AGNICO EAGLE MINES LTD

**2.**BASIS OF PRESENTATION (Continued)

Joint Arrangements

A joint arrangement is defined as an arrangement in which two or more parties have joint control and is classified as either a joint operation or a joint venture. A joint operation is a joint arrangement whereby the parties have joint control of the arrangement and have rights to the assets and obligations for the liabilities relating to the arrangement. These consolidated financial statements include the Company’s interests in the assets, liabilities, revenues and expenses of joint operations from the date that joint control commenced. The Company accounts for its interest in Minas de San Nicolas, S.A.P.I. de C.V. (“MSN”), the entity which holds the San Nicolas copper-zinc project, as a joint operation. Under the joint venture shareholders agreement that governs the project, a wholly-owned Mexican subsidiary of Agnico must subscribe for a 50% interest in MSN for $580.0 million. This amount will be contributed as study and development costs are incurred by MSN, though for governance purposes, the agreement treats Agnico Eagle as a 50% shareholder of MSN regardless of the number of shares that have been issued to Agnico Eagle or its affiliates, except in certain circumstances of default.