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Agnico advances its next two Nunavut gold mines

 

Last updated 5/8/2016 at Noon



Agnico Eagle Mines Ltd. April 28 reported good progress on a plan of transitioning to processing ore from its Amaraq deposit in Nunavut once mining is completed at the Meadowbank gold mine, expected near year's end 2018.

During the first quarter of 2016, the Meadowbank mill processed an average of 10,390 metric tons per day gold ore, roughly 5.6 percent less than the 11,006 tpd averaged during the same period a year earlier.

Agnico attributes the drop primarily to replacement of belts on the conveyor system feeding the SAG mill and a roughly eight-day unscheduled shutdown to repair a main shaft on the secondary crushing circuit.

The lower throughput resulted in an increase in the cost per metric ton of ore milled to C$77 this year, compared with C$71 in the first quarter of 2015.

Meadowbank's payable production in the first quarter of 2016 was 72,311 ounces of gold at total cash costs of C$788/oz. This compares with 88,523 oz. of gold produced during the first quarter of 2015 when total cash costs equaled $655/oz. In addition to lower throughput, the processing of lower grade ore - down 14 percent - resulted from the lower production and higher costs.

Studies are currently underway to investigate additional opportunities to extend production at Meadowbank through year-end 2018.

As Agnico finds opportunities to extend Meadowbank, it is making progress toward the potential development of Amaraq, a large gold project about 50 kilometers (30 miles) to the south, as a satellite operation.

In March, the company received the final permit needed to build an all-weather access road linking the Amaruq exploration site and the Meadowbank mill.

Construction of the Amaruq Exploration Access Road began in the first quarter of 2016 and nine kilometers (5.6 miles) of the 62-kilometer (38.5 miles) road has been completed.

An application for an amendment to the Amaruq Exploration Type B Water License was submitted on March 31 to allow for the development of an exploration ramp and portal and the mining of a bulk sample from the deposit.

The permit approval process for the exploration ramp is expected to take roughly nine months.

In order to mine the Whale Tail deposit at Amaruq, Agnico plans to apply for needed amendments to Meadowbank licenses by the end of June.

The company, meanwhile, is engaged in an initial 75,000-meter drill program aimed at expanding the Whale Tail deposit and delineating a second source of open-pit ore.

At the end of 2015, the Amaraq project hosted 16.9 million metric tons of inferred resource averaging 6.05 grams per metric ton (3.3 million oz.) gold.

Through the end of March 2016, 18,836 meters of drilling in 84 holes had been completed at Amaraq.

Agnico Eagle CEO Sean Boyd told shareholders that drilling at Whale Tale is encountering thicker zones of gold mineralization.

"As everybody knows, we have the large mill at Meadowbank, which will be available to us by the end of 2018.

So the thicker the deposit is at Whale Tail, the higher the mining rate to take advantage of the available capacity at the Meadowbank plant." Drilling is ongoing with nine rigs on the property.

An updated Amaruq mineral resource is expected in the second half of 2016.

At Meladine, Agnico's largest advanced exploration project based on mineral reserves and resources, the company has set a capital budget of US$96 million for 2016.

This year's activities focused on roughly 3,700 meters of underground development, detailed engineering and procurement, construction of essential surface infrastructure and the acquisition of a used camp facility for the large gold development project located near the community of Rankin Inlet, Nunavut.

The goal of the program is to ensure that the project remains on track for a potential 2020 production startup.

During first-quarter 2016, the underground development was advanced by 1,103 meters.

Of this total, 442 meters of development were completed in March, making it the best month since the beginning of the project.

Agnico anticipates receiving federal approval for a Type A Water License needed for the construction and operation of the Meliadine project by the end of May. "So Meliadine will be fully permitted," said Boyd. The company, meanwhile, is evaluating the potential to extract additional gold from the Tiriganiaq and Wesmeg/Normeg deposits, which could potentially extend the mine life, increase annual production and improve project economics of Meliadine.

These studies are expected to be completed by the end of 2016.

 

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