March 28, 2011 / 10:14 PM / 7 years ago

UPDATE 2-Agnico Eagle says kitchen fire to burn a hole in FY output

* Sees FY production at 1.08-1.15 mln gold ounces

* Expects Meadowbank FY production at 310,000 gold ounces (Adds detail of fire, share movement)

March 28 (Reuters) - Gold producer Agnico-Eagle Mines said it expects to produce lesser gold this year, after a fire at its Meadowbank mine in the Nunavut Territory destroyed the kitchen and crippled the mine’s staffing levels.

Production for the entire company is now forecast to be 1.08-1.15 million ounces for the full year, down from 1.13-1.23 million ounces estimated earlier. The difference between the midpoints of forecasts represents a 5.5 percent drop.

Agnico expects first-quarter production of about 245,000 ounces.

The Toronto-based miner said it now expects full-year production at the Meadowbank mine to be about 310,000 ounces of gold, down about 14 percent from its previous estimate.

Agnico, which now expects to restore the full strength of 450 employees at Meadowbank by the end of April, said the plant has been processing lower grade ore from its stockpile as a result of the lower staffing since early this month.

It expects grades and processing rates to improve from the second quarter. A permanent secondary crushing unit is to be commissioned in the third quarter.

The company also expects cash cost at the mine to be about $700 per ounce, a steep rise from the $600 per ounce it estimated earlier.

Shares of the company closed at C$64.65 on Monday on the Toronto Stock Exchange. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Roshni Menon, Vyas Mohan)

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