granting of water rights and the Ministry of Defense as concerns the use of explosives.
        Concessions are for 50 years, renewable once. The main obligations to keep them current are the semi-annual payment of mining duties (taxes), based on the surface area of the concession, and the performance of work in the areas covered by the concessions, which is evidenced by minimum expenditures or by the production of ore.
Organizational Structure
        The Company's significant subsidiaries (all of which are wholly owned, unless otherwise indicated) include Riddarhyttan, 1715495 Ontario Inc., which owns all of the shares of Agnico-Eagle Sweden AB, Agnico-Eagle Sweden AB, a Swedish company through which the Company holds its interest in Riddarhyttan, and Agnico-Eagle AB, a Swedish company through which Riddarhyttan holds its interest in the Kittila mine project. In addition, the Company's interest in the Pinos Altos mine project in northern Mexico is held through its wholly-owned Mexican subsidiary, Agnico Eagle Mexico S.A. de C.V., which is owned, in part, by 1641315 Ontario Inc. The Company's only other significant subsidiaries are Agnico-Eagle (Delaware) LLC, Agnico-Eagle (Delaware) II LLC and Agnico-Eagle (Delaware) III LLC, each a limited liability company organized under the laws of Delaware. The LaRonde Mine (including the LaRonde Mine extension), the Goldex mine project, the Lapa mine project and the Meadowbank mine project are each owned directly by the Company.
        The Company's wholly-owned subsidiaries Servicios Agnico Eagle Mexico, S.A. de C.V. and Servicios Pinos Altos, S.A. de C.V. provide services in connection with the Company's operations in Mexico. Riddarhyttan Resources Oy provides services in connection with the Company's operations at the Kittila mine project in Finland. The Company's operations in the United States are conducted through Agnico-Eagle (USA) Limited.
        In addition, the Company has an approximate 13.1% interest in Stornoway, a TSX listed diamond exploration company, organized under the laws of British Columbia. See "— History and Development of the Company".
        The following chart sets out the corporate structure of the Company together with the jurisdiction of incorporation of each of the Company's subsidiaries as at March 14, 2008:
19

Agnico-Eagle Organizational Chart
         
Property, Plant and Equipment
Quebec Region
        The LaRonde Mine and the Goldex and Lapa mine projects and the Bousquet and Ellison properties are located in the Abitibi region of northwestern Quebec. The Abitibi region is characterized by an availability of experienced mining personnel. The climate of the region is continental and the average annual rainfall is 64 centimetres and the average annual snowfall is 318 centimetres. 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.
20

Location Map of Abitibi Properties
         
LaRonde Mine
        The LaRonde Mine is situated approximately 60 kilometres west of the City of Val d'Or in northwestern Quebec (approximately 650 kilometres northwest of Montreal, Canada) in the municipalities of Preissac and Cadillac. At December 31, 2007, the LaRonde Mine was estimated to contain proven mineral reserves of approximately 416,000 ounces of gold comprised of 4.7 million tonnes of ore grading 2.77 grams per tonne and probable mineral reserves of 4.5 million ounces of gold comprised of 30.2 million tonnes of ore grading 4.67 grams per tonne. The Company's LaRonde Mine consists of the LaRonde property, and the adjacent El Coco and Terrex properties, each of which is 100% owned and operated by the Company. The LaRonde Mine can be accessed from either Val d'Or in the east or Rouyn-Noranda in the west, which are located approximately 60 kilometres from the LaRonde Mine via Quebec provincial highway No. 117. The LaRonde Mine is situated approximately two kilometres north of highway No. 117 on Quebec regional highway No. 395. The Company has access to the Canadian National Railway at Cadillac, Quebec, approximately six kilometres from the LaRonde Mine. The elevation is 337 metres 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 four kilometres to the mine site through a surface pipeline.
        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 one provincial mining lease and covers in total approximately 884.1 hectares. The El Coco property consists of 22 contiguous mining claims and a provincial mining lease and covers in total approximately 356.7 hectares. The Terrex property consists of 20 mining claims that cover in total approximately 408.4 hectares. The mining leases 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 leases are expected to be renewed in early 2008. The Company also has two surface rights leases covering approximately 122.3 hectares that relate to the water pipeline right of way from Lake Preissac and the eastern extension of the LaRonde tailings pond #7 on the El Coco property. The surface rights leases are renewable annually.
        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 on future production from approximately 500 metres east of the LaRonde property
21

boundary. The remaining 1,500 metres is subject to a 4% net smelter return royalty. This area of the property is now substantially mined out and the Company has not paid royalties since 2004 and does not expect to pay royalties in 2008. 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% net smelter return royalty to Breakwater Resources Ltd. and a 2% 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 1,207 metre 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 242 at the Penna Shaft. The mineral reserve accessible from Shaft #1 was depleted in September 2000 and Shaft #1 is no longer in use. A second production shaft (Shaft #2), located approximately 1.2 kilometres to the east of Shaft #1, was completed in 1994 down to a depth of 525 metres 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 (approximately 280 metres). A third shaft (the Penna Shaft) located approximately 800 metres to the east of Shaft #1, was completed down to a depth of 2,250 metres in March 2000. The Penna Shaft is used to mine Zones 20 North, 20 South, 7 and 6. As part of the LaRonde Mine extension, the Company is currently sinking an 835 metre internal shaft from Level 215 to access the ore below Level 245. At December 31, 2007, this internal shaft extended 20 metres below Level 215 and will eventually reach a total depth of 2,865 metres below surface.
        Four mining methods have historically been used at the LaRonde Mine: open pit for the three 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 2007, two mining 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 30 metre and 40 metre vertical intervals, depending on the depth. Stopes are undercut in 15 metre panels. In the longitudinal method, panels are mined in 15 metre 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 in 2000 and located on the surface at the processing facility. On the second pass, the remainder of the ore is mined and filled with unconsolidated waste rock fill or cemented paste backfill.
        Surface facilities at the LaRonde Mine include a processing plant with a daily capacity of 6,350 tonnes of ore, which has been expanded four times from the original 1,630 tonnes of ore treated per day rate. The expansion to 6,350 tonnes per day was completed in October 2002 and the milling complex has been operating well above this level for the past four years. This expansion consisted of additions to the grinding and precious metals circuits and modifications to the copper and zinc flotation circuits. An ore handling system was completed at the end of 1999. It included a truck dump linked by a new conveyor gallery to a coarse ore bin with a capacity of 4,500 tonnes. The coarse ore bin feeds a SAG mill that was installed at the end of 1999. Ore from the Penna Shaft is transported to the ore handling facility by 32 tonne trucks.
        The milling complex consists of a grinding, copper flotation, zinc flotation, and a precious metals recovery circuit and refinery. A copper concentrate containing approximately 73% of the gold plus byproduct silver and copper is recovered. The zinc flotation circuit produces a zinc concentrate containing approximately 5% of the gold. The remaining 14% is recovered by the precious metals circuit, including a refinery using the Merrill Crowe process, and it is shipped as dore 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 2007, zinc recoveries averaged 87% and zinc concentrate quality averaged 54% zinc. In 2007, copper recoveries averaged 86% and copper concentrate quality averaged 11% for the year.
        Since 1991, gold recoveries have averaged 93%. During 2007, gold recoveries averaged approximately 91% and silver recoveries averaged 88%. During 2007, the mill processed approximately 2.67 million tonnes of ore, averaging approximately 7,324 tonnes of ore treated per day and operating at 93% of available time.
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        The following table sets out the metal recoveries, concentrate grades and contained metals for the 2.67 million tonnes of ore extracted by the Company at the LaRonde Mine in 2007.

 	 	 	 	Copper Concentrate
(74,887 tonnes produced)
	 	Zinc Concentrate
(155,886 tonnes produced)
	 	 	 	 	 	 	
 	 	Head Grades
					 	Dore Produced
	 	Overall Metal
Recoveries
	 	Payable Production
	
 			 	Grade
	 	Recovery
	 	Grade
	 	Recovery
							
Gold	 	2.95 g/t	 	77.2 g/t	 	72.7%	 	2.6 g/t	 	5.1%	 	34,871 oz	 	91.21%	 	230,992 oz	
Silver	 	75.4 g/t	 	1,678 g/t	 	62.4%	 	167 g/t	 	13.2%	 	643,936 oz	 	87.51%	 	4,919,427 oz	
Zinc	 	3.63%	 	7.7%	 	—	 	53.6%	 	86.8%	 	—	 	86.80%	 	71,577 t	
Copper	 	0.36%	 	10.8%	 	86.2%	 	—	 	—	 	—	 	86.20%	 	7,482 t	
        Currently, water is treated at various facilities at the LaRonde Mine operations. Water contained in the tailings to be used as underground backfill is treated to degrade cyanide using a sulphur dioxide and air process (Inco). The tailings entering the tailings pond are first decanted and the clear water subjected to natural cyanide degradation. This water is then transferred to tailings pond #1 to undergo a secondary treatment at a plant located between tailings ponds #1 and #2 that uses a peroxy-silica process to destroy cyanide. As the LaRonde ore contains a lot of sulphur and that the process water was recirculated at more than 80% rate, a thiocyanate build-up in pond #2 resulted in a toxicity problem in the late 1990s. Thiocyanate is a very difficult compound to oxidise and, in 2000, the Company decided to operate at a 100% water recirculation rate while a solution to the toxicity problem was being developed. The Company determined that a biological treatment process was optimal. A biological treatment plant was placed in service in January 2004. Operation of the tailings pond with zero effluent in the interim period required raising the dykes in 2002 and again in 2004 because of the rising water levels. Prior to dyke raising in 2004, the Company advised the Quebec Ministry of the Environment that some water had to be released to permit dyke raising using the upstream method. The Quebec Ministry of the Environment sent a notice of infraction in respect of this release of slightly toxic water in March 2005. The Federal government permitted the release under a transitional discharge permit. However, the operation of the tailings pond at 100% water recirculation rates continued to increase the thiocyanate concentration and a second phase to the biological treatment plant was placed in service in December 2004 to increase the treatment capacity. The higher contaminant concentration of the biological treatment plant feed made the treatment process more susceptible to disturbances and, in June 2005, the effluent failed the toxicity test for daphnia for one week and the suspended solids exceeded the monthly average limit. The Quebec Ministry of the Environment issued a notice of infraction related to these issues in September 2005, but indicated that the infractions would not lead to any fines or sanctions. The Company engaged consultants to assist the LaRonde staff in process optimisation. The process is now more stable and the effluent remained non-toxic for 2006 and 2007. A Certificate of Authorization was granted by the Quebec Ministry of the Environment in 2006 to carry out an ammonia stripping operation of an effluent partially treated by the biological treatment plant. This allowed an increase in treatment flowrate, while keeping the final effluent toxicity free. The Certificate of Authorization was renewed in 2007 for an indefinite period.
        In addition to the above-mentioned process water treatment, water from mine dewatering and drainage water are treated to remove metals prior to discharge at a lime treatment plant located at the LaRonde mill.
        The tailings pond occupies an area of about 120 hectares and waste rock that is not used underground for backfill is brought up to surface and stored in close proximity to the tailings pond to be used for dyke raising. A waste rock pile containing approximately 1.5 million cubic metres of waste and occupying about nine hectares is located west of the mill.
Development
        In 2007, a total of 10,667 metres of lateral development was completed. Development was focused on stope preparation of mining blocks for production in 2007 and 2008, especially the preparation of the new lower mine production horizon, Level 233. A total of 1,200 metres of development work was completed for the LaRonde Mine extension mainly on Levels 170, 194, 215 and 233 for ventilation infrastructure. This development work also included construction work on a ramp from Level 215 to Level 218 for the new internal shaft.
23

        A total of 11,000 metres of lateral development is planned for 2008. The main focus of development work continues to be stope preparation. The Company plans to develop down to Level 245 and prepare the access to Zone 20 South on three levels, Level 203, Level 206 and Level 209. Finally, the Company will continue construction of a ramp up from Level 94 to Level 92. There are 400 metres of exploration drift development planned in 2008 on the Level 215 exploration drift. This new area will be used to test the new target west of the Zone 20 North below the Bousquet II shaft. For LaRonde, a total of 420 metres of development is planned mainly to complete infrastructure around the new shaft and for the future ventilation infrastructure for the LaRonde Mine extension. A total of 464 metres of shaft sinking is planned for 2008.
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 (the "CLL Fault Zone") marking the contact between the Abitibi and the Pontiac sub-provinces, located approximately two kilometres 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) 400 metres of the Kewagama Group which is made up of a thick band of interbedded wacke; (ii) 1,500 metres of the Blake River Group, a volcanic assemblage which hosts all the known economic mineralisation on the property; and (iii) 500 metres of the Cadillac Group, made up of a 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 10 kilometres within the Blake River Group from the LaRonde Mine westward to the Mouska gold mine.
        The gold bearing zones at the LaRonde Mine are lenses of disseminated, stringer through to massive, aggregates of coarse pyrite with zinc, copper and silver content. Ten zones that vary in size from 50,000 to 40,000,000 tonnes have been identified, of which four are (or 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 higher in areas where the pyrite lenses are cross-cut by tightly spaced north-south fractures.
        These historical relationships are maintained at the Penna Shaft zones. The zinc-silver (i.e. Zone 20 North) mineralization with lower gold values, common in the upper mine, grades into gold-copper mineralization within the lower mine. Gold value enhancement associated with cross-cutting north-south fractures also occurs within the LaRonde Mine. Predominant base metal sulphides within the LaRonde Mine are chalcopyrite (copper) and sphalerite (zinc).
        The combined tonnage of proven and probable mineral reserves at the LaRonde Mine for year-end 2007 is 34.9 million tonnes which only represents a 2% decrease in the amount compared to year-end 2006. This 34.9 million tonnes of mineral reserves includes the replacement of 2.6 million tonnes that were mined in 2007. The Company's ability to sustain its level of proven and probable mineral reserves was primarily due to continued successful exploration results at depth.
        The LaRonde Mine 2007 exploration program was a continuation of the diamond drilling from the Level 215 exploration drift, approximately 2,150 metres below the surface. This drift, completed in 2005 west of the Penna Shaft, provides access for deep drilling along 2,000 metres of the Bousquet-LaRonde stratigraphy. Much of the 2007 drilling was undertaken to define the western limit of the deposit below Level 245, consequently the western and eastern edges of the reserves below Level 245 are now known; however, the deposit remains open at depth. Another important focus of the drilling was to continue exploration below and down plunge of the Bousquet II deposit at 2,000 to 3,000 metres below surface. Systematic drilling along the
24

Bousquet stratigraphy has been successful in the past, notably the discovery of the LaRonde deposit. Finally, some in-fill drilling was also completed within selected areas of the resource envelope below Level 245 to confirm continuity. In addition, some definition and delineation drilling was completed to assist in final mining stope design mainly of Zone 20 North.
        A summary of the diamond drilling completed on the LaRonde Mine property is set out below:

 	 	Number of Holes Drilled
	 	Length Drilled
(m)
	
LaRonde Target for Diamond Drilling
	 	2007
	 	2006
	 	2007
	 	2006
	
Production Stope Delineation	 	136	 	136	 	8,587	 	7,631	
Definition	 	27	 	50	 	6,052	 	10,614	
Deep Exploration (below Level 245, Zone 20 North)	 	32	 	38	 	20,680	 	22,135	
TOTAL	 	195	 	224	 	35,319	 	40,380	
        Expenditure on diamond drilling at the LaRonde Mine during 2007 was approximately $2.8 million including $0.9 million in definition and delineation drilling expenses charged to operating costs at the LaRonde Mine. Expenditures on exploration in 2007 were $1.9 million and are expected to be $2.9 million in 2008.
         Zone 20 North was the main focus of the drilling completed in 2007. The Company believes that Zone 20 North 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 table summarizes Zone 20 North's contribution to the LaRonde Mine's mineral reserve:

 	 	Proven and Probable Mineral Reserves
	
Total LaRonde Property	 	34,896,734 tonnes	
Zone 20 North	 	33,479,342 tonnes	
        The following table summarizes Zone 20 North's contribution to the LaRonde Mine's mineral resources (see "Note to Investors Concerning Estimates of Mineral Resources"):

 	 	Measured and Indicated Mineral Resources
	
Total LaRonde Property	 	5,642,935 tonnes	
Zone 20 North	 	4,351,418 tonnes	
 	
 	 	Inferred Mineral Resources
	
Total LaRonde Property	 	4,722,901 tonnes	
Zone 20 North	 	4,484,903 tonnes	
        Zone 20 North initially occurs at a depth of 700 metres below surface and has been traced down to a depth of 3,100 metres below surface. With increased access on the lower levels of the mine (i.e., Levels 170, 194, 215 and 224), the transformation from a "zinc/silver" ore body to a "gold/copper" deposit continued during 2007.
        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 1,700 metres and a horizontal distance of 570 metres, with thicknesses approaching 40 metres. The gold zone has been traced over a vertical distance of over 2,200 metres and a horizontal distance of 600 metres, with thicknesses varying from three metres to 30 metres. 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 2007, 2.5 million tonnes of ore grading 2.97 grams of gold per tonne, 79.6 grams of silver per tonne, 0.40% copper and 4.30% zinc were mined from Zone 20 North.
25

        The results of 2007 in-fill drilling in Zone 20 North below Level 245 combined with the higher metal prices used for the 2007 year-end reserve and resource estimate contributed to an increase of probable mineral reserves by 185,645 ounces of gold (1.1 million tonnes of ore grading 5.3 grams of gold per tonne) below Level 245. The table below shows the most significant results encountered in 2007 in the resource-reserve envelope below Level 245 at the LaRonde Mine.

 	 	 	 	Interval (m)
	 	 	 	 	 	 	 	 	
Drill Hole
	 	True
Thickness (m)
			 	Gold (g/t)
(Cut 41.43 g/t)
	 	Silver
(g/t)
	 	Copper
(%)
	 	Zinc
(%)
	
			 	From:
	 	To:
									
3215-114B	 	6.2	 	1064.7	 	1073.5	 	10.45	 	9.57	 	0.01	 	0.02	
3215-117A	 	22.2	 	905.0	 	931.8	 	12.06	 	26.01	 	0.16	 	0.01	
3215-146D	 	10.0	 	966.8	 	977.8	 	9.93	 	1.86	 	0.01	 	0.02	
        Step-out drilling west of the known resource-reserve envelope below Level 245 has intersected anomalous results along the Zone 20 North horizon underneath and down plunge from the Bousquet II deposit. These results from late 2007 remain untested, open at depth and towards the west and are potentially part of a significant mineralized horizon. In 2008, the Company plans to extend the Level 215 exploration drift by approximately 240 metres to provide access for the continuation of exploration drilling further west of the current reserves below Level 245. The table below shows the most significant results from this area encountered in 2007.

 	 	 	 	Interval (m)
	 	 	 	 	 	 	 	 	
Drill Hole
	 	True
Thickness (m)
			 	Gold (g/t)
(Cut 41.43 g/t)
	 	Silver
(g/t)
	 	Copper
(%)
	 	Zinc
(%)
	
			 	From:
	 	To:
									
3215-141	 	3.5	 	526.2	 	530.9	 	3.86	 	8.12	 	0.05	 	0.22	
3215-147C	 	2.8	 	904.2	 	908.2	 	0.88	 	1.08	 	0.02	 	0.02	
        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 the original estimates.
         Zone 20 South is located approximately 150 metres 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 1,615 metres and a horizontal distance of up to 255 metres, with a mineralized thickness varying from three metres to 12 metres. 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 117,000 ounces of probable mineral reserves (1.0 million tonnes grading 3.5 grams of gold per tonne); there are no mineral reserves on the El Coco property. In 2007, approximately 346 tonnes grading 2.4 grams of gold per tonne were mined from Zone 20 South on the LaRonde property.
        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.
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•
Mineralization is continuous down to Level 154 (1,540 metres below surface). Economic mineralization reoccurs at the Level 170 horizon (1,700 metres below surface) and is open at depth. Mineralization has been traced to a depth of 2,377 metres.
        Some delineation drilling was conducted in a small part of Zone 20 South in 2007 from the Level 212 access drift. The results were generally lower than the initial holes and the reserve grade of Level 209 to Level 215 blocks decreased but were still economic at the 2007 year-end metal prices. This zone will require significantly more delineation drilling with tighter spacing. Ore development is also planned for 2008 on Level 209 and Level 212.
Capital Projects and Expansion
        In May 2006, the Company initiated construction to extend the infrastructure at the LaRonde Mine to access the ore below Level 245, referred to as the LaRonde Mine extension. Construction of the LaRonde Mine extension is currently underway with production from this part of the LaRonde Mine expected to commence in 2011. Once commenced, production is estimated to be approximately 340,000 ounces per year at total cash costs per ounce of approximately $150, with an estimated mine life of nine years. The Company has commenced sinking a new 835 metre internal shaft starting from Level 206, to a total depth of approximately 2,865 metres, to access the deposit. An internal winze system will be used to hoist ore from depth to facilities on Level 215, approximately 2,150 metres below surface, where it will be transferred to the Penna Shaft hoist. Excavation of the underground mining facilities is in progress and, as of December 31, 2007, the shaft has been sunk to a depth of 20 metres below Level 215.
        Capital expenditures at the LaRonde Mine during 2007 were approximately $87 million, which included $34 million on sustaining capital expenditure and $53 million comprised mostly of expenditures on the LaRonde Mine extension and ramp development below Level 215. Budgeted 2008 capital expenditures at the LaRonde Mine are $68 million, including $33 million on sustaining capital expenditures and $35 million on the LaRonde Mine extension, which will consist mostly of shaft sinking and upgrades to the ventilation system. Total capital cost of construction of the LaRonde Mine extension is estimated to be $293 million, of which the Company had incurred $43 million at the end of 2007.
Lapa Mine Project
        The Lapa mine project is a pre-production stage development property located approximately 11 kilometres east of the LaRonde Mine near Cadillac, Quebec and is accessible by provincial highway. At December 31, 2007, the Lapa mine project was estimated to contain probable mineral reserves of 1.1 million ounces of gold comprised of 3.8 million tonnes of ore grading 8.86 grams per tonne and approximately 1,000 ounces of proven gold reserves from 2,800 tonnes of ore grading 10.65 grams per tonne. The Lapa property is made up of the Tonawanda property, which consists of 43 mining claims covering an aggregate of approximately 705.8 hectares and the Zulapa property, which consists of one mining concession of approximately 93.5 hectares. The Company's initial interest in the Lapa property was acquired in 2002, through an option agreement with Breakwater Resources Ltd. ("Breakwater"). The Company undertook an aggressive exploration program, and discovered a new gold deposit almost 300 metres below the surface. In 2003, the Company purchased the Lapa property from Breakwater for a payment of $8.925 million, and a 1% net smelter return royalty on the Tonawanda property and a 0.5% net smelter return royalty on the Zulapa property. In addition, both the Zulapa and Tonawanda properties are subject to a 5% net profit royalty payable to Alfer Inc. and René Amyot. In 2004 an additional claim of 9.4 hectares (the "Additional Lapa Claim") was added to the Company's holdings at the Lapa mine project. The Additional Lapa Claim is not subject to any royalty interests. An additional $1.0 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 million may be used by the Company as a credit to offset net smelter return royalties payable.
        In July 2004, the Company initiated sinking an 825 metre deep production shaft at the Lapa property. On June 5, 2006, the Company announced that on the basis of the recent drilling results and a revised feasibility study, it would accelerate construction of the Lapa mine project. This construction included the extension of the 4.9 metre diameter concrete lined shaft to a depth of approximately 1,370 metres which was completed in
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October 2007. Lateral mine development on three horizons began in November 2007 and over 400 metres was completed by December 31, 2007. Infrastructure on the property includes the former LaRonde shaft #1 headframe and shafthouse, which were both refurbished, a service building housing the hoist and compressors, temporary offices and settling ponds for waste water. A services building houses engineering and operations staff along with dry facilities. An ore bin and a diesel reservoir have been completed at the site and a new mine access road was opened during the summer of 2007. The Lapa cement plant is currently under construction. In 2006, an application for a mining lease covering 69.9 hectares was submitted to the Ministry of Natural Resources. Land surveying activities in respect of the property were completed in 2007 and the application is currently under review. The certificates of authorization to proceed with mine production and with mill construction were issued by the Quebec Ministry of the Environment respectively in October and December 2007. The Lapa site will host the underground mining operation and the ore will be trucked to the processing facility at the LaRonde Mine, which will be modified to treat, recover the gold and store the residues. An application for a certificate of authorization for the deposition of tailings from the Lapa mine project in the tailings pond at the LaRonde Mine is expected to be submitted to the Quebec Ministry of the Environment in 2008.
        Capital costs at the Lapa mine project are $165 million, of which the Company incurred approximately $29 million in 2007 and expects to incur approximately $78 million in 2008. Based on current estimates of mineral reserves and resources and grade, the Company anticipates a seven-year mine life, with full production levels of 125,000 ounces of gold annually by early 2010 at total cash costs per ounce of approximately $300.
Geology and Diamond Drilling
        Geologically, the Lapa property is similar to LaRonde and is also 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 CLL Fault Zone marking the contact between the Abitibi and the Pontiac sub-provinces, which passes through the property from west to east. The CLL Fault Zone is marked by schists and mafic to ultramafic volcanic flows that comprise the Piché Group (up to approximately 300 metres in thickness in the mine area). The CLL Fault Zone is generally east-west trending but on the Lapa property, it curves southward abruptly before returning to its normal trend; the flexure defines a "Z" shaped fold to which all of the lithological groups in the region conform. Feldspathic dykes cut the Piché Group (more often in the sector of the fold). To the north of the Piché Group lies the Cadillac Group sedimentary group, which consists of approximately 500 metres or more of well-banded wacke, conglomerate and siltstone with intercalations of iron formation. The Pontiac Group sedimentary rocks (up to approximately 300 metres thickness) that occur to the south of the Piché Group are similar to the Cadillac Group but do not contain conglomerate nor iron formation. Minor Protorozoic age (2.0 billion years) diabase dykes cut all of the rocks in a northwest direction.
        All of the known gold mineralization along the CLL Fault Zone is epigenetic (late) vein type and mineralization is controlled by structure; mineralization is associated with the fault zone and occurs all or immediately adjacent to the Piché Group rocks. Although gold mineralization also occurs throughout the Piché Group at Lapa, except for the Contact and the satellite zones, it is generally discontinuous and has low economic potential.
        The Lapa deposit is comprised of the Contact Zone and five satellite zones. The ore zones are made up of multiple quartz veins and veinlets, often smokey and anastomosing, within a sheared and altered envelope (with minor sulphides and visible gold). The Contact Zone is generally located at the contact between the Piché Group and the Cadillac Group sediments. The satellite zones are located within the Piché Group at a distance varying from 10 to 50 metres from the north contact with the sediments except for the Contact North zone which is located approximately 10 metres north of the Contact Zone within the sediment unit. The ore envelope is not always in the same volcanic unit since the Piché/Cadillac contact is discordant. The sheared envelope consists of millimetre-thick foliation bands of biotite or sericite with silica (depending on the rock type that hosts the alteration). Sericitization predominates when the zone is in sedimentary rocks while biotization and silicification predominates when the envelope affects the Piché Group volcanics. Quartz veins and millimetre-sized veinlets that are parallel to the foliation (structural fabric) account for 5% to 25% of the mineralization. Visible gold is common in the veins and veinlets but can also be found in the altered host rock. Sulphides account for 1% to 3%
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of the mineralization; the most common sulphide is, in order of decreasing importance, arsenopyrite, pyrite, pyrrhotite and stibnite. Graphite is also rarely observed as inclusions in smokey quartz veins.
        The Contact Zone (and the satellite zones) is a tabular shaped mineralized envelope that is oriented east-west and dips very steeply (-87 degrees) to the north, turning south at depth. The economic portion of the zone has been traced from roughly 450 metres below surface to below 1,500 metres depth, has an average strike length of 300 metres and varies in thickness between 2.8 to 5.0 metres and is open at depth. Locally some thicker intervals have been intercepted but their continuity have not been demonstrated. This zone accounts for approximately 65% of the reserves.
        The satellite zones (North, FW, Center, South 1 and South 2) are also steeply dipping and are oriented sub-parallel or slightly oblique to the Contact Zone. The thicknesses are similar to the Contact Zone.
        Drilling in 2007 concentrated on confirming and expanding the known ore bodies (Contact Zone and the other satellite zones). The results are incorporated in the December 31, 2007 reserve/resource estimate set out under " — Mineral Reserve and Mineral Resource" below.
Goldex Mine Project
        The Goldex mine project is a pre-production stage development property located in the municipality of Val d'Or, Quebec, approximately 60 kilometres east of the LaRonde Mine. At December 31, 2007, the Goldex mine project was estimated to contain proven mineral reserves of approximately 18,000 ounces comprised of 0.3 million tonnes of ore grading 2.23 grams per tonne and probable mineral reserves of 1.6 million ounces of gold comprised of 22.8 million tonnes of ore grading 2.20 grams per tonne.
        The Goldex mine project is held under 22 claims, covering an aggregate of approximately 267.78 hectares. 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, 122.38 hectares); the Dalton block (one claim, 10.4 hectares); and the Goldex Extension block (11 claims, 135.0 hectares). The Goldex 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 Goldex mine project, 18,000 shares of the Company will be issued to the estate of John Michael Dalton Jr.
        The Goldex mine project is accessible by provincial highway. The elevation is approximately 302 metres above sea level. All of the Goldex mine project's power requirements are supplied by Hydro-Quebec through connections to its main power transmission grid. All of the water required at the Goldex mine project will be sourced directly by aqueduct from the Thompson River immediately adjacent to the project.
        In 1997, the Company completed a mining study that showed that the deposit was not economically viable to mine at the then prevailing gold price using the mining approach chosen and drill-hole indicated grade, the property was placed on a care and maintenance basis and the workings were allowed to flood. Throughout 2003, the Company re-evaluated the Goldex project reviewing mining methods and grade estimation methods. In February 2004, based on a new reserve and resource estimate for the Goldex Extension Zone and revised feasibility study the Company decided to undertake a $4.7 million underground bulk sampling program to provide additional geological and sampling information to increase the level of confidence in the gold grade. The bulk sample was processed during the first quarter of 2005 and returned a grade of 2.78 grams of gold per tonne, nearly 10% higher than the bulk sample processed in 1997.
        In February 2005, a new reserve and resource estimate was completed for the Goldex Extension Zone which, coupled with a revised feasibility study, led to a probable reserve estimate of 1.6 million ounces of gold contained in 20.1 million tonnes of ore grading 2.54 grams of gold per tonne. The Goldex Extension Zone resource model was revised and in March 2005, the Company approved a revised feasibility study and the construction of the Goldex mine. Annual gold production is expected to average 170,000 ounces over a 10-year mine life commencing in April 2008.
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        At the time the Company determined to initiate construction of the Goldex mine project, the surface facilities at the Goldex mine project included a headframe, a hoistroom, a surface building containing a mechanical shop, a warehouse and an office. In addition, the Goldex property had a 790-metre deep shaft, which provides access to underground workings. At the end of 2007, the new surface facilities on the new construction site included an electrical sub-station, a compressor building, a service building for administration and changing rooms, a warehouse building, a concrete headframe above Shaft #2 and a sinking hoist room. Also, the processing plant building was 75% enclosed. A sedimentation pond for mine water treatment and sewage facilities has also been built. Environmental permits for the construction and operation of an ore extracting infrastructure at the Goldex project were received from the Quebec Ministry of the Environment in October 2005 and in the same month work started on the production shaft collar and surface facilities at the new construction site. The sinking of the new production shaft was completed by the end of 2007. This new 5.5 metre diameter concrete lined shaft reached a final depth of 865 metres. Underground development and construction commenced in August 2005, with access provided by underground workings from the existing 790-metre shaft. During 2007, approximately 5,800 metres lateral and vertical development were completed.
        Plant construction at the Goldex mine project commenced in the second quarter of 2006 and was completed in the first quarter of 2008. The Company anticipates that grinding at the Goldex mill will be done through a two-stage circuit comprising of a SAG mill and a ball mill. It is estimated that two-thirds of the gold will be recovered through a gravity circuit, passed over a shaking table and smelted on site. The target size for grinding will be 80% of a diameter of 106 microns or less, before the remainder of the gold and pyrite are recovered by a flotation process. The concentrate will then be thickened and trucked to the mill at the LaRonde Mine where it will be further treated by cyanidation. The treated concentrate will then be processed through the existing Merrill-Crowe circuit at the LaRonde mill and gold recovered with be consolidated with precious metals from the LaRonde Mine. The Company is targeting an average gold recovery of 93.6%. In November 2006, the Company and the Quebec government signed an agreement regarding the disposition of the Goldex tailings at the Manitou mine site, a tailings site formerly used by an unrelated third party and abandoned to the Quebec government. There is acid drainage from the Manitou mine site and the proposed construction of tailings facilities by the Company is hoped to help remedy the negative effects of the existing environmental damage. Under the agreement, the Company manages the construction of the tailings facilities and the government pays all additional cost above the Goldex budget set out in the Goldex mine project feasibility study. The Quebec government has retained responsibility for all environmental contamination at the Manitou tailings site and for final closure of the facility. In addition, the Company has built a separate tailings deposition area (auxiliary tailings pound) near the mine. Environmental permits for the construction and operation of the auxiliary tailings pond of the Goldex project were received in March 2007.
        Estimated capital costs to bring Goldex into production are $183 million, of which $105 million was spent in 2007. Approximately $95 million was budgeted for the new shaft, underground development and construction and mining equipment while an additional $60 million was budgeted for the processing plant and tailings facility. The remainder has been budgeted for the surface plant and working capital. At the end of 2007, a total of $160 million had been spent on the project. The Company expects capital expenditures at Goldex in 2008 to be approximately $23 million, most of which will be used for the completion of the mill and construction of the underground crushing and hoisting facility.
Geology and Diamond Drilling
        Geologically, the Goldex property is similar to Lapa and LaRonde and is located near the southern boundary of the Archean-age (2.7 billion years old) Abitibi Sub-Province, a typical granite-greenstone terrane located within the Superior Province of the Canadian Shield. The southern contact of the Abitibi Sub-Province with the Pontiac Sub-Province is marked by the east-southeast trending CLL Fault Zone, the most important regional structural feature. The Goldex deposit is hosted within a quartz diorite sill, the Goldex "Granodiorite", located in a succession of mafic to ultramafic volcanic rocks that are all oriented generally west-northwest (and because the stratigraphic tops are to the South) and are geologically overturned steeply to the North (75 to 85 degrees).
        Gold mineralization at Goldex corresponds to the quartz-tourmaline vein deposit type. The Goldex gold-bearing quartz-tourmaline-pyrite veins and veinlets are the result of a strong structural control; the most
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significant structure directly related to mineralization is a discreet shear zone, the Goldex Mylonite, that is up to five metres in thickness and occurs within the Goldex Granodiorite, just south of the Goldex Extension Zone (which hosts all of the current mineral reserves) and other gold occurrences. Oriented west-northwest and also dipping 65 to 75 degrees North (and to a lesser extent 60 to 80 degrees South), minor fracture zones (that display reverse movement, North to South) that are developed parallel but to the North of the Goldex Mylonite, control the quartz-tourmaline-pyrite vein mineralization. Three vein sets (all oriented west northwest but with different dips) are developed within the Goldex Extension Zone. The most important vein set are extensional-shear veins that dip 30 degrees South and are usually less than 10 centimetres in thickness; synchronous and conjugate with the latter veins are less abundant extensional-shear veins (also generally less than 10 centimetres in thickness) that dip 30 to 45 degrees to the North. The third vein set is made up of shear zone veins up to a metre in thickness that occasionally occur within the steep North dipping fracture zones. The vein sets (and alteration associated with them) combine to form stacked envelopes up to 30 metres thick that also dip approximately 30 degrees South (parallel to the main vein orientation) but which always conform to the orientation (75 degree North dip) of the Goldex Granodiorite and the main fracture zones.
        The Goldex Extension Zone extends from 500 to 800 metres below the surface and is entirely hosted by the Goldex Granodiorite. The limits of the zone are defined by the intensity of the quartz vein stockwork envelope and assays rather than by individual veins. The zone is almost egg-shaped (flattened in the orientation of the sill) and elongated almost horizontally (also parallel to the west-northwest trending sill and fracture zones); it is over 300 metres tall by 450 metres long (in a west-northwest direction) and its thickness increases rapidly from 25 metres along the east-west edges to almost 150 metres in the centre. Exploration results have essentially delimited the Goldex Extension Zone both at its summit and at its base but is not well defined at either point (the mineralization is inferred to extend above the reserve limit for approximately 50 metres and below 800 metres depth where inferred mineralization may extend down an additional 50 metres). Inferred mineralization in the eastern portion of the property extends the Goldex Extension Zone 175 meters east and 125 meters below the current envelope of probable reserves. The Goldex Extension Zone is open above Level 73 to the east-southeast for approximately 300 metres.
        Strong albite-sericite alteration of the quartz-diorite (giving it a pale "granodiorite" look) surrounds the quartz-tourmaline-pyrite veins and covers almost 80% of the mineralized zone; outside of the envelopes, prior chlorite alteration affects the quartz diorite and gives it a darker grey-green colour. Occasionally enclaves of relatively unaltered medium grey-green coloured quartz diorite (with no veining or gold) are found within the Goldex Extension Zone (they are included exceptionally as internal waste to allow for a smooth shape required for mining purposes).
        Most of the gold occurs as microscopic particles that are almost always associated with pyrite (generally adjacent to grains and crystals but also 20% included in the pyrite) that occurs in the quartz-tourmaline veins and in narrow fractures in the sericite-albite altered quartz diorite (but generally immediately adjacent to the veins); less than 1.5% of the gold occurs as Calaverite (a gold telluride).
Bousquet and Ellison Properties
        The Bousquet property is located immediately west of the LaRonde Mine and consists of two mining leases covering 73.09 hectares and 31 claims covering 384.85 hectares. The property, along with various equipment and other mining properties, was acquired from Barrick in September 2003 for $3.9 million in cash, $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 covering 101.10 hectares. 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 commitment was fulfilled in 2004 and the property is 100% owned by the Company. 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 from the Ellison property commence, Yorbeau Resources Inc. will receive an additional C$0.5 million in cash.
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        In 2007, the Company recovered 77,629 tonnes of ore grading 5.67 grams per tonne from two small ore blocks at Bousquet. The mining of these areas was completed in 2007.
        The 2007 indicated mineral resource at the Bousquet property is approximately 1.7 million tonnes grading 5.63 grams of gold per tonne. The inferred mineral resource is 1.7 million tonnes grading 7.45 grams of gold per tonne. The December 31, 2007 indicated mineral resource at Ellison is 0.4 million tonnes grading 5.68 grams of gold per tonne, and the inferred resource is 0.8 million tonnes grading 5.81 grams of gold per tonne.
Kittila Mine Project
        The Kittila mine project is located approximately 900 kilometres north of Helsinki and 50 kilometres northeast of the town of Kittila, in northern Finland. At December 31, 2007, the Kittila mine project was estimated to contain probable mineral reserves of 3.0 million ounces comprised of 18.2 million tonnes of ore grading 5.12 grams per tonne. The Kittila mine project is accessible by paved road to the village of Kiistala, which is located on the southern portion of the main claim block. The gold deposit is located near the small village of Rouravaara, approximately 10 kilometres north of the village of Kiistala, accessible via a good quality all-weather gravel road. The project is subject to a 2.0% net smelter return royalty payable to the Republic of Finland after commencement of commercial exploitation. The property is close to infrastructure, including hydro power, an airport, the town of Kittila, and mining and construction contractors. The project also has access to a qualified labour force.
Location Map of Kittila Mine Project
         
