UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 20-F

o    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
ORý    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
ORo    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  to

ORo    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report

Commission file number: 1-13422

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AGNICO-EAGLE MINES LIMITED(Exact name of Registrants Specified in its Charter)

Not Applicable

(Translation of Registrant's Name or Organization)

Ontario, Canada

(Jurisdiction of Incorporation or Organization)

145 King Street East, Suite 500
Toronto, Ontario, M5C 2Y7

(Address of Principal Executive Offices)

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Securities registered or to be registered pursuant to Section 12(b) of the Act:

|Common Shares without par value(Title of Class) |  | The Toronto Stock Exchange and
the New York Stock Exchange(Name of exchange on which registered)
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------------

Securities registered or to be registered pursuant to Section 12(g) of the Act:

|Share Purchase Warrants(Title of Class) |  | The Toronto Stock Exchange and
the Nasdaq National Market(Name of exchange on which registered)
|--------------------------------------- |  | -----------------------------------------------------------------------------------------------

Securities for which this is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

97,836,954 Common Shares as of December 31, 2005

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes    ý            No        o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15(d) of the Securities Act.

Yes    o            No    ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements
for the past 90 days.

Yes    ý            No    o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one)

Large
Accelerated Filer ý        Accelerated Filer
o        Non-Accelerated Filer o

Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17    o            Item 18    ý

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act):

Yes    o            No    ý



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TABLE OF CONTENTS

|                                                             |                                                                        | Page                                                                                  |    
|------------------------------------------------------------ | ---------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ---
|PRELIMINARY NOTE                                             |                                                                        | 1                                                                                     |    
|NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESOURCES  |                                                                        | 2                                                                                     |    
|                                                             |                                                                        | Cautionary Note to Investors concerning estimates of Measured and Indicated Resources |    
|                                                             |                                                                        | Cautionary Note to Investors concerning estimates of Inferred Resources               |    
|NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE |                                                                        | 2                                                                                     |    
|                                                             | ITEM 1.      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS     |                                                                                       | 2  
|                                                             | ITEM 2.      OFFER STATISTICS AND EXPECTED TIMETABLE                   |                                                                                       | 2  
|                                                             | ITEM 3.      KEY INFORMATION                                           |                                                                                       | 2  
|                                                             |                                                                        | Selected Financial Data                                                               |    
|                                                             |                                                                        | Currency Exchange Rates                                                               |    
|                                                             |                                                                        | Risk Factors                                                                          |    
|                                                             | ITEM 4.      INFORMATION ON THE COMPANY                                |                                                                                       | 10 
|                                                             |                                                                        | History and Development of the Company                                                |    
|                                                             |                                                                        | Business Overview                                                                     |    
|                                                             |                                                                        | Mining Legislation and Regulation                                                     |    
|                                                             |                                                                        | Organizational Structure                                                              |    
|                                                             |                                                                        | Property, Plant and Equipment                                                         |    
|                                                             | ITEM 4A.    UNRESOLVED STAFF COMMENTS                                  |                                                                                       | 48 
|                                                             | ITEM 5.      OPERATING AND FINANCIAL REVIEW AND PROSPECTS              |                                                                                       | 48 
|                                                             | ITEM 6.      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                |                                                                                       | 72 
|                                                             | ITEM 7.      MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS         |                                                                                       | 89 
|                                                             |                                                                        | Major Shareholders                                                                    |    
|                                                             |                                                                        | Related Party Transactions                                                            |    
|                                                             | ITEM 8.      FINANCIAL INFORMATION                                     |                                                                                       | 90 
|                                                             | ITEM 9.      THE OFFER AND LISTING                                     |                                                                                       | 90 
|                                                             |                                                                        | Market and Listing Details                                                            |    
|                                                             | ITEM 10.    ADDITIONAL INFORMATION                                     |                                                                                       | 92 
|                                                             |                                                                        | Memorandum and Articles of Incorporation                                              |    
|                                                             |                                                                        | Disclosure of Share Ownership                                                         |    
|                                                             |                                                                        | Material Contracts                                                                    |    
|                                                             |                                                                        | Exchange Controls                                                                     |    
|                                                             |                                                                        | Restrictions on Share Ownership by Non-Canadians                                      |    
|                                                             |                                                                        | Canadian Federal Income Tax Considerations                                            |    
|                                                             |                                                                        | United States Federal Income Tax Considerations                                       |    
|                                                             |                                                                        | Audit Fees                                                                            |    
|                                                             |                                                                        | Documents on Display                                                                  |    
|                                                             | ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |                                                                                       | 100
|                                                             |                                                                        | Metal Price and Foreign Currency                                                      |    
|                                                             |                                                                        | Interest Rate                                                                         |    
|                                                             |                                                                        | Derivatives                                                                           |    

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| |                                                                                          | Page |    
| | ---------------------------------------------------------------------------------------- | ---- | ---
| | ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |      | 102
| | ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |      | 102
| | ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |      | 102
| | ITEM 15.    CONTROLS AND PROCEDURES                                                      |      | 102
| | ITEM 16A.    AUDIT COMMITTEE FINANCIAL EXPERT                                            |      | 103
| | ITEM 16B.    CODE OF ETHICS                                                              |      | 103
| | ITEM 16C.    PRINCIPAL ACCOUNTANT FEES AND SERVICES                                      |      | 103
| | ITEM 16D.    EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                  |      | 103
| | ITEM 16E.    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      |      | 103
| | ITEM 17.    RESERVED                                                                     |      | 103
| | ITEM 18.    FINANCIAL STATEMENTS                                                         |      | 103
| | ITEM 19.    EXHIBITS                                                                     |      | 138

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PRELIMINARY NOTE

Currencies:Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") presents its consolidated
financial statements in United States dollars. All dollar amounts in this Form 20-F are stated in United States dollars ("US dollars", "$", or "US$"), except
where otherwise indicated. Certain information in this Form 20-F is presented in Canadian dollars ("C$"). See "Item 3: Key
Information  Selected Financial Data  Currency Exchange Rates" for a history of exchange rates of Canadian dollars into US
dollars.

Generally Accepted Accounting Principles:Effective January 1, 2002, Agnico-Eagle changed its
primary basis of financial reporting from Canadian generally accepted accounting principles ("Canadian GAAP") to United States generally accepted accounting principles ("US GAAP") due to
its substantial U.S. shareholder base and to maintain comparability with other gold mining companies. All references to financial results herein are to those calculated under US GAAP.

Forward-Looking Information:Certain statements in this report constitute "forward-looking
statements": within the meaning of the United States Private Securities Litigation Reform Act of 1995 and provisions of Canadian provincial securities laws. These forward-looking statements
relate to, among other things, our plans, objectives, expectations, estimates, beliefs, strategies and intentions and can generally be identified by the use of words such as "may", "will", "should",
"could", "would", "expects", "anticipates", "believes", "plans", "intends", or other variations of these terms or comparable terminology. Forward-looking statements in this report include, but are not
limited to, the following:



Such
forward-looking statements reflect the Company's views as at the date of this Form 20-F and involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the Company or industry results, to be materially different from any future results, performance, or achievements expressed
or implied by such forward-looking statements. Such factors include, among others, the Risk Factors set forth in "Item 3. Key Information  Risk Factors".
Given these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, the Company
expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events,
conditions or circumstances on which any such statement is based.

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NOTE TO INVESTORS CONCERNING ESTIMATES OF MINERAL RESOURCES

Cautionary Note to Investors concerning estimates of Measured and Indicated Resources



Cautionary Note to Investors concerning estimates of Inferred Resources



NOTE TO INVESTORS CONCERNING CERTAIN MEASURES OF PERFORMANCE

This document presents certain measures, including "total cash cost per ounce" and "minesite cost per tonne", that are not recognized measures under US GAAP. This
data may not be comparable to data presented by other gold producers. For a reconciliation of these measures to the closest measures recognized under US GAAP see "Item 5. Operating and
Financial Review and Prospects  Results of Operations  Production Costs". The Company believes that these generally
accepted industry measures are realistic indicators of operating performance and useful in allowing year over year comparisons. However, both of these non-GAAP measures should be
considered together with other data prepared in accordance with US GAAP, and these measures, taken by themselves, are not necessarily indicative of operating costs or cash flow measures prepared in
accordance with US GAAP.

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Pursuant to the instructions to Item 1 of Form 20-F, this information has not been provided.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.    KEY INFORMATION

Selected Financial Data

The following selected financial data for each of the years in the five-year period ended December 31, 2005 are derived from the consolidated
financial statements of Agnico-Eagle audited by Ernst & Young LLP. The selected financial data should be read in conjunction with the Company's operating and financial review and
prospects set out in Item 5 of this Form 20-F, the consolidated
financial statements and the notes thereto set out in Item 18 of this Form 20-F and other financial information included elsewhere in this
Form 20-F.

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|                                                                          |  | Year Ended December 31, |  
|------------------------------------------------------------------------- |  | ----------------------- | -
|
|
|Income Statement Data                                                     |  |                         |  
|Revenues from mining operations                                           |  | 241,338                 |  
|Interest and sundry income                                                |  | 4,996                   |  
|                                                                          |  |                         |  
|                                                                          |  | 246,334                 |  
|                                                                          |  |                         |  
|Production costs                                                          |  | 127,365                 |  
|Loss on derivative financial instruments                                  |  | 15,396                  |  
|Exploration and corporate development                                     |  | 16,581                  |  
|Equity loss in junior exploration company                                 |  | 2,899                   |  
|Amortization                                                              |  | 26,062                  |  
|General and administrative                                                |  | 11,727                  |  
|Provincial capital tax                                                    |  | 1,352                   |  
|Interest                                                                  |  | 7,813                   |  
|Foreign exchange (gain) loss                                              |  | 1,860                   |  
|                                                                          |  |                         |  
|Income (loss) before income and mining taxes (recoveries)                 |  | 35,279                  |  
|Income and mining taxes (recoveries)                                      |  | (1,715                  | )
|                                                                          |  |                         |  
|Income before cumulative catch-up adjustment                              |  | 36,994                  |  
|Cumulative catch-up adjustment related to asset retirement obligations    |  |                        |  
|                                                                          |  |                         |  
|Net income (loss)                                                         |  | 36,994                  |  
|                                                                          |  |                         |  
|Net income (loss) before cumulative catch-up adjustment per share  basic |  | 0.42                    |  
|                                                                          |  |                         |  
|Net income (loss) per share  basic and diluted                           |  | 0.42                    |  
|                                                                          |  |                         |  
|Weighted average number of shares outstanding  basic                     |  | 89,029,754              |  
|Weighted average number of shares outstanding  diluted                   |  | 89,512,799              |  
|Total common shares outstanding                                           |  | 97,836,954              |  
|Dividends declared per common share                                       |  | 0.03                    |  
|Balance Sheet Data (at end of period)                                     |  |                         |  
|Mining properties (net)                                                   |  | 661,196                 |  
|Total assets                                                              |  | 976,069                 |  
|Long-term debt                                                            |  | 131,056                 |  
|Reclamation provision and other liabilities                               |  | 16,220                  |  
|Shareholders' equity                                                      |  | 655,067                 |  

Currency Exchange Rates

All dollar amounts in this Form 20-F are in United States dollars, except where otherwise indicated. The following tables present, in
Canadian dollars, the exchange rates for the US dollar, based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal

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Reserve
Bank of New York (the "Noon Buying Rate"). On March 20, 2006, the Noon Buying Rate was US$1.00 equals C$1.1627.

|              |  | Year Ended December 31,
|------------- |  | -----------------------
|
|High          |  | 1.2703                 
|Low           |  | 1.1507                 
|End of Period |  | 1.1656                 
|Average       |  | 1.2115                 

|
|

|              |  | 2006   |  | 2005  
|------------- |  | ------ |  | ------
|
|High          |  | 1.1577 |  | 1.1726
|Low           |  | 1.1379 |  | 1.1436
|End of Period |  | 1.1379 |  | 1.1436
|Average       |  | 1.1489 |  | 1.1572

Risk Factors

Dependence on the LaRonde Division

The Company's mining and milling operations at the LaRonde Division account for all of the Company's gold production and will continue to account for all of its
gold production in the future unless additional properties are acquired or brought into production. Any adverse condition affecting mining or milling at the LaRonde Division could be expected to have
a material adverse effect on the Company's financial performance and results of operations until such time as the condition is remedied. In addition, the Company's ongoing development of the LaRonde
Mine involves the exploration and extraction of ore from new areas and may present new or different challenges for the Company. Based on current infrastructure, the LaRonde Mine has an estimated mine
life of approximately seven years; however gold production at the LaRonde Mine is expected to begin to decline commencing in 2008. Unless the Company can successfully bring into production the
Goldex property, the LaRonde II project, the Lapa property, the Suurikuusikko property, the Pinos Altos property or its other exploration properties or otherwise acquire gold producing assets
prior to 2008, the Company's results of operations will be adversely affected. There can be no assurance that the Company's current exploration and development programs at the LaRonde Division will
result in any new economically viable mining operations or yield new mineral reserves to replace and expand current mineral reserves.

Metal Price Volatility

The Company's earnings are directly related to commodity prices as revenues are derived from precious metals (gold and silver), zinc and copper. The Company's
policy and practice is not to sell forward its future gold production; however, under the Company's Price Risk Management Policy, approved by its Board of Directors, the Company may review this
practice on a project by project basis, making use of derivative instruments where appropriate to ensure an adequate return to shareholders on new projects. See "Item 11. Quantitative and
Qualitative Disclosures About Market Risk  Derivatives" for more details of the Company's use of derivative instruments. Gold prices fluctuate widely and are
affected by numerous factors beyond the Company's control, including central bank sales, producer hedging activities, expectations of inflation, the relative exchange rate of the US dollar with other
major currencies, global and regional demand and political and economic conditions, and production costs in major gold producing regions. The aggregate effect of these factors is impossible to predict
with accuracy. Gold prices are also affected by worldwide production levels. In addition, the price of gold has on occasion been subject to very rapid short-term changes because of
speculative activities. Fluctuations in gold prices may adversely affect the Company's financial performance or results of operations. If the market price of gold falls below the Company's total cash
costs and remains at such a level for any sustained period, the Company may experience losses and may curtail or suspend some or all of its exploration, development and mining activities. The prices
received for the Company's byproducts (zinc, silver and copper) affect the Company's ability to meet its targets for total cash cost per ounce of gold produced. Byproduct prices fluctuate

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widely
and are affected by numerous factors beyond the Company's control. The Company occasionally uses derivative instruments to mitigate the effects of fluctuating byproduct metal prices.

The
volatility of gold prices is illustrated in the following table which sets forth, for the periods indicated, the high and low afternoon fixing prices for gold on the London Bullion
Market (the "London P.M. Fix") and the average gold prices received by the Company.

|                                     |  | 2005 |  | 2004 |  | 2003 |  | 2002 |  | 2001
|------------------------------------ |  | ---- |  | ---- |  | ---- |  | ---- |  | ----
|High price ($ per ounce)             |  | 538  |  | 454  |  | 417  |  | 350  |  | 293 
|Low price ($ per ounce)              |  | 411  |  | 375  |  | 323  |  | 278  |  | 256 
|Average price received ($ per ounce) |  | 449  |  | 418  |  | 368  |  | 312  |  | 273 

On
March 20, 2006, the London P.M. Fix was $555.75 per ounce of gold.

Based
on 2006 production estimates, the approximate sensitivities of the Company's after-tax income to a 10% change in metal prices from 2005 market average prices are as
follows:

|       |  | Income per share
|------ |  | ----------------
|Gold   |  | $               
|Zinc   |  | $               
|Silver |  | $               
|Copper |  | $               

Sensitivities
of the Company's after-tax income to changes in metal prices will increase with increased production.

Recent Losses

Although the Company reported net income for the years ended December 31, 2004 and 2005, it incurred net losses in 2003 and in each of the five years prior
to 2002. For a discussion of the factors contributing to the financial performance of the Company, see "Item 5. Operating and Financial Review and Prospects". The Company's profitability
depends on the price of gold, gold production, total cash costs, the prices and production levels of byproduct zinc, silver and copper and other factors discussed in this section of the
Form 20-F. Substantially all of these factors are beyond the Company's control and there can be no assurance that the Company will sustain profitability in the future.

Uncertainty of Production Estimates

The Company's gold production may fall below estimated levels as a result of mining accidents such as cave-ins, rock falls, rock bursts, fires or
flooding. In addition, production may be unexpectedly reduced if, during the course of mining, unfavourable ground conditions or seismic activity are encountered, ore grades are lower than expected,
or the physical or metallurgical characteristics of the ore are less amenable than expected to mining or treatment. Accordingly, there can be no assurance that the Company will achieve current or
future production estimates.

A
rock fall that occurred in two production stopes during the first quarter of 2003 led to an initial 20% reduction in the Company's 2003 gold production estimate from
375,000 ounces to 300,000 ounces. Production drilling challenges and lower than planned recoveries in the mill in the third quarter of 2003 led to a further reduction in the production
estimate by 21%. Final gold production in 2003 was 236,653 ounces. In 2004, higher than expected dilution in lower levels of the mine led to actual gold production for the year of
271,567 ounces, below the initial production estimate of 308,000 ounces. In the first quarter of 2005, increased stress levels in the sill pillar area below Level 194 required
three production sublevels to be closed for rehabilitation for a period of six weeks. Production from these sublevels was delayed and replaced by ore extracted from the upper levels of the mine that
have relatively lower gold content. The lower gold content of this ore, together with higher than budgeted dilution, resulted in actual gold production in 2005 being 241,807 ounces,
approximately 38,000 ounces less than the Company's original forecast of 2005 production of 280,000 ounces.

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Financing of Additional Capital Requirements

The exploration and development of the Company's properties, including continuing exploration and development projects in the Abitibi region of Quebec and the
recently acquired Suurikuusikko project in Finland and Pinos Altos project in Mexico and the construction of mining facilities and commencement of mining operations at the Goldex property will require
substantial capital expenditure. In addition, the Company will have further capital requirements to the extent it decides to expand its present operations and exploration activities or construct new
mining and processing operations at any of its properties or take advantage of opportunities for acquisitions, joint ventures or other business opportunities that may arise. Also, the Company may
incur major unanticipated expenses related to exploration, development or mine construction or maintenance on its properties. Failure to obtain any financing necessary for the Company's capital
expenditure plans may result in a delay or indefinite postponement of exploration, development or production on any or all of the Company's properties. Historically, the Company has financed its
expenditures through a combination of offerings of equity and debt securities, bank borrowing and cash flow generated from operations at the LaRonde Mine and the Company expects to use such sources of
funds to finance its anticipated expenditures. However, additional financing may not be available when needed or if available, the terms of such financing may not be favourable to the Company and, if
raised by offering equity securities, any additional financing may involve substantial dilution to existing shareholders. Failure to raise capital when needed or on reasonable terms may have a
material adverse effect on the Company's business, financial condition and results of operations.

Cost of Exploration and Development Programs

The Company's profitability is significantly affected by the costs and results of its exploration and development programs. As mines have limited lives based on
proven and probable mineral reserves, the Company actively seeks to replace and expand its reserves, through exploration and development and, from time to time, through strategic acquisitions.
Exploration for minerals is highly speculative in nature, involves many risks and frequently is unsuccessful. Among the many uncertainties inherent in any gold exploration and development program are
the location of economic ore bodies, the development of appropriate
metallurgical processes, the receipt of necessary governmental permits and the construction of mining and processing facilities. In addition, substantial expenditures are required to pursue such
exploration and development activities. Assuming discovery of an economic ore body, depending on the type of mining operation involved, several years may elapse from the initial phases of drilling
until commercial operations are commenced and during such time the economic feasibility of production may change. Accordingly, there can be no assurance that the Company's current exploration and
development programs will result in any new economically viable mining operations or yield new reserves to replace and expand current reserves.

Total Cash Costs of Gold Production at the LaRonde Mine

The Company's total cash costs to produce an ounce of gold are dependent on a number of factors, including primarily the prices and production levels of byproduct
silver, zinc and copper, the revenue from which is offset against the cost of gold production, the Canadian dollar/US dollar exchange rate, smelting and refining charges and production royalties,
which are affected by all of these factors and the gold price. All these factors are beyond the Company's control.

Total
cash cost per ounce is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. Management uses this generally accepted
industry measure in evaluating operating performance and believes it to be a realistic indication of such performance and useful in allowing year over year comparisons. The data also indicates the
Company's ability to generate cash flow and operating income at various gold prices. This additional information should be considered together with other data prepared in accordance with US GAAP and
is not necessarily indicative of operating costs or cash flow measures prepared in accordance with US GAAP. See "Item 5. Operating and Financial Review and
Prospects  Results of Operations  Production Costs" for reconciliation of total cash costs per ounce and minesite costs
per tonne to their closest US GAAP measure.

Risks of Acquisitions

The Company regularly evaluates opportunities to acquire shares or assets of other mining businesses. Such acquisitions may be significant in size, may change the
scale of the Company's business, and may expose the

6

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Company
to new geographic, political, operating, financial or geological risks. The Company's success in its acquisition activities depends on its ability to identify suitable acquisition candidates,
acquire them on acceptable terms and integrate their operations successfully with those of the Company. Any acquisitions would be accompanied by risks, such as the difficulty of assimilating the
operations and personnel of any acquired businesses; the potential disruption of the Company's ongoing business; the inability of management to maximize the financial and strategic position of the
Company through the successful integration of acquired assets and businesses; the maintenance of uniform standards, controls, procedures and policies; the impairment of relationships with employees,
customers and contractors as a result of any integration of new management personnel; and the potential unknown liabilities associated with acquired assets and businesses. In addition, the Company may
need additional capital to finance an acquisition. Debt financing related to any acquisition may expose the Company to increased risk of leverage, while equity financing may cause existing
shareholders to suffer dilution. The Company is permitted under the terms of its recently amended bank credit facility to raise additional debt financing provided that it complies with certain
covenants including that no default under the credit facility has occurred and is continuing, the terms of such indebtedness are no more onerous to the Company than those under the credit facility and
the incurrence of such indebtedness would not result in a material adverse change in respect of the Company, the LaRonde Mine or the Goldex mine project. There can be no assurance that the Company
would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.

Foreign Operations

The Company's operations have recently been expanded to include advanced exploration projects in Finland and northern Mexico. These operations are exposed to
various levels of political, economic and other risks and uncertainties that are different from those encountered at the Company's current operation base in Canada. These risks and uncertainties vary
from country to country and include, but are not limited to, extreme fluctuations in currency exchange rates; high rates of inflation; labour unrest; the risks of war or civil unrest; expropriation
and nationalization; renegotiation or nullification of existing concessions, licences, permits and contracts; illegal mining; corruption; changes in taxation policies; restrictions on foreign exchange
and repatriation; hostage taking; and changing political conditions, currency controls and governmental regulations that favour or require the awarding of contracts to local contractors or require
foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. In addition, the Company will have to comply with multiple and potentially conflicting regulations in
Canada, the United States, Europe and Mexico, including export requirements, taxes, tariffs, import duties and other trade barriers, as well as health and safety requirements.

Changes,
if any, in mining or investment policies or shifts in political attitude in Finland or Mexico may adversely affect the Company's operations or profitability. Operations may be
affected in varying degrees by
government regulations with respect to matters including restrictions on production, price controls, export controls, currency remittance, income and other taxes, expropriation of property, foreign
investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local
practices relating to mineral right applications and tenure could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture
partners with carried or other interests.

In
addition, the Company has no significant operating experience in Finland, Mexico or internationally. While the Company believes Finland and Mexico to be generally supportive of mining
activity, these countries operate under significantly different laws and regulations and there exist cultural and language differences between these countries and Canada. Also, the Company will face
challenges inherent in efficiently managing an increased number of employees over large geographical distances, including the challenges of staffing and managing operations in multiple locations and
implementing appropriate systems, policies, benefits and compliance programs. These challenges may divert management's attention to the detriment of its operations in the Abitibi region of Quebec.
There can be no assurance that difficulties associated with the Company's expanded foreign operations can be successfully managed.

7

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Restrictions in the Bank Credit Facility

The Company's recently amended $150 million revolving bank credit facility limits, among other things, the Company's ability to incur additional
indebtedness, pay dividends or make payments in respect of its common shares, make investments or loans, transfer the Company's assets, or make expenditures relating to property secured under the
credit agreement that are inconsistent with the mine plan and operating budget delivered pursuant to the credit facility. Further, the bank credit facility requires the Company to maintain specified
financial ratios and meet financial condition covenants. Events beyond the Company's control, including changes in general economic and business conditions, may affect the Company's ability to satisfy
these covenants, which could result in a default under the bank credit facility. While there are currently no amounts of principal or interest owing under the bank credit facility, if an event of
default under the bank credit facility occurs, the Company would be unable to draw down on the facility, or if amounts were drawn down at the time of the default, the lenders could elect to declare
all principal amounts outstanding thereunder at such time, together with accrued interest, to be immediately due and payable and to enforce their security interest over substantially all property
relating to the LaRonde Mine, the El Coco property and the Goldex mine project. An event of default under the bank credit facility may also give rise to an event of default under existing and
future debt agreements and, in such event, the Company may not have sufficient funds to repay amounts owing under such agreements.

Competition for and Scarcity of Mineral Lands

Many companies and individuals are engaged in the mining business, including large, established mining companies with substantial capabilities and long earnings
records. There is a limited supply of desirable
mineral lands available for claim staking, lease or other acquisition in the areas where the Company contemplates conducting exploration activities. The Company may be at a competitive disadvantage in
acquiring mining properties, as it must compete with these individuals and companies, many of which have greater financial resources and larger technical staffs than the Company. Accordingly, there
can be no assurance that the Company will be able to compete successfully for new mining properties.

Uncertainty of Mineral Reserve and Mineral Resource Estimates

The figures for mineral reserves and mineral resource presented herein are estimates, and no assurance can be given that the anticipated tonnages and grades will
be achieved or that the indicated level of recovery of gold will be realized. The ore grade actually recovered by the Company may differ from the estimated grades of the mineral reserves and mineral
resource. Such figures have been determined based on assumed gold prices and operating costs. The Company has estimated proven and probable mineral reserves based on a $405 per ounce gold price, which
is the three-year average daily price. Gold prices have generally been above $405 per ounce since the beginning of 2004, however for the five years prior to that the market price of gold
was generally below $405 per ounce. Based on the metals price and exchange rate assumptions used in the Company's 2006 production estimates, a 10% decrease in the gold price would result in an
approximately 5% decrease on average in proven and probable gold reserves. Prolonged declines in the market price of gold may render mineral reserves containing relatively lower grades of gold
mineralization uneconomic to exploit and could materially reduce the Company's reserves. Should such reductions occur, the Company could be required to take a material write-down of its
investment in mining properties or delay or discontinue production or the development of new projects, resulting in increased net losses and reduced cash flow. Market price fluctuations of gold, as
well as increased production costs or reduced recovery rates, may render mineral reserves containing relatively lower grades of mineralization uneconomical to recover and may ultimately result in a
restatement of mineral resources. Short-term factors relating to mineral reserves, such as the need for orderly development of ore bodies or the processing of new or different grades, may
impair the profitability of a mine in any particular accounting period.

Mineral
resource estimates for properties that have not commenced production are based, in most instances, on very limited and widely spaced drill hole information, which is not
necessarily indicative of conditions between and around the drill holes. Accordingly, such mineral resource estimates may require revision as more drilling information becomes available or as actual
production experience is gained. See "Note to Investors Regarding Estimates of Mineral Resources".

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Mining Risks and Insurance

The business of gold mining is generally subject to certain types of risks and hazards, including environmental hazards, industrial accidents, unusual or
unexpected rock formations, changes in the regulatory environment, cave-ins, rock bursts, rock falls and flooding and gold bullion losses.
Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and
possible legal liability. The Company carries insurance to protect itself against certain risks of mining and processing in amounts that it considers to be adequate but which may not provide adequate
coverage in certain unforeseen circumstances. The Company may also become subject to liability for pollution, cave-ins or other hazards against which it cannot insure or against which it
may elect not to insure because of high premium costs or other reasons or the Company may become subject to liabilities which exceed policy limits. In such case, the Company may be required to incur
significant costs that could have a material adverse effect on its financial performance and results of operations.

In
the first quarter of 2004, two accidents claimed the lives of an employee and a contract miner. Quebec's Commission de la santé et de la
sécurité du travail completed an investigation into these accidents, and the Company paid fines totalling C$27,500 in respect of these accidents. In January 2005,
an accident claimed the life of an employee. The Commission de la santé et de la sécurité du travail has ruled that the accident was due to human error,
and the Company expects no fines or further sanctions in respect of this accident.

Laws and Regulations

The Company's mining and mineral processing operations and exploration activities are subject to the laws and regulations of federal, provincial, state and local
governments in the jurisdictions in which the Company operates. These laws and regulations are extensive and govern prospecting, development, production, exports, taxes, labour standards, occupational
health and safety, waste disposal, toxic substances, environmental protection, mine safety and other matters. Compliance with such laws and regulations increases the costs of planning, designing,
drilling, developing, constructing, operating, closing, reclaiming and rehabilitating mines and other facilities. Amendments to current laws and regulations governing operations and activities of
mining companies or more stringent implementation or interpretation thereof could have a material adverse impact on the Company, cause a reduction in levels of production and delay or prevent the
development of new mining properties.

In
January 2003, the Company received a notice of infraction from the Quebec Ministry of the Environment in connection with a controlled discharge of water of excess toxicity,
which was carried out over a three-month period in the summer of 2002. The purpose of the discharge was to establish favourable construction conditions for the increase of tailings pond capacity in
the autumn of 2002. No fine was payable in respect of the notice of infraction, however, the notice required production of a report detailing the causes of algae proliferation at the LaRonde Mine,
which was delivered in 2003. In March 2005, the Company received a further notice of infraction in connection with a controlled discharge made under a federal transitional discharge permit
during the third and fourth quarters of 2004. In September 2005, the Company received a notice of infraction relating to excess daphnia toxicity and exceeding the permitted average monthly
concentration of suspended solids in the polishing pond. The Ministry has indicated that no fines or other sanctions will be imposed on the Company in connection with these notices of infraction.

Under
mine closure plans submitted to, and accepted by, the Minister of Natural Resources in Quebec (the "MNR"), the estimated reclamation costs for the LaRonde Division and the
Bousquet property are approximately $18 million and $3 million respectively. Every five years mine closure plans must be amended to reflect any changes in circumstances surrounding a
property and resubmitted to the MNR. These amended reclamation plans are subject to approval by the MNR and there can be no assurance that the MNR will not
impose additional reclamation obligations with attendant higher costs. In addition, the MNR may require that the Company provide financial assurances to support such plans. At December 31,
2005, the Company had an asset retirement obligation of $12.6 million, with $6.4 million allocated for the LaRonde Division and $6.2 million allocated for Bousquet.

Prior
to January 1, 2003, reclamation costs were accrued on an undiscounted unit-of-production basis, using proven and probable reserves as the base. On
this basis, the Company recorded its annual reclamation provision for the LaRonde Division at approximately $5 per ounce of gold produced. Effective January 1, 2003, the

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Company
adopted the provisions of Financial Accounting Standards Board Statement No. 143 relating to asset retirement obligations, which applies to long-lived assets such as mines.
This standard requires companies to recognize the present value of reclamation costs as a liability in the period in which the legal obligation is incurred. The application of the new provisions
resulted in the Company recording a one-time, net of tax, non-cash charge of $1.7 million on January 1, 2003 reflecting the cumulative effect of adopting this
standard.

Currency Fluctuations

The Company's operating results and cash flow are significantly affected by changes in the Canadian dollar/US dollar exchange rate. Exchange rate movements can
have a significant impact as all of the Company's revenues are earned in US dollars but most of its operating and capital costs are in Canadian dollars. The Canadian dollar/US dollar exchange rate has
varied significantly over the last several years. During the period from January 1, 2001 to December 31, 2005, the Noon Buying Rate fluctuated from a high of C$1.6128 per $1.00 to
a low of C$1.1507 per $1.00. Historical fluctuations in the Canadian dollar/US dollar exchange rate are not necessarily indicative of future exchange rate fluctuations. Based on the Company's
anticipated 2006 after-tax operating results, a 10% change in the average annual Canadian dollar/US dollar exchange rate would affect net income by approximately $0.09 per share. To
mitigate its foreign exchange risk and minimize the impact of exchange rate movements on operating results and cash flow, the Company has periodically used foreign currency options and forward foreign
exchange contracts to purchase Canadian dollars. In addition, the Company's expenditures at the Suurikuusikko project and the Pinos Altos project will be denominated in Euros and Mexican Pesos,
respectively. Each of these currencies has varied significantly against the US dollar over the past several years. There can be no assurance that the Company's foreign exchange derivatives strategies
will be successful or that foreign exchange fluctuations will not materially adversely affect the Company's financial performance and results of operations.

Interest Rate Fluctuations

Fluctuations in interest rates can affect the Company's results of operations and cash flows. While the Company's recently redeemed 4.50% convertible subordinated
debentures due 2012 were issued at a fixed
rate of interest (though swapped for variable rate payments), the Company's bank debt and cash balances are subject to variable interest rates and thus are subject to risks inherent with interest rate
fluctuations.

Potential Unenforceability of Civil Liabilities and Judgments in the United States

The Company is incorporated under the laws of the Province of Ontario, Canada. All but one of the Company's directors and officers and certain of the experts
named in this Form 20-F are residents of countries other than the United States. Also, almost all of the Company's assets and the assets of these persons are located outside of the
United States. As a result, it may be difficult for shareholders to initiate a lawsuit within the United States against these non-United States residents, or to
enforce judgments in the United States against the Company or these persons that are obtained in a United States court. The Company's Canadian counsel has advised the Company that a
monetary judgment of a U.S. court predicated solely upon the civil liability provisions of U.S. federal securities laws would likely be enforceable in Canada if the U.S. court in
which the judgment was obtained had a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes. The Company cannot assure you that this will be the case. It is
less certain that an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such laws.

ITEM 4.    INFORMATION ON THE COMPANY

History and Development of the Company

The Company is an established Canadian gold producer with mining operations located in northwestern Quebec and exploration and development activities in Canada,
Finland, the western United States and Northern Mexico. The Company's operating history includes over three decades of continuous gold production primarily from underground operations. Since
its formation in 1972, the Company has produced over 3.9 million ounces of gold. For a definition of terms used in the following discussion, see " Property, Plant and
Equipment  Mineral Reserve and Mineral Resource".

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The
Company believes it is currently one of the lowest total cash cost producers in the North American gold mining industry. In 2005, the Company produced 241,807 ounces of gold
at a total cash cost of $43 per ounce, net of revenues received from the sale of silver, zinc and copper byproducts. For 2006, the Company expects total cash costs per ounce of gold produced to be
approximately $50. These expected higher costs
compared to 2005 are due to lower assumed byproduct metals prices than those realized in 2005 and a reduction in the contribution of foreign exchange hedging activities. See "Note to Investors
Concerning Certain Measures of Performance" for a discussion of the use of the non-US GAAP measure total cash costs per ounce. The Company has traditionally sold all of its production at the
spot price of gold due to its general policy not to sell forward its future gold production.

The
Company's strategy is to focus on the continued exploration, development and expansion of its properties in the Abitibi region of Quebec in which the LaRonde Mine, the Goldex mine
project and the Lapa property are situated, with a view to increasing annual gold production and gold mineral reserve. In addition, the Company will continue exploration and development at its
recently acquired Suurikuusikko property in northern Finland and at the Pinos Altos project in northern Mexico. The Company also plans to pursue opportunities for growth in gold production and gold
reserves through the acquisition or development of advanced exploration properties, development properties, producing properties and other mining businesses in the Americas or Europe.

The
Company's principal operating divisions are the LaRonde Division, the Goldex Division, the Regional Division and the Exploration Division. The LaRonde Division consists of the
LaRonde Mine and the adjacent El Coco and Terrex properties, each of which is 100% owned and operated by the Company. The LaRonde Mine, with its single production shaft (the "Penna
Shaft"), currently accounts for all of the Company's gold production. Since the commissioning of the mill in 1988, the LaRonde Division has produced almost 2.9 million ounces of gold. In
March 2000, the Company completed the Penna Shaft at the LaRonde Mine to a depth of 2,250 metres, which the Company believes makes it the deepest single-lift shaft in the
Western Hemisphere. Production was expanded at the LaRonde Mine to 6,350 tonnes of ore treated per day in October 2002 and the milling complex has been operating well above this level
for the last two years. An extensive surface and underground exploratory drilling program to delineate additional mineral reserve began in 1990 and is continuing. The program successfully outlined
several ore zones and a large mineral resource to the east of what was, at the time, the main production shaft. As at December 31, 2005, the LaRonde Division (including the project at LaRonde
to access the Company's mineral reserve base located outside the Penna Shaft infrastructure (the "LaRonde II" project)) had established proven and probable mineral reserves of
approximately 5.3 million ounces of contained gold.

The
Company's Goldex Division is focused on the construction and development of the Goldex deposit.

The
Company's Regional Division conducts all mining activities in northwestern Quebec, including the development and management of the Company's advanced projects in the Abitibi region
other than the LaRonde Mine, but including the LaRonde II project. The Regional Division is also responsible for the Company's operations in respect of the Lapa, Bousquet and Ellison
projects and supplies technical services for the Company's international projects.

The
Company's Exploration Division focuses primarily on the identification of new mineral reserve, mineral resource and development opportunities in the proven producing regions of
Canada, with a particular emphasis on northwestern Quebec. The Company currently directly manages exploration on 68 properties in central and eastern Canada and 13 properties in the
United States, including properties acquired from Contact Diamond Corporation (formerly Sudbury Contact Mines Limited) ("Contact Diamond") in September 2004. The Company's Reno, Nevada
exploration office, acquired in that transaction, is focused on evaluating exploration opportunities in the United States and northern Mexico. An administrative office has been
opened in Chihuahua, Mexico. The Company's operations in Finland and Mexico are conducted through separate subsidiaries.

In
addition, the Company continuously evaluates opportunities to make strategic acquisitions. In the second quarter of 2004, the Company acquired a 13.8% ownership interest in
Riddarhyttan Resources AB ("Riddarhyttan"), a Swedish company that was, until November 2006, listed on the Stockholm Stock Exchange. In December 2004, the Company raised its
ownership level to 14% of Riddarhyttan's outstanding shares through

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participation
in a rights offering made by Riddarhyttan. In May 2005, the Company initiated a tender offer (the "Offer") for all of the issued and outstanding shares of Riddarhyttan that
it did not own and, in November 2005, the Company completed the Offer. As consideration for the Riddarhyttan shares acquired under the Offer, the Company issued 10,023,882 of its shares and
paid an aggregate of $1,420 in cash to Riddarhyttan shareholders. Agnico-Eagle, through its wholly-owned subsidiary, Agnico-Eagle Sweden AB, currently holds 102,880,951 shares of Riddarhyttan
representing approximately 97.3% of the outstanding shares and has initiated a compulsory acquisition procedure under Swedish law for the remaining 2.7% of the Riddarhyttan shares that it does not
hold. The Company expects that, in accordance with Swedish practice relating to public share-for-share offers, the purchase price for the remaining Riddarhyttan shares will
generally be equal to the price paid to Riddarhyttan shareholders under the Offer. The Company expects to obtain advance possession of these shares in the second half of 2006. Advance possession means
that the Company will be entitled to be registered as owner of these shares and thereby entitled to exercise all rights relating to these shares that vest in a shareholder.

Riddarhyttan
is a precious and base metals exploration and development company with a focus on the Nordic region of Europe. Riddarhyttan, through its wholly owned subsidiary,
Suurikulta AB, is the 100% owner of the Suurikuusikko gold deposit, located approximately 900 kilometres north of Helsinki near the town of Kittilä in Finnish Lapland.
Riddarhyttan's property position in the Suurikuusikko area consists of approximately 16,000 hectares with similar Precambrian greenstone belt geology and topography to the Company's land
package in the Abitibi region of Quebec.

In
the first quarter of 2005, the Company entered into an exploration and option agreement with Industrias Peñoles S.A. de C.V. ("Peñoles") to
acquire the Pinos Altos project in northern Mexico. The Pinos Altos project is located on an approximately 11,000 hectare property in the Sierra Madre gold belt, roughly 225 kilometres
west of the city of Chihuahua in the state of Chihuahua in northern Mexico. Under the exploration and option agreement, the Company was required to spend $2.8 million on a 16,800 metre
diamond drilling program. In December 2005, the length of time in which the Company could exercise its option to acquire Peñoles' 100% interest in the Pinos Altos project was
extended and, in February 2006, the Company exercised the option. Under the terms of the exploration and option agreement, the purchase price was stipulated as $65 million, comprised of
$32.5 million in cash and 2,063,635 shares of the Company. The transaction closed in escrow on in March 15, 2006. The escrow will be released five business days after the
satisfaction of certain requirements relating to the Mexican environmental authorities' acceptance of the transfer by Peñoles to the Company of its environmental impact statement
authorization relating to the Pinos Altos project. If satisfaction of these requirements has not occurred within 60 days following March 15, 2006 or such later date to which the Company
and Peñoles may mutually agree, the Company may terminate the exploration and option agreement.

The
Company has no other commitments or agreements with respect to any other acquisitions.

The
Company was formed by articles of amalgamation under the laws of the Province of Ontario on June 1, 1972 as a result of the amalgamation of Agnico Mines Limited ("Agnico
Mines") and Eagle Gold Mines Limited ("Eagle"). Agnico Mines was incorporated under the laws of the Province of Ontario on January 21, 1953 under the name "Cobalt Consolidated Mining
Corporation Limited". Eagle was incorporated under the laws of the Province of Ontario on August 14, 1945.

On
December 19, 1989, Agnico-Eagle acquired the remaining 57% interest in Dumagami Mines Limited not already owned by it as a consequence of the amalgamation of Dumagami Mines
Limited with a wholly-owned subsidiary of Agnico-Eagle, to continue as one company under the name Dumagami Mines Inc. ("Dumagami"). On December 29, 1992, Dumagami transferred all of its
property and assets, including the LaRonde Mine, to Agnico-Eagle and was subsequently dissolved. On December 8, 1993, the Company acquired the remaining 46.3% interest in Goldex Mines Limited
not already owned by it, as a consequence of the amalgamation of Goldex Mines Limited with a wholly-owned subsidiary of the Company, to continue as one company under the name Goldex Mines Limited. On
January 1, 1996, the Company amalgamated with two wholly-owned subsidiaries, including Goldex Mines Limited.

In
October 2001, pursuant to a plan of arrangement, the Company amalgamated with an associated corporation, Mentor Exploration and Development Co., Limited ("Mentor"). In
connection with the

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arrangement,
the Company issued 369,348 common shares in consideration for the acquisition of all of the issued and outstanding shares of Mentor that it did not already own.

Effective
February 11, 1999, two subsidiaries of the Company, Sudbury Contact Mines, Limited and Silver Century Explorations Ltd. ("Silver Century"), amalgamated pursuant
to a court-approved plan of arrangement to form Contact Diamond. The Company has an approximate 39.4% interest in Contact Diamond. Contact Diamond is a junior exploration and development company with
diamond properties in Ontario, Quebec, Nunavut and the Northwest Territories. Contact Diamond is incorporated under the laws of the Province of Ontario and is listed on the Toronto Stock Exchange
(the "TSX").

The
Company's executive and registered office is located at Suite 500, 145 King Street East, Toronto, Ontario, Canada M5C 2Y7; telephone number
(416) 947-1212; website: http://www.agnico-eagle.com. The information contained on the website is not part of this Form 20-F.

Business Overview

The Company believes that it has a number of key operating strengths that provide distinct competitive advantages.

First,
the Company and its predecessors have over three decades of continuous gold production, experience and expertise in metals mining. The Company's operations and exploration and
development projects are located in areas that are supportive of the mining industry. The Company's mine is located in one of North America's principal gold-producing regions.

Second,
the Company believes that it is one of the lowest total cash cost producers in the North American gold mining industry with total cash costs per ounce of gold produced at $43 for
2005. The Company has achieved significant improvements in this measure through the strength of its byproduct revenue, the economies of scale afforded by its large single shaft mine and its dedication
to cost-efficient mining operations. In addition, the Company believes its highly motivated work force contributes significantly to continued operational improvements and to the Company's
low cost producer status. For 2006, the Company expects total cash cost per ounce of gold produced to be approximately $50.

Third,
the Company's existing operations at the LaRonde Division provide a sound economic base for additional mineral reserve and production development at the property and in the
Abitibi region of northwestern Quebec and the development of the recently acquired projects in Finland and northern Mexico. The experience gained through building and operating the LaRonde Mine, along
with the LaRonde Mine's extensive infrastructure, are expected to support the development of new projects including the Lapa property, the construction of the Goldex mine project, and the
LaRonde II project.

Fourth,
the Company's senior management team has an average of approximately 20 years of operating and exploration experience in the mining industry. Management's significant
experience has been instrumental in the Company's historical growth and provides a solid base upon which to expand the Company's operations. The geological knowledge that management has gained through
its years of experience in mining and developing the LaRonde Division is expected to benefit the Company's current expansion program in the Abitibi region, Finland and northern Mexico.

The
Company believes it can benefit not only from the existing infrastructure at its mine, but also from geological knowledge that it has gained in mining and developing its properties.
The Company's strategy is to capitalize on its mining expertise to exploit fully the potential of its properties. The Company's goal is to apply the proven operating principles of the LaRonde Division
to each of its existing and future properties.

The
Company continues to focus its resources and efforts on the exploration and development of its properties in the Abitibi region of Quebec and Finland and northern Mexico with a view
to increasing annual gold production and gold mineral reserve. The Company is evaluating, among others, the Lapa property, and the LaRonde II project as potential growth opportunities in the
Abitibi region. LaRonde's proven and probable gold mineral reserves as at February 22, 2006 on contained gold basis were 1,625,825 ounces, including replacement of 241,807 ounces
of gold mined (after mill recoveries and smelter charges). As a result, the LaRonde Division's current proven and probable mineral reserve (including LaRonde II) is estimated to contain
approximately

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5.3 million
ounces of gold, 54.6 million ounces of silver, almost 1.8 billion pounds of zinc and over 275 million pounds of copper. In July 2005, based on an
independently reviewed feasibility study, the Company decided to start construction of a mine at the Goldex property. Also, at the Lapa project, the Company's other advanced development project in the
Abitibi region, the Company commenced a 870 metre deep shaft sinking project. At LaRonde II, a feasibility study has been completed and is currently undergoing independent review. The
independent review is scheduled to be completed in the second quarter of 2006. Based on the results of this study, the Company will determine whether to construct new, deeper infrastructure to access
the almost 3.7 million ounces of probable gold reserves indicated to be potentially economic by pre-feasibility studies, but outside the reach of current infrastructure. At the
Company's Surrikuusikko project in northern Finland, estimated probable mineral reserves are 13.7 million tonnes grading 5.26 grams per tonne, and work in 2006 will continue on resource
conversion, testing the deposit at depth and along strike. These results will be incorporated into a feasibility study that is expected to be ready to be submitted for independent review in the second
quarter of 2006. At the Pinos Altos project in northern Mexico, work will continue on deep exploration and resource conversion in the Santo Niño, Cerro Colorado and Oberon de Weber
zones in anticipation of preparing a feasibility study in respect of the property.

The
Company's growth strategy has been to pursue the expansion of its development base through the acquisition of additional properties in the Americas and Europe. Historically, the
Company's producing properties have resulted from a combination of investments in early-stage exploration companies and primary exploration activities. By investing in early-stage exploration
companies, the Company believes that it has been able to acquire control of exploration properties at favourable prices. The Company's approach to property acquisition has evolved to include joint
ventures and partnerships and the acquisition of producing properties and, more recently, has evolved to include acquisition of properties outside of Canada and the United States.

Expenditures
on the expansion of the LaRonde Mine and exploration and development in the surrounding region in the last three fiscal years were $70 million, $53 million and
$44 million, respectively. The 2005 expenditures include $42 million of capital expenditures at the LaRonde Mine, approximately $1 million at the LaRonde II project,
$13 million for the development of the Lapa property and $14 million for the development of the Goldex property. Budgeted 2006 exploration and capital expenditures of $117 million
consist of $82 million on construction of a mine at the Goldex property, $10 million of sustaining capital expenditures at the LaRonde Mine, $13 million on projects relating to
the LaRonde II project and $12 million at the Lapa property. The financing for these expenditures is expected to be from internally generated cash flow from operations and from the Company's
existing cash balances. Depending on the success of the exploration programs at this and other properties, the Company may be required to make additional capital expenditures for exploration,
development and preproduction.

Agnico-Eagle
mitigates the likelihood and potential severity of the various risks it encounters in its day to day operations through the application of high standards in the planning,
construction and operation of mining facilities. In addition, emphasis is placed on hiring and retaining competent personnel and developing their skills through training in safety and loss control.
Agnico-Eagle's operating and technical personnel have a solid track record of developing and operating precious metal mines and the LaRonde Mine has been recognized for its excellence in this regard
with various safety and development awards. Unfortunately, in spite of efforts to ensure the safety of employees, industrial accidents can occur. In the first quarter of 2005, an accident claimed the
life of an employee. Quebec's Commission de la santé et de la sécurité du travail completed an investigation into this accident and determined that the
accident was caused by human error and the Company expects no further fines or sanctions in connection with the accident. The Company previously paid C$27,500 in fines relating to two fatalities at
the LaRonde Mine in January 2004. Other than the investigations discussed above, no regulatory or other action has been initiated against the Company in connection with these industrial
accidents. The Company's LaRonde Mine remains one of the safest mines in Quebec with a lower accident frequency index than the provincial mining industry average. Nevertheless, the Company and its
employees continue with a focused effort to improve workplace safety and the Company has placed additional emphasis on safety procedure training for both mining and supervisory employees.

Agnico-Eagle
also mitigates some of the Company's normal business risk through the purchase of insurance coverage. An Insurable Risk Management Policy, approved by the Board of
Directors, governs the purchase of insurance coverage and only permits the purchase of coverage from insurance companies of the highest credit

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quality.
For a more complete list of the risk factors affecting the Company, please see "Item 3. Key Information  Risk Factors".

Mining Legislation and Regulation

Canada

The mining industry in Canada operates under both federal and provincial legislation governing the exploration, development, operation and decommissioning of
mines and mineral processing facilities. Such legislation relates to the method of acquisition and ownership of mining rights, labour, occupational or worker health and safety standards, royalties,
mining, exports, reclamation, closure and rehabilitation of mines, and other matters.

The
mining industry in Canada is also subject to extensive laws and regulations at both the federal and provincial levels concerning the protection of the environment. The primary
federal and provincial regulatory authorities with jurisdiction over the Company's mining operations in respect of environmental matters are
the Department of Fisheries and Oceans, the Quebec Ministry of the Environment and the Quebec Ministry of Natural Resources. The construction, development and operation of a mine, mill or refinery
requires compliance with applicable environmental laws and regulations and/or review processes including the obtaining of land use permits, water permits, air emissions certifications, hazardous
substances management and similar authorizations from various governmental agencies. Environmental laws and regulations impose high standards on the mining industry to reduce or eliminate the effects
of waste generated by mining and processing operations and subsequently deposited on the ground or emitted into the air or water. Laws and regulations regarding the decommissioning, reclamation and
rehabilitation of mines may require approval of reclamation plans, the provision of financial assurance and the long-term management of former mines.

In
Quebec, mining rights are governed byMining Act(Quebec). In 1966, the mining concession system set out for Crown lands containing
mineralized zones by theMining Act(Quebec) was replaced by a system of claims and mining leases. A claim entitles its holder to explore for minerals
on the subject land. It remains in force for a term of two years from the date it is registered and may be renewed indefinitely subject to continued exploration works in relation thereto. A mining
lease entitles its holder to mine and remove valuable mineral substances from the subject land, providing it pays the annual lease fees set by Quebec government regulations, which range from C$37 to
C$85 per hectare. In Quebec, in order to retain title to mining claims, in addition to paying a small bi-annual rental fee, exploration work (or an equivalent value cash
payment) has to be completed in advance (either on the claim or on adjacent claims) and filed with the Quebec Ministry of Natural Resources. The amount of exploration work
(and bi-annual rental fee) required bi-annually ranges from $500 to $2,500 per claim (the rate is fixed by Quebec Government regulations). Leases are granted
initially for a term of 20 years and are renewable up to three times, each for a duration of 10 years.

The
Company believes it holds all necessary claims, mining leases and environmental permits necessary for its mining operations and is reliant on these claims, leases and permits for its
continued operations. The Company is currently unaware of any issues that would affect the validity of its claims, mining leases and environmental permits in the near future.

