Agnico Eagle Mines Ltd (AEM) 2008 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Agnico-Eagle Mines Q4 and full-year 2008 results webcast conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. (Operator Instructions). I would like to remind everyone this conference call is being recorded on Wednesday, February 18th, 2009, sorry, 4:30 p.m. eastern time. I will now turn the conference over to Mr. Sean Boyd, Vice Chairman and Chief Executive Officer. Please go ahead.

Thank you, operator, and good afternoon, everyone. With us here in Toronto is our full management team and operating team, and once we finish the formal part of the presentation, they will be happy to respond to any questions that you may have.

Just off the top, just like to make a comment on gold. I think the conventional wisdom over the last few months is that we needed expectations for inflation to kick in before we would see an upward move in the price of gold, but I think what we're seeing now is there is an extremely strong desire out there for wealth preservation, and the World Gold Council came out with some supply/demand statistics today, and they were very striking in terms of demand in fourth quarter of 2008. Total demand in tonnage terms was up 26%, compared to Q4 '07.

So what we are seeing is everybody expected jewelry demand to fall off, and that would possibly negatively impact the gold price. But what we're seeing is extremely strong growth in investment demand which has easily offset any decline in demand for jewelry. In fact, investment demand, according to the World Gold Council in Q4, was up 182% over the quarter in 2007, and for the full year 2008, investment demand was up 64%.

So I think the safe haven attributes of gold are coming to the fore. The ability to preserve value is certainly coming to the fore. And it's just reinforcing that argument that people in the gold business have had that it makes sense, in terms of portfolio diversification, to have a component of your portfolio in gold, and in our case, in gold equities. So I just wanted to - - those statistics came out today. Just wanted to highlight those.

So we'll go through a series of slides. We'll cover off all of the projects, cover off the quarter, talk a bit about the exploration. We've got a reserve update, as you see in the press release, and then we'll open it up for questions.

Just moving through the Safe Harbor statement, just in terms of highlights, we're seeing, as these new mines ramp up, we're seeing increased gold production. In fact we were at record levels in Q4 of almost 90,000 ounces. We had record annual gold production of about 277,000 ounces. Our reserves continue to grow, and that growth in reserves is coming from exploration drilling, which is significant. That's the way that we've been able to create value consistently over many years is through the exploration drill bit.

We saw an 8% increase in reserves. We increased reserves 1.4 million ounces net of production. We also, at the same time, despite transferring a significant amount of resource into reserves, we did increase the resource.

At Agnico the resource now stands at almost nine million ounces, so we've continued to grow these deposits. They're still wide open. We expect them to continue to grow as we gain better access and continue with a very active drill program.

One of the nice attributes about the reserve and resource base at LaRonde, Kittila, and Meadowbank, the combined reserve and resource individually at these projects exceeds five million ounces. In Pinos Altos, a significant jump this year, its reserve and resource is now over four million ounces, and still growing and wide open, so we have some good potential there to have have the Pinos deposit rival the other three deposits in terms of exceeding eventually the five million mark.

We had very good costs in the year, in terms of cost per ounce of $162.00 an ounce, but more importantly, the cost per ton performance continued to be very good at LaRonde, on budget, and also according to plan at Goldex. So we're starting to get some very good performance at Goldex. We'll talk about that in a minute.

In terms of the balance sheet, we strengthened it significantly in the latter half 2008. The credit facility was doubled to 600 million. We raised a significant amount of equity in the quarter, and that puts us in position to fund the $450 million in planned CapEx for 2009 without the anticipated cash flow that will come from producing almost 600,000 ounces of gold in 2009.

As far as the operating results, again, we pointed out the cost per ounce for the full year was $162.00. In the fourth quarter, it was over $400.00, and that was largely due to a significant decline in by-product revenue, to the point where we were realize ago zinc price of $0.30 due to settlement losses, and in fact, a negative copper price. So we anticipate that those costs in 2009 will be in the low $300.00 per ounce range. If you back out the settlement losses, they would, in fact, have been below $300.00 an ounce in the quarter. We're still forecasting 590 for the full year at cash costs that we estimate to be at $325.00 an ounce.

