Agnico says share price thwarted plans

An Agnico-Eagle Mines (TSE) shareholder was claiming victory recently after the company elected not to proceed with a public offering to raise $40 million for exploration at its properties. Jacques Forget, who owns 3% of Agnico-Eagle through Montreal- based Invesfor, says an interlocutory injunction launched by his company to prevent the offering forced Agnico-Eagle to withdraw it.

“Invesfor believes that its efforts have gotten the better of management,” said Forget.

But according to an Agnico- Eagle spokesman, the decision to cancel its issue of units and warrants was simply a function of the company’s share price which has dropped from $12.88 in January to $7.88.

“We weren’t interested in issuing shares at these prices,” said Agnico Secretary-Treasurer Sean Boyd who declined to comment on recent criticisms directed at Agnico management by Forget. Agnico President Paul Penna refused to be interviewed for this story.

While Agnico had planned to spend $32 million over the next three years at its two gold mines and properties in Quebec and the Northwest Territories, Boyd wasn’t prepared to say what alternatives are being considered or when they will be announced.

Roughly $20 million had been earmarked for expansion and definition of the Dumagami and Telbel orebodies in Quebec which are expected to yield 175,000 oz. gold this year.

Instead, Boyd said management is waiting to see how Forget will fare with his attempt to persuade shareholders to vote against them at the company’s meeting in Toronto’s Royal York Hotel, June 29. Forget has been highly critical of Penna for failing to protect the company from falling gold prices through hedging programs adopted by other Canadian gold producers like American Barrick Resources (TSE).

“Agnico needs a good vice- president of finance looking at the best way to sell production, ” said Forget. He has also accused Penna and other Agnico executives of granting themselves what he called “excessive amounts from the company in the form of wages, bonuses, pension payments and loans.” Penna received $1 million in cash compensation last year.

Invesfor has given its legal counsel a mandate “to evaluate all possible actions of legal recourse” that could be taken to prevent Agnico- Eagle management from voting the shares held by subsidiaries Mentor Explorations (ME) and Long Shots Inc.

Together the two companies hold about 11% of Agnico’s 25.8 million outstanding shares.