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1. BASIS OF PRESENTATION
The accompanying interim unaudited consolidated financial statements of Agnico Eagle Mines Limited ("Agnico Eagle" or the "Company") have been prepared in accordance with United States generally accepted accounting principles ("US GAAP") in US dollars. They do not include all of the disclosures required by US GAAP for annual financial statements. Accordingly, these interim unaudited consolidated financial statements should be read in conjunction with the fiscal 2012 audited annual consolidated financial statements, including the accounting policies and notes thereto, included in the Annual Report and Annual Information Form/Form 20-F for the year ended December 31, 2012. In the opinion of management, the interim unaudited consolidated financial statements reflect all adjustments, which consist only of normal and recurring adjustments necessary to present fairly the financial position as at September 30, 2013 and the results of operations and cash flows for the three and nine months ended September 30, 2013 and September 30, 2012.
Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2013.
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2. USE OF ESTIMATES
The preparation of the interim unaudited consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the interim unaudited consolidated financial statements and accompanying notes. Management believes that the estimates used in the preparation of the interim unaudited consolidated financial statements are reasonable and prudent; however, actual results may differ from these estimates.
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3. ACCOUNTING POLICIES
These interim unaudited consolidated financial statements follow the same accounting policies and methods of their application as the December 31, 2012 audited annual consolidated financial statements except for the recently adopted accounting pronouncements discussed below.
Recently Adopted Accounting Pronouncements
Disclosures about Offsetting Assets and Liabilities
In November 2011, ASC guidance was issued relating to disclosure on offsetting financial instrument and derivative financial instrument assets and liabilities. Under the updated guidance, entities are required to disclose gross information and net information about both instruments and transactions eligible for offset in the consolidated balance sheets and instruments and transactions subject to an agreement similar to a master netting arrangement. The Company adopted this updated guidance, effective for the fiscal year beginning January 1, 2013. See notes 4 and 10 for disclosure on offsetting financial instrument and derivative financial instrument assets and liabilities.
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Loss
In February 2013, ASC guidance was issued relating to the reporting of amounts reclassified out of accumulated other comprehensive loss. Under the updated guidance, entities are required to provide information about the amounts reclassified out of accumulated other comprehensive loss by component and by consolidated statement of income line item, as required under US GAAP. The Company adopted this updated guidance, effective for the fiscal year beginning January 1, 2013. See the Company's interim unaudited consolidated statements of income and comprehensive income for reporting of amounts reclassified out of accumulated other comprehensive loss.
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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 summarizes the Company's financial assets and liabilities measured at fair value as at September 30, 2013 within the fair value hierarchy:
|
Level 1 | Level 2 | Level 3 | Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financial assets: |
||||||||||||||
Trade receivables(i) |
$ | — | $ | 64,171 | $ | — | $ | 64,171 | ||||||
Available-for-sale securities(ii) |
83,098 | — | — | 83,098 | ||||||||||
Fair value of derivative financial instruments(iii) |
— | 9,305 | — | 9,305 | ||||||||||
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$ | 83,098 | $ | 73,476 | $ | — | $ | 156,574 | ||||||
Financial liabilities: |
||||||||||||||
Fair value of derivative financial instruments(iii) |
$ | — | $ | 484 | $ | — | $ | 484 | ||||||
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:
|
Level 1 | Level 2 | Level 3 | Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financial assets: |
||||||||||||||
Trade receivables(i) |
$ | — | $ | 67,750 | $ | — | $ | 67,750 | ||||||
Available-for-sale securities(ii) |
44,719 | — | — | 44,719 | ||||||||||
Fair value of derivative financial instruments(iii) |
— | 2,112 | — | 2,112 | ||||||||||
|
$ | 44,719 | $ | 69,862 | $ | — | $ | 114,581 | ||||||
Financial liabilities: |
||||||||||||||
Fair value of derivative financial instruments(iii) |
$ | — | $ | 277 | $ | — | $ | 277 | ||||||
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 interim unaudited consolidated statements of income and comprehensive income and a new cost basis for the investment is established. The Company assesses whether a decline in value is considered to be other-than-temporary by considering available evidence, including changes in general market conditions, specific industry and individual company data, the length of time and the extent to which the fair value has been less than cost, the financial condition and the near-term prospects of the individual investment. New evidence could become available in future periods which would affect this assessment and thus could result in material impairment charges with respect to those investments in available-for-sale securities for which the cost basis exceeds its fair value.
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5. PROPERTY, PLANT AND MINE DEVELOPMENT
|
As at September 30, 2013 | As at December 31, 2012 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Cost | Accumulated Amortization |
Net Book Value |
Cost | Accumulated Amortization |
Net Book Value |
||||||||||||||
Mining properties |
$ | 1,364,909 | $ | 104,098 | $ | 1,260,811 | $ | 1,356,227 | $ | 86,839 | $ | 1,269,388 | ||||||||
Plant and equipment |
2,641,015 | 782,595 | 1,858,420 | 2,538,328 | 617,826 | 1,920,502 | ||||||||||||||
Mine development costs |
1,050,260 | 255,042 | 795,218 | 918,482 | 237,967 | 680,515 | ||||||||||||||
Construction in Progress: |
||||||||||||||||||||
Meliadine project |
178,635 | — | 178,635 | 133,840 | — | 133,840 | ||||||||||||||
La India project |
141,411 | — | 141,411 | 32,553 | — | 32,553 | ||||||||||||||
Goldex mine M and E zones |
77,218 | — | 77,218 | 30,658 | — | 30,658 | ||||||||||||||
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$ | 5,453,448 | $ | 1,141,735 | $ | 4,311,713 | $ | 5,010,088 | $ | 942,632 | $ | 4,067,456 | ||||||||
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6. SHAREHOLDERS' EQUITY
In 2009, the Company implemented the restricted share unit ("RSU") plan for certain employees. Effective January 1, 2012, the RSU plan was amended to include directors and senior executives of the Company.
A deferred compensation balance is recorded for the total grant date value on the date of each RSU plan grant. The deferred compensation balance is recorded as a reduction of shareholders' equity and is amortized as compensation expense over the applicable vesting period.
