Agnico-Eagle extends Laronde at depth

Drilling by Agnico-Eagle Mines (AGE-T) has extended Zone 20 North some 2,700 ft. below the deepest known occurrence of mineralization at the Laronde mine in northwestern Quebec.

President Sean Boyd says the intersection, which returned 51.8 ft. grading 0.19 oz. gold and 0.18 oz. silver per tonne, plus 0.18% copper and 0.01% zinc, “is the deepest massive-sulphide result in the Rouyn-Val d’Or mining camp.”

The results extended Zone 20 North over a vertical distance of more than 8,700 ft. Additional deep drilling is planned.

Exploration and definition drilling has been focusing on three targets: Zone 20-South and the extension on to the newly acquired El Coco property; Zone 20-North (both gold and zinc sections); and deep drilling below the bottom of shaft 3.

Among the better results from definition drilling of Zone 20-North are: 24.6 ft. of 0.19 oz. gold and 1.63 oz. silver (plus minor copper and zinc); and 32.8 ft. of 0.25 oz. gold, 5 oz. silver, 0.37% copper and 6.91% zinc.

The company described these results as “noteworthy,” owing to the larger-than-expected thickness and the higher gold grades in both the zinc and gold sections of the deposit.

“What the recent drill results indicate is the tremendous potential for Laronde to get significantly larger,” says Boyd.

An updated reserve and resource estimate will be released in February — around the same time that the new shaft 3 is due to be completed.

Agnico-Eagle is currently mining on level 125 and will begin pulling ore from zone 20-South and El Coco in the fourth quarter via shaft 3. By December, the daily mining rate is expected to have increased to 3,600 tons from the current 2,000 tons.

Meanwhile, the mill is being upgraded to handle 5,000 tonnes per day. And once the new shaft is drawing ore, mining from shafts 1 and 2 will be phased out.

The expansion should boost Agnico’s gold production to 340,000 oz. by 2004 from roughly 115,000 oz. this year, with operating costs expected to fall to about US$100 per oz. from the current US$225 (net of byproduct credits.)

Notwithstanding these projections, the company suffered a third-quarter loss of US$5 million (or US9 cents per share) on US$5.5 million in revenue derived from production of 15,024 oz. gold sold at an average og US$263 per oz.

These latest results add to an unbroken string of quarterly losses dating back to early 1996.

During the third quarter of 1998, Agnico-Eagle lost US$2.5 million (US5 cents per share) on US$10.3 million in revenue derived from 37,075 oz. gold.

“Our third-quarter operating results are, to say the least, disappointing,” says Boyd, who attributes the loss to difficult mining conditions and lower grades in the last mining areas of shafts 1 and 2, and to the US$1.9-million settlement of a lawsuit launched by Noranda (NOR-T). As well, operations were stalled for two weeks in August so that a 5,000-ton-per-day semi-autogenous grinding mill could be commissioned.

During the quarter, cash operating costs swelled to an abnormally high US$375 per oz. (net of byproduct credits for silver, copper and zinc), compared with US$214 per oz. a year ago, though, on a brighter note, operating costs fell by C$8, to C$53 per ton of ore milled.

Costs are expected to continue falling as mining shifts from shafts 1 and 2 to the new zones accessible from shaft 3.

Comments Chief Operating Officer Ebe Scherkus: “Some of the excellent drilling results, which show higher [than expected] grades and thicknesses, will make our lives easier in the years going forward — but 1999 and 2000 will probably test our endurance.”

At the end of the third quarter, Agnico-Eagle maintained a cash balance of about US$35 million and a working capital position of US$39 million.

To cover US$89 million in planned capital expenditures over the next three years, the company is arranging a US$100-million line of credit.