Agnico-Eagle Mines Ltd. suspended operations at its Goldex mine in Val d'Or, Quebec, Canada, over concerns about flooding in the mine and will write down its investment in the property by an after-tax amount of $170 million.
An analysis of the mine indicates that a weak volcanic rock unit in the hanging wall of the Goldex deposit has failed. The rock failure is thought to extend between the top of the deposit and surface. As a result, the structure has allowed ground water to flow into the mine and has likely contributed to further weakening and movement of the rock mass.
Considering the safety of the company's employees, and the integrity of the mine's infrastructure and that of the surrounding area, the decision was made to stop production indefinitely said Sean Boyd, Vice-Chairman and CEO.
It is estimated that the mill will continue to process feed from the remaining surface stockpile until the end of October.
The write-down will be booked in the third quarter, the results of which are to be released Oct. 26.
Agnico-Eagle also intends to reclassify the remaining 1.6 million ounces of proven and probable gold reserves at Glodex as mineral resources.
Shares of Agnico-Eagle fell 15.3 percent, or $8.74, to $48.36 in morning trading. It's 52-week trading range is $47.86 to $88.20.