During the first quarter of 2013, the Company funded the RSU plan by transferring $19.0 million (first quarter of 2012 — $12.0 million) to an employee benefit trust (the "Trust") that then purchased shares of the Company in the open market. For accounting purposes, the Trust is treated as a variable interest entity and consolidated in the accounts of the Company. 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.
The following table summarizes the maximum number of common shares that would be outstanding if all instruments outstanding at September 30, 2013 were exercised:
Common shares outstanding at September 30, 2013 |
173,428,331 | ||||
Employee stock options |
11,495,535 | ||||
Warrants |
8,600,000 | ||||
RSU plan |
302,454 | ||||
|
193,826,320 | ||||
The following table provides the weighted average number of common shares used in the calculation of basic and diluted net income per share:
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Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2013 | 2012 | 2013 | 2012 | ||||||||||
Net income for the period |
$ | 47,311 | $ | 106,326 | $ | 46,790 | $ | 228,146 | ||||||
Weighted average number of common shares outstanding — basic (in thousands) |
173,102 | 171,341 | 172,651 | 171,055 | ||||||||||
Add: Dilutive impact of employee stock options |
— | — | — | — | ||||||||||
Dilutive impact of warrants |
— | — | — | — | ||||||||||
Dilutive impact of shares related to RSU plan |
350 | 255 | 379 | 242 | ||||||||||
|
||||||||||||||
Weighted average number of common shares outstanding — diluted (in thousands) |
173,452 | 171,596 | 173,030 | 171,297 | ||||||||||
Net income per share — basic |
$ | 0.27 | $ | 0.62 | $ | 0.27 | $ | 1.33 | ||||||
Net income per share — diluted |
$ | 0.27 | $ | 0.62 | $ | 0.27 | $ | 1.33 | ||||||
Diluted net income per share has been calculated using the treasury stock method. In applying the treasury stock method, outstanding employee stock options and warrants with an exercise price greater than the average quoted market price of the common shares for the reporting period are not included in the calculation of diluted net income per share as the impact would be anti-dilutive.
For the three and nine months ended September 30, 2013, all employee stock options and warrants were excluded from the calculation of diluted net income per share as their effect would have been anti-dilutive.
For the three and nine months ended September 30, 2012, all employee stock options and warrants were excluded from the calculation of diluted net income per share as their effect would have been anti-dilutive.
Accumulated other comprehensive loss
The following table details the changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2013:
|
Cumulative Translation Adjustment |
Available-for-sale Securities and Other Investments |
Derivative Financial Instruments |
Pension Benefits |
Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Accumulated other comprehensive (loss) income, December 31, 2012 |
$ | (16,206 | ) | $ | (7,680 | ) | $ | 137 | $ | (3,562 | ) | $ | (27,311 | ) | |||
Other comprehensive loss before reclassifications |
— | (9,445 | ) | (152 | ) | — | (9,597 | ) | |||||||||
Income tax expense impact |
— | — | 41 | — | 41 | ||||||||||||
Reclassifications from accumulated other comprehensive (loss) income to the Consolidated Statements of Income |
— | 28,607 | (189 | ) | 393 | 28,811 | |||||||||||
Income tax expense impact |
— | — | 50 | (103 | ) | (53 | ) | ||||||||||
Other comprehensive income (loss) for the period |
— | 19,162 | (250 | ) | 290 | 19,202 | |||||||||||
Accumulated other comprehensive (loss) income, September 30, 2013 |
$ | (16,206 | ) | $ | 11,482 | $ | (113 | ) | $ | (3,272 | ) | $ | (8,109 | ) | |||
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7. STOCK-BASED COMPENSATION
The following continuities summarize activity with respect to the Company's outstanding employee stock options:
|
Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Number of Employee Stock Options |
Weighted Average Exercise Price |
Number of Employee Stock Options |
Weighted Average Exercise Price |
||||||||||
Outstanding, beginning of period |
10,587,126 | C$ | 56.60 | 8,959,051 | C$ | 62.88 | ||||||||
Granted |
2,803,000 | 52.13 | 3,257,000 | 36.99 | ||||||||||
Exercised |
(213,500 | ) | 37.06 | (140,475 | ) | 37.04 | ||||||||
Forfeited |
(340,206 | ) | 58.25 | (726,500 | ) | 59.80 | ||||||||
Expired |
(1,340,885 | ) | 54.86 | (481,650 | ) | 47.49 | ||||||||
Outstanding, end of period |
11,495,535 | C$ | 56.03 | 10,867,426 | C$ | 56.35 | ||||||||
Exercisable, end of period |
7,413,795 | C$ | 59.35 | 6,780,014 | C$ | 59.34 | ||||||||
Agnico Eagle estimated the fair value of employee stock options under the Black-Scholes option pricing model using the following weighted average assumptions:
|
Nine Months Ended September 30, |
|||||||
---|---|---|---|---|---|---|---|---|
|
2013 | 2012 | ||||||
Risk-free interest rate |
1.50% | 1.25% | ||||||
Expected life of employee stock options (in years) |
2.6 | 2.8 | ||||||
Expected volatility of Agnico Eagle's share price |
35.00% | 37.52% | ||||||
Expected dividend yield |
1.80% | 2.14% |
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8. AVAILABLE-FOR-SALE SECURITIES
During the three and nine months ended September 30, 2013, the Company did not dispose of any available-for-sale securities. During the three months ended September 30, 2012, the Company did not dispose of any available-for-sale securities. During the nine months ended September 30, 2012, the Company received proceeds of $30.7 million and recognized a loss before income taxes of $6.7 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 September 30, 2013 |
As at December 31, 2012 |
||||||
---|---|---|---|---|---|---|---|---|
Available-for-sale securities in an unrealized gain position: |
||||||||
Cost (net of impairments) |
$ | 43,474 | $ | 4,352 | ||||
Unrealized gains in accumulated other comprehensive loss |
14,734 | 1,902 | ||||||
Estimated fair value |
58,208 | 6,254 | ||||||
Available-for-sale securities in an unrealized loss position: |
||||||||
Cost (net of impairments) |
28,028 | 48,047 | ||||||
Unrealized losses in accumulated other comprehensive loss |
(3,138 | ) | (9,582 | ) | ||||
Estimated fair value |
24,890 | 38,465 | ||||||
Total estimated fair value of available-for-sale securities |
$ | 83,098 | $ | 44,719 | ||||
The Company's investments in available-for-sale securities consist primarily of investments in common shares of entities in the mining industry. During the three and nine months ended September 30, 2013, 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 three months ended September 30, 2013, the Company recorded a $0.3 million (three months ended September 30, 2012 — $0.6 million) impairment loss on certain available-for-sale securities that were determined to be other-than-temporarily impaired. During the nine months ended September 30, 2013, the Company recorded a $28.6 million (nine months ended September 30, 2012 — $12.2 million) impairment loss on certain available-for-sale securities that were determined to be other-than-temporarily impaired.
