Feb 12, 2015
Operator
Good day and welcome to the Agnico Eagle Mines Limited’s Fourth Quarter Conference Call. Today’s conference is being recorded.
At this time I would like to turn the conference over to Mr. Sean Boyd, President and CEO.
Please go ahead Mr. Boyd.
Sean Boyd
Thank you, operator and good morning everyone and thanks for joining our Q4 and full year 2014 conference call. What I like to do is just start it with some highlights and go through the operations and the projects and also give you some sense of what we’re thinking on the exploration front which is sighting developments for us given the success we had last year.
In terms of the production highlights in Q4, we saw a record gold production combined with continued good cost performance and that allowed us to exceed our annual production in cost guidance for the third straight year. Our strong performance in 2014, it sets us up nicely to deliver more gold production in 2015.
We’re looking for 12% more gold production and producing more gold production and producing more gold at lower unit cost. We’re looking for cash cost in a range of $610 to $630 per ounce and all-in sustaining cost in a range $880 to $900 an ounce.
Another highlight for us was on the reserves side. We calculated our reserves this year at $1150 US that’s down $50 from the prior year except for Canadian Malartic, the partnership decided to leave the reserve price at $1300 an ounce US for the Canadian Malartic Mine.
As a result our reserves stand at 20 million ounces but more importantly we saw a grade increasing at several of our key mines. We saw LaRonde grade go up, now 5.2 grams per ton.
At Kittila, now 4.9 grams per ton up from 4.6 and at Pinos Altos we’re seeing a 3 gram per ton or 3.2 gram per ton reserve grade. So I think that’s a good thing we’re lowering [ph] the gold price and we’re seeing the quality of the reserve base improve at several of our key mines.
From a resource perspective we saw a jump in measured and indicated resource up 56% and our inferred resource increased a little over 30% and the inferred resource included our initial resource at the Amaruq discovery, which is now 1.5 million ounces. We’ll talk a bit more about that later in the conference call.
As far as operating results, not only record quarterly but record annual production, we got solid contribution from all of the operations and very good Q4 performance from LaRonde, Goldex and Lapa and the Abitiibi. We also saw a bounce back at Kittila as we expected and continued really good production both on the cost - on the production side but also on the cost side in Mexico.
Just wanted to point out, in terms of metal mix we continue to see a decline in the importance of base metals now. It in 2014 amounted to about 1% of our total revenue.
As far as financial position our net debt is $1.2 billion, our available credit is $700 million, our repayment schedule on our long term debt is very manageable. The first principle is not due until 2017 and it’s a $115 million.
From a financial perspective our strong production and good cost performance allowed us to generate very good cash flow performance. For the full year we generated almost $670 million from operations or $3.42 per share.
So with increasing production in 2015 projected to come in at lower unit cost than in 2014, we are positioned to continue to grow both our operating cash flow and our net free cash flow, as a result of that we maintained our dividend, our quarterly dividend at $0.08 per share. As far as three year guidance, we’re seeing on average about 1.6 million ounces over the next three years.
In 2015, approximately $1.6 the cash cost as we said in the range of $610 to $630 per ounce. All-in sustaining cost as we mentioned earlier in the highlights to be below $900 an ounce.
A breakdown of our production for the next three years, we’re seeing about 70% of the contribution coming from Canada, about 10% from Europe and about 20% from Mexico. We’re seeing improving cost at LaRonde, we’re forecasting sub $600 [ph], at Malartic around $600, at Goldex about $620.
So some key mines showing lower unit cost, in our Mexican business we’re seeing steady production in cost for the next several years. I think the importance about the geographical distribution of our production is that we’ve seen significant weakness and declines in the value of both the Canadian dollar and the Euro against the US dollar, which is a key factor in our US unit dollar cost and that’s one of the reasons we’re seeing the decline as well as some optimization efforts at the mine.
We can see from a cost per ton basis at our mine, our cost per ton is on target or better in 2014 and we expect improvements in cost per ton at several of our mines going forward. We talked about our three year production guidance and the split.
In terms of what we have - in terms of potential or possibilities beyond the three year guidance, we have several projects that we’re working on now that have the potential to come in, in 2017 and beyond. Firstly at Meadowbank, we have in the past taken a part of the wealth deposit out of our reserves base.
