Agnico idles Quebec, Nunavut mines

Agnico Eagle Mines Ltd. March 25 reported that it is temporarily shuttering its LaRonde Complex, Goldex and Canadian Malartic gold mines in Quebec, and reducing operations at its Meadowbank and Meliadine mines in Nunavut.

This decision follows a March 23 order by the Quebec government for all non-essential businesses in the eastern Canada province to close in response to the COVID-19 outbreak.

Based on the Quebec decision, as well as discussion with provincial leaders, Agnico has decided to ramp down its Quebec mines in an orderly fashion that ensures the safety of employees and the sustainability of the infrastructure.

All three Quebec operations are to be placed on care and maintenance until April 13, with minimal work taking place during that time.

Employees sent home as a result of the shutdown will receive their base pay during this time.

In addition, the Toronto-based gold miner will reduce activities at its Meliadine and Meadowbank mining operations in Nunavut, which are serviced out of Val d'Or, Quebec. Exploration activities in Canada will also be suspended during this period.

"The health, safety and well-being of all our employees and the communities that we operate in continue to remain our priority. As directed by the Quebec government, our Quebec mines will be placed on care and maintenance. At the same time, our Nunavut mines will be operating at reduced levels," said Agnico Eagle CEO Sean Boyd.

Last week, the company announced that it is sending all of its Nunavut-based workforce at its operations in the Canadian territory home, with pay.

While there have been no confirmed cases of COVID-19 at any of Agnico's global operations, the company took this precautionary measure to help ensure the coronavirus strain known as COVID-19 does not enter Nunavut communities via Agnico mines.

There is roughly a 40-day stockpile of ore at Meliadine and the mill will continue operations from this already mined store.

At Meadowbank, crews will focus on maintenance activities and water management at Amaruq, a satellite mine that is now providing ore to the mill, ahead of spring thaw and the extra water that comes with it.

Agnico said the activities at its Nunavut operations are expected to position the company to achieve a timely and safe ramp up of normal operations once all restrictions are lifted.

Affected Nunavut employees will continue to receive their base pay through April 13.

"Even with the reduction in mining activities, we plan to maintain a state of operational readiness in order to resume normal operations in a timely and safe manner once the restrictions are lifted," said Boyd.

With the reduced production activity at the Quebec and Nunavut operations, together with the uncertainties with respect to future developments, Agnico Eagle expects its overall gold output for 2020 to drop significantly and its production costs to rise. As such, the company is withdrawing its 2020 production and cash costs guidance.

As a cautionary measure given the current uncertainty with respect to the COVID-19 pandemic, Agnico also drew down US$1 billion on its US$1.2 billion unsecured revolving bank credit facility. The company currently has no plans to use the funds, though a portion may be used to repay a portion of the US$360 million 6.67% Series B Notes due in April. The company will also be reviewing its 2020 sustaining and growth capital budget with a focus on reducing expenditures.

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