LaRonde rockfall crimps output

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 operation 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 rockfill.

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.

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

As a result of the rockfall, Agnico estimates that up to 10 large mining blocks on the lower level will have to be mined later than planned. Miners will have to extract narrower blocks from Level 215 until the end of the second quarter.

Over the long term, Agnico expects no change in the mining method, which has been used since startup in 1988.

The company will provide an impact assessment and first-quarter results in mid-April.

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.