TORONTO Canadian gold miner Agnico Eagle Mines Ltd (AEM.TO) (AEM.N) is considering selling a minority stake in its Meliadine gold project in the Canadian sub Arctic, according to two sources familiar with the situation.
The Toronto-based miner, which owns operations in Canada, Finland and Mexico, has held some preliminary discussions with interested parties, said the sources, who asked not to be named as they are not authorized to discuss the matter with the media.
However, a deal is unlikely until after Agnico completes a feasibility study on the project during the first half of 2014, the sources added.
Agnico declined to comment on the matter.
"Our goal is to complete the feasibility study on Meliadine early next year, as well as obtain all the necessary regulatory permits required to move forward with development," Agnico spokesman Dale Coffin said in an email. "Anything else at this point would be speculation, and we do not comment on speculation."
Meliadine, located near the western shore of Hudson Bay in the Kivalliq region of the territory of Nunavut, is one of Agnico's more advanced projects and is likely to drive the next phase of the company's growth.
One source familiar with the situation said that because of rising development costs and the decline of the gold price, Agnico and other gold miners are compelled to consider more "creative" means of funding projects such as Meliadine.
Spot gold has fallen roughly 21 percent in the past year and is now at $1,352 an ounce.
The sale of a minority interest in Meliadine would help to reduce Agnico's capital spending burden and help protect its balance sheet, one source said.
Following a spate of takeovers and costly bets on expensive projects, the sharp drop in gold prices has left Barrick Gold Corp (ABX.TO), the world's biggest gold miner, and its smaller competitors scrambling to sell noncore assets, mothball projects, reduce capital spending and lay off workers to cut costs and trim debt.
Agnico moved to trim costs and cut its exploration spending earlier this year.
Another source familiar with the situation said Agnico has held preliminary talks with possible partners, but no decision is imminent.
Agnico produced more than 1 million ounces of gold in 2012, and almost 4.7 million ounces of silver.
The company, which traces its roots back over six decades, has more than 18 million ounces of gold reserves, and plans to boost its annual output by 20 percent to more than 1.2 million ounces over the next three years.
Meliadine is one of Agnico's largest gold projects with some 3 million ounces in proven and probable gold reserves.
Shares in Agnico, which have fallen more than 40 percent over the past 12 months, were up 3.5 percent at C$33.36 on Monday afternoon on the Toronto Stock Exchange.
(Reporting by Euan Rocha; Editing by Peter Galloway)