Gold operation shines with early startup

With the Meliadine project near Rankin Inlet, Nunavut hitting its target for commercial production in mid-May, senior gold miner Agnico Eagle Mines Ltd. is already reaping the rewards of output from its newest and largest mine, in terms of mineral reserves, even as gold prices sprint upward.

The target, accomplished ahead of schedule and anticipated to cost less than projected capital expenses of US$900 million, marks the second time the Toronto-based senior has ushered into production a gold mine in Canada's northernmost territory and brings more good news to the Inuit-majority and under-employed labor market in this part of the world.

"Congratulations to all of our employees at Meliadine for achieving commercial production ahead of the original schedule and below the initial capital budget," Agnico Eagle Mines Chief Executive Officer Sean Boyd said in a statement May 30.

Boyd attributed the lower capital costs to strong project execution, which curbed contingency costs and owners' costs.

"We also would like to thank the various government agencies and the local communities for their support of the project and our efforts in Nunavut," he added.

Nearly one-third (386) of Agnico Eagle's 1,224 employees and contractors at Meliadine are Inuit.

At a community celebration June 19 marking the mine's official opening, Agnico Eagle Mines Chairman Jim Nasso presented three checks totaling C$1 million to local community projects: C$250,000 to help build a regional fire response training center, C$250,000 for construction of a headquarters building for the Nunavut Literacy Council, and C$500,000 over five years to the council's programs that promote and advance adult and youth literacy rates in Nunavut.

Citing the miner's support for these life-saving and life-changing initiatives, Nasso told a crowd of more than 1,000 people that "Agnico Eagle has developed tremendous respect and trust with you – the people of Nunavut – since we first came to visit this region back in 2007.

"We will continue to work hard to earn your trust. We will continue to work with you to build safe, strong and healthy communities. We will continue to help secure a better future for all Nunavummiut," he added.

Huge property hosts hidden depths

Meliadine is a 111,358-hectare property that covers an 80-kilometer- (50 miles) long greenstone belt. Its current mineral reserves are mainly in the Tiriganiaq deposit at underground and open pit depths, and totals 3.8 million ounces of gold in proven and probable reserves (16.7 million metric tons at 6.97 grams per metric ton gold) as of Dec. 31, 2018.

Commissioning of the process plant at Meliadine began in early February, and pre-commercial gold production totaled 17,582 ounces for the first quarter of 2019. Mill throughput averaged about 3,000 metric tons per day in the second quarter, and the plant operated at 3,700 tpd on several occasions.

Metallurgical recoveries are expected to average 96 percent, while phase 1 mill capacity is expected to hit 3,750 tpd, increasing in phase 2 to roughly 6,000 tpd starting in 2023.

Three underground mining areas were in operation in the first quarter, with a fourth underground area expected to commence by June 30.

Agnico Eagle plans to mine Meliadine through several underground mining operations and open pits over a 14-year mine life, and believes the property offers numerous opportunities to create additional value, both at the mine and on the large regional land package.

The Meliadine project includes seven gold deposits, six of which are part of the current mine plan. Tiriganiaq is the largest of the deposits with a strike length of approximately 3,000 meters at surface and a known depth of 800 meters. The current mineral reserves at the Meliadine project are mainly in the Tiriganiaq deposit and consist of 16.7 million metric tons grading 6.97 g/t gold (containing 3.8 million ounces of gold) at underground and open pit depths as of the end of 2018).

The Pyke Fault and associated secondary structures (i.e., the Lower Fault) appear to control gold mineralization on the property. Along the fault is a series of oxide iron formations that host six of the seven Meliadine mine deposits. The northern, magnetite-rich Upper Oxide iron formation hosts the Tiriganiaq zone, as well as the Wolf North and Discovery zones. The southern, weakly magnetic Lower Lean iron formations contain the F Zone, Pump, Wolf Main and Wesmeg deposits. Normeg, situated between the Wesmeg and Tiriganiaq zones, is hosted by mafic volcanics.

The deposits are all within five kilometers (three miles) of Tiriganiaq, except for Discovery, which is 17 kilometers (10.5 miles) to the east-southeast. Each of these deposits has mineralization within 120 meters of surface, making them potentially mineable by open pit methods.

Agnico Eagle said deeper mineralization at Meliadine could potentially be mined with underground methods, which are currently being considered in various studies.

Results from the company's 2019 exploration program are in a previously unexplored area below the deepest west extent of the Tiriganiaq deposit. Hole M19-2525-W1 intersected 39.9 g/t gold over 4.5 meters at 794 meters depth (lode 1252), the deepest reported intercept to date at the Meliadine project, demonstrating that Tiriganiaq remains open at depth and to the west. This new area is expected to increase inferred mineral resources in 2019 pending additional diamond drilling.

Two recent drill holes located some 40 meters west of hole M18-2505-W2, which intersected 9.8 g/t gold over 6.6 meters at 600 meters depth (lode 1025), are expected to upgrade resources in this area.

Hole M18-2505-W3 intersected 11.3 g/t gold over 6.5 meters at 559 meters depth (lode 1025) and hole M19-2505A intersected 4.0 g/t gold over 2.8 meters at 616 meters depth (lode 1000). Further, hole M19-2505A intersected two other lodes including 7.5 g/t gold over 8.6 meters at 589 meters depth (lode 1100).

The conversion program is expected to increase the indicated mineral resources in the Tiriganiaq deposit by year's end.

Agnico-Eagle said this resource conversion drilling at Tiriganiaq and Wesmeg is ongoing, and exploration drilling test the Tiriganiaq deposit will continue.

Amaruq startup due in third quarter

Meliadine is expected to produce some 230,000 oz gold in 2019, including more than 47,000 oz from pre-commercial output in the first two quarters, and 385,000 oz in 2020, its first full year of operation.

This is Agnico-Eagle's second mine in Nunavut after Meadowbank, an operation that began churning out gold in March 2010.

Meadowbank, however, is winding down as its mill transitions to process ore from Amaruq, a gold property about 50 kilometers, or 32 miles to the northwest.

Situated on a 94,548-hectare property almost adjacent to the 51,943-hectare Meadowbank property, Amaruq was approved to be developed as a satellite deposit to supply ore to the existing Meadowbank mill early in 2017.

Dewatering of Whale Lake began early in the first quarter of this year, followed by the ramp-up of open pit mining activities. The long-haul truck fleet is performing as planned with ore being mined and trucked to the Meadowbank mill where it is being stockpiled for future processing. Underground ramp development is progressing on schedule.

At Whale Tail, the company said results continue to demonstrate the extension of high-grade mineralization below the proposed pit outline, including 14.5 g/t gold over 7.3 meters at 396 meters depth. Drilling at V Zone continued to expand the deposit's known mineral resources. Highlights include 29.8 g/t gold over 3.4 meters at 357 meters depth.

"With Meliadine ramping up production over the balance of the year, and Amaruq on schedule to achieve commercial production in the third quarter of 2019, the company is well-positioned to achieve its gold production target of 1.75 million ounces for 2019," Boyd said.

Currently, Agnico Eagle's global portfolio includes 10 mines, mostly located in North America.