Agnico Eagle closes on underground Detour

Staff reporter

Agnico Eagle will spend circa-US$100 million over the next three years to further study and de-risk its proposed $731 million Detour Lake underground project after a preliminary economic assessment pointed to favourable economics.

“With the development of an underground mine to complement the existing openpit mine we see the opportunity to transform the asset into one of the top five gold mines in the world by output,” CEO Ammar Al-Joundi said.

“We believe the underground project has relatively low execution risk and has the potential to generate a strong risk-adjusted return on capital while maintaining exploration and production upside for decades in one of the best mining jurisdictions in the world.”

The $100m interim spend includes investment in development of an exploration ramp and collection of a bulk sample.

Agnico Eagle thinks Detour Lake can generate annual free cash flow of about $650m from combined surface and underground production of about one million ounces a year from 2030, up from c700,000ozpa now.

It says 10 years of processing stockpiles when surface and underground mining wraps up in 2044 can generate c$280m of annual average free cash flow.

“The company believes that there is a good upside potential for additional exploration to add ounces to the mine plan in future years, which could result in continued mine production and a resulting increase in annual gold production in the period 2044 to 2054 or an extension of the life of mine,” Agnico Eagle said.

Detour Lake’s underground development off the west side of the openpit will aim to produce about four million tonnes per annum from transverse long-hole open stoping using a “combination of conventional and automated equipment, similar to the company’s Odyssey mine at the Canadian Malartic complex in Quebec”.

A blend of underground and surface ore will be fed to an enlarged, 29Mtpa plant.


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