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Agnico-Eagle Mines Updates on Exploration Program at New Meliadine Mine Project

Agnico-Eagle Mines Limited has provided an update on its 2010 exploration program and planned exploration activities for the coming year. 

Since its last exploration results news release on September 08, 2010, the Company has continued an aggressive exploration program at its mines and its new Meliadine mine project.

Drilling during 2010 has confirmed that several of Agnico-Eagle's gold deposits continue to have significant exploration upside. It is expected that the exploration success will contribute to an increase in year end 2010 reserves to between 20 million and 21 million ounces of gold from the 2009 level of 18.4 million ounces. The new total will be presented with the Q4 financial results in February 2011.

Additionally, the Company plans to complete a feasibility study on an expansion in throughput at its Kittila mine in the third quarter of 2011. As a result, at that time, an interim reserve update is planned. The target for year end 2011 gold reserves is 21 million to 22 million ounces of gold.

Agnico-Eagle's $110 million exploration program for 2010 yielded significant results at numerous targeted areas, including Meliadine, Kittila, Goldex and Ellison. As a result of this success, a record $145 million exploration program has been budgeted for 2011 including more than 400 kilometres of drilling.

Highlights of the exploration program include:

Meliadine property

  • New gold zone discovered at nearby Wesmeg
  • New gold mineralization discovered at the Tiriganiaq zone at shallow depths. Gold mineralization also extended at depth to the west
  • Hole M-10-920, on Tiriganiaq, returned 7.98 grams per tonne of gold ("gpt") over 39.3 metres while hole M-10-989 returned 9.12 gpt over 17.9 metres, including 16.64 gpt over 7.4 metres
  • 2011 exploration budget of $67 million including, 90,000 metres of diamond drilling planned, extracting an underground bulk sample, new permanent accommodations at the exploration camp and upgrading infrastructure

Kittila mine

  • Exploration advances gold mineralization 400 metres northward at depth in Roura Central
  • Hole ROU-10-026 cut 3.98 gpt gold over 17.2 metres at a depth of almost 1,000 metres while hole ROU-10-026B intersected two mineralized intervals grading 7.25 gpt over 10.0 metres and 6.46 gpt over 12.8 metres, respectively, at a depth of approximately 840 metres below surface
  • Deepest yet gold mineralization discovered at more than 1.4 kilometres below surface. Remains open at depth and on strike
  • Exploration drilling from underground expected to begin in 2011

Goldex D Zone

  • Exploration beneath the Goldex mine confirms continuity of the large D zone suggesting a significant extension of the life of the Goldex mine
  • Style of mineralization, deposit size and grade are similar to the GEZ zone which is currently being mined
  • Results include 1.69 gpt over 216.0 metres in drill hole 76-006, and drill hole 76-008 which returned 1.88 gpt over 181.5 metres

Regional programs

  • Deep drilling at the Ellison property returned significant high-grade intercepts, confirming that the mineralization is an extension of IAMGOLD Corporation's Westwood deposit
  • Drill hole 114-10-16J intersected the interpreted Westwood horizon and returned 8.0 gpt gold with 0.11% copper over an estimated true width of 13.3 metres.

"As we move into an optimization and production expansion phase at our existing mines, we have also stepped up our exploration efforts at these assets with a 30% increase in our 2011 exploration budget to a record $145 million," said Sean Boyd, Vice Chairman and Chief Executive Officer. "This increased exploration is focused on the conversion of our large gold resource to reserves and on providing information on several growth opportunities currently being evaluated," added Mr. Boyd.

Meliadine Mine Project Continues to Yield High Grade Drill Results

The recently acquired Meliadine project, in Nunavut, Canada, represents a key component of the Company's resource position and its anticipated reserve growth. Since the July 2010 acquisition, $14 million has been spent primarily on resource conversion and resource exploration drilling (128 drill holes, 32,000 metres) near the current deposits and also regionally. The results of this program have been positive and are expected to result in significant conversion of resources into reserves at year end 2010. Additionally, the program yielded intercepts outside of the known resource envelopes that suggest a strong likelihood of further growth in resources and reserves going forward.

