Agnico-Eagle approves Mexican gold mine

Agnico-Eagle Mines, the Canadian gold miner, is to proceed with the building of a mine at its Pinos Altos gold project, in northern Mexico.

Recent drilling at the site shows that gold ounces in reserves have increased 21%. (This increase compares with the figure released in February of this year.)

In addition, the silver ounces in the Pinos Altos reserves have increased a further 18% over the same period.

The new mine will be Agnico-Eagle’s sixth gold mine; current reserves at Pinos Altos total 2.2 million ounces from 20 million tonnes of ore in probable reserves, and approximately 65.7 million ounces of silver.

Average annual production is expected to be approximately 150,000 ounces of gold, at average total cash costs per ounce of US$230.

Silver production is expected to average more than 2 million ounces per annum.

The figure for the total cash cost of gold includes royalties and is net of byproduct silver credits.

The mine has an estimated life of 11 years and Initial production is expected to begin in the second quarter of 2009.

The project, which will have construction capital costs of $190 million and average sustaining capital expenditures of approximately $3 million per year, will be entirely funded from Agnico-Eagle’s existing cash and cash flows.