Exhibit 99C

LOGO

Annual Audited Consolidated Financial Statements
and Management's Discussion and Analysis(Prepared in accordance with US GAAP)

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ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's Discussion and Analysis should be read in conjunction with the accompanying annual audited consolidated financial statements. These consolidated
financial statements have been prepared in accordance with United States generally accepted accounting principles. All dollar amounts are presented in US dollars unless otherwise specified.

Table of Contents

|MANAGEMENT'S DISCUSSION AND ANALYSIS             |                                                                         | 1 
|------------------------------------------------ | ----------------------------------------------------------------------- | --
|                                                 | Overview                                                                |   
|                                                 | Highlights                                                              |   
|                                                 | Outlook                                                                 |   
|                                                 | Results of Operations                                                   |   
|                                                 | Liquidity and Capital Resources                                         |   
|                                                 | Risk Profile                                                            |   
|                                                 | Outstanding Securities                                                  |   
|                                                 | Critical Accounting Estimates                                           |   
|                                                 | Future Tax Assets and Liabilities                                       |   
|                                                 | Stock-Based Compensation                                                |   
|                                                 | Forward-Looking Statements                                              |   
|                                                 | Summarized Quarterly Data                                               |   
|                                                 | Five Year Financial and Operating Summary                               |   
|                                                 | Agnico-Eagle Mineral Reserve & Mineral Resource Data                    |   
|ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS |                                                                         | 23
|                                                 | Management's Responsibility for Financial Reporting                     |   
|                                                 | Auditors' Report                                                        |   
|                                                 | Summary Of Significant Accounting Policies                              |   
|                                                 | Consolidated Balance Sheet                                              |   
|                                                 | Consolidated Statement Of Income (Loss) And Comprehensive Income (Loss) |   
|                                                 | Consolidated Statement Of Shareholders' Equity                          |   
|                                                 | Consolidated Statement Of Cash Flows                                    |   
|                                                 | Notes To Consolidated Financial Statements                              |   

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Management's Discussion And Analysis

Overview

Agnico-Eagle Mines Limited is an intermediate-sized gold producer centered in one of the mining industry's most favorable political and regulatory environments in
the world: Quebec, Canada. In its over 30 year history, Agnico-Eagle has never hedged away increases in the price of gold. Our LaRonde Mine is a proven gold producer with a long reserve life.
We have amassed a large land position in one of the most prolific gold producing regions and we have the cash resources and experience to grow reserves and create a multi-mine platform.

The
most important driver of financial performance for Agnico-Eagle is the spot price of gold. As we have never sold gold forward, we are positioned to benefit from rising gold prices.
Due to the poly-metallic nature of the LaRonde orebody, spot prices of silver, copper and zinc are also key drivers of financial performance. Since the sale of these byproduct metals is
important to both revenue and production costs per ounce, we occasionally implement hedging strategies to mitigate the effects of fluctuating prices. We have never sold gold forward because we believe
that low-cost production is the best protection against decreasing gold prices. The US$/C$ exchange rate is an important financial driver to achieving low-cost production as
practically all our operating costs are paid in Canadian dollars. As such, we also use hedging strategies to mitigate the impact of fluctuating exchange rates on our per ounce production costs.

In
2002 and 2003, we encountered some operational challenges at LaRonde. We fell short of our production targets due to expansion related problems in 2002 and a rock fall and production
drilling challenges in 2003. However, with the expansion now complete and the implementation of a more focused and more conservative mining plan, we believe we have reduced mining risk and are well
positioned to profit from higher gold and byproduct metal prices. The production challenges of the past few years have accentuated the risks of reliance on the LaRonde Mine. Our strategy over the next
few years will be to reduce our dependence on LaRonde as our sole source of production while still taking advantage of the mine's personnel and infrastructure. Our strategy envisions the development
of multiple mines within a short distance of LaRonde with growing reserves and increasing production in one of the most mining friendly areas of the world. With our Lapa property only 7 miles
away, and our Goldex property only 35 miles away,
and with over 2.8 million ounces of cumulative gold reserves on these properties, we feel we can achieve long term-growth while capitalizing on internal synergies. Our strategy is
to capitalize on these opportunities by using the expertise of the LaRonde team, the mine's large processing capacity and the Company's large pool of available tax deductions.

While
regional expansion represents the core of our strategy, we continue to seek growth opportunities elsewhere. Our focus will be on politically stable regions and on situations where
the expertise developed at LaRonde can add value.

We
anticipate that LaRonde will generate strong cash flow in 2004 and, coupled with our strong working capital position and completely undrawn credit facility, we are in a strong
position to achieve our growth strategy. With a world class mine and promising properties in a mining friendly environment, we believe we can build per share value by focusing on these assets while
retaining full leverage to rising gold prices.

Highlights

In 2003, an operationally challenging year, we produced 236,653 ounces of gold which was well below our original production target of 375,000 ounces. In the first
quarter of 2003, we experienced a rock fall at the LaRonde Mine in Quebec which forced us to change our mining sequence, resulting in a delay in the extraction of higher grade gold mining blocks from
the lower part of the mine. The effects of the rock fall continued to adversely affect production in the second quarter. In the third quarter we faced production drilling challenges and realized lower
than planned recoveries in the mill.

Despite
these challenges, we achieved significant improvements in operating performance in the fourth quarter of 2003 as 73% of ore production came from the lower level mining horizon.
This mining horizon contains ore that has substantially higher gold grades than that of the upper mine and is also substantially richer in copper. Onsite operating costs showed a steady improvement
during the quarter and we were also able to

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begin
accumulating a surface ore stockpile which will mitigate the inherent risks associated with mining and will act as a source of ore should unforeseen events, such as those we faced in 2003,
affect mining operations.

The
operational challenges in 2003 led to a net loss of $19.5 million or $0.23 per share compared to income of $4.0 million or $0.06 per share in 2002. Total cash operating
costs to produce an ounce of gold were $269 for 2003 which was above our original estimate of $125 per ounce and above 2002 total cash operating costs of $182 per ounce. Total cash operating costs is
a non-GAAP measure and is explained in "Results of Operations  Production Costs." Lower production, higher operating costs, and the stronger Canadian dollar were the
major contributors to the increased cost per ounce. Other factors that contributed to the 2003 net loss were increased exploration expenditures resulting from the work conducted
on the Lapa property, increased amortization, increased interest expense as no interest was capitalized in the current year, increased administrative expenditures and a one time charge related to the
adoption of a new accounting standard.

In
the fourth quarter, as a result of operational improvements, we achieved net earnings of $2.4 million or $0.03 per share compared to earnings of $0.8 million or $0.01
per share in the fourth quarter of 2002. Compared to 2002, we produced 7% fewer ounces in the fourth quarter of 2003, however revenue increased 32% driven by increased gold and byproduct metal prices.
Fourth quarter 2003 earnings also reflected a higher tax recovery than the fourth quarter of 2002. Total cash operating costs in the fourth quarter of 2003 increased to $220 per ounce of gold produced
from $198 in the same period of 2002 due to lower gold production and a stronger Canadian dollar, offset by higher byproduct revenue.

We
ended the year with over $140 million in working capital, which includes $110 million in cash. Despite the production difficulties, stronger gold and byproduct prices
helped the Company generate positive operating cash flow (before working capital changes) of $4 million in 2003. Operating cash flow was well below 2002 levels of $20 million due mainly
to the operational challenges and stronger Canadian dollar, offset by increased metal prices. In the fourth quarter of 2003, we generated $10 million of operating cash flow compared to
$5 million in the fourth quarter of 2002. The increase was mainly due to increased metal prices offset somewhat by the stronger Canadian dollar.

2003
brought exploration success which culminated in record year-end gold reserves of 7.9 million ounces. At LaRonde, not only did we replace 2003 production, but we
also increased gold reserves by an additional one million ounces from four to five million ounces of gold. At Lapa, located only 7 miles east of LaRonde, the 2003 drilling program
led to a conversion of 1.2 million ounces of gold resource into reserves. At Goldex, located 35 miles east of LaRonde, a new geological model and an independent engineering review led to
a year end reserve of 1.6 million ounces of gold. A summary of our year end mineral reserve position can be found on page 21. Driven by this exploration success, the Company also
acquired more property along the prolific Cadillac-Bousquet gold belt and the Cadillac-Larder Lake Break immediately to the south.

By
the end of 2003, we had addressed LaRonde's operational problems. By the end of the year, we implemented a focused, more conservative mining plan and we ended the year with available
cash resources of $210 million, which includes $100 million available under our revolving bank facility. We now look forward to 2004 and 2005 with a renewed focus on implementing our
growth strategy.

Outlook

For 2004, we produced 271,567 ounces of gold at an estimated total cash operating cost per ounce between $75 and $85. The estimated decline from 2003 to
2004 in total cash operating costs is due to the elimination of the El Coco royalty, an increase in gold and byproduct metal production and an increase in by product metal prices.
Our silver and byproduct copper and zinc production can be found in "Results of Operations  Production costs".

For 2005, we expect to produce 280,000 ounces of gold at total cash operating costs per ounce between $135 and $145. The estimated increase in total cash
operating costs compared to the 2004 estimate is due to an anticipated decline in byproduct metals prices below those realized in 2004 and a reduction in the contribution of foreign exchange hedging
activities. Our estimated silver and byproduct copper and zinc production, along with metal price assumptions and sensitivities, can be found in "Results of Operations  Production
costs". We expect to generate strong operating cash flow which we will use to fund capital additions at LaRonde (including LaRonde II) and the continued development of our promising Lapa and
Goldex properties.

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Results of Operations

Revenues from Mining Operations

In 2003, revenue from mining operations increased 17% to $127 million from $108 million in 2002. The majority of our revenue is derived from
precious metal sales. Sales of gold and silver typically account for more than 80% of the Company's revenue. Revenues from mining operations are accounted for net of related smelting, refining and
other charges. In 2003, precious metal sales accounted for 84% of revenue, down slightly from 87% in 2002. This slight decrease over 2002 was due to surging metal prices in the latter half of the year
for byproduct copper and zinc. In 2004, we anticipate precious metal sales to account for 80% of overall revenue. The table below summarizes net revenue by metal:

2003

2002

% Change(thousands)Gold

$
85,566

$
80,177

7
%Silver


20,584


14,115

46
%Copper


6,452


(1,027
)
728
%Zinc


14,218


14,762

(4
)%$
126,820

$
108,027

17
%


The
increase in gold revenue was due to an 18% increase in realized prices offset by a 9% decrease in gold production. Revenues benefited from a 28% increase in silver production and a
10% increase in realized silver prices. Copper production increased by 126% while copper prices realized increased 17%. In 2002, net copper revenue had a negative effect on total revenue due to
historically low copper prices not being sufficient to recover the smelting, refining and transportation charges. However, since a majority of the gold ounces we recover is contained in our copper
concentrate, this negative net revenue represents a necessary cost of producing gold. Finally, zinc production declined 7% while realized zinc prices increased 12% leaving net zinc revenue essentially
unchanged.

Decreased
gold production in 2003 was due to a number of factors. In the first quarter of 2003, we experienced a rock fall which delayed extraction of higher grade gold mining blocks
from the lower part of the mine. The affected area stabilized on its own and we were able to recover and process most of the ore. We filled the affected area with cemented rock fill and paste fill to
further stabilize the area, and reduced the widths of certain mining blocks to accelerate the establishment of the pyramidal mining sequence. Due to the remedial work conducted in this area, we
reduced tonnage from the gold/copper rich lower levels and replaced it with tonnage from the upper zinc/silver rich areas of the mine. This resequencing of production led to increased silver
production for 2003. For 2004, most of the production will come from secondary, de-stressed mining blocks which should reduce the risk of such an event reoccurring.

In
the third quarter of 2003, we encountered production drilling challenges. Squeezing drill holes slowed down the planned extraction time of mining blocks from the lower part of the
mine. These drilling challenges resulted in shortages of ore which lead to numerous "stop-start" cycles in the mill but were resolved in the third and fourth quarters and did not affect
production in 2004. To address these drilling challenges, we added two production drills, increased drill hole diameter and changed our blasting method. The new blasting method has been successful in
decreasing dilution and improving fragmentation and, coupled with the completion of the Level 219 crushing plant, has improved ore flow and increased productivity.

Although
more ore was being mined from the upper areas of the mine, zinc production declined and copper production increased over 2002 as we were able to steadily increase tonnage from
the lower levels throughout the year. In the fourth quarter, LaRonde delivered record quarterly production from the lower gold/copper rich levels with 73% of total tonnage processed coming from these
levels. This led to fourth quarter production of 70,299 ounces which was 7% lower than the same quarter in 2002 but in line with our expectations.

In
light of the operational challenges encountered in 2003, in the fourth quarter, the Company undertook a comprehensive review of short-term and long-term
production targets. Based on recent experience, we implemented a more conservative mining plan. We have also taken a number of measures to reduce our exposure to normal mining risk such as increasing
our surface ore stockpile. This stockpile will ensure that the

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mill
can temporarily continue to process ore in the event of production stoppages due to unforeseen circumstances such as those encountered in 2003.

Outlook:Revenues from mining operations are estimated to have increased
significantly in 2004 due to increased production levels for all metals and higher realized metals prices. In 2005, revenues from mining operations are expected to be largely unchanged as slightly
higher production levels for all metals are offset by anticipated lower metals prices. The table below summarizes our production for 2004 and our estimated production in 2005.

2005 Estimate

2004 Actual

2003 Actual

% Change(1)Gold (ounces)

280,000

271,567

236,653

14.8%Silver (000's ounces)

5,500

5,699

3,953

44.2%Copper (000's pounds)

18,000

22,816

20,131

13.3%Zinc (000's pounds)

160,000

167,283

100,337

66.7%


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Estimated production levels for gold and byproduct metals in 2006 are expected to be in line with 2005 estimates.

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 our gold put option contracts expiring in the year. Interest and sundry income was $2.8 million in 2003 compared to $1.9 million in 2002. The $0.9 million
increase was due to a number of factors. While interest on cash balances remained relatively unchanged over 2002, in 2003, we realized approximately $2.5 million in gains on the disposition of
available-for-sale securities. This gain was offset by a $1.8 million charge relating to the cost of gold puts purchased in 1999.

Outlook:Interest and sundry income is estimated to have been essentially nil
in 2004 and projected not to change in 2005 as interest income on our cash balance is expected to be offset by the non-cash amortization of the cost of our gold put option
contracts.

Production Costs

In 2003, production costs increased 38% to $105 million from $76 million. Operating costs per ton milled remained essentially unchanged compared to
2002 at C$52 per ton. (Operating costs per ton is a non-GAAP measure and is explained below.) The following table summarizes the components of production costs.

2003

2002Definition Drilling

$
511

$
437Stope Development


11,832


8,625Mining


17,263


10,961Underground Services


25,836


16,591Milling


27,478


20,603Surface Services


2,245


1,928Administration


6,472


5,367El Coco Royalty


12,888


10,764Reclamation provision


519


1,301Inventory adjustments


(368
)

1,072Hedging losses (gains)


314


(1,680
)Total Production Costs

$
104,990

$
75,969


The
rock fall in the first quarter and the production drilling challenges encountered in the third quarter caused mining and underground service costs to increase in 2003. However, we
addressed the production drilling challenges in the third quarter and steadily ramped up tonnage milled in the fourth quarter. Milling costs increased due to increased mill throughput during 2003 and
the increase in stope development costs was also attributable to the drilling challenges encountered at depth. Of the overall cost increase of $29 million in 2003 compared to 2002, the
strengthening Canadian dollar accounted for $10 million, or 35%.

