Agnico Eagle banks on Canadian manufacturing upside

The most important producer of Canadian gold, Agnico Eagle Mines (TSX: AEM; NYSE: AEM), is banking on its soon-to-be-consolidated in-country portfolio to underpin its close to and long-term manufacturing progress profile, govt chair Sean Boyd informed the current Canadian Mining Symposium in London, England.

In an period the place most gold majors have exited the Abitibi Gold Belt, together with Barrick (TSX: BX; NYSE: GOLD), Placer Dome, and even Teck Sources (TSX: TECK-A, TECK-B; NYSE: TECK), the foremost is doubling down on the traditionally vital and rising gold belts of Canada. It’s on the verge of consolidating its Canadian place through the proposed take care of Pan American Silver (TSX: PAAS; NASDAQ: PAAS) to purchase fellow Canadian miner Yamana Gold (TSX: YRI; NYSE: AUY; LSE: AUY) in a US$4.8 billion cash-and-shares transaction.

It had inked a take care of the 2 valuable metals miners early in November after South Africa’s Gold Fields (NYSE: GFI; JSE: GFI) waived its proper to match the rival bid for Yamana in a proposed deal poorly supported by the market.

Upon closing late within the first quarter of 2023, the deal may have break up Yamana’s property in Latin America and Canada between them. With the acquisition of Yamana, Pan American will strengthen its place as a prime valuable metals producer in Latin America. On the similar time, Agnico would consolidate its possession of one of many world’s greatest gold mines, the Canadian Malartic in Quebec.

In line with Boyd, Agnico expects manufacturing to develop from 240,000 oz. per 12 months in 2005, to a forecast 3.3 million oz. in 2022. “This interprets into worth creation,” stated Boyd. “Now we have constructed per share worth akin to 2.7 ozfor each 1,000 shares held in 2005, to 7.3 ozper 1,000 shares at the moment, respectively.”

In Canada alone, Agnico is projecting to provide 74% or 2.4 million oz. of its 2022 manufacturing steering, rising to greater than 3.1 million oz. in 2023. It’s ranked because the world’s number-three gold miner by output.

Of its 50 million oz. in reserves, 54% is in Ontario, 19% in Nunavut and 13% in Quebec.

Boyd described the Detour operation and Malartic as key anchors to its progress technique.

“As we kind of transfer by way of the following few months and roll within the different half of Canadian Malartic and Detour, we’re assured we’ll have the ability to faucet extra worth from the property,” stated Boyd.

“Now we have ideas the place we will see the Detour mine producing over one million ounces a 12 months; we convey a whole lot of Agnico in-house technical experience to have a look at it a bit bit otherwise,” he stated.

Firm builder

Agnico’s homegrown worth technique, in essence, began in 1988 with the LaRonde Complicated in Quebec, which stays the corporate’s oldest working asset. LaRonde’s 2.2-km deep Penna Shaft is now the deepest single-lift shaft within the Western Hemisphere.

The LaRonde mine extension, the portion of the mine under stage 245, achieved business manufacturing in December 2011. It’s anticipated to be in manufacturing by way of 2030.

Boyd described how the fledgling gold producer’s administration group minimize its tooth on the operation and laid the inspiration for its future senior administration group’s success. “With a single asset, we weren’t turning a revenue. We thought to present ourselves publicity to different high quality deposits, take our LaRonde expertise, and apply it to those property. So, we began to increase within the area by buying Goldex and Lapa, and we expanded into Mexico and Finland,” he recounted.

“However we did so in small bites, small increments the place we may take that Quebec-based group, use all of the ability units – we name it ‘LaRonde College’ as a result of we had that broad vary of expertise the place we take these people and transfer them into these different deposits. And since then, we’ve added property to construct the bottom,” stated Boyd.

By 2012, Agnico had constructed 5 mines and established 4 regional mining platforms. By 2016, it had additional consolidated the Abitibi area with the acquisition of its present 50% stake in Canadian Malartic and, extra lately, with its merger with Kirkland Lake Gold which handed it management of the Detour Lake and Macassa mines in Ontario’s portion of the Abitibi Belt. Gaining full management of the 640,000-oz.-per-year (100% foundation) Canadian Malartic mine represents the crowning of Agnico’s unofficial ‘Canada-first’ technique.

“Take into consideration the truth that we’ve introduced two-kilometre step-out holes at Detour, exterior of the recognized mineralization. Take into consideration Malartic, the place we’ve received a kilometre to a kilometre-and-a-half within the sediments – step-outs exterior of the East, and Goldie deposits that are the core of the underground improvement,” stated Boyd.

He continued to level out that Agnico’s present Canadian manufacturing base is greater than Barrick’s 61.5% curiosity in Newmont’s (NYSE: NEM) Nevada Gold Mines three way partnership. “Nevertheless it doesn’t get the press as a result of it’s Canada. It’s not Nevada, however it’s greater.”

In the meantime Agnico has loved success in Canada’s Arctic, the place it constructed the Meadowbank Complicated and Meliadine mine in Nunavut, and consolidated its regional holdings with the acquisition of distressed TMAC Sources and its Hope Bay mine in January final 12 months. The operation has underperformed since first gold was poured in 2017, requiring TMAC to make investments to enhance the mill and enhance its capability to 2,000 tonnes per day from 1,000 tonnes per day.

Agnico is raring to as soon as once more wield its skilled, affected person experience to reorganize and finally restart the operation, stated Boyd.

Regular hand

Boyd started his profession as an accountant beginning as a clerk at Clarkson Gordon (at the moment Ernst & Younger). Quickly sufficient, he was appointed audit lead, engaged on a brand new account referred to as Agnico Eagle Mines. “I received to fulfill Paul Pena, who was basically the founding father of Agnico, which instilled a whole lot of the values of the corporate that also maintain at the moment.

He jumped, becoming a member of the Agnico head workplace group of 5 in 1985.

“Numerous that efficient technique we’ve talked about relies on the consistency of the administration, the board, how they work collectively, the staff, low turnover, a number of generations of workers working there. And that’s, I believe, been an enormous a part of the success of with the ability to be affected person, being disciplined over time, and placing the items collectively to in the end not solely construct a much bigger enterprise, however a extra profitable enterprise,” stated Boyd.

He additionally famous how threat and the notion of threat are shut at coronary heart for the administration group. “We’ve tended to concentrate on issues like political threat, preserving the enterprise manageable, so that you’re not taking over extreme execution threat, and we take our lead from our technical individuals once we have a look at including parts to the enterprise, and what we’re asking them to do is, is make a name on geology. We observe the geology,” stated Boyd.

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