Reuters
UPDATE - Disclosure probe unsettles Agnico-Eagle stock
Friday March 19, 12:47 pm ET
By Nicole Mordant
(Recasts with analyst, commission comment. Amounts in U.S. dollars unless noted)
VANCOUVER, British Columbia, March 19 (Reuters) - Shares in Agnico-Eagle Mines Ltd. (Toronto:AGE.TO - News; NYSE:AEM - News) fell more than 4 percent on Friday, rattled by news the Ontario Securities Commission might take action against the gold miner and some of its management over a news disclosure last year.
The mid-sized gold producer said after the market closed on Thursday that Canada's main regulatory body was investigating the timing and content of its March 31 disclosure of a rock fall at its LaRonde mine in northwestern Quebec.
Onno Rutten, a gold analyst at Scotia Capital, said that news of the probe would have a "slightly negative impact" on investor sentiment, but that it had no impact on his fundamental valuation of the Toronto-based company.
A second analyst agreed, saying that the investigation would not touch Agnico-Eagle's gold reserves and resources at its only gold mine, the firm's future source of income.
"So even if there was some management-related impropriety, there is still a value to this company.... It's not like a Martha Stewart (News) , where that is the asset," the analyst said.
Agnico-Eagle's stock was down 77 Canadian cents, or 4 percent, at C$18.62 early Friday afternoon in Toronto. Its Amex-quoted stock lost 65 cents to $13.98.
On March 31, 2003, Agnico-Eagle informed the market of a 30,000 ton rock fall at its LaRonde mine. It gave no exact date for the event, saying only it had happened "this month".
In its first-quarter 2003 results release, Agnico-Eagle said the incident, which was triggered by a production blast, had occurred over a period of about two weeks. It said the impact on output could not be assessed until the end of March.
"We believe it is plausible that at the moment that the rock fall was first identified, the company was not fully aware of the significant impact that the event would have on its medium-term production planning," Rutten said.
In its March 31 dispatch, the company said early estimates showed the fall could slash 2003 gold output by 20 percent.
Agnico-Eagle was not immediately available for comment on Friday.
The firm said on Thursday it would co-operate with the OSC. Commission spokeswoman Wendy Dey declined to comment on the investigation but said the authority had already been contacted by Agnico-Eagle.
After a tough 2003 due to the rock fall and a range of operational problems, the 250,000-ounce-a-year gold producer started coming back into favor with analysts earlier this year, winning several recommendation upgrades.
The stock has been the best performing in Toronto's S&P/TSX gold index (Toronto:^SPTTGD - News) this year, gaining more than 20 percent.
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