Good news is golden

After a major expansion, the LaRonde gold mine near Val d’Or, Qubec is again hitting its stride. Records are being set for underground development, ore production and mill throughput.

For Toronto-based owner Agnico-Eagle Mines Ltd., LaRonde’s continuing success is a good news story, as it has been since the mine opened 15 years ago. LaRonde is Canada’s largest gold deposit, containing more ounces than any other, and a proven producer. And the company’s exploration strategy will assure it a profitable future in Qubec for many years to come.

The LaRonde mine had a modest beginning, but it has grown spectacularly, from 90,000 oz of gold in its first year to a proposed 2004 production budget of between 380,000 and 400,000 oz. The mill has been in an almost-constant state of expansion recently, increasing from 2,000 tons per day (tpd) of mill throughput in 1999 to 3,600 tpd in 2000 to 5,000 tpd in 2001 and finally >7,000 tpd in 2003.

Likewise the mine. The original production shafts reached depths of 1,730 and 3,960 feet. To supply ever-increasing ore tonnages to the mill, Agnico-Eagle completed the Penna shaft to 7,380 feet in February 2000. The orebody that supports all this activity has grown into a world-class deposit, hosting as much as 8.1 million oz of gold.

Such rapid expansion does not always go smoothly. Recently the workforce has dealt with setbacks that reduced 2002 production, difficult underground congestion problems as the ore production rate was ramped up, and a breakdown of the semi-autogenous grinding (SAG) mill in the plant. Both Agnico-Eagle president and CEO Sean Boyd and executive vice-president and COO Ebe Scherkus refer to LaRonde employees as “battle-hardened”, and they are. Management truly appreciates their struggle and determination.

LaRonde geology

The LaRonde property is found midway between the towns of Rouyn-Noranda and Val d’Or. It straddles the southern boundary of the Abitibi and Pontiac sub-provinces. It is underlain by three east-west trending regional lithological units. From north to south they are the Kewagama Group (interbedded wacke), the Blake River Group (a volcanic assemblage), and the Cadillac Group (wacke interbedded with pelitic schist and minor iron formation).

The Blake River Group is further subdivided into three members, one of which–the Upper Felsic member–hosts the significant gold and base metal mineralization at LaRonde. It is about 500 feet thick near the No.1 shaft and as much as 1,800 feet thick near the Penna shaft. There are more than a dozen economic zones. They vary widely in size and type from massive to disseminated polymetallic sulphides.

The formations that are now the LaRonde mine were first uncovered in 1937, but it was not until 1965 that Dumagami Mines made an initial resource estimate. Geologists figured there might be over a million tons of material grading 0.18 ounces per ton (opt) Au, 0.58 opt Ag and 0.29% Cu. Given the low grades, work was suspended. In 1974 the resource was revised upwards. In 1979 Agnico-Eagle bought an interest in Dumagami (which it absorbed in 1989) and took over the exploration program. The feasibility study completed in 1987 was positive, and the go-ahead was given for a 1,500-tpd operation, based on reserves and resources of about 5.5 million tons grading 0.145 opt Au and 0.42% Cu.

Reserves and grades have continued to grow as mining goes deeper. The Agnico-Eagle geologists increased their estimates of proven and probable reserves plus indicated and inferred resources by 23% during 2002, to 65.4 million tons grading 0.12 opt Au, 1.44 opt Ag, 0.36% Cu, and 2.15% Zn.

LaRonde today

LaRonde is a classic hardrock development. Mining moves deeper as the operation matures. The first ore was recovered from the vicinity of the No.1 shaft, then the deeper No.2 shaft. Since completion in 2000, the Penna shaft has become the main production shaft. In May of this year, 45% of ore was supplied from the deeper levels of the mine. And now that the lower-level crusher (7,050 ft below the surface) is operational, about 75% of ore production will be hoisted from the deepest stopes.

Sometimes the best-laid plans go awry. Development of deeper ore blocks was delayed due to mechanical failure and excessive heat at depth last year, and that drove up production costs. The SAG mill was out of commission for several weeks beginning in July 2002, and that delayed the backfilling program. The mine suffered a 30,000-ton rock fall at about the 212 level in March this year. No one was injured, and no reserves were lost. The fallen area has been repaired with cemented backfill and paste fill. It is in times such as this that Agnico-Eagle employees become “battle hardened”.

