Agnico-Eagle is a Canadian-based gold miner with operations in Canada, Finland and Mexico. Goldex is one of their mines located in the Abitibi region of Quebec that has been very profitable for the company. Goldex accounted for 30% of the company’s total gold production in 2009 and 19% of its production in 2010.

The mine, however, ran into trouble in 2010. After a massive underground blast, Goldex started experiencing water inflow. Critics claim that the proper way to have handled the situation would have been to suspend mining operations immediately in order to stabilize the mine. Agnico-Eagle did not do so, but rather continued mining operations while attempting to repair the problem. Unfortunately, Agnico-Eagle’s response to rectify the problem may have been both slow and ineffective.

The water-inflow problem carried a number of risks for Agnico-Eagle, including that it could increase the cost of operation, rendering it uneconomical to operate the mine. The water-inflow issue could force Agnico-Eagle to close down the mine and loose its investments in it up to that point. Disclosing such information would certainly harm the company’s stock value. Being a publicly traded company, however, Agnico-Eagle was required to disclose the information under the rules of various securities acts in Canada.

During the whole period when Goldex was struggling with containing the water-inflow problem, Agnico-Eagle not only failed to disclose the information, but also still touted the mine as a significant current and future financial contributor. Agnico-Eagle only disclosed the specific details and risks of the water-inflow problem on October 19, 2011 when it finally shut down operation at the mine.

According to a Canadian Press article in The Globe and Mail, the shut down cost the company a $161.5 million after-tax write-off and another $32.7 million due to a US closure provision. Upon disclosure of the information, market value of Agnico-Eagle’s shares on the Toronto Stock Exchange dropped 18% from C$57.97 per share to C$47.35 per share, the lowest since 2007.

Having seen the value of their portfolios drop due to the decisions and actions of the company, shareholders filed a class action suit against Agnico-Eagle. In March 2012, the class action law firm of Siskinds LLP filed a lawsuit in the Ontario Superior Court on behalf of those who purchased Agnico-Eagle’s securities between March 26, 2010 and October 18, 2011.

The lawsuit alleges negligent misrepresentation by the defendant of the risks involved with the Goldex mine. It also alleges that the company is vicariously liable for the actions and omissions of its officers, directors and employees. Lastly, the lawsuit alleges that Agnico-Eagle was unjustly enriched and as such, the plaintiff investors are seeking equitable remedy from the Court.

In total, investors are seeking general and special damages of $250 million.

Agnico Eagle Mines Investor Class Action Settlement

On November 2, 2015, the plaintiffs and Agnico have entered into an agreement to settle the action for $17 million. The Settlement Agreement, Plan of Allocation and Class Counsel fees have been approved by the Ontario Superior Court of Justice and the Superior Court of Quebec. To view the settlement agreement, see https://www.siskinds.com/cmsfiles/PDF/Securities/AgnicoEagle/Settlement%20Agreement.pdf

For more information, visit Siskinds LLP’s website at https://www.siskinds.com/class-action/agnico-eagle-mines-ltd-2/