Good morning, ladies and gentlemen, thank you for standing by. Welcome to the Agnico-Eagle Mines second quarter 2009 results webcast conference call. (Operator Instructions). I’d like to remind everyone that this conference call is being recorded today July 30, 2009 at 11 a.m. Eastern Time. I will now turn the conference over to Sean Boyd, Vice Chairman and CEO. Please go ahead.

Thank you, operator, and good morning, everyone, and welcome to our second quarter conference call. We’re here in Toronto with our full team, all ready to answer your questions in the question and answer session. What I’d like to do is go through a series of slides, provide a bit of an overview, some of them I’ll go through quite quickly. I know it’s a busy morning for everyone. So we’d like to move through these in depth in the question and answer session. But just to sort of summarize where we are and where we’re going over the next several quarters, I think as you know we’re in the midst of ramping up a couple of our projects. We’re in the midst of completing construction on a couple more. And that was a program we began several years ago to transform the company. And what we’ve done as a result is we put ourselves in a position to move into an industry leadership position in things like cash flow per share, production per share, certainly on the cost side given the quality of these mines will be in the top range of good cost control performance. But what we also have done is we’ve neared the completion of building five mines at once. We’ve also started that next phase. We also announced yesterday two of the four internal expansion opportunities have been given a go ahead. We’re still working on studies of the remaining two. But the first two, as you’ll see in the presentation, has allowed us to show steady growth going forward all the way through to 2014. So we’ve still got good growth ahead of us with the two of the four expansion opportunities given the go ahead yesterday. They are high rates of return, low…

(Operator Instructions). Our first question comes from [John Finnegan with Fundamental Equities]. Please go ahead.

Mr. Boyd, earlier you were having some problems in Finland with the buildup towards production. Could you give us an update on where you stand on that?

Well the issue you’re referring to is in the processing facility and it was an issue with recoveries. When we talked about this in the last quarter, our recoveries were in the range of about 30%. Our recoveries in June were more than double that earlier rate. They’re now about 65%. We see continued improvements ahead of us, but I’ll turn it over to our technical team and they can give you and the people on the line an update of where we are --

Okay, in quarter two, we updated the curve as Sean mentioned. Presently we expect to have for the next coming two months as a kind of stability at around 65% recovery with the profile of gold. We are doing some minor modification and it’s a delivery on some equipment. As mentioned recently, the sump pump we have to change. Presently it’s follow exactly the pattern that we had last during the test work and pre-feasibility and the feasibility study. So presently we are quite happy. We just try to oxidize the ore gentle and that was quite successful. So it’s just limitation that we have presently that we will fix and it’s not costly what we have to do.

Will the eventual production cost be above what you expected when you started the project?

Yes, we do. We have about another 700 tons per day to ramp up. We are currently at 22 to 2,300 tons average, and once we do get to our design rate of 3,000 tons per day, well the unit cost on a per ton basis and on a per ounce basis will decline.

Thank you.

Our next question comes from John Bridges with JPMorgan. Please go ahead.

Good morning, Sean and everybody. Congratulations on the results. You must be really beavering away with all these projects. Just on LaRonde, that’s a sizable increase in the cost per ton we’ve seen over the last 12 months, and given this repeated deflation that we’re seeing in some areas, any chance of that coming back going in the next 12 months?

There might be a bit of a softening, John, but when you compare it to year-over-year the first half of last year we had very limited increases and a lot of the increases that we experienced in inputs were in the second half of the year. Currently that number also contains some stockpile adjustments, but on the mine level we are right on budget or below what we had forecasted including those additional input costs that we experienced late in the year.

Any stabs on what you think costs might be next year?

It’s a bit early, but my guess right now would be like they would remain flat or maybe slightly lower, but I would say flat.

Okay, that’s great. Just following on, that 16% recovery of silver at Creston, just wondered how flexible that was, is this stuff tied in there or if you give it a bit more cyanide could you increase that?