The 40% expansion to the mill has given it a nameplate capacity of 7,000 tpd, which is turning out to be well below the tonnage that is regularly treated. Miners delivered an average of 7,600 tpd of ore to the plant during the month of May 2003 and even set a record of 8,600 tpd for one week during the month. The mine is well on its way toward making up the ounces lost due to the rock fall and hitting the production target of 300,000 oz of gold this year.

The principal recovery processes are two-stage grinding followed by a gravity circuit and flotation followed by a carbon-in-pulp circuit. The plant produces gold-silver bullion, zinc concentrate, and a bulk copper-gold-silver concentrate. The gold recovery rate is in the neighbourhood of 95%.

The total cash costs per ounce of gold are US$180. With cash costs budgeted to fall to US$140/oz in 2004, LaRonde will surely be among the lowest cost producers in the world.

LaRonde of the future

The LaRonde mine of the future will be an even deeper, richer enterprise. The deposit remains open at depth below 7,050 ft and in other directions. Eighty-seven thousand feet of exploration drilling below the current working levels will prove up or even expand reserves in the 20 North zone. One intercept assayed 0.52 opt Au over 9.2 feet. Drill core from the margins so far tested is also returning excellent assays.

Agnico-Eagle has studied the options for mining this deeper mineralization, calling the project LaRonde II. One option would be to sink an internal shaft below the Penna shaft. Ultimately cheaper (at US$236 million) is the choice to sink a new shaft from surface to 10,000 ft. Independent evaluation of such a plan indicates that mining could continue without interruption during the sinking, and that current mining methods could be modified to recover deeper reserves at a rate of at least 7,000 tpd. The development costs of the LaRonde II project, based on sinking a new shaft, would be Cdn$50/oz assuming a US/Cdn dollar exchange rate of 0.72.

The company expects to have a complete bankable feasibility study for LaRonde II in the third quarter of 2004.

The future promises what the past has held along the Cadillac-Larder Break–more gold. Agnico-Eagle’s geologists are keen to find it, and well on their way to making historic discoveries. The company has acquired additional properties in the area, and will continue this strategy into the future.

The Abitibi mining camp is one of the most prolific gold camps in the world. Between Rouyn-Noranda and Val d’Or there are dozens of past and current producers. As well as LaRonde, Agnico-Eagle holds the Chibex North, Chibex South, Ellison, Ferris, Norgold, Normand, Lapa, and Goldex properties. Not all of these are familiar names yet, but Lapa and Goldex hold great promise.

The Lapa project is seven miles east of the LaRonde mine. Agnico-Eagle recently completed buying the property from Breakwater Resources. The deposit hosts high grade veins with visible gold, and it is open in all directions. There may be at least a million ounces of gold there. And there is potential to expand the mineralization below 2,100 feet. Agnico-Eagle has already upped the inferred resources estimate by 25% to 4.0 million tons at 0.25 opt Au. An accelerated surface drill program with five rigs is underway, as is additional metallurgical testing. Agnico-Eag
le plans to evaluate the potential for an underground program this fall.

The Goldex project lies 35 miles east of LaRonde, near Val d’Or. It has been the subject of investigation for many years. The latest figures give it 22.56 million tons with an undiluted grade of 0.068 opt Au. A 113,000-ton bulk sample with a grade of 0.074 opt Au has been tested. Developing a mine at the property would cost about US$131 million, but if it produced 7,500 tpd of ore as planned, it would rival LaRonde.

The next steps at the Goldex project are to commission an independent feasibility study, double-check the potential grade and consider a phased development approach. Agnico-Eagle would like to see Goldex take advantage of synergies with the LaRonde mine.

Agnico-Eagle’s future lies below the surface in the deep, rich rocks of Qubec. The company benefits from the great geological potential of the Abitibi Greenstone Belt. Even more it benefits from its own imagination and commitment. With good gut instincts and luck, Agnico-Eagle is propelled to the forefront of Qubec mining companies.

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