At September 30, 2013, the fair value of available-for-sale securities in an unrealized loss position was $24.9 million (December 31, 2012 — $38.5 million) with total unrealized losses in accumulated other comprehensive loss of $3.1 million (December 31, 2012 — $9.6 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 the investments 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 September 30, 2013.
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9. 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 September 30, 2013, the Credit Facility was drawn down by $150.0 million (December 31, 2012 — $30.0 million). Amounts drawn down, together with related outstanding letters of credit, resulted in Credit Facility availability of $1,039.9 million at September 30, 2013.
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 issued 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 | ||||||||
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$ | 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, 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 September 30, 2013.
Interest on long-term debt
Total long-term debt interest costs incurred during the three and nine months ended September 30, 2013 were $13.3 million (three months ended September 30, 2012 — $12.3 million) and $38.0 million (nine months ended September 30, 2012 — $34.7 million), respectively.
Total interest costs capitalized to property, plant and mine development for the three and nine months ended September 30, 2013 were $0.7 million (three months ended September 30, 2012 — $0.3 million) and $3.0 million (nine months ended September 30, 2012 — $0.8 million), respectively.
During the three months ended September 30, 2013, cash interest paid on the Credit Facility was $0.7 million (three months ended September 30, 2012 — $0.6 million), cash standby fees paid on the Credit Facility were $1.2 million (three months ended September 30, 2012 — $1.1 million) and cash interest paid on the 2010 Notes and 2012 Notes was $4.9 million (three months ended September 30, 2012 — nil).
During the nine months ended September 30, 2013, cash interest paid on the Credit Facility was $0.9 million (nine months ended September 30, 2012 — $3.3 million), cash standby fees paid on the Credit Facility were $3.6 million (nine months ended September 30, 2012 — $3.1 million) and cash interest paid on the 2010 Notes and 2012 Notes was $29.6 million (nine months ended September 30, 2012 — $19.8 million).
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10. FINANCIAL INSTRUMENTS
Currency Risk Management
The Company utilizes foreign exchange hedges to reduce the variability of the US dollar amount of expected future foreign currency expenditures arising from changes in currency exchange rates. Hedged items represent a portion of the Canadian dollar denominated cash outflows arising from Canadian dollar denominated expenditures.
As at September 30, 2013, the Company had outstanding foreign exchange zero cost collars with a cash flow hedging relationship that did qualify for hedge accounting under ASC 815 — Derivatives and Hedging. The purchase of US dollar put options was financed through selling US dollar call options at a higher level such that the net premium payable to the different counterparties by the Company was nil. At September 30, 2013, the zero cost collars hedged $60.0 million of 2013 expenditures and the Company recognized mark-to-market adjustments in accumulated other comprehensive loss ("AOCL").
Amounts deferred in AOCL are reclassified to the production costs line item on the interim unaudited consolidated statements of income, as applicable, when the derivative financial instrument has settled. Mark-to-market gains (losses) related to foreign exchange derivative financial instruments are based on broker-dealer quotations that utilize period end forward pricing of the currency hedged to calculate fair value.
The Company's other foreign currency derivative strategies in 2013 and 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 for Canadian dollars. All of these derivative transactions expired prior to period end such that no derivatives were outstanding on September 30, 2013 or September 30, 2012. Call option premiums were recognized in the (gain) loss on derivative financial instruments line item of the interim unaudited consolidated statements of income.
Commodity Price Risk Management
The Company uses intra-quarter zinc and copper derivative financial instruments associated with the timing of sales of the related products during 2013 and 2012 that were recognized in the (gain) loss on derivative financial instruments line item of the interim unaudited consolidated statements of income. There were no zinc intra-quarter derivative financial instruments outstanding at September 30, 2013 or December 31, 2012 and there were no intra-quarter copper derivative financial instruments purchased or outstanding during the three and nine months ended September 30, 2013.
To mitigate the risks associated with fluctuating diesel fuel prices, the Company uses derivative financial instrument 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. Financial contracts that expired in 2013 and totaled 10.5 million gallons of heating oil were entered into at an average price of $2.99 per gallon, which is approximately 55.0% of the Meadowbank mine's expected 2013 diesel fuel operating costs. These contracts did qualify for hedge accounting and the related market-to-market adjustments prior to settlement were recognized in AOCL. During the three months ended September 30, 2013, all the heating oil derivative financial instrument contracts settled.
Amounts deferred in AOCL are reclassified to the production costs line item of the interim unaudited consolidated statements of income, 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 fair value of the Company's derivative financial instruments are reported on the fair value of derivative financial instruments line item of the interim unaudited consolidated balance sheets.