Finland

Mining legislation in Finland consists of the Mining Act and the Mining Decree. In Finland any individual, corporation, or foundation having its principal place
of business or central administration within the European Economic Area is entitled to the same rights to carry out prospecting, to stake a claim and to exploit a deposit as any Finnish citizen or
corporation.

The
Ministry of Trade and Industry ("MTI") is primarily responsible for mining legislation and administration as well as granting concessions. If there are no impediments to granting a
claim, the MTI is obliged to grant the applicant a prospecting licence. The MTI has no power of discretion as to the material merits of the mining operation. A prospecting licence, which is in force
for two to five years, depending on the scope of the search for mineable minerals, gives the holder the right to examine the area in order to determine the size and scope of the deposit. In order to
obtain the rights to the mineable minerals located on the claim, the

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claimant
must apply to the MTI for the appropriation of a mining patent. When the mining patent procedure has become final (i.e., unappealable) regarding all matters other than compensation, the MTI
must issue the mining operator a mining certificate which gives the holder the right to fully exploit all mineable minerals found in the mining patent.

Mining
operations must be carried out in accordance with a number of laws and regulations concerning conservation and environmental protection issues. Under the Environmental Protection
Act mining activities require an environmental permit which is issued either for a definite or for an indefinite period of time. The Act is based on the principles of prevention and minimising of
damages and hazards, application of the best available technology, application of the best environmental practice and "polluter pays".

The
Act on Compensation for Environmental Damage includes provisions on the compensation for damage to a person or property resulting from pollution of water, air or soil, noise,
vibration, radiation, light, heat or smell, or other similar nuisance caused by an activity carried out at a fixed location. This Act is based on the principle of strict liability, that is liability
without fault if the causal relation between the activity and the damage can be established.

In
addition to the environmental permit, mining operators require several other permits and obligations under environmental protection legislation.

According
to the Land Use and Building Act, the buildings and constructions required in mining will require building permits. Furthermore, according to the Act on Environmental Impact
Assessment Procedure, certain projects always require compliance with an environmental impact assessment procedure. These include major projects with a considerable impact on the environment, such as
the excavation, enrichment and handling of metals and other minerals in cases where the excavated material is estimated to exceed 550,000 tonnes annually. A permit authority may not give its
approval to an activity covered by the scope of the Act on the Environmental Impact Assessment Procedure without having taken an environmental impact assessment report into consideration.

Mexico

Mining in Mexico is subject to the Mining Law, a federal law. Under the Mexican Constitution, all minerals belong to the Mexican Nation. Private parties may
explore and extract them pursuant to mining concessions granted by the executive branch of the Mexican Federal Government, as a general rule to whoever first claims them. While the Mining Law touches
briefly upon labour, occupational or worker health and safety standards, these are primarily dealt with by the Federal Labour Law, also a federal statute. The Mining Law also briefly addresses
environmental matters, which are primarily regulated by the General Law of Ecological Balance and Protection of the Environment, also of federal jurisdiction.

The
primary agencies with jurisdiction over mining activities are the Ministry of the Economy, the Ministry of Labor and Social Welfare and the Ministry of the Environment and Natural
Resources. The National Water Commission has jurisdiction regarding the granting of water rights, and the Ministry of Defense as concerns the use of explosives.

Concessions
are for 50 years, renewable once. The main obligations to keep them current is the semiannual payment of mining duties (taxes), based on the surface of the concession, and
the performance of work in the areas covered by the concessions, which is evidenced by minimum expenditures or by the production of ore.

Organizational Structure

The Company's only significant subsidiaries are Riddarhyttan, a Swedish company that was, until November 2005, listed on the Stockholm Stock Exchange,
Agnico-Eagle Sweden AB, a wholly owned Swedish company through which the Company holds its interest in Riddarhyttan, and Suurikulta AB, a Swedish company through which Riddarhyttan holds its interest
in the Suurikuusikko project. The Company, through Agnico-Eagle Sweden AB, holds approximately 97.3% of Riddarhyttan shares and, in November 2005, initiated a compulsory acquisition procedure
under Swedish law to acquire the remaining 2.7% of shares outstanding. The Company expects to obtain advance possession of these shares in the second half of 2006. Advance possession means that the
Company will be entitled to be registered as owner of these shares and thereby entitled to

16

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exercise
all rights relating to these shares that vest in a shareholder. See " History and Development of the Company" and " Property, Plant and
Equipment  Riddarhyttan (Suurikuusikko Project)".

The
Company's acquisition of the Pinos Altos project in northern Mexico was made through its wholly-owned Mexican subsidiary, Agnico Eagle S.A. de C.V. Riddarhyttan Resources Oy provides
services in
connection with the Company's operations at the Suurikuusikko project in Finland. The Company's operations in the United States are conducted through Agnico-Eagle (USA) Limited.

The
Company's only significant associate is Contact Diamond (formerly Sudbury Contact Mines Limited), a public company listed on the TSX under the symbol "CO". The Company has an
approximate 39.4% interest in Contact Diamond. Contact Diamond is an exploration and development company with diamond properties in Ontario, Quebec, Nunavut and the Northwest Territories. Contact
Diamond is a corporation incorporated under the laws of the Province of Ontario. Historically and until August 31, 2003, Contact Diamond had been a subsidiary of the Company. However in 2003,
through a series of equity financings, Contact Diamond became more financially independent and the Company's ownership was diluted to less than 50%. Accordingly, the Company no longer had a
controlling financial interest in Contact Diamond and therefore ceased consolidating Contact Diamond's operations with its own. The Company now uses the equity method to account for its interest in
Contact Diamond. Each member of Contact Diamond's management team (other than Matthew Manson, its President and Chief Executive Officer and Graham Long, its Vice-President, Exploration, a
former employee of the Company) is also a member of the management team of the Company, three of its directors are also directors of the Company (including two directors of the Company who are also
officers of the Company), and one of its directors is also an officer of the Company. In total, three of the seven officers of the Company are also officers of Contact Diamond.

The
following chart sets out the corporate structure of the Company together with the jurisdiction of incorporation of each of the Company's operating subsidiaries and related holding
companies:

LOGO

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Property, Plant and Equipment

Abitibi Properties

The LaRonde Mine, the Goldex mine project and the Lapa, Bousquet and Ellison properties are located in the Abitibi region of northwestern Quebec. The Abitibi
region is characterized by its availability of experienced mining personnel. The climate of the region is continental and the average annual rainfall is 64 centimetres and the average annual
snowfall is 318 centimetres. The average monthly temperatures range from a minimum of -23 degrees Celsius in January to a maximum of 23 degrees Celsius in July. Under
normal circumstances, mining operations are conducted year round without interruption due to weather conditions. However, in 2002 high underground temperatures due to extreme summer heat caused delay
in development activity in lower portions of the LaRonde Mine.

Location Map of Abitibi Properties

GRAPHIC

LaRonde Division Property

The Company's LaRonde Division consists of the LaRonde property, and the adjacent El Coco and Terrex properties (collectively the "LaRonde Mine"), each of
which is 100% owned and operated by the Company. The LaRonde Mine is situated approximately 60 kilometres west of the City of Val d'Or in northwestern Quebec (approximately
650 kilometres northwest of Montreal, Canada) in the municipalities of Preissac and Cadillac. The LaRonde Mine can be accessed from either Val d'Or or Rouyn-Noranda, which are located
approximately 60 kilometres east and west of the LaRonde Mine, respectively, via Quebec provincial highway No. 117. The LaRonde Mine is situated approximately two kilometres north
of highway No. 117 on Quebec regional highway No. 395. The Company has access to the Canadian National Railway at Cadillac, Quebec, approximately six kilometres from the LaRonde Mine.
The elevation is 337 metres above sea level. All of the LaRonde Mine's power requirements are supplied by Hydro-Quebec through connections to its main power transmission grid. Water used in the
LaRonde Mine's operations is sourced from Lac Preissac and is transported approximately four kilometres to the mine site through a surface pipeline.

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The
LaRonde Mine operates under mining leases obtained from the Quebec Ministry of Natural Resources and under certificates of approval granted by the Quebec Ministry of the Environment.
The LaRonde property consists of 35 contiguous mining claims and one provincial mining lease and covers in total approximately 884.1 hectares. The El Coco property consists of
22 contiguous mining claims and a provincial mining lease and covers in total approximately 356.7 hectares. The Terrex property consists of 20 mining claims that cover in total
approximately 408.4 hectares. The mining leases on the LaRonde and El Coco properties expire in 2008 and 2021, respectively, and are automatically renewable for three further
ten-year terms on payment of a small fee. The Company also has two surface rights leases covering approximately 122.3 hectares that relate to the water pipeline right of way from
Lake Preissac and the eastern extension of the LaRonde tailings pond #7 on the El Coco property. The surface rights leases are renewable annually.

The
LaRonde Mine includes underground operations at the LaRonde and El Coco properties that can both be accessed from the Penna Shaft, a mill, treatment plant, secondary crusher
building and related facilities. The El Coco property was acquired from Barrick Gold Corporation ("Barrick") in June 1999 and is subject to a 50% net profits interest in future
production from approximately 500 metres east of the LaRonde property boundary. The remaining 1,500 metres is subject to a 4% net smelter return royalty. This area of the property is now
substantially mined out and the Company did not pay royalties in 2004 or 2005 and does not expect to pay royalties in 2006. In 2003, exploration work started to extend outside of the LaRonde property
on to the Terrex property where a down plunge extension of the 20 North gold zone was discovered. The Terrex property is subject to a 5% net profits royalty to Delfer Gold Mines Inc., a
1% of the net smelter return royalty to Breakwater Resources Ltd. and a 2% of the net smelter return royalty to Barrick. In addition, the Company owns 100% of the Sphinx property immediately to
the east of the El Coco property.

Mining and Milling Facilities

The LaRonde Mine was originally developed utilizing a 1,207 metre shaft (Shaft #1) and an underground ramp access system. The ramp access system is
available down to the 25th Level of Shaft #1 and then continues down to Level 227 at the Penna Shaft. The mineral reserve accessible from Shaft #1 was depleted in
September 2000 and Shaft #1 is no longer in use. A second production shaft (Shaft #2), located approximately 1.2 kilometres to the east of Shaft #1, was completed in
1994 down to a depth of 525 metres and was used to mine Zones #6 and #7. Both ore zones were depleted in March 2000 and the workings were allowed to flood up to the
6th Level (approximately 280 metres). A third shaft (the Penna Shaft) located approximately 800 metres to the east of Shaft #1, was completed down to a depth of
2,250 metres in March 2000. The Penna Shaft is used to mine Zones 20 North, 20 South, 7 and 6.

Four
mining methods have historically been used at the LaRonde Mine: open pit for the three surface deposits, sublevel retreat, longitudinal retreat with cemented backfill, and
transverse open stoping with both cemented and unconsolidated backfill. The primary source of ore at the LaRonde Mine continues to be from underground mining methods. During 2005, two methods were
used: longitudinal retreat with cemented backfill and transverse open stoping with both cemented and unconsolidated backfill. In the underground mine, sublevels are driven at 30 metre and
40 metre vertical intervals, depending on the depth. Stopes are undercut in 15 metre panels. In the longitudinal method, panels are mined in 15 metre sections and backfilled with
100% cemented rock fill or paste fill. In the transverse open stoping method, 50% of the ore is mined in the first pass and filled with cemented rock fill or paste fill from the paste backfill plant
completed in 2000 and located on the surface at the processing facility. On the second pass, the remainder of the ore is mined and filled with unconsolidated waste rock fill or paste backfill.

Currently,
water is treated at various facilities at the LaRonde Division. Prior to the water entering the tailings pond system, cyanide is removed at a cyanide destruction facility
using a sulphur dioxide (Inco) process. A secondary treatment plant located between the #1 and #2 polishing ponds uses a peroxysilica process to complete the cyanide destruction process. In
addition, water with higher than permissible acidity is treated by lime in the mill complex prior to being released to the environment. In the first quarter of 2004, in response to revised Federal
mining effluent regulations, the Company completed and commissioned a new water treatment plant that reduces tailing effluent toxicity immediately prior to discharge. The plant uses a new biological
treatment process to treat water from ore milling. At the end of March 2004, treated water released from the plant successfully passed a toxicity test. In 2004, high water levels at the
tailings pond at LaRonde caused by

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above
average rainfall, overcast conditions and the retention of excess water in the tailings pond prior to completion of the water treatment plant were mitigated by a discharge of slightly toxic
water under a transitional discharge permit from Environment Canada. In March 2005, the Company received a notice of infraction from the Quebec Ministry of the Environment relating to the
discharge. In 2004, to increase the capacity in the tailings pond and treatment process, the Company installed a coffer dam in the tailings pond to provide extra capacity and initiated construction on
a second phase expansion of the water treatment plant to further increase treatment capacity. The second phase of the plant was completed in December 2004. Biomass build-up was
completed and the second phase was fully operational in the second quarter of 2005. Expenditures for this second phase expansion were $4.2 million.

Retention
of excess water in the tailings pond complex prior to commissioning the second phase of the water treatment plant caused concentrations of contaminants in the pond water to
almost double. As a result, the flowrate at the plant had to be reduced from design values to process the higher contaminant concentrations. Accordingly, treatment of the accumulated water in the
tailings pond proceeded at a slower pace than expected, and in 2005 the Company raised the tailings pond dikes by three metres to ensure the continued safe operation of the tailings pond complex. In
conjunction with consultants, the Company is further researching the physical, biological and chemical processes taking place during the treatment process so that it may increase treatment flowrate
and achieve stable treatment performance. This optimisation work will continue in 2006. In June 2005, the effluent discharge from the tailings pond failed the toxicity test for daphnia for a
one week period and exceeded the permitted the monthly average suspended solids concentration. A notice of infraction was issued to the mine on these two counts in September 2005. The Quebec
Ministry of the Environment has indicated to the Company that it will not impose fines or other sanctions in connection with the notice of infraction.

Tailings
are stored in a tailings pond covering an area of approximately 119 hectares and waste rock is stored in two waste rock piles with a combined volume of approximately
1.43 million cubic metres. The Company holds mining claims to the northeast, to the east and to the southeast of the tailings ponds that would allow expansion of the tailings ponds and the
establishment of additional waste disposal areas.

Surface
facilities at the LaRonde Mine include a processing plant with a daily capacity of 6,350 tonnes of ore, which has been expanded four times from the original
1,630 tonnes of ore treated per day rate. The expansion to 6,350 tonnes per day was completed in October 2002 and the milling complex has been operating well above this level for
the past two years. This expansion consisted of additions to the grinding and precious metals circuits and modifications to the copper and zinc flotation circuits. An ore handling system was completed
at the end of 1999. It included a truck dump linked by a new conveyor gallery to a coarse ore bin with a capacity of 4,500 tonnes. The coarse ore bin feeds a semi-autogenous (SAG)
mill that was installed at the end of 1999. Ore from the Penna Shaft is transported to the ore handling facility by 32 tonne trucks.

The
milling complex consists of a grinding, copper flotation, zinc flotation, and a precious metals recovery circuit and refinery. A copper concentrate containing, approximately 60% of
the gold plus byproduct silver and copper is recovered. The zinc flotation circuit produces a zinc concentrate containing approximately 9% of the gold. The remaining 22% is recovered by the precious
metals circuit, including a refinery using the Merrill Crowe process, and it is shipped as doré bars. Both the zinc and copper flotation circuits consist of a series of column and
mechanical cells that sequentially increase the zinc concentrate and copper concentrate quality. In 2005, zinc recoveries averaged 83% and zinc concentrate quality averaged 54% zinc. In 2005, copper
recoveries averaged 77% and copper concentrate quality averaged 12% for the year.

Since
1991, gold recoveries have averaged over 93%. During 2005, gold recoveries averaged approximately 91%. In 2005, silver recoveries averaged 85%. During 2005, the mill processed
approximately 2.67 million tonnes of ore, averaging approximately 7,297 tonnes of ore treated per day and operating over 94% of available time.

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The
following table sets out the metal recoveries, concentrate grades and contained metals for the 2.977 million tonnes of ore extracted by the Company at the LaRonde Division in
2005.

|       |  |          |  | Copper Concentrate
(64,943 tonnes produced) |  | Zinc Concentrate
(166,986 tonnes produced) |  |         |  |       |  |             
|------ |  | -------- |  | ------------------------------------------- |  | ------------------------------------------ |  | ------- |  | ----- |  | ------------
|
|
|Gold   |  | 3.11 g/t |  | 80.6 g/t                                    |  | 63.1%                                      |  | 3.8 g/t |  | 7.7%  |  | 48,374 oz   
|Silver |  | 77.5 g/t |  | 1,585 g/t                                   |  | 50.1%                                      |  | 186 g/t |  | 15.0% |  | 1,108,822 oz
|Zinc   |  | 4.06%    |  | 8.8%                                        |  |                                           |  | 53.9%   |  | 83.2% |  |            
|Copper |  | 0.39%    |  | 12.4%                                       |  | 76.9%                                      |  |        |  |      |  |            

Development

In 2005, a total of 12,170 metres of lateral development was completed. Development was focused on stope preparation of the 2005 and 2006 mining blocks,
especially the preparation of the new lower mine production horizon (Level 224). Also, the Company completed construction of a ramp between the upper and lower mining horizons of the Penna
Shaft that provides the Company with continuous ramp access from the surface to Level 227. In mid 2005, development activity related to exploration had reached its target of 285 metres
to the west of the boundary between the LaRonde and Bousquet properties. The focus of the development activity was to define the western limit of Zone 20 North at depth and to acquire
additional information on the high grade polymetallic zone of Zone 20 North at depth and to the west.

In
2006, a total of 9,520 metres of lateral development is planned. The main focus is the same as last year (stope preparation). Also the company plans to develop down to
Level 236 and prepare the access to Zone 20 South on two levels (Level 209 and Level 212). Finally, the company will start a ramp up from Level 98 to
Level 94. There is no exploration drift planned in 2006, as planned exploration activity will be done from the existing infrastructure.

Geology and Diamond Drilling

Geologically, the LaRonde Mine property is located near the southern boundary of the Archean-age (2.7 billion years old) Abitibi
Sub-Province and the Pontiac Sub-Province within the Superior Province of the Canadian Shield. The most important regional structure is the Cadillac-Larder Lake fault zone (the
"CLL Fault Zone") marking the contact between the Abitibi and the Pontiac sub-provinces, located approximately 2 kilometres to the south of the LaRonde property.

The
geology that underlies the LaRonde Mine consists of three east-west trending, steeply south dipping and generally southward facing regional lithological units (geological
Groups). The units are, from north to south: (i) 400 metres of the Kewagama Group which is made up of thick band of interbedded wacke; (ii) 1,500 metres of the Blake River Group, a
volcanic assemblage which hosts all the known economic
mineralisation on the property; and (iii) 500 metres of the Cadillac Group, made up of thick band of wacke interbedded with pelitic schist and minor iron formation.

Zones
of strong sericite and chlorite alterations, which enclose massive to disseminated sulphide mineralization (in which gold, silver, copper and zinc are mined at the LaRonde
Mine) follow steeply dipping, east-west trending, anastomosing shear zone structures within the Blake River Group volcanic units from east to west across the property. These shear zones
comprise a larger structure, the Doyon-Dumagami Structural Zone, which hosts several important gold occurrences (including the Doyon gold mine and the former Bousquet mines) and has been traced for
over 10 kilometres within the Blake River Group from the LaRonde Division property westward to the Mouska gold mine.

The
gold bearing zones at the LaRonde Division are lens-shaped aggregates of disseminated, stringer through to massive, aggregates of coarse pyrite with a copper, zinc and
silver content. Ten zones that vary in size from 50,000 to 40,000,000 tonnes have been identified, of which eight are believed to be economic. Gold content is not proportional to the total
sulphide content but does increase with copper content. Gold values are also enhanced locally where closely spaced north-south fractures cut the pyrite lenses.

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These
historical relationships are maintained at the Penna Shaft zones. The zinc-silver (i.e. Zone 20 North) mineralization, which is common in the upper
Penna Shaft area and contains lower gold values, grades into gold-copper mineralization at depth. North-south fractures have been noted in the Penna Shaft underground development along
with the associated gold value enhancement.

The
copper mineral that is present at the Penna Shaft is chalcopyrite while the predominant zinc mineral is sphalerite.

Compared
to the mineral reserve estimate as of December 31, 2004, on a tonnage basis, the LaRonde Division's combined proven and probable mineral reserve decreased by 0.6% to
36.7 million tonnes in 2005. The 36.7 million tonnes of mineral reserves includes the replacement of 2.7 million tonnes that were mined in 2005. The Company's ability to sustain
its level of proven and probable mineral reserve was primarily due to continued successful exploration results at depth.

The
exploration program was expanded in 2004 after the property boundary constraints were removed with the Company's acquisition of the Bousquet and Terrex properties in 2003. In 2005,
drilling continued mining stope definition of Zone 20 North, Zone 7 and Zone 20 South at LaRonde and was also focused on mineral resource conversion in order to
prepare for the feasibility study of the LaRonde II project. Reserves and resources above Level 245 are considered to be part of the LaRonde I deposit, those below such level are
considered to be part of the LaRonde II deposit. One objective of the LaRonde II project exploration program in 2005 was to test Zone 20 North at depth and to the west.
Other goals of the exploration program were to continue the conversion of mineral resource to mineral reserve at depth in the Zone 20 North portion
of LaRonde II, to confirm potential higher grade core at depth, to define the recently discovered polymetallic zone at depth to the west and to test for the extension of
Zone 20 South at depth and to the west. The results of the exploration program were incorporated into the LaRonde II feasibility study that is currently undergoing independent
review. This independent review is expected to be complete in the second quarter of 2006. A summary of the diamond drilling completed on the LaRonde Mine property is set out below:

|                                             |  | Number of Holes Drilled |  | Length Drilled
(m)
|-------------------------------------------- |  | ----------------------- |  | ------------------
|
|Production Stope Delineation                 |  | 231                     |  | 180               
|Definition                                   |  | 75                      |  | 54                
|Deep Exploration (LaRonde II, Zone 20 North) |  | 53                      |  | 41                
|TOTAL                                        |  | 359                     |  | 275               

The
combined cost of the diamond drilling at the LaRonde Mine was approximately $2.8 million in 2005 (including $0.9 million in definition drilling expenses charged to
operating costs at the LaRonde Mine and also the cost of the Level 215 exploration drift and services). The total cost of exploration incurred since production started at the LaRonde Mine in
1988 is estimated to be over C$60 million. Expenditures on exploration and studies for LaRonde II (Zone 20 North at depth) were $1.9 million in 2005 and are expected
to be $1.7 million in 2006.

Agnico-Eagle
currently controls almost 32 kilometres along the Cadillac-Bousquet belt both east and west of the LaRonde Mine, much of which remains unexplored at
depth. Access to a portion of this
property holding provided by the LaRonde Mine's underground infrastructure will facilitate further exploration.

Zone 20 Northhas developed into what the Company believes is one of the largest gold bearing massive sulphide mineralized
zones known in the world and one of the largest mineralized zones known in the Abitibi region of Ontario and Quebec. The following table summarizes Zone 20 North's contribution to the
LaRonde Mine's mineral reserve:

Proven and Probable Mineral ReservesTotal LaRonde Property

36,701,918 tonnesZone 20 North

34,888,489 tonnes


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The
following tables summarizes Zone 20 North's contribution to the LaRonde Mine's mineral resources (see "Note to Investors Concerning Estimates of Mineral
Resources"):

Measured and Indicated Mineral ResourcesTotal LaRonde Property

4,576,673 tonnesZone 20 North

3,670,742 tonnes


|
|

Inferred Mineral ResourceTotal LaRonde Property

5,182,238 tonnesZone 20 North

4,499,372 tonnes


Zone 20 North
initially occurs at a depth of 700 metres below surface and has been traced down to a depth of 3,100 metres below surface. With increased access
on the lower levels of the mine (i.e., Levels 170, 194, 215 and 218), the transformation from a "zinc/silver" ore body to a "gold/copper" deposit continued during 2004. Most of
the definition drilling was conducted from Levels 170 and 218. In 2005, deep exploration drilling for the LaRonde II Project was principally conducted from Level 215, the
deepest exploration drift at the Penna Shaft.

Zone 20 North
can be divided into an upper zinc/silver-enriched zone and a lower gold/copper-enriched zone. The zinc zone has been traced over a vertical distance of
1,700 metres and a horizontal distance of 570 metres, with thicknesses approaching 40 metres. The gold zone has been traced over a vertical distance of over 2,200 metres
and a horizontal distance of 600 metres, with thicknesses varying from 3 metres to 30 metres. The zinc zone consists of massive zinc/silver mineralization containing 50% to 90%
massive pyrite and 10% to 50% massive light brown sphalerite. The gold zone mineralization consists of 30% to 70% finely disseminated to massive pyrite containing 1% to 10% chalcopyrite veinlets,
minor disseminated sphalerite and rare specks of visible gold. Gold grades are generally related to the chalcopyrite or copper content. This is the same historical relationship noted at
Shaft #1's Main Zone. At depth, the massive sulphide lens becomes richer in gold and copper. During 2005, 2.5 million tonnes of ore grading 3.07 grams of gold per tonne,
78.7 grams of silver per tonne, 0.4% copper and 4.1% zinc were mined from Zone 20 North.

The
2005 drilling program continued testing Zone 20 North at depth and to the west. The purpose of this drilling was to continue the resource to reserve conversion process
and provide additional information for the LaRonde II feasibility study. Drilling was also conducted in 2005 using the underground infrastructure available from the Company's Bousquet property.
For 2005, three main areas of drilling were conducted, including testing potential extensions of mineralization at depth on the Ellison property from the 9th Level, and drilling from the bottom
of the Bousquet Shaft continued.

Drilling
results in 2005 continued to delineate and increase the size of the gold ore body at depth, however, the eastern and western boundaries of the deposit have been almost fully
delineated, though the deposit remains open at depth. During 2005, 46 drill holes were completed at depth. The drill holes were widely dispersed and continued to focus on further definition of
the polymetallic zone as well as the conversion from resource to reserves on the remainder of the deposit. Three of the most significant results of the year were obtained from drill holes
3215-106E, 3215-108A and 3215-117. These drill holes intersected the following values:

|          |  |      |  | Interval (m) |  |        |  |      |  |       |  |     
|--------- |  | ---- |  | ------------ |  | ------ |  | ---- |  | ----- |  | ----
|
|
|3215-106E |  | 14.5 |  | 1068.4       |  | 1085.7 |  | 8.62 |  | 2.46  |  | 0.07
|3215-108A |  | 19.6 |  | 996.0        |  | 1025.5 |  | 8.71 |  | 51.83 |  | 0.73
|3215-117  |  | 17.3 |  | 944.9        |  | 969.0  |  | 9.08 |  | 21.87 |  | 0.34

Another
significant result was obtained in drill hole 3215-114, located at 3,085 metres depth and 1,077 metres west of the Penna Shaft, which intersected strong
alteration but no significant gold values. This zone is within sericitized and silicified andalusite bearing felsic unit with 10-20% disseminated to banded pyrite.

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This
result appears to indicate that drilling has reached an isolated low-grade sector within the Zone 20 North at depth, as seen in the LaRonde I deposit.

|         |  |     |  | Interval (m) |  |        |  |      |  |      |  |     
|-------- |  | --- |  | ------------ |  | ------ |  | ---- |  | ---- |  | ----
|
|
|3215-114 |  | 2.8 |  | 1170.6       |  | 1175.4 |  | 1.44 |  | 1.24 |  | 0.02

Historically,
increased drill hole density has improved initial mineral reserve and mineral resource estimates based on widely spaced drill holes usually drilled from the shaft stations.
Ultimately development within the ore zones has confirmed the original estimates.

Zone 20 Southis located approximately 150 metres south of Zone 20 North. It consists of at least two
known disseminated to massive sulphide gold/copper/zinc-bearing lenses made up of 80% to 90% pyrite, 5% to 10% sphalerite and 1% to 3% chalcopyrite. The Zone 20 South horizon
has been traced over a vertical distance of 1,615 metres and a horizontal distance of up to 255 metres, with a mineralized thickness varying from 3 metres to 12 metres. The
El Coco property contains the eastern extension of Zone 20 South. The current mineral reserve position on Zone 20 South on the LaRonde property is
129,000 ounces and on the El Coco property is negligible (180 ounces). In 2005, approximately 9,336 tonnes grading 3.78 grams of gold per tonne were mined from
Zone 20 South on the LaRonde property.

Mineralization
of Zone 20 South in this lower area of the Penna Shaft appears to be very similar to what was initially encountered in Zone 20 South near
Level 146 where the mineralization is narrow, high-grade but more difficult to define. Additional high-grade gold mineralization at depth could have a significant impact
on the long-term mine plan. High grade mineralization just above Level 215 has not yet been factored into the long-term mine plan.

The
significance of Zone 20 South production can be summarized as follows:



Zone 20 South
will require significantly more delineation drilling. Zone 20 South will be drilled from the Level 215 exploration drift, resulting in
shorter drill holes and significantly tighter drill spacing. In 2004, 23 drill holes were completed in Zone 20 South below Level 215. The results were highly erratic and
generally poor. Limited drilling was completed on Zone 20 South during 2005. The results continued to be poor and confirmed the decision not to develop the zone at depth. Additional
drilling will be conducted in 2006; however the current results do not justify an economic evaluation.

Capital Projects and Expansion

In 2004, the Company commissioned a water treatment plant that reduces tailing effluent toxicity immediately prior to discharge. The Company completed
construction on a second phase expansion of the water treatment plant to further increase treatment capacity in December 2004. The second phase was fully operational in the second quarter of
2005. In 2004, the Company initiated ramp development between Level 215 and Level 236. The Company completed the ramp development between the upper and lower mining horizons and, at the
end of 2005, continuous ramp access was available from surface down to Level 227 of the Penna Shaft.

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In
2005, the Company completed a feasibility study in respect of LaRonde II. The feasibility study is undergoing an independent review, which is expected to be completed during
the second quarter of 2006. The study incorporates the latest drilling results at depth, as well as the latest reserve estimate. During 2005, rock mechanic experts evaluated the potential
geomechanical issues associated with deep mining at LaRonde II and issued recommendations. These recommendations were addressed in the feasibility study with the intent of reducing the overall
level of risk associated with deep mining.

The
Company made capital expenditures of $70 million in 2005 on the expansion of the LaRonde Mine and exploration and development of the surrounding region. The 2005
expenditures include $42 million of capital expenditures at the LaRonde Mine, approximately $1 million at the LaRonde II project, $13 million for the development of the Lapa
property and $14 million for the development of the Goldex property. Budgeted 2006 exploration and capital expenditures of $117 million consist of $82 million on construction of a
mine at the Goldex property, $10 million of sustaining capital expenditures at the LaRonde Mine, $13 million on projects relating to LaRonde II and $12 million on the
underground program at the Lapa property. During 2006, the Company plans exploration expenditures on grassroots exploration projects of approximately $12 million.

Mineral Reserve and Mineral Resource

The information set forth below with respect to the mineral reserves at the LaRonde Division, Bousquet, Ellison, Goldex, Lapa, Suurikuusikko and
Pinos Altos properties has been prepared by the following qualified people in accordance with the Canadian Securities Administrators' National
Instrument 43-101 Standards of Disclosure for Mineral Projects("National
Instrument 43-101"):

|Property             |  | Qualified person responsible for mineral reserve estimates             
|-------------------- |  | -----------------------------------------------------------------------
|LaRonde Division     |  | Marc Ruel, P.Geo., Chief Geologist,
LaRonde Division                   
|Bousquet and Ellison |  | Normand Bédard, P.Geo., Senior Geologist, Regional Development Division
|Goldex               |  | Carl Pelletier, P. Geo, Consulting Geologist                           
|Lapa                 |  | Christian D'Amours, P.Geo., Consulting Geologist                       
|Suurikuusikko        |  | Normand Bédard, P.Geo., Senior Geologist, Regional Development Division
|Pinos Altos          |  | Christian D'Amours, P.Geo., Consulting Geologist                       

The
qualified person responsible for the LaRonde II and Suurikuusikko pre-feasibility studies is François Vézina, Ing., Manager of
Technical Services for the Company. The qualified person responsible for the Goldex feasibility study is Rosaire Emond, Ing., Project Manager for the Company's Goldex Division. The qualified person
responsible for the Lapa pre-feasibility study is Yves Galarneau, Ing., Project Engineer for the Company's Lapa shaft sinking project.

The
Company's Manager of Project Evaluations, Marc H. Legault, P.Eng, a "qualified person" under National Instrument 43-101, has supervised the preparation of and
verified the information that forms the basis for the scientific and technical information in this Form 20-F. The Company's mineral reserve estimate was derived from internally
generated data or audited reports.

Cautionary Note to Investors concerning estimates of Measured and Indicated Resources



Cautionary Note to Investors concerning estimates of Inferred Resources



25

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The
criteria set forth in National Instrument 43-101 for reserve definitions and guidelines for classification of mineral reserve are similar to those used by
the United States Securities and Exchange Commission (the "SEC") Industry Guide No. 7, as interpreted by Staff of the SEC ("Guide 7"). However, the definitions in National
Instrument 43-101 differ in certain respects from those under Guide 7. Under Guide 7, among other things, a mineral reserve estimate must have a feasibility study and
be calculated using a historic three-year average price. The Company uses historic three-year average prices to calculate its mineral reserves; however, as permitted under National
Instrument 43-101, the mineral reserve estimates for the Lapa, LaRonde II and Suurikuusikko projects have been based on a preliminary feasibility study rather than a feasibility study.
In addition, on the Bousquet property, no feasibility study has been completed; however this mineral reserve consists of broken ore that has already been mined and is currently stockpiled on the
surface. As the grade of this ore is above the economic level to mill the material, it has been classified as proven mineral reserve. In addition to the differences noted above, Guide 7 does
not recognize mineral resources. Set out below are the reserve estimates as calculated National Instrument 43-101 and Guide 7, respectively:

|                                  |  | National Instrument 43-101 |  | Industry Guide 7
|--------------------------------- |  | -------------------------- |  | ----------------
|
|Bousquet                          |  | 18,256                     |  | 1.30            
|Goldex                            |  | 17,993                     |  | 1.88            
|LaRonde                           |  | 6,767,626                  |  | 2.92            
|Total Proven Reserve              |  | 6,803,815                  |  |                 
|                                  |  |                            |  |                 
|Goldex                            |  | 21,374,949                 |  | 2.39            
|Lapa                              |  | 4,090,420                  |  | 8.88            
|LaRonde                           |  | 10,779,845                 |  | 2.86            
|LaRonde II                        |  | 19,154,447                 |  | 5.98            
|Suurikuusikko                     |  | 13,757,215                 |  | 5.26            
|Total Probable Reserve            |  | 69,156,875                 |  |                 
|                                  |  |                            |  |                 
|Total Proven and Probable Reserve |  | 75,960,690                 |  |                 
|                                  |  |                            |  |                 

National
Instrument 43-101 requires mining companies to disclose reserves and resources using the subcategories of proven reserves, probable reserves, measured
resources, indicated resources and inferred resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

A
"mineral reserve" is the economically mineable part of a measured or indicated resource demonstrated by at least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes
diluting materials and allows for losses that may occur when the material is mined.

A
"proven mineral reserve" is the economically mineable part of a measured resource for which quantity, grade or quality, densities, shape and physical characteristics are so well
established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the
economic viability of the deposit.

A
"probable mineral reserve" is the economically mineable part of an indicated mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be
estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the
deposit.

26

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A
"mineral resource" is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth's crust in such form and quantity and of such a grade
or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted
from specific geological evidence and knowledge.

A
"measured mineral resource" is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of
confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based
on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.

An
"indicated mineral resource" is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of
confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based
on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely
enough for geological and grade continuity to be reasonably assumed. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

An
"inferred mineral resource" is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and
reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes.

A
"feasibility study" is a comprehensive study of a mineral deposit in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors are
considered in sufficient detail that
it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production.

A
"preliminary feasibility study" or "pre-feasibility study" is a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining
method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined,
includes a financial analysis based on reasonable assumptions of technical, engineering, operating, economic factors and the evaluation of other relevant factors which are sufficient for a qualified
person, acting reasonably, to determine if all or part of the mineral resource may be classified as a mineral reserve.

"Cut-off
grade" means (a) in respect of mineral resources, the lowest grade below which the mineralized rock currently cannot reasonably be expected to be economically
extracted, and (b) in respect of mineral reserves, the lowest grade below which the mineralized rock currently cannot be economically extracted as demonstrated by either a preliminary
feasibility study or a feasibility study. Cut-off grades vary between deposits depending upon the amenability of ore to gold extraction and upon costs of production and metal prices.

27

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|                                      |  | at December 31,
|------------------------------------- |  | ---------------
|
|Gold                                  |  |                
|Proven(1)  tonnes                    |  | 3,800,000      
|Average grade  gold ounces per tonne |  | 4.21           
|Probable(1)  tonnes                  |  | 26,100,000     
|Average grade  gold ounces per tonne |  | 5.45           
|Zinc                                  |  |                
|Proven  tonnes                       |  | 2,900,000      
|Average grade  gold ounces per tonne |  | 1.27           
|Probable  tonnes                     |  | 3,800,000      
|Average grade  gold ounces per tonne |  | 0.82           
|Total mineral reserve  tonnes        |  | 36,700,000     
|Total contained gold ounces(2)        |  | 5,307,000      

---

Tonnage information is rounded to the nearest 100,000 tonnes.

Notes:

Reconciliation of LaRonde Division Mineral Reserve

The
following table shows the reconciliation of mineral reserves (in nearest thousand tonnes) at the LaRonde Division by category at December 31, 2005 with those at
December 31, 2004.

|                  |  | Proven |   | Probable |   | Total  |  
|----------------- |  | ------ | - | -------- | - | ------ | -
|December 31, 2004 |  | 5,891  |   | 31,044   |   | 36,935 |  
|Mined             |  | (2,672 | ) |         |   | (2,672 | )
|Revision          |  | 3,549  |   | (1,110   | ) | 2,439  |  
|                  |  |        |   |          |   |        |  
|December 31, 2005 |  | 6,768  |   | 29,934   |   | 36,702 |  
|                  |  |        |   |          |   |        |  

28

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Preparation of Scientific and Technical Data

The
personnel at the LaRonde Division utilize quality assurance procedures and assay protocols in connection with drilling and sampling that conform to industry-accepted quality control
procedures. Exploration drilling is carried out on approximately a 100 metre by 100 metre pattern, whereas reserve drilling is carried out on approximately a 40 metre by
40 metre pattern. Samples are taken at regular (0.3 to 1.5 metre) intervals and assayed for gold using the fire assay method. Drill hole collar, survey and assay information used in
modelling and resource estimation are manually verified by on-site geologic staff and all core sample metal grades are verified by independent assay laboratories. Factors that could affect
the accuracy or reliability of the results of the sampling and assaying carried out at the LaRonde Division include uncleanliness of the coreshack area, a dirty coresaw, the lack of an unobstructed
drain for water and rock cuttings during the cutting process, the inability to collect uniform representative samples of adequate size, as well as an ore core recovery of less than 100%. In cases of
irregular mineralization, representative samples are sometimes chosen in order to avoid introducing a sampling bias during cutting.

Complete
information on the verification procedures, the quality assurance program, quality control procedures, operating and capital cost assumptions, parameters and methods and a full
discussion of the factors that may materially affect mineral reserve and mineral resource estimates may be found in the 2005 LaRonde Mineral Resource and Mineral Reserve Estimate, Agnico-Eagle Mines
Limited, LaRonde Division filed with Canadian Securities Administrators on SEDAR.

Lapa Project

The Lapa Project is a pre-production stage development property located approximately 11 kilometres east of the LaRonde Mine near Cadillac,
Quebec and is accessible by provincial highway. The Lapa property is made up of the Tonawanda property, which consists of 43 mining claims totalling approximately 709.0 hectares, and the
Zulapa property, which consists of one mining concession totalling approximately 93.5 hectares. In 2002, after signing an initial option agreement with Breakwater Resources and undertaking an
aggressive exploration program, the Company discovered a new gold deposit almost 300 metres below the surface. In 2003, the Company purchased the Lapa property from Breakwater Resources for a
payment of $8.925 million, a 1% net smelter return royalty on the Tonawanda property and a 0.5% net smelter return royalty on the Zulapa property. An additional $1 million is payable to
Breakwater if the published inferred mineral resource at the Lapa property reaches 2.0 million ounces of gold. Of the total potential cash consideration of $9.925 million,
$2.0 million may be used by the Company as a credit to offset net smelter return royalties payable.

Currently,
the only infrastructure on the property is employed for sinking the shaft and consists of the former LaRonde shaft #1 headframe and shafthouse, which were both
refurbished, a service building housing the hoist and compressors, temporary offices and settling ponds for waste water.

In
February 2003, the inferred mineral resource for the Lapa property, which consisted entirely of the Contact Zone lens, was estimated to be 2.97 million tonnes grading
8.54 grams per tonne of gold. Most of the mineralized drill holes in the Contact Zone contain visible gold. For this mineral resource estimate, high assay gold values were capped at
51.4 grams per tonne. Drilling throughout 2003 also confirmed a new zone, the Contact South Zone, immediately adjacent to the west and south of the Contact Zone. The 2003 drilling program also
focused on infill drilling that resulted in the resource to reserve conversion at year end. In 2003, the Company also focused on collecting material to be used in conducting metallurgical testing and
preliminary engineering and baseline environmental studies were initiated.

In
March 2005, the Company began sinking a 825 metre deep shaft at the Lapa property. At the end of 2005, the shaft had reached a depth of approximately 600 metres
below surface. Completion of the 4.9 metre diameter, concrete lined shaft is expected to occur in the second half of 2006. The shaft will provide access for an underground diamond drilling
program to test the depth potential of the deposit, to confirm the mining method, continuity and estimated dilution factor, to extract a 13,600-tonne metallurgical bulk sample, to validate current
reserve estimates and to refine the metallurgical process. Underground diamond drilling to validate the continuity and grade of the present reserve estimate commenced in the fourth quarter of 2005. A
feasibility study is anticipated to be completed by the end of 2006. The total cost of the underground development drilling

29

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and
metallurgical program at the Lapa property is estimated to be $30 million, of which $12 million is expected to be incurred in 2006.

Positive
results from the first phase program would result in an extension of the shaft to a depth of approximately 1,370 metres below surface in a second phase program.
Incremental capital costs to bring the project into full production after the bulk sample are currently estimated at approximately $80 million. Consideration is being given to accelerating the
second phase of the shaft sinking program. Assuming no further additions to reserves and the current reserve grade, the Company envisages a 10-year mine life with full production levels in
late 2008 of approximately 125,000 ounces of gold per annum at cash operating costs of approximately $200 per ounce.

The
Company envisages that the Lapa site will host the underground mining operation and the ore will be trucked to the LaRonde processing facility, which will be modified to treat,
recover the gold and store the residues.

Geology and Diamond Drilling

Geologically, the Lapa property is similar to LaRonde and is also located near the southern boundary of the Archean-age (2.7 billion years old)
Abitibi Sub-Province and the Pontiac Sub-Province within the Superior Province of the Canadian Shield. The most important regional structure is the CLL Fault Zone marking the
contact between the Abitibi and the Pontiac sub-provinces, which passes through the property from west to east. The CLL Fault Zone is marked by schists and mafic to ultramafic volcanic
flows that comprise the Piché Group (up to approximately 150 metres in thickness). The CLL Fault Zone is generally east-west trending but on the Lapa property,
it curves southward abruptly before returning to its normal trend; the flexure defines a "Z" shaped fold to which all of the lithological groups in the region conform. Feldspathic dykes cut
Piché Group (more often in the sector of the fold). To the north of the Piché Group lies the Cadillac Group sedimentary Group, which consists of approximately
500 metres or more of well-banded wacke, conglomerate and siltstone with intercalations of iron formation. The Pontiac Group sedimentary rocks (up to approximately 300 metres
thickness) that occur to the south of the Piché Group are similar to the Cadillac Group but do not contain conglomerate nor iron formation. Minor Protorozoic age (2.0 billion
years) diabase dykes cut all of the rocks in a northwest direction.

All
of the known gold mineralization along the CLL Fault Zone is epigenetic (late) vein type and mineralization is controlled by structure; mineralization is associated with the fault
zone and occurs all or immediately adjacent to the Piché Group rocks. Although gold mineralization also occurs throughout the Piché Group at Lapa, except for the Contact
and Contact South zones (which comprise the Lapa Deposit), it is generally discontinuous and has low economic potential. The Contact and Contact South zones are made up of multiple quartz veins and
veinlets, often smokey and anastomosing, within a sheared and altered envelope (with minor sulphides and visible gold) that is always at the contact between the Piché Group and the
Cadillac Group sediments. The envelope is not always in the same volcanic unit since the Piché/Cadillac contact is discordant. The sheared envelope consists of millimetre-thick
foliation bands of biotite or sericite with silica (depending on the rock type that hosts the alteration). Sericitization predominates when the zone is in sedimentary rocks while biotization and
silicification predominates when the envelope affects the Piché Group volcanics. Quartz veins and millimetre-sized veinlets that are parallel to the foliation (structural fabric)
account for 5% to 25% of the mineralization. Visible gold is common in the veins and veinlets but can also be found in the altered host rock. Sulphides account for 1% to 3% of the mineralization; the
most common sulphide is, in order of decreasing importance, arsenopyrite, pyrite, pyrrhotite and stibnite. Graphite is also rarely observed as inclusions in smokey quartz veins.

The
Contact zone is a tabular shaped mineralized envelope that is oriented south-east and dips very steeply (-87 degrees) to the south. The economic
portion of the zone has been traced from roughly 450 metres below surface to below 1,150 metres depth, has an average strike length of 350 metres and varies in thickness between
2.7 to 14.5 metres and is open at depth.

The
Contact South zone is also steeply dipping but is oriented west-northwest or slightly oblique to the Contact zone (and it intersects the Contact zone near its
western extremity). The Contact South zone, located at

30

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700 metres
depth, is 200 metres long by 200 metres in height and has a thickness that varies between 2.2 and 8.2 metres.

Drilling
in 2005 concentrated on expanding the known ore bodies (Contact Zone and Contact South Zone) as well as drilling untested portions of the volcano-sedimentary contact in the
eastern portion of the property. Exploration drilling, in particular drill holes 118-04-57C and 118-04-57E which tested below the lowest level of the
Lapa property reserves (at approximately 1,300 metres below the surface) successfully traced the Contact Zone lens in particular to a depth of 1,390 metres and the deposit remains
open for expansion at depth of 1,390 metres. The results are summarized below:

|           |  |     |  | Interval (m) |  |        
|---------- |  | --- |  | ------------ |  | -------
|
|
|118-04-57C |  | 6.0 |  | 1,886.7      |  | 1,892.9
|118-04-57E |  | 3.8 |  | 1,827.9      |  | 1,831.8

Mineral Reserve and Mineral Resource

At December 31, 2005, the Lapa property contained 4.1 million tonnes of probable reserves grading 8.88 grams of gold per tonne (unchanged
from December 31, 2004 due to no supplemental exploration results and no significant change in the cut-off grade).

|                               |                                      | December 31, 2005 |           | December 31, 2004
|------------------------------ | ------------------------------------ | ----------------- | --------- | -----------------
|Gold                           |                                      |                   |           |                  
|                               | Probable  tonnes                    |                   | 4,090,000 |                  
|                               | Average grade  gold grams per tonne |                   | 8.88      |                  
|Total mineral reserve  tonnes |                                      | 4,090,000         |           | 4,090,000        
|Total contained gold ounces    |                                      | 1,168,000         |           | 1,168,000        

---

Tonnage information is rounded to the nearest thousand tonnes.

Notes:

For
the mineral resource models, a minimum gold grade cut-off of 5.0 grams per tonne was used to evaluated drill hole intercepts that have been adjusted to respect a minimum mining
width of 2.8 metres (horizontal width). Separate cut-off grades are used for the estimation of mineral reserves and mineral resources. In order to estimate the mineral reserve, a
dilution factor that averaged 22.8% was applied. For the underground reserve models, the minimum in situ gold grade cut-off was 6.0 grams per tonne or 6.5 grams per tonne for
the Transverse mining method and the Avoca mining method, respectively. The cost per tonne estimate for the Transverse mining method is C$60.90 and for the Avoca mining method is C$58.91. The
cut-off grade used for the estimate of mineral reserves is based on the grades used in the preliminary feasibility study or feasibility study that supports the estimate of mineral reserves
whereas the cut-off grade used for the estimation of mineral resources is determined by the Company based on the minimum grade of ore that has reasonable prospects for economic extraction.
The metal grades reported in the mineral reserve estimate represent in-place grades and do not reflect losses in the recovery process, that is, the metallurgical losses associated with
processing the extracted ore. The mineral reserve and resource figures presented herein are estimates, and no assurance can be given that the anticipated tonnages and grades will be achieved or that
the indicated level of recovery will be realized. In addition to the mineral reserves set out above, at December 31, 2005 the Lapa property contained 0.75 million tonnes of indicated
mineral resource grading 5.49 grams of gold per tonne and 1.71 million tonnes of inferred mineral resource grading 7.69 grams of gold per tonne.

31

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Preparation of Scientific and Technical Data

The
qualified person responsible for the Lapa mineral reserves and mineral resource estimate is Christian D'Amours, P.Geo., of Service Conseil Geopointcom. All Lapa drill core has been
logged and the results have been verified by Dino Lombardi, P.Geo., Senior Geologist, Exploration Division, who is fully qualified per the standards outlined in National
Instrument 43-101. The Exploration Division personnel utilize quality assurance and assay protocols that conform to industry accepted quality control procedures. Exploration
drilling at Lapa is carried out on approximately a 100 metre by 100 metre pattern, whereas probable reserve drilling is carried out on approximately a 80 metre by 80 metre
pattern. Samples are taken consecutively at 0.3 metre to 1.5 metre intervals. The drill core selected for analysis is sawed in half with one half sent to a commercial laboratory and the
other half retained for future reference. Upon reception of the assay results, the pulps and rejects are recovered and submitted to a second laboratory for check-assay purposes. The gold assaying
method uses a 30-gram sample by Fire Assay or Metallic Sieve finish as requested by the project geologist. The laboratories used are Bourlamaque Assay Laboratories Ltd., Val d'Or,
Quebec, and Expert Laboratories Inc., Rouyn-Noranda, Quebec.

Goldex Project

The Goldex property is located in the municipality of Val d'Or, Quebec and is accessible by provincial highway. The elevation is approximately 275 metres
above sea level. All of the Goldex project's power requirements are supplied by Hydro-Quebec through connections to its man power transmission grid. All of the water required at the Goldex project
will be sourced directly by aqueduct from the Allard River immediately adjacent to the project.

The
Goldex Project is a development property held under 22 claims, totalling approximately 267.78 hectares. The claims are renewable every second year upon payment of a
small fee. The Company has a 100% working interest in the Goldex property. The Goldex property is made of three claim blocks: the Probe block (ten claims, 122.38 hectares); the Dalton
block (one claim, 10.4 hectares); and the Goldex Extension block (11 claims, 135.0 hectares). The Goldex Extension Zone, which is the gold deposit on which the Company is
currently focusing its exploration and development efforts, was discovered in 1989 on the Goldex Extension claim block (although a small portion of the deposit is interpreted to occur on both the
Dalton and Probe claim blocks). Probe Mines Ltd. holds a 5% net smelter return royalty interest on the Probe claim block. Should commercial production commence on the Goldex Project,
18,000 shares of the Company will be issued to the estate of John Michael Dalton Jr. The Goldex Extension block claims were subject to a 1% net smelter return royalty interest in favour of
Donald, Bernard, Marlin and Christine Charlebois. However, in 2005, the Company acquired this interest for approximately $1.2 million.

The
surface facilities at the Goldex Project include a headframe, a surface building containing a mechanical shop, a warehouse, an office and a 790 metre deep shaft, which
provides underground access. Since 1989, the Company has undertaken a major exploration program on the Goldex Extension Zone. This program included deepening the shaft from 460 metres to its
current 790 metre depth, over 48,000 metres of drilling, over 2,000 metres of horizontal development, 4,150 cubic metres of slashing, 145 metres of raising and the
extraction and milling of two bulk samples (33,333 tonnes in 1995 and 102,869 tonnes in 1996). Underground exploration drilling in 1997 confirmed earlier results that outlined a large
zone of low-grade mineralization ranging from 18 to 23 million tonnes in size with a gold grade in the range of 2.19 to 2.47 grams per tonne (using a cutting factor of
34.29 grams per tonne).

