The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.
Agnico Eagle Mines (TSX: AEM; NYSE: AEM) has grown over the past two decades from a single asset producer to a mid-tier gold miner, with mines spread across Quebec, Nunavut, Finland and Mexico. But its four gold mines strung out along a 50 km stretch of the Trans-Canada Highway in Quebec’s Abitibi region remain the heart of the Agnico beast, and show significant upside.
The biggest shakeup for Agnico this year has been its joint acquisition with Yamana Gold (TSX: YRI; NYSE: AUY) of Osisko Mining and its Canadian Malartic gold mine in Malartic, halfway between Rouyn-Noranda and Val-d’Or. The deal gave Agnico 50% of the mine, which ranks as one of the largest gold mines in Canada, and produced 475,000 oz. gold and 422,000 oz. silver in 2013.
Canadian Malartic yielded 11,878 oz. gold attributable to Agnico in the first half of 2014 (representing only 15 days of ownership at the end of June), at a total cash cost of US$614 per oz.
A new reserve estimate was recently calculated, and the partners expect to update mine-optimization plans this month.
Speaking at the Denver Gold Forum in September, Agnico president and CEO Sean Boyd said the transition has “gone well,” and that the acquisition “gives us big reserves, big production and good net free cash flow in a part of the world we know really well.”
The acquisition also partly allowed Agnico to boost its overall production guidance for 2014 to 1.35 million to 1.37 million oz. gold, with cash costs of US$650 to US$675 per oz., and all-in sustaining costs of US$990 per oz.
“It was a mine that was functioning well, and it was a solid team,” Boyd said of Canadian Malartic. “We’ve made some minor changes, but we’re still looking at ways that we can optimize that opportunity. We think some of the big opportunities are in the processing side. The mine plan calls for substantial mining and stockpiling of ore, and what we’re looking to do is come up with a way that we can expand the processing capacity, and as we mine some of that planned stockpiled ore, we put it through the plant.”
Boyd said the Osisko deal is yet another example that Agnico is “able to grow in a measured way by focusing on the quality of the opportunity, and taking the lead from our technical group. And most importantly, getting involved in situations as early as we can, so we can use the skill set that we have from an exploration point of view and mine-building point of view to add value.”
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