The following table summarizes the changes in AOCL balances recorded in the interim unaudited consolidated financial statements pertaining to derivative financial instruments:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2013 | 2012 | 2013 | 2012 | ||||||||||
Accumulated other comprehensive loss, beginning of period |
$ | (2,091 | ) | $ | (2,653 | ) | $ | (260 | ) | $ | (4,404 | ) | ||
Other comprehensive income (loss) — foreign exchange derivative financial instruments |
1,260 | 5,897 | (505 | ) | 7,979 | |||||||||
Other comprehensive income — heating oil derivative financial instruments |
439 | 89 | 353 | 135 | ||||||||||
Other comprehensive loss — other derivative financial instruments |
— | (3 | ) | — | (397 | ) | ||||||||
Reclassification to the interim unaudited consolidated statements of income |
(209 | ) | (1,245 | ) | (189 | ) | (1,228 | ) | ||||||
Accumulated other comprehensive (loss) income, end of period |
$ | (601 | ) | $ | 2,085 | $ | (601 | ) | $ | 2,085 | ||||
The following table summarizes the amounts recognized in the (gain) loss on derivative financial instruments line item of the interim unaudited consolidated statements of income:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2013 | 2012 | 2013 | 2012 | ||||||||||
Premiums realized on written foreign exchange call options |
$ | 1,074 | $ | 227 | $ | 2,547 | $ | 1,254 | ||||||
Mark-to-market gain on derivative equity contracts |
2,270 | — | 1,843 | — | ||||||||||
Realized gain on zinc derivative financial instruments |
60 | — | 60 | 476 | ||||||||||
Gain (loss) on heating oil derivative financial instruments and other |
— | 1,447 | — | (3,482 | ) | |||||||||
Gain (loss) on derivative financial instruments |
$ | 3,404 | $ | 1,674 | $ | 4,450 | $ | (1,752 | ) | |||||
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11. 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 September 30, 2013, the total amount of these guarantees was $176.2 million.
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12. SEGMENTED INFORMATION
Agnico Eagle operates in a single industry, the 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, the La India project and the Urastar properties | ||
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 $235.4 million of goodwill reflected on the interim unaudited consolidated balance sheets at September 30, 2013, $200.1 million relates to the Meliadine project which is a component of the Canada segment, $29.2 million relates to the La India project which is a component of the Latin America segment and $6.1 million relates to the May 16, 2013 acquisition of Urastar Gold Corporation 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.
Three Months Ended September 30, 2013 |
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 |
$ | 291,438 | $ | (166,537 | ) | $ | — | $ | (57,576 | ) | $ | (4,617 | ) | $ | 62,708 | |||||
Latin America |
88,449 | (39,584 | ) | — | (11,275 | ) | 2,578 | 40,168 | ||||||||||||
Europe |
64,433 | (25,414 | ) | — | (7,203 | ) | (12,153 | ) | 19,663 | |||||||||||
Exploration |
— | — | (15,550 | ) | — | 7,685 | (7,865 | ) | ||||||||||||
|
$ | 444,320 | $ | (231,535 | ) | $ | (15,550 | ) | $ | (76,054 | ) | $ | (6,507 | ) | $ | 114,674 | ||||
Segment income |
$ | 114,674 | ||||||||||||||||||
Corporate and other: |
||||||||||||||||||||
Interest and sundry income |
141 | |||||||||||||||||||
Impairment loss on available-for-sale securities |
(299 | ) | ||||||||||||||||||
Gain on derivative financial instruments |
3,404 | |||||||||||||||||||
General and administrative |
(24,205 | ) | ||||||||||||||||||
Interest expense |
(14,924 | ) | ||||||||||||||||||
Income before income and mining taxes |
$ | 78,791 | ||||||||||||||||||
Three Months Ended September 30, 2012 |
Revenues from Mining Operations |
Production Costs |
Exploration and Corporate Development |
Amortization of Property, Plant and Mine Development |
Foreign Currency Translation Loss |
Segment Income (Loss) |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Canada |
$ | 336,011 | $ | (160,405 | ) | $ | (11,947 | ) | $ | (51,656 | ) | $ | (11,215 | ) | $ | 100,788 | ||||
Latin America |
124,084 | (36,917 | ) | — | (8,816 | ) | (4,177 | ) | 74,174 | |||||||||||
Europe |
75,741 | (23,086 | ) | — | (7,846 | ) | (561 | ) | 44,248 | |||||||||||
Exploration |
— | — | (24,076 | ) | — | (312 | ) | (24,388 | ) | |||||||||||
|
$ | 535,836 | $ | (220,408 | ) | $ | (36,023 | ) | $ | (68,318 | ) | $ | (16,265 | ) | $ | 194,822 | ||||
Segment income |
$ | 194,822 | ||||||||||||||||||
Corporate and other: |
||||||||||||||||||||
Interest and sundry expense |
(3,200 | ) | ||||||||||||||||||
Impairment loss on available-for-sale securities |
(600 | ) | ||||||||||||||||||
Gain on derivative financial instruments |
1,674 | |||||||||||||||||||
General and administrative |
(25,416 | ) | ||||||||||||||||||
Interest expense |
(14,933 | ) | ||||||||||||||||||
Income before income and mining taxes |
$ | 152,347 | ||||||||||||||||||
Nine Months Ended September 30, 2013 |
Revenues from Mining Operations |
Production Costs |
Exploration and Corporate Development |
Amortization of Property, Plant and Mine Development |
Foreign Currency Translation Gain (Loss) |
Segment Income (Loss) |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Canada |
$ | 783,377 | $ | (503,493 | ) | $ | — | $ | (164,768 | ) | $ | 3,405 | $ | 118,521 | ||||||
Latin America |
263,171 | (113,291 | ) | — | (32,103 | ) | 1,851 | 119,628 | ||||||||||||
Europe |
154,618 | (70,755 | ) | — | (19,382 | ) | (8,730 | ) | 55,751 | |||||||||||
Exploration |
— | — | (35,447 | ) | — | 4,429 | (31,018 | ) | ||||||||||||
|
$ | 1,201,166 | $ | (687,539 | ) | $ | (35,447 | ) | $ | (216,253 | ) | $ | 955 | $ | 262,882 | |||||
Segment income |
$ | 262,882 | ||||||||||||||||||
Corporate and other: |
||||||||||||||||||||
Interest and sundry expense |
(3,805 | ) | ||||||||||||||||||
Impairment loss on available-for-sale securities |
(28,607 | ) | ||||||||||||||||||
Gain on derivative financial instruments |
4,450 | |||||||||||||||||||
General and administrative |
(89,910 | ) | ||||||||||||||||||
Provincial Capital Tax |
1,504 | |||||||||||||||||||
Interest expense |
(42,575 | ) | ||||||||||||||||||
Income before income and mining taxes |
