LaRonde rockfall to crimp production

The perils of being a one-mine company: Agnico-Eagle Mines (AGE-T) reports that a 30,000-ton rock fall has occurred in two production stopes at its LaRonde gold mine in Quebec.

The fall occurred above Level 215 (at 2,150 metres below surface) during development of a pyramid-shaped stoping sequence designed to distribute and relieve rock stress.

Workers have extracted the fallen ore and backfilled the void with cemented rock fill.

No one was injured, no equipment was damaged, and underground and mill operations were not interrupted.

However, Agnico’s preliminary assessment is that the rockfall could reduce by up to 20% its total gold production this year, owing to the necessity of replacing higher-grade mining blocks with lower-grade ones.

With an expansion last year of LaRonde’s mill capacity to 7,000 from 5,000 tons, Agnico had earlier been hoping to produce in 2003 a record-high 375,000 oz. gold at a record-low total cash cost of US$125 per oz.

Due to the rockfall, Agnico estimates that up to 10 large mining blocks on the lower level will have to be mined later than originally planned. For now, miners will have to extract narrower blocks from Level 215 until the end of the second quarter.

Over the long-term, Agnico expects there will be no long-term change to the mining method, which has been used at LaRonde since start up in 1988.

The company will provide a more detailed impact assessment along with its first-quarter results on April 23, or sooner, if possible.

On April 1, the first day of trading following the rockfall news, Agnico shares tumbled 15.1% to C$16.22 in Toronto and 15.9% to US$11.03 in New York.