Agnico Eagle cautiously optimistic about second Nunavut gold mine
“Feasibility and permitting are really the critical part for us now”
Depending on gold prices, the approval of certain permits and the results of a feasibility study due later this year, the prospects for Agnico Eagle’s Meliadine gold mine project are looking good, a company manager said April 8.
“I believe very strongly that the project will move forward,” Nancy Guay, Meliadine’s general program manager, said during a project update session at the Nunavut Mining Symposium in Iqaluit April 8.
Last year, Agnico Eagle slashed $80 million from the project’s capital budget, leaving just $45 million to spend in 2014.
Gold prices slumped in 2013 to about $1,300 an ounce and the company coped with one-time problems at its Kittila mine in Finland and at other projects.
The price of gold has improved a little this year. As of April 8, gold was listed at $1,428 per ounce on goldpriceoz.com.
But at another April 8 presentation at the mining symposium, Scotiabank’s commodity specialist, Patricia Mohr, said she expects gold prices to settle in at around $1,350 per ounce by 2015.
“It’s a question of commodity prices. Feasibility and permitting are really the critical part for us now,” Guay said.
A “big part” of Meliadine’s $45 million 2014 budget will go towards working on permits and completing a feasibility study, she said.
Guay said that if the project gets up and running, the mine will operate for 10 to 15 years at least.
“But we believe that it can be more than that,” she said.
That’s because the project’s mining camp stretches for nearly 80 kilometres, and much of the area is still under exploration.
A final environment impact assessment will be completed at the end of April, Guay said.
Then comes a final public hearing on the project, as well as a memorandum of understanding for an Inuit Impact and Benefits Agreement — both scheduled for August 2014.
The company hopes the Nunavut Impact Review Board will decide in September 2014 whether to give Meliadine the green light.
After that, the federal aboriginal affairs and northern development minister would likely issue a project certificate in early 2015 and construction of the mine could begin in the summer of 2016, Guay said.
That means the mine has the potential to replace revenue that will be lost when Agnico Eagle’s Meadowbank gold mine stops operating in 2018, Guay said.
“It is strategic to [Agnico Eagle Mine’s] overall plan that it replace the Meadowbank operation with another mine with a similar cash flow profile,” Guay said.
She added a mine at Meliadine would have the potential to produce 400,000 ounces of gold per year.
The Meadowbank mine produced a record 430,613 ounces in 2013 — a total cash cost of $774 an ounce.
Over $200 million has been spent on developing the Meliadine mine so far, Guay said. Last year she said $6.8 million of expenditures went towards Nunavut suppliers.
“I think it’s quite positive for the economy of Nunavut,” Guay said.
And Guay said the people of Rankin Inlet support the project, too.
Meliadine is located about 24 kilometres from Rankin Inlet and is connected by an all-weather road.
One of the main concerns she heard from the community during technical hearings and round table meetings was the impact on caribou in the area.
“The migration is close to the project. So we need to suspend operation during the migration,” Guay said.
Agnico Eagle has built an all-weather road to the site, which includes three bridges.
Guay said they want to open the road for hunters in mid-May.