Meadowbank project

Agnico-Eagle Mines is in the early stages of building its 100%-owned MEADOWBANK open pit gold mine and concentrator 70 km north of Baker Lake, in the Kivalliq District of Nunavut–the company’s first tundra location. Scheduled to begin production in January 2010,the $390-million project will be the first gold mine built since Nunavut was formed in 1999. The territory currently has no operating mines, since the Jericho diamond mine closed earlier this year.

Exploration in the late 1980s led to the discovery of gold mineralization on the Meadowbank property. Cumberland Resources had bought 100% interest by 1997, and completed a positive feasibility study in 2005. Agnico-Eagle acquired Cumberland in April 2007, in an all-share acquisition that valued Cumberland at $710 million.

The 49,000-ha property covers a portion of the 25-km Meadowbank gold trend in the Archean poly-deformed Woodburn Lake Group. Three deposits will be mined as open pits. GOOSE ISLAND and PORTAGE are in banded iron formation, and the VAULT DEPOSIT 7 km to the north lies in intermediate volcanic rocks. Gold mineralization is associated with intense quartz flooding, as well as pyrite and/or pyrrhotite.

Drilling in 2007 increased the probable reserves to the current total of 29.26 million tonnes (t) grading 3.67 g/t Au, containing 3.45 million oz of gold, including a small amount from the CANNU ZONE. This will allow for an eight-year-plus mine life. The current indicated and inferred mineral resources contain an additional 1.48 million oz of gold, all within 225 m of surface. With this amount of gold in reserves and resources, orebodies open in every direction and a large land position, Meadowbank is Agnico-Eagle’s best bet to become another ‘company-maker’ size mine, says Agnico-Eagle president Ebe Scherkus.

The focus of the $10-million exploration program on the property in 2008 will be a four-rig, 25,000-m drill program to extend the Portage and Goose Island zones to the south, the Cannu zone to the north, and the Goose South zone at depth., converting resources to reserves at Goose Island and Goose South.

The permitting process has been lengthy and fragmented, according to Scherkus. Cumberland signed an impact benefit agreement with the KIA (Kivalliq Inuit Association) in March 2006. In December 2006, Cumberland received a project certificate from the Nunavut Impact Review Board for development of Meadowbank and additional permits and licences were received from the Nunavut government, the Department of Indian Affairs and Northern Development and the KIA. The Type B water licence was received in February 2007. In April 2008 Agnico-Eagle signed a water compensation agreement with the KIA. Still outstanding is a Type A water licence from the Nunavut Water Board, but it is expected in July.

A 110-km all-weather gravel/rock road from Baker Lake to the site was completed this March by Nuna Logistics. Fuel, explosives, concrete and building steel as well as some of the mining equipment were barged by NTCL to Baker Lake last year from Bcancour, Que., and Churchill, Man., and are now being trucked to site by Arctic Fuel and Peter’s Expediting.

Hatch and Golder Associates are providing engineering for the mine and plant design. The site is being leveled and the plant foundation pour started, with Nahanni building a batch concrete plant at the site. Gem Steel of Edmonton is erecting fuel tanks at the site and in Baker Lake.

The Meadowbank mine will be a series of open pits. Initial ore will come from the Portage pit, with the waters of Second Portage Lake kept away from the pit area by a containment dike, as has been done at the Diavik diamond mine in the Northwest Territories. The start of mining in 2010 depends on whether the dike can be completed by the end of this year’s construction season. The enclosure will then be pumped dry and prepared for mining. Similarly, containment dikes will be built around the Goose Island pit, which will start up in 2011. Portage and Goose Island pits will be depleted 2014,when the Vault pit will begin production, and it will provide all ore from 2015-17.With mine closure, the dikes will be breached and the pits allowed to flood.

To protect the arctic char and lake trout living in the area of the future Portage pit, a “fish-out” process will begin this July, removing and transporting about 550 kg of live fish to nearby lakes for a cool $400 cost per fish.

Ore will be drilled, blasted, and mined by excavators and hydraulic shovels. It will be trucked to the gyratory crusher next to the mill. Waste will be crushed for dike construction or fill material, or placed on two waste piles or in the mined-out pits.

Crushed ore will feed an 8,500-t/d conventional process plant. A SAG mill will operate in closed circuit with a pebble crusher, and work with a ball mill and cyclones to reduce ore to 80% passing 74 microns. The thickened cyclone overflow will be leached with cyanide in agitated tanks followed by gold recovery in seven carbon-in-pulp tanks. Gold will be stripped from the carbon and recovered by electrowinning followed by smelting. Gravity is expected to recover 40% of the gold. Test work by SGS Lakefield has predicted a 93.2% gold recovery.

Meadowbank should produce 360,000 oz/y over mine life (430,000 oz/y for the first four years), at total cash costs of US$300/oz.

Tails will be treated with standard SO2- cyanide destruction process, and pumped 2.7 km to the permanent tailings facility. All process water will be reclaimed for the mill. The tails will be permanently frozen in one layer, covered by non-acid-generating waste rock, and monitored for 10 years after closure.

Meadowbank’s management team has been hired including regional manager Martin Bergeron. Up to 500 people will be working on construction this summer; there will be 390 employees when Meadowbank is in operation.

A 1,900-m-long airstrip by the camp is used to transport people. The 334-bed per- manent camp is being built at the mine site by Outland, with new accommodations, but kitchen and dining facilities coming from Voisey’s Bay in Labrador. An 82-bed exploration camp is being built 10 km south of the mine.

There has been a lot of local hiring, with about 40% Inuit in the current workforce. As a result, unemployment in Baker Lake (pop. 800) has dropped from 45% last year to 3% today. The company is now touring other Kivalliq communities such as Arviat, Rankin Inlet and Chesterfield Inlet looking for potential employees.

Agnico-Eagle has developed excellent relationships with the mayors and councils of Baker Lake and Rankin Inlet, who are very supportive, as they are already seeing some of the benefits of the Meadowbank project. Commerce has improved markedly. The two towns will soon have cell phone service for the first time, brought in by the company because of the mine. Agnico-Eagle is working on social issues in the area, urging high school students to complete their education, and offering university scholarships to students from the region.

The operation will have a profound effect on not just the local area but the whole sparsely- populated territory. When it reaches full production in 2012,Meadowbank is expected to increase the Nunavut gross domestic product by an astonishing 20%, according to David Simailak, member of the Nunavut Legislative Assembly representing Baker Lake.