VANCOUVER — Agnico Eagle Mines’ (TSX: AEM; NYSE: AEM) Amaruq gold project is well on the way to becoming its next great discovery story. The company has rapidly advanced the Whale Tail and IVR zones over the past three years, and the resource growth rate has been impressive.
On Sept. 15 Agnico reported an updated resource estimate at Amaruq, which boasts 3.7 million inferred oz. gold within 19.4 million tonnes grading 5.97 grams gold per tonne. The IVR deposit grew 320% to 3.9 million tonnes of 6.84 grams gold for 852,000 contained oz., while overall open-pit resources jumped 33% to 13.6 million tonnes at 5.53 grams gold for 2.4 million contained oz. gold.
“We’ve advanced quickly due to everything we’ve learned from our nine-year experience in Nunavut,” Agnico Eagle vice-president of exploration Guy Gosselin said during an interview. “Having the infrastructure in the region also keeps costs affordable, and we’ve established a really strong understanding of Archean greenstone deposits.”
Gosselin commented that most of the deposits Agnico has explored are typical of the iron-formation greenstone belts seen in northern Canada.
“The affinity with iron formation makes the magnetic and electromagnetic (EM) surveys very powerful,” he said. “You can recognize signs under cover and see the folds of the formations, which are the structural and chemical traps for the gold.”
Amaruq has become a high priority because Agnico’s Meadowbank gold mine, which lies 50 km southeast, is scheduled to run out of ore by the third quarter of 2018.
The company plans to complete a 62 km access road between the two sites, and hopes to get Amaruq into production by 2019.
To date at Amaruq, Agnico has discovered six zones of gold-bearing quartz-pyrrhotite-arsenopyrite veining and flooding within volcano-sedimentary rocks.
The IVR deposit is composed of the I, V and R zones. The V zone hosts almost the entire stated resource, and has emerged as a secondary source of open-pit mill feed in a production scenario.
Gosselin says the IVR material would help Agnico optimize throughput at Meadowbank’s 11,000-tonne-per-day mill, which manages operating and production costs.
Exploration at Amaruq has recently been highlighted by more lens discoveries in the V zone, which forms parallel quartz-vein structures dipping shallowly towards Whale Tail from surface to 542 metres deep.
The surface expression of the zone has a 1.2 km strike length, while the Whale Tail deposit has been defined over 2.2 km of strike length and extends from surface to 650 metres deep. Both deposits remain open to depth and lateral extension.
“We still have some room to grow Whale Tail towards the west, but in terms of potentially open-pit material, my interest is whether we can connect the two zones by filling in the gaps,” Gosselin said. “There could be interesting news coming out of that area, and we want to continue to work our way into the eastern part of the V zone to see if we can develop another ore shoot. These systems also have no limitation vertically, so there is a lot of work ahead.”
The company has conducted magnetic and EM surveys across the greater 1,170 sq. km Amaruq land package, and assigned one drill to test regional targets. Gosselin said there’s also work needed to better understand regional structural settings, but the exploration team has seen “good geology so far.”
Agnico should release a more detailed update on its regional program at year-end.
The company had suggested Amaruq could be permitted as an extension of the existing Meadowbank operation, since it would in all likelihood truck Amaruq ore to the Meadowbank mill, but in August the Nunavut Impact Review Board (NIRB) recommended the project undergo a full environmental assessment.
“We were anticipating this outcome, so we had already submitted the environmental impact study,” corporate director of communications and public affairs Dale Coffin said. “We’re moving forward with NIRB on the review process, and we continued to anticipate start-up at Amaruq in 2019. Meadowbank is scheduled to finish up earlier, so our challenge is to try to narrow that gap to keep momentum and minimize the impact on our employees.”
Drilling at Amaruq through June had totalled 77,500 metres, and Gosselin says another 30,000 metres will be complete through October.
In July the company reported that a $14-million budget had been approved for a second exploration phase at Amaruq this year, including 50,000 metres of drilling, as well as buying equipment and supplies for the 2017 exploration program.
Agnico is also working to permit an exploration ramp that would advance underground opportunities at both Whale Tail and IVR.
The company expects to produce between 1.58 million and 1.6 million oz. this year at all-in sustaining costs of US$840 to US$880 per oz. gold. Agnico shares have traded in a 52-week range of $30.22 to $78.35 per share, and closed at $68.78 at press time.
The company has 225 million shares outstanding for a $15.5-billion market capitalization.