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Carlton

Agnico-Eagle

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AEM shares were crushed today.

 

46.51

-10.59 (-18.55%)

 

Agnico-Eagle’s Goldex Mine To Suspend Production During Investigation And Remediation Of Water Inflow And Ground Stability Issue; Book Value Of Goldex To Be Written Off

 

Stock Symbol: AEM (NYSE and TSX)

 

(All amounts expressed in U.S. dollars unless otherwise noted)

 

TORONTO, Oct. 19, 2011 /PRNewswire/ – Agnico-Eagle Mines Limited (“Agnico-Eagle” or the “Company”) announced today that it is suspending

mining operations and gold production at its Goldex mine in Val d’Or,

Quebec effective immediately. This decision follows the receipt of an

opinion from a second rock mechanics consulting firm which recommended

that underground mining operations be halted until the situation is

investigated further.

 

...As a result, Agnico-Eagle

will write off its investment in Goldex. It is expected that this will

total approximately $260 million (or approximately $170 million after

tax, or $1.00 per share) and will occur in the third quarter 2011

financial results, scheduled for release on October 26. Additionally,

the Company expects to make an accounting provision for a portion of

the anticipated costs of remediation in the third quarter of 2011. All

of the remaining 1.6 million ounces of proven and probable gold

reserves1 at Goldex (approximately 10 years of mine life), other than the ore

stockpiled on surface, will be reclassified as mineral resources.

 

http://www.dailymarkets.com/stock/2011/10/19/agnico-eagles-goldex-mine-to-suspend-production-during-investigation-and-remediation-of-water-inflow-and-ground-stability-issue-book-value-of-goldex-to-be-written-off/

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Previously, I had thought of AEM as one of the safest miners. Good reserves, good jurisdiction, and apparently competent management. They may still deserve this description; however, this recent disappointment highlights the risk with all miners.

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