        The Kittila mine project is comprised of 103 individual tenements covering an aggregate area of approximately 8,341 hectares and one mining licence covering approximately 847 hectares. The mineral titles form three distinct blocks. The main block comprises the Suurikuusikko mining licence and 84 contiguous tenements. The centroid of this block is located at 25.4110 degrees longitude East and 67.9683 degrees latitude North. It excludes three small circular areas 0.78 hectares in size and six narrow linear strips covering roads. Other tenements form isolated blocks comprising four to 16 contiguous tenements located in the vicinity of the main Suurikuusikko block. The boundary of the mine licence is determined by ground surveyed points whereas the boundaries of the other tenements are not required to be surveyed. All of the tenements in the Kittila mine project are registered in the name of Agnico-Eagle AB, an indirect, wholly-owned subsidiary of the Company. According to the Finnish Government land tenure records, all tenements are in good standing. The expiry dates of the tenements vary from May 2008 to May 2012. Tenements are valid between three and five years, providing
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a small annual fee is paid to maintain title and extensions can be granted for three years or more. Applications for extensions to tenements that expired in October 2006 (17 tenements totalling 1,486 hectares) were lodged on October 3, 2006. Only three of these applications for extensions were granted in 2007, however the Company expects the remainder to be granted in 2008.
        The project area is scarcely populated and is situated between 200 and 245 metres elevation above sea level. The topography is characterized by low rolling forested hills separated by marshes, lakes and interconnected rivers. The gold deposit is situated on an area of land that has no special use at present and there is sufficient land available for tailings facilities. Water requirements for the Kittila mine project will be sourced from the nearby Seurujoki River, recirculation of water from pit dewatering and tailings pond water. Unemployment in the area is high. Municipal leaders are currently supportive of future mining operations.
        The project is located within the Arctic Circle but the climate is moderated by the Gulf Stream off the coast of Norway such that northern Finland's climate is comparable to that of eastern Canada. Winter temperatures range from -10 to -30 degrees Celsius, whereas summer temperatures range from 10 degrees to the mid-20s. Exploration and mining work can be carried out year round. Because of its northern latitude, winter days are extremely short with brief periods of 24-hour darkness around the winter solstice. Conversely, summer days are very long with a period of 24-hour daylight in early summer around the summer solstice. Annual precipitation varies between five and 50 centimetres, one-third of which falls as snow. Snow accumulation usually begins in November and remains until March or April.
        The Company acquired its interest in the Kittila mine project through a tender offer for all of the shares of Riddarhyttan that it did not own that was completed in November 2005. See "— History and Development of the Company". The Company, through wholly-owned subsidiaries, owns all of the issued and outstanding shares of Riddarhyttan. At the time of the tender offer, Riddarhyttan was an exploration stage mining company focussed on exploration and development of what is now the Kittila mine project at the Suurikuusikko property. Riddarhyttan was established under Swedish corporate law in 1996 and commenced operations in 1997 when it was listed on the Stockholm Stock Exchange. In 1998, Riddarhyttan won the public international tender conducted by the Finnish Government for the Suurikuusikko project (now referred to as the Kittila mine project).
        In June 2006, on the basis of an independently reviewed feasibility study, the Company approved construction of the Kittila mine and mine construction began immediately. The Kittila mine project will initially be an open pit mining operation followed by underground mining via ramp access, feeding a 3,000 tonne per day surface processing plant. Annual gold production is currently expected to average 150,000 ounces over a 14-year mine life at total cash costs of $250 per ounce, with initial gold production anticipated to commence in September 2008.
        Current estimated capital costs of construction of the Kittila mine project are $190 million, of which a total of $100 million had been incurred by the end of 2007 and $90 million are expected to be incurred in 2008. Anticipated sustaining capital expenditures at the Kittila mine project are estimated to be approximately $5 million annually.
        As of December 2007, construction had progressed according to schedule for commencement of open pit mining operations in the third quarter of 2008. Waste rock mining, construction and site infrastructure work had been completed in the area of the main Suurikuusikko deposit. To prepare for the open pit mining, 263,000 cubic metres of overburden and approximately 2.6 million tonnes of waste rock has been removed and excavated, respectively. Work on the ramp to access the underground reserves has started and total underground development to date is about 3,000 metres. The construction of the tailings dam is well advanced with the tailings dam completed in October 2007 and installation of a waterproof bottom layer now in progress. A high voltage power line connects the site to the main Finnish power grid. The office service buildings have been completed. The process plant building frame is completed, as well as concrete floors and structures for heavy plant equipment inside the building. Work on mill offices, control room and HVAC is ongoing. Concrete foundation structures for the ore crusher, conveyor and ore bin are ongoing, or near completion. Work on the foundations for the tank farm and oxygen plant commenced in June 2007.
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        The Company currently holds a mining licence and an environmental permit in respect of the Kittila mine project. The Company has submitted an application to Finnish authorities for an amendment to the environmental permit to allow the change from a biological oxidization process to a pressure oxidation process, which will allow the Company to use significantly smaller quantities of cyanide. The application for the amendment is currently being processed by the Finnish regulatory authorities and the Company understands from the authorities that the amendment is likely to be granted in the first half of 2008.
Geology, Deposit Type and Mineralization
        The Kittila mine project is situated within the Lapland Greenstone belt. The geology and metallogeny of this area is very similar to that of the Canadian Shield. In this portion of northern Finland, bedrock is typically covered by a thin but uniform blanket of unconsolidated glacial till. Bedrock exposures are scarce and irregularly distributed.
        The project area is underlain by late Proterozoic mafic volcanic and sedimentary rocks metamorphosed to greenschists assemblages (chlorite-carbonate) and ascribed to the Kittila Greenstone belt. The major rock units trend north to north-northeast and are near vertical. Volcanic rocks were further sub-divided into iron-rich (Kautoselka Formation) and magnesium-rich (Vesmajarvi Formation) tholeiites, respectively located to the west and to the east. The contact between the Kautoselka and Vesmajarvi formations consists of a transitional zone (Porkenen Formation) comprising mafic tuffs, graphitic metasedimentary rocks, black chert and banded iron formations. It varies in thickness between 10 and 50 metres and is characterized by strong heterogeneous penetrative strain, narrow shear zones, breccia zones and intense hydrothermal alteration (carbonate-albite-sulphide) and gold mineralization. The Porkenen Formation defines what is referred to as the Suurikuusikko Trend and is the major host for the gold mineralization. Its internal geometry is very complex and exhibits features consistent with that observed in major brittle-ductile deformation suggesting that this rock unit represents a significant structural discontinuity. This shear zone represents the principal metallogenic target at the Kittila mine project.
        The known gold mineralization on the Suurikuusikko Trend is associated with strong sulphide mineralization (principally arsenopyrite and lesser pyrite) and associated hydrothermal alteration and is hosted in the extensive brittle-ductile shear zone. The gold at the Kittila mine project is almost exclusively refractory. Gold particles are locked inside fine-grained arsenopyrite (approximately 73%) or pyrite (approximately 23%). What remains is "free gold", which is manifested as extremely small grains in pyrite. Most of the free gold is found in the outer, oxidized or eroded sections of the ore. Small amounts of copper pyrite, pyrrhotite, sphalerite, galena, gersdorffite, tetrahedrite, jamesonite, bornite, gudmundite and rutile are also present. The gold deposit is intersected at several locations by small massive bands containing the antimony mineral stibnite. The characteristics of the known gold mineralization are similar to a class of hydrothermal gold deposits referred to as "orogenic" gold deposits, which typically exhibit a strong relationship with regional arrays of major shear zones.
        The Suurikuusikko deposit is hosted by a north-south oriented shear zone (the Suurikuusikko Trend) containing multiple mineralized lenses, which have been traced over a strike length of over 15 kilometres. Most of the exploration work has been focused on the 4.5 kilometres which host the known gold reserves and resources.
History and Exploration
        In 1986, the discovery of coarse visible gold in quartz-carbonate veining along a road cut near the village of Kiistala alerted the Geological Survey of Finland ("GTK") to the gold exploration potential of the area. Following this discovery, GTK initiated regional exploration over the area and deployed a wide range of indirect exploration tools to explore this poorly exposed area. Low-altitude airborne geophysical surveys (magnetic, electromagnetic, radiometric), ground geophysical surveys and various soil and till sampling programs were carried out over a wide area encompassing the original bedrock gold discovery.
        By 1987, well-defined geochemical anomalies around the Suurikuusikko area presented obvious targets that were tested by a reconnaissance drilling program, confirming the existence of gold mineralization in bedrock. Between 1989 and 1991, GTK drilled a total of 72 diamond drill holes (9,031 metres in length) and five reverse
34

circulation bore holes (approximately 288 metres in length) to investigate soil anomalies and delineate the gold mineralization uncovered. Exploration resumed in 1998 under Riddarhyttan management. Between 1999 and 2005, 462 core boreholes (more than 136,278 metres) were drilled by Riddarhyttan over a strike length of 5.5 kilometres to investigate the main auriferous structure. Mineralogical, petrographic and structural studies were completed on unoriented and limited oriented drill core to further the understanding of the geological and structural setting of the gold mineralization. In conjunction with the drilling, ground geophysical surveys were carried out to improve the imaging of the host rocks and structural patterns. Throughout this period, Riddarhyttan continued to investigate the metallurgical properties of the refractory gold mineralization with the objective of demonstrating its recoverability and assessing suitable processing scenarios. Riddarhyttan initiated engineering and environmental studies to investigate other aspects and assess the feasibility of a mining project.
        In 2006, the Company performed pilot-plant testing based on a pressure oxidation process for gold extraction. In June 2006, the Company approved a feasibility study and the construction of the Kittila mine project. The study was based on an open pit mining scenario followed by underground mining via ramp access and mining of one million tonnes of ore per annum to be processed in a surface plant.
        The Company continued in-fill and exploration drilling throughout 2006 on the mining licence area to test the deeper portions of the main zones and to explore extensions to other zones. Exploration outside of the mining licence area was initiated with encouraging preliminary results. The results indicated two new gold zones to the north of the mine construction site, the Rimminvuoma South and the Hakokodanmaa areas, located one kilometre and four kilometres north of the main Suurikuusikko area, respectively. Systematic geochemical sampling and drilling of old geochemical anomalies to the north of the mining licence area were carried out and a high-quality, low altitude airborne survey covering the entire Suurikuusikko structure was completed. In total, the Company completed 190 diamond drill holes totalling 53,000 metres on the Kittila mine project.
        The 2007 diamond drilling program on the mining licence area focused on in-fill drilling, resource conversion and deep exploration below the main Suurikuusikko zones. Results from the deep exploration were very encouraging as they indicated that the Suurikuusikko zones may extend at least down to 1,000 metres below the surface. In total, 158 diamond drill holes totalling 31,995 metres were completed on the mining licence area in 2007. Systematic geochemical sampling also continued outside of the mining licence area on targets along the Suurikuusikko Trend and a number of new targets were tested by diamond drilling. Encouraging results were received from a new gold zone in the Kuotko area located approximately 10 kilometres north of the mine construction site. A total of 113 diamond drill holes totalling 26,806 metres were drilled on exploration targets outside of the mining licence area.
Exploration and Drilling
        The deposit at the Kittila mine project is hosted by a north-south oriented shear zone containing multiple mineralized lenses, which have been traced over a strike length of 15 kilometres. Most of the work has been focused on the 4.5 kilometres which host the known gold reserves and resources. From north to south, the zones are Rimminvuoma, North Rouravaara ("Roura-N"), Central Rouravaara ("Roura-C"), Suurikuusikko ("Suuri"), North Suurikuusikko ("Suuri-N"), Etela and Ketola. The Suuri and Suuri-N zones include three parallel zones that have previously been named Main East, Main Central and Main West. The Suuri zone hosts approximately 53%, Suuri-N about 24%, Roura-C about 16% and Roura-N about 3% of the probable gold reserve estimate on contained gold basis. Most of the recent work has focused on the Suuri and Rouravaara zones. Up to the end of December 2007, a total of 891 drill holes, comprising 237,519 metres, have been completed on the property. Since the beginning of 2007, between two and five drills have been in operation on the property: one to three drills on in-fill drilling; one or two drills on exploration; and one or two drills on resource conversion drilling.
35

The Suuri Zone
        Some of the highlights from the 2007 drilling are set out below:

 	 	 	 	Interval (m)
	 	 	
 	 	True Thickness (m)
			 	Gold (g/t) (Cut 110 g/t)
	
Drill Hole
			 	From:
	 	To:
			
SUBH 06032	 	9.8	 	425.0	 	439.0	 	11.9	
SUBH 06091	 	12.6	 	132.0	 	150.0	 	9.2	
SUBH 06044	 	20.6	 	77.4	 	106.8	 	9.0	
SUBH 07003	 	15.1	 	1054.4	 	1075.9	 	8.3	
SUBH 07007	 	19.9	 	62.0	 	90.4	 	10.0	
SUBH 07004	 	23.3	 	117.0	 	150.3	 	15.6	
        The Suuri and Suuri-N zones extend 1,300 metres horizontally and down to a vertical depth of approximately 800 metres below surface and are known to contain two to six parallel, gold bearing lenses. The thickness of the lenses varies generally between five and ten metres. Current drilling in the Suuri and Suuri-N zones is focused on resource to reserve conversion drilling in the area between 400 metres and 800 metres below surface and exploration drilling in the area between 800 metres and 1,100 metres below surface to test the extension of the deposit at depth.
        Of the probable reserves of approximately 3.0 million ounces at the Kittila mine project, about 20% are located in the Suuri and Suuri-N open pit areas and 57% in the Suuri and Suuri-N underground area.
The Roura-C and Roura-N Zones
        The Roura-C and Roura-N zones extend 1,200 metres horizontally and to a vertical depth of approximately 650 metres below surface. About 19% of the mineral reserves are located within the Roura-C and Roura-N zones. These zones contain one to three parallel, gold bearing lenses. The thickness of these lenses is generally between 10 and 40 metres. Current drilling in these zones is focused on resource to reserve conversion drilling in the area between 400 metres and 600 metres below surface and exploration drilling below 700 metres below surface to test the extension of the deposit at depth.
Meadowbank Mine Project
        The Meadowbank mine project is a pre-production stage development property located in the Third Portage Lake area in the Kivalliq District of the Nunavut Territory of northern Canada, approximately 70 kilometres north of Baker Lake. At December 31, 2007, the Meadowbank mine project was estimated to contain probable mineral reserves of 3.5 million ounces of gold comprised of 29.2 million tonnes of ore grading 3.67 grams of gold per tonne.
36

Location Map of Meadowbank Mine Project

        The Meadowbank mine project is held under ten Crown mining leases (the "Meadowbank Leases"), three exploration concessions (the "Meadowbank Concessions") and a Crown claim (the "Meadowbank Claim"). The Meadowbank Leases, which include the Portage, Goose Island, Goose South and Cannu deposits, are administered under federal legislation. There are no annual work commitments in respect of these leases, however annual rent of C$18,272 must be paid. The Meadowbank Leases cover approximately 7,400 hectares and each of the leases expires in either 2016 or 2019. Production from areas covered by the Meadowbank Leases is subject to a royalty of up to 14% of adjusted net profits, as defined in the Territorial Mining Regulations. In order to conduct exploration work on the Inuit owned lands, the Company is required to submit a proposal of work annually that must be approved by the KIA, the body that holds the surface rights in the Kivalliq District, and various boards that administer land use, including the Nunavut Water Board, which will provide a recommendation to the Ministry of Indian Affairs and Northern Development (Canada) whether to grant the construction and operating licences. The licence is expected in mid-2008. In order to construct a mine at the Meadowbank mine project the Company must obtain additional approvals and licences, as described below in "— Environmental Permitting & Inuit Impact Benefit Agreement".
        The Meadowbank Concessions cover approximately 23,000 hectares and are granted by Nunavut Tunngavik, an Inuit birthright corporation responsible for administering subsurface mineral rights on Inuit owned lands in Nunavut Territory. The Meadowbank Concessions, which include the Vault deposit, are explored under an agreement with Nunavut Tunngavik. For 2008, the Meadowbank Concessions require the Company to pay C$58,000 for land fees and incur exploration expenses of approximately C$416,000. During the exploration phase, lands within the Meadowbank Concessions can be held for up to 20 years and the concessions can be converted into a production lease with an annual fee of C$1.00 per hectare and no requirements for further exploration expenditure. Production from the Meadowbank Concessions is subject to a 12% net profits interest royalty from which annual deductions are limited to 85% of gross revenue. The Meadowbank Claim covers approximately 8,400 hectares and, for 2008, requires the Company to pay fees of approximately C$2,000 and incur expenditure of approximately C$83,000.
        The Kivalliq region in which the Meadowbank mining project is located has an arid arctic climate. The Meadowbank mine project site is at 134 metre elevation in low lying topography with numerous lakes. Water
37

requirements for the Meadowbank mine project will be sourced from Third Portage Lake. Operations at the Meadowbank mine project are expected to be year-round with only minor weather-related interruptions to mining operations; however, these interruptions are not expected to affect ore availability for milling operations or other operating activities.
        The Meadowbank mine project is accessible from Baker Lake, located 70 kilometres to the south, over a substantially completed 110 kilometre all-weather road. Baker Lake provides 2.5 months of summer shipping access via Hudson Bay and year-round airport facilities. The Meadowbank mine project also has a 1,100 metre long gravel airstrip, permitting access by air. The Company anticipates that it will use ocean transportation for fuel, equipment, bulk materials and supplies from Montreal, Quebec (or Hudson Bay port facilities) via barges and ships into Baker Lake during the summer port access period that starts in mid-July of each year. Fuel and supplies will be transported to the site from Baker Lake by conventional tractor trailer units. Transportation for personnel and air cargo will be provided on scheduled or chartered flights. The permanent base for employees from which to service the Meadowbank mine project has not been determined yet.
        The existing exploration camp at the Meadowbank mine project consists of a wood framed office/kitchen/dry facility and all-weather structures and tents that can accommodate up to 60 people. Plant site facilities to be constructed include a mill building with an attached maintenance facility, separate office and dry facilities, assay lab and heavy vehicle maintenance shop. A separate crusher structure will flank the main process complex. Power will be supplied by an 26.4 MW diesel electric power generation plant with heat recovery and an on site fuel storage and distribution system. A pre-fabricated modular type accommodation complex for 344 persons will be supported with a sewage treatment, solid waste disposal and potable water plant. The mill-service-power complex will be connected to the accommodation complex with enclosed corridors. In addition, the Company will build peripheral infrastructure including tailings and waste impoundment areas and a 7 kilometre haul road to the Vault open pit.
        Facilities to be constructed at Baker Lake include a barge landing site located several kilometres east of the community. A storage compound consisting of open storage area, a cold storage building and a fuel storage and distribution complex with a 40 million litre capacity will be constructed next to the barge landing facility. The all-weather conventional access road linking the Baker Lake storage facilities to the mine site is now substantially completed.
Environmental Permitting and Inuit Impact & Benefit Agreement
        The development of the Meadowbank mine project was subject to an extensive environmental review process under the Nunavut Land Claims Agreement administered by the Nunavut Impact Review Board ("NIRB"). This was a multi-year assessment involving both federal and territorial regulatory agencies, the Inuit landowners, as represented by the KIA and Nunavut Tunngavik, and the local communities of the Kivalliq Region. A production decision regarding the Meadowbank project was made by Cumberland in September 2006. The NIRB recommended to the Minister of Indian Affairs and Northern Development (Canada) that the project could be constructed without resulting in significant adverse environmental impact considering the proposed mitigation measures and that the project should be allowed to proceed to the permitting phase. In November 2006 the Federal Minister of Indian Affairs and Northern Development accepted the positive NIRB recommendation.
        On December 30, 2006, Cumberland received the Project Certificate from the NIRB. The issuance of the Project Certificate, which includes the terms and conditions to ensure the integrity of the development process, is the final stage of the NIRB review process for the environmental assessment of the Meadowbank mine project. Following receipt of the Project Certificate, Cumberland obtained land access and quarry permits in January and February 2007 from the Government of Nunavut, the Department of Indian Affairs and Northern Development and the KIA to commence and advance road construction to Meadowbank. Additional licences were received from Natural Resources Canada and other Territorial departments to commence construction. On February 22, 2007, Cumberland announced it had received a Water Licence Type B from the Nunavut Water Board, the final licence required for road construction to the Meadowbank mine project.
        In February 2007, a subsidiary of Cumberland and the Nunavut government signed a Development Partnership Agreement ("DPA") with respect to the Meadowbank mine project. The DPA provides a framework
38

for stakeholders including the federal and municipal governments and the KIA to maximize the long-term socio-economic benefits of the Meadowbank mine project to Nunavut.
        During 2005, Cumberland commenced formal discussions and negotiations with the KIA relating to the Inuit Impact Benefit Agreement ("IIBA") for the Meadowbank mine project, which Cumberland and the KIA ultimately signed in March 2006. The IIBA will ensure that local employment, training and business opportunities arising from all phases of the project are accessible to the Kivalliq Inuit. The IIBA also outlines the special considerations and compensation that Cumberland will provide for Inuit regarding traditional, social and cultural matters. In December 2007, the Company provided the KIA with a production notice under the IIBA.
        The Company currently holds an exploration lease from the KIA (exploration lease KVCL303H305) that expires December 31, 2010. The Company is currently negotiating with the KIA to convert this lease into a commercial production lease and to arrange for either a separate regional exploration lease or to incorporate the regional exploration activity into the commercial production lease. Agreement has been reached on the commercial production lease payment amounts and schedule and a final commercial production lease is expected to be in place before mid-2008.
        In January 2008, the Company and KIA reached agreement on a water compensation agreement for the Meadowbank mine project addressing Inuit rights under the Land Claims Agreement respecting compensation for water use and water impacts associated with the project. The agreement was ratified by the KIA Board of Directors in February 2008. In addition, the Company has now reached agreement with the KIA regarding the land lease.
        There are a number of further permits and authorizations required to allow for the construction, operation and ultimate reclamation of the Meadowbank mine project. The key items are set out below:
•
a Type A Water Licence from the Nunavut Water Board;

•
listing the proposed tailings impoundment on Schedule 2 of the Metal Mining Effluent Regulation under the Fisheries Act  (Canada);

•
authorization from the Department of Fisheries and Oceans (Canada) regarding the alteration of fish habitat and the tailings impoundment system;

•
approval from Transport Canada under the Navigable Waters Protection Act (Canada) covering construction of the dewatering dykes and the tailings impoundment; and

•
a permit from the Department of Natural Resources (Canada) relating to the mixing of open pit explosives on site in a designated explosives plant.
        The Company submitted an application in respect of the Type A Water Licence in September 2007 and a final public hearing in respect of the application is scheduled for April 2008. The Company has initiated procedures to have the proposed tailings impoundment listed on Schedule 2 to the Metal Mining Effluent Regulation , and the proposed regulation amendment has been published. In November 2007, the Company submitted a proposed compensation plan to the Department of Fisheries and Oceans (Canada) to offset the fish habitat affected by the project through creation of new habitat in Second Portage Lake and an agreement in principle has been reached. Once the Schedule 2 amendment and the compensation plan are completed, the Department of Fisheries and Oceans (Canada) will be in a position to issue the required habitat alteration authorizations for the Meadowbank mine project and the required authorizations relating to the tailings impoundment.
        In November 2007, the Company submitted applications to Transport Canada for the required approvals under the Navigable Waters Protection Act (Canada). Application to Department of Natural Resources (Canada) for the required explosives permits is being undertaken by the explosives supply contractor on the Company's behalf.
39

History and Exploration
        In the 1980s, regional grassroots exploration programs outlined gold-bearing Archean greenstone belts in the Baker Lake area. In 1985, a joint venture was established between Asamera Minerals Inc. ("Asamera") (60%) and Comaplex Minerals Corp. ("Comaplex") (40%) and commenced evaluating several targets in the area through diamond drilling and other studies. In 1987, the Third Portage deposit was discovered — the first of the five gold deposits currently known at the Meadowbank mine project. In 1994, Cumberland acquired Asamera's 60% interest in the joint venture, and continued drilling and geophysical programs through to 1997. This work further delineated the Third Portage deposit and outlined the Goose Island deposit. The North Portage deposit was also discovered and delineated during this period. In 1997, Cumberland acquired Comaplex's 40% interest and became the 100% owner of the project.
        In 1999, extensive surface trenching at the Third Portage deposit was completed and the Company acquired three Nunavut Tunngavik exploration concessions on land contiguous with the existing mining leases. Also in 1999, Cumberland commissioned an independent pre-feasibility study on the Bay Zone, Goose Island, North Portage and Third Portage deposits. The work involved a mineral resource estimate and a preliminary mine plan with a combination of open pit and underground mining.
        Exploration work on the newly acquired exploration concessions resulted in the discovery of the Vault deposit in 2000. The 2001 exploration program also focussed on the Vault deposit. In November 2001, Cumberland commissioned an independent mineral resource estimate on the Vault deposit.
        Additional drilling was completed at Vault in 2002 to improve confidence levels in preparation for a feasibility study to be completed on the Meadowbank property and which also identified a new zone of mineralization, the PDF deposit. In 2003, further infill drilling was completed in all of the deposits to improve confidence levels for future resource estimates. In 2005, Cumberland's drilling program expanded the size of the Goose Island deposit, intersected encouraging mineralization in the Goose Island South area, and resulted in the discovery of the new Cannu zone, which is the northward extension of the mineralization delineated in the proposed Portage open pit.
        During 2006, Cumberland drilled approximately 2,270 metres in 12 holes at the Goose South zone and approximately 5,940 metres in 46 holes at the Cannu zone. During 2007, the Company drilled approximately 2,173 metres in seven holes at the Goose South zone and approximately 688 metres in six holes at the Cannu zone.
        In 2007, exploration expenditure of $8.1 million was budgeted for drilling at the Meadowbank mine project. The main purpose of the drilling program was to convert mineral resource into mineral reserves within or immediately adjacent to the Meadowbank open pit zones and also to identify extensions of the Goose Island and Portage deposits. A portion of the summer exploration program was conducted on the large property along the prospective horizons; a regional airborne magnetic survey was also completed over the entire project area. Up to three drills operated throughout the exploration season from March to October. In 2007, a total of 117 drill holes were completed for a total of 18,183 metres.
Goose South
        Early in the 2007 drilling season, seven drill holes (for a total of 2,173 metres) successfully linked the mineralization at moderate to shallow depth from the Goose South discovery northward for almost 300 metres to the Goose Island deposit. A section of continuous mineralization almost 1.2 kilometres long was also defined from the Goose Island deposit south to Goose South zone. Some of the more significant results are set out below.

 	 	 	 	 	 	Interval (m)
	 	 	
Drill Hole
	 	 	 	True Width (m)
			 	Gold (g/t)
(Cut 100 g/t)
	
	 	Zone
			 	From:
	 	To:
			
G07-675	 	Goose South	 	11.3	 	236.96	 	261.87	 	11.84	
and	 	Goose South	 	2.5	 	302.57	 	307.86	 	8.26	
G07-685	 	Goose South	 	5.0	 	213.25	 	220.00	 	8.87	
and	 	Goose South	 	12.0	 	260.50	 	278.80	 	6.40	
40

Goose Island
        Seventeen drill holes, totalling 4,652 metres, were completed in 2007 on the Goose Island deposit in order to convert mineral resource to mineral reserve and explore for extensions of the deposit at depth. Some of the more significant gold results are set out in the table below and include 19.5 grams of gold per tonne over 12.0 metres in hole G07-683 that tested resource within the proposed open pit outline. In addition, approximately 100 metres below the previously planned pit, hole G07-692 returned 5.5 grams of gold per tonne over 9.5 metres.

 	 	 	 	 	 	Interval (m)
	 	 	
Drill Hole
	 	 	 	True Width (m)
			 	Gold (g/t)
(Cut 100 g/t)
	
	 	Zone
			 	From:
	 	To:
			
G07-676	 	Goose Island	 	18.5	 	164.0	 	185.0	 	5.84	
including	 	Goose Island	 	4.8	 	164.0	 	170.0	 	9.16	
including	 	Goose Island	 	5.0	 	179.11	 	185.0	 	10.12	
G07-679	 	Goose Island	 	8.0	 	152.52	 	161.84	 	15.25	
G07-683	 	Goose Island	 	12.0	 	76.0	 	90.0	 	19.45	
including	 	Goose Island	 	6.0	 	77.0	 	84.0	 	31.7	
G07-692	 	Goose Island	 	9.5	 	258.0	 	269.60	 	5.49	
Portage
        The majority of the 2007 drilling campaign at the Meadowbank mine project, with 59 holes totalling 5,887 metres, targeted the main Portage deposit and its northern and southern extensions, Cannu and Bay zones, respectively. Already 2.5 kilometres in length, exploration success at Portage, especially at the Bay zone suggests the potential for the Portage deposit to possibly connect with the Goose Island deposit 400 metres to the south. Continuous mineralization potentially could be traced for over 3.5 kilometres spanning Portage, Goose Island and Goose South. Some of the more significant results are set out below.

 	 	 	 	 	 	Interval (m)
	 	 	
Drill Hole
	 	 	 	True Width (m)
			 	Gold (g/t)
(Cut 100 g/t)
	
	 	Zone
			 	From:
	 	To:
			
TP07-694	 	Bay Zone	 	5.0	 	84.0	 	90.0	 	8.98	
and	 	Bay Zone	 	9.0	 	97.0	 	108.0	 	22.98	
including	 	Bay Zone	 	5.7	 	101.0	 	108.0	 	34.60	
TP07-695	 	Bay Zone	 	7.5	 	108.55	 	120.60	 	13.76	
including	 	Bay Zone	 	3.2	 	115.50	 	120.60	 	20.11	
TP07-704	 	Bay Zone	 	3.0	 	16.30	 	19.80	 	31.76	
and	 	Bay Zone	 	2.8	 	27.50	 	30.50	 	12.81	
TP07-706	 	Portage	 	4.6	 	68.4	 	73.0	 	4.34	
TP07-726	 	Portage	 	4.5	 	73.0	 	77.5	 	4.42	
NP07-721	 	Portage	 	6.0	 	77.0	 	83.0	 	3.72	
and	 	Portage	 	1.0	 	89.0	 	90.0	 	100.0	
NP07-731	 	Portage	 	5.1	 	78.0	 	83.1	 	4.98	
NP07-734	 	Portage	 	7.4	 	95.2	 	102.6	 	10.18	
        The focus of exploration in 2008 will be to extend the Portage and Goose Island zones to the south, the Cannu zone to the north and the Goose South zone at depth. Exploration expenditure of $10 million is planned on these zones for 2008. The Vault deposit, approximately seven kilometres to the north will also be tested. Additionally, surface regional programs will be executed to follow up recently identified gold and base metal showings on the property.
Geology and Mineralization
        Meadowbank comprises a series of Archean-aged gold deposits hosted within polydeformed rocks of the Woodburn Lake Group, part of a series of Archean supracrustal assemblages forming the Western Churchill supergroup in northern Canada. Three of the four known gold deposits are currently planned to be mined. The
41

Goose Island and Portage deposits are hosted by highly deformed magnetite rich iron formation rocks while intermediate volcanic rock assemblages host the majority of the mineralization at the more northerly Vault deposit. In all deposits, gold mineralization is commonly associated with intense quartz flooding, and the presence of iron sulphide minerals (pyrite and/or pyrrhotite). Arsenopyrite is typically absent.
        Defined over a 1.85 kilometre strike length and across lateral extents ranging from 100 metres to 230 metres, the geometry of the Portage gold deposit consists of a north north-west striking recumbent fold with limbs that extend to the west. The mineralization in the lower limb of the fold is typically six to eight metres in true thickness, reaching up to 20 metres in the hinge area.
        The Goose Island deposit is similar in setting to the Portage deposit, but exhibits different geometry, with a north north-south trend and a steep westerly dip. Mineralized zones typically occur as a single unit near surface, splaying into several limbs at depth. The deposit is currently defined over a 750 metre strike length and down to 500 metres at depth (mainly in the southern end); with true thicknesses of ten metres to 12 metres (reaching up to 20 metres locally).
        The Vault Deposit is a planar and shallow dipping with a defined strike of 1,100 metres. It remains open down-dip to the northeast; but has been defined for at least 700 metres, down dip. The deposit has been disturbed by two sets of normal faults striking east-west and north-south and dipping moderately to the southeast and steeply to the east respectively. The main lens has an average true thickness (based on one gram per tonne shell) of eight metres to 12 metres, reaching as high as 18 metres locally. The hanging wall lenses are typically three metres to five metres, and up to seven metres, in true thickness.
Mining and Metallurgy
        Mining at the Meadowbank mine project will be done by trucks and excavators and has been projected over an eight plus year mine life. Ore will be extracted conventionally using drilling and blasting with truck haulage to a primary gyratory crusher located adjacent to the mill. Waste rock will be hauled to one of two waste storage areas on the property or used for dyke construction, fill material or dumped into selective areas of the open pits that have previously been mined out. Mining will initially be concentrated in the Portage pit area. Waste material from the pre-stripping will be used as bulk construction materials for dykes, as well as for construction fill material around the site.
        During pre-production, ore grade material will be stockpiled close to the primary crusher. During year one, all of the ore material is scheduled to come from the Portage pit. Waste material will be used to complete the construction of the Goose Island dykes, with the remaining waste hauled to the primary dump north of the Second Portage Lake.
        With the completion of the Goose Island dyke, the Goose Island pit will be brought into production and will augment the ore flow from the Portage pit. The Company anticipates that these two pits will operate concurrently for a period of four years, from years two through five. Waste stripping is scheduled to commence in the Vault pit in year four, with the start of ore mining anticipated year four as the Goose pit comes to a close. During the last two and half years of the project life, mining will be exclusively from the Vault pit.
        Equipment at the site for the project includes blasthole drills, mass excavators, hydrolic shovels, front end loaders, haulage trucks, tracked dozers and graders.
        The recovery of gold from ore within the Portage, Goose and Vault open pit designs is based on detailed metallurgical test work of the materials from the Meadowbank mine project over the course of three years. The sampling of the deposits was extensive and test work was completed using only drill core from ore zones which fall within the proposed mining plan. The sample materials were selected by qualified persons, and the materials best represent geological materials planned to be mined. The metallurgical test program was completed in 2003 and 2004, with gold recovery studies by SGS Lakefield Research Ltd.
        The process design is based on a conventional gold plant flowsheet consisting of primary gyratory crushing, grinding, gravity concentration, cyanide leaching and gold recovery in a carbon-in-pulp ("CIP") circuit. The mill will be designed to operate 365 days per year with a design capacity of 3.1 million tonnes of ore per year
42

(8,500 tonnes per day). The overall gold recovery is projected to be approximately 93.2%, based on projections from metallurgical test work, with about 40% typically recovered in the gravity circuit.
        The crushed ore is fed to a coarse ore stockpile and then reclaimed to a SAG mill operating in closed circuit with a pebble crusher. The SAG mill operates together with a ball mill to reduce the ore to about 80% passing 60-90 microns, depending on the ore type and its hardness. The ball mill operates in closed circuit with cyclones. The grinding circuit incorporates a gravity process to recover free gold and the free gold concentrate will be leached in an intensive cyanide leach-direct electrowinning recovery process.
        The cyclone overflow is thickened prior to pre-aeration with air and leaching in agitated tanks. The leached slurry is directed to a six-tank CIP system for gold recovery. Gold in solution from the leaching circuit is recovered on carbon and subsequently stripped and then recovered from the strip solution by electrowinning, followed by smelting and the production of a dore bar.
        The CIP tailings will be treated for the destruction of cyanide using the standard sulphur-dioxide-air process. The detoxified tailings will be pumped to the permanent tailings facility. The tailings storage is designed for zero discharge, with all process water being reclaimed for re-use in the mill to minimize the water requirements for the project.
        Current facilities on the Meadowbank mine project consist of the original Cumberland exploration camp with capacity for 65 employees. During 2007, most of the work was on the 110 kilometre all-weather road between Baker Lake and the Meadowbank mine project site. Construction of the road has essentially been completed with 1.5 kilometres remaining to be completed. Transport of material on to the site started in December 2007 using a temporary ice road for the last 8.0 kilometres. Currently, construction of the permanent 350 person camp is nearing completion.
        A total of $173 million has been budgeted to be spent at the Meadowbank mine project in 2008, including over $56 million on process plant construction and process equipment and $42 million on mining preproduction and the mining fleet. Approximately 25% of the mining equipment has already been delivered to Baker Lake. Mining preproduction will include the rock work associated with the construction of the perimeter dykes around the Portage open pit. In addition, $18 million has been budgeted for power plant construction and $13 million for site infrastructure including the camp, service facilities and fuel storage.
        The mine is expected to start production in early 2010. Current estimated capital costs of construction of the Meadowbank mine project are approximately $390 million, of which a total of $160 million had been incurred by the end of 2007 and $173 million are expected to be incurred in 2008.
Pinos Altos Mine Project
        The Pinos Altos mine project is located on an 11,000 hectare property in the Sierra Madre gold belt, 285 kilometres west of the city of Chihuahua in the State of Chihuahua in northern Mexico. At December 31, 2007, the Pinos Altos mine project was estimated to contain probable mineral reserves of 2.5 million ounces of gold and 73.1 million ounces of silver comprised of 24.7 million tonnes of ore grading 3.21 grams of gold per tonne and 92.21 grams of silver per tonne. The Pinos Altos property is made up of three blocks, the Parrena Concessions (19 concessions, 6,041.1 hectares), the Madrono Concessions (17 concessions, 873.3 hectares) and the Pinos Altos Concession (one concession, 4,192.2 hectares).
        The Madrono Concessions (which cover approximately 74% of the current mineral resource) are subject to a net smelter royalty of 3.5% payable to Minerales El Madrono S.A. de C.V. ("Madrono"). The Pinos Altos Concession (which covers approximately 26% of the current mineral resource) is subject to a 2.5% net smelter return royalty payable to the Consejo de Recursos Minerales, a Mexican Federal Government agency; after 20 years, this portion of the property will also be subject to a 3.5% net smelter return royalty payable to Madrono. In 2007, advance payments of $0.14 million were paid to Madrono. The assets comprising the Pinos Altos mine project acquired by the Company are an assignment of rights under contracts to explore and exploit the Madrono Concessions and the Pinos Altos Concession, the right to use up to 400 hectares of land owned by Madrono for mining installations for a period of 20 years after formal mining operations have been initiated, sole ownership of the Parrena Concessions, possession rights under Mexican law to a 13.3 hectare parcel of land and rights to an environmental impact statement authorization issued by Mexican environmental authorities.
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Water requirements for the Pinos Altos mine project will be obtained from ground water sources intercepted by the mine workings.
        The Pinos Altos property is characterized by moderate to rough terrain with mixed forest (pine and oak) and altitude that varies from 1,770 metres to 2,490 metres above sea level. The climate is sub-humid, with about two-thirds of its average annual precipitation of approximately one metre occurring during the period from June through September. The average annual temperature is 18.3 degrees Celsius. The minimum monthly average temperature is 11.4 degrees Celsius in January and the maximum monthly average temperature is 25.5 degrees Celsius in June. Exploration and mining work can be carried out year round. The Pinos Altos mine project is located in an important mining area of northern Mexico and the Company anticipates skilled workers may be recruited from the local area and from the larger centers located near the region. The property is directly accessible by paved highway and within 10 kilometres of an extension of the state power grid.
        Over 90% of the Pinos Altos mine project's mineral resource is located in the Santo Nino vein, along a regional fault zone that holds a number of other known deposits in the area. This Santo Nino vein zone has thicknesses of up to 40 metres over a length of 2.5 kilometres and a vertical extent that can reach 600 metres or more. It remains open to the west and at depth. Penoles', the previous owner of the project, work also included metallurgical testing and initial work on the permitting for a potential mining operation.
        During 2006, the Company embarked upon a program to acquire surface rights, in addition to the underlying mineral rights which are already held by the Company, for approximately 7,215 hectares of land surrounding the Pinos Altos mine project.
        As at the end of 2006, the Company had successfully concluded negotiations with communal land owners (ejidos) and others for the purchase of 5,745 hectares of land as follows:

Ejido Jesus del Monte	 	800 hectares	
Ejido Gasachi	 	1,450 hectares	
Ejido Basacheachi	 	1,250 hectares	
Ejido Yepachi	 	1,480 hectares	
Anexo El Portrero	 	765 hectares	
        In addition to the land purchases listed above, a temporary occupation agreement with a 30-year term was successfully negotiated with ejido Jesus del Monte in 2006 for an additional 1,470 hectares of land. Activity during 2007 was limited to the completion of agreed phased payments for the purchases referred to above. The acquisition of surface rights for the prospective lands within the district surrounding the Pinos Altos project will facilitate future exploration activity and any potential future mining development in these areas. The Company believes its land position is sufficient for construction of tailings facilities.
        In August 2007, on the basis of an independently reviewed feasibility study, the Company approved construction of a mine at Pinos Altos. Annual gold production is expected to average 190,000 ounces of gold at total cash costs of $210 per ounce, with initial gold production occurring in the third quarter of 2009. The life of mine plan for Pinos Altos is based on a gold price of $566 per ounce and exchange rate of C$1.15 for each $1.00 and anticipates sustaining capital expenditures of approximately $5 million per year. Estimated capital costs of construction of the Pinos Altos mine project are $230 million, of which $126 million are expected to be incurred in 2008.
        In August 2007, the project received the necessary permit authorizations for construction and operation of a mine at Pinos Altos, including the Cambio de Uso de Suelo and Manifesto de los Impactos Ambientales approvals from the Mexican environmental agency ("SEMARNAT"). As of the end of 2007, the project was operating under these permits, and minor modifications to allow for future expansion of facilities were under review by SEMARNAT.
        Initial development of the underground mine was underway by December 2007, including more than 1,000 meters of lateral development. Purchase orders for the ball mill and SAG mill and mining equipment had been placed as at the end of 2007 and basic engineering for the project was nearly complete. During 2008, the major project activity is expected to include the detailed engineering, procurement, further pre-production
44

development of the underground mine, pre-production development of the surface mine, and civil and structural works related to the project and commencement of earthworks and construction of surface facilities.
Location Map of Pinos Altos Mine Project

Geology
        The Pinos Altos mine project is in the north part of the Sierra Madre geologic province. The stratigraphic column for the region and project is as follows:

Series
	 	Unit	 	Lithology	 	Age	
	
Upper Volcanic Series	 	Buenavista Ignimbrite	 	570m-Pale brown grey, beige rhyodacite crystal lithic tuffs, and lapilli	 	<38Ma	
 	 		 	 	
 	 	Frijolar andesite	 	420m-Brown, purple andesite lithic flow tuffs	 	 	
 	 		 	 	
 	 	Victoria Ignimbrite	 	400m-Buff, brownish-grey rhyolite and dacite crystal lithic ash flow tuffs	 	 	
	
Lower Volcanic Series	 	El Madrono Volcanics	 	250-750m-Interbedded greenish-grey andesite and rhyolite flows and volcanoclastics	 	<45Ma	
 	 		 	 	
 	 	Navosaigame Conglomerate	 	420m-Mostly purple conglomerates, sandstones, shales	 	 	
	
        Rhyolite and andesite dykes are emplaced along faults that cut the above series. There is a classic exposure of a rhyolite dome in the northwest edge of the Pinos Altos mine project. Future study may show a genetic relationship of the rhyolite dome to mineralization in the district. Structure in the Pinos Altos mine project is dominated by a ten kilometre by three kilometre horst, a fault-uplifted block structure, oriented west-northwest
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that is bounded on the south by the Santo Nino fault dipping south and on the north by the Reyna de Plata fault dipping north. Quartz-gold vein deposits are emplaced along these faults and along transfer faults that splay northwest from the Santo Nino fault.
        The Pinos Altos property is host to volcanic rocks belonging to both the Upper volcanic supergroup and the Lower volcanic complex. The drilling undertaken by the Company in 2005 intersected units belonging to the Upper volcanics. Units not seen in drill holes were briefly visited on outcrops.
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The Lower volcanic complex is represented on the property by the Navosaigame conglomerates and the El Madrono volcanics. These units represent episodes of erosion and andesite dominated volcanism. The Navosaigame conglomerate is made up of thinly bedded sandstone intercalated with siltstones and conglomerates. Clasts consist of andesite, limestone, granitoids and quartzofeldspathic gneisses. Some sandstone horizons also contain pumice fragments. The El Madrono volcanics consist of felsic tuffs and lavas intercalated with rhyolitic tuffs and sandy volcanoclastic and sediments. The andesitic tuffs are greenish grey. Feldspar and biotite phenocrysts are common as are lithic andesite and pumice fragments. The andesitic flows consist of intercalated horizons of agglomerates and massive porphyritic layers. Plagioclase and ferromagnesian oxides occur as phenocrysts in a light green aphanitic matrix. Intercalated within these flows are at least two rhyolitic tuff horizons, which can reach up to 50 metres in thickness. Theses horizons are commonly argillite altered and weakly oxidized. Thinly laminated medium to coarse grained sandstone horizons of less than 10 metres in thickness are also noted.

•
The Upper volcanic supergroup discordantly overlies rocks of the Lower volcanic sequence. The Upper volcanic group is made up of the Victoria ignimbrites, the Frijolar andesites, and the Buenavista ignimbrites. Intermediate and felsic dykes as well as rhyolitic domes intrude all of these units. Lacustrine deposits are also locally recognized. The Victoria ignimbrites represent an explosive felsic volcanic event. Layers within this unit present numerous textural, compositional, and colour variations. Rocks within this unit include vitrocyrtalline and lithic tuffs of rhyolitic to dacitic composition, aphanitic vitric tuffs, pyroclastic lithic tuffs ranging up to lapilli tuffs with fragments of variable composition, and volcanic breccias. The Frijolar andesite are massive to flow banded, porphyritic, consisting of 70% plagioclase and hornblend phenocrysts in a brownish to purple aphanitic groundmass locally hosting pyrite and hematite. The Buenavista ignimbrite consists of a series of dacitic to rhyolitic pyroclastics. This unit was intersected in all of the Agnico-Eagle drill holes. From top to bottom, the layers encountered are: (1) Basaltic flows (blackish coloured, aphanitic and amygdaloidal), (2) Dacitic flows (purple to maroon in colour and for the most part aphanitic), (3) Lapilli and sandy tuffs, (4) Vitrocrystalline lithic welded tuffs (beige to pinkish beige colour, with quartz, feldspar and biotite phenocrysts and 10 to 25% lithic and pumice fragments), and (5) Rhyodacitic vitrocrystalline tuffs (beige to purple in colour, with quartz, feldspar, plagioclase and biotite phenocrysts). For the most part, massive breccias with fragments of equal composition as the matrix are developed near the base of the unit.
        The Lacustrine deposits consist of layers of finely laminated fine grained, grey to black, silica rich beds intercalated with volcanic and limey layers.
        The intrusive rocks are represented by the rhyolite and Santo Nino andesite units. The rhyolites are present as dykes and small domes. These units intrude the Victoria and Buenavista ignimbrites close to the Santo Nino and Reyna de Plata fault zones as well as close to other minor structures. The unit is pale white to reddish beige, aphanitic to porphyritic and with well developed flow banding. Pyrite, as fine grained disseminations, is commonly associated to these rhyolites. The Santo Nino andesite is a dyke which intrudes along the Santo Nino fault zone. It is of purple to greenish mauve colour, fine to medium grained and with plagioclase and hornblend phenocrysts.
Structure
        The Pinos Altos property is centered on a horst structure striking at an azimuth of roughly 120 degrees. The horst is defined by the Reyna de Plata fault to the north and the Santo Nino fault to the south. Within this context, the principal veins and faults are grouped as follows:
1)
West-northwest ("WNW"), pre-mineralization, numerous re-activation episodes;
46

2)
North to northeast ("NNE"), pre- and post-mineralization;

3)
North to north-northwest pre- and post-mineralization, low angle fault, seen only at the Carola fault; and

4)
North to north-northwest post-mineralization, basin and range type structures.
        The mineralization is controlled by the WNW and the NNE system. The Santo Nino and Reyna de Plata faults represent the WNW system. These faults run sub-parallel to each other and can be traced for up to seven kilometres. The principal gold occurrences on the property are hosted by the Santo Nino fault zone. Numerous episodes of movements are interpreted, including a pre-mineralization sinistral to normal movement during a north-northwest to south-southeast extension period and a post-mineralization dextral movement during a northeast to east-northeast extensional period. The north to northeast faults were also important to the emplacement of gold on the property. It is at the intersection of two structures, the Victoria and the El Comedero faults with the Santo Nino fault zone, that are respectively located in the Santo Nino and the Oberon de Weber ore shoots.
Deposit Type and Mineralization
        Gold and silver mineralization at the Pinos Altos mine project consists of low sulphidation epithermal type hydrothermal veins and breccias. The Santo Nino structure outcrops over a distance of roughly six kilometres. It strikes at 060 degrees azimuth on its eastern portion and turns to strike roughly 090 degrees azimuth on its western fringe. The structure dips at 70 degrees towards the south. The four mineralized sectors hosted by the Santo Nino structure consist of discontinuous quartz rich lenses named from east to west: El Apache, Oberon de Weber, Santo Nino, and Cerro Colorado. All four mineralized sectors share a similar multi-episodic history. From oldest to most recent:
1)
Intrusion of Santo Nino andesite dykes within the Santo Nino fault zone.

