Agnico Eagle (TSX: AEM) is set to spend $100 million over the next three years to study the potential for developing an underground mine at the Detour Lake mine in Ontario.
The study follows the release of what the company calls the 2024 Life of Mine Plan, which updates the production profile of the current open pit mine and incorporates updated costing under a preliminary economic assessment, while also considering the potential for an underground operation. The revised plan calls for revised mill throughput of 29 million tonnes per annum.
The addition of underground operations is expected to result in average annual production at Detour Lake growing to 1.0 million ounces of gold per year for a 14 year period, beginning in 2030.
Underground mining is said to permit the company to access a high grade core of mineralization that exists at depth below the current reserve pit. The resource here is said to consist of 0.7 million ounces of gold at a grade of 2.36 g/t based on indicated resources, and a further 3.9 million ounces at a grade of 2.50 g/t in the inferred category.
The proposed underground operation is expected to have a mining rate of 11,200 tonnes per day beginning in 2030, while the current mill would be expanded to operate at 79,450 tonnes per day by 2028. Annual gold production meanwhile would expand by 300,000 ounces per year from 2030 through to 2043.
Cash costs for the underground project are estimated at $690 per ounce, while development capital expenditures are estimated at $731 million, with total sustaining capital expenditures estimated at $631 million. The IRR on the expansion project is estimated at being 18% on an after tax basis.
The 2024 Life of Mine Plan as a whole meanwhile estimated gold production increases of 27% to 22 million ounces of gold over the life of the mine, while extending the overall life of mine by two years.
The $100 million investment to study the potential expansion is expected to be put towards establishing a 2.0 kilometre exploration ramp to a depth of 270 metres, which will be used to collect a bulk sample, as well as for infill and expansion drilling. That ramp is also included in anticipated capital expenditures for the expansion.
Agnico Eagle last traded at $88.68 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
