Agnico-Eagle Mines Ltd.
(AEM-N, AEM-T) US$44.43 | C$60.48
Detour(ed) Lake Mine Tour/Technical Session Event
AEM hosted a Detour Lake mine technical session in Toronto on October 5 after a planned mine tour was aborted due to bad weather conditions at the operation.
Impact: NEUTRAL
Since acquiring the Detour Lake mine as part of the Kirkland Lake acquisition that closed earlier this year, AEM has made significant progress towards increasing mill throughput in support of the new life of mine plan (LOMP) that was updated mid-year. In our view, AEM has brought additional funding and technical expertise, improved local community relationship/permitting management, and made a more focused exploration effort to the operation to support what management believes will be a mine that will be in production well beyond the current LOMP through 2052.
Under the current LOMP, mill throughput is expected to achieve a full year at 28.0 Mtpa in 2025 (2022 mill throughput is projected to be 25.8 Mtpa) — management is optimistic that this can be achieved earlier based on the crusher and mill upgrades that have already been completed. The most significant bottleneck in the plant has been higher volumes of fine material in the SAG mills (reducing efficiency) — this is being solved through adding secondary crusher screens to remove the fines before they reach the mills. The screens have already been added on one mill line; the second line will be retrofitted over the next several weeks. Mill throughput in September was already at targeted levels (3,474 tph), with screens added to only one of the mill lines.
Increasing mill throughput to 28.0 Mtpy will support higher gold production to +800kozs/year by the early 2030s. Management expects that with continued exploration success down dip of the existing reserve/resource, a ramp access underground operation could be developed by the early 2030s that would feed higher-grade ore into the mill. Supporting both higher gold production (~1.0Mozs/ year) and extending mine life beyond 2052. An underground scoping study will be completed by YE2023. A 235,000 metre drill program will be completed this year, and we expect that YE2022 resources will increase y/y based on the results to-date.
TD Investment Conclusion
We are maintaining our BUY recommendation and US$67.00 target price.