Agnico starts up Laronde’s zinc circuit

With the attainment of commercial production from a new zinc circuit during the third quarter, Agnico-Eagle Mines (AGE-T) has reached another milestone in its expansion program at the Laronde gold mine in northwestern Quebec.

The new zinc circuit was only one of several accomplishments reported by Agnico-Eagle in the 3-month period:

• Shaft 3 reached a depth of 5,452 ft. (of a planned 7,350 ft.), and a ramp between shafts 1 and 3 was completed. Ore development is about to resume on the seventh, eighth and ninth levels once a safety bulkhead has been moved down to the 10th level.
• Zone 20N’s gold and zinc-bearing massive sulphides were exposed for the first time on the eighth level of shaft 3. The zone’s thickness was 110 ft., compared with the 75 ft. indicated by earlier definition drilling. As well, gold and copper development grades returned from channel sampling in the drift were higher than indicated by definition drilling. Gold grades averaged 0.08 oz. per ton, compared with 0.04 oz. per ton in the drill core, whereas copper averaged 0.47%, compared with 0.14%. Gold grades in the zinc-rich zone also were higher, averaging 0.04 oz. per ton, compared with the 0.02 oz. per ton indicated by definition drilling. Agnico-Eagle believes the higher grades are due to the same north-south fracturing that is responsible for higher-than-expected production grades from the Main zone of shaft 1.
• Underground drilling intersected areas of higher-grade gold mineralization in the upper, zinc-rich portion of Zone 20N and extended the lower and eastern limit of the current mineral resource. Further drilling this year will test the largely unexplored areas below the 11th level.
• At surface, highlights include the acquisition of a semi-autogenous-grinding mill with a 5,000-ton-per-day capacity, up from an originally planned 3,600-ton daily capacity. The increase makes it possible for Agnico-Eagle to boost Laronde’s daily throughput if drill results continue to surpass expectations.

  Agnico-Eagle’s development successes did not translate into a quarterly profit. For the three months ended Sept. 30, the company lost $3.9 million (or 7 cents per share) on production income of $15.3 million, compared with a loss of $1.4 million (3 cents per share) on production income of $17.5 million a year ago.

  Agnico-Eagle has not enjoyed a profitable quarter since the second quarter of 1996.

Recently, the company has been doubly hit by low gold prices and by reduced gold production, attributable to low grades at Laronde. Production in the third quarter totalled 37,075 oz. gold sold for an average realized price of just US$292 per oz., compared with 40,213 oz. sold at US$323 per oz. a year ago. As well, cash operating costs rose to US$214 per oz. in the quarter, compared with US$211 a year ago.

Low grades also took their toll on copper production, which amounted to 1.7 million lbs. at Laronde, compared with 2.1 million lbs. a year ago.

On a positive note, the new zinc circuit contributed 190,000 lbs. zinc during the period and on-site operating costs were down by $10, to $61 per tonne of ore milled.

The company has $171 million in working capital and bullion (including $136 million in cash) — a sum sufficient to complete Laronde’s $170-million expansion (T.N.M., May 25-31/98).