As far as the financial results, we talked a bit about the impact on zinc, the impact of significant declining zinc price in the period on our bottom line, although we had record gold production, which drove our gold revenues up $16 million in the quarter. This was more than offset by a $52 million drop in by-product revenue due to the settlement losses, so a negative swing of $35 million in revenue, which really accounts for the bulk of the change in earnings quarter on quarter. And as I mentioned, we had a negative realized copper price and a realized zinc price of $0.30 a pound, versus a little over a dollar in the quarter in 2007.

Financial position remains strong, about $100 million in cash. We paid down some debt, along that revolver in the fourth quarter. We've got available credit lines under that revolver of $345 million. Our shares outstanding fully diluted at $168 million after the equity financing, and assuming the exercise of the warrants that are outstanding which would, in fact, bring in an extra approximately $400 million, so a very strong balance sheet.

In terms of the strategy, no change in the strategy. We're going to stay focused in these regions. In fact, the focus for us remains on exploration, remains on tightening up our drill spacing within these deposits to convert more resource to reserve, and then put that bigger reserve into our production profile as we complete potential expansion studies on four of these existing projects. So those studies will come out at various times during 2009, and we'll be able to lay out our plans on how we think our production profile will increase as we move forward through internal growth at these projects.

Our reserve target, we hit 18.1 million ounces. As we said, up 8% by converting 1.7 million ounces of resource to the reserve category during the year. We're using a [725] gold price to convert those reserves.

In terms of the shares outstanding, up about three times in 10 years, but the reserves continue to grow as we expand these deposits, up almost 14 times over the 10-year period, so that's how we expect to continue to add value, grow this Company. Our target for 2010 reserves, is between 20 million and 22 million ounces, at 20 million and 21 million ounces at these projects, and that assumes significant production in '09 and 2010 that has to be replaced. So we will be converting a significant amount of our nine million ounce resource position to reach that target.

As far the gold production growth, it continues to be more than a double in 2009 over 2008, and a further doubling again from 2009 to 2010. And as we complete these studies on the four projects that have additional expansion potential, we feel that will continue our growth trajectory into 2011, 2012, and 2013 as we get more information on these expansion opportunities. Again, the focus on per share value continues, and as we complete the construction of the five mines and get our production base up to 1.2 million ounces in 2010, we significantly increase our shareholders' exposure to production.

Capital expenditures, no change. Still looking at $450 million in '09, but $150 million in 2010, and going to a more sustainable CapEx of about $75 million beyond 2011 to 2012, but that does not include any CapEx that we would expect to expand these deposits further, and we'll have more information as we complete those studies.

Getting into the operations, starting with LaRonde, that's the flagship. Again, excellent performance from LaRonde in the quarter, and for the full year 2008, very steady metal output. We achieved our budgeted production level in terms of total ounces produced.

The cost performance continues to be excellent, with our cost per ton for the full year being $67 per ton Canadian, and that's up less than 30% in total since the first quarter of 2004. So in five years, up only 30% in total. That's excellent performance from our flagship mine.

In terms of the reserve position, we replaced reserves. We continue to grow the resource. We've got five million ounces in reserves, and we've got 1.3 million ounces in resource, so it remains our biggest deposit by reserves and resource.

Our project to extend infrastructure to access the deeper ore is right on track. The LaRonde extension is right on track. We expect to complete the shaft sinking by the end of 2009. We've completed about 570 meters of shaft sinking. We expect at the end that we've had completed 840 meters, and we're down about 2.6 kilometers. We're seeing no issues with ground at those depths, so things are going extremely well with that program.

