Strong economic forecast for Nunavut

Economists at the government of Nunavut are predicting major economic growth in Canada's northernmost territory next year, partly due to increased production and steady commodity prices in its mining sector.

Nunavut Premier P.J. Akeeagok told an audience at the Nunavut Trade Show Sept. 19 that the Nunavut economy is expected to grow by 13.6% in 2024, up from around 7% this year.

"I'm happy to report Nunavut's economy is expected to expand strongly this year, at a rate of 7% – that's 6% higher than 2020," he said. "Even better, our growth rate is expected to almost double in 2024, reaching an impressive 13.6%."

Nunavut's Department of Economic Development and Transportation made the projections, according to published reports.

Canada's overall economic growth rate, by contrast, is projected to be much slower in 2023 and into 2024. TD Bank's quarterly economic forecast, also published on Sept. 19, pegged Canada's growth rate at 1.2% for this year and 0.7% next year.

Akeeagok cited economic diversification as an area of growth, including the mining sector, which he said has seen significant growth in Nunavut, especially during the height of the COVID-19 pandemic.

"While several sectors of the economy contracted during the COVID years, our mining sector expanded in both years by 27% in 2020 and 14% in 2021," he said.

"Ascending gold production and iron ore shipments, coupled with firm commodity prices should (increase) the value of our 2023 mining output," he explained.

Agnico Eagle Mines Ltd. and Baffinland Iron Ore Mines Ltd. were the key actors in the recent exponential growth in the Nunavut economy.

The two companies, moreover, are expected to continue to fuel the territory's growth in the near future.

Outlook bright for gold

During the first six months of 2023, Agnico reported payable gold production of nearly 1.7 million ounces, compared with 1.52 million oz during the same period a year earlier. The increase in payable gold production resulted from additional days of production at three of the company's mines in other regions of Canada.

"Agnico Eagle delivered another strong operational quarter, with record quarterly gold production and better than expected costs driving solid financial results," said Ammar Al-Joundi, Agnico Eagle's president and CEO, in reporting financial results for the first half of 2023 in July. "With this excellent start to the year, we are tracking very well to meet our annual production and cost guidance."

Agnico's Nunavut mines, however, overcame several challenges, including an early caribou migration, to report an increase in gold production for the period.

Gold output at Agnico's Meliadine Mine in central Nunavut during the first half of 2023 felt adverse effects from lower gold grades and operating delays, including 11 days of downtime in June. Overall production remained relatively flat during the period at 178,148 oz, compared to 178,256 oz a year earlier, thanks to increased mill throughput and additional ore sourced from the open pit.

Meliadine also achieved record monthly mill throughput in May as well as an overall robust performance from its processing plant in the second quarter of 2023.

A phase 2 mill expansion is expected to be completed in mid-2024 and followed by a processing rate ramp-up of throughput to 6,000 tpd by year's end 2024.

Favorable surface and underground exploration drilling results in the first half of 2023 at Meliadine led Agnico to approve a supplemental budget of C$7 million for the remainder of 2023 to drill another 25,000 meters and extend the mine's exploration ramp towards the east at the Tiriganiaq deposits.

The drilling continues to investigate the vertical extensions of mineralized zones in the central part of the mine's Tiriganiaq, Wesmeg and Wesmeg North deposits.

Gold production at the Meadowbank Complex, also located in central Nunavut, climbed to 205,885 oz during the first half of 2023, up from 156,463 oz during the same period of 2022. This increase resulted from higher gold grades in underground production and a higher-than-anticipated grade sequence in the Whale Tail and IVR open pits in the first quarter of 2023.

At the Hope Bay Project, where production has been suspended temporarily, nine exploration drill rigs were operating at the Doris and Madrid deposits and regionally during the second quarter. Based on positive results at Doris and Madrid during the first half of 2023, Agnico approved a supplemental exploration budget at Hope Bay of C$14.5 million for an additional 58,000 meters of drilling during the remainder of 2023. Previously, the exploration budget at Hope Bay for the full year in 2023 was C$30.6 million (US$22.3 million) for 72,000 meters of drilling.

A regional exploration program also got underway, with field work commencing in May. One drill rig tested anomalies identified during the 2022 and 2023 field seasons, with a focus on targets near the Koignuk fault located four kilometers (2.5 miles) northwest of the Madrid deposit and targets outside of the main Madrid mineralized trend.

The company said technical studies, meanwhile, continue to progress, while larger production scenarios for Hope Bay are being evaluated.

More iron output?

In mid-September, the Nunavut Impact Review Board recommended approval of Baffinland Iron Mines Corp.'s request to continue shipping six million metric tons of iron ore through Milne Inlet until the end of 2024.

Canada's Northern Affairs Minister Dan Vandal will take up the review board's recommendation and after considering the proposal with other federal ministers, make a final decision on whether to grant approval of the iron miner's request.

The impact review board assesses the environmental and social impact of development projects in Nunavut and makes recommendations to the northern affairs minister who must give final approval to the proposals.

Baffinland, the sole iron miner in Nunavut, began operations in 2015 and today its Mary River Mine operation now consists of mining and shipping iron ore by truck from a reserve at Deposit No. 1 on Baffin Island about 150 kilometers (93 miles) north to Milne Port. From there, the iron ore is loaded onto ships during the brief, open water season every summer and transported to customers, mainly in Europe.

Milne Port has been developed to accommodate a 3.5-million-metric-ton ore stockpile, an ore dock, a maintenance facility, and associated infrastructure for the operation of the port facilities.

The mine was developed by Baffinland using a phased approach and in accordance with local and territorial government agreements.

In 2018, Baffinland received approval to increase annual ore production to six million metric tons.

In addition to the six-million-metric-ton limit, Baffinland's current proposal calls for approval to ship up to 900,000 metric tons of stranded ore delivered to the Milne Inlet port in previous years but not shipped out due to either poor weather or shipping restraints.

If granted, this would give Baffinland the ability to potentially ship up to 6.9 million metric tons of ore in 2023 and 2024.

Baffinland's license currently allows the miner to ship 4.2 million metric tons of ore annually from the Mary River Mine. Since 2018, however, the company has operated under terms of temporary permits that allow it to ship six million metric tons per year.