Agnico earnings up smartly gold, silver output climbs

There was good news aplenty at Agnico-Eagle Mines’ annual meeting this year, another jam-packed homecoming affair:

* earnings are way up and headed higher

* its main gold operation is now in the best shape ever, with some remarkable deep ore developments taking place at the prized Telbel mine

* its silver mines at Cobalt, where the new mill is now in full operation, are likewise in their strongest ore position ever. And a brand new production shaft is to be put down there, only the second in that camp in 40 years

* its new real estate arm is off to a flying start. Already, it cou ld yield a breakup profit to Agnico of $8-$10 million

* the company is spreading its exploration wings into the Arctic re gion, where it is taking on a platinum-gold situation

* the company boasts a strong financial position — debt free with liquid assets of some $35 million. “We could write a cheque today in nine figures,” quipped Paul Penna, the happy president and managing director.

Profit for the second quarter will likely reach 23 cents per share, well up from the $920,000 or 7 cents for the first quarter and the $353,000 or 3 cents in the first quarter last year. With grade at the Telbel now coming up nicely and silver revenues starting, over- all profit this year could reach $1 per share. That would represent quite an improvement over last year’s $5.2 million or 37 cents per share.

Ore dilution, which has been plaguing the Telbel operation and adversely effecting over-all earnings, will soon be history with the stoping changeover from longhole blasting to a sub-level retreat method now coming into operation.

Indeed what was probably the best news to come out of the meeting was that the first of these new stopes, No 30-2-20, is now coming into full production. It contains a rather remarkable block of ore between the 3,000-ft and 2,550-ft levels conservatively estimated at 770,000 tons that should average at least 0.30 oz, mine manager Dan Maciejowski told The Northern Miner following the meeting. This represents something like 300,000 ounces of gold — a 3-year mill supply.

Development of another big new stope is well under way on the 2,250-ft level where ore widths are running 30 ft. And three more of these new deep stopes are on the drafting board, to be developed just as soon as more miners can be hired. (With the big gold mining boom in northwestern Quebec, good miners are hard to find these days.) Silver output resumes

Rebuilt at a cost of $2.5 million, the silver division’s new 300-ton mill at Cobalt is now operating and should turn out at least 500,000 oz of the white metal by year end.

Since the fire that destroyed the old Penn mill Feb 26, 1986, over 60,000 tons of broken ore have been built up at the company’s three producing mines in this camp.

The most notable success of this division is at the Langis project where an important discovery has been made that holds excellent tonnage and grade potential, Brian Thorniley, its chief geologist and assistant mine manager, told the meeting. A brand new 1,200-ft production shaft is to be put down here that will open up a whole new area at this large property seven miles east of New Liskeard. (Agnico holds a 30% controlling share block and management’s control of Langis Silver & Cobalt Mining Co. which retains a 5% net smelter return interest).

This is an exciting find that was made by chance in a virgin area in a trough of Huronian sediments masked by heavy overburden but which has been traced for at least 3,000 ft with a vertical thickness of 850 ft. Intersections picked up in long underground holes (over 3,000 ft) include 61 oz over 11.0 ft, 39 oz over 31 ft and 50 oz over 27 ft.

Agnico also manages and financially sponsors both Dumagami Mines and Goldex Mines. It is currently building a 2,000-ton milling plant that will serve both of these operations for large scale mining.

“The Dumagami picture is looking very good,” Anton Adamcik, general manager of the gold division, told the gathering. It should be producing by the end of next June. Costs will be very low. “We should have all our money back within three years,” he said, adding that “it’s money we don’t owe.”

“More work will be required to get the Goldex picture, but I’m sure that we will get some good production from that operation,” Mr Adamcik remarked. Real estate, too

Details of the company’s real estate venture, launched less than a year ago, were detailed by John Fisher, Agnico’s consulting real estate developer. There are five separate projects financed by Agnico at a cost of some $8 million which could be liquidated immediately at an $8-$10-million profit. These include a 240-acre residential development at Newcastle on Lake Ontario with an 88-slip marina which will be enlarged to 500 slips. Agnico paid $1.6 million cash for this, and has already turned down an offer for $6.5 million.

Extremely happy with the real estate venture, Mr Penna told The Northern Miner following the meeting that Agnico will not be called upon to put up any more money. Rather, his game plan is to form a new public company in which Agnico will retain a 10% interest. This will be no small corporation, it is gathered, for it will be registered with the sec for sale in the United States, as well as in Canada. And the shares will be listed on a major Canadian exchange.