We continue to do some exploration, but at this point, we don't see anything of note as we look at the exploration results. Goldex has ramped up nicely after having some challenges in the middle of the year. In fact, Q4 was a very strong performance at Goldex, where we produced 32,000 ounces, at a cash cost of $323.00 an ounce. So we've seen steady improvement in the tonnage and the rate, in the fourth quarter approximately 6,300 tons a day. The gray is about two grams in the fourth quarter, our recoveries were over 90%, and our cost per ton was $24.00, which was right where we thought it would be at this point in the ramp-up.

In early 2009 we continue to work on optimization in the areas of crushing and grinding. We've had weekends in 2009 where we've hoisted on average each day 9,000 tons a day, so we're ramping up nicely. And we've had no real issues on the blasting side. The blasting at Goldex has gone extremely well.

On the reserve side, we've maintained our reserve and resource, our reserve at 1.6 million ounces, our resource at about 900,000 ounces. We continue to study an expansion from the design of about 6,900 tons to at least 8,000 tons a day. So we're looking at several potential new tonnage rates, and the minimum in that study would be 8,000 tons a day. So, we'll see, as we move through to about the middle of the year, we'll have the results of that study. We continue to explore at Goldex, and there's certainly expectations that we can continue to grow that reserve as we drill out that deposit.

In Finland, we were pouring gold. We produced about 3,000 ounces in 2008 from concentrate. We've begun pouring gold in January of 2009. Commercial production is expected to be reached in the second quarter.

We're currently focused at Kittila on optimizing the individual circuits and improving the recoveries. Where we've had some challenges is in the getting constant mill feed to the plant. We've had some freezing conditions in the ore.

We've had some ore stuck in the coarse ore bin, and it's been difficult to get a steady mill feed, and until we get a steady mill feed, it's hard to balance and get your recoveries up to speed. But we have made some major improvements in the last couple of weeks, and expect to be in commercial production at Kittila in the second quarter this year.

We're also examining options to grow that deposit. That deposit has continued to grow in terms of the reserves. We grew the reserve base by 200,000 ounces.

We grew the resource base as well. That deposit combined reserve and resource is about six million ounces, so that presents opportunities to see a significant increase in output, but it will require a fair amount of infrastructure, including a large shaft and an increase in the plant capacity. So that study is going to take us through this year, and we expect to have results of that study by the fourth quarter of this year.

And as we said that deposit remains open. We're spending a tremendous amount of money there in terms of our total budget. We're spending $54 million total in the Company. Of that $54 million, $16 million is being spent on Finland, and I think that is just an indication of the potential that we feel we have there to continue to grow this deposit beyond the six million ounce mark.

At Lapa, the plant is within about two months of starting up. We continue to get good progress in our lateral development. We continue to meet our targets there.

We mined the first mining block in December. We're extracting the second mining block now. We're drilling the third mining block as we speak.

We're stock-piling ore. We expect to start commissioning the plant before the end of the first quarter 2009, and get the plant running nicely in April. So things are going very well at Lapa.

Pinos Altos in Mexico, again, things are going well there. We've had probably the biggest jump in reserves at this project versus the other ones. We saw an increase in reserves, up 1.1 million ounces, now at 3.6 million ounces of gold, and our silver reserve jumped 27 million ounces. It is now standing at 100 million ounces of silver reserve.

The resource is about 600,000. So combined reserve and resource just on the gold is now in excess of four million ounces. We're looking for start-up in the third quarter of this year. We're getting good performance in the pit. We're meeting targets in the last quarter in terms of our underground development, and the plant is expected to be ready in the third quarter for start-up in the third quarter.

Exploration continues there. We feel that there is very good potential to increase the size of this deposit, and we've moved along sharply on the feasibility study and the plan to build a stand-alone operation at Creston Mascota. That study is complete, and we expect to release it in the not too distant future.

At Meadowbank, we saw an increase in reserves of 200,000 ounces, now at 3.6 million ounces. We saw an increase in resources of 0.5 million ounces, now at two million ounces of resource. So combined reserve and resource at this project now 5.6 million ounces, and wide open.

We've completed a lot of construction in 2008. We have our mill building, our service building, the powerhouse there enclosed. There's mechanical installation underway.

