Meadowbank workers pour first gold bar

Meadowbank, Nunavut's newest gold mine, produced its first gold bar Feb. 27, marking an important milestone for owner Agnico-Eagle Mines Ltd.

Workers poured the gold bar, which weighed 8,134 grams or 287 ounces (nearly 18 pounds), at the mine near Baker Lake.

"The target is to produce about 300,000 ounces per year, so we should pour, once a week, a few bars," the mine's manager, Denis Gourde, said March 1.

The 39,000-hectare, or 96,330-acre, Meadowbank property is located about 110 kilometers, or 68 miles, by road north of Baker Lake in Nunavut's Kivalliq region.

About 500 people currently work at the mine site, including construction workers, but that number is expected to drop to 340 when the mine begins regular production later this year.

Meadowbank also is Nunavut's newest and only operating mine.

The territory's last mine, Tahera Diamond Corp.'s Jericho Diamond Mine, suspended operations in 2008 due to financial troubles. Owners of Jericho, which produced 786,000 carats of gem quality diamonds in less than two years, said in January that they have begun the process of selling the mine.

Larger dividends for shareholders

Meanwhile, Agnico-Eagle plans to increase its shareholder dividend as its capital costs decrease after completing five new mines during the past two years, the Toronto-based company said March 1.Speaking at a mining conference in Florida, Agnico-Eagle CEO Sean Boyd said spending is set to plunge following the recent construction of the company's new mines, including Meadowbank. The miner anticipates capital spending of about C$478 million this year, but expects it to fall to C$178 million in 2011 and to about C$100 million a year thereafter.

"What that will allow us to do is to generate net free cash flow, and what do we do with that, we will reinvest some of that back in the business at these projects, but we also increase the dividend," he said. Agnico-Eagle last raised its annual payout in 2007 to 18 cents a share.

Property hosts rich potential

Meadowbank is one of Agnico-Eagle's largest mines and the fifth one the company has opened since 2008, joining the Goldex and Lapa mines in Quebec, the Kittila mine in Finland and the Pinos Altos mine in Mexico.

The new mine has about 3.6 million ounces in reserves, grading 3.5 grams per metric ton gold, and Agnico-Eagle says it has tremendous potential for more. The property also has measured and indicated resources of 1.5 million ounces and an inferred resource of 400,000 ounces.

Meadowbank depends on an annual, warm-weather sealift by barge from Hudson Bay to Baker Lake for transportation of bulk supplies and heavy equipment. In addition to the all-weather road to Baker Lake, an on-site airstrip is used for shipping food and goods and for transporting employees who work on a fly-in, fly-out basis.

Mine commissioning and first gold production from the Portage open pit began in early 2010. The mine is expected to produce an average of 350,000 ounces of gold per year over a nine-year mine life through 2019 at an estimated cash cost of C$460 per ounce in 2010 dollars.