Agnico Eagle has 10 rigs turning at El Barqueo

Agnico Eagle Mines (TSX: AEM; NYSE: AEM) says the El Barqueno gold project in Mexico could become a heap-leach operation similar to its La India gold mine and the stand-alone Creston Mascota pit, near its Pinos Altos gold mine. 

“We’ve got a minimum of La India-type open-pit material, and we do think there is potential ultimately for a Pinos Altos-style underground — but we are still working there,” Sean Boyd, the company’s vice-chairman and CEO, said at the Denver Gold Forum. 

On Sept. 21, Agnico reported that recent drilling at the 328 sq. km property in Jalisco state expands mineralized zones. El Barqueno has three blocks of land, including the original El Barqueno package acquired from Cayden Resources last November, and two nearby blocks bought from Soltoro Ltd. in June 2015.

During the first eight months of 2015, Agnico drilled 36,000 metres in 148 holes on the project to delineate the limits of the Azteca-Zapoteca, Angostura and Pena de Oro prospects, as well as test for other mineralized structures and extensions. 

The main mineralized trend at El Barqueno has at least 8 km of strike potential. 

A recent hole from Azteca-Zapoteca returned 8.04 grams gold per tonne over 5 metres at 227 metres deep. Another hole hit four lenses between 173 and 303 metres deep, including 2.25 grams gold over 3.6 metres at 303 metres deep. The prospect has a 1.2 km strike length and is open at depth and along strike. 

Some 800 metres northwest of Azteca-Zapoteca, a hole at Angostura cut 15.4 grams gold over 3 metres at 87 metres deep. The prospect has a more than 1 km strike length, and seems to plunge shallowly southwest. 

At the Pena de Oro prospect, 6 km east of Azteca-Zapoteca, drilling has extended the target’s strike length to over 800 metres, with recent intercepts including 10.82 grams gold over 4.9 metres at 32 metres deep, and 2.69 grams gold over 27.5 metres at surface. 

“On the advanced exploration stage the one that has jumped ahead of everything else at this point, in addition to Amaruq, would be El Barqueno,” Boyd says. 

Under this year’s $22-million budget for El Barqueno, Agnico has 10 rigs turning on the property, and plans another 32,000 metres by year-end. A maiden resource estimate should be out by mid-February 2016. 

Preliminary studies on mine design, as well as metallurgical testing, are also underway. 

BMO analyst Andrew Kaip notes that El Barqueno “reflects an important greenfield project for Agnico Eagle, with similarities to the company’s existing Mexican heap-leach operations.” While Kaip has no value on the project, he says an initial resource estimate or technical report showing “economic viability of a potential operation may provide upside to the Agnico Eagle valuation.”  

In northern Mexico, drilling at Creston Mascota and La India are showing potential for growth. 

Recent infill drilling at Creston Mascota in Chihuahua state has indicated higher-grade and wide intercepts within the pit boundaries. 

This could increase reserves and extend the mine life beyond 2018. 

At the nearby La India mine in Sonora state, infill drilling and mine reconciliation data, combined with metallurgical test work on sulphide mineralization, should add to both oxide and sulphide reserves and resources, and could increase the mine’s life beyond 2020.

Kaip has a $30 price target and “market perform” rating on the stock.