Agnico Eagle greenlights $2.4B Arctic gold project

Agnico Eagle Mines (NYSE:AEM) has approved a positive investment decision for its Hope Bay gold project in Nunavut, advancing a multi-billion-dollar development in Canada’s far north as bullion prices hover near historic highs.

The Toronto-based miner expects the underground operation to process 6,000 tonnes of ore per day, according to a company statement.

At steady state, the asset is projected to produce an average of approximately 435,000 ounces of gold per year over an initial 11-year mine life, yielding total cumulative production of roughly 4.5 million ounces.

To bring the Arctic project to fruition, Agnico Eagle estimates initial development capital expenditures will total $2.4 billion.

An additional $1.1 billion is forecast for sustaining capital over the current span of the mine's operations.

Financial models calibrated to a gold price range of $3,600 to $4,500 per ounce indicate an after-tax internal rate of return (IRR) between 19% and 26%.

Under a 5% discount rate, the project’s net present value (NPV) is estimated at $2.7 billion to $4.3 billion.

Total cash costs are projected to average between $942 and $958 per ounce, with all-in sustaining costs (AISC) expected to arrive between $1,199 and $1,214 per ounce.