$ | 103,939 | ||||||||||||||||||
Nine Months Ended September 30, 2012 |
Revenues from Mining Operations |
Production Costs |
Exploration and Corporate Development |
Amortization of Property, Plant and Mine Development |
Foreign Currency Translation Loss |
Segment Income (Loss) |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Canada |
$ | 913,421 | $ | (469,821 | ) | $ | (35,910 | ) | $ | (147,560 | ) | $ | (12,882 | ) | $ | 247,248 | ||||
Latin America |
349,086 | (112,897 | ) | — | (29,324 | ) | (5,968 | ) | 200,897 | |||||||||||
Europe |
205,824 | (72,631 | ) | — | (22,297 | ) | (1,777 | ) | 109,119 | |||||||||||
Exploration |
— | — | (57,507 | ) | — | (146 | ) | (57,653 | ) | |||||||||||
|
$ | 1,468,331 | $ | (655,349 | ) | $ | (93,417 | ) | $ | (199,181 | ) | $ | (20,773 | ) | $ | 499,611 | ||||
Segment income |
$ | 499,611 | ||||||||||||||||||
Corporate and other: |
||||||||||||||||||||
Interest and sundry expense |
(2,954 | ) | ||||||||||||||||||
Impairment loss on available-for-sale securities |
(12,181 | ) | ||||||||||||||||||
Loss on sale of available-for-sale securities |
(6,731 | ) | ||||||||||||||||||
Loss on derivative financial instruments |
(1,752 | ) | ||||||||||||||||||
General and administrative |
(91,359 | ) | ||||||||||||||||||
Provincial Capital Tax |
(4,001 | ) | ||||||||||||||||||
Interest expense |
(43,600 | ) | ||||||||||||||||||
Income before income and mining taxes |
$ | 337,033 | ||||||||||||||||||
|
Total Assets as at | |||||||
---|---|---|---|---|---|---|---|---|
|
September 30, 2013 |
December 31, 2012 |
||||||
Canada |
$ | 3,391,818 | $ | 3,280,158 | ||||
Latin America |
1,137,903 | 1,069,379 | ||||||
Europe |
844,650 | 846,941 | ||||||
Exploration |
65,699 | 59,641 | ||||||
|
$ | 5,440,070 | $ | 5,256,119 | ||||
|
13. 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.
Due to the suspension of mining operations at the Goldex mine on October 19, 2011, an environmental remediation liability was recognized. During the nine months ended September 30, 2013, the Company incurred $8.4 million in remediation costs that were applied against the environmental remediation liability recognized in 2011. As at September 30, 2013, the remaining Goldex mine environmental remediation liability was $15.1 million, $3.8 million of which was classified as a current liability. The Goldex mine is part of the Canada segment as described in note 12.
|
14. ACQUISITIONS
Urastar Gold Corporation
On May 16, 2013, the Company completed the acquisition of all of the issued and outstanding common shares of Urastar Gold Corporation ("Urastar") pursuant to a court-approved plan of arrangement under the Business Corporations Act (British Columbia) for cash consideration of $10.1 million. The Urastar acquisition was accounted for as a business combination and goodwill of $6.1 million was recognized on the Company's consolidated balance sheets.
The transaction costs associated with the acquisition totaling $0.7 million were expensed through the general and administrative line item of the interim unaudited consolidated statements of income and comprehensive income during the nine months ended September 30, 2013.
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 |
$ | 10,127 | |||
Fair value of assets acquired and liabilities assumed: |
|||||
Mining properties |
$ | 7,699 | |||
Goodwill |
6,135 | ||||
Cash and cash equivalents |
76 | ||||
Trade receivables |
731 | ||||
Other current assets |
12 | ||||
Plant and equipment |
2 | ||||
Accounts payable and accrued liabilities |
(791 | ) | |||
Other liabilities |
(1,573 | ) | |||
Deferred tax liability |
(2,164 | ) | |||
Net assets acquired |
$ | 10,127 | |||
The Company believes that goodwill for the Urastar 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 the Company assuming the acquisition of Urastar described above had occurred as of January 1, 2012 are detailed below. On a pro forma basis, there would have been no effect on the Company's consolidated revenues.
|
Nine Months Ended September 30, 2013 |
Year Ended December 31, 2012 |
||||||
---|---|---|---|---|---|---|---|---|
|
Unaudited |
|||||||
Pro forma net income for the period |
$ | 44,296 | $ | 307,274 | ||||
Pro forma net income per share — basic |
$ | 0.26 | $ | 1.79 |
Grayd Resource Corporation
On November 18, 2011, the Company acquired 94.77% of the outstanding shares of Grayd Resource Corporation ("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 shares. The acquisition was accounted for as a business combination and goodwill of $29.2 million was recognized on the Company's consolidated balance sheets.
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, 2012 purchase price of $11.8 million was comprised of $9.3 million in cash and 68,941 newly issued Agnico Eagle shares valued at $2.4 million. The non-controlling interest as reported on the December 31, 2011 consolidated balance sheets of the Company was eliminated as a result of this transaction.
|
15. GENERAL AND ADMINISTRATIVE
Due to a kitchen fire at the Meadowbank mine in March 2011, the Company recognized a loss on disposal of the kitchen of $6.9 million, incurred related costs of $7.4 million, and recognized an insurance receivable for $11.2 million. The difference of $3.1 million was recognized in the general and administrative line item of the interim unaudited consolidated statements of income and comprehensive income during the three months ended March 31, 2011.
During the subsequent months of 2011 and 2012, the Company received $4.6 million in insurance proceeds relating to the kitchen fire at the Meadowbank mine and had a related remaining insurance receivable of $6.6 million as at December 31, 2012 within the other current assets line item of the consolidated balance sheets. During the nine months ended September 30, 2013, the Company did not receive any insurance proceeds relating to the kitchen fire at the Meadowbank mine and had a related remaining insurance receivable of $6.6 million as at September 30, 2013.
|
16. SUBSEQUENT EVENTS
On October 23, 2013, Agnico Eagle announced that the Board approved the payment of a quarterly cash dividend of $0.22 per common share, payable on December 16, 2013 to holders of record of the common shares of the Company on December 2, 2013.
