Canadian Mining Journal


GOLD: Agnico’s Meliadine reaches commercial production

NUNAVUT – Agnico Eagle Mines’ Meliadine mine – its largest gold deposit in terms of resources – achieved commercial production ahead of schedule and below the initial capital budget, the company reports.

Total construction costs after crediting pre-commercial gold sales came in below the 2017 guidance of US$900 million.

The mine, near Rankin Inlet, is expected to produce about 230,000 oz. of gold this year at total cash costs of US$612 per ounce.

The company forecasts total 2019 production of 1.75 million oz. – with its Amaruq deposit on schedule to reach commercial production in the third quarter of the year.

“The successful delivery of Meliadine into commercial production represents a transition phase for AEM as it begins to exit a period of elevated capital intensity and moves towards a free cash flow inflection in the second half of 2019,” Andrew Kaip of BMO Capital Markets comments in a research note to clients. “In our view, the announcement marks another positive step for the company as it executes on its strategy …. Meliadine represents approximately 30% of our project NPV5% for AEM at BMO metal price assumptions.”

Agnico acquired Meliadine in July 2010, and wholly owns the 1,114-km2 property. The board approved construction of the mine in February 2017.

News of Meliadine reaching commercial production sent Agnico’s shares up $2.54, or 4.5%, to $59.20.

The gold producer’s shares have traded within a 52-week range of $42.35 to $62.80, and the company has a $13.9-billion market capitalization.

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