TORONTO – Costs are rising to fix flooding problems at Agnico-Eagle Mines Ltd.’s Goldex mine where the company said Tuesday that it expects to spend $25 million this year, up from an earlier plan to spend $20 million.
The gold miner (TSX:AEM) said water draining into the mine has caused the ground at the surface to settle and cause movement in the mill building and mine headframe.
“While the company’s underground instrumentation shows that the volcanic rock mass above the Goldex ore body is stable, the company has received an opinion from a rock mechanics consultant that suggests that water inflow has negatively impacted the integrity of the rock mass,” the company said.
“As a result, the company is undertaking further assessment of the stability of the rock mass and is increasing its efforts to decrease water inflow and the potential negative effects of the water on the rock mass.”
The Goldex mine, which has more than 1.6 million ounces of gold in reserves, is located in Abitibi region of Quebec and is part of a group of mines that Agnico-Eagle owns, including the LaRonde and Lapa mines.
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Agnico-Eagle said grouting of weaker, fractured, volcanic rock in the eastern end of the hanging wall of the deposit is underway to reduce the flow of water into the mine.
The company is also drilling from the surface to investigate the area and drilling from underground to determine if additional fracturing and movement in the rock mass has occurred.
In addition to the $25 million this year, Agnico-Eagle said it also expects to spend $20 million next year for additional monitoring and remediation work.
Then increased costs came as the company announced it produced 265,978 ounces of gold overall in the third quarter, up from 239,328 ounces in the second quarter due to improvements at its Kittila and Meadowbank mines.
For the first nine months of this year, Agnico-Eagle produced 757,668 ounces of gold, up from 731,138 ounces a year ago.
Last month, Agnico-Eagle signed a deal to buy gold explorer Grayd Resource Corp. for $275 million in a move that will increase its presence in Mexico.
The deal will see the company gain the La India project in the Mulatos gold belt in Sonora, Mexico, and Grayd’s recently discovered Tarachi gold prospect that is about 10 kilometres north of La India.
The offer for Grayd, which is based in Vancouver, will give shareholders the option to receive either $2.80 in cash or 0.04039 of an Agnico-Eagle share and five cents in cash, to a maximum cash payout of about $92 million.
Agnico-Eagle said Tuesday that it expected a bid circular to be mailed to Grayd shareholders this week.
Agnico-Eagle is a gold producer with mining operations in Canada, Finland and Mexico as well as exploration and development projects.
Shares in the company were up 57 cents at $59.79 on the Toronto Stock Exchange at midday Tuesday.
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