Agnico-Eagle Mines Limited today announced a number of major steps in its strategy of expanding gold output and gold reserves:

- Kittila gold project (on the Suurikuusikko deposit) in northern Finland to be built for $135 million, and is expected to produce an average of 150,000 ounces of gold annually at average total cash costs of approximately $250 per ounce. Production expected to begin by the middle of 2008 and extend over 13 years.

- Lapa gold project in Quebec to be completed for an additional investment of $90 million, and is expected to produce an average of 125,000 ounces of gold annually at average total cash costs of approximately $210 per ounce. Production expected to begin by the fourth quarter of 2008 and continue for seven years.

- Expenditures on Pinos Altos project in Mexico increased to an estimated $23 million to conduct an extensive exploration program and complete a feasibility study by the end of the second quarter of 2007.

- Agnico-Eagle to raise $250 million in a marketed equity offering to fund its growth initiatives and for general corporate purposes.

"With today's project decisions, Agnico-Eagle has set the stage for a significant increase in its gold output with four gold projects under construction and a potential fifth new mine entering the feasibility stage," said Sean Boyd, Vice Chairman and Chief Executive Officer. "Our existing cash position and strong cash flows combined with the proceeds of the proposed $250 million equity issue should enable us to finance our growth and maintain a strong financial position," added Mr. Boyd.
Kittila Mine to be built on Suurikuusikko deposit

Construction will begin immediately at the Kittila Mine (on the Suurikuusikko deposit) in northern Finland, approximately 900 kilometers north of Helsinki. The Kittila mine, named after the nearby community of the same name, will initially be extracted via open pit followed by underground mining via ramp access. The mining operation will feed a 3,000 tonne per day surface processing plant.

The feasibility study has recently been reviewed by independent third parties. The study's base case projects an after tax rate of return of 15.0%, based on a gold price of $450 per ounce, and a US$/(euro) exchange rate of 1.20. Annual gold production is expected to average 150,000 ounces at total cash costs of $250 per ounce, with initial gold production occurring by the middle of 2008. The feasibility study anticipates capital expenditures of $135 million and incorporates minesite costs per tonne of $34 and sustaining capital expenditures of approximately $5 million per year. Current probable reserves are 2.4 million ounces of gold, from 14.2 million tonnes grading 5.16 grams per tonne yielding an estimated mine life of 13 years. See Note to Investors regarding the Use of Non-GAAP Financial Measures.

Eight drills are currently operating at the Kittila mine project and are focused on converting the large gold resource to reserve and on drilling the extensive land position along strike of the known gold reserve. The Kittila mine project contains a measured resource of 0.1 million tonne containing 4.07 grams of gold per tonne, an indicated mineral resource of 1.5 million tonnes containing 4.39 grams of gold per tonne and an inferred mineral resource of 6.7 million tonnes containing 4.35 grams of gold per tonne. See the notes to U.S. Investors Relating to the Use of "Resources".
Lapa Mine to be completed by 2008

The Lapa mine project is located in northwestern Quebec, approximately 11 kilometres east of Agnico-Eagle's operations at LaRonde, providing operating synergies. The initial phase of construction began in July 2004.

The shaft, currently at a depth of 760 metres, will be extended to approximately 1,370 meters below surface. In April 2006, 2,800 tonnes of development ore was extracted at Lapa and sorted through a sampling tower to form a representative appraisal. Together with the results of a diamond drilling program, the ore was estimated to contain on average 10.65 grams per tonne of gold. These results, and results from other sampling methods, predicted higher gold grades than the Company's reserve model from February 2005. These results were incorporated into a revised feasibility study.

A revised feasibility study on the Lapa mine project was recently completed and reviewed by independent third parties. The study's base case projects the mine reaching full production in the fourth quarter of 2008 with an after tax rate of return of 21.8%, based on a gold price of $450 per ounce, and a C$/US$ exchange rate of 1.25. Based on current estimates of mineral reserves and grades, annual gold production is expected to average 125,000 ounces annually at total cash costs of $210 per ounce.

Additional capital costs to bring the Lapa mine into production are projected to be $90 million. Based on an operation of up to 1,500 tonnes of ore per day, the revised feasibility study incorporates minesite costs of C$70 per tonne and average sustaining capital expenditures of approximately $4 million per year. See Note to Investors regarding the Use of Non-GAAP Financial Measures.

The Lapa deposit contains 1.1 million ounces of gold reserves from 3.4 million tons of ore at a grade of 10.17 grams per tonne, sufficient for an initial mine life of approximately seven years. Lapa also contains an indicated mineral resource of 1.1 million tons grading 5.92 grams of gold per tonne and an inferred mineral resource of 1.4 million tonnes grading 9.36 grams of gold per tonne. See the notes to U.S. Investors Relating to the Use of "Resources".
Pinos Altos program to explore property and prepare feasibility study

An estimated $23 million exploration and feasibility program will be initiated at the 100% owned Pinos Altos project in northern Mexico. The objectives of the program include:

- 29,800 meter drilling program to convert resources to reserves;
- 21,400 meter drilling program to drill at depth and expand the resource by drilling in under-explored regions along strike;
- completion of a feasibility study by the end of the second quarter of 2007;
- development of a 1,330 meter underground ramp to provide a deeper drilling platform, and to expose ore for sampling and examination.

The deposit remains open at depth and only approximately one third of the entire property position has been drilled. The Pinos Altos project's indicated resource contains 12.5 million tonnes at 3.9 grams per tonne gold, and 102.3 grams per tonne silver. The project's inferred resource contains 3.2 million tonnes at 5.2 grams per tonne gold, and 111.0 grams per tonne silver. See the Notes to U.S. Investors Relating to the Use of "Resources".

Agnico-Eagle's preliminary analysis contemplates a 3,000 tonne per day mining scenario with the open pit and underground operations each supplying 1,500 tonnes per day. The preliminary estimate of capital cost required to bring the project into production is approximately $150 million.
$250 million underwritten equity offering is prudent for growth plans

The Company plans to offer common shares under its existing shelf prospectus filed in Canada and under the multijurisdictional disclosure system in the United States. The Company proposes to raise approximately $250 million in an underwritten offering. The Underwriters will also have the option to purchase up to an additional 15% of the common shares issued to cover over- allotments. The offering is to be lead-managed by Merrill Lynch and it is anticipated to close in mid-June 2006.

Over the next three years, the Company projects consolidated capital expenditures of $170 million in 2006, $250 million in 2007 and $115 million in 2008, excluding any potential construction expenditures on the Pinos Altos project. The Company expects that financing of these expenditures, including those anticipated at Pinos Altos, will come from the proposed offering, existing cash balances and cash flows from its LaRonde mine. Additionally, the Company maintains substantially undrawn credit lines of $150 million.