February 24, 2010, was a big day for Agnico Eagle Mines Limited’s Meadowbank project, as Board chairman Jim Nasso, flanked by Inuit business and community leaders, watched the first pour of molten gold and silver doré from the roaring refractory furnace at the $700 million project.

Nasso passed that still-warm ingot among his guests, and later among the hundreds of excited workers who posed to have a photo with it. President and CEO Sean Boyd toasted their work at a gala mine site dinner with glasses of gold-flecked champagne and news that gold bullion that very day had touched a new record of $1,260 an ounce on world markets.

Before the Meadowbank mine was launched in 2010, the vast Kivalliq region of Nunavut hadn’t seen an operating mine for 25 years. But it has been the engine of a new economy, creating hundreds of jobs and fostered millions of dollars in business ventures for a cluster of small Inuit communities with very few other career opportunities.

For its veteran parent company, the mine’s $1 million-a-day output is the biggest in its portfolio of five mines in Canada, Mexico and Finland, making Agnico Eagle Canada’s fifth largest gold producer at $US1.8 billion in revenue last year.

Rewards come with Effort and Teamwork

The reward had not come without its measure of effort, investment and teamwork from both the company and its 790-strong workforce.

The Meadowbank project is geographically almost smack in the centre of Canada, yet is far from any existing infrastructure. Baker Lake, the nearest community, is about 110 kilometres south over an all-weather road scraped up from the tundra. It is the longest road in all of Nunavut.

Hauling in the construction, fuel and production materials is restricted to summer ocean freighters sailing into Hudson’s Bay, then by barge 320 kilometres inland to storage sites and tanks at Baker, and finally overland year-round via the road to the mine.

The 28 megawatt diesel plant that powers and heats the 11,000 tpd mill and 450 person camp has a voracious thirst. When the brutally cold winter of 2012-13 threatened fuel stocks, Meadowbank’s General Manager Dominique Girard took the critical problem to his team and worked out some solutions.

“We were looking at having to fly in fuel, and had to cut consumption. One option was to postpone projects, but also to stop idling all vehicles — when it’s warmer than -25C, equipment is stopped.”

“We achieved it, we did not have to fly in fuel… from 210,000 litres per day over January and February, we were down to 180,000 litres,” said Girard. “We saved around $400,000 in our first quarter over the year before… a major boost to the costs.”

The mine also started to burn its own waste engine oil, and is looking to source waste oil from community operations in Baker Lake. The landing strip at site was recently lengthened to accommodate Boeing 737 “combi” jets, an expense that’s easily compensated by greater efficiency of the bigger planes over small, prop-driven Convair aircraft.

“The real future (for really great efficiency) is not these individual steps,” says Girard. “We are working on the culture among all employees and contractors. If we have one thousand people working to reduce our costs, over the years, the savings will be huge.”

Growing that culture of teamwork crossed a major threshold early in the morning of March 10, 2011, when a disastrous fire wiped out the camp’s kitchen and office wing (see sidebar). Battling the cold and dark, the team stopped it before it could reach the accommodation block.

“A change started after the fire,” says Girard. “The fire created a sense of urgency, we mobilized the workforce to work together.” While it halted production, the full operation was restarted after only three weeks with temporary facilities and a vigorous new sense of what they can do by working together.

“It’s not magic. We use a systematic way to work. We do a risk assessment, we plan based on priorities while encouraging new ideas, we execute the mitigation plan and we celebrate our successes. ” says Girard. “We are minimizing risk and planning in advance how we could do better.”

A Clear Social Intent

Agnico Eagle has been earning kudos for investing in social responsibility, sustainability and corporate performance abroad and at home. An example of that social intent can be found at the Meadowbank mine.

It poured its first gold to great applause — and great expectation — that it would kick start the region’s remarkable mineral potential. Accepting the challenge of a chronically under-employed Inuit workforce with no mining experience, the company and the seven Kivalliq communities shared a vision: a stable sustainable mining economy and less dependence on flying in southern workers.

Meadowbank reckoned that on-the-job training, partnerships with a (short-lived) mine training alliance, and a steady pay cheque would be the key incentives for Inuit to stay on. Indeed, by 2011, Inuit workers were bringing $16 million home from their two-and-two week rotations.

But after two years, it wasn’t working out. A disappointingly high rate of no-shows was so bad it was hobbling production. The problem, said mine manager Girard, was the high cost of the additional workforce required to maintain a steady operation.

“In hind-sight, I would say maybe our expectations were a little high. Local employees were not ready to work in a mining environment, it was a culture shock,” he says, ” and changes were made over the last 24 months. We shifted to a one-on-one career path approach, including the southern hires, graphing an individual progression path showing timelines and milestones leading to promotions and higher wages.

“Today we are seeing perhaps fewer employees succeeding through the training program but the ones who pass are staying with us. We are doing a better assessment during the training, and we invest in work readiness up front to help them get used to being away from home, camp life, safety and personal finances.”