2)
Formation of vuggy cockade textured breccias containing variable amounts of andesitic (Santo Nino) and rhyolitic (Victoria) fragments.

3)
Formation of quartz-sericitic breccias. These breccias are usually strongly oxidized along fractures and are marked by fine pyrite disseminations (less than 1%). Visible gold is sometimes noted within these breccias. The quartz is host to andesitic and rhyolitic lithic fragments.

4)
Formation of green quartz breccias. The quartz-adularia matrix is host to strongly silicified wallrock fragments from the Santo Nino andesites and the Victoria ignimbrites. The matrix consists of banded coloform and crustiform, locally drusitic green quartz. Traces of visible gold and pyrite are noted. Native silver and electrum were noted in higher grade sectors.

5)
A late breccia event consisting of grey to yellowish green quartz with local amethyst. This quartz cements fragments of all units described above. Grey to blackish grey calcite is also associated to this event.

6)
Late brittle fault gouges along the Santo Nino fault within which mineralized rock fragments are sporadically noted.
        The El Apache is the most weakly mineralized. The area hosts a weakly developed white quartz dominated breccia. Gold values are low and erratic over its roughly 750 metre strike length. Past drilling suggests that this zone is of limited extent at depth.
        The Oberon de Weber showing is followed on surface and by diamond drilling over an extent of roughly 500 metres. Shallow holes drilled by the Company show good continuity both in grade and thickness over roughly 550 metres. From previous drilling done by Penoles, continuity at depth appears to be erratic with a weakly defined western rake.
        The Santo Nino lens is the most vertically extensive of these lenses. It has been traced to a depth of approximately 750 metres below surface. The vein is followed on surface over a distance of 550 metres and
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discontinuously up to 650 metres. Beyond its western and eastern extents, the Santo Nino andesite is massive and only weakly altered. Gold grades found are systematically associated with green quartz brecciated andestite.
        The Cerro Colorado lens is structurally more complex than the three described above. Near the surface, it is marked by a complex superposition of brittle faults with mineralized zones which are difficult to correlate from hole to hole. Its relation to the Santo Nino fault zone is not clearly defined. Two deeper holes done by Agnico-Eagle during this campaign suggest better grade continuity at depth.
        The San Eligio zone is located approximately 250 metres north of Santo Nino. The host rock is brecciated Victoria Ignimbrite with, rarely, stockworks. There is no andesite in this sector. Unlike the other lenses, the San Eligio lens dips towards the north. The lateral extent seems to be continuous at 850 metres depth. Its average width is five metres and never exceeds 15 metres. Surface mapping and prospecting has suggested good potential for additional mineralization on strike and at depths below 150 metres. Visible gold has been seen in the drill core.
Mineralogy
        The minerals present are indicative of an oxidized, epithermal, low sulphidation (and likely low sulphide) precious metals vein system rich in silver. The temperature of formation is thought to have been below 300 degrees Celsius, as no selenium minerals have been found to date. The presence of kaolinite and dickite are indicative of an acidic environment. The presence of hematite crystals in the center of acanthite indicates that the deposit was probably formed under oxidative conditions.
        One sample from the hole PA-05-03 was submitted for a petrographic description. Ore minerals observed under the petrographic microscope were native silver, acanthite and native gold. The gangue included quartz, kaolinite, hematite and minor apatite and chrysocolla. Acanthite forms fill between quartz grains and crystals. Silver occurs as replacement rims on the acanthite. Gold occurs as small, sub-millimetre grains either as floaters in quartz matrix or rarely associated directly with silver minerals. Hematite and chrysocolla form by oxide replacement of early sulphide phases, hematite from pyrite and chrysocolla, presumably from stromeyerite or chalcopyrite.
Exploration Program
        Based on the positive drilling results and growing precious metals resources, in 2007 the Company accelerated its work on the property and initiated a $23 million exploration program. The objectives of the exploration program included: converting resources to reserves, expanding the resource by drilling in under-explored sectors along the strike and at depth, completing the feasibility study and developing an underground ramp to provide a deeper drilling platform and to expose the mineralization sampling. In 2007, 84 holes were drilled on the property for a total length of 38,191 metres. And at the end of 2007, five drills are operating on the property, focused largely on resource conversion at relatively shallow depths (less than 300 metres generally). The program has confirmed the open pit and the underground potential of both the Santo Nino and Oberon de Weber structures. The work to date has also confirmed that the Santo Nino and Cerro Colorado structures remain open along strike and at depth.
        The exploration works focused on three known ore shoots, the Santo Nino, Oberon de Weber and Cerro Colorado Structures. The total strike length of the known mineralization is approximately eight kilometres. A summary of the best results from the recent drilling on the main Santo Nino zone is set out in the following table. These results have increased confidence that the overall gold and silver resource around Cerro Colorado and Santo Nino is likely to grow. One of the most significant results was in the hole PA-05-81 that returned 5.8 grams of gold per tonne and 42.0 grams of silver per tonne over 2.5 metres at a depth of approximately 625 metres. This hole is approximately midway between the Santo Nino and Cerro Colorado zones. This intersection suggests that these two zones may join at depth. Also significant are the intersections returned in hole PA-06-83 (16.2 grams of gold per tonne and 116.0 grams of silver per tonne over 3.2 metres) that confirms the depth potential along the steep east plunge of Santo Nino, and also in hole PA-06-111 (6.3 grams of gold per tonne and 105.0 grams of silver per tonne over 39.0 metres) that supports the open pit potential of Santo Nino.
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        Some of the most notable drill holes encountered in 2007 are set out below:
Pinos Altos

 	 	 	 	Interval (m)
	 	 	 	 	 	 	
 	 	True Thickness (m)
			 	Gold (g/t)
(Cut 41 g/t)
	 	Silver (g/t)
(Cut 1500 g/t)
	 	Horizontal Width
	
Drill Hole
			 	From:
	 	To:
							
PA-06-113	 	7.3	 	282.2	 	290.2	 	5.83	 	196.6	 	7.9	
PA-06-117	 	28.4	 	220.0	 	250.2	 	2.31	 	95.0	 	30.6	
PA-06-122	 	52.3	 	244.5	 	311.0	 	2.91	 	103.0	 	56.4	
PA-06-127	 	37.7	 	223.5	 	275.0	 	4.45	 	155.3	 	40.7	
PA-06-132	 	0.6	 	17.3	 	33.5	 	6.79	 	102.9	 	0.0	
PA-06-134	 	26.0	 	31.0	 	62.0	 	3.24	 	81.1	 	28.0	
PA-06-146	 	37.6	 	586.7	 	629.0	 	4.47	 	129.2	 	40.6	
PA-06-146	 	13.9	 	607.4	 	623.0	 	9.05	 	144.8	 	15.0	
PA-06-147	 	40.0	 	457.3	 	501.9	 	6.15	 	138.0	 	43.1	
PA-06-147	 	14.3	 	463.0	 	479.0	 	11.74	 	212.5	 	15.5	
PA-06-147	 	11.6	 	488.9	 	501.9	 	5.91	 	176.5	 	12.6	
PA-06-149	 	7.7	 	306.1	 	315.0	 	15.48	 	411.1	 	8.3	
PA-06-151	 	20.8	 	293.9	 	317.6	 	3.70	 	162.6	 	22.5	
PA-07-175	 	7.1	 	570.0	 	580.0	 	5.47	 	68.9	 	7.7	
        Exploration and resource conversion diamond drilling will now be focused at depths below 300 metres along the Santo Nino and Cerro Colorado zones and also along the San Eligio gold structure. San Eligio is located approximately 250 metres north of Santo Nino, where surface mapping and prospecting has suggested good potential for additional mineralization on strike and at depths below 150 metres. Assays from the initial round of drilling are expected to be completed shortly. Visual inspection of the drill core resulted in sightings of visible gold. The mineralization is very similar to that of Santo Nino geologically.
Creston/Mascota
        A recent discovery was made in the Creston/Mascota area in the northwest quadrant of the Pinos Altos property, approximately seven kilometres from the main Santo Nino deposit. In the fall of 2006, surface mapping, sampling and trenching identified gold associated with at least two, shallowly-dipping zones of brecciated quartz vein and quartz stock work near surface. The mineralization of the two zones, Mascota and Creston-Colorado is similar to Santo Nino except in their orientation (generally north-south with a shallow west dip).
        A north-south oriented almost vertical fault appears to separate the Creston Colorado and the Mascota zones. Drilling began in December 2006 and two drills are currently operating at the Creston Colorado zone.
        The gold mineralization in this zone is now known to be approximately 900 metres long (north-south) with widths ranging between 50 metres and 200 metres (east-west) and thicknesses ranging between 10 metres and 60 metres. Some of the most notable drill holes encountered in 2006-2007 are set out in the table below. An
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inferred resource was estimated at the end of 2007 to be 7.7 million tonnes grading 1.4 grams per tonne gold and 16.2 grams per tonne silver.

 	 	 	 	Interval (m)
	 	 	 	 	 	 	
 	 	True Thickness (m)
			 	Gold (g/t)
(Cut 41 g/t)
	 	Silver (g/t)
(Cut 1500 g/t)
	 	Vertical Thickness (m)
	
Drill Hole
			 	From:
	 	To:
							
CM-06-001	 	10.9	 	0.0	 	11.0	 	2.43	 	57.8	 	14.2	
CM-07-010	 	18.4	 	5.5	 	24.0	 	2.14	 	7.8	 	24.1	
CM-07-010A	 	10.0	 	0.0	 	10.0	 	5.14	 	21.9	 	13.0	
CM-07-010B	 	14.2	 	0.0	 	18.7	 	3.38	 	22.5	 	18.5	
CM-07-011	 	39.0	 	15.6	 	54.9	 	2.33	 	15.0	 	50.9	
CM-07-012	 	64.4	 	38.2	 	103.5	 	3.81	 	35.7	 	84.0	
CM-07-031	 	66.7	 	61.5	 	128.5	 	1.92	 	25.4	 	87.1	
CM-07-033	 	48.6	 	70.0	 	119.0	 	3.48	 	17.6	 	63.5	
CM-07-034	 	28.5	 	162.7	 	191.3	 	1.67	 	12.0	 	37.2	
Future Work
        The 2008 work program will include building an exploration ramp which will be developed on the footwall of Santo Nino and Cerro Colorado to permit additional drilling at depth in the area of the Cerro Colorado and Santo Nino structures where there are suggestions that the two structures may join at depth. The main objectives of the program will be to convert the present inferred resource estimates along Cerro Colorado, San Eligio and El Apache and along the depth extension of the Santo Nino Zones, and test the potential target around the Pinos Altos area. A program of geotechnical drilling was also started in December 2006, in order to collect some technical data to design the future open pits. Exploration in 2008 at Creston/Mascota will test the zones further north for one kilometre and to the west. A scoping study will be initiated to evaluate the potential of the Creston/Mascota zone. Budgeted exploration expenditure for 2008 at the Pinos Altos mine project is $10.3 million.
        Construction at the Pinos Altos mine project will include the development of underground and open pit mines, installation of shops, warehouses, and other surface facilities; and installation of a process plant capable of processing approximately 1.5 million tonnes of ore per year. The surface mine will use traditional open pit mining techniques with bench heights of seven meters. The underground mine will utilize the long hole sublevel stoping method. The process plant will utilize single stage crushing followed by a conventional SAG/ball mill circuit with gravity separation. Ore will be ground to 80% passing 75 microns followed by cyanide leaching, counter-current decantation and Merrill Crowe recovery. Tailings will be detoxified and used for paste backfill in the underground mine or deposited as dry tailings in an engineered impoundment area.
        Agnico-Eagle has opened a regional office in Chihuahua to develop and construct the Pinos Altos mine, to carry out further exploration at and around Pinos Altos, and to evaluate other opportunities in Mexico. Environmental reviews have been completed and applications for all major construction and applications for operating permits have been submitted to, or received from, the appropriate Mexican review agencies.
        Agnico-Eagle has also engaged the local communities in the project area to ensure that the project provides long-term benefits to the residents living and working in the region. The Company received distinction as an "Empresa Socialmente Responsable 2008" (socially responsible company) by the Mexican non-governmental agency CEMEFI for these efforts in the community.
Exploration Activities
        Agnico-Eagle continued to actively explore in Quebec, Ontario, Nunavut, Newfoundland, Nevada, Finland and Chihuahua, Mexico. At the end of December 2007, the land holdings of Agnico-Eagle in Canada consisted of 80 projects comprised of 2,928 mineral titles (claims, mining leases, etc.) covering an aggregate of 125,398 hectares. Land holdings in the United States consisted of seven properties covering 14,911 hectares. Land holdings in Finland consisted of two properties covering an aggregate of 9,360 hectares and 27 reservations covering 24,012 hectares. In Mexico, the holdings consisted of one property covering a total of 26,477 hectares and the Pinos Altos property, which covers 11,107 hectares. During 2007, the Company's Canadian exploration
50

activities were focused on the CLL Fault Zone between the Bousquet and Lapa areas in the Abitibi region of Quebec. The Company is conducting exploration activities in other parts of the Abitibi region, in Ontario and in Newfoundland and Labrador. The Company also has exploration property in northwestern Ontario. In Nevada, exploration activities during 2007 were concentrated on the Cortez-Battle Mountain trend and northeastern region of the State. With the acquisitions of the Pinos Altos and Kittila mine projects in Mexico and Finland, respectively, the Company began an aggressive exploration program at Pinos Altos in 2007 both within the Pinos Altos mine project area and also in the Creston/Mascota area in the northwest sector of the property. In Finland, exploration including diamond drilling continued along the Surrikuusikko Trend both to the north and south of the Kittila mining lease.
Mineral Reserve and Mineral Resource
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 SEC 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 SEC 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 .
        The information set forth below with respect to the mineral reserves at the LaRonde Mine (which includes mineral reserves at the LaRonde Mine extension), the Lapa, Goldex, Meadowbank, Kittila and Pinos Altos mine projects, and the Bousquet and Ellison properties has been prepared by the qualified people set out below in accordance with the Canadian Securities Administrators' National Instrument 43-101 Standards of Disclosure for Mineral Projects ("National Instrument 43-101"). The Company's Vice President, Project Development, Marc 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 Company's mineral reserve estimate was derived from internally generated data or audited reports.

Property
	 	Qualified person responsible for mineral reserve estimates
	
LaRonde Mine	 	Francois Blanchet, Ing., Superintendent of Geology, LaRonde Mine	
Goldex	 	Dyane Duquette, P. Geo., Assistant Superintendent, Technical Services, Goldex mine project	
Lapa	 	Normand Bédard, P. Geo., Geology Superintendent, Lapa mine project	
Meadowbank	 	Daniel Doucet, Ing., Principal Engineer, Technical Services Group	
Kittila	 	Marc Legault, P. Eng., Vice President, Project Development	
Pinos Altos	 	Daniel Douchet, Ing., Principal Engineer, Technical Services Group	
Bousquet and Ellison	 	Francois Blanchet, Ing., Superintendent of Geology, LaRonde Mine	
        The criteria set forth in National Instrument 43-101 for reserve definitions and guidelines for classification of mineral reserve are similar to those used by the SEC Industry Guide No. 7, as interpreted by Staff of the SEC ("Guide 7"). However, the definitions in National Instrument 43-101 differ in certain respects from those under Guide 7. Under Guide 7, among other things, a mineral reserve estimate must have a "final" or "bankable" feasibility study. Guide 7 also requires the use of prices that reflect current economic conditions at the time of reserve determination which Staff of the SEC has interpreted to mean historic three-year average prices. In
51

addition to the differences noted above, Guide 7 does not recognize mineral resources. The assumptions used for the mineral reserves and resources estimate reported by the Company in this Form 20-F were based on three-year average prices for the period ending December 31, 2007 of $583 per ounce gold, $10.77 per ounce silver, $1.19 per pound zinc, $2.65 per pound copper and exchange rates of C$1.14 per $1.00, 10.91 Mexican pesos per $1.00 and $1.29 per €1.00. The assumptions for the mineral reserves and resources estimates reported by the Company for the period ending December 31, 2006 were $486 per ounce gold, $8.69 per ounce silver, $0.89 per pound zinc, $1.99 per pound copper and exchange rates of C$1.21 per $1.00, 11.02 Mexican pesos per $1.00 and $1.25 per €1.00. Set out below are the reserve estimates as calculated in accordance with National Instrument 43-101 and Guide 7, respectively (tonnages and contained gold quantities are rounded to the nearest thousand):

 	 	National Instrument 43-101
	 	Industry Guide 7
	
Property
	 	Tonnes
	 	Grade
(g/t)
	 	Contained
Gold (oz)
	 	Tonnes
	 	Grade
(g/t)
	 	Contained
Gold (oz)
	
Proven Reserve	 	 	 	 	 	 	 	 	 	 	 	 	
Goldex	 	250,000	 	2.23	 	18,000	 	250,000	 	2.23	 	18,000	
Lapa	 	3,000	 	10.63	 	1,000	 	3,000	 	10.63	 	1,000	
LaRonde	 	4,672,000	 	2.77	 	416,000	 	4,672,000	 	2.77	 	416,000	
Total Proven Reserve	 	4,924,000	 	 	 	435,000	 	4,924,000	 	 	 	435,000	

Probable Reserve	

 	

 	

 	

 	
Goldex	 	22,849,000	 	2.20	 	1,616,000	 	22,849,000	 	2.20	 	1,616,000	
Lapa	 	3,756,000	 	8.86	 	1,070,000	 	3,756,000	 	8.86	 	1,070,000	
LaRonde	 	30,225,000	 	4.67	 	4,542,000	 	30,225,000	 	4.67	 	4,542,000	
Kittila	 	18,206,000	 	5.12	 	2,996,000	 	18,206,000	 	5.12	 	2,996,000	
Meadowbank	 	29,261,000	 	3.67	 	3,453,000	 	29,261,000	 	3.67	 	3,453,000	
Pinos Altos	 	24,657,000	 	3.21	 	2,547,000	 	24,657,000	 	3.21	 	2,547,000	
Total Probable Reserve	 	128,952,000	 	 	 	16,224,000	 	128,952,000	 	 	 	16,224,000	
Total Proven and Probable Reserve	 	133,877,000	 	 	 	16,659,000	 	133,877,000	 	 	 	16,659,000	
National Instrument 43-101 Definitions
        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.
        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
52

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. 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.
        A " feasibility study " is a comprehensive study of a mineral deposit in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production. A " preliminary feasibility study " or " pre-feasibility study " is 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, 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. " 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.
        In the following tables setting out reserve information about the Company's mineral projects, tonnage information is rounded to the nearest 100,000 tonnes, total contained gold ounces stated do not include equivalent gold ounces for byproduct metals contained in the mineral reserve and the reported metal grades in the estimates 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 and mineral resource figures presented in this Form 20-F 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.
53

LaRonde Mine Mineral Reserve and Resource

 	 	As at December 31,
	
 	 	2007
	 	2006
	 	2005
	
Gold	 	 	 	 	 	 	
Proven — tonnes	 	2,800,000	 	3,400,000	 	3,800,000	
Average grade — gold grams per tonne	 	3.98	 	3.91	 	4.21	
Probable — tonnes	 	25,600,000	 	25,800,000	 	26,100,000	
Average grade — gold grams per tonne	 	5.37	 	5.46	 	5.45	

Zinc	

 	

 	
Proven — tonnes	 	1,900,000	 	2,400,000	 	2,900,000	
Average grade — gold grams per tonne	 	1.06	 	1.15	 	1.27	
Probable — tonnes	 	4,600,000	 	4,100,000	 	3,800,000	
Average grade — gold grams per tonne	 	0.80	 	0.87	 	0.82	
Total mineral reserve — tonnes	 	34,900,000	 	35,600,000	 	36,700,000	
Total contained gold ounces	 	4,958,000	 	5,151,000	 	5,307,000	

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$61.00 per tonne and C$73.00 per tonne depending on the deposit. The Company's historical metallurgical recovery rates at the LaRonde Mine from January 1, 2002 to December 31, 2007 were 91.6% for gold, 85.4% for silver, 79.8% for copper and 83.4% for zinc. For every 10% change in the gold price, there would be an estimated 1% change in proven and probable reserves.

(2)
In addition to the mineral reserves set out above, at December 31, 2007, the LaRonde Mine had 5.6 million tonnes of indicated mineral resource grading 2.14 grams of gold per tonne and an inferred mineral resource of 4.7 million tonnes grading 6.26 grams of gold per tonne.

(3)
The following table shows the reconciliation of mineral reserves (in nearest thousand tonnes) at the LaRonde Mine by category at December 31, 2007 with those at December 31, 2006.

 	 	Proven
	 	Probable
	 	Total
	 	
December 31, 2006	 	5,779	 	29,863	 	35,642	 	
Mined	 	(2,596	)	—	 	(2,596	)	
Revision	 	1,489	 	362	 	1,851	 	
December 31, 2007	 	4,672	 	30,225	 	34,897	 	
(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, parameters and methods and other factors that may materially affect scientific and technical information presented in this Form 20-F relating to the LaRonde Mine may be found in the 2005 LaRonde Mineral Resource & Mineral Reserve Estimate filed with Canadian securities regulatory authorities on SEDAR March 23, 2005.
Lapa Mineral Reserve and Mineral Resource

 	 	December 31, 2007
	 	December 31, 2006
	
Gold	 	 	 	 	
 	Proven — tonnes	 	2,800	 	—	
 	Average grade — gold grams per tonne	 	10.65	 	—	
 	Probable — tonnes	 	3,800,000	 	3,900,000	
 	Average grade — gold grams per tonne	 	8.86	 	9.08	
Total mineral reserve — tonnes	 	3,800,000	 	3,900,000	
Total contained gold ounces	 	1,071,000	 	1,152,000	

Notes:
(1)
The 2007 mineral reserve and mineral resource estimate was calculated using metallurgical recoveries of 81.3% recovery and a cut-off grade of 4.8 grams per tonne. For every 10% change in the gold price, there would be an estimated 8% change in probable reserves. For the indicated mineral reserve models, a minimum in situ gold grade cut-off was 4.5 grams per tonne. The cost per tonne estimate for the Lapa mine project is C$84.12.
54

(2)
In addition to the mineral reserves set out above, at December 31, 2007 the Lapa property contained 0.9 million tonnes of indicated mineral resource grading 4.48 grams of gold per tonne and 0.8 million tonnes of inferred mineral resource grading 8.96 grams of gold per tonne.

(3)
For the 2007 mineral reserve and mineral resource estimate, gold assays were cut to 120 grams per tonne for the Contact, FW and North zones and the other satellite zones that comprise the Lapa deposit (Center and South zones) were cut at 50 grams of gold per tonne.

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures parameters and methods and other factors that may materially affect scientific and technical information presented in this Form 20-F relating to the Lapa mine project may be found in the Technical Report on the Lapa Gold Project filed with Canadian securities regulatory authorities on SEDAR June 8, 2006.

Goldex Mineral Reserve and Mineral Resource

 	 	December 31, 2007
	 	December 31, 2006
	
Gold	 	 	 	 	
 	Proven — tonnes	 	250,000	 	100,000	
 	Average grade — gold grams per tonne	 	2.23	 	2.25	
 	Probable — tonnes	 	22,800,000	 	22,800,000	
 	Average grade — gold grams per tonne	 	2.20	 	2.29	
Total mineral reserve — tonnes	 	23,100,000	 	22,900,000	
Total contained gold ounces	 	1,634,000	 	1,689,000	

Notes:
(1)
The 2007 mineral reserve and mineral resource estimate was calculated using metallurgical recoveries of 93.6%. Mining costs at Goldex were estimated to be C$18.67 per tonne. For a 10% change in the gold price, the Company estimates there would be no change in reserves. The cut-off grade used to evaluate drill intercepts at Goldex was 1.37 grams of gold per tonne over a minimum true thickness of approximately 15 metres.

(2)
The proven mineral reserve at the Goldex mine project is categorized as such as part of the underground development work at Goldex to prepare the project for future mine production during 2006 was within the Goldex Extension Zone probable mineral reserve envelope. Excavated rock from this area was stockpiled on the surface and was assigned to proven mineral reserves (at a grade measured by sampling) and the extracted ore was subtracted from the probable mineral reserves. The proven reserve stockpile also contained a minor amount of sampled rock from excavations through other mineralized zones that was above the Goldex Extension Zone gold grade cut-off (1.37 grams of gold per tonne cut-off as established by the feasibility study).

(3)
As at December 31, 2007, Goldex was estimated to contain 0.3 million tonnes of indicated mineral resource grading 2.75 grams of gold per tonne and 11.9 million tonnes of inferred mineral resource grading 2.35 grams of gold per tonne.

(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, parameters and methods and other factors that may materially affect scientific and technical information presented in this Form 20-F relating to the Goldex mine project may be found in the Technical Report on the Estimation of Mineral Resource and Reserves for the Goldex Extension Zone filed with the Canadian securities regulatory authorities on SEDAR October 27, 2005.
Kittila Mineral Reserve and Mineral Resource

 	 	December 31, 2007
	 	December 31, 2006
	
Gold	 	 	 	 	
 	Probable — tonnes	 	18,200,000	 	16,000,000	
 	Average grade — gold grams per tonne	 	5.12	 	5.08	
Total mineral reserve — tonnes	 	18,200,000	 	16,000,000	
Total contained gold ounces	 	2,996,000	 	2,616,000	

Notes:
(1)
The 2007 mineral reserve and mineral resource estimate was calculated using metallurgical recoveries of 83.5% in the first three years of operation and 87.0% thereafter. Gold cut-off grades used were 2.0 grams per tonne for open pit reserves and 2.4 grams per tonne for underground reserves. High gold values were cut to 50.0 grams per tonne. Open pit dilution was estimated to be 10% while underground dilution was set at 20%. The open pit operating cost is estimated to be €21.58 per tonne while the underground operating
55

cost is estimated to be €33.29 per tonne. For a 10% change in the gold price, the Company estimates that there would be a 1% change in probable mineral reserves.
(2)
Indicated mineral resources were 5.4 million tonnes grading 3.03 grams per tonne. In addition, the Kittila mine project had inferred mineral resources of 10.8 million tonnes of ore grading 3.39 grams per tonne.

(3)
The breakdown of reserves between planned open pit operations and underground operations at the Kittila mine project is (tonnages and contained ounces are rounded to the nearest thousand):

Mining Method
	 	Category
	 	Tonnes
	 	Grade (g/t)
	 	Contained Gold (oz)
	
Open pit	 	probable reserve	 	4,169,000	 	5.43	 	727,000	
Underground	 	probable reserve	 	14,036,000	 	5.03	 	2,268,000	
Total	 	probable reserve	 	18,205,000	 	5.12	 	2,996,000	
(4)
Complete information on the verification procedures, the quality assurance program, quality control procedures, parameters and methods and other factors that may materially affect scientific and technical information presented in this Form 20-F relating to the Kittila mine project may be found in the Technical Report on the Estimation of Mineral Resource and Reserves on the Surrikuusikko Gold Project, Northern Finland filed with the Canadian securities regulatory authorities on SEDAR March 14, 2006.
Meadowbank Mineral Reserve and Mineral Resource

 	 	December 31, 2007
	
Gold	 	 	
 	Probable — tonnes	 	29,300,000	
 	Average grade — gold grams per tonne	 	3.67	
Total mineral reserve — tonnes	 	29,300,000	
Total contained gold ounces	 	3,453,000	

Notes:
(1)
The 2007 mineral reserve and mineral resource estimate was calculated using metallurgical recoveries of 93.50%. Minimum mining widths used were four metres for open pit. A cut-off of 1.50 grams of gold was used to determine the open pit reserves. A 12% dilution factor was applied for the open pit reserve estimate. The estimated operating cost used from the 2007 mineral reserve estimate was C$27.09 per tonne. For a 10% change in the gold price, the Company estimates that there would be a 2% change in probable mineral reserves.

(2)
Indicated mineral resources were 14.6 million tonnes grading 2.30 grams of gold per tonne. In addition, the Meadowbank mine project property had inferred mineral resources of 3.4 million tonnes of ore grading 3.49 grams of gold.

(3)
Complete information on the verification procedures, the quality assurance program, quality control procedures, parameters and methods and other factors that may materially affect scientific and technical information presented in this Form 20-F relating to the Meadowbank mine project may be found in the Technical Report on the Meadowbank Gold Project, Nunavut — Technical Report filed with the Canadian securities regulatory authorities by Cumberland, a predecessor to the Company, on SEDAR March 31, 2005.
Pinos Altos Mineral Reserve and Resource

 	 	December 31, 2007
	 	December 31, 2006
	
Gold	 	 	 	 	
 	Probable — tonnes	 	24,700,000	 	18,600,000	
 	Average grade — gold grams per tonne	 	3.21	 	3.07	
Total mineral reserve — tonnes	 	24,700,000	 	18,600,000	
Total contained gold ounces	 	2,547,000	 	1,837,000	

Notes:
(1)
The 2007 mineral reserve and mineral resource estimate was calculated using metallurgical recoveries of 96.60%. Minimum mining widths used were either three metres for underground or four metres for open pit. A cut-off that varied between $4.56 and $28.50 per tonne was used to determine the mineral resource for open pit mining and underground mining, respectively. A cut-off that varied between $6.08 and $18.69 per tonne was used to determine heap-leach and milled reserves, respectively, while a cut-off of $38 per tonne was used to determine the underground mining reserve estimate. A 10% dilution was applied for the open pit reserve estimate while a
56

dilution that averaged 13% was applied for the underground reserve estimate. The Company estimates that a 10% change in the gold price would result in no change in mineral reserves.
(2)
In addition to the probable mineral reserve set out above, at December 31, 2007, the Pinos Altos mine project was estimated to contain 73.1 million ounces of silver comprised of 24.7 million tonnes of ore grading 92.21 grams of silver per tonne. Indicated mineral resources were 6.2 million tonnes grading 1.36 grams of gold per tonne and 49.88 grams of silver per tonne. In addition, the Pinos Altos property had inferred mineral resources of 12.2 million tonnes of ore grading 1.44 grams of gold and 24.08 grams of silver per tonne.

(3)
Gold assays were cut to either 15 grams per tonne or 78 grams per tonne, depending on the rock type. Silver assays were either not cut, or cut to 4,580 grams per tonne depending on the rock type.

(4)
The breakdown of reserves between planned open pit operations and underground operations at the Pinos Altos mine project is (tonnages and contained ounces are rounded to the nearest thousand):

Mining Method
	 	Category
	 	Tonnes
	 	Grade (g/t)
	 	Contained Gold (oz)
	
Open pit	 	probable reserve	 	10,493,000	 	2.98	 	1,005,000	
Underground	 	probable reserve	 	14,164,000	 	3.39	 	1,542,000	
Total	 	probable reserve	 	24,657,000	 	3.21	 	2,547,000	
(5)
Complete information on the verification procedures, the quality assurance program, quality control procedures, parameters and methods and other factors that may materially affect scientific and technical information presented in this Form 20-F relating to the Pinos Altos mine project may be found in the Pinos Altos Gold-Silver Project, Chihuahua State, Mexico, 2007 Technical Report on the Mineral Resources and Reserves filed with the Canadian securities regulatory authorities on SEDAR September 24, 2007.
Legal and Regulatory Proceedings
        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 and, on December 7, 2004, the Company terminated the officer.
Risk Mitigation
        Agnico-Eagle mitigates the likelihood and potential severity of the various risks it encounters in its day-to-day operations through the application of high standards in the planning, construction and operation of mining 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 efforts to ensure the safety of employees, industrial accidents can occur. In the first quarter of 2008, an accident claimed the life of an employee at the Goldex mine project. Quebec's Commission de la santé et de la sécurité du travail has investigated this accident but has not delivered a report or recommendation to date. The Company's LaRonde Mine is one of the safest mines in Quebec with a lower accident frequency index than the provincial mining industry average. Nevertheless, the Company and its employees continue with a focused effort to improve workplace safety and the Company has placed additional emphasis on safety procedure training for both mining and supervisory employees.
        Agnico-Eagle also mitigates some of the Company's normal business risk through the purchase of insurance coverage. An Insurable Risk Management Policy, approved by the Board, governs the 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 the Company, please see "Item 3. Key Information — Risk Factors".
ITEM 4A.    UNRESOLVED STAFF COMMENTS
        None.
57

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Results of Operations
Revenues from Mining Operations
        In 2007, revenue from mining operations decreased 7% to $432 million from $465 million in 2006. Production and sales of gold and zinc decreased compared to 2006 production and sales levels. The decrease in the production and sales volumes for these metals was partially offset by an increase in gold and silver prices, however, sharp price decreases for zinc and copper led to the overall decrease.
        In 2007, sales of gold and silver accounted for 56% of revenues, up from 47% in 2006 and down from 66% in 2005. The increase in the percentage of revenues from precious metals when compared to 2006 is largely due to the sharp increase in gold prices and sharp decreases in prices of byproduct zinc and copper. Revenues from mining operations are accounted for net of related smelting, refining, transportation and other charges. The table below sets out net revenue, production volumes and sales volumes by metal:

 	 	2007
	 	2006
	 	2005
	
Revenues from mining operations (thousands):	 	 	 	 	 	 	 	 	 	
Gold	 	$	171,537	 	$	159,815	 	$	117,888	
Silver	 	 	70,028	 	 	58,262	 	 	41,808	
Zinc	 	 	156,340	 	 	211,871	 	 	67,150	
Copper	 	 	34,300	 	 	34,684	 	 	14,492	
 	 		 		 		
 	 	$	432,205	 	$	464,632	 	$	241,338	

Production volumes:	

 	

 	

 	
Gold (ounces)	 	 	230,992	 	 	245,826	 	 	241,807	
Silver (000's ounces)	 	 	4,920	 	 	4,956	 	 	4,831	
Zinc (tonnes)	 	 	71,577	 	 	82,183	 	 	76,545	
Copper (tonnes)	 	 	7,482	 	 	7,289	 	 	7,378	

Sales volumes:	

 	

 	

 	
Gold (ounces)	 	 	229,316	 	 	256,961	 	 	262,429	
Silver (000's ounces)	 	 	5,171	 	 	4,739	 	 	5,221	
Zinc (tonnes)	 	 	72,905	 	 	81,689	 	 	75,722	
Copper (tonnes)	 	 	7,466	 	 	7,302	 	 	8,521	
        Revenue from gold sales increased $12 million, or 7%, in 2007. Realized gold prices increased 20% in 2007 to $748 per ounce from $622 per ounce in 2006. Silver revenue increased $12 million, or 20%, in 2007. The $12 million increase was due to higher realized silver prices and increased silver sales volume.
        Revenue from zinc sales decreased $56 million, or 26%, in 2007. The decrease in zinc revenue was due to 20% lower realized prices as well as an 11% decrease in sales volume. Revenue from copper sales remained relatively steady when compared to 2006. A decrease of 15% in the realized sales price of copper was offset by a 29% decrease in copper smelting fees.
        Gold production decreased to 230,992 ounces in 2007, down 6% from 245,826 ounces in 2006. The decrease is mainly attributable to the decrease in the gold grade of the ore processed as a result of the Company's decision to mine additional low-grade zinc ore during the year to capitalize on historically high zinc prices during the first half of the year.
        Total fourth quarter revenue decreased in 2007 compared to 2006 mainly due to the significant decrease in zinc revenue resulting from a significant decline in zinc prices during the quarter.
58

Interest and Sundry Income
        Interest and sundry income consists mainly of interest on cash balances. Interest and sundry income was $25.1 million in 2007 compared to $21.8 million in 2006. The $3.3 million increase in interest income was attributable to the signicantly higher average cash balance held during 2007 compared to 2006.
Gain on Sale of Available-for-sale Securities
        From time to time, the Company takes minority equity positions in other mining and exploration companies. In 2007, the Company liquidated a portion of its portfolio of available-for-sale securities resulting in a gain before taxes of $4.1 million compared to $24.1 million in 2006. The larger gain in 2006 was a result of the Company liquidating a significant portion of its total portfolio.
Production Costs
        In 2007, production costs increased 15% to $166 million from $144 million in 2006. In 2006, production costs increased 13% to $144 million from $127 million in 2005. The table below presents the components of production costs:

 	 	2007
	 	2006
	 	2005
	 	
 	 	(thousands)
	 	
Definition drilling	 	$	691	 	$	473	 	$	667	 	
Stope development	 	 	12,797	 	 	12,881	 	 	12,499	 	
Mining	 	 	30,686	 	 	26,369	 	 	22,506	 	
Underground services	 	 	52,252	 	 	44,888	 	 	38,236	 	
Milling	 	 	43,326	 	 	40,518	 	 	36,621	 	
Surface services	 	 	4,784	 	 	4,348	 	 	3,198	 	
Administration	 	 	12,446	 	 	10,957	 	 	8,457	 	
 	 		 		 		 	
Minesite production costs	 	$	156,982	 	$	140,434	 	$	122,184	 	
Accretion expense and reclamation costs	 	 	916	 	 	826	 	 	429	 	
Inventory adjustments	 	 	8,206	 	 	2,493	 	 	5,978	 	
Hedging gains	 	 	—	 	 	—	 	 	(1,226	)	
 	 		 		 		 	
Production costs (per Consolidated Statements of Income)	 	$	166,104	 	$	143,753	 	$	127,365	 	
 	 		 		 		 	
        Minesite production costs increased to $157.0 million from $140.4 million in 2006 primarily as a result of a stronger Canadian dollar and higher costs for fuel, chemical reagents used in the mill, mining labour and steel. Increases in the costs of the inputs have been seen throughout the mining industry. Underground services costs increased due to increased preventative maintenance to underground fixed and mobile equipment, increased ground support expenses associated with mining at depth and higher mining labour costs.
        During 2007, LaRonde processed an average of 7,325 tonnes of ore per day compared to 7,324 tonnes per day recorded during 2006. While the design capacity of the plant is 6,350 tonnes per day, it has now been operating at an average of approximately 7,292 tonnes per day for over three years. Minesite costs per tonne were C$65 in the fourth quarter compared to C$63 in the fourth quarter of 2006. For the full year, the minesite costs per tonne were C$66, as compared with C$62 per tonne recorded for 2006. The fourth quarter increase is largely due to further increases in fuel, reagents, steel and mining labour. The full year increase is attributable to these factors and to the higher cost of processing of the low-grade ore extracted from Bousquet during the second quarter of 2007.
        In 2007, total cash costs per ounce of gold increased to minus $365 from minus $690 in 2006 and $43 in 2005. Total cash costs are comprised of minesite costs reduced by net silver, zinc and copper revenue. Total cash costs per ounce are affected by various factors such as the number of gold ounces produced, operating costs, C$/US$ exchange rates, quantity of byproduct produced and byproduct metal prices. The table below illustrates the variance in total cash costs per ounce attributable to each of these factors. The most significant factor
59

contributing to the increase in total cash costs per ounce in 2007 was lower byproduct revenue which resulted from lower zinc and copper prices.

 	 	2007
	 	2006
	 	
Total cash costs per ounce (prior year)	 	$	(690	)	$	43	 	
Difference in gold production	 	 	40	 	 	11	 	
Stronger Canadian dollar	 	 	49	 	 	38	 	
Costs associated with increased fuel, reagent and steel costs	 	 	45	 	 	60	 	
Byproduct revenue	 	 	191	 	 	(842	)	
 	 		 		 	
Total cash costs per ounce (current year)	 	$	(365	)	$	(690	)	
 	 		 		 	
        Total cash cost per ounce is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. Management believes 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 Consolidated Statements of Income and Comprehensive Income for net byproduct revenues, royalties, inventory adjustments and asset retirement provisions and then dividing by the number of ounces of gold produced. Total cash cost per ounce is intended to provide investors with information about the cash generating capabilities of mining operations. Management uses this measure to monitor the performance of 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 is affected by fluctuations in byproduct metal prices and exchange rates. Management compensates for the limitations inherent in this measure by using it in conjunction with minesite cost per tonne (discussed below) as well as other data prepared in accordance with US GAAP. Management also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and exchange rates.
        Minesite cost per tonne 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 Consolidated Statement of Income and Comprehensive Income for royalties, inventory and hedging adjustments and asset retirement provisions and then dividing by tonnes of ore processed through the mill. Since total cash 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 tonne 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 tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware that this per tonne measure is affected by fluctuations in production levels and thus uses this measure as an evaluation tool in conjunction with production costs prepared in accordance with US GAAP. 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 level of 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 production costs or cash flow measures prepared in accordance with US GAAP. The tables presented below reconcile total cash costs per ounce and minesite costs per tonne to the production costs presented in the consolidated financial statements prepared in accordance with US GAAP.
60

Reconciliation of Total Cash Costs per Ounce to Production Costs

 	 	2007
	 	2006
	 	2005
	 	
 	 	(thousands, except as noted)
	 	
Production costs per Consolidated Statements of Income and Comprehensive Income	 	$	166,104	 	$	143,753	 	$	127,365	 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	
Byproduct revenues, net of smelting, refining and marketing charges	 	 	(260,668	)	 	(304,817	)	 	(123,450	)	
Inventory adjustments (i)	 	 	11,528	 	 	(7,607	)	 	6,991	 	
Accretion expense and other	 	 	(1,264	)	 	(936	)	 	(429	)	
 	 		 		 		 	
Cash costs	 	$	(84,300	)	$	(169,607	)	$	10,477	 	
Gold production (ounces)	 	 	230,992	 	 	245,826	 	 	241,807	 	
 	 		 		 		 	
Total cash costs (per ounce) (ii)	 	$	(365	)	$	(690	)	$	43	 	
 	 		 		 		 	
Reconciliation of Minesite Costs per Tonne to Production Costs

 	 	2007
	 	2006
	 	2005
	 	
 	 	(thousands, except as noted)
	 	
Production costs per Consolidated Statements of Income and Comprehensive Income	 	$	166,104	 	$	143,753	 	$	127,365	 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	
Inventory adjustments (iii)	 	 	916	 	 	2,494	 	 	(4,752	)	
Accretion expense and other	 	 	(1,264	)	 	(936	)	 	(429	)	
 	 		 		 		 	
Minesite costs ($)	 	$	165,756	 	$	145,311	 	$	122,184	 	
 	 		 		 		 	
Minesite costs (C$)	 	$	177,735	 	$	164,459	 	$	147,834	 	
Tonnes milled (000's tonnes)	 	 	2,673	 	 	2,673	 	 	2,672	 	
 	 		 		 		 	
Minesite costs per tonne (C$) (iv)	 	$	66	 	$	62	 	$	55	 	

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

(ii)
Total cash costs is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. The Company believes 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 above, this measure is calculated by adjusting Production Costs as shown in the Consolidated Statements of Income and Comprehensive Income 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 the Company's mining operations. Management uses this measure to monitor the performance of the Company's 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 minesite costs per tonne 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.

(iii)
This inventory adjustment reflects production costs associated with unsold concentrates.

(iv)
Minesite costs per tonne is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. As illustrated in the table above, this measure is calculated by adjusting Production Costs as shown in the Consolidated Statements of Income and Comprehensive Income for inventory and hedging adjustments and asset retirement provisions and then dividing by tonnes processed through the mill. Since total cash costs data can be affected by fluctuations in byproduct metal prices and exchange rates, management believes minesite costs per tonne provides additional information regarding the performance of mining operations and allows management to monitor operating costs on a more consistent basis as the per tonne 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 tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne. Management is aware that this per tonne
61

measure is impacted by fluctuations in production levels and thus uses this evaluation tool in conjunction with production costs prepared in accordance with US GAAP. 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.
        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 costs and a substantial portion of its 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, 2002 to December 31, 2007, the noon buying rate, as certified by the Federal Reserve Bank of New York, fluctuated from a high of $1.6128 to a low of $0.9168. In addition, a significant portion of the Company's expenditures at the Kittila mine project and the Pinos Altos mine project are denominated in Euros and Mexican Pesos, respectively. Each of these currencies has varied significantly against the US dollar over the past several years.
Loss on Derivative Financial Instruments
        During 2007, the Company recorded a $5.8 million loss on derivative financial instruments. This loss consisted entirely of the mark-to-market loss on a gold derivative purchased by the Company during the first quarter of 2007, prior to the full acquisition of Cumberland Resources to neutralize an existing gold derivative held by Cumberland Resources.
Exploration and Corporate Development Expense
        In 2007, the Company continued its significant exploration and corporate development activities including:
•
Significant Canadian grassroots exploration accounting for $5.3 million in exploration expenditures, a significant portion of the $5.3 million of which was spent on exploration activities in the Nunavut area around the Meadowbank mine project acquired by the Company during the year. Positive drill results have been reported both inside and outside of the current open pit and estimated reserves have increased 20% from 2.9 million ounces to 3.5 million ounces.

