JUNIOR MINING SPECIAL — Agnico develops new zones at

Proving that a Canadian mining company needn’t leave the country to succeed, Agnico-Eagle Mines (TSE) continues to operate mines and explore for metals exclusively in northwestern Quebec and Ontario.

The company operates through three divisions — LaRonde, Joutel and Silver — and recently launched large-scale development projects, as well as additional exploration to find reserves in and around some of its producing and past-producing mines. The total estimated cost of development, between 1994 and 1998, is $85.5 million.

The LaRonde division’s principal operation is the mine of the same name, 35 miles west of Val d’Or, Que. Production began in 1988, mainly from an open pit, and ore is currently produced from underground and milled on site. To date, seven zones have been outlined and proven and probable reserves consist of more than 5.4 million tons averaging 0.19 oz. gold. In 1993, 152,355 oz. gold and 270,671 oz. silver were produced.

Agnico is deepening the No. 1 shaft to 5,000 from 3,200 ft. and sinking a second shaft to a depth of 5,000 ft. The No. 2 shaft will be used to explore the 6-, 7-, 20-north and 20-south zones.

Two other zones, known as the 18 and 19, were identified from surface drilling, and additional work on these is intended to prove up reserves. As for the Joutel division, it produced 13,316 oz. gold and 4,798 oz. silver last year from three underground deposits 120 miles north of Val d’Or. Production came from the Eagle and Telbel mines and the Eagle West zone. However, high costs and declining reserves forced the company to close the mines and nearby mill temporarily.

Nevertheless, Agnico is not giving up the search in this well established camp. A drill program will soon get under way in an effort to find reserves that would provide feed to the Joutel mill. The 23,000-ft. program, expected to cost $930,000, will search for targets between 3,400 and 5,200 ft. below surface near the Eagle and Telbel mines.

In addition, Agnico is sinking a 1,100-ft. shaft on the wholly owned, 373-claim Vezza gold property, east of Joutel Twp. Figures indicate a mineral inventory of 2.1 million tons averaging 0.15 oz.

Through its Silver division, near Cobalt in northeastern Ontario, the company holds two past-producing silver mines and a 300-ton-per-day mill. In order to fund its overall exploration and development programs, Agnico has gone to the market twice in the past year. Last July, it announced plans to raise US$44 million through a public offering of 4.25 million shares at $11 each. And last January, it filed a preliminary prospectus in Canada and the U.S. allowing for the issue of US$110 million worth of convertible notes due in 2004.

A portion of the interest owed will be paid in cash semi-annually, and the remainder will accrue as long as the notes remain outstanding. The notes will be convertible into 55.762 shares for each US$1,000 worth of face value held. Agnico used some of the funds raised in the market to gain a larger interest in some of its affiliated companies.

Last December, it increased its ownership in Goldex to 100% from 53.7%, which was accomplished through an amalgamation in which one Goldex share was exchanged for 0.36 Agnico shares. As a result, Agnico acquired the Goldex Extension gold project near Malartic, Que.

Here, too, Agnico has undertaken extensive exploration and development, the estimated cost of which is $35 million. The shaft is being deepened to 2,500 from 1,500 ft. and drifting will be carried out on the 2400 level in an attempt to define reserves and test for additional mineralization below 2,400 ft. The company will then take a large bulk sample to test the metallurgy and grade of the zone. Should expectations be confirmed, a mill will be built on site.

The Extension project contains an estimated 25 million tons grading 0.073 oz., including a high-grade zone of 5.5 million tons averaging 0.13 oz. Agnico has also increased its stake in Sudbury Contact (TSE), to 18.3% from 13%. That company is currently evaluating results from winter drilling on the Victoria Lake project near Larder Lake, Ont. About 50,000 ft. of followup drilling are planned, at an estimated cost of $1 million.

Agnico also holds a 43% interest in Mentor Exploration and Development (TSE).