Results to date show strong intercepts from all tested zones, including Tiriganiaq, F and Wolf, as well as the discovery of a new gold zone at nearby Wesmeg (approximately 400 metres south of Tiriganiaq).

Initial results from the Company's regional prospecting program, within the 80 kilometre long Meliadine property, have also yielded encouraging results near the Felsic 1 showing area. This area is approximately 50 kilometres east of the main resource at Tiriganiaq.

The Meliadine property currently has 12.9 million tonnes of measured and indicated resources at 7.91 gpt gold (containing 3.3 million ounces gold) and 8.4 million tonnes of inferred resources at 6.42 gpt gold (containing 1.7 million ounces of gold).

Tiriganiaq

The Tiriganiaq zone is the focus of the Meliadine property, containing approximately 75% of the project's current gold resources. It strikes roughly east-west and remains open along strike and at depth.

Drilling at Tiriganiaq this year has accomplished three goals: it has confirmed the resources that had already been outlined, discovered additional gold mineralization at shallow, potentially open-pit, depths immediately adjacent to the current resources envelope, and has extended gold mineralization at depth to the west.

Significant Tiriganiaq September/October 2010 drill results

Since July, infill drilling at Tiriganiaq continued to target sectors of inferred resource for conversion to reserve at depths that are generally located between 200 metres to 500 metres below surface over much of the two kilometre strike length of the deposit.

These holes generally confirmed the presence of the high grade gold resource over significant thicknesses. For example, hole M-10-920, which intersected several closely spaced structures approximately 300 metres below surface, returned 7.98 gpt over 39.3 metres. In addition, approximately 200 metres to the west, hole M-10-989 also cut multiple structures, roughly 400 metres below surface, and returned 9.12 gpt over 17.9 metres, including 16.64 gpt over 7.4 metres. Hole M-10-916A, 180 metres farther west at 440 metres depth below surface, returned 15.14 gpt over 5.8 metres.

Exploration drilling at shallow depths continued to return high grade results from outside of the current resource envelope. For example, hole M-10-1001 on the west side of the deposit returned 8.62 gpt gold over 19.0 metres approximately 90 metres below surface, suggesting additional open pit potential.

Drilling at depth to test the western extent of the deposit intersected significant gold mineralization when hole M-10-940 returned 10.94 gpt gold over 7.0 metres at approximately 575 metres depth. Similarly, hole M-10-982 cut 2.69 gpt over 19.5 metres (including 5.33 gpt over 4.2 metres) in an interval almost 300 metres to the west of the current Tiriganiaq resource envelope. These holes have demonstrated that the Tiriganiaq deposit remains open on strike, as well as at depth.

Wesmeg Zone

A regional exploration program designed to follow up on gold occurrences 400 metres south of the main Tiriganiaq deposit has resulted in the discovery of the new Wesmeg zone, Meliadine's sixth gold deposit.  The seven drill holes completed in this area in 2010 found two, east-west mineralized trends (Wesmeg North and Wesmeg South) that are approximately 500 to 1000 metres in length, to date.

Selected Wesmeg zone 2010 drill results

The Wesmeg North trend includes two strong intercepts that trace it near surface for almost 500 metres in an east-west direction: hole M-10-987 returned 6.96 gpt gold over 11.3 metres while hole M-10-988 yielded 5.52 gpt gold over 17.4 metres. The Wesmeg South trend, located approximately 250 metres to the south, is currently defined by lower grade but thicker intercepts from holes M-10-981 and M-10-998, which are about 1,000 metres apart.

This system will be tested on strike and at depth in 2011 and the Company is expecting to establish a resource estimate by the end of next year.

