Continued exploration success by
LaRonde’s proven and probable reserves now stand at 33.7 million tons grading 0.10 oz. gold per ton (or 30.6 tonnes of 3.43 grams gold per tonne), 2.34 oz. silver per ton, 0.32% copper and 4.4% zinc, equivalent to 3.3 million contained ounces gold.
Additional resources below these reserves total 25.4 million tons of 0.18 oz. gold, 0.85 oz. silver, 0.73% copper and 0.41% zinc, for 4.5 million contained ounces gold. These resources have been calculated to 9,900 ft. below surface, where the deposit remains open in all directions.
The latest drill results would seem to confirm the growth potential of zone 20 North, where tonnage increased 18% over the previous year to 51.8 million tons. Agnico-Eagle says the quality of the resource continues to improve with depth, with increasing gold and copper grades and thicker mineralization over a strike length of about 2,000 ft.
In January 2001, one of the best holes ever drilled at LaRonde, 3206-14D, returned 101.7 ft. (true thickness) of 0.24 oz. gold (uncut), 0.44 oz. silver, 0.49% copper and 0.03% zinc. The hole intersected zone 20 North at a depth of 9,560 ft. below surface and 2,100 ft. west of the Penna shaft. The intercept contains six occurrences of visible gold and is uniformly mineralized within silicified felsic volcanics containing 10-15% disseminated and stringer sulphides — historically indicative of an alteration halo.
Over the next few years, Agnico-Eagle plans to drive an exploration adit at level 215 (that is, from the bottom of the Penna shaft) and then systematically drill the deeper mineralization encountered so far, as well as probe the western limits of the deposit. Operationally at LaRonde during 2000, Agnico-Eagle produced a record 173,852 oz. gold (90,035 oz. in 1999), 1.1 million oz. silver (277,000 oz.), 4.9 million lbs. copper (3.3 million lbs.) and 50.7 million lbs. zinc (9.8 million lbs.).
Recovery rates were 91.9% for gold, 71.6% for silver, 62.2% for copper and 73% for zinc, but the company expects the base-metal numbers to improve as the newly expanded mill is optimized.
Cash operating costs fell dramatically to US$188 per oz. in 2000, compared with US$277 per oz. in 1999, and the company received US$278 per oz. for its gold, up US$4 from 1999.
The fourth quarter was a watershed for LaRonde, as the mine operated continuously at the newly expanded design rate of 5,000 tons per day. Shafts 1 and 2 were closed, and all ore is now mined from the new, 7,380-ft. Penna shaft.
Fiscally, the picture is also brightening for Agnico-Eagle, with the company recording a smaller loss, for 2000, of US$5.2 million (US9 per share) on mining revenue of US$67 million. This compares with a loss of US$16.5 million (US31 per share) on revenue of US$25.6 million in 1999 (all 1999 figures are restated).
For the fourth quarter, the company — at long last — recorded a profit of US$3.1 million (US6 per share) on revenue of US$28.4 million, compared with a loss of US$6.8 million (US12 per share) on revenue of US$2.7 million during the corresponding period in 1999.
Operating cash flow during the fourth quarter also turned around, rising to US$9.1 million (US17 per share) compared to a deficit of US$6.5 million (US12) in the same period in 1999. Agnico-Eagle’s cash and equivalents dropped US$9 million to $14 million at the end of 2000, and during the year, US$53 million was drawn down from the company’s long-term bank facility.
For 2001, the company has budgeted US$31 million for capital expenditures at LaRonde, mostly for development of the lower gold-copper portion of the Penna shaft. The amount will be financed from operating cash flow and an additional US$7.5-million drawdown.
This year, the company expects to produce just under 230,000 oz. gold with cash costs decreasing further to under US$150 per oz. By late 2001, when much of the initial development of the lower gold-rich portion of zone 20 North is completed, gold production is expected to exceed 300,000 oz. per year.
The company will keep studying the feasibility of ramping up to a 7,000-ton-per-day rate and will also evaluate different development options, specifically whether to mine with a gold or a zinc bias in the near- to mid-term.
Agnico-Eagle President Sean Boyd says the company has been looking to grow beyond LaRonde: “We cannot remain a company that relies solely on one mine, but our task in putting something together is made difficult with an asset that has so much upside as LaRonde. We have to be selective and not dilute, unless we have something that has equal upside.”
He says Agnico has yet to find a high-grade core at LaRonde similar to the one evident in the main zone of Bousquet 2,
“Finding the core could materially change the complexion of this orebody and improve the economics substantially,” says Boyd. “So that’s where our focus is.”
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