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Agnico Eagle Mines (TSX: AEM; NYSE: AEM) has updated its plans for the Detour Lake gold mine, including the preliminary economic assessment for underground development. The mine, currently operating as an open pit is located near Cochrane in northwest Ontario.
As visualized, the project has the potential to bring annual production from the open pit and underground mines up to 1 million oz. of gold.
“We have adopted a phased and disciplined approach to develop this potential, with the approval of a $100 million investment over the next three years to further study and de-risk the underground project, including the development of an exploration ramp and the collection of a bulk sample,” said president and CEO Ammar Al-Joundi.
“With the development of an underground mine to complement the existing open pit mine, we see the opportunity to transform the asset into one of the top five gold mines in the world by output.
“We believe the underground project has relatively low execution risk and has the potential to generate a strong risk-adjusted return on capital while maintaining exploration and production upside for decades in one of the best mining jurisdictions in the world,” he added.
The 2024 PEA assumes an underground mining rate of about 11,200 t/y starting in 2030, combined with a mill expansion to 79,450 t/d starting in 2028. Annual gold production from underground will add 300,0000 oz., bringing the total to 1 million oz. per year from 2030 to 2043. The amount represents an increase of 43%, compared to 2024 to 2029.
Mine life is extended by two years to 2054, and there are ample exploration opportunities that may lead to an even longer mine life.
Based on $1,900/oz. gold, the underground project and mill optimization at Detour Lake has a net present value of C$1.2 billion and an internal rate of return of 18%. The budget calls for an initial capital commitment of approximately C$1 billion and sustaining capital of C$864 million.
Underground infrastructure will include a 2-km conveyor ramp to a depth of 270 metres, a portal, and an ore stockpile near the mill. It will include developing a mobile shop and maintenance area for large equipment. Rock hammers and a jaw crusher will also be installed. High intensity drilling and bulk sampling will be conducted in 2025 and 2026.
Underground mining will be carried out with bulk methods, namely 40-metre sub-level transverse mining. The stope size will average 30,000 tonnes. About 130 stopes will be developed each year. Backfill will consist of mainly cemented paste fill.
To boost mill capacity, the secondary crusher will be improved. Retention time in the semi-autogenous grinding (SAG) mill will be increased, and the ball mill will undergo optimization. Advanced process control is also planned for the mill. Gold production will begin in 2030.
Agnico is basing its underground plans on an indicated resource of 1.2 million oz. gold and an inferred resource of 7.1 million oz. gold in-situ. This is based on 53 million tonnes averaging 2.46 g/t gold (category unspecified).
As of March 31, 2024, total proven and probable reserves at Detour Lake were 818.6 million tonnes grading 0.75 g/t gold and containing 19.7 million oz. The measured and indicated resources were 669.0 million tonnes grading 0.64 g/t gold and containing 13.8 million oz. In the inferred category, there were 136.4 million tonnes grading 1.76 g/t gold and containing 7.7 million oz.
