AGNICO EAGLE MINES LTD, 20-F filed on 3/28/2013
Annual and Transition Report (foreign private issuer)
Document and Entity Information
12 Months Ended
Dec. 31, 2012
Document and Entity Information
 
Entity Registrant Name
AGNICO EAGLE MINES LTD 
Entity Central Index Key
0000002809 
Document Type
20-F 
Document Period End Date
Dec. 31, 2012 
Amendment Flag
false 
Current Fiscal Year End Date
--12-31 
Entity Well-known Seasoned Issuer
Yes 
Entity Voluntary Filers
No 
Entity Current Reporting Status
Yes 
Entity Filer Category
Large Accelerated Filer 
Entity Common Stock, Shares Outstanding
172,006,593 
Document Fiscal Year Focus
2012 
Document Fiscal Period Focus
FY 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Current
 
 
Cash and cash equivalents
$ 298,068 
$ 179,447 
Short-term investments
8,490 
6,570 
Restricted cash (note 14)
25,450 
35,441 
Trade receivables (note 1)
67,750 
75,899 
Inventories:
 
 
Ore stockpiles, current portion
52,342 
28,155 
Concentrates and dore bars
69,695 
57,528 
Supplies
222,630 
182,389 
Income taxes recoverable (note 9)
19,313 
371 
Available-for-sale securities (note 2 (b))
44,719 
145,411 
Fair value of derivative financial instruments (note 15)
1,835 
 
Other current assets (note 2(a))
92,977 
110,369 
Total current assets
903,269 
821,580 
Other assets (note 2(c))
55,838 
88,048 
Goodwill (note 10)
229,279 
229,279 
Property, plant and mine development (note 3)
4,067,456 
3,895,355 
TOTAL ASSETS
5,255,842 
5,034,262 
Current
 
 
Accounts payable and accrued liabilities (note 11)
185,329 
203,547 
Reclamation provision (note 6(a))
16,816 
26,069 
Dividends payable
37,905 
 
Interest payable (note 5)
13,602 
9,356 
Income taxes payable (note 9)
10,061 
 
Capital lease obligations (note 13(a))
12,955 
11,068 
Fair value of derivative financial instruments (note 15)
 
4,404 
Total current liabilities
276,668 
254,444 
Long-term debt (note 5)
830,000 
920,095 
Reclamation provision and other liabilities (note 6)
127,735 
145,988 
Deferred income and mining tax liabilities (note 9)
611,227 
498,572 
SHAREHOLDERS' EQUITY
 
 
Common shares (notes 7(a), 7(b), and 7(c)): Outstanding - 172,296,610 common shares issued, less 193,740 shares held in trust
3,241,922 
3,181,381 
Stock options (note 8(a))
148,032 
117,694 
Warrants (note 7(b))
24,858 
24,858 
Contributed surplus
15,665 
15,166 
Retained earnings (deficit)
7,046 
(129,021)
Accumulated other comprehensive loss (note 7(d))
(27,311)
(7,106)
Total common shareholders' equity
3,410,212 
3,202,972 
Non-controlling interest
 
12,191 
Total shareholders' equity
3,410,212 
3,215,163 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 5,255,842 
$ 5,034,262 
CONSOLIDATED BALANCE SHEETS (Parenthetical)
Dec. 31, 2012
Dec. 31, 2011
CONSOLIDATED BALANCE SHEETS
 
 
Common shares, issued
172,296,610 
170,859,604 
Treasury shares, held in trust
193,740 
45,868 
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
REVENUES
 
 
 
Revenues from mining operations (note 1)
$ 1,917,714 
$ 1,821,799 
$ 1,422,521 
COSTS, EXPENSES AND OTHER INCOME
 
 
 
Production (exclusive of amortization shown separately below)
897,712 
876,078 
677,472 
Exploration and corporate development
109,500 
75,721 
54,958 
Amortization of property, plant and mine development (note 3)
271,861 
261,781 
192,486 
General and administrative (note 16)
119,085 
107,926 
94,327 
Impairment loss on available-for-sale securities (note 2(b))
12,732 
8,569 
 
Provincial capital tax
4,001 
9,223 
(6,075)
Interest expense (note 5)
57,887 
55,039 
49,493 
Interest and sundry expense (income)
2,389 
5,188 
(10,254)
Loss (gain) on derivative financial instruments (note 15)
819 
(3,683)
(7,612)
Gain on sale of available-for-sale securities (note 2(b))
(9,733)
(4,907)
(19,487)
Impairment loss on Meadowbank mine (note 18)
 
907,681 
 
Loss on Goldex mine (note 17)
 
302,893 
 
Gain on acquisition of Comaplex Minerals Corp., net of transaction costs (note 10)
 
 
(57,526)
Foreign currency translation loss (gain)
16,320 
(1,082)
19,536 
Income (loss) before income and mining taxes
435,141 
(778,628)
435,203 
Income and mining taxes (note 9)
124,225 
(209,673)
103,087 
Net income (loss) for the year
310,916 
(568,955)
332,116 
Attributed to non-controlling interest
 
(60)
 
Attributed to common shareholders
310,916 
(568,895)
332,116 
Net income (loss) per share - basic (note 7(e)) (in dollars per share)
$ 1.82 
$ (3.36)
$ 2.05 
Net income (loss) per share - diluted (note 7(e)) (in dollars per share)
$ 1.81 
$ (3.36)
$ 2.00 
Cash dividends declared per common share (note 7(a)) (in dollars per share)
$ 1.02 
 
$ 0.64 
COMPREHENSIVE INCOME (LOSS)
 
 
 
Net income (loss) for the year
310,916 
(568,955)
332,116 
Other comprehensive income (loss):
 
 
 
Unrealized gain (loss) on derivative financial instrument activities (note 15)
6,902 
(5,863)
 
Adjustments for derivative financial instruments settled during the year (note 15)
(2,758)
1,459 
 
Unrealized (loss) gain on available-for-sale securities (note 2(b))
(27,004)
(26,874)
64,649 
Adjustments for realized loss (gain) on available-for-sale securities due to dispositions and impairments during the year (note 2(b))
2,999 
(4,907)
(19,487)
Net amount reclassified to net income on acquisition of business (note 10)
 
 
(64,508)
Change in unrealized gain (loss) on pension benefits liability (note 6(b))
1,148 
(1,055)
(4,093)
Tax effect of other comprehensive (loss) income items
(1,492)
1,744 
780 
Other comprehensive loss for the year
(20,205)
(35,496)
(22,659)
Comprehensive income (loss) for the year
290,711 
(604,451)
309,457 
Attributed to non-controlling interest
 
(60)
 
Attributed to common shareholders
$ 290,711 
$ (604,391)
$ 309,457 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Shares Outstanding
Stock Options
Warrants
Contributed Surplus
Retained Earnings (Deficit)
Accumulated Other Comprehensive Income (Loss)
Non-Controlling Interest
Balance at Dec. 31, 2009
 
$ 2,378,759 
$ 65,771 
$ 24,858 
$ 15,166 
$ 216,158 
$ 51,049 
 
Balance (in shares) at Dec. 31, 2009
 
156,625,174 
 
 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
 
Shares issued under employee stock option plan (note 8(a))
 
104,111 
(29,447)
 
 
 
 
 
Shares issued under employee stock option plan (note 8(a)) (in shares)
 
1,627,766 
 
 
 
 
 
 
Stock options
 
 
42,230 
 
 
 
 
 
Shares issued under the incentive share purchase plan (note 8(b))
 
14,963 
 
 
 
 
 
 
Shares issued under the incentive share purchase plan (note 8(b)) (in shares)
 
229,583 
 
 
 
 
 
 
Shares issued under the Company's dividend reinvestment plan
 
1,404 
 
 
 
 
 
 
Shares issued under the Company's dividend reinvestment plan (in shares)
 
25,243 
 
 
 
 
 
 
Shares issued for purchase of mining property (notes 7(b) and 7(c))
 
579,800 
 
 
 
 
 
 
Shares issued for purchase of mining property (notes 7(b) and 7(c)) (in shares)
 
10,225,848 
 
 
 
 
 
 
Net income (loss) for the year
332,116 
 
 
 
 
332,116 
 
 
Dividends declared ($1.02, nil and $0.64 per share for the years 2012, 2011 and 2010, respectively) (note 7(a))
 
 
 
 
 
(108,009)
 
 
Other comprehensive loss for the year
(22,659)
 
 
 
 
 
(22,659)
 
Restricted share unit plan (note 8(c))
 
(820)
 
 
 
 
 
 
Restricted share unit plan (note 8(c)) (in shares)
 
(13,259)
 
 
 
 
 
 
Balance at Dec. 31, 2010
 
3,078,217 
78,554 
24,858 
15,166 
440,265 
28,390 
 
Balance (in shares) at Dec. 31, 2010
 
168,720,355 
 
 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
 
Shares issued under employee stock option plan (note 8(a))
 
18,094 
(4,396)
 
 
 
 
 
Shares issued under employee stock option plan (note 8(a)) (in shares)
 
308,688 
 
 
 
 
 
 
Stock options
 
 
43,536 
 
 
 
 
 
Shares issued under the incentive share purchase plan (note 8(b))
 
19,229 
 
 
 
 
 
 
Shares issued under the incentive share purchase plan (note 8(b)) (in shares)
 
360,833 
 
 
 
 
 
 
Shares issued under the Company's dividend reinvestment plan
 
10,130 
 
 
 
 
 
 
Shares issued under the Company's dividend reinvestment plan (in shares)
 
176,110 
 
 
 
 
 
 
Shares issued for purchase of mining property (notes 7(b) and 7(c))
 
56,146 
 
 
 
 
 
 
Shares issued for purchase of mining property (notes 7(b) and 7(c)) (in shares)
 
1,250,477 
 
 
 
 
 
 
Non-controlling interest addition upon acquisition
 
 
 
 
 
 
 
12,251 
Net income (loss) for the year
(568,895)
 
 
 
 
(568,895)
 
 
Net loss for the year attributed to non-controlling interest
(60)
 
 
 
 
 
 
(60)
Dividends declared ($1.02, nil and $0.64 per share for the years 2012, 2011 and 2010, respectively) (note 7(a))
 
 
 
 
 
(391)
 
 
Other comprehensive loss for the year
(35,496)
 
 
 
 
 
(35,496)
 
Restricted share unit plan (note 8(c))
 
(435)
 
 
 
 
 
 
Restricted share unit plan (note 8(c)) (in shares)
 
(2,727)
 
 
 
 
 
 
Balance at Dec. 31, 2011
3,215,163 
3,181,381 
117,694 
24,858 
15,166 
(129,021)
(7,106)
12,191 
Balance (in shares) at Dec. 31, 2011
 
170,813,736 
 
 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
 
Shares issued under employee stock option plan (note 8(a))
 
22,968 
(4,759)
 
 
 
 
 
Shares issued under employee stock option plan (note 8(a)) (in shares)
 
416,275 
 
 
 
 
 
 
Stock options
 
 
35,097 
 
 
 
 
 
Shares issued under the incentive share purchase plan (note 8(b))
 
21,671 
 
 
 
 
 
 
Shares issued under the incentive share purchase plan (note 8(b)) (in shares)
 
507,235 
 
 
 
 
 
 
Shares issued under the Company's dividend reinvestment plan
 
18,907 
 
 
 
 
 
 
Shares issued under the Company's dividend reinvestment plan (in shares)
 
444,555 
 
 
 
 
 
 
Shares issued for purchase of mining property (notes 7(b) and 7(c))
 
2,447 
 
 
499 
 
 
 
Shares issued for purchase of mining property (notes 7(b) and 7(c)) (in shares)
 
68,941 
 
 
 
 
 
 
Non-controlling interest eliminated upon acquisition
 
 
 
 
 
 
 
(12,191)
Net income (loss) for the year
310,916 
 
 
 
 
310,916 
 
 
Dividends declared ($1.02, nil and $0.64 per share for the years 2012, 2011 and 2010, respectively) (note 7(a))
 
 
 
 
 
(174,849)
 
 
Other comprehensive loss for the year
(20,205)
 
 
 
 
 
(20,205)
 
Restricted share unit plan (note 8(c))
 
(5,452)
 
 
 
 
 
 
Restricted share unit plan (note 8(c)) (in shares)
 
(147,872)
 
 
 
 
 
 
Balance at Dec. 31, 2012
$ 3,410,212 
$ 3,241,922 
$ 148,032 
$ 24,858 
$ 15,665 
$ 7,046 
$ (27,311)
 
Balance (in shares) at Dec. 31, 2012
 
172,102,870 
 
 
 
 
 
 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2010
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
 
 
Dividends declared (in dollars per share)
$ 1.02 
$ 0.64 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Operating activities
 