Okay, I’ll take that one. 16% recovery for silver at Creston Mascota, that’s based on test work that’s a conservative number and over a long, long lease cycle, over a period of a couple of years, probably it will be higher than that. Silver to gold at Creston Mascota the ratio is lower than it is at Pinos Altos and it’s not very significant for the revenue.

Our next question comes from Anita Soni with Credit Suisse. Please go ahead.

Hi, congratulations on a good quarter. My question is with regards to the current commercial production at Kittila, I was just wondering what tests you used in order to get to that declaration for May 1?

There’s two main criteria. One is you have to achieve somewhere in the 60 to 70% range of capacity, it can be the mine operation of the mill. And then you also have to cover your operating costs. And that’s it essentially. And that criteria was met as of May 1.

Okay. So it’s only on the throughput that you’ve got the criteria and not...

No, it’s actually on the mine operation as a whole. You have to be operating at 60 to 70% capacity across the mine operation.

I guess, I think that it’s the recovery rates and I’m just wondering about, did you achieve that on the recovery rates?

Well, the recovery rates aren’t the issue. It’s whether you cover your operating costs or not. And so if you’re producing enough revenue to cover your operating costs regardless of what the recovery rate is then you achieve commercial production along with the other criteria.

Okay. And then just in terms of the improvements post two months. Could you go over that again in terms of where you expect to see I guess the next leg up in improvement and recovery rates I guess from the chart I’m looking at sometime in September, as you kind of move from the mid-60s range up to 80%?

I just to want make sure we have the question right before we turn it over to Jean Robitaille to answer. You just want an update on what we have done so far and what we propose to do in the next quarter to be able to continue along that graph, is that correct?

Exactly, yeah.

Okay. Essentially since the beginning, we just push more in the autoclave. The issue was the way that the oxidation was done. It was not according to the concept. The design was slightly different. So we cut the recirculation, what’s probably something like a gain of between 20 and 30% recovery. And now what we did, we pushed the oxygen at the back-end of the autoclave and we’re able to raise the total recovery at 65%. Presently, we have some limitation with the amount of oxygen we can have at the end and cut at the front. And this is on what we are working. And in excess of that we have to concentrate inside of the autoclave, we have excess capacity. So we reduce the quality of the concentrate, but we have some limitation in the de-water and the circuiting the CIL. So we are looking to change some pipe and pump presently and that we consider that will be completed in September. After that, we’ll be able to raise gradually by the end of the year at 83% recovery.

Okay. So you’ve got to switch out some of the pumps and pipes in order to push more concentrate through in September onwards?

Yes, as soon as we will have that done, we will be able to push more. That will reduce the retention time in the autoclave that will be beneficial, and we maybe able to push a little bit more on the production, so we are more than confident to achieve what we have put on this graph.

Our next question comes from Victor Flores with HSBC. Please go ahead.

Yeah, thank you. I have two questions. A very quick one and then perhaps a bit more complicated one. When do you expect to achieve commercial production at Pinos Altos, or is it too soon to ask that question?

Tim?

Well, I think it will be October-November. We’re planning on ramping up starting in September and we’ll just see how it goes.

Okay, fair enough. Thanks. The second question is back at the autoclave at Finland, I had a very good chat a few months ago with Ebe regarding the very specific issues with respect to the gold chlorides that were being formed and how they were binding with some of that carbonaceous material? And just going back to the last question that Anita asked, I’m trying to understand how the changes that you’ve talked about with respect to recirculation in oxygen levels in the autoclave address those specific issues that came up?

Okay, I will try to be short, and if it’s not enough we can have a discussion after the conference call. Essentially, when you over-oxidize what we see is in the ore you have some chloride. If you do a proper oxidation without any excess, you will not separate that excessive chloride, try to simplify that. If you recirculate the solids, you just expose to just liberate more free chloride that will dissolve gold and after that you are in trouble. So by cutting that recirculation, we avoid that issue and now by doing the oxidation just more at the end of the autoclave, we avoid that over-oxidation period of time and this is why we obtained that result. Now, we have some physical limitation and it’s not a big deal to resolve it. It just takes a bit of time.

