NNSL Photo/Graphic

Canadian North

Home page text size buttonsbigger textsmall textText size Email this articleE-mail this page

Meliadine slashes budget
Agnico Eagle reducing expenditures by $80 million at gold exploration project

Lyndsay Herman
Northern News Services
Published Monday, July 29, 2013

Agnico Eagle Mines Inc. is reducing its expenditures across its international projects by $200 million next year, including an $80-million reduction in spending on its work at the Meliadine gold project near Rankin Inlet.

"We've had to look at our financial capacity, and we needed to have some reductions in how much money we're allocating to projects next year," said Sean Boyd, Agnico Eagle's president and chief executive officer, on July 26.

"As a result of that, we have scaled back our investments in a number of properties, including Meliadine."

Agnico Eagle still plans to invest $45 million at Meliadine in 2014 on the construction of an underground ramp to keep the gold project on its original timeline. Meliadine is currently home to an active exploration camp as it makes its way through an approval process.

Boyd said Agnico Eagle still plans to complete a feasibility study next year and decide if the project is worth developing.

The project will also continue to work through the regulatory process until such time as the company decides it's not economically feasible to develop the project.

"There's been no change in the timing of the decision," Boyd said.

"The only change is being the amount of capital we are allocating to the project next year and that is really a function of the current gold price and the volatility of the gold price and the fact that we have to maintain as much financial flexibility as we can."

The Meliadine project, located 24 kilometres north of Rankin Inlet, will also see a $10-million cut in capital spending planned for this year.

A 24-kilometre all-season road is under construction to connect the site to Rankin Inlet and is expected to be completed in August, according to a release issued by Agnico Eagle July 24.

Meliadine is the largest of Agnico Eagle's projects and, with the additional costs of building in the remote North, it would take a lot of funds to develop, Boyd said.

Since Meadowbank, Agnico Eagle's operational gold mine in Nunavut, cost $800 million to build, Meliadine would likely cost more than $1 billion, he said.

"It's expensive to build mining operations in that part of the world and so from a project development standpoint, it would be by far the biggest in terms of the amount of money that would be required to build it," said Boyd.

"That's what will have to be considered when we decide how to approach it next year when our study is done. Size and cost of the project will be important considerations."

E-mailWe welcome your opinions. Click here to e-mail a letter to the editor.