The high-grade Meliadine gold project has 3.4 million ounces of gold in proven and probable reserves (14.5 million tonnes at 7.32 g/t) and a large mineral resource as of December 31, 2016. The reserves are in the Tiriganiaq and Wesmeg deposits, and the resources are in Tiriganiaq and Wesmeg plus another five nearby deposits within a large land package covering an 80-kilometre-long greenstone belt. The 111,358-hectare property is located near the western shore of Hudson Bay in the Kivalliq region of Nunavut, about 25 km north of Rankin Inlet and 290 km southeast of our Meadowbank mine.
Based on the results of 2016 internal studies, in February 2017 the Company approved the construction of the Meliadine project, with operations expected to begin in Q3 2019. In 2017, the Company expects to spend $0.8 million on 5,000 metres of exploration drilling, and $3.9 million on 12,500 metres of conversion drilling and 14,000 metres of underground delineation drilling at the project. Of the estimated $900 million initial capital costs, the capital budget for 2017 is approximately $360 million including 5,600 metres of underground and development (including the start of a second ramp and portal), completion of the camp complex and the fuel farm in Rankin Inlet and onsite, installation of underground ventilation, and closing in the process plant, power plant and multi-service building.
Project update:
- Internal studies in 2016 evaluated opportunities to improve the Meliadine project economics and the after-tax internal rate of return. Based on the results of the internal studies, in February 2017 the Company approved the construction of the Meliadine project.
- In Q1 2017, approximately 1,200 metres of underground development was completed, which was 5% above plan.
- Construction activities are progressing well, with the commissioning of the concrete batch plant underway and the resumption of pile installation at the end of March. Full camp facilities are expected to be completed in May, ahead of critical barge season.
- At the end of the first quarter, approximately 67% of the engineering work was completed. The Company expects to complete approximately 80% of the engineering work by the end of August 2017.
Mine development plans
The current mine plan outlines a phased approach to the development of the Meliadine project. The Phase 1 mill capacity is expected to be approximately 3,750 tonnes/day, with ore being sourced entirely from underground accessed by two ramps. The mill capacity in Phase 2 is expected to increase to approximately 6,000 tonnes/day, with ore being sourced from both the underground and open pits starting in year five. The mill will employ conventional carbon-in-leach processing technology. Metallurgical recoveries are expected to average 96%, resulting in average annual gold production of approximately 400,000 ounces in years two through fourteen.
Geology
Archean volcanic and sedimentary rocks of the Meliadine greenstone belt underlie the property. The rock layers have been folded, sheared and metamorphosed. They trend west-northwest, dip steeply to the north, and have been overturned. The rock units are truncated by the Pyke Fault, a regional structure that extends the entire 80-km length of the property. Pyke Fault appears to control gold mineralization on the property. The Meliadine greenstone belt is like a smaller scale version of the Abitibi Greenstone Belt and its Cadillac-Destor-Porcupine Fault, which have hosted many prolific gold and polymetallic mines, including our LaRonde, Lapa and Goldex mines.
Mineralization
North of Pyke Fault is a splay (the Lower Fault) that separates sedimentary and volcanic rocks. The sedimentary sequence contains a series of oxide iron formation consisting of a northern magnetite-rich "upper" oxide iron formation and two southern "lower lean" weakly magnetic iron formations. These two oxide iron formations host five of the Meliadine deposits including the Tiriganiaq zone. The sixth deposit (Wesmeg/Normeg) is hosted by the Wesmeg mafic volcanics. The deposits are a combination of mesothermal quartz veins associated with the fault system as well as quartz lodes or sulphide replacement in the iron formation.