Gold Production
It starts with gold, it ends with gold
Québec’s history was written in letters of gold. In the 1530s, French explorer Jacques Cartier thought he had stumbled upon gold on the slopes of Cap Diamant. Those stones turned out to be quartz and pyrite, but already 500 years ago, gold can be traced to the foundations of what was going to become Québec. Fast forward to 1906, and the first gold deposit was found in Rouyn-Noranda, near Lac Fortune. Today, market downturns seen in critical minerals have further reinforced that the base of Québec’s mining industry is a gold mine. As analysts and green energy transition enthusiasts all shifted their focus away from the king of commodities, gold prices rose while others tumbled. For the foreseeable future, Québec’s lifeline will be gold, and the province saw many important developments in that sense in the past months.
Perhaps more than ever, gold is the province’s most sought-after commodity. Of the 16 active metallic minerals mines in the province, eight produce gold (four produce iron, two nickel, with another niobium mine and a titan one). Québec again retained the lion’s share of Canada’s gold production with neighbor Ontario in 2023: Ontario and Québec account for close to 75% of the gold produced in Canada, the world’s fourth largest producer of the precious metal. Mines in Québec produced an estimated 1.8 million oz (an increase from last year’s 1.7 million oz), behind Ontario with 2.5 milion oz. The latest S&P report on Canadian mining also highlighted that Québec holds 24 million oz Au in reserves, and 54 million oz Au in measured and indicated resources. And the future is looking gold for the province’s titans, who despite escalating costs and challenges in replenishing reserves, are currently surfing on a high gold price. As of September 2024, gold is stable at over US$2,500, surpassing a previous all-time high of US$2,450 in May.
Operational updates
The first move that will undoubtedly keep the Québec gold production scene on its toes was when Newmont’s, the world’s top producer, announced plans to divest some of its Canadian assets, notably the James Bay-based Eleonore mine. To cut debt after the acquisition of Newcrest in November 2023, the Denver-based giant expressed its strategy to focus on 10 tier-1 assets in its “go-forward” portfolio, leaving the future of one of Québec’s most prolific mines in doubt. In February, Newmont’s CEO Tom Palmer said that the firm had already received interest from potential buyers.
Corporate restructuring has been a common theme to drive shareholder value in recent years, and in that sense, 2023 was a milestone year for Agnico Eagle. The major completed the US$3 billion acquisition of Yamana Gold and now operates eight mines within a 200-km radius in the Abitibi Greenstone Belt between Québec and Ontario, and most importantly now owns 100% of the Canadian Malartic Complex, the Odyssey mine, as well as the Wasamac project. The firm saw an increase in gold production in 2023, north of a million oz, and extracted the first ounces from the Odyssey underground mine by ramp.
West of Agnico’s LaRonde complex, IAMGOLD has seen stunning results at its Westwood mine. Having been struck by an earthquake in 2020, and after having been restarted in 2021, Westwood was partly responsible for the Canadian miner’s robust results across all operations in early 2024. The mine is on track to produce over 100,000 oz/Au in 2024. CEO Renaud Adams commented: “We have proven the effectiveness of the new mining method to control seismicity, and in 2024 we plan to continue to ramp up the underground mine to its full capacity towards further profitability. By 2025/2026, our goal is to see the underground operation return to full high-grade production while still having excess capacity at the mill, which allows for further opportunities as we continue to mine in the district.”
Near Val d’Or, another mine hit a landmark in 2024. Eldorado’s Lamaque Complex achieved in March five years of commercial production, having notably exceeded PFS expectations by 32%. The outlook for 2024 suggests the complex could produce up to 190,000 oz/Au, making it a leading operation in Québec. In 2023, production at Hecla Mining’s Casa Berardi was severely disturbed by the wildfires. Having now cleared the situation, the mine is on guidance to produce between 75,000 to 82,000 oz/y.
“Current gold prices are extremely attractive for the investment community and I believe we will see more exploration in the next five years, but having discipline in how you assess a project will be critical.”