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In
the fourth quarter of 2003, we milled 627,000 tons, which represents a 17% increase over the same quarter of 2002. Fourth quarter gold production was 7% lower than 2002 due to
decreased gold grades as a result of the implementation of a more conservative mining plan. Onsite operating costs per ton in the fourth quarter were C$54 per ton compared to C$53 per ton in the prior
year; however, steady improvement was made throughout the quarter as our operating costs decreased to C$48 per ton in December.

For
2004 we expect a slight increase in operating costs to be offset by an estimated 4% increase in total tons milled. Therefore, we expect operating costs per ton to decrease to between
C$49 and C$51 per ton.

In
2003, total cash operating costs to produce an ounce of gold increased 48% to $269 from $182. In 2002, total cash operating costs increased 17% over the prior year from $155 to $182.
Total cash operating costs are comprised of onsite operating costs reduced by net silver, zinc and copper revenue. Total cash operating costs are affected by various factors such as the number of gold
ounces produced, operating costs, US$/C$ exchange rates, production royalties and byproduct metal prices. The table below illustrates the change in total cash operating costs attributable to each of
the variables which affected it for 2003 and 2002. The most significant factors contributing to the increase in total cash operating costs in 2003 were increased operating costs and the stronger
Canadian dollar. Total cash operating costs per ounce is not a recognized measure under US GAAP and is described more fully below.

2003

2002Total cash operating costs (prior year)

$
182

$
155Lower (higher) gold production


19


(15
)Stronger (weaker) Canadian dollar


30


(3
)Higher El Coco royalty


13


20Increased operating costs


77


24(Higher) lower byproduct revenue


(52
)

1Total cash operating costs (current year)

$
269

$
182


Increased
operating costs for both the fourth quarter and year to date were a result of increased tonnage mined and processed coupled with increased mining and underground services costs
resulting from the first quarter rock fall and the production drilling challenges encountered in the third quarter. Increasing byproduct metal prices had a more significant effect in the fourth
quarter than on the entire year as most of the yearly increase in metal prices occurred in the fourth quarter. Copper and zinc prices increased 8% and 2%, respectively in the first nine months of 2003
and increased 22% and 17%, respectively in the fourth quarter. For 2004, we expect the El Coco royalty to be completely eliminated as that area of the mine is essentially mined out. As
byproduct metal prices increased throughout the year, we took the opportunity to liquidate our hedges of byproduct production. Therefore, at the end of the year, we had full leverage to increasing
byproduct metal prices.

Total
cash operating cost is not a recognized measure under US GAAP and this data may not be comparable to data presented by other gold producers. We believe 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 Statement 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 our mining operations. Management uses this measure to monitor the performance of our 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 impacted by fluctuations in byproduct metal prices and exchange rates. Management compensates for the limitation inherent with this measure by
using it in conjunction with the cost per ton 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.

Operating
cost per ton 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 Statement of Income (Loss) and Comprehensive Income (Loss) for

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royalties,
inventory and hedging adjustments and asset retirement provisions and then dividing by tons processed through the mill. Since total cash operating 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 ton 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 ton mined, in order to be economically viable the estimated revenue on a per ton basis must be in excess
of the operating cost per ton. 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 cash operating costs and operating costs per ton to the
figures presented in the financial statements prepared in accordance with US GAAP.

Reconciliation of Total Cash Operating Costs per ounce

|                                                             |                                                                     | 2003 |         | 2002    |   | 2001    |        
|------------------------------------------------------------ | ------------------------------------------------------------------- | ---- | ------- | ------- | - | ------- | -------
|
|Production costs per Consolidated Statement of Income (Loss) |                                                                     | $    | 104,990 |         | $ | 75,969  |        
|Adjustments:                                                 |                                                                     |      |         |         |   |         |        
|                                                             | Inventory adjustments(i)                                            |      |         | 368     |   |         | 593    
|                                                             | Byproduct revenues, net of smelting, refining and marketing charges |      |         | (41,254 | ) |         | (27,850
|                                                             | El Coco royalty                                                     |      |         | (12,888 | ) |         | (10,764
|                                                             | Reclamation provision                                               |      |         | (519    | ) |         | (1,301 
|                                                             |                                                                     |      |         |         |   |         |        
|Cash operating costs                                         |                                                                     | $    | 50,697  |         | $ | 36,647  |        
|Gold production (ounces)                                     |                                                                     |      | 236,653 |         |   | 260,183 |        
|                                                             |                                                                     |      |         |         |   |         |        
|Cash operating costs (per ounce)                             |                                                                     | $    | 215     |         | $ | 141     |        
|El Coco royalty                                              |                                                                     |      | 54      |         |   | 41      |        
|                                                             |                                                                     |      |         |         |   |         |        
|Total cash operating costs                                   |                                                                     | $    | 269     |         | $ | 182     |        
|                                                             |                                                                     |      |         |         |   |         |        

Reconciliation of Operating Costs per ton

|                                                             |                                          | 2003 |         | 2002    |   | 2001    |        
|------------------------------------------------------------ | ---------------------------------------- | ---- | ------- | ------- | - | ------- | -------
|
|Production costs per Consolidated Statement of Income (Loss) |                                          | $    | 104,990 |         | $ | 75,969  |        
|Adjustments:                                                 |                                          |      |         |         |   |         |        
|                                                             | Inventory(i) and hedging(ii) adjustments |      |         | 54      |   |         | 609    
|                                                             | El Coco royalty                          |      |         | (12,888 | ) |         | (10,764
|                                                             | Reclamation provision                    |      |         | (519    | ) |         | (1,301 
|                                                             |                                          |      |         |         |   |         |        
|Minesite operating costs (US$)                               |                                          | $    | 91,637  |         | $ | 64,513  |        
|                                                             |                                          |      |         |         |   |         |        
|Minesite operating costs (C$)                                |                                          | $    | 127,931 |         | $ | 101,289 |        
|Tons milled (000's tons)                                     |                                          |      | 2,449   |         |   | 1,963   |        
|                                                             |                                          |      |         |         |   |         |        
|Operating costs per ton (C$)                                 |                                          | $    | 52      |         | $ | 52      |        
|                                                             |                                          |      |         |         |   |         |        

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Notes:

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Outlook:For 2004, our total cash operating costs are
estimated to have been between $75 and $85 per ounce of gold. For 2005, we expect our total cash operating costs to be in the range of $135 to $145 per ounce of gold. The estimated increase in total
cash operating costs compared to the 2004 estimate is due to an anticipated decline in byproduct metal prices below those realized in 2004 and a reduction in the contribution of foreign exchange
hedging activities. As net silver, zinc and copper revenue are treated as a reduction of operating costs in arriving at total cash operating costs per ounce, production and price assumptions play an
important role in our estimates. As our operating costs are denominated in Canadian dollars, the US$/C$ exchange rate can also affect our estimate. The table below summarizes the metal price
assumptions and exchange rate assumptions used in deriving our 2005 estimate. 2005 production estimates for each metal are shown in the section entitled "Revenues from mining
operations".

Silver

$
6.00Zinc

$
0.45Copper

$
1.15US$/C$ exchange rate

$
1.27


Estimated total cash operating costs for 2006 are expected to be in line with 2005 estimates, assuming no change in the Company's metals price assumptions or
exchange rate assumptions from those set out for 2005 above and assuming no change in the contribution of foreign hedging activities from that expected in 2005.

As we have currently not hedged any of the above production, changes in the prices of these metals will impact our total cash operating
cost estimate. We currently have hedges in place to protect the downside risk associated with a strengthening Canadian dollar. For 2005, we have hedged approximately 15% of our estimated Canadian
dollar operating costs at exchange rates well above the prevailing exchange rates that are in effect when the hedges expire. The chart below shows the impact on total cash operating costs per ounce of
changes in the variables discussed above. The sensitivities presented for the changes in the US$/C$ exchange rate take into account the above hedges.

CHART

Exploration and Corporate Development Expense

In 2003, our exploration team continued to focus on the Lapa property which is located only 7 miles east of LaRonde. Their efforts resulted in a resource
to probable reserve conversion of 1.2 million ounces of gold. The property did not have reserves in 2002. In conjunction with our exploration success, our corporate development team was active
in acquiring a 100% interest in the Lapa property, a transaction completed late in the second quarter of 2003. We also acquired the Bousquet property adjacent to the LaRonde Mine, expanding our
property interests along the gold belt which hosts our LaRonde Mine. The former Bousquet mine office is now being used by a dedicated regional development team to evaluate and prioritize the Company's
exploration and development projects in the region.

In
2003, we re-evaluated our Goldex project. A new reserve and resource model was estimated which showed positive economics and led to a resource to probable reserve
conversion of 1.6 million ounces of gold. The property did not have reserves in 2002. We decided to undertake an underground program to provide additional geological information. Over the
course of 2004, we expect to complete three vertical slot raises through the orebody. We expect to process this material early in 2005. The objective of this bulk sample and additional drilling
planned for 2004 is to attempt to increase the level of confidence in the gold grade. Although our current focus is growth in our own backyard, we continue to evaluate corporate development
opportunities which could potentially increase returns for our shareholders.

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Total exploration and corporate development expense, including equity losses of Sudbury, increased 102% in 2003 to $7.6 from $3.8 million in 2002. The table below summarizes
exploration and corporate development expense (thousands):

2003

2002Lapa property

$
1,751

$
246Other regional properties


465


976Exploration conducted by Sudbury Contact Mines Limited


4,216


2,271Corporate development expense


1,169


273$
7,601

$
3,766


Exploration
is only conducted if warranted by drilling results and project economics. Therefore, the increase in expenses over 2002 reflects the success of our exploration and
development work during 2003. The 2003 gross exploration expenses on the Lapa property were approximately $3.0 million. However, these expenses were reduced by exploration investment tax
credits received from the provincial government of Quebec. In 2003, our equity investee, Contact Diamond Corporation (formerly Sudbury Contact Mines Limited) ("Contact Diamond"), conducted more
exploration due to the encouraging results on the Timiskaming diamond project. In 2002, we owned approximately 64% of Contact Diamond and were fully consolidating its exploration expenses as we were
providing full funding for its projects. In 2003, through a series of equity financings, Contact Diamond became more financially independent and our ownership interest was diluted to less than 50%.
Therefore, as of August 31, 2003, we are no longer required to consolidate Contact Diamond's operations with our own. Our 2003 exploration expenses reflect 100% of Contact Diamond's exploration
expenses up to that time and a 49.9% share of exploration expenses subsequent to de-consolidation.

In
2003 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. To comply with flow-through share purchase
agreements, the Company must spend $3.5 million on eligible Canadian exploration expenses in 2004 relating to the expenditures renounced effective in 2003.

Outlook:Exploration and corporate development expense, including our share
of Contact Diamond's exploration expenses, are expected to decrease in 2004 as we have met the criteria for capitalization at the Lapa and Goldex properties and exploration expenditures related to
these properties will not be recorded in the income statement in 2004 or 2005. However, our acquisition of shares of Riddarhyttan will result in an increased amount of exploration expense in 2005. We
expect to record $3.2 million of exploration expense on our income statement in 2004 which includes $1.2 million in non-cash expenses representing our share of Contact
Diamond's exploration expenses. We expect to record $7.2 million of exploration expense on our income statement in 2005 which includes $2.4 million in non-cash expenses
representing our share of the exploration expenses of Contact Diamond and Riddarhyttan. However, these estimates could increase materially if we have success on our various exploration
properties.

General and Administrative Expenses

General and administrative expenses increased to $7.1 million in 2003 from $5.5 million in 2002. Of the $1.6 million increase, 42% is
attributable to the stronger Canadian dollar as general and administrative expenses are almost entirely denominated in Canadian dollars. An additional 30% is attributable to compliance with new

8

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financial
reporting and securities law requirements. The remainder of the increase is attributable to increased corporate activities.

Outlook:General and administrative expenses are not expected to increase
materially in 2004 or 2005.

Provincial and Federal Capital Taxes

Provincial capital taxes were $1.2 million in 2003 compared to $0.8 million in 2002. These taxes are assessed on the Company's capitalization
(paid-up capital and debt) less certain allowances. The increase in 2003 was attributable to less exploration expenses being eligible for provincial tax credits that decrease capital taxes
otherwise payable. We estimate 2004 capital taxes to be $1.9 million due to increases in capitalization and less exploration expenses eligible for the provincial tax credits.

Federal
capital taxes are assessed on essentially the same capitalization base as provincial capital taxes. The increase in 2003 to $1.1 million from $0.9 million in 2002
represents increases in capitalization throughout the year. New legislation introduced in 2003 will completely eliminate federal capital taxes by 2008. These changes will be phased in gradually with
rate reductions each year. Based on new legislation, we estimate federal capital taxes to be $0.9 million in 2004.

Outlook:Provincial capital taxes are expected to be $1.7 to
$2.0 million in 2004 and, based on new legislation, we estimate federal capital taxes to be $0.9 million in 2004. In 2005, we expect these amounts to be $1.6 million and
$0.8 million, respectively.

Amortization Expense

Amortization expense was $17.5 million in 2003 compared to $13.0 million in 2002. The Company calculates its amortization on a
unit-of-production basis using proven and probable reserve tonnage as its amortization base. A 25% increase in tons processed coupled with an increased capital base due to the
recently completed LaRonde expansion more than offset the year end increase in reserves.

Outlook:Amortization is expected to increase as milled throughput increases
in 2004 and 2005. On a per ton basis, amortization is expected to remain unchanged in 2004 at $8 per ton as the increased capital base was offset by the year end increase in reserves and to increase
to $9 per ton in 2005.

Interest Expense

In 2003, interest expense increased 25% to $9.2 million from $7.3 million in 2002 as no interest was capitalized in 2003. In 2002,
$2.3 million in interest on our revolving bank facility was capitalized as the facility was used to fund the expansion at LaRonde. Of the $9.2 million interest expense in 2003,
approximately $6.5 million relates to cash interest on the 2012 convertible subordinated debentures, $1.5 million relates to cash standby fees and other costs associated with the
revolving bank facility, and the
remaining $1.2 million represents non-cash amortization of the financing costs associated with the 2012 convertible subordinated debentures and revolving bank facility.

In
the fourth quarter of 2003, we entered into an interest rate swap whereby we swapped our fixed rate payments on the convertible subordinated debentures for variable rate payments. The
notional amount under the swap exactly matches the $144 million face value of the debentures and the swap agreement terminates on February 15, 2006, which is the earliest date that the
debentures can be called for redemption. Under the terms of the swap agreement, we make interest payments of three-month LIBOR plus a spread of 2.37% and receive fixed interest payments of 4.50% which
completely offsets the interest payments we make on the subordinated convertible debentures. The three-month LIBOR rate was also capped at 3.38% such that total variable interest payments will not
exceed 5.75%. Based on the current three-month LIBOR rate of 1.12%, we estimate that this transaction will save approximately $1.5 million in debenture interest annually.

Outlook:Interest expense is expected to decrease by
approximately $1.5 million as we realize the benefits of our interest rate swap, assuming variable LIBOR rates remain at current levels throughout the year. In 2005, interest expense is
expected to decrease by a further $1.0 million as a result of the same factors.

