Agnico Eagle Mines says it has achieved commercial production at its Amaruq satellite deposit at the Meadowbank Complex, in Nunavut, Canada.

The achievement was completed on September 30, despite dewatering problems and adverse weather conditions in the June and September quarters, the company said.

Amaruq is around 50 km northwest of the Meadowbank mine, which in turn is located some 110 km by road north of Baker Lake in the Kivalliq District of Nunavut, Canada. Development of Amaruq was approved in February 2017 as a satellite deposit to supply ore to the existing Meadowbank mill.

Sean Boyd, Agnico Eagle’s Chief Executive Officer, said: “Congratulations to all of our employees at Amaruq for achieving commercial production in line with the original schedule despite ongoing challenges related to dewatering and adverse weather conditions in the second (June) and third (September) quarters of 2019. We would also like to thank the various government agencies and the local communities for their continued support in Nunavut.”

With the start of production at both Amaruq and Meliadine in 2019, the company is well positioned to deliver on its goal of generating net free cash flow in the second half of this year, Boyd said. “This is expected to allow us to reduce net debt and potentially increase the dividend while continuing to steadily grow our business,” he added.

The Amaruq mining operation uses the existing infrastructure at the Meadowbank mine (mining equipment, mill, tailings, camp and airstrip), but additional infrastructure has been built at the Amaruq site (truck shop/warehouse, fuel storage and an additional camp facility). Amaruq ore is transported using long haul off-road type trucks to the mill at the Meadowbank site for processing.

Amaruq ore processing commenced in August 2019 using low-grade stockpiles. In the September quarter of 2019, production at the Meadowbank Complex totalled 48,869 oz of gold, which included 13,588 oz from Meadowbank and pre-commercial payable gold production at Amaruq of 35,281 oz, compared with pre-commercial production guidance of 40,000 oz of gold. Pre-commercial production gold sales totalled 32,042 oz.

An update on total project capital costs will be provided with the company’s 2019 September quarter results scheduled for release on October 23.

The company noted: “During the third (September) quarter of 2019, mining activities at Amaruq continued to be affected by slower than expected dewatering activities (largely related to heavier than expected rainfall). Dewatering is now substantially complete (approximately one month later than previously expected).

“Given the slower than expected ramp up of mining activities, the company took the opportunity to accelerate planned maintenance to the milling and crushing circuits, which was originally scheduled for 2020. As a result, the mill was temporarily shut down in mid-September and is expected to restart on or about October 14, 2019. During the shutdown ore continues to be mined and trucked to the Meadowbank mill, where it is being stockpiled for future processing.”

As a result, production guidance at the Meadowbank Complex for 2019 is now anticipated to be 200,000 oz of gold (previous forecast of 230,000 oz). Despite the lower forecast for the Meadowbank Complex, the company’s full year 2019 production guidance of 1.75 Moz of gold remains unchanged.