Our Secret, keep it to your self and buy.
Agnico-Eagle Mines (AEM: $6.00) reported a loss of $.06 a share for the
June second quarter. Cash flow was a negative $.05 a share. Production
was 31,114 ounces at a cash cost of $293.00 an ounce. Operating costs
continued to decline from $40.50 a ton in the first quarter to $36.50 a ton.
Lower gold grades and lower than budgeted zinc production resulted in
higher than expected cash costs per ounce. For the six months the loss was
$0.13 a share. Production was 63,614 ounces at a cash cost of $286.00 an
ounce. The realized gold price was $288.00.
The expansion program is on schedule and on budget. The mill and
underground are each expected to reach 5,000 tpd by the 4th quarter.
About $51 million remains to be spent on the expansion program. $28 million
of that this year, $21 million for 2001 and $6 million for 2002.
The move to 5,000 tpd will produce about 110,000 ounces of au at a cash
cost of $100 an ounce in the second half of 2000. Once the rate is
sustained it will be expanded. Five drills are now active with three
conducting exploratory drilling while two are devoted to reserve definition
and delineation drilling. An exploration shaft is underway on the 215 level to
provide access to drill off reserves to the western edge of the property. This
program will take two years to complete. In the 4th quarter the company will
begin a major exploration and development program on the 20th level to
explore across the El Coco and Spririx properties, immediately east of the
LaRonde property.
As the expansion nears completion, the company will deliver lower cash
costs and better production results putting them on track to produce about
174,000 ounces this year, at a cash cost of $168 an ounce. Production and
costs are expected to further improve. Ultimately Agnico-Eagle will likely
rival Goldcorp and Meridian as one of the lowest cost intermediate gold
producers in No. America. Next year will be a big year for the company and
its stock. This is a strong buy.
In Addition to the significant increase in gold production expected in the 4th
quarter from Agnico-Eagle's LaRonde Mine the Company will begin to
produce increasing quantities of silver as a by-product. The LaRonde Mine
reserve and resource is estimated to contain approximately 85 million
ounces of by-product silver. Silver production of approximately 3 million
ounces annually is anticipated beginning in 2002. This silver production
along with the production of other by-product metals, zinc and copper, is
expected to drive the cost of producing an ounce of gold at LaRonde down
to $100. We are not compensated by this company.
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Crystallex International Corp. (KRY on T.S.E. and Amex) announced today
that it has closed in escrow its acquisition of all of the Venezuelan assets of
Bolivar Goldfields. Crystallex immediately assumes full control and operation
of the Venezuelan assets. The acquisition includes the Tomi mine, Revemin
mill and 44,438 hectares of exploration lands in the El Callao greenstone
belt, Venezuela's most prolific gold producing area over the past 150 years.
The purchase price, totaling US$20 million, includes a payment of US$5
million, a US$2 million note payable in 90 days, and the assumption of
US$13 million in existing long-term debt. Crystallex has the option of
converting the 90-day note to Crystallex shares at its discretion. The
Company intends to restructure the current existing debt associated with the
assets as non-recourse debt.
Located in Venezuela's Bolivar State, the Tomi concession as of March 1,
2000, reportedly contained open-pit mineable reserves of 263,000 ounces
of gold. The current reserves are located in four pits: McKenzie, Charlie
Richards, Milagrito and Fosforito. In addition to the concession's open-pit
reserves, drilling conducted by Bolivar Goldfields below the Charlie
Richards pit has intersected several high grade intervals including gold
values of 6.06 grams per tonne over 65 metres, 17.39 grams per tonne over
21 metres and 11.25 grams per tonne over 28 metres. This suggests a
strong potential for underground mining. Previous gold occurrences also
indicate excellent exploration potential on other parts of the Tomi
concession as well as on the Dividival and Belen concessions.
Crystallex's President and Chief Executive Officer, Marc J. Oppenheimer
commented, "This acquisition further strengthens Crystallex's long-term
commitment to Venezuela and its people. Our many years in Venezuela
have provided us with an extensive knowledge of the country's laws,
customs, geology and climatic conditions and this is clearly an advantage as
we expand our investment plans in Venezuela. We believe it is this unique
knowledge that will help us continue our success in the region. We look
forward to working with the Government of Venezuela on this and other
potential mining projects."
"The Tomi mine and Revemin mill have logistical and operational
characteristics that are compatible with our plans for developing our other
Venezuelan concessions; Albino 1, Carabobo and Santa Elena. For
example, ore from the Albino 1 mine may be processed at the Revemin mill,
taking advantage of the extra capacity that exists there.
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