Okay, and with respect to the issue of the carbonaceous material?

Carbonaceous material under certain condition you will activate more the organic portion and this is linked with the same issue, but by not over-oxidizing we expect to have better result and now we are working to load that part. And during the study we saw that not more than 3 to 5% have a potential impact. And we have also, we have the organic floatation circuit. That was introduced in the concept and presently we raised the organic from 10% recovery to 25% of the organic portion what is normally the most active one, most active one.

Our next question comes from Haytham Hodaly with Salman Partners. Please go ahead.

Thanks operator, morning Sean, everybody else. Just a couple of quick questions, maybe I’ll just follow-up on a question earlier on Creston Mascota. You gave some economic numbers in there, talked about internal rate of return of 17%. First question I’ll ask is, is that feasibility study actually posted on SEDAR or is that an internal one?

It’s internal.

Okay, and so a question, I ran the parameters that you outlined and the only way I could get a 17% IRR based on your commodity price assumption is if I’m assuming no taxes, no sustaining capital, and no reclamation. Can you give me an indication of just what you assumed for each of these three?

Well, on taxes we’re using a statutory rate in Mexico which is 28% and you really don’t pay any taxes until you recover all your capital. So it might be a time value issue there, Haytham, I’m not sure how your models run, but we don’t pay any cash taxes until the capital is recovered.

Okay. And in terms of sustaining capital annually and reclamation what’s your assumptions in there?

Well, including salvage value, the capital over the life of the mine is 65 million give or take.

I’m sorry, that was including sustaining capital and salvage value?

Yeah, yeah.

Okay, that’s what I wanted.

So salvage value and the sustaining capital more or less offset.

Okay, fair enough. That makes sense. Another question I guess with regards to your debt. We saw that you drew down another 70 million debt this last quarter. Curious where do you think you’ll be in terms debt drawdowns, pardon me, by the end of the year?

It’s discretionary. It really depends on how much cash you want to carry, but assuming we keep our cash balances in more or less same level, we’ll probably draw another $200 million.

100 million more in debt. And then with regards to expensed interest estimate for the year, where do you think that will end up?

Expensed interest will be more or less double you saw in the first six months. A lot of it is still capitalized because we still have construction expenditures.

So, it will just double. If I take the number now and double it, it’s probably not unreasonable?

Yeah. I think that’s right.

And then you give a 550 million CapEx in 2009. I know it was given before. Can you just give us the break down of that again?

The CapEx breakdown?

Yeah, by asset.

Yeah, we’re still looking for, one second I’ll just pull up the page. We’re looking at a sustaining capital at LaRonde of about 25 million, 10 million at Goldex, 20 million at Lapa, LaRonde depth extension is 40, Lapa is 22 of construction capital.

Sorry, could I just slow you down a little bit. Let’s go back, LaRonde 25, Goldex 10, Lapa 5 was it?

Sorry, sustaining capital 25 at LaRonde, 10 at Goldex, 20 at Lapa, 40 million on the depth extension at LaRonde, construction capital at Lapa of 22 which is now spent, Goldex construction capital of about 10 which is now spent, Meadowbank about 200 odd million, sustaining capital at Kittila of about 50, and construction capital of about 35 and Pinos Altos about 140, that should roughly come to 550, given you round numbers there.

Our next question comes from Steve Butler with Canaccord Adams. Please go ahead.

Well guys, good afternoon or morning there I guess it still is. Ebe, a couple questions for you on Lapa. I mean respecting that it’s declared May 1 and only you poured your first gold May 7, so it’s very early days still at Lapa. But you had alluded to 40% greater reconciliation on the first three stopes of Creston, so does that reconciliation pan out through the mill on those particular stopes material that’s just not yet processed? And then secondly how is the dilution, I think obviously you implied or you showed us 34% dilution assumption in the Analyst Day, May 29 and I assume it’s therefore higher than that. So how are you managing?

