Agnico Eagle Mines Limited, a Canadian-based gold mining company, announced earlier this week results from the company’s internal study on its Odyssey mine, which is a portion of the company’s 100%-owned Canadian Malartic complex. The results reflect excellent progress, extended mine life, and notable resource growth.
The most significant results from the internal study included an additional 1.7 million ounces of gold in the mine’s plan and elongated mine life to 2042.
“Over the last three years, we have significantly de-risked the project while improving its production profile and increasing its overall value. We have added approximately 1.7 million ounces of gold to the mine plan and extended the mine life to 2042,” the company explained in the statement.
With these results, the mine’s forecasted payable gold production has now increased by 23% when compared to the internal study completed in 2020. At the end of 2022, Agnico Eagle Mines discovered a larger resource estimate that also contributed to these results.
Because of the increased resource base, the Odyssey mine’s lifespan has now increased by three years to 2042. The average annual payout production forecast comes to approximately 558,000 ounces of gold for the years 2029 to 2041. To put this into perspective, the 2020 internal study forecasted the annual payout production at 557,000 ounces for the years 2029 to 2039.
The Canadian Malartic complex is one of the largest mining operations in the world, consisting of the open-pit Canadian Malartic mine and the underground Odyssey mine. In 2022, the mine and processing plant (which can go through 60,000 tons per day) produced 658,792 ounces of gold.
“Since the initial discovery of the East Gouldie deposit in late 2018, the company has made tremendous progress bringing the Odyssey mine into production, initiating the transition from the largest open pit gold mine in Canada to the largest underground mine in Canada,’’ Ammar Al-Joundi, the president and CEO of Agnico, explained in the press release.
Following the latest internal study, Agnico believes that the Odyssey mine’s internal zones, East Gouldie and Camflo, also show exciting potential for future mine life extensions based on expanded gold production. The only bottleneck here is costs. The forecasted total cash costs per ounce have increased since 2020 from $630 per ounce from the years 2029 to 2039 to $768 per ounce from 2029 to 2041.
“Costs estimates, including underground development and mining costs, processing costs, and equipment procurement, reflect the new cost environment following three years of high inflationary cost pressures,” the company explained.
Agnico used a gold price of $1,650 per ounce and a Canadian to U.S. dollar foreign exchange rate assumption of 1.32 to develop the mine’s after-tax internal rate of return figure estimates and landed at 24%. The after-tax net present value using a 5% discount rate came to $1.6 billion.
In comparison, the 2020 internal study projected the after-tax internal rate of return to be 17.5%, with the net present value at a 5% rate coming to $1.14 billion. The figures used for this calculation included a gold price of $1,550 per ounce and an exchange rate of 1.3.
Despite higher costs, the project’s construction and mine development rates remain on schedule. The company’s forecasts for capital expenditures between June 2021 and 2023 are 11% above 2020’s expectations, totaling an estimated figure of $429 million, largely due to supply chain complications and inflation.
Moving forward, Agnico plans to continue aggressive exploration efforts at the Canadian Malartic complex to hopefully take full advantage of the mill’s capacity, which it expects to reach 40,000 tons per day by 2028. The increased mill capacity, along with the new-found reserves at the Odyssey mine, provide a promising level of growth for Agnico Eagle Mines.
“In the Abitibi Gold Belt, we have a significant competitive advantage, being the employer of choice and having infrastructure and a project pipeline that supports our unique ability to generate organic growth at reduced capital intensity and a lower environmental footprint, which we believe will generate significant shareholder value,” Al-Joundi concluded.
Just a few months ago, in March 2023, Agnico purchased the 50% interest Yamana Gold carried in the Canadian Malartic complex. Now, Agnico maintains 100% ownership in both the Canadian Malartic and Odyssey mines, allowing it to conduct such successful exploration and development endeavors. Moving forward, we can likely expect to see more exciting press releases from Agnico Eagle Mines regarding the Odyssey mine’s resources and lifespan.