•
Extensive exploration activities continued at the Pinos Altos mine project during 2007 accounting for $6.0 million in exploration expenditures compared to $8.0 million in 2006. These expenditures included exploration on the promising Mascota, Santa Nino and Cerro Colorado gold zones. The high potential of these gold zones has resulted in significant planned exploration activities and budgets for 2008.

•
Deep drilling continued throughout the year at the Kittila mine project area and the results are encouraging. Drilling results indicate that the Suurikuusikko main zones continue at depths down to 1000 metres from surface. A major drill program is being carried out in 2008 to further test grades and dimensions of the Suurikuusikko zones at depth. Exploration outside of the Mining License area has focused on testing targets along the Suurikuusikko trend to the north and south of the mining license area with positive results. In addition, drilling at the Oijärvi property returned several new encouraging gold intersections within the Kylmäkoski zone and on other targets in the area. Follow-up drilling will continue in 2008. In January 2008, the Company purchased Troy Resources NL's 50% interest in the Oijärvi property for $0.9 million and Oijärvi is now 100% owned by Agnico-Eagle.

•
The Company is currently conducting exploration in proven gold producing areas of Nevada and incurred in exploration expenditures of $5.1 million during 2007, an increase of $1.3 million compared to 2006. The increase is attributable to additional drilling of high grade gold intercepts at the West Pequop project. In addition, there was increased drilling in newly discovered areas containing gold mineralization, which required the purchase of additional claims, leases and road building.

•
Agnico-Eagle's corporate development team continued to be active in 2007 evaluating many new properties and possible corporate development opportunities resulting in a $0.2 million increase in corporate development expense compared to 2006.
62

        The table below illustrates exploration expense by country and corporate development expense:

 	 	2007
	 	2006
	 	2005
	
 	 	(thousands)
	
Finland	 	 	5,719	 	 	9,843	 	 	3,174	
Mexico	 	 	6,047	 	 	8,017	 	 	4,161	
Canada	 	 	5,276	 	 	6,276	 	 	7,963	
United States	 	 	5,084	 	 	3,780	 	 	2,893	
Corporate development expense	 	 	3,381	 	 	3,161	 	 	1,289	
 	 		 		 		
 	 	$	25,507	 	$	31,077	 	$	19,480	
 	 		 		 		
General and Administrative Expenses
        General and administrative expenses increased to $38.2 million in 2007 from $25.9 million in 2006. A number of factors contributed to this increase including an increased stock option expense of $5.8 million, the increased bonus expenses of $2.3 million reflecting a special one-time "Metals Bonus" given to all employees, increased travel expenses of $1.9 million resulting from the Company's new international scope and increased insurance costs of $1.0 million due to increased property and directors' and officers' insurance premiums.
Provincial and Federal Capital Taxes
        Provincial capital taxes were $3.2 million in 2007 compared to $3.8 million in 2006. These taxes are assessed on the Company's capitalization (paid-up capital and debt) less certain allowances and tax credits for exploration expenses incurred.
Amortization Expense
        Amortization expense was $27.8 million in 2007 compared to $25.3 million in 2006. The Company calculates its amortization on a unit-of-production basis using proven and probable reserve tonnage as its amortization base. The amortization base and production units are similar to the prior year. The increase in 2007 is attributable to the additions in sustaining capital at the LaRonde Mine and the commencement of depreciation of newly developed computer systems.
Interest Expense
        In 2007, interest expense increased to $3.3 million from $2.9 million in 2006 and $7.8 million in 2005. The table below shows the components of interest expense.

 	 	2007
	 	2006
	 	2005
	 	
 	 	(thousands)
	 	
Interest on convertible subordinated debentures	 	$	—	 	$	689	 	$	6,286	 	
Stand-by fees on credit facility	 	 	2,289	 	 	1,201	 	 	1,211	 	
Amortization of credit facility and convertible subordinated debenture financing costs	 	 	806	 	 	763	 	 	1,847	 	
Interest rate derivative payments	 	 	—	 	 	442	 	 	916	 	
Other interest expense	 	 	199	 	 	132	 	 	38	 	
Interest capitalized to construction in progress	 	 	—	 	 	(325	)	 	(2,485	)	
 	 		 		 		 	
 	 	$	3,294	 	$	2,902	 	$	7,813	 	
 	 		 		 		 	
Foreign Currency Translation Loss
        The foreign currency translation loss was $32.3 million in 2007 compared to $2.1 million in 2006. The significant negative effect of exchange rates is attributable to the strengthening of the Canadian dollar and the Swedish krona against the US dollar during 2007. The loss is mainly due to the impact on the foreign currency future tax liabilities partially off-set by the impact on cash balances in Canadian dollars and Euro.
63

Income and Mining Taxes
        In 2007, the effective accounting income and mining tax expense rate was 12.5% compared to 38.1% in 2006 and an income tax recovery rate of 7.9% in 2005. The Company's effective tax rate was significantly lower in 2007 compared to 2006 because of favourable changes in both federal and Quebec income tax laws enacted in December 2007. In particular, during the fourth quarter of 2007, the Company recognized a $29.8 million reduction in federal deferred taxes resulting from the reduction of the federal tax rate to 15% effective for 2012 onward. The Company also recognized a $7.7 million reduction in Quebec deferred taxes from changes in regulations that now permit the deduction of Quebec mining duties for Quebec income tax purposes retroactive to January 1, 2007.
        Although Agnico-Eagle reported income before income and mining taxes in 2005, tax recoveries were recorded in 2005 due to the utilization of losses carried forward which had previously not been recorded as future tax assets. At the end of 2005, Agnico-Eagle did not have any remaining unrecorded tax assets related to operating loss carryforwards and, as such, recorded income and mining tax in 2006 was much closer to statutory tax rates of 34.6%. The effective income and mining tax rate of 12.5% in 2007 is significantly lower than the statutory tax rate due to the Canadian federal tax rate reduction and the Quebec mining duty relief which represents a combined 39.2% reduction in the effective tax rate.
Liquidity and Capital Resources
        At the end of 2007, the Company's cash and cash equivalents, short-term investments and restricted cash totalled $396.0 million compared to $458.6 million at the end of 2006. In 2007, significant increases in cash were provided by operating and financing activities which were completely offset by investing activities. The investing activities mainly consisted of project capital expenditures for the Meadowbank, Goldex, Kittila, LaRonde Mine extension and Pinos Altos projects. Cash flow provided by operating activities increased to $229.2 million in 2007 from $226.3 million in 2006.
        In 2007, the Company invested $510.9 million of cash in new projects and sustaining capital expenditures. Major expenditures in 2007 included include $169.7 million at Meadowbank, $105.0 million at Goldex, $79.6 million at Kittila, $52.8 million for the LaRonde Mine extension, $33.0 million at Pinos Altos, $29.3 million at Lapa and $33.8 million for sustaining capital at the LaRonde Mine. The remaining capital expenditures to complete all of the Company's projects are expected to be funded by cash provided by operating activities, cash on hand and, if required, drawing from the unsecured credit facility. A significant portion of the Company's cash and cash equivalents and short-term investments are denominated in US dollars. The Company believes that its working capital is sufficient for the Company's present requirements.
        On July 9, 2007, the Company completed its 100% acquisition of Cumberland through a share exchange offer. As of July 9, 2007, a total of 13,768,510 of the Company's shares were issued for the acquisition resulting in an increase of $536.6 million in common shares issued and outstanding. As a result of the acquisition, the Company acquired $84.2 million in cash, net of transaction costs. Prior to the acquisition, the Company purchased a gold derivative for $15.9 million to neutralize an existing gold derivative held by Cumberland. Both derivative positions were extinguished in late June 2007.
        In 2007, the Company declared its 26th consecutive annual dividend. The dividend was $0.18 per share, an increase of $0.06 per share from 2006. During the first quarter of 2007, the Company paid out its 2006 dividend amounting to $13.4 million. 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.
        In 2007, the Company issued shares resulting in $144.1 million in proceeds. This was mainly attributable to the exercise of the Company's warrants in 2007 which resulted in the issuance of 6,877,190 shares for proceeds of $130.6 million.
        The effect of exchange rate changes on cash and cash equivalents during 2007 resulted in increased cash balances of $26.5 million. This positive effect on cash was mainly attributable to the strengthening Canadian dollar as the Company holds significant Canadian dollar cash balances.
64

        The Company entered into a new credit agreement on January 10, 2008 (the "Facility") with a group of financial institutions providing for a $300 million unsecured revolving bank credit facility to replace its previous secured credit facility. The Facility matures on January 10, 2013, but is extendible in certain circumstances. As at March 14, 2008, there were no amounts of principal or interest outstanding under the Facility; however, outstanding letters of credit issued as security for pension and environmental obligations have decreased the amount available for future drawdowns under the Facility to $280 million.
        Agnico-Eagle's contractual obligations as at December 31, 2007 are set out below:

Contractual Obligations
	 	Total
	 	Less than 1 Year
	 	1-3 Years
	 	4-5 Years
	 	More than 5 Years
	
 	 	(millions)
	
Letter of credit obligations	 	6.2	 	—	 	—	 	—	 	6.2	
Reclamation obligations (1)	 	103.4	 	2.2	 	2.2	 	2.2	 	96.8	
Pension obligations (2)	 	4.4	 	0.3	 	0.6	 	0.8	 	2.7	
Total	 	114.0	 	2.5	 	2.8	 	3.0	 	105.7	

Notes:
(1)
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 consolidated financial statements on a discounted basis in accordance with FAS 143. See Note 5(a) to the audited consolidated financial statements.

(2)
The Company has Retirement Compensation Arrangements ("RCA") with certain executives and a defined benefit pension plan for certain former employees. The RCA provides 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 RCA are secured by letter of credit from a Canadian chartered bank. The figures presented in this table have been actuarially determined.

(3)
The Company's estimated future positive cash flows are expected to be sufficient to satisfy the obligations set out above.
2008 Liquidity and Capital Resources Analysis
        The Company believes that it has sufficient capital resources to satisfy its 2008 mandatory expenditure commitments (including future obligations set out above) and discretionary expenditure commitments. The following table sets out expected future capital requirements and resources for 2008:

 	 	Amount
(millions)
	
2008 Mandatory Commitments:	 	 	 	
Contractual obligations (from table above)	 	$	114	
Dividend payable (declared in 2007)	 	$	26	
 	 		
Total 2008 mandatory expenditure commitments	 	$	140	
 	 		
2008 Discretionary Commitments:	 	 	 	
Budgeted capital expenditures	 	$	591	
 	 		
Total 2008 mandatory and discretionary expenditure commitments	 	$	732	
 	 		
2008 Capital Resources:	 	 	 	
Cash, cash equivalents and short term investments (at December 31, 2007)	 	$	394	
Estimated 2008 operating cash flow (based on 2007)	 	$	229	
Working capital (at December 31, 2007) (excluding cash, cash equivalents and short term investments)	 	$	78	
Available under bank credit facility	 	$	280	
 	 		
Total 2008 Capital Resources	 	$	981	
 	 		
65

        The Company believes its capital resources will be sufficient to satisfy all 2008 commitments (mandatory and discretionary). If extremely negative financial circumstances arise in the future, the Company may choose to decrease certain of its discretionary expenditure commitments, which includes its construction projects and future dividends.
Outlook
        The following section contains "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws. Please see "Preliminary Note — Forward-Looking Information" for a discussion of assumptions and risks relating to such statements and information.
Gold Production Growth
        In May 2006, the Company initiated construction to extend the infrastructure at the LaRonde Mine to access the ore below Level 245, referred to as the LaRonde Mine extension. During 2007, construction of the LaRonde Mine extension proceeded, with production from this part of the LaRonde Mine expected to commence in early 2012. Once commenced, production is estimated to be approximately 340,000 ounces per year at total cash costs per ounce of approximately $150, over an estimated mine life of nine years.
        In June 2006, the Company announced that on the basis of the drilling results and a revised feasibility study, it would accelerate construction of the Lapa mine project, located 11 kilometres east of the LaRonde Mine. The Lapa mine is expected to begin production by mid-year 2009 and to produce an average of 125,000 ounces of gold per year over a seven-year mine life with average total cash costs of $300 per ounce. Lateral development commenced in December 2007. In addition, development of the "Lapa Circuit" at the LaRonde mill, where the Lapa ore will be processed, commenced in December 2007.
        The Goldex mine project is expected to commence production during the second quarter of 2008 and gold production during 2008 is expected to be over 90,000 ounces. Over the anticipated ten year mine life, total cash costs are estimated to be $230 per ounce of gold with average annual gold production of approximately 175,000 ounces.
        On July 9, 2007, the Company completed its 100% acquisition of Cumberland Resources, the developer of the Meadowbank mine project. The Meadowbank mine project is located in Nunavut, Canada, and production is expected to commence in early 2010. A 110 kilometre road to the mine site is now substantially complete. Work completed at the site includes construction of the permanent camp and erection of the fuel tank farm at Baker Lake. The construction of the mill foundation is also underway. At the time of acquisition, the Meadowbank mine project had total gold reserves of approximately 2.9 million ounces. Based on drilling results during the second half of 2007, an additional 600,000 ounces were added to reserves, a 20% increase. Anticipated annual production will be approximately 360,000 ounces with cash costs of $300 per ounce over an estimated nine year mine life.
        The Kittila mine project is scheduled to begin production during the third quarter of 2008 with initial production of 50,000 ounces in 2008. Over the estimated life of the mine, the cash cost per ounce will be approximately $300 with anticipated average annual gold production of 150,000 ounces. To date, significant progress has been made on the mine, tailings pond and the general site. The office complex was completed during mid-year 2007.
        The Pinos Altos mine project, located in the state of Chihuahua in northern Mexico, is expected to begin production by mid-year 2009. The mine is expected to produce an average of 190,000 ounces of gold per year over a 12-year mine life. The total cash cost per ounce over the mine life is expected to be approximately $210 per ounce.
        With the planned startup of Goldex in April 2008 and the planned startup of Kittila in September 2008, the Company believes its growth objective of achieving steady state gold production is attainable. The ultimate gold production objective is to produce 1.3 million ounces per year over the period of 2010 through 2017 with total cash costs per ounce estimated to be approximately $250 per ounce.
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        In 2008, the Company expects to diversify its production base with gold production coming from three mines instead of one. The LaRonde Mine is expected to continue to generate strong cash flow as production volumes are expected to remain steady and the Goldex and Kittila mines are expected to be commissioned in the second and third quarters of 2008, respectively. Metal prices will have a large impact on financial results, and although the Company cannot predict the prices that will be realized in 2008, prices in early 2008 have continued to remain strong with gold prices reaching all-time highs of $1,004 per ounce in March of 2008 (up to March 14, 2008).
        The table below sets out actual production for 2007 and estimated production in 2008.

 	 	2008 Estimate
	 	2007 Actual
	
Gold (ounces)	 	358,000	 	230,992	
Silver (000's ounces)	 	4,200	 	4,920	
Zinc (tonnes)	 	72,000	 	71,577	
Copper (tonnes)	 	7,400	 	7,482	
        For 2008, the Company is expecting total cash costs per ounce to be $48 per ounce of gold compared to minus $365 achieved in 2007. Due to the large byproduct production, total cash costs per ounce at LaRonde are expected to be minus $189 in 2008. Net silver, zinc and copper revenue is treated as a reduction of production costs in arriving at estimates of total cash costs per ounce, and therefore production and price assumptions for these metals play an important role in these estimates. Total cash costs per ounce at the Goldex and Kittila mine projects, neither of which have significant byproduct production, are expected to be $230 and $300, respectively. As production costs at the LaRonde Mine and the Goldex mine project are denominated mostly in Canadian dollars, and the production costs at Kittila mine project will be denominated mostly in Euros, the C$/US$ and €/US$ exchange rates can also affect the estimates. The table below sets out the metal price assumptions and exchange rate assumptions used in deriving the estimated total cash costs per ounce for 2008 (production estimates for each metal are shown in the table above) as well as the year-to-date market average closing prices for each variable for the first two months of 2008.

 	 	Cash Cost
Assumptions
	 	Market
Average
	
Silver (per ounce)	 	$	10.55	 	$	15.71	
Zinc (per tonne)	 	$	2,600	 	$	2,389	
Copper (per tonne)	 	$	5,630	 	$	7,474	
C$/US$ exchange rate	 	$	1.1460	 	$	1.0042	
EUR/US$ exchange rate	 	$	1.2880	 	$	1.4743	
        The estimated sensitivity of the Company's 2008 estimated total cash costs and 2008 estimated operating costs to a 10% change in the metal price and exchange rate assumptions above follows:

Change in variable
	 	Impact on total cash costs
($/oz.)
	 	Impact on operating costs
($ millions)
	
C$/US$	 	$	65	 	$	20.0	
Zinc	 	$	48	 	 	—	
Silver	 	$	13	 	 	—	
Copper	 	$	12	 	 	—	
EUR/US$	 	$	6	 	$	0.4	

Note:
The sensitivities presented are based on production and price assumptions set out above. Operating costs are not affected by fluctuations in byproduct metal prices. The Company uses derivative strategies to limit the downside risk associated with fluctuating byproduct metal prices and enters into forward contracts to lock in exchange rates based on projected Canadian dollar operating and capital needs. Please see "Item 11. Quantitative and Qualitative Disclosures About Market Risk — Metal Price and Foreign Currency" and "Item 11. Quantitative and Qualitative Disclosures About Market Risk — Derivatives". Please see "— Results of Operations — Production Costs" for a discussion about the use of the non-GAAP financial measure total cash costs per ounce.
67

        In 2008, Agnico-Eagle expects expenditure of $29 million on grassroots exploration and corporate development comprised mostly of grassroots exploration in Canada, Mexico, Finland and the United States outside of the Company's currently contemplated mining areas. Exploration is success driven and thus these estimates could change materially based on the success of the various exploration programs.
        General and administrative expenses are not expected to increase materially in 2008. In 2008, provincial capital taxes are expected to be between $2.6 million and $3.0 million as the increased capitalization due to the Cumberland acquisition and warrant exercise is offset by the elimination of capital taxes in some Canadian provincial jurisdictions. Amortization is expected to be approximately $58 million in 2008 due to a higher capital base at LaRonde and the amortization of the new Goldex and Kittila mines as they come into commercial production in the year. Interest expense is expected to increase to between $4.0 and $4.5 million as the Company expects it will draw down its new $300 million, unsecured credit facility to fund capital expenditures in 2008. The Company's effective tax rate is expected to be 35% in 2008 due to recently announced changes in the Canadian federal tax regime. The tax rate is expected to increase from the 12.7% effective rate realized in 2007 primarily due to the fact that the 2007 rate was reduced from statutory rates due to the factors mentioned under the caption " Income and Mining Taxes ".
        In 2008, Agnico-Eagle expects to incur approximately $591 million of capital expenditures, which include:
•
$90 million in capital expenditures related to construction and development at the Kittila mine project;

•
$23 million in capital expenditures related to construction and development at the Goldex mine project;

•
$65 million in capital expenditures at the LaRonde Mine which includes sustaining capital expenditures and construction and development of the LaRonde Mine extension;

•
$78 million relating to shaft sinking and development at the Lapa mine project;

•
$126 million in capital expenditures related to construction and development at the Pinos Altos mine project;

•
$173 million in capital expenditures related to construction and development at the Meadowbank mine project; and

•
$36 million in capital expenditures related to exploration drilling aimed at extending the current ore zones within the Company's various mining areas.
        The Company continues to examine other possible corporate development opportunities which may result in the acquisition of companies or assets with securities, cash or a combination thereof. If cash is used, depending on the size of the acquisition, Agnico-Eagle may be required to borrow money or issue securities to fund such cash requirements.
Outstanding Securities
        The following table presents the maximum number of common shares that would be outstanding if all dilutive instruments outstanding at March 14, 2008 were exercised:

Common shares outstanding at March 14, 2008	 	143,507,606	
Employee stock options	 	4,857,705	
 	 		
 	 	148,365,311	
 	 		
Critical Accounting Estimates
        The preparation of the consolidated 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 trade receivables, inventories, future tax assets and liabilities, mining properties and asset retirement obligations. In making judgments about the carrying value of assets and liabilities, the Company uses estimates based on historical
68

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 consolidated 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 Operating and Financial Review.
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 units-of-production method based on 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. Costs for grassroots exploration are charged to income when incurred until an ore body is discovered. Further exploration and development to delineate costs of the ore body are capitalized as mine development costs once a feasibility study is successfully completed and proven and probable reserves are established.
        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.
        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 are capitalized. 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 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 operating mine and development properties include estimates of recoverable ounces of gold based on the proven and probable reserves. To the extent economic value exists beyond the proven and probable reserves of an operating mine or development property, this value is included as part of the estimated future cash flows. Estimated future cash flows also involve estimates regarding 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.
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 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. Agnico-Eagle records revenues under these
69

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 the Company 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. In 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, the Company has made estimates of the final reclamation costs based on mine-closure plans approved by environmental agencies. Agnico-Eagle periodically reviews these estimates and updates reclamation cost estimates if assumptions change. Material assumptions that are made in deriving these estimates include variables such as mine life and inflation rates.
Future Tax Assets and Liabilities
        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 enacted tax rates and laws expected to be in effect when the differences are expected to reverse.
        Effective January 1, 2007, the Company adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109, or FIN 48. FIN 48 requires the recognition of the effect of uncertain tax positions where it is more likely than not based on technical merits that the position would be sustained. The Company recognizes the amount of the tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in the year of such change. Accrued interest and penalties related to unrecognized tax benefits are recorded in income tax expense in the current year. The impact of the adoption of FIN 48 was to increase the future income tax liability by $4.5 million.
Financial Instruments
        Agnico-Eagle uses derivative financial instruments, primarily option and forward contracts, to manage exposure to fluctuations, metal prices, interest rates and foreign currency exchange rates. Agnico-Eagle does not hold financial instruments or derivative financial instruments for trading purposes.
        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 accumulated other comprehensive income (loss), depending on the nature of the derivative financial instrument and whether it qualifies for hedge accounting. Financial instruments designated as hedges are tested for effectiveness on a quarterly basis. Gains and losses on those contracts that are proven to be effective are reported as a component of the related transaction.
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
70

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 term 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 the Company 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 create 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.
        In December 2004, the FASB enacted FAS 123 — revised 2004 ("FAS 123R"), " Share-Based Payment ", which replaces FAS 123 and supersedes APB Opinion No. 25 ("APB 25"), " Accounting for Stock Issued to Employees ". FAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statements of income. The Company was required to adopt FAS 123R in the first quarter of 2006. There was no significant impact on the Company based on the adoption of the new requirements under FAS 123R.
Pensions
        As of December 31, 2006, the Company adopted the provisions of Financial Accounting Standards Board ("FASB") Statement No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)" ("FAS 158"). FAS 158 required employers that sponsor one or more defined benefit plans to (i) recognize the funded status of a benefit plan in its statement of financial position, (ii) recognize the gains or losses and prior service costs or credits that arise during the period as a component of other comprehensive income, net of tax, (iii) measure the defined benefit plan assets and obligations as of the date of the employer's fiscal year-end statement of financial position, and (iv) disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The impact of adopting FAS 158 on the Consolidated Balance Sheets was as follows:

 	 	Before
Application of
FAS 158
	 	Adjustment
	 	After
Application of
FAS 158
	 	
Reclamation provision and other liabilities	 	$	26,051	 	$	1,406	 	$	27,457	 	
Deferred income tax liability	 	$	170,087	 	$	(396	)	$	169,691	 	
Accumulated other comprehensive loss	 	$	(16,989	)	$	(1,010	)	$	(17,999	)	
Total stockholders' equity	 	$	1,253,415	 	$	(1,010	)	$	1,252,405	 	
Deferred Stripping Costs
        In the mining industry, companies may be required to remove overburden and other mine waste materials to access mineral deposits. During the development of a mine (before production begins), it is generally accepted practice that such costs are capitalized as part of the depreciable cost of building, developing and constructing the mine. The capitalized costs are typically amortized over the productive life of the mine using the units-of-production method. A mining company may continue to remove overburden and waste materials, and therefore incur stripping costs, during the production phase of the mine.
        In March 2005, the Financial Accounting Standards Board ratified Emerging Issues Task Force Issue No. 04-6 ("EITF 04-6") which addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in costs applicable to sales in the same period as the revenue from the sale of
71

inventory. As a result, capitalization of costs is appropriate only to the extent product inventory exists at the end of a reporting period. Agnico-Eagle adopted the provisions of EITF 04-6 on January 1, 2006. The impact of adoption resulted in the decrease of ore stockpile inventory by $5.1 million, net of tax. Adoption of EITF 04-6 had no impact on the Company's cash position or earnings.
Other Accounting Developments
        Under the SEC Staff Accounting Bulletin 74 ("SAB 74"), the Company is required to disclose information related to new accounting standards that have not yet been adopted.
        In September 2006, the FASB issued FASB Statement No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions for FAS 157 are effective for the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
        In February 2007, FASB issued FASB Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"), which allows entities to voluntary choose, at specified election dates, to measure many financial assets and financial liabilities (as well as certain non-financial instruments that are similar to financial instruments) at fair value with changes in fair value reported in earnings. The election is made on an instrument-by-instrument basis and is irrevocable. The provisions for FAS 159 are effective for the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
        In December 2007, the FASB issued FASB Statement No. 160, "Non-controlling Interests in Consolidated Financial Statements" ("FAS 160"). FAS 160 establishes accounting and reporting standards for entities that have equity investments that are not attributable directly to the parent, called non-controlling interests or minority interests. Specifically, FAS 160 states where and how to report non-controlling interests in the consolidated statements of financial position and operations, how to account for changes in non-controlling interests and provides disclosure requirements. The provisions of FAS 160 are effective for the Company beginning January 1, 2009. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations and disclosures.
        In December 2007, the FASB issued FASB Statement No. 141(R), "Business Combinations" ("FAS 141(R)"). FAS 141(R) establishes how an entity accounts for the identifiable assets acquired, liabilities assumed, and any non-controlling interests acquired, how to account for goodwill acquired and determines what disclosures are required as part of a business combination. FAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, early adoption is prohibited. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations and disclosures.
        In June 2007, the EITF reached consensus on Issue No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards." EITF Issue No. 06-11 requires that the tax benefit related to dividend and dividend equivalents paid on equity-classifed nonvested shares and nonvested share units, which are expected to vest, be recorded as an increase to additional paid-in capital. EITF Issue No. 06-11 is to be applied prospectively for tax benefits on dividends declared in the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
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Summarized Quarterly Data
Consolidated Financial Data
(thousands of United States dollars, except where noted)

 	 	March 31, 2006
	 	June 30, 2006
	 	September 30, 2006
	 	December 31, 2006
	 	Total
2006
	 	
Income and cash flows	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LaRonde Mine	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations	 	$	90,581	 	$	126,872	 	$	108,798	 	$	138,381	 	$	464,632	 	
Production costs	 	 	33,187	 	 	35,567	 	 	36,456	 	 	38,543	 	 	143,753	 	
 	 		 		 		 		 		 	
Gross profit (exclusive of amortization shown below)	 	 	57,394	 	 	91,305	 	 	72,342	 	 	99,838	 	 	320,879	 	
Amortization	 	 	5,997	 	 	6,108	 	 	6,119	 	 	7,031	 	 	25,255	 	
 	 		 		 		 		 		 	
Gross profit	 	$	51,397	 	$	85,197	 	$	66,223	 	$	92,807	 	$	295,624	 	
 	 		 		 		 		 		 	
Net income for the period	 	$	37,190	 	$	37,092	 	$	45,203	 	$	41,852	 	$	161,337	 	
Net income per share — basic	 	$	0.35	 	$	0.32	 	$	0.38	 	$	0.35	 	$	1.40	 	
Net income per share — diluted	 	$	0.34	 	$	0.31	 	$	0.37	 	$	0.34	 	$	1.35	 	
Operating cash flow	 	$	19,711	 	$	48,095	 	$	73,945	 	$	84,501	 	$	226,252	 	
Investing cash flow	 	$	(50,969	)	$	(5,578	)	$	(185,498	)	$	(57,678	)	$	(299,723	)	
Financing cash flow	 	$	45,456	 	$	246,449	 	$	2,268	 	$	4,406	 	$	298,579	 	
Weighted average number of common shares outstanding (in thousands)	 	 	106,127	 	 	114,434	 	 	120,386	 	 	120,897	 	 	115,461	 	
Tonnes of ore milled	 	 	661,528	 	 	656,902	 	 	669,026	 	 	685,624	 	 	2,673,080	 	

Head grades:	

 	

 	

 	

 	

 	
 	
Gold (grams per tonne)	 	 	3.30	 	 	2.89	 	 	3.01	 	 	3.31	 	 	3.13	 	
Silver (grams per tonne)	 	 	77.00	 	 	78.20	 	 	75.90	 	 	75.26	 	 	76.58	 	
Zinc	 	 	3.79%	 	 	4.27%	 	 	4.43%	 	 	4.06%	 	 	4.13%	 	
Copper	 	 	0.41%	 	 	0.33%	 	 	0.39%	 	 	0.34%	 	 	0.39%	 	

Recovery rates:	

 	

 	

 	

 	

 	
 	
Gold	 	 	91.91%	 	 	91.35%	 	 	92.34%	 	 	90.51%	 	 	91.51%	 	
Silver	 	 	86.50%	 	 	87.70%	 	 	88.30%	 	 	87.30%	 	 	87.53%	 	
Zinc	 	 	86.70%	 	 	87.20%	 	 	87.70%	 	 	88.50%	 	 	87.60%	 	
Copper	 	 	83.80%	 	 	81.10%	 	 	81.70%	 	 	83.00%	 	 	82.40%	 	

Payable production: (1)	

 	

 	

 	

 	

 	
 	
Gold (ounces)	 	 	64,235	 	 	55,966	 	 	59,603	 	 	66,022	 	 	245,826	 	
Silver (thousands of ounces)	 	 	1,227	 	 	1,247	 	 	1,233	 	 	1,249	 	 	4,956	 	
Zinc (tonnes)	 	 	18,462	 	 	20,787	 	 	22,068	 	 	20,866	 	 	82,183	 	
Copper (tonnes)	 	 	2,053	 	 	1,590	 	 	1,884	 	 	1,762	 	 	7,289	 	

Realized prices:	

 	

 	

 	

 	

 	
 	
Gold (per ounce)	 	$	611	 	$	687	 	$	600	 	$	594	 	$	622	 	
Silver (per ounce)	 	$	10.83	 	$	13.06	 	$	12.39	 	$	13.38	 	$	12.42	 	
Zinc (per tonne)	 	$	2,640	 	$	3,786	 	$	3,525	 	$	4,640	 	$	3,699	 	
Copper (per tonne)	 	$	5,812	 	$	14,901	 	$	6,843	 	$	6,059	 	$	8,186	 	

Total cash costs (per ounce):	

 	

 	

 	

 	

 	
 	
Production costs	 	$	517	 	$	636	 	$	612	 	$	584	 	$	585	 	
Less: Net byproduct revenues	 	 	(748	)	 	(1,523	)	 	(1,340	)	 	(1,475	)	 	(1,240	)	
 	Inventory adjustments	 	 	(8	)	 	(86	)	 	21	 	 	33	 	 	(31	)	
 	Accretion expense and other	 	 	(2	)	 	(2	)	 	(2	)	 	(10	)	 	(4	)	
 	 		 		 		 		 		 	
Total cash costs (per ounce) (2)	 	$	(241	)	$	(975	)	$	(709	)	$	(868	)	$	(690	)	
 	 		 		 		 		 		 	
Minesite costs per tonne milled (2)	 	C$	57	 	C$	61	 	C$	63	 	C$	63	 	C$	62	 	

Notes:
(1)
Payable mineral production means the quantity of mineral produced during a period contained in products that are or will be sold by the Company, whether such products are sold during the period or held as inventory at the end of the period.

(2)
Minesite costs per tonne milled and total cash costs per ounce are non-GAAP measures of performance that the Company uses to monitor the performance of its operations. See "Item 5. Operating and Financial Review and Prospects — Results of Operations — Production Costs".
73

 Consolidated Financial Data
(thousands of United States dollars, except where noted)

 	 	March 31, 2007
	 	June 30, 2007
	 	September 30, 2007
	 	December 31, 2007
	 	Total
2007
	 	
Income and cash flows	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LaRonde Mine	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations	 	$	100,730	 	$	117,935	 	$	104,812	 	$	108,728	 	$	432,205	 	
Production costs	 	 	36,178	 	 	42,810	 	 	44,936	 	 	42,180	 	 	166,104	 	
 	 		 		 		 		 		 	
Gross profit (exclusive of amortization shown below)	 	 	64,552	 	 	75,125	 	 	59,876	 	 	66,548	 	 	266,101	 	
Amortization	 	 	6,928	 	 	7,094	 	 	7,578	 	 	6,157	 	 	27,757	 	
 	 		 		 		 		 		 	
Gross profit	 	$	57,624	 	$	68,031	 	$	52,298	 	$	60,391	 	$	238,344	 	
 	 		 		 		 		 		 	
Net income for the period	 	$	24,922	 	$	37,809	 	$	11,452	 	$	65,162	 	$	139,345	 	
Net income per share — basic	 	$	0.21	 	$	0.28	 	$	0.08	 	$	0.46	 	$	1.05	 	
Net income per share — diluted	 	$	0.20	 	$	0.27	 	$	0.08	 	$	0.46	 	$	1.04	 	
Operating cash flow	 	$	56,066	 	$	79,832	 	$	49,946	 	$	43,345	 	$	229,189	 	
Investing cash flow	 	$	90,748	 	$	(25,242	)	$	(213,119	)	$	(212,570	)	$	(360,183	)	
Financing cash flow	 	$	(10,663	)	$	1,853	 	$	15,361	 	$	124,181	 	$	130,732	 	
Weighted average number of common shares outstanding (in thousands)	 	 	121,159	 	 	133,788	 	 	135,509	 	 	140,618	 	 	132,768	 	
Tonnes of ore milled	 	 	671,484	 	 	679,765	 	 	667,238	 	 	654,976	 	 	2,673,463	 	

Head grades:	

 	

 	

 	

 	

 	
 	
Gold (grams per tonne)	 	 	3.00	 	 	2.82	 	 	2.85	 	 	3.14	 	 	2.95	 	
Silver (grams per tonne)	 	 	84.40	 	 	68.60	 	 	75.00	 	 	73.50	 	 	75.40	 	
Zinc	 	 	3.71%	 	 	3.44%	 	 	3.80%	 	 	3.59%	 	 	3.63%	 	
Copper	 	 	0.39%	 	 	0.32%	 	 	0.32%	 	 	0.40%	 	 	0.36%	 	

Recovery rates:	

 	

 	

 	

 	

 	
 	
Gold	 	 	90.66%	 	 	91.54%	 	 	91.58%	 	 	91.11%	 	 	91.21%	 	
Silver	 	 	87.40%	 	 	87.40%	 	 	88.10%	 	 	86.70%	 	 	87.51%	 	
Zinc	 	 	85.30%	 	 	87.60%	 	 	86.20%	 	 	88.20%	 	 	86.80%	 	
Copper	 	 	84.80%	 	 	86.40%	 	 	84.90%	 	 	88.40%	 	 	86.20%	 	

Payable production: (1)	

 	

 	

 	

 	

 	
 	
Gold (ounces)	 	 	58,588	 	 	56,392	 	 	55,830	 	 	60,182	 	 	230,992	 	
Silver (ounces in thousands)	 	 	1,397	 	 	1,135	 	 	1,222	 	 	1,166	 	 	4,920	 	
Zinc (tonnes)	 	 	17,944	 	 	17,462	 	 	18,609	 	 	17,562	 	 	71,577	 	
Copper (tonnes)	 	 	1,990	 	 	1,689	 	 	1,647	 	 	2,156	 	 	7,482	 	

Realized prices:	

 	

 	

 	

 	

 	
 	
Gold (per ounce)	 	$	669	 	$	683	 	$	748	 	$	895	 	$	748	 	
Silver (per ounce)	 	$	13.82	 	$	13.28	 	$	12.79	 	$	14.40	 	$	13.63	 	
Zinc (per tonne)	 	$	2,798	 	$	3,950	 	$	2,838	 	$	2,313	 	$	2,941	 	
Copper (per tonne)	 	$	6,090	 	$	7,008	 	$	7,910	 	$	6,134	 	$	6,994	 	

Total cash costs (per ounce):	

 	

 	

 	

 	

 	
 	
Production costs	 	$	617	 	$	759	 	$	804	 	$	701	 	$	719	 	
Less: Net byproduct revenues	 	 	(1,071	)	 	(1,396	)	 	(1,131	)	 	(850	)	 	(1,082	)	
 	Inventory adjustments	 	 	(126	)	 	(57	)	 	25	 	 	(28	)	 	4	 	
 	Accretion expense and other	 	 	(4	)	 	(5	)	 	(5	)	 	(7	)	 	(6	)	
 	 		 		 		 		 		 	
Total cash costs (per ounce) (2)	 	$	(584	)	$	(699	)	$	(307	)	$	(184	)	$	(365	)	
 	 		 		 		 		 		 	
Minesite costs per tonne milled (2)	 	C$	64	 	C$	71	 	C$	66	 	C$	65	 	C$	66	 	
 	 		 		 		 		 		 	
74

Five Year Financial and Operating Summary
Financial Data
(thousands of United States dollars, except where noted)

 	 	2007
	 	2006
	 	2005
	 	2004
	 	2003
	 	
Revenues from mining operations	 	$	432,205	 	$	464,632	 	$	241,338	 	$	188,049	 	$	126,820	 	
Interest, sundry income and gain on available-for-sale securities	 	 	29,230	 	 	45,915	 	 	4,996	 	 	655	 	 	2,775	 	
 	 		 		 		 		 		 	
 	 	 	461,435	 	 	510,547	 	 	246,334	 	 	188,704	 	 	129,595	 	
Costs and expenses	 	 	302,157	 	 	249,904	 	 	211,055	 	 	142,671	 	 	147,708	 	
 	 		 		 		 		 		 	
Income (loss) before income taxes	 	 	159,278	 	 	260,643	 	 	35,279	 	 	46,033	 	 	(18,113	)	
Income and mining taxes expense (recovery)	 	 	19,933	 	 	99,306	 	 	(1,715	)	 	(1,846	)	 	(358	)	
 	 		 		 		 		 		 	
Income (loss) before cumulative catch-up adjustment	 	 	139,345	 	 	161,337	 	 	36,994	 	 	47,879	 	 	(17,755	)	
Cumulative catch-up adjustment relating to FAS 143	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(1,743	)	
 	 		 		 		 		 		 	
Net income (loss)	 	$	139,345	 	$	161,337	 	$	36,994	 	$	47,879	 	$	(19,498	)	
 	 		 		 		 		 		 	
Net income (loss) per share — basic	 	$	1.05	 	$	1.40	 	$	0.42	 	$	0.56	 	$	(0.23	)	
Net income (loss) per share — diluted	 	 	1.04	 	 	1.35	 	 	0.42	 	 	0.56	 	 	(0.23	)	
Operating cash flow	 	$	229,189	 	$	226,252	 	$	82,980	 	$	49,525	 	$	4,253	 	
Investing cash flow	 	$	(360,183	)	$	(299,723	)	$	(66,539	)	$	(94,832	)	$	(105,907	)	
Financing cash flow	 	$	130,732	 	$	298,579	 	$	11,689	 	$	21,173	 	$	5,439	 	
Dividends declared per share	 	$	0.18	 	$	0.12	 	$	0.03	 	$	0.03	 	$	0.03	 	
Capital expenditures	 	$	510,877	 	$	149,185	 	$	70,270	 	$	53,318	 	$	42,038	 	
Average gold price per ounce realized	 	$	748	 	$	622	 	$	449	 	$	418	 	$	368	 	
Average exchange rate — C$ per $	 	C$	1.0738	 	C$	1.1344	 	C$	1.2115	 	C$	1.3017	 	C$	1.4011	 	
Weighted average number of common shares outstanding (in thousands)	 	 	132,768	 	 	115,461	 	 	89,030	 	 	85,157	 	 	83,889	 	
Working capital (including undrawn credit lines)	 	$	751,587	 	$	839,898	 	$	338,490	 	$	266,305	 	$	240,613	 	
Total assets	 	$	2,735,498	 	$	1,521,488	 	$	976,069	 	$	718,164	 	$	637,101	 	
Long-term debt	 	$	—	 	$	—	 	$	131,056	 	$	141,495	 	$	143,750	 	
Shareholders' equity	 	$	2,058,934	 	$	1,252,405	 	$	655,067	 	$	470,226	 	$	400,723	 	

Operating Summary (thousands of United States dollars, except where noted)	

 	

 	

 	

 	

 	

LaRonde Mine	

 	

 	

 	

 	

 	
 	
Revenues from mining operations	 	$	432,205	 	$	464,632	 	$	241,338	 	$	188,049	 	$	126,820	 	
Production costs	 	 	166,104	 	 	143,753	 	 	127,365	 	 	98,168	 	 	104,990	 	
 	 		 		 		 		 		 	
Gross profit (exclusive of amortization shown below)	 	$	266,101	 	$	320,879	 	$	113,973	 	$	89,881	 	$	21,830	 	
Amortization	 	 	27,757	 	 	25,255	 	 	26,062	 	 	21,763	 	 	17,504	 	
 	 		 		 		 		 		 	
Gross profit	 	$	238,344	 	$	295,624	 	$	87,911	 	$	68,118	 	 	4,326	 	
 	 		 		 		 		 		 	
Tonnes of ore milled	 	 	2,673,463	 	 	2,673,080	 	 	2,671,811	 	 	2,700,650	 	 	2,221,337	 	
Gold — grams per tonne	 	 	2.95	 	 	3.13	 	 	3.11	 	 	3.41	 	 	3.77	 	
Gold production — ounces	 	 	230,992	 	 	245,826	 	 	241,807	 	 	271,567	 	 	236,653	 	
Silver production — ounces (in thousands)	 	 	4,920	 	 	4,956	 	 	4,831	 	 	5,699	 	 	3,953	 	
Zinc production — tonnes	 	 	71,577	 	 	82,183	 	 	76,545	 	 	75,879	 	 	45,513	 	
Copper production — tonnes	 	 	7,482	 	 	7,289	 	 	7,378	 	 	10,349	 	 	9,131	 	

Total cash costs (per ounce):	

 	

 	

 	

 	

 	
 	
Production costs	 	$	719	 	$	585	 	$	527	 	$	362	 	$	390	 	
Less: Net byproduct revenues	 	 	(1,082	)	 	(1,240	)	 	(511	)	 	(304	)	 	(173	)	
 	Inventory adjustments	 	 	4	 	 	(31	)	 	29	 	 	—	 	 	—	 	
 	El Coco royalty	 	 	—	 	 	—	 	 	—	 	 	—	 	 	54	 	
 	Accretion expense and other	 	 	(6	)	 	(4	)	 	(2	)	 	(2	)	 	(2	)	
 	 		 		 		 		 		 	
Total cash costs (per ounce) (1)	 	$	(365	)	$	(690	)	$	43	 	$	56	 	$	269	 	
 	 		 		 		 		 		 	
Minesite costs per tonne milled	 	C$	66	 	C$	62	 	C$	55	 	C$	53	 	C$	57	 	

Note:
(1)
Minesite costs per tonne milled and total cash costs per ounce is a non-GAAP measure of performance that the Company uses to monitor the performance of its operations. See "Item 5. Operating and Financial Review and Prospects — Results of Operations — Production Costs".
75

ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Directors and Senior Management
        The articles of Agnico-Eagle provide for a minimum of five and a maximum of twelve directors. By special resolution of the shareholders of Agnico-Eagle approved at the annual and special meeting of Agnico-Eagle held on June 27, 1996, the shareholders authorized the Board to determine the number of directors within that minimum and maximum. The number of directors to be elected is nine as determined by the Board by resolution passed on December 13, 2005.
        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 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).
        The following is a brief biography of each of Agnico-Eagle's directors and senior officers:
         Dr. Leanne M. Baker , 55, of Mill Valley, California, is an independent director of Agnico-Eagle. Dr. Baker is Managing Director of Investor Resources LLC, consulting to companies in the mining and financial services industries, and is a registered representative with U.S. broker-dealer Puplava Securities, Inc., a member of the National Association of Securities Dealers (NASD) and the Securities Investor Protection Corporation (SIPC). 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 Reunion Gold Corporation (a mining exploration company traded on the TSX Venture Exchange) and U.S. Gold Corporation and Kimber Resources Inc. (mining exploration companies traded on the American Stock Exchange and the TSX). Dr. Baker is chair of the Company's Compensation Committee and a member of the Company's Audit Committee.
         Douglas R. Beaumont, P.Eng. , 75, of Toronto, Ontario, is an independent 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 and Construction. 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 the chair of the Company's Corporate Governance Committee and a member of the Company's Compensation Committee.
         Sean Boyd, CA , 49, of Newmarket, Ontario, is the Vice Chairman and Chief Executive Officer and a director of Agnico-Eagle. Mr. Boyd has been with Agnico-Eagle since 1985. Prior to his appointment as Vice Chairman and Chief Executive Officer in December 2005, Mr. Boyd served as President and Chief Executive Officer from 1998 to 2005, 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. Prior to joining Agnico-Eagle in 1985, he was a staff accountant with Clarkson Gordon (Ernst & Young). 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 a director and member of the Audit Committee of the World Gold Council.
         Bernard Kraft, C.A ., 77, of Toronto, Ontario, is an independent director of Agnico-Eagle. Mr. Kraft is recognized as a Designated Specialist in Investigative and Forensic Accounting by the Canadian Institute of Chartered Accountants. Mr. Kraft is a recently-retired senior partner of the Toronto accounting firm Kraft, Berger LLP, Chartered Accountants and now serves as a consultant to that firm. He is also a principal in Kraft Yabrov 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), St. Andrews Goldfields, Limited (a mining exploration company listed on the TSX) and Kaboose Inc. (an online media company listed on the TSX). Mr. Kraft is a member of the Company's Audit Committee and Corporate Governance Committee.
         Mel Leiderman, CA., TEP , ICD.D , 55, of Toronto, Ontario, is an independent director of Agnico-Eagle. Mr. Leiderman is the managing partner of the Toronto accounting firm Lipton, Wiseman, Altbaum &
76

Partners LLP. Mr. Leiderman is a graduate of the University of Windsor (B.A.). He has been a director of Agnico-Eagle since January 1, 2003. Mr. Leiderman is the chair of the Audit Committee and a member of the Company's Compensation Committee.
         James D. Nasso , ICD.D , 74, of Toronto, Ontario, is Chairman of the Board of Directors and an independent director of Agnico-Eagle. Mr. Nasso, now retired, founded and was the President of Unilac Limited, a manufacturer of infant formula, for 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 a member of the Company's Audit Committee, Corporate Governance Committee and Health, Safety and Environment Committee.
         Eberhard Scherkus, P.Eng. , 56, of Oakville, Ontario, is the President and Chief Operating Officer and a director of Agnico-Eagle. Mr. Scherkus has been with Agnico-Eagle since 1985. Prior to his appointment as President and Chief Operating Officer in December 2005, Mr. Scherkus served as Executive Vice President and Chief Operating Officer from 1998 to 2005, Vice President, Operations from 1996 to 1998 and as a manager of Agnico-Eagle LaRonde Division from 1986 to 1996. Mr. Scherkus is a graduate of McGill University (B.Sc.). Mr. Scherkus was appointed a director of Agnico-Eagle on January 17, 2005. Mr. Scherkus is a member of the Company's Health, Safety and Environment Committee.
         Howard R. Stockford, P.Eng. , 66, of Toronto, Ontario, is an independent director of Agnico-Eagle. Mr. Stockford is a retired mining executive and was Executive Vice President of Aur Resources Inc. ("Aur"), a mining company which was traded on the TSX, from 1989 until his retirement at the end of 2004. He was a director of Aur from 1984 until August 2007, when Aur was taken over by Teck Cominco Limited. From 1983 to 1989, Mr. Stockford was Vice President of Aur. Mr. Stockford is a member of the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") and has previously served as Chairman of both the Winnipeg and Toronto branches of the CIM and as President of the CIM national body. Mr. Stockford is also a member of the Prospectors and Developers Association of Canada, the Geological Association of Canada and the Society of Economic Geologists. Mr. Stockford is a graduate of the Royal School of Mines, Imperial College, London University (B.Sc.). Mr. Stockford has been a director of Agnico-Eagle since May 6, 2005 and a director of both Nuinsco Resources Limited ("Nuinsco") and Victory Nickel Inc., which was spun off from Nuinsco effective as of February 1, 2007. Mr. Stockford is the chair of the Company's Health, Safety and Environment Committee and a member of the Compensation Committee.
         Pertti Voutilainen, M.Sc., M.Eng. , 66, of Espoo, Finland, is an independent director of Agnico-Eagle. Mr. Voutilainen is a mining industry veteran. Most recently, he was the Chairman of the board of directors of Riddarhyttan Resources AB. Previously, Mr. Voutilainen was Chairman of the board of directors and Chief Executive Officer for Kansallis Banking Group and President after its merger with Union Bank of Finland until his retirement in 2000. He was also employed by Outokumpu Corp., Finland's largest mining and metals company, for 26 years, including as Chief Executive Officer for 11 years. During the last five years, Mr. Voutilainen has served as director on the board of directors of each of Metso Oyj (Chairman), Viola Systems Oy (Chairman), Innopoli Oy (Chairman) and Fingrid Oyj. Mr. Voutilainen holds the honorary title of Mining Counsellor (Bergsrad) which was awarded to him by the President of the Republic of Finland in 2003. Mr. Voutilainen holds graduate degrees from Helsinki University of Technology (M.Sc.), Helsinki University of Business Administration (M.Sc.) and Pennsylvania State University (M. Eng.). He has been a director of Agnico-Eagle since December 13, 2005. Mr. Voutilainen is a member of the Company's Corporate Governance Committee and Health, Safety and Environment Committee.
         Donald G. Allan , 52, of Toronto, Ontario, is Senior Vice President, Corporate Development of Agnico-Eagle, a position he has held since December 14, 2006. Prior to that, Mr. Allan had been Vice President, Corporate Development since May 6, 2002. Prior to that, 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.
         Alain Blackburn, P.Eng. , 51, of Oakville, Ontario, is Senior Vice President, Exploration of Agnico-Eagle, a position he has held since December 14, 2006. Prior to that, Mr. Blackburn had been Vice President, Exploration since October 1, 2002. Prior to that, Mr. Blackburn served as Manager, Corporate Development of
77

Agnico-Eagle from January 1999 and as Agnico-Eagle's Exploration Manager from September 1996 to January 1999. Mr. Blackburn is a graduate of Universite du Quebec de Chicoutimi (P.Eng.) and Universite du Quebec en Abitibi-Temiscamingue (M.Sc.).
         David Garofalo, C.A ., 42, of Richmond Hill, Ontario, is Senior Vice President, Finance and Chief Financial Officer of Agnico-Eagle, a position he has held since December 14, 2006. Prior to that, Mr. Garofalo had been Vice President, Finance and Chief Financial Officer 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 also serves as a director of Stornoway, a TSX listed company in which the Company holds a 13.1% interest. Mr. Garofalo is a graduate of the University of Toronto (B.Comm.).
         R. Gregory Laing, BA, LL.B. , 49, of Oakville, Ontario, is General Counsel, Senior Vice President, Legal and Corporate Secretary of Agnico-Eagle, a position he has held since December 14, 2006, prior to which, Mr. Laing had been General Counsel, Vice President, Legal and Corporate Secretary since September 19, 2005. Prior to that, he was Vice President, Legal of Goldcorp Inc. (gold mining company) from October 2003 to June 2005 and General Counsel, Vice President, Legal and Corporate Secretary of TVX Gold Inc. (gold mining company) between October 1995 and January 2003. He worked as a corporate securities lawyer for two prominent Toronto law firms prior to that. Mr. Laing is a director of New Gold Inc. (mining company), a TSX and American Stock Exchange listed company, and Andina Minerals Inc. (mining exploration company), a TSX-Venture Exchange listed company.
         Patrice Gilbert , 44, of Oakville, Ontario, is Vice President, Human Resources of Agnico-Eagle, a position that he has held since September 25, 2006. Prior to his appointment, Mr. Gilbert worked for Placer Dome in various senior capacities in Chile, South Africa, the Dominican Republic, Quebec and British Columbia including Director, Human Resources and Sustainability, Placer Dome Dominicana Corporacion (2005-2006) and Vice President, Human Resources and Sustainability, Placer Dome Africa (1999-2005). Mr. Gilbert studied industrial relations at Laval University, Quebec, Canada and Wits University in Johannesburg, South Africa.
         Louise Grondin , Ing., P.Eng. 54, of Amos, Quebec, is the Vice President, Environment of Agnico-Eagle, a position she has held since March 19, 2007. Prior to her appointment as Vice President, Environment, Ms. Grondin was the Company's Regional Environmental Manager and Environmental Manager LaRonde Division. Prior to her employment with Agnico-Eagle, Ms. Grondin worked for Billiton Canada Ltd. as Manager Environment, Human Resources and Safety. Ms. Grondin obtained a B.Sc. from the University of Ottawa and a M.Sc from McGill University.
         Ingmar Haga , 56, of Espoo, Finland, is Vice President, Europe of Agnico-Eagle, a position he has held since September 26, 2006. Prior to his appointment as Vice President, Europe, Mr. Haga was Managing Director — Europe from March 1, 2006. Prior to his employment with Agnico-Eagle, Mr. Haga held various positions with the Outokumpu Group in Finland and Canada. Prior to joining Agnico-Eagle, Mr. Haga was President of Polar Mining Oy, a Finnish subsidiary of Australian based Dragon Mining NL. Mr Haga has an M.Sc. from Xbo Akademi in Finland.
         Tim Haldane, P.Eng. , 51, of Sparks, Nevada, is the Vice President, Latin America of Agnico-Eagle, a position he has held since May 2006. Prior to this appointment, he was Vice President, Development for Glamis Gold Inc. where he participated in numerous acquisition and development activities in North America and Central America. Mr. Haldane is a graduate of the Montana School of Mines and Technology (B.S. Metallurgical Engineering) and has 28 years of experience in the precious metals and base metals industries.
         Marc Legault, Ing., P.Eng. , 48, of Mississauga, Ontario, is the Vice President, Project Development of Agnico-Eagle, a position he has held since July 2006. Prior to that, Mr. Legault served Agnico-Eagle in various capacities, including Manager, Project Evaluation based in Toronto, Ontario since 2002, Mine Geologist and later Chief Geologist at the Company's LaRonde Mine in Cadillac, Quebec from 1994 to 2002 and Project Geologist at the Company's Exploration Division in Val d'Or, Quebec starting in 1988. Mr. Legault is also a director of Golden Goliath Resources Ltd., a TSX-Venture Exchange listed mineral exploration company (in which Agnico-Eagle holds an interest) with activities principally in northern Mexico. Mr. Legault is a
78

graduate of Queen's University (B.Sc. Honours in geological engineering) and Carleton University (M.Sc. in geology).
         Daniel Racine, Ing., P. Eng. , 44, of Oakville, Ontario, is the Vice President, Operations of Agnico-Eagle, a position he has held since July 2006. Prior to his appointment, he served Agnico-Eagle in various capacities for 19 years, including Operations Manager, LaRonde Mine Manager, Underground Superintendent and Mine Captain. Prior to joining Agnico-Eagle, Mr. Racine worked as a mining engineer for several mining companies. Mr. Racine graduated as a mining engineer from Laval University (B.Sc.) in December 1986.
         Jean Robitaille , 45, of Oakville, Ontario, is Vice President, Metallurgy & Marketing of Agnico-Eagle, a position that he has held since January 1, 2006. Prior to his appointment, he served Agnico-Eagle in various capacities for 19 years, most recently as General Manager, Metallurgy & Marketing and as Mill Superintendent and Project Manager for the expansion of the Laronde mill. Prior to joining Agnico-Eagle, Mr. Robitaille worked as a metallurgist with Teck Mining Group. Mr. Robitaille is a mining graduate of the College de l'Abitibi-Témiscamingue with a specialty in mineral processing.
         David Smith , 44, of Toronto, Ontario, is the Vice President, Investor Relations with Agnico-Eagle. He started work in investor relations at the Company in February 2005. Prior to that, he was a mining analyst at Dominion Bond Rating Service for more than five years. Mr. Smith's professional experience also includes a variety of engineering positions in the mining industry, both in Canada and abroad. He has a B.Sc. and a M.Sc. in Mining Engineering from Queen's University and the University of Arizona, respectively. Mr. Smith is also a professional engineer.
        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 Executive Officers
        The executive officers of Agnico-Eagle are:
•
Sean Boyd, Vice-Chairman and Chief Executive Officer

•
Eberhard Scherkus, President and Chief Operating Officer

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

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

•
Alain Blackburn, Senior Vice-President, Exploration

•
R. Gregory Laing, General Counsel, Senior Vice-President, Legal and Corporate Secretary

•
Patrice Gilbert, Vice-President, Human Resources

•
Louise Grondin, Vice-President, Environment

•
Ingmar Haga, Vice-President, Europe

•
Tim Haldane, Vice-President, Latin America

•
Marc Legault, Vice-President, Project Development

•
Daniel Racine, Vice-President, Operations

•
Jean Robitaille, Vice-President, Metallurgy and Marketing

•
David Smith, Vice-President, Investor Relations
        The following Summary Compensation Table sets out compensation during the three fiscal years ended December 31, 2007 for the Vice-Chairman and Chief Executive Officer, the Senior Vice-President, Finance and Chief Financial Officer and the three other most highly compensated officers (collectively the "Named Executive Officers") of Agnico-Eagle measured by base salary and bonus earned during the fiscal year ended December 31, 2007.
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Summary Compensation Table — Agnico-Eagle Mines Limited

 	 	Annual Compensation
	 	Long-Term Compensation Award
	 	 	
Name and Principal Position
	 	Year
	 	Salary
(C$)
	 	Bonus
(C$) (1)
	 	Securities Under Options
	 	All Other Compensation
(C$) (2)
	
Sean Boyd	 	2007	 	825,000	 	1,237,000	 	100,000	 	60,765	
Vice-Chairman and	 	2006	 	700,000	 	1,050,000	 	100,000	 	40,265	
Chief Executive Officer	 	2005	 	660,000	 	475,000	 	125,000	 	38,061	

Eberhard Scherkus	
 	
2007	
 	
600,000	
 	
675,000	
 	
75,000	
 	
66,945	
President and	 	2006	 	500,000	 	562,000	 	75,000	 	40,945	
Chief Operating Officer	 	2005	 	475,000	 	270,000	 	100,000	 	38,741	

David Garofalo	
 	
2007	
 	
375,000	
 	
281,000	
 	
50,000	
 	
44,039	
Senior Vice-President, Finance and	 	2006	 	357,096	 	281,000	 	50,000	 	40,936	
Chief Financial Officer	 	2005	 	320,000	 	150,000	 	70,000	 	38,691	

R. Gregory Laing	
 	
2007	
 	
310,000	
 	
232,000	
 	
50,000	
 	
57,445	
General Counsel, Senior Vice-President,	 	2006	 	271,635	 	232,000	 	25,000	 	20,857	
Legal and Corporate Secretary	 	2005	(3)	55,385	 	25,000	 	50,000	 	5,716	

Alain Blackburn	
 	
2007	
 	
310,000	
 	
232,000	
 	
50,000	
 	
54,757	
Senior Vice-President,	 	2006	 	276,750	 	232,000	 	50,000	 	38,944	
Exploration	 	2005	 	220,000	 	85,000	 	40,000	 	33,903	

(1)
Consists of 100% of the maximum permissible bonus calculated on the base salaries of each Named Executive Officer as of the end of 2007.

(2)
Consists of annual contributions made by Agnico-Eagle on behalf of the Named Executive Officers under the Company's defined contribution pension plan (see "— Pension Arrangements"), premiums paid for term life insurance and automobile allowances for the Named Executive Officers and education and fitness benefits.

(3)
Mr. Laing joined Agnico-Eagle on September 19, 2005.
Stock Option Plan
        Under the Company's Stock Option Plan, options to purchase common shares may be granted to directors, officers, employees and service providers of the Company. The exercise price of options granted may not be less than the closing market price for the common shares of the Company on the TSX on the day prior to the date of grant. The maximum term of options granted under the Stock Option Plan is five years and the maximum number of stock options that can be issued in any year is 2% of the Company's outstanding common shares. In addition, a maximum of 25% of the options granted in an option grant vest upon the date they are granted with the remaining options vesting equally over the next three anniversaries of the option grant.
        The Stock Option Plan provides for the termination of an option held by an option holder in the following circumstances:
•
the option expires (no later than five years after the option was granted);

•
30 days after the option holder ceases to be an employee, officer, director of or consultant to the Company or any subsidiary of the Company;

•
six months after the death of the option holder; and

•
where such option holder is a director, four years after the date he or she resigns or retires from the Board (provided that in no event will any option expire later than five years after the option was granted).
        An option granted under the Stock Option Plan may only be assigned to eligible assignees, including a spouse, minor child and minor grandchild, a trust governed by a registered retirement savings plan of an eligible participant, a corporation controlled by such participant or a family trust of which the eligible participant is a trustee and of which all beneficiaries are eligible assignees. Assignments must be approved by the Board and any stock exchange or other authority.
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        In connection with the evaluation of management's performance conducted near the end of each fiscal year, the Compensation Committee makes a recommendation in respect of the number of options to be granted to officers and directors of the Company in mid-December. If such recommendation is deemed acceptable to the Board, the Board approves the grant of the options on the first trading day in the following month of January and such grant becomes effective immediately with an exercise price equal to the closing price of the immediately preceding trading day.
        The Board may amend or revise the terms of the Stock Option Plan as permitted by law and subject to any required approval by any stock exchange or other authority. No amendment or revision to the Stock Option Plan which adversely affects the rights of any option holder under any option granted under the Stock Option Plan can be made without the consent of the option holder whose rights are being affected. In addition, no amendments to the Stock Option Plan to increase the number of common shares reserved for issuance, to change the designation of who is an eligible participant, or to decrease the prices at which options can be exercised can be made without first obtaining the approval of the Company's shareholders. In response to a staff notice regarding amendments to security based compensation arrangements, the Stock Option Plan was amended in 2007 such that where the Company has imposed trading restrictions on directors and officers that fall within ten trading days of the expiry of an Option, such Option's expiry date shall be the tenth day following the termination of such restrictions. The Stock Option Plan does not expressly entitle participants to convert a stock option into a stock appreciation right.
        Under the Stock Option Plan, only eligible persons who are not directors or officers of the Company are entitled to receive loans, guarantees or other support arrangements from the Company to facilitate option exercises. During 2007, no loans, guarantees or other financial assistance was provided under the plan.
        The number of common shares reserved for issuance under the Stock Option Plan is 4,797,135 common shares (comprised of 4,743,200 common shares relating to options issued but unexercised and 53,935 common shares relating to options available to be issued), being 3.3% of the Company's 143,507,606 common shares outstanding as at March 14, 2008.
        The following table sets out stock option awards received by the Named Executive Officers during the year ended December 31, 2007.
Option grants of Agnico-Eagle during 2007

Name
	 	Securities
Under Options (1)
	 	% of Total Option Grants in Year
	 	Exercise Price
	 	Market Value of Securities Underlying Options on Date of Grant
	 	Expiration Date
	
Sean Boyd	 	100,000	 	8	 	C$48.09	 	NIL	 	January 2, 2012	
Eberhard Scherkus	 	75,000	 	6	 	C$48.09	 	NIL	 	January 2, 2012	
David Garofalo	 	50,000	 	4	 	C$48.09	 	NIL	 	January 2, 2012	
Greg Laing	 	50,000	 	4	 	C$48.09	 	NIL	 	January 2, 2012	
Alain Blackburn	 	50,000	 	4	 	C$48.09	 	NIL	 	January 2, 2012	

(1)
Black-Scholes value of each option on the date of grant (January 2, 2007) was C$12.76.
        The following table shows, for each Named Executive Officer, the number of common shares acquired through the exercise of stock options of the Company during the year ended December 31, 2007, the aggregate value realized upon exercise and the number of unexercised options under the Stock Option Plan as at December 31, 2007. The value realized upon exercise is the difference between the market value of common shares on the exercise date and the exercise price of the option. The value of unexercised in-the-money options at December 31, 2007 is the difference between the exercise price of the options and the market value of Agnico-Eagle's common shares on December 31, 2007, which was C$54.42 per common share of the Company.
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Aggregate option exercises during 2007 and year end option values

 	 	 	 	 	 	Unexercised options at December 31, 2007
	 	Value of unexercised in-the-money options at December 31, 2007
(C$)
	
 	 	Securities acquired at exercise
	 	Aggregate value realized
(C$)
					
Name
					 	Exerciseable
	 	Unexerciseable
	 	Exerciseable
	 	Unexerciseable
	
Sean Boyd	 	nil	 	nil	 	290,000	 	125,000	 	9,815,200	 	2,044,750	
Eberhard Scherkus	 	50,000	 	2,023,000	 	284,250	 	93,750	 	10,243,448	 	1,533,563	
David Garofalo	 	12,500	 	427,125	 	60,000	 	62,500	 	1,128,400	 	1,679,150	
Greg Laing	 	nil	 	nil	 	50,000	 	87,500	 	1,433,125	 	1,110,625	
Alain Blackburn	 	23,000	 	762,505	 	34,500	 	62,500	 	831,225	 	1,022,375	
        The following table shows, as at December 31, 2007, compensation plans under which equity securities of Agnico-Eagle 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	 	3,609,924	 	$	30.34	 	2,832,250	
Equity compensation plans not approved by shareholders	 	Nil	 	 	Nil	 	Nil	
Employee Share Purchase Plan
        In 1997, the shareholders of Agnico-Eagle approved the Employee Share Purchase Plan to encourage directors, officers and full-time employees of Agnico-Eagle to purchase common shares of Agnico-Eagle. Full-time employees who have been continuously employed by Agnico-Eagle or its subsidiaries for at least twelve months are eligible at the beginning of each fiscal year to elect to participate in the Employee 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. Agnico-Eagle contributes an amount equal to 50% of the individual's contributions and issues shares which have a market value equal to the total contributions (individual and Corporation) under the Employee Share Purchase Plan. Of the 2,500,000 shares approved in 1997 under the Employee Share Purchase Plan, Agnico-Eagle has, as of March 14, 2008, reserved 592,151 common shares for issuance under the plan.
Pension Arrangements
        Two individual Retirement Compensation Arrangement Plans (the "RCA Plans") for Mr. Boyd and Mr. Scherkus 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 Company, less the annual pension payable under the Company's basic defined contribution plan. 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. Payments under the RCA Plans are secured by a letter of credit from a Canadian chartered bank.
        The following table provides illustrations of the total estimated pension payable from both the RCA Plan and the Basic Plan assuming various current pensionable earnings, current ages and total years of service to
82

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 Company to Age 60 (1)
	
 	 	Current Age
			
Current Earnings
			 	15 years
	 	20 years
	 	25 years
	 	30 years
	 	35 years
	
C$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	

C$500,000	
 	
45	
 	
$	
220,300	
 	
$	
293,700	
 	
$	
367,100	
 	
$	
440,600	
 	
$	
514,000	
 	 	50	 	 	190,000	 	 	253,400	 	 	316,700	 	 	380,000	 	 	443,400	
 	 	55	 	 	163,900	 	 	218,500	 	 	273,200	 	 	327,800	 	 	382,500	
 	 	60	 	 	141,400	 	 	188,500	 	 	235,600	 	 	282,800	 	 	329,900	

C$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	

C$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	

C$800,000	
 	
45	
 	
$	
352,400	
 	
$	
469,900	
 	
$	
587,400	
 	
$	
704,900	
 	
$	
822,400	
 	 	50	 	 	304,000	 	 	405,400	 	 	506,700	 	 	608,000	 	 	709,400	
 	 	55	 	 	262,300	 	 	349,700	 	 	437,100	 	 	524,500	 	 	611,900	
 	 	60	 	 	226,200	 	 	301,600	 	 	377,000	 	 	452,400	 	 	527,900	

C$900,000	
 	
45	
 	
$	
396,500	
 	
$	
528,700	
 	
$	
660,800	
 	
$	
793,000	
 	
$	
925,200	
 	 	50	 	 	342,000	 	 	456,000	 	 	570,000	 	 	684,100	 	 	798,100	
 	 	55	 	 	295,000	 	 	393,400	 	 	491,700	 	 	590,100	 	 	688,400	
 	 	60	 	 	254,500	 	 	339,300	 	 	424,200	 	 	509,000	 	 	593,800	
        At December 31, 2007, the two individuals under the RCA Plans had the following years of service:

•	Mr. Boyd	 	22 years	
•	Mr. Scherkus	 	22 years	
        Accordingly, the total projected pension payable at retirement from both the RCA Plan and the Basic Plan for Mr. Boyd and Mr. Scherkus are C$767,260 and C$355,765 per annum, respectively. The 2007 annual service cost and total accrued pension obligation, respectively, for each of Mr. Boyd and Mr. Scherkus as at December 31, 2007 are as follows: Mr. Boyd — C$270,970 and C$3,954,630, Mr. Scherkus — C$202,380 and C$3,231,110. The annual service cost represents the value of the projected pension benefit earned during the year. The total accrued pension obligation represents the value of the projected pension benefit earned for all service to date. The benefits listed in the table are not subject to any deduction for social security or other offset amounts such as Canada Pension Plan amounts.
Employment Contracts/Termination Arrangements
        Agnico-Eagle 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
83

were last updated in December 2005 and, at that time, provided minimum annual base salaries for the Named Executive Officers as follows:

•	Mr. Boyd	 	C$700,000	
•	Mr. Scherkus	 	C$500,000	
•	Mr. Garofalo	 	C$340,000	
•	Mr. Laing	 	C$235,000	
•	Mr. Blackburn	 	C$245,000	
        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 resignation 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 and one-half 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 100 kilometres;

•
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 Company.
        If a severance payment triggering event had occurred on December 31, 2007, the severance payments (excluding the value of the continuing and ancillary benefits) that would be payable to each of the Named Executive Officers would be as follows: Mr. Boyd — C$4,921,250; Mr. Scherkus — C$3,046,250; Mr. Garofalo — C$1,640;000 Mr. Laing — C$1,355,000; and Mr. Blackburn — C$1,355,000.
Compensation of Directors and Other Information
        Mr. Boyd, who is a director and the Vice-Chairman and Chief Executive Officer of the Company, and Mr. Scherkus, who is a director and the President and Chief Operating Officer of the Company, do not receive any remuneration for their services as directors of the Company.
        The table below summarizes the annual retainers (annual retainers for the Chairs of the Board and other Committees are in addition to the base annual retainer) and attendance fees paid to the other directors during the year ended December 31, 2007.

 	 	Compensation during the year ended December 31, 2007 (1)
	
Annual board retainer (base)	 	C$55,000	
Annual retainer for Chairman of the Board	 	C$70,000	
Annual retainer for Chairman of the Audit Committee	 	C$25,000	
Annual retainer for Chairpersons of other Board Committees	 	C$10,000	
Board/Committee meeting attendance fee	 	C$  1,500	
(C$2,500 maximum per day, if more than one meeting)	 	 	

(1)
These amounts became effective as of July 1, 2007
        To align the interests of directors with those of shareholders, directors, other than Mr. Boyd and Mr. Scherkus, are required to own the equivalent of at least three years of their annual retainer fee in Agnico-Eagle's stock. Directors have a period of three years to achieve this ownership level either through open market purchases or through participation in Agnico-Eagle's Employee Share Purchase Plan. In addition, each director
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is eligible to be granted options under Agnico-Eagle's Stock Option Plan. Individual grants are determined annually by the Compensation Committee based on performance evaluations for each director.
        The table below sets out the fees paid and the options granted to each of the directors of Agnico-Eagle during the year ended December 31, 2007 and the number and the value of common shares held by each director as of March 14, 2008 based on the closing price of the common shares of C$79.00 on the TSX on such day:
Director Compensation and Share Ownership

 	 	Directors' fees and stock awards during the year ended December 31, 2007
	 	Aggregate common shares owned by directors and aggregate value thereof as of March 14, 2008
	
Director
	 	Director Fees
(C$)
	 	Option Grants (1)
	 	Aggregate Common Shares
	 	Aggregate Value of Common Shares
(C$)
	
Leanne M. Baker	 	79,750	 	25,000	 	3,500	 	276,500	
Douglas R. Beaumont	 	77,750	 	25,000	 	7,167	 	566,193	
Sean Boyd	 	N/A	 	100,000	 	164,232	 	12,974,328	
Bernard Kraft	 	72,000	 	25,000	 	5,104	 	403,216	
Mel Leiderman	 	93,500	 	25,000	 	3,000	 	237,000	
James D. Nasso	 	131,500	 	50,000	 	18,131	 	1,432,349	
Eberhard Scherkus	 	N/A	 	75,000	 	56,597	 	4,471,163	
Howard Stockford	 	73,625	 	25,000	 	3,529	 	278,791	
Pertti Voutilainen	 	71,000	 	25,000	 	7,000	 	553,000	

(1)
Black-Scholes value of each option on the date of grant (January 2, 2007) was C$12.76.
        During the year ended December 31, 2007, Agnico-Eagle issued a total of 4,148 common shares under its Employee Share Purchase Plan to the following directors as follows:

•	Mr. Boyd	 	1,318	
•	Mr. Scherkus	 	1,690	
•	Mr. Nasso	 	380	
•	Mr. Beaumont	 	253	
•	Mr. Kraft	 	253	
•	Mr. Stockford	 	254	
        Agnico-Eagle will provide healthcare benefits to Mr. Ernest Sheriff until May 2010, which is the fifth anniversary of his resignation from the Board.
        The following table sets out the attendance of each of the directors to the Board meetings and the Board committee meetings held in 2007.

Director
	 	Board Meetings Attended
	 	Committee Meetings Attended
	
Leanne M. Baker	 	9 of 10	 	9 of 9	
Douglas R. Beaumont	 	10 of 10	 	6 of 6	
Sean Boyd	 	10 of 10	 	N/A	
Bernard Kraft	 	10 of 10	 	11 of 11	
Mel Leiderman	 	10 of 10	 	9 of 9	
James D. Nasso	 	10 of 10	 	11 of 11	
Eberhard Scherkus	 	10 of 10	 	N/A	
Howard Stockford	 	10 of 10	 	5 of 5	
Pertti Voutilainen	 	10 of 10	 	7 of 7	
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Indebtedness of Directors, Executive Officers and Senior Officers
        There is no outstanding indebtedness to Agnico-Eagle by any of its officers or directors. Agnico-Eagle does not make loans to directors and officers under any circumstances.
Directors' and Officers' Liability Insurance
        The Company 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 Company. The premium for these policies for the period from December 31, 2007 to December 31, 2008 is C$1,028,000. The policies provide coverage of up to C$50 million per occurrence to a maximum of C$95 million per annum. There is no deductible for directors and officers and a $250,000 deductible for each claim made by the Company (C$1 million deductible for securities claims). The insurance applies in circumstances where the Company may not indemnify its directors and officers for their acts or omissions.
Board Practices
        The Board 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 Company 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 Company revises, from time to time, the charters for the Audit Committee, the Compensation Committee and the Corporate Governance Committee to reflect the new and evolving corporate governance requirements and best practices standards in Canada and the United States.
        The Board believes that effective corporate governance contributes to improved corporate performance and enhanced shareholder value. The Company's governance practices reflect the Board's assessment of the governance structure and process which can best serve to realize these objectives in the Company's particular circumstance. The Company's governance practices are subject to review and evaluation through the Board's Corporate Governance Committee to ensure that, as the Company's business evolves, changes in structure and process necessary to ensure continued good governance are identified and implemented.
        The Company is required under the rules of the Canadian Securities Administrators (the "CSA") to disclose its corporate governance practices and provide a description of the Company's system of corporate governance. This Statement of Corporate Governance Practices has been prepared by the Board's Corporate Governance Committee and approved by the Board.
        Additional information on each director standing for election, including other public company boards on which they serve and their attendance record for all Board and Committee meetings during 2007, can be found under "— Directors and Senior Management".
Director Independence
        The Board consists of nine directors. The Board has made an affirmative determination that seven of its nine current members are "independent" within the meaning of the CSA rules and the standards of the NYSE. With the exception of Mr. Boyd and Mr. Scherkus, 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 Company. In reaching this determination, the Board considered the circumstances and relationships with the Company and its affiliates of each of its directors. In determining that all directors except Mr. Boyd and Mr. Scherkus are independent, the Board took into consideration the fact that none of the remaining directors is an officer or employee of the Company or party to any material contract with the Company and that none receives remuneration from the Company in excess of directors' fees, employee share purchase plan grants and stock option grants. Mr. Boyd and Mr. Scherkus are considered related because they are officers of the Company. All directors, other than Mr. Boyd and Mr. Scherkus, also meet the independence standard as set out in SOX.
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        The Board regularly meets independently of management at the request of any director 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. The Board is scheduled to meet without management before or after each Board meeting. In addition, after each Board meeting held to consider interim and annual financial statements, the Board meets without management. In 2007, the Board met without management at each Board meeting, being ten separate occasions, including the four scheduled quarterly meetings.
        To promote the exercise of independent judgment by directors in considering transactions and agreements, any director or officer who has a material interest in the matter being considered would not be present for discussions relating to the matter and would not participate in any vote on the matter.
Chairman
        Mr. Nasso is the Chairman of the Board and Mr. Boyd is the Vice-Chairman and Chief Executive Officer of the Company. 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 that the offices of Chairman and Chief Executive Officer will be held by the same person.
        The Board has adopted a position description for the Chairman of the Board. The Chairman's role is to provide leadership to directors in discharging their duties and obligations as set out in the mandate of the Board. The specific responsibilities of the Chairman include providing advice, counsel and mentorship to the CEO, appointing the Chair of each of the Board's committees and promoting the delivery of information to the members of the Board on a timely basis to keep them fully apprised of all matters which are material to them at all times. The Chairman's responsibilities also include scheduling, overseeing and presiding over meetings of the Board and presiding over meetings of the Company's shareholders.
Board Mandate
        The Board's mandate is to provide stewardship of the Company and to oversee the management of the Company's business and affairs, to maintain its strength and integrity, to oversee the Company's strategic direction, its organization structure and succession planning of senior management and to perform any other duties required by law. The Board's strategic planning process consists of an annual review of the Company'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 Chief Executive Officer and advises management in the development of a corporate strategy to achieve those objectives. The Board also reviews the principal risks inherent in the Company's business, including environmental, industrial and financial risks, and assesses the systems to manage these risks. 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 holds management responsible for the development of long-term strategies for the Company. 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 Vice-Chairman and Chief Executive Officer, the President and Chief Operating Officer, the Senior Vice-President, Finance and Chief Financial Officer, Senior Vice-President, Corporate Development, Senior Vice-President, Exploration and Vice-President, Metallurgy and Marketing report to the Board at least every quarter on the Company's progress in the preceding quarter and on the strategic, operational and financial issues facing the Company.
        Management is authorized to act, without Board approval, on all ordinary course matters relating to the Company's business. Management seeks the Board's prior approval for significant changes in the Company's affairs such as major capital expenditures, financing arrangements and significant acquisitions and divestitures. Board approval is required for any venture outside of the Company'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
87

or policy. The Company'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 Company 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. The Board, directly and through its Audit Committee, also assesses the integrity of the Company's internal control and management information systems.
        The Board oversees the Company's approach to communications with shareholders and other stakeholders and approves specific communications initiatives from time to time. The Company 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 Company, as well as meeting with individual investors and other stakeholders. Senior management reports regularly to the Board on these matters. The Board reviews and approves the Company'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 Mandate is posted on the Company's website at www.agnico-eagle.com .
Position Descriptions
Chief Executive Officer
        The Board has adopted a position description for the Chief Executive Officer who has full responsibility for the day-to-day operation of the Company's business in accordance with the Company's strategic plan and current year operating and capital expenditure budgets as approved by the Board. In discharging his responsibility for the day-to-day operation of Agnico-Eagle's business, subject to the oversight by the Board, the Chief Executive Officer's specific responsibilities include:
•
providing leadership and direction to the other members of Agnico-Eagle's senior management team;

•
fostering a corporate culture that promotes ethical practices and encourages individual integrity;

•
maintaining a positive and ethical work climate that is conducive to attracting, retaining and motivating top-quality employees at all levels;

•
working with the Chairman in determining the matters and materials that should be presented to the Board;

•
together with the Chairman, developing and recommending to the Board a long-term strategy and vision for Agnico-Eagle that leads to enhancement of shareholder value;

•
developing and recommending to the Board annual business plans and budgets that support Agnico-Eagle's long-term strategy;

•
ensuring that the day-to-day business affairs of Agnico-Eagle are appropriately managed;

•
consistently striving to achieve Agnico-Eagle's financial and operating goals and objectives;

•
designing or supervising the design and implementation of effective disclosure and internal controls;

•
maintaining responsibility for the integrity of the financial reporting process;

•
seeking to secure for Agnico-Eagle a satisfactory competitive position within its industry;

•
ensuring that Agnico-Eagle has an effective management team below the level of the Chief Executive Officer and has an active plan for management development and succession;

•
ensuring, in cooperation with the Chairman and the Board, that there is an effective succession plan in place for the position of Chief Executive Officer; and
88

•
serving as the primary spokesperson for Agnico-Eagle.
        The Chief Executive Officer is to consult with the Chairman on matters of strategic significance to the Company and alert the Chairman on a timely basis of any material changes or events that may impact upon the risk profile, financial affairs or performance of the Company.
Chairs of Board Committees
        The Board has adopted written position descriptions for each of the Chairs of the Board's committees which include the Audit Committee, the Corporate Governance Committee, the Compensation Committee and the Health, Safety and Environment Committee. The role of each of the Chairs is to ensure the effective functioning of his or her committee and provide leadership to its members in discharging the mandate as set out in the committee's charter. The responsibilities of each Chair include, among others:
•
establishing procedures to govern his or her committee's work and ensure the full discharge of its duties;

•
chairing every meeting of his or her committee and encourage free and open discussion at such meetings;

•
reporting to the Board on behalf of his or her committee; and

•
attending every meeting of shareholders and responding to such questions from shareholders as may be put to the Chair of his or her committee.
        Each of the Chairs is also responsible for carrying out other duties as requested by the Board, depending on need and circumstances.
Orientation and Continuing Education
        Agnico-Eagle holds annual educational sessions with its directors and legal counsel to review and assess the Board's corporate governance policies. This allows new directors to become familiar with the corporate governance policies of Agnico-Eagle as they relate to its business.
Ethical Business Conduct
        The Board has adopted a Code of Business Conduct and Ethics which provides a framework for directors, officers and employees on the conduct and ethical decision-making integral to their work. In addition, the Board has adopted a Code of Business Conduct and Ethics for Consultants and Contractors. The Audit Committee is responsible for monitoring compliance with these codes of ethics and any waivers or amendments thereto can only be made by the Board or a Board committee. These codes are available on www.sedar.com .
        The Board has also adopted a Confidential Anonymous Complaint Reporting Policy which provides procedures for officers and employees who believe that a violation of the Code of Business Conduct and Ethics has occurred to report this violation on a confidential and anonymous basis. Complaints can be made internally to the General Counsel, Senior Vice-President, Legal and Corporate Secretary or the Senior Vice-President, Finance and Chief Financial Officer. Complaints can also be made anonymously by telephone, e-mail or postal letter through a hotline provided by an independent third party service provider. The General Counsel, Senior Vice-President, Legal and Corporate Secretary periodically prepares a written report to the Audit Committee regarding the complaints, if any, received through these procedures.
        The Board believes that providing a procedure for employees and officers to raise concerns about ethical conduct on an anonymous and confidential basis fosters a culture of ethical conduct within the Company.
Nomination of Directors
        The Corporate Governance Committee, which is comprised entirely of non-management and independent directors, is responsible for participating in the recruitment and recommendation of new nominees for appointment or election to the Board. When considering a potential candidate, the Corporate Governance Committee considers the qualities and skills that the Board, as a whole, should have and assesses the competencies and skills of the current members of the Board. Based on the talent already represented on the Board, the Corporate Governance Committee then identifies the specific skills, personal qualities or experiences
89

that a candidate should possess in light of the opportunities and risks facing the Company. The Corporate Governance Committee maintains a list of potential director candidates for its future consideration and may engage outside advisors to assist in identifying potential candidates. Potential candidates are screened to ensure that they possess the requisite qualities, including integrity, business judgment and experience, business or professional expertise, independence from management, international experience, financial literacy, excellent communications skills and the ability to work well in a team situation. The Corporate Governance Committee also considers the existing commitments of a potential candidate to ensure that such candidate will be able to fulfill his or her duties as a Board member.
Compensation
        Remuneration is paid to the Company'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. For a summary of remuneration paid to directors, please see "— Compensation of Directors and Other Information" and the description of the Compensation Committee below.
Board Committees
        The Board has four Committees: the Audit Committee, the Compensation Committee, the Corporate Governance Committee and the Health, Safety and Environment 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 Company's financial reports and information;

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

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

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

•
the fairness of related party agreements and arrangements between the Company 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 proxy circular in accordance with applicable laws or the rules of applicable securities regulatory authorities.
        The Board has adopted an Audit Committee charter, which provides that each member of the Audit Committee must be unrelated to and independent from the Company as determined by the Board in accordance with the applicable requirements of the laws governing the Company, the applicable stock exchanges on which the Company's securities are listed and applicable securities regulatory authorities. In addition, each member must be financially literate and at least one member of the Audit Committee must be an audit committee financial expert, as the term is defined in SOX. The Audit Committee must pre-approve all audit and permitted non-audit engagements to be provided by the external auditors to the Company.
        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 Company'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 Company's financial statements and any litigation, claim or other contingency that could have a material effect upon the Company's financial statements. In addition, the Audit Committee is responsible for assessing management's programs and policies relating to
90

the adequacy and effectiveness of internal controls over the Company's accounting and financial systems. The Audit Committee reviews and discusses 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 recommending to the Board the external auditor to be nominated for shareholder approval who will be responsible for preparing audited financial statements and completing other audit, review or attest services. The Audit Committee also recommends to the Board the compensation to be paid to the external auditor and directly oversees its work. The Company's external auditor reports directly to the Audit Committee. The Audit Committee reports directly to the Board of Directors.
        The Audit Committee is entitled to retain (at the Company's expense) and determine the compensation of any independent counsel, accountants or other advisors to assist the Audit Committee in its oversight responsibilities.
        The Audit Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Mr. Leiderman (Chair), Dr. Baker, Mr. Kraft and Mr. Nasso), each of whom is financially literate, as the term is used in the CSA's Multilateral Instrument 52-110 — Audit Committees. In addition, Mr. Leiderman and Mr. Kraft are chartered accountants; Mr. Leiderman is currently active in private practice and Mr. Kraft is recently retired and, as such, qualify as audit committee financial experts, as the term is used in SOX. The education and experience of each member of the Audit Committee is set out under "— Directors and Senior Management". Fees paid to the Company's Auditors, Ernst & Young LLP, are set out under "Item 10. Additional Information — Audit Fees". The Audit Committee met six times in 2007.
Compensation Committee
        The Compensation Committee is responsible for:
•
recommending to the Board policies relating to compensation of the Company's executive officers;

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

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

•
administering the Company'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 Company's compensation and benefits programs generally.

