Canadian Mining Journal

Feature

Agnico Eagle’s gold properties continue to pay higher dividends

Many Canadian mining companies have earned national and international recognition for their knowledge and understanding of what it takes to be a successful and innovative miner, and Agnico-Eagle Mines Limited of Toronto is certainly one of them.



Many Canadian mining companies have earned national and international recognition for their knowledge and understanding of what it takes to be a successful and innovative miner, and Agnico-Eagle Mines Limited of Toronto is certainly one of them.

In fact, since 1957 when the company became known as “Agnico,” a name cleverly derived from the periodic table of elements using the symbols for silver (Ag), nickel (Ni), and cobalt (C0), the company’s early focus, until the later merger with Eagle Mines Ltd., a successful gold exploration company, the now-known Agnico-Eagle has become a leader in mineral exploration and development.

With operations in Canada, Finland and Mexico, Agnico-Eagle is a company with international credentials and it proudly ranks 13th in Canadian Mining Journal’s list of Canada’s Top 40, but perhaps most impressive is that it ranked first in Canada with an asset change of +331.1 % from 2013 to 2014.

And here’s a look at five Canadian projects that have helped the company reach this envious position.


Canadian Malartic (50% ownership)

The Canadian Malartic operation is one of the largest operating gold mines in Canada. The large open pit mine and plant, located in the Abitibi region of northwestern Quebec, began commercial production in May 2011. The operation was built by Osisko Mining Corp., which was jointly acquired in June 2014 by Agnico Eagle Mines Limited (50%) and Yamana Gold Corporation (50%).

The Canadian Malartic mine is located in the heart of the prolific Abitibi Gold Belt in Quebec, south of the town of Malartic, approximately 25 kilometres west of the City of Val-d’Or. It only took six years from the initiation of exploration drilling in 2005 for the then-owner Osisko Mining Corporation (“Osisko”) to complete the mine development. In August 2009, Osisko received government approval to begin construction of the mine. The first gold pour was in April 2011, and the start of commercial production in May 2011. The total capital cost to that time was approximately C$1.1 billion.

The mine poured its millionth ounce of gold in November 2013. The mine is currently Canada’s largest operating gold mine, and is developing into one of the world’s largest pure gold producers. The 55,000-tonnes/day open pit mine and plant produced 535,470 ounces of gold as well as 533,315 ounces silver (on a 100% basis) in 2014. It is expected to produce approximately 280,000 ounces of gold in 2015, to Agnico Eagle’s account, with a mine life expected to last through 2028. The mine has 4.33 million ounces of gold in proven and probable reserves* (127 million tonnes grading 1.06 grams of gold per tonne) on a 50% basis. (Source: 50% basis, Canadian Malartic December 31, 2014 Reserves and Resources.)

Mining productivity improves, North Zone mining rate increases in Q2 2015

  • Agnico Eagle’s 50% share of attributable production at the Canadian Malartic mine during the second quarter of 2015 totaled 68,441 ounces gold at a total cash cost per ounce of $609 on a by-product basis; production in this period included 69,000 ounces of silver.
  • During the quarter, on 100% basis, the mill processed 4,614,000 tonnes of ore (50,705 tonnes/day). Mine site costs per tonne were in line with guidance at approximately C$20 (C$23 including royalties).
  • The average stripping ratio in the second quarter was 2.64 to 1.0.
  • Agnico Eagle’s 50% share of attributable production at the Canadian Malartic mine during the first six months of 2015 totaled 136,334 ounces gold at a total cash cost per ounce of $621 on a by-product basis; production in this period included 141,000 ounces of silver.
  • During the six-month period, on 100% basis, the mill processed 9,294,000 tonnes of ore (51,343 tonnes/day). Mine site costs per tonne were approximately C$20 (C$23 including royalties).
  • Discussions took place in the second quarter with permitting authorities about improving the efficiency and environmental performance of the existing mobile crusher used for pre-crushing. An application for a Certificate of Authorization is being prepared for possible submission later this year.

Outlook

Mill throughput levels at Canadian Malartic are forecast to be approximately 53,000 tonnes/day through 2016 (on a 100% basis). The Partnership continues to work on several mining and milling initiatives to optimize the operations. Permitting activities for the Barnat Extension and deviation of Highway 117 continue; the process remains on schedule for receipt of the necessary permits in November 2016. Drilling continues on the Odyssey North and Odyssey South zones, with data currently being compiled and interpreted. Odyssey North is in part hosted on the Malartic CHL property in which the Partnership increased its interest to 100% in March 2015.


Goldex

The Goldex mine is part of the chain of operations and properties that Agnico Eagle owns in the Abitibi region of Quebec. Underground mining from the M and E satellite zones and processing in the mill started in September 2013. The Goldex operation achieved commercial production in October 2013.