Okay, with respect to the overall grade we have processed, our reconciliation has been based on 80,000 tons. This is very early, 80,000 tons of which 60,000 tons of the material has been development ore, so it’s a bit premature. We only have about two stopes that actually went through, so two stopes out of 750 that are planned over the life of mine. So we still have some work to do. We’re going to do that in August and we’re going to be running strictly on production stopes rather than commissioning development ore. With respect to dilution, we are seeing about 20% more than we had projected in the model. Yet despite that our grade so far to the mill are reasonably close to this, slightly lower despite having 20% more dilution. But we went on the ground and we looked at the situation and it is a situation that we have previously experienced at LaRonde and there are remedial plans currently in progress to address that.

Okay. And Ebe or Jean, you had shown a recovery curve for Lapa I think as well and at least a recovery ramp-up through May since May 1 or May 7 I guess it was and you showed improvement from 55 up towards 75 to imply May around 65. And if you did 70% in the quarter, I suppose is June therefore closer to 75 or are you getting better on recoveries at Lapa as well?

The recovery is I don’t have the number in front of me, but near 72. What we just investigated more is when we did the study and we have 14 composite of the different ore zone. And presently we started with, as you know, Lapa is slightly refractory and we started with the most part refractory. So presently we’re doing better than the composite we process. We are near 72 and the process was between 66 and 68. So on the curve we provided was the average curve. So as soon as we’ll be in other zone, you can expect some extent improvement.

Our next question comes from (inaudible) with Silver Arrow Capital Markets. Please go ahead.

Sean, I would like to know what you’re going to do with all the free cash flow you’re going to generate. If we look at the gold price of say 1,000 bucks next year which is probably very conservative and then 1,200 for 2011 and 1,400 for 2012, we’re looking at cash flow generation of between 500 million and $1.4 billion. What are you going to do with all that money?

Well, we’ve got two more internal expansion studies underway, one at Meadowbank and one at Kittila, and the Kittila expansion would involve a fair amount of capital because it’s an internal shaft. We’ve also now begun a study at Pinos Altos to increase the main horizon throughput from 4,000 and 6,000 tons a day. So we’re certainly going to reinvest some of that back to the existing asset base to optimize and maximize those assets. We will also look to increase the dividend; that’s certainly an objective of ours given the track record of paying one for 27 years. And then we’ll look at opportunities to increase our production beyond 2014 through acquisition. So we’re certainly looking at smaller, earlier stage development potential assets with a resource on it that we think can be quickly put into a reserve base and then eventually built into a mine over a three to five year horizon. So that’s where we’re focused right now.

Okay. And could you tell me what your cash cost would be ex the byproducts?

I guess ex the byproduct, I think I’ve seen some co-product calculations out there by some analysts that put LaRonde in the low 400s per ounce, but we don’t do that calculation. So I’m quoting somebody else’s.

$400 you said for the whole company?

Low 400s if you use co-product accounting. That’s what I saw on one analyst report this morning. But I think one way to look at it is the byproduct component of revenue becomes very small as we move forward. And with that small component using assumptions on silver at $11 and zinc in the mid-50s, we look at that and our costs are still in the low 300s overall, incorporating that small component. So it’s becoming less and less of a factor moving forward.

Our next question comes from [Steve Valardo with Casadevil]. Please go ahead.

Hello, gentlemen; it’s [Steven Kissey]. I was just wondering; you do have a lot of focus on growth right now and just following on from the last question where assumption of the gold price staying where it is or actually going a bit higher; that you would have expansion and growth, increase dividends and that. My question is regarding more risk management. Your debt position has grown. Agnico traditionally never had a lot of debt. Granted, the ratio on net debt is probably somewhere below 15%; but I’m just wondering in terms of risk management and in terms of your strategy of debt versus growth. If we look historically from the 1980s to 1990s, gold did go from 800 to $300. And I’m just wondering if you stress test your strategy, if gold was to fall from where it is now to around the $500 level; and I know that sounds extreme, how would you manage the debt versus growth scenario? If you are going to have good cash flow going forward, are you going to use some of that to pay down the debt or are you comfortable with having a higher debt level going forward?

