Agnico Eagle completed a preliminary economic assessment for its Detour Lake mine in Ontario, Canada, which proposes an underground mining project and mill optimisation in addition to its current open pit operations.

The underground mining and mill optimisation could increase Detour Lake's production to an average of around 1Mozpa of gold over 14 years from 2030, Agnico Eagle said.

"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," chief executive Ammar Al-Joundi said. "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."

Compared to its previous mine plan update from 2022, the new PEA increased the life-of-mine payable gold production by 27% to 22Moz, adding 0.7Moz from the open pit and 4Moz from the underground project. The plan also extends Detour Lake's mine life by two years to 2054.

Based on a gold price of $1,900/oz, the underground project and mill optimisation have an after-tax internal rate of return of around 18% and an after-tax net present value of US$0.89 billion. Initial capital expenditures are estimated at approximately $731 million. 

"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 and the collection of a bulk sample," Al-Joundi added. "Concurrently, we are planning a conversion and expansion drill program to realise the upside exploration potential along the western plunge of the mineralisation."

The Canadian gold producer also updated its mineral reserve and mineral resource estimate for Detour Lake, with 1.2Moz of gold (19Mt grading 1.93gpt) of indicated mineral resource and 7.1Moz of gold (107.7Mt grading 2.06gpt) of inferred mineral resource.

Agnico's shares are trading at C$88.66/share, up around 23% since the beginning of the year. It has a market cap of C$44.21 billion.