        The Compensation Committee reports directly to the Board. The Charter of the Compensation Committee provides that each member of the Compensation Committee must be unrelated and independent.
        The Compensation Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Dr. Baker (Chair), Mr. Beaumont, Mr. Leiderman and Mr. Stockford). The Compensation Committee met three times in 2007.
Corporate Governance Committee
        The Corporate Governance Committee is responsible for:
•
evaluating the Company's governance practices;

•
developing its response to the Company's Statement of Corporate Governance and recommending changes to the Company'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 and of each committee of the Board and recommending any changes;
91

•
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 independent directors; and

•
participating in the recruitment and recommendation of new nominees for appointment or election to the Board.
        The Corporate Governance Committee also provides a forum for a discussion of matters not readily discussed in a full Board meeting. The Charter of the Corporate Governance Committee provides that each member of the Corporate Governance Committee must be independent, as such term is defined in the CSA rules.
        The Corporate Governance Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Mr. Beaumont (Chair), Mr. Kraft, Mr. Nasso and Mr. Voutilainen). The Corporate Governance Committee met three times in 2007.
Health, Safety and Environment Committee
        The Health, Safety and Environment Committee is responsible for:
•
monitoring and reviewing health, safety and environmental policies, principles, practices and processes;

•
overseeing health, safety and environmental performance; and

•
monitoring and reviewing current and future regulatory issues relating to health, safety and the environment.
        The Health, Safety and Environment Committee reports directly to the Board and provides a forum to review health, safety and environmental issues in a more thorough and detailed manner than could be adopted by the full Board. The Health, Safety and Environment Committee Charter provides that a majority of the members of the Committee be unrelated and independent.
        The Health, Safety and Environment Committee is comprised of three outside directors who are unrelated to and independent from the Company (currently Howard Stockford (Chair), Mr. Nasso and Mr. Voutilainen) and one non-executive director (Mr. Scherkus, President and COO of the Company). The Health, Safety and Environment Committee met two times in 2007.
Assessment of Directors
        The Company's Corporate Governance Committee (see description of Corporate Governance Committee above) 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.
        Each of the directors completes a detailed annual assessment questionnaire on the Board and Board Committees. The assessment addresses performance of the Board, each Board committee and individual directors, including through a peer to peer evaluation. A broad range of topics is covered such as Board and Board committee structure and composition, succession planning, risk management, director competencies and Board processes and effectiveness. The assessments help identify opportunities for continuing Board and director development and also forms the basis of continuing Board participation.
Employees
        As of December 31, 2007, the Company employed 2,425 employees; 1,303 permanent employees and 1,112 contractors of which 670 permanent employees were employed at LaRonde, 77 at Lapa, 177 at Goldex, 91 at Pinos Altos (Mexico), 60 at Kittila (Finland), 44 in the Exploration group worldwide, 56 for the Meadowbank project in Vancouver and Baker Lake, 85 at the regional technical office in Abitibi and 53 in Toronto. The number of permanent employees employed by the Company at the end of 2007, 2006 and 2005 were 1,303, 933 and 789, respectively.
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Share Ownership
        As of March 14, 2008, officers and directors as a group (21 persons) beneficially owned or controlled (excluding options to purchase 2,923,150 common shares, of which 1,243,775 are currently exercisable and 1,679,375 are currently unexercisable) an aggregate of 322,718 common shares or about 0.2% of the 143,507,606 issued and outstanding common shares. See also "— Directors, Senior Management and Employees — Compensation of Officers".
Security Ownership of Directors and Executive Officers
        The following table sets forth certain information concerning the direct and beneficial ownership as at March 14, 2008 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 (C$)
	 	Expiry Date
	
Leanne M. Baker	 	3,500	 	75,000	 	35,000	 	C$54.42/US$54.63	 	1/2/2013	
Director	 	 	 	 	 	25,000	 	C$48.09/US$41.24	 	1/3/2012	
 	 	 	 	 	 	7,500	 	C$23.02/US$19.76	 	1/2/2011	
 	 	 	 	 	 	7,500	 	C$16.89/US$13.72	 	12/13/2009	

Douglas R. Beaumont	
 	
7,167	
 	
82,000	
 	
35,000	
 	
54.42	
 	
1/2/2013	
Director	 	 	 	 	 	25,000	 	48.09	 	1/2/2012	
 	 	 	 	 	 	7,500	 	23.02	 	1/3/2011	
 	 	 	 	 	 	7,500	 	16.89	 	12/13/2009	
 	 	 	 	 	 	7,000	 	10.40	 	1/5/2010	

Sean Boyd	
 	
164,232	
 	
365,000	
 	
200,000	
 	
54.42	
 	
1/2/2013	
Director, Vice Chairman	 	 	 	 	 	100,000	 	48.09	 	1/2/2012	
and Chief Executive Officer	 	 	 	 	 	65,000	 	23.02	 	1/3/2011	

Bernard Kraft	
 	
5,104	
 	
55,625	
 	
26,250	
 	
54.42	
 	
1/2/2013	
Director	 	 	 	 	 	12,500	 	48.09	 	1/3/2011	
 	 	 	 	 	 	1,875	 	23.02	 	1/3/2011	
 	 	 	 	 	 	15,000	 	10.40	 	1/5/2010	

Mel Leiderman	
 	
3,000	
 	
65,000	
 	
35,000	
 	
54.42	
 	
1/2/2013	
Director	 	 	 	 	 	25,000	 	48.09	 	1/2/2012	
 	 	 	 	 	 	5,000	 	23.02	 	1/3/2011	

James D. Nasso	
 	
18,131	
 	
91,875	
 	
65,000	
 	
54.42	
 	
1/3/2013	
Director and Chairman of	 	 	 	 	 	25,000	 	48.09	 	1/2/2012	
the Board	 	 	 	 	 	1,875	 	23.02	 	1/3/2011	

Eberhard Scherkus	
 	
56,597	
 	
303,000	
 	
125,000	
 	
54.42	
 	
1/2/2013	
Director, President and	 	 	 	 	 	75,000	 	48.09	 	1/2/2012	
Chief Operating Officer	 	 	 	 	 	75,000	 	23.02	 	1/3/2011	
 	 	 	 	 	 	28,000	 	16.69	 	1/12/2009	

Howard Stockford	
 	
3,529	
 	
72,000	
 	
35,000	
 	
54.42	
 	
1/2/2013	
Director	 	 	 	 	 	25,000	 	48.09	 	1/2/2012	
 	 	 	 	 	 	4,500	 	14.67	 	5/27/2010	
 	 	 	 	 	 	7,500	 	23.02	 	1/3/2011	

Pertti Voutilainen	
 	
7,000	
 	
68,000	
 	
35,000	
 	
54.42	
 	
1/2/2013	
Director	 	 	 	 	 	25,000	 	48.09	 	1/2/2012	
 	 	 	 	 	 	8,000	 	23.02	 	1/3/2011	

93

David Garofalo	
 	
23,191	
 	
137,500	
 	
75,000	
 	
54.42	
 	
1/2/2013	
Senior Vice President,	 	 	 	 	 	50,000	 	48.09	 	1/2/2012	
Finance and	 	 	 	 	 	12,500	 	23.02	 	1/3/2011	
Chief Financial Officer	 	 	 	 	 	 	 	 	 	 	

Alain Blackburn	
 	
1,904	
 	
150,000	
 	
75,000	
 	
54.42	
 	
1/2/2013	
Senior Vice President,	 	 	 	 	 	50,000	 	48.09	 	1/2/2012	
Exploration	 	 	 	 	 	25,000	 	23.02	 	1/3/2011	

R. Gregory Laing	
 	
2,247	
 	
172,500	
 	
60,000	
 	
54.42	
 	
1/2/2013	
General Counsel,	 	 	 	 	 	50,000	 	48.09	 	1/2/2012	
Senior Vice President,	 	 	 	 	 	25,000	 	23.02	 	1/3/2011	
Legal and Corporate	 	 	 	 	 	37,500	 	15.96	 	10/26/2010	
Secretary	 	 	 	 	 	 	 	 	 	 	

Donald G. Allan	
 	
6,106	
 	
205,000	
 	
60,000	
 	
54.42	
 	
1/2/2013	
Senior Vice President,	 	 	 	 	 	50,000	 	48.09	 	1/2/2012	
Corporate Development	 	 	 	 	 	50,000	 	23.02	 	1/3/2011	
 	 	 	 	 	 	40,000	 	16.89	 	12/13/2009	
 	 	 	 	 	 	5,000	 	16.69	 	1/12/2009	

Patrice Gilbert	
 	
627	
 	
113,000	
 	
50,000	
 	
54.42	
 	
1/2/2013	
Vice President,	 	 	 	 	 	63,000	 	48.09	 	1/2/2012	
Human Resources	 	 	 	 	 	 	 	 	 	 	

Louise Grondin	
 	
1,468	
 	
96,650	
 	
50,000	
 	
54.42	
 	
1/2/2013	
Vice President,	 	 	 	 	 	10,000	 	48.09	 	1/2/2012	
Environment	 	 	 	 	 	30,000	 	39.18	 	5/8/2012	
 	 	 	 	 	 	6,650	 	23.02	 	1/3/2011	

Ingmar Haga	
 	
923	
 	
140,000	
 	
50,000	
 	
54.42	
 	
1/2/2013	
Vice President,	 	 	 	 	 	40,000	 	48.09	 	1/2/2012	
Europe	 	 	 	 	 	50,000	 	27.71	 	2/16/2011	

Tim Haldane	
 	
2,136	
 	
115,000	
 	
50,000	
 	
54.42	
 	
1/2/2013	
Vice President,	 	 	 	 	 	40,000	 	48.09	 	1/2/2012	
Latin America	 	 	 	 	 	25,000	 	31.70	 	6/21/2011	

Marc Legault	
 	
4,893	
 	
143,000	
 	
50,000	
 	
54.42	
 	
1/2/2013	
Vice President,	 	 	 	 	 	30,000	 	48.09	 	1/2/2012	
Project Evaluation	 	 	 	 	 	35,000	 	39.18	 	5/8/2012	
 	 	 	 	 	 	20,000	 	23.02	 	1/3/2011	
 	 	 	 	 	 	8,000	 	16.89	 	12/13/2009	

Daniel Racine	
 	
6,880	
 	
208,000	
 	
50,000	
 	
54.42	
 	
1/2/2013	
Vice President,	 	 	 	 	 	40,000	 	48.09	 	1/2/2012	
Operations	 	 	 	 	 	35,000	 	39.18	 	5/8/2012	
 	 	 	 	 	 	30,000	 	23.02	 	1/3/2011	
 	 	 	 	 	 	20,000	 	16.89	 	1/12/2009	
 	 	 	 	 	 	5,000	 	16.69	 	1/12/2009	
 	 	 	 	 	 	10,000	 	15.96	 	10/26/2010	
 	 	 	 	 	 	18,000	 	15.60	 	6/20/2010	

Jean Robitaille	
 	
3,406	
 	
160,000	
 	
50,000	
 	
54.42	
 	
1/2/2013	
Vice President,	 	 	 	 	 	40,000	 	48.09	 	1/2/2012	
Metallurgy	 	 	 	 	 	35,000	 	23.02	 	1/3/2011	
 	 	 	 	 	 	35,000	 	16.89	 	12/13/2009	
94

David Smith	
 	
677	
 	
105,000	
 	
50,000	
 	
54.42	
 	
1/2/2013	
Vice President,	 	 	 	 	 	40,000	 	48.09	 	1/2/2012	
Investor Relations	 	 	 	 	 	10,000	 	23.02	 	1/3/2011	
 	 	 	 	 	 	5,000	 	16.05	 	1/24/2010	

Notes:
(1)
As of December 31, 2007. 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 0.2% of the issued and outstanding common shares of the Company.

(2)
As of December 31, 2007.
ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major Shareholders
        To the knowledge of the directors and senior officers of the Company, as of March 14, 2008, no 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 March 14, 2008, there were 4,086 holders of record of Agnico-Eagle's 143,507,606 outstanding common shares, of which 3,425 holders of record were in the United States and held 47,165,398 common shares or about 32.87% of the outstanding common shares.
        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
        Prior to December 31, 2002, the Company loaned C$4,034,406 to Contact to fund ongoing exploration and operating activity (the "Contact Loan"). The rate of interest on the Contact Loan was 8% per annum; however, the Company waived the interest on the Contact Loan from May 13, 2002 until September 30, 2006. The largest amount outstanding under the Contact Loan was C$4,009,826 during 2007 and, as discussed further below, the Contact Loan was repaid in full on February 12, 2007.
        In September 2006 the Company tendered its interest in Contact to Stornoway in connection with a share exchange take-over bid made by Stornoway for Contact. The Company acquired 4,968,747 common shares of Stornoway through the tender of its entire interest (approximately 31%) in Contact to this offer. On January 17, 2007, Stornoway completed its acquisition of Contact by means of a compulsory acquisition. See "Item 4. Information on the Company — History and Development of the Company". The Contact Loan was repaid in full under a note assignment agreement dated February 12, 2007 between the Company, Contact and Stornoway and the Company was issued 3,207,861 common shares of Stornoway in satisfaction principal and accrued interest under the Contact Loan. Amounts repaid under the note assignment agreement included C$22,237 in respect of interest accrued in 2007. The book value of the Contact Loan on the Company's consolidated financial statements at December 31, 2007 was nil. In addition, on March 16, 2007, the Company subscribed for C$10 million of 12% unsecured convertible debentures issued by Stornoway due 2009.
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ITEM 8.    FINANCIAL INFORMATION
        The consolidated financial statements furnished pursuant to Item 18 are presented in accordance with US GAAP.
        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 TSX and in the United States on the NYSE. Prior to their expiry on November 14, 2007, the Company's share purchase warrants (the "Warrants") traded 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 five fiscal years ended December 31, 2007 and for each quarter during the two fiscal years ended December 31, 2007.

 	 	TSX (C$)
	 	NYSE ($)
	
 	 	High
	 	Low
	 	Average Daily Volume
	 	High
	 	Low
	 	Average Daily Volume
	
2003	 	24.94	 	13.40	 	559,622	 	16.47	 	9.72	 	986,285	
2004	 	19.95	 	15.50	 	355,830	 	16.73	 	11.47	 	728,385	
2005	 	23.13	 	13.63	 	366,937	 	19.86	 	10.80	 	774,393	
2006	 	52.03	 	23.31	 	911,132	 	45.67	 	19.94	 	2,006,680	
2007	 	55.86	 	35.70	 	913,173	 	59.45	 	33.25	 	2,076,082	

2006	

 	

 	

 	

 	
First Quarter	 	35.63	 	23.31	 	880,397	 	30.51	 	19.94	 	1,769,548	
Second Quarter	 	45.65	 	28.33	 	1,037,849	 	41.70	 	25.49	 	2,240,933	
Third Quarter	 	45.56	 	32.64	 	866,023	 	41.20	 	29.25	 	2,587,921	
Fourth Quarter	 	52.03	 	30.72	 	859,208	 	45.67	 	27.24	 	2,176,860	

2007	

 	

 	

 	

 	
First Quarter	 	49.51	 	40.39	 	967,603	 	42.36	 	34.48	 	2,331,885	
Second Quarter	 	44.60	 	35.70	 	838,994	 	39.39	 	33.25	 	1,660,821	
Third Quarter	 	52.84	 	36.68	 	1,058,677	 	52.43	 	34.24	 	2,325,611	
Fourth Quarter	 	55.86	 	45.85	 	788,863	 	59.45	 	45.55	 	1,995,413	
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        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 12 months.

 	 	TSX (C$)
	 	NYSE ($)
	
 	 	High
	 	Low
	 	Average Daily Volume
	 	High
	 	Low
	 	Average Daily Volume
	
2007	 	 	 	 	 	 	 	 	 	 	 	 	
March	 	45.75	 	40.39	 	850,670	 	39.04	 	34.48	 	2,234,123	
April	 	44.60	 	39.00	 	744,492	 	39.39	 	35.00	 	1,719,510	
May	 	40.98	 	35.70	 	862,996	 	37.00	 	33.25	 	1,762,459	
June	 	41.01	 	36.00	 	903,851	 	38.55	 	33.67	 	1,498,448	
July	 	47.42	 	38.92	 	965,110	 	45.24	 	36.82	 	2,118,414	
August	 	48.70	 	36.68	 	959,191	 	46.10	 	34.24	 	2,445,074	
September	 	52.84	 	46.02	 	1,227,289	 	52.43	 	43.75	 	2,410,005	
October	 	55.86	 	47.52	 	917,633	 	57.34	 	47.53	 	2,052,017	
November	 	54.06	 	46.36	 	742,727	 	59.45	 	46.81	 	2,360,957	
December	 	54.46	 	45.85	 	693,183	 	54.84	 	45.55	 	1,546,495	

2008	

 	

 	

 	

 	
January	 	64.54	 	54.00	 	1,227,219	 	65.04	 	52.81	 	3,532,533	
February	 	69.00	 	58.80	 	791,605	 	70.55	 	58.41	 	2,511,195	
March (to March 14)	 	79.60	 	68.81	 	1,231,956	 	80.48	 	69.02	 	3,897,115	
        On March 14, 2008 the closing price of the common shares was C$79.00 on the TSX and $80.05 on the NYSE. The registrar and transfer agent for the common shares is Computershare Trust Company of Canada, Toronto, Ontario.
        On February 15, 2006 (the "Redemption Date"), the Company fully redeemed its $143.75 million principal amount, 4.50% convertible subordinated debentures due February 15, 2012 (the "Debentures") for common shares of the Company. The Company issued an aggregate of 10,259,068 common shares in satisfaction of its obligations under the Debentures, of which 70,520 common shares were issued on the redemption of $1,111,000 principal amount of Debentures that were redeemed and 10,188,548 common shares were issued on the conversion of $142,639,000 of Debentures that occurred prior to the Redemption Date. The Company paid cash to satisfy interest that had accrued up to and including February 15, 2006.
        The Warrants expired on November 14, 2007 (the "Expiry Date"). Prior to expiry, holders exercised 6,873,190 Warrants and the Company issued 6,873,190 common shares and received proceeds of $130,640,561 in connection with the exercise of such Warrants.
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        The following table sets forth the high and low sale prices for the Warrants on the TSX and Nasdaq for each of the five fiscal years ended December 31, 2007 and for each quarter during the two fiscal years ended December 31, 2007. The Warrants traded in US dollars on both the TSX and the Nasdaq.

 	 	TSX ($)
	 	Nasdaq ($)
	
 	 	High
	 	Low
	 	Average Daily Volume
	 	High
	 	Low
	 	Average Daily Volume
	
2003	 	5.80	 	2.11	 	16,488	 	5.96	 	2.20	 	17,888	
2004	 	4.00	 	2.50	 	7,498	 	4.00	 	2.50	 	13,729	
2005	 	4.50	 	1.18	 	2,426	 	4.75	 	1.20	 	15,224	
2006	 	27.00	 	4.95	 	7,737	 	27.49	 	4.69	 	44,284	
2007	 	39.64	 	14.50	 	16,722	 	40.00	 	14.90	 	19,087	

2006	

 	

 	

 	

 	
First Quarter	 	13.25	 	4.95	 	3,711	 	13.60	 	4.69	 	56,508	
Second Quarter	 	23.71	 	10.5	 	7,491	 	24.00	 	10.27	 	48,441	
Third Quarter	 	23.75	 	13.00	 	13,743	 	23.75	 	12.86	 	43,090	
Fourth Quarter	 	27.00	 	11.25	 	6,138	 	27.49	 	11.13	 	29,290	

2007	

 	

 	

 	

 	
First Quarter	 	24.04	 	16.47	 	3,093	 	24.30	 	16.85	 	17,836	
Second Quarter	 	20.79	 	15.21	 	3,932	 	20.80	 	14.90	 	16,504	
Third Quarter	 	33.00	 	14.50	 	6,995	 	33.50	 	15.69	 	21,279	
Fourth Quarter (to November 14)	 	39.64	 	29.25	 	70,940	 	40.00	 	27.74	 	21,553	
        The following table sets forth the monthly high and low sales prices for the Warrants on the TSX and the Nasdaq for the period from April 1, 2007 to the Expiry Date.

 	 	TSX ($)
	 	Nasdaq ($)
	
 	 	High
	 	Low
	 	Average Daily Volume
	 	High
	 	Low
	 	Average Daily Volume
	
2007	 	 	 	 	 	 	 	 	 	 	 	 	
April	 	20.79	 	16.97	 	1,772	 	20.80	 	16.95	 	14,620	
May	 	18.36	 	15.21	 	4,605	 	18.41	 	14.90	 	18,195	
June	 	19.74	 	15.52	 	5,419	 	19.76	 	15.33	 	16,695	
July	 	26.75	 	18.00	 	5,995	 	26.42	 	18.00	 	24,219	
August	 	27.00	 	14.50	 	9,686	 	27.26	 	15.69	 	22,570	
September	 	33.00	 	25.32	 	5,305	 	33.50	 	25.17	 	17,047	
October	 	38.00	 	29.87	 	37,800	 	38.62	 	28.20	 	24,265	
November (to November 14, 2007)	 	39.64	 	29.21	 	104,080	 	40.00	 	27.74	 	18,840	
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. For more information, see the Articles of Amendment incorporated by reference as an exhibit to this Form 20-F.
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
98

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 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.
Retirement of Directors
        Effective as of February 21, 2007, the Board discontinued the mandatory retirement policy for directors based solely on age. Due in part to the recently implemented practice of conducting annual Board, Committee and individual director evaluations, the Board approved and adopted a resignation policy primarily based on the directors' performance, commitment, skills and experience. As set out in greater detail under "Item 6. Directors, Senior Management and Employees — Assessment of Directors", each of the directors' performance will continue to be evaluated annually.
Directors' Share Ownership
        As of March 17, 2004, directors, other than Mr. Boyd and Mr. Scherkus, are required to own the equivalent of at least three years of their annual retainer fee in the Company's stock. Directors have a period of three years to achieve this ownership level either through open market purchases or through participation in the Company's incentive share purchase plan.
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
99

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 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.
Majority Voting Policy
        As part of its ongoing review of corporate governance practices, on February 20, 2008, the Board of Directors adopted a policy providing that in an uncontested election of directors, any nominee who receives a greater number of votes "withheld" than votes "for" will tender his or her resignation to the Chairman of the Board of Directors promptly following the shareholders' meeting. The Corporate Governance Committee will consider the offer of resignation and will make a recommendation to the Board of Directors on whether to accept it. In considering whether or not to accept the resignation, the Corporate Governance Committee will consider all factors deemed relevant by members of such Committee. The Corporate Governance Committee will be expected to accept the resignation except in situations where the considerations would warrant the applicable director continuing to serve on the Board of Directors. The Board of Directors will make its final decision and announce it in a press release within 90 days following the shareholders' meeting. A director who tenders his or her resignation pursuant to this policy will not participate in any meeting of the Board of Directors or the Corporate Governance Committee at which the resignation is considered.
Disclosure of Share Ownership
        The Securities Act (Ontario) provides that a person or company that beneficially owns, directly or indirectly, voting securities of an issuer or that exercises control or direction over voting securities of an issuer or a combination of both, carrying more than 10% of the voting rights attached to all the issuer's outstanding voting securities (an "insider") must, within 10 days of becoming an insider, file a report in the required form effective the date on which the person became an insider, disclosing any direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer. The Securities Act (Ontario) also provides for the filing of a report by an insider of a reporting issuer who acquires or transfers securities of the issuer. This report must be filed within 10 days after the end of the month in which the acquisition or transfer takes place.
        The Securities Act (Ontario) also provides that a person or company that acquires (whether or not by way of a take-over bid, issuer bid or offer to acquire) beneficial ownership of voting or equity securities or securities convertible into voting or equity securities of a reporting issuer that, together with previously held securities brings the total holdings of such holder to 10% or more of the outstanding securities of that class, must (a) issue and file forthwith a news release containing the prescribed information and (b) file a report within two business days containing the same information set out in the news release. The acquiring person or company must also issue a press release and file a report each time it acquires an additional 2% or more of the outstanding securities of the same class and every time there is a "material change" to the contents of the news release and report previously issued and filed.
        The rules in the United States governing the ownership threshold above which shareholder ownership must be disclosed are more stringent than those discussed above. Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") imposes reporting requirements on persons who acquire beneficial ownership
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(as such term is defined in Rule 13d-3 under the Exchange Act) of more than 5% of a class of an equity security registered under Section 12 of the Exchange Act. In general, such persons must file, within 10 days after such acquisition, a report of beneficial ownership with the SEC containing the information prescribed by the regulations under Section 13 of the Exchange Act. This information is also required to be sent to the issuer of the securities and to each exchange where the securities are traded.
Material Contracts
        The Company believes the following contracts constitute the only material contracts to which it is a party.
Credit Agreement
        The Company entered into a credit agreement on January 10, 2008 (the "Facility") with a group of financial institutions providing for an unsecured revolving bank credit facility that replaced the Company's previous secured revolving bank credit facility. The amount available under the Facility is $300 million and the Facility matures and all indebtedness thereunder is due and payable on January 10, 2013. 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 additional one-year terms. The credit facility is available in multiple currencies through prime rate, base rate and LIBOR advances, bankers' acceptances and letters of credit, priced at the applicable rate plus an applicable margin that ranges from 1.00% to 1.60% depending on certain financial ratios. The lenders under the Facility are each paid a commitment fee at a rate that ranges from 0.375% to 0.55%, depending on the financial ratios. Payment and performance of the Company's obligations under the Facility are guaranteed by certain material subsidiaries of the Company (together with the Company, each an "Obligor").
        The Facility contains covenants that restrict, among other things the ability of an Obligor to:
•
incur additional indebtedness;

•
pay or declare dividends or make other restricted distributions or payments in respect of any shares of the Company's equity securities after a default or an event of default that is continuing;

•
make sales or other dispositions of material assets;

•
permit the creation of liens on its existing or future assets;

•
enter into transactions with affiliates other than the Obligors, except on arm's length terms;

•
make any loans to or investments in businesses other than those in the mining business or a business ancillary to the mining business;

•
amalgamate or otherwise transfer its assets; and

•
carry on a business other than a mining business or a business ancillary to the mining business.
        The Company is also required to maintain certain financial ratios as well as a minimum tangible net worth.
        Events of default under the Facility include, among other things:
•
the failure to pay principal when due and payable or interest, fees or other amounts payable within five business days of such amounts becoming due and payable;

•
the breach by the Company of any financial covenant;

•
the breach by any Obligor of any other term, covenant or other agreement or the inaccuracy of any representation or warranty that is not cured within 30 business days after written notice of the breach has been given to the Company;

•
a default in any payment of principal or interest or in the observance or performance of any other agreement or condition of other indebtedness of Obligors in excess of $50 million, or the occurrence or existence of any other event or condition resulting in an acceleration of such indebtedness;

•
a change in control of the Company;
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•
judgments against any Obligors in excess of $20 million that are not voided or provided for within 45 days;

•
the seizure of property of any Obligor in excess of $20 million that is not contested or corrected within 60 days; and

•
various events relating to the bankruptcy or insolvency or winding-up, liquidation or dissolution or cessation of business of any Obligor.
        As at March 14, 2008, there were no amounts of principal or interest outstanding under the Facility; however, outstanding letters of credit issued as security for pension and environmental obligations have decreased the amount available for future drawdowns under the Facility to approximately $280 million.
Stock Option Plan
        The Company has a Stock Option Plan for directors, officers, employees and service providers to the Company. See "Item 6. Directors, Senior Management and Employees — Compensation of Officers — Stock Option Plan". A copy of the Stock Option Plan is incorporated by reference as an exhibit to this Form 20-F.
Incentive Share Purchase Plan
        The Company has an Incentive Share Purchase Plan for directors, officers and full-time employees of the Company. See "Item 6. Directors, Senior Management and Employees — Compensation of Officers — Incentive Share Purchase Plan". A copy of the Incentive Share Purchase Plan is incorporated as an exhibit to this Form 20-F.
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 "Canadian Federal Income Tax Considerations" 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.
Corporate Governance
        The Company is subject to a variety of corporate governance guidelines and requirements enacted by the TSX, the Canadian Securities Administrators, the NYSE and by the SEC under its rules and those mandated by SOX. Today, the Company meets and often exceeds not only corporate governance legal requirements in Canada and the United States, but also the best practices recommended by securities regulators. The Company is listed on the NYSE and, although the Company is not required to comply with all of the NYSE corporate governance requirements to which the Company would be subject if the Company were a U.S. corporation, the Company's governance practices differ significantly in only one respect from those required of U.S. domestic issuers. The Company complies with the TSX rules. The TSX rules require shareholder approval of share compensation arrangements involving new issuances of shares, and of certain amendments to such arrangements, but do not require such approval if the compensation arrangements involve only shares purchased by the company in the open market.
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        The NYSE rules for U.S. domestic issuers require approval of all equity compensation plans regardless of whether new issuances, treasury shares or shares that the Company has purchased in the open market are used.
        A certificate of Sean Boyd, the Chief Executive Officer of the Company, will be submitted to the NYSE on March 19, 2008 certifying that he was not aware of any violation by the Company of the NYSE's corporate governance listing standards.
Canadian Federal Income Tax Considerations
        The following is a brief summary of some of the principal Canadian federal income tax consequences generally applicable 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) that are not taxed as corporations pursuant to the provisions of the Internal Revenue Code of 1986, as amended, do not qualify as resident in the United States for purposes of the Treaty. However, once a proposed amendment to the Treaty comes into effect, a member of such an LLC that is itself resident in the United States for such purposes generally will be considered for purposes of the Treaty to have derived dividends or gains that in fact were derived by the LLC.
        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 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 at a time that the Company's shares are listed on the TSX or the NYSE unless (i) at any time in the 60-month 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, persons with whom the U.S. holder did not deal at arm's length or the U.S. holder and such persons 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.
United States Federal Income Tax Considerations
        The following is a brief summary of some of the principal U.S. federal income tax consequences to a holder of common shares of the Company, who deals at arm's length with the Company, holds the shares as a capital asset and who, for the purposes of the Internal Revenue Code of 1986, as amended (the "Code") and the Treaty, is at all relevant times a U.S Stockholder (as defined below).
        As used herein, the term "U.S. Stockholder" means a holder of common shares of the Company who (for United States federal income tax purposes): (a) is a citizen or resident of the United States; (b) is a corporation created or organized in or under the laws of the United States or of any state therein; (c) is an estate the income of which is subject to United States federal income taxation regardless of its source; or (d) is a trust if either (i) such trust has validly elected to be treated as a U.S. person or (ii) is subject to both the primary
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supervision of a U.S. court and the control of one or more U.S. persons with respect to all substantial trust decisions.
        This summary is based on the Code, final and temporary Treasury Regulations promulgated thereunder, United States court decisions, published rulings and administrative positions of the U.S. Internal Revenue Service (the "IRS") interpreting the Code, and the Treaty, as applicable and, in each case, as in effect and available as of the date of this Form 20-F. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis and could affect the United States federal income tax consequences described in this summary. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive basis.
        This summary does not describe United States federal estate and gift tax considerations, nor does it describe regional, state and local tax considerations within the United States. The following summary does not purport to be a comprehensive description of all of the possible tax considerations that may be relevant to a decision to purchase, hold or dispose of the common shares. In particular, this summary only deals with a holder who will hold the common shares as a capital asset and who does not own, directly or indirectly, 10% or more of our voting shares or of any of our direct or indirect subsidiaries. This summary does not address all of the tax consequences that may be relevant to holders in light of their particular circumstances, including but not limited to application of alternative minimum tax or rules applicable to taxpayers in special circumstances. Special rules may apply, for instance, to tax-exempt entities, banks, insurance companies, S corporations, dealers in securities or currencies, persons who will hold common shares as a position in a "straddle", hedge, constructive sale, or "conversion transaction" for U.S. tax purposes, persons who have a "functional currency" other than the U.S. dollar, or persons subject to U.S. taxation as expatriates. Furthermore, in general, this discussion does not address the tax consequences applicable to holders that are treated as partnerships or other pass-through entities for U.S. federal income tax purposes.
        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. Stockholder and no representation is made with respect to the U.S. income tax consequences to any particular person. Accordingly, U.S. Stockholders are advised to consult their own tax advisors with respect to their particular circumstances.
Dividends
        For United States federal income tax purposes, the gross amount of all distributions, if any, paid with respect to the common shares out of current or accumulated earnings and profits ("E&P") to a U.S. Stockholder generally will be treated as foreign source dividend income to such holder, even though the U.S. Stockholder generally receives a portion of the gross amount (after giving effect to the Canadian withholding tax as potentially reduced by the Treaty). United States corporations that hold the common shares generally will not be entitled to the dividends received deduction that applies to dividends received from United States corporations. To the extent a distribution exceeds E&P, it will be treated first as a return of capital to the extent of the U.S. Stockholder's adjusted basis and then as gain from the sale of a capital asset.
        In the case of certain non-corporate U.S. Stockholders including individuals and certain estates and trusts, gains recognized prior to 2011 from the sale of a capital asset held for longer than twelve months are taxable at a maximum federal income tax rate of 15%, while gains from the sale of a capital asset that does not meet such holding period are taxable at the rates applicable to ordinary income. Certain dividends paid prior to 2011 to certain non-corporate U.S. Stockholders including individuals and certain estates and trusts generally are also subject to the 15% maximum rate. The reduced tax rates generally are available only with respect to dividends received from U.S. corporations, and from non-U.S. corporations (a) that are eligible for the benefits of a comprehensive income tax treaty with the United States that the U.S. Treasury Department determines to be satisfactory and that contains an exchange of information program, or (b) whose stock is readily tradeable on an established securities market in the United States. In addition, the reduced tax rates are not available with respect to dividends received from a foreign corporation that was a passive foreign investment company in either the taxable year of the distribution or the preceding taxable year. Special rules may apply, however, to cause such dividends to be taxable at the higher rates applicable to ordinary income. For example, the reduced tax
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rates are not available with respect to a dividend on shares where the U.S. Stockholder does not continuously own such shares for more than 60 days during the 120-day period beginning 60 days before the ex-dividend date. Many other complex and special rules may apply as a condition to, or as a result of, the application of the reduced tax rate on dividends. U.S. Stockholders are advised to consult their own tax advisors.
        For United States federal income tax purposes, the amount of any dividend paid in Canadian dollars will be the United States dollar value of the Canadian dollars at the exchange rate in effect on the date the dividend is properly included in income, whether or not the Canadian dollars are converted into United States dollars at that time. Gain or loss recognized by a U.S. Stockholder on a sale or exchange of the Canadian dollars will generally be United States source ordinary income or loss.
        The withholding tax imposed by Canada generally is a creditable foreign tax for United States federal income tax purposes. Therefore, the U.S. Stockholder generally will be entitled to include the amount withheld as a foreign tax paid in computing a foreign tax credit (or in computing a deduction for foreign income taxes paid, if the holder does not elect to use the foreign tax credit provisions of the Code). The Code, however, imposes a number of limitations on the use of foreign tax credits, based on the particular facts and circumstances of each taxpayer. Investors should consult their tax advisors regarding the availability of the foreign tax credit. U.S. Stockholders that do not elect to claim foreign tax credit for a taxable year, may be eligible to deduct such withholding tax imposed by Canada.
Capital Gains
        Subject to the discussion below under the heading "— Passive Foreign Investment Company Considerations", gain or loss recognized by a U.S. Stockholder on the sale or other disposition of the common shares will be subject to United States federal income taxation as capital gain or loss in an amount equal to the difference between such U.S. Stockholder's adjusted basis in the common shares and the amount realized upon its disposition.
        Gain on the sale of common shares held for more than one year by certain non-corporate U.S. Stockholders, including individuals and certain estates and trusts, will be taxable at a maximum rate of 15%. A reduced rate does not apply to capital gains realized by a U.S. Stockholder that is a corporation. Capital losses are generally deductible only against capital gains and not against ordinary income. In the case of an individual, however, unused capital losses in excess of capital gains may offset up to $3,000 annually of ordinary income.
        Capital gain or loss recognized by a U.S. Stockholder on the sale or other disposition of common shares will generally be sourced in the United States.
Passive Foreign Investment Company Considerations
        The Company will be classified as a passive foreign investment company ("PFIC") for United States federal income tax purposes if either (i) 75% or more of its gross income is passive income or (ii) on average for the taxable year, 50% or more of its assets (by value) produce or are held for the production of passive income. Based on projections of the Company's income and assets and the manner in which the Company intends to manage its business, the Company expects that the Company will not be a PFIC. However, there can be no assurance that this will actually be the case.
        If the Company were to be classified as a PFIC, the consequences to a U.S. Stockholder will depend in part on whether the U.S. Stockholder has made a "Mark-to-Market Election" or a "QEF Election" with respect to the Company. If the Company is a PFIC during a U.S. Stockholder's holding period and the U.S. Stockholder does not make a Mark-to-Market Election or a QEF Election, the U.S. Stockholder will generally be subject to special rules including interest charges.
        If a U.S. Stockholder makes a Mark-to-Market Election, the U.S. Stockholder would generally be required to include in its income the excess of the fair market value of the common shares as of the close of each taxable year over the U.S. Stockholder's adjusted basis therein. If the U.S. Stockholder's adjusted basis in the common shares is greater than the fair market value of the common shares as of the close of the taxable year, the U.S. Stockholder may deduct such excess, but only up to the aggregate amount of ordinary income previously included as a result of the Mark-to-Market Election, reduced by any previous deduction taken. The
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U.S. Stockholder's adjusted basis in its common shares will be increased by the amount of income or reduced by the amount of deductions resulting from the Mark-to-Market Election.
        A U.S. Stockholder who makes a QEF Election would generally be currently taxable on its pro rata share of our ordinary earnings and net capital gain (at ordinary income and capital gains rates, respectively) for each taxable year that the Company is classified as a PFIC, even if no dividend distributions were received.
        If for any year the Company determines that it is properly classified as a PFIC, it will comply with all reporting requirements necessary for a U.S. Stockholder to make a QEF Election and will, promptly following the end of such year and each year thereafter for which the Company is properly classified as a PFIC, provide to U.S. Stockholders the information required by the QEF Election.
        Under current U.S. law, if the Company is a PFIC in any year, a U.S. Stockholder must file an annual return on IRS Form 8621, which describes the income received (or deemed to be received pursuant to a QEF Election) from the Company, any gain realized on a disposition of common shares and certain other information.
Information Reporting; Backup Withholding Tax
        Dividends on, and proceeds arising from a sale of common shares generally will be subject to information reporting and backup withholding tax, currently at the rate of 28%, if (a) a U.S. Stockholder fails to furnish the U.S. Stockholder's correct United States taxpayer identification number (generally on Form W-9), (b) the withholding agent is advised the U.S. Stockholder furnished an incorrect United States taxpayer identification number, (c) the withholding agent is notified by the IRS that the U.S. Stockholder has previously failed to properly report items subject to backup withholding tax, or (d) the U.S. Stockholder fails to certify, under penalty of perjury, that the U.S. Stockholder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified the U.S. Stockholder that it is subject to backup withholding tax. However, U.S. Stockholders that are corporations generally are excluded from these information reporting and backup withholding tax rules. Amounts withheld as backup withholding may be credited against a U.S. Stockholder's U.S. federal income tax liability, and a U.S. Stockholder may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information.
Audit Fees
        Fees paid to Ernst & Young LLP for 2007 and 2006 are set out below.

 	 	Year ended
December 31, 2007
(C$ thousands)
	 	Year ended
December 31, 2006
(C$ thousands)
	
Audit fees	 	1,451	 	1,304	
Audit-related fees	 	241	 	357	
Tax consulting fees	 	705	 	465	
All other fees	 	42	 	52	
 	 		 		
 	 	2,439	 	2,178	
 	 		 		
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        Audit fees were paid for professional services rendered by the auditors for the audit of Agnico-Eagle's annual financial statements and related statutory and regulatory filings and for the quarterly review of Agnico-Eagle's interim financial statements. Audit fees also include prospectus related fees for professional services rendered by the auditors in connection with equity financings by Agnico-Eagle during 2007. 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 filing of these documents.
        Audit-related fees consist of fees paid for assurance and related services performed by the auditors that are reasonably related to the performance of the audit of the Company's financial statements. This includes consultation with respect to financial reporting, accounting standards and SOX Section 404 compliance.
        Tax consulting fees were paid for professional services relating to tax compliance, tax advice and tax planning. These services included the review of tax returns, assistance with eligibility of expenditures under the Canadian flow-through 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 include fees 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.
        No other fees were paid to auditors in the previous two years.
        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, and all fees referred to above were pre-approved in accordance with such policy.
Documents on Display
        The Company's filings with the SEC, including exhibits and schedules filed with this Form 20-F, 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 (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 www.sedar.com.
ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Metal Price and Foreign Currency
        Agnico-Eagle's net income is most sensitive to metal prices and the C$/US$ exchange rate. For the purpose of the sensitivities presented in the table below, Agnico-Eagle used the following metal price and exchange rate assumptions:
•
Gold — $566 per ounce;

•
Silver — $10.55 per ounce;

•
Zinc — $2,596 per tonne;

•
Copper — $5,628 per tonne; and
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•
C$/US$ — $1.1461 per $1.00.
        Changes in the market prices of gold are due to numerous factors such as demand, global mine production levels, forward selling by producers, central bank sales and investor sentiment. Changes in the market prices of other metals are due to factors such as demand and global mine production levels. Changes in the C$/US$ exchange rate are due to factors such as supply and demand for Canadian and U.S. currencies and economic conditions in each country. In 2007, the price ranges for metal prices and the C$/US$ exchange rate were:
•
Gold — $602 – $846 per ounce averaging $697 per ounce;

•
Silver — $11.06 – $16.22 per ounce averaging $13.39 per ounce;

•
Zinc — $2,221 – $4,402 per tonne averaging $3,257 per tonne;

•
Copper — $5,301 – $8,375 per tonne averaging $7,139 per tonne; and

•
C$/US$ — C$0.9059 – C$1.1876 per $1.00 averaging C$1.0740 per $1.00.

        The following table shows the estimated impact on budgeted income per share ("EPS") in 2007 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 2007 price ranges shown above, a 10% change in assumed metal prices and exchange rates is reasonably likely in 2008.

