Agnico Eagle Mines is looking to begin construction on a 50-kilometre road to a potential open pit gold mine near Baker Lake, Nunavut, while announcing a delay in the start-up of its Meliadine mine near Rankin Inlet.
The Toronto-based mining company reported a loss Wednesday of $15.5 million in its fourth quarter of 2015, but said it was able to cut down its net debt by $190 million over the course of the year.
"We see Nunavut becoming a major source of production for us going forward but more importantly we're not in a huge rush to get there," said CEO Sean Boyd on a conference call discussing fourth quarter results on Thursday.
Agnico Eagle received a permit last year to construct a road that will connect its existing Meadowbank mine near Baker Lake to its Amaruq exploration project, 50 kilometres to the northwest.
Last June, the company announced it found a promising gold deposit at the Amaruq site it now estimates at 3.3 million ounces.
"Given that the initial mineral resource grade at Amaruq is well in excess of the mineral reserve grade at Meadowbank, the company believes that there is good potential for Amaruq to have similar annual output to Meadowbank in its peak production years," reads a release by Agnico Eagle.
The company anticipates the Amaruq site could be operational by 2019, shortly after Meadowbank is scheduled to close in 2018.
Delayed Rankin Inlet development
Agnico Eagle also said it's delaying the opening of its Meliadine gold mine near Rankin Inlet by a year.
In March 2015, the Nunavut Impact Review Board gave Agnico Eagle the go-ahead to build the company's second gold mine in the territory.
The Meliadine mine is expected to have a nine-year life cycle, with an annual production of 350,000 ounces of gold.
"We felt that in the current gold market that it was best to be more prudent, to be more measured and slow it down and that was the approach we decided to take," Boyd said.
The company plans on spending $96 million on the site in 2016 to further develop it, aiming for a potential start-up date in 2020, about a one year delay from previous expectations.
"We have always felt, particularly with the recent success at Amaruq, that Nunavut is a place that we can see ourselves for multi-decades. As we said many times before, we know we can do business there, it is open for business," he said.
"It's more just taking that long term view that that's a part of the world we want to be and we want to get as much ground as we can, get it as cheap as we can, get it early."