The company’s Meadowbank Gold mine, in Canada’s northernmost Nunavut region, enjoys low-cash production costs, which fell to $637 per ounce in its latest quarter. That’s well below the spot price of gold, which sold for $1,320 per ounce on Monday, and below average industry production costs.
But the mine has seen setbacks in the remote region, thanks to a lack of nearby transport and logistics infrastructure. Agnico was forced to build a $50 million highway to ferry in food and other supplies for its 550 workers, and one 2011 fire cost the company $18 million.
The company has recently seen $269 million in impairment charges related to the Meadowbank mine, part of wider write-downs costing $1.2 billion. Agnico lost $436 million in impairments from its mines, partly due to weak gold prices in 2013.
Still, the challenging Arctic geography promises material mineral riches. In 2011, the Meadowbank mine produced 270,800 ounces of gold, then worth $420 in market value, according to the Nunavut government’s website. Companies spent $300 million in 2011 exploring for gold, diamond and industrial metal deposits in Nunavut alone.
The Arctic also has abundant oil and natural gas reserves, alongside more than $1.5 trillion worth of minerals, estimates the U.S. Geochemical Society. Major Russian miner Norilsk Nickel (MCX:GMKN) has been active in the Arctic for years.
More than 200 mines have been abandoned or are still in early planning stages, according to the Raw Materials Group. Only six mines are now operating in the North American part of the Arctic.