Changes in variable
	 	Impact on EPS ($)
	
C$/US$	 	$	0.11	
Gold	 	$	0.09	
Zinc	 	$	0.07	
Silver	 	$	0.02	
Copper	 	$	0.02	
        In order to mitigate the impact of fluctuating precious and base metal prices, the Company occasionally enters into derivative transactions under its Metal Price Risk Management Policy, approved by the Board. 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, Agnico-Eagle has bought put options and forward contracts to protect minimum precious and base metal prices while maintaining full participation to gold price increases. The Company's policy does not allow speculative trading.
        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, to hedge part of the foreign currency 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. The Company entered into foreign currency derivative transactions in 2007 which were not accounted for as hedges in the income statement. The Company's derivative strategy consisted of writing US dollar call options with short maturities to generate premiums that would, in essence, enhance the spot transaction rate received when exchanging US dollars to Canadian dollars. All the derivative transactions matured prior to the year end such that no derivatives were outstanding on December 31, 2007. Throughout 2007, the Company's foreign currency derivative strategy generated $3.7 million in call option premiums using this strategy.
Interest Rate
        The Company's current exposure to market risk for changes in interest rates relates primarily to its investment portfolio, however the Company anticipates that it will need to drawdown on its $300 million unsecured revolving bank credit facility, which currently has no amounts of principal or interest owing, to fund part of the capital expenditures related to its development projects.
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        The Company usually invests its cash in investments with short maturities or with frequent interest reset terms with a credit rating of R1-High or better. As a result, the Company's interest income fluctuates with short-term market conditions. As of December 31, 2007, substantially all of our investments in our portfolio were highly liquid investments and consisted primarily of bank notes and short-term corporate notes.
        Amounts drawn under the bank credit facility will be subject to floating interest rates based on benchmark rates available in the United States or Canada or on LIBOR. In the past, the Company has entered into derivative instruments to hedge against unfavourable changes in interest rates. The Company will continue to monitor its interest rate exposure and may enter into such agreements, if and/or when amounts are drawn under the facility, to manage its exposure to fluctuating interest rates. The Company estimates that a one percent change in the interest rate would change its net income per share by $0.02.
Derivatives
        The Company enters into derivative contracts to limit the downside risk associated with fluctuating metal prices. The contracts act as economic hedges of underlying exposures to metal price risk and foreign currency exchange risk and are not held for speculative purposes. Agnico-Eagle does not use complex derivative contracts to hedge exposures. The Company uses simple contracts, such as puts and calls, to mitigate downside risk yet maintain full participation to rising precious metal prices. Agnico-Eagle also enters into forward contracts to lock in exchange rates based on projected Canadian dollar operating and capital needs.
        Using derivative instruments creates various financial risks. Credit risk is the risk that the counterparties to derivative contracts will fail to perform on an obligation to the Company. Credit risk is mitigated by dealing with high quality counterparties such as financial institutions. Market liquidity risk is the risk that a derivative position cannot be liquidated quickly. The Company mitigates market liquidity risk by spreading out the maturity of derivative contracts over time, usually based on projected production levels for the specific metal being 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 metals will affect financial condition. Since derivative contracts are used as economic hedges, for most of the contracts, changes in the mark-to-market value affect income. For a description of the accounting treatment of derivative contracts, please see "— Critical Accounting Estimates — Financial Instruments".
        For 2007, Agnico Eagle recorded a $0.8 million charge in the Consolidated Statements of Income to reflect the maturity of gold put option contracts which were liquidated in 2005. This amount is simply the original cost for gold puts maturing in the year. Since the Company uses only over-the-counter instruments, the fair value of individual hedging instruments is based on readily available market values.
        The Company did not enter in any new derivative contracts in 2006. In 2006, the Company's remaining copper and zinc derivative contracts matured. The Company made aggregate cash payments of $27 million to settle these contracts at their individual maturity dates. These contracts are discussed more fully in Item 18 of this Form 20-F.
        In February 2007, the Company entered into a series of gold derivative transactions in connection with its take-over bid for Cumberland. Prior to the announcement of the take-over bid, Cumberland secured a gold loan facility for up to 420,000 ounces. As a condition to the gold loan facility, Cumberland entered into a series of derivative transactions to secure a minimum monetized value for the gold that was expected to be received under the gold loan. Cumberland entered into a zero-cost collar whereby a gold put option was bought with a strike price of C$605 per ounce. The cost of the put option was financed by the sale of a gold call option with a strike price of $800 per ounce. Cumberland's derivative positions were for 420,000 ounces of gold and matured on September 20, 2007. As Agnico-Eagle's policy is to not sell forward gold production, Agnico-Eagle entered into a series of transactions to neutralize Cumberland's derivative position should the Company's then pending take-over bid be successful. Accordingly, Agnico-Eagle purchased call options and sold put options with the exact same size, strike price and maturity as Cumberland's derivative position for $15.9 million. These contracts were offset against Cumberland's derivative position in April of 2007 once the take-over bid was complete. From February 2007 to April 2007, the Company recorded a charge of $5.0 million in the Consolidated Statements of Income to reflect the change in value of its derivative position prior to offsetting it against the derivative position of Cumberland.
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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.

 PART II
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
Evaluation of disclosure controls and procedures
        The Company's management, with the participation of the Company's chief executive officer and chief financial officer, evaluated the effectiveness of the Company's disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
        Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2007, the Company's disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information the Company is required to disclose in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management's report on internal control over financial reporting
        Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Company's Chief Executive Officer and Chief Financial Officer and effected by the Company's Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
        The Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2007. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework . Based upon its assessment, management concluded that, as of December 31, 2007, the Company's internal control over financial reporting was effective. Excluded from this assessment was Cumberland Resources Limited which was acquired by the Company in April 2007. Registrants are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year if, among other circumstances and factors, there is not adequate time between the consummation date of the acquisition and the assessment date for internal
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controls. The total assets and revenues of the Cumberland business represent 13% and 0% of the Company's consolidated total assets and revenues, respectively, for the year ended December 31, 2007.
        The effectiveness of the Company's internal control over financial reporting as of December 31, 2007 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein.
        The Company will continue to periodically review its disclosure controls and procedures and internal control over financial reporting and may make modifications from time to time as considered necessary or desireable.
Attestation report of the registered public accounting firm
        Please see "Item 18. Financial Statements — Report of Independent Registered Public Accounting Firm" included in the Company's Consolidated Financial Statements.
Changes in internal control over financial reporting
        Management regularly reviews its system of internal control over financial reporting and make changes to the Company's processes and systems to improve controls and increase efficiency, while ensuring that the Company maintains an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.
        There were no changes in the Company's internal control over financial reporting that occurred during the period covered by this Annual Report on Form 20-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 Board 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. Each of the audit committee financial experts is "independent" under applicable listing standards.
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 was filed as Exhibit 2 to the Form 6-K filed on December 13, 2005 and is incorporated by reference hereto. The code of ethics is available on the Company's website at www.agnico-eagle.com or by request, without charge, from the Corporate Secretary, Agnico-Eagle Mines Limited, Suite 400, 145 King Street East, Toronto, Ontario M5C 2Y7 (telephone 416-947-1212).
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 by 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 SOX and other applicable legislation. A summary of all fees paid to Ernst & Young LLP for the fiscal years ended December 31, 2007 and 2006 can be found under "Item 10. Additional Information — Audit Fees". All fees paid to Ernst & Young LLP in 2007 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, 2007 for which audited financial statements appear in this Annual Report on Form 20-F.
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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.

 PART III
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.
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Agnico-Eagle Mines Limited:
        We have audited the effectiveness of Agnico-Eagle Mines Limited's internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Agnico-Eagle Mines Limited's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's report on internal control over financial reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.
        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
        As indicated in the accompanying Management's report on internal control over financial reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Cumberland Resources Ltd., which is included in the 2007 consolidated financial statements of Agnico-Eagle Mines Limited and constituted 13% and 0.8% of total and net assets, respectively, as of December 31, 2007 and 0% of revenues for the year then ended. The net loss of Cumberland Resources Ltd. included in Agnico-Eagle Mines Limited's consolidated net income was 5% for the year ended December 31, 2007. Our audit of internal control over financial reporting of Agnico-Eagle Mines Limited also did not include an evaluation of the internal control over financial reporting of Cumberland Resources Ltd.
        In our opinion, Agnico-Eagle Mines Limited maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the COSO criteria.
        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Agnico-Eagle Mines Limited as of December 31, 2007 and 2006, and the related consolidated statements of income and comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2007, and our report dated March 14, 2008, expressed an unqualified opinion thereon.

Toronto, Canada	 	ERNST & YOUNG LLP	
March 14, 2008	 	Chartered Accountants
Licensed Public Accountants	
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 Management Certification
        Agnico-Eagle Mines Limited (the "Company") will file with the New York Stock Exchange ("NYSE") on March 19, 2008, the annual written affirmation by its Chief Executive Officer, certifying that, as of the date of such affirmation, he was not aware of any violation by Agnico-Eagle Mines Limited of the NYSE's corporate governance listing standards. The Company has also filed the required certifications under Section 302 of the Sarbanes-Oxley Act of 2002 regarding the quality of its public disclosures as Exhibits 12.01 and 12.02 to its annual report on Form 20-F for the year ended December 31, 2007.
        Management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2007.
        Management concluded that, as of December 31, 2007, the Company's internal control over financial reporting is effective as more fully described in "Item 15. Controls and Procedures" of the Company's Annual Report on Form 20-F.
        The effectiveness of the Company's internal control over financial reporting as of December 31, 2007, has been audited by Ernst & Young, LLP, an independent registered public accounting firm, as stated in their report which appears herein.
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Agnico-Eagle Mines Limited:
        We have audited the accompanying consolidated balance sheets of Agnico-Eagle Mines Limited as of December 31, 2007 and 2006, and the related consolidated statements of income and comprehensive income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2007. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis for our opinion.
        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Agnico-Eagle Mines Limited at December 31, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with United States generally accepted accounting principles.
        As described in the "Summary of Significant Accounting Policies", the Company changed its method of accounting for uncertain tax positions as of January 1, 2007 and, on January 1, 2006, the Company changed its method of accounting for stockpiles inventory.
        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Agnico-Eagle Mines Limited's internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2008 expressed an unqualified opinion thereon.

Toronto, Canada	 	ERNST & YOUNG LLP	
March 14, 2008	 	Chartered Accountants
Licensed Public Accountants	
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 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"). Since a precise determination of assets and liabilities depends on future events, the preparation 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 its wholly-owned subsidiaries and entities in which it has a controlling financial interest after the elimination of intercompany accounts and transactions. The Company has a controlling financial interest if it owns a majority of the outstanding voting common stock or has significant control over an entity through contractual or economic interests of which the Company is the primary beneficiary.
        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 contributed surplus.
Cash and cash equivalents
        Cash and cash equivalents include cash on hand and short-term investments in money market instruments with remaining maturities of three months or less at the date of purchase. Short-term investments are designated as held to maturity for accounting purposes and are carried at amortized cost, which approximates market value. Agnico-Eagle places its cash and cash equivalents 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.
Inventories
        Inventories consist of ore stockpiles, concentrates 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.
        Mining costs include all costs associated with mining operations and are allocated to each tonne of stockpile. Fully absorbed costs include direct and indirect materials and consumables, direct labour, utilities and amortization of mining assets incurred up to the point of stockpiling the ore. 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 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 tonne 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 practice in the future. Stockpiled ore on the surface is exposed to the elements, but the Company does not expect its condition to deteriorate significantly.
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        In addition, companies in the mining industry may be required to remove overburden and other mine waste materials to access mineral deposits. During the development of a mine (before production begins), it is generally accepted practice that such costs are capitalized as part of the depreciable cost of building, developing and constructing the mine. The capitalized costs are typically amortized over the productive life of the mine using the units-of-production method. A mining company may continue to remove overburden and waste materials, and therefore incur stripping costs, during the production phase of the mine.
        In March 2005, the Financial Accounting Standards Board ratified Emerging Issues Task Force Issue No. 04-6 ("EITF 04-6") which addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in costs applicable to sales in the same period as the revenue from the sale of inventory. As a result, capitalization of costs is appropriate only to the extent product inventory exists at the end of a reporting period. Agnico-Eagle adopted the provisions of EITF 04-6 on January 1, 2006. The impact of adoption was to decrease ore stockpile inventory by $8.4 million and increase future income and mining tax assets by $3.3 million. Adoption of EITF 04-6 had no impact on the Company's cash position or earnings.
Concentrates
        Concentrates inventories consist of concentrates for which legal title has not yet passed to custom smelters. Concentrates 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 sheets and relate to the issuance of the Company's 4.50% convertible subordinated debentures due February 15, 2012 ("Convertible Debentures"), that were fully redeemed in February 2007 and the Company's revolving credit facility, are being amortized to income over the term of the related obligations. When the holders of the Company's Convertible Debentures exercised their conversion option, the common shares issued on such conversion were 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. The same principles were applied upon redemption of the Convertible Debentures by the Company.
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 for the construction of projects 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. The unit-of-production method defines the denominator as the total proven and probable tonnes of reserves.
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        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.
        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 ore body 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. To the extent economic value exists beyond the proven and probable reserves of an operating mine or development property, this value is included as part of the estimated future cash flows. Estimated future cash flows also involve estimates regarding metal 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 uses derivative financial instruments, primarily option and forward contracts, to manage exposure to fluctuations, metal prices, interest rates and foreign currency exchange rates. Agnico-Eagle does not hold financial instruments or derivative financial instruments for trading purposes.
        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 accumulated other comprehensive income (loss), depending on the nature of the derivative financial instrument and whether it qualifies for hedge accounting. Financial instruments designated as hedges are tested for effectiveness on a quarterly basis. Gains and losses on those contracts that are proven to be effective are reported as a component of the related transaction.
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 doré bars is recorded when the refined gold and silver is sold. Generally all the gold and silver in the form of doré bars 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 metals contained 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 the
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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, transportation and other marketing charges. Revenues from byproduct 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 the US dollar 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
        Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The amount of the liability is subject to re-measurement at each reporting period. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value and amortized over the estimated life of the mine. The key assumptions on which the fair value of the asset retirement obligations is based includes the estimated future cash flows, the timing of those cash flows and the credit-adjusted risk-free rate or rates on which the estimated cash flows have been discounted.
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 enacted tax rates and laws expected to be in effect when the differences are expected to reverse.
        Effective January 1, 2007, the Company adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109, or FIN 48. FIN 48 requires the recognition of the effect of uncertain tax positions where it is more likely than not based on technical merits that the position would be sustained. The Company recognizes the amount of the tax benefit that has a greater than 50 percent likelihood of being ultimately realized upon settlement. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in the year of such change. Accrued interest and penalties related to unrecognized tax benefits are recorded in income tax expense in the current year. The impact of the adoption of FIN 48 was to increase the future income tax liability by $4.5 million.
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.
        The fair value of stock options granted by the Company is recognized 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.
        In December 2004, the FASB enacted FAS 123 — revised 2004 ("FAS 123R"), " Share-Based Payment ", which replaced FAS 123 and superseded APB Opinion No. 25 ("APB 25"), " Accounting for Stock Issued to Employees ". FAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statement of income. The Company was required to adopt FAS 123R in the first quarter of 2006. There was no impact on the Company based on the adoption of the new requirements under FAS 123R.
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Income per share
        Basic income per share is calculated on net income for the year using the weighted average number of common shares outstanding during the year. For years in which the Convertible Debentures were oustanding, diluted income per share was calculated on the weighted average number of common shares that would have been outstanding during such year had all Convertible Debentures been converted at the beginning of the year into common shares, if such conversions were dilutive. In addition, the weighted average number of common shares used to determine diluted income per share includes an adjustment for stock options outstanding and warrants outstanding using the treasury stock method. Under the treasury stock method:
•
the exercise of options or warrants is assumed to be at the beginning of the period (or date of issuance, if later);

•
the proceeds from the exercise of options or warrants, plus in the case of options the future period compensation expense on options granted on or after January 1, 2003, are assumed to be used to purchase common shares at the average market price during the period; and

•
the incremental number of common shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) is included in the denominator of the diluted earnings per share computation.
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 other post-retirement benefits to its employees.
        As of December 31, 2006, the Company adopted the provisions of FASB Statement No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)" ("FAS 158"). FAS 158 required employers that sponsor one or more defined benefit plans to (i) recognize the funded status of a benefit plan in its statement of financial position, (ii) recognize the gains or losses and prior service costs or credits that arise during the period as a component of other comprehensive income, net of tax, (iii) measure the defined benefit plan assets and obligations as of the date of the employer's fiscal year-end statement of financial position, and (iv) disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The impact of adopting FAS 158 on the Consolidated Balance Sheets was as follows:

As of December 31, 2006
	 	Before Application of FAS 158
	 	Adjustment
	 	After Application of FAS 158
	 	
Reclamation provision and other liabilities	 	$	26,051	 	$	1,406	 	$	27,457	 	
Deferred income tax liability	 	$	170,087	 	$	(396	)	$	169,691	 	
Accumulated other comprehensive loss	 	$	(16,989	)	$	(1,010	)	$	(17,999	)	
Total stockholders' equity	 	$	1,253,415	 	$	(1,010	)	$	1,252,405	 	
120

Impact of recently issued accounting pronouncements
        Under the U.S. Securities and Exchange Commission Staff Accounting Bulletin 74 ("SAB 74"), the Company is required to disclose information related to new accounting standards that have not yet been adopted.
Fair Value Measurements
        In September 2006, the FASB issued FASB Statement No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions for FAS 157 are effective for the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
The Fair Value Option for Financial Assets and Financial Liabilities
        In February 2007, FASB issued FASB Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"), which allows entities to voluntary choose, at specified election dates, to measure many financial assets and financial liabilities (as well as certain non-financial instruments that are similar to financial instruments) at fair value with changes in fair value reported in earnings. The election is made on an instrument-by-instrument basis and is irrevocable. The provisions for FAS 159 are effective for the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
Non-controlling Interests in Consolidated Financial Statements
        In December 2007, the FASB issued FASB Statement No. 160, "Non-controlling Interests in Consolidated Financial Statements" ("FAS 160"). FAS 160 establishes accounting and reporting standards for entities that have equity investments that are not attributable directly to the parent, called non-controlling interests or minority interests. Specifically, FAS 160 states where and how to report non-controlling interests in the consolidated statements of financial position and operations, how to account for changes in non-controlling interests and provides disclosure requirements. The provisions of FAS 160 are effective for the Company beginning January 1, 2009. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations and disclosures.
Business Combinations
        In December 2007, the FASB issued FASB Statement No. 141(R), "Business Combinations" ("FAS 141(R)"). FAS 141(R) establishes how an entity accounts for the identifiable assets acquired, liabilities assumed, and any non-controlling interests acquired, how to account for goodwill acquired and determines what disclosures are required as part of a business combination. FAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, early adoption is prohibited. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations and disclosures.
Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
        In June 2007, the EITF reached consensus on Issue No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards." EITF Issue No. 06-11 requires that the tax benefit related to dividend and dividend equivalents paid on equity-classifed nonvested shares and nonvested share units, which are expected to vest, be recorded as an increase to additional paid-in capital. EITF Issue No. 06-11 is to be applied prospectively for tax benefits on dividends declared in the Company's fiscal year beginning January 1, 2008. The Company is currently evaluating the impact that the adoption of this statement will have on the Company's consolidated financial position, results of operations or cash flows.
Comparative figures
        Certain items in the comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the 2007 consolidated financial statements.
121

 AGNICO-EAGLE MINES LIMITED

CONSOLIDATED BALANCE SHEETS

(thousands of United States dollars, US GAAP basis)

 	 	As at December 31,
	 	
 	 	2007
	 	2006
	 	
ASSETS	 	 	 	 	 	 	 	
Current	 	 	 	 	 	 	 	
 	Cash and cash equivalents	 	$	314,794	 	$	288,575	 	
 	Short-term investments	 	 	78,770	 	 	170,042	 	
 	Restricted cash (note 14)	 	 	2,455	 	 	—	 	
 	Trade receivables (note 1)	 	 	79,419	 	 	84,987	 	
 	Inventories:	 	 	 	 	 	 	 	
 	 	Ore stockpiles	 	 	5,647	 	 	2,330	 	
 	 	Concentrates	 	 	1,913	 	 	3,794	 	
 	 	Supplies	 	 	15,637	 	 	11,152	 	
 	Available-for-sale securities (note 2(a))	 	 	38,006	 	 	38,760	 	
 	Other current assets (note 2(a))	 	 	69,453	 	 	23,193	 	
 	 		 		 	
Total current assets	 	 	606,094	 	 	622,833	 	
Other assets (notes 2(b))	 	 	16,436	 	 	7,737	 	
Future income and mining tax assets (note 8)	 	 	5,905	 	 	31,059	 	
Property, plant and mine development, net (note 3)	 	 	2,107,063	 	 	859,859	 	
 	 		 		 	
 	 	$	2,735,498	 	$	1,521,488	 	

LIABILITIES AND SHAREHOLDERS' EQUITY	

 	

 	
 	
Current	 	 	 	 	 	 	 	
 	Accounts payable and accrued liabilities (note 10)	 	$	108,227	 	$	42,538	 	
 	Dividends payable	 	 	26,280	 	 	15,166	 	
 	Income taxes payable (note 8)	 	 	—	 	 	14,231	 	
 	 		 		 	
Total current liabilities	 	 	134,507	 	 	71,935	 	
 	 		 		 	
Reclamation provision and other liabilities (note 5)	 	 	57,941	 	 	27,457	 	
 	 		 		 	
Future income and mining tax liabilities (note 8)	 	 	484,116	 	 	169,691	 	

SHAREHOLDERS' EQUITY	

 	

 	
 	
Common shares (note 6(a))	 	 	 	 	 	 	 	
 	Authorized — unlimited	 	 	 	 	 	 	 	
 	Issued — 142,403,379 (2006 — 121,025,635)	 	 	1,931,667	 	 	1,230,654	 	
Stock options	 	 	23,573	 	 	5,884	 	
Warrants (note 6(c))	 	 	—	 	 	15,723	 	
Contributed surplus	 	 	15,166	 	 	15,128	 	
Retained earnings	 	 	112,240	 	 	3,015	 	
Accumulated other comprehensive loss (note 6(d))	 	 	(23,712	)	 	(17,999	)	
 	 		 		 	
Total shareholders' equity	 	 	2,058,934	 	 	1,252,405	 	
 	 		 		 	
 	 	$	2,735,498	 	$	1,521,488	 	
 	 		 		 	
Contingencies and commitments (note 12)	 	 	 	 	 	 	 	
On behalf of the Board:

Sean Boyd C.A., Director	
 	
Mel Leiderman C.A., Director	
See accompanying notes
122

 AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(thousands of United States dollars except per share amounts, US GAAP basis)

 	 	Years ended December 31,
	 	
 	 	2007
	 	2006
	 	2005
	 	
REVENUES	 	 	 	 	 	 	 	 	 	 	
Revenues from mining operations (note 1)	 	$	432,205	 	$	464,632	 	$	241,338	 	
Interest and sundry income (note 11)	 	 	25,142	 	 	21,797	 	 	4,535	 	
Gain on sale of available-for-sale securities (note 2(a))	 	 	4,088	 	 	24,118	 	 	461	 	
 	 		 		 		 	
 	 	 	461,435	 	 	510,547	 	 	246,334	 	

COSTS AND EXPENSES	

 	

 	

 	
 	
Production	 	 	166,104	 	 	143,753	 	 	127,365	 	
Exploration and corporate development	 	 	25,507	 	 	30,414	 	 	16,581	 	
Equity loss in junior exploration companies (note 2(b))	 	 	—	 	 	663	 	 	2,899	 	
Amortization of plant and mine development	 	 	27,757	 	 	25,255	 	 	26,062	 	
General and administrative	 	 	38,167	 	 	25,884	 	 	11,727	 	
Loss on derivative financial instruments	 	 	5,829	 	 	15,148	 	 	15,396	 	
Provincial capital tax	 	 	3,202	 	 	3,758	 	 	1,352	 	
Interest (note 4)	 	 	3,294	 	 	2,902	 	 	7,813	 	
Foreign currency translation loss (note 8)	 	 	32,297	 	 	2,127	 	 	1,860	 	
 	 		 		 		 	
Income before income, mining and federal capital taxes	 	 	159,278	 	 	260,643	 	 	35,279	 	
Federal capital tax	 	 	—	 	 	—	 	 	1,062	 	
Income and mining tax (recovery) (note 8)	 	 	19,933	 	 	99,306	 	 	(2,777	)	
 	 		 		 		 	
Net income for the year	 	$	139,345	 	$	161,337	 	$	36,994	 	
 	 		 		 		 	
Net income per share — basic (note 6(e))	 	$	1.05	 	$	1.40	 	$	0.42	 	
 	 		 		 		 	
Net income per share — diluted (note 6(e))	 	$	1.04	 	$	1.35	 	$	0.42	 	

Comprehensive income:	

 	

 	

 	
 	
Net income for the year	 	$	139,345	 	$	161,337	 	$	36,994	 	

Other comprehensive income (loss):	

 	

 	

 	
 	
 	Unrealized gain on hedging activities	 	 	—	 	 	—	 	 	1,135	 	
 	Unrealized gain (loss) on available-for-sale securities	 	 	(5,436	)	 	1,067	 	 	10,228	 	
 	Cumulative translation adjustments	 	 	—	 	 	—	 	 	(2,236	)	
 	Adjustments for derivative instruments maturing during the year	 	 	1,653	 	 	(2,167	)	 	(3,398	)	
 	Adjustments for realized gains on available-for-sale securities due to dispositions during the year	 	 	(1,918	)	 	(12,506	)	 	(65	)	
 	Amortization of unrecognized loss on pension liability	 	 	(16	)	 	—	 	 	—	 	
 	Tax effect of other comprehensive income (loss) items	 	 	4	 	 	1,241	 	 	(1,241	)	
 	 		 		 		 	
Other comprehensive income (loss) for the year	 	 	(5,713	)	 	(12,365	)	 	4,423	 	
 	 		 		 		 	
Comprehensive income for the year	 	$	133,632	 	$	148,972	 	$	41,417	 	
 	 		 		 		 	
See accompanying notes
123

 AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(thousands of United States dollars, US GAAP basis)

 	 	Common Shares
	 	 	 	 	 	 	 	 	 	 	 	
 			 	Stock Options Outstanding
	 	 	 	Contributed Surplus
	 	Retained Earnings (Deficit)
	 	Accumulated Other Comprehensive Loss
	 	
 	 	Shares
	 	Amount
			 	Warrants
							 	
Balance December 31, 2004	 	86,072,779	 	$	620,704	 	$	465	 	$	15,732	 	$	15,128	 	$	(172,756	)	$	(9,047	)	
Shares issued under Employee Stock Option Plan (note 7(a))	 	214,725	 	 	2,264	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Stock options	 	—	 	 	—	 	 	2,404	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Incentive Share Purchase Plan (note 7(b))	 	245,494	 	 	3,646	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under flow-through share private placement (note 6(b))	 	500,000	 	 	6,387	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	4,715	 	 	15	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for holder conversions of convertible debentures (note 4)	 	775,359	 	 	10,855	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for purchase of Riddarhyttan Resources AB (note 9)	 	10,023,882	 	 	120,788	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Net income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	36,994	 	 	—	 	
Dividends declared ($0.03 per share) (note 6(a))	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(2,935	)	 	—	 	
Other comprehensive income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	4,423	 	
 	 		 		 		 		 		 		 		 	
Balance December 31, 2005	 	97,836,954	 	$	764,659	 	$	2,869	 	$	15,732	 	$	15,128	 	$	(138,697	)	$	(4,624	)	
Shares issued under Employee Stock Option Plan (note 7(a))	 	1,805,085	 	 	28,217	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Stock options	 	—	 	 	—	 	 	3,015	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Incentive Share Purchase Plan (note 7(b))	 	146,249	 	 	4,711	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under flow-through share private placement (note 6(b))	 	1,226,000	 	 	30,749	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	5,003	 	 	22	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for holder conversions of convertible debentures (note 4)	 	9,483,709	 	 	129,910	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued on exercise of warrants	 	4,000	 	 	85	 	 	—	 	 	(9	)	 	—	 	 	—	 	 	—	 	
Shares issued for purchase of Pinos Altos project (note 9)	 	2,063,635	 	 	34,310	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under public offering	 	8,455,000	 	 	237,991	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Net income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	161,337	 	 	—	 	
Dividends declared ($0.12 per share) (note 6(a))	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(14,523	)	 	—	 	
Stockpile inventory adjustment, net of tax (EITF 04-6)	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(5,102	)	 	—	 	
Other comprehensive loss for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(12,365	)	
Adjustment for unrecognized loss on pension liability upon application of FASB Statement No. 158 (note 5(b))	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(1,010	)	
 	 		 		 		 		 		 		 		 	
Balance December 31, 2006	 	121,025,635	 	$	1,230,654	 	$	5,884	 	$	15,723	 	$	15,128	 	$	3,015	 	$	(17,999	)	
 	 		 		 		 		 		 		 		 	
Shares issued under Employee Stock Option Plan (note 7(a))	 	536,116	 	 	10,232	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options	 	—	 	 	—	 	 	17,689	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Incentive Share Purchase Plan (note 7(b))	 	167,378	 	 	7,100	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued for purchase of Cumberland Resources Ltd (note 9)	 	13,768,510	 	 	536,556	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued under the Company's dividend reinvestment plan	 	32,550	 	 	812	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	
Shares issued on exercise of warrants	 	6,873,190	 	 	146,313	 	 	—	 	 	(15,723	)	 	38	 	 	—	 	 	—	 	
Net income for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	139,345	 	 	—	 	
Dividends declared ($0.18 per share) (note 6(a))	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(25,633	)	 	—	 	
Future tax asset adjustment upon the adoption of FIN 48 (note 8)	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(4,487	)	 	—	 	
Other comprehensive loss for the year	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(5,713	)	
 	 		 		 		 		 		 		 		 	
Balance December 31, 2007	 	142,403,379	 	 	1,931,667	 	 	23,573	 	 	—	 	 	15,166	 	 	112,240	 	 	(23,712	)	
 	 		 		 		 		 		 		 		 	
See accompanying notes
124

 AGNICO-EAGLE MINES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of United States dollars, US GAAP basis)

 	 	Years ended December 31,
	 	
 	 	2007
	 	2006
	 	2005
	 	
Operating activities	 	 	 	 	 	 	 	 	 	 	
Net income for the year	 	$	139,345	 	$	161,337	 	$	36,994	 	
Add (deduct) items not affecting cash:	 	 	 	 	 	 	 	 	 	 	
 	Amortization of plant and mine development	 	 	27,757	 	 	25,255	 	 	26,062	 	
 	Future income and mining taxes	 	 	16,380	 	 	81,993	 	 	(2,777	)	
 	Unrealized loss on derivative contracts	 	 	—	 	 	—	 	 	8,335	 	
 	Gain on sale of available-for-sale securities	 	 	(4,088	)	 	(24,118	)	 	(461	)	
 	Gain on Contact Diamond Corporation	 	 	—	 	 	(7,361	)	 	—	 	
 	Stock option expense	 	 	12,155	 	 	5,391	 	 	2,553	 	
 	Foreign currency translation loss	 	 	32,297	 	 	2,127	 	 	1,860	 	
 	Other	 	 	14,921	 	 	(7,230	)	 	3,062	 	
Changes in non-cash working capital balances	 	 	 	 	 	 	 	 	 	 	
 	Trade receivables	 	 	5,568	 	 	(28,683	)	 	(12,862	)	
 	Income (taxes payable)/recoverable	 	 	(14,231	)	 	21,954	 	 	8,382	 	
 	Inventories	 	 	(1,187	)	 	(2,493	)	 	2,550	 	
 	Other current assets	 	 	(55,389	)	 	(4,422	)	 	(1,054	)	
 	Accounts payable and accrued liabilities	 	 	55,661	 	 	4,745	 	 	10,519	 	
 	Interest payable	 	 	—	 	 	(2,243	)	 	(183	)	
 	 		 		 		 	
Cash provided by operating activities	 	 	229,189	 	 	226,252	 	 	82,980	 	

Investing activities	

 	

 	

 	
 	
Additions to property, plant and mine development	 	 	(510,877	)	 	(149,185	)	 	(70,270	)	
Purchase of gold derivatives (note 9(c))	 	 	(15,875	)	 	—	 	 	—	 	
Cash acquired on acquisition of Cumberland Resources Ltd. net of transaction costs (note 9(c))	 	 	84,207	 	 	—	 	 	—	 	
Acquisition of Pinos Altos property (note 9(b))	 	 	—	 	 	(32,500	)	 	—	 	
Recoverable value added tax on acquisition of Pinos Altos property	 	 	9,750	 	 	(9,750	)	 	—	 	
Purchase of Stornoway Diamond Corporation debentures	 	 	(8,519	)	 	—	 	 	—	 	
Investment in Stornoway Diamond Corporation	 	 	—	 	 	(19,784	)	 	—	 	
Decrease (increase) in short-term investments	 	 	91,272	 	 	(110,215	)	 	5,009	 	
Net proceeds on available-for-sale securities	 	 	5,393	 	 	34,034	 	 	(7,089	)	
Purchase of available-for-sale securities	 	 	(13,079	)	 	(12,323	)	 	(2,362	)	
Decrease (increase) in restricted cash	 	 	(2,455	)	 	—	 	 	8,173	 	
 	 		 		 		 	
Cash used in investing activities	 	 	(360,183	)	 	(299,723	)	 	(66,539	)	

Financing activities	

 	

 	

 	
 	
Dividends paid	 	 	(13,406	)	 	(3,166	)	 	(2,525	)	
Common shares issued	 	 	144,138	 	 	315,160	 	 	14,243	 	
Share issue costs	 	 	—	 	 	(13,415	)	 	(29	)	
 	 		 		 		 	
Cash provided by financing activities	 	 	130,732	 	 	298,579	 	 	11,689	 	
 	 		 		 		 	
Effect of exchange rate changes on cash and cash equivalents	 	 	26,481	 	 	2,312	 	 	20	 	
 	 		 		 		 	
Net increase in cash and cash equivalents during the year	 	 	26,219	 	 	227,420	 	 	28,150	 	
Cash and cash equivalents, beginning of year	 	 	288,575	 	 	61,155	 	 	33,005	 	
 	 		 		 		 	
Cash and cash equivalents, end of year	 	$	314,794	 	$	288,575	 	$	61,155	 	

Other operating cash flow information:	

 	

 	

 	
 	
Interest paid during the year	 	$	2,406	 	$	4,214	 	$	8,304	 	
 	 		 		 		 	
Income, mining and capital taxes paid (recovered) during the year	 	$	22,138	 	$	1,405	 	$	(6,259	)	
 	 		 		 		 	
See accompanying notes
125

 AGNICO-EAGLE MINES LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(thousands of United States dollars except per share amounts, unless otherwise indicated)
December 31, 2007
1.     TRADE RECEIVABLES AND REVENUES FROM MINING OPERATIONS
        Trade receivables are recognized once the transfer of ownership for the metals sold has occurred and reflect the amounts owing to the Company in respect of its sales of bullion or concentrates to third parties prior to the satisfaction in full of payment obligations of the third parties.

 	 	2007
	 	2006
	
Bullion awaiting settlement	 	$	122	 	$	2,520	
Concentrates awaiting settlement	 	 	79,297	 	 	82,467	
 	 		 		
 	 	$	79,419	 	$	84,987	
 	 		 		
 	 	2007
	 	2006
	 	2005
	
Revenues from mining operations (thousands):	 	 	 	 	 	 	 	 	 	
Gold	 	$	171,537	 	$	159,815	 	$	117,888	
Silver	 	 	70,028	 	 	58,262	 	 	41,808	
Zinc	 	 	156,340	 	 	211,871	 	 	67,150	
Copper	 	 	34,300	 	 	34,684	 	 	14,492	
 	 		 		 		
 	 	$	432,205	 	$	464,632	 	$	241,338	
 	 		 		 		
        In 2007, precious metals accounted for 56% of Agnico-Eagle's revenues from mining operations (2006 — 47%; 2005 — 66%). The remaining revenues from mining operations consisted of net byproduct revenues. In 2007, these net byproduct revenues as a percentage of total revenues from mining operations consisted of 36% zinc (2006 — 45%; 2005 — 28%) and 8% copper (2006 — 8%; 2005 — 6%):
2.     OTHER ASSETS
(a)
Other current assets

 	 	2007
	 	2006
	
Federal, provincial and other sales taxes receivable	 	 	24,369	 	 	16,327	
Interest receivable	 	 	2,140	 	 	4,453	
Prepaid expenses	 	 	13,556	 	 	733	
Employee loans receivable	 	 	926	 	 	626	
Government refundables	 	 	17,776	 	 	—	
Advances to suppliers	 	 	4,284	 	 	—	
Other	 	 	6,402	 	 	1,054	
 	 		 		
 	 	$	69,453	 	$	23,193	
 	 		 		
        In 2007, the Company realized $5.4 million (2006 — $35.9 million; 2005 — $1.4 million) in proceeds and recorded a gain of $4.1 million (2006 — $24.1 million; 2005 — $0.5 million) in income on the sale of available-for-sale securities. Available-for-sale securities consist of equity securities whose cost basis is determined using the average cost method. Available-for-sale securities are carried at fair value and comprise the following:

 	 	2007
	 	2006
	 	
Cost	 	$	44,401	 	$	37,890	 	
Unrealized gains	 	 	4,933	 	 	5,258	 	
Unrealized losses	 	 	(11,328	)	 	(4,388	)	
 	 		 		 	
Estimated fair value of available-for-sale securities	 	$	38,006	 	$	38,760	 	
 	 		 		 	
126

(b)
Other assets

 	 	2007
	 	2006
	
Deferred financing costs, less accumulated amortization of $960 (2006 — $154)	 	$	3,224	 	$	3,709	
Stornoway Diamond Corporation debentures (note 11)	 	 	10,120	 	 	—	
Loan to Contact Diamond Corporation (note 11)	 	 	—	 	 	3,422	
Finnish Government Grants	 	 	2,643	 	 	—	
Other	 	 	449	 	 	606	
 	 		 		
 	 	$	16,436	 	$	7,737	
 	 		 		
        The Company has a commitment to repay parts of the grant to the Finnish Government, should the Kittila mine not be in operation by 2013. Management currently expects that Kittila will commence production in the second half of 2008.
        The fair value of the Stornoway Diamond Corporation debentures approximates their carrying amounts.
3.     PROPERTY, PLANT AND MINE DEVELOPMENT

 	 	2007
	 	2006
	
 	 	Cost
	 	Accumulated Amortization
	 	Net Book Value
	 	Cost
	 	Accumulated Amortization
	 	Net Book Value
	
Mining properties	 	$	1,108,449	 	$	20,197	 	$	1,088,252	 	$	340,308	 	$	17,751	 	$	322,557	
Plant and equipment	 	 	351,663	 	 	116,862	 	 	234,801	 	 	322,660	 	 	104,350	 	 	218,310	
Mine development costs	 	 	261,613	 	 	80,792	 	 	180,821	 	 	241,275	 	 	67,986	 	 	173,289	
Construction in process:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Goldex mine project	 	 	186,302	 	 	—	 	 	186,302	 	 	80,777	 	 	—	 	 	80,777	
 	LaRonde Mine extension	 	 	46,716	 	 	—	 	 	46,716	 	 	9,780	 	 	—	 	 	9,780	
 	Pinos Altos mine project	 	 	37,065	 	 	—	 	 	37,065	 	 	—	 	 	—	 	 	—	
 	Meadowbank mine project	 	 	168,374	 	 	—	 	 	168,374	 	 	—	 	 	—	 	 	—	
 	Kittila mine project	 	 	101,966	 	 	—	 	 	101,966	 	 	21,982	 	 	—	 	 	21,982	
 	Lapa mine project	 	 	62,766	 	 	—	 	 	62,766	 	 	33,164	 	 	—	 	 	33,164	
 	 		 		 		 		 		 		
 	 	$	2,324,914	 	$	217,851	 	$	2,107,063	 	$	1,049,946	 	$	190,087	 	$	859,859	
 	 		 		 		 		 		 		
Geographic Information

 	 	Net Book Value
2007
	 	Net Book Value
2006
	
Canada	 	$	1,705,212	 	$	574,949	
Finland	 	 	292,300	 	 	212,363	
Mexico	 	 	107,346	 	 	70,342	
U.S.A	 	 	2,205	 	 	2,205	
 	 		 		
Total	 	$	2,107,063	 	$	859,859	
 	 		 		
In 2007, Agnico-Eagle capitalized $0.8 million of costs (2006 — $3.1 million) and recognized $0.5 million of amortization expense (2006 — $0.2 million) related to computer software. The unamortized capitalized cost for computer software at the end of 2007 was $5.4 million (2006 — $5.1 million).
4.     LONG-TERM DEBT
(a)
Convertible subordinated debentures
        The Company's $143.75 million principal amount convertible subordinated debentures bore interest at 4.50% per annum, payable semi-annually in cash or, at the option of the Company, common shares of the Company. The debentures were 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 US dollar principal amount. The debentures were 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 had the option to redeem the debentures in cash or by delivering freely tradeable common shares.
127

        The original principal amount of the Convertible Debentures was $143.8 million. In 2005, there were aggregate conversions of $10.9 million.
        In 2006, interest on the Convertible Debentures of $0.1 million (2005 — $1.8 million) was capitalized for the construction of the Lapa and Goldex mine projects as well as certain construction programs at the LaRonde mine.
        In late 2003, the Company entered into an interest rate swap whereby fixed rate payments on the Convertible Debentures were swapped for variable rate payments. The notional amount under the swap exactly matched the original $143.8 million face value of the debentures and the swap agreement terminated on February 15, 2006, which was the earliest date that the debentures could be called for redemption. Under the terms of the swap agreement, the Company made interest payments of three-month LIBOR plus a spread of 2.37% and received fixed interest payments of 4.50%, which completely offset the interest payments the Company made on the Convertible Debentures. The three-month LIBOR was also capped at 3.38% such that total variable interest payments would not exceed 5.75%. In 2005, the Company made $0.9 million in swap payments such that net interest on the Convertible Debentures was $6.3 million.
        Between January 1, 2006 and February 15, 2006, holders representing $131.8 million aggregate principal amount converted their debentures into 9,413,189 common shares. On February 15, 2006, the Company redeemed the remaining $1.1 million aggregate principal amount, at par plus accrued interest, by exercising its redemption option and delivering 70,520 freely tradeable common shares.
        Also in 2006, the Company's interest rate swap matured. The Company made net interest payments of $1.4 million under the terms of the swap at maturity such that net interest on the Convertible Debentures in 2006 was $2.1 million.
(b)
Revolving credit facility
        In October 2006, the Company executed an amendment with its bank syndicate to increase the limit of its revolving credit facility from $150 million to $300 million, and to extend its term by two years to December 2011. At December 31, 2007, the facility was completely undrawn however outstanding letters of credit decreased the amounts available under the facility such that $280 million was available for future drawdowns at December 31, 2007.
        The Company entered into a new $300 million unsecured revolving credit agreement on January 10, 2008 (the "New Facility") with a group of financial institutions and the secured facility has been terminated. The New Facility matures on January 10, 2013, however, 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 additional one-year terms. Payment and performance of the Company's obligations under the New Facility are guaranteed by certain material subsidiaries of the Company.
        The New Facility contains covenants that restrict, among other things, the ability of the Company to incur additional indebtedness, make distributions in certain circumstances, sell material assets and carry on a business other than a mining business. The Company is also required to maintain certain financial ratios as well as a minimum tangible net worth.
        For the year ended December 31, 2007, interest expense was $3.3 million (2006 — $2.9 million; 2005 — $7.8 million), of which cash payments were $2.4 million (2006 — $4.2 million; 2005 — $8.3 million). In 2007, cash interest on the facility was nil (2006 — nil; 2005 — nil) and cash standby fees on the facility were $2.3 million (2006 — $1.3 million; 2005 — $1.2 million). In 2007, no interest (2006 — $0.3 million; 2005 — $2.5 million) was capitalized to construction in progress. The Company's weighted average interest rate on all of its debt as at December 31, 2007 was nil (2006 — nil; 2005 — 7.9%).
5.     RECLAMATION PROVISION AND OTHER LIABILITIES
        Reclamation provision and other liabilities consist of the following:

 	 	2007
	 	2006
	
Reclamation and closure costs (note 5(a))	 	$	44,690	 	$	22,073	
Pension benefits (note 5(b))	 	 	6,786	 	 	5,384	
Long term portion of capital lease obligations (note 13)	 	 	6,465	 	 	—	
 	 		 		
 	 	$	57,941	 	$	27,457	
 	 		 		
(a)
Reclamation and closure costs
        Reclamation estimates are based on current legislation, third party estimates and feasibility study calculations. 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.
128

        The following table reconciles the beginning and ending carrying amounts of the asset retirement obligations.

