November 3, 2009 / 2:15 PM / in 9 years

UPDATE 1-Three miners die in mine accident in Quebec

* Bodies of all three missing miners found

* Metanor suspends operations at Bachelor Lake mine (Changes attribution, adds details, share price move)

By Euan Rocha

TORONTO, Nov 3 (Reuters) - Metanor Resources Inc (MTO.V) said on Tuesday the bodies of all three missing miners have been found following an accident at its Bachelor Lake gold mine in northwestern Quebec.

The accident occurred late on Friday, when a section of the mine about 500 metres (1,600 feet) below the surface flooded. The junior Canadian gold miner has suspended operations at the site.

Rescue workers had worked frantically for three days to pump water out of the mine in the hope of rescuing the trapped miners.

Metanor said the circumstances of the accident are currently unknown, while adding that it is working closely with authorities.

A spokeswoman for the Quebec Provincial Police told Reuters that authorities have begun an investigation into whether criminal negligence had led to the accident at the mine.

Metanor initially acquired a 50 percent stake in the Bachelor Lake property in 2004 from Campbell Resources. In 2006, it acquired the remaining interest in the operation from Halo Resources.

The underground mine, which had produced about 130,000 ounces of gold in the 1980s, required significant capital to rehabilitate.

Metanor acquired the nearby Barry open-pit mine in 2006 to feed its mill at Bachelor Lake and generate the cash flow that would allow it to finance the redevelopment of the higher-grade Bachelor Lake mine.

The company had planned to restart mining operations at Bachelor Lake in mid-2010 and has been ramping up operating capacity at the mill to handle additional production.

Bachelor Lake was expected to account for nearly 60 percent of the ore processed at its mill by mid-2010, according to the company’s website.

Metanor had planned to blend the lower-grade ore from the Barry open-pit mine with the higher-grade ore from Bachelor Lake, a move that was expected to more than double its gold production to about 70,000 ounces a year and drastically reduce mining costs.

It was unclear on Tuesday how the accident might affect the company’s timetable and production goals. Metanor did not return repeated calls seeking comment.

Shares of the small gold miner, which fell 22 percent on Monday following news of the accident, were up 1 Canadian cent at 46.5 Canadian cents on the TSX Venture Exchange on Tuesday morning.

$1=$1.07 Canadian Reporting by Euan Rocha; editing by Rob Wilson

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