laronde – a prolific, long-life resource
 
 
Our flagship LaRonde mine is the company’s engine of earnings and cash flow, producing approximately 240,000 ounces of gold per year, as well as lucrative byproduct metals, from an exceptionally low cost base. What’s more, the deep extension of the current operation promises to extend the mine life of the LaRonde complex beyond 2020.
 
     
  Located in the prolific Cadillac-Bousquet belt in northwestern Quebec, the LaRonde mine extracts gold from one of the largest deposits in Canada. LaRonde is currently being mined to a depth of 2,240 metres. However, once the extension project is completed, mining will reach approximately 3,000 metres below surface.

In 2006, LaRonde continued to operate at a high level, processing approximately 2.7 million tonnes of ore. The mine has processed a daily average of approximately 7,300 tonnes for the past three years.

Payable gold production of 245,826 ounces was 2% higher than in 2005, largely due to improved mill recoveries. In addition, we produced 5.0 million ounces of silver, 82,000 tonnes of zinc, and 7,300 tonnes of copper for the year. The zinc output was greater than the 77,000 tonnes produced in the prior year, as additional zinc ore was mined to take advantage of historically high prices. Production of the other byproducts was similar to 2005 levels.		  
     
  Adding Reserves and Resources
Despite high production rates, LaRonde has consistently replaced or grown its gold reserves since it began production in 1988. At year-end 2006, proven and probable gold reserves at the LaRonde property were 5.2 million ounces. In addition, the property contains byproduct reserves of 49 million ounces of silver, 111,000 tonnes of copper, and 730,000 tonnes of zinc.

This past year, we continued a diamond drilling campaign west of LaRonde’s Penna production shaft, which intersected a new gold-bearing massive sulphide zone. Follow-up drilling is in progress and the level 215 exploration drift is being extended in order to investigate the continuity, strike, and depth extension of this new zone.

We have also continued drilling at the large extension zone of gold-copper and zinc-silver mineralization below the existing LaRonde operations. This deposit holds the company’s most substantial reserves, with 20 million tonnes of ore containing 3.8 million ounces of gold. Work continues to convert resources to reserves, and the deposit remains undrilled below 3,300 metres.
Increasing Gold Production
In one of the year’s most significant developments, construction of the $210-million deep extension of the LaRonde operation commenced in the second quarter. Production is scheduled to start up in 2011, extending the life of the LaRonde complex by at least nine years.

Gold production, post-start-up, is expected to average 320,000 ounces annually, with total cash cost of approximately $230 per ounce. Annual byproduct production is expected to average 670,000 ounces of silver, 4,000 tonnes of copper, and 8,600 tonnes of zinc.

Detailed engineering is under way and underground development is advancing quickly. A winze will provide access from the Penna Shaft to a 2,900-metre depth, with a series of ramps enabling mining to about 3,100 metres. To the extent possible, we are using, and striving to optimize, existing infrastructure, equipment, and approaches in order to reduce technical risk and construction lead time as well as to contain costs.

In addition, the LaRonde mill is undergoing modifications, so that it can refine gold concentrate from the nearby Goldex mine beginning in 2008.		  
 
     
 
 
The LaRonde mine remains one of the lowest-cost gold producers in the world. Total cash cost per ounce of gold was a record low at minus $690 in 2006, significantly below the 2005 record of $43 per ounce.

While minesite costs increased from C$55 in 2005 to C$62 per tonne, largely due to higher operating costs affecting the entire gold industry, strong byproduct metal prices and a culture of continuous improvement and cost efficiency enabled LaRonde to, in effect, produce gold for free in 2006 as byproduct revenue exceeded the total costs of production.