We now are in a position to possibly bring that back into the mine plant based on a lower oil price, based on a weaker Canadian dollar. We’re currently studying that possibility.
That would allow us to bring that production back in 2017 and continue into 2018, which gives us the potential to extend the mine life at Meadowbank. At Goldex, given the fact that the mine is producing extremely well, mining lower grade for an underground mine, doing it very profitably, that opens up the opportunity to develop deeper resources at Goldex that we’re currently studying that and we recently had a very good drill home a deep zone [ph], which is indicating the potential for better grades in the core of the deep zone.
We also have potential at Goldex to add more throughput to the mill, it is an 800 ton a day mill. We were mining in the fourth quarter about 6,200 tons a day and we have purchased the Akasaba West property a couple of years back for $5 million, that has the potential to provide satellite mill feed to Goldex and allow us to leverage off for the infrastructure there.
At Kittila we’re accelerating ramp development towards Rimpi. At Rimpi we see better grades and thicknesses, so that could allow us also to take advantage of the expanded plant capacity.
As could the Kuotko satellite deposit, the plant has been expanded at Kittila, we were there couple of weeks ago. It has a rated capacity of 4,000 tons a day, originally it was 3,750.
We’re confident it can do more than 4,000 tons a day based on the performance we’re seeing now and that’s why it brings into play possible satellite material coming from Kuotko. We have a detailed reserve and resource slide.
I’ll go through it just to point out a couple of highlights that I didn’t touch on previously, was the Meliadine reserves are up 0.5 million ounces, we’re seeing a slight increase in grade at Meliadine. A combined reserve and resource at Meliadine now exceeds 10 million ounces.
As we indicated earlier we’re seeing gold grades at a couple of key operations, our sensitivity on a reserve to the gold price is also important. We have - if we see gold fall to $1,000 an ounce, so down $150 from our calculation $1,150.
We see a reduction in reserves at about 6%, so not that sensitive to a decline in the gold price and conversely if gold was to go up $150, we’d probably see about a 6% increase in the reserve base. Another point just like to mention is at LaRonde, our resource has increased a depth and that opens up the LaRonde III three study, so we’re doing preliminary work on that and what we’re looking at is ultimately establishing mining horizons between 3.1 kilometers and 3.7 kilometers filial service [ph].
Just moving into the assets in detail starting with LaRonde, a production 13% year-over-year, cash cost down a $100 year-over-year or 13% and what that tells us is we’re starting to see the benefits of getting more ore [ph] from the higher grade lower mine. Are reserve grade as we said, went up to 5.2 grams per ton from 5.
We mined 3.24 grams per ton in 2014 to drive those production results. So there’s certainly a lot of room to improve our cash flow generating ability at this mine as we continue to open up the lower mine and access the higher grade material.
The conveyor system in the lower mine is set to be commissioned in the second half of 2015, so that will give us more flexibility in the lower mine. So LaRonde continues to perform, I think it’s best years or still ahead of it, it’s shown itself to be a world class mine with a world class team and operating since 1988 and it still has a reserve and resource of over 5 million ounces.
So the team continues to do a good job there. Meadowbank had a great year.
We expect another strong year in 2015, it’s certainly helped by the lower diesel price as they’re a large consumer of diesel, also certainly helped by the Canadian dollar but I think more importantly for Meadowbank is that - two developments there. We talked about the potential to extend the mine life into 2018 with an extension of the well pit but I think more importantly for Meadowbank is the discovery of Amaruq, which is 50 kilometers north of Meadowbank or about 62 kilometers by way of a road.
And we’re certainly based on what we see now with 1.5 million ounces at Amaruq at a grade of a little over 7 grams per ton given its proximity to the Meadowbank facilities that it certainly looks like we’ll be shipping ore at some point from Amaruq into Meadowbank. We have an extensive land package now just north of Meadowbank, we started with a little over 40,000 hectares.
We added more than 60,000 hectares through additional stacking after our drill results. I think what our expectation is this year we’ve got a very large program.
