Agnico-Eagle digs deeper in Quebec (May 10, 2011)

Agnico-Eagle Mines‘ (AEM-T, AEM-N) Goldex, Lapa, and LaRonde gold mines in Quebec are getting a slice of the company’s largest-ever US$145-million global exploration program this year.

“This increased exploration is focused on the conversion of our large gold resource to reserves and on providing information on several growth opportunities currently being evaluated,” said Sean Boyd, vice-chairman and CEO, in a 2010 statement. 

The company plans to use about 40 rigs to drill 400 km on its properties and says it’s in-line with its 2011 goal of producing more than 22 million oz. of gold reserves.

 In Quebec’s Abitibi region, the company has a US$6-million exploration program to drill more than 58,000 metres at Goldex to expand the D zone. The mine, which came online in 2008, has roughly a 10-year life. But, the company is working to push that beyond 2018, by adding reserves in the D zone.

Last year it started defining the large D zone, which lies 150 metres below the Goldex Extension zone or GEZ, the orebody currently being mined.

“We hit good grade and good thickness (at the D zone),” comments Alain Blackburn, senior vice-president of exploration, on the 2010 results. “And we decided to do the program this year.”

He says the D zone, which is similar in geology, mineralization and size to the GEZ, was an exciting find. “It’s a big surprise for us, because we did not expect an extension below the infrastructure.”

Blackburn adds that the company continued to hit under the resources it calculated last year for the D zone, and the resources in the inferred category, which is apparent in the recently released drill results. 

At 1,350 metres depth, about 150 metres below the current resources, highlight hole 76-014 returned 192 metres grading 2.17 grams gold per tonne, including 98 metres of 3.07 grams gold. At 1,225 metres, hole 76-013 intersected 240 metres of 2.47 grams gold, including 120 metres of 3.09 grams.

Agnico-Eagle says the results, such as hole 76-012, which cut 192 metres of 1.70 grams gold, confirm the grades and thicknesses within the D zone resources. 

The zone contains an inferred resource of 746,000 oz. gold from 14.4 million tonnes grading 1.62 grams gold per tonne.

To rev up the program at the D zone, the company is driving a 300-metre exploration ramp below the current mine workings.

The ramp would be used as a platform to drill, to define, and convert the upper portion of the D zone, says Guy Gosselin, vice-president of exploration. He added that it would also be used to find the depths of the zone.   

 The ramp would add another 12,000 metres of exploration drilling, and an additional US$2.2 million to Goldex’s 2011 exploration tab.

The drill results from the ongoing program will be included into a scoping study on the zone, which the miner expects to complete this year, while the results from the ramp would be incorporated into a feasibility study. Agnico-Eagle aims to complete the feasibility study looking at the prospects of mining the zone in mid-2013.  

“We have to know if the 14 million tonnes that we discovered is economic,” says Blackburn, adding that the company wants to first complete a scoping study to find out more about the zone’s grade, because it’s a bit lower than the GEZ’s grade of 1.8 grams gold per tonne.

However, Blackburn reckons the D zone’s resource grew with the two “nice” holes that the company recently hit below the inferred resource.

Though the exact details of D zone still need to be worked out, Gosselin says the D zone and the GEZ have “high similarities,” which could mean “very good news in the long-term for Goldex.”  

The company says the GEZ extends from 500 metres to 800 metres below surface and 450 metres along strike, varying in thickness from 25 metres along the edges to more than 150 metres in the middle.

Similarly, it estimates that the D zone extends about 325 metres high, 490 metres long and 100 metres thick, remaining open in all directions. 

The company notes that all zones, expect for the South zone on the 2.7-sq.-km Goldex property are hosted by the Goldex Granodiorite, a huge table-shaped quartz-diorite body, with the bulk of the gold mineralization occurring at the GEZ.

Agnico-Eagle says gold mineralization in the GEZ is related to a stockwork of pyrite-bearing quartz-tourmaline veins, adding that albite alteration and disseminated pyrite associated with these veins overprint earlier sericite and chlorite alteration.

It says gold at Goldex mostly occurs as microscopic particles associated with pyrite, while the rest occurs as coarse native gold grains. 

