SOMBA K'E/YELLOWKNIFE - Agnico-Eagle, the current owner of the Meadowbank mine in Baker Lake, will acquire the Meliadine mine near Rankin Inlet, the company recently announced.

Sean Boyd is the vice-chairman and CEO of Agnico-Eagle. Agnico-Eagle, the current owner of the Meadowbank mine in Baker Lake, will acquire the Meliadine mine near Rankin Inlet. - photo courtesy of Agnico-Eagle

Agnico-Eagle Mines Limited will pay $650 million to acquire the remaining Comaplex Minerals Corporation shares, which it does not currently own and in the process, Comaplex' Meliadine mine, after both companies reached an agreement in principle.

The deal is expected to close in June. Agnico-Eagle also owns the Meadowbank mine, which is expected to produce about 400,000 ounces of gold in its first year of operation. That mine has 3.6 million ounces of gold reserves with average grades of 3.5 grams per tonne.

The Meliadine gold deposit, about 24 kilometres north of Rankin Inlet and 300 km east of Agnico-Eagle's Meadowbank mine, has 5 million ounces of gold with average grades in excess of 7 grams per tonne.

The company likes the deposits quality, location and exploration potential, said Sean Boyd, Agnico-Eagle's vice-chairman and CEO.

"Its proximity to our Meadowbank Mine is important to us in terms of extracting synergies and also in terms of putting to use our Arctic skill set," said Boyd, also noting no major contracts of long-term commitments are attached to the Meliadine project.

"That's important to us because we can now move that project forward in the direction that suits us and at the pace that works best for Agnico."

Boyd said the company plans to explore and drill the deposit, accelerate the underground development program to expand the resource and start a feasibility study before the end of 2011.

"We feel we need to do that before we decide what should be built on the project. We really want to see how big the deposit is. We are not really anticipating any production from Meliadine until around 2015," he said, adding the company's approach toward the project will be steady.

The company has no expectations yet of what it will build on the site, said Boyd.

Over time, Agnico-Eagle expects the mine to have a "significant economic impact" on Rankin Inlet, said Ebe Scherkus, the company's chief operating officer. He added 75 to 100 people, including the mining crew, will be hired at the start of operations.

Rankin Inlet mayor John Hickes said Rankin Inlet residents should be hired to work at the mine, especially since it closer than Meadowbank at Baker Lake.

"The acquisition, I think, is good for this region and this area. It won't be a gold mine overnight ... but I think it's positive for our community, positive for the region to have an operating gold mine. It's a long time in coming," he said.

"Some of the people ... working at Baker Lake now might want to transfer to this one once it gets operational because they have the work experience and it's very close to home; it's close enough that you can drive there and back doing your work shift."

- with files from Darrell Greer