We expect to spend $20 million at a minimum. We anticipate actually having that $20 million spent by July, which would leave a little bit more than two months of drilling time available to us.
So based on results, our expectations are that we’ll continue that program. The largest part of the 1.5 million ounce, our inferred resource is coming from Whale Tail, it’s 1.4 million ounces of that but it really only encompasses the two ends of what we think is a larger structure.
In our drilling program last year, we were not able to drill the central part of the Whale Tail area. So there is a gap there in our resource and that’s where our initial focus will be when we start the drills next month as our objective is to fill in the gap between the two ends of the Whale Tail resource, all sort of designed to provide a midyear resource update on Amaruq, which will be the basis for continuing with the scoping study on turning this into a satellite operation.
I think one of the other interesting things when we look at our potential targets is not only do we have a strong target in the center of the Whale Tail zone, but we also have a second boulder train identified in our field season last year. So we have, in addition to the original boulder field, we identified a second boulder field.
We think the source of both of those trains of boulders is in the Mammoth Lakes area. That’s an area we couldn’t do a lot of drilling on last year from the lake.
These are shallow lakes. So that is also a primary target for our drill season if it starts up in March from the ace [ph].
So we certainly think there’s good potential to add to the resource here and we’ll be providing more information midyear on the resource, also on some of our scoping parameters but these are not deep holes. So we expect to have a series of updates on our Amaruq drill program as we go through 2014.
Moving to Canadian Malartic, we saw a very strong second half performance at Canadian Malartic. The partnership took ownership in mid-June.
For the second half of the year, the average throughput in the mill was 53,000 tons per day versus 49,500 tons a day in the first half and the mine site costs per ton were better than our guidance coming in a little less than $20 per ton. We’re forecasting production in 2015 to be to our account about 280,000 ounces.
We’re still seeing positive reconciliation in the block model. There is still more optimization to go.
We’ve got several initiatives underway on cost savings and optimization. And as we indicated, this is a mine that benefits from the lower diesel price.
It consumes about 45 million liters of diesel on an annual basis. So the lower diesel price and the weaker Canadian dollar certainly help this operation and we’re forecasting cash cost in 2015 including the royalty to be in the low $600 an ounce.
So it’s a good solid mine producing good quantities of gold in an area that Agnico knows very well. At Goldex, faster ramp-up in the mining rate than we anticipated, as a result, we processed over 6,200 tons per day in the fourth quarter at $34 a ton Canadian, so extremely good cost performance.
We produced almost 30,000 ounces in the quarter with cash cost below $600, so a very good performance for a mine that’s mining grades in the 1.6 gram per ton range. We continue to look at - because of that cost structure in the proven mining method there, we’re looking at the deeper zone and also some additional satellite zones.
As we have always discussed this is an area that once we started the base case operation back, we thought we had additional potential to continue to add value there. We’re seeing that potential being more realized now with the proven cost base there and we’re working on a technical study now to outline minable reserves in the deep zone we expect it later this year and I think if now [ph] when we look at the exploration in the long section, we’ve recently drilled a hole through the deep zone which returned over 4 grams over a 157 meters.
So that’s telling us there is potential to see a higher grade core in the deep zone and the reserve grade there is sort of in the 1.5 gram, 1.4 gram to 1.5 gram range. So there is potential hopefully to see better grades as we go deeper.
As we said, the mill has an 8,000 ton capacity. We’re currently operating around 6,000 tons a day, so that’s why the Akasaba West deposit could add some value, create some flexibility, allow for us to take advantage of some synergies with the Goldex plant and the Goldex facility.
At Lapa, short mine life but the team continues doing excellent job in controlling this cost. They continue to beat their budget on a cost per ton basis, so generating good cash flow, very low capital.
We continue to put some money towards exploration. We’ve had some success on zone 7 with higher grades.
We’re hopeful that possibly we could extend the mine life a few months but I think more importantly we’ve now moved exploration drills on to the partnership ground with the Yamana and Pandora, which is immediately adjacent to Lapa to the west and recently we’ve had some good drill results. So we’ll continue to drill that to see if that can take advantage of the potential next to Lapa but also take advantage of the capacity we’ll have at the LaRonde plant when the main Lapa deposit ends.