9

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Income and Mining Taxes

In 2003, the effective accounting income tax recovery rate was 8.0% compared to an income tax recovery rate of 7.8% in 2002. Although we reported a loss before
income and mining taxes of $18.1 million, we did not record a tax recovery due the uncertainty surrounding the realization of the benefit of these losses. The loss we incurred in 2003 can be
carried forward to reduce taxable income of future years and expires, if not used, within a legislated time period. Normally, the benefits of being able to utilize these losses against future taxable
income would be recorded as a future tax asset. However, due to the uncertainty surrounding the realization of this and other limited life tax assets, we have provided a full valuation allowance
against these tax assets thereby reducing their value in our financial statements to nil. The effect of not recognizing the benefits of these potential future deductions reduces the tax recovery that
we would have otherwise recorded against the current year's loss.

In
2002, we recorded income before income and mining taxes of $4.6 million yet recorded a tax recovery of 7.8%. The recovery was due to the utilization of previously unrecognized
losses carried forward. In prior years, just as in 2003, when the Company incurred losses, the benefit of the future tax deduction was not recorded as a future tax asset. In 2002, when the Company
used these prior losses to reduce taxable income, the tax that would have otherwise been recorded against 2002 income was reduced.

Outlook:We expect our effective income tax rate for accounting purposes to
be approximately 10% in 2004 and to be between 35% and 40% in 2005 (in each case, including provincial mining duties). These effective tax rates could decrease if we are able to realize unrecognized
tax assets. Due to uncertainty surrounding the realization of
certain tax assets, we have provided a full valuation allowance against limited life tax assets and, as such, the possible benefit of these future tax deductions is not recorded as an asset in the
financial statements. Due to rising metal prices, we expect to be able to realize some of these assets before they expire thus leading to corresponding tax credits in income representing the decrease
in valuation allowance attached to these tax assets.

Liquidity and Capital Resources

As a result of the operating challenges encountered in 2003, we ended 2003 with less capital resources than 2002. Including $100 million of undrawn credit
under our revolving bank facility, we ended 2004 with available cash resources of approximately $210 million, unchanged from those available at the end of 2003 and to $253 million at the
end of 2002. In 2004 we amended our revolving bank facility with a syndicate of international banks. Under the amended facility, the Company will have a $100 million line of credit on a
revolving basis for at least three years. In 2003, we used $43 million in cash compared to 2002 when we added $132 million to our cash position. The largest components of the cash used
in 2003 were:



These
cash outflows were offset by $4 million in operating cash flow and $6 million of financing cash flows. Despite the production difficulties, we still managed to
generate positive operating cash flow due in large part to the increase in metal prices. The metal price increases were offset somewhat by the strengthening Canadian dollar and our increased
exploration activities driven by our success at Lapa. The $6 million in financing cash flows included $5 million of employee stock purchases under our share purchase and stock option
plans. In 2003, working capital changes had a negligible effect on cash flow.

In
2003, the Company declared its 24th consecutive annual dividend of $0.03 per share, unchanged from 2002. 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.

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Agnico-Eagle's
contractual obligations as at December 31, 2003 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)          |  | $     | 143.8 |                  | $ |          |  | $         |    |                  
|Capital lease obligations  |  |       | 0.7   |                  |   | 0.7       |  |           |    |                  
|Reclamation obligations(2) |  |       | 23.2  |                  |   | 0.9       |  |           | 2.7 |                  
|Pension obligations(3)     |  |       | 5.9   |                  |   | 0.1       |  |           | 0.2 |                  
|                           |  | $     | 173.6 |                  | $ | 1.7       |  | $         | 2.9 |                  

---

Notes:

In 2003, the Company was unable to achieve its completion test and was in default of its interest coverage covenants under its revolving bank
facility. Given that the facility was completely undrawn throughout 2003, these were technical violations which were waived by all the banks in the lending syndicate for the third and fourth quarters
of 2003. The syndicate also extended the deadline for achieving the completion test to September 30, 2004. This completion test was satisfied in the third quarter of 2004.

Outlook:In 2004 sustaining and project capital expenditures are estimated to
have been approximately $23 million at LaRonde and approximately $30 million on other projects, including Lapa, Goldex and LaRonde II. At Lapa, we will continue construction of
the shaft with underground diamond drilling scheduled to start in late 2005. At Goldex, we have conducted a bulk sampling program to obtain an increased level of confidence in the gold grade. The bulk
sample consisted of three vertical slot raises through the orebody and we expect to process this material early in 2005. At LaRonde II, we expect a detailed feasibility study to be completed in
mid 2005.

In 2005 we expect to incur approximately $14.1 million in sustaining capital expenditures at LaRonde, $12.7 million in sustaining capital
expenditures on projects relating to LaRonde II, $12.1 million on the
underground program at the Lapa property, $1.5 million on the bulk sample and engineering at the Goldex property and $1.6 million on drilling at the Bousquet and Ellison properties. We
expect all these capital expenditures to be completely funded out of operating cash flow.

The following table provides a summary of our revised 2004 estimated and 2005 estimated capital and exploration expenditures. The grassroots exploration amount is
the cash component of our exploration expense and does not include our share of Contact Diamond's or Riddarhyttan's exploration expense.

|                                  |  | 2005 |        | 2004
|--------------------------------- |  | ---- | ------ | ----
|
|
|
|LaRonde I projects & sustaining   |  | $    | 14,100 |     
|LaRonde II drilling & feasibility |  |      | 12,700 |     
|Goldex bulk sample & engineering  |  |      | 1,500  |     
|Lapa drilling & engineering       |  |      | 12,100 |     
|Bousquet/Ellison drilling         |  |      | 1,600  |     
|Grassroots exploration            |  |      |       |     
|                                  |  |      |        |     
|                                  |  | $    | 42,000 |     
|                                  |  |      |        |     

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Risk Profile

Agnico-Eagle is subject to various risks that it encounters in its day-to-day operations. We mitigate the likelihood and potential
severity of these risks through the application of the highest standards in the planning, construction and operation of our 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 our extensive efforts to ensure
the safety of our employees, industrial accidents can occur. In February 2004, an underground explosion claimed the life of a contract miner, and in March 2004, an accident in a storage
area claimed the life of an employee.

We
also mitigate 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
our purchase of insurance coverage and only permits the purchase of coverage from insurance companies of the highest credit quality. For a more complete list of the risk factors affecting
Agnico-Eagle, please see the Company's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission.

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. The Company is currently in discussions with Ontario Securities Commission staff concerning
this matter and the timing of the Company's disclosure of a production shortfall prior to its earnings announcement in the third quarter of 2003. The Company believes it is unlikely that there will be
any material financial impact resulting from this matter.

Financial Risk

Agnico-Eagle's net income is most sensitive to metal prices and the US$/C$ 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 US$/C$ exchange rate are due to factors such as supply and demand for
Canadian and U.S. currencies and economic conditions in each country. In 2003, the price ranges for metal prices and the US$/C$ exchange rate were:



The
following graph shows the estimated impact on budgeted income per share ("EPS") in 2004 of a 10% change in assumed metal prices and exchange rates. A 10% change in each variable was
considered in isolation

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while
holding all other assumptions constant. Based on historical market data and 2003 price ranges shown above, a 10% change in assumed metal prices and exchange rates is reasonably likely in 2004.

GRAPHIC

In
order to mitigate the impact of fluctuating precious and base metal prices, Agnico-Eagle enters into hedging 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, we have bought put options to protect a minimum gold price while maintaining full participation to gold price increases. The Company's policy does not
allow speculative trading. At the end of 2003, the Company's only metal hedges are gold puts with a strike price of $260. These gold puts protect a minimum gold price of $260 for 44% to 64% of
anticipated gold production between 2004 and 2007. Gold puts are exercised at our option therefore they do not limit participation to rising gold prices.

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. We have entered into currency hedging transactions under the Company's Foreign Exchange Risk Management Policy, approved by the Board of Directors, to hedge part of our 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 2004, we hedged approximately 40% of our Canadian dollar operating cost requirement at a level well above the prevailing exchange rates that are in effect when the
hedges expire. As shown in the chart above, a 10% increase in budget exchange rates would increase EPS by $0.11. Due to the 2004 foreign currency hedges, a 10% decrease in exchange rates would
decrease EPS by only $0.05.

Fluctuations
in interest rates can also affect income and cash flows. Due to the interest rate swap entered into in 2003, increases in LIBOR rates will increase interest expense. The
maximum interest rate payable under the swap transaction is 5.75% thus, based on this maximum rate, the maximum exposure from rising interest rates is $0.02 per share. The Company has a
Short-Term Investment Risk Management Policy, approved by the Board of Directors, which only permits investment of excess cash balances in short-term money market instruments
of the highest credit quality.

Operational Risk

The business of gold mining is generally subject to certain types of risks and hazards such as environmental hazards, industrial accidents such as
cave-ins, rock bursts, rock falls and flooding, unusual or unexpected rock formations, changes in the regulatory environment and metal 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. As a result, the Company
may be required to incur significant costs that could have a material adverse effect on its financial performance, liquidity and results of operations.

The
Company's LaRonde Mine and milling operations account for all of our gold production and will continue to account for all of our gold production in the future unless additional
properties are acquired or

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brought
into production. Any adverse condition affecting mining or milling conditions at LaRonde could have a material adverse effect on our financial performance, liquidity and results of operations.
At current reserves and mining rates, LaRonde has a mine life of approximately 15 years.

Our
gold production estimates for subsequent years may fall below estimated levels as a result of the general mining risks summarized above. Furthermore, production may be unexpectedly
reduced if, during the course of mining, unfavorable ground conditions or seismic activity are encountered or grades are lower than expected. Production estimates may also be affected if the physical
or metallurgical characteristics of ore are less amenable than expected to mining or treatment. Therefore, there can be no assurance that the Company will achieve current or future production
estimates.

Our
reported proven and probable mineral reserves are estimates and there can be no assurance that anticipated tonnage and grade can be achieved. Reserve figures have been determined
based on assumed gold prices and operating costs. We have estimated mineral reserves based on a $325 per ounce gold price. Though the gold price is higher than the $300 per ounce assumption used in
last year's reserve estimate, this impact was essentially negated by the change in the US$/C$ exchange rate assumed from $1.50 to $1.40. While gold prices were generally above $325 for 2003, the
average gold price over the past three years has been below $325 per ounce. If gold prices of $300 and $350 were assumed, our gold reserve position would change by 6%. Substantial prolonged decreases
in the price of gold, silver, copper and zinc and the US$/C$ exchange rate could have a material adverse effect on our financial performance, liquidity and results of operations. To help maintain or
grow production levels over the long term, Agnico-Eagle must continually replace mineral reserves depleted by production by reclassifying mineral resources to reserves, expanding known orebodies or
locating new ones. Success in gold exploration is highly uncertain and there is a risk that future depletion of mineral reserves through normal mining operations will not be adequately replaced.

Environmental Risk

Agnico-Eagle's activities are subject to extensive federal and local laws and regulations governing environmental protection and employee health and safety.
Agnico-Eagle is required to obtain governmental permits and comply with mine reclamation rules. Although Agnico-Eagle makes provisions for reclamation costs, there can be no assurance that these
provisions will be adequate to discharge the obligations associated with these regulations. Failure to comply with applicable environmental and health and safety laws can result in injunctions,
damages or revocation of permits and imposition of penalties. There can be no assurance that Agnico-Eagle has been or will be at all times in complete compliance with such laws and regulations or that
the costs of complying will not have a material adverse effect on our financial performance, liquidity and results of operations.

Environmental
laws and regulations are complex and have become more stringent over time. Any changes in such laws or environmental conditions could have a material adverse effect on
Agnico-Eagle's financial condition, liquidity or results of operations. Agnico-Eagle is not able to estimate the impact of future changes in laws and regulations due to the uncertainty surrounding the
ultimate form these changes may take. At December 31, 2003, Agnico-Eagle has accrued approximately $6 million for each of its reclamation obligations on its LaRonde and Bousquet
properties.

Derivatives Risk

Management enters into derivative contracts to limit the downside risk associated with fluctuating metal prices. The contracts act as economic hedges of our
underlying exposures to metal price risk and foreign currency exchange risk and are not held for speculative purposes. We do not use complex derivative contracts to hedge our exposures. We use simple
contracts, such as puts and calls, to mitigate downside risk yet maintain full participation to rising metal prices. We also enter into forward contracts to lock in exchange rates based on our
projected Canadian dollar operating and capital needs.

By
using derivative instruments, we have various financial risks. Credit risk is the risk that the counterparties to our derivative contracts will fail to perform on an obligation to us.
We mitigate this risk by dealing with high quality counterparties such as financial institutions. Market liquidity risk is the risk that a derivative position cannot be liquidated quickly. We mitigate
market liquidity risk by spreading out the maturity of derivative contracts over time, usually based on our projected production levels for the specific metal being

14

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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 our metals will affect
our financial condition. Since we use derivative contracts as economic hedges, for most of the contracts, changes in the mark-to-market value do no affect income. For a
description of the accounting treatment of our derivative contracts, please see "Critical Accounting Estimates  Financial Instruments."

For
2003, we have recorded a $1.8 million charge against our total revenue to reflect the maturity of our 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 2003 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 $1.8 million charge. Also for 2003, we recorded a $1.9 million
gain on our byproduct metal derivative contracts which was recorded as revenue for the specific metal being hedged and a $0.5 million gain on our foreign currency derivative contracts maturing
in 2003 which was recorded as part of our production costs. Since the Company uses only over-the-counter instruments, the fair value of individual hedging instruments is based
on readily available market values.

Outstanding Securities

The following table presents the maximum number of common shares that would be outstanding if all dilutive instruments outstanding at March 31, 2004 were
exercised:

Common shares outstanding at March 31, 2004

84,956,333Convertible debentures (based on debenture holders' option)

10,267,919Employee stock options

3,301,400Warrants

6,900,000105,425,652


The
convertible debentures are convertible into common shares, at the option of the holder, at any time prior to maturity, at a conversion rate of 71.429 common shares per $1,000
principal amount of debentures. The debentures mature on February 15, 2012 but may be redeemed at the option of the Company on or after February 15, 2006 in cash or, at the option of the
Company, by delivering freely tradable common shares.

Each
warrant entitles the holder to purchase one common share at a price of US$19.00. The warrants expire on November 6, 2007.

Critical Accounting Estimates

The preparation of the 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 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 MD&A.

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 unit-of-production method based on proven and probable reserves. If no mineable orebody 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 orebody is discovered. Further exploration and development to delineate costs
of the orebody are capitalized as mine development costs once a feasibility study is successfully completed and proven and probable reserves established.

15

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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.

Construction
costs, including interest costs for projects specifically financed by debt, are capitalized at cost and are not depreciated until commercial production begins. Amortization
is based on the unit-of-production method over the estimated proven and probable reserves of the mine.

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 mining development costs are periodically reviewed for impairment. Impairment testing is based on the future
undiscounted net cash flows of the operating mine or development property. If it is determined that the estimated net recoverable amount is less than the carrying value, the asset is written down to
its fair value with a charge to income. Estimated future cash flows include estimates of recoverable metals in proven and probable reserves. Metals price assumptions are determined considering current
and historical prices, price trends and other market-related factors. Estimated future cash flows also consider ongoing capital requirements, reclamation costs, and related income and mining taxes,
and are based on detailed engineering life-of-mine plans.

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 our 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. We record 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 us 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. 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, we have made estimates of the final reclamation costs based on mine-closure plans approved by
environmental agencies. We periodically review these estimates and update our reclamation cost estimates if assumptions change. Material assumptions that are made in deriving these estimates include
variables such as mine life and inflation rates.