 
 
Net income (loss) for the year
$ 310,916 
$ (568,955)
$ 332,116 
Add (deduct) items not affecting cash:
 
 
 
Amortization of property, plant and mine development (note 3)
271,861 
261,781 
192,486 
Deferred income and mining taxes (note 9)
72,145 
(275,773)
66,928 
Gain on sale of available-for-sale securities (note 2(b))
(9,733)
(4,907)
(19,487)
Stock-based compensation (note 8)
47,632 
51,873 
45,672 
Impairment loss on Meadowbank mine (note 18)
 
907,681 
 
Loss on Goldex mine (note 17)
 
302,893 
 
Gain on acquisition of Comaplex Minerals Corp. (note 10)
 
 
(64,508)
Foreign currency translation loss (gain)
16,320 
(1,082)
19,536 
Other
28,780 
31,561 
13,015 
Adjustment for settlement of environmental remediation
(21,449)
(7,616)
 
Changes in non-cash working capital balances:
 
 
 
Trade receivables
8,149 
37,050 
(19,378)
Income taxes
13,304 
(29,867)
9,949 
Inventories
(44,145)
(43,066)
(91,306)
Other current assets
18,909 
(25,838)
(28,729)
Accounts payable and accrued liabilities
(20,928)
31,837 
23,136 
Interest payable
4,246 
(387)
8,077 
Cash provided by operating activities
696,007 
667,185 
487,507 
Investing activities
 
 
 
Additions to property, plant and mine development (note 3)
(445,550)
(482,831)
(511,641)
Acquisition of Grayd Resource Corporation (note 10)
(9,322)
(163,047)
 
(Increase) decrease in short-term investments
(1,920)
(3,262)
Net proceeds from available-for-sale securities (note 2(b))
73,358 
9,435 
36,586 
Purchase of available-for-sale securities (note 2(b))
(2,713)
(91,115)
(42,479)
Decrease (increase) in restricted cash (note 14)
9,991 
(32,931)
(2,510)
Cash used in investing activities
(376,156)
(760,484)
(523,306)
Financing activities
 
 
 
Dividends paid
(118,121)
(98,354)
(26,830)
Repayment of capital lease obligations (note 13(a))
(12,063)
(13,092)
(16,019)
Sale-leaseback financing (note 13(a))
 
 
14,017 
Proceeds from long-term debt (note 5)
315,000 
475,000 
711,000 
Repayment of long-term debt (note 5)
(605,000)
(205,000)
(1,376,000)
Notes issuance (note 5)
200,000 
 
600,000 
Long-term debt financing costst (note 5)
(3,133)
(2,545)
(12,772)
Repurchase of common shares for restricted share unit plan (note 8(c))
(12,031)
(3,723)
(4,037)
Common shares issued
32,742 
26,536 
84,659 
Cash (used in) provided by financing activities
(202,606)
178,822 
(25,982)
Effect of exchange rate changes on cash and cash equivalents
1,376 
(1,636)
(2,939)
Net increase (decrease) in cash and cash equivalents during the year
118,621 
83,887 
(64,720)
Cash and cash equivalents, beginning of year
179,447 
95,560 
160,280 
Cash and cash equivalents, end of year
298,068 
179,447 
95,560 
Supplemental cash flow information
 
 
 
Interest paid
52,213 
52,833 
41,429 
Income and mining taxes paid
$ 56,962 
$ 110,889 
$ 25,199 
TRADE RECEIVABLES AND REVENUES FROM MINING OPERATIONS
TRADE RECEIVABLES AND REVENUES FROM MINING OPERATIONS

1.   TRADE RECEIVABLES AND REVENUES FROM MINING OPERATIONS

  • Agnico-Eagle is a gold mining company with mining operations in Canada, Mexico and Finland. The Company earns a significant proportion of its revenues from the production and sale of gold in both dore bar and concentrate form. The remainder of revenue and cash flow is generated by the production and sale of byproduct metals. The revenue from byproduct metals is mainly generated by production at the LaRonde mine in Canada (silver, zinc, copper and lead) and the Pinos Altos mine in Mexico (silver).

    Revenues are generated from operations in Canada, Mexico and Finland. The cash flow and profitability of the Company's operations are significantly affected by the market price of gold and, to a lesser extent, silver, zinc, copper and lead. The prices of these metals can fluctuate significantly and are affected by numerous factors beyond the Company's control.

    As gold can be sold through numerous gold market traders worldwide, the Company is not economically dependent on a limited number of customers for the sale of its product.

    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 dore bars or concentrates to third parties prior to the satisfaction in full of the payment obligations of the third parties.

    Years Ended December 31,
   
    2012   2011   2010  
   
Revenues from mining operations:              

Gold   $1,712,665   $1,563,760   $1,216,249  

Silver   140,221   171,725   104,544  

Zinc   45,797   70,522   77,544  

Copper   19,019   14,451   22,219  

Lead   12   1,341   1,965  

    $1,917,714   $1,821,799   $1,422,521  

 
  • In 2012, precious metals (gold and silver) accounted for 97% of Agnico-Eagle's revenues from mining operations (2011 – 95%; 2010 – 93%). The remaining revenues from mining operations consisted of net byproduct metals revenues. In 2012, these net byproduct metals revenues as a percentage of total revenues from mining operations were 2% from zinc (2011 – 4%; 2010 – 5%) and 1% from copper (2011 – 1%; 2010 – 2%).

OTHER ASSETS
OTHER ASSETS

2.   OTHER ASSETS

(a)   Other current assets

    As at December 31,
   
    2012     2011  
   
Federal, provincial and other sales taxes receivable   $36,400   $ 51,603  

Prepaid expenses   36,119     25,540  

Meadowbank insurance receivable   6,553     8,765  

Prepaid royalty(i)       7,684  

Employee loans receivable   1,800     5,567  

Retirement compensation arrangement plan refundable tax receivable   4,044      

Other   8,061     11,210  

    $92,977   $ 110,369  

  • Note:

    (i)
    The prepaid royalty relates to the Pinos Altos mine in Mexico.

(b)   Available-for-sale securities

  • In 2012, the Company received proceeds of $73.4 million (2011 – $9.4 million; 2010 – $36.6 million) and recognized a gain before income taxes of $9.7 million (2011 – $4.9 million; 2010 – $19.5 million) on the sale of certain 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:

    As at December 31,
   
    2012   2011    
   
Available-for-sale securities in an unrealized gain position:            

Cost (net of impairments)   $  4,352   $127,344    

Unrealized gains in accumulated other comprehensive loss   1,902   16,408    

Estimated fair value   6,254   143,752    

Available-for-sale securities in an unrealized loss position:            

Cost (net of impairments)   48,047   1,717    

Unrealized losses in accumulated other comprehensive loss   (9,582 ) (58 )  

Estimated fair value   38,465   1,659    

Total estimated fair value of available-for-sale securities   $44,719   $145,411    

  • The Company's investments in available-for-sale securities consist primarily of investments in common shares of entities in the mining industry. During the course of the year, certain available-for-sale securities fell into an unrealized loss position. In each case, the Company evaluated the near-term prospects of the issuers in relation to the severity and duration of the impairment. During the year ended December 31, 2012, the Company recorded a $12.7 million (2011 – $8.6 million) impairment loss on certain available-for-sale securities that were determined to be other-than-temporarily impaired.

    At December 31, 2012, the fair value of available-for-sale securities in an unrealized loss position was $38.5 million (2011 – $1.7 million) with total unrealized losses in accumulated other comprehensive loss of $9.6 million (2011 – $0.1 million). Based on an evaluation of the severity and duration of the impairment of these available-for-sale securities (less than three months) and on the Company's intent to hold them for a period of time sufficient for a recovery of fair value, the Company does not consider these available-for-sale securities to be other-than-temporarily impaired as at December 31, 2012.

(c)   Other assets

    As at December 31,
   
    2012   2011  
   
Deferred financing costs, less accumulated amortization of $8,888 (2011 – $5,809)   $15,836   $15,777  

Long-term ore in stockpile(i)   32,711   64,392  

Other   7,291   7,879  

    $55,838   $88,048  

  • Note:

    (i)
    Due to the ore body structures at the Pinos Altos, Kittila and Meadowbank mines, a significant amount of drilling and blasting was undertaken early in their mine lives, resulting in long-term ore stockpiles. At December 31, 2012, long-term ore stockpiles were valued at $14.8 million (2011 – $7.1 million) at the Pinos Altos mine (including the Creston Mascota deposit at Pinos Altos), $7.7 million (2011 – $8.0 million) at the Kittila mine and $10.2 million (2011 – $49.3 million) at the Meadowbank mine.
PROPERTY, PLANT AND MINE DEVELOPMENT
PROPERTY, PLANT AND MINE DEVELOPMENT

3.   PROPERTY, PLANT AND MINE DEVELOPMENT

    As at December 31, 2012   As at December 31, 2011
   
 
    Cost   Accumulated
Amortization
  Net
Book Value
  Cost   Accumulated
Amortization
  Net
Book Value
 
   
Mining properties   $1,356,227   $  86,839   $1,269,388   $1,228,523   $111,567   $1,116,956  

Plant and equipment   2,538,328   617,826   1,920,502   2,467,300   437,706   2,029,594  

Mine development costs   918,482   237,967   680,515   869,746   190,399   679,347  

Construction in progress:                          

Meliadine project   133,840     133,840   69,458     69,458  

La India project   32,553     32,553        

Goldex mine M and E Zones   30,658     30,658        

    $5,010,088   $942,632   $4,067,456   $4,635,027   $739,672   $3,895,355  

  • Geographic Information:

    As at December 31,
   
    2012   2011  
   
Canada   $2,543,171   $2,433,527  

Latin America   809,556   776,892  

Europe   704,031   674,258  

United States   10,698   10,678  

Total   $4,067,456   $3,895,355  

  • In 2012, Agnico-Eagle capitalized $1.3 million of costs (2011 – $1.4 million) and recognized $1.2 million of amortization expense (2011 – $0.9 million) related to computer software. The unamortized capitalized cost for computer software at December 31, 2012 was $5.7 million (2011 – $5.6 million).

    The unamortized capitalized cost for leasehold improvements at December 31, 2012 was $3.4 million (2011 – $3.2 million), which is being amortized on a straight-line basis over the life term of the lease plus one renewal period.

    The amortization of assets recorded under capital leases is included in the amortization of property, plant and mine development line item of the consolidated statements of income (loss) and comprehensive income (loss).

FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT

4.   FAIR VALUE MEASUREMENT

  • ASC 820 – Fair Value Measurement and Disclosure defines fair value, establishes a framework for measuring fair value under US GAAP, and requires expanded disclosures about fair value measurements including the following three fair value hierarchy levels:

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

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

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

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

  • The following table details the Company's financial assets and liabilities measured at fair value as at December 31, 2012 within the fair value hierarchy:

   
      Total     Level 1     Level 2   Level 3  
   
Financial assets:                        

Available-for-sale securities(i)   $ 44,719   $ 44,719   $   $–  

Trade receivables(ii)     67,750         67,750    

Fair value of derivative financial instruments(iii)     2,112         2,112    

    $ 114,581   $ 44,719   $ 69,862   $–  

Financial liabilities:                        

Fair value of derivative financial instruments(iii)   $ 277   $   $ 277   $–  

  • Notes:

    (i)
    Available-for-sale securities are recorded at fair value using quoted market prices (classified within Level 1 of the fair value hierarchy).

    (ii)
    Trade receivables from provisional invoices for concentrate sales are valued using quoted forward rates derived from observable market data based on the month of expected settlement (classified within Level 2 of the fair value hierarchy).

    (iii)
    Derivative financial instruments are recorded at fair value using external broker-dealer quotations (classified within Level 2 of the fair value hierarchy).
  • In the event that a decline in the fair value of an investment in available-for-sale securities occurs and the decline in value is considered to be other-than-temporary, an impairment charge is recorded in the consolidated statements of income (loss) and comprehensive income (loss) and a new cost basis for the investment is established. The Company assesses whether a decline in value is considered to be other-than-temporary by considering available evidence, including changes in general market conditions, specific industry and individual company data, the length of time and the extent to which the fair value has been less than cost, the financial condition and the near-term prospects of the individual investment. New evidence could become available in future periods which would affect this assessment and thus could result in material impairment charges with respect to those investments in available-for-sale securities for which the cost basis exceeds its fair value.

LONG-TERM DEBT
LONG-TERM DEBT

5.   LONG-TERM DEBT

  • Credit Facility

    On June 22, 2010, the Company amended and restated its Credit Facility, increasing the amount available from $900.0 million to $1,200.0 million.

    On July 20, 2012, the Company further amended the Credit Facility, extending the maturity date from June 22, 2016 to June 22, 2017 and updating pricing terms to reflect improved market conditions.