Our mine air strip is now complete, so we've made major headway in terms of construction. We're on track to start this project in Q1 of 2010. We continue to actively explore it.

There is potential at depth below the planned pits. We're spending $11 million on exploration. Our scoping study is underway for a potential expansion. We feel that there is good potential to increase the production rate from 8,500 tons a day to 10,000 tons a day, and we're looking at possibly doing that just from open pit ore, and there is potential for underground ore, but we need further exploration results as we drill that project. So this one has some head room as well in terms of overall output.

So just to summarize, we've made major strides in terms of construction. We've got Goldex working extremely well, both on the production side and the cost side. We anticipate commercial production at Kittila in the second quarter.

We anticipate starting to introduce ore at Lapa next month, and starting to ramp up that mill in April. We expect Pinos Altos to start in the third quarter, and Meadowbank to start in the first quarter of 2010, and the remaining focus for us in 2009 is to complete the studies on the potential expansions. And just to remind you, the expected release of those studies is Goldex and Creston Mascota in the second quarter, Meadowbank in the third quarter, and Kittila in the fourth quarter.

So I think our timing is quite good. We're bringing in three projects within the next 11 to 12 months, at a time when the gold price looks to be strengthening. So that's a quick run down of where we are, and operator, we'd like to open the line up for questions.

Thank you. (Operator Instructions). Your first question comes from Victor Flores from HSBC. Please go ahead. Mr. Flores, your line is open.

Sorry, I was on mute. Apologies. Good afternoon. A couple questions regarding the ramp-up of Goldex and Kittila. Could you give us a sense of how you see production increasing at Goldex, say throughout the year, maybe first half, second half, or by quarter? And the same thing for Kittila, because you've given us a fairly conservative first quarter outlook, which implies that then things have to start moving pretty quickly from the second quarter onwards. Thanks.

Good afternoon, Victor. Ebe here. The actual mining plan at Goldex, we've just started having a couple of major blasts in the range of 277,000 to 300,000 tons per day. So we're starting to get into the core of the deposit. So I think the first half of the year will be very similar to Q4, and then the second half of the year, as we build up the amount of available ore, we will be able to increase the tonnage coming up from underground to the mill.

There are days that we have exceeded over 8,000 tons already in the mill, and we've also stress-tested the shaft, and as Sean mentioned, over the past weekend, we've been able to hoist over 9,000 tons a day from the underground operation. So we feel it will be staged Q2 much the same as Q1 and Q4, and then increasing in the second half of the year.

With respect to Kittila, we expect to have steady performance improvements. Currently we have well over 200,000 tons stockpiled on surface. It is more a milling issue of where we have had issues putting ore into the mill due to freezing. We have several solutions that we are currently looking at, and we expect to have some of those solutions available to us in March, and that's why we foresee to have commercial production sometime toward the end of the first quarter, beginning of the second quarter.

After that it's pretty much a straight line, that once we get the production up, it will be pretty much straight lined, 11,000 to 12,000 ounces per month during the rest of the year. The grade is pretty straightforward, and then we will be just optimizing the operations, mostly in the mill and also in the open pit.

Great. Thanks. If I could just ask two follow-up questions, how much production do you have to get out of Kittila to consider it commercial?

The definition is 30 days at rated tonnage, at rated recoveries, and ore reserve grades.

Okay. Great. Then with respect to Goldex, once you get that steady state mining going in, say, the second half of this year, then that basically carries on for the life of the mine, right? Once you've set up the, basically, the mining sequence, right? You're not going to have lumpy production going forward?

One of the things with respect to Goldex, all of the blasting will be completed by 2012, and that means around anywhere between 17 million, 18 million tons of ore will be broken, then it will become strictly a materials handling mine. That's all conditional that we don't find any other zones.

There are zones that we are looking at, at depth, but currently we see then the cost per ounce and the cost per ton declining, as there will no longer be any drilling and blasting, there will no longer be any drilling and blasting of significance, and any development. So then it will be a very simple mining operation. And then if we can find ways of upping the tonnage to in excess of 8,000 tons plus per day, metric tons that is, we can see an improvement in output and ounces and declining gold prices, cost per ounce.