In
1997, the Company completed a mining study that showed that the deposit was not economically viable to mine at the then prevailing gold price using the mining approach chosen and
drill-hole indicated grade. Results from the bulk sampling suggested, however, that the estimation method used may have underestimated the realized grade for the Goldex Extension Zone.
However, in late 1997, in view of the then-prevailing market price of gold, the property was placed on a care and maintenance basis. In September 1998, the workings were allowed to
flood. The carrying value of the Goldex Project was written down to nil in 1997.

Throughout
2003, the Company re-evaluated the Goldex project reviewing mining methods and grade estimation methods. In February 2004, a new reserve and resource
estimate was completed for the Goldex Extension Zone conforming to National Instrument 43-101 which, coupled with a new preliminary feasibility

32

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study,
led to a probable reserve estimate of 1.6 million ounces of gold contained in 21.8 million tonnes of ore grading 2.37 grams of gold per tonne. In addition, the
February 2004 reserve and resource estimate led to an indicated resource estimate of 1.1 million tonnes grading 2.64 grams of gold per tonne and an inferred resource estimate of
2.5 million tonnes grading 2.13 grams of gold per tonne.

In
February 2004, based on a review of the project conducted by independent engineers, the Company decided to undertake a $4.7 million underground bulk sampling program to
provide additional geological and sampling information to increase the level of confidence in the gold grade. Dewatering of the underground workings was completed in 2004 in preparation for the
exploration program and a bulk sample. In 2004, 28 diamond drill holes were completed for 5,940 metres and over 610 metres of development in three subvertical raises (each
approximately 3 metres in diameter) were excavated over an approximate 210 metre distance along the strike of the Goldex Extension Zone. The 16,500 tonnes of ore were collected
and sampled and the resultant bulk sample was processed during the first quarter 2005 and returned a grade of 2.78 grams of gold per tonne, nearly 10% higher than the grade of 2.54 grams
of gold per tonne returned during the 103,000 tonne bulk sample processed in 1997.

In
February 2005, a new reserve and resource estimate was completed for the Goldex Extension Zone which, coupled with a preliminary feasibility study, led to a probable reserve
estimate of 1.6 million ounces of gold contained in 20.1 million tonnes of ore grading 2.54 grams of gold per tonne. While this estimate was essentially unchanged from the
previous estimate, the exploration and bulk sampling program increased the level of confidence in the project. In addition, the February 2005 reserve and resource estimate led to an indicated
resource of 0.8 million tonnes grading 2.33 grams of gold per tonne and an inferred resource of 3.2 million tonnes grading 1.75 grams of gold per tonne.

In
2005, the Goldex Extension Zone resource model was revised and a feasibility study was completed and submitted for review by an independent consultant. In July 2005, the
Company approved the feasibility study and the construction of the Goldex mine. Annual gold production is expected to average 170,000 ounces over a 10-year mine life commencing in 2008.
Environmental permits for the construction and operation of an ore extracting infrastructure at the Goldex project were received from the Quebec Ministry of the Environment in October 2005, and
in the same month work started on the shaft collar. The Company anticipates that sinking of the new production shaft will begin in the third quarter of 2006 and that the new 5.5 metre diameter
concrete lined shaft will reach a final depth of 863 metres. Underground development and construction has commenced, with access provided by existing underground workings from the existing
790-metre shaft. The Company has applied to the Quebec Ministry of the Environment for necessary permits for construction of a processing plant and tailings facilities at the Goldex
Project. Plant construction is expected to commence in the second quarter of 2006. The Company expects capital expenditures at Goldex in 2006 will be approximately $82 million.

The
preproduction plans at Goldex will require a new production shaft and processing facility. Estimated capital costs to bring Goldex into production are $135 million.
Approximately $75 million has been budgeted
for the new shaft, underground development and construction and mining equipment while an additional $53 million has been budgeted for the processing plant and tailings facility. The remainder
has been budgeted for the surface plant and working capital.

Geology

Geologically, the Goldex property is similar to Lapa and LaRonde and is located near the southern boundary of the Archean-age (2.7 billion
years old) Abitibi Sub-Province, a typical granite-greenstone terrane located within the Superior Province of the Canadian Shield. The southern contact of Abitibi Sub-Province
with the Pontiac Sub-Province is marked by the east-southeast trending CLL Fault Zone, the most important regional structural feature. The Goldex deposit is hosted within a
quartz diorite sill, the Goldex "Granodiorite", located in a succession of mafic to ultramafic volcanic rocks that are all oriented generally west-northwest (and because the
stratigraphic tops are to the South) and are geologically overturned steeply to the North (75 to 85 degrees).

Gold
mineralization at Goldex corresponds to the quartz-tourmaline vein deposit type. The Goldex gold-bearing quartz-tourmaline-pyrite veins and veinlets are the result of a
strong structural control; the most significant structure directly related to mineralization is a discreet shear zone, the Goldex Mylonite, that is up to 5 metres in thickness and occurs within
the Goldex Granodiorite, just south of the Goldex Extension Zone

33

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(which
hosts all of the current mineral reserves) and other gold occurrences. Oriented west-northwest and also dipping 65 to 75 degrees North (and to a lesser extent 60 to
80 degrees South), minor fracture zones (that display reverse movement, North to South) that are developed parallel but to the North of the Goldex Mylonite, control the quartz-tourmalene-pyrite
vein mineralization. Three vein sets (all oriented west northwest but with different dips) are developed within the Goldex Extension Zone. The most important vein set are extensional-shear
veins that dip 30 degrees South and are usually less that 10 centimetres in thickness; synchronous and conjugate with the latter veins are less abundant extensional-shear veins (also
generally less than 10 centimetres in thickness) that dip 30 to 45 degrees to the North. Shear zone veins up to a metre in thickness occasionally occur within the steep North
dipping fracture zones. The vein sets (and alteration associated with them) combine to form stacked envelopes up to 30 metres thick that also dip approximately 30 degrees South
(parallel to the main vein orientation) but which always conform to the orientation (75 degree North dip) of the Goldex Granodiorite and the main fracture zones.

The
Goldex Extension Zone extends from 500 to 800 metres below the surface and is entirely hosted by the Goldex Granodiorite. The limits of the zone are defined by the intensity
of the quartz vein stockwork envelope and assays rather than by individual veins. The zone is almost egg-shaped (flattened in the orientation of the sill) and elongated almost horizontally
(also parallel to the west-northwest trending sill and fracture zones); it is over 300 metres tall by 450 metres long (in a west-northwest direction) and
its thickness increases rapidly from 25 metres along the east-west edges to almost 150 metres in the centre. Exploration results have essentially delimited the Goldex
Extension Zone both at its summit and at its base but is not well defined at either point (the mineralization is inferred to extend above the reserve limit for approximately 50 metres
and below
800 metres depth where inferred mineralization may extend down an additional 50 metres). The Goldex Extension Zone is open to the east-southeast for approximately
300 metres.

Strong
albite-sericite alteration of the quartz-diorite (giving it a pale "granodiorite" look) surrounds the quartz-tourmaline-pyrite veins and cover almost 80% of the mineralized zone;
outside of the envelopes, prior chlorite alteration affects the quartz diorite and gives it a darker grey-green colour. Occasionally enclaves of relatively unaltered medium
grey-green coloured quartz diorite (with no veining or gold) are found within the Goldex Extension Zone (they are included exceptionally as internal waste to allow for a smooth shape
required for mining purposes).

Most
of the gold occurs as microscopic particles that are almost always associated with pyrite (generally adjacent to grains and crystals but also 20% included in the pyrite) that occurs
in the quartz-tourmaline veins and in narrow fractures in the sericite-albite altered quartz diorite (but generally immediately adjacent to the veins); less than 1.5% of the gold occurs as
Calaverite (a gold telluride). Occasionally the gold particles reach to 2 to 3 millimetres in size; this coarse-sized gold fraction present at Goldex has contributed to the grade
estimation problem present on the property.

Mineral Reserve and Mineral Resource

During 2005, part of the underground development work at Goldex that was done to prepare the project for future mine production was within the Goldex Extension
Zone probable mineral reserve envelope; this excavated rock was stockpiled on the surface and was assigned to proven mineral reserves (at a grade measured by sampling) whereas the extracted ore
was subtracted from the probable mineral reserves. The proven reserve stockpile also contained a minor amount of sampled rock from excavations through other mineralized zones that was above the Goldex
Extension Zone gold grade cut-off (1.37 grams of gold per tonne cut-off as established by the feasibility study). At December 31, 2005, the Goldex property
contained 21.4 million tonnes of proven and probable reserves grading 2.39 grams of gold per tonne).

34

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The
following table shows the Goldex property reserves as of December 31, 2005.

|                                  |                                       | December 31, 2005 |            | December 31, 2004
|--------------------------------- | ------------------------------------- | ----------------- | ---------- | -----------------
|Gold                              |                                       |                   |            |                  
|                                  | Proven  tonnes                       |                   | 18,000     |                  
|                                  | Average grade  gold ounces per tonne |                   | 1.88       |                  
|                                  | Probable  tonnes                     |                   | 21,375,000 |                  
|                                  | Average grade  gold ounces per tonne |                   | 2.39       |                  
|Total mineral reserve(1)  tonnes |                                       | 21,393,000        |            | 20,092,000       
|Total contained gold ounces       |                                       | 1,641,000         |            | 1,627,000        

---

Tonnage information is rounded to the nearest thousand tonnes.

Notes:

Reconciliation of Goldex Division Mineral Reserve

The
following table shows the reconciliation of mineral reserves (in nearest thousand tonnes) at the Goldex Division by category as at December 31, 2004 to
December 31, 2005.

|                  |  | Proven |  | Probable |  | Total 
|----------------- |  | ------ |  | -------- |  | ------
|December 31, 2004 |  | 0      |  | 20,092   |  | 20,092
|Mined             |  | 0      |  | 0        |  | 0     
|Revision          |  | 18     |  | 1,283    |  | 1,301 
|December 31, 2005 |  | 18     |  | 21,375   |  | 21,393

Preparation of Scientific and Technical Data

At
Goldex, exploration drilling was carried out on approximately a 100 metre by 200 metre pattern whereas probable reserve drilling was carried out on approximately a 30 metre by 30
metre pattern. Core samples were taken consecutively at 0.3 metre to 1.5 metre intervals. The core selected for analysis was cut or sawed in half with one half sent to a commercial assay
laboratory. Prior to 2004, 3.7 centimetre diameter, or BQ, core was used to test the Goldex Extension Zone; whereas in 2004, 4.8 centimetre diameter, or NQ, core drilling was completed
at Goldex. Upon reception of the assay results, at least 10% of the pulps and rejects were sent to another laboratory for check-assay purposes. Prior to 2004, the principal gold assaying method used
was either by Fire Assay with an atomic absorption of a 30 gram pulverized sub-sample or by Metallic Sieve assaying method of a 30 gram pulverized sub-sample. The
principal laboratory used was Abilab Laboratories, Val d'Or,

35

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Quebec.
During the 2004-2005 program, ALS Chemex of Val d'Or Quebec completed all of the assaying of core and chip samples. The principal assaying method was by Fire Assay with an atomic
absorption or gravimetric finish of a 50 gram pulverized sub-sample. In the case of visible gold, a 1000 gram pulverized sub-sample was assayed using the Total
Pulverisation method.

Complete
information on the verification procedures, the quality assurance program, quality control procedures, operating and capital cost assumptions, parameters and a full discussion
of the factors that may materially affect mineral reserve and mineral resources estimates may be found in the Technical Report on the Estimation of Mineral Resource and Reserves for the Goldex
Extension Zone, Goldex Project, Val-D'Or, Quebec Canada filed with the Canadian Securities Administrators on SEDAR.

Bousquet and Ellison Properties

The Bousquet property is located immediately west of the LaRonde property and consists of two mining leases (73.09 hectares) and 31 claims
(384.85 hectares). The property, along with various equipment and other mining properties, was acquired from Barrick in September 2003 for $3.9 million in cash (including
transaction costs), $1.5 million in common shares of the Company, and the assumption of specific reclamation and other obligations related to the Bousquet property. The property is subject to a
2% net smelter return royalty interest in favour of Barrick.

The
Ellison property is located immediately west of the Bousquet property and consists of eight claims (101.10 hectares). The property was acquired in August 2002 for
C$0.5 million in cash and a commitment to spend C$0.5 million in exploration over four years. The commitment was fulfilled in 2004 and the property is 100% owned by the Company. The
property is subject to a net smelter return royalty interest in favour of Yorbeau Resources Inc. that varies between 1.5% and 2.5% depending on the price of gold. Should commercial production
from the Ellison property commence, Yorbeau Resources Inc. will receive an additional C$0.5 million in cash.

In
the first quarter of 2003, a mineral resource was estimated for the A Zone on the Ellison property conforming to National Instrument 43-101. The estimate, which
used a gold price of $300 per ounce and a 3.0 grams per tonne cut-off grade, revealed an indicated mineral resource of 226,000 tonnes grading 5.5 grams of gold per
tonne. With the underground exploration access provided by the Bousquet II infrastructure, an exploration program was initiated in late 2003 to test the potential of both the Ellison and Bousquet
properties. As of December 2005, exploration activity on the Ellison property in the almost three and a half years of the program totalled 34 holes totalling 18,813 metres. In
2005, the two main targets were the deep extension of the Bousquet 1 corridor and the felsic volcanic package to the south. During 2005, 12 holes (for 7,407 metres) were
drilled on the property from the underground on the Bousquet property. No significant results were returned. The drilling activity on the Bousquet property for the same period since 2002 totalled over
25,698 metres in 50 holes. The main target was the deep extension of the 3-1 Zone and the felsic volcanic package to the south which was thought to contain
mineralization similar to that found at the Laronde Mine's Zone 20 North. In 2005, 27 drill holes were completed on the Bousquet property for almost 8,154 metres.

In
addition, in 2003, the mineral resources at the Bousquet and Ellison properties were reviewed with the possibility of mining resource blocks which could become potentially economic
given the proximity of the mill facility at LaRonde. The result was the definition of a small proven mineral reserve on the Bousquet property (86,000 tonnes grading 3.11 grams of gold
per tonne) of which 109,355 tonnes were extracted in 2004 from a small open pit mine grading 2.23 grams of gold per tonne. As of December 31, 2005, 90,605 tonnes were
milled at a grade of 2.52 grams of gold per tonne. Approximately 18,000 tonnes of remaining proven reserve grading 1.30 grams of gold per tonne were crushed and stockpiled close
to the LaRonde mill; this is a decrease in proven reserves of almost 34,000 tonnes from December 31, 2004 (due to milling and minor mining losses). Based on a gold price of
$405, the three-year average price of gold, an exchange rate of C$1.30 per $1.00 and a mill recovery of 91.5%, the recovered value per tonne is $20.14, which is in excess of the associated milling
costs of $15.75 per tonne, and accordingly the ore is classified as proven mineral reserve.

The
2006 measured and indicated mineral resource at the Bousquet property is approximately 1.8 million tonnes grading 6.02 grams of gold per tonne (unchanged from
December 31, 2004) but following the 2005 exploration program, the inferred mineral resource decreased to 1.7 million tonnes grading 7.45 grams of gold

36

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per
tonne. The December 31, 2005 indicated mineral resource at Ellison is 0.3 million tonnes grading 5.67 grams of gold per tonne, unchanged from December 31, 2004, and the
inferred resource also remains unchanged for December 31, 2004, at 1.0 million tonnes grading 6.40 grams of gold per tonne. In 2005, three main areas of drilling were conducted,
testing potential extensions of mineralization at depth on the Ellison property from the Level 9 and drilling from the bottom of the Bousquet shaft.

The
most interesting results during the year were obtained from the 3-4 Zone at depth. Two of these were located on the Ellison Property, 320 to 370 metres to
the west of the Ellison-Bousquet Property boundary. D04-2805 intersected the zone at a depth of 1,950 metres below surface approximately 320 metres to the west of the
boundary intersecting 11.7 grams of gold per tonne over a true thickness of 2.9 metres.

A
second drill hole, D04-2803 intersected the zone at a depth of 2,390 metres below surface at approximately 1,200 metres west of the boundary returning
24.3 grams of gold per tonne over a true thickness of 2.8 metres. The results have been summarized in the table below:

|         |  |     |  | Interval (m) |  |        
|-------- |  | --- |  | ------------ |  | -------
|
|
|D04-2805 |  | 2.9 |  | 995.0        |  | 999.5  
|D04-2803 |  | 2.8 |  | 1,447.5      |  | 1,451.0

It
was difficult to correlate these two values as there was a vertical distance of 440 metres and a horizontal distance of 50 metres. However, the alteration appeared to
increase in intensity at depth.

DDH
D05-280C intersected the large alteration zone (30 metre core length) correlating to the Zone 20 North Horizon. The alteration zone was characterized
by sericite-silica alteration along with 1% to 5% of stringer pyrite and pyrrhotite mineralization. This was very similar to what was noted prior to the initial discovery of Zone 20 North. A
wedge cut below was attempted and did not reach the target area due to the length of the drill hole and excessive deviation. As a result, further drilling was curtailed on the Bousquet Property due to
the depth of the target of 3,000 metres below surface.

The
underground exploration program at the Bousquet and Ellison properties was suspended on December 31, 2005 and the drills have been demoblilized. A small surface exploration
program is planned on the Ellison property in 2006. A full revision of the economic potential of the resource identified on both properties will be conducted during 2006.

Preparation of Scientific and Technical Data

In
estimating the Bousquet and Ellison 2005 mineral reserve and mineral resource, a minimum gold cut-off grade of 3.0 grams of gold per tonne was used to evaluate
drill intercepts that have been adjusted to respect a minimum mining width of 3.0 metres. The estimate was derived using a combination of three-dimensional block modelling (grades were
interpolated using the inverse distance power squared method) for certain zones and for the other zones, by the polygonal method on longitudinal sections. A portion of the resource estimate is based
on estimates reported when the Bousquet I mine closed in 1996. This information is of a good quality and is considered reliable. The resource was reviewed and reclassified using the CIM Standards on
Mineral Resources and Mineral Reserves Definitions and Guidelines (the "CIM Guidelines") published by the Canadian Institute of Mining, Metallurgy and Petroleum.

Riddarhyttan (Suurikuusikko Project)

On November 2005, the Company completed its tender offer for all of the shares of Riddarhyttan that it did not own
(see " History and Development of the Company"). As of the date hereof, the Company, through its wholly-owned subsidiary, Agnico-Eagle Sweden AB, owns an aggregate of
102,880,951 Riddarhyttan shares, or approximately 97.3% of the issued and outstanding shares of Riddarhyttan. Compulsory acquisition of the remaining 2.7% of the Riddarhyttan shares has been
initiated under Swedish law. Riddarhyttan shares were de-listed from the Stockholm Stock Exchange on November 25, 2005.

37

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Riddarhyttan
is an exploration stage mining company whose primary focus is on exploration and development of the Suurikuusikko project located approximately 880 kilometres north
of Helsinki near the town of Kittilä in northern Finland. Riddarhyttan was established under Swedish corporate law in 1996 and commenced operations in 1997 when it was listed on the
Stockholm Stock Exchange. In 1998, Riddarhyttan won the public international tender conducted by the Finnish Government for the Suurikuusikko project.

The
Suurikuusikko project is located approximately 900 kilometres north of Helsinki and 50 kilometres northeast of the town of Kittilä, in northern Finland.
The project is accessible by paved road to the village of Kiistala, which is located on the southern portion of the main claim block. The gold deposit is located near the small village of Rouravaara,
approximately 10 kilometres north of the village of Kiistala, accessible via a good quality all-weather gravel road. The project is subject to a 2.0% net smelter return royalty
payable to the Republic of Finland after commencement of commercial exploitation. The property is close to infrastructure, including hydro power, an airport at Kittilä, the municipality
of Kittilä, and mining and construction contractors. The project also has access to a qualified labour force.

LOGO

38

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The
Suurikuusikko project comprises a total of 101 individual tenements covering an aggregate area of approximately 7,696 hectares and one mining licence covering an area
of approximately 847 hectares. The mineral titles form 10 distinct blocks. The main block comprises the Suurikuusikko mining licence and 74 contiguous tenements and covers an
aggregate area of approximately 6,560 hectares. The centroid of this block is located at 25.4110 degrees longitude East and 67.9683 degrees latitude North. It excludes three small
circular areas 0.78 hectares in size and six narrow linear strips covering roads. Other tenements form isolated blocks comprising one to seven contiguous tenements located in the vicinity of
the main Suurikuusikko block. The boundary of the mine licence is determined by ground surveyed points whereas the boundaries of the other tenements are not required to be surveyed. All of the
tenements in the Suurikuusikko project are registered in the name of Suurikulta AB, a subsidiary of Riddarhyttan. According to the Finnish Government land tenure records, all tenements are in good
standing. The expiry dates of the tenements vary from July 20, 2006 to August 31, 2009. Tenements are valid between three and five years, providing a small annual fee is paid to
maintain title and extensions can be granted for three years or more.

The
project area is scarcely populated and is situated between 200 and 245 metres elevation above sea level. The topography is characterized by low rolling forested hills
separated by marshes, lakes and interconnected rivers. The gold deposit is situated on an area of land that has no special use at present. Unemployment in the area is high, making municipal leaders
supportive of future mining operations.

The
project is located within the Arctic Circle but the climate is moderated by the Gulf Stream off the coast of Norway such that northern Finland's climate is comparable to that of
eastern Canada. Winter temperatures range from -10 to -30 degrees Celsius, whereas summer temperatures range from 10 degrees to the mid-20s.
Exploration and mining work can be carried out year round. Because of its northern latitude, winter days are extremely short with brief periods of 24-hour darkness around the winter
solstice. Conversely, summer days are very long with a period of 24-hour daylight in early summer around the summer solstice. Annual precipitation varies between 5 and
50 centimetres, one third of which falls as snow. Snow accumulation usually begins in November and remains until March or April.

Geology, Deposit Type and Mineralization

The Suurikuusikko project is situated within the Lapland Greenstone belt. The geology and metallogeny of this area is very similar to that of the Canadian Shield.
In this portion of northern Finland, bedrock is
typically covered by a thin but uniform blanket of unconsolidated glacial till. Bedrock exposures are scarce and irregularly distributed.

The
project area is underlain by late Proterozoic mafic volcanic and sedimentary rocks metamorphosed to greenschists assemblages (chlorite-carbonate) and ascribed to the
Kittilä Greenstone belt. The major rock units trend north to north-northeast and are near vertical. Volcanic rocks were further sub-divided into iron-rich
(Kautoselkä Formation) and magnesium-rich (Vesmajärvi Formation) tholeiites, respectively located to the west and to the east. The contact between the
Kautoselkä and Vesmajärvi formations consists of a transitional zone (Porkenen Formation) comprising mafic tuffs, graphitic metasedimentary rocks, black chert and banded
iron formations. It varies in thickness between 10 and 50 metres and is characterized by strong heterogeneous penetrative strain, narrow shear zones, breccia zones and intense hydrothermal
alteration (carbonate-albite-sulphide) and gold mineralization. The Porkenen Formation defines what is referred to as the Suurikuusikko Trend and is the major host for the gold mineralization. Its
internal geometry is very complex and exhibits features consistent with that observed in major brittle-ductile deformation suggesting that this rock unit represents a significant structural
discontinuity. This shear zone represents the principal metallogenic target on the Suurikuusikko property.

The
known gold mineralization on the Suurikuusikko Trend is associated with strong sulphide mineralization (principally arsenopyrite and lesser pyrite) and associated hydrothermal
alteration and is hosted in the extensive brittle-ductile shear zone. The gold at Suurikuusikko is almost exclusively refractory. Gold particles are locked inside fine-grained arsenopyrite
(approximately 73%) or pyrite (approximately 23%). What remains is "free gold", which is manifested as extremely small grains in pyrite. Most of the free gold is found in the outer, oxidized or eroded
sections of the ore. Small amounts of copper pyrite, pyrrhotite, sphalerite, galena, gersdorffite, tetrahedrite, jamesonite, bornite, gudmundite and rutile are also present. The gold deposit is

39

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intersected
at several locations by small massive bands containing the antimony mineral stibnite. The characteristics of the known gold mineralization are similar to a class of hydrothermal gold
deposits referred to as "orogenic" gold deposits, which typically exhibit a strong relationship with regional arrays of major shear zones.

The
Suurikuusikko deposit is hosted by a north-south oriented shear zone containing multiple mineralized lenses, which have been traced over a strike length of 15 kilometres. Most
of the exploration work has been focused on the 4.5 kilometres which host the known gold reserves and resources.

From
north to south, the zones comprising the Suurikuusikko deposit are Rimminvuoma, North Rouravaara, Central Rouravaara, Main East, Main West, Etelä and Ketola. The Main
West and East zones host approximately 83% of the probable mineral reserve estimate.

Exploration and Drilling History

In 1986, the discovery of coarse visible gold in quartz-carbonate veining along a road cut near the village of Kiistala alerted the Geological Survey of Finland
("GTK") to the gold exploration potential of the area. Following this discovery, GTK initiated regional exploration over the area and deployed a wide range of indirect exploration tools to explore
this poorly exposed area. Low-altitude airborne geophysical surveys (magnetic, electromagnetic, radiometric), ground geophysical surveys and various soil and till sampling programs were
carried out over a wide area encompassing the original bedrock gold discovery.

By
1987, well-defined geochemical anomalies around the Suurikuusikko area presented obvious targets that were tested by a reconnaissance drilling program, confirming the existence of
gold mineralization in bedrock. Between 1989 and 1991, GTK drilled a total of 72 diamond drill holes (9,031 metres in length) and five reverse circulation bore holes (approximately
288 metres in length) to investigate soil anomalies and delineate the gold mineralization uncovered at Suurikuusikko.

The
project remained essentially dormant between 1991 and 1998. Exploration at Suurikuusikko resumed in 1998 under Riddarhyttan management. Between 1999 and 2005, 462 core
boreholes (more than 136,278 metres) were drilled by Riddarhyttan over a strike length of 5.5 kilometres to investigate the main Suurikuusikko auriferous structure. Mineralogical,
petrographic and structural studies were completed on unoriented and limited oriented drill core to further the understanding of the geological and structural setting of the gold mineralization. In
conjunction with the drilling, ground geophysical surveys were carried out to improve the imaging of the Suurikuusikko host rocks and structural patterns. Throughout this period, Riddarhyttan
continued to investigate the metallurgical properties of the refractory gold mineralization with the objective of demonstrating its recoverability and assessing suitable processing scenarios.
Riddarhyttan initiated engineering and environmental studies to investigate other aspects and assess the feasibility of a mining project at Suurikuusikko. As of August 2005, drilling and
studies of metallurgical, engineering and environmental aspects were ongoing with the objective of improving the characterization of the gold deposit, assessing the feasibility of a potential mining
project and evaluating the potential project economic returns.

In
February 2006, Agnico-Eagle announced that probable gold reserves at Suurikuusikko total 2.3 million ounces from 13.8 million tonnes grading 5.3 grams of
gold per tonne. The mineral resource model which formed the basis of an economic evaluation and from which the declaration of the mineral reserve was derived incorporated drilling results to the end
of January 2006. The conversion of mineral resources to mineral reserves is based on an internal pre-feasibility study completed by Agnico-Eagle in August 2005 with
subsequent changes to reflect current market conditions.

Currently,
pilot-plant testing is proceeding on pressure oxidation as the selected process for gold extraction. The current drill program is focused on in-fill drilling and
resource conversion, as there has been a significant increase in the resource category over the past year. A feasibility study is expected to be completed in the second quarter of 2006. The study will
be based on an open pit mining scenario with underground mining via ramp access and a one million tonne per annum surface processing plant.

40

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Exploration and Drilling

The Suurikuusikko deposit is hosted by a north-south oriented shear zone containing multiple mineralized lenses, which have been traced over a strike length of
15 kilometres. Most of the work has been focused on the 4.5 kilometres which host the known gold reserves and resources. From north to south, the zones are Rimminvuoma, North Rouravaara,
Central Rouravaara, Main East, Main West, Etela and Ketola. The Main West and East zones host approximately 83% of the probable gold reserve estimate. Most of the focus of the recent work has been on
the Main and Rouravaara Zones. Up to the end of December 2005, a total of 555 drill holes, comprising 157,238 metres of diamond drilling, were completed on the property. Since the
beginning of 2006, eight drills have been in operation on the property, five on resource conversion, two on exploration drilling, and one on condemnation drilling required for the
feasibility study.

The Main West and Main East Zones

Some
of the highlights from the holes drilled in the Main zones in 2005 are set out below:

|               |  |      |  | Interval (m) |  |      
|-------------- |  | ---- |  | ------------ |  | -----
|
|
|Main West Zone |  |      |  |              |  |      
|SUBH 5046      |  | 4.7  |  | 447.0        |  | 454.0
|SUBH 5060      |  | 6.9  |  | 668.0        |  | 678.6
|SUBH 5069      |  | 3.1  |  | 470.0        |  | 475.0
|SUBH 5078      |  | 7.3  |  | 476.0        |  | 486.0
|SUBH 5103      |  | 15.3 |  | 407.6        |  | 434.1
|Main East Zone |  |      |  |              |  |      
|SUBH 5046      |  | 7.4  |  | 429.1        |  | 440.4
|SUBH 5060      |  | 2.5  |  | 643.0        |  | 647.0
|SUBH 5069      |  | 17.2 |  | 427.4        |  | 455.9
|SUBH 5090      |  | 22.3 |  | 414.9        |  | 446.9
|SUBH 5098      |  | 20.0 |  | 300.6        |  | 330.5

The
Main West and East zones have been traced over a horizontal distance of 1.5 kilometres and a vertical depth of approximately 800 metres below surface. Most of the
converted reserves are located within the Main zones, which are known to contain at least three, roughly parallel, gold bearing lenses.

It
is these types of parallel zones, which require additional drilling either from surface or underground, that contribute to the additional potential of the property. The drilling
continues to confirm a northern plunge which is open for further expansion at depth and to the north.

The
Main zones are currently the focus of mine planning for an open pit and underground mine as part of the feasibility study. Over 600,000 ounces of the gold reserves are located
in the proposed open pit. This study is expected to be completed in the second quarter of 2006.

The Central and North Rouravaara Zones

The
Central and North Rouravaara zones have been the focus of much of the exploration drilling over the past year and have developed into significant gold zones, in terms of tonnage,
grade and exploration potential. Drilling has confirmed that they have similar characteristics as the Main zones, in that they also contain several, roughly parallel, gold bearing zones. The
Rouravaara zones have been traced over a strike length of 500 metres and down to a depth of approximately 500 metres below surface. Parts of the Rouravaara zones have been

41

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characterized
by significant thicknesses and potentially higher grades than the Main zones. Some of the most recent drilling results have been highlighted below:

|                        |  |      |  | Interval (m) |  |      
|----------------------- |  | ---- |  | ------------ |  | -----
|
|
|Central Rouravaara Zone |  |      |  |              |  |      
|SUBH 5066               |  | 31.5 |  | 360.8        |  | 408.0
|SUBH 5073               |  | 12.0 |  | 515.0        |  | 534.3
|SUBH 5081               |  | 22.3 |  | 296.7        |  | 340.3
|SUBH 5104               |  | 27.7 |  | 343.6        |  | 391.2
|North Rouravaara Zone   |  |      |  |              |  |      
|SUBH 6001               |  | 11.4 |  | 583.7        |  | 599.2

The
latest drill hole SUBH 6001 was significant as it is the northernmost intersection to date, the deepest on the northern section of the Rouravaara North zone. This
result suggests that this zone is open in all directions at depth.

The
latest drilling on both the Main and Rouravaara zones continues to confirm the upside potential of the entire Suurikuusikko gold structure. The drilling over the past
18 months has continued to grow the deposit and provide a better understanding of the geological controls. For 2006, Agnico-Eagle will continue to drill with the seven exploration drills
presently on site. The program will continue on resource conversion; testing the deposit at depth, and along strike, especially towards the north. An underground exploration and development program is
currently being considered as part of the feasibility study.

Mineral Resource Estimation

On July 19, 2005, Riddarhyttan released a mineral resource estimate for the Suurikuusikko project. The measured mineral resources were estimated at
2.5 million tonnes grading 6.2 grams of gold per tonne, the indicated mineral resources were estimated at 9.3 million tonnes grading 5 grams of gold per tonne and the
inferred mineral resources were estimated at 12.5 million tonnes grading 4.2 grams of gold per tonne at a cut-off of 2.0 grams of gold per tonne.

The
Company's work, released February 2006, has essentially confirmed previous estimates and resulted in the initial conversion of resource into gold reserves. A summary follows:

|                                    |                                      | December 31, 2005 |            | December 31, 2004
|----------------------------------- | ------------------------------------ | ----------------- | ---------- | -----------------
|Gold                                |                                      |                   |            |                  
|                                    | Probable  tonnes                    |                   | 13,757,000 |                  
|                                    | Average grade  gold grams per tonne |                   | 5.26       |                  
|Total mineral reserve(1,2)  tonnes |                                      | 13,757,000        |            | 0                
|Total contained gold ounces         |                                      | 2,325,000         |            | nil              

---

Tonnage information is rounded to the nearest 100,000 tonnes.

Notes:

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Preparation of Scientific and Technical Data

The
Suurikuusikko deposit has been drilled in sections with an intermediate distance of 40 to 50 metres. Down to approximately 200 metres depth the vertical distance
between the drill holes is between 40 and 50 metres. Below this level it generally is between 50 and 100 metres.

Before
the purchase of the Suurikuusikko gold deposit by Riddarhyttan the cores were logged by geologists from the GTK. Most of these holes were, however, re-logged by
Riddarhyttan. Cores have been logged by Riddarhyttan personnel and the results have been verified by a person who has been qualified by SveMin, the Swedish Association of Mines, Mineral and Metal
Producers. Most drill cores have a diameter of 42 millimetres, but there are also many cores with a diameter of 46 millimetres.

Mineralized
parts of the cores have, depending on visual estimation of the grade, been sampled in section lengths of 0.5 to 1.0 metres. The drill core sections, selected for
analysis, are sawed in half with one half sent to a commercial laboratory and the other half retained for future reference.

All
core samples from the Suurikuusikko deposit have been analyzed by the Geological Survey of Finland (Geolaboratory) which is accredited according to the SFS-EN ISO/IEC
17025 to perform chemical analyses of geological samples. The accreditation was awarded by the Centre for Metrology and Accreditation (FINAS) 2.11.1994, by evaluating the performance of the laboratory
and finding it to comply with the requirements. The accreditation was renewed in 1998 and awarded according to ISO/IEC 17025 in 2001. The accreditation code of the laboratory is T025.

The
decomposition pre-treatment method used is Pb-Fire Assay and the gold assaying method is Atomic Absorption Spectrometry, Flame Atomization. Sample sizes have
been 25 grams or 50 grams. Multi-element analyses (Inductively Coupled Plasma Atomic Emission Spectrometry) have been carried out on all samples containing more than 0.5 grams of
gold per tonne.

To
elucidate the criteria for classifying tonnage in Central Suurikuusikko in different categories (measured, indicated and inferred, respectively) a variography study was carried out in
July 2005 by the external consulting firm Reserva International LLC. The study concluded that the nominal drill spacing of 40 metres is enough for classifying a mineral resource
in the measured mineral resources category, and that the nominal drill spacing of 111 metres is enough for classifying a mineral resource in the indicated mineral resource category.

Complete
information on the verification procedures, the quality assurance program, quality control procedures, operating and capital cost assumptions, parameters and methods and a full
discussion of the factors that may naturally affect mineral resource estimates may be found in the Technical Report on the Suurikuusikko Gold Project, Northern Finland by Agnico-Eagle Mines Limited
and SRK Consulting (Canada) Inc. filed with Canadian Securities Administrators on SEDAR.

Pinos Altos

In the first quarter of 2005, the Company entered into an exploration and option agreement with Industrias Peñoles S.A. de C.V.
("Peñoles") to acquire the Pinos Altos project in northern Mexico. The Pinos Altos project is located on a 11,000 hectare property in the Sierra Madre gold belt,
225 kilometres west of the city of Chihuahua in the State of Chihuahua of northern Mexico. Under the option agreement, the Company was required to spend $2.8 million on an exploration
program that included 16,800 metres of diamond drilling. In December 2005, the length of time in which the Company could exercise its option to acquire Peñoles' 100%
interest in the Pinos Altos project was extended and, in February 2006, the Company exercised the option. Under the terms of the exploration and option agreement, the purchase price is
$65 million, comprised of

43

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$32.5 million
in cash and 2,063,635 shares of the Company. The transaction closed in escrow on March 15, 2006. The escrow will be released five business days after the
satisfaction of certain requirements relating to the Mexican environmental authorities' acceptance of the transfer by Peñoles to the Company of its environmental impact statement
authorization relating to the Pinos Altos project. If the satisfaction of these requirements has not occurred within 60 days following March 15, 2006 or such later date to which the
Company and Peñoles may mutually agree, the Company may terminate the exploration and option agreement.

The
Pinos Altos property is made up of three blocks, the Parreña Concessions (19 concessions, 6,041.1 hectares), the Madroño
Concessions (17 concessions, 889.2 hectares) and the Pinos Altos Concession (one concession, 4,192.2 hectares). The Madroño Concessions (which cover
approximately 64% of the current mineral resource) are subject to net smelter royalty of 3.5% payable to Minerales El Madroño S.A. de C.V. ("Madroño"). The Pinos
Altos Concession (which covers approximately 36% of the current mineral resource) is subject to a 2.5% net smelter return royalty payable to the Consejo de Recursos Minerales, a Mexican Federal
Government agency; after 20 years, this portion of the property will also be subject to a 3.5% net smelter return royalty payable to Madroño. Beginning on May 18, 2006,
advance royalty payments of $0.142 million are payable to Madroño. The assets comprising the Pinos Altos project acquired by the Company are an assignment of rights under
contracts to explore and exploit the Madroño Concessions and the Pinos Altos Concession, the right to use up to 400 hectares of land owned by Madroño for mining
installations for a period of 20 years after formal mining operations have been initiated, sole ownership of the Parreña Concessions, possession rights under Mexican law to a
13.3 hectare parcel of land and rights to an environmental impact statement authorization issued by Mexican environmental authorities. Additional surface rights may need to be secured from
other private or communal land owners. The property is approximately 100 kilometres from a major electric power terminus but within 10 kilometres of an extension of the grid that is
currently under construction by the State and Federal Governments. According to previous estimates by Peñoles, there is sufficient water on the property to operate a 1,500 tonne
per day processing plant.

Peñoles
acquired the property in 1995 and drilling by Peñoles in 2003, outlined an indicated mineral resource of 4.04 million tonnes with a grade of
6.29 grams of gold per tonne and 131.0 grams of silver per tonne. In addition, the property has an inferred mineral resource of 2.2 million tonnes grading 6.1 grams of gold
per tonne and 117.0 grams of silver per tonne. Over 90% of the Pinos Altos mineral resource is located in the Santo Niño vein, along a regional fault zone that holds a number of
other known deposits in the area. This Santo Niño vein zone has thicknesses of up to 40 metres over a length of 2.5 kilometres and a vertical extent
that can reach 600 metres or more. It remains open to the west and at depth. Peñoles' work to date has also included metallurgical testing and initial work on the permitting for
a potential mining operation.

The Exploration Program

Under the terms of the exploration and option agreement with Peñoles in 2005, Agnico-Eagle completed a total of 88 surface drill holes and
49 underground drill holes resulting in a total of 19,768 metres of drill core. The program had three initial objectives: first, to test for open pit potential, second, to confirm
previously calculated Peñoles resource estimates and third, to test the known zones at depth. Each of these objectives was achieved.

The
exploration program focused on three known areas of mineralization, the Santo Niño, Oberon de Weber, and Cerro Colorado structures. The total strike length of the
known mineralization is approximately eight kilometres. The exploration to date has focused on approximately one-third of this, so additional exploration remains to be explored. Currently,
the Santo Niño zone contains approximately 60% of both the indicated and inferred gold resource on the property.

Exploration
drilling to date has outlined the Santo Niño deposit to approximately 750 metres in depth. This zone is open both at depth and to the west.

Since
October 2005, diamond drilling has tested the Santo Niño zone at depths greater than 200 metres to determine whether potentially economic intervals of
mineralization occur adjacent to historically mined areas. Several intercepts confirmed that significant mineralization does occur adjacent to these zones. Hole
PA-05-64 intersected a 13.6 metre thick interval grading 19.40 g/t gold and 141.12 g/t silver.

44

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Drilling
from the Santo Niño underground workings confirmed that the structure can be traced over thicknesses reaching 10 metres or more (drill hole
SN1925-53 returned true thickness of 10 metres, grading 6.40 grams of gold per tonne and 164.74 grams of silver per tonne).

One
of the most significant recent results from the deep exploration program was drill hole PA-05-39A, which tested the Cerro Colorado zone at a depth of almost
600 metres. This hole returned grades of 9.74 grams of gold per tonne and 25.36 grams of silver per tonne over a true thickness of 3.8 metres. This hole extended the
mineralization 200 metres down plunge from the previous intercept (PA-05-52, returned grades of 19.64 grams of gold per tonne and 337.45 grams of silver
per tonne over a true thickness of 14.0 metres). Hole PA-05-39A also confirmed that PA-05-39 had
stopped short of the high grade zone. The results from drill hole PA-05-39A also suggest that the Cerro Colorado and Santo Niño zones might join at depth. This
area will be the focus of further exploration in 2006.

In
the Oberon de Weber sector, almost 1,000 metres east of Santo Niño, results continue to confirm the promising open pit potential. In particular
PA-05-40 returned 4.49 grams of gold per tonne and 130.44 grams of silver per tonne over true thickness of 22.0 metres. Exploration during the
remainder of 2006 will continue to test the potential extension of mineralization at depth on the Oberon de Weber zone.

Currently,
two drills continue to operate on the Pinos Altos property. These drills are focused on testing further depth extensions of the Santo Niño and Cerro Colorado
structures. Particular attention is being focused on the area below the Cerro Colorado structure where high grade intersections were encountered in recent drilling.

The
program has confirmed the open pit potential of both the Santo Niño and Oberon de Weber structures. Our work to date has also confirmed that all three structures
remain open along strike and at depth.

Some
of the most notable drill holes from the most recent program are set out below:

|                     |             |     |      | Interval (m) |       |       |       |      
|-------------------- | ----------- | --- | ---- | ------------ | ----- | ----- | ----- | -----
|
|
|Cerro Colorado Zone  |             |     |      |              |       |       |       |      
|                     | PA-05-39A   |     | 3.8  |              | 662.5 |       | 667.5 |      
|Santo Niño Zone      |             |     |      |              |       |       |       |      
|                     | PA-05-64(1) |     | 2.8  |              | 291.2 |       | 294.1 |      
|                     |             | and |      | 1.8          |       | 296.2 |       | 298.2
|                     |             | and |      | 13.6         |       | 299.4 |       | 314.0
|                     | PA-05-77    |     | 31.5 |              | 263.5 |       | 295.0 |      
|                     | SN1925-53   |     | 10.0 |              | 30.3  |       | 40.0  |      
|                     | SN1925-58   |     | 6.0  |              | 31.0  |       | 38.5  |      
|Oberon de Weber Zone |             |    |      |             |       |      |       |     
|                     | PA-05-53    |     | 3.5  |              | 43.3  |       | 51.5  |      
|                     | PA-05-40    |     | 22.0 |              | 36.0  |       | 60.5  |      
|                     | PA-05-49(2) |     | 1.0  |              | 631.0 |       | 632.0 |      

---

Notes:

Additional infill drilling on both the underground and open pit regions will be required to convert the latest resource estimate into reserves.
Detailed engineering on the process plant, additional metallurgical work, and mine planning will be undertaken. The objective is to refine preliminary operating and processing parameters, including
capital cost estimates. Heap leaching of the lower grade material is a possibility and remains to be validated. While a preliminary base line environmental audit was initiated and has indicated no
significant impediments, further detailed work will be undertaken as part of the environmental permitting process. Work on acquiring all necessary permits will begin as soon as possible.

45

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The Mineral Resource

Based on the results of the Company's extensive drill program completed over the past year, the new Pinos Altos resource is set out in the following table.

|Category and Zone          |  | Gold |  | Silver |  | Tonnes
|-------------------------- |  | ---- |  | ------ |  | ------
|
|Indicated Mineral Resource |  |      |  |        |  |       
|Open Pit                   |  | 2.72 |  | 80.88  |  | 6,495 
|Underground                |  | 5.26 |  | 125.42 |  | 5,989 
|Total Indicated Resource   |  | 3.94 |  | 102.25 |  | 12,484

|
|

|Category and Zone         |  | Gold |  | Silver |  | Tonnes
|------------------------- |  | ---- |  | ------ |  | ------
|
|Inferred Mineral Resource |  |      |  |        |  |       
|Open Pit                  |  | 2.54 |  | 75.35  |  | 509   
|Underground               |  | 5.74 |  | 117.64 |  | 2,729 
|Total Inferred Resource   |  | 5.23 |  | 110.99 |  | 3,238 

---

Tonnage amounts and contained metal amounts presented in the tables have been rounded to the nearest thousand.

Notes:

Preparation of Scientific and Technical Data

At
Pinos Altos, the diamond drilling equipment recovered either NQ (48 mm diameter) or HQ (64 mm diameter) core samples. In a few cases, BQ (36.5 mm diameter) core
was also recovered. The drill core selected for analysis was sawed in half with one half sent to a commercial analytical laboratory and the other half retained for future reference.

An
Analytical Quality Assurance Program has been established to control and assure the analytical quality of assays in its exploration at Pinos Altos. This program includes the
systematic addition of blank samples, duplicate samples and certified standards to each batch of samples sent for analysis to commercial accredited laboratories. Blank samples are used to check for
possible contamination in laboratories, duplicate samples quantify overall precision while certified standards determine the analytical accuracy. In addition, approximately 10% of the assayed samples
are sent to a second certified laboratory for check analysis.

BSI
Inspectorate Laboratories, an ISO 9002 / 9001:2000 accredited exploration analysis laboratory, collects the split core samples directly from the Pinos Altos project site, then
prepares the samples at its facilities in Durango, Mexico and finally performs gold and silver analyses at its lab in Reno, Nevada. ALS Chemex in Reno, Nevada, also an ISO accredited laboratory,
re-analyzes all of the samples selected for check assaying.

The
gold assaying method, using a 60 gram charge, is by Fire Assay with either an atomic absorption finish or, if the atomic absorption result is greater than 3 parts per million
of gold, gravimetric finish as requested by

46

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the
project geologist. Silver analysis, from a 30 gram charge, is either by three acid digestion followed by atomic absorption or, if the atomic absorption result is greater than
200 parts per million of silver by Fire Assay with a gravimetric finish as requested.

Future Work

Based on the positive drilling results and the growing precious metals resource, Agnico-Eagle will accelerate its work program on the property with the objective
of completing a feasibility study on the property by the end of the second quarter of 2007. The work program will include additional drilling at depth in the area between the Cerro Colorado and Santo
Niño structures where there are suggestions that the two structures may join at depth. Currently, two drills are on site, however, additional drills with greater depth capability are
being sourced and will be added to the program shortly. The main objectives of the program will be to convert the present resource estimates into reserves, and test the potential target areas.
Agnico-Eagle has also engaged the local communities in the project area to ensure that the project provides real, long-term benefits to the residents living and working in the region.

Agnico-Eagle
has opened a regional office in Chihuahua to facilitate the feasibility study and permitting process, to carry out further exploration on the Pinos Altos property, and to
evaluate other opportunities in Mexico.

Joutel Project

The Joutel properties consist of the former Eagle Mine (including the Eagle West Zone) and the former Telbel Mine, in Joutel Township, Quebec, located
approximately 300 kilometres north of the LaRonde mine. The Eagle Mine and Telbel Mine are held under one mining (14.5 hectares) and 49 claims, totalling approximately
568.26 hectares. Dismantling of the Eagle Mine and Telbel Mine facilities was completed in 2000. Mining and milling operations at the Eagle and Telbel Mines in Joutel ceased in
December 1993 and the Company began the restoration of the Joutel mining and milling site in 1998. The carrying value of the Joutel mine site was written down to nil in 1997.

During
1996, the Company submitted a mine closure plan for the Joutel Project to the Minister of Natural Resources in Quebec. Expenditures on reclamation at the Joutel Project under this
closure plan were $0.2 million in 2005 and $0.1 million in 2004. As of December 31, 2005, the Company has not recorded an asset retirement obligation related to the Joutel Project
as reclamation costs under the mine closure plan have all been substantially incurred.

All
decommissioning and rehabilitation of the Joutel property has been completed except for re-vegetation of the tailings area. In 2002, the Company submitted a geochemical
modelling study on the long-term acid drainage potential of the tailings area to the Ministry of Natural Resources in Quebec in support of a closure plan to revegetate the tailings pond.
Since 2003, pore water quality, the water in the solids contained in the tailings pond has been monitored by the Company. The Company continues monitoring the site and in 2006 will validate the
geochemical model against actual pore water conditions in the tailings. The results of this study and validation will be submitted to the Ministry of Natural Resources and contouring and
re-vegetation of the tailings area will commence after receiving a favourable ruling from the Ministry of Natural Resources regarding the closure plan.

Vezza Project

The Company's Vezza Project is located approximately 50 kilometres northeast of the Joutel properties and consists of the Vezza deposit located in Vezza
Township, Quebec and a number of properties in the Vezza, Noyon and Cavalier Townships in Quebec. The Vezza Project currently comprises ten exploration properties held under 326 mining claims,
totalling approximately 5,307.1 hectares. The Company owns 100% of the Vezza deposit free of royalty interests. The carrying value of the Vezza Project was written down to nil in 1997. The
Company's closure plan was accepted by the Ministry of Environment in Quebec. Rehabilitation will be carried out after the Company has made a decision on the future exploration potential of the
property. Expenditures under the closure plans were nil in 2005 and are expected to be nil in 2006. As at December 31, 2005, the Company's reclamation provision for the Vezza Project
was nil.

47

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Agnico-Eagle's Exploration Activities

Agnico-Eagle continued to actively explore in Quebec, Ontario, Newfoundland, Nevada and Idaho. At the end of December 2005, the land holdings of
Agnico-Eagle consisted of 2,618 mineral titles (claims, mining leases, etc.) covering 65,486 hectares while the land holdings in the United States consisted of
1,263 mineral titles for a total of 11,169 hectares. During 2005, the Company's Canadian exploration activities were focused on the CLL Fault Zone east of the Lapa property as well as
the Chibex North, Chibex South, and Amphi North properties in the Abitibi region. The Company is conducting exploration activities in other parts of the Abitibi region, in Ontario and in Newfoundland
and Labrador. The Company also recently acquired exploration property in northwestern Ontario. In Nevada, exploration activities during 2005 were concentrated on the Cortez-Battle Mountain trend in
Nevada.

Legal and Regulatory Proceedings

As disclosed by the Company on March 18, 2004, the staff of the Ontario Securities Commission had been investigating the Company in relation to the timing
and content of the Company's disclosure concerning a rock fall that occurred at the LaRonde Mine in the first quarter of 2003. In April 2005, the Ontario Securities Commission approved a
settlement agreement reached between the Company and staff at the Ontario Securities Commission. Under the settlement agreement the Company agreed to submit to a third party review of its disclosure
practices and policies, which is currently underway.

In
addition, on November 4, 2004, the Company was advised that Ontario Securities Commission staff were investigating an officer of the Company for potential insider trading
violations. On November 5, 2004, the Company suspended the officer with pay pending the outcome of an internal investigation into the allegations and, on December 7, 2004, the Company
terminated the officer. The Company is cooperating with the Ontario Securities Commission in its investigation.

ITEM 4A.    UNRESOLVED STAFF COMMENTS

None.

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Business Overview and 2005 Highlights

The Company is a leading, intermediate-sized, gold producer with roots that go back more than 30 years. Today it operates the LaRonde gold mine in
northwestern Quebec, Canada, one of the world's most mining friendly and political risk-free areas.

Throughout
2005, the Company continued to execute its strategy of building a multi-mine platform from the foundation of its LaRonde mine. Shaft sinking and level development
continued at the Company's Lapa property, located seven miles east of LaRonde, and shaft sinking and underground construction commenced at the Company's Goldex property, 35 miles east of
LaRonde. Management currently expects Lapa and Goldex to begin contributing to the Company's production in late 2008.