16

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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

We use derivative financial instruments, primarily option contracts, to manage exposure to fluctuations in metal prices and foreign currency exchange 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 our gold put option contracts are originally recorded in equity as a component of accumulated other comprehensive 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 loss and recording these losses as part of normal income.
The Company's other derivative contracts hedging byproduct silver, copper and zinc production do not qualify for hedge accounting under FAS 133 and thus changes in the market value of these
contracts are recorded in income as part of the hedged transactions. 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, our foreign currency hedges also qualified for hedge accounting and as such are now being accounted for in the same manner as the gold puts. Unrealized
mark-to-market gains and losses on these hedges are recorded in accumulated other comprehensive 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 our foreign currency hedges were recorded in
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 life 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 us 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.

Forward-Looking Statements

The information in this report has been prepared as at February 24, 2004. Certain statements contained in this annual report constitute "forward-looking
statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. When used in this document, the words "anticipate", "expect", "estimate," "forecast," "planned"
and similar expressions are intended to identify forward-looking statements. Such statements reflect the Company's views at the time with respect to future events and are subject to certain risks,
uncertainties and assumptions. Many factors could cause the actual results to be materially different from those expressed or implied by such forward-looking statements, including, among others, those
which are discussed under the heading "Risk Factors" in the Company's Annual Information Form and Annual Report on Form 20-F for the year ended December 31, 2003. The Company
does not intend, and does not assume any obligation, to update these forward-looking statements.

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AGNICO-EAGLE MINES LIMITED        Summarized Quarterly Data        (thousands of United States dollars, except where noted)

|                                                                    |                              | March 31,
2003 |         | June 30,
2003 |   | September 30,
2003 |        | December 31,
2003 |         | Total
2003 |  
|------------------------------------------------------------------- | ---------------------------- | -------------- | ------- | ------------- | - | ------------------ | ------ | ----------------- | ------- | ---------- | -
|Consolidated Financial Data                                         |                              |                |         |               |   |                    |        |                   |         |            |  
|Income and cash flows                                               |                              |                |         |               |   |                    |        |                   |         |            |  
|LaRonde Division                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Revenues from mining operation                                      |                              | $              | 30,112  |               | $ | 30,014             |        | $                 | 24,845  |            | $
|Production costs                                                    |                              |                | 24,347  |               |   | 24,581             |        |                   | 25,909  |            |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Gross profit (exclusive of amortization shown below)                |                              | $              | 5,765   |               | $ | 5,433              |        | $                 | (1,064  | )          | $
|Amortization                                                        |                              | $              | 4,517   |               | $ | 4,787              |        | $                 | 4,471   |            | $
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Gross profit                                                        |                              | $              | 1,248   |               | $ | 646                |        | $                 | (5,535  | )          | $
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Net income (loss) for the period                                    |                              | $              | (6,237  | )             | $ | (3,779             | )      | $                 | (11,869 | )          | $
|Net income (loss) per share (basic and fully diluted)               |                              | $              | (0.07   | )             | $ | (0.05              | )      | $                 | (0.14   | )          | $
|Operating cash flow                                                 |                              | $              | 612     |               | $ | (2,823             | )      | $                 | 761     |            | $
|Operating cash flow (before non-cash working capital)*              |                              | $              | (577    | )             | $ | 632                |        | $                 | (6,580  | )          | $
|Weighted average number of common shares outstanding (in thousands) |                              |                | 83,725  |               |   | 83,836             |        |                   | 83,954  |            |  
|Tons of ore milled                                                  |                              |                | 602,633 |               |   | 648,292            |        |                   | 570,661 |            |  
|Head grades:                                                        |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Gold (ounces per ton)        |                |         | 0.10          |   |                    | 0.10   |                   |         | 0.10       |  
|                                                                    | Silver (ounces per ton)      |                |         | 2.44          |   |                    | 2.24   |                   |         | 1.69       |  
|                                                                    | Zinc                         |                |         | 3.55          | % |                    | 3.14   | %                 |         | 2.71       | %
|                                                                    | Copper                       |                |         | 0.45          | % |                    | 0.52   | %                 |         | 0.62       | %
|Recovery rates:                                                     |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Gold                         |                |         | 91.66         | % |                    | 90.62  | %                 |         | 91.60      | %
|                                                                    | Silver                       |                |         | 83.80         | % |                    | 80.80  | %                 |         | 79.79      | %
|                                                                    | Zinc                         |                |         | 78.20         | % |                    | 77.80  | %                 |         | 75.00      | %
|                                                                    | Copper                       |                |         | 79.10         | % |                    | 79.20  | %                 |         | 79.90      | %
|Payable production:                                                 |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Gold (ounces)                |                |         | 55,005        |   |                    | 60,157 |                   |         | 51,192     |  
|                                                                    | Silver (ounces in thousands) |                |         | 1,036         |   |                    | 1,049  |                   |         | 648        |  
|                                                                    | Zinc (pounds in thousands)   |                |         | 27,964        |   |                    | 27,080 |                   |         | 20,561     |  
|                                                                    | Copper (pounds in thousands) |                |         | 3,956         |   |                    | 5,015  |                   |         | 5,411      |  
|Realized prices (US$):                                              |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Gold (per ounce)             |                | $       | 350           |   | $                  | 349    |                   | $       | 365        |  
|                                                                    | Silver (per ounce)           |                | $       | 4.70          |   | $                  | 4.57   |                   | $       | 5.04       |  
|                                                                    | Zinc (per pound)             |                | $       | 0.35          |   | $                  | 0.35   |                   | $       | 0.37       |  
|                                                                    | Copper (per pound)           |                | $       | 0.76          |   | $                  | 0.73   |                   | $       | 0.80       |  
|Total production costs per gold ounce produced (US$):               |                              |                |         |               |   |                    |        |                   |         |            |  
|Onsite operating costs (including reclamation provision)            |                              | $              | 378     |               | $ | 371                |        | $                 | 451     |            | $
|Less: Reclamation provision                                         |                              |                | (2      | )             |   | (2                 | )      |                   | (2      | )          |  
|                                                                    | Net byproduct revenues       |                |         | (207          | ) |                    | (161   | )                 |         | (140       | )
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Cash operating costs                                                |                              |                | 169     |               |   | 208                |        |                   | 309     |            |  
|El Coco royalty                                                     |                              |                | 74      |               |   | 50                 |        |                   | 59      |            |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Total cash operating costs                                          |                              | $              | 243     |               |   | 258                |        | $                 | 368     |            | $
|Other costs:                                                        |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Reclamation provision        |                |         | 2             |   |                    | 2      |                   |         | 2          |  
|                                                                    | Amortization                 |                |         | 82            |   |                    | 80     |                   |         | 87         |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Total production costs                                              |                              | $              | 327     |               | $ | 340                |        | $                 | 457     |            | $
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Onsite operating costs per ton milled (Canadian dollars)            |                              | $              | 52      |               | $ | 48                 |        | $                 | 56      |            | $
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  

---

18

---



AGNICO-EAGLE MINES LIMITED        Summarized Quarterly Data        (thousands of United States dollars, except where noted)

|                                                                    |                              | March 31,
2002 |         | June 30,
2002 |   | September 30,
2002 |        | December 31,
2002 |         | Total
2002 |  
|------------------------------------------------------------------- | ---------------------------- | -------------- | ------- | ------------- | - | ------------------ | ------ | ----------------- | ------- | ---------- | -
|Consolidated Financial Data                                         |                              |                |         |               |   |                    |        |                   |         |            |  
|Income and cash flows                                               |                              |                |         |               |   |                    |        |                   |         |            |  
|LaRonde Division                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Revenues from mining operations                                     |                              | $              | 25,547  |               | $ | 30,616             |        | $                 | 20,224  |            | $
|Production costs                                                    |                              |                | 17,603  |               |   | 19,613             |        |                   | 15,460  |            |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Gross profit (exclusive of amortization shown below)                |                              | $              | 7,944   |               | $ | 11,003             |        | $                 | 4,764   |            | $
|Amortization                                                        |                              |                | 3,251   |               |   | 3,678              |        |                   | 3,313   |            |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Gross profit                                                        |                              |                | 4,693   |               |   | 7,325              |        |                   | 1,451   |            |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Net income (loss) for the period                                    |                              | $              | 477     |               | $ | 3,360              |        | $                 | (630    | )          | $
|Net income (loss) per share (basic and fully diluted)               |                              | $              | 0.01    |               | $ | 0.05               |        | $                 | (0.01   | )          | $
|Operating cash flow                                                 |                              | $              | (7,057  | )             | $ | 15,867             |        | $                 | 8,301   |            | $
|Operating cash flow (before non-cash working capital)*              |                              | $              | 4,972   |               | $ | 7,633              |        | $                 | 2,343   |            | $
|Weighted average number of common shares outstanding (in thousands) |                              |                | 68,006  |               |   | 69,050             |        |                   | 69,549  |            |  
|Tons of ore milled                                                  |                              |                | 477,333 |               |   | 491,083            |        |                   | 456,818 |            |  
|Head grades:                                                        |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Gold (ounces per ton)        |                |         | 0.14          |   |                    | 0.17   |                   |         | 0.13       |  
|                                                                    | Silver (ounces per ton)      |                |         | 2.52          |   |                    | 2.28   |                   |         | 2.25       |  
|                                                                    | Zinc                         |                |         | 5.24          | % |                    | 3.64   | %                 |         | 4.01       | %
|                                                                    | Copper                       |                |         | 0.22          | % |                    | 0.30   | %                 |         | 0.31       | %
|Recovery rates:                                                     |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Gold                         |                |         | 94.54         | % |                    | 92.92  | %                 |         | 92.43      | %
|                                                                    | Silver                       |                |         | 83.70         | % |                    | 80.10  | %                 |         | 77.60      | %
|                                                                    | Zinc                         |                |         | 84.90         | % |                    | 81.40  | %                 |         | 67.20      | %
|                                                                    | Copper                       |                |         | 60.30         | % |                    | 74.40  | %                 |         | 63.60      | %
|Payable production:                                                 |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Gold (ounces)                |                |         | 60,259        |   |                    | 74,617 |                   |         | 50,073     |  
|                                                                    | Silver (ounces in thousands) |                |         | 724           |   |                    | 709    |                   |         | 547        |  
|                                                                    | Zinc (pounds in thousands)   |                |         | 35,997        |   |                    | 24,740 |                   |         | 20,713     |  
|                                                                    | Copper (pounds in thousands) |                |         | 1,131         |   |                    | 2,084  |                   |         | 1,728      |  
|Realized prices (US$):                                              |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Gold (per ounce)             |                | $       | 300           |   | $                  | 310    |                   | $       | 314        |  
|                                                                    | Silver (per ounce)           |                | $       | 4.48          |   | $                  | 4.67   |                   | $       | 4.73       |  
|                                                                    | Zinc (per pound)             |                | $       | 0.36          |   | $                  | 0.36   |                   | $       | 0.37       |  
|                                                                    | Copper (per pound)           |                | $       | 0.72          |   | $                  | 0.78   |                   | $       | 0.74       |  
|Total production costs per gold ounce produced (US$):               |                              |                |         |               |   |                    |        |                   |         |            |  
|Onsite operating costs (including reclamation provision)            |                              | $              | 258     |               | $ | 219                |        | $                 | 304     |            | $
|Less: Reclamation provision                                         |                              |                | (5      | )             |   | (5                 | )      |                   | (5      | )          |  
|Net byproduct revenues                                              |                              |                | (124    | )             |   | (90                | )      |                   | (102    | )          |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Cash operating costs                                                |                              |                | 129     |               |   | 124                |        |                   | 197     |            |  
|El Coco royalty                                                     |                              |                | 32      |               |   | 40                 |        |                   | 11      |            |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Total cash operating costs                                          |                              | $              | 161     |               | $ | 164                |        | $                 | 208     |            | $
|Other costs:                                                        |                              |                |         |               |   |                    |        |                   |         |            |  
|                                                                    | Reclamation provision        |                |         | 5             |   |                    | 5      |                   |         | 5          |  
|                                                                    | Amortization                 |                |         | 54            |   |                    | 49     |                   |         | 66         |  
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Total production costs                                              |                              | $              | 220     |               | $ | 218                |        | $                 | 279     |            | $
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  
|Onsite operating costs per ton milled (Canadian dollars)            |                              | $              | 52      |               | $ | 52                 |        | $                 | 51      |            | $
|                                                                    |                              |                |         |               |   |                    |        |                   |         |            |  

---

19

---





AGNICO-EAGLE MINES LIMITED        Five Year Financial and Operating Summary        (thousands of United States dollars, except where noted)