At Kittila, we processed almost 4,000 tons per day in the fourth quarter, so the tie-in of the expanded plant was successful. In fact the recoveries are bouncing back nicely.
Our recoveries in Q4 were about 80%, in January mid-80s to date, in February, a little bit higher than the mid-80s up to about 87%. So there is still more work to do but it’s nice to see those recoveries coming back at Kittila.
Now we continue to focus on the Rimpi zone and accelerating the ramp over the Rimpi and that’s to just to take advantage of the better grades and thicker mineralization we have on that part of the deposit and to utilize the headroom that we have in the plant. We believe this plant can do more than 4,000 tons a day based on how it’s configured without any significant increases in capital.
At Meliadine, we talked about the increase in reserves. Now up to 3.3 million ounces at 7.44 grams per ton, reserve in resource now over 10 million ounces.
We continue to work on our study. We will have our 43-101 study which is simply based on the reserves out shortly.
We are also working on a study which incorporates a portion of the almost 7 million ounces resource into the study and it will be that study that we’ll use to ultimately make a decision on construction for this deposit. Moving to the Southern Business, at Pinos Altos, we continue to see increasing tonnage through the mill.
At Pinos Altos, the shaft is on schedule for late 2015. That’s going to give the operation more flexibility in the underground mines.
The shaft sinking is going well at Pinos Altos, the greater deposit increase. They continue to have a low cost operation at Creston Mascota.
We had record a Q4 and annual tons stacked on the heaps there, so that small deposit continues to produce good quantity of gold at low cost. At La India, we saw a record quarterly production, so we are seeing part of our increased guidance going forward.
It’s coming from La India now that we’ve got it up to full production coming on the back of a good solid fourth quarter. So good solid operations in Mexico and in Mexico, we also have a project acquired through Cayden Resources called El Barqueño.
We have a $15 million drill program on Barqueño and that project has extremely good exploration potential and we’re pretty confident that our $15 million drill program is going to come up with some good drill results allowing us to calculate an initial resource before the end of this year and that information will be important in terms of how we move that project forward but the reason we bought it was not only exploration potential but it has a lot of similarities to Pinos Altos in terms of having near surface heap leach [ph] material as well as underground potential from some deeper drilling on that deposit. So that’s a good rundown of our quarter, our full-year, our expectations on production and cost going forward but also we wanted to give you some good sense of our exploration potential particularly at Amaruq and Barqueño.
Operator, I’d be happy to open the call now for questions.
Operator
Thank you. [Operator Instructions] And your first question comes from the line of David Haughton of Bank of Montreal.
Please go ahead.
David Haughton
Yes, good morning, Sean and Tim.
Sean Boyd
Good morning.
David Haughton
Thank you very much for the update. You’ve got a lot of opportunities well beyond your base case and I just wanted to ask you a couple of questions about that if I may.
Sean Boyd
Sure.
David Haughton
You’ve spoken about vault and the potential for it to extend the life at Meadowbank beyond 2017, what sort of grade and size should we be thinking about for a Vault?
Sean Boyd
The vault would be about 200,000 ounces. So it’s similar to the grades we have now.
It would be sort of 2.6, 2.7 grams per ton and we were expecting Meadowbank to be finished around the end of the third quarter of 2017. So if we do a vault, there is really two phases here.
We could do phase one or we could also do phase two. So we’re looking at both phases and whether we do one and two, we will determine how far into 2018 we could go.
And I think why that’s important is that although we are drilling Amaruq quite quickly and we are getting a lot of information and we will calculate a midyear resource and we’ll work hard at moving that project forward. The further we can push Meadowbank back the better it is for the Amaruq development and the potential for a smaller gap between the startup of Amaruq and the mining out of the last remnants of vault.
David Haughton
Okay, well, at least it gives you another year to close that gap. Do you have other deposits that you could bring on string given the benefits that you spoke about of the currency in energy?
Sean Boyd
Not at Meadowbank, no. The focus will be on the vaulted extension phase one and phase two in Amaruq and then ultimately Meliadine and the Nunavut business.
