remediation of water inflow and ground stability issue; book value of Goldex to be written off

cnw




Stock Symbol: AEM (NYSE and TSX)


(All amounts expressed in U.S. dollars unless otherwise noted)




TORONTO, Oct. 19, 2011 /CNW/ - Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") announced today that it is suspending
mining operations and gold production at its Goldex mine in Val d'Or,
Quebec effective immediately. This decision follows the receipt of an
opinion from a second rock mechanics consulting firm which recommended
that underground mining operations be halted until the situation is
investigated further.


While the Company continues to assess the situation, it appears that a
weak volcanic rock unit in the hangingwall of the Goldex deposit has
failed. This rock failure is thought to extend between the top of the
deposit and surface. As a result, this structure has allowed ground
water to flow into the mine. This water flow has likely contributed to
further weakening and movement of the rock mass.


"Considering the safety of the Company's employees, and the integrity of
the mine's infrastructure and that of the surrounding area, the
decision was made to stop production indefinitely" said Sean Boyd,
Vice-Chairman and CEO.


It is estimated that the mill will continue to process feed from the
remaining surface stockpile until the end of October.


The Company will assess the potential for restarting the mining
operations next year on the western side of the deposit where the ore
zone is narrower and still considered to be relatively stable, however,
there is no guarantee that this will occur. As a result, Agnico-Eagle
will write off its investment in Goldex. It is expected that this will
total approximately $260 million (or approximately $170 million after
tax, or $1.00 per share) and will occur in the third quarter 2011
financial results, scheduled for release on October 26. Additionally,
the Company expects to make an accounting provision for a portion of
the anticipated costs of remediation in the third quarter of 2011. All
of the remaining 1.6 million ounces of proven and probable gold
reserves1 at Goldex (approximately 10 years of mine life), other than the ore
stockpiled on surface, will be reclassified as mineral resources.


__________________________


1 Approximately 0.9 million ounces of proven reserves in 14.8 million
tonnes grading 1.87 grams per tonne and approximately 0.7 million
ounces of probable reserves in 13.0 million tonnes grading 1.6 grams
per tonne were estimated as of December 31, 2010


Monitoring and Remediation Plan


In the past week, rock subsidence has been confirmed above the
north-eastern limit of the deposit. The exact location and extent of
this subsidence is unknown and remains to be determined by diamond
drilling and other methods. However, as a result of these findings,
previously planned grouting and water re-injection efforts have been
suspended and work will be reoriented to preserve the surface
infrastructure in the area.


Ongoing investigative and remediation efforts include:



Drilling from underground into the volcanic rock unit to determine
whether additional fracturing has occurred and the extent of movement
in the rock mass


Installing additional instrumentation to monitor for further soil and
rock movements


Backfilling the surface depression to reduce the potential for further
soil migration


Considering backfilling and mining options for the deposit



Through the period of investigation and remediation, the Company
anticipates that underground exploration drilling of the deeper D Zone
will continue.


The Company is also implementing a plan to minimize the impact on the
current workforce of 233 permanent employees during the investigation
and remediation phase. The plan will include:



Re-deployment of employees to the remediation and investigation project
team


Extensive maintenance programs of all mobile equipment not being used
during the investigation and remediation phase


Internal transfers within the Company's Canadian operations


Employee training and skills upgrading programs to facilitate potential
transfers to other Agnico-Eagle operations



During the investigation and remediation period, ongoing assessments of
the workforce requirements will be made in collaboration with the
employee representatives in order to try to reduce the number of
employees that are impacted by this stoppage of operations at the
Goldex mine.


As announced on October 11, 2011, it is anticipated that approximately
C$25 million will be spent in 2011, and a further C$20 million will be
spent in 2012, on monitoring and remediation activities.


Conference Call


The Company's senior management will host a conference call on
Wednesday, October 19, 2011 at 9:00 AM (E.D.T.) to discuss the Goldex situation.


Via Webcast:


A live audio webcast of the meeting will be available on the Company's
website

Via Telephone:


For those preferring to listen by telephone, please dial 416-644-3414 or
Toll-free 1-800-814-4859. To ensure your participation, please call
approximately five minutes prior to the scheduled start of the call.


Replay archive:


Please dial 416-640-1917 or the Toll-free access number 877-289-8525,
passcode 44882668#.

The conference call replay will expire on Sunday, November 1, 2011.

The webcast will be archived for 180 days on the website.


Upcoming News


October 26 - Q3 financial results

November - Exploration update

December - Dividend announcement

February - Q4 financial results and cost forecasts


About Agnico-Eagle


Agnico-Eagle is a long established, Canadian headquartered, gold
producer with operations located in Canada, Finland and Mexico, and
exploration and development activities in Canada, Finland, Mexico and
the United States. The Company has full exposure to higher gold prices
consistent with its policy of no forward gold sales and maintains a
corporate strategy based on increasing shareholder's exposure to gold,
on a per share basis. It has paid a cash dividend for 29 consecutive
years. http://www.agnico-eagle.com/">www.agnico-eagle.com