Boom in gold price could bring new mine to Nunavut
Agnico Eagle also credits higher price for extending life of Meadowbank mine
Record-setting gold prices could spur construction of a new mine in Nunavut next year and prolong the life of Meadowbank gold mine, says an executive for Agnico Eagle Mines Ltd.
“[It] is good for us, but also good for Nunavut and Inuit organizations,” said Dominique Girard, executive vice-president and chief operating officer of Agnico Eagle Mines Ltd. for Nunavut, Quebec and Europe, in an interview.
“The gold mining business … is cyclical,” he said, adding “we are in a very good position.”
After reaching the record-breaking price of C$5,581 (US$4,000) per troy ounce at the beginning of October, the price climbed to C$6,123 (US$4,387) on Oct. 15, setting a new record.
A troy ounce is used to measure precious metals. A regular ounce is 28.35 grams, while a troy ounce is slightly heavier at 31.1 grams.
The price of gold on Dec. 4 still sat at C$5,882 (US$4,215) — up nearly 60 per cent from the C$3,706 (US$2,656) on the same date a year ago.
Girard said the increased profit from high gold prices could extend the longevity of existing mines and restart mining at the Hope Bay project, which went into care and maintenance in March 2020.
Agnico Eagle bought the site in 2021 and opted to continue exploration instead of restarting operations.
“The goal is to potentially announce construction [at Hope Bay] by the middle of next year, if everything goes well,” Girard said.
Hope Bay is about 125 kilometres southwest of Cambridge Bay.
Agnico Eagle has two active mines in the territory: the Meliadine mine, 25 kilometres north of Rankin Inlet; and the nearby Meadowbank complex.
Girard noted the Meadowbank mine was due to close in 2028, but with current gold prices it’s now expected to produce until 2030.
“For Agnico Eagle, over C$4,163 (US$3,000) per troy ounce it makes sense to keep operating at Meadowbank at least until 2030,” said Genevieve Latour, communications director for Agnico Eagle, in an email.
One way to measure the viability of mining operations is to compare the cost of extracting a troy ounce of gold versus the market price for a troy ounce — and the cost of mining in Nunavut is very high, Girard said.
Low-grade gold — which if found in the south would be extracted because of lower costs there — will usually be left in the rock at a Nunavut mine because of the higher costs.
However, the boom in the price of gold makes low-grade gold ore much more economically viable and allows the lifespan of the mine to be increased, Girard said.
Uncertainty in the global economy — caused by variables like interest rates, inflation or geopolitical issues — makes gold more attractive to investors compared to other commodities.
Girard cited the ongoing war in Ukraine as one factor investors are considering.
“Gold is traditionally seen as a safe and stable asset,” said Hudson Lester, Nunavut general manager for the N.W.T. and Nunavut Chamber of Mines, in an interview last month.
When there’s instability in the market, he said, “investors tend to move towards gold.”
Located in Iqaluit, Nunavut, Canada, Nunatsiaq News is dedicated to covering affairs in Nunavut and the Nunavik territory of Quebec since 1973. It has been a partner to ArcticToday and its predecessors since 2016.
