Agnico-Eagle Swings to Loss After Canadian Gold Mine Writedown

Agnico-Eagle Mines Ltd. (AEM), a gold producer with mines in North America, posted a fourth-quarter loss after taking a $644.9 million writedown on its Meadowbank project in Nunavut Territory in northern Canada.

The net loss was $601.4 million, or $3.53 a share, compared with net income of $88 million, or 51 cents, a year earlier, Toronto-based Agnico-Eagle said in a statement released after the close of regular trading yesterday.

Profit excluding the writedown, foreign-exchange losses and tax and stock-option expenses was 2 cents less than the 47-cent average of 11 analysts’ estimates compiled by Bloomberg.

Agnico-Eagle took the writedown on Meadowbank because of “persistently high operating costs,” it said in the statement. The move cuts the project’s mine life by three years. Cash costs at the mine may rise to $1,040 an ounce this year from $1,000 in 2011, according to the statement.

Canada’s Barrick Gold Corp. and Goldcorp Inc., the world’s two largest producers of the metal by market capitalization, have also reported higher costs as labor and raw-material expenses rise. Kinross Gold Corp. said yesterday it took a $2.49 billion goodwill writedown on its Tasiast mine in Mauritania.

Mining companies will take “several writedowns” as the they deal with increasing costs, Agnico-Eagle Chief Executive Officer Sean Boyd said today in an interview with Betty Liu on Bloomberg Television’s “In the Loop.”

Agnico-Eagle erased earlier losses to close 7.2 percent higher at C$36.57 in Toronto.

Chief Operating Officer Eberhard Scherkus will leave after 26 years with the company, Agnico-Eagle said. Paul-Henri Girard, vice president, Canada, will also depart after 25 years.

The company’s output was 985,460 ounces last year, 13 percent less than the bottom end of the range of its forecast in December 2010. Agnico-Eagle forecast production of 875,000 ounces to 950,000 ounces in 2012, about 990,000 ounces in 2013, and 1.06 million ounces in 2014.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net.

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