Agnico-Eagle plans for a better end to 2011

Agnico-Eagle plans to cut production costs at its Meadowbank mine near Baker Lake by increasing the gold mine’s production and using a high-grade ore. (FILE PHOTO)

Here’s the good news: operations at the Meadowbank gold mine near Baker Lake have fully recovered from the March fire which completely destroyed its kitchen and dining room canteen facilities, Agnico-Eagle said in a June 27 news release.

The permanent replacement kitchen has been ordered. The kitchen will arrive this summer and will be completed by the end of this year, the company said.

And by upping production and using higher-quality ore, Meadowbank plans to slash its production costs during the second half of 2011.

“Despite a difficult start to 2011, our Meadowbank mine has made good progress in ramping up operations and adding additional processing capacity. As we continue to work on optimizing mining operations in the open pit, we are in a very good position to significantly increase gold production and reduce unit operating costs in the second half of 2011,” said Sean Boyd, Agnico-Eagle’s vice-chairman and chief executive officer.

As for the less-good news, as a result of the fire, the resulting work slowdown in April, and lower-than-expected ore grades due to dilution in the open pit, production at Meadowbank from March to June was down.

The dilution in the pit resulted from excessive movement of ore and waste during production blasts.

But that problem has been resolved, Agnico-Eagle said.

And, following a five-day slowdown to tie in the mine’s new crusher, this crusher at Meadowbank is now operational and has started to process ore.

Its additional crushing capacity should allow the mill to exceed its output.

As a result of expected increases in output and use of higher ore grades, Meadowbank’s production from now until the end of 2011 should be 50 per cent higher than during the first half of 2011.

On a per tonne basis, Meadowbank’s production costs should also decrease by about 15 per cent in the second half of 2011.

And higher gold production should result in “significantly reduced total cash costs per ounce.”

For the first half of 2011, Meadowbank’s production is expected to tally in at 490,000 ounces with total cash costs of about $540 to $570 per ounce.

“The Company expects a significant improvement in both production and costs during the second half of the year, with overall production expected to increase by approximately 20%, and total cash costs per ounce expected to decline by a similar percentage,” says the news release.

But this forecast depends on Meadowbank seeing a 50 per cent increase in production during the second half of the year.

Agnico-Eagle continues to work at its Meliadine project, where recent exploration has expanded the deposit.

“We are developing a strategy for a significantly expanded exploration initiative that will include more drills and an accelerated installation of the underground ramp infrastructure,” Boyd said.