Agnico-Eagle adds tonnage to LaRonde

While Agnico-Eagle Mines (AGE-T) struggles to return to profitability, there has been nothing but good news from the exploration and development programs under way at the company’s flagship LaRonde gold mine in northwestern Quebec.

Definition drilling from shaft 3 has continued to intersect mineralization that is thicker than previously indicated by exploration drilling. As a result, the resources for zone 20N have increased in size by 6 million tons since Jan. 1, and a substantial quantity of the resources has been converted to the status of probable reserves.

The drilling has allowed Agnico-Eagle to update the reserves and resources of the steeply dipping zone 20N, which remains open to the west and at depth. Above the 10th level (5,260 ft. below surface), there are reserves and resources of 15.6 million tons grading 0.04 oz. gold and 2.32 oz. silver per ton, plus 0.17% copper and 6.55% zinc. Below the 10th level are 11.7 million tons of 0.13 oz. gold, 2.55 oz. silver, 0.58% copper and 4.76% zinc.

The total resources in zone 20N are now pegged at 27.3 million tons, up from the 21.1 million tons delineated on Jan. 1.

Definition drilling along the 10th level also encountered an increase in gold grades in the gold-copper section of zone 20N — a rise that is interpreted as the beginning of an expected transition between zone 20N’s zinc-silver section and its gold-copper section. At depth, zone 20N transforms primarily into a gold-copper zone.

At the end of July, shaft 3 had reached a depth of 5,150 ft. of its planned depth of 7,350 ft., and a ramp was completed from shaft 1 to shaft 3 at the seventh level. Drilling from the ramp into zone 7 has encountered no significant mineralization. Current mine development is proceeding according to schedule on both the seventh and eighth levels, with the first development ore from zone 20N expected to be obtained from the eighth level in mid-August. Based on the shaft-sinking schedule, definition drilling will resume on the 11th level in November.

At surface, plant construction continued during the second quarter, and a zinc circuit is expected to be completed in September.

On the financial side, low gold prices and a decline in byproduct copper production caused Agnico-Eagle to rack up another quarter of losses, despite a significant boost in gold production.

For the second quarter ended June 30, the company posted a net loss of $3 million, (or 6 cents per share) on income from production of $16.6 million, compared with a loss of $1.2 million (3 cents per share) on $18.1 million in the corresponding period last year.

A 7% increase in gold production to 40,580 oz. during the second quarter was attributed to higher grades, as mill throughput was essentially unchanged.

The average gold price realized during the 1998 second quarter was US$300 per oz., down 12.5% from the US$343 per oz. realized a year ago. Increased gold production and the improved foreign exchange rate allowed cash operating costs to remain unchanged at US$213 per oz. gold

Owing to lower copper grades, only 1.5 million lbs. of the red metal were produced — a decline of 1 million lbs. from the second quarter of 1997. At June 30, Agnico-Eagle had a cash balance, excluding bullion on hand, of $162 million and a working capital position of $179 million; the figure includes an equity financing concluded in May for net proceeds of $95.4 million.

Expenditures on the $256-million expansion program at LaRonde, including mill construction and shaft-sinking, totalled $11 million in the second quarter leaving $193 million to spend over the next three and a half years.