On
the corporate development side, the Company continued focusing on acquiring properties in mining-friendly, low political risk areas where the experience obtained in northwestern
Quebec can be used to build new mines. In that vein, in 2005 the Company completed a tender offer for all the shares of Riddarhyttan Resources AB ("Riddarhyttan"). Prior to the offer, the Company
owned 14% of Riddarhyttan and after the tender offer now owns 97.3%. Agnico-Eagle has initiated the compulsory acquisition under Swedish law of the remaining 2.7% of the Riddarhyttan shares, and
anticipates that "advance possession" of these shares will be obtained in the second half of 2006. Advance possession means that the Company will be entitled to be registered as owner of these shares
and thereby entitled to exercise all rights relating to these shares that vest in a shareholder. Riddarhyttan is the 100% owner of the Suurikuusikko gold deposit, located approximately
550 miles north of Helsinki near Kittilä in Finnish Lapland. Riddarhyttan's property position in the Suurikuusikko area is geologically and topographically similar to
Agnico-Eagle's land package in the Abitibi region of Quebec. The acquisition of Riddarhyttan is consistent with the Company's strategy of creating value by leveraging its technical skills developed at
the LaRonde mine and building a larger more diversified gold production base.

48

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In
2006, the Company continued executing its growth strategy by exercising its option to acquire 100% of the Pinos Altos project in northern Mexico from Industrias
Peñoles S.A. de C.V. ("Peñoles"). The acquisition of the Pinos Altos property is another step towards the Company's goal of building a
multi-mine gold company. The acquisition of the Pinos Altos project closed in escrow on March 15, 2006. This property, in the prolific gold producing Sierra Madre region of northern
Mexico, will be the subject of additional exploration in 2006 as the Company advances towards a feasibility study.

The
addition of the new properties to the Agnico-Eagle growth pipeline resulted in the Company increasing its gold reserves by 32% over 2004 to 10.4 million ounces as at
December 31, 2005. LaRonde, the largest gold deposit in Canada, continues to be the Company's catalyst with 5.3 million of the Company's 10.4 million gold reserve ounces. The
largest increase in the Company's reserve base came from the newly acquired Suurikuusikko property where 2.3 million ounces were converted to reserves. The Company's strategy continues to be
focused around building from its current strength. The Company is focusing on growing its reserve base from the existing portfolio of mines and projects.

Agnico-Eagle's
production is low-cost, which protects shareholders during periods of weaker gold prices. The Company is positioned to benefit from a stronger gold price and,
throughout its 30-year history, it has never sold away the upside for its gold production.

The
Company earns a significant proportion of its revenue and generates cash flow from the production and sale of gold in both doré and concentrate form. The remainder of
revenue and cash flow is generated by the production and sale of byproduct metals, namely silver, zinc and copper.

The
main highlights for 2005 were:



Throughout
this section, the terms total cash costs per ounce and minesite costs per tonne are used. Both of these measures are non-GAAP measures and are discussed in more
detail, including management's use of the measures and their limitations and the reconciliation of such measures to GAAP measures, on pages 37 to 38.

Key Performance Drivers

The key drivers of financial performance for Agnico-Eagle are:



Agnico-Eagle
has never sold gold forward as management believes that low-cost production is the best protection against decreasing gold prices. As a result, the Company is
positioned to benefit from rising gold prices. The sale of byproduct silver, zinc and copper is important to both revenue and total cash costs per ounce. Therefore, certain strategies are implemented
occasionally to mitigate the effects of fluctuating prices of byproduct metals. The C$/US$ exchange rate is also an important financial driver as practically all operating

49

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costs
are paid in Canadian dollars while revenue is generated in U.S. dollars. As such, hedging strategies are also used to mitigate the impact of fluctuating exchange rates on total cash costs per
ounce.

Markets

The following market analysis for gold and silver was reproduced from Scotia Mocatta"Metal Matters"reports.
Charts were constructed from data derived from the London Bullion Market Association ("LBMA"). The market analysis for copper and zinc was reproduced from Morgan Stanley"Basic
Materials"research reports.

The
gold price continued to rise in 2005 reaching 25 year highs and peaking at $575 in mid-February 2006.

Gold PM Fix (US$/Oz)(Source: LBMA)

GRAPHIC

Investment
rather than physical demand was the main contributor to gold's continued rise throughout 2005 as portfolio managers added to their long positions. Investment in gold via
Exchange Traded Funds ("ETF") increased rapidly over the year, and especially in the fourth quarter, with total ETF investment sitting at 12 million ounces at December 31, 2005.
Continued weakening of the U.S. dollar has helped lift gold higher in the fourth quarter. In the first half of 2005, gold increased despite broad-based increases in the U.S. dollar
across major currencies but the traditional relationship between gold and the U.S. dollar has re-emerged in the fourth quarter.

As
a result of increasing prices, jewelry demand continued to fall throughout 2005. Mine supply is expected to grow in 2006 as new mines are brought into production and mines brought on
line in 2005 ramp up production. The supply/demand relationship could lead to pull-backs in the gold price, however investment demand is expected to remain strong in 2006. European central
banks are expected to maximize their sales under the European Central Bank Gold Agreement, however there are indications that secondary central banks of the world, such as Russia, China and India, are
considering increasing their gold holdings. Any shift towards higher gold reserve levels outside of Europe and the United States could have a large impact on the price of gold.

Silver
continued to rise throughout 2005, ending the year with a fourth quarter rally breaking $9.00 per ounce in December and settling into a new range between $8.70 and $9.30. This
move cannot be justified by fundamental supply and demand factors as the surplus in the silver market continues to grow. New mine supply for silver has increased due to increasing base metal
production on the back of highs in those prices as well. Silver demand continued to fall due to continued decline in silver usage in photography and as higher prices

50

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limited
jewelry and silverware demand. Net investment has been the main reason for the increases in the silver price as speculative net long positions on the Comex have doubled since 2003.

Silver PM Fix (US$/Oz)(Source: LBMA)

GRAPHIC

Copper
prices continued to strengthen throughout 2005 as the market continued to be impacted by supply problems. Although London Metal Exchange inventories rose in the fourth quarter,
supply remains a key factor in a market affected by labour strikes and lower than expected production. Chinese demand continues to be strong fueled by demand from power-generating manufacturers as
industrialization and urbanization of the Chinese economy continues. Zinc prices rose steadily throughout the year as a result of a steady fall in London Metal Exchange inventories. Supply concerns
also contributed to the higher zinc price as the concentrate market experienced tightness as a result of recent smelter closures in Mexico and Peru due to power outages and labour issues. The market
is headed for a substantial deficit in 2006 as end-user sectors, such as car manufacturing, continue their robust growth in both Europe and Japan.

Results of Operations

Revenues from Mining Operations

In 2005, revenue from mining operations increased 28% to $241 million from $188 million in 2004. Although production for all metals declined
compared to 2004 production levels, sharp price increases for all metals more than offset the production decrease and led to increased overall revenue.

The
majority of the Company's revenue is derived from precious metal sales. In 2005, sales of gold and silver accounted for 66% of revenues, down from 75% and 84% in 2004 and 2003,
respectively. The decline in the percentage of revenues from precious metals is largely due to increased revenues from byproduct copper and zinc as a result of a sharp increase in prices for each
metal. Revenues from mining operations are accounted for

51

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net
of related smelting, refining, transportation and other charges. In 2006, Agnico-Eagle anticipates precious metal sales to account for 75% of overall revenue. The table below summarizes net
revenue by metal:

|                                             |  | 2005 |         | 2004 |   | 2003   
|-------------------------------------------- |  | ---- | ------- | ---- | - | -------
|Revenues from mining operations (thousands): |  |      |         |      |   |        
|Gold                                         |  | $    | 117,888 |      | $ | 105,528
|Silver                                       |  |      | 41,808  |      |   | 35,289 
|Zinc                                         |  |      | 67,150  |      |   | 33,044 
|Copper                                       |  |      | 14,492  |      |   | 14,188 
|                                             |  |      |         |      |   |        
|                                             |  | $    | 241,338 |      | $ | 188,049
|                                             |  |      |         |      |   |        
|Production volumes:                          |  |      |         |      |   |        
|Gold (ounces)                                |  |      | 241,807 |      |   | 271,567
|Silver (000's ounces)                        |  |      | 4,831   |      |   | 5,699  
|Zinc (tonnes)                                |  |      | 76,545  |      |   | 75,879 
|Copper (tonnes)                              |  |      | 7,378   |      |   | 10,349 
|Sales volumes:                               |  |      |         |      |   |        
|Gold (ounces)                                |  |      | 262,429 |      |   | 254,937
|Silver (000's ounces)                        |  |      | 5,221   |      |   | 5,362  
|Zinc (tonnes)                                |  |      | 75,722  |      |   | 75,221 
|Copper (tonnes)                              |  |      | 8,521   |      |   | 9,230  

Revenue
from gold sales increased $12 million, or 12%, in 2005. Approximately 25% of the $12 million increase was due to increased sales volumes for gold. Despite decreased
production volumes, the Company sold more ounces in 2005 compared to 2004 due to the sale of copper concentrate inventory that had built up at the end of 2004; a substantial portion of the Company's
gold production is contained in the copper concentrate. The remaining 75% of the $12 million increase in gold revenue was due to higher realized gold prices. Realized gold prices increased 7%
in 2005 to $449 per ounce from $418 per ounce in 2004. Silver revenue increased $7 million, or 18%, in 2005. The entire $7 million increase was due to higher realized silver prices as
increasing prices more than offset the minor decrease in silver sales volume.

Revenue
from copper sales increased $0.3 million, or 2%, in 2005. Although realized copper prices increased 50% over 2004, lower production and higher smelting, refining and
transportation charges offset the effect of sharply higher prices. Revenue from zinc sales increased $34 million, or 103%, in 2005. The increase in zinc revenue was due to 46% higher realized
prices as well as lower transportation charges as the Company diverted more of its zinc concentrate production to domestic smelters to avoid escalating ocean freight rates.

Gold
production decreased to 241,807 ounces in 2005, down 11% from 271,567 ounces in 2004. The main reason for the lower gold production was a recovered gold grade of
3.11 grams per tonne, compared to a grade of 3.41 grams per tonne in the prior year. The decreased gold grade was due primarily to less ore being mined from lower level, higher grade,
gold zones and being replaced with more zinc ore. With high zinc prices prevailing over the past several quarters, numerous stopes have been extended in length (thereby increasing recovered tonnage),
to recover the zinc ore which is typically found in the immediate hanging wall. This had the effect of reducing the gold head grade of the ore sent to the mill, and displacing some gold/copper ore and
other higher grade zinc ore.

Silver
and copper production decreased 15% and 29% respectively when compared to 2004 due to the extension of stopes in the lower mining horizons to recover the zinc ore in the hanging
wall. Zinc production increased slightly due the extension of stopes as indicated above to recover zinc ore from the hanging wall.

Fourth
quarter revenues also increased in 2005 compared to 2004 due to the same factors which affected full year revenues. Production of all metals decreased in the fourth quarter of
2005 compared to 2004 due to lower tonnage being processed through the mill and due to the change in ore mix occurring due to the Company's decision to extend stopes on the lower mining horizon to
recover the zinc found in the hanging wall.

52

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Interest and Sundry Income

Interest and sundry income consists of interest on cash balances, realized gains on the disposition of available-for-sale securities, and
amortization related to gold put option contracts expiring in the year. Interest and sundry income was $5.0 million in 2005 compared to $0.7 million in 2004. The $4.3 million
increase was due almost entirely to increased interest on cash balances due to higher market interest rates and increased cash-on-hand. Gains on sales of
available-for-sale securities and amortization of gold put options purchased in 1999 remained relatively unchanged over 2004.

Production Costs

In 2005, production costs increased 30% to $127 million from $98 million in 2004. The table below presents the components of production costs:

|                                                              |  | 2005 |         | 2004 |   | 2003    |  
|------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|
|Definition Drilling                                           |  | $    | 667     |      | $ | 723     |  
|Stope Development                                             |  |      | 12,499  |      |   | 10,768  |  
|Mining                                                        |  |      | 22,506  |      |   | 20,851  |  
|Underground Services                                          |  |      | 38,236  |      |   | 32,668  |  
|Milling                                                       |  |      | 36,621  |      |   | 34,466  |  
|Surface Services                                              |  |      | 3,198   |      |   | 2,480   |  
|Administration                                                |  |      | 8,457   |      |   | 8,005   |  
|                                                              |  |      |         |      |   |         |  
|Minesite production costs                                     |  | $    | 122,184 |      | $ | 109,961 |  
|El Coco Royalty                                               |  |      |        |      |   |        |  
|Accretion expense and reclamation costs                       |  |      | 429     |      |   | 314     |  
|Inventory adjustments                                         |  |      | 5,978   |      |   | (7,436  | )
|Hedging losses (gains)                                        |  |      | (1,226  | )    |   | (4,671  | )
|                                                              |  |      |         |      |   |         |  
|Production costs per Consolidated Statements of Income (Loss) |  | $    | 127,365 |      | $ | 98,168  |  
|                                                              |  |      |         |      |   |         |  

Minesite
production costs increased to $122 million from $110 million in 2004 primarily as a result of higher costs for fuel, chemical reagents used in the mill, and steel.
Increases in the costs of these inputs has been seen throughout the mining industry. The average C$/US$ exchange rate for 2005 fell to $1.2115 from $1.3017 in 2004 and this deterioration of the U.S.
dollar was responsible for $8.5 million of the $12.2 million increase in 2005 minesite production costs. Underground services costs increased due to increased preventative maintenance to
underground fixed and mobile equipment and increased ground support expenses associated with mining at depth. At the end of 2004, $7 million of production costs were recorded in inventory due
to the large amount of unsold copper concentrate. This build-up of copper concentrate inventory reversed in 2005 and inventory levels for all products were substantially reduced at
December 31, 2005.

Throughout
2005, the Company was able to benefit from its currency hedges to sell U.S. dollars at a C$/US$ exchange rate of $1.30, well above the 2005 average C$/US$ exchange rate of
$1.21. The hedge gains were reduced from 2004 as the Company had a larger hedge position in 2004 at a C$/US$ exchange rate of $1.59.

In
2004, many of the same factors led to the increase in minesite production costs compared to 2003. In 2004, the Company was already experiencing increased costs for reagents, steel and
fuel and the deteriorating U.S. dollar was responsible for $8.1 million of the $18.3 million variance.

In
the fourth quarter of 2005, LaRonde processed an average of 7,316 tonnes of ore per day contributing to the strong operating performance of 7,297 tonnes per day recorded
during 2005. While the design capacity of the plant is 6,350 tonnes per day, it has now been operating at an average of approximately 7,250 tonnes per day for over two years. Minesite
costs per tonne were C$56 in the fourth quarter compared to C$52 in the fourth quarter of 2004. For the full year, the minesite costs per tonne were C$55, as compared with C$53 per tonne recorded for
2004. The fourth quarter and full year increase is largely due to the increases in fuel, reagents and steel costs as discussed above.

53

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In
2005, total cash costs to produce an ounce of gold decreased to $43 from $56 in 2004 and $269 in 2003. Total cash costs are comprised of minesite costs reduced by net silver, zinc and
copper revenue. Total cash costs per ounce are affected by various factors such as the number of gold ounces produced, operating costs, C$/US$ exchange rates, production royalties and byproduct metal
prices. The table below illustrates the variance in total cash costs per ounce attributable to each of these factors. The most significant factor contributing to the decrease in total cash costs per
ounce in 2005 was higher byproduct revenue resulting
from higher metal prices. Total cash costs per ounce is not a recognized measure under US GAAP and is described more fully below.

|                                                              |  | 2005 |      | 2004 |  
|------------------------------------------------------------- |  | ---- | ---- | ---- | -
|Total cash costs per ounce (prior year)                       |  | $    | 56   |      | $
|Lower (higher) gold production                                |  |      | 5    |      |  
|Stronger Canadian dollar                                      |  |      | 31   |      |  
|Lower El Coco royalty                                         |  |      |     |      |  
|Costs associated with increased fuel, reagent and steel costs |  |      | 56   |      |  
|Foreign exchange hedge gains                                  |  |      | 13   |      |  
|Higher byproduct revenue                                      |  |      | (118 | )    |  
|                                                              |  |      |      |      |  
|Total cash costs per ounce (current year)                     |  | $    | 43   |      | $
|                                                              |  |      |      |      |  

Total
cash cost per ounce is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. Management believes that this generally
accepted industry measure is a realistic indication of operating performance and is useful in allowing year over year comparisons. As illustrated in the table below, this measure is calculated by
adjusting Production Costs as shown in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for net byproduct revenues, royalties, inventory adjustments and asset retirement
provisions. This measure is intended to provide investors with information about the cash generating capabilities of mining operations. Management uses this measure to monitor the performance of
mining operations. Since market prices for gold are quoted on a per ounce basis, using this per ounce measure allows management to assess the mine's cash generating capabilities at various gold
prices. Management is aware that this per ounce measure of performance can be affected by fluctuations in byproduct metal prices and exchange rates. Management compensates for the limitation inherent
in this measure by using it in conjunction with the minesite cost per tonne measure (discussed below) as well as other data prepared in accordance with US GAAP. Management
also performs sensitivity analyses in order to quantify the effects of fluctuating metal prices and exchange rates.

Minesite
cost per tonne is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. As illustrated in the table below, this
measure is calculated by adjusting Production Costs as shown in the Consolidated Statement of Income (Loss) and Comprehensive Income (Loss) for royalties, inventory and hedging adjustments and asset
retirement provisions and then dividing by tonnes processed through the mill. Since total cash cost data can be affected by fluctuations in byproduct metal prices and exchange rates, management
believes this measure provides additional information regarding the performance of mining operations and allows management to monitor operating costs on a more consistent basis as the per tonne
measure eliminates the cost variability associated with varying production levels. Management also uses this measure to determine the economic viability of mining blocks. As each mining block is
evaluated based on the net realizable value of each tonne mined, in order to be economically viable the estimated revenue on a per tonne basis must be in excess of the minesite costs per tonne.
Management is aware that this per tonne measure is impacted by fluctuations in production levels and thus uses this measure as an evaluation tool in conjunction with production costs prepared in
accordance with US GAAP. This measure supplements production cost information prepared in accordance with US GAAP and allows investors to distinguish between changes in production costs resulting from
changes in production versus changes in operating performance.

Both
of these non-GAAP measures used should be considered together with other data prepared in accordance with US GAAP, and none of the measures taken by themselves is
necessarily indicative of operating costs or cash flow measures prepared in accordance with US GAAP. The tables presented below reconcile total

54

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cash
costs and minesite costs per tonne to the figures presented in the consolidated financial statements prepared in accordance with US GAAP.

Reconciliation of Total Cash Costs per ounce

|                                                                    |  | 2005 |          | 2004 |   | 2003    |  
|------------------------------------------------------------------- |  | ---- | -------- | ---- | - | ------- | -
|
|Production costs per Consolidated Statements of Income (Loss)       |  | $    | 127,365  |      | $ | 98,168  |  
|Adjustments:                                                        |  |      |          |      |   |         |  
|Byproduct revenues, net of smelting, refining and marketing charges |  |      | (123,450 | )    |   | (82,521 | )
|Inventory(i) adjustments                                            |  |      | 6,991    |      |   |        |  
|El Coco royalty                                                     |  |      |         |      |   |        |  
|Accretion expense and other                                         |  |      | (429     | )    |   | (493    | )
|                                                                    |  |      |          |      |   |         |  
|Cash costs                                                          |  | $    | 10,477   |      | $ | 15,154  |  
|Gold production (ounces)                                            |  |      | 241,807  |      |   | 271,567 |  
|                                                                    |  |      |          |      |   |         |  
|Cash costs (per ounce)                                              |  | $    | 43       |      | $ | 56      |  
|El Coco royalty                                                     |  |      |         |      |   |        |  
|                                                                    |  |      |          |      |   |         |  
|Total cash costs (per ounce)                                        |  | $    | 43       |      | $ | 56      |  
|                                                                    |  |      |          |      |   |         |  

Reconciliation of Minesite Costs per tonne

|                                                              |  | 2005 |         | 2003 |   | 2002    |  
|------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|
|Production costs per Consolidated Statements of Income (Loss) |  | $    | 127,365 |      | $ | 98,168  |  
|Adjustments:                                                  |  |      |         |      |   |         |  
|Inventory(i) and hedging(ii) adjustments                      |  |      | (4,752  | )    |   | 12,107  |  
|El Coco royalty                                               |  |      |        |      |   |        |  
|Accretion expense and other                                   |  |      | (429    | )    |   | (314    | )
|                                                              |  |      |         |      |   |         |  
|Minesite costs (US$)                                          |  | $    | 122,184 |      | $ | 109,961 |  
|                                                              |  |      |         |      |   |         |  
|Minesite costs (C$)                                           |  | $    | 147,834 |      | $ | 142,702 |  
|Tonnes milled (000's tonnes)                                  |  |      | 2,672   |      |   | 2,701   |  
|                                                              |  |      |         |      |   |         |  
|Minesite costs per tonne (C$)                                 |  | $    | 55      |      | $ | 53      |  
|                                                              |  |      |         |      |   |         |  

---

Notes:

Loss on Derivative Financial Instruments

In 2005, the Company entered into new derivative contracts for its by-product metal production. Silver put options were purchased with a strike price of
$7.00 per ounce on approximately 1.0 million ounces of silver. Copper call options were written with a strike price of $3,310 per tonne on approximately 4,500 tonnes of copper.
The Company also entered into a series of derivative transactions to sell zinc forward at $1,263 per tonne and a zero-cost collar was entered into to set a minimum price of $1,215 per
tonne on approximately 20,000 tonnes of zinc over 2005 and 2006. While setting a minimum price, the zero-cost collar strategy also limits participation to zinc prices above $1,480
per tonne.

55

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Due
to rising zinc and copper prices, the Company recorded realized losses on these derivatives as contracts matured throughout 2005. As mentioned above, the derivative strategies limit
participation to rising zinc and copper prices. The Company has also recorded unrealized gains on contracts that mature in 2006. As none of these contracts qualify for hedge accounting, the realized
and unrealized losses are recorded in income. In December 2005, the Company liquidated its entire zinc collar derivative position at a total cost of $3.5 million. In
February 2006, the remaining silver and copper derivative contracts expired such that only the zinc forward derivative contracts remain. The remaining zinc forward contracts expire on a monthly
basis over 2006.

Of
the $15.4 million derivative loss recorded in the Consolidated Statements of Income (Loss), $8.3 million was an unrealized loss based on the
mark-to-market value of the outstanding derivative contracts at December 31, 2005. The remaining $7.1 million was a realized loss on monthly settlements of
derivative contracts and the liquidation of the zinc collar derivative position.

Exploration and Corporate Development Expense

In 2005, with Lapa shaft sinking and Goldex construction well underway, the Company's exploration focus was on acquiring and developing properties abroad in
carrying out its strategy to become a multi-mine company. In March 2005, the Company entered into an option agreement with Industrias Peñoles S.A. de C.V.
("Peñoles") to acquire the Pinos Altos project in Chihuahua, Mexico. Under the terms of the agreement, Agnico-Eagle acquired an option to purchase the Pinos Altos project for cash and
share consideration. Throughout 2005, Agnico-Eagle conducted a $4.2 million exploration program in order to determine whether to exercise its option. On February 13, 2006, as a result of
positive results from the 2005 exploration program, Agnico-Eagle exercised its option to acquire 100% of the Pinos Altos project from Peñoles. Under the terms of the agreement,
Agnico-Eagle will pay Peñoles $32.5 million in cash and 2,063,635 in common shares of Agnico-Eagle. The transaction closed in escrow on March 15, 2006.

In
2004, the Company purchased a 14% equity stake in Riddarhyttan which owns the Suurikuusikko gold deposit in Finland. With Agnico-Eagle's guidance, Riddarhyttan conducted an extensive
drilling program in 2004, which culminated in a new resource calculation in early 2005. Further positive drilling results announced by Riddarhyttan in 2005 led to the Company initiating a tender offer
to acquire the remaining shares of Riddarhyttan. The Company acquired an additional 103 million shares of Riddarhyttan in exchange for issuing approximately 10 million Agnico-Eagle
shares to the former shareholders of Riddarhyttan. Agnico-Eagle has initiated the compulsory acquisition under Swedish law of the remaining 2.7% of the Riddarhyttan shares and anticipates that advance
possession of these shares will be obtained in the second half of 2006. Advance possession means that the Company will be entitled to be registered as owner of these shares and thereby entitled to
exercise all rights relating to these shares that vest in a shareholder. Prior to October 2005, Agnico-Eagle accounted for its interest in Riddarhyttan under the equity method of accounting.
Agnico-Eagle considered its equity losses in Riddarhyttan as exploration as the significant majority of these losses were generated from Riddarhyttan's exploration activities. After
October 2005, Agnico-Eagle began consolidating the results of Riddarhyttan's operations with its own.

Agnico-Eagle's
portion of exploration expenditures of Contact Diamond Corporation ("Contact Diamond") were approximately the same in 2005 as in 2004. In 2005, Contact Diamond's
exploration focus centered around locating and evaluating kimberlite pipes. Contact Diamond continues to focus on its Timiskaming diamond properties but has also begun exploring for diamonds in
Canada's Northwest Territories and Nunavut Territory. Agnico-Eagle considered its equity losses in Contact Diamond as exploration as the significant majority of these losses were generated from
Contact Diamond's exploration activities.

In
September 2004, Agnico-Eagle purchased all of Contact Diamond's gold exploration properties, including a Nevada-based subsidiary which was renamed Agnico-Eagle (USA) Limited.
Agnico-Eagle (USA) Limited is currently conducting exploration in proven gold producing areas of Nevada. In 2005, the Company's U.S. exploration expenditures contain a full year of exploration as
opposed to 2004 which only contained three months of exploration expenditures incurred after the acquisition.

In
2005, the Company also continued conducting exploration around its LaRonde mine and Lapa and Goldex development projects in the Abitibi region of Quebec. The Company has had
tremendous exploration success in this region and the Abitibi region remains the cornerstone of its growth strategy. No matter where the

56

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Company's
exploration activities take it, a multi-mine platform will have a solid foundation at the Company's LaRonde mine. The Company continues to invest in exploration in this region.
As a result, exploration expenditures in this region were $3.8 million higher in 2005, compared to 2004.

Agnico-Eagle's
corporate development team continued to be active in 2005 evaluating many new properties and possible corporate development targets. These increased activities led to the
purchase of the Pinos Altos property and Riddarhyttan. These increased activities, led to a $0.5 million increase in corporate development expense compared to 2004.

The
table below illustrates the various components of exploration expense.

|                                                                                              |  | 2005 |        | 2004 |   | 2003 
|--------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | -----
|
|Lapa property (net of investment tax credits)                                                 |  | $    |       |      | $ |     
|Pinos Altos exploration                                                                       |  |      | 4,161  |      |   |     
|Other Canadian and Abitibi region properties                                                  |  |      | 6,074  |      |   | 2,276
|Agnico-Eagle portion of exploration conducted by Contact Diamond                              |  |      | 1,889  |      |   | 1,784
|United States exploration                                                                     |  |      | 2,893  |      |   | 544  
|Agnico-Eagle portion of Suurikuusikko exploration conducted by Riddarhyttan (pre-acquisition) |  |      | 1,888  |      |   | 440  
|Suurikuusikko exploration (post Riddarhyttan acquisition)                                     |  |      | 1,286  |      |   |     
|Corporate development expense                                                                 |  |      | 1,289  |      |   | 764  
|                                                                                              |  |      |        |      |   |      
|                                                                                              |  | $    | 19,480 |      | $ | 5,808
|                                                                                              |  |      |        |      |   |      

In
2005, the Company issued flow-through shares to take advantage of its large undeducted exploration tax pools. Issuing flow-through shares is common practice in
the mining industry for companies with large pools of available tax deductions. Under the terms of the flow-through share agreements, the Company is required to spend the proceeds of the
offering on eligible Canadian exploration expenses and renounce the tax deductions associated with those exploration expenses to the initial purchasers of the flow-through shares. Since
investors are receiving tax deductions for the exploration expenses incurred by the Company, these flow-through shares typically command a premium to the market price of the Company's
stock on the date of issuance. Should the Company fail to spend the proceeds of the flow-through share offering on eligible Canadian exploration expenses, the investors would lose their
tax deductions, which would create the potential for shareholder lawsuits and penalties imposed by the Canada Revenue Agency. In its history, the Company has never failed to spend
flow-through share proceeds on eligible exploration nor has it ever failed to renounce those exploration expenditures to investors. The Company spent the entire $8.3 million of
flow-through funds raised in 2005 by December 31, 2005 on eligible exploration expenditures and renounced these expenditures in February 2006. In the first quarter of 2006,
the Company raised an additional $35 million through the issuance of flow-through shares.

General and Administrative Expenses

General and administrative expenses increased to $11.8 million in 2005 from $6.9 million in 2004. A number of factors contributed to the increase in
general and administrative expenses in 2005. Firstly, the Company strengthened its management team to accommodate growth with the addition of in-house legal counsel. The Company also hired
additional staff to help achieve Sarbanes-Oxley compliance required by December 31, 2006. In addition, due to the increasing size of the Company, corporate insurance expenditures increased in
2005 over 2004. Also contributing to increased general and administrative expenses is the establishment of a corporate investor relations function, the continued strengthening of the Canadian dollar
and increased stock-based compensation relating to the expensing of the fair value of stock options granted. The strengthening Canadian dollar contributed $0.8 million of the overall increase
in general and administrative expenses.

57

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Provincial and Federal Capital Taxes

Provincial capital taxes were $1.4 million in 2005 compared to $0.4 million in 2004. These taxes are assessed on the Company's capitalization
(paid-up capital and debt) less certain allowances and tax credits for exploration expenses incurred. The increase in 2005 was due to the fact that 2004 had a non-recurring
gain as part of the capital tax expense resulting from a favorable tax re-assessment for the 2003 taxation year related to the calculation of exploration expenditures eligible for tax
credits.

Federal
capital taxes are assessed on essentially the same capitalization base as provincial capital taxes. Federal capital taxes of $1.1 million in 2005 were approximately
similar to the $1.0 million paid in 2004, as increased capitalization was offset by decreased tax rates. New legislation introduced in 2003 will eliminate federal capital taxes by 2008. These
changes are being phased in gradually with rate reductions each year.

Amortization Expense

Amortization expense was $26.1 million in 2005 compared to $21.8 million in 2004. The Company calculates its amortization on a
unit-of-production basis using proven and probable reserve tonnage as its amortization base. The amortization base and production units were similar to the prior year, however
a reversal of amortization in inventory at the end of 2004 was the main reason for the increase. At the end of 2004, the Company had inventoried amortization relating to its unsold concentrates.
Concentrate inventory levels were greatly reduced in 2005 over 2004 leading to less amortization being allocated to inventory in the current year. Amortization on a per tonne basis was $10 in 2005
compared to
$8 in 2004. As detailed above, the reversal of 2004 inventoried amortization was the main contributor to the per tonne increase.

Interest Expense

In 2005, interest expense decreased to $7.8 million from $8.2 million in 2004 and $9.2 million in 2003. The small decrease in 2005 over 2004
was due to a number of offsetting factors. In 2005, the Company paid $0.9 million under its interest rate swap due to rising LIBOR rates compared to 2004 when the Company received
$0.9 million. Non-cash amortization of financing costs increased $0.7 million in 2005 compared to 2004 due to increased costs associated with refinancing the Company's credit
facility in December 2004. The increase in these two components of interest expense was offset by $2.5 million of interest expense capitalized to construction in progress in 2005
compared to no capitalized amounts in 2004. The small decrease in 2005 in interest on the Company's convertible subordinated debentures was due to holder conversions throughout 2005 which decreased
the amount of the debt outstanding.

The
table below shows the components of interest expense.

|                                                                                        |  | 2005 |        | 2004 |   | 2003 
|--------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | -----
|
|Interest on convertible subordinated debentures                                         |  | $    | 6,286  |      | $ | 6,469
|Stand-by fees on credit facility                                                        |  |      | 1,211  |      |   | 1,337
|Amortization of credit facility and convertible subordinated debentures financing costs |  |      | 1,847  |      |   | 1,167
|Interest rate derivative payments                                                       |  |      | 916    |      |   | (858 
|Other interest expense                                                                  |  |      | 38     |      |   | 90   
|Interest capitalized to construction in progress                                        |  |      | (2,485 | )    |   |     
|                                                                                        |  |      |        |      |   |      
|                                                                                        |  | $    | 7,813  |      | $ | 8,205
|                                                                                        |  |      |        |      |   |      

On
February 15, 2006, the Company's convertible subordinated debentures were redeemed in full. Prior to February 15, 2006, holders representing $142.6 million
aggregate principal amount converted their debentures into 10,188,549 common shares. On February 15, 2006, the Company redeemed the remaining $1.1 million aggregate principal
amount, at par plus accrued interest, by exercising its redemption option and delivering 70,520 common shares. Also in February 2006, the Company's interest rate swap matured. The
Company made net interest payments of $1.4 million under the terms of the swap at maturity.

58

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In November 2005, the Company executed an amendment with its bank syndicate to increase the limit of its revolving credit facility from US$100 million to
US$150 million, and to extend its term by two years to December 2009. The amended facility can still be extended, at the option of the Company, for an additional one-year term, to
December 2010 and the Goldex property was added as security for the facility. All other terms of the facility were substantially unchanged.

Income and Mining Taxes

In 2005, the effective accounting income tax recovery rate was 7.9% compared to an income tax recovery rate of 6.3% in 2004 and 8.0% in 2003. Although
Agnico-Eagle reported income before income and mining taxes of $35 million in 2005, tax expense was not recorded due to the utilization of losses carried forward which had previously not been
recorded as future tax assets. Normally, the benefits of being able to utilize prior year losses against future taxable income would have been recorded as a future tax asset. These unrecorded losses
arose in 2003 and earlier and were not fully recorded due to the uncertainty of realization of these losses. The losses were used to offset taxable income in both 2004 and 2005. The losses were
recorded as assets but a full valuation allowance was recorded against this future tax asset thereby reducing their value in the consolidated financial statements to nil at December 31, 2003.
As a result, the recovery rate in 2003 was 8.0% compared to a statutory tax rate of 38.3%.

At
the end of 2005, the Company has no unrecorded tax assets related to operating loss carryforwards and as such expects to record income and mining taxes at statutory tax rates in 2006.

Liquidity and Capital Resources

At the end of 2005, the Company's cash and cash equivalents were $61 million compared to $33 million at the end of 2004. In 2004, significant
increases in cash provided by operating activities was offset by continued investments in sustaining and project capital at the LaRonde mine and construction capital at Lapa and Goldex. Cash flow
provided by operating activities increased substantially to $83 million in 2005 from $50 million in 2004 due primarily to increased metal prices and increased sales volumes. Cash
provided by operating activities was negatively affected in 2004 by a buildup in non-cash working capital balances and due to the increased production volumes 2004 ended with large
build-ups in metals awaiting settlement and concentrate inventories. These build-ups in concentrate inventories reversed in 2005 as there was less inventory on hand at
December 31, 2005. However, metals
awaiting settlement continued to increase, thereby reducing cash provided by operating activities, due to the increased value of concentrates resulting from increased metal prices. The increase in the
Company's year-end cash balance was also affected by a reduction in restricted cash in 2005 compared to 2004. Restricted cash in 2004 represented funds raised through the issuance of
flow-through shares that were restricted in their use to conducting exploration activities. At the end of 2005, none of the Company's cash was restricted for such purposes.

In
2005, the Company used $67 million of cash in its investing activities. The largest components of this $67 million were:



In
November 2005, the Company executed an amendment with its bank syndicate to increase the limit of its revolving credit facility from US$100 million to
US$150 million and to extend its term by two years to December 2009. The amended facility can still be extended, at the option of the Company, for an additional one year term, to
December 2010 and the Goldex property was added as security for the facility. All other terms of the facility

59

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were
substantially unchanged. The facility is completely undrawn; however, outstanding letters of credit decrease the amounts available under the facility such that $139 million is available
for future drawdowns.

In
addition, on January 19, 2006, a subsidiary of Agnico-Eagle entered into an unsecured, guaranteed bank overdraft facility (the "Overdraft Facility") of
EUR 6.6 million. The Overdraft Facility is unconditionally guaranteed by the subsidiary and guaranteed to a limit of EUR 4.2 million by Agnico-Eagle. The Overdraft Facility
matures on June 30, 2006 and may be terminated by the subsidiary at any time without penalty or notice. A standby fee at an annual rate of 0.70% on the Overdraft Facility amount of
EUR 6.6 million is due and payable quarterly in advance. In addition, interest at an annual rate of 1.67% above EURIBOR one month is due and payable monthly in arrears on amounts
outstanding under the Overdraft Facility. The subsidiary has also agreed not to enter into any other financing arrangements or issue any guarantees without the prior written consent of
the lender.

In
2006, Agnico-Eagle exercised its option to purchase the Pinos Altos property from Peñoles. On closing, Agnico-Eagle will pay $32.5 million in cash,
1,809,350 in common shares of Agnico-Eagle and an additional $6.5 million worth of shares (valued near the closing date). The closing date is scheduled to be March 15, 2006. The
cash payment is expected to be funded from existing cash balances.

In
2006, the Company issued 1.2 million flow-through common shares for proceeds of approximately $35 million.

In
2005, the Company declared its 26th consecutive annual dividend of $0.03 per share, unchanged from 2004. Although the Company expects to continue paying dividends, future dividends
will be at the discretion of the Company's Board of Directors and will be subject to factors such as income, financial condition and capital requirements.

Agnico-Eagle's
contractual obligations as at December 31, 2005 are summarized as follows:

|Contractual Obligations      |  | Total |       | Less than
1 Year |   | 1-3 Years |  | 3-5 Years |     | More than
5 Years
|---------------------------- |  | ----- | ----- | ---------------- | - | --------- |  | --------- | --- | -----------------
|
|Long-term debt(1)            |  | $     | 132.9 |                  | $ |          |  | $         |    |                  
|Letter of credit obligations |  |       | 11.4  |                  |   |          |  |           |    |                  
|Reclamation obligations(2)   |  |       | 25.4  |                  |   | 2.2       |  |           | 2.2 |                  
|Pension obligations(3)       |  |       | 3.7   |                  |   | 0.3       |  |           | 0.5 |                  
|                             |  |       |       |                  |   |           |  |           |     |                  
|                             |  | $     | 173.4 |                  | $ | 2.5       |  | $         | 2.7 |                  
|                             |  |       |       |                  |   |           |  |           |     |                  

---

Notes:

Outlook

For 2006, the Company expects to continue working toward its strategic objectives using the LaRonde mine as the cornerstone. Agnico-Eagle expects the
LaRonde mine to generate strong cash flow again in 2006 as

60

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production
volumes are expected to remain steady. Metal prices will have a large impact on financial results, and although the Company cannot predict the prices that will be realized in 2006, prices
in early 2006 have continued to remain strong.

In
2006, revenues from mining operations are expected to be largely unchanged. The table below summarizes actual production for 2005 and estimated production in 2006.

|                      |  | 2006 Estimate |  | 2005 Actual
|--------------------- |  | ------------- |  | -----------
|Gold (ounces)         |  | 250,000       |  | 241,807    
|Silver (000's ounces) |  | 5,700         |  | 4,831      
|Zinc (tonnes)         |  | 73,000        |  | 76,545     
|Copper (tonnes)       |  | 9,000         |  | 7,378      

For
2006, the Company expects total cash costs in the range of $50 to $60 per ounce of gold compared to $43 achieved in 2005. Net silver, zinc and copper revenue is treated as a
reduction of production costs in arriving at estimates of total cash costs per ounce, and therefore production and price assumptions play an important role in these estimates. As production costs are
denominated in Canadian dollars, the C$/US$ exchange rate can also affect the estimate. The table below summarizes the metal price assumptions and exchange rate assumptions used in deriving the
estimated total cash costs per ounce for 2006 (production estimates for each metal are shown in the table above).

|Silver (per ounce)   |  | $ | 7.00 
|-------------------- |  | - | -----
|Zinc (per tonne)     |  | $ | 1,430
|Copper (per tonne)   |  | $ | 3,310
|C$/US$ exchange rate |  | $ | 1.20 

The
estimated sensitivity of the LaRonde mine's 2006 estimated total cash costs to a 10% change in the metal price and exchange rate assumptions above follows:

|Change in variable |  | Impact on total cash costs
($/oz.)
|------------------ |  | ----------------------------------
|C$/US$             |  | 44                                
|Zinc               |  | 25                                
|Silver             |  | 15                                
|Copper             |  | 11                                

In
2006, Agnico-Eagle expects to record $12 million of exploration and corporate development expense which includes $3 million in non-cash expenses representing
Agnico-Eagle's share of the exploration expenses of Contact Diamond. Exploration is success driven and thus these estimates could increase materially based on the success of the various exploration
programs.

General
and administrative expenses are not expected to increase materially in 2006. In 2006, provincial capital taxes are expected to be between $2.0 million and
$2.4 million reflecting the increase in the Company's capitalization due primarily to shares issued to effect the Riddarhyttan acquisition and shares issued on the redemption of the Company's
convertible subordinated debentures. Federal capital taxes are expected to be between $0.8 million and $1.0 million in 2006, as increased capitalization is offset by legislation
introduced in 2003 which reduces tax rates every year until 2008 when this tax will be eliminated. Amortization is expected to be $10 per tonne in 2006 due to a higher capital base being offset by a
small increase in reserves at LaRonde. Interest is expected to decrease substantially in 2006 to $2.8 million due to the redemption of the Company's convertible subordinated debentures.

In
2006, Agnico-Eagle expects to incur approximately $117 million of capital expenditures, the components of which are as follows:



61

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The
Company also expects to incur $33 million to effect its purchase of the Piños Altos property from Peñoles

Subsequent
to year end, the Company raised $35 million by issuing flow-through shares to partially fund expenditures at Lapa and Goldex. The remaining capital
expenditures are expected to be funded by cash provided by operating activities, cash on hand and proceeds from the maturity of short-term investments.

The
Company continues to examine other possible corporate development opportunities which could result in the acquisition of companies or assets with securities, cash or a combination
thereof. If cash is used, depending on the size of the acquisition, Agnico-Eagle may be required to borrow money or issue securities to fund such cash requirements.

Outstanding Securities

The following table presents the maximum number of common shares that would be outstanding if all dilutive instruments outstanding at March 3, 2006 were
exercised:

|Common shares outstanding at March 3, 2006 |  | 109,722,561
|------------------------------------------ |  | -----------
|Employee stock options                     |  | 3,963,125  
|Warrants                                   |  | 6,900,000  
|                                           |  |            
|                                           |  | 120,585,686
|                                           |  |            

Each
warrant entitles the holder to purchase one common share at a price of US$19.00. The warrants expire on November 14, 2007.

Critical Accounting Estimates

The preparation of the consolidated financial statements in accordance with US GAAP requires management to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses. The Company evaluates the estimates periodically, including those relating to metals awaiting settlement, inventories, future tax assets and
liabilities, and mining properties. In making judgments about the carrying value of assets and liabilities, the Company uses estimates based on historical experience and various assumptions that are
considered reasonable in the circumstances. Actual results may differ from these estimates.

The
Company believes the following critical accounting policies relate to its more significant judgments and estimates used in the preparation of its consolidated financial statements.
Management has discussed the development and selection of the following critical accounting policies with the Audit Committee of the Board of Directors and the Audit Committee has reviewed the
Company's disclosure in this Operating and Financial Review.

Mining Properties

The Company capitalizes the cost of acquiring land and mineral rights. If a mineable ore body is discovered, such costs are amortized when production begins,
using the units-of-production method based on proven and probable reserves. If no mineable ore body is discovered, such costs are expensed in the period in which it is
determined the property has no future economic value. Costs for grassroots exploration are charged to income when incurred until an ore body is discovered. Further exploration and development to
delineate costs of the ore body are capitalized as mine development costs once a feasibility study is successfully completed and proven and probable reserves are established.

Mine
development costs incurred after the commencement of production are capitalized or deferred to the extent that these costs benefit the entire ore body. Costs incurred to access
single ore blocks are expensed as incurred; otherwise, such vertical and horizontal developments are classified as mine development costs.

62

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Expenditures
for new facilities and improvements that can extend the useful lives of existing facilities are capitalized as plant and equipment at cost. Interest costs incurred prior to
the commencement of commercial production are capitalized. Subsequent capital expenditures which benefit future periods, such as the construction of underground infrastructure, are capitalized at cost
and depreciated as mentioned above.

The
carrying values of mining properties, plant and equipment and mine development costs are reviewed periodically, when impairment factors exist, for possible impairment, based on the
future undiscounted net cash flows of the operating mine and development property. If it is determined that the estimated net recoverable amount is less than the carrying value, then a write down to
the estimated fair value amount is made with a charge to income. Estimated future cash flows of operating mine and development properties include estimates of recoverable ounces of gold based on the
proven and probable reserves. To the extent economic value exists beyond the proven and probable reserves of an operating mine or development property, this value is included as part of the estimated
future cash flows. Estimated future cash flows also involve estimates regarding gold prices (considering current and historical prices, price trends and related factors), production levels, capital
and reclamation costs and related income and mining taxes, all based on detailed engineering life-of-mine plans. Cash flows are subject to risks and uncertainties and changes
in the estimates of the cash flows could affect the recoverability of long-lived assets.

Revenue Recognition

Revenue is recognized when the following conditions are met:



Revenue
from gold and silver in the form of dore bars is recorded when the refined gold and silver is sold. Generally all the gold and silver in the form of dore bars recovered in the
Company's milling process is sold in the period in which it is produced.

Under
the terms of concentrate sales contracts with third-party smelters, final prices for the gold, silver, zinc and copper in the concentrate are set based on the prevailing spot
market metal prices on a specified future date based on the date that the concentrate is delivered to the smelter. Agnico-Eagle records revenues under these contracts based on forward prices at the
time of delivery, which is when transfer of legal title to concentrate passes to the third-party smelters. The terms of the contracts result in differences between the recorded estimated price at
delivery and the final settlement price. These differences are adjusted through revenue at each subsequent financial statement date.

Revenues
from mining operations consist of gold revenues, net of smelting, refining and other marketing charges. Revenues from byproduct sales are shown net of smelter charges as part of
revenues from mining operations.

Reclamation Obligations

Estimated reclamation costs are based on legal, environmental and regulatory requirements. Current accounting standards require the Company to recognize the
present value of mine reclamation costs as a liability in the period the obligation is incurred and to periodically re-evaluate the liability. At the date a reclamation liability is
incurred, an amount equal to the present value of the final liability is recorded as an increase to the carrying value of the related long-lived asset. In each period, an accretion amount
is charged to income to adjust the liability to the estimated future value. The initial liability, which is included in the carrying value of the asset, is also depreciated each period based on the
depreciation method used for that asset. In order to calculate the present value of mine reclamation costs, the Company has made estimates of the final reclamation costs based on
mine-closure plans approved by environmental agencies. Agnico-Eagle periodically reviews these estimates and updates reclamation cost estimates if assumptions change. Material assumptions
that are made in deriving these estimates include variables such as mine life and inflation rates.

63

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Future Tax Assets and Liabilities

The Company uses the liability method of tax allocation for accounting for income taxes. Under the liability method, future tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of assets and liabilities. Future tax assets are reduced by a valuation allowance if it is more likely than not that some
or all of the future tax asset will not be realized. The Company evaluates the carrying value of its future tax assets quarterly by assessing its valuation allowance and by adjusting the amount of
such allowance, if necessary. The factors used to assess the likelihood of realization are forecasts of future taxable income and available tax planning strategies that could be implemented to realize
future tax assets.

Financial Instruments

Agnico-Eagle uses derivative financial instruments, primarily option and forward contracts, to manage exposure to fluctuations in metal prices, foreign currency
exchange rates and interest rates. Under the Company's treasury management system which complies with Statement of Financial Accounting Standard ("FAS") 133 requirements for hedge accounting,
unrealized mark-to-market losses on gold put option contracts are originally recorded in equity as a component of accumulated other comprehensive income (loss). On the
contracts' scheduled maturity dates, the realization of losses on these contracts is reflected by removing the accumulated mark-to-market losses from accumulated other
comprehensive income (loss) and recording these losses as part of normal income. All the Company's hedging contracts on byproduct production were liquidated in 2003 with a corresponding charge being
recorded in income. Effective January 1, 2003, foreign currency hedges also qualified for hedge accounting and as such are now being accounted for in the same manner as the gold put options.
Unrealized mark-to-market gains and losses on these hedges are recorded in accumulated other comprehensive income (loss) and realized gains and losses are recorded in income in
the same period the hedged transaction affects income, or on the scheduled maturity dates. Prior to 2003, unrealized mark-to-market gains and losses on foreign currency hedges
were recorded in income.

In
late 2003, the Company entered into interest rate swap arrangements whereby it swapped its fixed rate payments on the Convertible Debentures for variable rate payments. The fair value
of the swap is recorded as an asset or liability with a corresponding charge to income. The carrying value of the Convertible Debentures is also adjusted for changes in fair value attributable to the
risk being hedged with a corresponding charge to income. In connection with the swap, the Company also entered into an interest rate cap to limit the interest rate charged under the swap to 3.38%. The
fair value of the cap is recorded as an asset or a liability with a corresponding charge to income.

Stock-Based Compensation

In 2003, the Company prospectively adopted FAS 123, "Accounting for Stock-Based Compensation" as amended by FAS 148, "Accounting for Stock-Based
Compensation  Transition and Disclosure".
These accounting standards recommend the expensing of stock option grants after January 1, 2003. The standards recommend that the fair value of stock options be recognized in income over the
applicable vesting period as a compensation expense.

The
Company's existing stock-based compensation plan provides for the granting of options to directors, officers, employees and service providers to purchase common shares. Share options
have exercise prices equal to market price at the grant date or over the term of the applicable vesting period depending on the terms of the option agreements. The fair value of these stock options is
recorded as an expense on the date of grant. Fair value is determined using the Black-Scholes option valuation model which requires the Company to estimate the expected volatility of the Company's
share price and the expected life of the stock options. Limitations with existing option valuation models and the inherent difficulties associated with estimating these variables creates difficulties
in determining a reliable single measure of the fair value of stock option grants. The dilutive impact of stock option grants is currently factored into the Company's reported diluted income (loss)
per share.

In
December 2004, the FASB enacted FAS 123  revised 2004 ("FAS 123R"), "Share-Based
Payment", which replaces FAS 123 and supersedes APB Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to
Employees". FAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a
fair-value-based method and the recording of such expense in the

64

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consolidated
statements of income (loss). The Company is required to adopt FAS 123R in the first quarter of 2006. The Company does not expect any significant impact based on the adoption of the
new requirements under FAS 123R.

Impact of recently issued accounting pronouncements

Under the U.S. Securities and Exchange Commission Staff Accounting Bulletin 74 ("SAB 74"), the Company is required to disclose information related
to new accounting standards that have not yet been adopted.

In
the mining industry, companies may be required to remove overburden and other mine waste materials to access mineral deposits. During the development of a mine (before production
begins), it is generally accepted practice that such costs are capitalized as part of the depreciable cost of building, developing and constructing the mine. The capitalized costs are typically
amortized over the productive life of the mine using the units-of-production method. A mining company may continue to remove overburden and waste materials, and therefore incur
deferred costs, during the production phase of the mine.

In
March 2005, the Financial Accounting Standards Board ratified Emerging Issues Task Force Issue No. 04-6 ("EITF 04-6") which addresses the
accounting for deferred costs
incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in costs applicable to sales
in the same period as the revenue from the sale of inventory. As a result, capitalization of costs is appropriate only to the extent product inventory exists at the end of a reporting period.
Agnico-Eagle will adopt the provisions of EITF 04-6 on January 1, 2006. The impact of adoption will be to decrease ore stockpile inventory by $8.4 million.
Adoption of EITF 04-6 will have no impact on the Company's cash position.