  • At December 31, 2012, the Credit Facility was drawn down by $30.0 million (2011 – $320.0 million). Amounts drawn down, together with related outstanding letters of credit, resulted in Credit Facility availability of $1,168.9 million at December 31, 2012.

    2012 Notes

    On July 24, 2012, the Company closed a private placement consisting of $200.0 million of guaranteed senior unsecured notes due in 2022 and 2024 (the "2012 Notes") with a weighted average maturity of 11.0 years and weighted average yield of 4.95%.

    The following are the individual series' of the 2012 Notes:

   
      Principal   Interest Rate   Maturity Date  
   
Series A   $ 100,000   4.87%   7/23/2022  

Series B     100,000   5.02%   7/23/2024  

    $ 200,000          

  • 2010 Notes

    On April 7, 2010, the Company closed a private placement consisting of $600.0 million of guaranteed senior unsecured notes due in 2017, 2020 and 2022 (the "2010 Notes") with a weighted average maturity of 9.84 years and weighted average yield of 6.59%.

    The following are the individual series' of the 2010 Notes:

   
      Principal   Interest Rate   Maturity Date  
   
Series A   $ 115,000   6.13%   7/4/2017  

Series B     360,000   6.67%   7/4/2020  

Series C     125,000   6.77%   7/4/2022  

    $ 600,000          

  • Covenants

    Payment and performance of Agnico-Eagle's obligations under the Credit Facility, 2012 Notes and 2010 Notes is guaranteed by each of its significant subsidiaries and certain of its other subsidiaries (the "Guarantors").

    The Credit Facility contains covenants that limit, 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 one related to the mining business.

    The 2012 Notes and 2010 Notes contain covenants that restrict, among other things, the ability of the Company to amalgamate or otherwise transfer its assets, sell material assets and carry on a business other than one related to mining and the ability of the Guarantors to incur indebtedness.

    The Credit Facility, 2012 Notes and 2010 Notes also require the Company to maintain a total net debt to EBITDA ratio below a specified maximum value as well as a minimum tangible net worth.

  • The Company was in compliance with all covenants contained within the Credit Facility, 2012 Notes and 2010 Notes as at December 31, 2012.

    Interest on long-term debt

    For the year ended December 31, 2012, total interest expense was $57.9 million (2011 – $55.0 million; 2010 – $49.5 million) and total cash interest payments were $52.2 million (2011 – $52.8 million; 2010 – $41.4 million). In 2012, cash interest on the Credit Facility was $3.6 million (2011 – $1.7 million; 2010 – $12.3 million), cash standby fees on the Credit Facility were $4.2 million (2011 – $8.6 million; 2010 – $6.7 million), and cash interest on the 2010 Notes and 2012 Notes was $39.5 million (2011 – $39.5 million; 2010 – $19.8 million). In 2012, $1.5 million (2011 – $1.0 million; 2010 – $4.6 million) of the total interest expense was capitalized to construction in progress.

    The Company's weighted average interest rate on all of its long-term debt as at December 31, 2012 was 6.02% (2011 – 5.02%; 2010 – 5.43%).

RECLAMATION PROVISION AND OTHER LIABILITIES
RECLAMATION PROVISION AND OTHER LIABILITIES

6.   RECLAMATION PROVISION AND OTHER LIABILITIES

  • Reclamation provision and other liabilities consist of the following:

    As at December 31,
   
    2012   2011  
   
Reclamation provision (note 6(a))   $101,753   $105,443  

Long-term portion of capital lease obligations (note 13(a))   12,108   26,184  

Pension benefits (note 6(b))   13,734   13,991  

Other   140   370  

Total   $127,735   $145,988  

(a)   Reclamation provision

  • Agnico-Eagle's reclamation provision includes both asset retirement obligations and environmental remediation liabilities. Reclamation provision estimates are based on current legislation, third party estimates, management's estimates and feasibility study calculations.

    The following table reconciles the beginning and ending carrying amounts of the Company's asset retirement obligations:

   
    2012   2011    
   
Asset retirement obligations, beginning of year   $86,386   $91,641    

Current year additions and changes in estimate, net   1,495   (8,398 )  

Current year accretion   5,068   4,953    

Liabilities settled   (254 )    

Foreign exchange revaluation   1,655   (1,810 )  

Reclassification from long-term to current   (4,630 )    

Asset retirement obligations – long-term, end of year   $89,720   $86,386    

  • Due to the suspension of mining operations at the Goldex mine on October 19, 2011 (see note 17), Agnico-Eagle recognized an environmental remediation liability. The following table reconciles the beginning and ending carrying amounts of the Goldex mine's environmental remediation liability:

   
      2012     2011    
   
Environmental remediation liability – long-term, beginning of year   $ 19,057   $    

Environmental remediation liability – current, beginning of year     26,069        

Current year change in estimate     (36 )   51,736    

Liabilities settled     (21,450 )   (7,616 )  

Foreign exchange revaluation     579     1,006    

Reclassification from long-term to current     (12,186 )   (26,069 )  

Environmental remediation liability – long-term, end of year   $ 12,033   $ 19,057    

(b)   Pension benefits

  • Agnico-Eagle provides the Executives Plan for certain senior officers. The funded status of the Executives Plan is based on actuarial valuations performed as of July 1, 2012, projected to December 30, 2012 and covering the period through June 30, 2013.

    The components of Agnico-Eagle's net pension benefits expense are as follows:

      Years Ended December 31,
   
      2012     2011     2010  
   
Service cost – benefits earned during the year   $ 650   $ 996   $ 981  

Interest cost on projected benefit obligation     489     663     613  

Amortization of net transition asset     169     171     164  

Prior service cost     26     26     25  

Loss due to settlement     2,921          

Recognized net actuarial loss     340     245      

Net pension benefits expense   $ 4,595   $ 2,101   $ 1,783  

  • Assets for the 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 the Executives Plan at December 31, 2012 was $9.7 million (2011 – $13.2 million).

  • The funded status of the Executives Plan for 2012 and 2011 is as follows:

   
      2012     2011    
   
Reconciliation of the market value of plan assets:                

Fair value of plan assets, beginning of year   $ 2,952   $ 2,443    

Agnico-Eagle's contribution     839     1,156    

Benefit payments     (520 )   (578 )  

Settlements     (961 )      

Effect of exchange rate changes     63     (69 )  

Fair value of plan assets, end of year     2,373     2,952    

Reconciliation of projected benefit obligation:                

Projected benefit obligation, beginning of year     14,370     12,041    

Service cost     650     996    

Interest cost     489     663    

Net actuarial loss     675     1,704    

Benefit payments     (520 )   (696 )  

Settlements     (5,148 )      

Effect of exchange rate changes     302     (338 )  

Projected benefit obligation, end of year     10,818     14,370    

Deficiency of plan assets compared with projected benefit obligation   $ (8,445 ) $ (11,418 )  

  • Comprised of the following net amounts recognized in the consolidated balance sheets:

      As at December 31,
   
      2012     2011  
   
Accrued employee benefit liability   $ 5,008   $ 7,292  

Accumulated other comprehensive loss:              

  Transition obligation     341     500  

  Prior service cost     52     76  

  Net actuarial loss     3,044     3,550  

Net liability   $ 8,445   $ 11,418  

Assumptions:              

Weighted average discount rate – net periodic pension cost     4.45%     5.20%  

Weighted average discount rate – projected benefit obligation     4.00%     4.45%  

Weighted average rate of compensation increase     3.00%     3.00%  

Estimated average remaining service life for the plan (in years)(i)     6.0     3.0  

  • Note:

    (i)
    Estimated average remaining service life for the Executives Plan was developed for individual senior officers.
  • Executives Plan components expected to be recognized in accumulated other comprehensive loss in 2013:

Transition obligation   $170  

Prior service cost   26  

Net actuarial loss   327  

    $523  

  • Estimated benefit payments from the Executives Plan over the next ten years are presented below:

Years ended December 31,:     Estimated Executives Plan
Benefit Payments
 

2013   $ 117  

2014   $ 116  

2015   $ 115  

2016   $ 114  

2017   $ 113  

2018 – 2022   $ 3,591  

  • In addition to the Executives Plan, the Company maintains the Basic Plan and the Supplemental Plan. Under the Basic Plan, Agnico-Eagle contributes 5% of certain employees' base employment compensation to a defined contribution plan. In 2012, $11.9 million (2011 – $10.7 million; 2010 – $8.8 million) was contributed to the Basic Plan. Effective January 1, 2008, the Company adopted the Supplemental Plan for designated executives at the level of Vice-President or above. Under the Supplemental Plan, an additional 10% of the designated executive's earnings for the year (including salary and short-term bonus) is contributed by the Company. In 2012, $0.8 million (2011 – $0.9 million; 2010 – $1.1 million) was contributed to the Supplemental Plan. The Supplemental Plan is accounted for as a cash balance plan.

SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY

7.   SHAREHOLDERS' EQUITY

(a)   Common shares

  • The Company's authorized share capital includes an unlimited number of common shares with issued common shares of 172,296,610 (2011 – 170,859,604), less 193,740 common shares held by a trust in connection with the Company's restricted share unit ("RSU") plan (2011 – less 45,868 common shares). The trust is treated as a variable interest entity and, as a result, its holdings of shares are offset against the Company's issued shares in its consolidated financial statements (see note 8(c) for details).

    In 2012, the Company declared dividends on its common shares of $1.02 per share (2011 – nil per share; 2010 – $0.64 per share).

(b)   Private placements and warrants

  • On December 3, 2008, the Company closed a private placement of 9.2 million units, with each unit consisting of one common share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share of the Company at a price of $47.25 per share at any time during the five-year term of the warrant. As consideration for the lead purchaser's commitment, the Company issued to the lead purchaser an additional 4 million warrants. The net proceeds of the private placement were approximately $281.0 million, after deducting share issue costs of $8.8 million. If all outstanding warrants were exercised, the Company would issue an additional 8.6 million common shares. No warrants had been exercised as of December 31, 2012.

    On July 26, 2010, the Company issued 15,000 common shares with a market value of $0.8 million in connection with the purchase of a mining property.

(c)   Public issuance of common shares

  • On July 6, 2010, the Company issued 10,210,848 common shares with a market value of $579.0 million in connection with the acquisition of Comaplex Minerals Corp. ("Comaplex") (see note 10 for details).

    On November 18, 2011, the Company issued 1,250,477 common shares with a market value of $56.1 million in connection with the acquisition of 94.77% of the outstanding shares of Grayd Resource Corporation ("Grayd"). On January 23, 2012, the Company issued an additional 68,941 common shares with a market value of $2.4 million in connection with the compulsory acquisition of the remaining outstanding shares of Grayd it did not already own (see note 10 for details).

(d)   Accumulated other comprehensive loss

  • The following table details the components of accumulated other comprehensive loss, net of related tax effects:

      As at December 31,
   
      2012     2011    
   
Cumulative translation adjustment   $ (16,206 ) $ (16,206 )  

Unrealized net (loss) gain on available-for-sale securities     (7,680 )   16,350    

Unrealized loss on derivative financial instruments     (260 )   (4,404 )  

Unrealized loss on pension benefits liability     (4,071 )   (5,219 )  

Tax effect of unrealized loss on derivative financial instruments     397     1,491    

Tax effect of unrealized loss on pension benefits liability     509     882    

Accumulated other comprehensive loss   $ (27,311 ) $ (7,106 )  

  • In 2012, a $9.7 million gain on sale of available-for-sale securities (2011 – $4.9 million gain; 2010 – $19.5 million gain) was reclassified from accumulated other comprehensive loss to the consolidated statements of income (loss) and comprehensive income (loss).

(e)   Net income (loss) per share

  • The following table provides the weighted average number of common shares used in the calculation of basic and diluted net income (loss) per share:

    Years Ended December 31,
   
    2012   2011   2010  
   
Weighted average number of common shares outstanding – basic   171,250,179   169,352,896   162,342,686  

Add: Dilutive impact of employee stock options       1,192,530  

Dilutive impact of warrants       2,263,902  

Dilutive impact of shares related to RSU plan   235,436     43,141  

Weighted average number of common shares outstanding – diluted   171,485,615   169,352,896   165,842,259  

  • The calculation of diluted net income (loss) per share has been calculated using the treasury stock method. In applying the treasury stock method, employee stock options and warrants with an exercise price greater than the average quoted market price of the common shares, for the period outstanding, are not included in the calculation of diluted net income (loss) per share, as the impact is anti-dilutive. In 2010, a total of 58,750 employee stock options were excluded from the calculation of diluted net income (loss) per share as their impact would have been anti-dilutive. In 2011, the impact of any additional shares issued under the employee stock option plan, as a result of the conversion of warrants, or related to the RSU plan would have been anti-dilutive as a result of the net loss recorded for the year. Consequently, diluted net loss per share was calculated in the same manner as basic net loss per share in 2011. In 2012, 7,742,151 employee stock options and all warrants were excluded from the calculation of diluted net income (loss) per share as their impact would have been anti-dilutive.

STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION

8.   STOCK-BASED COMPENSATION

(a)   Employee Stock Option Plan ("ESOP")

  • The Company's ESOP provides for the granting of stock options to directors, officers, employees and service providers to purchase common shares. Under the ESOP, stock options are granted at the fair market value of the underlying shares on the day prior to the date of grant. The number of common shares that may be reserved for issuance to any one person pursuant to stock options (under the ESOP or otherwise), warrants, share purchase plans or other arrangements may not exceed 5% of the Company's common shares issued and outstanding at the date of grant.

    On April 24, 2001, the Compensation Committee of the Board of Directors adopted a policy pursuant to which stock options granted after that date have a maximum term of five years. In 2010, the shareholders approved a resolution to increase the number of common shares reserved for issuance under the ESOP by 1,300,000 to 20,300,000. In 2011 and 2012 the shareholders approved a further 3,000,000 and 2,500,000 common shares for issuance under the ESOP, respectively.

    Of the 3,257,000 stock options granted under the ESOP in 2012, 814,250 stock options vested immediately and expire in 2017. The remaining stock options expire in 2017 and vest in equal installments, on each anniversary date of the grant, over a three-year period. Of the 2,630,785 stock options granted under the ESOP in 2011, 657,696 stock options vested immediately and expire in 2016. The remaining stock options expire in 2016 and vest in equal installments, on each anniversary date of the grant, over a three-year period. Of the 2,926,080 stock options granted under the ESOP in 2010, 731,520 stock options vested immediately and expire in 2015. The remaining stock options expire in 2015 and vest in equal installments, on each anniversary date of the grant, over a three-year period. Upon the exercise of stock options under the ESOP, the Company issues new common shares to settle the obligation.

  • The following summary details activity with respect to Agnico-Eagle's outstanding stock options:

    2012   2011   2010
   
 
 
    Number of
Stock Options
  Weighted
Average
Exercise Price
  Number of
Stock Options
  Weighted
Average
Exercise Price
  Number of
Stock Options
  Weighted
Average
Exercise Price
 
   
Outstanding, beginning of year   8,959,051   C$62.88   6,762,704   C$56.94   5,707,940   C$53.85  

Granted   3,257,000   36.99   2,630,785   76.12   2,926,080   57.55  

Exercised   (416,275 ) 43.51   (308,688 ) 43.62   (1,627,766 ) 47.02  

Forfeited   (731,000 ) 59.72   (125,750 ) 67.47   (243,550 ) 58.03  

Expired   (481,650 ) 47.49          

Outstanding, end of year   10,587,126   C$56.60   8,959,051   C$62.88   6,762,704   C$56.94  

Options exercisable at end of year   6,510,464       5,178,172       2,972,857      

  • The following table details 2012 activity with respect to Agnico-Eagle's nonvested stock options:

    2012
   
    Number of
Stock Options
    Weighted Average
Grant Date
Fair Value
 
   
Nonvested, beginning of year   3,780,879   C$ 17.79  

Granted   3,257,000     8.29  

Vested   (2,625,467 )   15.63  

Forfeited (nonvested)   (335,750 )   12.50  

Nonvested, end of year   4,076,662   C$ 13.33  

  • Cash received for stock options exercised in 2012 was $18.2 million (2011 – $13.6 million; 2010 – $74.7 million).

    The total intrinsic value of stock options exercised in 2012 was C$3.6 million (2011 – C$8.0 million; 2010 – C$46.5 million).

    The weighted average grant date fair value of stock options granted in 2012 was C$8.29 (2011 – C$17.05; 2010 – C$16.31). The total fair value of stock options vested during 2012 was $41.0 million (2011 – $46.7 million; 2010 – $36.7 million).

  • The following table summarizes information about Agnico-Eagle's stock options outstanding and exercisable at December 31, 2012:

    Stock Options Outstanding   Stock Options Exercisable
   
 
Range of Exercise Prices   Number
Outstanding
  Weighted Average
Remaining
Contractual Life
  Weighted Average
Exercise Price
  Number
Exercisable
  Weighted Average
Exercise Price
 

C$33.26 – C$59.71   6,378,941   2.50 years   C$47.45   3,485,921   C$52.68  

C$60.72 – C$83.08   4,208,185   2.14 years   70.46   3,024,543   68.18  

C$33.26 – C$83.08   10,587,126   2.36 years   C$56.60   6,510,464   C$59.88  

  • The weighted average remaining contractual term of stock options exercisable at December 31, 2012 was 1.7 years.

    The Company has reserved for issuance 10,587,126 common shares in the event that these stock options are exercised.

    The number of common shares available for the granting of stock options under the ESOP as at December 31, 2012, December 31, 2011 and December 31, 2010 was 3,717,785, 3,262,135 and 2,771,420, respectively.

    Subsequent to the year ended December 31, 2012, on January 2, 2013, 2,803,000 stock options were granted under the ESOP, of which 700,750 stock options vested immediately and expire in the year 2018. The remaining stock options expire in 2018 and vest in equal installments on each anniversary date of the grant, over a three-year period.

    Agnico-Eagle estimated the fair value of stock options under the Black-Scholes option pricing model using the following weighted average assumptions:

   
    2012   2011   2010  
   
Risk-free interest rate   1.26%   1.95%   1.86%  

Expected life of stock options (in years)   2.8   2.5   2.5  

Expected volatility of Agnico-Eagle's share price   37.5%   34.70%   43.80%  

Expected dividend yield   2.14%   0.89%   0.42%  

  • The Company uses historical volatility in estimating the expected volatility of Agnico-Eagle's share price. The expected term of stock options granted is derived from historical data on employee exercise and post-vesting employment termination experience.

    The aggregate intrinsic value of stock options outstanding at December 31, 2012 was C$(47.3) million. The aggregate intrinsic value of stock options exercisable at December 31, 2012 was C$(50.5) million.

    The total compensation expense for the ESOP recognized in the general and administrative line item of the consolidated statements of income (loss) and comprehensive income (loss) for 2012 was $33.8 million (2011 – $42.2 million; 2010 – $37.8 million). The total compensation cost related to nonvested stock options not yet recognized is $24.5 million as at December 31, 2012 and the weighted average period over which it is expected to be recognized is 1.6 years. Of the total compensation cost for the ESOP, $1.3 million was capitalized as part of the property, plant and mine development line item of the consolidated balance sheets in 2012 (2011 – $1.4 million; 2010 – $1.3 million).

(b)   Incentive Share Purchase Plan

  • On June 26, 1997, the Company's 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 value. In 2009, the Purchase Plan was amended to remove non-executive directors as eligible Participants.

    Under the Purchase Plan, Participants may contribute up to 10% of their basic annual salaries, and the Company contributes an amount equal to 50% of each Participant's contribution. All common shares subscribed for under the Purchase Plan are newly issued by the Company. The total compensation cost recognized in 2012 related to the Purchase Plan was $7.2 million (2011 – $6.4 million; 2010 – $5.0 million).

    In 2012, 507,235 common shares were subscribed for under the Purchase Plan (2011 – 360,833; 2010 – 229,583) for a value of $21.7 million (2011 – $19.2 million; 2010 – $15.0 million). In May 2008, the Company's shareholders approved an increase in the maximum number of common shares reserved for issuance under the Purchase Plan to 5,000,000 from 2,500,000. As at December 31, 2012, Agnico-Eagle has reserved for issuance 1,642,853 common shares (2011 – 2,150,088; 2010 – 2,510,921) under the Purchase Plan.

(c)   Restricted Share Unit Plan

  • In 2009, the Company implemented the RSU plan for certain employees. A deferred compensation balance was recorded for the total grant date value on the date of grant. The deferred compensation balance was recorded as a reduction of shareholders' equity and was amortized as compensation expense over the applicable vesting period of two years.

    Effective January 1, 2012, the RSU plan was amended to include directors and senior executives of the Company. A deferred compensation balance was recorded for the total grant date value on the date of grant. The deferred compensation balance was recorded as a reduction of shareholders' equity and is to be amortized as compensation expense over the applicable vesting period of three years.

    In 2012, the Company funded the RSU plan by transferring $12.0 million (2011 – $3.7 million; 2010 – $4.0 million) to an employee benefit trust (the "Trust") that then purchased shares of the Company in the open market. The Trust is funded once per year during the first quarter of each year. Compensation cost for the RSU plan incorporates an expected forfeiture rate. The forfeiture rate is estimated based on the Company's historical employee turnover rates and expectations of future forfeiture rates that incorporate various factors that include historical employee stock option plan forfeiture rates. For the years 2009 through 2012, the impact of forfeitures was not material. For accounting purposes, the Trust is treated as a variable interest entity and consolidated in the accounts of the Company. On consolidation, the dividends paid on the shares held by the Trust are eliminated. The common shares purchased and held by the Trust are treated as not outstanding for the basic earnings per share ("EPS") calculations. They are included in the basic EPS calculations once they have vested. All of the unvested common shares held by the Trust are included in the diluted EPS calculations.

    Compensation cost related to the RSU plan was $6.6 million in 2012 (2011 – $3.3 million; 2010 – $3.0 million). Compensation cost related to the RSU plan is included as part of the production, general and administrative and exploration and corporate development line items of the consolidated statements of income (loss) and comprehensive income (loss), consistent with the classification of other elements of compensation expense for those employees who held RSUs. Of the total compensation cost for the RSU plan, nil was capitalized as part of the property, plant and mine development line item of the consolidated balance sheets in 2012 (2011 – nil; 2010 – $0.1 million).

    Subsequent to the year ended December 31, 2012, 422,553 RSUs were granted under the RSU plan. Of these, 131,846 RSUs vest in 2014, 277,944 RSUs vest in 2015 and 12,763 RSUs vest in 2016.

INCOME AND MINING TAXES
INCOME AND MINING TAXES

9.   INCOME AND MINING TAXES

Income and mining taxes expense (recovery) is made up of the following geographic components:

      Years Ended December 31,
   
      2012     2011     2010  
   
Current income and mining taxes:                    

  Canada   $ 8,750   $ 62,382   $ 34,217  

  Mexico     33,531     3,496     1,942  

  Finland     9,799     222      

      52,080     66,100     36,159  

Deferred income and mining taxes:                    

  Canada     26,041     (341,038 )   47,083  

  Mexico     25,284     54,996     18,759  

  Finland     20,820     10,269     1,086  

      72,145     (275,773 )   66,928  

Income and mining taxes   $ 124,225   $ (209,673 ) $ 103,087  

  • Cash income and mining taxes paid in 2012 were $57.0 million (2011 – $110.9 million; 2010 – $25.2 million).

    The income and mining taxes expense (recovery) is different from the amount that would have been calculated by applying the Canadian statutory income tax rate as a result of the following:

   
    2012   2011   2010  
   
Combined federal and composite provincial tax rates   26.3%   27.8%   29.6%  

Increase (decrease) in tax rates resulting from:              

Provincial mining duties   3.6   5.9   6.8  

Tax law changes     (2.7)   (5.1)  

Impact of foreign tax rates   (1.5)   (0.2)   (0.5)  

Permanent differences   1.0   (1.6)   (4.2)  

Valuation allowances   1.2   (0.3)   (0.2)  

Impact of changes in income tax rates   (2.1)   (2.0)   (2.7)  

Actual rate as a percentage of pre-tax income   28.5%   26.9%   23.7%  

  • The following table details the components of Agnico-Eagle's deferred income and mining tax liabilities:

    Liabilities (Assets)
as at December 31,
   
    2012   2011    
   
Mining properties   $761,508   $704,379    

Net operating and capital loss carryforwards   (102,005 ) (104,332 )  

Mining duties   (36,158 ) (88,670 )  

Reclamation provisions   (42,688 ) (51,926 )  

Valuation allowance   30,570   39,121    

Deferred income and mining tax liabilities   $611,227   $498,572    

  • All of Agnico-Eagle's deferred income and mining tax assets and liabilities were denominated in the local currency based on the jurisdiction in which the Company paid taxes, except for Canada, and were translated into US dollars using the exchange rate in effect at the applicable consolidated balance sheets dates. For Canadian income tax purposes, for December 31, 2008 and subsequent years, the Company elected to use the US dollar as its functional currency.

    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.

