When Agnico Eagle Mines merged with Kirkland Lake Gold in early 2022, it entered Australia for the first time. Now the company is mulling what to do with its only Australian asset.
Speaking with Bloomberg News, Agnico Eagle chief executive officer Ammar Al-Joundi said he is pondering one key question for the company’s Australian involvement: “Do we get bigger in Australia or do we get smaller?”
Agnico Eagle’s Fosterville gold mine in Victoria remains one of the lowest cost, highest grade gold mines in the world, however it’s recently ran into troubles, with noise restrictions stripping 70,000 ounces (oz) of gold production from Agnico’s 2023 guidance.
The company had previously targeted 375,000oz of gold production from Fosterville this year, but its goal is now 305,000oz “primarily due to primary ventilation operating restrictions related to the low frequency noise constraints”.
Fosterville produced 383,327oz of gold in 2022, slightly down from its 390,000–410,000oz guidance. The mine produced 88,634oz in the fourth quarter of 2022 at production costs of $385/oz.
This came as Agnico posted a record year of production (3.1 million ounces) in 2022, with the Detour Lake mine in Canada – which Agnico acquired from Kirkland Lake – delivering its own record annual gold production of 732,572oz.
Al-Joundi said Agnico Eagle won’t be looking to divest Fosterville but understands its Australian footprint doesn’t compare to its peers.
“We like Australia, we have no intention to sell Australia, but it would be disingenuous for me to say that we’ve got this big competitive advantage in Australia when we’ve got one mine,” he said.
“Our job this year is to optimise what we’ve got, which is on the operations, and then to revisit the whole portfolio again.”
Al-Joundi’s internal muse comes as the gold industry continues to be a hive of dealmaking activity, with Newmont currently bidding to acquire Newcrest.
Newmont’s recent offer that would see Newcrest shareholders receive 0.38 Newmont shares for each Newcrest share was rejected, with Newcrest interim chief executive officer Sherry Duhe saying the company was “worth a lot more”.
This hasn’t officially closed to door on Newcrest considering a future Newmont proposal but the latter would need to refine its bid before anything is entertained.
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