Agnico Eagle Mines Aims to Create “Value Through the Bit” in Outlying Plans of Northeast Gold Camp
Tony Makuch, the former chairman and CEO of Kirkland Lake Gold, is on the move.
Agnico Eagle Mines, the new mining kingpin of the Kirkland Lake gold camp, introduced Ammar Al-Joundi as its new CEO and announced Makuch’s departure as CEO and director of the new, expanded company.
Agnico presented its fourth quarter and 2021 production performance during a conference call with mining analysts on February 24.
Toronto-based Agnico recently closed its $13.4 billion deal to acquire Kirkland Lake Gold in the so-called “merger of equals.”
Makuch’s decision is a sudden reversal from two weeks ago, when it was announced that he would remain with Agnico as CEO, with Al-Joundi filling the role of chairman under Sean Boyd, the executive chairman.
In his remarks, Al-Joundi wished Makuch good luck, calling him a “man of integrity” and a “good human being” who “will succeed in whatever endeavors he undertakes next.”
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For 2021, Agnico Eagle recorded record annual gold production of 2,030,176 ounces from its operations in Western Quebec, Nunavut and Mexico. The company also has a reserve of 44.6 million ounces, which is also an all-time high.
In releasing their company-wide three-year guidance figure of 3.2 to 3.4 million ounces, Agnico officials spoke of the fill producing a steady, continuous stream of quality leads. which begins with a strategy of aggressive exploration programs.
By “creating value through the bit,” the company said it was investing $324 million in exploration of the company’s assets and $700 million in development capital.
These are two newly acquired mines in northeastern Ontario that will recover much of it.
The Agnico team spoke enthusiastically about the potential for an indefinite expansion of the Detour Lake open pit mine, north of Cochrane, already considered one of Agnico’s top six assets.
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Kirkland Lake Gold has made a number of new discoveries at Detour in 2021 which Agnico plans to continue with a massive exploration program with 234,000 meters to be drilled in 2022. The exploration team will again focus on areas West Pit and Saddle in seeking to expand gold resources at depth and to the west.
“Frankly, Detour has the potential to be one of the best gold mines in the world,” Al-Joundi said, “in one of the best jurisdictions in the world.”
A new technical report with an updated resource calculation and a revised mine plan is released mid-year. Al-Joundi said there was a real likelihood that they could add over 10 million ounces to the resource base.
“They are almost finding gold faster than we can come up with a mine plan to exploit it,” Al-Joundi said, citing Detour’s geological potential that could prolong operations for decades.
At the Macassa mining complex at Kirkland Lake, 150,000 meters below and surface are planned to chase mineralization to the east, west and deeper extensions, and to drill new targets in the central portion of the mine above the southern mining complex.
Al-Joundi and his team are eager to unleash Macassa’s full potential.
Development of the new No. 4 well is underway, with this project approximately one year away from being operational.
But a real challenge appeared in Macassa concerning the production.
Agnico revealed it had unspecified issues with its fleet of underground electric vehicles, a challenge that has dampened the rate of extraction from an “exceptional mine” with plenty of untapped high-grade gold.
Al-Joundi said Kirkland Lake Gold’s former management had done an “exceptional job” in modernizing a mine that dates back to the 1930s. Years ago, the company made the forward-thinking decision to switching from conventional diesel equipment to battery-powered vehicles due to Macassa’s unsuitable ventilation system.
“To their credit, they did a terrific job, but they were probably five years ahead of the technology,” he said.
Al-Joundi said the battery issue was something they took very seriously and he felt they were making progress.
“When we were there (Kirkland Lake) in the summer, we asked the team, ‘If you had ventilation, would you like to have diesel? and the answer was, ‘yes.’
“That’s an option we’re considering. Certainly the future of underground mining is electric. But it’s probably 10 years from now.”
He doesn’t expect the battery issue to be a constraint much longer.
“Either the technology improves and we use it, or it doesn’t work and we use diesel.”
Expect to see a hybrid fleet of battery and diesel vehicles in Macassa, he said, allowing them to increase the mining rate up to a 350,000 to 400,000 ounce producer rather than to be a 200,000 ounce producer.
“We can’t deal with this indefinitely, and we don’t expect to,” Al-Joundi said.