    A reconciliation of the beginning and ending amounts of the unrecognized tax benefits is as follows:

   
      2012   2011     2010    
   
Unrecognized tax benefits, beginning of year   $ 1,200   $1,630   $ 5,608    

Additions (reductions)     9,667   (430 )   (3,978 )  

Unrecognized tax benefit, end of year   $ 10,867   $1,200   $ 1,630    

  • The full amount of unrecognized tax benefits, if recognized, would reduce the Company's annual effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next year.

    The Company is subject to taxes in Canada, Mexico and Finland, each with varying statutes of limitations. The 2007 through 2012 taxation years generally remain subject to examination.

ACQUISITIONS
ACQUISITIONS

10. ACQUISITIONS

  • Grayd Resource Corporation

    In September 2011, Agnico-Eagle entered into an acquisition agreement with Grayd, a Canadian-based natural resource company listed on the TSX Venture Exchange, pursuant to which the Company agreed to make an offer to acquire all of the issued and outstanding common shares of Grayd. On October 13, 2011, the Company made the offer by way of a take-over bid circular, as amended and supplemented on October 21, 2011.

    On November 18, 2011, Agnico-Eagle acquired 94.77% of the outstanding shares of Grayd, on a fully-diluted basis, by way of a take-over bid. The November 18, 2011 purchase price of $222.1 million was comprised of $166.0 million in cash and 1,250,477 newly issued Agnico-Eagle common shares.

    The related transaction costs associated with the acquisition totalling $3.8 million were expensed through the interest and sundry expense (income) line item of the consolidated statements of income (loss) and comprehensive income (loss) during the fourth quarter of 2011. The Company has accounted for the purchase of Grayd as a business combination.

    The following table details the allocation of the purchase price to assets acquired and liabilities assumed, based on management's estimates of fair value.

Total purchase price:        

Cash paid for acquisition   $165,954    

Agnico-Eagle common shares issued for acquisition   56,146    

Total purchase price to allocate   $222,100    

Fair value of assets acquired and liabilities assumed:        

Mining properties   $282,000    

Goodwill   29,215    

Cash and cash equivalents   2,907    

Trade receivables   469    

Other current assets   1,700    

Equipment   56    

Accounts payable and accrued liabilities   (9,767 )  

Deferred tax liability   (72,229 )  

Non-controlling interest   (12,251 )  

Net assets acquired   $222,100    

  • The Company believes that goodwill for the Grayd acquisition arose principally because of the following factors: (1) the going concern value implicit in the Company's ability to sustain and/or grow its business by increasing reserves and resources through new discoveries; and (2) the requirement to record a deferred tax liability for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed in a business combination at amounts that do not reflect fair value.

  • Pro forma results of operations for Agnico-Eagle assuming the acquisition of Grayd described above had occurred as of January 1, 2010 are detailed below. On a pro forma basis, there would have been no effect on Agnico-Eagle's consolidated revenues:

      Years Ended December 31,
   
      2011     2010  
   
      Unaudited
Pro forma net income (loss) attributed to common shareholders   $ (582,762 ) $ 324,708  

Pro forma net income (loss) per share – basic   $ (3.42 ) $ 1.98  

  • On January 23, 2012, the Company acquired the remaining outstanding shares of Grayd it did not already own, pursuant to a previously announced compulsory acquisition carried out under the provisions of the Business Corporations Act (British Columbia). The January 23, 2011 purchase price of $11.8 million was comprised of $9.3 million in cash and 68,941 newly issued Agnico-Eagle common shares.

    Summit Gold Project

    On December 20, 2011, the Company completed the acquisition of 100% of the Summit Gold project from Columbus Gold Corporation, subject to a 2% net smelter returns mineral production royalty reserved by Cordilleran Exploration Company. The Nevada-based project's purchase price of $8.5 million, including transaction costs, was comprised entirely of cash. This transaction was accounted for as an asset acquisition.

    Comaplex Minerals Corp.

    On April 1, 2010, Agnico-Eagle and Comaplex jointly announced that they reached an agreement in principle whereby Agnico-Eagle would acquire all of the shares of Comaplex (the "Comaplex Shares") that it did not already own. The transaction was completed under a plan of arrangement under the Business Corporations Act (Alberta). Under the terms of the transaction, each shareholder of Comaplex, other than Agnico-Eagle, received 0.1576 of an Agnico-Eagle common share per Comaplex share. Additionally, at closing, each Comaplex shareholder, other than Agnico-Eagle and Perfora Investments S.a.r.l. ("Perfora"), received one common share of a newly formed, wholly-owned, subsidiary of Comaplex, Geomark Exploration Ltd. ("Geomark"), in respect of each Comaplex share and Comaplex transferred to Geomark all of the assets and related liabilities of Comaplex other than those relating to the Meliadine gold exploration properties in Nunavut, Canada. The Geomark assets included all of Comaplex's net working capital, the non-Meliadine mineral properties, all oil and gas properties and investments. Under the plan of arrangement, Comaplex changed its name to Meliadine Holdings Inc.

    Prior to the announcement of the transaction, Perfora and Agnico-Eagle had entered into a support agreement pursuant to which Perfora agreed to, among other things, support the transaction and vote all of the shares it held in Comaplex in favour of the plan of arrangement. Perfora held approximately 17.3% and Agnico-Eagle held approximately 12.3%, on a fully diluted basis, of the outstanding shares of Comaplex prior to the announcement of the acquisition.

    On July 6, 2010, the transactions relating to the plan of arrangement closed and Agnico-Eagle issued a total of 10,210,848 common shares to the shareholders of Comaplex, other than Agnico-Eagle, for a total value of $579.0 million. The related transaction costs associated with the acquisition totalling $7.0 million were expensed through the interest and sundry expense (income) line item of the consolidated statements of income (loss) and comprehensive income (loss) during the third quarter of 2010. The Company has accounted for the purchase of Comaplex as a business combination.

  • The following table details the allocation of the purchase price to assets acquired and liabilities assumed, based on management's estimates of fair value.

Total purchase price:          

Comaplex shares previously purchased   $ 88,683    

Agnico-Eagle common shares issued for acquisition     578,955    

Total purchase price to allocate   $ 667,638    

Fair value of assets acquired and liabilities assumed:          

Property   $ 642,610    

Goodwill     200,064    

Supplies     542    

Equipment     2,381    

Asset retirement obligation     (3,400 )  

Deferred tax liability     (174,559 )  

Net assets acquired   $ 667,638    

  • The Comaplex shares purchased prior to the April 1, 2010 announcement of the acquisition had a cost base of $24.1 million and a fair value at July 6, 2010 of $88.6 million. Upon the acquisition of Comaplex, the non-cash gain of $64.5 million on those shares within accumulated other comprehensive income was reversed into the consolidated statements of income (loss) and comprehensive income (loss) as a gain during the third quarter of 2010.

    The Company believes that goodwill for the Comaplex acquisition arose principally because of the following factors: (1) the going concern value implicit in the Company's ability to sustain and/or grow its business by increasing reserves and resources through new discoveries; and (2) the requirement to record a deferred tax liability for the difference between the assigned values and the tax basis of assets acquired and liabilities assumed in a business combination at amounts that do not reflect fair value.

    Pro forma results of operations for Agnico-Eagle assuming the acquisition of Comaplex described above had occurred as of January 1, 2009 are detailed below. On a pro forma basis, there would have been no effect on Agnico-Eagle's consolidated revenues:

      Years Ended December 31,
   
      2010     2009  
   
      Unaudited
Pro forma net income attributed to common shareholders   $ 331,516   $ 85,371  

Pro forma net income per share – basic   $ 2.04   $ 0.55  

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

      As at December 31,
   
      2012     2011  
   
Trade payables   $ 89,289   $ 104,699  

Wages payable     35,752     27,247  

Accrued liabilities     27,372     47,462  

Goldex mine government grant         1,452  

Other liabilities     32,916     22,687  

    $ 185,329   $ 203,547  

  • In 2012 and 2011, the other liabilities balance mainly consisted of various employee payroll tax withholdings and other payroll taxes.

COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES

12. COMMITMENTS AND CONTINGENCIES

  • 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, 2012, the total amount of these guarantees was $147.3 million.

    Certain of the Company's properties are subject to royalty arrangements. The following are the most significant royalty arrangements:

    The Company has a royalty agreement with the Finnish government relating to the Kittila mine. Starting 12 months after Kittila mine operations commenced, the Company is required to pay 2% on net smelter returns, defined as revenue less processing costs. The royalty is paid on a yearly basis the following year.

    The Company is committed to pay a royalty on production from certain properties in the Abitibi area. The type of royalty agreements include, but are not limited to, net profits interest royalties and net smelter return royalties, with percentages ranging from 0.5% to 5%.

    The Company is committed to pay a royalty on production from certain properties in the Pinos Altos mine area. The type of royalty agreements include, but are not limited to, net profits interest royalties and net smelter return royalties, with percentages ranging from 1.0% to 3.5%.

    The Company regularly enters into various earn-in and shareholder agreements, often with commitments to pay net smelter return and other royalties.

  • The Company had the following purchase commitments as at December 31, 2012:

Years ended December 31,:     Purchase
Commitments
 

2013   $ 12,258  

2014     12,428  

2015     7,080  

2016     5,071  

2017     4,466  

Thereafter     22,274  

Total   $ 63,577  

LEASES
LEASES

13. LEASES

(a)   Capital leases

  • In each of 2010 and 2009, the Company entered into five sale-leaseback agreements with third parties for various fixed and mobile equipment within Canada. These arrangements represent sale-leaseback transactions in accordance with ASC 840-40 – Sale-Leaseback Transactions. The sale-leaseback agreements have an average effective annual interest rate of 6.18% and the average length of the contracts is 4.5 years.

    All of the sale-leaseback agreements have end of lease clauses that qualify as bargain purchase options that the Company expects to execute. As at December 31, 2012, the total gross amount of assets recorded under sale-leaseback capital leases amounted to $33.9 million (2011 – $33.6 million).

    The Company has agreements with third party providers of mobile equipment that are used at the Meadowbank and Kittila mines. These arrangements represent capital leases in accordance with the guidance in ASC 840-30 – Capital Leases. The leases for mobile equipment at the Kittila and Meadowbank mines are for five years. The effective annual interest rate on the lease for mobile equipment at the Meadowbank mine is 5.64%. The effective annual interest rate on the lease for mobile equipment at the Kittila mine is 4.99%.

  • The following is a schedule of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as at December 31, 2012:

Years ended December 31,:     Minimum Capital
Lease Payments
 

2013   $ 14,052  

2014     8,970  

2015     3,646  

2016      

2017      

Thereafter      

Total minimum lease payments     26,668  

Less amount representing interest     1,605  

Present value of net minimum lease payments   $ 25,063  

  • The Company's capital lease obligations are comprised of the following:

    As at December 31,
   
    2012   2011  
   
Total future lease payments   $26,668   $40,630  

Less: interest   1,605   3,378  

    25,063   37,252  

Less: current portion   12,955   11,068  

Long-term portion of capital lease obligations   $12,108   $26,184  

  • At December 31, 2012, the gross amount of assets recorded under capital leases, including sale-leaseback capital leases was $51.0 million (2011 – $56.9 million; 2010 – $56.9 million). The charge to income resulting from the amortization of assets recorded under capital leases is included in the amortization of property, plant and mine development line item of the consolidated statements of income (loss) and comprehensive income (loss).

(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-cancellable lease terms in excess of one year as at December 31, 2012 are as follows:

Years ended December 31,:     Minimum Operating
Lease Payments
 

2013   $ 1,434  

2014     1,013  

2015     837  

2016     822  

2017     813  

Thereafter     3,473  

Total   $ 8,392  

  • The portion of operating leases relating to rental expense was $1.1 million in 2012 (2011 – $0.9 million; 2010 – $4.1 million).

RESTRICTED CASH
RESTRICTED CASH

14. RESTRICTED CASH

  • As part of the Company's insurance programs fronted by a third party provider and reinsured through the Company's internal insurance program, the third party provider requires that cash of $4.7 million be restricted as at December 31, 2012 (2011 – $3.4 million).

    As part of the Company's tax planning, $32.0 million was contributed to a qualified environmental trust ("QET") in December 2011 to fulfill the requirement of financial security for costs related to the environmental remediation of the Goldex mine. During the year ended December 31, 2012, $12.0 million was withdrawn from the QET to fund the environmental remediation expenditures. As at December 31, 2012, $20.7 million remained in the QET.

FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS

15. FINANCIAL INSTRUMENTS

  • Agnico-Eagle has entered into financial instruments with several financial institutions in order to hedge underlying cash flow and fair value exposures arising from changes in commodity prices, interest rates, equity prices or foreign currency exchange rates.