Renaud Adams, President and CEO, IAMGOLD
Capitalizing on strong prices, but discipline needed
Current gold prices are extremely attractive to the investment community. Indeed, gold’s surge was much more than a US dollar story. The precious metal saw historic breakouts from the Japanese yen, to the Indian rupee, to the Canadian dollar. Central banks are buying historic amounts of gold, underscoring the universal appeal of the commodity as a store of value at a time when wars keep making headlines. IAMGOLD’s CEO Renaud Adams said: “We are currently in an environment where gold producers in Canada have the rare opportunity to combine a very high gold price with a currency that plays in your favor.”
The high price of gold means that Québec’s majors are fattening their margins, and allowing themselves to spend on new technologies. In the past couple of years, such investment towards automation, innovation, and ESG has undoubtedly become part of the ethos of the province’s giants. The environment is ideal for reaping future rewards, and offers promises for the whole of the industry, particularly when remembering that most technologies are first tested in gold mines. At Lamaque (one of the five lowest-emitting gold mines in the world) Eldorado Gold installed ventilation-on-demand technology that monitors air quality and adjusts ventilation throughout the mine to be more energy efficient, and commissioned two 50-t capacity underground electric trucks, the first application of this technology in Québec. Sylvain Lehoux, VP of exploration in Canada, explained: “It is a good time for gold mining companies to do trials and work with technology suppliers to build the next generation of machines that will power the future of our industry.”
Majors must however not fall into the trap of growing ounces at all costs and mining lower-grade stockpiles. The temptation certainly exists, but taking a bird’s eye view, the reality is that all-in-sustaining costs (AISC) have been constantly rising in North America since 2021. Both the World Gold Council and S&P reported that the AISC of the world’s top 10 miners rose in Q3 2023, Agnico Eagle notably included there. Among the culprits are a fall in the average grade (down to 1.1 g/t), and energy, including indirect impacts on reagents and other consumables. Transitioning from an extractive model to another also adds to the bill, with Hecla Mining notably estimating AISC to range from US$1,750 to US$1,975 per ounce due to the phase of transition the firm is undergoing at Casa Berardi.
“With all the hype around critical minerals, people should not forget that gold always remains relatively stable and is a solid value, that the mining industry is trained by gold miners, and that technologies are tested in gold mines.”
Sylvain Lehoux, VP Canada, Eldorado Gold
Replenishing reserves
While juniors are responsible for most greenfield exploration spending, majors have led the way in brownfield investment, and nothing suggests a change to this paradigm in the months ahead. After all, is the best way to find a new mine not to explore next to an existing one? In that sense, given that majors’ reserves have been drying out for years, keeping an aggressive exploration strategy is key for sustainable growth going forward. Pursuing its Québec-focused strategy of “feeding the mill” (as coined by its VP of exploration Daniel Paré), Agnico continued with aggressive brownfield exploration in the Odyssey area, with recent results including 3 g/t over 32 m and 4.5 g/t over 33 m, located 400 m and 1,000 m away from the current mineral reserve.
Surrounding the Lamaque deposit are several targets that the Eldorado exploration team keeps working on. The firm acquired QMX to increase its footprint in the Abitibi Greenstone Belt and to add a pipeline of additional exploration opportunities proximal to Lamaque.
For gold producers in Québec, continued investment in exploration is not just about finding more gold. It is about ensuring long-term viability, economic efficiency, and sustainable growth. This investment underpins their ability to maintain production levels, manage costs, and contribute positively to the economy and community while staying competitive in the global market. In the Québec gold production scene, 2023 was a year of consolidation, expansion, and technological advancement.
The future metals frenzy has quieted down (for now) and put Québec’s gold into the spotlight again. Perhaps the correction seen in battery minerals was the reminder the industry needed that its people, its technologies, and advanced ESG practices are all historically birthed in gold mines. And despite diminishing reserves and high costs, the current pricing and geopolitical environments suggest that all lights will stay green for Québec’s gold producers in the coming months.
Article header image courtesy of Osisko Mining