Great. Thanks, Ebe.

Your next question comes from John Bridges, JPMorgan.

Good morning, Sean, everybody.

Good morning, John.

Sorry, afternoon. Been a long day. Lapa, you are getting your hands around that deposit now. Have you closed that thing off yet, or is it still open?

It is still open at depth. We really haven't been able to put the drill grips in that we wanted. Also, it is open to the west. Right now with underground pre-production, the focus has been on infrastructure development and construction, and we really haven't focused on at depth and off to the west. Once we get the mine up and running, we do have a longer term view where we'd like to put these exploration drives out there and open it up for further drilling.

Okay. And you've got a stockpile now of ore. There was an issue at one stage about the refractory nature of that stuff. Are you comfortable of how it's going to work in the mill?

I will let Jean Robitaille, our VP of Technical Services, answer the question with respect to the refractory nature of Lapa.

Essentially in the study, Lapa will function, [the at grade] will be between 83% and 86% recovery gold. This is a part of gold in the arsenal barite but this is not more than that, so we don't have any autoclave, it's a straightforward pool or leaching process.

Okay. Could I ask a recovery question on Pinos? You have 100 million ounces. What do you think the recovery is going to be of the silver at Pinos?

Well, just off the top of my head, I think that's going to be around 53% average life of mine.

Okay. And then I think Sean has been getting off quite easy on the call so far. Sean, a bigger picture question. You've got production which gets up to the 120 level in 2010 and then looks pretty stable. Where do you see the Company going to from there.

Well we're working on another five-year segment in terms of our strategy and planning, and a big part of that will be these four internal growth opportunities which we're evaluating and assessing right now. Ideally, given how we're structured in terms of people and abilities and skills, we're built to have a couple of projects in the development pipeline while we expand the existing portfolio. But there's no urgency. There's no pressure to do that, and we don't have to make a major acquisition to grow the Company.

So we'd like to do more of what we've been doing, but we just won't do it to the degree where we're building five new ones from scratch at the same time.

Yes, that's definitely challenging, but so far you seem up to it. Well done and good luck.

thank you.

Your next question comes from Stefan Butler from Canaccord Adams. Please go ahead.

Yes, I've had a name change, guys, Stefan.

If it's only a name change, that's okay.

Yes, good point, Sean. Okay. The question for you guys on capitalizing or not interest expense on your debt facilities, Dave, how will that roll through the income statement eventually?

Well once construction is complete, we're going to have to start expensing that. US GAAP requires capitalization during the construction period to the extent you are drawing down the debt to fund construction capital, and that's essentially why we're drawing the debt at this stage.

Okay, so which project - - I mean, is it project specific, Dave?

Well, no, we look at the capital program as a whole and to what degree we're spending on construction capital, and I would say this year we're capitalizing all but the stand-by fees on our bank debt.

Okay. So and then ramp it up I guess over the next year or two?

Yes, we'll start essentially expensing all of it starting in 2010.

Okay. Why the big jump in reserves at Pinos Altos, 1.1 million ounces in gold? This is a nice reserve Ebe. Where did that come from?

Marc Legault?

Yes, Steve, part of it comes from just exploration; we've been doing a lot of underground diamond drilling Santa Nino and Cerro Colorado, so there's a portion of that in there. The other portion comes from Creston Mascota, and the new zone at San Eligio, where we've defined open pit and underground reserves there. So all three of them put together, top it up to about a million and something ounces of reserve growth.

Okay. That's another thing that sounds like a name change is required on that mine. The last question, I guess, was TCRCs, I know you don't really release them, but are we closer to a $200.00 treatment charge on the zinc in the quarter than $300.00?

Steve, the terms, the negotiations start really this week in California, so presently it's nothing that's firm. Some indication for 2009, I will say 170-odd thousand, but the escalation is unclear at this time.

