Agnico Eagle Mines said on Wednesday it would invest more than $1.2 billion in building a gold mine in Canada's Arctic and expanding another, making it one of the few gold companies to be constructing mines at a time when industry output is shrinking.
Toronto-based Agnico said its board had approved mine builds for its Meliadine project as well its Amaruq deposit, which is a satellite deposit of its existing Meadowbank mine. Both Meliadine and Amaruq are in Canada's Nunavut territory.
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Both operations are expected to start production in the third quarter of 2019. As such, production at Meliadine is now forecast to start about a year earlier than previously expected.
Meliadine's capital cost is roughly $900 million and Amaruq around $330 million, Agnico Chief Executive Sean Boyd said.
It was a good time to be building mines as there was not a lot of competition for goods and services, making for less pressure on input costs, he told Reuters by telephone.
"There is not a lot of building activity in the mining sector right now. It is a good time to access high quality contractors," Boyd said.
The two projects would help expand Agnico's gold production to a forecast 2 million ounces in 2020 from expected annual production of around 1.55 million ounces over the next three years. Depending on the timing of the Amaruq permits and development at both projects, 2019 production could be higher.
The Meliadine project has received all its necessary permits and licenses from Nunavut authorities, while Agnico expects Amaruq to get its final approvals this year and next.
Global gold mine production fell 1.5 percent to 3,168 tonnes in 2016 from 3,216 in 2015, according to a report in January by GFMS analysts at Thomson Reuters.
Five years of weak gold prices, a lack of new large finds and miners' focus on slashing debt has reduced the number of gold mine builds around the world in recent years. (Reporting by Nicole Mordant in Vancouver; Editing by Sandra Maler)