Capital investment plans Agnico to spend $100 million

“You can’t sit still in this business. But you have to raise money to go forward.”

So said Agnico-Eagle’s Paul Penna at the company’s annual meeting, citing expansion requirements that will call for some $100 million of financing over the next five years.

Other meeting highlights:

* A new 5,000-ft circular production shaft is in the cards for the Telbel gold mine at Joutel at estimated cost of $28 million.

* Canada’s newest gold mine, an initial 700-oz gold bar, has just been poured at Dumagami Mines (TSE). Brought into production with a 2,000-ton plant under budget and ahead of schedule at a total cost of less than $50 million, this 32% owned associated company is debt free with several million dollars in the bank and “is going to earn a lot of money,” Penna said.

* Agnico’s new real estate division is doing quite well. Nine industrial properties purchased in the Toronto area for $22 million now have an estimated market value of $45 million.

* Exploration activities of both its gold and silver divisions is to be stepped up significantly. Platinum, too, is drawing attention, both at Cobalt and in the Northwest Territories where the company currently has crews at work.

* Agnico has been holding discussions with North American Rare Metals (ME) that could lead to a $12-million underground program at that company’s Vezza gold property, which is within trucking distance of Agnico’s mill at Joutel.

Emphasizing that Agnico has not carried out any public financing since 1972, Penna sought and received shareholder approval to remove the current restriction on the number of shares the company can issue. (Present shareholder equity is $71.8 million, with 14,559,747 shares outstanding.)

Removal of the current 20-million-share capping gives management more flexibility and access to equity markets. “We abhor debt,” he reiterated, “but we will not issue shares at current levels. You must trust us.” Major shaft job

Tentative location of the planned new shaft will be some 4,000 ft east of the Telbel No 1 shaft, still 2,000 ft short of the east boundary. But before this can be finalized, two or three deep holes will be put down from surface. These will go to 5,000 ft or so in virgin ground.

At the same time, an underground drive will be extended east on the 3,150-ft level along the ore zone to the new shaft area, together with considerable diamond drilling. So it will likely be a year or so before the exact location can be pinpointed and construction started.

The dilution problems encountered in the deeper mine workings at the Telbel, which required a changeover to a completely new stoping method, are now under control, with grade on the way back up. This averaged 0.184 oz per ton in the first quarter and is currently running close to 0.20 oz.

“Dilution is no longer a serious problem. The serious problem now is a shortage of good miners,” Anton Adamcik, general manager of the gold division, told The Northern Miner following the meeting.

Under its agreement with Cominco Ltd., Agnico has now spent $1.5 million in a continuing program that has earned it a 45% interest in a 25-mile-long spread of ground in the Casa Berardi area. While nothing exciting has yet been turned up, this joint venture is far from over, it is gathered, with Cominco now the operator. Heavy spending for silver

The company continues to make heavy exploration and production commitments in the Cobalt camp, where it has been adding to its land spread and where it operates three producing silver mines and a new mill, as well as its own refinery.

Hopes are especially high for what is known as the Langis project, 17 miles north of Cobalt, where a 1,200-ft production shaft is going down to be followed by a very extensive underground program. Located 3,400 ft southeast of the present Langis No 6 shaft, it will explore a brand new silver zone 3,000 ft in length, discovered in 1986 in virgin ground.

“This major undertaking is probably the largest in the recent history of the Cobalt camp and reaffirms our faith in the richness of this historic silver area,” says Penna.

In the heart of the Cobalt camp itself, Agnico has purchased the land holdings of Canadaka Mining Corp. for $1.5 million cash.

It is going back underground here, working from two old shafts in a program budgeted at $7.5 million over the next five years. And $7 million is being earmarked for the property of Silver Century Explorations (ASE), an associated company likewise headed by Penna. This is to be a 50-50 joint venture.

In the Gowganda area from which ore is being trucked 60 miles to Cobalt, underground work is winding down at the Castle mine which has turned out over three million oz of silver since 1980. But a $9-million program is to be launched on the recently acquired nearby Peerless Silver property where one of two shafts is to be rehabilitated and a decline put down for a thorough underground investigation of the eastern portion of the Gowganda basin. Dumagami in production

The new 2,000-ton mill at Dumagami, just now coming into operation with a 10-year ore reserve ahead of it, will likely turn out 30,000 oz gold this year.

Based on a planned throughput of 1,500 tons per day or 525,000 tons per year, mining and milling costs here are estimated at $40-41 per ton or a cash cost of $260(US) per ounce, using the reserve average grade of 0.134 oz. This virtually assures a profitable operation.

The shaft here has already been carried to a depth of 3,200 ft, but a much larger hoist is going to be installed to facilitate the development of some fine new deep ore findings.

There is a considerable tonnage of marginal grade material at this Dumagami operation — known as the Donald La Ronde mine. In fact, management already calculates reserves in excess of 30 million tons averaging 0.08 oz that could be readily mined if the price of gold warrants.

The present Dumagami hoist will be moved to Goldex Mines (TSE), another new mine under full-scale development by Agnico, in which company it holds a minority interest.

A 27,000-ton stockpile of development muck has already been built up here as a bulk sample, awaiting shipment to the Dumagami mill this fall. (Dumagami has reserved 500 tons of its mill capacity for the Goldex operation, should the grade warrant.