|                                                                    |                        | 2003 |           | 2002 |   | 2001      |      | 2000 |           | 1999 |  
|------------------------------------------------------------------- | ---------------------- | ---- | --------- | ---- | - | --------- | ---- | ---- | --------- | ---- | -
|Financial Data                                                      |                        |      |           |      |   |           |      |      |           |      |  
|Revenues from mining operations                                     |                        | $    | 126,820   |      | $ | 108,027   |      | $    | 96,043    |      | $
|Interest and sundry income                                          |                        |      | 2,775     |      |   | 1,943     |      |      | 5,752     |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|                                                                    |                        |      | 129,595   |      |   | 109,970   |      |      | 101,795   |      |  
|Costs and expenses                                                  |                        |      | 147,708   |      |   | 105,359   |      |      | 104,651   |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Income (loss) before income taxes                                   |                        |      | (18,113   | )    |   | 4,611     |      |      | (2,856    | )    |  
|Income and mining taxes expense (recovery)                          |                        |      | (358      | )    |   | (588      | )    |      | 2,862     |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Income (loss) before cumulative catch-up adjustment                 |                        |      | (17,755   | )    |   | 4,023     |      |      | (5,718    | )    |  
|Cumulative catch-up adjustment relating to FAS 143                  |                        |      | (1,743    | )    |   |          |      |      |          |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Net income (loss)                                                   |                        | $    | (19,498   | )    | $ | 4,023     |      | $    | (5,718    | )    | $
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Net income (loss) per share                                         |                        | $    | (0.23     | )    | $ | 0.06      |      | $    | (0.09     | )    | $
|Operating cash flow (before non-cash working capital)*              |                        | $    | 3,952     |      | $ | 20,364    |      | $    | 12,424    |      | $
|Operating cash flow                                                 |                        | $    | 4,253     |      | $ | 13,112    |      | $    | (4,179    | )    | $
|Dividends declared per share                                        |                        | $    | 0.03      |      | $ | 0.03      |      | $    | 0.02      |      | $
|Capital expenditures                                                |                        | $    | 42,038    |      | $ | 64,836    |      | $    | 36,278    |      | $
|Average gold price per ounce realized                               |                        | $    | 368       |      | $ | 312       |      | $    | 273       |      | $
|Average exchange rate  US$ per C$                                  |                        | $    | 0.7137    |      | $ | 0.6368    |      | $    | 0.6458    |      | $
|Weighted average number of common shares outstanding (in thousands) |                        |      | 83,889    |      |   | 70,821    |      |      | 61,334    |      |  
|Working capital (including undrawn credit lines)                    |                        | $    | 240,613   |      | $ | 285,142   |      | $    | 135,908   |      | $
|Total assets                                                        |                        | $    | 637,101   |      | $ | 593,807   |      | $    | 393,464   |      | $
|Long-term debt                                                      |                        | $    | 143,750   |      | $ | 143,750   |      | $    | 151,081   |      | $
|Shareholders' equity                                                |                        | $    | 400,723   |      | $ | 397,693   |      | $    | 198,426   |      | $
|Operating Summary                                                   |                        |      |           |      |   |           |      |      |           |      |  
|LaRonde Division                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Revenues from mining operations                                     |                        | $    | 126,820   |      | $ | 108,027   |      | $    | 96,043    |      | $
|Production costs                                                    |                        |      | 104,990   |      |   | 75,969    |      |      | 67,009    |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Gross profit (loss) (exclusive of amortization shown below)         |                        | $    | 21,830    |      | $ | 32,058    |      | $    | 29,034    |      | $
|Amortization                                                        |                        |      | 17,504    |      |   | 12,998    |      |      | 12,658    |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Gross profit (loss)                                                 |                        |      | 4,326     |      |   | 19,060    |      |      | 16,376    |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Tons of ore milled                                                  |                        |      | 2,448,580 |      |   | 1,963,129 |      |      | 1,805,249 |      |  
|Gold  ounces per ton                                               |                        |      | 0.11      |      |   | 0.14      |      |      | 0.15      |      |  
|Gold production  ounces                                            |                        |      | 236,653   |      |   | 260,184   |      |      | 234,860   |      |  
|Silver production  ounces (in thousands)                           |                        |      | 3,953     |      |   | 3,084     |      |      | 2,524     |      |  
|Zinc production  pounds (in thousands)                             |                        |      | 100,337   |      |   | 108,060   |      |      | 126,275   |      |  
|Copper production  pounds (in thousands)                           |                        |      | 20,131    |      |   | 8,927     |      |      | 4,097     |      |  
|Total production costs per gold ounce produced (US$):               |                        |      |           |      |   |           |      |      |           |      |  
|Onsite operating costs (including reclamation provision)            |                        | $    | 390       |      | $ | 253       |      | $    | 257       |      | $
|Less:                                                               |                        |      |           |      |   |           |      |      |           |      |  
|Reclamation provision                                               |                        |      | (2        | )    |   | (5        | )    |      | (5        | )    |  
|                                                                    | Net byproduct revenues |      |           | (173 | ) |           | (107 | )    |           | (120 | )
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Cash operating costs                                                |                        |      | 215       |      |   | 141       |      |      | 132       |      |  
|El Coco royalty                                                     |                        |      | 54        |      |   | 41        |      |      | 23        |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Total cash operating costs                                          |                        | $    | 269       |      | $ | 182       |      | $    | 155       |      | $
|Other costs:                                                        |                        |      |           |      |   |           |      |      |           |      |  
|                                                                    | Reclamation provision  |      |           | 2    |   |           | 5    |      |           | 5    |  
|                                                                    | Amortization           |      |           | 74   |   |           | 50   |      |           | 45   |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Total production costs                                              |                        | $    | 345       |      | $ | 237       |      | $    | 205       |      | $
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Onsite operating costs per ton milled (Canadian dollars)            |                        | $    | 52        |      | $ | 52        |      | $    | 52        |      | $
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  
|Gold reserves and resources:                                        |                        |      |           |      |   |           |      |      |           |      |  
|Total Proven and Probable Reserves (thousands, ounces of gold)      |                        |      | 7,864     |      |   | 4,022     |      |      | 3,267     |      |  
|                                                                    |                        |      |           |      |   |           |      |      |           |      |  

---

20

---



Agnico-Eagle Mineral Reserve & Mineral Resource Data

|Category and Zone                          |  | Au(oz/t) |  | Ag(oz/t) |  | Cu(%) |  | Zn(%) |  | Au (000's oz.) |  | Tons (000's)
|------------------------------------------ |  | -------- |  | -------- |  | ----- |  | ----- |  | -------------- |  | ------------
|Proven Mineral Reserve                     |  |          |  |          |  |       |  |       |  |                |  |             
|LaRonde                                    |  | 0.09     |  | 2.49     |  | 0.42  |  | 4.24  |  | 638            |  | 6,848       
|Bousquet                                   |  | 0.09     |  |          |  |       |  |       |  | 9              |  | 104         
|                                           |  |          |  |          |  |       |  |       |  |                |  |             
|Subtotal Proven Mineral Reserve            |  | 0.09     |  |          |  |       |  |       |  | 647            |  | 6,952       
|                                           |  |          |  |          |  |       |  |       |  |                |  |             
|Probable Mineral Reserve                   |  |          |  |          |  |       |  |       |  |                |  |             
|LaRonde                                    |  | 0.13     |  | 1.47     |  | 0.31  |  | 2.32  |  | 4,383          |  | 34,754      
|Lapa                                       |  | 0.25     |  |          |  |       |  |       |  | 1,187          |  | 4,661       
|Goldex                                     |  | 0.07     |  |          |  |       |  |       |  | 1,647          |  | 23,983      
|                                           |  |          |  |          |  |       |  |       |  |                |  |             
|Subtotal Probable Mineral Reserve          |  | 0.11     |  |          |  |       |  |       |  | 7,217          |  | 63,938      
|                                           |  |          |  |          |  |       |  |       |  |                |  |             
|Total Proven and Probable Mineral Reserves |  | 0.11     |  |          |  |       |  |       |  | 7,864          |  | 70,350      
|                                           |  |          |  |          |  |       |  |       |  |                |  |             

|Category and Zone                     |  | Au(oz/t) |  | Ag(oz/t) |  | Cu(%) |  | Zn(%) |  | Tons (000's)
|------------------------------------- |  | -------- |  | -------- |  | ----- |  | ----- |  | ------------
|Measured & Indicated Mineral Resource |  |          |  |          |  |       |  |       |  |             
|LaRonde                               |  | 0.09     |  | 0.70     |  | 0.27  |  | 1.10  |  | 3,716       
|Goldex                                |  | 0.08     |  |          |  |       |  |       |  | 1,174       
|Lapa                                  |  | 0.16     |  |          |  |       |  |       |  | 705         
|Bousquet                              |  | 0.16     |  |          |  |       |  |       |  | 1,608       
|Ellison                               |  | 0.16     |  |          |  |       |  |       |  | 249         
|                                      |  |          |  |          |  |       |  |       |  |             
|Total Measured & Indicated Resource   |  | 0.11     |  |          |  |       |  |       |  | 7,452       
|                                      |  |          |  |          |  |       |  |       |  |             

|Category and Zone         |  | Au(oz/t) |  | Ag(oz/t) |  | Cu(%) |  | Zn(%) |  | Tons (000's)
|------------------------- |  | -------- |  | -------- |  | ----- |  | ----- |  | ------------
|Inferred Mineral Resource |  |          |  |          |  |       |  |       |  |             
|LaRonde                   |  | 0.19     |  | 1.15     |  | 0.35  |  | 0.94  |  | 15,294      
|Bousquet                  |  | 0.27     |  |          |  |       |  |       |  | 2,445       
|Goldex                    |  | 0.06     |  |          |  |       |  |       |  | 2,797       
|Lapa                      |  | 0.18     |  |          |  |       |  |       |  | 324         
|Ellison                   |  | 0.29     |  |          |  |       |  |       |  | 1,692       
|                          |  |          |  |          |  |       |  |       |  |             
|Total Inferred Resource   |  | 0.19     |  |          |  |       |  |       |  | 22,552      
|                          |  |          |  |          |  |       |  |       |  |             

A
qualified person, Guy Gosselin, P.Eng., P.Geo., LaRonde Division's Chief Geologist, has verified the LaRonde exploration information disclosed above. The verification
procedures, the quality assurance program and quality control procedures used in preparing such data may be found in the 2004 Mineral Resource and Mineral Reserve Report, Agnico-Eagle Mines Limited,
LaRonde Division, dated November 15, 2004, filed on SEDAR.

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. The effective date of each estimate is December 31, 2003. More recent information on exploration, mining, processing, metallurgy and other economic factors has also been used. The
estimates disclosed in this report are based on the following key metal price assumptions and foreign exchange rates: gold, $325/oz; silver, $5.00/oz; copper $0.80/lb; zinc $0.50/lb; US$/C$=1.40.
There are no known relevant issues that would materially affect the estimates. No independent verification of the data has been published.

Tonnage
amounts and contained metal amounts presented in the tables in this report have been rounded to the nearest 1,000.

A
mineral reserve is the economically mineable part of a measured or indicated resource demonstrated by a preliminary feasibility study or a 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

21

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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 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 reasonable 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
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 that are not mineral reserves do not have demonstrated economic
viability.

The
qualified person responsible for the LaRonde II, Lapa and Goldex pre-feasibility studies is Rosaire Émond P.Eng., Regional Project Division's Senior
Mining Engineer.

The
qualified person responsible for the LaRonde mineral reserve and resource estimate is Guy Gosselin, P.Eng, P.Geo., LaRonde Division's Chief Geologist. A description of the operating
and capital cost assumptions, parameters and methods used to estimate the Penna shaft can be found in the LaRonde Division SEDAR disclosure cited above. Recently disclosed probable reserves, located
between 9,200 ft and 9,850 ft depth, are estimated using a grade cut-off equivalent to a minimum net smelter return of $42.90/ton.

The
qualified person responsible for the Lapa and Goldex mineral reserve and resource estimates is Marc H. Legault, P.Eng., Manager, Project Evaluations of Agnico-Eagle.

The
minimum gold grade cut-off used to evaluate drill intercepts at Goldex was 0.04 oz/ton over a minimum true thickness of 50 feet. The reserve was derived by evaluating a
three-dimensional model of the Goldex Extension zone, whose gold grade was estimated using a 95% confidence interval grade calculation method, and then adjusting the model envelope to only include
sectors with a high probability of exceeding the cut-off grade.

In
estimating the Lapa resource and reserve, a minimum gold grade cut-off of 0.15 and 0.19 oz/ton, respectively was used to evaluate drill intercepts that have been adjusted
to respect a minimum mining width of 9.2 ft. The estimate was derived using a three dimensional block model of the deposit; the grades were interpolated using the inverse distance power squared
method.

The
qualified person responsible for the Bousquet and Ellison mineral reserve and resource estimates is Normand Bédard P.Geo., Regional Project Division's Senior
Geologist. In estimating the Bousquet and Ellison mineral resource and reserve, a minimum gold grade cut-off of 0.09 oz/ton was used to evaluate drill intercepts that have been adjusted to
respect a minimum mining width of 9.8 ft. 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 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. The resource was reviewed and reclassified using the CIM definitions and guidelines. This information is of a good quality and is considered reliable.

22

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ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS        Management's Responsibility for Financial Reporting        AGNICO-EAGLE MINES LIMITED

The accompanying financial statements of Agnico-Eagle Mines Limited and all the information in this annual report are the responsibility of management and have
been approved by the Board of Directors.

The
consolidated financial statements have been prepared by management in accordance with United States generally accepted accounting principles. Where alternative accounting methods
exist, management has selected those it considered to be the most appropriate in the circumstances. The consolidated financial statements are not precise, since they include amounts based on estimates
and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the consolidated financial statements are presented fairly, in all material respects. Management has
prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with that in the consolidated financial statements.

Agnico-Eagle
Mines Limited maintains systems of internal accounting and administrative controls of high quality, consistent with reasonable cost. Such systems are designed to provide
reasonable assurance that the financial information is relevant, reliable and accurate and that the Company's assets are appropriately accounted for and adequately safeguarded.

The
Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the
consolidated financial statements. The Board of Directors carries out this responsibility principally through its Audit Committee.

The
Audit Committee is appointed by the Board of Directors and all of its members are independent directors. The Audit Committee meets periodically with management, as well as the
external auditors, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues, to satisfy itself that each party is properly discharging its
responsibilities, and to review the annual report, the
consolidated financial statements and the external auditors' report. The Audit Committee reports its findings to the Board of Directors for consideration when approving the consolidated financial
statements for issuance to the shareholders.

The
Audit Committee also considers, for review by the Board of Directors and approval by the shareholders, the engagement or re-appointment of the external auditors.

The
consolidated financial statements have been audited by Ernst & Young LLP, the external auditors, in accordance with Canadian generally accepted auditing standards and United
States generally accepted auditing standards on behalf of the shareholders. Ernst & Young LLP has full and free access to the Audit Committee.

|SIGNATURE                             |  | SIGNATURE                                          
|------------------------------------- |  | ---------------------------------------------------
|Sean Boyd, C.A.                       |  | David Garofalo, C.A.                               
|President and
Chief Executive Officer |  | Vice President, Finance and
Chief Financial Officer

Toronto, Canada,
February 24, 2004.

23

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Auditors' Report

To
the Shareholders of Agnico-Eagle Mines Limited:

We
have audited the consolidated balance sheet of Agnico-Eagle Mines Limited as at December 31, 2003 and 2002 and the consolidated statements of income (loss) and comprehensive
income (loss), shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2003. 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 Canadian generally accepted auditing standards and United States generally accepted auditing standards. Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation.

In
our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2003 and 2002 and the
results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2003 in accordance with United States generally accepted accounting
principles.

We
also reported separately on February 24, 2004 to the shareholders of Agnico-Eagle Mines Limited on our audit conducted in accordance with Canadian generally accepted auditing
standards and United States generally accepted auditing standards, where we expressed an opinion without reservation on the December 31, 2003 and 2002 consolidated financial statements,
prepared in accordance with Canadian generally accepted accounting principles.

As
described in the "Summary of Significant Accounting Policies  Reclamation costs and Stock-based compensation", the Company changed its method of
(i) accounting for reclamation costs effective January 1, 2003; and (ii) accounting for stock-based compensation effective January 1, 2003.

GRAPHIC

Ernst &
Young LLP
Chartered Accountants
Toronto, Canada,
February 24, 2004.

24

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AGNICO-EAGLE MINES LIMITED  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"). We have also prepared consolidated financial statements in
accordance with Canadian generally accepted accounting principles. Since a precise determination of assets and liabilities depends on future events, the presentation 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 all its subsidiaries. Prior to October 15, 2001, Agnico-Eagle consolidated
its 49.5% direct and indirect ownership interest in Mentor Exploration and Development Co., Limited ("Mentor") on the basis of the Company's ability to determine its strategic operating, investing and
financing policies. Effective October 15, 2001, Mentor was amalgamated with the Company under a court approved plan of arrangement to continue as Agnico-Eagle Mines Limited.

The
cost of the Company's own shares held by Mentor had been presented in the consolidated balance sheets as a reduction of shareholders' equity. Changes in the Company's own shares held
by a subsidiary company resulted from purchases and sales of Agnico-Eagle shares by Mentor.

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 loss.

As
a result of issuances of stock by its subsidiary company, Sudbury Contact Mines Limited ("Sudbury Contact"), the Company's interest in Sudbury Contact has been diluted to below 50%
during the year. The
Company therefore no longer consolidates the results of Sudbury but accounts for its investment using the equity method of accounting. The Company reports its share of losses in Sudbury Contact as a
separate line item in the consolidated financial statements. The Company began using the equity method to account for its interest in Sudbury Contact on September 1, 2003.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and short-term investments in money market instruments with original 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, in-process inventories 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.

25

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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 labor; repairs and maintenance; utilities; amortization of mining assets incurred up to the point of stockpiling the ore; and local mine administrative expenses. 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 practise in the future. Stockpiled ore on the surface is
exposed to the elements, but the Company does not expect its condition to deteriorate significantly.