65

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Summarized Quarterly Data

Consolidated Financial Data  (thousands of United States dollars, except where noted)

|                                                                    |                             | March 31, 2004 |         | June 30, 2004 |    | September 30, 2004 |     | December 31, 2004 |         | Total
2004 |   
|------------------------------------------------------------------- | --------------------------- | -------------- | ------- | ------------- | -- | ------------------ | --- | ----------------- | ------- | ---------- | --
|Income and cash flows                                               |                             |                |         |               |    |                    |     |                   |         |            |   
|LaRonde Division                                                    |                             |                |         |               |    |                    |     |                   |         |            |   
|Revenues from mining operations                                     |                             | $              | 48,604  |               | $  | 45,664             |     | $                 | 47,986  |            | $ 
|Production costs                                                    |                             |                | 24,141  |               |    | 25,680             |     |                   | 26,172  |            |   
|                                                                    |                             |                |         |               |    |                    |     |                   |         |            |   
|Gross profit (exclusive of amortization shown below)                |                             | $              | 24,463  |               | $  | 19,984             |     | $                 | 21,814  |            | $ 
|Amortization                                                        |                             |                | 5,582   |               |    | 5,859              |     |                   | 5,861   |            |   
|                                                                    |                             |                |         |               |    |                    |     |                   |         |            |   
|Gross profit                                                        |                             | $              | 18,881  |               | $  | 14,125             |     | $                 | 15,953  |            | $ 
|                                                                    |                             |                |         |               |    |                    |     |                   |         |            |   
|Net income for the period                                           |                             | $              | 12,909  |               | $  | 8,805              |     | $                 | 10,556  |            | $ 
|Net income per share (basic and fully diluted)                      |                             | $              | 0.15    |               | $  | 0.11               |     | $                 | 0.12    |            | $ 
|Operating cash flow                                                 |                             | $              | 6,219   |               | $  | 14,901             |     | $                 | 16,683  |            | $ 
|Investing cash flow                                                 |                             | $              | 41,501  |               | $  | (23,493            | )   | $                 | (84,020 | )          | $ 
|Financing cash flow                                                 |                             | $              | (1,068  | )             | $  | 1,552              |     | $                 | 18,540  |            | $ 
|Weighted average number of common shares outstanding (in thousands) |                             |                | 84,525  |               |    | 84,648             |     |                   | 84,791  |            |   
|Tonnes of ore milled                                                |                             |                | 625,240 |               |    | 683,774            |     |                   | 672,708 |            |   
|Head grades:                                                        |                             |                |         |               |    |                    |     |                   |         |            |   
|Gold (ounces per tonne)                                             |                             |                | 3.81    |               |    | 3.17               |     |                   | 3.38    |            |   
|Silver (ounces per tonne)                                           |                             |                | 77.80   |               |    | 85.40              |     |                   | 92.40   |            |   
|Zinc                                                                |                             |                | 3.78%   |               |    | 3.79%              |     |                   | 4.53%   |            |   
|Copper                                                              |                             |                | 0.56%   |               |    | 0.52%              |     |                   | 0.54%   |            |   
|Recovery rates:                                                     |                             |                |         |               |    |                    |     |                   |         |            |   
|Gold                                                                |                             |                | 92.24%  |               |    | 91.25%             |     |                   | 92.09%  |            |   
|Silver                                                              |                             |                | 85.40%  |               |    | 86.40%             |     |                   | 88.10%  |            |   
|Zinc                                                                |                             |                | 82.60%  |               |    | 84.40%             |     |                   | 84.70%  |            |   
|Copper                                                              |                             |                | 80.20%  |               |    | 78.10%             |     |                   | 78.10%  |            |   
|Payable production:                                                 |                             |                |         |               |    |                    |     |                   |         |            |   
|Gold (ounces)                                                       |                             |                | 70,188  |               |    | 65,233             |     |                   | 67,237  |            |   
|Silver (ounces in thousands)                                        |                             |                | 1,128   |               |    | 1,558              |     |                   | 1,501   |            |   
|Zinc (tonnes)                                                       |                             |                | 16,613  |               |    | 17,012             |     |                   | 21,931  |            |   
|Copper (tonnes)                                                     |                             |                | 2,649   |               |    | 2,302              |     |                   | 2,637   |            |   
|Realized prices (US$):                                              |                             |                |         |               |    |                    |     |                   |         |            |   
|Gold (per ounce)                                                    |                             | $              | 412     |               | $  | 393                |     | $                 | 409     |            | $ 
|Silver (per ounce)                                                  |                             | $              | 6.72    |               | $  | 6.22               |     | $                 | 6.45    |            | $ 
|Zinc (per pound)                                                    |                             | $              | 1,036   |               | $  | 1,036              |     | $                 | 970     |            | $ 
|Copper (per pound)                                                  |                             | $              | 2,756   |               | $  | 2,778              |     | $                 | 2,844   |            | $ 
|Total cash costs (per ounce) (US$):                                 |                             |                |         |               |    |                    |     |                   |         |            |   
|Production costs                                                    |                             | $              | 344     |               | $  | 394                |     | $                 | 440     |            | $ 
|Less: Net byproduct revenues                                        |                             |                | (260    | )             |    | (300               | )   |                   | (334    | )          |   
|                                                                    | Inventory adjustments       |                |         | (4            | )  |                    | (15 | )                 |         | (24        | ) 
|                                                                    | Accretion expense and other |                |         | (2            | )  |                    | (2  | )                 |         | (5         | ) 
|                                                                    |                             |                |         |               |    |                    |     |                   |         |            |   
|Total cash costs (per ounce)(1)                                     |                             | $              | 78      |               | $  | 77                 |     | $                 | 77      |            | $ 
|                                                                    |                             |                |         |               |    |                    |     |                   |         |            |   
|Minesite costs per tonne milled (C$)(1)                             |                             | C$             | 52      |               | C$ | 51                 |     | C$                | 55      |            | C$
|                                                                    |                             |                |         |               |    |                    |     |                   |         |            |   

---

Note:

66

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Consolidated Financial Data  (thousands of United States dollars, except where noted)

|                                                                    |                             | March 31, 2005 |         | June 30, 2005 |    | September 30, 2005 |    | December 31, 2005 |         | Total
2005 |   
|------------------------------------------------------------------- | --------------------------- | -------------- | ------- | ------------- | -- | ------------------ | -- | ----------------- | ------- | ---------- | --
|Income and cash flows                                               |                             |                |         |               |    |                    |    |                   |         |            |   
|LaRonde Division                                                    |                             |                |         |               |    |                    |    |                   |         |            |   
|Revenues from mining operations                                     |                             | $              | 61,766  |               | $  | 49,572             |    | $                 | 58,608  |            | $ 
|Production costs                                                    |                             |                | 30,973  |               |    | 30,268             |    |                   | 32,548  |            |   
|                                                                    |                             |                |         |               |    |                    |    |                   |         |            |   
|Gross profit (exclusive of amortization shown below)                |                             |                | 30,793  |               |    | 19,304             |    |                   | 26,060  |            |   
|Amortization                                                        |                             |                | 7,211   |               |    | 5,983              |    |                   | 6,276   |            |   
|                                                                    |                             |                |         |               |    |                    |    |                   |         |            |   
|Gross profit                                                        |                             | $              | 23,582  |               | $  | 13,321             |    | $                 | 19,784  |            | $ 
|                                                                    |                             |                |         |               |    |                    |    |                   |         |            |   
|Net income for the period                                           |                             | $              | 10,448  |               | $  | 12,794             |    | $                 | 2,057   |            | $ 
|Net income per share (basic and fully diluted)                      |                             | $              | 0.12    |               | $  | 0.15               |    | $                 | 0.02    |            | $ 
|Operating cash flow                                                 |                             | $              | 28,105  |               | $  | 19,103             |    | $                 | 11,151  |            | $ 
|Investing cash flow                                                 |                             |                | 37,149  |               |    | (29,586            | )  |                   | (42,467 | )          |   
|Financing cash flow                                                 |                             |                | (1,095  | )             |    | 920                |    |                   | 9,431   |            |   
|Weighted average number of common shares outstanding (in thousands) |                             |                | 86,131  |               |    | 86,220             |    |                   | 86,638  |            |   
|Tonnes of ore milled                                                |                             |                | 656,635 |               |    | 681,848            |    |                   | 660,058 |            |   
|Head grades:                                                        |                             |                |         |               |    |                    |    |                   |         |            |   
|Gold (grams per tonne)                                              |                             |                | 2.94    |               |    | 3.13               |    |                   | 3.19    |            |   
|Silver (grams per tonne)                                            |                             |                | 73.00   |               |    | 76.30              |    |                   | 84.70   |            |   
|Zinc                                                                |                             |                | 4.14%   |               |    | 4.21%              |    |                   | 4.30%   |            |   
|Copper                                                              |                             |                | 0.39%   |               |    | 0.36%              |    |                   | 0.43%   |            |   
|Recovery rates:                                                     |                             |                |         |               |    |                    |    |                   |         |            |   
|Gold                                                                |                             |                | 90.56%  |               |    | 90.02%             |    |                   | 91.33%  |            |   
|Silver                                                              |                             |                | 83.60%  |               |    | 85.20%             |    |                   | 84.40%  |            |   
|Zinc                                                                |                             |                | 81.70%  |               |    | 82.50%             |    |                   | 83.90%  |            |   
|Copper                                                              |                             |                | 77.10%  |               |    | 74.50%             |    |                   | 73.80%  |            |   
|Payable production:                                                 |                             |                |         |               |    |                    |    |                   |         |            |   
|Gold (ounces)                                                       |                             |                | 55,310  |               |    | 61,771             |    |                   | 61,704  |            |   
|Silver (ounces in thousands)                                        |                             |                | 1,097   |               |    | 1,205              |    |                   | 1,295   |            |   
|Zinc (tonnes)                                                       |                             |                | 18,661  |               |    | 20,116             |    |                   | 20,233  |            |   
|Copper (tonnes)                                                     |                             |                | 1,810   |               |    | 1,680              |    |                   | 1,921   |            |   
|Realized prices (US$):                                              |                             |                |         |               |    |                    |    |                   |         |            |   
|Gold (per ounce)                                                    |                             | $              | 430     |               | $  | 427                |    | $                 | 432     |            | $ 
|Silver (per ounce)                                                  |                             | $              | 6.85    |               | $  | 7.16               |    | $                 | 7.04    |            | $ 
|Zinc (per tonne)                                                    |                             | $              | 1,323   |               | $  | 1,279              |    | $                 | 1,345   |            | $ 
|Copper (per tonne)                                                  |                             | $              | 3,241   |               | $  | 3,417              |    | $                 | 4,144   |            | $ 
|Total cash costs (per ounce) (US$):                                 |                             |                |         |               |    |                    |    |                   |         |            |   
|Production costs                                                    |                             | $              | 560     |               | $  | 490                |    | $                 | 527     |            | $ 
|Less: Net byproduct revenues                                        |                             |                | (455    | )             |    | (379               | )  |                   | (467    | )          |   
|                                                                    | Inventory adjustments       |                |         | (36           | )  |                    | (6 | )                 |         | (25        | ) 
|                                                                    | Accretion expense and other |                |         | (2            | )  |                    | (2 | )                 |         | (2         | ) 
|                                                                    |                             |                |         |               |    |                    |    |                   |         |            |   
|Total cash costs (per ounce)(1)                                     |                             | $              | 67      |               | $  | 103                |    | $                 | 33      |            | $ 
|                                                                    |                             |                |         |               |    |                    |    |                   |         |            |   
|Minesite costs per tonne milled (C$)(1)                             |                             | C$             | 52      |               | C$ | 56                 |    | C$                | 57      |            | C$
|                                                                    |                             |                |         |               |    |                    |    |                   |         |            |   

---

Note:

67

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Five Year Financial and Operating Summary

Financial Data  (thousands of United States dollars, except where noted)

|                                                                           |                             | 2005 |           | 2004 |    | 2003      |    | 2002 |           | 2001 |   
|-------------------------------------------------------------------------- | --------------------------- | ---- | --------- | ---- | -- | --------- | -- | ---- | --------- | ---- | --
|Revenues from mining operations                                            |                             | $    | 241,338   |      | $  | 188,049   |    | $    | 126,820   |      | $ 
|Interest and sundry income                                                 |                             |      | 4,996     |      |    | 655       |    |      | 2,775     |      |   
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|                                                                           |                             |      | 246,334   |      |    | 188,704   |    |      | 129,595   |      |   
|Costs and expenses                                                         |                             |      | 211,055   |      |    | 142,671   |    |      | 147,708   |      |   
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Income (loss) before income taxes                                          |                             |      | 35,279    |      |    | 46,033    |    |      | (18,113   | )    |   
|Income and mining taxes expense (recovery)                                 |                             |      | (1,715    | )    |    | (1,846    | )  |      | 358       |      |   
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Income (loss) before cumulative catch-up adjustment                        |                             |      | 36,994    |      |    | 47,879    |    |      | (17,755   | )    |   
|Cumulative catch-up adjustment relating to FAS 143                         |                             |      |          |      |    |          |    |      | (1,743    | )    |   
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Net income (loss)                                                          |                             | $    | 36,994    |      | $  | 47,879    |    | $    | (19,498   | )    | $ 
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Net income (loss) per share                                                |                             | $    | 0.42      |      | $  | 0.56      |    | $    | (0.23     | )    | $ 
|Operating cash flow                                                        |                             | $    | 82,980    |      | $  | 49,525    |    | $    | 4,253     |      | $ 
|Investing cash flow                                                        |                             | $    | (66,539   | )    | $  | (94,832   | )  | $    | (105,907  | )    | $ 
|Financing cash flow                                                        |                             | $    | 11,689    |      | $  | 21,173    |    | $    | 5,439     |      | $ 
|Dividends declared per share                                               |                             | $    | 0.03      |      | $  | 0.03      |    | $    | 0.03      |      | $ 
|Capital expenditures                                                       |                             | $    | 70,270    |      | $  | 53,318    |    | $    | 42,038    |      | $ 
|Average gold price per ounce realized                                      |                             | $    | 449       |      | $  | 418       |    | $    | 368       |      | $ 
|Average exchange rate  US$ per C$                                         |                             | $    | 0.8254    |      | $  | 0.7682    |    | $    | 0.7137    |      | $ 
|Weighted average number of common shares outstanding (in thousands)        |                             |      | 89,030    |      |    | 85,157    |    |      | 83,889    |      |   
|Working capital (including undrawn credit lines)                           |                             | $    | 338,490   |      | $  | 266,305   |    | $    | 240,613   |      | $ 
|Total assets                                                               |                             | $    | 976,069   |      | $  | 718,164   |    | $    | 637,101   |      | $ 
|Long-term debt                                                             |                             | $    | 131,056   |      | $  | 141,495   |    | $    | 143,750   |      | $ 
|Shareholders' equity                                                       |                             | $    | 655,067   |      | $  | 470,226   |    | $    | 400,723   |      | $ 
|Operating Summary (thousands of United States dollars, except where noted) |                             |      |           |      |    |           |    |      |           |      |   
|LaRonde Division                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Revenues from mining operations                                            |                             | $    | 241,338   |      | $  | 188,049   |    | $    | 126,820   |      | $ 
|Production costs                                                           |                             |      | 127,365   |      |    | 98,168    |    |      | 104,990   |      |   
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Gross profit (exclusive of amortization shown below)                       |                             | $    | 113,973   |      | $  | 89,881    |    | $    | 21,830    |      | $ 
|Amortization                                                               |                             |      | 26,062    |      |    | 21,763    |    |      | 17,504    |      |   
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Gross profit                                                               |                             | $    | 87,911    |      | $  | 68,118    |    |      | 4,326     |      |   
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Tonnes of ore milled                                                       |                             |      | 2,671,811 |      |    | 2,700,650 |    |      | 2,221,337 |      |   
|Gold  grams per tonne                                                     |                             |      | 3.11      |      |    | 3.41      |    |      | 3.77      |      |   
|Gold production  ounces                                                   |                             |      | 241,807   |      |    | 271,567   |    |      | 236,653   |      |   
|Silver production  ounces (in thousands)                                  |                             |      | 4,831     |      |    | 5,699     |    |      | 3,953     |      |   
|Zinc production  tonnes                                                   |                             |      | 76,545    |      |    | 75,879    |    |      | 45,513    |      |   
|Copper production  tonnes                                                 |                             |      | 7,378     |      |    | 10,349    |    |      | 9,131     |      |   
|Total cash costs (per ounce) (US$):                                        |                             |      |           |      |    |           |    |      |           |      |   
|Production costs                                                           |                             | $    | 527       |      | $  | 362       |    | $    | 390       |      | $ 
|Less: Net byproduct revenues                                               |                             |      | (511      | )    |    | (304      | )  |      | (173      | )    |   
|                                                                           | Inventory adjustments       |      |           | 29   |    |           |   |      |           |     |   
|                                                                           | El Coco royalty             |      |           |     |    |           |   |      |           | 54   |   
|                                                                           | Accretion expense and other |      |           | (2   | )  |           | (2 | )    |           | (2   | ) 
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Total cash costs (per ounce)(1)                                            |                             | $    | 43        |      | $  | 56        |    | $    | 269       |      | $ 
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   
|Minesite costs per tonne milled (C$)                                       |                             | C$   | 55        |      | C$ | 53        |    | C$   | 57        |      | C$
|                                                                           |                             |      |           |      |    |           |    |      |           |      |   

68

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Detailed Mineral Reserve and Resource Data

|Category and Zone                          |  | Au
(g/t) |  | Ag
(g/t) |  | Cu
(%) |  | Zn
(%) |  | Au
(000's oz.) |  | Tonnes
(000's)
|------------------------------------------ |  | -------- |  | -------- |  | ------ |  | ------ |  | -------------- |  | --------------
|Proven Mineral Reserve                     |  |          |  |          |  |        |  |        |  |                |  |               
|LaRonde I                                  |  | 2.92     |  | 84.90    |  | 0.42   |  | 4.31   |  | 635            |  | 6,768         
|Goldex                                     |  | 1.88     |  |          |  |        |  |        |  | 1              |  | 18            
|Bousquet                                   |  | 1.30     |  |          |  |        |  |        |  | 1              |  | 18            
|                                           |  |          |  |          |  |        |  |        |  |                |  |               
|Subtotal Proven Mineral Reserve            |  | 2.91     |  |          |  |        |  |        |  | 637            |  | 6,804         
|                                           |  |          |  |          |  |        |  |        |  |                |  |               
|Probable Mineral Reserve                   |  |          |  |          |  |        |  |        |  |                |  |               
|LaRonde I                                  |  | 2.86     |  | 65.54    |  | 0.31   |  | 3.40   |  | 991            |  | 10,780        
|LaRonde II                                 |  | 5.98     |  | 21.78    |  | 0.33   |  | 0.81   |  | 3,682          |  | 19,154        
|Suurikuusikko                              |  | 5.26     |  |          |  |        |  |        |  | 2,325          |  | 13,757        
|Lapa                                       |  | 8.88     |  |          |  |        |  |        |  | 1,168          |  | 4,090         
|Goldex                                     |  | 2.39     |  |          |  |        |  |        |  | 1,640          |  | 21,375        
|                                           |  |          |  |          |  |        |  |        |  |                |  |               
|Subtotal Probable Mineral Reserve          |  | 4.41     |  |          |  |        |  |        |  | 9,806          |  | 69,156        
|                                           |  |          |  |          |  |        |  |        |  |                |  |               
|Total Proven and Probable Mineral Reserves |  | 4.28     |  |          |  |        |  |        |  | 10,443         |  | 75,960        
|                                           |  |          |  |          |  |        |  |        |  |                |  |               

|Category and Zone               |  | Au
(g/t) |  | Ag
(g/t) |  | Cu
(%) |  | Zn
(%) |  | Tonnes
(000's)
|------------------------------- |  | -------- |  | -------- |  | ------ |  | ------ |  | --------------
|Measured Mineral Resource       |  |          |  |          |  |        |  |        |  |               
|Suurikuusikko                   |  | 3.84     |  |          |  |        |  |        |  | 155           
|Bousquet                        |  | 13.04    |  |          |  |        |  |        |  | 95            
|                                |  |          |  |          |  |        |  |        |  |               
|Total Measured Mineral Resource |  | 7.33     |  |          |  |        |  |        |  | 250           
|                                |  |          |  |          |  |        |  |        |  |               

|Category and Zone                |  | Au
(g/t) |  | Ag
(g/t) |  | Cu
(%) |  | Zn
(%) |  | Tonnes
(000's)
|-------------------------------- |  | -------- |  | -------- |  | ------ |  | ------ |  | --------------
|Indicated Mineral Resource       |  |          |  |          |  |        |  |        |  |               
|LaRonde I                        |  | 2.25     |  | 38.62    |  | 0.18   |  | 2.47   |  | 2,628         
|LaRonde II                       |  | 3.39     |  | 13.65    |  | 0.23   |  | 0.50   |  | 1,949         
|Suurikuusikko                    |  | 4.23     |  |          |  |        |  |        |  | 1,715         
|Pinos Altos                      |  | 3.94     |  | 102.25   |  |        |  |        |  | 12,484        
|Lapa                             |  | 5.49     |  |          |  |        |  |        |  | 754           
|Bousquet                         |  | 5.63     |  |          |  |        |  |        |  | 1,704         
|Ellison                          |  | 5.67     |  |          |  |        |  |        |  | 247           
|                                 |  |          |  |          |  |        |  |        |  |               
|Total Indicated Mineral Resource |  | 3.92     |  |          |  |        |  |        |  | 21,481        
|                                 |  |          |  |          |  |        |  |        |  |               

|Category and Zone               |  | Au
(g/t) |  | Ag
(g/t) |  | Cu
(%) |  | Zn
(%) |  | Tonnes
(000's)
|------------------------------- |  | -------- |  | -------- |  | ------ |  | ------ |  | --------------
|Inferred Mineral Resource       |  |          |  |          |  |        |  |        |  |               
|LaRonde II                      |  | 6.15     |  | 30.05    |  | 0.52   |  | 1.20   |  | 5,182         
|Suurikuusikko                   |  | 4.35     |  |          |  |        |  |        |  | 6,688         
|Pinos Altos                     |  | 5.23     |  | 110.99   |  |        |  |        |  | 3,238         
|Bousquet                        |  | 7.45     |  |          |  |        |  |        |  | 1,667         
|Goldex                          |  | 1.92     |  |          |  |        |  |        |  | 3,194         
|Lapa                            |  | 7.69     |  |          |  |        |  |        |  | 1,709         
|Ellison                         |  | 6.40     |  |          |  |        |  |        |  | 965           
|                                |  |          |  |          |  |        |  |        |  |               
|Total Inferred Mineral Resource |  | 5.11     |  |          |  |        |  |        |  | 22,643        
|                                |  |          |  |          |  |        |  |        |  |               

---

Tonnage amounts and contained metal amounts presented in the tables in this news release have been rounded to the nearest thousand.

69

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Scientific and Technical Data

Agnico-Eagle Mines Limited is reporting mineral resource and reserve estimates in accordance with the CIM guidelines for the estimation, classification and
reporting of resources and reserves.

Cautionary Note to U.S. Investors-The United States Securities and Exchange Commission permits U.S. mining companies, in their
filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this press release, such as "measured",
"indicated", and "inferred", "resources", that the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. Investors are urged to
consider closely the disclosure in our Form 20-F, which may be secured from us, or from the SEC's website at: http://sec.gov/edgar.shtml. A "final" or
"bankable" feasibility study is required to meet the requirements to designate reserves under Guide 7. Estimates were calculated using historic three-year average metals prices and foreign
exchange rates in accordance with the SEC Industry Guide 7. Industry Guide 7 requires the use of prices that reflect current economic conditions at the time of reserve determination which Staff
of the SEC has interpreted to mean historic three-year average prices. The assumptions used for 2005 reserves and resources were $405 per ounce gold. There are no known relevant issues
that would materially affect the estimate. No independent verification of the data has been published. The assumptions used for 2005 mineral reserves and resources were $405 per ounce gold, $6.35 per
ounce silver, $0.51 per pound zinc, $1.24 per pound copper and a C$/US$ exchange rate of 1.30.

Canadian
Securities Administrators National Instrument 43-101 ("NI 43-101") requires mining companies to disclose reserves and resources using the
subcategories of "proven" reserves, "probable" reserves, "measured" resources, "indicated" resources and "inferred" resources. Mineral resources that are not mineral reserves do not have demonstrated
economic viability.

A
mineral reserve is the economically mineable part of a measured or indicated resource demonstrated by at least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes
diluting materials and allows for losses that may occur when the material is mined. A proven mineral reserve is the economically mineable part of a measured resource for which quantity, grade or
quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic
parameters, to support production planning and evaluation of the economic viability of the deposit. A probable mineral reserve is the economically mineable part of an indicated mineral resource for
which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic
parameters, to support mine planning and evaluation of the economic viability of the deposit.

A
mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth's crust in such form and quantity and of such a grade
or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted
from specific geological evidence and knowledge. A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics, can be
estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm both geological and grade continuity. An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality,
densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning
and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. An inferred mineral resource is that part of a
mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade

70

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continuity.
The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Mineral
resources which are not mineral reserves do not have demonstrated economic viability.

Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

The
qualified person responsible for the LaRonde I and LaRonde II mineral reserve and resource estimate is Marc Ruel, P.Geo., Superintendent of Geology for the LaRonde Division. The
effective date of the estimate is February 22, 2006, using the same operating and capital cost assumptions, parameters and methods as that found in the 2005 Mineral Resource and Mineral Reserve
Report by Guy Gosselin, P.Geo. Agnico-Eagle Mines Limited, LaRonde Division that was posted on SEDAR on March 23, 2005.

A
qualified person, Carl Pelletier, Geo., of Innovexplo Geological Services, was responsible for the mineral reserve and mineral resource estimate at Goldex. A description of the
operating and capital cost assumptions, parameters and methods may be found in the Technical Report on the Estimation of Mineral Resources and Reserves for the Goldex Extension that was posted on
SEDAR on October 27, 2005. The effective date of the estimate was September 9, 2005. The 2005 estimate differs from the previous in that a minor amount of proven reserves in the form of
development rock that was in stockpiles on December 31, 2005. Although the price assumptions used to constrain the wireframe models and also estimate the mineral resource and reserve in 2005
are slightly lower than those currently used, it is the opinion of the qualified person that the differences are not significant.

The
qualified person responsible for the Lapa mineral reserve and mineral resource estimate is Christian D'Amours, Geo., of Service Conseil Géopointcom. The
effective date of the estimate was
February 23, 2005. Wireframe models of zones comprising the Lapa deposit that were used to estimate the mineral resource were derived using drill hole intercepts. The key assumptions used to
determine the drill hole intercept intervals were a gold price of $360 per ounce and metallurgical recoveries of 85.9% for gold. Gold assays were cut to 51.4 grams per tonne or
58.6 grams per tonne depending on the zone. For the mineral resource models, a minimum gold grade cut-off of 5.0 grams per tonne was used to evaluate drill hole intercepts
that have been adjusted to respect a minimum mining width of 2.8 metres (horizontal width). Although the price assumptions used to constrain the wireframe models and also estimate the mineral
resource and reserve in 2005 are slightly lower than those currently used, it is the opinion of the qualified person that the differences are not significant.

The
Lapa mineral resource estimate was derived using a three dimensional block model of the deposit; the grades were interpolated using the inverse distance power squared method. In
order to estimate the mineral reserve, a dilution factor that averaged 22.8% was applied. For the underground reserve models, the minimum in situ gold grade cut-off was 6.0 grams
per tonne or 6.5 grams per tonne depending on the mining method.

The
Qualified Person responsible for the Suurikuusikko mineral resource and mineral reserve estimate is Normand Bédard P.Geo., the Abitibi Regional Division's Senior
Geologist. The effective date of the estimate is February 22, 2006. A technical report describing the mineral resource and mineral reserve estimate has been filed with the securities regulatory
authorities.

Wireframe
models of zones comprising the Suurikuusikko deposit that were used to estimate the mineral resource were derived using drill hole intercepts. The key assumptions used to
determine the drill hole intercept intervals were a gold price of $405 per ounce, metallurgical recoveries of 87% for gold, and cut-off grades that varied were applied depending on whether
the material could be potentially mined by open pit or by underground methods. Gold assays were cut to 50 grams per tonne. For the open pit resource models, a minimum gold grade
cut-off of 1.0 grams per tonne was used to evaluate drill hole intercepts that have been adjusted to respect a minimum mining width of 3.0 metres (horizontal width). For the
underground resource models, a minimum gold grade cut-off of 3.0 grams per tonne was used to evaluate drill hole intercepts that have been adjusted to respect a minimum mining width
of 3.0 metres (horizontal width).

The
Suurikuusikko mineral resource estimate was derived using a three dimensional block model of the deposit; the grades were interpolated using the inverse distance power squared
method. In order to estimate the Suurikuusikko mineral reserve, a dilution factor was applied between 10 and 20 percent depending on the mining method. For the open pit reserve models, a
minimum in situ gold grade cut-off of 1.7 grams per tonne was used. For the underground reserve models, a minimum in situ gold grade cut-off of 4.0 grams per
tonne was used.

71

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The qualified person responsible for the Bousquet and Ellison mineral reserve and resource estimates is Normand Bédard P.Geo., Regional Division's Senior Geologist. In
estimating the Bousquet and Ellison mineral resource and reserve, a minimum gold grade cut-off of 3.0 grams per tonne was used to evaluate drill intercepts that have been adjusted
to respect a minimum mining width of 3.0 metres. The estimate was derived using a combination of three dimensional block modeling (grades were interpolated using the inverse distance power
squared method) for certain zones and for other zones, by the polygonal method on longitudinal sections. A portion of the resource estimate is based on estimates reported when the Bousquet I mine
closed in 1996. The resource was reviewed and reclassified using the CIM definition and guidelines. This information is of a good quality and is considered reliable.

ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

The articles of Agnico-Eagle provide for a minimum of five and a maximum of twelve directors. By special resolution of the shareholders of Agnico-Eagle approved
at the annual and special meeting of Agnico-Eagle held on June 27, 1996, the shareholders authorized the Board of Directors to determine the number of directors within that minimum and maximum.
The number of directors to be elected is nine as determined by the Board of Directors by resolution passed on December 13, 2005.

The
by-laws of the Company provide that directors shall hold office for a term expiring at the next annual meeting of shareholders after such directors' election or
appointment or until their successors are elected or appointed. The Board of Directors annually appoints the officers of the Company, who are subject to removal by resolution of the Board at any time,
with or without cause (in the absence of a written agreement to the contrary).

The
following is a brief biography of each of Agnico-Eagle's directors and senior officers:

Dr. Leanne M. Baker, 53, is a director of Agnico-Eagle. Dr. Baker is a member of the Audit Committee and Chair of the
Compensation Committee. Dr. Baker is Managing Director of Investor Resources LLC, consulting to companies in the mining and financial services industries, and is a registered
representative with Puplava Securities, Inc., a U.S. broker-dealer. Previously, Dr. Baker was employed by Salomon Smith Barney where she was one of the top-ranked
mining sector equity analysts in the United States. Dr. Baker is a graduate of the Colorado School of Mines (M.S. and Ph.D. in mineral economics). Dr. Baker has been a director of
Agnico-Eagle since January 1, 2003, and is also a director of New Sleeper Gold Corporation, a mining exploration company traded on the TSX Venture Exchange, and U.S. Gold
Corporation. Dr. Baker resides in Tiburon, California.

Douglas R. Beaumont, P.Eng., 73, is a director of Agnico-Eagle. Mr. Beaumont is a member of the Compensation Committee and Chair of
the Corporate Governance Committee. Mr. Beaumont, now retired, is a former Senior Vice-President, Process Technology with SNC Lavalin. Prior to that he was Executive Vice-President
of Kilborn Engineering & Construction. Mr. Beaumont is a graduate of Queen's University (B.Sc.). Mr. Beaumont has been a director of Agnico-Eagle since February 25, 1997.
Mr. Beaumont resides in Toronto, Ontario.

Sean Boyd, CA, 47, is the Vice-Chairman and Chief Executive Officer and a director of Agnico-Eagle. Mr. Boyd has been
with Agnico-Eagle since 1985. Prior to his appointment as Vice-Chairman in December 2005 and Chief Executive Officer in 1998, Mr. Boyd served as President and Chief Executive
Officer from 1998 to 2005, Vice-President and Chief Financial Officer from 1996 to 1998, Treasurer and Chief Financial Officer from 1990 to 1996 and Secretary Treasurer during a portion of
1990, and Comptroller from 1985 to 1990. Prior to joining Agnico-Eagle in 1985, he was a chartered accountant with Clarkson Gordon. Mr. Boyd is a graduate of the University of Toronto
(B.Comm.). Mr. Boyd has been a director of Agnico-Eagle since April 14, 1998, and is also a director of Contact Diamond Corporation ("Contact Diamond"), a 39.4% equity investee of
Agnico-Eagle traded on the TSX. Mr. Boyd resides in Newmarket, Ontario.

Bernard Kraft, C.A., 75, is a director of Agnico-Eagle. Mr. Kraft is a member of the Audit Committee, the Compensation Committee
and the Corporate Governance Committee. Mr. Kraft is recognized as a Designated Specialist in Investigative and Forensic Accounting by the Canadian Institute of Chartered Accountants.

72

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Mr. Kraft
is a recently-retired senior partner of the Toronto accounting firm Kraft, Berger, Grill, Schwartz, Cohen & March LLP, Chartered Accountants and now serves as a
consultant to that firm. He is also a principal in Kraft Yabrov Valuations Inc. Mr. Kraft is a member of the Canadian Institute of Chartered Business Valuators, the Association of
Certified Fraud Examiners and the American Society of Appraisers. Mr. Kraft has been a director of Agnico-Eagle since March 12, 1992. Mr. Kraft is also a director of Canadian
Shield Resources Inc., a mining exploration company traded on the TSX Venture Exchange. Mr. Kraft resides in Toronto, Ontario.

Mel Leiderman, C.A., TEP, 53, is a director of Agnico-Eagle. Mr. Leiderman is Chair of the Audit Committee and a member of the
Corporate Governance Committee. Mr. Leiderman is the managing partner of the Toronto accounting firm Lipton, Wiseman, Altbaum & Partners LLP. Mr. Leiderman is a graduate of
the
University of Windsor (B.A.). He has been a director since January 1, 2003. Mr. Leiderman resides in Toronto, Ontario.

James D. Nasso, 72, is Chairman of the Board of Directors and a director of Agnico-Eagle. Mr. Nasso is a member of the Audit
Committee and the Corporate Governance Committee. Mr. Nasso, now retired, founded and was the President of Unilac Limited, a manufacturer of infant formula, for 35 years.
Mr. Nasso is a graduate of St. Francis Xavier University (B.Comm.). Mr. Nasso has been a director of Agnico-Eagle since June 27, 1986. Mr. Nasso is also a director and
Chairman of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 39.4% interest. Mr. Nasso resides in Toronto, Ontario.

Eberhard Scherkus, P.Eng., 54, is President and Chief Operating Officer and a director of Agnico-Eagle. Mr. Scherkus has been a
director of the Company since January 17, 2005 and has been President and Chief Operating Officer since December 13, 2005 and was Executive Vice-President and Chief Operating
Officer since February 6, 1998. Prior to his appointment as Executive Vice-President and Chief Operating Officer, Mr. Scherkus served as Vice-President,
Operations from September 19, 1996 and prior to that as a manager of the Company's LaRonde Division. Mr. Scherkus is a graduate of McGill University (B.Sc.). Mr. Scherkus also
serves as director of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 39.4% interest. Mr. Scherkus resides in Oakville, Ontario.

Howard R. Stockford, P.Eng., 64, is a director of Agnico-Eagle. Mr. Stockford is a member of the Compensation Committee.
Mr. Stockford is an independent consultant to the mining industry and is currently the President of Stockford Consulting Inc. Mr. Stockford was Executive
Vice-President of Aur Resources Inc. ("Aur"), a mining company which is traded on the TSX, from 1989 until his retirement at the end of 2004. From 1983 to 1989, Mr. Stockford
was Vice-President of Aur. Mr. Stockford is a member of the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") and has previously served as Chairman of both
the Winnipeg and Toronto branches of the CIM and as President of the CIM national body. Mr. Stockford is also a member of the Prospectors and Developers Association of Canada, the Geological
Association of Canada and the Society of Economic Geologists. Mr. Stockford is a graduate of the Royal School of Mines, Imperial College, London University (B.Sc.). Mr. Stockford is a
director of Aur, an office he has held since 1984, and a director of Nuinsco Resources Limited, an office he has held since March of 2005. Mr. Stockford has been a director of Agnico-Eagle
since May 2005. Mr. Stockford resides in Toronto, Ontario.

Pertti Voutilainen, M.Sc., M.Eng., 65, is a director of Agnico-Eagle and a member of the Audit Committee. Mr. Voutilainen is a
mining industry veteran. Most recently, he was the Chairman of the board of directors of Riddarhyttan Resources AB. Previously, Mr. Voutilainen was Chairman of the board of directors and CEO
for Kansallis Banking Group and President after its merger with Union Bank of Finland until his retirement in 2000. He was also employed by Outokumpu Corp., Finland's largest mining and metals
company, for 26 years, including as CEO for 11 years. During the last five years, Mr. Voutilainen has served as director on the board of directors of each of Metso Oyj (Chairman),
Viola Systems Oy (Chairman), Innopoli Oy (Chairman) and Fingrid Oyj. He is currently a director of Technopolis Oyj (Chairman). Mr. Voutilainen holds the honorary title of Mining Counsellor
(Bergsråd) which was awarded to him by the President of the Republic of Finland in 2003. Mr. Voutilainen also holds graduate degrees from Helsinki University of Technology
(M.Sc.), Helsinki University of Business Administration (M.Sc.) and Pennsylvania State University (M. Eng.). He was appointed as director of Agnico-Eagle on December 13, 2005. He also
serves on the board of directors of three of Agnico-Eagle's subsidiaries, namely Riddarhyttan, Riddarhyttan Resources Oy and Agnico-Eagle Sweden AB. Mr. Voutilainen resides in Espoo, Finland.

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Donald G. Allan, 49, is Vice-President, Corporate Development of Agnico-Eagle, a position he has held since May 6,
2002. Prior to his appointment as Vice-President, Corporate Development, Mr. Allan spent 16 years as an investment banker covering the mining and natural resources sectors
with the firms Salomon Smith Barney and Merrill Lynch. Mr. Allan is a graduate of the Amos Tuck School, Dartmouth College (M.B.A.) and the University of Toronto (B.Comm.). Mr. Allan is
also qualified as a Chartered Accountant. Mr. Allan also serves as Vice-President, Corporate Development of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 39.4%
interest. Mr. Allan resides in Toronto, Ontario.

Alain Blackburn, P.Eng., 49, is Vice-President, Exploration of Agnico-Eagle, a position he has held since October 1,
2002. Prior to his appointment as Vice-President, Exploration, Mr. Blackburn served as Manager, Corporate Development of Agnico-Eagle from January 1999 and as Agnico-Eagle's
Exploration Manager from September 1996 to January 1999. Mr. Blackburn is a graduate of Université du Québec de Chicoutimi (P.Eng.) and
Université du Québec en Abitibi-Temiscamingue (M.Sc.). Mr. Blackburn also serves as a director of Contact Diamond, a TSX listed company in which Agnico-Eagle holds
a 39.4% interest. Mr. Blackburn resides in Oakville, Ontario.

David Garofalo, C.A., 40, is Vice-President, Finance and Chief Financial Officer of Agnico-Eagle, a position he has held since
January 1, 1999, prior to which he served as Treasurer of Agnico-Eagle from June 8, 1998. Prior to joining Agnico-Eagle, Mr. Garofalo served as Treasurer of Inmet Mining
Corporation, an international mining company. Mr. Garofalo is a graduate of the University of Toronto (B.Comm.). Mr. Garofalo also serves as Vice-President, Finance and Chief
Financial Officer of Contact Diamond, a TSX listed company in which Agnico-Eagle holds a 39.4% interest. Mr. Garofalo resides in Richmond Hill, Ontario.

R. Gregory Laing, BA, LL.B., 47, is General Counsel, Vice-President, Legal and Corporate Secretary of Agnico-Eagle, a position
he has held since September 19, 2005. Prior to this, he was Vice President, Legal of Goldcorp Inc. (gold mining company) from October 2003 to June 2005 and General Counsel,
Vice President, Legal and Corporate Secretary of TVX Gold Inc. (gold mining company) between
October 1995 and January 2003. He worked as a corporate securities lawyer for two prominent Toronto law firms prior to that. Mr. Laing is a director of New Gold Inc. (mining
company), a TSX and AMEX listed company, and Andina Minerals Inc. (mining exploration company), a TSX-V listed company. Mr. Laing is also General Counsel, Vice President,
Legal and Corporate Secretary of Contact Diamond Corporation, a TSX listed company in which Agnico-Eagle holds a 39.4% interest. Mr. Laing resides in Oakville, Ontario.

Jean Robitaille, 43, is Vice-President, Metallurgy & Marketing of Agnico-Eagle, a position that he has held since
January 1, 2006. Prior to his appointment, he served Agnico-Eagle in various capacities for 18 years, most recently as General Manager, Metallurgy & Marketing and as Mill
Superintendent and Project Manager for the expansion of the Laronde mill. Prior to joining Agnico-Eagle, Mr. Robitaille worked as a metallurgist with Teck Mining Group. Mr. Robitaille is
a mining graduate of the College de l'Abitibi-Témiscamingue with a specialty in mineral processing. Mr. Robitaille resides in Oakville, Ontario.

There
are no arrangements or understandings between any director or executive officer and any other person pursuant to which such director or executive officer was selected to serve, nor
are there any family relationships between any such persons.

Compensation of Officers

The executive officers of Agnico-Eagle are:



74

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The
following Summary Compensation Table sets out compensation during the three fiscal years ended December 31, 2005 for the Vice-Chairman and Chief Executive Officer,
the Vice-President, Finance and Chief Financial Officer and the three other most highly compensated officers (collectively the "Named Executive Officers") of Agnico-Eagle measured by base
salary and bonus earned during the fiscal year ended December 31, 2005.

Summary Compensation Table  Agnico-Eagle Mines Limited

|                            |  | Annual Compensation |  | Long-Term Compensation Awards |  |        
|--------------------------- |  | ------------------- |  | ----------------------------- |  | -------
|
|Sean Boyd                   |  | 2005                |  | 660,000                       |  | 475,000
|Vice-Chairman and           |  | 2004                |  | 600,000                       |  | 393,000
|Chief Executive Officer     |  | 2003                |  | 600,000                       |  |       
|Eberhard Scherkus           |  | 2005                |  | 475,000                       |  | 270,000
|President and               |  | 2004                |  | 435,000                       |  | 228,000
|Chief Operating Officer     |  | 2003                |  | 435,000                       |  |       
|David Garofalo              |  | 2005                |  | 320,000                       |  | 150,000
|Vice-President, Finance and |  | 2004                |  | 290,000                       |  | 120,000
|Chief Financial Officer     |  | 2003                |  | 290,000                       |  |       
|Donald G. Allan             |  | 2005                |  | 240,000                       |  | 95,000 
|Vice-President,             |  | 2004                |  | 220,000                       |  | 70,000 
|Corporate Development       |  | 2003                |  | 220,000                       |  |       
|Alain Blackburn             |  | 2005                |  | 220,000                       |  | 85,000 
|Vice-President,             |  | 2004                |  | 200,000                       |  | 65,000 
|Exploration                 |  | 2003                |  | 175,000                       |  | 75,000 

---



Under the Company's Stock Option Plan, options to purchase common shares may be granted to directors, officers, employees and service providers of the Company.
The exercise price of options granted may not be less than the closing market price for the common shares of the Company on the TSX on the day prior to the date of grant. The maximum term of options
granted under the Stock Option Plan is five years and the maximum number of stock options that can be issued in any year is 1% of the Company's outstanding common shares. In addition, a maximum of 25%
of the options granted in an option grant vest upon the date they are granted with the remaining options vesting equally over the next three anniversaries of the option grant.

The
Stock Option Plan provides for the termination of an option held by an option holder in the following circumstances:



An
option granted under the Stock Option Plan may only be assigned to eligible assignees, including a spouse, minor child and minor grandchild, a trust governed by a registered
retirement savings plan of an eligible

75

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participant,
a corporation controlled by such participant or a family trust of which the eligible participant is a trustee and of which all beneficiaries are eligible assignees. Assignments must be
approved by the Board and any stock exchange or other authority.

The
Board may amend or revise the terms of the Stock Option Plan as permitted by law and subject to any required approval by any stock exchange or other authority. No amendment or
revision to the Stock Option Plan which adversely affects the rights of any option holder under any option granted under the Stock Option Plan can be made without the consent of the option holder
whose rights are being affected. In addition, no amendments to the Stock Option Plan to increase the number of common shares reserved for issuance, to change the designation of who is an eligible
participant, or to decrease the prices at which options can be exercised can be made without first obtaining the approval of the Company's shareholders. The Stock Option Plan does not expressly
entitle participants to convert a stock option into a stock appreciation right.

Under
the Stock Option Plan, only eligible persons who are not directors or officers of the Company are entitled to receive loans, guarantees or other support arrangements from the
Company to facilitate option exercises. During 2005, no loans, guarantees or other financial assistance was provided under the plan.

The
Compensation Committee is recommending an increase of common shares reserved for issuance under the Stock Option Plan from 10,000,000 to 13,000,000 common shares to be
approved at the annual and special shareholders meeting scheduled for May 12, 2006. Should shareholders approve this recommendation, the maximum amount of shares issuable under the Stock Option
Plan (which includes options available for future grants and unexercised options) would be 6.3% of the Company's 109,050,565 common shares outstanding as at March 3, 2006.

The
following table sets out stock option awards received by the Named Executive Officers during the year ended December 31, 2005.

Option grants of Agnico-Eagle Mines Limited during 2005

|Name              |  | Securities Under
Options |  | % of Total
Option Grants
in Year |  | Exercise
Price
(C$) |       | Market Value
of Underlying
Options on
Date of Grant |     | Expiration Date
|----------------- |  | ------------------------ |  | -------------------------------- |  | ------------------- | ----- | --------------------------------------------------- | --- | ---------------
|Sean Boyd         |  | 125,000                  |  | 13                               |  | $                   | 16.89 |                                                     | NIL |                
|Eberhard Scherkus |  | 100,000                  |  | 10                               |  | $                   | 16.89 |                                                     | NIL |                
|David Garofalo    |  | 70,000                   |  | 7                                |  | $                   | 16.89 |                                                     | NIL |                
|Donald Allan      |  | 40,000                   |  | 4                                |  | $                   | 16.89 |                                                     | NIL |                
|Alain Blackburn   |  | 40,000                   |  | 4                                |  | $                   | 16.89 |                                                     | NIL |                

The
following table shows, for each Named Executive Officer, the number of common shares acquired through the exercise of options of the Company during the year ended December 31,
2005, the aggregate value realized upon exercise and the number of unexercised options under the Stock Option Plan as at December 31, 2005. The value realized upon exercise is the difference
between the market value of common shares on the exercise date and the exercise price of the option. The value of unexercised in-the-money options at December 31, 2005
is the difference between the exercise price of the options and the market value of Agnico-Eagle's common shares on December 31, 2005, which was C$23.02 per share of the Company's common stock.

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Aggregate option exercises during 2005 and year end option values

|                  |  |        |  |         |  | Unexercised options at December 31, 2005 |  | Value of unexercised in-the-money options at December 31, 2005 (C$)
|----------------- |  | ------ |  | ------- |  | ---------------------------------------- |  | -------------------------------------------------------------------
|
|
|Sean Boyd         |  |       |  | NIL     |  | 432,400                                  |  | 107,500                                                            
|Eberhard Scherkus |  |       |  | NIL     |  | 328,000                                  |  | 85,000                                                             
|David Garofalo    |  | 13,000 |  | 123,760 |  | 135,000                                  |  | 60,000                                                             
|Donald Allan      |  |       |  | NIL     |  | 90,000                                   |  | 40,000                                                             
|Alain Blackburn   |  | 8,000  |  | 76,840  |  | 120,000                                  |  | 45,000                                                             

The
following table shows, as at December 31, 2005, compensation plans under which equity securities of Agnico-Eagle are authorized for issuance from treasury. The information has
been aggregated by plans approved by shareholders and plans not approved by shareholders, of which there are none.

|Plan Category                                          |  | Number of securities to be issued on exercise of outstanding options |  | Weighted average exercise price of outstanding options |       | Number of securities remaining available for future issuances under equity compensation plans
|------------------------------------------------------ |  | -------------------------------------------------------------------- |  | ------------------------------------------------------ | ----- | ---------------------------------------------------------------------------------------------
|Equity compensation plans approved by shareholders     |  | 3,071,625                                                            |  | C$                                                     | 15.78 |                                                                                              
|Equity compensation plans not approved by shareholders |  | Nil                                                                  |  |                                                        | Nil   |                                                                                              



In 1997, the shareholders of Agnico-Eagle approved the Share Purchase Plan to encourage directors, officers and full-time employees of Agnico-Eagle to
purchase common shares of Agnico-Eagle. Full-time employees who have been continuously employed by Agnico-Eagle or its subsidiaries for at least twelve months are eligible at the beginning
of each fiscal year to elect to participate in the Share Purchase Plan. Eligible employees may contribute up to 10% of their basic annual salary through monthly payroll deductions or quarterly
payments by cheque. Directors may contribute up to 100% of their annual Board and committee retainer fees. Agnico-Eagle contributes an amount equal to 50% of the individual's contributions and issues
shares which have a market value equal to the total contributions (individual and Corporation) under the Share Purchase Plan. Of the 2,500,000 shares approved in 1997 under the Share Purchase
Plan, Agnico-Eagle has, as of March 3, 2006, reserved 905,778 common shares for issuance under the plan.



Two individual Retirement Compensation Arrangement Plans ("RCA Plans") for Mr. Boyd and Mr. Scherkus provide pension benefits which are
generally equal (on an after-tax basis) to what the pension benefits would be if they were provided directly from a registered pension plan. There are no pension benefit limits
under the RCA Plans. The RCA Plans provide an annual pension at age 60 equal to 2% of the executive's final three-year average pensionable earnings for each year of continuous
service with the Company, less the annual pension payable under the Company's basic defined contribution plan. Payments under the RCA Plans are secured by a letter of credit from a Canadian chartered
bank.

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The
following chart provides illustrations of the total estimated pension payable from both the RCA Plan and the Basic Plan assuming various current pensionable earnings, current ages
and total years of service to retirement at age 60. In all cases, it was assumed that current pensionable earnings would increase at the rate of 3% per annum, compounded annually.

|          |  |             |  | Total Years of Service with the Company to Age 60(1)
|--------- |  | ----------- |  | ----------------------------------------------------
|
|
|C$400,000 |  | 45
50
55
60 |  | $                                                   
|C$500,000 |  | 45
50
55
60 |  | $                                                   
|C$600,000 |  | 45
50
55
60 |  | $                                                   
|C$700,000 |  | 45
50
55
60 |  | $                                                   

---

At December 31, 2005, the two individuals under the RCA Plans had the following years of service:

  Mr. Boyd

20 years  Mr. Scherkus

20 years


Accordingly,
the total projected pension payable at retirement from both the RCA Plan and the Basic Plan for Mr. Boyd and Mr. Scherkus are C$632,225 and C$290,100 per
annum, respectively. The 2005 annual service cost and total accrued pension obligation, respectively, for each of Mr. Boyd and Mr. Scherkus as at December 31, 2005 are as follows:
Mr. Boyd  C$175,700 and C$2,490,200, Mr. Scherkus  C$124,400 and C$1,960,900. The annual service cost
represents the value of the projected pension benefit earned during the year. The total accrued pension obligation represents the value of the projected pension benefit earned for all service to date.
The pensionable earnings for the purposes of the RCA Plans consist of all basic remuneration and do not include benefits, bonuses, automobile or other allowances, and unusual payments. The benefits
listed in the table are not subject to any deduction for social security or other offset amounts such as Canada Pension Plan amounts.



Agnico-Eagle has employment agreements with all executive officers which provide for an annual base salary, bonus and certain pension, health, dental and other
insurance and automobile benefits. The agreements were updated in December 2005 and provide minimum annual base salaries for the Named Executive Officers as follows:

  Mr. Boyd

C$
700,000  Mr. Scherkus

C$
500,000  Mr. Garofalo

C$
340,000  Mr. Allan

C$
270,000  Mr. Blackburn

C$
245,000


78

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These
amounts may be increased at the discretion of the Board of Directors upon the recommendation of the Compensation Committee. If the individual agreements are terminated other than
for cause, death or disability, or upon their resignations following certain events, all of the above named individuals would be entitled to a payment equal to two and one-half times the
annual base salary at the date of termination plus an amount equal to two and one-half times the annual bonus (averaged over the preceding two years) and a continuation of benefits for up
to two years or until the individual commences new employment. Certain events that would trigger a severance payment are:



Compensation of Directors and Other Information

Mr. Boyd, who is a director, and is also the Vice-Chairman and Chief Executive Officer of the Company, and Mr. Scherkus, who is a
director and is also the President and Chief Operating Officer, receive no remuneration for their services as directors.