Okay, thank you very much. That's it.

Your next question comes from Mike Curran from RBC.

Gee, it's like we all moved to Valdor. We've all got French accents and French names. Two things, guys. One, I'm having trouble with your stock-based compensation expense that's rolled into the G&A. Your Q3 guidance said you were at 17.3. The year end is 25.3. That suggests eight million more, but then you say it's actually negative 1.1. So is there some re-statement along the way, or - - ?

No, we did a catch-up capitalization on some stock-based compensation related to people working directly on the projects, which we had expensed in prior quarters, so essentially we capitalized over the year - -

So the full year number is 25.3.

25.3, of which 15 is expensed and 10 is capitalized.

Okay, great. And then I didn't see it when I was scrolling through, but can you tell us what the change in the gold price assumption for your reserves year-over-year was?

Yes, 725 versus 582 last year.

Great. That's all for me, thanks.

Your next question comes from Gayle Howard, private investor. Please go ahead.

Gold went up $18.00 today and AEM went down 20-some cents. Is this still reflecting the drop in the price of zinc and copper?

It's difficult to say. You get movements within trading days, so that can happen. I think you have to look at the performance over a much more extended period than a simple day.

Except most of the gold stocks did go up today except for AEM.

Yes, I wouldn't worry about that.

I do. That's all I had.

Thank you.

Your next question comes from Andrew Mikitchook from Thomas Weisel Partners. Please go ahead.

Good afternoon, gentlemen. Just want to come back to the reserves price assumption of gold. Can you give us an idea of what it would have been if you stayed at [585]?

Every 10% move in the gold price has a 2% impact on the ounces.

Okay, so we can back-calculate that.

You can use whatever assumptions you want on that basis.

Okay, and then just to confirm my understanding of these marked to markets, if we look at the price charts of zinc and copper over the last since January 1st, they've been fairly flat. So all else being equal, you would see much less variability for Q1 in going forward than what we saw in Q4?

Yes, exactly. Zinc and copper prices since the beginning of Q1 have been very range bound, so assuming there's no significant move either way between now and March 31st, we don't expect to have any significant settlement changes.

Okay, but there still will be a small carry-over if there were moves at the end of Q4, because that still hits you in Q1. But going forward, there should be less.

We value our unsettled at the 30-day average at the end of the quarter, so we more or less baked in most of the December move into our unsettled, so I don't expect any significant variability in Q1. Again assuming we stay in these ranges right through the end of the quarter.

Okay. I think that's it. Some of my other questions have been answered. Thank you.

Your next question comes from David Haughton from BMO Capital Markets. Please go ahead.

Oh, hi, thank you for the update. I've got a question on the depreciation split. Would you be able to provide the split between LaRonde and Goldex?

Off the top of my head I can't remember. I'm going to have to get back to you, David, if I can call you back after. I just don't have have the split with me right here.

That's fine. In relation to the write -off and also the sales of securities, was there a tax impact in that $22 million that you reported for the corporate tax expense?

No, they're accounting write-downs, so there's no tax provision against those.

Okay, but there would be for the gain on sale of assets?

Which happened in prior quarters. Is that the one you are referring to? Because we didn't have any gain - -

Yes, I'm just trying to get a picture of the 22.8 million for the tax for the year, how much of that is associated with non-operating business.

In fact, we didn't have any tax on that because we had some unused capital losses from prior years, so we didn't actually to have provide any taxes on those gains in the prior quarters.

All right. Now, I was listening to the comments about difficulty of presenting ore to mill at Kittila. Should we be factoring in some seasonality in the profile to take account of winter difficulties?

No, you should not. These are typical start-up issues, similar to what we had experienced at LaRonde, once that operating started up. So these are typical teething pains.

Alright, thank you very much.

Your next question comes from Anita Soni from Credit Suisse.

I was looking forward to a name change, that was pretty bang on, there. My question is with regard to the ore difficulties that you've had, and you said that you would have some solutions. Can you go over a couple those solutions and what you are looking ?

