Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Canadian gold producer Agnico-Eagle Mines reported a $604 million loss in the fourth quarter after writing down its Meadowbank mine in Nunavut, northern Canada.
In a statement, the company (TSE:AEM) said the $644 million writedown was a result of “persistently high operating costs”; therefore, less ore will be mined and the minelife has been cut by three years. The Meadowbank writedown rings familiar to another Canadian gold producer, Kinross, which lost 2.4 billion in the fourth quarter as a result of writing down its Tasiast project in Africa.
Agnico-Eagle also had problems with its Goldex mine in Quebec. In October, the company suspended mining and gold production at the mine due to unstable ground and water inflow. The shutdown resulted in a $260 million charge in the third quarter results.
“While 2011 was a very difficult year for our company, we look forward to 2012 as we expect most of our mines to produce more gold. We also anticipate further growth in gold output in 2013 and 2014 from our existing mines while we advance our development projects at La India and Meliadine,” said President and CEO Sean Boyd.
