PRECIOUS METALS — Laronde development on fast track

Having endured yet another quarterly loss, mid-tier gold producer Agnico-Eagle Mines (AGE-T) is forging ahead with expansion plans at its Laronde mine in northwestern Quebec.

For the 3-month period ended March 31, Agnico-Eagle reported a net loss of US$1.7 million (or 3 cents per share) on mining revenue of US$10.1 million, compared with a loss of US$2.1 million (5 cents per share) on revenue of US$10.5 million in the first quarter of 1998. The company’s last profitable quarter was in early 1996.

On the positive side, the Laronde mine did have an operating profit of US$2.1 million during the recent quarter, compared with US$2.3 million a year ago.

First-quarter production from the mine totalled 33,006 oz. gold, 1.22 million lbs. copper and 1.56 million lbs. zinc., compared with year-ago figures of 35,732 oz. gold and 1.42 million lbs. copper. (Laronde’s zinc circuit only came on-stream last autumn.)

On-site operating costs between the two periods fell to C$59 from C$66 per ton of ore milled. However, cash operating costs were virtually unchanged at US$216 per oz. (net of byproduct credits), with lower head grades being compensated by increased byproduct credits and a weaker Canadian dollar.

At the end of the recent quarter, Agnico-Eagle had a cash balance of US$60 million plus US$80 million in working capital. Including bullion on hand, the company has US$82 million available to complete its expansion of the Laronde operation to 3,600 tons per day (T.N.M., March 15-21/99).

First-quarter development work on the seventh level has confirmed drill results, while exposing Zone 20N in two additional draw points west of shaft 3. Commercial production from the shaft 3 zones will begin in July, with ore being trucked by ramp to shaft 1.

So far, shaft 3 has reached 6,200 ft. of a planned depth of 7,350 ft, and the sinking is expected to be completed by year-end.

Under construction are a

5,000-ton-per-day semi-autogenous-grinding mill circuit and a 5,000-ton ore bin. The mill circuit is expected to be operational in the third quarter. Also, foundation work has started on a pastefill plant, which is expected to be up and running by year-end.

Exploration drilling conducted from the 10th level (5,250 ft. below surface) during the quarter has confirmed Zone 7 as a high-grade zone over a vertical distance of 800 ft. and a horizontal distance of 600 ft. The best values were found in hole 3160-05, which cut 3 ft. grading an uncut 39 oz. gold per ton. Cut to 1.5 oz. gold, hole 3160-05 intersected 9.8 ft. (true width) of 0.52 oz. gold, 2.92 oz. silver, 1.31% copper and 6.1% zinc.

Zone 7 has been intersected at 8,800 ft. below surface and remains open in all directions at that depth.

Ongoing exploration drilling is also targeting Zone 20N at a similar depth.

The company says there is now sufficient drilling data to complete a feasibility study for a further expansion of Laronde’s facilities to 5,000 tons per day.

At this capacity, annual production could soar to 280,000 oz. gold by 2002, plus byproducts of 2.3 million oz. silver, 16 million lbs. copper and 90 million lbs. zinc.

With this next level of expansion potentially costing an extra US$41 million, the company has begun negotiations for a long-term financing.