Results from our neighbour’s mine (Lamaque’s bulk mining potential)

Agnico-Eagle’s Goldex mine (located in the Val d’Or area) recently finished its first full quarter (Q4) after achieving commercial production. Agnico-Eagle uses a bulk mining method to mine gold at that location. Here are some stats from Goldex:

*grade – 2.05 g/t (based on historical production, Lamaque’s bulk mining ounces will likely grade 4.5 to 5.5 g/t – gold grade more than twice as high as ounces at Goldex)

*location of gold reserves – about 1500 to 2300 ft down

*LOM expected cash cost per oz - $230

*Q4’s actual cash cost per oz - $323 (it will likely move lower, closer to the $230 target, once Goldex is fully ramped up)

*expected production – 160,000 ounces per year


Lamaque’s bulk mining potential:

1) bulk mining method may be possible with mining some zones identified in the Feb. 24’09 NR (“These newly defined dyke and shear structures indicate the presence of large virgin ore zones, which may be bulk mined within 2,000 feet of surface.”) – 1000 to 2000 ft

2) West Plug – 2800 to 5500 ft

3) Lamaque Main Plug – 4000 to 6000 ft

In addition, the Bedard Dyke appears to have at least 3 large high grade zones. The Bedard Dyke appears to start at the surface and go down to about 1000 ft.

The West Plug and the Lamaque Main Plug, combined, has potential for 2 million bulk mineable ounces.

We will likely not be able to begin upgrading (firming up) those 2 million bulk ounces for another 3 years. That’s alright though as we will not need those ounces for many years into the future (we have plenty of other economical ounces). Longer term though, those 2 million bulk mining ounces (once firmed up) should ensure Lamaque stays economically viable, under all gold price situations (even if by chance the gold price should happen to fall back to, say, $350 in 7 years time). Lamaque should be well positioned to succeed. It will help Century to ride out potential rough times in the gold price cycle, and become a multi-decade gold mining company (similar to what the LaRonde Mine did for Agnico-Eagle over the past couple of decades). This bulk mining contingency will eventually allow for greater long-term investor confidence in Century.

It may be possible to more rapidly access the bulk ounces (and high grade zones) located at 2,000 ft and below.

The ounces at Goldex are closer to the surface than most of the bulk mineable ounces at Lamaque, however, the much higher gold grade at Lamaque (relative to Goldex) should likely more than compensate for that shortfall.

I think it’s fairly reasonable to assume that cash cost per ounce for Lamaque’s bulk mineable ounces should be somewhat consistent with results being achieved by Goldex ($230 to $300 range) – perhaps even better.