October 27, 2011 / 1:18 AM / 7 years ago

UPDATE 2-Agnico-Eagle posts loss on Quebec mine write-off

* Q3 loss $0.47/shr vs yr-ago EPS of $0.71

* Agnico says cash position continues to remain solid

* Lowers 2011 production outlook; raises cost forecast

(Adds details on results, outlook; Figures in U.S. dollars, unless noted)

By Euan Rocha

Oct 26 (Reuters) - Agnico-Eagle Mines reported a third-quarter net loss on Wednesday, as its results were hurt by a large charge related to the write-off of its investment in the Goldex mine in Quebec.

Toronto-based Agnico last week said it has shut down the mine due to water inflow and ground stability concerns that made operating there unsafe for its miners.

“While the suspension of production at Goldex, one of our lowest cost mines, is extremely disappointing ... our strategy remains unchanged and we will continue to focus on improving our business,” Chief Executive Sean Boyd said in a statement.

Boyd said while the gold miner had seen operating improvements at its Kittila mine in Finland and its Meadowbank mine in the Canadian Arctic, further improvements were still necessary.

“There is still more work to do, particularly at Meadowbank where realized gold grades are still below plan,” said Boyd.

Earlier this month, Agnico pre-announced strong production results for the quarter, but the news has since largely been overshadowed by the company’s announcement that it has shutdown operations at Goldex.

Its shares have fallen more than 20 percent since the announcement.

Agnico’s Toronto-listed shares closed 2.1 percent lower at C$45.05 on Wednesday.


The company reported a third-quarter loss of $81.6 million, or 47 cents a share. That compared with a year-ago profit of $121.5 million or 71 cents a share.

Excluding the write-off and other one-time items, Agnico said its profit in the quarter ended Sept. 30 was $101.9 million, or 60 cents a share.

Total cash costs were $563 per ounce, up from $423 per ounce, a year earlier. Costs rose due to a 7 percent decline in gold production that resulted largely from lower grade ores being processed at some of its mines in Canada and Finland.

Agnico cut its gold production forecast for the year and raised its average operating cost forecast, due to the loss of its relatively low-cost Goldex mine.

It now expects 2011 gold production of 1.01 million ounces, down from a prior forecast of 1.08 million ounces. Average cash costs per ounce in 2011 are now expected to be $575, well above the prior view of $495.

Agnico said its cash position continues to remain strong, despite recent setbacks.

The company said with current cash balances, anticipated cash flows and available bank lines, it believes it remains fully funded for the development and exploration of its current pipeline of gold projects in Canada, Finland, Mexico and the United States. ($1= $1 Canadian) (Reporting by Euan Rocha; editing by Carol Bishopric and Vinu Pilakkott)

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