May 10, 2012 / 7:29 PM / in 5 years

UPDATE 3-Fire disrupts operations at Osisko's Quebec mill

* Mill operations expected to resume in 2 to 3 weeks

* No chemicals, toxic gases released; no injuries reported

* Maintenance to be performed ahead of schedule

* Shares close higher, as analysts see minimal impact

TORONTO, May 10 (Reuters) - Osisko Mining Corp said a fire has disrupted operations at its Canadian Malartic mill in the province of Quebec and estimated it would take two to three weeks to get the gold-processing facility up and running again.

No industrial chemicals or toxic gases were released during the fire and all staff have resumed mining activities in the pit outside the mill, the Montreal-based company said.

The fire, which began late Wednesday night, was extinguished in the early hours of Thursday morning.

Osisko initially informed investors about the fire before the opening bell on Thursday, and the news sent its shares sliding more than 11 percent in early trading.

However, shares pared losses through the day and closed more than 1 percent higher at C$8.50 as analysts weighed in and said the fire is unlikely to hurt the company significantly.

In a note to clients, Macquarie analyst Pierre Vaillancourt said the news is a short-term negative as Osisko may be forced to revise its 2012 production forecast.

“Longer term, this news should not affect the stock,” he said. “A relatively short delay of roughly one month should not materially impact our valuation.”

In an update issued on Thursday afternoon, the company said it plans to use the coming days to perform some maintenance operations at the mill that had been scheduled for later in the year.

The fire caused a limited amount of damage to some equipment, but the company said its SAG mill, ball mill and other systems do not appear to have been damaged.

There were about 50 employees at the mill but no one was injured when the fire broke out, the company said. Osisko is set to report first-quarter results on Friday.

Malartic, Osisko’s only operating mine, reached commercial production last year and is expected to produce between 610,000 and 670,000 ounces this year. The company also owns the Hammond Reef Gold Project in Northern Ontario.

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