The Goldex underground mine and processing plant are located in the city of Val-d’Or, Quebec, some 60 kilometres east of the LaRonde mine. This proximity allows for operating synergies between the two sites. Commercial production from the M and E zones was achieved in October 2013.

Goldex has proven and probable reserves of 0.3 million ounces of gold* (7.1 million tonnes grading 1.5 grams/tonne gold) as of December 31, 2014.

The current reserves, which are in the M, Mx and E zones, are estimated to support an underground mine over a three-year life with average annual production of approximately 95,000 ounces gold, using long-hole stoping methods with paste backfill. Based on a positive internal technical study, in July 2015 the company approved the Goldex Deep 1 project, which is the development of the Dx and D zones between 850 and 1,200 metres depth, for production beginning in 2018 using the same mining methods.

Goldex is expected to produce 100,000 ounces of gold in 2015 and to average approximately 95,000 ounces of gold annually from 2016 through 2017 from the M and E zones. The mine is expected to average more than 100,000 ounces of gold production from 2018 through 2024 from the Dx and D zones. (Source: Goldex December 31, 2014 Reserves and Resources)

Deep 1 project approved for mining; production expected to extend through 2024

  • In the second quarter of 2015, payable gold production totaled 26,462 ounces at a total cash cost per ounce of $633 on a by-product basis.
  • During the quarter, the mill processed 604,000 tonnes of ore (6,640 tonnes/day) with mine-site costs at C$34 per tonne.
  • In the first six months of 2015, payable gold production totaled 55,712 ounces at a total cash cost per ounce of $585 on a by-product basis.
  • During the six-month period, the mill processed 1,171,000 tonnes of ore (6,468 tonnes/day) with mine-site costs at C$34 per tonne.
  • Agnico Eagle approved the Goldex Deep 1 project in July 2015 to develop the Dx and D zones for production. Deep 1 underground development and resource conversion drilling will be accelerated in the second half of the year.
  • Mining operations at GEZ remain suspended.

Outlook

The Deep 1 project was approved based on a positive internal technical study focused on mining the lower part of the Dx zone and the top of the D zone from a depth of 850 metres to 1,200 metres (Level 120), adding seven years to the mine life to 2024. The company plans to develop Deep 1 from the current Goldex infrastructure, with existing equipment and personnel. The mining rate for Deep 1 will be approximately 6,000 tonnes/day, producing an average of more than 100,000 ounces of gold per year. The plant would have additional capacity to process up to 2,000 tonnes/day from other sources such as the nearby Akasaba West project. No changes are anticipated in the processing plant; tailing deposition at the Manitou site is expected to continue. The Deep 1 project development capital is forecast at approximately $135 to $140 million including the cost of installing an automated conveyor system, and sustaining capital is estimated at $60 to $70 million.

The advancement of the Deep 1 project unlocks significant upside potential for additional mineral resource conversion in Deep 1, potential for mining at Deep 2 (below Level 120), potential to develop the South Zone from the Deep 1 infrastructure, and the potential development of the Akasaba West deposit.


Lapa

The Lapa underground mine is located near the LaRonde operation. It is Agnico Eagle’s highest grade mine, with gold grades more than twice as rich as the company’s average.

The Lapa underground mine is located in the Abitibi region of northwest Quebec, just 11 kilometres east of Agnico Eagle’s LaRonde mine, and 49 kilometres west of the Goldex property. Lapa has proven and probable reserves containing approximately 0.2 million ounces of gold* (0.9 million tonnes grading 5.8 g/tonne gold). Lapa is expected to pour 75,000 ounces of gold in 2015 and 50,000 ounces of gold in 2016, with a mine life ending in 2016. Additional near-term exploration results could extend the mine life. (Source: Lapa December 31, 2014 Reserves and Resources)

Zulapa Z7 zone continues to yield higher grades and recoveries

  • In the second quarter of 2015, payable gold production totaled 19,450 ounces at a total cash cost per ounce of $678 on a by-product basis.
  • During the quarter, the mill processed 126,000 tonnes of ore (1,387 tonnes/day) with mine-site costs at C$126 per tonne.
  • In the first six months of 2015, payable gold production totaled 45,370 ounces at a total cash cost per ounce of $615 on a by-product basis.
  • During the six-month period, the mill processed 278,000 tonnes of ore (1,538 tonnes/day) with mine-site costs at C$122 per tonne.

Outlook

At Lapa, 2015 is the last full year of production based on the current life of mine plan. In 2016, production is expected to decline from the current level. Additional exploration drilling in the Zulapa Z7 zone at depth and on the adjoining Pandora property (50% Agnico Eagle) could potentially extend the mine life.


LaRonde

LaRonde is Agnico Eagle’s flagship mine, and it is located in the Abitibi region of northwestern Quebec. LaRonde has produced 4.6 million ounces of gold since it opened in 1988 and currently has a mine life lasting through to 2024. The 7,200-tonne-per-day mine and plant has produced 4.6 million ounces of gold as well as valuable by-products. The mine still has 3.4 million ounces of gold in proven and probable reserves* (21 million tonnes grading 5.2 grams of gold per tonne).

