Agnico closes production gap

Agnico Eagle Mines Ltd. Feb. 14 reported that its plans to bring the Amaraq and Meliadine gold mines in Nunavut into production is ahead of schedule.

In recent years, the company expanded its presence in Nunavut, a jurisdiction the company sees as both politically stable and geologically rich.

"(W)e continue to make excellent progress on our Nunavut development projects which has allowed us to advance the expected start-up of Meliadine and increase our production guidance for 2018 and 2019," said Agnico Eagle President and CEO Sean Boyd.

Meadowbank, which began operation in 2010, now has enough ore to continue operations into 2019, which bridges the gap between the end of Meadowbank mining and the expected start of production at Amaruq, a satellite deposit about 50 kilometers (31 miles) to the north.

The additional Meadowbank production comes from an extension of the mine plan at the Vault and Phaser pits in 2018 and the Portage pit in 2018 and 2019. In addition, production will be supplemented from stockpiles in 2018 and 2019.

The Meadowbank Mine produced 352,256 ounces of gold in 2017, and is forecast to produce another 220,000 oz next year and 60,000 oz in 2019.

Amaruq ore is scheduled to be trucked to Meadowbank in 2019, where it will be processed through the 11,000-metric-ton-per-day mill there.

Production from Amaruq is currently slated to begin around August of next year. Agnico expects that the new satellite operation will produce around 162,050 oz of gold in 2019 and around 265,000 oz in 2020.

Agnico's initial mine plan for Amaruq anticipates the mine will produce 2.1 million oz of gold between 2019 and 2024, with pre-mining activities starting in 2018 at the Whale Tail deposit. This start-up mine plan only considers mining roughly 40 percent of the current mineral reserve and resource base outlined at the project.

At the end of 2017, Amaruq hosted 20.1 million metric tons of probable reserves averaging 3.67 grams per metric ton (2.4 million oz) gold; and 8.8 million metric tons of indicated resources averaging 3.62 g/t (1 million oz) gold.

Agnico invested US$89 million into Amaruq in 2017. With this capital investment, the company completed the road connecting the satellite gold project to the Meadowbank Mine; drilled roughly 98,000 meters at Amaruq; constructed a portal for the development of an underground ramp starting in 2018; and completed an updated technical study that converted large portions of the Amaruq resource to reserves.

Agnico is also on pace to begin production at Meliadine, a gold project about 25 kilometers (15 miles) from the town of Rankin Inlet, Nunavut in 2019.

Given the progress of construction and development activities in 2017, and the acceleration of capital spending, the company now expected to begin production at Meliadine by mid-2019, which is roughly one quarter ahead of previous forecasts.

The company budgeted US$360 million for capital expenditures there in 2017. This work included some 5,600 meters of underground development; about 26,500 meters of drilling; and new camp and other surface facilities.

With the advancement of the production schedule, Agnico now estimates that Meliadine will produce roughly 170,000 oz of gold in 2019, compared to previous guidance of 125,000 oz, and 385,000 oz in 2020.

At the end of 2017, the Meliadine property was estimated to host 16 million metric tons of proven and probable mineral reserves averaging 7.12 g/t (3.7 million oz) gold; 25.3 million metric tons of indicated resources averaging 3.77 g/t (3.1 million oz) gold; and 13.8 million metric tons of inferred resources averaging 6.04 g/t (2.7 million oz) gold.

In addition, Agnico said there are numerous other known gold occurrences along the 80-kilometre- (50 miles) long greenstone belt at Meliadine that require further evaluation.

For now, however, Agnico is pleased to have extended Meadowbank and accelerated its two coming mines in Nunavut – moves that help absorb most of the gap in gold production previously anticipated by the company.

"(W)hen we were sitting here a couple of years ago, there was certainly an expectation that there could have been a sizable production gap in Nunavut between the end of Meadowbank and the potential start-up of Amaruq and Meliadine. So, our team in Nunavut has done an exceptional job at optimizing the plant and closing that gap to the point that we have a slight drop in production in 2018," said Boyd.

–SHANE LASLEY