Solutions for Kittila, for the - -

You speak about the Kittila ore bin?

Yes.

Essentially, presently we are looking at a couple of ones. One of them is to put the temporary crusher plant and process the ore through the crusher separately of the current ore bin, so essentially bypass until we can realize a permanent solution.

Okay. And Dave perhaps you can walk me through - - sorry, I'm just having a little trouble with the G&A expense and I guess the run rate is a little lower than I thought for this quarter. Can you just - - I think you explained it to Mike, but I kind of missed it.

Yes, we ended up having a small credit on our stock option expense in the quarter because we did a bit of a catch-up capitalization on some of the stock-based comp related to project managing people, so that's why we didn't have as high G&A as we normally do. Normally we have $2.5 million to $3 million of stock-based compensation expense, but this quarter we had actually a small negative number. So that's why the G&A was a little lower in the quarter.

And then the G&A ex the stock-based comp, I guess that was running around $7 million then?

Yes, that's right.

Alright, thank you, that's it for me.

Your next question comes from John Hill from [Cambrian] Funds. Please go ahead.

Thanks, and thanks for a very detailed presentation as always. Just curious, you've had some pretty exciting exploration results in Nevada at the West Pequop property, working towards a resource on that. Obviously no numbers in the press release, but how is it going and what should we be looking for there?

(Inaudible). What we are doing now, we are doing an exercise to see what would be the potential for the resources, and at this moment, we're looking the next program, next spring. We do not have any program this winter because of the road conditions, but we expect to reach the target that we planned during the winter probably in April or May. But at that moment, we don't have any resource calculation in hand.

Okay. So I'm not sure I followed you. Should we look for a resource number in April or May, or later in the year from that?

Probably later in the year, but I don't expect any big number for now.

Very good. Thank you.

(Operator Instructions). Your next question comes from David Christie from Scotia Capital. Please go ahead.

It's David Christie. Just quickly on the reserve increases and the sensitivity you provided in the release, which deposit has the most sensitivity to gold? You talked about 2% on a moving gold there.

Marc?

I can give you that in a second. Overall it's 2%, and it's prorated to the amount of reserve ton. Just a second.

Maybe another question, while you're looking for that is, to get the 20 to 21 million ounces, which deposit are you thinking is going to return that kind of number for you in the next couple of years?

I think we were putting a lot of pressure on, or actually, we're putting a lot of resources, as Sean mentioned, on Kittila. I think Kittila presents to Agnico-Eagle a real opportunity to increase reserves. We're seeing really good drill results at depth. Really good exploration results this year resulted in well over 1.3 million ounces of additional resourcing added to Kittila, so that's where we think we have the most potential for conversion to reserves.

We have nine drills on the property, currently drilling deep holes, wedge holes, to try to increase the confidence level of those reserves at depth, which aren't that deep, between 650 meters and 1,100 meters. So we're putting a lot of resources, a lot of talented people working on that project. The project that's got the highest sensitivity of gold price is, believe it or not, Lapa, because of the high grades and [in each of] that deposit. It's around, if I can say, it's around 7%. So that one there is more sensitive than others.

Okay. One more question. At Goldex, you put out that there's a $24.00 per ton mill rate right now. Do you expect that to improve as the ramp up improves over the year, or is it going to stay around that level?

We expect that to improve, Dave. We currently have a portable crusher on site, and when we have a final solution to get rid of the portable crusher, we expect that to drop, but I would say the biggest drop would come after 2012, once all of the blasting of the ore body has been completed and all of the development has been completed. So it's not a straight line drop.

Okay.

Dave, just as a reminder, we were guiding $25.00 a ton for '09, so it's roughly where we are now.

Yes, I know, I just saw that was dropping there. I was wondering if it was going to keep dropping. Okay.

There are no further questions at this time. Please continue.

Just wrap it up here. Thanks for your continued attention, and if there's anything else you need post call, you can give any of our team a call, and they will help you out. Thanks again.

Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation. Please disconnect your lines.