David Haughton
All right, you’ve got two operations that are exceeding expectation on throughput Kittila and La India. Just on Kittila, design capacity 4,000 tons a day, you’re moving out through that already, where could you see it going to?
Sean Boyd
I will turn that over to Yvon.
Yvon Sylvestre
Well, I think with the expansion in the plant the - we’re seeing probably additional capacity going forward. Unfortunately the capacity in the mine will be driving the show for the next few years.
That opens the door with the Rimpi development and a third mining horizon. So somewhere 17, 18 and that’s presently not incorporated to get past 4,000 ton in our Lapa mine.
So that’s an opportunity to grow moving forward.
Sean Boyd
When we were there a couple of weeks ago, they were saying that 4,500 tons a day is certainly possible there. The auto play that it looks like it has that capacity without making any modifications to it because one of our challenges earlier on was somewhat oversized for what we needed at the time at 3,000 tons a day.
So that’s a good thing at this point as we’re looking at the potential to open up another mining horizon or bring in a satellite deposit at Finland.
David Haughton
Yeah and the ramp capacity is also at the 4,500 tons a day kind of level 2 [ph] from more recollection.
Sean Boyd
Yeah.
David Haughton
Other two - La India, that stacking right keeps on growing. What should we be thinking about is the ideal kind of stacking right?
Sean Boyd
Tim?
Timothy Haldane
I think Q4 we’re kind of topped off on our rate. On Q4 actually we’re using a contract crushing plant that’s adding 1,000 tons a day just to clean up some oil that’s in front of us.
So it’s going to be the round range of our Q4 rate looking forward.
David Haughton
Okay.
Timothy Haldane
Maybe a little lower actually, but around that rate.
David Haughton
Alright, thank you, Tim.
Operator
Our next question comes from Andrew Quail of Goldman Sachs. Please go ahead.
Andrew Quail
Good morning, Sean. Thanks very much for the update and congratulations on a very strong quarter again.
Sean Boyd
Thank you.
Andrew Quail
Question on Malartic, you guys outline many, I suppose, initiatives to optimize the mill. My sort of question is what - will they sort of ballpoint to you?
What do you think the key ones that decide to talk through that you’re focused on, Sean and you can get to that sort of that 55,000 tons a day rate?
Sean Boyd
Thanks Andrew, I’ll turn that over to Yvon.
Yvon Sylvestre
Well, I don’t think there is one specific key activity. It’s more a series of activities that will lead to the changes and some of these items that have been identified in a release that’s been ongoing and their part of the baby steps that have occurred from first half of the year to second half of the year to show some of the progress.
So we’ll continue on that but increasing in [indiscernible] will probably get us to the next level and that’s the biggest factor moving forward to get that 55,000 tons per day.
Sean Boyd
And there is another area of focus there outside of the plant, it’s in the mining areas. We’re focused on the North Wall.
That’s where we have the better grades and the southern part of the pit was more advanced than the northern part of the pit. So we’ve got an uneven floor in the pit.
So we’re looking at accelerating the northern mining rate and the Northern Wall that will make the pit more efficient but also there’s better grades in the Northern Wall. So that’s an opportunity as well and that’s where we’re putting some effort and focus.
Andrew Quail
And last one on Amaruq, it looks pretty good from initial [ph] spin. Is there anything that worries about the infrastructure there or the infrastructure between Meadowbank and Amaruq and how much do you guys need to spend to sort of ensure that if you do sort of in time track or it will be up to shape [ph]?
Sean Boyd
Yeah, we have a good sense, Andrew, of the road and we’ve looked at several locations for the road. The one difference in the area between Meadowbank and Amaruq versus Baker Lake and Meadowbank or ranking in the Meliadine is there is more changes in topography.
So the road is a little bit more complex, which would make it a little bit more expensive but on a relative basis compared to Meliadine we could get a satellite operation started at Amaruq for a fraction of the cost of what the number is at Meliadine. So that’s where the focus is.
The road is the biggest single component of that because the focus would be on starting a pit but we’re also seeing a potential for underground given that we do have some deeper drill holes there. So that will come in time.
So I think so far so good. Maybe what I will do is I’ll let Alain or Guy just give you some sense of what the focus is over the next couple of months on drilling and what they’re seeing and why it’s generating some excitement within their group.