 	 	2007
	 	2006
	 	
Asset retirement obligations, beginning of year	 	$	22,073	 	$	12,569	 	
Current year additions	 	 	21,298	 	 	8,696	 	
Current year accretion	 	 	1,319	 	 	825	 	
Other	 	 	—	 	 	(17	)	
 	 		 		 	
Asset retirement obligations, end of year	 	$	44,690	 	$	22,073	 	
 	 		 		 	
        The assumptions used for the calculation of the provision are as follows:

 	 	2007
	 	2006
	
Cash flows to settle the obligation (undiscounted)	 	$103,356	 	$61,897	
Timing range for settling the obligation for all active projects	 	2020 - 2027	 	2027	
Credit-adjusted risk-free interest rate range for all active projects	 	5.80% - 6.60%	 	6.60%	
(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 who retired prior to that date remain in the Employees Plan ("Employees Plan"). In addition, Agnico-Eagle provides a non-registered executive supplementary defined benefit plan for certain senior officers. The funded status of the Employees Plan is based on an actuarial valuation as of January 1, 2006 and projected to December 31, 2007. The funded status of the executive supplementary defined benefit plan is based on actuarial valuations as of July 1, 2007 and projected to December 31, 2007. The components of Agnico-Eagle's net pension plan expense are as follows:

 	 	2007
	 	2006
	 	2005
	 	
Service cost — benefits earned during the year	 	$	429	 	$	399	 	$	274	 	
Gain due to settlement	 	 	—	 	 	(16	)	 	(124	)	
Prior service cost	 	 	24	 	 	23	 	 	21	 	
Interest cost on projected benefit obligation	 	 	466	 	 	384	 	 	352	 	
Return on plan assets	 	 	(171	)	 	(166	)	 	(157	)	
Amortization of net transition asset, past service liability and net experience gains	 	 	(25	)	 	(22	)	 	(34	)	
 	 		 		 		 	
Net pension plan expense	 	$	723	 	$	602	 	$	332	 	
 	 		 		 		 	
        Agnico-Eagle contributes 5% of its Canadian payroll expense to a defined contribution plan. The expense in 2007 was $4.3 million (2006 — $3.0 million; 2005 — $2.2 million).
        Assets of the Employees Plan are comprised of pooled Canadian and U.S. equity funds and pooled bond funds. As of the measurement date, the plan's assets are allocated 60% to equity securities and 40% to fixed income securities. 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.
129

        As of December 31, 2006, the Company adopted the provisions of FASB Statement No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)" ("FAS 158"). FAS 158 requires employers that sponsor one or more defined benefit plans to (i) recognize the funded status of a benefit plan in its statement of financial position, (ii) recognize the gains or losses and prior service costs or credits that arise during the period as a component of other comprehensive income, net of tax, (iii) measure the defined benefit plan assets and obligations as of the date of the employer's fiscal year-end statement of financial position, and (iv) disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The impact of adopting FAS 158 on the 2006 Consolidated Balance Sheets was as follows:

 	 	Before Application of FAS 158
	 	Adjustment
	 	After Application of FAS 158
	 	
Reclamation provision and other liabilities	 	$	26,051	 	$	1,406	 	$	27,457	 	
Deferred income tax liability	 	$	170,087	 	$	(396	)	$	169,691	 	
Accumulated other comprehensive loss	 	$	(16,989	)	$	(1,010	)	$	(17,999	)	
Total stockholders' equity	 	$	1,253,415	 	$	(1,010	)	$	1,252,405	 	
        Assets for the executives' retirement plan ("Executives Plan") 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, 2007 was $6.8 million (2006 — $5.4 million). At the end of 2007, the remaining unamortized net transition obligation was $1.0 million (2006 — $1.2 million) for the Executives Plan and the net transition asset was $0.2 million (2006 — $0.4 million) for the Employees Plan.
        The following table provides the net amounts recognized in the consolidated balance sheets as of December 31:

 	 	Pension Benefits
2007
	 	Pension Benefits
2006
	 	
 	 	Employees
	 	Executives
	 	Employees
	 	Executives
	 	
Intangible liability (asset)	 	$	(495	)	$	—	 	$	(363	)	$	—	 	
Accrued employee benefit liability	 	 	—	 	 	5,624	 	 	—	 	 	4,071	 	
Accumulated other comprehensive income (loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Initial transition obligation (asset)	 	 	(186	)	 	1,017	 	 	(372	)	 	1,162	 	
 	Past service liability	 	 	—	 	 	140	 	 	—	 	 	177	 	
 	Net experience (gains) losses	 	 	446	 	 	5	 	 	466	 	 	(26	)	
 	 		 		 		 		 	
Net liability (asset)	 	$	(235	)	$	6,786	 	$	(269	)	$	5,384	 	
 	 		 		 		 		 	
        The following table provides the components of the expected recognition in 2008 of amounts in accumulated other comprehensive loss:

 	 	Employees
	 	Executives
	
Initial transition obligation (asset)	 	$	(186	)	$	171	
Past service liability	 	 	—	 	 	26	
Net experience losses	 	 	21	 	 	—	
 	 		 		
 	 	$	(165	)	$	197	
 	 		 		
130

        The funded status of the Employees Plan and the Executives Plan for 2007 and 2006 is as follows:

 	 	2007
	 	2006
	 	
 	 	Employees
	 	Executives
	 	Employees
	 	Executives
	 	
Reconciliation of the market value of plan assets	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value of plan assets, beginning of year	 	$	2,341	 	$	897	 	$	2,243	 	$	747	 	
Agnico-Eagle's contribution	 	 	—	 	 	310	 	 	—	 	 	153	 	
Actual return on plan assets	 	 	(67	)	 	—	 	 	272	 	 	—	 	
Benefit payments	 	 	(185	)	 	(155	)	 	(172	)	 	(153	)	
Other	 	 	—	 	 	—	 	 	—	 	 	153	 	
Divestitures	 	 	—	 	 	—	 	 	—	 	 	—	 	
Effect of exchange rate changes	 	 	398	 	 	174	 	 	(2	)	 	(3	)	
 	 		 		 		 		 	
Fair value of plan assets, end of year	 	$	2,487	 	$	1,226	 	$	2,341	 	$	897	 	

Reconciliation of projected benefit obligation	

 	

 	

 	

 	
 	
Projected benefit obligation, beginning of year	 	$	2,072	 	$	6,280	 	$	2,013	 	$	5,237	 	
Service costs	 	 	—	 	 	429	 	 	—	 	 	399	 	
Interest costs	 	 	108	 	 	358	 	 	99	 	 	285	 	
Actuarial losses (gains)	 	 	(98	)	 	34	 	 	133	 	 	641	 	
Benefit payments	 	 	(185	)	 	(264	)	 	(172	)	 	(256	)	
Effect of exchange rate changes	 	 	355	 	 	1,175	 	 	(1	)	 	(26	)	
 	 		 		 		 		 	
Projected benefit obligation, end of year	 	$	2,252	 	$	8,012	 	$	2,072	 	$	6,280	 	
 	 		 		 		 		 	
Excess (deficiency) of plan assets over projected benefit obligation	 	$	235	 	$	(6,786	)	$	269	 	$	(5,383	)	

Comprised of:	

 	

 	

 	

 	
 	
Unamortized transition asset (liability)	 	$	186	 	$	(1,017	)	$	372	 	$	(1,162	)	
Unamortized net experience loss	 	 	(446	)	 	(145	)	 	(466	)	 	(150	)	
Accrued assets (liabilities)	 	 	495	 	 	(5,624	)	 	363	 	 	(4,071	)	
 	 		 		 		 		 	
 	 	$	235	 	$	(6,786	)	$	269	 	$	(5,383	)	
 	 		 		 		 		 	
Weighted average discount rate (i)	 	 	5.50%	 	 	5.50%	 	 	5.00%	 	 	5.00%	 	
Weighted average expected long-term rate of return	 	 	7.00%	(ii)	 	n.a.	 	 	7.50%	(ii)	 	n.a.	 	
Weighted average rate of compensation increase	 	 	n.a.	 	 	3.00%	 	 	n.a.	 	 	3.00%	 	
Estimated average remaining service life for the plan (in years)	 	 	12.0	 	 	7.0	(iii)	 	13.0	 	 	8.0	(iii)	

Notes:
(i)
Discount rates used for the Executives Plan and Employees Plans 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 are presented below:

 	 	Employees
	 	Executives
	 	Total
	
2008	 	$	178	 	$	109	 	$	287	
2009	 	$	172	 	$	109	 	$	281	
2010	 	$	167	 	$	109	 	$	276	
2011	 	$	160	 	$	109	 	$	269	
2012	 	$	154	 	$	373	 	$	527	
2013 - 2017	 	$	652	 	$	2,133	 	$	2,785	
131

6.     SHAREHOLDERS' EQUITY
(a)
Common shares
        In February 2006, the Convertible Debentures were redeemed in full (see note 4(a)) and there are no longer shares reserved for future issuances related to the Convertible Debentures.
        In 2007, the Company declared dividends on its common shares of $0.18 per share (2006 — $0.12 per share; 2005 — $0.03 per share).
(b)
Flow-through share private placements
        In 2007, Agnico-Eagle issued nil (2006 — 1,226,000; 2005 — 500,000) common shares under flow-through share private placements for total proceeds of nil (2006 — $35.3 million; 2005 — $8.3 million), net of share issue costs. Proceeds from previous private placements were used by Agnico-Eagle for the purpose of incurring Canadian exploration expenditures in connection with its 2007 and 2008 exploration activities. Effective December 31, 2007, the Company renounced to its investors C$10.1 million (2006 — C$40.2 million; 2005 — C$10.0 million) of such expenses for income tax purposes. The Company has no further obligations to incur exploration expenditures related to the expenditures previously renounced.
        The difference between the flow-through share issuance price and the market price of Agnico-Eagle's 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 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 6,900,000 warrants. Each whole warrant entitled the holder to purchase one common share at a price of $19.00, subject to certain adjustments summarized in the prospectus relating to the issuance of the warrants. During 2007, 6,873,190 warrants were exercised (2006 — 4,000). The warrants were exercisable at any time prior to November 14, 2007, at which time 22,810 warrants expired.
        In 2006 the Company closed a public offering of 8,455,000 common shares for total proceeds of $238.0 million net of share issue costs.
(d)
Accumulated other comprehensive loss
        The opening balance of the cumulative translation adjustment in accumulated other comprehensive loss in 2007 and 2006 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 periods' 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 deficit in the cumulative translation adjustment account within accumulated other comprehensive loss as at December 31, 2007 and 2006.
        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 certain foreign exchange derivative 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 accumulated other comprehensive loss, net of related tax effects:

 	 	2007
	 	2006
	 	
Cumulative translation adjustment from adopting US dollar as principal reporting currency	 	$	(15,907	)	$	(15,907	)	
Unrealized gain (loss) on available-for-sale securities	 	 	(6,484	)	 	870	 	
Unrealized loss on gold put option contracts	 	 	—	 	 	(1,653	)	
Cumulative translation adjustments	 	 	(299	)	 	(299	)	
Unrealized loss on pension liability upon application of FASB Statement No. 158	 	 	(1,422	)	 	(1,406	)	
Tax effect of accumulated other comprehensive loss items	 	 	400	 	 	396	 	
 	 		 		 	
 	 	$	(23,712	)	$	(17,999	)	
 	 		 		 	
132

        In 2007, a $1.7 million (2006 — $2.0 million) 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 2007. Also in 2007, a $1.9 million gain (2006 — $16.6 million gain) 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 per share
        The following table provides the weighted average number of common shares used in the calculation of basic and diluted income per share:

 	 	2007
	 	2006
	 	2005
	
Weighted average number of common shares outstanding — basic	 	132,768,049	 	115,461,046	 	89,029,754	
Add: Dilutive impact of employee stock options	 	1,189,820	 	786,358	 	483,045	
 	Dilutive impact of warrants	 	—	 	2,862,891	 	—	
 	 		 		 		
Weighted average number of common shares outstanding — diluted	 	133,957,869	 	119,110,295	 	89,512,799	
 	 		 		 		
        The calculation of diluted income per share has been computed using the treasury stock method. In applying the treasury stock method, options and warrants with an exercise price greater than the average quoted market price of the common shares are not included in the calculation of diluted income per share as the effect is anti-dilutive.
        In 2005, the Convertible Debentures and warrants were anti-dilutive and thus were not included in the calculation of diluted income per share.
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.
        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. In 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. In 2004 and 2006, the shareholders approved a further 2,000,000 and 3,000,000 common shares for issuance under the ESOP, respectively.
        Of the 1,380,000 options granted under the ESOP in 2007, 345,000 options granted vested immediately and expire in 2012. The remaining options expire in 2012 and vest in equal installments, on each anniversary date of the grant, over a three-year period. As a result of the Cumberland acquisition, 326,250 options in Cumberland were converted to options in the Company. All these options vested immediately. Of the 1,232,000 options granted under the ESOP in 2006, 308,000 options granted vested immediately and expire in 2011. The remaining options expire in 2011 and vest in equal installments, on each anniversary date of the grant, over a three-year period. Of the 982,000 options granted under the ESOP in 2005, 245,500 options granted vested immediately and expire in 2010. The remaining options expire in 2010 and vest in equal installments, on each anniversary date of the grant, over a three-year period.
133

        The following summary sets out the activity with respect to Agnico-Eagle's outstanding stock options:

 	 	2007
	 	2006
	 	2005
	
 	 	Options
	 	Weighted average
exercise price
	 	Options
	 	Weighted average
exercise price
	 	Options
	 	Weighted average
exercise price
	
Outstanding, beginning of year	 	2,478,790	 	C$	19.55	 	3,071,625	 	C$	15.78	 	2,383,150	 	C$	15.16	
Granted	 	1,706,250	 	 	41.74	 	1,232,000	 	 	24.52	 	982,000	 	 	16.61	
Exercised	 	(536,116	)	 	17.56	 	(1,805,085	)	 	16.49	 	(214,725	)	 	12.44	
Cancelled	 	(39,000	)	 	19.16	 	(19,750	)	 	19.28	 	(78,800	)	 	16.33	
 	 		 		 		 		 		 		
Outstanding, end of year	 	3,609,924	 	C$	30.34	 	2,478,790	 	C$	19.55	 	3,071,625	 	C$	15.78	
 	 		 		 		 		 		 		
Options exercisable at end of year	 	1,908,049	 	 	 	 	1,137,103	 	 	 	 	2,257,250	 	 	 	
 	 		 	 	 	 		 	 	 	 		 	 	 	
        Cash received for options exercised in 2007 was $8.8 million (2006 — $26.0 million).
        The weighted average grant-date fair value of options granted in 2007 was C$12.53 (2006 — C$8.17; 2005 — C$4.17). The following table summarizes information about Agnico-Eagle's stock options outstanding at December 31, 2007:

 	 	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$9.20	 	40,573	 	2.1 years	 	C$7.52	 	40,573	 	C$7.52	
C$10.40 — C$14.67	 	212,275	 	2.0 years	 	C$10.75	 	207,775	 	C$10.66	
C$15.60 — C$19.14	 	914,150	 	1.8 years	 	C$16.71	 	860,775	 	C$16.77	
C$19.24 — C$25.60	 	772,600	 	3.0 years	 	C$23.02	 	285,100	 	C$23.02	
C$25.62 — C$31.70	 	276,176	 	3.3 years	 	C$29.06	 	154,676	 	C$27.90	
C$36.23 — C$47.95	 	186,650	 	4.4 years	 	C$41.39	 	59,150	 	C$42.77	
C$48.09 — C$52.88	 	1,207,500	 	4.0 years	 	C$48.15	 	300,000	 	C$48.15	
 	 		 		 		 		 		
C$6.55 — C$52.88	 	3,609,924	 	3.1 years	 	C$30.34	 	1,908,049	 	C$23.48	
 	 		 		 		 		 		
        The Company has reserved for issuance 3,609,924 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, 2007, 2006 and 2005 was 2,832,250, 4,212,250 and 1,943,285, respectively.
        On January 2, 2008, 2,385,000 options were granted under the ESOP, of which 596,250 options vested immediately and expire in the year 2013. The remaining options expire in 2013 and vest in equal installments on each anniversary date of the grant, over a three-year period.
        Agnico-Eagle estimated the fair value of options under the Black-Scholes option pricing model using the following weighted average assumptions:

 	 	2007
	 	2006
	 	2005
	
Risk-free interest rate	 	4.02%	 	3.91%	 	3.1%	
Expected life of options (in years)	 	2.5	 	2.5	 	2.5	
Expected volatility of Agnico-Eagle's share price	 	37.6%	 	48.7%	 	35.6%	
Expected dividend yield	 	0.29%	 	0.12%	 	0.24%	
        The Company uses historical volatility in estimating the expected volatility of Agnico-Eagle's share price.
        The total compensation cost for the ESOP recognized in the consolidated statements of income (loss) for the current year was $9.8 million (2006 — $5.2 million; 2005 — $2.4 million). The total compensation cost related to nonvested options not yet recognized was $9.9 million as of December 31, 2007.
134

(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 2007, 167,378 common shares were issued under the Purchase Plan (2006 — 146,249; 2005 — 245,494) for proceeds of $7.1 million (2006 — $4.7 million; 2005 — $3.6 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 592,151 common shares (2006 — 759,529; 2005 — 905,778) under the Purchase Plan.
8.     INCOME AND MINING TAXES
        Income and mining taxes recovery is made up of the following geographic components:

 	 	2007
	 	2006
	 	2005
	 	
Current provision	 	 	 	 	 	 	 	 	 	 	
 	Canada	 	$	3,272	 	$	20,266	 	$	—	 	
Future provision	 	 	 	 	 	 	 	 	 	 	
 	Canada	 	 	20,363	 	 	69,645	 	 	(13,323	)	
 	Finland	 	 	(3,702	)	 	11,522	 	 	10,546	 	
 	Other	 	 	—	 	 	(2,127	)	 	—	 	
 	 		 		 		 	
 	 	$	19,933	 	$	99,306	 	$	(2,777	)	
 	 		 		 		 	
        Cash income and mining taxes paid in 2007 were $22.1 million (2006 — $1.4 million expense; 2005 — $6.2 million recovery).
        The income and mining taxes 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:

 	 	2007
	 	2006
	 	2005
	 	
Combined federal and composite provincial tax rates	 	32.6%	 	34.6%	 	34.8%	 	
Increase (decrease) in taxes resulting from:	 	 	 	 	 	 	 	
Provincial mining duties	 	12.3	 	12.3	 	19.2	 	
Resource allowances	 	—	 	(3.5	)	(17.8	)	
Impact of foreign tax rates	 	(2.3	)	1.1	 	—	 	
Permanent and other differences	 	(0.9	)	0.8	 	0.8	 	
Utilization of temporary differences for which no benefit was previously recognized	 	—	 	—	 	(10.4	)	
Utilization of losses for which no benefit was previously recognized	 	—	 	(4.5	)	(34.5	)	
Effect of changes in Canadian income tax legislation	 	(29.2	)	(2.7	)	—	 	
 	 		 		 		 	
Actual rate as a percentage of pre-tax income	 	12.5%	 	38.1%	 	(7.9%	)	
 	 		 		 		 	
135

        As at December 31, 2007 and 2006, Agnico-Eagle's future income and mining tax assets and liabilities are as follows:

 	 	2007
	 	2006
	 	
 	 	Assets
	 	Liabilities
	 	Assets
	 	Liabilities
	 	
Non-current:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income taxes:	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Plant and equipment	 	 	—	 	 	—	 	$	3,374	 	$	—	 	
 	Mine development costs	 	 	—	 	 	—	 	 	—	 	 	29,787	 	
 	Mining properties	 	 	—	 	 	565,613	 	 	435	 	 	142,340	 	
 	Net operating and capital loss carryforwards	 	 	17,805	 	 	—	 	 	16,029	 	 	—	 	
 	Unrealized foreign exchange gain on Convertible Debentures	 	 	—	 	 	—	 	 	—	 	 	—	 	
 	Mining duties	 	 	—	 	 	(55,998	)	 	15,867	 	 	—	 	
 	Reclamation provisions	 	 	—	 	 	(25,499	)	 	6,298	 	 	(2,436	)	
 	Other	 	 	—	 	 	—	 	 	916	 	 	—	 	
Valuation allowance	 	 	(11,900	)	 	—	 	 	(11,860	)	 	—	 	
 	 		 		 		 		 	
Non-current future income and mining tax assets and liabilities	 	$	5,905	 	$	484,116	 	$	31,059	 	$	169,691	 	
 	 		 		 		 		 	
        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 due in part to the weaker US dollar in relation to the Canadian dollar and the Swedish krona throughout 2007. In addition, upon the Cumberland acquisition, an additional $279.8 million future tax liability was recognized attributable to the purchase price. At December 31, 2007, asset and liability amounts were translated into US dollars at an exchange rate of C$0.9881 per $1.00, and at an exchange rate of SEK 6.4568 per $1.00, whereas at December 31, 2006, asset and liability amounts were translated at an exchange rate of C$1.1652 per $1.00, and at an exchange rate of SEK 6.8342 per $1.00. A future income tax liability was also recorded on the acquisition of Riddarhyttan (see note 9 (a)).
        The Company operates in different jurisdictions and accordingly it is subject to income and other taxes under the various tax regimes in the countries in which it operates. The tax rules and regulations in many countries are highly complex and subject to interpretation. The Company may be subject in the future to a review of its historic income and other tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules and regulations to the Company's business conducted within the country involved. The Company has not accrued any taxes associated with any such reviews of its income tax filing as no such losses are considered to be probable.
        The capital loss carryforwards do not expire.
        In June 2006, the Financial Accounting Standards Board (FASB) issued FIN 48 to create a single model to address accounting for uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006.
        The Company adopted the provision of FIN 48 effective January 1, 2007. As a result of the implementation of FIN 48, the Company reported a $4,487 reduction to the January 1, 2007, balance of retained earnings.
        A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows:

Balance at January 1, 2007	 	$	4,487	 	
Reductions for foreign exchange	 	 	(1,097	)	
 	 		 	
Balance at December 31, 2007	 	$	3,390	 	
 	 		 	
        The full amount of unrecognized tax liability of $3,390, if recognized, would reduce our annual effective tax rate. We do not expect our unrecognized tax liability to change significantly over the next 12 months.
        The Company is subject to taxes in the following significant jurisdictions: Canada, Mexico and Finland, each with varying statutes of limitations. The 1998 through 2007 tax years generally remain subject to examination.
136

9.     ACQUISITIONS
(a)
Riddarhyttan Resources AB
        Riddarhyttan was a precious and base metals exploration and development company with a focus on the Nordic region of Europe. Riddarhyttan was the 100% owner of the Suurikuusikko gold deposit in Finland on which the Kittila mine project is located. In the second quarter of 2004, the Company acquired a 13.8% ownership interest in Riddarhyttan. In connection with this acquisition, two representatives of the Company were elected to Riddarhyttan's Board of Directors. Through the subscription for shares in Riddarhyttan's rights issue in December 2004, the Company increased its ownership level to approximately 14%.
        On November 14, 2005, the Company completed its tender offer for all the shares of Riddarhyttan. As of December 31, 2005, the Company owned an aggregate of 102,880,951 shares, or approximately 97.3% of the outstanding shares and voting rights of Riddarhyttan. In 2006, the Company completed the acquisition of the remaining 2.7% of the Riddarhyttan shares that it did not already own under the compulsory acquisition procedures under Swedish law by obtaining advanced possession of these shares in the second half of 2006. Advance possession means that the Company is entitled to be registered as owner of these shares and thereby entitled to exercise all rights relating to these shares that vest in a shareholder. Payment of the redemption price was made in February 2007.
        The results of operations of Riddarhyttan are included in the consolidated statements of income from October 18, 2005.
        The purchase price, before transaction costs, was $125.9 million which was paid through the issuance of 10,023,882 shares of the Company and a cash payment amounting to $5.1 million:

 	 	Shares Issued
	
Total Issuance of the Company's Shares for Riddarhyttan Acquisition:	 	 	
October 18, 2005	 	9,104,542	
October 26, 2005	 	666,905	
November 14, 2005	 	252,435	
 	 		
Total shares issued	 	10,023,882	
 	 		
        The allocation of the total purchase price to the fair values of assets acquired is set forth in the table below:

Total Purchase Price:	 	 	 	 	
Purchase price	 	$	125,908	 	
Balance of equity investment	 	 	11,123	 	
Transaction costs	 	 	7,725	 	
 	 		 	
Total purchase price to allocate	 	$	144,756	 	

Fair Value of Assets Acquired:	

 	
 	
Suurrikuusikko property	 	$	194,465	 	
Net future tax liability	 	 	(52,688	)	
Iso-Kuotko property	 	 	2,335	 	
Oijarvi property	 	 	609	 	
Other	 	 	35	 	
 	 		 	
Total fair value of assets acquired	 	$	144,756	 	
 	 		 	
(b)
Pinos Altos Project
        In March 2005, the Company entered into an agreement with Industrias Penoles S.A. de C.V. ("Penoles") to acquire the Pinos Altos project in Chihuahua, Mexico. The Pinos Altos project is located in the Sierra Madre gold belt, 225 kilometres west of the city of Chihuahua.
        Under the terms of the agreement, Agnico-Eagle had the option to purchase the Pinos Altos project for cash and share consideration. In March 2006, Agnico-Eagle paid Penoles $32.5 million in cash and issued 2,063,635 common shares to Penoles to obtain 100% ownership of the Pinos Altos project. In addition, the Company incurred $0.2 million in transaction costs associated with the property acquisition.
137

        The allocation of the total purchase price to the fair values of assets acquired is set forth in the table below:

	 	 	
Total Purchase Price:	 	 	 	
Purchase price	 	$	66,809	
Transaction costs	 	 	167	
 	 		
Total purchase price to allocate	 	$	66,976	

Fair Value of Assets Acquired:	

 	
Pinos Altos mining property	 	$	66,976	
 	 		
(c)
Cumberland Resources Ltd.
        On February 14, 2007, the Company and Agnico-Eagle Acquisition Corporation ("Agnico Acquisition"), a wholly-owned subsidiary of the Company, signed an agreement with Cumberland under which the Company and Agnico Acquisition (the "Offeror") agreed to make an exchange offer (the "Offer") for all of the outstanding common shares of Cumberland not already owned by the Company. At the time, the Company owned 2,037,000 or 2.6% of the outstanding shares of Cumberland on a fully diluted basis. Under the terms of the Offer, each Cumberland share was to be exchanged for 0.185 common share of Agnico-Eagle. At the time, Cumberland owned 100% of the Meadowbank gold project, located in Nunavut, Canada. As of July 9, 2007, all common shares of Cumberland were acquired pursuant to the Offer. As of July 9, 2007, a total of 13,768,510 of the Company's shares were issued for the acquisition resulting in an increase of $536.6 million in common shares issued. The total purchase price as of July 9, 2007 amounted to $577.0 million which was allocated to various balance sheet accounts, mainly mining properties. On August 1, 2007, the Agnico Acquisition, Cumberland and a wholly-owned subsidiary of Cumberland were amalgamated with Agnico-Eagle.
        The results of operations of Cumberland are included in the income statement for the combined entity from April 17, 2007.
        The purchase price paid through the issuance of 13,768,510 shares of the Company is summarized as follows.

 	 	Shares Issued
	
Total Issuance of the Company's Shares for Cumberland Acquisition:	 	 	
April 16, 2007	 	11,610,074	
April 30, 2007	 	932,958	
July 9, 2007	 	1,225,478	
 	 		
Total shares issued	 	13,768,510	
 	 		
        In addition, the Company entered into a series of gold derivative transactions in connection with the take-over bid for Cumberland in February 2007. Prior to announcement of the take-over bid by Agnico-Eagle, Cumberland secured a gold loan facility for up to 420,000 ounces. As part of the condition of the gold loan, Cumberland entered into a series of derivative transactions to secure a minimum monetized value for the gold that was expected to be received under the gold loan. Cumberland entered into a zero-cost collar whereby a gold put option was bought with a strike price of C$605 per ounce. The cost of the put option was financed by the sale of a gold call option with a strike price of $800 per ounce. Both of Cumberland's derivative positions were for 420,000 ounces of gold and matured on September 20, 2007, the expected drawdown date of the loan. As Agnico-Eagle's policy is to not sell forward gold production, Agnico-Eagle entered into a series of transactions to neutralize Cumberland's derivative position. Accordingly, Agnico-Eagle purchased call options and sold put options with the exact same size, strike price and maturity as Cumberland's derivative position for $15.9 million. All derivative positions were extinguished in late June 2007.
138

        The allocation of the total purchase price for the 100% owned by the Company to the fair values of assets acquired is set forth in the table below:

Total Purchase Price:	 	 	 	 	
Purchase price	 	$	536,556	 	
Share of Cumberland previously acquired for cash	 	 	9,637	 	
Fair value of options and warrants acquired	 	 	18,956	 	
Transaction costs	 	 	11,836	 	
 	 		 	
Total purchase price to allocate	 	$	576,985	 	

Fair Value of Assets Acquired:	

 	
 	
Net working capital acquired (including cash of $96,043)	 	$	81,704	 	
Plant and equipment	 	 	40,238	 	
Other net liabilities	 	 	(1,399	)	
Mining properties	 	 	736,197	 	
Future income tax liability	 	 	(279,755	)	
 	 		 	
Total purchase price	 	$	576,985	 	
 	 		 	
        Pro forma results of operations for Agnico-Eagle assuming the acquisition of Cumberland described above had occurred as of January 1, 2006 are shown below. On a pro forma basis, there would have been no effect on Agnico-Eagle's consolidated revenues.

 	 	Unaudited
	
 	 	2007
	 	2006
	
Pro forma net income	 	$	124,393	 	$	167,435	
Pro forma income per share — basic	 	$	0.96	 	$	1.30	
10.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 	 	2007
	 	2006
	
Trade payables	 	$	58,438	 	$	28,243	
Wages payable	 	 	7,043	 	 	3,450	
Accrued liabilities	 	 	33,040	 	 	10,845	
Current portion of capital lease obligation	 	 	9,706	 	 	—	
 	 		 		
 	 	$	108,227	 	$	42,538	
 	 		 		
11.   RELATED PARTY TRANSACTIONS
        As at December 31, 2007, the total indebtedness of Contact to the Company was nil (2006 — $3.5 million) including accrued interest to December 31, 2007 of nil (2006 — $0.1 million).
        Contact was a consolidated entity of the Company for the year ended December 31, 2002. As of August 2003, the Company ceased consolidating 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 was 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.
        In 2006, the Company tendered its 13.8 million Contact shares in conjunction with Stornoway's offer to acquire all of the outstanding shares of Contact. Under the terms of the offer, each share of Contact was exchanged for 0.36 of a Stornoway share resulting in the receipt by the Company of 4,968,747 Stornoway shares.
        A $4.4 million gain on the exchange of shares was recognized and a gain of $2.9 million was recognized on the write-up of the loan to Contact during 2006. In addition, Agnico-Eagle subscribed to a private placement of subscription receipts by Stornoway for a total cost of $19.8 million.
139

        On January 26, 2007, the Company entered into a note assignment agreement with Stornoway. The agreement resulted in Stornoway acquiring the debt in full by way of assignment of the note in consideration for the issuance to the Company of 3,207,861 common shares of Stornoway at a deemed value of C$1.25 per share on February 12, 2007.
        In addition, on March 16, 2007, the Company purchased from Stornoway C$5 million in unsecured Series A Convertible Debentures and C$5 million in unsecured Series B Convertible Debentures. Both series of debentures mature two years after their date of issue and interest is payable under the debentures quarterly at 12% per annum. At the option of Stornoway, interest payments may be paid in cash or in shares of Stornoway. On the maturity date, the principal amount of the Series A Debentures may be repaid in cash or shares at Stornoway's election and the Series B Debentures must be repaid in cash or shares at the Company's election. During 2007, the interest payments to the Company consisted of $0.6 million in cash and 302,450 shares in Stornoway.
12.   COMMITMENTS AND CONTINGENCIES
        The Company was served with a Statement of Claim on April 30, 2007 from a former employee, alleging, among other things, wrongful dismissal and seeking damages of approximately C$13.1 million. The Company believes this claim is frivolous and without merit and will vigorously defend the matter, and therefore, no provision for this contingency has been recorded.
        The Company is involved in a legal proceeding in Sweden relating to the compulsory acquisition procedures under Swedish law (note 9(a)); and the Company has been required to provide financial assurance in the form of a bank guarantee. As of December 31, 2007, the amount of this guarantee was $3.2 million.
        As part of its ongoing business and operations, the Company has been required to provide assurance in the form of letters of credit for environmental and site restoration costs, custom credits, government grants and other general corporate purposes. As at December 31, 2007, the total amount of these guarantees was $23.0 million.
        The Company has a royalty agreement with the Finnish Government relating to the Kittila mining operation. Starting 12 months after the mining operations commence, the Company has to pay 2% on net smelter return, defined as revenue less processing costs. The royalty is paid on a yearly basis the following year.
13.   LEASES
(a)
Capital Leases
        The Company has agreements with third-party providers of mobile equipment for the development of the mines in Meadowbank, Canada, and in Kittila, Finland. These arrangements represent capital leases in accordance with the guidance in FAS 13. The leases for mobile equipment in Finland are for five years and the leases for mobile equipment in Canada are for three years. The effective annual interest rate on the lease for mobile equipment in Canada is 5.80%. The effective annual interest rate on the lease for mobile equipment in Finland is 4.99%. Amortization of capital lease expenses will start when mining commences.
        The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of December 31, 2007.

Year ending December 31:	 	 	 	 	
2008	 	$	9,706	 	
2009	 	 	4,914	 	
2010	 	 	620	 	
2011	 	 	620	 	
2012	 	 	1,664	 	
Later years	 	 	—	 	
 	 		 	
Total minimum lease payments	 	 	17,524	 	
Less amount representing interest	 	 	(1,353	)	
 	 		 	
Present value of net minimum lease payments	 	 	16,171	 	
 	 		 	
140

        The Company's capital lease obligation at December 31 is comprised as follows:

 	 	2007
	 	2006
	
Total future lease payments	 	$	17,524	 	$	—	
Less: Interest	 	 	(1,353	)	 	—	
 	 		 		
 	 	 	16,171	 	 	—	
 	 		 		
Less: Current portion	 	 	9,706	 	 	—	
 	 		 		
Long-term portion of capital leases	 	 	6,465	 	 	—	
 	 		 		
(b)
Operating Leases
        The Company has a number of operating lease agreements involving office space. Some of the leases for office facilities contain escalation clauses for increases in operating costs and property taxes. Future minimum lease payments required to meet obligations that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2007 are as follows:
        Minimum lease payments:

2008	 	1.2	
2009	 	1.2	
2010	 	1.2	
2011	 	1.2	
2012	 	1.2	
Thereafter	 	9.3	
 	 		
Total	 	15.3	
 	 		
14.   RESTRICTED CASH
        The Company has provided security to support an outstanding letter of credit made available to the Company for the purchase of mining equipment. The letter of credit to expires in April, 2008.
15.   FINANCIAL INSTRUMENTS
        Agnico-Eagle has in the past entered into financial instruments with a number of financial institutions in order to hedge underlying revenue, cost and fair value exposures arising from commodity prices, interest rates and foreign currency exchange rates.
        In 2007, financial instruments which have subjected Agnico-Eagle to market risk and concentration of credit risk consisted primarily of cash, cash equivalents and short-term investments. Agnico-Eagle places its cash and cash equivalents 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 has attempted to mitigate the risks associated with fluctuating metal prices and foreign exchange rates. Agnico-Eagle has used 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 were straightforward contracts and involve limited complexity. Agnico-Eagle was exposed to credit risk in the event of non-performance by counterparties in connection with its currency and metal option contracts. Agnico-Eagle did not obtain any security to support financial instruments subject to credit risk, but mitigated 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 expired monthly based on planned production volumes. These instruments had 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 complied with the new documentation requirements of FAS 133. As a result, these option contracts qualified for hedge accounting and from 2002 onwards, changes in the fair value of these option contracts were recognized as part of other comprehensive income (loss).
141

        Gains and losses on gold put option contracts are reclassified from accumulated other comprehensive income (loss) to income in the same period the forecasted transaction affects income. Although the gold put option contracts were liquidated in 2005, the accumulated loss on these contracts remained in accumulated other comprehensive income (loss) and have been reclassified to income based on the original maturities of these contracts. In 2007, the Company reclassified a loss of $1.7 million relating to its gold put option contracts to income resulting in a $nil balance in accumulated other comprehensive loss at year-end.
        Silver and base metal option contracts
        In January 2005, the Company purchased silver put options with a strike price of $7.00 per ounce and also sold copper call options with a strike price of $3,310 per tonne. The Company sold forward zinc production at a weighted average price of $1,263 per tonne and entered into a zero-cost collar to set a minimum zinc price of $1,215. While setting a minimum price, the zero-cost collar strategy also limits participation to zinc prices above $1,480. In December 2005, the entire 2006 zinc collar position was collapsed at a cost of $3.5 million. These contracts did not qualify for hedge accounting under FAS 133.
        Foreign exchange, metals, and interest rate hedging program
        Agnico-Eagle generates almost all of its revenues in US dollars. The Company's Canadian operations, which include the LaRonde Mine and the Goldex and Lapa mine projects, have Canadian dollar requirements for capital, operating and exploration 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. The Company's written put options did not qualify for hedge accounting and thus were not designated as hedging instruments. As such, changes in fair value for these instruments were recorded in net income. These instruments were entered into to set a range for the US dollar, along with the zero-cost collar of purchased put options and written call options.
        In December 2005, the Company's entire foreign exchange derivative position was collapsed generating cash flow of $4.1 million. As a result of this transaction, Agnico-Eagle had no foreign exchange derivative positions at December 31, 2005. In 2006 however, the Company reclassified a gain of $4.1 million relating to its foreign exchange derivative contracts to income. As at December 31, 2006 the remaining balance in accumulated other comprehensive income was $nil.
        As at December 31, 2007, there were no metal or foreign exchange derivative positions.
        Other required derivative disclosures can be found in note 6(d), "Accumulated other comprehensive income (loss)", and information regarding the Company's interest rate derivatives can be found in note 4(a), "Convertible subordinated debentures".
        Agnico-Eagle's exposure to interest rate risk at December 31, 2007 relates to its cash, cash equivalents and short term investments of $396 million (2006 — $459 million). The Company's short-term investments and cash equivalents have a fixed weighted average interest rate of 5.14% (2006 — 4.89%).
        The fair values of Agnico-Eagle's current financial assets and liabilities approximate their carrying values as at December 31, 2007.
142

ITEM 19.    EXHIBITS
        Exhibits and Exhibit Index.     The following Exhibits are filed as part of this Annual Report and incorporated herein by reference to the extent applicable.
Exhibit Index

Exhibit No.
	 	Description
	 	 	
1.01	 	By-laws of the Registrant, as amended, (incorporated by reference to Exhibit 99F to the Registrant's Annual Report on Form 20-F (File No. 001-13422) for the fiscal year ended December 31, 2003, as filed with the SEC on May 18, 2004).	 	*	
1.02	 	Articles of Amalgamation of the Registrant.	 	*	
4.01	 	Credit Agreement dated January 10, 2008.	 	*	
4.02	 	Form of Trust Indenture (incorporated by reference to Exhibit 7.1 to the Registrant's Registration Statement on Form F-10/A (File No. 333-100902) filed with the SEC on November 8, 2002).	 	*	
4.03	 	Form of Warrant Indenture (incorporated by reference to Exhibit 7.1 to the Registrant's Registration Statement on Form F-10/A (File No. 333-100850) filed with the SEC on November 6, 2002).	 	*	
4.05	 	Amended and Restated Stock Option Plan (incorporated by reference to Exhibit 99.1 to the Registrant's Registration Statement on Form S-8) (File No. 333-130339), filed with the SEC on December 15, 2005).**	 	*	
4.06	 	Amended and Restated Incentive Share Purchase Plan (incorporated by reference to Exhibit 99.2 to the Registrant's Registration Statement on Form S-8) (File No. 333-130339), filed with the SEC on December 15, 2005).**	 	*	
8.01	 	List of subsidiaries of the Registrant.	 	*	
11.01	 	Code of Ethics (incorporated by reference to Exhibit 2 to the Registrant's Form 6-K filed December 13, 2005).	 	*	
12.01	 	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Subsections (A) and (B) of Section 1350, Chapter 63 of Title 18, United States Code)(Sean Boyd).	 	*	
12.02	 	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Subsections (A) and (B) of Section 1350, Chapter 63 of Title 18, United States Code)(David Garofalo).	 	*	
13.01	 	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).***	 	*	
13.02	 	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).***	 	*	
15.01	 	Consent of Independent Registered Public Accounting Firm.	 	*	
15.02	 	Audit Committee Charter (incorporated by reference to Exhibit 15.04 to the Registrant's Annual Report on Form 20-F for the year ended December 31, 2005)
(File No. 1-13422), filed with the SEC on March 27, 2006).	 	*	

*
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 located at 110 F Street, N.E., Room 1580, Washington, D.C. 20549, U.S.A.

**
Management contracts or arrangements

***
Pursuant to the SEC Release No. 33-8212, this certification will be treated as "accompanying" this Annual Report on Form 20-F and not "filed" as part of such report for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act, and this certification will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
143

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

 	 	AGNICO-EAGLE MINES LIMITED	

Toronto, Canada
March 14, 2008	
 	
By:	
/s/   DAVID GAROFALO       

David Garofalo
 Senior Vice President, Finance and
Chief Financial Officer	
144

 
SHAREHOLDER INFORMATION

OFFICERS
Sean Boyd
Vice-Chairman and Chief Executive Officer
 
Eberhard Scherkus
President and Chief Operating Officer
 
Donald G. Allan
Senior Vice-President, Corporate Development
 
Alain Blackburn
Senior Vice-President, Exploration
 
David Garofalo
Senior Vice-President, Finance and Chief Financial Officer
 
R. Gregory Laing
General Counsel, Senior Vice-President, Legal
and Corporate Secretary
 
Patrice Gilbert
Vice-President, Human Resources

Louise Grondin
Vice-President, Environment
 
Ingmar E. Haga
Vice-President, Europe
 
Tim Haldane
Vice-President, Latin America
 
Marc Legault
Vice-President, Project Development
 
Daniel Racine
Vice-President, Operations
 
Jean Robitaille
Vice-President, Metallurgy and Marketing
 
David Smith
Vice-President, Investor Relations

 

AUDITORS
Ernst & Young LLP
Chartered Accountants
 
SOLICITORS
Davies Ward Philips & Vineberg LLP
(Toronto and New York)
 
LISTINGS
The New York Stock Exchange and the
Toronto Stock Exchange
Stock Symbol: AEM
 
TRANSFER AGENT
Computershare Trust Company of Canada
1-800-564-6253
 
INVESTOR RELATIONS
Hazel Winchester
(416) 947-1212
 
ANNUAL MEETING OF SHAREHOLDERS
Le Royal Meridien King Edward Hotel
37 King Street East
Toronto, Ontario, Canada
May 9, 2008
11:00 am
CORPORATE HEAD OFFICE
Agnico-Eagle Mines Limited
145 King Street East, Suite 400
Toronto, Ontario
Canada M5C 2Y7
Phone: (416) 947-1212
 
WEBSITE
www.agnico-eagle.com

 

 
THE COVER AND FIRST 24 PAGES OF THIS
BOOK WERE PRINTED ON FSC-CERTIFIED
MOHAWK OPTIONS 100% RECYCLED PAPER.
 
PAGES 25 THROUGH 124 WERE PRINTED
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FOR INVESTORS LOOKING FOR QUALITY GROWTH AND EXPOSURE TO GOLD, THIS IS THE PRIME TIME TO INVEST IN AGNICO-EAGLE. WE HAVE STRUCTURED OUR COMPANY TO GENERATE ABOVE-AVERAGE RETURNS TO SHAREHOLDERS AT EVERY STAGE OF THE GOLD CYCLE.

 

>               We are poised to increase gold production fivefold by 2010, with five new mines starting up in the next two years.
 
>               By year-end 2008, we expect to reach 18 to 20 million ounces of gold in reserves through exploration on existing properties.
 
>               Our operations are located in mining-friendly regions with low political risk and long-term mining camp potential.
 
>               Agnico-Eagle is one of the lowest-cost producers in the gold industry, allowing the payment of consecutive annual dividends since 1981.
>               Our longstanding policy regarding non-hedging ensures that shareholders always participate fully in rising gold prices.
 
>               We maintain a solid financial position, have full funding for our growth and maintain a low number of shares outstanding, putting us in a strong position to continue to build per share value.
 
>               The CEO/COO partnership of Sean Boyd and Ebe Scherkus has been in place for 23 years. These two men were recently honoured by The Northern Miner newspaper as 2007 Mining Men of the Year.

 

145  KING STREET EAST, SUITE 400, TORONTO, CANADA M5C 2Y7 TEL. 416.947.1212 FAX. 416.367.4681	agnico-eagle .com	

QuickLinks
TABLE OF CONTENTS
 PRELIMINARY NOTE
NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESOURCES
NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE
PART I
 Consolidated Financial Data (thousands of United States dollars, except where noted)
 Consolidated Financial Data (thousands of United States dollars, except where noted)
 Financial Data (thousands of United States dollars, except where noted)
 PART II
PART III
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Management Certification
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 AGNICO-EAGLE MINES LIMITED CONSOLIDATED BALANCE SHEETS (thousands of United States dollars, US GAAP basis)
AGNICO-EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (thousands of United States dollars except per share amounts, US GAAP basis)
 AGNICO-EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (thousands of United States dollars, US GAAP basis)
AGNICO-EAGLE MINES LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of United States dollars, US GAAP basis)
 AGNICO-EAGLE MINES LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (thousands of United States dollars except per share amounts, unless otherwise indicated) December 31, 2007
 SIGNATURES