Title: Mine profile

Subtitle: Agnico-Eagle LaRonde mine extension

 

When you have what mining sector veterans call a “company maker,” amongst your holdings, as Agnico-Eagle Mines got when it acquired the Dumagi open pit in 1988, you want to keep it in operation for as long as possible. So it came as no surprise several years ago when the company announced that the LaRonde mine (as the new property was later named) would be expanded.

 

The LaRonde initiative, which when the accompanying expansion of the mill facilities is included, is expected to cost CAN $337 million, is a major investment for Agnico-Eagle.  However the money being spent is expected to yield significant longer-term benefits. Ore extraction from the extension shaft currently being dug is expected to start by 2011. When ancillary facilities are completed, the combined LaRonde operation is expected to yield an average of about 320,000 ounces of gold per year and will extend the mine’s useful life through to at least 2022

 

LaRonde: a “company maker”

“LaRonde is Canada’s largest operating gold mine,” says Christian Provencher, the site’s general manager. “Extraction has continued at a steady and reliable pace for six years. Furthermore, sinking of the extension shaft is almost complete and the project is proceeding both on-schedule and on budget.”

 

The LaRonde mine, is located in north-western Quebec, near the villages of Preissac and Cadillac, in the southern portion of the Archean-age Abitibi volcanic belt, within the Bousquet Formation of the Blake River volcanic group. According to Agnico-Eagle, the geology is east-west trending, steeply southward dipping and generally southwards facing. As of the end of 2008, all of the mineral reserves and most of the mineral resources at LaRonde, were located near the Penna shaft. These reserves and resources occur as several sulphide-rich lenses which are found along five different stratigraphic horizons.

 

The company currently uses two main mining methods at the LaRonde site. The first is longitudinal retreat in 15 meter sections and the second is transverse open stoping. The property has already yielded more than 3 million ounces of gold and holds approximately another 5.0 million ounces of proven and probable reserves. These are comprised of 35.8 tonnes of ore with an average grade of 4.3 grams per tonne. Much of the production equipment at the site, including 17 load haul dumpers, is supplied by Sandvik Tamrock.

 

The other good news regarding ore from the LaRonde property, which makes it an investor’s dream, is that it is fairly inexpensive to extract and process. During the first quarter of 2009, mine site costs were approximately $72 per tonne and total cash costs were $294 per ounce, meaning that La Ronde is likely one of the lowest cost mines in the country.

 

The LaRonde extension

According to Provencher, excavation work on the new extension began in 2006. Project design was handled by Genivar, an engineering group. During the first three months of this year, a further 120 metes was bored onto the new internal shaft, which had by the end of the quarter been dug down to a depth of 2,860 meters, just 200 meters shy of its planned 2,880 meter depth. “What makes the work being done so far particularly challenging, is that it is being done inside a mine that is already operating,” says Provencher. “Since the mine only has one operating shaft and accessory ramp, this has the potential to create a lot of bottlenecks.”

 

Parallel to the main shaft, workers are excavating a down ramp and building in ventilation and other key infrastructure. Three underground hoists are also being installed, with many of their components supplied by Sheffield heavy engineering company Davy Markham.  “When it is completed we will have access to one of the single deepest shafts in North America,” says Provencher. “As a result, construction comprises numerous safety features such as magnetic heads for automatic stopping on the elevators and secondary safety exits.”

 

The human element

Although Agnico-Eagle’s properties are what attract attention to the company, its people and the way they are managed are another often-underrated asset, says Provencher. For example close to 700 direct employees work at the LaRonde site. Anecdotal evidence (in particular the long line-up of job-applicants at its doors) coupled with the fact that employees have remained non-unionized, signal that Agnico-Eagle’s labour relations are top notch.

 

According to Provencher, one key reason for the high degree of job satisfaction, which dates back to the site’s opening, is a 17-person collaboration committee that he chairs, which deals with employee management issues at the site. The committee, which also includes the human resources superintendent, plus five mill and underground operations managers and staffers, as well as 12 employees, also provides an invaluable forum that company personnel to candidly provide feedback and suggestions regarding issues ranging from productivity enhancements to safety concerns. 

 

The company’s non-union status also provides both Agnico-Eagle and its employees other benefits says Provencher; though not the sort that some would imagine. “Our employees salaries are at the same level that they would be at if we were a union shop, so it is not a big saver that way,” says Provencher. “Where we really gain, is from the enhanced flexibility we get. For example recently we offered our employees the option of transferring from LaRonde to our Goldex and Lapa operations and we will do the same thing for our Nunavut open pit. Several employees took us up on the offer. But we would never have been able to have done that, if we were unionized.” In the absence of a formal union, annual contract negotiations are handled by an employee committee.

 

According to Provencher, another key benefit that mine workers get is substantial discounts when purchasing company shares. Furthermore, unlike many stock sale programs, which require employees to hold onto shares bought at a discount for a minimum period, the LaRonde plan sets no such limits. “Of course we prefer it when our employees own stock, because that generally makes them better more committed stakeholders,” says Provencher. “But they are free to do what they like with their shares.”

 

A broad and high level supplier network

Another of the LaRonde operation’s big intangible assets is its top level supplier network. “Our region includes many mines, so there are a lot of companies around here that have built up a good knowledge of the industry,” says Provencher.  For example Beroma, a Val D’Or based company, is supplying much of the steel being used in the current mine expansion and Fournier et Fils is supplying much of the concrete. Dumas Contractor, a local firm which is doing the shaft sinking for the extension, has 65 people working on the LaRonde site and C-Mac, which handles excavation for the extension’s ventilation network, has another 40 people working there.

 

In fact according to Provencher, the close to 150 contract workers of all sorts who are working at the LaRonde site, - from drillers to maintenance and supply personnel,- deserve a big chunk of the credit for the extension project’s success so far.

 

However as good as the news surrounding the LaRonde site and its extension project is, Agnico-Eagle is far from done. Exploration at the site continues, and is now focused on possible additional potential at deeper levels and in areas east of the present development.

 

 

 

Peter Diekmeyer (peter@peterdiekmeyer.com) is CIM Magazine’s Quebec correspondent.

 

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