    Currency risk management

    In 2012 and 2011, financial instruments that subjected Agnico-Eagle to market risk and concentration of credit risk consisted primarily of cash and 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 generates almost all of its revenues in US dollars. The Company's Canadian operations, which include the LaRonde, Goldex, Lapa and Meadowbank mines and the Meliadine project have Canadian dollar requirements for capital, operating and exploration expenditures.

    The Company utilizes foreign exchange hedges to reduce the variability in expected future cash flows arising from changes in foreign currency exchange. The hedged items represent a portion of the Canadian dollar denominated cash outflows arising from Canadian dollar denominated expenditures in 2012.

  • The forward contracts with a cash flow hedging relationship that did qualify for hedge accounting hedged $60 million of 2011 expenditures at an average rate of US$1.00 = C$0.99 and $300 million of 2012 expenditures at an average rate of US$1.00 = C$1.01. The hedges that expired during the year resulted in a realized gain of $2.8 million (2011 – $(1.5) million). As at December 31, 2012, the Company recognized a mark-to-market gain of nil (2011 – $(4.4) million) in accumulated other comprehensive loss. Amounts deferred in accumulated other comprehensive loss are reclassified to the production costs line item on the consolidated statements of income (loss) and comprehensive income (loss), as applicable, when the hedged transaction has occurred.

    Mark-to-market gains (losses) related to foreign exchange derivative financial instruments are recorded at fair value based on broker-dealer quotations that utilize period end forward pricing of the currency hedged.

    In 2011, the Company entered into foreign exchange forward contracts with an ineffective cash flow hedging relationship that did not qualify for hedge accounting. The risk hedged in 2011 was the variability in expected future cash flows arising from changes in foreign currency exchange. The hedged items represented a portion of the unhedged forecasted Canadian dollar denominated cash outflows arising from Canadian dollar denominated expenditures in 2011. The forward contracts hedged $150 million of 2011 expenditures and nil of 2012 expenditures at an average rate of US$1.00 = C$0.99. The hedges that expired in 2011 resulted in a realized loss of $1.4 million that was recognized in the loss (gain) on derivative financial instruments line item of the consolidated statements of income (loss) and comprehensive income (loss). As at December 31, 2011, all ineffective cash flow hedges had expired. There were no foreign exchange forward contracts with ineffective cash flow hedging relationships purchased or outstanding in 2012.

    The Company's other foreign currency derivative strategies in 2012 consisted mainly 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 of these derivative transactions expired prior to year end such that no derivatives were outstanding as at December 31, 2012. The Company's foreign currency derivative strategy generated $1.5 million in call option premiums for the year ended December 31, 2012 (2011 – $5.0 million) that were recognized in the loss (gain) on derivative financial instruments line item of the consolidated statements of income (loss) and comprehensive income (loss).

    Commodity price risk management

    In the first quarter of 2011, to mitigate the risks associated with fluctuating zinc prices, the Company entered into a zero-cost collar to hedge the price on a portion of zinc associated with the LaRonde mine's 2011 production. The purchase of zinc put options was financed through selling zinc call options at a higher level such that the net premium payable to the counterparty by the Company was nil. There were no zinc zero-cost collars purchased or outstanding in 2012.

    A total of 20,000 metric tonnes of zinc call options were written at a strike price of $2,500 per metric tonne with 2,000 metric tonnes expiring each month beginning February 28, 2011. A total of 20,000 metric tonnes of zinc put options were purchased at a strike price of $2,200 per metric tonne with 2,000 metric tonnes expiring each month beginning February 28, 2011. While setting a minimum price, the zero-cost collar strategy also limits participation to zinc prices above $2,500 per metric tonne. These contracts did not qualify for hedge accounting under ASC 815 – Derivatives and Hedging. Gains or losses, along with mark-to-market adjustments, were recognized in the loss (gain) on derivative financial instruments line item of the consolidated statements of income (loss) and comprehensive income (loss). All options entered into during 2011 expired during the year resulting in a realized gain of $2.8 million.

    The Company also uses intra-quarter zinc, copper and silver derivative financial instruments associated with the timing of sales of the related products during 2012 that were recognized in the loss (gain) on derivative financial instruments line item of the consolidated statements of income (loss) and comprehensive income (loss). There were no zinc, copper or silver intra-quarter derivative financial instruments outstanding at December 31, 2012 or December 31, 2011.

  • In the second quarter of 2012, to mitigate the risks associated with fluctuating diesel fuel prices, the Company entered into financial contracts to hedge the price on a portion of diesel fuel costs associated with the Meadowbank mine's diesel fuel exposure (as it relates to operating costs). The financial contracts that expired in 2012 totalled 9.5 million gallons of heating oil, representing approximately 55% of Meadowbank's expected 2012 diesel fuel exposure. In addition, the financial contracts expiring in 2013 total 0.5 million gallons of heating oil, representing approximately 3% of Meadowbank's expected 2013 diesel fuel exposure. The contracts that expired in 2012 did not qualify for hedge accounting and the related realized loss of $1.5 million was recognized in the loss (gain) on derivative financial instruments line item of the consolidated statements of income (loss) and comprehensive income (loss). The contracts expiring in 2013 qualify for hedge accounting and the related $0.1 million market-to-market gain as at December 31, 2012 was recognized in the accumulated other comprehensive loss ("AOCI") line item on the consolidated balance sheets. The Company was not a party to any similar heating oil derivative financial instruments in 2011. Amounts deferred in AOCI are reclassified to the production costs line item on the consolidated statements of income (loss) and comprehensive income (loss), as applicable, when the derivative financial instrument has settled. Mark-to-market gains (losses) related to heating oil derivative financial instruments are based on broker-dealer quotations that utilize period end forward pricing to calculate fair value.

    The following table details the changes in the AOCI balances recorded in the consolidated financial statements pertaining to the foreign exchange and commodity hedging activities. The fair values, based on calculated mark-to-market valuations, of recorded derivative related assets and liabilities and their corresponding entries to AOCI reflect the netting of the fair values of individual derivative financial instruments.

   
      2012     2011    
   
AOCI, beginning of year   $ (4,404 ) $    

(Gain) loss reclassified from AOCI into production cost     (2,758 )   1,459    

Loss recognized in OCI – heating oil derivative financial instruments     (117 )      

Gain (loss) recognized in OCI – foreign exchange and other derivative financial instruments     7,019     (5,863 )  

AOCI, end of year   $ (260 ) $ (4,404 )  

  • As at December 31, 2012 and 2011, there were no metal derivative positions. The Company may from time to time utilize short-term (including intra-quarter) financial instruments as part of its strategy to minimize risks and optimize returns on its byproduct metal sales.

    Other required derivative disclosures can be found in note 7(d), accumulated other comprehensive loss.

  • The following table provides a summary of the amounts recognized in the loss (gain) on derivative financial instruments line item of the consolidated statements of income (loss) and comprehensive income (loss):

      Years Ended December 31,
   
      2012     2011     2010    
   
Premiums realized on written foreign exchange call options   $ 1,505   $ 4,995   $ 4,845    

Realized gain on foreign exchange extendible flat forward             1,797    

Realized loss on foreign exchange forwards         (1,407 )      

Realized gain on foreign exchange collar             711    

Mark-to-market gain on foreign exchange extendible flat forward(i)             142    

Realized gain on zinc derivative financial instruments     430     3,419     3,733    

Realized gain (loss) on copper derivative financial instruments     63     79     (558 )  

Realized loss on silver derivative financial instruments         (3,403 )   (3,058 )  

Mark-to-market loss on warrants(i)     (1,294 )          

Realized loss on heating oil derivative financial instruments     (1,523 )          

(Loss) gain on derivative financial instruments   $ (819 ) $ 3,683   $ 7,612    

  • Note:

    (i)
    Mark-to-market gains and losses on financial instruments that did not qualify for hedge accounting are recognized through the loss (gain) on derivative financial instruments line item of the consolidated statements of income (loss) and comprehensive income (loss) and through the other line item of the consolidated statements of cash flow.
  • Agnico-Eagle's exposure to interest rate risk at December 31, 2012 relates to its cash and cash equivalents, short-term investments and restricted cash totalling $332.0 million (2011 – $221.5 million) and the Credit Facility. The Company's short-term investments and cash equivalents have a fixed weighted average interest rate of 0.47% (2011 – 0.61%).

    The fair values of Agnico-Eagle's current financial assets and liabilities approximate their carrying values as at December 31, 2012.

GENERAL AND ADMINISTRATIVE
GENERAL AND ADMINISTRATIVE

16. GENERAL AND ADMINISTRATIVE

  • As a result of a kitchen fire at the Meadowbank mine in March 2011, the Company recognized a loss on disposal of the kitchen of $6.9 million, incurred related costs of $7.4 million and recognized an insurance receivable of $11.2 million. The difference of $3.1 million was recognized in the general and administrative line item of the consolidated statements of income (loss) and comprehensive income (loss) in the first quarter of 2011.

    During the subsequent months of 2011, the Company received $2.4 million of insurance proceeds and had a remaining insurance receivable of $8.8 million recorded in the other current assets line item of the consolidated balance sheets as at December 31, 2011. During the year ended December 31, 2012, the Company received $2.2 million of insurance proceeds and had a remaining insurance receivable of $6.6 million as at December 31, 2012.

LOSS ON GOLDEX MINE
LOSS ON GOLDEX MINE

17. LOSS ON GOLDEX MINE

  • On October 19, 2011, the Company announced that it was suspending mining operations and gold production at the Goldex mine in Quebec, Canada, effective immediately. This decision followed the receipt of an opinion from a second rock mechanics consulting firm which recommended that underground mining operations be halted. It appeared that a weak volcanic rock unit in the hanging wall above the Goldex Extension Zone ("GEZ") of the Goldex mine deposit had failed. This rock failure was thought to extend between the top of the deposit and surface. As a result, this structure allowed an increase in ground water to flow into the mine.

    As at September 30, 2011, Agnico-Eagle had written off its investment in the Goldex mine (net of expected residual value), written off the underground ore stockpile and recorded a provision for the anticipated costs of environmental remediation. Given the amount of uncertainty in estimating the fair value of the Goldex mine property, plant, and mine development, the Company determined that the fair value was equal to the residual value. All of the remaining 1.6 million ounces of proven and probable gold reserves at the Goldex mine, other than the ore stockpiled on surface, were reclassified as mineral resources effective September 30, 2011. The Goldex mine is part of the Canada segment as detailed in note 19.

    The mill processed feed from the remaining surface stockpile at the Goldex mine in October 2011.

Impairment loss on Goldex mine property, plant, and mine development   $237,110  

Loss on underground ore stockpile   16,641  

Supplies inventory obsolescence provision   1,915  

Increase in environmental remediation liability   47,227  

Loss on Goldex mine (before income and mining taxes) for the year ended December 31, 2011   $302,893  

  • The environmental remediation liability for the anticipated costs of remediation associated with the suspension of operations at the Goldex mine has required management to make estimates and judgments that affect the reported amount. In making judgments in accordance with US GAAP, 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.

    In July 2012, the Company's Board approved the development of the M and E Zones at the Goldex mine. The operations in the GEZ remain suspended indefinitely.

IMPAIRMENT LOSS ON MEADOWBANK MINE
IMPAIRMENT LOSS ON MEADOWBANK MINE

18. IMPAIRMENT LOSS ON MEADOWBANK MINE

  • For the year ended December 31, 2011, the Company performed a full review of the Meadowbank mine operations and updated the related life of mine plan. This review considered the exploration potential of the area, the mineral reserves and resources, the projected operating costs in light of the persistently high operating costs experienced since commencement of commercial operations, metallurgical performance and gold price. These served as inputs into pit optimizations to determine which reserves and resources could be economically mined and be considered as mineable mineral reserves. As a result of these factors, an updated mine plan with a shorter mine life was developed and cash flows calculated, resulting in an impairment charge to the Meadowbank mine carrying value of $907.7 million for the year ended December 31, 2011. The Meadowbank mine had a property, plant and mine development book value of approximately $1.7 billion prior to recording this impairment charge.

    Net estimated future cash flows from the Meadowbank mine were calculated as at December 31, 2011, on an undiscounted basis, based on best estimates of future gold production, which were based on long-term gold prices from $1,250 to $1,553 per ounce (in real terms), foreign exchange rates from US$0.92:C$1.00 to US$0.97:C$1.00, increased cost estimates based on revised operating levels, average gold recovery of 92.9% and expected continuation of operations to 2017, including the processing of stockpiled ore. Future expected operating costs, capital expenditures, and asset retirement obligations were based on the updated life of mine plan. The fair value was calculated by discounting the estimated future net cash flows using a 5% interest rate (in real terms), commensurate with the estimated level of risk. Management's estimate of future cash flows is subject to risk and uncertainties. Therefore, it is reasonably possible that changes could occur which may affect the recoverability of the Company's long-lived assets and may have a material effect on the Company's consolidated financial statements. The Meadowbank mine is a part of the Canada segment as detailed in note 19.