|
17. SECURITIES CLASS ACTION LAWSUITS
On November 7, 2011 and November 22, 2011, the Company and certain current and former senior officers, some of whom also are or were directors of the Company, 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 ordered that the two complaints be consolidated under the caption In re Agnico-Eagle Mines Ltd. Securities Litigation, and lead counsel was appointed. On April 6, 2012, a Consolidated Complaint was issued against the Company and certain of its current and former senior officers and directors. The Consolidated Complaint alleges that the Company had violated federal securities law in connection with its disclosure related to the Goldex mine. The Consolidated Complaint seeks, among other things, damages on behalf of persons who purchased or acquired securities of the Company during the period July 28, 2010 to October 19, 2011. The Consolidated Complaint has not been certified as a class action, and the Company intends to vigorously defend it. On January 14, 2013, Judge Oetken granted the Company's motion to dismiss the Consolidated Complaint and all claims therein and denied the plaintiffs' request for leave to amend the Consolidated Complaint. On February 12, 2013, the plaintiffs filed a Notice of Appeal to the United States Court for Appeals for the Second Circuit. On October 3, 2013, the United States Court of Appeals for the Second Circuit issued a summary order affirming the dismissal of the Complaint for the reasons stated in the District Court's January 14, 2013 opinion. Unless their time is extended, the plaintiffs have 90 days in which to file a petition for a writ of certiorari, requesting review by the United States Supreme Court.
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, some of whom also are or were directors of the Company. 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. On April 17, 2013 an Order was granted on consent certifying a class action proceeding and granting leave for the claims under Section 138 of the Securities Act (Ontario) to proceed. The Company intends to vigorously defend the action on the merits.
On April 12, 2012, two senior officers of the Company, who also are or were directors 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 with fewer than 50 employees resident 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. On October 1, 2013, the Quebec court certified the class action on terms identical to those set out in the consent Order granted in Ontario on April 17, 2013. No date has been set for the hearing to argue the class action on the merits. The Company intends to vigorously defend the action on the merits.
|
18. COMPARATIVE FIGURES
Certain figures in the comparative interim unaudited consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the 2013 interim unaudited consolidated financial statements.
|
The following table summarizes the Company's financial assets and liabilities measured at fair value as at September 30, 2013 within the fair value hierarchy:
|
Level 1 | Level 2 | Level 3 | Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financial assets: |
||||||||||||||
Trade receivables(i) |
$ | — | $ | 64,171 | $ | — | $ | 64,171 | ||||||
Available-for-sale securities(ii) |
83,098 | — | — | 83,098 | ||||||||||
Fair value of derivative financial instruments(iii) |
— | 9,305 | — | 9,305 | ||||||||||
|
$ | 83,098 | $ | 73,476 | $ | — | $ | 156,574 | ||||||
Financial liabilities: |
||||||||||||||
Fair value of derivative financial instruments(iii) |
$ | — | $ | 484 | $ | — | $ | 484 | ||||||
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:
|
Level 1 | Level 2 | Level 3 | Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Financial assets: |
||||||||||||||
Trade receivables(i) |
$ | — | $ | 67,750 | $ | — | $ | 67,750 | ||||||
Available-for-sale securities(ii) |
44,719 | — | — | 44,719 | ||||||||||
Fair value of derivative financial instruments(iii) |
— | 2,112 | — | 2,112 | ||||||||||
|
$ | 44,719 | $ | 69,862 | $ | — | $ | 114,581 | ||||||
Financial liabilities: |
||||||||||||||
Fair value of derivative financial instruments(iii) |
$ | — | $ | 277 | $ | — | $ | 277 | ||||||
|
|
As at September 30, 2013 | As at December 31, 2012 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Cost | Accumulated Amortization |
Net Book Value |
Cost | Accumulated Amortization |
Net Book Value |
||||||||||||||
Mining properties |
$ | 1,364,909 | $ | 104,098 | $ | 1,260,811 | $ | 1,356,227 | $ | 86,839 | $ | 1,269,388 | ||||||||
Plant and equipment |
2,641,015 | 782,595 | 1,858,420 | 2,538,328 | 617,826 | 1,920,502 | ||||||||||||||
Mine development costs |
1,050,260 | 255,042 | 795,218 | 918,482 | 237,967 | 680,515 | ||||||||||||||
Construction in Progress: |
||||||||||||||||||||
Meliadine project |
178,635 | — | 178,635 | 133,840 | — | 133,840 | ||||||||||||||
La India project |
141,411 | — | 141,411 | 32,553 | — | 32,553 | ||||||||||||||
Goldex mine M and E zones |
77,218 | — | 77,218 | 30,658 | — | 30,658 | ||||||||||||||
|
$ | 5,453,448 | $ | 1,141,735 | $ | 4,311,713 | $ | 5,010,088 | $ | 942,632 | $ | 4,067,456 | ||||||||
|
Common shares outstanding at September 30, 2013 |
173,428,331 | ||||
Employee stock options |
11,495,535 | ||||
Warrants |
8,600,000 | ||||
RSU plan |
302,454 | ||||
|
193,826,320 | ||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2013 | 2012 | 2013 | 2012 | ||||||||||
Net income for the period |
$ | 47,311 | $ | 106,326 | $ | 46,790 | $ | 228,146 | ||||||
Weighted average number of common shares outstanding — basic (in thousands) |