In-Process Inventories

In-process inventories consist of concentrates for which legal title has not yet passed to custom smelters. In-process 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 sheet and relate to the issuance of the senior 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 exercise their conversion
option, the common shares issued on such conversion will be 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 prior to
the commencement of commercial production for projects specifically financed by debt 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, which does not exceed 20 years. The unit-of-production method defines the denominator as the total proven and
probable tons of reserves. A unit for the purposes of the unit-of-production method is a ton of ore. A unit is considered "produced" for the purposes of recording amortization
when the ton of ore has been mined.

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.

26

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

As
a result of adopting United States Financial Accounting Standards Board ("FASB") Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133"), 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 other
comprehensive loss depending on whether the derivative financial instrument qualifies for hedge accounting. Currently, the Company's gold put option and foreign exchange contracts qualify for hedge
accounting and changes in the fair value of these derivative financial instruments are recognized as a component of accumulated other comprehensive loss. Changes in the fair value of all other
derivative financial 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 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 the Company's 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. 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

27

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

Reclamation costs

Effective January 1, 2003, the Company adopted the provisions of FASB Statement No. 143 ("FAS 143") related to asset retirement obligations.
FAS 143 applies to legal obligations resulting from the construction, development and operation of long-lived assets, such as mining assets. This standard requires companies to
recognize the present value of reclamation costs as a liability in the period the legal obligation is incurred. The Company estimated the final reclamation provision taking into account current
circumstances such as projected mine life at the end of 2003 and current throughput. Subsequent revisions to the final reclamation estimate could result from legislative changes or changes in the
underlying assumptions  such as life-of-mine.

For
periods prior to January 1, 2003, estimated future reclamation costs were based primarily on legal, environmental and regulatory requirements. Future reclamation costs for the
Company's inactive mines were accrued based on management's best estimate of the costs at the end of each period, comprising costs expected to be incurred at a site, on an undiscounted basis. Such
cost estimates included, where applicable, ongoing care and maintenance and monitoring costs. Changes in estimates were reflected in income in the period an estimate was revised.

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 substantively 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 at the market price
in exchange for Agnico-Eagle giving up the tax benefits arising from the exploration activities. Agnico-Eagle records such common share issuances by crediting share capital for the full value of cash
consideration received. The cost of the future income and mining tax benefits arising at the time Agnico-Eagle renounces the income and mining tax deductibility of the eligible expenditures to the
investors are accounted for as a share issue cost.

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

28

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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.

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 post-retirement benefits to its employees.

Comparative figures

Certain items in the comparative financial statements have been reclassified from statements previously presented to conform to the presentation of the 2003
consolidated financial statements.

29

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AGNICO-EAGLE MINES LIMITED        Consolidated Balance Sheet        (thousands of United States dollars, US GAAP basis)

|                                                        |                                                    | As at December 31, |         
|------------------------------------------------------- | -------------------------------------------------- | ------------------ | --------
|
|ASSETS                                                  |                                                    |                    |         
|Current                                                 |                                                    |                    |         
|                                                        | Cash and cash equivalents                          |                    | $       
|                                                        | Metals awaiting settlement (note 1)                |                    |         
|                                                        | Income taxes recoverable                           |                    |         
|Inventories:                                            |                                                    |                    |         
|                                                        | Ore stockpiles                                     |                    |         
|                                                        | In-process concentrates                            |                    |         
|                                                        | Supplies                                           |                    |         
|Prepaid expenses and other (note 2(a))                  |                                                    |                    | 10,363  
|                                                        |                                                    |                    |         
|Total current assets                                    |                                                    |                    | 177,016 
|Fair value of derivative financial instruments (note 9) |                                                    |                    | 7,573   
|Other assets (notes 2(b) and 12)                        |                                                    |                    | 11,214  
|Future income and mining tax assets (note 8)            |                                                    |                    | 41,579  
|Mining properties (note 3)                              |                                                    |                    | 399,719 
|                                                        |                                                    |                    |         
|                                                        |                                                    | $                  | 637,101 
|                                                        |                                                    |                    |         
|LIABILITIES AND SHAREHOLDERS' EQUITY                    |                                                    |                    |         
|Current                                                 |                                                    |                    |         
|                                                        | Accounts payable and accrued liabilities (note 11) |                    | $       
|                                                        | Dividends payable                                  |                    |         
|                                                        | Income and mining taxes payable                    |                    |         
|                                                        | Interest payable                                   |                    |         
|                                                        |                                                    |                    |         
|Total current liabilities                               |                                                    |                    | 36,403  
|                                                        |                                                    |                    |         
|Long-term debt (note 4)                                 |                                                    |                    | 143,750 
|                                                        |                                                    |                    |         
|Reclamation provision and other liabilities (note 5)    |                                                    |                    | 15,377  
|                                                        |                                                    |                    |         
|Fair value of derivative financial instruments (note 9) |                                                    |                    |        
|                                                        |                                                    |                    |         
|Future income and mining tax liabilities (note 8)       |                                                    |                    | 40,848  
|                                                        |                                                    |                    |         
|Shareholders' Equity                                    |                                                    |                    |         
|                                                        | Common shares (note 6(a))                          |                    |         
|                                                        | Authorized  unlimited                             |                    |         
|Issued  84,469,804 (2002  83,636,861)                 |                                                    |                    | 601,305 
|Warrants (note 6(c))                                    |                                                    |                    | 15,732  
|Contributed surplus                                     |                                                    |                    | 7,181   
|Deficit                                                 |                                                    |                    | (218,055
|Accumulated other comprehensive loss (note 6(d))        |                                                    |                    | (5,440  
|                                                        |                                                    |                    |         
|Total shareholders' equity                              |                                                    |                    | 400,723 
|                                                        |                                                    |                    |         
|                                                        |                                                    | $                  | 637,101 
|                                                        |                                                    |                    |         

On behalf of the Board:

|SIGNATURE                |  | SIGNATURE                   
|------------------------ |  | ----------------------------
|Sean Boyd C.A., Director |  | Bernard Kraft C.A., Director

See accompanying notes

30

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AGNICO-EAGLE MINES LIMITED        Consolidated Statements Of Income (Loss) And Comprehensive Income (Loss)        (thousands of United States dollars, US GAAP basis)

|                                                                                                  |                                                                                                                                             | Years ended December 31, |        
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | -------
|
|REVENUES                                                                                          |                                                                                                                                             |                          |        
|Revenues from mining operations                                                                   |                                                                                                                                             | $                        | 126,820
|Interest and sundry income                                                                        |                                                                                                                                             |                          | 2,775  
|                                                                                                  |                                                                                                                                             |                          |        
|                                                                                                  |                                                                                                                                             |                          | 129,595
|COSTS AND EXPENSES                                                                                |                                                                                                                                             |                          |        
|Production (note 3)                                                                               |                                                                                                                                             |                          | 104,990
|Exploration and corporate development (note 3)                                                    |                                                                                                                                             |                          | 5,975  
|Equity loss in junior exploration company                                                         |                                                                                                                                             |                          | 1,626  
|Amortization                                                                                      |                                                                                                                                             |                          | 17,504 
|General and administrative                                                                        |                                                                                                                                             |                          | 7,121  
|Provincial capital tax                                                                            |                                                                                                                                             |                          | 1,240  
|Interest (note 4)                                                                                 |                                                                                                                                             |                          | 9,180  
|Foreign currency loss (gain)                                                                      |                                                                                                                                             |                          | 72     
|                                                                                                  |                                                                                                                                             |                          |        
|Income (loss) before income, mining and federal capital taxes                                     |                                                                                                                                             |                          | (18,113
|Federal capital tax                                                                               |                                                                                                                                             |                          | 1,090  
|Income and mining taxes expense (recovery) (note 8)                                               |                                                                                                                                             |                          | (1,448 
|                                                                                                  |                                                                                                                                             |                          |        
|Net income (loss) before cumulative catch-up adjustment                                           |                                                                                                                                             |                          | (17,755
|Cumulative catch-up adjustment relating to FAS 143                                                |                                                                                                                                             |                          | (1,743 
|                                                                                                  |                                                                                                                                             |                          |        
|Net income (loss) for the year                                                                    |                                                                                                                                             | $                        | (19,498
|                                                                                                  |                                                                                                                                             |                          |        
|Net income (loss) before cumulative catch-up adjustment per share  basic and diluted (note 6(e)) |                                                                                                                                             | $                        | (0.21  
|Cumulative catch-up adjustment per share  basic and diluted                                      |                                                                                                                                             |                          | (0.02  
|                                                                                                  |                                                                                                                                             |                          |        
|Net income (loss) per share  basic and diluted (note 6(e))                                       |                                                                                                                                             | $                        | (0.23  
|                                                                                                  |                                                                                                                                             |                          |        
|Comprehensive income (loss):                                                                      |                                                                                                                                             |                          |        
|Net income (loss) for the year                                                                    |                                                                                                                                             | $                        | (19,498
|                                                                                                  |                                                                                                                                             |                          |        
|Other comprehensive income (loss), net of tax:                                                    |                                                                                                                                             |                          |        
|                                                                                                  | Unrealized gain (loss) on hedging activities                                                                                                |                          |        
|                                                                                                  | Unrealized gain on available-for-sale securities                                                                                            |                          |        
|                                                                                                  | Dilution gain on issuance of securities by subsidiary company                                                                               |                          |        
|                                                                                                  | Minimum pension liability                                                                                                                   |                          |        
|                                                                                                  | Cumulative transitional adjustment upon the adoption of FAS 133 related to the accounting for derivative instruments and hedging activities |                          |        
|                                                                                                  | Adjustments for derivative instruments, maturing during the year, included in the cumulative adjustment at January 1, 2001                  |                          |        
|                                                                                                  | Adjustments for realized gains on available-for-sale securities due to dispositions during the year                                         |                          |        
|                                                                                                  |                                                                                                                                             |                          |        
|Other comprehensive income (loss) for the year                                                    |                                                                                                                                             |                          | 15,726 
|                                                                                                  |                                                                                                                                             |                          |        
|Total comprehensive income (loss) for the year                                                    |                                                                                                                                             | $                        | (3,772 
|                                                                                                  |                                                                                                                                             |                          |        

See accompanying notes

31

---





AGNICO-EAGLE MINES LIMITED        Consolidated Statement Of Shareholders' Equity        (thousands of United States dollars, US GAAP basis)

|                                                                          |  | Years ended December 31, 2003, 2002 and 2001 | 
|------------------------------------------------------------------------- |  | -------------------------------------------- | 
|
|
|
|Balance December 31, 2000                                                 |  | 56,139,480                                   | 
|                                                                          |  |                                              | 
|Shares issued under Employee Stock Option Plan (note 7(a))                |  | 426,100                                      | 
|Shares issued under the Share Incentive Plan (note 7(b))                  |  | 209,826                                      | 
|Shares issued under flow-through share private placement (note 6(b))      |  | 200,000                                      | 
|Shares issued by public offering, net of share issue costs (note 6(c))    |  | 10,350,000                                   | 
|Shares issued on the conversion of the Company's senior convertible notes |  | 6,691                                        | 
|Shares issued to acquire Mentor                                           |  | 369,348                                      | 
|Shares issued under the Company's dividend reinvestment plan              |  | 21,408                                       | 
|Net loss for the year                                                     |  |                                             | 
|Dividends declared ($0.02 per share)                                      |  |                                             | 
|Other comprehensive loss for the year                                     |  |                                             | 
|                                                                          |  |                                              | 
|Balance December 31, 2001                                                 |  | 67,722,853                                   | 
|Shares issued under Employee Stock Option Plan (note 7(a))                |  | 1,927,500                                    | 
|Shares issued under the Share Incentive Plan (note 7(b))                  |  | 138,747                                      | 
|Shares issued under flow-through share private placement (note 6(b))      |  | 40,161                                       | 
|Units issued by public offering, net of issue costs (note 6(c))           |  | 13,800,000                                   | 
|Shares issued on the conversion of the Company's senior convertible notes |  | 4,460                                        | 
|Shares issued under the Company's dividend reinvestment plan              |  | 3,140                                        | 
|Net income for the year                                                   |  |                                             | 
|Dividends declared ($0.03 per share)                                      |  |                                             | 
|Other comprehensive loss for the year                                     |  |                                             | 
|                                                                          |  |                                              | 
|Balance December 31, 2002                                                 |  | 83,636,861                                   | 
|Shares issued under Employee Stock Option Plan (note 7(a))                |  | 229,100                                      | 
|Shares issued under the Share Incentive Plan (note 7(b))                  |  | 217,855                                      | 
|Shares issued under flow-through share private placement (note 6(b))      |  | 255,768                                      | 
|Shares issued under the Company's dividend reinvestment plan              |  | 4,608                                        | 
|Shares issued for acquisition (note 10)                                   |  | 125,612                                      | 
|Net loss for the year                                                     |  |                                             | 
|Dividends declared ($0.03 per share)                                      |  |                                             | 
|Other comprehensive income for the year                                   |  |                                             | 
|                                                                          |  |                                              | 
|Balance December 31, 2003                                                 |  | 84,469,804                                   | 
|                                                                          |  |                                              | 

See accompanying notes

32

---



AGNICO-EAGLE MINES LIMITED        Consolidated Statement Of Cash Flows        (thousands of United States dollars, US GAAP basis)

|                                                                     |                                                    | Years ended December 31, |        
|-------------------------------------------------------------------- | -------------------------------------------------- | ------------------------ | -------
|
|Operating activities                                                 |                                                    |                          |        
|Net income (loss) for the year                                       |                                                    | $                        | (19,498
|Add (deduct) items not affecting cash:                               |                                                    |                          |        
|                                                                     | Amortization                                       |                          |        
|                                                                     | Future income and mining taxes                     |                          |        
|                                                                     | Unrealized 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 (used in) operating activities                      |                                                    |                          | 4,253  
|                                                                     |                                                    |                          |        
|Investing activities                                                 |                                                    |                          |        
|Additions to mining properties                                       |                                                    |                          | (42,038
|Acquisitions and additions to available-for-sale securities          |                                                    |                          | (10,438
|                                                                     |                                                    |                          |        
|Cash used in investing activities                                    |                                                    |                          | (52,476
|                                                                     |                                                    |                          |        
|Financing activities                                                 |                                                    |                          |        
|Dividends paid                                                       |                                                    |                          | (2,431 
|Common shares issued                                                 |                                                    |                          | 8,141  
|Warrants issued                                                      |                                                    |                          |       
|Share and warrant issue costs                                        |                                                    |                          | (271   
|Proceeds from long-term debt (note 4)                                |                                                    |                          |       
|Financing costs                                                      |                                                    |                          |       
|Repayment of the Company's senior convertible debentures (note 4)    |                                                    |                          |       
|Bank debt                                                            |                                                    |                          |       
|Resale of the Company's own shares by a subsidiary company and other |                                                    |                          |       
|                                                                     |                                                    |                          |        
|Cash provided by financing activities                                |                                                    |                          | 5,439  
|                                                                     |                                                    |                          |        
|Effect of exchange rate changes on cash and cash equivalents         |                                                    |                          | 215    
|                                                                     |                                                    |                          |        
|Net increase (decrease) in cash and cash equivalents during the year |                                                    |                          | (42,569
|Cash and cash equivalents, beginning of year                         |                                                    |                          | 152,934
|                                                                     |                                                    |                          |        
|Cash and cash equivalents, end of year                               |                                                    | $                        | 110,365
|                                                                     |                                                    |                          |        

See notes 4, 8 and 10 for supplemental cash flow information

See accompanying notes

33

---





AGNICO-EAGLE MINES LIMITED        Notes To Consolidated Financial Statements        (In thousands of United States dollars, unless otherwise indicated)  December 31, 2003

1.     METALS AWAITING SETTLEMENT

2003

2002Precious metals

$
1,327

$
2,856Concentrates awaiting settlement


33,243


26,893$
34,570

$
29,749


In
2003, precious metals (gold and silver) accounted for 83.7% (2002  87.7%; 2001  79.8%) of Agnico-Eagle's revenues from mining operations. Other
net byproduct revenues in 2003 consisted of 11.2% zinc (2002  12.3%; 2001  20.2%) and 5.1% copper (2002  nil; 2001 
nil).