SEGMENTED INFORMATION
SEGMENTED INFORMATION

19. SEGMENTED INFORMATION

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


 

 

 

Canada:

 

LaRonde mine, Lapa mine, Goldex mine, Meadowbank mine, Meliadine project and the Regional office

Latin America:

 

Pinos Altos mine, Creston Mascota deposit at Pinos Altos and the La India project

Europe:

 

Kittila mine

Exploration:

 

United States Exploration office, Europe Exploration office, Canada Exploration offices and the Latin America Exploration office
  • The accounting policies of the reportable segments are the same as those described in the accounting policies note. There are no transactions between the reportable segments affecting revenue. Production costs for the reportable segments are net of intercompany transactions. Of the $229.3 million of goodwill reflected on the consolidated balance sheets at December 31, 2012, $200.1 million relates to the Meliadine project which is a component of the Canada segment and $29.2 million relates to the La India project which is a component of the Latin America segment.

    Corporate head office assets are included in the Canada segment and specific corporate income and expense items are noted separately below.

    The Meadowbank mine achieved commercial production on March 1, 2010. The Creston Mascota deposit at Pinos Altos achieved commercial production on March 1, 2011. The LaRonde mine extension achieved commercial production on December 1, 2011.

   
Year ended
December 31, 2012:
  Revenues
from
Mining
Operations
  Production
Costs
    Exploration
and Corporate
Development
  Amortization
of Property,
Plant and
Mine
Development
    Foreign
Currency
Translation
(Loss)
Gain
    Segment
Income
(Loss)
   

Canada   $1,182,621   $(646,733 ) $ (37,627 ) $(204,243 ) $ (6,294 ) $ 287,724    

Latin America   450,664   (152,942 )     (37,527 )   3,305     263,500    

Europe   284,429   (98,037 )     (30,091 )   (18,726 )   137,575    

Exploration         (71,873 )     5,395     (66,478 )  

    $1,917,714   $(897,712 ) $ (109,500 ) $(271,861 ) $ (16,320 ) $ 622,321    

Segment income   $ 622,321    

Corporate and other:          

  Interest and sundry expense     (2,389 )  

  Gain on sale of available-for-sale securities     9,733    

  Loss on derivative financial instruments     (819 )  

  General and administrative     (119,085 )  

  Impairment loss on available-for-sale securities     (12,732 )  

  Provincial capital tax     (4,001 )  

  Interest expense     (57,887 )  

Income before income and mining taxes   $ 435,141    

 
   
Year ended
December 31,
2011:
  Revenues
from
Mining
Operations
  Production
Costs
    Exploration
and Corporate
Development
  Amortization
of Property,
Plant and
Mine
Development
    Foreign
Currency
Translation
(Loss)
Gain
  Loss on
Goldex Mine
  Impairment
Loss on
Meadowbank
Mine
  Segment
(Loss)
Income
   

Canada   $1,217,858   $(619,987 ) $   $(198,219 ) $ (2,825 ) $(302,893 ) $(907,681 ) $(813,747 )  

Latin America   378,329   (145,614 )     (36,988 )   4,955       200,682    

Europe   225,612   (110,477 )     (26,574 )   (1,063 )     87,498    

Exploration         (75,721 )     15       (75,706 )  

    $1,821,799   $(876,078 ) $ (75,721 ) $(261,781 ) $ 1,082   $(302,893 ) $(907,681 ) $(601,273 )  

Segment loss   $(601,273 )  

Corporate and other:        

  Interest and sundry expense   (5,188 )  

  Gain on sale of available-for-sale securities   4,907    

  Impairment loss on available-for-sale securities   (8,569 )  

  Gain on derivative financial instruments   3,683    

  General and administrative   (107,926 )  

  Provincial capital tax   (9,223 )  

  Interest expense   (55,039 )  

Loss before income and mining taxes   $(778,628 )  

 
   
Year ended
December 31, 2010:
  Revenues
from
Mining
Operations
  Production
Costs
    Exploration
and Corporate
Development
  Amortization
of Property,
Plant and
Mine
Development
  Foreign Currency
Translation (Loss)
Gain
  Segment
Income
(Loss)
   

Canada   $1,086,744   $(499,621 ) $   $(140,024 ) $(22,815 ) $424,284    

Latin America   175,637   (90,116 )     (21,134 ) 2,126   66,513    

Europe   160,140   (87,735 )     (31,231 ) 2,780   43,954    

Exploration         (54,958 ) (97 ) (1,627 ) (56,682 )  

    $1,422,521   $(677,472 ) $ (54,958 ) $(192,486 ) $(19,536 ) $478,069    

Segment income   $478,069    

Corporate and other:        

  Interest and sundry income   10,254    

  Gain on acquisition of Comaplex Minerals Corp., net of transaction costs   57,526    

  Gain on sale of available-for-sale securities   19,487    

  Gain on derivative financial instruments   7,612    

  General and administrative   (94,327 )  

  Provincial capital tax   6,075    

  Interest expense   (49,493 )  

Income before income and mining taxes   $435,203    

 
    Total Assets as at December 31,
   
    2012   2011  
   
Canada   $3,279,881   $3,205,158  

Latin America   1,069,379   1,020,078  

Europe   846,941   771,714  

Exploration   59,641   37,312  

    $5,255,842   $5,034,262  

 
    Capital Expenditures
Years Ended December 31,
   
    2012   2011   2010  
   
Canada   $316,234   $347,790   $335,198  

Latin America   69,225   39,966   104,475  

Europe   60,036   86,514   71,968  

Exploration   55   8,561    

    $445,550   $482,831   $511,641  

SUBSEQUENT EVENTS
SUBSEQUENT EVENTS

20. SUBSEQUENT EVENTS

  • On March 19, 2013, the Company entered into a subscription agreement for 9,600,000 units of ATAC Resources Ltd. ("ATC") at a private placement price of C$1.35 per unit for total consideration of C$13.0 million. Each unit is comprised of one common share of ATC and one-half of one common share purchase warrant, representing 8.48% of the issued and outstanding common shares of ATC. Each whole common share purchase warrant entitles the holder to acquire one common share of ATC at a price of C$2.10 for a period of 18 months from the March 22, 2013 closing date. If the closing price of ATC's common shares exceeds C$3.00 for a period of ten consecutive trading days subsequent to the expiry of the applicable four month hold period, ATC may provide notice that the common share purchase warrants will expire 30 days from the date of such notice.

SECURITIES CLASS ACTION LAWSUITS
SECURITIES CLASS ACTION LAWSUITS

21. SECURITIES CLASS ACTION LAWSUITS

  • On November 7, 2011 and November 22, 2011, the Company and certain current and former officers who also are, or were, directors were named as defendants in two putative class action lawsuits, styled Jerome Stone v. Agnico-Eagle Mines Ltd., et al., and Chris Hastings v. Agnico-Eagle Mines Limited, et al., respectively, which were filed in the United States District Court for the Southern District of New York. On February 6, 2012, the court entered an order consolidating the actions under the caption In re Agnico-Eagle Mines Ltd. Securities Litigation and appointed a lead plaintiff (not one of the plaintiffs who filed the original complaints). On April 6, 2012, the lead plaintiff served its Consolidated Complaint (the "Complaint"). The Complaint names the Company, its current Chief Executive Officer and its former President and Chief Operating Officer as defendants and purports to be brought on behalf of all persons and entities who purchased or otherwise acquired the Company's publicly traded securities in the United States or on a U.S. exchange during the period July 28, 2010 through October 19, 2011 (the "Class Period"). The Complaint alleges, among other things, that defendants violated U.S. securities laws by misrepresenting the Company's gold reserves and the status, ability to operate and projected production of its Goldex mine. The Complaint seeks, among other things, (i) a determination that the action is a proper class action and (ii) an award of unspecified damages, attorneys' fees and expenses. On June 6, 2012, the Company and the other defendants filed a motion, pursuant to the Private Securities Litigation Reform Act and Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the Consolidated Complaint, for failure to state a claim upon which relief could be granted. On January 14, 2013, Judge Oetken granted the Company's motion to dismiss the Complaint and all claims therein and denied the plaintiffs' request for leave to amend the Complaint. On February 12, 2013, the plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the Second Circuit. No date has been set for the appeal.

    On March 8, 2012 and April 10, 2012, a Notice of Action and Statement of Claim (collectively, the "Ontario Claim") were issued by William Leslie, AFA Livforsakringsaktiebolag and certain other entities against the Company and certain of its current and former officers and directors. On September 27, 2012, the plaintiffs issued a Fresh as Amended Statement of Claim. The Fresh as Amended Statement of Claim alleges that the Company's public disclosure concerning water flow issues at its Goldex mine was misleading. The Ontario Claim was issued by the plaintiffs on behalf of all persons and entities who acquired securities of the Company during the period March 26, 2010 to October 19, 2011, excluding persons resident or domiciled in the Province of Quebec at the time they purchased or acquired such securities. The plaintiffs seek, among other things, damages of C$250.0 million and to certify the Ontario Claim as a class action. The plaintiffs have brought motions for leave to commence an action under s. 138 of the Securities Act (Ontario) and to certify the action as a class action, which are scheduled to be argued April 16, 2013 to April 19, 2013. The Company intends to vigorously contest the motions and defend the Ontario Claim.

    On April 12, 2012, two senior officers of the Company were served with a Motion for Leave to Institute a Class Action and for the Appointment of a Representative Plaintiff (the "Quebec Motion"). The action is on behalf of all persons and entities residing or domiciled in Quebec who acquired securities of the Company between March 26, 2010 and October 19, 2011. The proposed class action is for damages of C$100.0 million arising as a result of allegedly misleading disclosure by the Company concerning its operations at the Goldex mine. On October 15, 2012, the plaintiffs served an amended Quebec Motion seeking leave to commence an action under the Securities Act (Quebec) in addition to seeking authorization to institute a class action. No date has been set for the hearing to argue the Quebec Motion. The Company intends to vigorously contest the Quebec Motion and defend the claim.

TRADE RECEIVABLES AND REVENUES FROM MINING OPERATIONS (Tables)
Revenues from mining operations
    Years Ended December 31,
   
    2012   2011   2010  
   
Revenues from mining operations:              

Gold   $1,712,665   $1,563,760   $1,216,249  

Silver   140,221   171,725   104,544  

Zinc   45,797   70,522   77,544  

Copper   19,019   14,451   22,219  

Lead   12   1,341   1,965  

    $1,917,714   $1,821,799   $1,422,521  

OTHER ASSETS (Tables)
    As at December 31,
   
    2012     2011  
   
Federal, provincial and other sales taxes receivable   $36,400   $ 51,603  

Prepaid expenses   36,119     25,540  

Meadowbank insurance receivable   6,553     8,765  

Prepaid royalty(i)       7,684  

Employee loans receivable   1,800     5,567  

Retirement compensation arrangement plan refundable tax receivable   4,044      

Other   8,061     11,210  

    $92,977   $ 110,369  

  • Note:

    (i)
    The prepaid royalty relates to the Pinos Altos mine in Mexico.
    As at December 31,
   
    2012   2011    
   
Available-for-sale securities in an unrealized gain position:            

Cost (net of impairments)   $  4,352   $127,344    

Unrealized gains in accumulated other comprehensive loss   1,902   16,408    

Estimated fair value   6,254   143,752    

Available-for-sale securities in an unrealized loss position:            

Cost (net of impairments)   48,047   1,717    

Unrealized losses in accumulated other comprehensive loss   (9,582 ) (58 )  

Estimated fair value   38,465   1,659    

Total estimated fair value of available-for-sale securities   $44,719   $145,411    

    As at December 31,
   
    2012   2011  
   
Deferred financing costs, less accumulated amortization of $8,888 (2011 – $5,809)   $15,836   $15,777  

Long-term ore in stockpile(i)   32,711   64,392  

Other   7,291   7,879  

    $55,838   $88,048  

  • Note:

    (i)
    Due to the ore body structures at the Pinos Altos, Kittila and Meadowbank mines, a significant amount of drilling and blasting was undertaken early in their mine lives, resulting in long-term ore stockpiles. At December 31, 2012, long-term ore stockpiles were valued at $14.8 million (2011 – $7.1 million) at the Pinos Altos mine (including the Creston Mascota deposit at Pinos Altos), $7.7 million (2011 – $8.0 million) at the Kittila mine and $10.2 million (2011 – $49.3 million) at the Meadowbank mine.
PROPERTY, PLANT AND MINE DEVELOPMENT (Tables)

 

    As at December 31, 2012   As at December 31, 2011
   
 
    Cost   Accumulated
Amortization
  Net
Book Value
  Cost   Accumulated
Amortization
  Net
Book Value
 
   
Mining properties   $1,356,227   $  86,839   $1,269,388   $1,228,523   $111,567   $1,116,956  

Plant and equipment   2,538,328   617,826   1,920,502   2,467,300   437,706   2,029,594  

Mine development costs   918,482   237,967   680,515   869,746   190,399   679,347  

Construction in progress:                          

Meliadine project   133,840     133,840   69,458     69,458  

La India project   32,553     32,553        

Goldex mine M and E Zones   30,658     30,658        

    $5,010,088   $942,632   $4,067,456   $4,635,027   $739,672   $3,895,355  

  •  

    As at December 31,
   
    2012   2011  
   
Canada   $2,543,171   $2,433,527  

Latin America   809,556   776,892  

Europe   704,031   674,258  

United States   10,698   10,678  

Total   $4,067,456   $3,895,355  

FAIR VALUE MEASUREMENT (Tables)
Financial assets and liabilities measured at fair value within the fair value hierarchy
  • The following table details the Company's financial assets and liabilities measured at fair value as at December 31, 2012 within the fair value hierarchy:

   
      Total     Level 1     Level 2   Level 3  
   
Financial assets:                        

Available-for-sale securities(i)   $ 44,719   $ 44,719   $   $–  

Trade receivables(ii)     67,750         67,750    

Fair value of derivative financial instruments(iii)     2,112         2,112    

    $ 114,581   $ 44,719   $ 69,862   $–  

Financial liabilities:                        

Fair value of derivative financial instruments(iii)   $ 277   $   $ 277   $–  

  • Notes:

    (i)
    Available-for-sale securities are recorded at fair value using quoted market prices (classified within Level 1 of the fair value hierarchy).