The
table below summarizes the annual retainers and attendance fees paid to the other directors during the year ended December 31, 2005.

|                                                           |  | Compensation during the year ended December 31, 2005
|---------------------------------------------------------- |  | ----------------------------------------------------
|Annual board retainer                                      |  | C$                                                  
|Annual retainer for Chairman of the Board                  |  | C$                                                  
|Annual retainer for Chairman of the Audit Committee        |  | C$                                                  
|Annual retainer for chairpersons of other Board committees |  | C$                                                  
|Board meeting attendance fee                               |  | C$                                                  
|Long-distance Board meeting attendance fee                 |  | C$                                                  
|Board meeting phone attendance fee                         |  | C$                                                  

The
following table sets out the attendance of each of the directors to the Board meetings and the Board committee meetings held in 2005.

|Director              |  | Board Meetings Attended |  | Committee Meetings Attended
|--------------------- |  | ----------------------- |  | ---------------------------
|Leanne M. Baker       |  | 16 of 16                |  | 10 of 10                   
|Douglas R. Beaumont   |  | 16 of 16                |  | 6 of 6                     
|Sean Boyd             |  | 16 of 16                |  | N/A                        
|Alan Green(1)         |  | 1 of 1                  |  | 1 of 1                     
|Bernard Kraft         |  | 16 of 16                |  | 9 of 10                    
|Mel Leiderman         |  | 16 of 16                |  | 6 of 6                     
|James D. Nasso        |  | 16 of 16                |  | 6 of 6                     
|Eberhard Scherkus(2)  |  | 13 of 13                |  | N/A                        
|Howard Stockford      |  | 6 of 6                  |  | 5 of 5                     
|Pertti Voutilainen(3) |  | 1 of 1                  |  | 1 of 1                     

---

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To align the interests of directors with those of shareholders, directors, other than Mr. Boyd and Mr. Scherkus, are required to own
the equivalent of at least three years of their annual retainer fee in Agnico-Eagle's stock. Directors have a period of three years to achieve this ownership level either through open market purchases
or through participation in Agnico-Eagle's Incentive Share Purchase Plan. In addition, each director, other than Mr. Boyd and Mr. Scherkus, is eligible to be granted a maximum of
7,500 options per year under Agnico-Eagle's Stock Option Plan. Beginning with the 2005 fiscal year, individual grants will be determined annually by the Compensation Committee based on
performance evaluations for each director.

In
2005, Mr. Voutilainen was the Chairman of Riddarhyttan Resources AB which became a subsidiary of Agnico-Eagle on October 12, 2005. As Chairman of Riddarhyttan Resources
AB, he earned 100,000 SEK, 21,000 SEK (approximately C$3,079) of which was earned after October 12, 2005.

During
the year ended December 31, 2005, Agnico-Eagle issued a total of 7,925 common shares under its Incentive Share Purchase Plan to the following directors as follows:

  Mr. Boyd

2,527  Mr. Scherkus

3,665  Mr. Beaumont

632  Mr. Kraft

632  Mr. Stockford

469


Agnico-Eagle
will provide healthcare benefits to Ernest Sheriff until May 2010, which is the fifth anniversary of his resignation from the Board.

Indebtedness of Directors, Executive Officers and Senior Officers

During the year ended December 31, 2005, there was no outstanding indebtedness to Agnico-Eagle by any of its officers or directors made in connection with
the purchase of securities of Agnico-Eagle. In addition, during the year ended December 31, 2005 and as at March 3, 2006, the only officer indebted to the Company was Alain Blackburn,
Vice-President, Exploration. The non-interest bearing loan was advanced by Agnico-Eagle to Mr. Blackburn in 1999 for the purchase of a residence as a relocation
incentive. The loan matures in 2024 and is secured by a second mortgage on the residence of Mr. Blackburn which provides for full recourse against the assets of Mr. Blackburn. As at
December 31, 2005, the amount outstanding under this loan was C$92,500. As at March 3, 2006, the amount outstanding under this loan was C$91,731. The highest aggregate amount of
indebtedness outstanding under the loan in 2005 was C$97,500. Agnico-Eagle will no longer make loans to officers under any circumstances.

Directors' and Officers' Liability Insurance

The Corporation has purchased, at its expense, directors' and officers' liability insurance policies to provide insurance against possible liabilities incurred by
them in their capacity as directors and officers of the Corporation. The premium for these policies for the period from December 31, 2005 to December 31, 2006 is C$784,000. The policies
provide coverage of up to C$50 million per occurrence, to a maximum of C$50 million per annum. There is no deductible for directors and officers and a C$250,000 deductible for each claim
made by the Corporation ($1 million deductible for securities claims). The insurance applies in circumstances where the Corporation may not indemnify its directors and officers for their acts
or omissions.

Board Practices

The Board and management have been following the developments in corporate governance requirements and best practices standards in both Canada and the
United States. As these requirements and practices have evolved, the Company has responded by assessing its practices against these requirements and modifying, or targeting for modification,
practices to bring them into compliance with these corporate governance requirements and best practices standards. The Company revises, from time to time, the charters for the Audit Committee, the
Compensation Committee and the Corporate Governance Committee to reflect the new and evolving corporate governance requirements and best practices standards in Canada and the United States.

80

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The
Company is required under the rules of the Canadian Securities Administrators (the "CSA") to disclose its corporate governance practices and provide a description of the
Company's system of corporate
governance. Set out below is a description of the corporate governance practices of the Board which has been prepared by the Corporate Governance Committee and approved by the Board.

Additional
information on each director of the Company, including other public company boards on which they serve and their attendance record for all Board and Committee meetings during
2005, can be found on pages 72 to 74 and 79 of this Form 20-F.

Director Independence

The Board consists of nine directors. The Board has made an affirmative determination that seven of its nine current members are "independent" within the meaning
of the CSA rules and the standards of the New York Stock Exchange (the "NYSE"). With the exception of Mr. Boyd and Mr. Scherkus, all directors are independent of management
and free from any interest and any business which could materially interfere with their ability to act as a director with a view to the best interests of the Company. In reaching this determination,
the Board considered the circumstances and relationships with the Company and its affiliates of each of its directors. In determining that all directors except Mr. Boyd and Mr. Scherkus
are independent, the Board took into consideration the fact that none of the remaining directors is an officer or employee of the Company or party to any material contract with the Company and that
none receives remuneration from the Company in excess of directors' fees, grants and grants of stock options.

Mr. Boyd
and Mr. Scherkus are considered related because they are officers of the Company. All directors, other than Mr. Boyd and Mr. Scherkus, also meet the
independence standard as set out in the Sarbanes-Oxley Act of 2002 ("SOX").

The
Board regularly meets independently of management at the request of any director and the related directors or may excuse such persons from all or a portion of any meeting where a
potential conflict of interest arises or where otherwise appropriate. The Board meets without management at least once each quarter after each Board meeting held to consider interim and annual
financial statements. In 2005, the Board met without management on eight separate occasions, including the four scheduled quarterly meetings.

Chairman

Mr. Nasso is the Chairman of the Board and Mr. Boyd is the Vice-Chairman and Chief Executive Officer of the Company. Mr. Nasso is
not a member of management. The Board believes that the separation of the offices of Chairman and Chief Executive Officer enhances the ability of the Board to function independently of management and
does not foresee that the offices of Chairman and Chief Executive Officer will be held by the same person.

The
Board has adopted a position description for the Chairman of the Board. The Chairman's role is to provide leadership to directors in discharging their duties and obligations as set
out in the mandate of the Board. The specific responsibilities of the Chairman include providing advice, counsel and mentorship to the CEO and, promoting the delivery of information to the members of
the Board on a timely basis to keep them fully apprised of all matters which are material to them at all times. The Chairman's responsibilities also include selecting the Chair for each of the Board's
committees scheduling, overseeing and presiding over meetings of the Board and presiding over meetings of the Company's shareholders.

Board Mandate

The Board's mandate is to provide stewardship of the Company and to supervise the management of the Company's business and affairs, to maintain its strength and
integrity, to oversee the Company's strategic direction, its organization structure and succession planning of senior management and to perform any other duties required by law. The Board's strategic
planning process consists of an annual review of the Company's three-year business plan and, from time to time (at least annually), a meeting focused on strategic planning matters.
As part of this process, the Board reviews and approves the corporate objectives proposed by the CEO and advises management in the development of a corporate strategy to achieve those objectives. The
Board also

81

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reviews
the principal risks inherent in the Company's business, including environmental, industrial and financial risks, and assesses the systems to manage these risks. The Board also monitors the
performance of senior management against the business plan through a periodic review process (at least every quarter) and reviews and approves promotion and succession matters.

The
Board oversees the Company's approach to communications with shareholders and other stakeholders and approves specific communications initiatives from time to time. The Company
conducts an active investor relations program. The program involves responding to shareholder inquiries, briefing analysts and fund managers with respect to reported financial results and other
announcements by the Company, as well as meeting with individual investors and other stakeholders. Senior management reports regularly to the Board on these matters. The Board reviews and approves the
Company's major communications with shareholders and the public, including quarterly and annual financial results, the annual report and management information circular. The Board has a Disclosure
Policy which establishes standards and procedures relating to contacts with analysts and investors, news releases, conference calls, disclosure of material information, trading restrictions and
blackout periods.

The
Board Mandate is posted on the Company's website at www.agnico-eagle.com.

Approach to Corporate Governance Issues

The Board believes that effective corporate governance contributes to improved corporate performance and enhanced shareholder value. The Company's governance
practices reflect the Board's assessment of the governance structure and process which can best serve to realize these objectives in the Company's particular circumstance. The Company's governance
practices are subject to review and evaluation through the Corporate Governance Committee to ensure that, as the Company's business evolves, changes in structure and process necessary to ensure
continued good governance are identified and implemented.

The
Board holds management responsible for the development of long-term strategies for the Company. The role of the Board is to review, question, validate and ultimately
approve the strategies and policies proposed by management. The Board relies on management to perform the data gathering, analysis and reporting functions which are critical to the Board for effective
corporate governance. In addition, the Vice-Chairman and Chief Executive Officer, the President and Chief Operating Officer, the Vice-President, Finance and Chief Financial
Officer, Vice-President, Corporate Development, Vice-President, Exploration and Vice-President, Metallurgy and Marketing report to the Board at least every quarter
on the Company's progress in the preceding quarter and on the strategic, operational and financial issues facing the Company.

Management
is authorized to act, without Board approval, on all ordinary course matters relating to the Company's business. Management seeks the Board's prior approval for significant
changes in the Company's affairs such as major capital expenditures, financing arrangements and significant acquisitions and divestitures. Board approval is required for any venture outside of the
Company's existing businesses and for any change in senior management. Recommendations of committees of the Board require the approval of the full Board before being implemented. In addition, the
Board oversees and reviews significant corporate plans and initiatives, including the annual three-year business plan and budget and significant matters of corporate strategy or policy.
The Company's authorization policy and risk management policy ensure compliance with good corporate governance practices. Both policies formalize controls over the management or other employees of the
Company by stipulating internal approval processes for transactions, investments, commitments and expenditures and, in the case of the risk management policy, establishing objectives and guidelines
for metal price hedging, foreign exchange and short-term investment risk management and insurance. The Board, directly and through its Audit Committee, also assesses the integrity of the
Company's internal control and management information systems.

Position Descriptions



The Board has adopted a position description for the CEO who has full responsibility for the day-to-day operation of the Company's
business in accordance with the Company's strategic plan, current year operating

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and
capital expenditure budgets as approved by the Board. In discharging his responsibility for the day-to-day operation of Agnico-Eagle's business, subject always to the
oversight by the Board, the CEO's specific responsibilities include:



The
CEO is to consult with the Chairman on matters of strategic significance to the Company and alert the Chairman on a timely basis of any material changes or events that may impact
upon the risk profile, financial affairs or performance of the Company.



The Board has adopted written position descriptions for each of the Chairs of the Board's committees which include the Audit Committee, Corporate Governance
Committee and Compensation Committee. The role of each of the Chairs is to ensure the effective functioning of his or her committee and provide leadership to its members in discharging the mandate as
set out in the committee's charter. The responsibilities of each Chair include, among others:



Each
of the Chairs is also responsible for carrying out other duties as requested by the Board, depending on need and circumstances.

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Orientation and Continuing Education

Agnico-Eagle holds annual educational sessions with its directors and legal counsel to review and assess the Board's corporate governance policies. This allows
new directors to become familiar with the corporate governance policies of Agnico-Eagle as they relate to its business.

Ethical Business Conduct

The Board has adopted a Code of Business Conduct and Ethics which provides a framework for directors, officers and employees on the conduct and ethical
decision-making integral to their work. In addition, the Board has adopted a Code of Business Conduct and Ethics for Consultants and Contractors. The Audit Committee is responsible for monitoring
compliance with this code of ethics and any waivers or amendments thereto can only be made by the Board or a Board committee. These codes are available on www.sedar.com.

The
Board has also adopted a Confidential Anonymous Complaint Reporting Policy which provides procedures for officers and employees who feel that a violation of the Code of Business
Conduct and Ethics has occurred to report this violation on a confidential and anonymous basis. Complaints can be made internally to the General Counsel, Vice-President, Legal and
Corporate Secretary or the Vice-President, Finance and Chief Financial Officer. Complaints can also be made anonymously by telephone, e-mail or postal letter through a hotline
provided by an independent third party service provider. The General Counsel, Vice-President, Legal and Corporate Secretary periodically prepares a written report to the Audit Committee
regarding the complaints, if any, received through these procedures.

The
Board believes that providing a procedure for employees and officers to raise concerns about ethical conduct on an anonymous and confidential basis fosters a culture of ethical
conduct within the Company.

To
promote the exercise of independent judgment by directors in considering transactions and agreements, any director or officer who has a material interest in the matter being
considered would not be present for discussions relating to the matter and would not participate in any vote on the matter.

Nomination of Directors

The Corporate Governance Committee, which is comprised entirely of non-management and independent directors, is responsible for participating in the recruitment
and recommendation of new nominees for appointment or election to the Board. When considering a potential candidate, the Corporate Governance Committee considers the qualities and skills that the
Board, as a whole, should have and assesses the competencies and skills of the current members of the Board. Based on the talent already represented on the Board, the Corporate Governance Committee
then identifies the specific skills, personal qualities or experiences that a candidate should possess in light of the opportunities and risks facing the Company. The Corporate Governance Committee
maintains a list of potential director candidates for its future consideration and may engage outside advisors to assist in identifying potential candidates. Potential candidates are screened to
ensure that they possess the requisite qualities, including integrity, business judgment and experience, business or professional expertise, independence from management, international experience,
financial literacy, excellent communications skills and the ability to work well in a team situation. The Corporate Governance Committee also considers the existing commitments of a potential
candidate to ensure that such candidate will be able to fulfill his or her duties as a Board member.

Compensation

Remuneration is paid to the Company's directors based on several factors, including time commitments, risk workload, and responsibility demanded by their
positions. The Compensation Committee periodically reviews and fixes the amount and composition of the compensation of directors. For a summary of remuneration paid to directors, see "Directors,
Senior Management and Employees  Compensation of Directors" above and the description of the Compensation Committee below.

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Board Committees

The Board has three Committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee.



The Audit Committee has two primary objectives. The first is to advise the Board of Directors in its oversight responsibilities regarding:



The
second primary objective of the Audit Committee is to prepare the reports required to be included in the management information circular in accordance with applicable laws or the
rules of applicable securities regulatory authorities.

The
Board has adopted an Audit Committee charter, attached to this Form 20-F as Exhibit 15.04, which provides that each member of the Audit Committee must be
unrelated to and independent from the Company as determined by the Board of Directors in accordance with the applicable requirements of the laws governing the Company, the applicable stock exchanges
on which the Company's securities are listed and applicable securities regulatory authorities. In addition, each member must be financially literate and at least one member of the Audit Committee must
be an audit committee financial expert, as the term is defined in SOX. The Audit Committee must pre-approve all audit and permitted non-audit engagements to be provided by the
external auditors to the Company.

The
Audit Committee is responsible for reviewing all financial statements prior to approval by the Board, all other disclosures containing financial information and all management
reports which accompany any financial statements. The Audit Committee is also responsible for all internal and external audit plans, any recommendation affecting the Company's internal controls, the
results of internal and external audits and any changes in accounting practices or policies. The Audit Committee reviews any accruals, provisions, estimates or related party transactions that have a
significant impact on the Company's financial statements and any litigation, claim or other contingency that could have a material effect upon the Company's financial statements. In addition, the
Audit Committee is responsible for assessing management's programs and policies relating to the adequacy and effectiveness of internal controls over the Company's accounting and financial systems. The
Audit Committee reviews and discusses with the Chief Executive Officer and Chief Financial Officer the procedures undertaken in connection with their certifications for annual filings in accordance
with the requirements of applicable securities regulatory authorities. The Audit Committee is also responsible for recommending to the Board the external auditor to be nominated for shareholder
approval and who will be responsible for preparing audited financial statements and completing other audit, review or attest services. The Audit Committee is also responsible for recommending to the
Board the quantum of compensation for the Company's external auditors. The Audit Committee is responsible for overseeing the work of the Company's external auditors. The Company's external auditor
reports directly to the Audit Committee. The Audit Committee reports directly to the Board of Directors.

The
Audit Committee is entitled to retain and determine the compensation (to be funded by the Company) of any independent counsel, accountants or other advisors to assist the Audit
Committee in its oversight responsibilities.

85

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The
Audit Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Mr. Leiderman (Chair), Dr. Baker,
Mr. Kraft, Mr. Nasso, and Mr. Voutilainen), each of whom is financially literate, as the term is used in the CSA's National Instrument 52-110. In addition,
Mr. Leiderman and Mr. Kraft are chartered accountants currently active in private practice and, as such, qualify as audit committee financial experts, as the term is used in SOX. The
education and experience of each member of the Audit Committee is set out under "Item 6. Directors, Senior Management and Employees  Directors and
Senior Management". Fees paid to the Company's Auditors, Ernst & Young LLP, are set out under "Item 10. Additional Information  Audit Fees".
The Audit Committee met five times in 2005.



The Compensation Committee is responsible for:



The
Compensation Committee reports directly to the Board. The Charter of the Compensation Committee provides that each member of the Compensation Committee must be unrelated and
independent.

The
Compensation Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Dr. Baker (Chair), Mr. Beaumont,
Mr. Kraft and Mr. Stockford). The Compensation Committee met five times in 2005.



The Corporate Governance Committee is responsible for:



The
Corporate Governance Committee also provides a forum for a discussion of matters not readily discussed in a full Board meeting. The Charter of the Corporate Governance Committee
provides that each member of the Corporate Governance Committee must be independent, as such term is defined in the CSA rules.

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The
Corporate Governance Committee is composed entirely of outside directors who are unrelated to and independent from the Company (currently, Mr. Beaumont (Chair),
Mr. Kraft, Mr. Leiderman and Mr. Nasso). The Corporate Governance Committee met once in 2005.

Assessment of Directors

The Company's Corporate Governance Committee (see description of Corporate Governance Committee above) is responsible for the assessment of the
effectiveness of the Board as a whole and participates in the recruitment and recommendation of new nominees for appointment or election to the Board of Directors.

Each
of the directors completes a detailed annual assessment questionnaire on the Board and Board Committees. The assessment addresses performance of the Board, each Board committee and
individual directors, including through a peer to peer evaluation. A broad range of topics is covered such as Board and Board committees structure and composition, succession planning, risk
management, director competencies and Board processes and effectiveness. The assessments help identify opportunities for continuing Board and director development.

Employees

As of March 3, 2006, the LaRonde Division employed 576 persons. The employees are not unionized. As of March 3, 2006, the Executive Office,
Exploration Division, the Regional Development Division, the Goldex Division and the Riddarhyttan Division employed 22, 6, 76, 97 and 12 persons, respectively.

The
number of employees employed by the Company at the end of 2005, 2004, 2003 and 2002 were 789, 610, 549 and 457, respectively.

Share Ownership

As of March 3, 2006, officers and directors as a group (14 persons) beneficially owned or controlled (excluding options to purchase
2,170,250 common shares, of which 1,432,750 are currently exercisable and 737,500 are currently unexercisable) an aggregate of 260,235 common shares or about 0.2% of the
109,050,565 issued and outstanding common shares. See also "  Directors, Senior Management and
Employees  Compensation of Officers".

Security Ownership of Directors and Executive Officers

The following table sets forth certain information concerning the direct and beneficial ownership as at March 3, 2006 by each director and executive
officer of the Company of common shares of the Company and options to purchase common shares of the Company. Unless otherwise noted, exercise prices are in Canadian dollars.

|Beneficial Owner             |  | Share Ownership(1) |  | Total Common Shares under Option(2) |  | Common Shares under Option |  | Exercise Price
(C$) |                                              | Expiry Date
|---------------------------- |  | ------------------ |  | ----------------------------------- |  | -------------------------- |  | ------------------- | -------------------------------------------- | -----------
|Leanne M. Baker
Director     |  | 3,500              |  | 24,000                              |  | 9,000
7,500
7,500          |  | C$C$C$              | 21.84/US$14.06
16.89/US$13.72
23.02/US$19.76 |            
|Douglas R. Beaumont
Director |  | 6,608              |  | 52,000                              |  | 12,000
25,000
7,500
7,500  |  |                     | 8.25
10.40
16.89
23.02                       |            
|                             |  |                    |  |                                     |  |                            |  |                     |                                              |            

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|Sean Boyd
Director, Vice-Chairman and Chief Executive Officer      |  | 101,689 |  | 639,900 |  | 225,000
90,000
125,000
79,900
20,000
100,000 |  |  | 15.93
16.69
16.89
10.40
9.20
23.02 |  | 1/10/2007
1/12/2009
12/13/2009
1/5/2010
1/3/2011
1/3/2011
|------------------------------------------------------------------ |  | ------- |  | ------- |  | -------------------------------------------- |  |  | ---------------------------------- |  | ---------------------------------------------------------
|Bernard Kraft
Director                                             |  | 6,608   |  | 50,000  |  | 10,000
7,500
25,000
7,500                    |  |  | 11.40
16.89
10.40
23.02            |  | 9/29/2009
12/13/2009
1/5/2010
1/3/2011                   
|Mel Leiderman
Director                                             |  | 2,000   |  | 23,000  |  | 8,000
7,500
7,500                            |  |  | 21.84
16.89
23.02                  |  | 12/18/2007
12/13/2009
1/3/2011                           
|James Nasso
Director and Chairman of the Board                     |  | 17,751  |  | 40,000  |  | 25,000
7,500
7,500                           |  |  | 10.40
16.89
23.02                  |  | 1/5/2010
12/13/2009
1/3/2011                             
|Eberhard Scherkus
Director, President and Chief Operating Officer  |  | 52,968  |  | 488,000 |  | 135,000
70,000
100,000
108,000
75,000        |  |  | 15.93
16.69
16.89
10.40
23.02      |  | 1/10/2007
1/12/2009
12/13/2009
1/5/2010
1/3/2011         
|Howard Stockford
Director                                          |  | 469     |  | 25,500  |  | 18,000
7,500                                 |  |  | 14.67
23.02                        |  | 5/2/2010
1/3/2011                                        
|Pertti Voutilainen
Director                                        |  | NIL     |  | 18,000  |  | 18,000                                       |  |  | 23.02                              |  | 1/3/2011                                                 
|David Garofalo
Vice-President, Finance and Chief Financial Officer |  | 23,048  |  | 220,000 |  | 50,000
50,000
70,000
50,000                  |  |  | 15.93
16.69
16.89
23.02            |  | 1/10/2007
1/12/2009
12/13/2009
1/3/2011                  
|Donald G. Allan
Vice-President, Corporate Development              |  | 4,492   |  | 180,000 |  | 50,000
40,000
40,000
50,000                  |  |  | 21.82
16.89
16.69
23.02            |  | 5/6/2007
12/13/2009
1/12/2009
1/3/2011                   
|Alain Blackburn
Vice-President, Exploration                        |  | 1,592   |  | 132,500 |  | 25,000
25,000
12,500
20,000
50,000           |  |  | 18.75
21.84
16.69
16.89
23.02      |  | 12/6/2006
12/18/2007
1/12/2009
12/13/2009
1/3/2011       
|                                                                   |  |         |  |         |  |                                              |  |  |                                    |  |                                                          

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|R. Gregory Laing
General Counsel, Vice-President,
Legal and Corporate Secretary |  | 383   |  | 75,000  |  | 50,000
25,000                                  |  |  | 15.96
23.02                              |  | 10/26/2010
1/3/2011                                                
|------------------------------------------------------------------------------- |  | ----- |  | ------- |  | ---------------------------------------------- |  |  | ---------------------------------------- |  | -------------------------------------------------------------------
|Jean Robitaille
Vice-President, Marketing
and Mettalurgy                        |  | 3,572 |  | 117,000 |  | 15,000
12,000
35,000
5,000
10,000
5,000
35,000 |  |  | 15.93
16.69
16.89
13.85
10.40
8.25
23.02 |  | 1/10/2007
1/12/2009
12/13/2009
6/19/2007
1/5/2010
3/6/2008
1/3/2011

---

Notes:

ITEM 7.    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

FMR Corp. and Fidelity International Limited (collectively, "Fidelity") have filed a report with securities regulators stating that they collectively have control
over 5,836,776 common shares of the Company (5.32%) and that, while they are of the view that they are not acting as a "group" for the purposes of the Securities Act of 1934, they have filed a
report on a voluntary basis as if all of the common shares of the Company are beneficially owned by them on a joint basis. Fidelity does not exercise different voting rights than other holders of the
Company's common shares. To the knowledge of the directors and senior officers of the Company, as of March 3, 2006, no other person or corporation beneficially owns or exercises control or
direction over common shares of the Company carrying more than 5% of the voting rights attached to all common shares of the Company.

As
of March 3, 2006, there were: (i) 4,346 holders of record of Agnico-Eagle's 109,050,565 outstanding common shares, of which 3,707 holders of record were in
the United States and held 35,295,277 common shares or about 32.4% of the outstanding common shares, and (ii) four holders of record of Agnico-Eagle's 6,900,000 outstanding
Warrants, of which two holders of record were in the United States and held 4,423,500 Warrants or about 64.11% of the outstanding Warrants.

The
Company is not aware of any arrangements the operation of which may at a subsequent date result in a change in control of the Company. To the best knowledge of the Company, it is not
directly or indirectly owned or controlled by another corporation, by any government or by any natural or legal person severally or jointly.

Related Party Transactions

See the information set forth under the captions "Directors, Senior Management and Employees  Indebtedness of Directors,
Executive Officers, and Senior Officers" above.

For
the year ended December 31, 2002, the Company loaned C$4,034,406 to Contact Diamond to fund ongoing exploration and operating activity. For the years ended December 31,
2003, 2004, 2005 and the period from January 1, 2006 to March 3, 2006, Contact Diamond repaid C$329,915, nil, nil and nil, respectively, to the Company. The largest amount outstanding
under this loan was C$25,640,785 in 2002, C$5,307,643 in 2003, C$3,902,111 in 2004, C$3,902,111 in 2005 and C$3,902,111 for the period from January 1, 2006 to March 3, 2006. The total
indebtedness of Contact Diamond to the Company at March 3, 2006 is C$3,902,111, including accrued interest to March 3, 2006 of nil. The loan is repayable on demand. The rate of interest
on the loan is 8% per annum. The Company waived the interest on this loan commencing May 13, 2002 and has no intention of

89

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charging
any interest or demanding repayment until Contact Diamond has the ability to repay. The book value of the loan on the Company's consolidated financial statements was C$1,351,670 at
December 31, 2005.

On
May 13, 2002, the Company completed a transaction with Contact Diamond which resulted in the elimination of $25,640,785 of the outstanding amount owed by Contact Diamond to the
Company. In connection with a public offering by Contact Diamond in July 2003, the Company committed to fund Contact Diamond if and to the extent that Contact Diamond was unable to raise an
additional C$4.8 million of gross proceeds in equity capital prior to the public offering and December 31, 2003. In August 2003, Contact Diamond raised aggregate cash proceeds of
approximately C$5.2 million in a private offering of flow-through shares and therefore is no longer subject to this commitment.

On
September 20, 2004, the Company purchased all of Contact Diamond's interests in ten gold and other precious metals exploration properties located in Canada and the
United States for cash consideration of C$3.290 million. The purchase price was based on a valuation prepared by Watts, Griffis and McOuat Limited of Toronto, Canada, consulting
geologists and engineers.

The
Company provides Contact Diamond with all of its executives, employees and administrative support (other than Contact Diamond's President and Chief Executive Officer and
Vice-President, Exploration) at no cost to Contact Diamond. Of the nine current directors of Contact Diamond, three are also directors of the Company (including two officers of the Company
who are also directors of the Company), one is an officer of the Company and one is a former officer and director of the Company.

ITEM 8.    FINANCIAL INFORMATION

The consolidated financial statements furnished pursuant to Item 18 are presented in accordance with US GAAP.

During
the period under review, inflation has not had a significant impact on the Company's operations.

ITEM 9.    THE OFFER AND LISTING

Market and Listing Details

Agnico-Eagle's common shares are listed and traded in Canada on the TSX and in the United States on the the NYSE. The Company's Warrants trade on
the TSX and the Nasdaq National Market (the "Nasdaq").

The
following table sets forth the high and low sale prices for Agnico-Eagle's common shares on the TSX and the NYSE for each of the five fiscal years ended December 31, 2005 and
for each quarter during the two fiscal years ended December 31, 2005.

|     |                | TSX (C$) |       | NYSE (US$)
|---- | -------------- | -------- | ----- | ----------
|
|2001 |                | 18.50    |       | 7.97      
|2002 |                | 27.59    |       | 15.65     
|2003 |                | 24.94    |       | 13.40     
|2004 |                | 19.95    |       | 15.50     
|2005 |                | 23.13    |       | 13.63     
|2004 |                |          |       |           
|     | First Quarter  |          | 19.76 |           
|     | Second Quarter |          | 19.80 |           
|     | Third Quarter  |          | 19.30 |           
|     | Fourth Quarter |          | 19.95 |           
|2005 |                |          |       |           
|     | First Quarter  |          | 18.97 |           
|     | Second Quarter |          | 18.12 |           
|     | Third Quarter  |          | 18.10 |           
|     | Fourth Quarter |          | 23.13 |           

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The following table sets forth the high and low sale prices for the Company's common shares on the TSX and the NYSE for the last 12 months.

|     |           | TSX (C$) |       | NYSE (US$)
|---- | --------- | -------- | ----- | ----------
|
|2005 |           |          |       |           
|     | March     |          | 18.97 |           
|     | April     |          | 18.12 |           
|     | May       |          | 17.25 |           
|     | June      |          | 15.98 |           
|     | July      |          | 15.65 |           
|     | August    |          | 16.47 |           
|     | September |          | 18.10 |           
|     | October   |          | 17.32 |           
|     | November  |          | 18.19 |           
|     | December  |          | 23.13 |           
|2006 |           |          |       |           
|     | January   |          | 29.39 |           
|     | February  |          | 30.95 |           

On
March 3, 2006 the closing price of the common shares was C$31.53 on the TSX and $27.75 on the NYSE. The registrar and transfer agent for the common shares is
Computershare Trust Company of Canada, Toronto, Ontario.

The
following table sets forth the high and low sale prices for the Warrants on the TSX and Nasdaq since trading began on November 14, 2002 and November 7, 2002
respectively ("Trading Start") and for each quarter during the two fiscal years ended December 31, 2005. The Warrants trade in US dollars on both the TSX and the Nasdaq.

|                          |                | TSX (US$) |      | Nasdaq (US$)
|------------------------- | -------------- | --------- | ---- | ------------
|
|2002 (from Trading Start) |                | 5.55      |      | 2.85        
|2003                      |                | 5.80      |      | 2.11        
|2004                      |                | 4.00      |      | 2.50        
|2005                      |                | 4.50      |      | 1.18        
|2004                      |                |           |      |             
|                          | First Quarter  |           | 4.00 |             
|                          | Second Quarter |           | 3.98 |             
|                          | Third Quarter  |           | 3.36 |             
|                          | Fourth Quarter |           | 4.00 |             
|2005                      |                |           |      |             
|                          | First Quarter  |           | 2.99 |             
|                          | Second Quarter |           | 2.45 |             
|                          | Third Quarter  |           | 2.15 |             
|                          | Fourth Quarter |           | 4.50 |             

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The
following table sets forth the high and low sales prices for the Warrants on the TSX and the Nasdaq for the last 12 months.

|     |           | TSX (US$) |       | Nasdaq (US$)
|---- | --------- | --------- | ----- | ------------
|
|2005 |           |           |       |             
|     | April     |           | 2.45  |             
|     | May       |           | 2.05  |             
|     | June      |           | 1.98  |             
|     | July      |           | 1.70  |             
|     | August    |           | 1.60  |             
|     | September |           | 2.15  |             
|     | October   |           | 2.05  |             
|     | November  |           | 2.00  |             
|     | December  |           | 4.50  |             
|2006 |           |           |       |             
|     | January   |           | 9.22  |             
|     | February  |           | 10.50 |             

On
March 3, 2006, the closing price of the Warrants was C$11.40 on the TSX and C$11.18 on the Nasdaq. The registrar and transfer agent for the Warrants is
Computershare Trust Company of Canada, Toronto, Ontario.

On
February 15, 2006 (the "Redemption Date"), the Company fully redeemed its $143.75 principal amount, 4.50% convertible subordinated debentures due February 15,
2012 (the "Debentures") for common shares of the Company. The Company issued an aggregate of 10,259,068 common shares in satisfaction of its obligations under the Debentures, of which
70,520 common shares were issued on the redemption of $1,111,000 principal amount of Debentures that were redeemed and 10,188,548 common shares were issued on the conversion of
$142,639,000 of Debentures that occurred prior to the Redemption Date. The Company paid cash to satisfy interest that had accrued up to and including February 15, 2006.

ITEM 10.    ADDITIONAL INFORMATION

Memorandum and Articles of Incorporation

Articles of Amendment

The Company's articles of incorporation do not place any restrictions on the Company's objects and purposes. For more information, see the Articles of Amendment
incorporated by reference as an exhibit to this Form 20-F.

Certain Powers of Directors

TheBusiness Corporations Act(Ontario) (the "OBCA") requires that every director who is a party to a
material contract or transaction or a proposed material contract or transaction with a corporation, or who is a director or officer of, or has a material interest in, any person who is a party to a
material contract or transaction or a proposed material contract or transaction with the corporation, shall disclose in writing to the corporation or request to have entered in the minutes of the
meetings of directors the nature and extent of his or her interest, and shall refrain from voting in respect of the material contract or transaction or proposed material contract or transaction unless
the contract or transaction is: (a) an arrangement by way of security for money lent to or obligations undertaken by the director for the benefit of the corporation or an affiliate;
(b) one relating primarily to his or her remuneration as a director, officer, employee or agent of the corporation or an affiliate; (c) one for indemnity of or insurance for directors as
contemplated under the OBCA; or (d) one with an affiliate. However, a director who is prohibited by the OBCA from voting on a material contract or proposed material contract may be counted in
determining whether a quorum is present for the purpose of the resolution,

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if
the director disclosed his or her interest in accordance with the OBCA and the contract or transaction was reasonable and fair to the corporation at the time it was approved.

The
Company's by-laws provide that the directors shall from time to time determine by resolution the remuneration to be paid to the directors, which shall be in addition to
the salary paid to any officer or employee of the Company who is also a director. The directors may also by resolution award special remuneration to any director in undertaking any special services on
the Company's behalf other than the normal work ordinarily required of a director of the Company. The by-laws provide that confirmation of any such resolution by the Company's shareholders
is not required.

The
Company's by-laws also provide that the directors may: (a) borrow money upon the credit of the Company; (b) issue, reissue, sell or pledge bonds,
debentures, notes or other evidences of indebtedness or guarantee of the Company, whether secured or unsecured; (c) to the extent permitted by the OBCA, give directly or indirectly financial
assistance to any person by means of a loan, a guarantee on behalf of the Company to secure performance of any present or future indebtedness, liability or other obligation of any person, or
otherwise; and (d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real or personal, movable or immovable, tangible
or intangible, property of the Company to secure any such bonds, debentures, notes or other evidences of indebtedness or guarantee or any other present or future indebtedness, liability or other
obligation of the Company.

The
directors may, by resolution, amend or repeal any by-laws that regulate the business or affairs of the Company. The OBCA requires the directors to submit any such
amendment or repeal to the Company's shareholders at the next meeting of shareholders, and the shareholders may confirm, reject or amend the amendment or repeal.

Retirement of Directors

Under the Company's retirement policy, directors elected or appointed before April 14, 1998 are required to submit their resignation at the age of 75 and
directors elected or appointed on or after April 14, 1998 are required to submit their resignation at the age of 70. Bernard Kraft turned 75 and submitted his resignation on February 7,
2006. However, the Board did not accept his resignation and requested that he continue to serve as a director on the basis that his significant experience with Agnico-Eagle will be beneficial to
management as Agnico-Eagle grows from a single-mine to a multi-mine operation. In addition, while Mr. Kraft no longer serves as the Chair of the Audit Committee, he
remains a member of the Audit Committee as the Board determined that his considerable experience as former Chair of the Audit Committee will be of assistance to Mr. Leiderman, the Chair of the
Audit Committee. If Mr. Kraft is re-elected, he will continue to hold office until his next birthday.

Directors' Share Ownership

As of March 17, 2004, directors, other than Mr. Boyd and Mr. Scherkus, are required to own the equivalent of at least three years of their
annual retainer fee in the Company's stock. Directors have a period of three years to achieve this ownership level either through open market purchases or through participation in the Company's
incentive share purchase plan.

Meetings of Shareholders

The OBCA requires the Company to call an annual shareholders' meeting not later than 15 months after holding the last preceding annual meeting and permits
the Company to call a special shareholders' meeting at any time. In addition, in accordance with the OBCA, the holders of not less than 5% of the Company's shares carrying the right to vote at a
meeting sought to be held may requisition our directors to call a special shareholders' meeting for the purposes stated in the requisition. The Company is required to mail a notice of meeting and
management information circular to registered shareholders not less than 21 days and not more than 50 days prior to the date of any annual or special shareholders' meeting. These
materials also are filed with Canadian securities regulatory authorities and the SEC. The Company's by-laws provide that a quorum of two shareholders in person or represented by proxy
holding or representing by proxy not less than 10% of the Company's issued shares carrying the right to vote at the meeting is required to transact business at a

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shareholders'
meeting. Shareholders, and their duly appointed proxies and corporate representatives, as well as the Company's auditors, are entitled to be admitted to the Company's annual and special
shareholders' meetings.

Authorized Capital

The Company's authorized capital consists of an unlimited number of shares of one class designated as common shares. The Company may not create any class or
series of shares or make any modification to the provisions attaching to the Company's common shares without the affirmative vote of two-thirds of the votes cast by the holders of the
common shares. The Company's common shares do not have pre-emptive rights to purchase additional shares.

Disclosure of Share Ownership

TheSecurities Act(Ontario) provides that a person or company that beneficially owns, directly or indirectly,
voting securities of an issuer or that exercises control or direction over voting securities of an issuer or a combination of both, carrying more than 10% of the voting rights attached to all the
issuer's outstanding voting securities (an "insider") must, within 10 days of becoming an insider, file a report in the required form effective the date on which the person became
an insider, disclosing any direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer. TheSecurities
Act(Ontario) also provides for the filing of a report by an insider of a reporting issuer who acquires or transfers securities of the issuer. This report must be filed within
10 days after the end of the month in which the acquisition or transfer takes place.

The Securities Act(Ontario) also provides that a person or company that acquires (whether or not by way of a take-over bid,
issuer bid or offer to acquire) beneficial ownership of voting or equity securities or securities convertible into voting or equity securities of a reporting issuer that, together with previously held
securities brings the total holdings of such holder to 10% or more of the outstanding securities of that class, must (a) issue and file forthwith a news release containing the prescribed
information and (b) file a report within two business days containing the same information set out in the news release. The acquiring person or company must also issue a press release
and file a report each time it acquires an additional 2% or more of the outstanding securities of the same class and every time there is a "material change" to the contents of the news release
and report previously issued and filed.

The
rules in the United States governing the ownership threshold above which shareholder ownership must be disclosed are more stringent than those discussed above.
Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act") imposes reporting requirements on persons who acquire beneficial ownership (as such term is defined in the
Rule 13d-3 under the Exchange Act) of more than 5% of a class of an equity security registered under Section 12 of the Exchange Act. In general, such persons must
file, within 10 days after such acquisition, a report of beneficial ownership with the SEC containing the information prescribed by the regulations under Section 13 of the Exchange Act.
This information is also required to be sent to the issuer of the securities and to each exchange where the securities are traded.

Material Contracts

The Company believes the following contracts constitute the only material contracts to which it is a party.

Credit Agreement

The Company entered into an amended and restated credit agreement on December 23, 2004 with a group of financial institutions providing for a revolving
bank credit facility of up to $100 million. The facility was amended in December 2005. The amendment increased the amount available under the facility to $150 million and extended
the date on which the facility matures. The amended facility matures and all indebtedness thereunder is due and payable on December 23, 2009. The Company, with the consent of lenders
representing 662/3% of the aggregate commitments under the facility, has the option to extend the term of the facility for one additional one-year term to
December 23, 2010. The credit facility is available in multiple currencies through prime rate, base rate and LIBOR advances and through bankers' acceptances, priced at the applicable rate plus
an applicable margin. The lenders under the facility are each paid a commitment fee at a rate that ranges from

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0.875%
to 0.50%, depending on the financial ratios. Payment and performance of the Company's obligations under the amended facility are secured by substantially all property relating to the LaRonde
Mine, the El Coco property and the Goldex mine project.

The
facility limits, among other things, the Company's ability to incur additional indebtedness, pay dividends or make payments in respect of its common shares, make investments or
loans, transfer the Company's assets or make expenditures relating to property secured under the credit agreement at that time that are not consistent with the mine plan and operating budget delivered
pursuant to the credit facility. Further, the agreement requires the Company to maintain specified financial ratios and meet financial condition covenants. Under the terms of the facility, the Company
has entered into hedge agreements to ensure that projected revenues from sales of metals are sufficient to reasonably ensure that the Company will be in compliance with financial and other covenants
of the credit agreement.

Warrant Indenture

The Company entered into a warrant indenture with Computershare Trust Company of Canada on November 6, 2002 which governs the terms of the warrants issued
by the Company on November 15, 2002. This warrant indenture is incorporated by reference as an exhibit to this Form 20-F.

Compensation Agreements

Agnico-Eagle has entered into employment agreements dated as of December 31, 2005 with each of Sean Boyd, Eberhard Scherkus, David Garofalo, Donald Allan,
Alain Blackburn and R. Gregory Laing and dated as of January 1, 2006 with Jean Robitaille. Agnico-Eagle has also entered into retirement compensation arrangement plans dated July 1, 1997
with each of Sean Boyd and Eberhard Scherkus. See "Item 6. Directors, Senior Management and Employees  Compensation of
Officers  Employment Contracts/Termination Arrangements" and "Item 6. Directors, Senior Management and
Employees  Compensation of Officers  Pension Arrangements", respectively. In addition, each of the employment agreements
and retirement agreements has been filed as an exhibit to this Form 20-F.

Support Agreement

The Company and Riddarhyttan entered into a Support Agreement dated May 12, 2005 relating to the tender offer made by the Company for all of the
outstanding shares of Riddarhyttan, a copy of which is incorporated by reference as an exhibit to this Form 20-F.

Stock Option Plan

The Company has a Stock Option Plan for directors, officers, employees and service providers to the Company. See "Item 6. Directors,
Senior Management and Employees  Compensation of Officers  Stock Option Plan". A copy of the Stock Option Plan is
incorporated by reference as an exhibit to this Form 20-F.

Incentive Share Purchase Plan

The Company has an Incentive Share Purchase Plan for directors, officers and full time employees of the Company. See "Item 6. Directors,
Senior Management and Employees  Compensation of Officers  Incentive Share Purchase Plan". A copy of the Incentive
Share Purchase Plan is incorporated as an exhibit to this Form 20-F.

Exchange Controls

Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to
non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to
non-resident holders of the Company's securities, except as discussed in " Taxation" below.

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Restrictions on Share Ownership by Non-Canadians

There are no limitations under the laws of Canada or in the constating documents of the Company on the right of foreigners to hold or vote securities of the
Company, except that theInvestment Canada Actmay require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control"
of the Company by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company.
"Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by
non-Canadians.

Canadian Federal Income Tax Considerations

The following is a brief summary of some of the principal Canadian federal income tax consequences generally applicable to a holder of common shares of the
Company (a "U.S. holder") who deals at arm's length with the Company, holds the shares as capital property and who, for the purposes of theIncome
Tax Act(Canada) (the "Act") and the Canada-United States Income Tax Convention (the "Treaty"), is at all relevant times resident in the
United States, is not and is not deemed to be resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a business in Canada. Special rules, which
are not discussed below, may apply to a U.S. holder which is an insurer that carries on business in Canada and elsewhere. Limited liability companies (LLCs) that are not taxed as corporations
pursuant to the provisions of the Internal Revenue Code of 1986, as amended, do not qualify as resident in the United States for purposes of the Treaty.

This
summary is of a general nature only and is not, and should not be interpreted as, legal or tax advice to any particular U.S. holder and no representation is made with respect
to the Canadian income tax consequences to any particular person. Accordingly, U.S. holders are advised to consult their own tax advisors with respect to their particular circumstances.

Under
the Act and the Treaty, a U.S. holder of common shares will generally be subject to a 15% withholding tax on dividends paid or credited or deemed by the Act to have been
paid or credited on such shares. The withholding tax rate is 5% where the U.S. holder is a corporation that beneficially owns at least 10% of the voting shares of the Company and the dividends
may be exempt from such withholding in the case of some U.S. holders such as qualifying pension funds and charities.

In
general, a U.S. holder will not be subject to Canadian income tax on capital gains arising on the disposition of shares of the Company unless at a time that the Company's
shares are listed on the TSX or the NYSE unless (i) at any time in the 60-month period immediately preceding the disposition, 25% or more of the shares of any class or series of the
capital stock of the Company was owned by the U.S. holder, persons with whom the U.S. holder did not deal at arm's length or the U.S. holder and such persons and (ii) the
value of the common shares of the Company at the time of the disposition derives principally from real property (as defined in the Treaty) situated in Canada. For this purpose, the Treaty
defines real property situated in Canada to include rights to explore for or exploit mineral deposits and other natural resources situated in Canada, rights to amounts computed by reference to the
amount or value of production from such resources, certain other rights in respect of natural resources situated in Canada and shares of a corporation the value of whose shares is derived principally
from real property situated in Canada.

United States Federal Income Tax Considerations

The following is a brief summary of some of the principal U.S. federal income tax consequences to a holder of common shares of the Company, who deals at
arm's length with the Company, holds the shares as capital property and who, for the purposes of the Internal Revenue Code of 1986, as amended (the "Code") and the Treaty, is at all relevant
times a U.S Stockholder (as defined below), is not and is not deemed to be resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a business in
Canada.

As
used herein, the term "U.S. Stockholder" means a holder of common shares of the Company who (for United States federal income tax purposes): (a) is a
citizen or resident of the United States; (b) is a corporation, partnership, or other entity created or organized in or under the laws of the United States or of any

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political
subdivision thereof; (c) is an estate the income of which is subject to United States federal income taxation regardless of its source; or (d) is a trust subject to both
the primary supervision of a U.S. court and the control of one or more U.S. persons with respect to substantial trust decisions.

Special
rules, which are not discussed below, may apply to a U.S. Stockholder that is an insurer that carries on business in Canada and elsewhere. Limited liability companies
(LLCs) do not qualify as resident in the United States for purposes of the Treaty.

These
summaries do not describe United States federal estate and gift tax considerations, nor do they describe regional, state and local tax considerations within the
United States. The following summaries do not purport to be a comprehensive description of all of the possible tax considerations that may be relevant to a decision to purchase, hold or dispose
of the common shares. In particular, these summaries only deal with a holder who will hold the common shares as a capital asset and who does not own, directly or indirectly, 10% or more of our voting
shares or of any of our direct or indirect subsidiaries. This summary does not address all of the tax consequences that may be relevant to holders in light of their particular circumstances, including
but not limited to application of alternative minimum tax or rules applicable to taxpayers in special circumstances. Special rules may apply, for instance, to tax-exempt entities, banks,
insurance companies, S corporations, dealers in securities or currencies, persons who will hold common shares as a position in a "straddle", hedge, constructive sale, or "conversion transaction" for
U.S. tax purposes, persons who have a "functional currency" other than the U.S. dollar, or persons subject to U.S. taxation as expatriates. Furthermore, in general, this
discussion does not address the tax consequences applicable to holders that are treated as partnerships or other pass-through entities for U.S. federal income tax purposes.

This
summary is of a general nature only and is not, and should not be interpreted as, legal or tax advice to any particular U.S. Stockholder and no representation is made with
respect to the U.S. income tax consequences to any particular person. Accordingly, U.S. Stockholders are advised to consult their own tax advisors with respect to their particular
circumstances.

Dividends

For United States federal income tax purposes, the gross amount of all distributions, if any, paid with respect to the common shares out of current or
accumulated earnings and profits ("E&P") to a U.S. Stockholder generally will be treated as foreign source dividend income to such holder, even though the U.S. Stockholder generally
receives only 85% of that amount (after giving effect to the Canadian withholding tax as reduced by the Treaty). United States corporations that hold the common shares generally will not be
entitled to the dividends received deduction that applies to dividends received from United States corporations. To the extent a distribution exceeds E&P, it will be treated first as a return
of capital to the extent of the U.S. Stockholder's adjusted basis and then as gain from the sale of a capital asset.

In
the case of a U.S. Stockholder that is an individual, estate or trust, gains from the sale of a capital asset held for longer than twelve months are taxable at a maximum
federal income tax rate of 15%, while gains from the sale of a capital asset that does not meet such holding period are taxable at the rates applicable to ordinary income. Dividends paid prior to 2009
to a U.S. Stockholder that is an individual, estate or trust generally are also subject to the 15% maximum rate. Special rules may apply, however, to cause such dividends to be taxable at the
higher rates applicable to ordinary income. For example, the reduced tax rates are not available with respect to a dividend on shares where the U.S. Stockholder does not continuously own such
shares for more than 60 days during the 120-day period beginning 60 days before the ex-dividend date. In addition, the reduced tax rates are not available with
respect to dividends received from a foreign corporation that was a foreign investment company, a passive foreign investment company, or a foreign personal holding company in either the taxable year
of the distribution or the preceding taxable year. The reduced tax rates generally are available only with respect to dividends received from U.S. corporations, and from
non-U.S. corporations (a) that are eligible for the benefits of a comprehensive income tax treaty with the United States that the U.S. Treasury Department
determines to be satisfactory and that contains an exchange of information program, or (b) whose stock is readily tradeable on an established securities market in the United States. Many
other complex and special rules may apply as a condition to, or as a result of, the application of the reduced tax rate on dividends. Moreover, the applicability of the reduced tax rate on dividends
received from non-U.S. corporations is subject to change. The

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United States
tax authorities have announced their intention to promulgate rules that would permit U.S. Stockholders to rely on certifications from issuers to establish the applicability
of the reduced dividend tax rate. U.S. Stockholders are advised to consult their own tax advisors.

For
United States federal income tax purposes, the amount of any dividend paid in Canadian dollars will be the United States dollar value of the Canadian dollar at the
exchange rate in effect on the date of receipt, whether or not the Canadian dollar is converted into United States dollars at that time. Gain or loss recognized by a U.S. Stockholder on
a sale or exchange of Canadian dollars will be United States source ordinary income or loss.

The
withholding tax imposed by Canada generally is a creditable foreign tax for United States federal income tax purposes. Therefore, the U.S. Stockholder generally will be
entitled to include the amount withheld as a foreign tax paid in computing a foreign tax credit (or in computing a deduction for foreign income taxes paid, if the holder does not elect to use
the foreign tax credit provisions of the Code). The Code, however, imposes a number of limitations on the use of foreign tax credits, based on the particular facts and circumstances of each taxpayer.
Investors should consult their tax advisors regarding the availability of the foreign tax credit.

Capital Gains

Subject to the discussion below under the heading " Passive Foreign Investment Company Considerations", gain or loss recognized by a
U.S. Stockholder on the sale or other disposition of the common shares will be subject to United States federal income taxation as capital gain or loss in an amount
equal to the difference between such U.S. Stockholder's adjusted basis in the common shares and the amount realized upon its disposition.

Gain
on the sale of common shares held for more than one year by a U.S. Stockholder that is an individual, estate or trust will be taxable at a maximum rate of 15%. A reduced rate
does not apply to capital gains realized by a U.S. Stockholder that is a corporation. Capital losses are generally deductible only against capital gains and not against ordinary income. In the
case of an individual, however, unused capital losses in excess of capital gains may offset up to $3,000 annually of ordinary income.

Capital
gain or loss recognized by a U.S. Stockholder on the sale or other disposition of common shares will generally be sourced in the United States.