The property is underlain by volcanic rocks and granitic intrusion that comprise part of the southern Abitibi greenstone belt. The sequence of intermediate to mafic and ultramafic volcanic rocks dip steeply to the northwest and are intruded by the Goldex Granodiorite that also dips to the northeast, and minor cross-cutting feldspar-porphyry dykes. The Cadillac-Larder Lake fault zone runs through the property’s southern limit.

In 2010, Goldex had its production rate ramped up from 6,900 tonnes per day to its current 8,000 tonnes per day. This helped it to produce a record 184,386 oz. gold, at a cash cost of US$335 per oz. in 2010.

For 2011, the company predicts Goldex will churn out 184,000 oz. gold at total cash costs of US$349 per oz. On average, it expects the mine to produce 179,000 oz. a year from 2012 through 2015.

Goldex boasts gold reserves of 1.6 million oz. from 27.8 million tonnes grading 1.8 grams. It has another 8.3 million tonnes at 1.8 grams gold for 500,000 oz. in the indicated category, and 26 million tonnes at 1.7 grams gold for 1.4 million oz. in the inferred.

Along with the D zone, Agnico is studying the nearby M, E, and S zones to see if they could be added to the mine plan to boost Goldex’s life. Initial production from the M zone is set for 2012.

Some 60 km west of Goldex, the company is working to define new reserves near the current Lapa mine infrastructure in order to boost the mine’s life past 2015. Lapa will see 22,700 metres of exploration drilling this year, which would cost the company around US$2.1 million.

Gosselin says the company is getting some “interesting” results from the current drilling, adding that it started an exploration drift at about 1 km below surface to investigate the eastern part of the project.

The company has spent US$3.6 million to continue excavating the drift.

Some highlights from the current program include: hole 10-98-19 hitting 2.8 metres grading 12.8 grams gold per tonne, and hole 11-98-40 cutting 2.8 metres of 13.5 grams gold. The company says both holes show “strong gold grades” below and to the east of the current reserves.

“We want to infill these new discoveries we made, and hopefully find some more and, at the end of the day, extend the life of the mine,” says Gosselin.

Blackburn adds if the company is successful at Lapa it can add around seven months to the mine’s life.

Lapa, which has been crowned as the company’s “highest grade mine,” has gold reserves of 700,000 oz. based on 2.8 million tonnes of 7.4 grams gold. Agnico-Eagle says the mine’s grade is more than double the company’s average.

The miner expects Lapa to churn out 125,000 oz. gold this year, and an average of 117,000 oz. gold a year, from 2012 to 2014.

Some 11 km away from Lapa, sits the company’s flagship LaRonde gold mine, which hosts reserves of 4.8 million oz. based on 35 million tonnes of 4.3 grams gold, making it one of Canada’s largest gold reserves. (The mine also produces silver, copper and zinc as byproducts.)

The 7,200-tonne-per-day operation is estimated to generate 157,000 oz. gold this year. The mine, which launched in 1988, is expected to be running until 2023.

However, to extend its life and to convert resources to reserv
es, the company in 2006 started building a deep extension of the mine to reach higher-grade ore at a depth of about 3.1 km. An 835-metre-long internal shaft was completed in early 2010.

   Agnico expects initial ore production from the extension in late 2011, reaching full production in 2013.

LaRonde would see about 12,550 metres of exploration drilling this year (US$2.1 million), and 3 km west of the mine, the company has 20,000 metres of conversion drilling (US$1.9 million) planned at its Bousquet property.

 There, the company is examining the Bousquet zone 5 and if it could be economically mined as an open-pit. A scoping study on the zone is expected to be done by late 2011.

Zone 5 hosts an inferred resource of 18.8 million tonnes at 1.87 grams gold, as the end of last year.

About 1 km west of Bousquet, the company’s Ellison property is also getting some of the drill action, with a US$4.8-million, 9,500-metre program planned this year to trace the Westwood zone eastward to possibly define a new resource.

Agnico-Eagle says drill results from its 2010 program indicated that Iamgold‘s (IMG-T, IAG-N) Westwood gold zone extended onto the Ellison property at depth.

This year, the miner’s Pinos Altos operation in Mexico, Kittila mine in northern Finland, Meadowbank mine and Meliadine gold project in Nunavut are also getting a piece of the exploration pie, with a good chunk of it, about US$65 million, dedicated to bringing Meliadine closer to feasibility.