AEM - AR07 - Growth Strategy

For the past three years, we have successfully pursued a five-pronged
growth strategy focused on finding more gold and developing new mines at
the lowest possible cost.

produce more gold | grow gold reserves | acquire small, think big
be a low-cost leader | maintain a solid financial position

1. Produce More Gold

Our goal is to increase annual gold production more than fivefold, from 230,992 ounces in 2007 to 1.4 million ounces by 2011, by building and exploring our own mines. With the planned start-ups of the Goldex mine in spring 2008 and the Kittila mine later in the year, we will be on our way to having six operating gold mines. The Lapa and Pinos Altos mines are scheduled to begin production in 2009. The Meadowbank mine is slated to come on-stream in early 2010 and the LaRonde mine extension is to be completed by 2011, both of which will significantly boost gold output. Over the period from 2010 to 2017, we are targeting steady-state gold production averaging 1.3 million ounces. Total cash operating costs are expected to be approximately $250 per ounce, which would enable Agnico-Eagle to remain among the lowest-cost gold producers in the world.

2. Grow gold reserves

From 16.7 million ounces of gold at year-end 2007, we aim to grow gold mineral reserves to between 18 and 20 million ounces by year-end 2008 through aggressive exploration on our 100%-owned properties. Agnico-Eagle has active exploration programs in Canada (Ontario, Quebec, the Yukon and Nunavut), the United States (Nevada), Finland and Mexico (Chihuahua), in regions that are politically stable, mining friendly and have excellent nearby infrastructure. Over the past several years, we have established our ability to find gold and grow reserves faster than most other intermediate gold producers. We intend to continue this pace and, for 2008, have allocated more than $65 million – the largest exploration budget in our history – towards 275,000 metres of drilling, primarily at Pinos Altos, Kittila and Meadowbank. We see the potential for several five-million ounce gold deposits at our existing properties.

3. acquire small, think big

We continuously look to add quality projects and assets to our portfolio. Agnico-Eagle is positioned to act if an opportunity is well-matched to our technical skills and abilities, and can significantly strengthen the business. Our focus is on smaller companies or projects, which can typically be acquired at favourable prices and whose operations can be quickly and easily integrated into our company. Within six months of the 2007 acquisition of Cumberland Resources, and its large Meadowbank project, we were able to accelerate the mine development timeline and grow gold reserves at the property by 20%, increasing the projected mine life by one year. In the same way, the Pinos Altos and Kittila projects – and even the LaRonde mine – started with small investments that have grown to show tremendous potential.

4. be a low-cost leader

Agnico-Eagle is one of the lowest-cost producers in the gold industry with total cash cost per ounce of gold produced at minus $365 in 2007. We consider low-cost production to be an important competitive advantage that helps position the company to deliver value. At LaRonde, strong byproduct revenues, economies of scale afforded by the high-tonnage mine and a highly skilled and motivated workforce enable us to uphold our low-cost producer status. As we build new mines, we have implemented rigorous cost-control measures and monitoring programs, including the use of existing infrastructure and equipment wherever possible, to ensure that project budgets remain on track.

5. maintain a solid financial position

A conservative and strong balance sheet gives us the financial resources to fund growth projects while maintaining our longstanding policy of never selling away the price upside on our gold reserves. Despite ambitious exploration and capital development programs, we maintained our cash position near $400 million. We have no long-term debt and available bank lines of approximately $300 million that were recently extended to December 31, 2012. As we open the new gold mines, growing cash flow should allow us to execute on opportunities, and reward our shareholders, while maintaining a solid financial position.