Title: Agnico-Eagle strikes Goldex

Sub-title:  Continued strength in gold prices is making low yield bodies such as the Abitibi region’s Goldex mine, which hit full production earlier this year, more economical.


For many years Agnico-Eagle’s Goldex deposits, located in Quebec’s gold rich Cadillac-Bousquet belt, were not considered an ideal ore body to mine. Although the property had been on miners’ radar screens for some time, its low grade status and the weak prices that gold was fetching on international markets meant that the business case for investing there was poor. As a result, for many years the project was pretty much kept on a backburner.


However in 2004, Agnico-Eagle, which already operated a mine in nearby LaRonde decided to move ahead and to develop the Goldex project. That move turned out to be prescient. “The timing was excellent,” said Yvon Sylvestre, the company’s director of mining operations. “Production began at a time when gold prices were holding up well, especially relative to those of many other commodities.” Sylvestre isn’t kidding. In fact Agnico-Eagle has had a long-term policy of not pre-selling its production, which positions it well to profit when prices move up.


A long-term presence

Agnico-Eagle Mines, which is listed on the Toronto Stock Exchange, has been around seemingly forever. The company was formed in 1972 following the amalgamation of Agnico Mines Limited and Eagle Gold Mines. However until recently the combined operation’s revenues had been coming from one single major stream: its LaRonde mine, which is located a short driving distance from the Goldex operation. 


Agnico-Eagle regards itself as one of the lowest total cash costs per ounce producers in the North American mining industry.

Construction work worth about $183 million at the Goldex operation itself was completed in 2008 and production began in August of that year. In January of this year the mine hit its first month of full capacity at 7,000 tons per day. So far, according to company reports the milled grade has been running at about 2.1 grams per ton, which is fairly closely in line with initial estimates.


The Goldex mine’s short distance from Agnico-Eagle’s LaRonde operation turned out to be a major boost, because of the synergies available from using combined infrastructure. As a result, total cash production costs per ounce are running at just $311, which compare quite favourably with initial forecasts. As production efficiencies continue those costs are expected to fall even further, bottoming out later this year at around $270 per ounce. If current plans come to fruition, Goldex is expected to yield an average of 165,000 ounces of gold annually for the next ten years.


The Goldex mine and its history

The Goldex desposit is both large and impressive. Estimates are that it includes about 23.1 million tonnes of probable mineral reserves at an average grade of 2.2 grams per ton, which would imply an eventual yield of 1.6 million ounces. The deposit itself extends from about 510 meters to 770 meters below the surface. To access and process those reserves, Agnico-Eagle built up new mining and milling facilities, which incorporated many new technologies and processes that have been either developed or refined in recent years.


“The fact that ore yields are so low there compared to other bodies in the region, meant that the only way that we could justify the mine development was to find ways to minimize extraction and processing costs,” said Sylvestre.


To speed along the extraction process, a 5.5 meter diameter shaft was dug down to a depth of 865 meters and bordered with a six-inch concrete lining, using the steel sheet piling method. The shaft needed to be that large in order to accommodate both the hoisting equipment that was installed within, and to provide the space required to ensure proper ventilation. The hoisting system, which is a refurbished unit, now handles both production and service duties. An auxiliary unit was also installed to handle emergencies and personnel service.


Mining, per-production and blasting

According to Sylvestre, Agnico-Eagle uses a relatively simple though productive high volume bulk mining method, that incorporates large step-like excavations, as well as long hole drilling and shrinkage methods. The drilling and blasting are done in such a way to ensure a good muck size, and a percentage of the broken ore is kept on the stope in order to minimize back-filling costs.


The Goldex facility also includes underground crushing, surface grinding, a gold gravity recovery circuit, sulphide flotation and a concentrate handling facility. Flotation tails disposal is done in a new tailings pond, three kilometres south of the complex. Once the ore is blasted free, it is mucked and then undergoes preliminary crushing, before then being hoisted to the surface.


