Site visit: Big gets bigger for Agnico, Yamana at Canadian Malartic

MALARTIC, QUEBEC — Despite its already enormous size, the Canadian Malartic open-pit gold mine in Malartic, Que., halfway between Rouyn-Noranda and Val-d’Or, is on track to grow even more for owners Agnico Eagle Mines (TSX: AEM; NYSE: AEM) and Yamana Gold (TSX: YRI; NYSE: AUY), as mine life is extended to 2026 and beyond.

The mine is equally owned by Agnico and Yamana, with operations managed by a fifty-fifty joint partnership.

Canadian Malartic became Canada’s largest gold mine as it achieved commercial production in May 2011 and has gone on to raise production every year since: 390,000 oz. gold in 2012; 475,000 oz. gold in 2013; 535,000 oz. gold in 2014; 572,000 oz. gold in 2015; and 585,000 oz. gold in 2016. The mine poured its two-millionth gold ounce in September 2015.

Agnico Eagle Mines and Yamana Gold’s Canadian Malartic gold mine in Malartic, Quebec. Photo by John Cumming.

Trucks in Agnico Eagle Mines and Yamana Gold’s Canadian Malartic gold mine in Malartic, Quebec. Photo by John Cumming.

This year, the mine is slated to produce a record 600,000 oz. gold, churning through ore at a rate of 55,000 tonnes per day and ranking as one of the world’s largest pure gold mines.

During the first half of 2017, the mine cranked out 307,782 oz. gold at a production cost per ounce of US$554 and a total cash cost per ounce of US$548 on a by-product basis (with 346,000 oz. silver produced over this period).

During the half, it processed 10.1 million tonnes of ore, or 55,650 tonnes per day, with production costs per tonne at $23, and mine site costs per tonne of $23. The complex includes semi-autogenous grinding followed by processing through three identical ball mills, conventional cyanidation and carbon-in-pulp processing technology. Doré bars containing gold and silver are poured on-site.

Total capital expenses at Canadian Malartic for 2017 are pegged at $172 million, including $101 million in sustaining costs, $67 million in stripping and pre-split, and $4 million on an extension project.

Looking ahead, the partners expect to produce 650,000 oz. gold in 2018 before levelling off to 640,000 oz. gold in 2019. The main pit at Canadian Malartic is slated to be mined out in 2021–2022, at which time the pit will be partly filled by waste from the Barnat pit as it comes online, as well as tailings residue.

Agnico and Yamana acquired the mine through its purchase of Osisko Mining in June 2014, and since then, the partners haves sought to improve the environmental performance of the mine, particularly in relation to dust, vibration and noise effects on the local town of Malartic, which sits right against the open pit.

Proven and probable reserves at Canadian Malartic stood at 204 million tonnes grading 1.08 grams per tonne gold (7.1 million contained oz. gold) at the end of 2016.

Aerial view of the town of Malartic, Que., the main pit of Agnico Eagle Mines and Yamana Gold’s Canadian Malartic gold mine, and the mill complex. Credit: Agnico Eagle Mines.

The partners received more good news in April 2017, in the form of the Quebec government authorizing a proposed expansion of the Canadian Malartic mine that would require the $60-million diversion of 3.4 km of Highway 117 in Malartic to allow the mining of the Barnat deposit.

More resource growth potential is seen 1.5 km east of the pit in the Odyssey North and South Zones, with initial Odyssey Zone inferred resources calculated at year-end 2016 of 20.6 million tonnes grading 2.15 grams gold per tonne.

Agnico describes the property as lying on the southern margin of the eastern part of the Archean-aged Abitibi volcanic belt, mainly within the Pontiac Group of metasedimentary rocks. The north-central portion of the property covers a 3.5 km long section of the Cadillac-Larder Lake Fault Zone and is underlain by mafic-ultramafic metavolcanic rocks of the Piché Group cut by intrusions, as well as metasediments of the Cadillac Group north of the fault zone.

Mineralization is described as a large-tonnage, low-grade Archean gold system, consisting of a widespread shell of disseminated gold-bearing pyrite mineralization hosted by porphyritic felsic to intermediate intrusions and altered metasediments, with the system open west and south at depth.

The partners continue to explore on the property, and this year expect to spend $6.4 million on 46,000 metres of exploration drilling and $4.6 million on 53,700 metres of conversion drilling.