‘Still early days’ for Agnico Eagle at Amaruq

VANCOUVER — Agnico Eagle Mines’(TSX: AEM; NYSE: AEM) Amaruq deposit in Nunavut is building its reputation as one of Canada’s most exciting grassroots gold discoveries.

Located 50 km north of its operating Meadowbank gold mine in Nunavut’s Kivalliq region, the wholly owned Amaruq property sits within an underexplored and highly prospective greenstone belt known to host the large Meadowbank and Meliadine gold deposits.

Agnico had initially planned for a $1.5-million program in 2014 to expand the project’s newly discovered IVR and Whale Tail zones, but ballooned the budget to $9 million in the third quarter once it saw substantial resource potential at Whale Tail.

By the time the program had wrapped up in October, Agnico had drilled 144 infill and step-out drill holes totalling 31,600 metres into the two zones.

“Mineralization at Whale Tail is remarkably consistent and predictable,” Guy Gosselin, Agnico’s vice-president of exploration, told The Northern Miner in an interview on the sidelines of the Mineral Exploration Roundup in Vancouver in late January. He said drilling in 2014 had encountered high-grade gold in up to five horizons across a 1.2 km northeasterly trend, with depths ranging between surface and 350 metres, although most holes averaged 250 metres deep.

Best holes reported to the east include 14-152, which encountered two main horizons grading 24.1 grams gold per tonne over 3.5 metres (all widths being true widths) at 115 metres depth, and 10.8 grams gold over 11.9 metres at 134 metres. To the west, hole 14-109 cut four horizons, of which the first two returned 13.7 grams gold over 5.3 metres at 107 metres deep, and 5.3 grams gold over 13.4 metres at 204 metres. Targeting extensions of western intercepts, hole 14-125A stepped out and returned 7.6 grams gold over 23.2 metres at 248 metres deep.

Drilling last year was partially obstructed by Whale Lake, which resulted in a 300-metre wide sampling gap in the middle of the 1.2 km long prospect.

“Bathymetric surveys performed in 2014 have shown the lake to be zero to four metres deep, and so it doesn’t pose a similar issue to the one we had with Meadowbank, where we had to significantly dewater to access its reserves,” Gosselin commented.

As such, the outlook for closing that gap remains optimistic.

“We drilled one hole [14-144] beneath the lake to ensure continuity of mineralization, and we intersected grades similarly seen to the east and west,” he added. These results include 8.7 grams gold over 7.8 metres at 339 metres, 16.5 grams gold over 3.1 metres at 112 metres and 8.7 grams gold over 13 metres at 131 metres deep.

Most of the third-quarter drilling was used to generate a maiden resource for both the IVR and Whale Tail zones. The inferred resource, released early February, is estimated at 6.6 million tonnes of 7.1 grams gold for a total of 1.5 million oz. Of the total inferred resource, 1.4 million oz. are contained at Whale Tail.

Considering that 18 months ago the prospect was only a patch of open land with a few gold-rich boulders, there could well be more blue sky potential ahead.

“We’ve found that electromagnetic (EM) and magnetic (mag) geophysical anomalies correspond well with known surface and sub-surface mineralization. Our drilling, in conjunction with these surveys, suggests that mineralization carries even farther to the west,” Gosselin said.

His words may be prophetic: The year’s final western drill hole 14-150 intercepted 8.1 grams gold over 12.1 metres just 14 metres from surface, as well as 5.9 grams gold over 5.4 metres at 226 metres deep, in what Agnico is interpreting as a previously unrecognized fifth mineralized horizon. 

The Amaruq discovery is perfect timing for Agnico, as it reckons it will deplete the reserves at Meadowbank in 2017.

Agnico expects to have produced 430,000 oz. gold at Meadowbank in 2014, from reserves that stood at the end of 2013 at 17 million proven and probable tonnes grading 3.2 grams gold, or 1.8 million contained oz. gold.

Agnico notes that the intercepts at Amaruq are two to three times the head grade of the 2.9 grams gold per tonne mined at Meadowbank.

“Preliminary metallurgical results have varied depending on where you are, but we’re already seeing a mid-80% recovery of the metal, so it’s nothing that is strange to us,” Gosselin added.

The Meadowbank deposit is hosted in the Neoarchean Woodburn Lake group in the Rae domain of the western Churchill geological province. Gold mineralization is associated with pyrrhotite and pyrite replacement of magnetite-rich horizons within an Algoma-type banded iron formation (BIF) sequence, and extends into surrounding volcaniclastic units. The ore zones largely occur along contacts with the komatiitic horizons, which are interpreted as being syn-depositional and consistent with an active continental margin setting.

Strain partitioning, largely due to the mechanical contrast of the iron formation and komatiitic horizons, promoted dilation through isoclinal folding and created a trap for gold-bearing fluids concentrated along high-strain corridors. The deformation event responsible for gold is considered as Paleoproterozoic-age, though later deformation also truncated and redistributed the orebodies.

The geology of the IVR and Whale Tail zone shares structural and mineralogical similarities with Meadowbank,  but so far there is no BIF at Amaruq. Mineralization is sub-vertical, and occurs as pyrrhotite and pyrite replacement, and stringers focused along the contacts between an openly to tightly folded greywacke and komatiitic package.

“There is still a lot more to learn because we haven’t worked a lot in the field regarding the geology,” Gosselin said.

He noted that Agnico came across the prospect by reviewing old assessment reports in 2008 and, once it obtained its permits in 2013, conducted ground truthing, EM-mag surveys and targeted anomalies around IVR with preliminary drilling.

“All the holes we drilled intersected mineralization, and so we continued following geophysical anomalies to the south into the Whale Tail, and it all took off quickly from there,” he said.

When asked about the prospectivity of the wider Amaruq area, Gosselin answered that “there’s not much data, as it’s still early days and little exploring has ever been done, though we’ve already identified nearby prospects like Boulder Fields, Whale Fin and Mammoth — all of which show attractive gold from surface samples.”

With momentum building at this greenfield project, Agnico reacted by quadrupling its land tenure in the area to cover 12 km of a highly prospective conductor that can be traced from IVR, Whale Tail and the new showings.

“We are focusing on a drill approach at Whale Tail for now, but plan to pursue a glacial history, detailed geological mapping and further EM-mag surveys to help determine how much more is out there,” Gosselin said. “After all that is completed, then we’ll see what else needs to be done. ‘Is it 1 million oz., or 10 million oz.?’ That’s the question we are all asking.”

This year at Amaruq, Agnico is budgeting $20 million for exploration that will include 50,000 metres of drilling.

“The objective is to fill the gap that exists beneath Whale Lake, but also to narrow the drill centres so that by mid-year we should be in a position to upgrade the inferred resource to indicated,” he said.

Agnico is also building a 100-person exploration camp and completing the environmental surveys needed to permit a linkage road from the property to Meadowbank.

“Amaruq is a significant project for the company,” Gosselin said. “We wouldn’t have gotten here if it wasn’t for a great team. We want to
cover all the baselines in order to fast-track the project and get ore from Amaruq to Meadowbank.”