Shares in gold miner Agnico Eagle Mines Ltd. climbed almost 11% on Wednesday morning before trading was halted on news of a US$252-million private placement.

After trading resumed at noon in Toronto, the stock promptly turned down, and just after 12:10 p.m. ET were trading up just 1%.

Agnico-Eagle will place privately 8 million units of Agnico-Eagle at a price of US$31.50 per unit. Each unit will consist of one common share of Agnico-Eagle and one-half of one common share purchase warrant.

Each whole warrant will entitle the holder to purchase one common share of the company, at a price of US$47.25 per share, at any time during the five-year term of the warrant.

The company said it will use the proceeds which could reach almost US$290-million if the underwriter's option is exercised in full, for mine development and related capital expenditures, as well as for general corporate purposes.

"This financing is a prudent measure to secure our ongoing production growth and strengthen our financial position", Agnico-Eagle chairman and CEO Sean Boyd stated.

"It also puts the Company in an excellent position to further new internal expansion opportunities and to continue to aggressively grow our gold reserves within our portfolio of high quality deposits."

One of the mines surely to benefit from the financing, will be the Kittila mine in Finland which, this week moved into start-up mode and is expected to produce 150,000 ounces of gold in 2009, based on 84.6% recovery.

"All in, we were impressed with the progress to date at the mine, especially when compared to our June 2006 tour when only earthworks were in progress," said Steven Butler, Canaccord Adams analyst, in a note to clients published prior to today's private placement announcement.

The analyst said that with additional investment and pilot plant testwork, Agnico-Eagle now predicts an 89% life-of-mine recovery, up from the feasibility plan of 87%.

Near term, however, he doubts whether the mine can attain the recent guidance of 20,000 ounces by year end.

"We currently assume 30 days of commercial production for 12,000 oz in Q4/09), though commercial production will likely be a Q1/09 event," he wrote.

Mr. Butler told clients that Kittila represents about $7 per share to Agnico's net asset value. He maintained his "buy" rating and left his target price of US$48.75 unchanged.

David Pett