Passive Foreign Investment Company Considerations

The Company will be classified as a passive foreign investment company ("PFIC") for United States federal income tax purposes if either (i) 75% or
more of its gross income is passive income or (ii) on average for the taxable year, 50% or more of its assets (by value) produce or are held for the production of passive income. Based
on projections of the Company's income and assets and the manner in which the Company intends to manage its business, the Company expects that the Company will not be a PFIC. However, there can be no
assurance that this will actually be the case. In reaching the conclusion that the Company does not expect to be a PFIC, the Company has valued its assets based on the price per share of the common
shares. For purposes of applying the PFIC rules to the Company, such a valuation method results in the attribution of substantial value to the Company's intangible assets, including goodwill and other
potential resource related assets that are considered neither to produce nor to be held for the production of passive income for purposes of the PFIC rules. The Company believes that this is a
reasonable method of valuing our non-passive assets based on the legislative history of the PFIC provisions.

If
the Company were to be classified as a PFIC, the consequences to a U.S. Stockholder will depend in part on whether the U.S. Stockholder has made a
"Mark-to-Market Election" or a "QEF Election" with respect to the Company. If the Company is a PFIC during a U.S. Stockholder's holding period and the
U.S. Stockholder does not make a Mark-to-Market Election or a QEF Election, the U.S. Stockholder will generally be required to pay a special United States
tax, in lieu of the U.S. tax that would otherwise apply, if such U.S. Stockholder (a) realizes a gain on disposition of common shares or (b) receives an "excess distribution" from
the Company on common shares.

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If
a U.S. Stockholder makes a Mark-to-Market Election, the U.S. Stockholder would not be subject to the special tax. Instead, it would be required
to include in its income the excess of the fair market value of the common shares as of the close of each taxable year over the U.S. Stockholder's adjusted basis therein. If the
U.S. Stockholder's adjusted basis in the common shares is greater than the fair
market value of the common shares as of the close of the taxable year, the U.S. Stockholder may deduct such excess, but only up to the aggregate amount of ordinary income previously included as
a result of the Mark-to-Market Election, reduced by any previous deduction taken. The U.S. Stockholder's adjusted basis in its common shares will be increased by the
amount of income or reduced by the amount of deductions resulting from the Mark-to-Market Election.

If
a U.S. Stockholder makes a QEF Election, the U.S. Stockholder would not be subject to the special tax. Instead, it would be currently taxable on its pro rata
share of our ordinary earnings and net capital gain (at ordinary income and capital gains rates, respectively) for each taxable year that the Company is classified as a PFIC, even if no
dividend distributions were received.

If
for any year the Company determines that it is properly classified as a PFIC, it will comply with all reporting requirements necessary for a U.S. Stockholder to make a QEF
Election and will, promptly following the end of such year and each year thereafter for which the Company is properly classified as a PFIC, provide to U.S. Stockholders the information required
by the QEF Election.

Under
current U.S. law, if the Company is a PFIC in any year, a U.S. Stockholder must file an annual return on IRS Form 8621, which describes the income received
(or deemed to be received pursuant to a QEF Election) from the Company, any gain realized on a disposition of common shares and certain other information.

United States Information Reporting and Backup Withholding

Dividend payments on common shares and proceeds from the sale, exchange or redemption of the common shares may be subject to information reporting to the Internal
Revenue Services ("IRS") and possible U.S. backup withholding at a 28% rate. Backup withholding will not apply, however, to a holder who furnishes a correct taxpayer identification number or
certificate of foreign status and makes any other required certification or who is otherwise exempt from backup withholding. Persons required to establish their exempt status generally must provide
such certification on IRS Form W-9 (Request for Taxpayer Identification Number and Certification) in the case of U.S. persons and on IRS Form W-8BEN
(Certificate of Foreign Status) in the case of non-U.S. persons.

Amounts
withheld as backup withholding may be credited against a holder's U.S. federal income tax liability, and a holder may obtain a refund of any excess amounts withheld under
the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information. U.S. Stockholders should consult their tax advisors regarding the
application of the information reporting and backup withholding rules.

Audit Fees

Fees paid to Ernst & Young LLP for the years ended December 31, 2005 and 2004 are set out below.

|(C$)                |  | Year ended December 31, 2005 |           | Year ended December 31, 2004
|------------------- |  | ---------------------------- | --------- | ----------------------------
|Audit fees          |  | C$                           | 759,000   |                             
|Audit related fees  |  |                              | 18,000    |                             
|Tax consulting fees |  |                              | 438,000   |                             
|All other fees      |  |                              | 29,000    |                             
|                    |  |                              |           |                             
|                    |  | $                            | 1,244,000 |                             
|                    |  |                              |           |                             

Audit
fees were paid for professional services rendered by the auditors for the audit of Agnico-Eagle's annual financial statements and related statutory and regulatory filings and for
the quarterly review of Agnico-Eagle's Interim financial statements. Audit fees also include prospectus related fees paid for professional services rendered by the auditors in connection with
Agnico-Eagle's acquisition of Riddarhyttan Resources AB.

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These
services consisted of the audit or review, as required, of financial statements included in the prospectuses, reviewing documents filed with securities regulatory authorities, correspondence
with securities regulatory authorities and all other services required by regulatory authorities in connection with the filing of these documents.

Audit
related fees consist of fees paid for professional services rendered by the auditors for the audit of the financial statements of Agnico-Eagle's employee benefit plans and the
related statutory and regulatory filings.

Tax
consulting fees were paid for professional services relating to tax compliance, tax advice and tax planning. These services included the review of tax returns, assistance with
eligibility of expenditures under the Canadian flow-through share tax regime, and tax planning and advisory services in connection with international and domestic taxation issues.

All
other fees were paid for services other than the fees listed above and include professional services rendered by the auditors in connection with the translation of securities
regulatory filings required to comply with securities laws in certain Canadian jurisdictions.

No
other fees were paid to the auditors in the previous two years.

The
Audit Committee has adopted a policy that requires the pre-approval of all fees paid to Ernst & Young LLP prior to the commencement of the specific
engagement.

Documents on Display

The Company's filings with the SEC, including exhibits and schedules filed with this Annual Report, may be reviewed at the SEC's public reference facilities in
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such materials may be obtained from the Public Reference Section of the SEC,
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Further information on the public reference rooms may be obtained by calling the
SEC at 1-800-SEC-0330. The SEC maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. Agnico-Eagle began to file electronically with the SEC in August 2002.

Any
reports, statements or other information that the Company files with the SEC may be read at the addresses indicated above and some of them may also be accessed electronically at the
web site set forth above. These SEC filings are also available to the public from commercial document retrieval services.

The
Company also files reports, statements and other information with the Canadian Securities Administrators and these can be accessed electronically at the Canadian Securities
Administrators' System for Electronic Document Analysis and Retrieval web site at http://www.sedar.com.

ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Metal Price and Foreign Currency

Agnico-Eagle's net income is most sensitive to metal prices and the C$/US$ exchange rate. For the purpose of the sensitivities presented in the graph below,
Agnico-Eagle used the following metal price and exchange rate assumptions:



Changes
in the market prices of gold are due to numerous factors such as demand, global mine production levels, forward selling by producers, central bank sales and investor sentiment.
Changes in the market prices of other metals are due to factors such as demand and global mine production levels. Changes in the C$/US$

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exchange
rate are due to factors such as supply and demand for Canadian and U.S. currencies and economic conditions in each country. In 2005, the price ranges for metal prices and the C$/US$
exchange rate were:



The
following table shows the estimated impact on budgeted income per share ("EPS") in 2006 of a 10% change in assumed metal prices and exchange rates. A 10% change in each variable was
considered in isolation while holding all other assumptions constant. Based on historical market data and 2005 price ranges shown above, a 10% change in assumed metal prices and exchange rates is
reasonably likely in 2006.

Change in variable

Impact on EPS ($)C$/US$

0.09Gold

0.06Zinc

0.03Silver

0.02Copper

0.02


In
order to mitigate the impact of fluctuating precious and base metal prices, Agnico-Eagle enters into derivative transactions under its Metal Price Risk Management Policy, approved by
the Board of Directors. The Company's policy and practice is not to sell forward its gold production. The Policy does allow the Company to review this to use hedging strategies where appropriate to
ensure an adequate return on new projects. In the past, Agnico-Eagle has bought put options and forward contracts to protect minimum precious and base metal prices while maintaining full participation
to gold price increases. The Company's policy does not allow speculative trading. The Company's derivative contracts outstanding at the end of 2005 are summarized in note 9 to the
consolidated financial statements in Item 18 of this Form 20-F.

The
Company receives payment for all of its metal sales in US dollars and pays most of its operating and capital costs in Canadian dollars. This gives rise to significant currency risk
exposure. The Company has entered into currency hedging transactions under the Company's Foreign Exchange Risk Management Policy, approved by the Board of Directors, to hedge part of the foreign
currency exposure. The policy does not permit the hedging of translation exposure (that is, the gains and losses that arise from the accounting translation of Canadian dollar assets and liabilities
into US dollars) as these do not give rise to cash exposure. In 2005, the Company liquidated its remaining foreign exchange derivative position and has recorded a deferred gain, net of tax on
liquidation of these contracts of $2.9 million in accumulated other comprehensive income. The entire gain will be recorded in income in 2006.

Interest Rate

In February 2006, the Company extinguished its convertible subordinated debentures and the Company's interest rate swap matured. Therefore, the Company
will not be exposed to fluctuations in interest rates in 2006 unless it draws on its credit facility or takes on any additional debt. The Company does not expect credit facility drawdowns or to enter
into other debt transactions in 2006.

Derivatives

The Company enters into derivative contracts to limit the downside risk associated with fluctuating metal prices. The contracts act as economic hedges of
underlying exposures to metal price risk and foreign currency exchange risk and are not held for speculative purposes. Agnico-Eagle does not use complex derivative contracts to hedge exposures. The
Company uses simple contracts, such as puts and calls, to mitigate downside risk yet

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maintain
full participation to rising precious metal prices. Agnico-Eagle also enters into forward contracts to lock in exchange rates based on projected Canadian dollar operating and capital needs.

Using
derivative instruments creates various financial risks. Credit risk is the risk that the counterparties to derivative contracts will fail to perform on an obligation to the
Company. Credit risk is mitigated by dealing with high quality counterparties such as financial institutions. Market liquidity risk is the risk that a derivative position cannot be liquidated quickly.
The Company mitigates market liquidity risk by spreading out the maturity of derivative contracts over time, usually based on projected production levels for the specific metal being hedged, such that
the relevant markets will be able to absorb the contracts. Mark-to-market risk is the risk that an adverse change in market prices for metals will affect financial condition.
Since derivative contracts are used as economic hedges, for most of the contracts, changes in the mark-to-market value affect income. For a description of the accounting
treatment of derivative contracts, please see "Critical Accounting Estimates  Financial Instruments".

For
2005, Agnico-Eagle recorded a $2.3 million charge in the Consolidated Statements of Income (Loss) to reflect the maturity of gold put option contracts purchased in 1999. This
amount is simply the original cost for gold puts maturing in the year. Mark-to-market losses on the 2005 gold put option contracts had originally been recorded as part of
accumulated other comprehensive income and these amounts were reclassified to earnings for the current year and are included as part of the $2.3 million charge. Also for 2005, Agnico-Eagle
recorded a $4.2 million gain in the Consolidated Statements of Income (Loss) on foreign currency derivative contracts maturing in 2005. Since the Company uses only
over-the-counter instruments, the fair value of individual hedging instruments is based on readily available market values.

In
2005, the Company entered into new derivative contracts. Silver put options were purchased with a strike price of $7.00 per ounce on approximately 1.0 million ounces of silver.
Copper calls were written with a strike price of $3,310 per tonne on approximately 4,500 tonnes of copper. The Company also entered into a series of derivative transactions to sell zinc forward
at $1,263 per tonne and a collar was entered into to set a minimum price of $1,215 per tonne on approximately 20,000 tonnes of zinc over 2005 and 2006. While setting a minimum price, the collar
strategy also limits participation to zinc prices above $1,480 per tonne. These contracts are discussed more fully in Item 18 of this Form 20-F.

ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Pursuant to the instructions to Item 12 of Form 20-F, this information is inapplicable and has not been provided.

ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None / not applicable.

ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None / not applicable.

ITEM 15.    CONTROLS AND PROCEDURES



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ITEM 16A.    AUDIT COMMITTEE FINANCIAL EXPERT

The Company's Board of Directors has determined that the Company shall have at least one audit committee financial expert (as defined in Item 16A of
Form 20-F) and that Messrs. Bernie Kraft and Mel Leiderman are the Company's "audit committee financial experts" serving on the Audit Committee of the Board of
Directors. Each of the audit committee financial experts is "independent" under applicable listing standards.

ITEM 16B.    CODE OF ETHICS

The Company has adopted a code of ethics (as defined in Item 16B of Form 20-F) that applies to its Chief Executive Officer, Chief
Financial Officer, principal accounting officer, controller and persons performing similar functions. A copy of this code of ethics was filed as Exhibit 2 to the
Form 6-K filed on December 13, 2005 and is incorporated by reference hereto.

ITEM 16C.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit Committee establishes the independent auditors' compensation. In 2003, the Audit Committee also established a policy to pre-approve all
services provided the Company's independent public accountant, Ernst & Young LLP. The Audit Committee determines which non-audit services the independent auditors are
prohibited from providing and authorizes permitted non-audit services to be performed by the independent auditors to the extent those services are permitted by the Sarbanes-Oxley Act and
other applicable legislation. A summary of all fees paid to Ernst & Young LLP for the fiscal years ended December 31, 2005 and 2004 can be found on under "Item 10:
Additional Information  Audit Fees". All fees paid to Ernst & Young LLP in 2005 were pre-approved by the Audit Committee.
Ernst & Young LLP has served as the Company's independent public accountant for each of the fiscal years in the three-year period ended December 31, 2005 for which
audited financial statements appear in this Annual Report on Form 20-F.

ITEM 16D.    EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

ITEM 17.    RESERVED

ITEM 18.    FINANCIAL STATEMENTS

Pursuant to General Instruction E(c) of Form 20-F, the registrant has elected to provide the financial statements and related
information specified in Item 18.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Shareholders of Agnico-Eagle Mines Limited:

We
have audited the accompanying consolidated balance sheets of Agnico-Eagle Mines Limited as of December 31, 2005 and 2004, and the related consolidated statements of income
(loss) and comprehensive income (loss), shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Agnico-Eagle Mines Limited at
December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005 in conformity with
United States generally accepted accounting principles.

|                                                           |  |                      
|---------------------------------------------------------- |  | ---------------------
|Toronto, Canada                                            |  | ERNST & YOUNG LLP    
|February 21, 2006                                          |  | Chartered Accountants
|except for note 13, as to which
the date is March 15, 2006 |  |                      

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Summary Of Significant Accounting Policies

These consolidated financial statements of Agnico-Eagle Mines Limited ("Agnico-Eagle" or the "Company") are expressed in thousands of United States dollars
("US dollars"), except where noted, and have been prepared in accordance with United States generally accepted accounting principles ("US GAAP"). Since a precise determination of
assets and liabilities depends on future events, the preparation of consolidated financial statements for a period necessarily involves the use of estimates and approximations. Actual results may
differ from such estimates and approximations. The consolidated financial statements have, in management's opinion, been prepared within reasonable limits of materiality and within the framework of
the significant accounting policies referred to below.

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and entities in which it has a controlling financial
interest after the elimination of intercompany accounts and transactions. The Company has a controlling financial interest if it owns a majority of the outstanding voting common stock or has
significant control over an entity through contractual or economic interests in which the Company is the primary beneficiary.

Agnico-Eagle
recognizes gains and losses on the effective disposition of interests in associated companies arising when such associated companies issue treasury shares to third parties.
Gains are recognized in income only if there is reasonable assurance of realization; otherwise, they are recorded within accumulated other comprehensive income (loss).

Cash and cash equivalents

Cash and cash equivalents include cash on hand and short-term investments in money market instruments with remaining maturities of three months or
less at the date of purchase. Short-term investments are carried at cost, which approximates market value.

Inventories

Inventories consist of ore stockpiles, concentrates and supplies.

Stockpiles

Stockpiles consist of coarse ore that has been mined and hoisted from underground and is available for further processing and in-stope ore inventory
in the form of drilled and blasted stopes ready to be mucked and hoisted to the surface. The stockpiles are measured by estimating the number of tons, contained ounces (based on assays) and recovery
percentages (based on actual recovery rates achieved for processing similar ore). Specific tonnages are verified and compared to original estimates once the stockpile is milled. The ore stockpile is
valued at the lower of net realizable value and mining costs incurred up to the point of stockpiling the ore. The net realizable value of stockpiled ore is assessed by comparing the sum of the
carrying value plus future processing and selling costs to the expected revenue to be earned, which is based on the estimated volume and grade of stockpiled material.

Mining
costs include all costs associated with underground mining operations and are allocated to each ton of stockpile. Fully absorbed costs include direct and indirect materials and
consumables, direct labour, utilities and amortization of mining assets incurred up to the point of stockpiling the ore. Royalty expenses and production taxes are included in production costs, but are
not capitalized into inventory. Stockpiles are not intended to be long-term inventory items and therefore are generally processed within twelve months of extraction. The decision to
process stockpiled ore is based on a net smelter return analysis. The Company processes its stockpiled ore if its estimated revenue, on a per ton basis and net of estimated smelting and refining
costs, is greater than the related mining and milling costs. The Company has never elected to not process stockpiled ore and does not anticipate departing from this practice in the future. Stockpiled
ore on the surface is exposed to the elements, but the Company does not expect its condition to deteriorate significantly.

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Concentrates

Concentrates inventories consist of concentrates for which legal title has not yet passed to custom smelters. Concentrates inventories are measured based on
assays of the processed concentrates and are valued based on the lower of net realizable value and the fully absorbed mining and milling costs associated with extracting and processing the ore.

Supplies

Supplies, consisting of mine stores inventory, are valued at the lower of average cost and replacement cost.

Deferred financing costs

Deferred financing costs, which are included in other assets on the consolidated balance sheets and relate to the issuance of the Convertible Debentures and the
Company's revolving credit facility, are being amortized to income over the term of the related obligations. If the holders of the Company's Convertible Debentures exercised their conversion option,
the common shares issued on such conversion were recorded at an amount equal to the aggregate of the carrying value of the long-term liability, net of the associated financing costs, with
no gain or loss being recognized in income.

Mining properties, plant and equipment and mine development costs

Significant payments related to the acquisition of land and mineral rights are capitalized as mining properties at cost. If a mineable ore body is discovered,
such costs are amortized to income when production begins, using the unit-of-production method, based on estimated proven and probable reserves. If no mineable ore body is
discovered, such costs are expensed in the period in which it is determined the property has no future economic value.

Expenditures
for new facilities and improvements that can extend the useful lives of existing facilities are capitalized as plant and equipment at cost. Interest costs incurred for the
construction of projects are capitalized.

Mine
development costs incurred after the commencement of production are capitalized or deferred to the extent that these costs benefit the entire ore body. Costs incurred to access
single ore blocks are expensed as incurred; otherwise, such vertical and horizontal developments are classified as mine development costs.

Agnico-Eagle
records depreciation on both plant and equipment and mine development costs used in commercial production on a unit-of-production basis based on the
estimated proven and probable ore reserves of the mine. The unit-of-production method defines the denominator as the total proven and probable tonnes of reserves.

Repairs
and maintenance expenditures are charged to income as production costs. Assets under construction are not depreciated until the end of the construction period. Upon commencement
of commercial production, the capitalized construction costs are transferred to the various categories of plant and equipment.

Mineral
exploration costs are charged to income in the year in which they are incurred. When it is determined that a mining property can be economically developed as a result of
established proven and probable reserves, the costs of further exploration and development to further delineate the orebody on such property are capitalized. The establishment of proven and probable
reserves is based on results of final feasibility studies, which indicate whether a property is economically feasible. Upon commencement of the commercial production of a development project, these
costs are transferred to the appropriate asset category and are amortized to income using the unit-of-production method mentioned above. Mine development costs, net of salvage
values, relating to a property which is abandoned or considered uneconomic for the foreseeable future are written off.

The
carrying values of mining properties, plant and equipment and mine development costs are reviewed periodically, when impairment factors exist, for possible impairment, based on the
future undiscounted net cash flows of the operating mine and development property. If it is determined that the estimated net recoverable amount is less than the carrying value, then a write down to
the estimated fair value amount is made with a charge to income. Estimated future cash flows of an operating mine and development properties include estimates of recoverable ounces of gold based on
the proven and probable reserves. To the extent economic value exists beyond the proven and probable reserves of an operating mine or development property, this value

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is
included as part of the estimated future cash flows. Estimated future cash flows also involve estimates regarding gold prices (considering current and historical prices, price trends and related
factors), production levels, capital and reclamation costs, and related income and mining taxes, all based on detailed engineering life-of-mine plans. Cash flows are subject to
risks and uncertainties and changes in the estimates of the cash flows could affect the recoverability of long-lived assets.

Financial instruments

Agnico-Eagle uses derivative financial instruments, primarily option and forward contracts, to manage exposure to fluctuations in metal prices, foreign currency
exchange rates and interest rates. Agnico-Eagle does not hold financial instruments or derivative financial instruments for trading purposes.

The
Company recognizes all derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes
in the fair value of derivative financial instruments are either recognized periodically in income or in shareholders' equity as a component of accumulated other comprehensive income (loss), depending
on the nature of the derivative financial instrument and whether it qualifies for hedge accounting. Financial instruments designated as hedges are
tested for effectiveness on a quarterly basis. Gains and losses on those contracts that are proven to be effective are reported as a component of the related transaction.

The
fair value of the Company's interest rate swap is recorded as an asset or liability with a corresponding charge to income. The carrying value of the Convertible Debentures is also
adjusted for changes in fair value attributable to the risk being hedged with a corresponding charge to income. The Company's interest rate cap, and silver and base metal derivative contracts do not
qualify for hedge accounting and changes in the fair value of these derivative instruments are recognized in income.

Revenue recognition

Revenue is recognized when the following conditions are met:



Revenue
from gold and silver in the form of doré bars is recorded when the refined gold and silver is sold. Generally all the gold and silver in the form of
doré bars is sold in the period in which it is produced.

Under
the terms of the Company's concentrate sales contracts with third-party smelters, final prices for the metals contained in the concentrate are set based on the prevailing spot
market metal prices on a specified future date based on the date that the concentrate is delivered to the smelter. The Company records revenues under these contracts based on forward prices at the
time of delivery, which is when transfer of legal title to concentrate passes to the third-party smelters. The terms of the contracts result in differences between the recorded estimated price at
delivery and the final settlement price. These differences are adjusted through revenue at each subsequent financial statement date.

Revenues
from mining operations consist of gold revenues, net of smelting, refining, transportation and other marketing charges. Revenues from byproduct sales are shown net of smelter
charges as part of revenues from mining operations.

Foreign currency translation

The functional currency for the Company's operations is the US dollar. Monetary assets and liabilities of Agnico-Eagle's operations denominated in a currency
other than the US dollar are translated into US dollars using the exchange rate in effect at the year end. Non-monetary assets and liabilities are translated at historical exchange rates
while revenues and expenses are translated at the average exchange rate during the year, with the exception of amortization, which is translated at historical exchange rates. Exchange gains and losses
are included in income except for gains and losses on foreign currency contracts used to hedge specific future

107

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commitments
in foreign currencies. Gains and losses on these contracts are accounted for as a component of the related hedged transactions.

Reclamation costs

Asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The amount of the liability is subject to
re-measurement at each reporting period. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the
asset's carrying value and amortized over the estimated life of the mine. The key assumptions on which the fair value of the asset retirement obligations is based includes the estimated future cash
flows, the timing of those cash flows and the credit-adjusted risk-free rate or rates on which the estimated cash flows have been discounted.

Income and mining taxes

Agnico-Eagle follows the liability method of tax allocation for accounting for income taxes. Under this method of tax allocation, future income and mining tax
bases of assets and liabilities are measured using the enacted tax rates and laws expected to be in effect when the differences are expected to reverse.

From
time to time, the Company issues flow-through shares to finance some of its exploration activities. Common shares of the Company are issued for cash in exchange for
Agnico-Eagle giving up the
tax benefits arising from the exploration activities. The difference between the flow-through share issuance price and the prevailing market price of Agnico-Eagle stock at the time of
issuance is recorded as a liability at the time the flow-through shares are issued. This liability is extinguished at the time the exploration expenditures are renounced to investors. The
difference between the flow-through share issuance price and market price reduces the future tax expense charged to income (loss) as this difference represents proceeds received by the
Company for the sale of future tax deductions to investors in the flow-through shares.

Stock-based compensation

Agnico-Eagle has two stock-based compensation plans. The Employee Stock Option Plan is described in note 7(a) and the Incentive Share Purchase Plan
is described in note 7(b) to the consolidated financial statements.

In
2003, the Company prospectively adopted Statement of Financial Accounting Standard ("FAS") 123, "Accounting for Stock-Based
Compensation" as amended by FAS 148, "Accounting for Stock-Based Compensation  Transition and
Disclosure". These accounting standards recommend the expensing of stock option grants after January 1, 2003. The standards recommend that the fair value of stock
options be recognized in income over the applicable vesting period as a compensation expense. Any consideration paid by employees on exercise of stock options or purchase of stock is credited to share
capital.

Prior
to 2003, the Company accounted for its stock option grants based on the recognition and measurement principles of Accounting Principles Board Opinion No. 25
and related interpretations. The application of Opinion No. 25 resulted in no compensation expense being recorded in Agnico-Eagle's circumstances, as all options granted had an exercise
price equal to the market value of the underlying stock on the date of grant (intrinsic value method). Pro forma fair value disclosures assumed that the estimated fair value of options would be
amortized to expense over the options' vesting period.

In
December 2004, the FASB enacted FAS 123  revised 2004 ("FAS 123R"), "Share-Based
Payment", which replaces FAS 123 and supersedes APB Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to
Employees". FAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a
fair-value-based method and the recording of such expense in the consolidated statement of income (loss). The Company is required to adopt FAS 123R in the first quarter of 2006. The
Company does not expect any significant impact based on the adoption of the new requirements under FAS 123R.

Income (loss) per share

Basic income (loss) per share is calculated on net income (loss) for the year using the weighted average number of common shares outstanding during the year.
Diluted income (loss) per share is calculated on the weighted average number of common shares that would have been outstanding during the year had all

108

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Convertible
Debentures been converted at the beginning of the year into common shares, if such conversions are dilutive. In addition, the weighted average number of common shares used to determine
diluted income (loss) per share includes an adjustment for stock options outstanding and warrants outstanding using the treasury stock method. Under the treasury stock method:



Pension costs and obligations and post-retirement benefits

Prior to July 1, 1997, Agnico-Eagle had a defined benefit plan for its salaried employees, which was substantially converted to a defined contribution
plan. In addition, Agnico-Eagle provides a non-registered supplementary executive retirement defined benefit plan for its senior officers. The executive retirement plan benefits are
generally based on the employees' years of service and level of compensation. Pension expense related to the defined benefit plan is the net of the cost of benefits provided, the interest cost of
projected benefits, return on plan assets and amortization of experience gains and losses. Pension fund assets are measured at current fair values. Actuarially determined plan surpluses or deficits,
experience gains or losses and the cost of pension plan improvements are amortized on a straight-line basis over the expected average remaining service life of the employee group.

Agnico-Eagle
maintains a defined contribution plan covering all of its employees. The plan is funded by Company contributions based on a percentage of income for services rendered by
employees.

The
Company does not offer any other post-retirement benefits to its employees.

Impact of recently issued accounting pronouncements

Under the U.S. Securities and Exchange Commission Staff Accounting Bulletin 74 ("SAB 74"), the Company is required to disclose information related
to new accounting standards that have not yet been adopted.

In
the mining industry, companies may be required to remove overburden and other mine waste materials to access mineral deposits. During the development of a mine (before production
begins), it is generally accepted practice that such costs are capitalized as part of the depreciable cost of building, developing and constructing the mine. The capitalized costs are typically
amortized over the productive life of the mine using the units-of-production method. A mining company may continue to remove overburden and waste materials, and therefore incur
deferred costs, during the production phase of the mine.

In
March 2005, the Financial Accounting Standards Board ratified Emerging Issues Task Force Issue No. 04-6 ("EITF 04-6") which addresses the
accounting for deferred costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized
in costs applicable to sales in the same period as the revenue from the sale of inventory. As a result, capitalization of costs is appropriate only to the extent product inventory exists at the end of
a reporting period. Agnico-Eagle will adopt the provisions of EITF 04-6 on January 1, 2006. The impact of adoption will be to decrease ore stockpile inventory by
$8.4 million. Adoption of EITF 04-6 will have no impact on the Company's cash position.

Comparative figures

Certain items in the comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of
the 2005 consolidated financial statements.

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AGNICO-EAGLE MINES LIMITED        CONSOLIDATED BALANCE SHEETS        (thousands of United States dollars, US GAAP basis)

|                                                          |                                                    | As at December 31, |         
|--------------------------------------------------------- | -------------------------------------------------- | ------------------ | --------
|
|ASSETS                                                    |                                                    |                    |         
|Current                                                   |                                                    |                    |         
|                                                          | Cash and cash equivalents                          |                    | $       
|                                                          | Restricted cash (note 6(b))                        |                    |         
|                                                          | Short-term investments                             |                    |         
|                                                          | Metals awaiting settlement (note 1)                |                    |         
|                                                          | Income taxes recoverable                           |                    |         
|                                                          | Inventories:                                       |                    |         
|                                                          |                                                    | Ore stockpiles     |         
|                                                          |                                                    | Concentrates       |         
|                                                          |                                                    | Supplies           |         
|                                                          | Other current assets (note 2(a))                   |                    |         
|                                                          |                                                    |                    |         
|Total current assets                                      |                                                    |                    | 243,335 
|Fair value of derivative financial instruments (note 9)   |                                                    |                    |        
|Other assets (notes 2(b))                                 |                                                    |                    | 7,995   
|Future income and mining tax assets (note 8)              |                                                    |                    | 63,543  
|Property, plant and mine development (note 3)             |                                                    |                    | 661,196 
|                                                          |                                                    |                    |         
|                                                          |                                                    | $                  | 976,069 
|                                                          |                                                    |                    |         
|LIABILITIES AND SHAREHOLDERS' EQUITY                      |                                                    |                    |         
|Current                                                   |                                                    |                    |         
|                                                          | Accounts payable and accrued liabilities (note 11) |                    | $       
|                                                          | Dividends payable                                  |                    |         
|                                                          | Interest payable                                   |                    |         
|                                                          |                                                    |                    |         
|Total current liabilities                                 |                                                    |                    | 43,845  
|                                                          |                                                    |                    |         
|Fair value of derivative financial instruments (note 9)   |                                                    |                    | 9,699   
|                                                          |                                                    |                    |         
|Long-term debt (note 4)                                   |                                                    |                    | 131,056 
|                                                          |                                                    |                    |         
|Reclamation provision and other liabilities (note 5)      |                                                    |                    | 16,220  
|                                                          |                                                    |                    |         
|Future income and mining tax liabilities (note 8)         |                                                    |                    | 120,182 
|                                                          |                                                    |                    |         
|Shareholders' Equity                                      |                                                    |                    |         
|Common shares (note 6(a))                                 |                                                    |                    |         
|                                                          | Authorized  unlimited                             |                    |         
|                                                          | Issued  97,836,954 (2004  86,072,779)            |                    |         
|Stock options                                             |                                                    |                    | 2,869   
|Warrants (note 6(c))                                      |                                                    |                    | 15,732  
|Contributed surplus                                       |                                                    |                    | 7,181   
|Deficit                                                   |                                                    |                    | (138,697
|Accumulated other comprehensive income (loss) (note 6(d)) |                                                    |                    | 3,323   
|                                                          |                                                    |                    |         
|Total shareholders' equity                                |                                                    |                    | 655,067 
|                                                          |                                                    |                    |         
|                                                          |                                                    | $                  | 976,069 
|                                                          |                                                    |                    |         

On behalf of the Board:

|GRAPHIC                  |  | LOGO                        
|------------------------ |  | ----------------------------
|Sean Boyd C.A., Director |  | Mel Leiderman C.A., Director

See accompanying notes

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AGNICO-EAGLE MINES LIMITED        CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)        (thousands of United States dollars except per share amounts, US GAAP
basis)

|                                                                                                  |                                                                                                     | Years ended December 31, |        
|------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------------ | -------
|
|REVENUES                                                                                          |                                                                                                     |                          |        
|Revenues from mining operations                                                                   |                                                                                                     | $                        | 241,338
|Interest and sundry income                                                                        |                                                                                                     |                          | 4,996  
|                                                                                                  |                                                                                                     |                          |        
|                                                                                                  |                                                                                                     |                          | 246,334
|COSTS AND EXPENSES                                                                                |                                                                                                     |                          |        
|Production                                                                                        |                                                                                                     |                          | 127,365
|Loss on derivative financial instruments                                                          |                                                                                                     |                          | 15,396 
|Exploration and corporate development                                                             |                                                                                                     |                          | 16,581 
|Equity loss in junior exploration companies (note 2(b))                                           |                                                                                                     |                          | 2,899  
|Amortization                                                                                      |                                                                                                     |                          | 26,062 
|General and administrative                                                                        |                                                                                                     |                          | 11,727 
|Provincial capital tax                                                                            |                                                                                                     |                          | 1,352  
|Interest (note 4)                                                                                 |                                                                                                     |                          | 7,813  
|Foreign currency loss                                                                             |                                                                                                     |                          | 1,860  
|                                                                                                  |                                                                                                     |                          |        
|Income (loss) before income, mining and federal capital taxes                                     |                                                                                                     |                          | 35,279 
|Federal capital tax                                                                               |                                                                                                     |                          | 1,062  
|Income and mining tax recovery (note 8)                                                           |                                                                                                     |                          | (2,777 
|                                                                                                  |                                                                                                     |                          |        
|Net income (loss) before cumulative catch-up adjustment                                           |                                                                                                     |                          | 36,994 
|Cumulative catch-up adjustment relating to FAS 143                                                |                                                                                                     |                          |       
|                                                                                                  |                                                                                                     |                          |        
|Net income (loss) for the year                                                                    |                                                                                                     | $                        | 36,994 
|                                                                                                  |                                                                                                     |                          |        
|Net income (loss) before cumulative catch-up adjustment per share  basic and diluted (note 6(e)) |                                                                                                     | $                        | 0.42   
|Cumulative catch-up adjustment per share  basic and diluted                                      |                                                                                                     |                          |       
|                                                                                                  |                                                                                                     |                          |        
|Net income (loss) per share  basic and diluted (note 6(e))                                       |                                                                                                     | $                        | 0.42   
|                                                                                                  |                                                                                                     |                          |        
|Comprehensive income (loss):                                                                      |                                                                                                     |                          |        
|Net income (loss) for the year                                                                    |                                                                                                     | $                        | 36,994 
|                                                                                                  |                                                                                                     |                          |        
|Other comprehensive income:                                                                       |                                                                                                     |                          |        
|                                                                                                  | Unrealized gain on hedging activities                                                               |                          |        
|                                                                                                  | Unrealized gain on available-for-sale securities                                                    |                          |        
|                                                                                                  | Dilution gain on issuance of securities by equity investee                                          |                          |        
|                                                                                                  | Minimum pension liability                                                                           |                          |        
|                                                                                                  | Cumulative translation adjustments                                                                  |                          |        
|                                                                                                  | Adjustments for derivative instruments maturing during the year                                     |                          |        
|                                                                                                  | Adjustments for realized gains on available-for-sale securities due to dispositions during the year |                          |        
|                                                                                                  | Tax effect of other comprehensive income items                                                      |                          |        
|                                                                                                  |                                                                                                     |                          |        
|Other comprehensive income for the year                                                           |                                                                                                     |                          | 4,423  
|                                                                                                  |                                                                                                     |                          |        
|Total comprehensive income (loss) for the year                                                    |                                                                                                     | $                        | 41,417 
|                                                                                                  |                                                                                                     |                          |        

See accompanying notes

111

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AGNICO-EAGLE MINES LIMITED    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY    (thousands of United States dollars, US GAAP basis)

|                                                                        |  |            |  |   |         | Years ended December 31, 2005, 2004 and 2003 |  
|----------------------------------------------------------------------- |  | ---------- |  | - | ------- | -------------------------------------------- | -
|
|
|
|Balance December 31, 2002                                               |  | 83,636,861 |  | $ | 591,969 |                                              | $
|Shares issued under Employee Stock Option Plan (note 7(a))              |  | 229,100    |  |   | 1,636   |                                              |  
|Shares issued under the Incentive Share Purchase Plan (note 7(b))       |  | 217,855    |  |   | 2,605   |                                              |  
|Shares issued under flow-through share private placement (note 6(b))    |  | 255,768    |  |   | 3,570   |                                              |  
|Shares issued under the Company's dividend reinvestment plan            |  | 4,608      |  |   | 59      |                                              |  
|Shares issued for acquisition (note 10)                                 |  | 125,612    |  |   | 1,466   |                                              |  
|Net loss for the year                                                   |  |           |  |   |        |                                              |  
|Dividends declared ($0.03 per share) (note 6(a))                        |  |           |  |   |        |                                              |  
|Other comprehensive income for the year                                 |  |           |  |   |        |                                              |  
|                                                                        |  |            |  |   |         |                                              |  
|Balance December 31, 2003                                               |  | 84,469,804 |  | $ | 601,305 |                                              | $
|Shares issued under Employee Stock Option Plan (note 7(a))              |  | 391,525    |  |   | 3,410   |                                              |  
|Stock options                                                           |  |           |  |   |        |                                              |  
|Shares issued under the Incentive Share Purchase Plan (note 7(b))       |  | 198,387    |  |   | 2,754   |                                              |  
|Shares issued under flow-through share private placement (note 6(b))    |  | 1,000,000  |  |   | 13,114  |                                              |  
|Shares issued under the Company's dividend reinvestment plan            |  | 13,063     |  |   | 121     |                                              |  
|Net income for the year                                                 |  |           |  |   |        |                                              |  
|Dividends declared ($0.03 per share) (note 6(a))                        |  |           |  |   |        |                                              |  
|Other comprehensive income for the year                                 |  |           |  |   |        |                                              |  
|                                                                        |  |            |  |   |         |                                              |  
|Balance December 31, 2004                                               |  | 86,072,779 |  | $ | 620,704 |                                              | $
|Shares issued under Employee Stock Option Plan (note 7(a))              |  | 214,725    |  |   | 2,264   |                                              |  
|Stock options                                                           |  |           |  |   |        |                                              |  
|Shares issued under the Incentive Share Purchase Plan (note 7(b))       |  | 245,494    |  |   | 3,646   |                                              |  
|Shares issued under flow-through share private placement (note 6(b))    |  | 500,000    |  |   | 6,387   |                                              |  
|Shares issued under the Company's dividend reinvestment plan            |  | 4,715      |  |   | 15      |                                              |  
|Shares issued for holder conversions of convertible debentures (note 4) |  | 775,359    |  |   | 10,855  |                                              |  
|Shares issued for purchase of Riddarhyttan Resources AB (note 10)       |  | 10,023,882 |  |   | 120,788 |                                              |  
|Net income for the year                                                 |  |           |  |   |        |                                              |  
|Dividends declared ($0.03 per share) (note 6(a))                        |  |           |  |   |        |                                              |  
|Other comprehensive income for the year                                 |  |           |  |   |        |                                              |  
|                                                                        |  |            |  |   |         |                                              |  
|Balance December 31, 2005                                               |  | 97,836,954 |  | $ | 764,659 |                                              | $
|                                                                        |  |            |  |   |         |                                              |  

See accompanying notes

112

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AGNICO-EAGLE MINES LIMITED    CONSOLIDATED STATEMENTS OF CASH FLOWS    (thousands of United States dollars, US GAAP basis)

|                                                                     |                                                    | Years ended December 31, |        
|-------------------------------------------------------------------- | -------------------------------------------------- | ------------------------ | -------
|
|Operating activities                                                 |                                                    |                          |        
|Net income (loss) for the year                                       |                                                    | $                        | 36,994 
|Add (deduct) items not affecting cash:                               |                                                    |                          |        
|                                                                     | Amortization                                       |                          |        
|                                                                     | Future income and mining taxes                     |                          |        
|                                                                     | Unrealized loss (gain) on derivative contracts     |                          |        
|                                                                     | Cumulative catch-up adjustment relating to FAS 143 |                          |        
|                                                                     | Amortization of deferred costs and other           |                          |        
|Changes in non-cash working capital balances                         |                                                    |                          |        
|                                                                     | Metals awaiting settlement                         |                          |        
|                                                                     | Income taxes recoverable                           |                          |        
|                                                                     | Inventories                                        |                          |        
|                                                                     | Prepaid expenses and other                         |                          |        
|                                                                     | Accounts payable and accrued liabilities           |                          |        
|                                                                     | Interest payable                                   |                          |        
|                                                                     |                                                    |                          |        
|Cash provided by operating activities                                |                                                    |                          | 82,980 
|                                                                     |                                                    |                          |        
|Investing activities                                                 |                                                    |                          |        
|Additions to mining properties                                       |                                                    |                          | (70,270
|Decrease (increase) in short-term investments                        |                                                    |                          | 5,009  
|Increase in investments and other                                    |                                                    |                          | (9,451 
|Decrease (increase) in restricted cash                               |                                                    |                          | 8,173  
|                                                                     |                                                    |                          |        
|Cash used in investing activities                                    |                                                    |                          | (66,539
|                                                                     |                                                    |                          |        
|Financing activities                                                 |                                                    |                          |        
|Dividends paid                                                       |                                                    |                          | (2,525 
|Common shares issued                                                 |                                                    |                          | 14,243 
|Share and warrant issue costs                                        |                                                    |                          | (29    
|                                                                     |                                                    |                          |        
|Cash provided by financing activities                                |                                                    |                          | 11,689 
|                                                                     |                                                    |                          |        
|Effect of exchange rate changes on cash and cash equivalents         |                                                    |                          | 20     
|                                                                     |                                                    |                          |        
|Net increase (decrease) in cash and cash equivalents during the year |                                                    |                          | 28,150 
|Cash and cash equivalents, beginning of year                         |                                                    |                          | 33,005 
|                                                                     |                                                    |                          |        
|Cash and cash equivalents, end of year                               |                                                    | $                        | 61,155 
|                                                                     |                                                    |                          |        
|Other operating cash flow information:                               |                                                    |                          |        
|Interest paid during the year                                        |                                                    | $                        | 8,304  
|                                                                     |                                                    |                          |        
|Income, mining and capital taxes paid (recovered) during the year    |                                                    | $                        | (6,259 
|                                                                     |                                                    |                          |        

See accompanying notes

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AGNICO-EAGLE MINES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(thousands of United States dollars except per share amounts, unless otherwise indicated)
December 31, 2005

1.     METALS AWAITING SETTLEMENT

|                                 |  | 2005 |        | 2004
|-------------------------------- |  | ---- | ------ | ----
|Bullion awaiting settlement      |  | $    | 222    |     
|Concentrates awaiting settlement |  |      | 56,082 |     
|                                 |  |      |        |     
|                                 |  | $    | 56,304 |     
|                                 |  |      |        |     

In
2005, precious metals accounted for 66.2% of Agnico-Eagle's revenues from mining operations (2004  74.9%;
2003  83.7%). Net byproduct revenues in 2005 consisted of 27.8% zinc (2004  17.6%;
2003  11.2%) and 6.0% copper (2004  7.5%; 2003  5.1%).

2.     OTHER ASSETS

|                                                      |  | 2005 |        | 2004
|----------------------------------------------------- |  | ---- | ------ | ----
|Estimated fair value of available-for-sale securities |  | $    | 25,462 |     
|Prepaid expenses                                      |  |      | 3,664  |     
|Employee loans receivable                             |  |      | 555    |     
|Federal and provincial sales taxes receivable         |  |      | 3,236  |     
|Other                                                 |  |      | 1,566  |     
|                                                      |  |      |        |     
|                                                      |  | $    | 34,483 |     
|                                                      |  |      |        |     

In
2005, the Company realized $1.4 million (2004  $1.3 million) in proceeds and recorded a gain of $0.5 million
(2004  $0.8 million) in income on the sale of available-for-sale securities. Available-for-sale
securities consist of equity securities and the cost basis is determined using the average cost method. Available-for-sale securities are carried at fair value and comprise the
following:

|                                                      |  | 2005 |        | 2004 |  
|----------------------------------------------------- |  | ---- | ------ | ---- | -
|Cost                                                  |  | $    | 13,153 |      | $
|Unrealized gains                                      |  |      | 12,606 |      |  
|Unrealized losses                                     |  |      | (297   | )    |  
|                                                      |  |      |        |      |  
|Estimated fair value of available-for-sale securities |  | $    | 25,462 |      | $
|                                                      |  |      |        |      |  

|                                                                                  |  | 2005 |       | 2004
|--------------------------------------------------------------------------------- |  | ---- | ----- | ----
|Deferred financing costs, less accumulated amortization of $3,283 (2004  $3,488) |  | $    | 5,697 |     
|Loan to Contact Diamond Corporation                                               |  |      | 1,159 |     
|Investment in Riddarhyttan Resources AB                                           |  |      |      |     
|Other                                                                             |  |      | 1,139 |     
|                                                                                  |  |      |       |     
|                                                                                  |  | $    | 7,995 |     
|                                                                                  |  |      |       |     

The
change in the loan to Contact Diamond Corporation ("Contact Diamond") from the prior year is attributable to the recording of equity losses against the loan and to the difference in
foreign exchange rates at the respective year-ends.

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Riddarhyttan Resources AB

In 2004, Agnico-Eagle purchased a 14% stake in Riddarhyttan Resources AB ("Riddarhyttan"), then a public company listed on the Stockholm Stock Exchange in Sweden
under the trading symbol "RHYT." Agnico-Eagle accounted for its investment in Riddarhyttan using the equity method of accounting through to October 17, 2005. Although Agnico-Eagle owned less
than 20% of Riddarhyttan's common stock through this period, Agnico-Eagle was able to significantly influence Riddarhyttan's operating, investing and financing activities through its representation on
Riddarhyttan's Board of Directors.

As
at December 31, 2004, the Company owned 14,538,461 shares with a market value of $16.7 million.

As
of October 18, 2005, the Company's interest was greater than 50% of the outstanding shares and voting rights of Riddarhyttan. The Company therefore ceased using the equity
method of accounting for its investment in Riddarhyttan and commenced consolidating the results of Riddarhyttan (Note 10).

Contact Diamond Corporation

As a result of issuances of stock by Contact Diamond in 2003, the Company's interest in Contact Diamond was diluted to below 50%. The Company therefore ceased
consolidating the results of Contact Diamond and began accounting for its investment using the equity method of accounting on September 1, 2003. Agnico-Eagle's 2003 share of losses in Contact
Diamond decreased the book value of the investment in Contact Diamond to nil as at December 31, 2003, with the excess applied to reduce the outstanding debt.

In
2004, as a result of further issuances of stock by Contact Diamond, Agnico-Eagle recorded a dilution gain with a resultant increase in the carrying value of its investment in Contact
Diamond. As Contact Diamond is considered a "development stage enterprise," the dilution gain was recorded in other comprehensive income for the year. The carrying value of the investment resulting
from issuances of stock by Contact Diamond was reduced to nil at December 31, 2004 as a result of Agnico-Eagle recording its share of losses in Contact Diamond.

As
at December 31, 2005, the Company owned 39% (13,814,077 shares) of Contact Diamond, with a market value of $5.9 million. Contact Diamond is a public company
listed on the Toronto Stock Exchange under the trading symbol "CO."

The
loan to Contact Diamond is due on demand, unsecured and bears interest at 8% per annum. Agnico-Eagle has waived interest on the loan commencing May 13, 2002 and will not
charge interest or demand repayment of the loan and any outstanding interest within the next year. Accordingly, the outstanding principal and accrued interest on the loan has been classified as a
long-term asset.

Loss on equity accounted investments:

|                            |  | 2005 |       | 2004 |   | 2003 
|--------------------------- |  | ---- | ----- | ---- | - | -----
|Riddarhyttan Resources AB   |  | $    | 1,010 |      | $ | 440  
|Contact Diamond Corporation |  |      | 1,889 |      |   | 1,784
|                            |  |      |       |      |   |      
|                            |  | $    | 2,899 |      | $ | 2,224
|                            |  |      |       |      |   |      

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3.     PROPERTY, PLANT AND MINE DEVELOPMENT

|                         |                 | 2005 |         | 2004  
|------------------------ | --------------- | ---- | ------- | ------
|
|Mining properties        |                 | $    | 263,661 |       
|Plant and equipment      |                 |      | 299,085 |       
|Mine development costs   |                 |      | 225,720 |       
|Construction in process: |                 |      |         |       
|                         | Goldex property |      |         | 17,900
|                         | Lapa property   |      |         | 18,892
|                         |                 |      |         |       
|                         |                 | $    | 825,258 |       
|                         |                 |      |         |       

Geographic Information

|        |  | Net Book Value
2005 |         | Net Book Value
2004
|------- |  | ------------------- | ------- | -------------------
|Canada  |  | $                   | 468,685 |                    
|U.S.A   |  |                     | 2,104   |                    
|Mexico  |  |                     | 13      |                    
|Finland |  |                     | 190,394 |                    
|        |  |                     |         |                    
|Total   |  | $                   | 661,196 |                    
|        |  |                     |         |                    

In
2005, Agnico-Eagle capitalized $2.2 million related to the purchase and implementation of an enterprise resource planning system ("ERP"). Amortization of the ERP will begin in
2006.

The
Company's El Coco property ("El Coco"), located adjacent to and immediately east of the Company's LaRonde mine, is subject to a royalty interest payable to Barrick Gold
Corporation. The El Coco royalty, on production from an area that extends 500 metres from the property boundary with the LaRonde mine, consists of a 50% net profits interest ("NPI"), which is
defined as net revenues from the sale of minerals produced from the property less the pro-rated portion of the production costs and allowable direct and common capital expenditures related
to the exploration and development of the property. The remaining area of the El Coco property is subject to a 4% net smelter return royalty (defined as gross revenues from the sale of minerals less
applicable refining, selling and delivery costs and applicable taxes). During 2005, the Company made NPI royalty payments of $nil (2004  $2.2 million;
2003  $8.9 million). No further payments are expected to be made as the economical mining activity in the area subject to the royalty was completed in
2004.

4.     LONG-TERM DEBT

The
Company's convertible subordinated debentures (the "Convertible Debentures") bear interest at 4.50% per annum, payable in cash semi-annually, on the principal
amount. The debentures are convertible into common shares of Agnico-Eagle at the option of the holder, at any time on or prior to maturity, at a rate of 71.429 common shares per $1,000 US
dollar principal amount. The debentures are redeemable by Agnico-Eagle, in whole or in part, at any time on or after February 15, 2006 at a redemption price equal to par plus accrued and unpaid
interest. The Company may redeem the debentures in cash or, at the option of the Company, by delivering freely tradeable common shares.

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The
original principal amount of the Convertible Debentures was $143.8 million. In the third and fourth quarter of 2005 there were aggregate conversions of $10.9 million.

In
2005, interest on the Convertible Debentures of $1.8 million (2004  nil) was capitalized for the construction of the Lapa and Goldex
properties as well as certain construction programs at the LaRonde mine. The amount in 2004 was not significant.

In
late 2003, the Company entered into an interest rate swap whereby fixed rate payments on the Convertible Debentures were swapped for variable rate payments. The notional amount under
the swap exactly matched the original $144 million face value of the debentures and the swap agreement terminated on February 15, 2006, which is the earliest date that the debentures can
be called for redemption. Under the terms of the swap agreement, the Company makes interest payments of three-month LIBOR plus a spread of 2.37% and receives fixed interest payments of 4.50%, which
completely offsets the interest payments the Company makes on the Convertible Debentures. The three-month LIBOR was also capped at 3.38% such that total variable interest payments will not exceed
5.75%. Throughout 2005, the Company made $0.9 million in swap payments such that net interest on the Convertible Debentures was $6.3 million.

Subsequent
to year-end, the Company extinguished the remainder of its Convertible Debentures. Between January 1, 2006 and February 15, 2006, holders
representing $131.8 million aggregate principal amount converted their debentures into 9,413,189 common shares. On February 15, 2006, the Company redeemed the remaining
$1.1 million aggregate principal amount, at par plus accrued interest, by exercising its redemption option and delivering 70,520 freely tradeable common shares.

