TORONTO, Aug. 9 /PRNewswire-FirstCall/ - Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") today announced that a positive development decision was made for the 100% owned Pinos Altos gold project in northern Mexico. Additionally, as a result of recent drilling at Pinos Altos, the gold ounces in reserves have increased 21% from the figure released in February 2007. The silver ounces in these reserves has increased a further 18% over the same period.

The current gold reserves at Pinos Altos total 2.2 million ounces from 20.0 million tonnes of ore in probable reserves grading 3.5 grams per tonne, an increase of 13% in gold grade over the previous reserve estimate. The Pinos Altos deposit also includes approximately 65.7 million ounces of silver in the reserve category, an increase of approximately 10 million ounces over the previous estimate.

The Pinos Altos feasibility study did not include the increase in gold grade and gold reserves announced today. The study projects an after tax rate of return of 18.3%, based on a gold price of $530 per ounce and a silver price of $9.59 per ounce. Average annual production is expected to be approximately 150,000 ounces of gold, at average total cash costs per ounce of $230 (including royalties and net of byproduct silver credits). In addition, annual silver production is expected to average over 2.0 million ounces per annum. The initial production ramp-up is expected to begin in second quarter of 2009.

Over an estimated 11 year mine life, the feasibility study incorporates a conventional milling operation of 4,000 tonnes of ore per day and a heap leach operation reaching peak production rates of 2,500 tonnes of ore per day. Metallurgical testing indicates that the ore is non-refractory, yielding excellent gold recoveries of greater than 95% with conventional cyanidation processing (silver recoveries are expected to average approximately 50%). Overall minesite operating costs are expected to average $39 per tonne, with construction capital costs of $190 million and average sustaining capital expenditures of approximately $3 million per year. Agnico-Eagle estimates that the project will be entirely funded from existing cash and cash flows.

"Our decision to build Pinos Altos is an important step in expanding and strengthening our gold production base on our way to having six operating gold mines," said Sean Boyd, Vice-Chairman and Chief Executive Officer. "With the increase in gold reserves and grades at Pinos Altos, we continue to demonstrate the reserve growth potential of our development projects and the ability to increase gold production and further extend mine life. Additionally, we are excited to be operating in Mexico, and working with the local communities in the development of a new gold mine," added Mr. Boyd.

Agnico-Eagle has signed a letter of intent for delivery of the long-lead time ball and SAG mills for the Pinos Altos project. All the necessary land agreements with the four local ejidos are in place. Negotiations for additional surface rights with the underlying royalty holder are ongoing. If these negotiations are not successful, modifications to the proposed mine plan contained in the base case feasibility study will be implemented.

Internal rate of return sensitivities to the gold price, gold grade, capital costs, operating costs and schedules detailing the life of mine plan, capital expenditures and operating costs can be reviewed by clicking on the link below or simply copy and paste into your internet browser.

Detail of 2007 Exploration

Four drill rigs are operating on the Pinos Altos property. Diamond drilling from the first underground drilling station is planned to commence in October 2007. This drilling will follow up on recent positive drill results at depth, targeting possible extensions of the Santo Nino and Cerro Colorado zones.

Over 12,000 metres of diamond drilling is planned to be completed by the end of 2007. The main focus of the underground exploration program will be resource to reserve conversion of the Cerro Colorado/Santo Nino zones and the area between them.

Most significantly, the results of the current exploration program suggest that the Creston Colorado and Mascota zones (northwest of the main Santo Nino deposit) may form part of a larger more widespread zone, occurring at a similar geologic interval, but separated by sub-vertical fault zones that displace the same mineralized horizon. These zones are not included in the current reserve and resource estimate at Pinos Altos and were not considered in the feasibility study.

Development on the underground ramp began in March, 2007. Over 350 metres of ramp have been completed to date and over 1,350 metres of ramp are expected to be completed by year end 2008.

Pinos Altos Analyst Tour

Agnico-Eagle is planning to host a tour of its Pinos Altos property on August 20 and August 21, 2007. The trip is open to equity analysts. A charter will be departing from Toronto early in the morning on August 20, returning late on August 21. Interested parties should contact Hazel Winchester at (416) 847-3717 or hwinchester@agnico-eagle.com as soon as possible as spaces are limited.

About Agnico-Eagle

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