Then the ore is shipped to the processing plant where it is reduced to units of about 100 microns which are then gravity separated in centrifuge machines to isolate the high density gold chunks. The gold bullion from the initial separation and from subsequent processing are sent to the mint and the flotation concentrate is shipped to the cyanidation plant at Agnico-Eagle’s LaRonde facility.


Maintaining strong community relations

One major challenge that Agnico-Eagle faces with its Goldex operation says Sylvestre, relates to its location within the suburban area of the town of Val D’Or Quebec. “We are a large employer which provides the region close to 230 well-paying jobs in the region, so naturally our corporate brand value there is high,” says Sylvestre. “But we have to constantly work to maintain that respect. Our presence there is considerable and many parts of the mine are visible from town itself. However bearing that in mind, we try to maintain the smallest footprint possible in the area.”


According to Sylvestre, maintaining excellent community relations is an integral and crucial component of running the Goldex facility. As a result, Agnito-Eagle personnel have consistently kept the surrounding community aware of all major initiatives undertaken at the mine, particularly those related to noise mitigation efforts and the environment. This is done in several ways, including visits to the mine’s closest neighbours, holding open house sessions, distributing newsletters and making presentations to various citizens committees.


Major efforts were made to mitigate some of the more noticeable disturbances created by typical mining operations. The design of the facility itself was kept intentionally compact, to minimize land use. Mining can be a very noisy business. To keep the decibel count to a minimum, Agnico-Eagle installed ventilators underground to dissipate sound. The company also constructed a large dome on top of the ore stockpile in order to reduce the amount of dust that gets blown around. And finally, no cyanide, which is a by-product of production there, is retained on the site, it is instead send to the LaRonde mine, where it is reprocessed.


An environmentally friendly mine

As for almost all serious mining companies these days, environmental concerns run at the top of Agnico-Eagle’s agenda. To help deal with these issues on an on-going basis, the company has set up a multi-disciplinary environmental team that includes specialists from many disciplines, including engineers, biologists, chemists, mining technicians and operational personnel.


One key environmental initiative that the company undertook was to find a way to avoid building a large tailings pond, in order to better preserve natural resources in the area such as sand and gravel. The way around this came in the form of a cooperative program with the Quebec government to rehabilitate an old acid-generating tailings site located at Manitou. Tailings form the Goldex site, which have some neutralizing properties in them are transported to the Manitou site through a 24 kilometre pipeline.


Officials believe that by covering the existing Manitou tailings, with tailings from the Goldex site, the acidity of the effluent from the site will be reduced, and metal concentration will fall within acceptable limits. The result of this combined private sector-government effort, which Sylvestre hails as a first in the mining industry, is that a wetland will be established upstream and several wildlife and aquatic habitats will be rehabilitated.


Just the tip of the iceberg

However according to Sylvestre, the Goldex and LaRonde operations represent only the tip of the Agnico-Eagle iceberg.

The company’s longer term strategy is to continue to search out new ore bodies and that the same time to build on its Quebec operations. Over the long-term, the goal to is make Agnico-Eagle into what Sylvestre calls “a multi-mine platform,” which has six mines running.


These will include a third mine in Quebec, an operation in Kittala Finland, where construction began in 2006, one in Nunavut and a final gold and silver mine in Pinos Altos Mexico, where production is expected to begin some time this year.As if that were not enough, on top of that all, Agnico-Eagle officials also believe that they may eventually be able to boost production at the Goldex facility itself. In fact the company is currently conducting a scoping study, that is looking at the possibility on boosting the Goldex mine’s current production rate by an additional 15%. Results of the study are expected later this year.


Peter Diekmeyer is CIM Magazine’s Quebec correspondent.





Home | Gazette articles | Finance/Economics | Foreign affairs | Magazine/ Gvmt | Book reviews


© 2009, 2008, 2007, 2006, 2005, 2004, 2003, 2002, 2001, 2000, 1999, 1998

 Peter Diekmeyer Communications Inc.