Agnico-Eagle Gold Reserves Grow by 33% to Record 16.7M Oz



Miners confer as underground development progresses at Agnico-Eagle’s Kittila mine in Finland,
where recent drilling has confirmed that the mine’s main deposit extends 350 m deeper than
originally thought.
Agnico-Eagle Mines reported that as of December 31, 2007, its proven and probable gold reserves hit a record of 16.7 million oz, an increase of 33% over the year end 2006 level. The company said the strong growth in gold reserves of 4.5 million oz—prior to considering 2007 gold production—resulted from successful definition drilling at its development projects, which converted 1.6 million oz to reserves, along with the acquisition of the Meadowbank project in northern Canada as part of its takeover of Cumberland Resources.

Gold resources also continued to grow to record levels, according to the company, with indicated mineral resources now standing at 2.8 million oz and inferred mineral resources at 4.7 million oz.

Considering the growth in gold reserves and resources at several key projects, company officials are optimistic that the company’s target range of 18–20 million oz may be surpassed within the next two years as promising results continue to be encountered outside of the current gold reserve and resource envelopes.

At a recent investors’ conference, Vice- Chairman and CEO Sean Boyd said that the company’s current projects also have the potential to increase gold production fivefold by 2010 to 1.4 million oz, and further drilling could result in several 5-million- oz gold deposits. Gold production for 2008 is forecast at 360,000 oz, a 50% increase over last year’s output.

Some of the more recent exploration successes include the northwest quadrant of the company’s Pinos Altos property in Mexico, where the initial inferred resource estimate on the Creston Colorado zone is 7.7 million mt, grading 1.4 g/mt gold, or 400,000 oz. A scoping study for a standalone operation is under way there.

Deep drilling at the Kittila property in Finland confirmed the depth extension of the main Suuri deposit to approximately 1,000 m—approximately 350 m below the current reserves and resources.

These results have not been incorporated into the current resource estimates, according to the company.

The company’s exploration budget for 2008 is more than $65 million—highest in the company’s history—which will include approximately 270 km of drilling using 25 drill rigs.


Agnico-Eagle’s project capital investment spending will decline significantly after 2008 as new
mines are brought to the production phase. The company’s current projects have the potential,
when completed, to increase gold production fivefold by 2010.
• At the flagship LaRonde mine in Quebec, proven and probable gold reserves total 35.6 million mt at 4.5 g/t, or 5.2 million oz. Over the life of mine, an average production rate of 340,000 oz/y is predicted at total cash costs of approximately $150/oz. Shaft sinking is under way for the Extension project, with $40 million invested to date and $185 million needed for completion in early 2012.
• At Goldex, also located in Quebec, proven and probable gold reserves stand at 1.7 million oz from 22.9 million mt grading 2.3 g/t. The mine is forecast to produce average annual output of 175,000 oz with total cash costs expected at $230/oz. Shaft sinking is finished and the processing plant is scheduled for completion in the first quarter of 2008. The company has invested $160 million to date in this project, with another $23 million to come before completion in April 2008.
• The Lapa property, 11 km east of the LaRonde mine, contains probable gold reserves of 1.2 million oz in 3.9 million mt grading 9.1 g/t, and is expected to produce average production of 125,000 oz/y at estimated total cash costs of $300/oz. Shaft sinking has been completed and level development is under way at the $165-million project.
• At the $190-million Kittila mine project in Finland, exploration is ongoing to convert a large gold resource to reserves. The deposit is open on strike and at depth, with current probable reserves of 2.6 million oz contained in 16 million mt grading 5.1 g/t. After anticipated completion in September 2008, the mine is targeted to produce 150,000 oz/y with estimated total cash costs of $300/oz.
• The company’s Pinos Altos project in Mexico contains probable gold reserves of 2.2 million oz gold and 65.7 million oz of silver in 20 million mt at 3.5 g/t gold and 102.3 g/t silver. Construction is scheduled to start in the first quarter of this year, with a total project capital costs estimated at $230 million. Annual output will be an estimated 190,000 oz at total cash costs of $210/oz. A $14-million exploration program is under way there, and drilling from an underground decline will also begin in the first quarter of 2008.
• The Meadowbank project is anticipated to produce 435,000 oz/y of gold during its first four years of production at an approximate cash cost of $240/oz; average life-of-mine production will be around 360,000 oz/y with cash costs of $300/oz. The company has spent $110 million to date, with another $280 million required before completion in January 2010.


As featured in Womp 08 Vol 2 - www.womp-int.com