Shutting down silver operations contributes to Agnico’s ’89 loss

Toronto-based Agnico-Eagle Mines (TSE) was forced last year to count the cost of shutting down its silver mining operations in Cobalt, Ont. After swallowing a fourth-quarter writedown of $17.7 million, the company reported a net loss of $13.9 million or 91 cents per share in the four months ended Dec. 31, compared with a net loss of $3.5 million or 24 cents per share in the 1988 period.

The 1988 fourth-quarter loss included an extraordinary gain of $0.4 million or 3 cents per share relating to insurance payments, following a fire at the Cobalt mill.

Those results brought Agnico’s losses for the year to $10.1 million or 66 cents per share, compared with losses of $5.1 million or 36 cents per share at the same time last year. Annual revenues dropped to $37 million from $42.3 million in 1988.

After merging last year with affiliate Dumagami Mines, Agnico increased its gold production in 1989 to 156,978 oz. from 60,371 oz. in 1988. Annual silver output, however, dropped to 813,588 oz. from 1.34 million oz. the previous year.

Agnico said the fourth-quarter charges included an $11.3 million writeoff on deferred costs relating to its silver division which was shut down last year because of low silver prices. While a silver price of about US$9 per oz. is needed to make the operations economic, the metal was trading recently at US$5.10.

In addition, the charges include a writeoff of deferred exploration costs and related investments. Agnico-Eagle Mines (TSE) –000s Year ended Dec. 31 1989 1988 Revenue $37,000 $42,300 Net earnings (loss) (10,100 )(5,100)

per share (0.66 ) (0.36)004