“They can see right at the beginning where they start, how long it takes, and what they need to do to grow into the job,” he said. They purchased a haul truck simulator and started an on-site 350-hour training program, and will be upgrading the reading and math skills,

It’s paying off, says Girard. Inuit turnover of 25 per cent in 2011 dropped to 16 per cent in 2012 and so far this year, a very impressive eight per cent. The program has even better results among non-Inuit: turnovers of 13 per cent in 2011 have almost disappeared, to two per cent this year. While the mine does not set aboriginal hiring targets, 246 Kivalliq Inuit were on the payroll in June of this year, just over a third of the total workforce of 786.

“In my mind, to stay over 30% is a very, very good achievement and we have many growing into more skilled positions thanks to the career path.”

Ambitious Growth, Disciplined Spending

The Kivalliq’s sparse mining history counts only two long-closed mines: North Rankin Nickel of the 1950s, and the Cullaton Lake-Shear Lake gold mine, west of Arviat, in the early 1980s. The Meadowbank deposit was found in 1987 and was acquired by Agnico Eagle in 2007 from Cumberland Resources. Development had alrea

dy started including negotiating impact benefit and partnership agreements with Inuit organizations.

The deposit, currently being mined from three pits all within seven kilometres of the mill complex, has 2.3 million ounces of gold in reserves and will yield 358,000 ounces annually through 2015. Exploration continues to define the resource, expected to operate until at least 2018. Eight to 10 doré bars a week are poured, running about 81 per cent gold and 19 per cent silver.

The parent company charts its roots back seven decades to 1953 when five marginal miners joined to form Cobalt Consolidated Mining. In 1957 they adopted the scientific symbols for their prime products — silver, nickel and cobalt — and became Agnico Mines. Led by Paul Penna, it merged with Eagle Mines Ltd, and in 1974 brought Eagle’s Joutel deposit into production.

It later acquired the Dumagami property from Noranda Mines, renamed it LaRonde, and from this foundation built a diverse portfolio of properties in Finland (Kittila), Mexico (La India, Pinos Altos) as well as in the prolific Abitibi gold fields of Quebec (LaRonde, Lapa, Goldex).

In 2012 it poured a record 1,043,811 ounces of gold and almost 4.7 million ounces of silver. Its gold reserves stand at 18.7 million ounces, plus approximately 96 million ounces of silver, 220,000 tonnes of zinc and 73,000 tonnes of copper.

And in an environment where metals have lost a lot of their shine, Agnico Eagle has an ambitious growth forecast of boosting gold output by 20 per cent — to 1.2 million ounces — by 2015.

In a July 2013 message to investors, CEO Boyd said the 200,000 new ounces will come from new properties and ramping up production at others. But during the current volatile market, he also announced it will be curbing exploration and capital spending by $US250 million over the same period.

“The low gold price has actually accelerated the industry from a high growth phase into a more moderate growth phase, focused on execution and delivery of plans,” said Boyd. “Agnico Eagle is no exception…. we’ve got the production growth, we’re able to pull back on some of that capital investment to improve flexibility and withstand the volatility.”

While the cuts are substantial, the company stills plans on ploughing some $US400 million into capital at existing mines and on exploration in Canada, Mexico, Finland, Alaska and Nevada.

Among the company’s advanced projects, another Arctic deposit stands out as its largest yet — the Meliadine find, 290 kilometres southeast of Meadowbank and just 25 kilometres north of the Kivalliq hub of Rankin Inlet.

Proven and probable reserves pegged at three million ounces have been found in seven deposits within a sprawling strike zone some 80 kilometres long. The company plans to invest approximately $125 million over the next two years on definition and grassroots drilling, ramp development, permitting and the completion this summer of a 24 kilometre all-season road to Rankin Inlet.

Further development will depend on the results of a technical report by mid-2014, market conditions and board approval. With a 60-year track record of performance, and 31 years of paying consecutive dividends, Meliadine may well be the next success story for both Agnico Eagle, its shareholders and Nunavut.

FIRE! at Meadowbank

The fire started small but grew steadily, spreading in the crawlspace under the kitchen and office wings and threatening the living quarters for some 400 workers at the Meadowbank gold mine near Baker Lake, Nunavut.

The danger was magnified by the weather. It was March 10, still dead-cold winter, and with the nearest help a two-hour drive from Baker Lake, the Meadowbank team was on its own. When the alarm was turned in at 4 A.M., workers were evacuated to the gymnasium and firefighters beat back the stubborn blaze with no injuries.

Production was not impaired, but the camp couldn’t feed the whole workforce. It sent about 300 workers home and kept a skeleton crew of 150 until a temporary kitchen was flown in. Meadowbank was back in full swing by April, suffering $18 million in direct costs and carving 50,000 ounces off its 360,000 ounce target for the year.

The cause may indirectly have been an opportunistic wolverine. An electrician had tried to repair the heat trace on a frozen pipe the day before, but the animal – regarded as one of the Arctic’s most ferocious critters – had claimed the cozy crawlspace as his. The worker wisely retreated but the fire started hours later, blamed on a short circuit. There is no word on the fate of the wolverine.