Thank you.
Welcome, everyone. Thank you for taking the time to hear our story.
Agnico has been around the mining industry for over 54 years. We have six mines, four of which are in Canada: one in Nunavut and three in northwestern Quebec. We first acquired the Meadowbank project a little over five years ago, back in April 2007. We can say that we arrived in Nunavut without any preconceptions. The Meadowbank Mine, as a result of our mine-building program, had the first gold pour on Inuit-owned lands on February 27, 2010.
We then acquired another project located outside of Rankin Inlet, the Meliadine project from Comaplex Minerals on July 6, 2010.
Since we began our activities in Nunavut, the GDP of Nunavut has increased—by 11% in 2010—largely due to Meadowbank.
We can also say that of our 750 employees on site, 38% or almost 300, are Inuit.
We have spent almost 43%, or a total of $665 million, on northern businesses in the Northwest Territories, Yukon, and Nunavut. However, most of the jobs we have created are entry-level and semi-skilled jobs.
Looking back over our five years, we note some of our challenges and observations. I'll start from the beginning of the mine development process.
Getting access to Inuit-owned lands for exploration is still a very long and very difficult process.
You'll also hear today that environmental permitting is not keeping pace with the development of a mining project, especially a project that has very limited windows for shipping. Also, the process appears to be focused on the process rather than on the results.
We have had some issues with respect to NIRB. The process is difficult even for low-impact activities.
IIBA negotiations are rather different. They're new for most. They're new for the Kivalliq Inuit Association. They're new for us. So there's a learning curve involved. However, our experience at the negotiating table is that they tend to be front-ended, and they also tend to restrict competitive business process by favouring northern businesses.
There does not appear to be enough emphasis on building Nunavut economic capacity and competitiveness in a global investment market.
Education and training have often been seen as the responsibility of the project promoters, and I'll talk a bit more about that.
With regard to geography and logistics, planning is key and represents a very large component of operating costs.
We've also learned that we have a lot to learn from each other's culture.
Challenges exist with respect to permitting. Here's just a summary of those related to Meadowbank. We currently have 202 conditions that we have to respect. We've already submitted our 2009 and 2010 annual reports. These documents are in excess of 4,000 pages each. We have not received any comments on either document up to two years later, so there is a lack of capacity.
The industry is taking a lead role in training. We have acquired an almost one million dollar simulator to help train Inuit in haul truck driving. We are a sponsor of the diamond drilling school in Arviat. We are also a sponsor of the Kivalliq Mine Training Society. We invested over $1.7 million in training last year.
Our view is that the governments are more focused on social programs than on providing skilled labour for the resource industry. We currently have only four Inuit mechanic apprentices at Meadowbank because of the high number of high school dropouts. They just can't pass the trade entrance exam.
The Canadian aboriginal skills employment program will be terminated unless there is further funding. We see more issues for the future.
When you look at our overall conclusions and recommendations, resource development does create opportunities. Other jurisdictions have realized this. However, we have to realize that our business is very cyclical. We must seize the opportunity when it is presented to us.
We've heard about education a lot. Training is the wave of the future, and as we've said many times, it is very expensive to import skilled labour from other parts of the country.
Infrastructure has to be improved. Other jurisdictions are investing to promote access and development. We need improvements to airports, ports, communication, and housing to be able to house the labour force that will be required. The permitting process has to be streamlined. It is still too long and, most importantly, in the world around us, too unpredictable from an investment point of view.
Also, high IIBAs should not have a negative impact on project economics. This should be used as a tool to attract investment rather than be front-ended and as a result end up decreasing the IRR. Access to Inuit-owned lands for exploration has to be simpler and more predictable; it shouldn't take up to three years to be able to attain land. Hamlets also should progressively gain powers of taxation. We currently spend the equivalent of $800,000 that flows to the GN. However, very little of it appears to get back to the municipality. This would help build capacity and increase local accountability.
In summary, we've had great community support from the councils, the peoples, and the businesses; the communities are unified in their support of resource development. Nunavut has excellent mineral potential. Over the past year, 35 new joint ventures have been formed. We were able to consummate a deal with NTI on prospective claims. It took three years of negotiation, but that three years is also three years of lost exploration. Shipping costs have declined. There are more flights up north, but we need larger runways and aircraft.
With declining unemployment, the impact of the Meadowbank Mine has been significant. Income support to Baker Lake has declined 20% from 2008 to 2010. There is an increase in and focus on training. We have gained valuable experience in developing the Meadowbank Mine and hope to apply all that knowledge on the Meliadine project in Rankin Inlet. We've developed regional, Government of Nunavut, Government of Canada, and community, personal, and business relationships, and these will be valuable in our future development. Probably, most importantly, we have a much better understanding of the Inuit culture.
Mining is a very risky business. In a pro-mining region like the Abitibi, recently we closed our gold mine due to concerns over employee and public safety. Our company was recently questioned about our Arctic strategy and our Arctic exposure. We just closed a transaction in Sonora, Mexico, with acquisition costs of $250 million and a build of $150 million that should be in production in three years.
It has become abundantly clear that resource development is the way of the future in the north. The numbers tell the story. There has to be a better way. Industry can lead, but we can't foot the whole bill and carry the whole freight.
Thank you.