173,102 | 171,341 | 172,651 | 171,055 | ||||||||||
Add: Dilutive impact of employee stock options |
— | — | — | — | ||||||||||
Dilutive impact of warrants |
— | — | — | — | ||||||||||
Dilutive impact of shares related to RSU plan |
350 | 255 | 379 | 242 | ||||||||||
|
||||||||||||||
Weighted average number of common shares outstanding — diluted (in thousands) |
173,452 | 171,596 | 173,030 | 171,297 | ||||||||||
Net income per share — basic |
$ | 0.27 | $ | 0.62 | $ | 0.27 | $ | 1.33 | ||||||
Net income per share — diluted |
$ | 0.27 | $ | 0.62 | $ | 0.27 | $ | 1.33 | ||||||
|
Cumulative Translation Adjustment |
Available-for-sale Securities and Other Investments |
Derivative Financial Instruments |
Pension Benefits |
Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Accumulated other comprehensive (loss) income, December 31, 2012 |
$ | (16,206 | ) | $ | (7,680 | ) | $ | 137 | $ | (3,562 | ) | $ | (27,311 | ) | |||
Other comprehensive loss before reclassifications |
— | (9,445 | ) | (152 | ) | — | (9,597 | ) | |||||||||
Income tax expense impact |
— | — | 41 | — | 41 | ||||||||||||
Reclassifications from accumulated other comprehensive (loss) income to the Consolidated Statements of Income |
— | 28,607 | (189 | ) | 393 | 28,811 | |||||||||||
Income tax expense impact |
— | — | 50 | (103 | ) | (53 | ) | ||||||||||
Other comprehensive income (loss) for the period |
— | 19,162 | (250 | ) | 290 | 19,202 | |||||||||||
Accumulated other comprehensive (loss) income, September 30, 2013 |
$ | (16,206 | ) | $ | 11,482 | $ | (113 | ) | $ | (3,272 | ) | $ | (8,109 | ) | |||
|
|
Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Number of Employee Stock Options |
Weighted Average Exercise Price |
Number of Employee Stock Options |
Weighted Average Exercise Price |
||||||||||
Outstanding, beginning of period |
10,587,126 | C$ | 56.60 | 8,959,051 | C$ | 62.88 | ||||||||
Granted |
2,803,000 | 52.13 | 3,257,000 | 36.99 | ||||||||||
Exercised |
(213,500 | ) | 37.06 | (140,475 | ) | 37.04 | ||||||||
Forfeited |
(340,206 | ) | 58.25 | (726,500 | ) | 59.80 | ||||||||
Expired |
(1,340,885 | ) | 54.86 | (481,650 | ) | 47.49 | ||||||||
Outstanding, end of period |
11,495,535 | C$ | 56.03 | 10,867,426 | C$ | 56.35 | ||||||||
Exercisable, end of period |
7,413,795 | C$ | 59.35 | 6,780,014 | C$ | 59.34 | ||||||||
|
Nine Months Ended September 30, |
|||||||
---|---|---|---|---|---|---|---|---|
|
2013 | 2012 | ||||||
Risk-free interest rate |
1.50% | 1.25% | ||||||
Expected life of employee stock options (in years) |
2.6 | 2.8 | ||||||
Expected volatility of Agnico Eagle's share price |
35.00% | 37.52% | ||||||
Expected dividend yield |
1.80% | 2.14% |
|
|
As at September 30, 2013 |
As at December 31, 2012 |
||||||
---|---|---|---|---|---|---|---|---|
Available-for-sale securities in an unrealized gain position: |
||||||||
Cost (net of impairments) |
$ | 43,474 | $ | 4,352 | ||||
Unrealized gains in accumulated other comprehensive loss |
14,734 | 1,902 | ||||||
Estimated fair value |
58,208 | 6,254 | ||||||
Available-for-sale securities in an unrealized loss position: |
||||||||
Cost (net of impairments) |
28,028 | 48,047 | ||||||
Unrealized losses in accumulated other comprehensive loss |
(3,138 | ) | (9,582 | ) | ||||
Estimated fair value |
24,890 | 38,465 | ||||||
Total estimated fair value of available-for-sale securities |
$ | 83,098 | $ | 44,719 | ||||
|
|
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 | |||||||||
|
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 | |||||||||
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2013 | 2012 | 2013 | 2012 | ||||||||||
Accumulated other comprehensive loss, beginning of period |
$ | (2,091 | ) | $ | (2,653 | ) | $ | (260 | ) | $ | (4,404 | ) | ||
Other comprehensive income (loss) — foreign exchange derivative financial instruments |
1,260 | 5,897 | (505 | ) | 7,979 | |||||||||
Other comprehensive income — heating oil derivative financial instruments |
439 | 89 | 353 | 135 | ||||||||||
Other comprehensive loss — other derivative financial instruments |
— | (3 | ) | — | (397 | ) | ||||||||
Reclassification to the interim unaudited consolidated statements of income |
(209 | ) | (1,245 | ) | (189 | ) | (1,228 | ) | ||||||
Accumulated other comprehensive (loss) income, end of period |
$ | (601 | ) | $ | 2,085 | $ | (601 | ) | $ | 2,085 | ||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2013 | 2012 | 2013 | 2012 | ||||||||||
Premiums realized on written foreign exchange call options |
$ | 1,074 | $ | 227 | $ | 2,547 | $ | 1,254 | ||||||
Mark-to-market gain on derivative equity contracts |
2,270 | — | 1,843 | — | ||||||||||
Realized gain on zinc derivative financial instruments |
60 | — | 60 | 476 | ||||||||||
Gain (loss) on heating oil derivative financial instruments and other |
— | 1,447 | — | (3,482 | ) | |||||||||
Gain (loss) on derivative financial instruments |
$ | 3,404 | $ | 1,674 | $ | 4,450 | $ | (1,752 | ) | |||||
|
Three Months Ended September 30, 2013 |
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 |
$ | 291,438 | $ | (166,537 | ) | $ | — | $ | (57,576 | ) | $ | (4,617 | ) | $ | 62,708 | |||||
Latin America |
88,449 | (39,584 | ) | — | (11,275 | ) | 2,578 | 40,168 | ||||||||||||
Europe |
64,433 | (25,414 | ) | — | (7,203 | ) | (12,153 | ) | 19,663 | |||||||||||
Exploration |
— | — | (15,550 | ) | — | 7,685 | (7,865 | ) | ||||||||||||
|
$ | 444,320 | $ | (231,535 | ) | $ | (15,550 | ) | $ | (76,054 | ) | $ | (6,507 | ) | $ | 114,674 | ||||
Segment income |
$ | 114,674 | ||||||||||||||||||
Corporate and other: |
