Agnico Eagle expands
Company stakes more than 68,000 additional hectares
Karen K. Ho
Northern News Services
Saturday, October 31, 2015
KANGIQLINIQ/RANKIN INLET
Mining company Agnico Eagle is staking even more property near its Meliadine gold project, located about 25 kilometres north of Rankin Inlet and 290 kilometres southeast of the company's Meadowbank mine.
A photo of Agnico Eagle's Amaruq drill program near Rankin Inlet. The company recently staked 68,000 additional hectares in the territory. - photo courtesy of Agnico Eagle
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In its latest news release about its third quarter earnings, the company stated it recently staked claims totalling 68,012 hectares on land west-northwest of the advanced stage project. The company said after nearly 800 rock samples were collected, 21 of them returned values above 1 gram of gold per tonne, including seven with more than 10 grams of gold per tonne and a maximum value of 42 grams of gold per tonne.
By comparison, the former Con Mine in Yellowknife produced more than 6.1 million ounces of gold at an average grade of 16.1 grams of gold per tonne.
The new properties appear to be geologically similar to Meadowbank, Meliadine and the company's 114,761 hectare Amaruq project, located 50 kilometres northwest of Meadowbank. The data collected this summer will help prepare a drill program for next year, according to the report.
At Amaruq, Agnico completed phase two of its drilling program for this year in mid-October.
According to the company, the 108,000 metres of drilling that were completed in 378 holes confirmed the project's Whale Tail and Mammoth zones form a single mineralized system at least 2.3 kilometres long, to a depth of 450 metres.
While the results in the amounts of gold per tonne varied, Agnico's report states the results for the Whale Tail deposit were expected to have a positive impact on the size of Amaruq's upcoming resources estimate.
Notably, Agnico also singled out the V zone as a potential second source of open pit ore at Amaruq, but stated further drilling was required.
The most recent drilling at depth in the Whale Tail area also indicated that this deposit hosts high-grade points, which suggest the site has underground potential, according to the report.
In terms of infrastructure, an application to construct an all-weather access road between Meadowbank and the Amaruq site was filed in the first quarter and is currently working its way through the territory's permitting process.
"We've always said the capital expectation for the road are in the $90 to 100 million range," said Agnico CEO Sean Boyd on the company's conference call on Oct. 29, calling Nunavut one of the company's key operating platforms over the next couple of years.
When it comes to Meliadine, the company's largest development project, the report states there are currently ongoing internal studies "to evaluate the potential to extract additional ounces from the Tiriganiaq and Wesmeg/Normeg deposits." This could potentially extend the life of the mine, improve the project economics, and increase the after-tax internal rate of return. The company expects these studies to be completed in the first half of next year.
By the end of the third quarter, approximately 1,960 metres of underground development had been completed, and additional underground equipment has been transported to site. The company's plan for underground development totals approximately 2,500 metres.
On Oct. 5, the Nunavut Water Board issued a License B permit for Meliadine pre-development work. Agnico said they expect License A, which is required for production activities, to be granted in the second quarter of next year.
"Meliadine's return will go up," Boyd said during the conference call. "We're trying to put a growth plan in place that doesn't introduce successive risk into our business."
Meadowbank, which has been in production for more than four and a half years, saw processing amounts fall from an average of 10,824 tonnes per day in the third quarter, down from 11,492 tonnes per day during the same quarter last year.
Agnico attributes this to a higher percentage of vault ore being processed, which affected this department's efficiency.
The report states the current US dollar to Canadian dollar foreign exchange rate, lower fuel costs and the growing significance of the Amaruq Project were the reasons why the decision was made in July to expand the Vault pit. Because of this development, the Meadowbank mine is now expected to be in production until the third quarter of 2018, approximately one year longer than originally forecast.
Gold production at the mine for this year is forecast to be approximately 1.65 million ounces, up from 1.6 million ounces previously. Total cash costs are also expected to be lower at approximately $590 to $610 per ounce instead of the previously forecast $600 to $620 and all-in sustaining costs of approximately $840 to $860 per ounce (previously $870 to $890) expected.
On Oct. 28 Agnico also announced a dividend of eight cents per share.
