Agnico-Eagle basks in bright ore position

While there will be no output from Agnico-Eagle Mines’ silver division here until its new $2.5-million mill is ready, which now looks like mid-year, there has been absolutely no letup in exploration or development, The Northern Miner finds on a visit to this famed old camp.

Firmly believing in the adage “if you don’t look, you don’t find,” this company spends at least $100,000 every month, year in and year out, on underground exploratory drilling on its dominant Cobalt-Gowganda area holdings in its gutsy and on-going search for ore, employing eight diamond drills.

And this is certainly paying off, for it is probably now in the strongest ore position since the Paul Penna organization took over 24 years ago. This includes a full year’s supply of broken ore on hand ready for the mill.

Management, of course, would dearly like to see a higher price for silver. However, Mr Penna expresses confidence that this has seen bottom and is headed higher.

Even if the mill had been operating during the past year, it is unlikely that the company would have sold much of any output, preferring to stockpile bullion in Mr Penna’s firm belief that he will get better prices. Right now, the company has 840,000 oz of refined bullion on hand which it is carrying at $7(C) an ounce and currently is worth about $7.50. Management estimates its total cost to produce an ounce of refined silver this year will be about $4.75 (US) or about $6.50(C) per ounce.

The fire that completely destroyed the old wooden mill structure early last year, fortunately, did not reach the crusher house which remains intact and ready to go. The heavy grinding equipment is now in place at the new all-steel plant, where contractors now have about 30 men working on construction and installation, The Northern Miner observed. Modern new mill

This will be a fully modern plant with capacity to handle 300 tons of run-of-mine ore daily. However, management would be more than satisfied if it matches the 97% recovery that the old plant was achieving before the fire.

Because of the much healthier ore position the company now finds itself in, it is expected that the new plant will be able to operate on a year- round basis. And it will almost certainly turn out more than a million ounces in its first full year of operation.

Work is currently under way at four separate mines. While there have been no dramatic new developments of late, ore continues to be turned up at a satisfactory rate, says Brian Thorniley, the division’s chief geologist and assistant mine manager, who has been with Agnico at Cobalt for the past 25 years. Three of these mines are in production (stockpiling) — the Beaver-Temiskaming, Castle and Langis. These are all former producers which, over the years, have turned out over 35 million oz of silver from what is known as the upper contact and three million from the lower ore-sensitive contact area of the regional diabase dike with which all of this camp’s ore is associated and where most of the current work is being directed.

The fourth project, known as the Slate Creek, is regarded as a prospect. Located in Bucke Twp., this is an assemblage of 20 claims that Agnico put together under a royalty agreement with three separate companies. A whole series of long exploratory underground holes is being drilled from a decline but nothing of significance has as yet been encountered.

The Beaver-Temiskaming operation, which is vying with the Castle for the lead role, is located in the northern area of the company’s extensive holdings in the camp proper. This is serviced by a 1,600-ft vertical shaft which goes to the under side of the sill and is the deepest shaft in the entire district. With more than a mile of lateral workings on the 1,600-ft horizon, it taps no less than five former producers — Christopher, Silver Miller, Brady Lake, Temiskaming and Cobalt Lode. Of these the Brady Lake, where two promising looking new silver zones have been outlined, is being accorded exploration-development priority.

But it is the Temiskaming mine area that contains the main source of actual production. There are four stopes in production in this sector, where there is about 14,000 tons of broken ore underground and another 12,000 tons on surface. This grades about 18 oz. Gowganda a jewel

But the real jewel so far has been the Castle mine at Gowganda, 50 miles west of Cobalt. This mine, which is held under a royalty lease from Milner Consolidated Silver Mines, accounted for over 1,000,000 oz of silver in 1985, with the ore grading close to 50 oz per ton. Some 11,000 tons of this ore has already been trucked to the mill site, with another 5,000 tons or so broken underground. But it looks as if the grade this year will be down a bit, probably in the 30-oz range. There are two underground diamond drills operating at this project, which employs a 30-man crew.

But what is perhaps the most exciting new development, and one that will certainly bear close watching, is that taking place at the Langis project, seven miles northeast of the town of New Liskeard — here again, quite separate from the Cobalt camp proper.

This is another old mine, taken over by Agnico about eight years ago, and on which it has since spent a lot of money. Former operators turned out some 10 million oz from over 12 miles of workings here, some of which Agnico is now putting back into production (stockpiling the ore).

As previously reported in detail in this paper (May 5/86), some blind exploratory drilling a mile or so west of the shaft through deep overburden on virgin ground, turned up some excellent silver values in an ideal geological and structural setting. The company has since driven a cro sscut to this brand new area from which a large drill station has been cut. Exploratory drilling using heavy machines is just getting started here. If successful, it is likely that a new 1,200-ft production shaft would be put down.

“We should get the Langis picture in 6 to 8 months,” John Young, manager of the silver division, told The Northern Miner. (Both Manager Taylor and Geologist Thorniley regard this situation highly, it was gathered. Indeed they hope to duplicate the Cobalt picture).

This 46-claim Langis property is held under lease from Langis Silver & Cobalt Mining Co., a company over which Agnico subsequently acquired control and which is now headed by Mr Penna. All ore currently being mined here is subject to royalty payments to the Langis company. But this new find, which is on ground recently acquired by Agnico, would not be subject to royalty payments to Langis.

As mentioned earlier, Agnico’s management is watching the silver price carefully. For any significant upward bulge would quickly reclassify considerable tonnages of marginal material in the $4 to $5 range into the ore category, both at the Langis and these other mines in the Agnico fold.