2.     OTHER ASSETS

(a)Prepaid expenses and other

2003

2002Available-for-sale securities (at market value)

$
4,426

$
3,886Prepaid expenses


1,269


824Loans receivable


540


465Federal and provincial sales taxes receivable


3,499


3,716Other


629


1,134$
10,363

$
10,025


In
2003, the Company realized $3,692 (2002  $352) in proceeds and recorded a gain of $2,507 (2002  $186) in income on the sale of
available-for-sale securities. The cost basis of available-for-sale securities is determined using the average cost method.

(b)Other assets

2003

2002Deferred financing costs, less accumulated amortization of $2,321 (2002  $1,313)

$
8,080

$
8,577Loan to Sudbury Contact Mines Limited


2,739


Other


395


218$
11,214

$
8,795


3.     MINING PROPERTIES

|                       |  | 2003 |         | 2002
|---------------------- |  | ---- | ------- | ----
|
|Mining properties      |  | $    | 60,362  |     
|Plant and equipment    |  |      | 274,725 |     
|Mine development costs |  |      | 181,761 |     
|                       |  |      |         |     
|                       |  | $    | 516,848 |     
|                       |  |      |         |     

34

---



Included
in exploration expense in 2001 is the Company's write-off of its investment in the Tonkin Springs project of $1.6 million and the payment of
$0.7 million for environmental restoration costs. On March 1, 1999, Sudbury Contact acquired a 60% interest in Tonkin Springs, an advanced exploration property on the Battle
Mountain-Cortez Gold Trend in Nevada, for $1.6 million. The remaining 40% ownership
interest was owned and controlled by U.S. Gold Corporation, an unrelated gold exploration company based in the United States. Effective October 18, 2001, management determined that this project
was not viable under the current gold price environment and elected, under the management and operating agreement with U.S. Gold Corporation, to exit the Tonkin Springs project as the project manager
and relinquish its entire ownership interest in Tonkin Springs. The Company's obligation with respect to environmental and regulatory requirements was fully satisfied by the payment of
$0.5 million in additional environmental bonding and $0.2 million to an independent consultant under an escrow agreement for future environmental restoration work.

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 sales of
minerals less applicable refining, selling and delivery costs and applicable taxes). During 2003, the Company made NPI royalty payments of $8.9 million (2002 
$12.0 million; 2001  $5.4 million).

4.     LONG-TERM DEBT

(a)Convertible subordinated debentures

The Company's convertible subordinated debentures bear interest of 4.50% per annum, payable in cash semi-annually, on the principal amount of
$143,750. 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 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 tradable common shares.

(b)Revolving credit facility

The revolving credit facility (the "Facility") with a syndicate of banks provides the Company with up to $125 million of revolving debt. Under the terms of
the Facility, which is primarily secured by a first charge on the Company's LaRonde Mine and the El Coco property, an initial tranche of $100 million is currently available and a second
tranche of $25 million will also be made available upon satisfaction of certain completion tests in connection with the LaRonde Mine expansion to 7,000 tons of ore per day. The Facility
is fully revolving until the end of 2004, at which time the drawn portion of the Facility will begin to amortize at annual rates of 25%, 32.5%, 20%, 12.5% and 10% in the years 2004 to 2008,
respectively. The interest rate under the Facility currently is LIBOR plus 2.25% per annum and a standby fee of 1% per annum on any undrawn portion of the Facility. At the end of 2003 and 2002, the
Facility was completely undrawn.

For
the year ended December 31, 2003, interest expense was $9.2 million (2002  $7.3 million; 2001  $12.9 million) of
which cash payments were $8.0 million (2002  $24.4 million; 2001  $10.4 million). Approximately $19 million of the cash interest
payments in 2002 were in connection with the redemption of the Company's January 27, 2004 senior convertible notes. In 2003, cash interest on the Facility was nil (2002 
$1.3 million; 2001  $9.1 million) and cash standby fees on the Facility were $1.2 million (2002  $1.0 million;
2001  $1.0 million). In 2003, cash interest on the Facility of nil (2002  $2.3 million; 2001  nil) was capitalized in
construction in progress. Weighted average interest rate for the year ended December 31, 2003 was 6.4% (2002  7.6%; 2001  6.1%).

35

---



In
2003, the Company was unable to achieve its completion test and was in default of its interest coverage covenants. Given that the Facility was completely undrawn throughout 2003,
these were technical violations which were waived by all the banks in the lending syndicate for the third and fourth quarters of 2003.

5.     RECLAMATION PROVISION AND OTHER LIABILITIES

Reclamation provision and other liabilities consist of the following:

2003

2002Reclamation and closure costs (note 5(a))

$
11,629

$
2,066Pension benefits (note 5(b))


3,748


2,977$
15,377

$
5,043


(a)Reclamation and closure costs

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 $17.0 million and $2.7 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.

The
following table reconciles the beginning and ending carrying amount of asset retirement obligations. The amounts for 2002 are pro-forma amounts which present the
liability for asset retirement obligations as if FAS 143 had been applied throughout 2002. Had FAS 143 been applied for all periods presented in the Consolidated Statement of Income
(Loss), net income (loss) would not have been materially different from the amounts reported.

2003

2002
(pro forma)Asset retirement obligations, beginning of year

$
5,520

$
5,282Current year accretion


424


238Reclamation payments relating to non-operating properties


(44
)

Liabilities incurred on the purchase of the Bousquet mine


5,729


Asset retirement obligations, end of year

$
11,629

$
5,520


(b)Pension benefits

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 also 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 is based on an actuarial valuation as of December 31, 2002 and projected to December 31, 2003. The
funded status of the

36

---



executive
supplementary defined benefit plan is based on an actuarial valuation as of July 1, 2003 and projected to December 31, 2003. The components of Agnico-Eagle's net pension plan
expense are as follows:

|                                                                                      |  | 2003 |      | 2002 |   | 2001 |  
|------------------------------------------------------------------------------------- |  | ---- | ---- | ---- | - | ---- | -
|Service cost  benefits earned during the year                                        |  | $    | 263  |      | $ | 210  |  
|Actuarial losses                                                                      |  |      | 26   |      |   |     |  
|Interest cost on projected benefit obligation                                         |  |      | 419  |      |   | 348  |  
|Return on plan assets                                                                 |  |      | (127 | )    |   | (125 | )
|Amortization of net transition asset, past service liability and net experience gains |  |      | 58   |      |   | (138 | )
|                                                                                      |  |      |      |      |   |      |  
|Net pension plan expense                                                              |  | $    | 639  |      | $ | 295  |  
|                                                                                      |  |      |      |      |   |      |  

Agnico-Eagle
contributes 5% of its payroll expense to a defined contribution plan. The expense in 2003 was $1.4 million (2002  $1.1 million;
2001  $0.8 million).

Assets
of the defined benefit employees' pension plan ("Employees") are comprised of pooled Canadian and US equity funds and pooled bond funds. As of the measurement date, the plan's
assets are allocated 65% to equity securities, 34% to fixed income securities, and 1% to cash and short-term investments. 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 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

TargetCash 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 loss for this plan in 2003 or 2002.

Assets
for the executives' retirement plan ("Executives") 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, 2003 was $3.7 (2002  $2.9 million) and nil
(2002  $1.0 million) was recorded in other comprehensive income (loss) arising from a change in the additional minimum pension liability.

37

---



The
funded status of the Employees and the Executives plans for 2003 and 2002 are as follows:

|                                                                     |  | 2003 |       | 2002  |  
|-------------------------------------------------------------------- |  | ---- | ----- | ----- | -
|
|Reconciliation of the market value of plan assets                    |  |      |       |       |  
|Fair value of plan assets, beginning of year                         |  | $    | 1,576 |       | $
|Agnico-Eagle's contribution                                          |  |      |      |       |  
|Actual return on plan assets                                         |  |      | 321   |       |  
|Benefit payments                                                     |  |      | (132  | )     |  
|Effect of exchange rate changes                                      |  |      | 367   |       |  
|                                                                     |  |      |       |       |  
|Fair value of plan assets, end of year                               |  | $    | 2,132 |       | $
|                                                                     |  |      |       |       |  
|Reconciliation of projected benefit obligation                       |  |      |       |       |  
|Projected benefit obligation, beginning of year                      |  | $    | 1,468 |       | $
|Service costs                                                        |  |      |      |       |  
|Interest costs                                                       |  |      | 101   |       |  
|Actuarial losses                                                     |  |      | 35    |       |  
|Benefit payments                                                     |  |      | (132  | )     |  
|Plan amendments                                                      |  |      | (29   | )     |  
|Effect of exchange rate changes                                      |  |      | 325   |       |  
|                                                                     |  |      |       |       |  
|Projected benefit obligation, end of year                            |  | $    | 1,768 |       | $
|                                                                     |  |      |       |       |  
|Excess (deficiency) of plan assets over projected benefit obligation |  | $    | 364   |       | $
|                                                                     |  |      |       |       |  
|Comprised of:                                                        |  |      |       |       |  
|Unamortized transition asset (liability)                             |  | $    | 839   |       | $
|Unamortized net experience (loss)                                    |  |      | (167  | )     |  
|Accrued liabilities                                                  |  |      | (308  | )     |  
|                                                                     |  |      |       |       |  
|                                                                     |  | $    | 364   |       | $
|                                                                     |  |      |       |       |  
|Weighted average discount rate(i)                                    |  |      | 6.50  | %     |  
|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)     |  |      | 5.0   |       |  

---

Notes:

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

Employees

Executives

Total2004

$
75

$
92

$
1672005


90


77


1672006


90


77


1672007


90


84


1742008


90


84


1742009 - 2013


450


435


885


38

---



6.     SHAREHOLDERS' EQUITY

(a)Common shares

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 has reserved for issuance 10,267,919 common shares in the event that the senior convertible debentures are converted into common shares and 6,900,000 common shares in the
event that the warrants are exercised.

In
2003 the Company declared dividends on its common shares of $0.03 per share (2002  $0.03 per share; 2001  $0.02 per share). Under the terms of
the Company's revolving credit facility, the Company's dividend payments are restricted to an aggregate of $16 million per year.

(b)Flow-through share private placements

In 2003, Agnico-Eagle issued 255,768 (2002  40,161; 2001  200,000) common shares under a flow-through share
private placement for proceeds of $3.6 million (2002  $0.6 million; 2001  $2.5 million) net of share issue costs. Agnico-Eagle has agreed
to use such proceeds for the purpose of incurring Canadian exploration expenditures in connection with its 2003 and 2004 exploration activities. In 2003, the Company renounced to its investors
C$5.3 million (2002  C$1.0 million; 2001  C$4.0million) of such expenses for income tax purposes. To comply with the flow-through
share agreement, the Company must incur $3.5 million of exploration expenditures in 2004 related to the expenditures renounced in 2003.

The
difference between the flow-through share issuance price and the market price of Agnico-Eagle 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 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.

(c)Public offering

In 2002, Agnico-Eagle issued 13,800,000 units, each unit consisting of one common share and one-half warrant, at $13.90 per unit for net proceeds of
$182.9 million, after deducting share issue costs of $9.1 million (no related income tax effect). $167.2 million of the net proceeds was allocated to common shares and the
remaining $15.7 million was allocated to the 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. 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.

In
2001, Agnico-Eagle issued 10,350,000 common shares at $7.90 per share for net proceeds of $76.2 million, after deducting share issue costs of $5.6 million (no related
income tax effect).

(d)Accumulated other comprehensive loss

The opening balance in accumulated other comprehensive loss in 2000 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 period's 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

39

---



deficit
in the cumulative translation adjustment account within accumulated other comprehensive loss as at December 31, 2003, 2002 and 2001.

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 loss of $2.8 million. The Company has
designated its gold put contracts and foreign exchange forward contracts as cash flow hedges and, as such, unrealized gains and losses on these contracts are recorded in accumulated other
comprehensive loss.

The
following table presents the components of the accumulated other comprehensive loss.

2003

2002Cumulative translation adjustment from adopting US dollar as principal reporting currency

$
(15,907
)
$
(15,907
)Unrealized gain on available-for-sale securities


2,176


1,559Dilution gain on equity issuances of subsidiary


6,110


1,610Unrealized gain on foreign exchange derivative contracts


9,973


Unrealized loss on gold put option contracts


(6,812
)

(7,448
)Minimum pension liability


(980
)

(980
)$
(5,440
)
$
(21,166
)


In
2003, a $1.8 million (2002  nil) loss was reclassified from accumulated other comprehensive loss to income to reflect the amortization of gold put option
contract premiums for contracts originally scheduled to mature in 2003. Also in 2003, a $1.6 million gain (2002  nil) was reclassified from accumulated other comprehensive
loss to income to reflect the realization of gains on available-for-sale securities due to the disposition of those securities.

(e)Net income (loss) per share

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

2003

2002

2001Weighted average number of common shares outstanding  basic

83,889,115

70,821,081

61,333,630Add: Dilutive impact of employee stock options



810,182

Weighted average number of common shares outstanding  diluted

83,889,115

71,631,263

61,333,630


In
2003, the employee stock options, convertible debentures and warrants were anti-dilutive and thus were not included in the calculation of diluted weighted average number
of common shares outstanding. In 2002, the convertible debentures and warrants were anti-dilutive and thus were excluded from the calculation of diluted weighted average number of common
shares outstanding. In 2001, the employee stock options and convertible debentures were anti-dilutive and thus were not included in the calculation of diluted weighted average number of
common shares outstanding.

7.     STOCK-BASED COMPENSATION

(a)Employee Stock Option Plan ("ESOP")

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.

40

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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.

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 instalments, on each anniversary
date of the grant, over a three-year term. Of the 1,358,500 options granted in 2002, 1,299,500 options granted vest immediately and expire in the year 2007. The remaining options vest over
periods ranging from two to five years and expire between 2007 and 2012. Of the total options granted in 2001, 181,250 have a vesting period of four years, in which 20% or 36,250 vest immediately and
are exercisable on the date of the grant, while the remaining 80% or 145,000 options are exercisable in equal instalments, on each anniversary date of the grant, over a four-year term. The
remaining 10,000 options granted in 2001 were for a term of five years and are exercisable on the date of grant.

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

|                                   |  | 2003      |   | 2002 |       | 2001
|---------------------------------- |  | --------- | - | ---- | ----- | ----
|
|Outstanding, beginning of year     |  | 3,060,350 |   | C$   | 14.47 |     
|Granted                            |  | 40,000    |   |      | 18.49 |     
|Exercised                          |  | (229,100  | ) |      | 10.23 |     
|Cancelled                          |  | (26,100   | ) |      | 16.01 |     
|                                   |  |           |   |      |       |     
|Outstanding, end of year           |  | 2,845,150 |   | C$   | 14.85 |     
|                                   |  |           |   |      |       |     
|Options exercisable at end of year |  | 2,697,950 |   |      |       |     
|                                   |  |           |   |      |       |     

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

|                  |  | Options outstanding |  | Options exercisable
|----------------- |  | ------------------- |  | -------------------
|
|C$6.55  C$9.30   |  | 242,800             |  | 5.1 years          
|C$10.20  C$15.75 |  | 801,200             |  | 5.9 years          
|C$15.93  C$19.94 |  | 1,545,650           |  | 2.1 years          
|C$21.72  C$25.60 |  | 255,500             |  | 3.2 years          
|                  |  |                     |  |                    
|C$6.55  C$25.60  |  | 2,845,150           |  | 3.5 years          
|                  |  |                     |  |                    

The
Company has reserved for issuance 2,845,150 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, 2003, 2002 and 2001 was 776,010, 789,910 and 2,117,560, respectively.

