The Amaruq satellite deposit at the Meadowbank Complex, in Nunavut, has achieved commercial production, gold mining company Agnico Eagle reported on Monday.

Development of the Amaruq project was approved in February 2017 as a satellite deposit to supply ore to the existing Meadowbank mill, which is located about 50 km away.

The project achieved commercial production in line with the original schedule, despite challenges related to dewatering and adverse weather conditions in the second and third quarters of 2019, CEO Sean Boyd reported.

Ore processing started in August using low-grade stockpiles.

In the third quarter of 2019, production at the Meadowbank Complex totalled 48 869 oz of gold, which included 13 588 oz from Meadowbank and pre-commercial payable gold production at Amaruq of 35 281 oz, compared to pre-commercial production guidance of 40 000 oz.

However, slower-than-expected dewatering activities, largely related to heavy rainfall, continued to impact production in the third quarter. Agnico said that although dewatering was substantially complete, it took about one month longer than planned.

Given the slower ramp-up of mining activities, the company decided to accelerate planned maintenance to the milling and crushing circuits, which was originally scheduled for 2020. As a result, the mill was temporarily shut down in mid-September and would restart by about October 14.

The shutdown will affect production at the Meadowbank Complex for 2019, with the forecast lowered from 230 000 oz to 200 000 oz of gold.

Despite the lower forecast for the Meadowbank Complex, Agnico’s full year 2019 production guidance of 1.75-million ounces of gold remained unchanged.

The company would provide an update on total project capital in its third-quarter results, which were scheduled for release on October 23.

"With the start of production at both Amaruq and Meliadine in 2019, the company is well positioned to deliver on its goal of generating net free cash flow in the second half of this year. This is expected to allow us to reduce net debt and potentially increase the dividend, while continuing to steadily grow our business,” said Boyd.