Agnico Eagle Mines (TSX: AEM) has pulled the trigger on its long anticipated Hope Bay project, approving a development decision that puts one of the largest new gold mines in Nunavut on track for first production in 2030.
The decision follows a preliminary economic assessment released Tuesday that outlines an underground operation feeding a 6,000 tonne per day mill, with annual gold output projected between 400,000 and 435,000 ounces a year during steady state operations.
Initial development capital is pegged at roughly $2.4 billion, broken down into $1.5 billion for surface infrastructure, $700 million for underground development across the Doris, Madrid and Patch 7 mining fronts, and $200 million for mobile equipment. Total sustaining capital over the life of mine is estimated at $1.1 billion.
Average total cash costs are forecast at $958 per ounce and all-in sustaining costs at $1,214 per ounce.
As for economics, the project boasts a $2.7 billion after-tax net present value and an IRR of 19% at $3,600 an ounce gold. At current spot prices near $4,500 per ounce those figures jump to a 26% IRR and a $4.3 billion NPV.
The initial mine plan stretches 11 years, processing 22.8 million tonnes of ore at an average grade of 6.50 grams per tonne for total production of approximately 4.5 million ounces. Metallurgical recovery is expected to average 94%.
Notably, that mine life relies on just 55% of measured and indicated resources and 48% of inferred resources currently in the ground. The deposit hosts 5.79 million ounces in the measured and indicated category and another 3.33 million ounces inferred, with significant exploration upside across an 80 kilometre greenstone belt running from Doris south to the Boston deposit.
President and CEO Ammar Al-Joundi framed Hope Bay as the first major milestone in delivering the company’s targeted 20% to 30% production growth over the next decade, with the project lifting the Nunavut platform toward annual output of 800,000 to one million ounces.
The project is also reasonably de-risked heading into construction. Detailed engineering is approximately 62% complete, key underground access points are advanced, and the company is leveraging nearly two decades of Arctic mining experience. Surface infrastructure upgrades, including port, camp and water management improvements, are well underway.
Agnico Eagle last traded at $247.83 on the TSX.
Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