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 options granted 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

41

---



compensation
expense. 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. The following table illustrates the effect on net income (loss) and net income (loss) per share for 2003, 2002 and 2001 as if the
Company had applied the fair value recognition provisions of FAS 123 to account for all its stock option grants. The 2003 pro-forma compensation expense includes option grants made
prior to the adoption of FAS 123/FAS 148 which vest in the current year.

|                                                                                                        |                                | 2003 |         | 2002  |   | 2001   |     
|------------------------------------------------------------------------------------------------------- | ------------------------------ | ---- | ------- | ----- | - | ------ | ----
|Net income (loss) for the year, as reported                                                             |                                | $    | (19,498 | )     | $ | 4,023  |     
|Add: Stock-based employee compensation included in reported net income (loss)                           |                                |      | 95      |       |   |       |     
|Deduct: Total stock-based employee compensation determined under fair value based method for all awards |                                |      | (263    | )     |   | (2,621 | )   
|                                                                                                        |                                |      |         |       |   |        |     
|Pro forma net income (loss)                                                                             |                                | $    | (19,666 | )     | $ | 1,402  |     
|                                                                                                        |                                |      |         |       |   |        |     
|Net income (loss) per share:                                                                            |                                |      |         |       |   |        |     
|                                                                                                        | Basic and diluted, as reported |      | $       | (0.23 | ) | $      | 0.06
|                                                                                                        |                                |      |         |       |   |        |     
|Basic and diluted, pro forma                                                                            |                                | $    | (0.23   | )     | $ | 0.02   |     
|                                                                                                        |                                |      |         |       |   |        |     

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

2003

2002

2001Risk-free interest rate

2.9
%
2.6
%
5.5
%Expected life of options (in years)

2.5

2.1

7.5Expected volatility of Agnico-Eagle's share price

43.5
%
36.9
%
46.2
%Expected dividend yield

0.25
%
0.19
%
0.46
%


The
Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. As the Company's
employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions, such as expected stock market price
volatility, can materially affect the fair value
estimate, in management's opinion, the existing pricing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

(b) Incentive Share Purchase Plan

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
2003, 217,855 common shares were issued under the Purchase Plan (2002  138,747; 2001  209,826) for proceeds of $2.6 million
(2002  $2.1 million; 2001  $1.8 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 1,349,659 common shares (2002  1,567,514; 2001  206,261)
under the Purchase Plan.

42

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8.     FUTURE INCOME AND MINING TAXES

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

|                  |                          | 2003 |        | 2002   |   | 2001  |       
|----------------- | ------------------------ | ---- | ------ | ------ | - | ----- | ------
|Current provision |                          |      |        |        |   |       |       
|                  | Provincial mining duties |      | $      | (2,538 | ) | $     | (2,779
|                  |                          |      |        |        |   |       |       
|Future provision  |                          |      |        |        |   |       |       
|                  | Federal income taxes     |      |        |       |   |       |      
|                  | Provincial income taxes  |      |        |       |   |       |      
|                  | Provincial mining duties |      |        | 1,090  |   |       | 2,418 
|                  |                          |      |        |        |   |       |       
|                  |                          |      | 1,090  |        |   | 2,418 |       
|                  |                          |      |        |        |   |       |       
|                  |                          | $    | (1,448 | )      | $ | (361  | )     
|                  |                          |      |        |        |   |       |       

Mining
taxes 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 well as certain exploration costs. The mining taxes 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 2003 was $0.6 million (2002  $0.8 million; 2001  $0.6 million).

Future
income and mining taxes expense (recovery) has been provided on temporary differences which consist of the following:

|                            |  | 2003 |        | 2002 |   | 2001  |  
|--------------------------- |  | ---- | ------ | ---- | - | ----- | -
|Amortization                |  | $    | (11    | )    | $ | (587  | )
|Exploration and development |  |      | 2,910  |      |   | 3,152 |  
|Other                       |  |      | (1,809 | )    |   | (147  | )
|                            |  |      |        |      |   |       |  
|                            |  | $    | 1,090  |      | $ | 2,418 |  
|                            |  |      |        |      |   |       |  

The
income and mining taxes expense (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:

|                                                          |  | 2003  |    | 2002   |    | 2001  |   
|--------------------------------------------------------- |  | ----- | -- | ------ | -- | ----- | --
|Combined federal and composite provincial tax rates       |  | (38.3 | )% | 39.9   | %  | (41.3 | )%
|Increase (decrease) in taxes resulting from:              |  |       |    |        |    |       |   
|Provincial mining duties                                  |  | 20.1  |    | (7.8   | )  | 14.5  |   
|Resource allowances                                       |  | (8.4  | )  | (101.7 | )  | (25.2 | ) 
|Non-deductible expenses                                   |  | 14.0  |    | 6.5    |    | 24.6  |   
|Temporary differences for which no benefit was recognized |  | 20.5  |    | 78.7   |    | 83.0  |   
|Unrecognized benefit of non-capital losses                |  | 22.7  |    | (23.4  | )  | 19.3  |   
|Effect of changes in Canadian income tax legislation      |  | (38.6 | )  |       |    |      |   
|                                                          |  |       |    |        |    |       |   
|Actual rate as a percentage of pre-tax income (loss)      |  | (8.0  | )% | (7.8   | )% | 74.9  | % 
|                                                          |  |       |    |        |    |       |   

43

---



Agnico-Eagle
and its subsidiaries have non-capital tax loss carryforwards of approximately C$55 million, which may be carried forward to reduce future years' taxable
income. These losses expire as follows:

2004

C$
8,1882005


17,4872006


6,0842007


462009


8,7332010


14,883C$
55,421


Agnico-Eagle
has approximately C$372 million of cumulative Canadian exploration and development expenses and C$363 million of unamortized capital pools available
indefinitely to reduce future years' taxable income.

As
at December 31, 2003 and 2002, Agnico-Eagle's future income and mining tax assets and liabilities are as follows:

|                                                                |                                              | 2003 |         | 2002   |  
|--------------------------------------------------------------- | -------------------------------------------- | ---- | ------- | ------ | -
|
|Non-current:                                                    |                                              |      |         |        |  
|Income taxes:                                                   |                                              |      |         |        |  
|                                                                | Plant and equipment                          |      | $       | 14,655 |  
|                                                                | Mine development costs                       |      |         | 19,746 |  
|                                                                | Net operating and capital loss carryforwards |      |         | 26,022 |  
|                                                                | Mining duties                                |      |         | 6,992  |  
|                                                                | Other                                        |      |         | 3,542  |  
|Valuation allowance                                             |                                              |      | (29,378 | )      |  
|                                                                |                                              |      |         |        |  
|Total non-current                                               |                                              | $    | 41,579  |        | $
|                                                                |                                              |      |         |        |  
|Mining duties:                                                  |                                              |      |         |        |  
|                                                                | Plant and equipment                          |      | $       | 440    |  
|                                                                | Mine development costs                       |      |         | 344    |  
|                                                                | Other                                        |      |         |       |  
|Valuation allowance                                             |                                              |      | (784    | )      |  
|                                                                |                                              |      |         |        |  
|Total non-current                                               |                                              | $    |        |        | $
|                                                                |                                              |      |         |        |  
|Non-current future income and mining tax assets and liabilities |                                              | $    | 41,579  |        | $
|                                                                |                                              |      |         |        |  

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 sheet 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 2003. At December 31, 2002, asset and liability amounts were translated into US dollars at an exchange rate of $1.58 whereas at December 31,
2003, asset and liability amounts were translated at an exchange rate of $1.29. The additional increase in future tax assets and liabilities was due to increases in capital pools resulting from the
LaRonde Mine capital expenditures and the purchase of the Lapa and Bousquet properties. At January 1, 2003, the valuation allowance, a reserve against future income tax assets recorded in the
accounts, was $14.5 million. In 2003, the valuation allowance increased by $14.9 million due to the impact of a weaker US dollar and the recognition of a full valuation allowance against
current year's losses. The change in mining duty tax assets and the respective valuation allowance against those assets decreased by $3.4 million due to the Company no longer consolidating
Sudbury Contact.

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

44

---



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.

9.     FINANCIAL INSTRUMENTS

Agnico-Eagle enters into financial instruments with a number of financial institutions in order to hedge underlying revenue and cost 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 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 straight forward contracts and involve little 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 2002 and 2003, changes in the fair value of these option contracts were recognized as part of other
comprehensive loss.

Gains
and losses on gold put option contracts are reclassified from accumulated other comprehensive loss to income in the same period the forecasted transaction affects income. In 2004,
the Company expects to reclassify an unrealized loss of $1.5 million relating to its gold put option contracts to income. Due to the nature and structure of the Company's gold put option
contracts, the Company does not record amounts for ineffectiveness in income.

Silver and base metal option contracts

Agnico-Eagle's silver and base metal derivatives portfolio was unwound during 2003 at a net cost of nil.

As
at December 31, 2003, Agnico-Eagle's derivative financial instruments relating to metals consisted of the following:

|     |                       | Expected Maturity      
|---- | --------------------- | -----------------------
|
|Gold |                       |                        
|     | Put options purchased |                        
|     |                       | Amount hedged (ounces) 
|     |                       | Average price ($/ounce)

Subsequent
to year end, the Company entered into derivative contracts to eliminate the negative effects of price fluctuations on a portion of its 2004 copper production. The Company
purchased put option contracts

45

---



which
hedge 2.9 million pounds of copper production in 2004 and establish a minimum price of $1.04 per pound. The maximum premium payable under these derivative contracts is
$0.4 million.

Foreign currency 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 2004, the Company expects to reclassify an unrealized gain of $2.4 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.

At
December 31, 2003, Agnico-Eagle's foreign currency hedging program consisted of the following:

|                                      |  | Expected Maturity
|------------------------------------- |  | -----------------
|
|US$ call options sold                 |  |                  
|Amount (thousands)                    |  | $                
|US$/C$ weighted average exchange rate |  |                  
|US$ put options purchased             |  |                  
|Amount (thousands)                    |  | $                
|US$/C$ weighted average exchange rate |  |                  
|US$ put options sold                  |  |                  
|Amount (thousands)                    |  |                  
|US$/C$ weighted average exchange rate |  |                  

Subsequent
to year end, the Company entered into forward contracts to hedge additional Canadian dollar expenditures forecasted for 2004. These contracts hedge $10 million at a
US$/C$ exchange rate of $1.35. These contracts were entered into at a cost of nil.

At
December 31, 2003, the aggregate unrealized loss of the net market value of Agnico-Eagle's metals derivative position amounted to $6.8 million (2002 
nil). The Company's unrealized gain (loss) on its foreign exchange hedge position at December 31, 2003 was $10.0 million (2002  $(3.5) million). Since the
Company uses 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 loss."

|                                    |  | Metals |        | Foreign Exchange |  
|----------------------------------- |  | ------ | ------ | ---------------- | -
|
|Fair value, beginning of year       |  | $      | (26    | )                | $
|Instruments entered into or settled |  |        | 1,861  |                  |  
|Changes in fair value               |  |        | (1,166 | )                |  
|                                    |  |        |        |                  |  
|Fair value, end of year             |  | $      | 669    |                  | $
|                                    |  |        |        |                  |  

Agnico-Eagle's
exposure to interest rate risk at December 31, 2003 relates to its short-term investments of $106.6 million (2002 
$144.7 million). The Company's short-term investments have a fixed weighted average interest rate of 0.90% (2002  2.29%) for a period of 17 days
(2002  37 days).

46

---



In
addition, Agnico-Eagle has outstanding letters of credit amounting to C$11.8 million relating to the Executives Plan (2002  C$11.8 million) for which
fees vary up to 2.25% per annum.

The
fair values of Agnico-Eagle's current financial assets and liabilities approximate their carrying values as at December 31, 2003. The fair value of Agnico-Eagle's senior
convertible debentures at December 31, 2003 is $152.4 million (2002  $178.3 million).

10.   ACQUISITIONS

In the third quarter of 2003, the Company purchased from Barrick Gold Corporation a 100% interest in Barrick's Bousquet property, immediately to the west and
south of Agnico-Eagle's 100% owned LaRonde Mine in northwestern Quebec. Agnico-Eagle also acquired used machinery and equipment from the now closed Bousquet Mines including underground rolling stock
and the headframe at Bousquet 2. In addition to the Bousquet Mine assets, Agnico-Eagle also purchased certain of Barrick's regional exploration properties.

The
primary reason for the acquisition was to enhance the Company's regional development. With this acquisition, the Company now controls 100% of over 14 miles of contiguous
favorable geology along the prolific Cadillac-Bousquet Gold Belt which hosts the Company's 100% owned LaRonde Mine. With this transaction, the Company also has the dominant land position on the
Cadillac-Larder Lake Break immediately to the south which hosts the Company's 100% owned Lapa property.

The
Company's consolidated financial statements do not include pro-forma results of operations from this acquisition as there are currently no mining activities on any of the
acquired properties.

The
following represents the purchase price allocation for the acquisition:

Cash

$
3,665125,612 Agnico-Eagle shares (valued at $11.67 per share)


1,466Transaction costs


225$
5,356Allocation of purchase price:Buildings and property

$
843Production equipment


1,499Head-frame and related infrastructure


3,463Mining properties


5,280Liabilities assumed


(5,729
)$
5,356


Also
in 2003, the Company purchased a 100% interest in the Lapa property from Breakwater Resources Inc. for $9.1 million (including $0.2 million of transaction
costs). The entire purchase price has been classified as mining properties. Under the terms of the agreement, the Company will have to pay contingent consideration of $1 million if the
published Inferred Mineral Resource on the property reaches 2,000,000 ounces of gold. This payment would reduce any future royalties payable should the property reach commercial production.

11.   OTHER FINANCIAL INFORMATION

|                    |  | 2003 |       | 2002 |   | 2001 
|------------------- |  | ---- | ----- | ---- | - | -----
|Wages payable       |  | $    | 1,467 |      | $ | 775  
|                    |  |      |       |      |   |      
|Accrued liabilities |  | $    | 3,818 |      | $ | 1,335
|                    |  |      |       |      |   |      

47

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12.   RELATED PARTY TRANSACTIONS

As at December 31, 2003, the total indebtedness of Sudbury Contact to the Company was $2.739 million (2002 
$2.678 million) including accrued interest to December 31, 2003 of nil (2002  nil).

Sudbury
Contact was a consolidated entity of the Company for the year ended December 31, 2002. As of August 2003, the Company ceased consolidating Sudbury Contact 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.

On
May 13, 2002, the Company completed a transaction with Sudbury Contact which resulted in the elimination of $25,640,785 of the outstanding amount owed by Sudbury Contact to the
Company.

In
addition, the Company provides Sudbury Contact with all of its executives, employees and administrative support at no cost to Sudbury Contact. Two of the seven current directors of
Sudbury Contact are also directors of the Company.

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