||||||||||||||||||||
Interest and sundry income |
141 | |||||||||||||||||||
Impairment loss on available-for-sale securities |
(299 | ) | ||||||||||||||||||
Gain on derivative financial instruments |
3,404 | |||||||||||||||||||
General and administrative |
(24,205 | ) | ||||||||||||||||||
Interest expense |
(14,924 | ) | ||||||||||||||||||
Income before income and mining taxes |
$ | 78,791 | ||||||||||||||||||
Three Months Ended September 30, 2012 |
Revenues from Mining Operations |
Production Costs |
Exploration and Corporate Development |
Amortization of Property, Plant and Mine Development |
Foreign Currency Translation Loss |
Segment Income (Loss) |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Canada |
$ | 336,011 | $ | (160,405 | ) | $ | (11,947 | ) | $ | (51,656 | ) | $ | (11,215 | ) | $ | 100,788 | ||||
Latin America |
124,084 | (36,917 | ) | — | (8,816 | ) | (4,177 | ) | 74,174 | |||||||||||
Europe |
75,741 | (23,086 | ) | — | (7,846 | ) | (561 | ) | 44,248 | |||||||||||
Exploration |
— | — | (24,076 | ) | — | (312 | ) | (24,388 | ) | |||||||||||
|
$ | 535,836 | $ | (220,408 | ) | $ | (36,023 | ) | $ | (68,318 | ) | $ | (16,265 | ) | $ | 194,822 | ||||
Segment income |
$ | 194,822 | ||||||||||||||||||
Corporate and other: |
||||||||||||||||||||
Interest and sundry expense |
(3,200 | ) | ||||||||||||||||||
Impairment loss on available-for-sale securities |
(600 | ) | ||||||||||||||||||
Gain on derivative financial instruments |
1,674 | |||||||||||||||||||
General and administrative |
(25,416 | ) | ||||||||||||||||||
Interest expense |
(14,933 | ) | ||||||||||||||||||
Income before income and mining taxes |
$ | 152,347 | ||||||||||||||||||
Nine Months Ended September 30, 2013 |
Revenues from Mining Operations |
Production Costs |
Exploration and Corporate Development |
Amortization of Property, Plant and Mine Development |
Foreign Currency Translation Gain (Loss) |
Segment Income (Loss) |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Canada |
$ | 783,377 | $ | (503,493 | ) | $ | — | $ | (164,768 | ) | $ | 3,405 | $ | 118,521 | ||||||
Latin America |
263,171 | (113,291 | ) | — | (32,103 | ) | 1,851 | 119,628 | ||||||||||||
Europe |
154,618 | (70,755 | ) | — | (19,382 | ) | (8,730 | ) | 55,751 | |||||||||||
Exploration |
— | — | (35,447 | ) | — | 4,429 | (31,018 | ) | ||||||||||||
|
$ | 1,201,166 | $ | (687,539 | ) | $ | (35,447 | ) | $ | (216,253 | ) | $ | 955 | $ | 262,882 | |||||
Segment income |
$ | 262,882 | ||||||||||||||||||
Corporate and other: |
||||||||||||||||||||
Interest and sundry expense |
(3,805 | ) | ||||||||||||||||||
Impairment loss on available-for-sale securities |
(28,607 | ) | ||||||||||||||||||
Gain on derivative financial instruments |
4,450 | |||||||||||||||||||
General and administrative |
(89,910 | ) | ||||||||||||||||||
Provincial Capital Tax |
1,504 | |||||||||||||||||||
Interest expense |
(42,575 | ) | ||||||||||||||||||
Income before income and mining taxes |
$ | 103,939 | ||||||||||||||||||
Nine Months Ended September 30, 2012 |
Revenues from Mining Operations |
Production Costs |
Exploration and Corporate Development |
Amortization of Property, Plant and Mine Development |
Foreign Currency Translation Loss |
Segment Income (Loss) |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Canada |
$ | 913,421 | $ | (469,821 | ) | $ | (35,910 | ) | $ | (147,560 | ) | $ | (12,882 | ) | $ | 247,248 | ||||
Latin America |
349,086 | (112,897 | ) | — | (29,324 | ) | (5,968 | ) | 200,897 | |||||||||||
Europe |
205,824 | (72,631 | ) | — | (22,297 | ) | (1,777 | ) | 109,119 | |||||||||||
Exploration |
— | — | (57,507 | ) | — | (146 | ) | (57,653 | ) | |||||||||||
|
$ | 1,468,331 | $ | (655,349 | ) | $ | (93,417 | ) | $ | (199,181 | ) | $ | (20,773 | ) | $ | 499,611 | ||||
Segment income |
$ | 499,611 | ||||||||||||||||||
Corporate and other: |
||||||||||||||||||||
Interest and sundry expense |
(2,954 | ) | ||||||||||||||||||
Impairment loss on available-for-sale securities |
(12,181 | ) | ||||||||||||||||||
Loss on sale of available-for-sale securities |
(6,731 | ) | ||||||||||||||||||
Loss on derivative financial instruments |
(1,752 | ) | ||||||||||||||||||
General and administrative |
(91,359 | ) | ||||||||||||||||||
Provincial Capital Tax |
(4,001 | ) | ||||||||||||||||||
Interest expense |
(43,600 | ) | ||||||||||||||||||
Income before income and mining taxes |
$ | 337,033 | ||||||||||||||||||
|
||||||||
|
Total Assets as at | |||||||
---|---|---|---|---|---|---|---|---|
|
September 30, 2013 |
December 31, 2012 |
||||||
Canada |
$ | 3,391,818 | $ | 3,280,158 | ||||
Latin America |
1,137,903 | 1,069,379 | ||||||
Europe |
844,650 | 846,941 | ||||||
Exploration |
65,699 | 59,641 | ||||||
|
$ | 5,440,070 | $ | 5,256,119 | ||||
|
Total purchase price: |
|||||
Cash paid for acquisition |
$ | 10,127 | |||
Fair value of assets acquired and liabilities assumed: |
|||||
Mining properties |
$ | 7,699 | |||
Goodwill |
6,135 | ||||
Cash and cash equivalents |
76 | ||||
Trade receivables |
731 | ||||
Other current assets |
12 | ||||
Plant and equipment |
2 | ||||
Accounts payable and accrued liabilities |
(791 | ) | |||
Other liabilities |
(1,573 | ) | |||
Deferred tax liability |
(2,164 | ) | |||
Net assets acquired |
$ | 10,127 | |||
|
Nine Months Ended September 30, 2013 |
Year Ended December 31, 2012 |
||||||
---|---|---|---|---|---|---|---|---|
|
Unaudited |
|||||||
Pro forma net income for the period |
$ | 44,296 | $ | 307,274 | ||||
Pro forma net income per share — basic |
$ | 0.26 | $ | 1.79 |
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