OSC may probe Agnico-Eagle (March 29, 2004)

Agnico-Eagle Mines (AGE-T) says the Ontario Securities Commission is “contemplating commencing proceedings” against the company and some members of management.

The matter relates to the “timing and content” of the company’s disclosure concerning a rock fall that occurred in early 2003 at the LaRonde mine in Quebec.

Agnico-Eagle issued an announcement about the rock fall after the markets had closed on March 31, 2003. The announcement stated that the rock fall had occurred sometime in March, but the date was not specified.

When trading resumed the next day, Agnico-Eagle shares promptly tumbled 15.1% to C$16.22 in Toronto and 15.9% to US$11.03 in New York.

The 30,000-ton rockfall occurred in two production stopes above the mine’s Level 215 (at 2,150 metres below surface) during development of a pyramid-shaped stoping sequence designed to distribute and relieve rock stress. Workers extracted the fallen ore and filled the void with cement. No one was injured, no equipment was damaged, and underground and mill operations were not interrupted.

Agnico-Eagle’s preliminary assessment was that the rock fall might reduce, by up to 20%, its 2003 production forecast of 375,000 oz., owing to the necessity of replacing higher-grade mining blocks with lower-grade ones.

The outcome proved worse: Agnico-Eagle’s gold sales for 2003 totalled 236,653 oz., or 63% of the goal that had been set prior to the rock fall.

Agnico-Eagle says it intends to co-operate fully with the OSC.

On March 19, the first day of trading following the announcement of the possible investigation, Agnico-Eagle’s shares dropped 3.5% to C$18.72 in Toronto and 3.9% to US$14.06 in New York.