The deep extension of the LaRonde mine achieved commercial production in November 2011 and is the focus of mining activities going forward. LaRonde is expected to increase gold production rates, anticipated to exceed 300,000 ounces per year by mid-2016 and continuing over the life of mine, reflecting the higher gold grades expected at depth.

Ore is processed at the LaRonde mineral processing complex, which includes copper and zinc flotation as well as precious metals recovery and refining. The processing plant produces doré bars containing gold and silver, as well as zinc and copper concentrates that also carry valuable gold and silver credits. (Source: LaRonde December 31, 2014 Reserves and Resources)

Gold production steadily increasing, commissioning of coarse ore conveyor on track for late Q3 2015

  • In the second quarter of 2015, payable gold production totaled 64,007 ounces at a total cash cost per ounce of $613 on a by-product basis.
  • During the quarter, LaRonde also produced 201,000 ounces of silver, 827 tonnes of zinc and 1,133 tonnes of copper.
  • During the quarter, the mill processed 568,000 tonnes of ore (6,242 tonnes/day) with mine-site costs at C$99 per tonne.
  • In the first six months of 2015, payable gold production totaled 122,900 ounces at a total cash cost per ounce of $656 on a by-product basis.
  • During the six-month period, LaRonde also produced 398,000 ounces of silver, 1,763 tonnes of zinc and 2,300 tonnes of copper.
  • During the six-month period, the mill processed 1,126,000 tonnes of ore (6,223 tonnes/day) with mine-site costs at C$101 per tonne.

In the second quarter, work continued on the installation of the coarse ore conveyor system that will extend from the 293 level to the crusher on the 280 level. Installation of the new conveyor and the connection of an internal ramp at the 281 level are expected to be completed by the end of the third quarter of 2015. These two infrastructure components should help to improve mining flexibility and reduce congestion in the deeper portions of the mine.

Outlook

Studies continue to assess the potential to extend the reserve base and carry out mining activities below the present level (311 level, 3.1 kilometres depth) to the 371 level (a depth of 3.7 kilometres below surface). Drilling is ongoing to further expand the known mineral resource between the 311 and 341 levels. Additional holes are being drilled to evaluate the extent of the mineralization down to the 371 level.


Meadowbank

The Meadowbank open pit gold mine in the Nunavut Territory of Canada is Agnico Eagle’s first Low Arctic mine and largest gold producer.

The Meadowbank mine is located in the Kivalliq region of Nunavut, about 2,600 kilometres northwest of Toronto. It is 300 kilometres west of Hudson Bay and 110 kilometres by road north of Baker Lake, the nearest community. Meadowbank was Agnico Eagle’s largest gold producer in 2014, and has 1.2 million ounces of gold in proven and probable reserves* (12 million tonnes at 3.08 g/t). The mine is located on a very large property that has exploration potential for gold. Meadowbank depends on the annual, warm-weather sealift by barge from Hudson Bay to Baker Lake for transportation of bulk supplies and heavy equipment. An all-weather road links Baker Lake to the site. An on-site airstrip is used for shipping food and goods and for transporting employees, who work on a fly-in, fly-out basis.

Mine commissioning and first gold production from the Portage open pit began in early 2010. The mine is expected to produce 400,000 ounces of gold in 2015. (Source: Meadowbank December 31, 2014 Reserves and Resources)

Mine life extended as Vault pit extension approved

  • In the second quarter of 2015, payable gold production totaled 91,276 ounces at a total cash cost per ounce of $688 on a by-product basis. The mine also produced 57,000 ounces of silver in the quarter.
  • During the quarter the mill processed 1,019,000 tonnes of ore (11,199 tonnes/day), with mine-site costs at C$74 per tonne.
  • In the first six months of 2015, payable gold production totaled 179,799 ounces at a total cash cost per ounce of $672 on a by-product basis. The mine also produced 153,000 ounces of silver in the period.
  • During the six-month period the mill processed 2,010,000 tonnes of ore (11,103 tonnes/day), with mine-site costs at C$73 per tonne.

Outlook

In 2015, approximately 55% of the production is expected to occur in the second half of the year; the expected production increases would be due to higher grades being mined from the Portage E3 pit.

The company announced in July 2015 that it would proceed with the expansion of the Vault pit. With the expansion, the Meadowbank mine is now expected to be in production until the third quarter of 2018 (approximately one year longer than originally forecast). In addition, a major drill program is planned at Amaruq in 2015 to expand the initial inferred resource base, with the goal of potentially developing the deposit as a satellite operation to Meadowbank. The extension of the Meadowbank mine life is expected to help bridge the production gap between the end of production at Meadowbank and the potential start of production at a satellite operation at Amaruq (not yet approved for construction).