F Zone and New F Zone East

About 2.5 kilometres southeast of Tiriganiaq, the F zone continues to yield encouraging intervals near surface and higher grades at depth, showing very good potential to increase resources. In addition, testing of a geophysical anomaly more than 650 metres east of the F zone resulted in the discovery of a new occurrence named "F Zone East".

Significant F zone and F Zone East drill results

Near surface, in the eastern portion of F zone, hole M-10-934 yielded 6.04 gpt gold over 7.9 metres outside of the current mineralized envelope. In testing for higher grade underground potential of the F zone, hole M-10-956, intersected 9.08 gpt over 3.7 metres at 275 metres depth.

Results from hole M-10-950 (4.8 gpt over 3.0 metres), more than 650 metres to the east of the known F zone deposit along the same trend, demonstrate new near-surface resource potential at F zone east.

The discovery of the Wesmeg zone and the latest results on the F zone are leading the Company to re-evaluate its development options on the Meliadine Property with respect to tonnage rates, mining methods, surface infrastructure while incorporating the latest results.

Wolf Zone - Yielding strong gold grades

About 2.5 kilometres west of Tiriganiaq, exploration of the Wolf North and Wolf Main deposits in 2010 targeted resource conversion and tested for extensions at depth.

Significant Wolf zone 2010 drill results

Drilling this fall has encountered the best grades found in the Wolf deposit to date. Near the western end of this zone, hole M-10-993 returned 5.55 gpt gold over 5.5 metres. Also holes M-10-971, M-10-976 and M-10-979 returned good results intercepts at approximately 125 metres below surface over a strike length of almost 500 metres.

Regional Reconnaissance Near Meliadine

A reconnaissance prospecting program was also undertaken to follow up several historic gold occurrences located throughout the large Meliadine property. This program discovered significant mineralization associated with the Felsic 1 occurrence, which is approximately 50 kilometres east of the Tiriganiaq deposit. This gold bearing structure is continuous along strike for several hundred metres. Partial sampling on surface returned 3.0 gpt gold over 6.2 metres.

Kittila Mine

The Company believes there is a strong potential to continue to increase the reserves and resources at its Kittila mine in northern Finland. Consequently, the Company budgeted more than $16 million in 2010 to drill the Suuri North and Roura Central zones in order to convert and expand the gold resources between 600 and 1,100 metres below surface. The results to date have been positive, suggesting a continuous underground resource. These results will be incorporated into a feasibility study that will investigate increasing the mining rate and plant throughput by at least 50% above the current 3,000 tonne per day design. The study is expected to be completed and reviewed in the third quarter of 2011.

To the end of October, overall exploration drilling has totaled almost 85,000 metres through 148 holes. This includes shallower drilling on strike to the north and to the south of the Kittila deposit, as well as conversion and exploration below the Suuri North and Roura Central sectors.

In 2011, the Company is planning a $15.6-million exploration program at Kittila that will include 56 kilometres of exploration and conversion drilling focused on the areas shown on the following longitudinal section. An exploration ramp, that is part of this program, will materially improve access for deep exploration and conversion drilling. The Company expects this to accelerate the definition of resources in this area and to facilitate additional exploration at depth.

Roura Central Zone

Since September, the focus of the Kittila exploration program has been to convert the resources below the Roura Central zone to reserves and to extend the resource envelope northward from its current limit, between 600 metres and 1,100 metres below surface. Results from this program have confirmed the presence of significant mineralization at this depth, extending the current resource outline almost 400 metres to the north.

Several holes have repeatedly intersected gold mineralization below Roura Central. In addition to previously reported hole ROU-09-002,  hole ROU-10-024 returned 6.42 gpt over 4.9 metres outside of the current resource envelope.

