Agnico Eagle is evaluating the potential for Detour Lake in Ontario, Canada, to become a million ounce per year gold operation after the completion of a recent slew of studies.
The 2024 Life of Mine plan builds on the company’s previously filed technical report on Detour Lake as well as the mine plan update released by the company in July 2022. It updates the open-pit mine production profile and incorporates updated costing. The company has also completed a preliminary economic assessment (PEA) which contemplates the concurrent operation of the open pit and a proposed underground mining project, combined with mill throughput optimisation to 29 Mt.y. The 2024 PEA demonstrates that the Underground Project and the mill optimisation have the potential to increase the Detour Lake mine’s overall production to an average of approximately 1 Moz/y of gold over a 14-year period, starting in 2030. The current open-pit operation produced 677,446 oz of gold in 2023.
The 2024 PEA assumes an underground mining rate of approximately 11,200 t/d starting in 2030, combined with a mill expansion to 79,450 t/d starting in 2028. Annual production is expected to increase by approximately 43%, or 300,000 oz/y of gold, from 2030 to 2043. The PEA extends Detour Lake’s mine life by two years to 2054, with the company saying it believes that there is a good upside potential for additional exploration to add ounces to the mine plan in future years, which could result in an increase in production in the period between 2044 and 2054 or extend the life of the mine.
The preliminary mining concept for the Underground Project is based on transverse longhole open stoping, as this mining method is best suited for the sub-vertical mineral deposit. Sublevels will be 40 m apart, with the stope size averaging approximately 30,000 t. Primary stopes will be backfilled with cemented paste fill, while secondary stopes will be backfilled with either cemented paste fill or waste rock fill according to the sequence and waste material available. Approximately 130 stopes will be mined annually to sustain a mining rate of approximately 11,200 t/d (equivalent to an annualized production rate of 4 Mt/y).
The Underground Project is expected to use a combination of conventional and automated equipment, similar to the company’s Odyssey mine at the Canadian Malartic complex in Quebec. Ore and waste handling will be conducted by LHDs and trucks with a capacity of 21 t and 60 t, respectively. The ore handling system to surface will consist of ore passes, an underground jaw crusher located at level 760 and a conveyor system with a capacity of 15,000 t/d. The conveyor will be installed in a dedicated conveyor ramp, with the portal located near the primary crusher on surface, east of the open pit. A service ramp, with the portal located near the west end of the open pit, will be the main underground access for the workforce, equipment and materials.
Production could begin as early as 2030 and ramp up to the designed rate 11,200 t/d by 2033, which is expected to be sustained throughout the mine life until 2044.
The Detour Lake processing facility consists of two independent milling circuits, including gravity separation, concentrate leach, agitated tank leaching, carbon-in-pulp, solvent extraction and electrowinning. Over the last four years, the processing plant has undergone significant modifications to de-bottleneck existing circuits and improve throughput while maintaining recovery and reliability. The 2024 PEA contemplates that underground ore will be blended with the open-pit ore and processed through the existing plant.
Through investments in the crushing and grinding circuits and continuous improvement efforts, the mill throughput rate has increased from approximately 62,900 t/d in 2020 to approximately 69,700 t/d in 2023 and is expected to reach 76,700 t/d by the end of 2024. The company believes that further process optimisation can be achieved with minimal investment to reach a mill throughput rate of 79,450 t/d by 2028. The main initiatives to realise this potential include:
- The implementation of advanced process control systems to optimise circuit charge, mass flow balance and recovery;
- Further improvements to the crushing and grinding circuits, including the implementation of variable frequency drives for the secondary crushers and pebble crushers and redesigned SAG discharge screens; and
- Further optimisation to the maintenance practices and improved mill runtime.
An investment of approximately $12 million is included in the 2024 PEA to execute these initiatives.
Ammar Al-Joundi, Agnico Eagle’s President and Chief Executive Officer, said: “At Detour Lake, the company continues to build on the unique potential of this world-class asset. With the development of an underground mine to complement the existing open-pit mine, we see the opportunity to transform the asset into one of the top five gold mines in the world by output. We believe the Underground Project has relatively low execution risk, and has the potential to generate a strong risk-adjusted return on capital while maintaining exploration and production upside for decades in one of the best mining jurisdictions in the world.
“We have adopted a phased and disciplined approach to develop this potential, with the approval of a $100 million investment over the next three years to further study and de-risk the Underground Project, including the development of an exploration ramp (2 km) and the collection of a bulk sample. Concurrently, we are planning a conversion and expansion drill program to realise the upside exploration potential along the western plunge of the mineralisation. The long mineral reserve life and significant production base at both Detour Lake and Canadian Malartic provide a solid foundation for Agnico Eagle’s production profile and strongly positions the company for decades to come.”
The average total cash costs for the Underground Project, combined with the mill optimization to 29 Mt/y, are expected to be $690/oz. Development capital expenditures for the Underground Project and mill optimisation to 29 Mt/y are forecast to be approximately $731 million. Sustaining capital expenditures are forecast to be approximately $631 million over the life of the Underground Project, or between $40 million-$45 million per year from 2030 to 2043.
Agnico says the Underground Project and mill throughput optimization to 29 Mt/y are expected to generate an after-tax internal rate of return of approximately 18% using a gold price assumption of $1,900/oz and a C$/US$ foreign exchange rate of 1.34. At current gold prices of approximately $2,300 per ounce and a C$/US$ foreign exchange rate of 1.34, the Underground Project and mill throughput optimization to 29 Mtpa are expected to generate an after-tax IRR of approximately 25%.
