Agnico greenlights $2.4B Nunavut gold mine

Agnico Eagle Mines (TSX: AEM; NYSE: AEM) said it will proceed with construction of the $2.4-billion (C$3.3-billion) Hope Bay underground mine in Nunavut with a goal of starting operations in as few as four years.

Hope Bay is expected to produce between 400,000 and 435,000 oz. gold annually over an initial 11-year mine life, Agnico said Tuesday in a statement. A study this year outlines an after-tax net present value (NPV) of $2.7 billion for the project and an after-tax internal rate of return (IRR) of 19%, based on a $3,600 per oz. gold price assumption. At current gold prices of about $4,500 per oz., the NPV jumps to $4.3 billion with an IRR of 26%.

Tuesday’s investment decision represents the first major step toward Toronto-based Agnico lifting annual output to more than 4 million oz. — from about 3.45 million oz. in 2025 — sometime in the 2030s. Expansions of the company’s Canadian Malartic and Detour Lake operations will play a key role in the projected growth, Agnico said April 30.

“We see this as a positive step in Agnico’s push to deliver 20-30% production growth over the next decade,” BMO Capital Markets mining analyst Matthew Murphy said in a note. “The initial 11-year mine life is based on about 50% of the resource, which we think will grow considerably.”

Three deposits

Located in Nunavut’s Kitikmeot region, about 160 km north of the Arctic Circle and about 125 km southwest of Cambridge Bay, Hope Bay comprises a 1,951 sq. km land package. It includes a combination of Crown mineral claims, Crown mining leases, a production lease and land access agreements providing surface and subsurface mineral rights on Inuit‑owned lands.

Agnico plans to simultaneously develop and mine three underground deposits on the property — Doris, Madrid, and Patch 7, which contain orogenic‑style gold mineralization associated with major deformation zones within the Hope Bay greenstone belt. Mining will mostly take place via long-hole stoping to feed a 6,000 tonne-per-day processing facility.

“Significant” exploration upside is expected to extend mine life through mineral resource conversion and expansion drilling at the Doris and Madrid deposits in the short term, and the potential addition of Boston as a satellite deposit in the medium to long term, National Bank Financial mining analyst Shane Nagle said in a note.

Agnico has budgeted over $100 million in exploration over the next three years, including about $43 million this year. Priorities this year will include ongoing testing of the Patch 7 zone and diamond drilling at Boston. Regional exploration will also focus on satellite targets between Madrid and Boston, which historically has seen limited shallow drilling.

Conversion drilling

Hope Bay holds 31.97 million measured and indicated tonnes grading 5.63 grams gold per tonne for contained metal of 5.79 million oz. of gold, according to a resource released this month. Inferred resources are pegged at 17.33 million tonnes grading 5.97 grams gold for contained metal of 3.33 million oz. gold.

The resource excludes over 100,000 metres of drilling completed between August 2025 and last month. Results from this program, together with planned conversion drilling, are expected to be incorporated into the next resource estimate to be released at the end of 2026, Agnico said Tuesday.

Using a gold price of $3,600 per oz., total cash costs for Hope Bay are projected to be about $942 per oz., while all-in sustaining costs per oz. are pegged at $1,199 per oz., Agnico said. Total sustaining capital expenditures are estimated at about $1.1 billion. 

Hope Bay already has key environmental permits and production leases in place. Remaining permit amendments and water license updates are advancing.

The project aligns with the federal government’s push to stimulate economic development and strengthen Canada’s Arctic presence. Hope Bay is expected to generate an estimated C$2.6 billion ($1.9 billion) annually in exports, Agnico said Tuesday.

Agnico acquired the asset through its takeover of China-controlled TMAC Resources in February 2021. It suspended mining operations seven months later to focus on exploration.

Shares of Agnico fell 3.6% to C$238.86 Tuesday morning in Toronto as wider markets declined, valuing the company at about C$120 billion. The stock has traded between C$145.03 and C$348.94 in the past year.