The high-grade Meliadine gold project has 3.7 million ounces of gold in proven and probable reserves (16.1 million tonnes at 7.12 g/t) and a large mineral resource as of December 31, 2017. 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. However, given the progress of construction and development activities in 2017, the Meliadine project is now expected to begin production in Q2 2019. With the advancement of the production schedule, new guidance estimates 2019 gold production of approximately 170,000 ounces, and 385,000 ounces of gold production in 2020. Production is now forecast to be approximately 5.7 million ounces of gold over a 15-year mine life.
In 2018, the Company expects to spend $2.0 million on 10,000 metres of exploration drilling, and $5.6 million on 19,000 metres of conversion drilling at the project. As well, a 7,000-metre regional exploration drill program is planned.
Of the estimated $900 million initial capital costs, to the Company spent approximately $372 million in 2017. Capital spending in 2018 is forecast to be approximately $398 million, with the remaining project capital of approximately $130 million to be spent in 2019.
Project update:
- In 2017, 5,551 metres of underground and development was completed including the start of a second ramp system from underground and completion of the second ramp portal from surface.
- The camp complex was completed as well as the fuel farm in Rankin Inlet and onsite.
- Installation of underground ventilation and heating has been completed.
- The mill, administration/warehouse and generator buildings are now fully enclosed.
- All arctic corridors are in place with the glycol heating system operational.
- There has been successful commissioning of surface utilities (potable water, sewage and effluent treatment plant, boilers, heating system, generators and incinerator).
- In 2017, there was approximately 18,000 metres of conversion drilling (focused on the Pump and Wesmeg zones) and approximately 12,000 metres of delineation drilling.
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.