Also
subsequent to year-end, the Company's interest rate swap matured. The Company made net interest payments of $1.4 million under the terms of the swap at maturity.

Prior
to November 2005, the Company's revolving bank facility, with a syndicate of international banks, provided the Company with a $100 million line of credit on a
revolving basis. The facility matures and all indebtedness thereunder is due and payable on December 23, 2007. The Company, with the consent of lenders representing 662/3% of the
aggregate commitments had the option to extend the term of the facility for three additional one-year terms to December 23, 2010. The facility was available in multiple currencies
through prime rate, base rate and LIBOR advances and through bankers' acceptances priced at the applicable rate plus a margin that ranged from 2.25% to 1.50% depending on certain financial ratios. The
lenders under the facility were each paid a commitment fee at a rate that changed from 0.5% to 0.875% depending on financial ratios. Payment and performance of the Company's obligations under the
facility were secured by substantially all the property relating to the LaRonde mine and the El Coco property.

In
November 2005, the Company executed an amendment with its bank syndicate to increase the limit of its revolving credit facility from $100 million to $150 million,
and to extend its term by two years to December
2009. The amended facility can be further extended, at the option of the Company, for an additional one-year term, to December 23, 2010. All other terms of the facility were
substantially unchanged. The amended facility is completely undrawn however outstanding letters of credit decrease the amounts available under the facility such that $139 million is available
for future drawdowns.

The
amended facility limits, among other things, the Company's ability to incur additional indebtedness, pay dividends or make payments in respect of its common shares, make investments
or loans, transfer the Company's assets or make expenditures relating to property secured under the credit agreement at that time that are not consistent with the mine plan and operating budget
delivered pursuant to the credit facility. Further,

117

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the
agreement requires the Company to maintain specified financial ratios and meet financial condition covenants.

In
addition, on January 19, 2006, a subsidiary of Agnico-Eagle entered into an unsecured, guaranteed bank overdraft facility (the "Overdraft Facility") of EUR
6.6 million. The Overdraft Facility is unconditionally guaranteed by the subsidiary and guaranteed to a limit of EUR 4.2 million by Agnico-Eagle. The Overdraft Facility matures on
June 30, 2006 and may be terminated by the subsidiary at any time without penalty or notice. A standby fee at an annual rate of 0.70% on the Overdraft Facility amount of EUR 6.6 million
is due and payable quarterly in advance. In addition, interest at an annual rate of 1.67% above EURIBOR one month is due and payable monthly in arrears on amounts outstanding under the Overdraft
Facility. The subsidiary has also agreed not to enter into any other financing arrangements or issue any guarantees without the prior written consent of the lender.

For
the year ended December 31, 2005, interest expense was $7.8 million (2004  $8.2 million;
2003  $9.2 million), of which cash payments were $8.3 million (2004  $7.0 million;
2003  $8.0 million). In 2005, cash interest on the facility was nil (2004  nil;
2003  nil) and cash standby fees on the facility were $1.2 million (2004  $1.4 million;
2003  $1.2 million). In 2005, interest of $2.5 million (2004  nil;
2003  nil) was capitalized to construction in progress. The Company's weighted average interest rate on all of its debt for the year ended December 31,
2005 was 7.9% (2004  4.9%; 2003  6.4%).

5.     RECLAMATION PROVISION AND OTHER LIABILITIES

Reclamation
provision and other liabilities consist of the following:

|                                          |  | 2005 |        | 2004
|----------------------------------------- |  | ---- | ------ | ----
|Reclamation and closure costs (note 5(a)) |  | $    | 12,569 |     
|Pension benefits (note 5(b))              |  |      | 3,651  |     
|                                          |  |      |        |     
|                                          |  | $    | 16,220 |     
|                                          |  |      |        |     

Under
mine closure plans submitted to the Minister of Natural Resources in Quebec, the estimated future reclamation costs for the LaRonde and Bousquet mines are approximately
$18.1 million and $3.0 million, respectively. These reclamation estimates are based on current legislation and there can be no assurance that the Minister of Natural Resources will not
impose additional reclamation obligations with higher costs. All of the accrued reclamation and closure costs are long-term in nature and thus no portion of these costs has been
reclassified to current liabilities. The Company does not currently have assets that are restricted for the purposes of settling these obligations.

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The
following table reconciles the beginning and ending carrying amounts of the asset retirement obligations.

|                                                |  | 2005 |        | 2004 |  
|----------------------------------------------- |  | ---- | ------ | ---- | -
|Asset retirement obligations, beginning of year |  | $    | 11,560 |      | $
|Current year accretion                          |  |      | 402    |      |  
|Reclamation payments                            |  |      | (145   | )    |  
|Foreign exchange revaluation and other          |  |      | 752    |      |  
|                                                |  |      |        |      |  
|Asset retirement obligations, end of year       |  | $    | 12,569 |      | $
|                                                |  |      |        |      |  

Effective
July 1, 1997, Agnico-Eagle's defined benefit pension plan for active employees was converted to a defined contribution plan. Employees retired prior to that date remain
in the defined benefit pension plan. In addition, Agnico-Eagle provides a non-registered executive supplementary defined benefit plan for certain senior officers. The funded status of
Agnico-Eagle's defined benefit employees' pension plan ("Employees' Plan") is based on an actuarial valuation as of January 1, 2003 and projected to December 31, 2005. The funded status
of the executive supplementary defined benefit plan is based on an actuarial valuation as of July 1, 2005 and projected to December 31, 2005. The components of Agnico-Eagle's net pension
plan expense are as follows:

|                                                                                      |  | 2005 |      | 2004 |   | 2003 |  
|------------------------------------------------------------------------------------- |  | ---- | ---- | ---- | - | ---- | -
|Service cost  benefits earned during the year                                        |  | $    | 274  |      | $ | 307  |  
|Gain due to settlement                                                                |  |      | (124 | )    |   | (784 | )
|Prior service cost                                                                    |  |      | 21   |      |   | 20   |  
|Interest cost on projected benefit obligation                                         |  |      | 352  |      |   | 488  |  
|Return on plan assets                                                                 |  |      | (157 | )    |   | (151 | )
|Amortization of net transition asset, past service liability and net experience gains |  |      | (34  | )    |   | 208  |  
|                                                                                      |  |      |      |      |   |      |  
|Net pension plan expense                                                              |  | $    | 332  |      | $ | 88   |  
|                                                                                      |  |      |      |      |   |      |  

Agnico-Eagle
contributes 5% of its payroll expense to a defined contribution plan. The expense in 2005 was $2.2 million
(2004  $1.8 million; 2003  $1.4 million).

Assets
of the Employees' Plan are comprised of pooled Canadian and U.S. equity funds and pooled bond funds. As of the measurement date, the plan's assets are allocated 59% to equity
securities and 41% to fixed income securities. The Employees' Plan is relatively mature with a substantial portion of the projected benefit obligation liability attributable to pensioners and there
are no contributions being made to the plan. Since benefit payments are completely funded from plan assets and investment returns, the plan assets are managed to

119

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achieve
a moderate degree of risk in terms of short-term variability of returns. The major categories of plan assets along with minimum, maximum and target allocations are presented below:

|                                |  | Minimum |  | Maximum |  | Target
|------------------------------- |  | ------- |  | ------- |  | ------
|Cash and short-term investments |  | 0%      |  | 35%     |  | 5%    
|Fixed income securities         |  | 25%     |  | 75%     |  | 35%   
|Equity securities               |  | 25%     |  | 65%     |  | 60%   
|Real estate                     |  | 0%      |  | 10%     |  | 0%    

Fixed
income securities must meet quality constraints in the form of minimum investment ratings. Equity securities also have quality constraints in the form of maximum allocations to any
one security and maximum exposure to any one industry group. The accumulated benefit obligation for the Employees Plan is equal to the projected benefit obligation and no amount was included in
accumulated other comprehensive income (loss) for this plan in 2005, 2004 or 2003.

Assets
for the executives' retirement plan ("Executives Plan") consist of deposits on hand with regulatory authorities which are refundable when benefit payments are made or on the
ultimate wind-up of the plan. The accumulated benefit obligation for this plan at December 31, 2005 was $3.5 million
(2004  $3.2 million) and nil (2004  $(0.9) million) was recorded in other comprehensive income arising from a
change in the additional minimum pension liability. At the end of 2005, the remaining unamortized net transition obligation was $1.3 million
(2004  $1.4 million) for the Executives Plan and the net transition asset was $0.6 million
(2004  $0.7 million) for the Employees Plan.

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The
funded status of the Employees and the Executives Plans for 2005 and 2004 are as follows:

|                                                                     |  | 2005 |       | 2004 |  
|-------------------------------------------------------------------- |  | ---- | ----- | ---- | -
|
|Reconciliation of the market value of plan assets                    |  |      |       |      |  
|Fair value of plan assets, beginning of year                         |  | $    | 2,196 |      | $
|Agnico-Eagle's contribution                                          |  |      |      |      |  
|Actual return on plan assets                                         |  |      | 138   |      |  
|Benefit payments                                                     |  |      | (161  | )    |  
|Other                                                                |  |      |      |      |  
|Divestitures                                                         |  |      |      |      |  
|Effect of exchange rate changes                                      |  |      | 70    |      |  
|                                                                     |  |      |       |      |  
|Fair value of plan assets, end of year                               |  | $    | 2,243 |      | $
|                                                                     |  |      |       |      |  
|Reconciliation of projected benefit obligation                       |  |      |       |      |  
|Projected benefit obligation, beginning of year                      |  | $    | 1,858 |      | $
|Service costs                                                        |  |      |      |      |  
|Interest costs                                                       |  |      | 106   |      |  
|Actuarial losses (gains)                                             |  |      | 146   |      |  
|Benefit payments                                                     |  |      | (161  | )    |  
|Plan amendments                                                      |  |      |      |      |  
|Settlements                                                          |  |      |      |      |  
|Effect of exchange rate changes                                      |  |      | 64    |      |  
|                                                                     |  |      |       |      |  
|Projected benefit obligation, end of year                            |  | $    | 2,013 |      | $
|                                                                     |  |      |       |      |  
|Excess (deficiency) of plan assets over projected benefit obligation |  | $    | 230   |      | $
|                                                                     |  |      |       |      |  
|Comprised of:                                                        |  |      |       |      |  
|Unamortized transition asset (liability)                             |  | $    | 558   |      | $
|Unamortized net experience gain (loss)                               |  |      | (460  | )    |  
|Accrued assets (liabilities)                                         |  |      | 132   |      |  
|                                                                     |  |      |       |      |  
|                                                                     |  | $    | 230   |      | $
|                                                                     |  |      |       |      |  
|Weighted average discount rate(i)                                    |  |      | 5.00% |      |  
|Weighted average expected long-term rate of return                   |  |      | 7.50% | (ii) |  
|Weighted average rate of compensation increase                       |  |      | n.a.  |      |  
|Estimated average remaining service life for the plan (in years)     |  |      | 12.0  |      |  

---

Notes:

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The
estimated benefits to be paid from each plan in the next ten years is presented below:

|            |  | Employees |  | Executives |  | Total
|----------- |  | --------- |  | ---------- |  | -----
|2006        |  | 163       |  | 97         |  | 260  
|2007        |  | 162       |  | 97         |  | 259  
|2008        |  | 159       |  | 97         |  | 256  
|2009        |  | 158       |  | 97         |  | 255  
|2010        |  | 155       |  | 97         |  | 252  
|2011  2015 |  | 738       |  | 482        |  | 1,220

6.     SHAREHOLDERS' EQUITY

The
Company's common shares are covered by a Shareholder Rights Plan whereby each shareholder, in the event of certain takeover bids or other change-in-control
transactions involving the acquisition of 20% or more of Agnico-Eagle's outstanding voting shares, has the right ("Rights") to purchase from Agnico-Eagle for an exercise price of C$80.00 that number
of shares of Agnico-Eagle having an aggregate market price equal to twice the exercise price. Until such time as a triggering bid for control occurs, the Rights trade together with the existing common
shares and will expire on May 10, 2009.

The
Company reserved for issuance 9,492,557 common shares in the event that the Convertible Debentures are converted into common shares and 6,900,000 common shares in the
event that the warrants are exercised. Subsequent to year-end, the Convertible Debentures were extinguished (see note 4(a)) and there are no longer shares reserved for
future issuances related to the Convertible Debentures.

In
2005, the Company declared dividends on its common shares of $0.03 per share (2004  $0.03 per share;
2003  $0.03 per share). Under the terms of the Company's amended credit facility, the Company's dividend payments are restricted to an aggregate of
$20 million per year.

In
2005, Agnico-Eagle issued 500,000 (2004  1,000,000; 2003  255,768) common shares under a
flow-through share private placement for proceeds of $8.3 million (2004  $17.5 million;
2003  $3.6 million) net of share issue costs. The 2005 shares were issued at a 25% premium to the prevailing market price. The premium was allocated to
income and mining tax recovery as discussed in the following paragraph. Agnico-Eagle has agreed to use such proceeds for the purpose of incurring Canadian exploration expenditures in connection with
its 2005 and 2006 exploration activities. Effective December 31, 2005, the Company renounced to its investors C$10.0 million
(2004  C$23.0 million; 2003  C$5.3 million) of such expenses for income tax purposes. To comply with the
flow-through share agreement, the Company must incur nil
(2004  C$9.8 million) of exploration expenditures in 2006 related to the expenditures renounced in 2005. The 2004 amount was classified as restricted cash
on the consolidated balance sheets.

The
difference between the flow-through share issuance price and the market price of Agnico-Eagle's stock at the time of purchase is recorded as a liability at the time the
flow-through shares are issued. This liability is extinguished at the time the exploration expenditures are renounced to investors. The difference between the

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flow-through
share issuance price and market price reduces the future tax expense charged to income (loss) as this difference represents proceeds received by the Company for the sale of
future tax deductions to investors in the flow-through shares.

In
2002, Agnico-Eagle issued 6,900,000 warrants. Each whole warrant entitles the holder to purchase one common share at a price of $19.00, subject to certain adjustments
summarized in the prospectus relating to the issuance of the Warrants. Warrants are exercisable at any time prior to November 14, 2007, after which time the warrants will expire and be of no
value. The Company will inform warrant holders, through a press release, of pending expiry at least 90 days prior to the expiry date. If all outstanding warrants are exercised, the Company
would issue an additional 6,900,000 common shares.

The
opening balance of the cumulative translation adjustment in accumulated other comprehensive income (loss) in 2004 and 2005 of $(15.9) million resulted from Agnico-Eagle
adopting the US dollar as its principal currency of measurement. Prior to this change, the Canadian dollar had been used as the reporting currency. Prior periods' consolidated financial statements
were translated into US dollars by the current rate method using the year end or the annual average exchange rate where appropriate. This translation approach was applied from January 1, 1994.
This translation gave rise to a deficit in the cumulative translation adjustment account within accumulated other comprehensive income (loss) as at December 31, 2005 and 2004.

Effective
January 1, 2001, the Company prospectively adopted the new accounting recommendations made under FAS 133 and FAS 138 on accounting for derivative financial
instruments and hedging. Upon the adoption of FAS 133, the Company recorded a cumulative translation adjustment to accumulated other comprehensive income (loss) of $2.8 million. The
Company has designated its gold put contracts and certain
foreign exchange derivative contracts as cash flow hedges and, as such, unrealized gains and losses on these contracts are recorded in accumulated other comprehensive income (loss).

The
following table presents the components of accumulated other comprehensive income (loss), net of related tax effects:

|                                                                                          |  | 2005 |         | 2004 |  
|----------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | -
|Cumulative translation adjustment from adopting US dollar as principal reporting currency |  | $    | (15,907 | )    | $
|Unrealized gain on available-for-sale securities                                          |  |      | 12,309  |      |  
|Dilution gain on equity issuances of subsidiary                                           |  |      | 7,947   |      |  
|Unrealized gain on foreign exchange derivative contracts                                  |  |      | 4,134   |      |  
|Unrealized loss on gold put option contracts                                              |  |      | (3,620  | )    |  
|Cumulative translation adjustments                                                        |  |      | (299    | )    |  
|Tax effect of other comprehensive income items                                            |  |      | (1,241  | )    |  
|                                                                                          |  |      |         |      |  
|                                                                                          |  | $    | 3,323   |      | $
|                                                                                          |  |      |         |      |  

In
2005, a $2.3 million (2004  $1.5 million) loss was reclassified from accumulated other comprehensive income (loss) to income to
reflect the amortization of gold put option contract premiums for contracts originally

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scheduled
to mature in 2005. Also in 2005, a $0.1 million gain (2004  $0.6 million gain) was reclassified from accumulated other comprehensive
income (loss) to income to reflect the realization of gains on available-for-sale securities due to the disposition of those securities.

The
following table provides the weighted average number of common shares used in the calculation of basic and diluted income (loss) per share:

|                                                               |  | 2005       |  | 2004       |  | 2003      
|-------------------------------------------------------------- |  | ---------- |  | ---------- |  | ----------
|Weighted average number of common shares outstanding  basic   |  | 89,029,754 |  | 85,157,476 |  | 83,889,115
|Add: Dilutive impact of employee stock options                 |  | 483,045    |  | 414,555    |  |          
|                                                               |  |            |  |            |  |           
|Weighted average number of common shares outstanding  diluted |  | 89,512,799 |  | 85,572,031 |  | 83,889,115
|                                                               |  |            |  |            |  |           

The
calculation of diluted income (loss) per share has been computed using the treasury stock method. In applying the treasury stock method, options and warrants with an exercise price
greater than the average
quoted market price of the common shares are not included in the calculation of diluted income (loss) per share as the effect is anti-dilutive.

In
2005 and 2004, the Convertible Debentures and warrants were anti-dilutive and thus were not included in the calculation of diluted income per share. In 2003, the employee
stock options, Convertible Debentures and warrants were anti-dilutive and thus were not included in the calculation of diluted loss per share.

7.     STOCK-BASED COMPENSATION

The
Company's ESOP provides for the granting of options to directors, officers, employees and service providers to purchase common shares. Under this plan, options are granted at the
fair market value of the underlying shares on the date of grant. The number of shares subject to option for any one person may not exceed 5% of the Company's common shares issued and outstanding at
the date of grant.

Up
to May 31, 2001, the number of common shares reserved for issuance under the ESOP was 6,000,000 and options granted under the ESOP had a maximum term of ten years. On
April 24, 2001, the Compensation Committee of the Board of Directors adopted a policy pursuant to which options granted after that date shall have a maximum term of five years. On
May 31, 2001, the shareholders approved a resolution to increase the number of common shares reserved for issuance under the ESOP by 2,000,000 to 8,000,000. In 2004, the shareholders approved a
further 2,000,000 common shares for issuance under the ESOP.

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Of the 982,000 options granted under the ESOP in 2005, 245,500 options granted vest immediately and expire in the year 2010. The remaining options
expire in 2010 and vest in equal installments, on each anniversary date of the grant, over a three-year term. Of the 537,250 options granted under the ESOP in 2004,
134,313 options granted vest immediately and expire in the year 2009. The remaining options expire in 2009 and vest in equal installments, on each anniversary date of the grant, over a
three-year term. Of the 40,000 options granted under the ESOP in 2003, 37,000 options granted vest immediately and expire in the year 2008. The remaining options expire in
2008 and have a vesting period of three years, in which 33% or 1,000 vest immediately and are exercisable on the date of the grant, while the remaining 67% or 2,000 options are
exercisable in equal installments, on each anniversary date of the grant, over a three-year term.

The
following summary sets out the activity with respect to Agnico-Eagle's outstanding stock options:

|                                   |  | 2005      |   | 2004 |       | 2003
|---------------------------------- |  | --------- | - | ---- | ----- | ----
|
|Outstanding, beginning of year     |  | 2,383,150 |   | C$   | 15.16 |     
|Granted                            |  | 982,000   |   |      | 16.61 |     
|Exercised                          |  | (214,725  | ) |      | 12.44 |     
|Cancelled                          |  | (78,800   | ) |      | 16.33 |     
|                                   |  |           |   |      |       |     
|Outstanding, end of year           |  | 3,071,625 |   | C$   | 15.78 |     
|                                   |  |           |   |      |       |     
|Options exercisable at end of year |  | 2,257,250 |   |      |       |     
|                                   |  |           |   |      |       |     

The
weighted average grant-date fair value of options granted in 2005 was C$4.17 (2004  C$4.35;
2003  C$3.33). The following table summarizes information about Agnico-Eagle's stock options outstanding at December 31, 2005:

|                  |  | Options outstanding |  |           |  |   
|----------------- |  | ------------------- |  | --------- |  | --
|
|
|
|C$6.55  C$9.20   |  | 91,700              |  | 2.8 years |  | C$
|C$10.20  C$15.43 |  | 532,900             |  | 3.9 years |  | C$
|C$15.60  C$19.94 |  | 2,193,925           |  | 2.8 years |  | C$
|C$21.72  C$25.60 |  | 253,100             |  | 1.8 years |  | C$
|                  |  |                     |  |           |  |   
|C$6.55  C$25.60  |  | 3,071,625           |  | 2.9 years |  | C$
|                  |  |                     |  |           |  |   

The
Company has reserved for issuance 3,071,625 common shares in the event that these options are exercised.

The
number of un-optioned shares available for granting of options as at December 31, 2005, 2004 and 2003 was 1,943,285, 2,846,485 and 776,010, respectively.

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Agnico-Eagle
estimated the fair value of options under the Black-Scholes option pricing model using the following weighted average assumptions:

|                                                  |  | 2005  |  | 2004  |  | 2003 
|------------------------------------------------- |  | ----- |  | ----- |  | -----
|Risk-free interest rate                           |  | 3.1%  |  | 3.0%  |  | 2.9% 
|Expected life of options (in years)               |  | 2.5   |  | 2.5   |  | 2.5  
|Expected volatility of Agnico-Eagle's share price |  | 35.6% |  | 38.5% |  | 43.5%
|Expected dividend yield                           |  | 0.24% |  | 0.24% |  | 0.25%

The
total compensation cost for the ESOP recognized in the consolidated statements of income (loss) for the current year was $2.4 million
(2004  $0.5 million; 2003  $0.1 million).

On
June 26, 1997, the shareholders approved an Incentive Share Purchase Plan (the "Purchase Plan") to encourage directors, officers and employees ("Participants") to
purchase Agnico-Eagle's common shares at market values.

Under
the Purchase Plan, eligible employees may contribute up to 10% of their basic annual salaries and directors may contribute up to 100% of their annual board and committee retainer
fees. For both employees and directors, Agnico-Eagle contributes an amount equal to 50% of each Participant's contribution.

In
2005, 245,494 common shares were issued under the Purchase Plan (2004  198,387; 2003  217,855) for
proceeds of $3.6 million (2004  $2.8 million; 2003  $2.6 million). In June 2002, shareholders
approved an increase in the maximum amount of shares reserved for issuance under the Purchase Plan to 2,500,000 from 1,000,000. Agnico-Eagle has reserved
for issuance 905,778 common shares (2004  1,151,272; 2003  1,349,659) under the Purchase Plan.

8.     FUTURE INCOME AND MINING TAXES

Income
and mining taxes recovery is made up of the following components:

|                  |                          | 2005 |        | 2004    |   | 2003   |        
|----------------- | ------------------------ | ---- | ------ | ------- | - | ------ | -------
|Current provision |                          |      |        |         |   |        |        
|                  | Provincial mining duties |      | $      |        |   | $      | (5,233 
|                  |                          |      |        |         |   |        |        
|Future provision  |                          |      |        |         |   |        |        
|                  | Federal income taxes     |      |        | (13,323 | ) |        | (13,950
|                  | Provincial mining duties |      |        | 10,546  |   |        | 16,288 
|                  |                          |      |        |         |   |        |        
|                  |                          |      | (2,777 | )       |   | 2,338  |        
|                  |                          |      |        |         |   |        |        
|                  |                          | $    | (2,777 | )       | $ | (2,895 | )      
|                  |                          |      |        |         |   |        |        

Mining
duties are assessed at the rate of 12% on income from mining operations. Income from mining operations is calculated as revenue from mined metals less production costs directly
attributable to mining. Income from mining operations is reduced by depreciation allowances on mine construction and development as

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well
as certain exploration costs. The mining duties are paid to the government agency which grants the mining lease and/or mining concession required in order to extract ore in the particular
jurisdiction.

Cash
income and mining taxes recovered in 2005 was $6.2 million (2004  $0.2 million;
2003  $0.6 million).

Future
income and mining taxes recovery has been provided on temporary differences which consist of the following:

|                               |  | 2005 |        | 2004 |   | 2003   |  
|------------------------------ |  | ---- | ------ | ---- | - | ------ | -
|Amortization                   |  | $    | (3,420 | )    | $ | 4,855  |  
|Exploration and development    |  |      | 9,832  |      |   | 2,789  |  
|Premium on flow-through shares |  |      | (1,647 | )    |   | (4,373 | )
|Other                          |  |      | (7,542 | )    |   | (933   | )
|                               |  |      |        |      |   |        |  
|                               |  | $    | (2,777 | )    | $ | 2,338  |  
|                               |  |      |        |      |   |        |  

The
income and mining taxes recovery is different from the amount that would have been computed by applying the Canadian statutory income tax rate as a result of the following:

|                                                                                    |  | 2005   |  | 2004   |  | 2003   
|----------------------------------------------------------------------------------- |  | ------ |  | ------ |  | -------
|Combined federal and composite provincial tax rates                                 |  | 34.8%  |  | 36.9%  |  | (38.3)%
|Increase (decrease) in taxes resulting from:                                        |  |        |  |        |  |        
|Provincial mining duties                                                            |  | 19.2   |  | 23.7   |  | 20.1   
|Resource allowances                                                                 |  | (17.8) |  | (12.1) |  | (8.4)  
|Permanent and other differences                                                     |  | 0.8    |  | (7.0)  |  | 14.0   
|Utilization of temporary differences for which no benefit was previously recognized |  | (10.4) |  | (11.6) |  | 20.5   
|Utilization of losses for which no benefit was previously recognized                |  | (34.5) |  | (36.2) |  | 22.7   
|Effect of changes in Canadian income tax legislation                                |  |       |  |       |  | (38.6) 
|                                                                                    |  |        |  |        |  |        
|Actual rate as a percentage of pre-tax income (loss)                                |  | (7.9)% |  | (6.3)% |  | (8.0)% 
|                                                                                    |  |        |  |        |  |        

Agnico-Eagle
has approximately C$426 million of cumulative Canadian exploration and development expenses and C$401 million of unamortized capital pools available
indefinitely to reduce future years' taxable income.

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As
at December 31, 2005 and 2004, Agnico-Eagle's future income and mining tax assets and liabilities are as follows:

|                                                                |                                                                         | 2005 |        | 2004   |  
|--------------------------------------------------------------- | ----------------------------------------------------------------------- | ---- | ------ | ------ | -
|
|Non-current:                                                    |                                                                         |      |        |        |  
|Income taxes:                                                   |                                                                         |      |        |        |  
|                                                                | Plant and equipment                                                     |      | $      | 22,896 |  
|                                                                | Mine development costs                                                  |      |        | 18,670 |  
|                                                                | Mining properties                                                       |      |        |       |  
|                                                                | Net operating and capital loss carryforwards                            |      |        | 15,168 |  
|                                                                | Unrealized foreign exchange gain on convertible subordinated debentures |      |        | (5,149 | )
|                                                                | Mining duties                                                           |      |        | 15,068 |  
|                                                                | Other                                                                   |      |        | 6,276  |  
|Valuation allowance                                             |                                                                         |      | (9,386 | )      |  
|                                                                |                                                                         |      |        |        |  
|Total non-current                                               |                                                                         | $    | 63,543 |        | $
|                                                                |                                                                         |      |        |        |  
|Mining duties:                                                  |                                                                         |      |        |        |  
|                                                                | Plant and equipment                                                     |      | $      | 488    |  
|                                                                | Mine development costs                                                  |      |        | 382    |  
|                                                                | Other                                                                   |      |        |       |  
|Valuation allowance                                             |                                                                         |      | (870   | )      |  
|                                                                |                                                                         |      |        |        |  
|Total non-current                                               |                                                                         | $    |       |        | $
|                                                                |                                                                         |      |        |        |  
|Non-current future income and mining tax assets and liabilities |                                                                         | $    | 63,543 |        | $
|                                                                |                                                                         |      |        |        |  

All
of Agnico-Eagle's future income tax assets and liabilities are denominated in local currency based on the jurisdiction in which the Company pays taxes and are translated into US
dollars using the exchange rate in effect at the consolidated balance sheets date. The increase in the gross amounts of the future tax assets and liabilities was impacted by the weaker US dollar in
relation to the Canadian dollar throughout 2005. At December 31, 2005, asset and liability amounts were translated into US dollars at an exchange rate of $1.1656 whereas at December 31,
2004, asset and liability amounts were translated at an exchange rate of $1.2034. The additional increase in future tax assets and liabilities was due to increases in capital pools resulting from the
LaRonde mine capital expenditures and increased future tax assets relating to increased future mining duty liabilities. A future income tax liability was also recorded on the acquisition of
Riddarhyttan (see note 10). At January 1, 2005, the valuation allowance, a reserve against future income tax assets recorded in the accounts, was $17.7 million. In 2005,
the valuation allowance decreased by $8.3 million due to the impact of a weaker US dollar and the utilization of capital and net operating loss carryforwards which were previously unrecognized.

In
2003, tax legislation changes gave rise to additional future income tax assets. As provincial mining duties are now deductible in computing Canadian federal income taxes payable, the
Company has recorded an asset representing the future deductions that will be available at the federal level arising from the payment of provincial mining duties. As this mining duty tax asset is
long-term in nature and does not have a set expiry date, the Company has not provided a valuation allowance against this future tax asset.

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The
Company operates in different jurisdictions and accordingly it is subject to income and other taxes under the various tax regimes in the countries in which it operates. The tax rules
and regulations in many countries are highly complex and subject to interpretation. The Company may be subject in the future to a review of its historic income and other tax filings and in connection
with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules and regulations to the Company's business conducted within the country
involved. The Company has not accrued any taxes associated with any such reviews of its income tax filing as no such losses are considered to be probable.

9.     FINANCIAL INSTRUMENTS

Agnico-Eagle
enters into financial instruments with a number of financial institutions in order to hedge underlying revenue, cost and fair value exposures arising from commodity prices,
interest rates and foreign currency exchange rates. Financial instruments which subject Agnico-Eagle to market risk and concentration of credit risk consist primarily of cash and
short-term investments and derivative contracts for currencies, interest rates and precious and base metals. Agnico-Eagle places its cash and cash equivalents and short-term
investments in high quality securities issued by government agencies, financial institutions and major corporations and limits the amount of credit exposure by diversifying its holdings.

Agnico-Eagle's
risk management policy attempts to mitigate the risks associated with fluctuating metal prices and foreign exchange rates. Agnico-Eagle uses
over-the-counter put and call option metals and foreign exchange contracts to hedge its net revenues from mining operations and costs of production, respectively. These
instruments are straightforward contracts and involve limited complexity. Agnico-Eagle is exposed to credit risk in the event of non-performance by counterparties in connection with its
currency and metal option contracts. Agnico-Eagle does not obtain any security to support financial instruments subject to credit risk, but mitigates the risk by dealing with a diverse group of
creditworthy counterparties and, accordingly, does not anticipate loss for non-performance. The Company continually monitors the market risk of its hedging activities.

Gold put option contracts

Agnico-Eagle's portfolio of gold put option contracts was entered into to establish a minimum price which the Company will receive from the sale of its gold
production. The contracts expire monthly based on planned production volumes. These instruments have been designated as hedges under the criteria established by FAS 133 and FAS 138 on
accounting for derivative financial instruments and hedging. At December 31, 2001, these option contracts did not qualify as a designated hedge under FAS 133. Accordingly, changes in
fair value were recognized as part of the Company's net loss. On January 1, 2002, the Company implemented a new treasury management system that complies with the new documentation requirements
of FAS 133. As a result, these option contracts now qualify for hedge accounting. In 2005, 2004 and 2003, changes in the fair value of these option contracts were recognized as part of other
comprehensive income (loss).

Gains
and losses on gold put option contracts are reclassified from accumulated other comprehensive income (loss) to income in the same period the forecasted transaction affects income.
Although the gold put option contracts were liquidated in 2005, the accumulated loss on these contracts will remain in accumulated other comprehensive income (loss) and will be reclassified to income
based on the original maturities of these contracts. In 2006, the Company expects to reclassify a loss of $2.0 million relating to its gold put option contracts to income.

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Silver and base metal option contracts

In
January 2005, the Company purchased silver put options with a strike price of $7.00 per ounce and also sold copper call options with a strike price of $3,310 per tonne. The
Company sold forward zinc production at a weighted average price of $1,263 per tonne and entered into a zero-cost collar to set a minimum zinc price of $1,215. While setting a minimum
price, the zero-cost collar strategy also limits participation to zinc prices above $1,480. In December 2005, the entire 2006 zinc collar position was collapsed at a cost of
$3.5 million. These contracts do not qualify for hedge accounting under FAS 133.

As
at December 31, 2005, Agnico-Eagle's derivative financial instruments relating to metals consisted of the following:

|       |                       | Expected
Maturity
2006 
|------ | --------------------- | -----------------------
|Silver |                       |                        
|       | Put options purchased |                        
|       |                       | Ounces                 
|       |                       | Average price ($/ounce)
|Copper |                       |                        
|       | Call options sold     |                        
|       |                       | Tonnes                 
|       |                       | Average price ($/tonne)
|Zinc   |                       |                        
|       | Forwards              |                        
|       |                       | Tonnes                 
|       |                       | Average price ($/tonne)

Foreign exchange, metals, and interest rate hedging program

Agnico-Eagle
generates almost all of its revenues in US dollars. The Company's LaRonde mine and Exploration Division both have Canadian dollar requirements for capital and operating
expenditures. Agnico-Eagle entered into a series of put and call option contracts to hedge a monthly sum of Canadian dollar expenditures based on forecasted Canadian dollar requirements. In 2006, the
Company will reclassify a gain of $4.1 million relating to its foreign exchange derivative contracts to income. Due to the nature and structure of the Company's foreign currency hedge
contracts, the Company does not record amounts for ineffectiveness in income. The Company's written put options do not qualify for hedge accounting and thus have not been designated as hedging
instruments. As such, changes in fair value for these instruments are recorded in net income (loss). These instruments were entered into to set a range for the US dollar, along with the
zero-cost collar of purchased put options and written call options.

In
December 2005, the Company's entire foreign exchange derivative position was collapsed generating cash flow of $4.1 million. As a result of this transaction,
Agnico-Eagle had no foreign exchange derivative positions at December 31, 2005.

At
December 31, 2005, the aggregate unrealized loss of the net market value of Agnico-Eagle's metals derivative position amounted to $8.3 million
(2004  $5.9 million). The Company's unrealized gain on its foreign exchange hedge position at December 31, 2005 was $nil
(2004  $8.7 million). Since the Company uses

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only
over-the-counter instruments, the fair value of individual hedging instruments is based on readily available market values.

The
following table shows the changes in the fair values of derivative instruments recorded in the consolidated financial statements. The fair values of recorded derivative related
assets and liabilities reflect the netting of the fair values of individual derivative financial instruments. Other required derivative disclosures can be found in note 6(d), "Accumulated other
comprehensive income (loss)" and information regarding the Company's interest rate derivatives can be found in note 4(a), "Convertible subordinated debentures."

|                                              |  | Interest Rate |        | Metals |   | Foreign Exchange |  
|--------------------------------------------- |  | ------------- | ------ | ------ | - | ---------------- | -
|
|Fair value, beginning of year                 |  | $             | (1,876 | )      | $ |                 |  
|Financial instruments entered into or settled |  |               |       |        |   | (1,876           | )
|Changes in fair value                         |  |               | 512    |        |   |                 |  
|                                              |  |               |        |        |   |                  |  
|Fair value, end of year                       |  | $             | (1,364 | )      | $ | (1,876           | )
|                                              |  |               |        |        |   |                  |  

Agnico-Eagle's
exposure to interest rate risk at December 31, 2005 relates to its short-term investments and cash equivalents of $121 million
(2004  $104.9 million) and its interest rate swap. Interest rate swap exposure is limited through the use of an interest rate cap. The Company's
short-term investments and cash equivalents have a fixed weighted average interest rate of 3.79% (2004  1.81%) for a period of 14 days
(2004  19 days). Agnico-Eagle is also exposed to interest rate risk through its interest rate swap whereby the Company swapped its fixed rate payments on
the Convertible Debentures for variable rate payments. The exposure to interest rate risk under the terms of the Company's interest rate swap is limited as the Company has also entered into an
interest rate cap such that the three-month LIBOR will not exceed 5.75%.

In
addition, Agnico-Eagle has outstanding letters of credit amounting to C$13.3 million relating to the Executives Plan and reclamation obligations
(2004  C$13.4 million) for which fees were 2.25% per annum.

The
fair values of Agnico-Eagle's current financial assets and liabilities approximate their carrying values as at December 31, 2005. The fair value of Agnico-Eagle's Convertible
Debentures as at December 31, 2005 is $187.4 million (2004  $163.2 million).

10.   ACQUISITION

Riddarhyttan
is a precious and base metals exploration and development company with a focus on the Nordic region of Europe. Riddarhyttan is the 100% owner of the Suurikuusikko gold
deposit located in Finland. In the second quarter of 2004, the Company acquired a 13.8% ownership interest in Riddarhyttan. In connection with this acquisition, two representatives of the Company were
elected to Riddarhyttan's Board of Directors. Through the subscription for shares in Riddarhyttan's rights issue in December 2004, the Company increased its ownership level to approximately
14%.

On
November 14, 2005, the Company completed its tender offer for all the shares of Riddarhyttan. As of December 31, 2005, the Company owns an aggregate of
102,880,951 shares, or approximately 97.3% of the outstanding shares and voting rights of Riddarhyttan. The Company is completing the acquisition of the remaining 2.7% of the Riddarhyttan
shares that it does not already own under the compulsory acquisition procedures under Swedish law and anticipates that advance possession of these shares will be obtained in the

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second
half of 2006. Advance possession means that the Company will be entitled to be registered as owner of these shares and thereby entitled to exercise all rights relating to these shares that vest
in a shareholder.

The
results of operations of Riddarhyttan are included in the consolidated statements of income (loss) from the date of the share issuances detailed below.

The
purchase price, before transactions costs, amounted to $120.8 million which was paid through the issuance of 10,023,882 shares of the Company:

|                                                                     |  | Shares Issued
|-------------------------------------------------------------------- |  | -------------
|Total Issuance of the Company's Shares for Riddarhyttan Acquisition: |  |              
|October 18, 2005                                                     |  | 9,104,542    
|October 26, 2005                                                     |  | 666,905      
|November 14, 2005                                                    |  | 252,435      
|                                                                     |  |              
|Total shares issued                                                  |  | 10,023,882   
|                                                                     |  |              

The
allocation of the total purchase price to the fair values of assets acquired is set forth in the table below:

|                                    |  |   |        
|----------------------------------- |  | - | -------
|Total Purchase Price:               |  |   |        
|Purchase price                      |  | $ | 120,788
|Balance of equity investment        |  |   | 11,123 
|Transaction costs                   |  |   | 7,725  
|                                    |  |   |        
|Total purchase price to allocate    |  | $ | 139,636
|                                    |  |   |        
|Fair Value of Assets Acquired:      |  |   |        
|Suurrikuusikko property             |  | $ | 187,500
|Net future tax liability            |  |   | (50,738
|Iso-Kuotco property                 |  |   | 2,252  
|Oijarvi property                    |  |   | 587    
|Other                               |  |   | 35     
|                                    |  |   |        
|Total fair value of assets acquired |  | $ | 139,636
|                                    |  |   |        

Pro forma
results of operations for Agnico-Eagle assuming the acquisition of Riddarhyttan described above had occured as of January 1, 2004 are shown below. On a
pro forma basis, there would have been no effect on Agnico-Eagle's consolidated revenues:

|                                               |  | Unaudited
|---------------------------------------------- |  | ---------
|
|Pro forma net income                           |  | $        
|Pro forma income per share  basic and diluted |  | $        

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11.   OTHER FINANCIAL INFORMATION

|                    |  | 2005 |        | 2004
|------------------- |  | ---- | ------ | ----
|Trade payables      |  | $    | 31,497 |     
|Wages payable       |  |      | 4,759  |     
|Accrued liabilities |  |      | 1,537  |     
|                    |  |      |        |     
|                    |  | $    | 37,793 |     
|                    |  |      |        |     

12.   RELATED PARTY TRANSACTIONS

As
at December 31, 2005, the total indebtedness of Contact Diamond to the Company was $1.159 million (2004  $3.024 million)
including accrued interest to December 31, 2005 of nil (2004  nil).

Contact
Diamond was a consolidated entity of the Company for the year ended December 31, 2002. As of August 2003, the Company ceased consolidating Contact Diamond as the
Company's investment no longer represented a "controlling financial interest".

The
loan was originally advanced for the purpose of funding ongoing exploration and operating activities. The loan is repayable on demand with a rate of interest on the loan of 8% per
annum. The Company, however, waived the interest on this loan commencing May 13, 2002 and has no intention of charging any interest or demanding repayment in the next year.

In
addition, the Company provides Contact Diamond with some executives, employees and administrative support at no cost to Contact Diamond. Four of the nine current directors of Contact
Diamond are also directors of the Company.

13.   SUBSEQUENT EVENTS

In
March 2005, the Company entered into an agreement with Industrias Peñoles S.A. de C.V. ("Peñoles") to acquire the Pinos Altos project in
Chihuahua, Mexico. Under the terms of the agreement, Agnico-Eagle had the option to purchase the Pinos Altos project for cash and share consideration. Agnico-Eagle will pay Peñoles,
$32.5 million in cash and 2,063,635 common shares of Agnico-Eagle. The transaction closed in escrow on March 15, 2006.

Subsequent
to year end, the Company raised approximately $35 million by issuing 1.2 million flow-through shares to partially fund expenditures at Lapa and Goldex.

Also
subsequent to year end, the Company liquidated a substantial portion of its portfolio of available-for-sale securities which resulted in a gain before taxes of approximately
$21.5 million.

14.   DIFFERENCES FROM CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

These
consolidated financial statements have been prepared in accordance with US GAAP. A reconciliation between US GAAP and Canadian generally accepted accounting
principles ("Canadian GAAP") is presented below together with a description of the significant measurement differences affecting these consolidated financial statements.



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134

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|                                               |                                          |                |     | As at December 31 |         
|---------------------------------------------- | ---------------------------------------- | -------------- | --- | ----------------- | --------
|
|
|ASSETS                                         |                                          |                |     |                   |         
|Current                                        |                                          |                |     |                   |         
|                                               | Cash and cash equivalents                |                |     |                   | $       
|                                               | Restricted cash                          |                |     |                   |         
|                                               | Short-term investments                   |                |     |                   |         
|                                               | Metals awaiting settlement               |                |     |                   |         
|                                               | Income taxes recoverable                 |                |     |                   |         
|                                               | Inventories:                             |                |     |                   |         
|                                               |                                          | Ore stockpiles |     |                   |         
|                                               |                                          | Concentrates   |     |                   |         
|                                               |                                          | Supplies       |     |                   |         
|                                               | Other current assets                     |                | (b) |                   |         
|                                               |                                          |                |     |                   |         
|Total current assets                           |                                          |                |     |                   | 243,335 
|Fair value of derivative financial instruments |                                          | (a)            |     |                   |        
|Other assets                                   |                                          | (a)            |     |                   | 7,995   
|Future income and mining tax assets            |                                          | (e)            |     |                   | 63,543  
|Mining properties                              |                                          | (f)            |     |                   | 661,196 
|                                               |                                          |                |     |                   |         
|                                               |                                          |                |     | $                 | 976,069 
|                                               |                                          |                |     |                   |         
|LIABILITIES AND SHAREHOLDERS' EQUITY           |                                          |                |     |                   |         
|Current                                        |                                          |                |     |                   |         
|                                               | Accounts payable and accrued liabilities |                |     |                   | $       
|                                               | Dividends payable                        |                |     |                   |         
|                                               | Interest payable                         |                |     |                   |         
|                                               |                                          |                |     |                   |         
|Total current liabilities                      |                                          |                |     |                   | 43,845  
|                                               |                                          |                |     |                   |         
|Fair value of derivative financial instruments |                                          | (a)            |     |                   | 9,699   
|                                               |                                          |                |     |                   |         
|Long-term debt                                 |                                          | (c)            |     |                   | 131,056 
|                                               |                                          |                |     |                   |         
|Reclamation provision and other liabilities    |                                          |                |     |                   | 16,220  
|                                               |                                          |                |     |                   |         
|Future income and mining tax liabilities       |                                          | (e)            |     |                   | 120,182 
|                                               |                                          |                |     |                   |         
|Shareholders' Equity                           |                                          |                |     |                   |         
|Common shares                                  |                                          | (g),(h),(i)    |     |                   | 764,659 
|Stock options                                  |                                          |                |     |                   | 2,869   
|Other paid-in capital                          |                                          | (c)            |     |                   |        
|Warrants                                       |                                          |                |     |                   | 15,732  
|Contributed surplus                            |                                          | (g)            |     |                   | 7,181   
|Deficit                                        |                                          | (g),(i)        |     |                   | (138,697
|Accumulated other comprehensive income (loss)  |                                          | (b)            |     |                   | 3,323   
|Cumulative translation adjustment              |                                          | (b)            |     |                   |        
|                                               |                                          |                |     |                   |         
|Total shareholders' equity                     |                                          |                |     |                   | 655,067 
|                                               |                                          |                |     |                   |         
|                                               |                                          |                |     | $                 | 976,069 
|                                               |                                          |                |     |                   |         

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|                                                         |  |         |  | For the years ended December 31 |       
|-------------------------------------------------------- |  | ------- |  | ------------------------------- | ------
|
|Net income  US GAAP                                     |  |         |  | $                               | 36,994
|Interest and sundry income                               |  | (a),(c) |  |                                 | (2,027
|Interest expense                                         |  | (c)     |  |                                 | (1,864
|Amortization                                             |  | (f)     |  |                                 | (426  
|Dilution gain on issuance of shares by subsidiary        |  | (d)     |  |                                 |      
|Income and mining tax recovery (expense)                 |  | (e)     |  |                                 | (5,345
|                                                         |  |         |  |                                 |       
|Net income  Canadian GAAP                               |  |         |  | $                               | 27,332
|                                                         |  |         |  |                                 |       
|Net income per share  basic and diluted  Canadian GAAP |  |         |  | $                               | 0.31  
|                                                         |  |         |  |                                 |       





|                                                              |  |    |   | For the year ended
December 31 |        
|------------------------------------------------------------- |  | -- | - | ------------------------------ | -------
|
|Operating activities                                          |  |    |   |                                |        
|Cash flows provided by operating activities per Canadian GAAP |  | (c | ) | $                              | 83,946 
|Investing activities                                          |  |    |   |                                |        
|Cash flows used in investing activities per Canadian GAAP     |  | (c | ) | $                              | (67,505
|Financing activities                                          |  |    |   |                                |        
|Cash flows provided by financing activities per Canadian GAAP |  |    |   | $                              | 11,689 

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ITEM 19.    EXHIBITS

Exhibits and Exhibit Index.The following Exhibits are filed as part of this Annual Report and incorporated herein by
reference to the extent applicable.

Exhibit Index

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                              |  | Page
Number
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|1.01        |  | By-laws of the Registrant, as amended, and Articles of Amalgamation of the Registrant (incorporated by reference to Exhibit 99F to the Registrant's Annual Report on Form 20-F (File No. 001-13422)
for the fiscal year ended December 31, 2003, as filed with the SEC on May 18, 2004). |  | *          
|4.01        |  | Amended and Restated Credit Agreement dated December 23, 2004 (incorporated by reference to Exhibit 4 to the Registrant's Annual Report on Form 20-F/A (File No. 001-13422) for the fiscal year
ended December 31, 2003, as filed with the SEC on April 1, 2005).                        |  | *          
|4.02        |  | Amendment No. 1 to Second Amended and Restated Credit Agreement dated October 17, 2005 (incorporated by reference to Exhibit 1 to the Registrant's Report on Form 6-K (File No. 001-13422)
filed with the SEC on December 21, 2005).                                                     |  | *          
|4.03        |  | Form of Trust Indenture (incorporated by reference to Exhibit 7.1 to the Registrant's Registration Statement on Form F-10/A (File No. 333-100902) filed with the SEC on November 8,
2002).                                                                                               |  | *          
|4.04        |  | Form of Warrant Indenture (incorporated by reference to Exhibit 7.1 to the Registrant's Registration Statement on Form F-10/A (File No. 333-100850) filed with the SEC on November 6,
2002).                                                                                             |  | *          
|4.05        |  | Employment Agreement dated as of December 31, 2005 between the Registrant and Sean Boyd, Vice-Chairman and Chief Executive Officer of the Registrant.**                                                                                                                                  |  |            
|4.06        |  | Employment Agreement dated as of December 31, 2005 between the Registrant and Eberhard Scherkus, President and Chief Operating Officer of the Registrant.**                                                                                                                              |  |            
|4.07        |  | Employment Agreement dated as of December 31, 2005 between the Registrant and David Garofalo, Vice President, Finance and Chief Financial Officer of the Registrant.**                                                                                                                   |  |            
|4.08        |  | Employment Agreement dated as of December 31, 2005 between the Registrant and Donald Allan, Vice President, Corporate Development of the Registrant.**                                                                                                                                   |  |            
|4.09        |  | Employment Agreement dated as of December 31, 2005 between the Registrant and Alain Blackburn, Vice President, Exploration of the Registrant.**                                                                                                                                          |  |            
|4.10        |  | Retirement Compensation Arrangement Plan dated July 1, 1997 between the Registrant and Sean Boyd (incorporated by reference to Exhibit 10.8 to the Registrant's Registration Statement on Form F-4 (File
No. 333-125752) filed with the SEC on June 10, 2005). **                        |  | *          
|4.11        |  | Retirement Compensation Arrangement Plan dated July 1, 1997 between the Registrant and Eberhard Scherkus (incorporated by reference to Exhibit 10.9 to the Registrant's Registration Statement on
Form F-4 (File No. 333-125752) filed with the SEC on June 10, 2005).**                 |  | *          
|4.12        |  | Support Agreement, dated May 12, 2005 between the Registrant and Riddarhyttan Resources AB (publ) (incorporated by reference to the Registrant's Report on Form 6-K (File No. 001-13422), as filed with the
SEC on May 25, 2005).                                                        |  | *          
|4.13        |  | Amended and Restated Stock Option Plan (incorporated by reference to Exhibit 99.1 to the Registrant's Registration Statement on Form S-8) (File No. 333-130339), filed with the SEC on December 15,
2005).**                                                                             |  | *          
|4.14        |  | Amended and Restated Incentive Share Purchase Plan (incorporated by reference to Exhibit 99.2 to the Registrant's Registration Statement on Form S-8) (File No. 333-130339), filed with the SEC on
December 15, 2005).**                                                                 |  | *          
|            |  |                                                                                                                                                                                                                                                                                          |  |            

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|4.15  |  | Employment Agreement dated as of December 31, 2005 between the Registrant and R. Gregory Laing, General Counsel, Vice President, Legal and Corporate Secretary of the Registrant.** |  |    
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|4.16  |  | Employment Agreement dated as of January 1, 2006 between the Registrant and Jean Robitaille, Vice President, Metallurgy and Marketing of the Registrant.**                          |  |    
|8.01  |  | Subsidiaries.                                                                                                                                                                       |  |    
|11.01 |  | Code of Ethics (incorporated by reference to Exhibit 2 to the Registrant's Form 6-K filed December 13, 2005).                                                                       |  | *  
|12.01 |  | Certification Pursuant to Section 302 Of The Sarbanes-Oxley Act Of 2002 (Subsections (A) And (B) Of Section 1350, Chapter 63 Of Title 18, United States Code)(Sean Boyd).           |  | 141
|12.02 |  | Certification Pursuant to Section 302 Of The Sarbanes-Oxley Act Of 2002 (Subsections (A) And (B) Of Section 1350, Chapter 63 Of Title 18, United States Code)(David Garofalo).      |  | 142
|13.01 |  | Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Sean Boyd).                              |  | 143
|13.02 |  | Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (David Garofalo).                         |  | 144
|15.03 |  | Consent of Independent Registered Public Accounting Firm                                                                                                                            |  | 145
|15.04 |  | Audit Committee Charter                                                                                                                                                             |  | 146

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this Annual Report on its behalf.

|                               |  | AGNICO-EAGLE MINES LIMITED
|------------------------------ |  | --------------------------
|Toronto, Canada
March 27, 2006 |  | By:                       

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