I’ll just start and then I’ll turn it over to Dave. But I think what you’ve seen yesterday with the announcement of the two expansions, combined additional investment there is about $75 million, of which roughly 10 is spent this year and the balance spent next year when we’re generating net free cash flow. And if we look at on a potential expansion at Kittila, those funds would be spent over a sort of three-to-five year time horizon. And then if you look at the strategy and tie it into what we’re looking for in terms of acquisition, as we stated over the last several quarters, anything that we’d be looking at in terms of bringing in, we would undertake a 12 to 24 month exploration and feasibility study phase before we committed any further capital. So this is the go-slow approach that we’ve been referring to for the last couple of quarters. But certainly, part of that net free cash flow will be used to reduce the drawings under the line of credit and I’ll turn it over to Dave.

Yes, the net debt to cap this past quarter, Steve, was just over 10% and I think that’s pretty conservative. We might get it up to about 15% by the end of the year, but I think that’s still a relatively low level given the size of the company and the cash flow we’re generating. And we’re also constraining ourselves to no more than 3.5 times net debt to EBITDA; that’s both a covenant within our existing facility and it’s a policy we have internally in terms of maintaining a conservative debt position. And on top of that, the existing facility has no amortization; it’s a three-year unsecured facility – it’s a revolver. As Sean said, as we generate more cash, we’ll just revolve some of that debt back in and keep it available for other opportunities that might come up. So I think we’re quite conservatively capitalized right now and we feel comfortable with the debt we’re carrying.

Our question comes from Barry Cooper with CIBC. Please go ahead.

Yeah, good day, congratulations on turning Kittila around. What was the recovery at Kittila for July?

For July, the month end is not completed and we need to complete inventory so it will be in the 60s, but I cannot give a nominal digit. But it was 65.3% for June.

Right. And Jean is that kind of lumpy week to week or day to day or is it kind of gets stabilized?

It’s stabilized. We’re still doing some validation, so for sure in the three month period I’m saying that will be at that level. We are planning some tests. So to be honest we have some days that we are over the 65% and some weeks, but we have some cushion to do some validation.

Right; okay. And then for Dave, this is the first time we’ve got to see some depreciation per ounce costs obviously for Lapa and Kittila. How relevant are those for a go-forward basis, Dave?

Well I think I’d rather look at it on an aggregate basis, I’d say, across all the operations. Our acquisition and discovery costs have averaged about 50 bucks an ounce. Our build-out costs have averaged about 100. So I would say our depreciation over time will average about 150 across all the operations. It might be a little lumpy between operations, but on average it’s about 150.

Right, but I guess Lapa was close to -- I don’t have that figure in front of me I guess it’s in that ballpark. How was Lapa able to meet the commercial hurdle, given that its op costs were higher than the gold price?

It was close enough. And I’m not trying to be flip. Actually, the onus is on us to prove that we don’t have commercial production according to SEC. They assume we’re in commercial production when we start pouring gold and we have to prove that we’re not. And so when we’re close enough to covering our operating costs and we’re at 60 to 70% of throughput, the SEC says well close enough; you’re at commercial production, you’re not allowed to capitalize cost anymore.

Your next question comes from John Tumazos with John Tumazos Independent Research. Please go ahead.

Two questions if I may. I’m very intrigued at the 146 kilometers you’re drilling at Kittila and Meadowbank. And in Mexico, I guess you don’t go to the gym to lift weights or sleep at night; you just squint and look at drill core boxes. You expect to drill the same 146 kilometers in the second half of the year and should we view that volume of drilling as indicative of 5, 10, 15 or 20 million ounce potential resource magnitudes?

