Agnico Eagle Mines (NYSE:AEM) has a new plan to increase gold production at Detour Lake in Ontario.
What Happened: The company aims to boost production to an average of one million ounces per year over a 14-year period. Agnico plans to start in 2030 as part of its newly released 2024 life-of-mine plan (LoMP).
"With the development of an underground mine to complement the existing open pit, we see the opportunity to transform Detour Lake into one of the top five gold mines globally by output," Agnico Eagle president and CEO Ammar Al-Joundi said.
Detour Lake, the largest gold-producing mine in Canada, currently operates as an open-pit mine in northeastern Ontario. The updated 2024 LoMP outlines a plan to develop an underground mining project along with the existing operations.
This plan includes a preliminary economic assessment (PEA) for concurrent open-pit and underground operations. It aims to increase yearly production by 43%, or 300,000 ounces of gold, from 2030 to 2043.
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The 2024 PEA proposes an underground mining rate of about 11,200 tons per day starting in 2030 and a mill expansion to 29 million tons per year by 2028. This expansion will help extend Detour Lake's mine life by two years, now projected to continue operations until 2054. Furthermore, ongoing exploration efforts can potentially add resources beyond this timeframe.
"We believe the underground project has relatively low execution risk and the potential to generate a strong risk-adjusted return on capital while maintaining exploration and production upside for decades," Al-Joundi said.
Agnico Eagle has committed $100 million over the next three years to de-risk the underground project. This investment will fund the development of a 2 km exploration ramp, bulk sample collection, and an intensive drilling program to convert and expand the current underground mineral resource. The company is particularly focused on the western plunge of the mineralization.
The underground mineral resource estimate includes 1.2 million ounces of indicated gold and 7.1 million ounces of inferred gold. Capital expenditures for the underground project and mill optimization are forecasted at $731 million for development and $631 million for sustaining capital. The expected after-tax internal rate of return (IRR) is 25% at a gold price of $1,900 per ounce.
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