    (ii)
    Trade receivables from provisional invoices for concentrate sales are valued using quoted forward rates derived from observable market data based on the month of expected settlement (classified within Level 2 of the fair value hierarchy).

    (iii)
    Derivative financial instruments are recorded at fair value using external broker-dealer quotations (classified within Level 2 of the fair value hierarchy).
LONG-TERM DEBT (Tables)
  • The following are the individual series' of the 2010 Notes:

   
      Principal   Interest Rate   Maturity Date  
   
Series A   $ 115,000   6.13%   7/4/2017  

Series B     360,000   6.67%   7/4/2020  

Series C     125,000   6.77%   7/4/2022  

    $ 600,000          

  • The following are the individual series' of the 2012 Notes:

   
      Principal   Interest Rate   Maturity Date  
   
Series A   $ 100,000   4.87%   7/23/2022  

Series B     100,000   5.02%   7/23/2024  

    $ 200,000          

RECLAMATION PROVISION AND OTHER LIABILITIES (Tables)
  •  

    As at December 31,
   
    2012   2011  
   
Reclamation provision (note 6(a))   $101,753   $105,443  

Long-term portion of capital lease obligations (note 13(a))   12,108   26,184  

Pension benefits (note 6(b))   13,734   13,991  

Other   140   370  

Total   $127,735   $145,988  

  •  

   
    2012   2011    
   
Asset retirement obligations, beginning of year   $86,386   $91,641    

Current year additions and changes in estimate, net   1,495   (8,398 )  

Current year accretion   5,068   4,953    

Liabilities settled   (254 )    

Foreign exchange revaluation   1,655   (1,810 )  

Reclassification from long-term to current   (4,630 )    

Asset retirement obligations – long-term, end of year   $89,720   $86,386    

  •  

      Years Ended December 31,
   
      2012     2011     2010  
   
Service cost – benefits earned during the year   $ 650   $ 996   $ 981  

Interest cost on projected benefit obligation     489     663     613  

Amortization of net transition asset     169     171     164  

Prior service cost     26     26     25  

Loss due to settlement     2,921          

Recognized net actuarial loss     340     245      

Net pension benefits expense   $ 4,595   $ 2,101   $ 1,783  

  •  

   
      2012     2011    
   
Reconciliation of the market value of plan assets:                

Fair value of plan assets, beginning of year   $ 2,952   $ 2,443    

Agnico-Eagle's contribution     839     1,156    

Benefit payments     (520 )   (578 )  

Settlements     (961 )      

Effect of exchange rate changes     63     (69 )  

Fair value of plan assets, end of year     2,373     2,952    

Reconciliation of projected benefit obligation:                

Projected benefit obligation, beginning of year     14,370     12,041    

Service cost     650     996    

Interest cost     489     663    

Net actuarial loss     675     1,704    

Benefit payments     (520 )   (696 )  

Settlements     (5,148 )      

Effect of exchange rate changes     302     (338 )  

Projected benefit obligation, end of year     10,818     14,370    

Deficiency of plan assets compared with projected benefit obligation   $ (8,445 ) $ (11,418 )  

  •  

      As at December 31,
   
      2012     2011  
   
Accrued employee benefit liability   $ 5,008   $ 7,292  

Accumulated other comprehensive loss:              

  Transition obligation     341     500  

  Prior service cost     52     76  

  Net actuarial loss     3,044     3,550  

Net liability   $ 8,445   $ 11,418  

Assumptions:              

Weighted average discount rate – net periodic pension cost     4.45%     5.20%  

Weighted average discount rate – projected benefit obligation     4.00%     4.45%  

Weighted average rate of compensation increase     3.00%     3.00%  

Estimated average remaining service life for the plan (in years)(i)     6.0     3.0  

  • Note:

    (i)
    Estimated average remaining service life for the Executives Plan was developed for individual senior officers.
  • Executives Plan components expected to be recognized in accumulated other comprehensive loss in 2013:

Transition obligation   $170  

Prior service cost   26  

Net actuarial loss   327  

    $523  

  •  

Years ended December 31,:     Estimated Executives Plan
Benefit Payments
 

2013   $ 117  

2014   $ 116  

2015   $ 115  

2016   $ 114  

2017   $ 113  

2018 – 2022   $ 3,591  

  •  

   
      2012     2011    
   
Environmental remediation liability – long-term, beginning of year   $ 19,057   $    

Environmental remediation liability – current, beginning of year     26,069        

Current year change in estimate     (36 )   51,736    

Liabilities settled     (21,450 )   (7,616 )  

Foreign exchange revaluation     579     1,006    

Reclassification from long-term to current     (12,186 )   (26,069 )  

Environmental remediation liability – long-term, end of year   $ 12,033   $ 19,057    

SHAREHOLDERS' EQUITY (Tables)
  •  

      As at December 31,
   
      2012     2011    
   
Cumulative translation adjustment   $ (16,206 ) $ (16,206 )  

Unrealized net (loss) gain on available-for-sale securities     (7,680 )   16,350    

Unrealized loss on derivative financial instruments     (260 )   (4,404 )  

Unrealized loss on pension benefits liability     (4,071 )   (5,219 )  

Tax effect of unrealized loss on derivative financial instruments     397     1,491    

Tax effect of unrealized loss on pension benefits liability     509     882    

Accumulated other comprehensive loss   $ (27,311 ) $ (7,106 )  

  •  

    Years Ended December 31,
   
    2012   2011   2010  
   
Weighted average number of common shares outstanding – basic   171,250,179   169,352,896   162,342,686  

Add: Dilutive impact of employee stock options       1,192,530  

Dilutive impact of warrants       2,263,902  

Dilutive impact of shares related to RSU plan   235,436     43,141  

Weighted average number of common shares outstanding – diluted   171,485,615   169,352,896   165,842,259  

STOCK-BASED COMPENSATION (Tables)
  •  

    2012   2011   2010
   
 
 
    Number of
Stock Options
  Weighted
Average
Exercise Price
  Number of
Stock Options
  Weighted
Average
Exercise Price
  Number of
Stock Options
  Weighted
Average
Exercise Price
 
   
Outstanding, beginning of year   8,959,051   C$62.88   6,762,704   C$56.94   5,707,940   C$53.85  

Granted   3,257,000   36.99   2,630,785   76.12   2,926,080   57.55  

Exercised   (416,275 ) 43.51   (308,688 ) 43.62   (1,627,766 ) 47.02  

Forfeited   (731,000 ) 59.72   (125,750 ) 67.47   (243,550 ) 58.03  

Expired   (481,650 ) 47.49          

Outstanding, end of year   10,587,126   C$56.60   8,959,051   C$62.88   6,762,704   C$56.94  

Options exercisable at end of year   6,510,464       5,178,172       2,972,857      

  •  

    2012
   
    Number of
Stock Options
    Weighted Average
Grant Date
Fair Value
 
   
Nonvested, beginning of year   3,780,879   C$ 17.79  

Granted   3,257,000     8.29  

Vested   (2,625,467 )   15.63  

Forfeited (nonvested)   (335,750 )   12.50  

Nonvested, end of year   4,076,662   C$ 13.33  

  • The following table summarizes information about Agnico-Eagle's stock options outstanding and exercisable at December 31, 2012:

    Stock Options Outstanding   Stock Options Exercisable
   
 
Range of Exercise Prices   Number
Outstanding
  Weighted Average
Remaining
Contractual Life
  Weighted Average
Exercise Price
  Number
Exercisable
  Weighted Average
Exercise Price
 

C$33.26 – C$59.71   6,378,941   2.50 years   C$47.45   3,485,921   C$52.68  

C$60.72 – C$83.08   4,208,185   2.14 years   70.46   3,024,543   68.18  

C$33.26 – C$83.08   10,587,126   2.36 years   C$56.60   6,510,464   C$59.88  

  •  

   
    2012   2011   2010  
   
Risk-free interest rate   1.26%   1.95%   1.86%  

Expected life of stock options (in years)   2.8   2.5   2.5  

Expected volatility of Agnico-Eagle's share price   37.5%   34.70%   43.80%  

Expected dividend yield   2.14%   0.89%   0.42%  

INCOME AND MINING TAXES (Tables)

 

      Years Ended December 31,
   
      2012     2011     2010  
   
Current income and mining taxes:                    

  Canada   $ 8,750   $ 62,382   $ 34,217  

  Mexico     33,531     3,496     1,942  

  Finland     9,799     222      

      52,080     66,100     36,159  

Deferred income and mining taxes:                    

  Canada     26,041     (341,038 )   47,083  

  Mexico     25,284     54,996     18,759  

  Finland     20,820     10,269     1,086  

      72,145     (275,773 )   66,928  

Income and mining taxes   $ 124,225   $ (209,673 ) $ 103,087  

  •  

   
    2012   2011   2010  
   
Combined federal and composite provincial tax rates   26.3%   27.8%   29.6%  

Increase (decrease) in tax rates resulting from:              

Provincial mining duties   3.6   5.9   6.8  

Tax law changes     (2.7)   (5.1)  

Impact of foreign tax rates   (1.5)   (0.2)   (0.5)  

Permanent differences   1.0   (1.6)   (4.2)  

Valuation allowances   1.2   (0.3)   (0.2)  

Impact of changes in income tax rates   (2.1)   (2.0)   (2.7)  

Actual rate as a percentage of pre-tax income   28.5%   26.9%   23.7%  

  •  

    Liabilities (Assets)
as at December 31,
   
    2012   2011    
   
Mining properties   $761,508   $704,379    

Net operating and capital loss carryforwards   (102,005 ) (104,332 )  

Mining duties   (36,158 ) (88,670 )  

Reclamation provisions   (42,688 ) (51,926 )  

Valuation allowance   30,570   39,121    

Deferred income and mining tax liabilities   $611,227   $498,572    

  •  

   
      2012   2011     2010    
   
Unrecognized tax benefits, beginning of year   $ 1,200   $1,630   $ 5,608    

Additions (reductions)     9,667   (430 )   (3,978 )  

Unrecognized tax benefit, end of year   $ 10,867   $1,200   $ 1,630    

ACQUISITIONS (Tables)
  •  

Total purchase price:        

Cash paid for acquisition   $165,954    

Agnico-Eagle common shares issued for acquisition   56,146    

Total purchase price to allocate   $222,100    

Fair value of assets acquired and liabilities assumed:        

Mining properties   $282,000    

Goodwill   29,215    

Cash and cash equivalents   2,907    

Trade receivables   469    

Other current assets   1,700    

Equipment   56    

Accounts payable and accrued liabilities   (9,767 )  

Deferred tax liability   (72,229 )  

Non-controlling interest   (12,251 )  

Net assets acquired   $222,100    

  •  

      Years Ended December 31,
   
      2011     2010  
   
      Unaudited
Pro forma net income (loss) attributed to common shareholders   $ (582,762 ) $ 324,708  

Pro forma net income (loss) per share – basic   $ (3.42 ) $ 1.98  

  •  

Total purchase price:          

Comaplex shares previously purchased   $ 88,683    

Agnico-Eagle common shares issued for acquisition     578,955    

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