Alain Blackburn
Yeah, thank you for your question. Right now we are looking to move the camp from Meadowbank exploration, the whole exploration camp and we have already a camp in place for over 20 bed and we can start, when we want the three rigs but we want to have a better camp with 80 beds and to bring the six rig in place this winter and what the plan is to have that resource calculation this summer and to have the indicated resources and to stop the thinking design but the target that we have along the seven kilometer trend that is a regional program that we have two boulder trend that we think that the source is the Mammoth Lake.
And this is another program that we will follow this winter and this spring and at the same time we will start the Whale Tail conversion on infill program to fill the gaps between - under the lake and to fill the gaps between the hole that we drilled last year. That means that the new resource calculation next summer will give us a good indication about the real size of Whale Tail.
Andrew Quail
Thanks very much guys.
Sean Boyd
Thank you.
Operator
Your next question comes from the line of Anita Soni of Credit Suisse. Please go ahead.
Anita Soni
Hi, just a couple of quick questions on sort of minor points. The Malartic, Q4 cost per ton 22 that did include the royalty in the guidance for 2015 of $20 a ton that does not include the royalty, is that correct?
Sean Boyd
Yes.
Anita Soni
Okay and then just on the LaRonde, if I could ask, how were the TCRCs, are they changing at all at LaRonde right now?
Sean Boyd
I’ll turn that over to Yvon, he’s making a face. So I don’t think we’re pretty sure exactly where that’s going, there’s such a small component now of the process.
Yvon Sylvestre
I don’t have the exact number Anita. I can check and relate that back to Brian but the - I think the - the conditions have been pretty stable on that side.
Anita Soni
Yeah, thank you very much and congratulations on a good quarter.
Sean Boyd
Thank you.
Operator
[Operator Instructions] And your next question comes from the Mike Parkin of Desjardin. Please go ahead.
Mike Parkin
Hi guys, cognates’ on this quarter [indiscernible] quarter. Just one question on Amaruq, given its 50 kilometers away, what would - do you have any sense of what the potential like cost per ton increase with the - the core or back to the Meadowbank now?
Alain Blackburn
Well, we’ve had some internal studies, they’re preliminary in nature but we’re looking at about $11 a ton so far transport.
Mike Parkin
Okay, so that added to the [indiscernible] that you guys are averaging now.
Alain Blackburn
Well, added to whatever mining cost will be determined on that project at that time.
Mike Parkin
Okay, that’s it from me. Thanks.
Operator
Your next question comes from the line of Don Maclean of Paradigm Capital. Please go ahead.
Don Maclean
Good morning guys, well done. Just on the Amaruq - maybe a little bit more color on the timing for the economic analysis and production decision and permitting of this.
When do you think realistically we might expect it to come in a production?
Sean Boyd
Well, we’re sort of saying in the first half of 2019 and always said, sort of Meliadine second half of 2019, if we give it a go ahead. So that’s roughly where we are now and we’ll see but the first step is to continue the drilling, get the resource done, fine tune the road analysis and then the drilling will really, ultimately determine the extent of a potential underground but I would suspect it’s open pit to start hopefully turning into an underground operation at some point.
But there could be multiple pits there given that we haven’t really drilled the Mammoth Lake area and that’s where we think the source for the boulders are.
Don Maclean
Alright, is there anything that’s kind of a critical path item Sean, a lot of this sounds like it’s just getting your ducks in a row but is there a critical path item like the permitting process?
Sean Boyd
Permitting is the critical path in Nunavut but we’ve done it successfully for. It’s really the same regulatory bodies and actually the same officials that - these regulatory bodies, so they’re very familiar with Agnico.
We’ve already started doing some preliminary work with the local community for Amaruq. So I wouldn’t see any issue at all in obtaining a permit for Amaruq.
Don Maclean
Okay and maybe a question for Alain on the Whale Tail, maybe you could give us a sense of what the strike length of the undrilled portion in the center was relative to the total strike length of the existing resource?