What we know is Meadowbank, the season is very short and we drill during the winter season and the spring season. Presently we drill over a 47 kilometer and the rest of the year we do not drill a lot; probably my guess would be around 8 kilometers of drilling. And we expect to receive all the asset probably at the end of August and we put all the information together to know what we have in hand.

And does the drilling continue at the same rates at Kittila and in Mexico through the second half?

Kittila, yes, and in Mexico as well.

Should we assume that this drilling converts into resources and could you give us any idea as to the magnitudes? It would seem like that magnitude of drilling would be worth more than a million ounces of indicated or inferred resource at each location and possibly much more.

Well, I think the break down would be about 25% exploration, 75% conversion, John. That’s just a very rough figure. And as Sean mentioned at the outset of his presentation, we are on track to be able to convert the resource into reserves, to be able to get close or attain the 20-million ounce level. We’re monitoring this very closely and we always update our internal progress mid-year, and we’re just in the process of doing that as we speak.

The one part of that, John, is in terms of actual drill core, I think the industry is challenged in terms of getting assays processed, and we’re certainly no different. So we’ve got a backlog, and we’re working through that backlog and that’s why we’re saying that we anticipate having an exploration update in September based on clearing up that assay backlog. So as Alain just mentioned, we expect to have a lot of assays in on and a lot of this drilling done in the first half of the year in August and we’ll be compiling that. But again, we’ve had some success in Mexico. It’s a large property position. We’re really just, from our view, scratching the surface there. Meadowbank is also large; 40,000 hectares, so we’ve seen some encouragement there. So it’s really targeted on taking deposits that we felt had a lot of potential and drilling them very aggressively and that’s the focus. And in answer to one of the earlier questions where do we spend the increasing cash flow? Well, certainly some of that is going to go back to increasing the exploration budgets, because as you know, this team on the exploration side like the operating team has been together for 20 years. They’ve had a great track record. They’re excited about the prospects of some of these properties. So we’re going to support their recommendation to continue with a very healthy drill program and look to increase it next year.

If I could ask a specific accounting question; there was 50 million of cost involving concentrates and at Lapa and Kittila those concentrates I guess had not yet changed title at quarter end or some of them if I understand the note. Do you use the June actual month recovery rate in estimating production from those concentrates and could you just give slightly more color on the accounting process?

Well, for revenue recognition, frankly, title would has to pass for revenue to be recognized, otherwise concentrates are carried at cost on the balance sheet for quarter end. I don’t know if that answers your question, John, or not. So all we’re doing is we’re not really estimating the market value of those unproduced cons or unsold cons; we just carry them at cost at quarter end. For production purposes, there is an estimate in terms of what’s produced from the circuit. I don’t know Jean, if you want to give some insights as to how you estimate gold production within the circuit and quarter end.

The estimation is we have different kind of inventory; one is it’s considered as produced when it’s on the final form that we can sell, so copper come, zinc come, lead come or fine carbon, then what is the payable is really, so what is out of the site, so.

So, the footnote small I and small III, in the cash cost details in the second half of the release; those footnotes are cons for production and footnotes I and III –

What that refers to is we calculate our cash costs on a production basis. So we have to reconcile that back to the P&L. So we have to take our cost of sales and adjust it to bring it up to a production basis in order to calculate the cash cost per ounce of production. So that’s what that inventory adjustment refers to.

So it’s only related to the cash cost, not (inaudible) and not the P&L.

That’s right.

As accounted.

Yeah. That’s right. The cash cost we reported on a production basis, whereas the P&L is obviously on a revenue or sales basis. And that’s part of the adjustment process.

Thank you.

Welcome.

(Operator Instructions). There are no further questions at this time. Please continue.

Okay, thank you operator and thank you everyone and we’re not just excited about completing another quarter, but we’ve been told that summer is going to start this weekend up here in Toronto, so we’re excited about that. Thanks for your attention and we’ll talk to you at the next quarter. Thanks.

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