Holes ROU-10-026 and ROU-10-026B indicate that mineralization extends almost 400 metres farther north than the current resource envelope below Roura. Hole ROU-10-026 cut 3.98 gpt gold over 17.2 metres at a depth of almost 1,000 metres while hole ROU-10-026B cut two mineralized intervals grading 7.25 gpt over 10.0 metres and 6.46 gpt over 12.8 metres, respectively, at a depth of approximately 840 metres below surface.

This sector below Roura Central and Roura North will continue to be tested to estimate a new resource and convert a portion into reserve. The zone remains open to the north and at depth below Roura North.

Deep Exploration Program

Results of the exploration program below the depth of 1,300 metres in the Suuri and Roura zones show that the target horizon persists 300 metres and 450 metres below the current resource envelope. Results from the first drill hole of the deep program (ROU-10-029) returned two separate intervals, one at about 1,260 metres depth and the other at 1,415 metres depth. The results indicate the potential for ore nearby. Through the remainder of 2010 and into 2011, several widely spaced holes will continue to explore the region beneath Suuri and Roura.

Goldex D Zone

At the Goldex mine in the Abitibi region of Quebec, the Company is pursuing an aggressive exploration program with four drill rigs to define and extend the D zone, located approximately 150 metres below the current mine workings of the GEZ deposit. At the end of October, over 38,000 metres of exploration drilling had been completed through 109 holes.

Results, to date, have yielded several promising intersections with grades and thicknesses very similar to those encountered in the main orebody of the mine. In particular, the D zone mineralization has been traced within an approximate 400m x 400m x 100m shape, with numerous drill holes returning results with consistent grades over long intervals, as has been the experience with the Goldex orebody to date. This structure of the mineralization suggests a strong potential to materially increase the life of mine at Goldex.

Selected Goldex D Zone drill results

The D zone continues to return long gold intercepts, such as 1.69 gpt over 216.0 metres in hole 76-006, and hole 76-008 which returned 1.88 gpt over 181.5 metres. Many of the intersections are also comprised of relatively higher grade intervals. For example, within the broad intersection in holes 76-006 and 73-403, there are intervals grading 2 gpt to 3 gpt over 30 metres to 70 metres.

The most promising results are from what now appears to be the central part of D zone (section 6190E), where four holes (76-003, 76-008, 76-006 and 76-007) intersected mineralization with encouraging grades (between roughly 1 gpt and 2 gpt) and widths up to 100 metres over almost 400 metres vertically (between the depths of 910 metres and 1290 metres below surface).

Hole 73-402, which returned 1.34 gpt over 96.0 metres, and hole 76-007, which returned 0.92 gpt over 159 metres, are the deepest holes to intersect the D zone to date, cutting mineralization approximately 1300 metres below surface.

An initial inferred resource is expected by year end. In 2011, $5.7 million, including over 58,000 metres of diamond drilling has been budgeted for exploration and will principally target resource expansion for the D zone. Pending the results of a planned mining study in 2011, a reserve conversion program will also be considered.

Regional Exploration

Ellison Project

Current exploration results indicate that Iamgold Corporation's Westwood gold zone extends onto Agnico-Eagle's Ellison property at depth. Ellison is located immediately west of the Company's LaRonde and Bousquet properties in the Abitibi region of Quebec, and immediately east of Iamgold's Westwood gold project.

Drill hole 114-10-16J intersected the interpreted Westwood horizon at a depth of about 2,600 metres below the surface and returned 8.0 gpt gold with 0.11% copper over an estimated true width of 13.3 metres. Included in this intercept was a higher grade interval of 14.1 gpt gold and 0.16% copper over 7.0 metres. This intersection is roughly 120 metres above and to the east of hole 114-10-16G which was previously reported.

Ellison 2010 deep drill results, Westwood zone

There is significant potential to extend the mineralization to the east and possibly at shallower depths. A follow-up exploration program, is planned for Ellison in 2011 at a budget of $4.8 million, and will include 9,500 metres of drilling using two drill rigs.

Source: Agnico-Eagle Mines Limited

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