Alain Blackburn
Yeah, as you know the trend is or the mag [ph] that we find is over seven kilometer and when looking only Whale Tail is around 1, 1.2 kilometer long and the western part and the deeper part is completely open and when looking the western trend and we think that Whale Tail continued to do well. In the last hole that we drilled, the west shore - another zone - we had another zone with Whale Tail is completely open, we don’t know about that zone that the blue sky is there.
Sean Boyd
Yeah, the gap between the two ends of the currently calculated resource is about 300 meters. So that will be the focus of the infield drilling, so we’ll have that incorporated on a mid-year resource update as well and there’s also hallow [ph] mineralization that we’re also focused on drilling around the current resource.
So we would expect to add those two components to the $1.4 million Whale Tail and then anything outside that and as Alain indicated moving to the west it’s open ended with a new zone and the west is really Whale Tail where we have the boulder trend or Mammoth Lake sorry, where we have the boulder trend, so there’s lots of target here.
Alain Blackburn
When you’re looking at what we have to do with the conversion program and feeding the gap and feeding between the hole that is - I think we can double the resource one day. I’m not sure when but one day.
Don Maclean
And just to clarify, when you - Alain, you mentioned Whale Tail was sort of 1 to 1.2 kilometers, is that the strike length where the other resource footprint?
Alain Blackburn
Exactly.
Don Maclean
Okay and is there anything in the infield drilling that you feel you need to - that could change the grade as you put in more holes?
Alain Blackburn
The program that we design is we would drill between 70 by 70 meter and for the interior and feeding the gap that gave us probably, I’m guessing the same grade thus we have a good understanding about the 1.2 kilometer and [indiscernible] 50 meter deep. We’re not expecting this bad surprise, probably good surprise because we have to walk about also the capping grade and more sample in hand we can improve the capping grade because we have free goal as well.
Don Maclean
Okay, that was the heart of the question I guess because so often we see when infield drilling takes place where there are these high grade elements, sometimes the grade can actually go down as it gets tightened up but that’s not your sense.
Sean Boyd
Yeah, there is also two ultimate holes that we’ve drilled in that gap, so the mineralization is there, so it’s a matter now from the lake now, drilling into that 300 meter gap and seeing if we can connect the two ends of what we now have in the Whale Tail resource. And that’s important because all of our studies right now are done on two separate pits on either end of Whale Tail are preliminary works of filling in the gap because there’s a one bigger pit improves the strip ratio, improves the economics et cetera.
So that information is important.
Don Maclean
That sounds good. Good luck.
Sean Boyd
Thank you.
Operator
Your next question comes from Anita Soni of Credit Suisse. Please go ahead.
Anita Soni
Hi, just a couple of follow ups. The Whale Tail, what is the strip ratio right now that you’re looking at?
Sean Boyd
Yeah, it’s more than Meadowbank but it’s two smaller pits, so we think ultimately with one bigger pit it’s more like Meadowbank maybe a bit better.
Anita Soni
And then in terms of the inferred category at Meadowbank, so that grade seems pretty decent even if you throw in some dilution, I’m not quite sure if you guys talked about dilution in your effort or not but is there anything about that inferred mineral inventory that you have at Meadowbank itself that I should be aware of why it’s - if you’re [ph] not something that you’re not focused on it, yet?
Sean Boyd
Yeah, it’s below the bit. So it’s unlikely that we’re going to invest capital to put a ramp in to go after it.
Anita Soni
And then last question is - with respect to sort of big picture plant for Kirkland Lake, I think it’s a good deposit in Canada, obviously the cads helping a lot of them - a lot of these properties, so I’m just wondering what you guys are, I was thinking about that one.
Sean Boyd
Well, continuing to drill. We had some good drill holes at depths which are suggesting the ore body continues, so that’s part of an updated study.
So I think the partnerships agreed that the best approach now is to continue to drill it and then update the economics.
Anita Soni
And where would you have that?
Sean Boyd
I think it’s toward the end of the year.
Anita Soni
Thank you, very much.
Operator
And we have no further questions at this time. I would like to hand it back over to Mr.
Boyd for closing remarks.
Sean Boyd
Thank you, operator and thank you everyone for tuning into our conference call. Thanks again.
Operator
Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation.
You may now disconnect your line and have a great day.