Agnico-Eagle to grab second Nunavut gold field

Rankin Inlet may soon see a gold mine at its doorstep, which would be similar to the Baker Lake’s Meadowbank complex shown here. (PHOTO BY BILL BRADEN)

Heavy equipment operators and miners from the Kivalliq region who now work at the Meadowbank gold mine near Baker Lake can look forward to a day when they can work closer to home.

Agnico-Eagle Mines Ltd., the owner of Meadowbank, has made a $570 million bid to acquire the Meliadine gold property, 24 kilometres north of Rankin Inlet.

And a go-ahead for Agnico-Eagle’s friendly deal with Meliadine’s owner, Comaplex Minerals Corp., means Nunavut could see its second gold mine up and running by 2015.

“The Meliadine property is a perfect fit with our Arctic skill set and the transaction solidifies our commitment to Nunavut,” Sean Boyd, Vice-Chairman and CEO of Agnico-Eagle, said in an April 1 news release announcing the proposed acquisition.

The proposed Meliadine mine, which lies about 300 km south of Meadowbank, includes open pit and underground mining operations, although most of the property’s highest-grade deposits are underground.

This summer Agnico-Eagle plans to start drilling 24 targets on the 67,000 square-km Meliadine property, first explored by the Western Mining Corp. in the late 1980s.

During the 2010 and 2011 exploration seasons, up to 100 workers will be housed in an on-site camp, Agnico-Eagle said in April 5 teleconference on their plans for Meliadine.

“We like the project’s location and its proximity to Meadowbank,” Boyd said.

Meliadine also has high-grade gold reserves, which have the potential to grow, Boyd said.

But before moving into development, Agnico-Eagle wants to see how large the estimated gold reserves on the site are.

The Meliadine property is believed to hold at least 3.29 million ounces of gold at grades that run as high as 7.9 grams per tonne.

Based on its exploration results, Agnico-Eagle wants to begin a feasibility study by the end 2011.

A larger mining complex for Meliadine than Comaplex planned for the site is possible, but Boyd said there are “no expectations for what we will ultimately build.”

However, the economic spin-offs for the Kivalliq start this summer with “significant economic impacts” for Rankin Inlet.

And, as Meliadine moves into development, Meadowbank workers who commute from nearby communities in the Kivalliq, will be able to move to the new mine.

The presence of trained local work force is a “potential up side” to Meliadine.

Shipping, including bringing an ocean-going vessel into Rankin Inlet, with barges going to Baker Lake for Meadowbank, are also among Agnico-Eagle’s plans for Meliadine.

Drawing on Agnico-Eagle’s previous experience in Nunavut, Boyd said he’s hopeful the company will be able to move more quickly and smoothly through the regulatory process and the negotiation of an Inuit impacts and benefits agreement.

“We’re a known entity in Nunavut so we’d hope we could speed the process up but that remains to be seen,” he said.

Although the deal hasn’t been formally accepted or finalized, Agnico-Eagle wants to obtain the 87 per cent of Comaplex that it doesn’t already own through a share swap.

Under this deal, current Comaplex shareholders will get new Agnico-Eagle shares whose value is about 34 per cent higher than their existing Comaplex shares.

Comaplex’s non-Meliadine assets will be spun off into a new subsidiary company called “New Comaplex.”

The construction of the future mine would like be as costly as the Meadowbank site, which came in at more than $700 million.

However, Agnico-Eagle hopes to move ahead at a slower place than it did at Meadowbank, and save money by bringing in a modular, pre-fabricated processing plant.

At Meadowbank, some of the facilities and contracts were already in place when the company took it over from Cumberland Resources in 2007.