Kittila Gold Mine

 mine, gold mine

This is the Kittila Mine Licence area. It is registered in the name of Agnico-Eagle AB as indicated on the Government of Finland land tenure records. Agnico-Eagle AB is a wholly owned subsidiary of Agnico-Eagle Mines Limited, based in Toronto, Canada.

The Kittila open-pit and underground gold mine and processing plant has been in production since September 2008 and has a design rate of 3,000 tonnes per day. It is located on the Suurikuusikko property and is approximately 50 km northeast of the town of Kittila in northern Finland. The property consists of 130 claims (covering 11,130.3 hectares), 152 claim applications (covering an additional 13,730.4 ha) and one mining licence covering an area of 846.4 ha.

At the Kittila Mine, the mineral reserves are mined both at surface and underground. It is estimated that approximately 3.3 million tonnes of ore is extractable from surface mining and 22.6 million tonnes by underground mining. Surface mining began in 2008 and lasted five years, during which time the underground mine was developed.

The Suurikuusikko property, which covers the Kittila Mine, was originally acquired from the Government of Finland by Riddarhyttan Resources AB of Sweden through its Finnish subsidiary Svenska Platina AB, through an agreement dated April 17, 1998. The terms of the agreement included the payment of a lump sum equal to FIM 1,100,000 within three weeks of the signing of the agreement, and minimum exploration expenditures totalling FIM 1,400,000 over a 12-month period dating from the signing of the agreement. The agreement also provides for a 2.0% net smelter return (“NSR”) payable to the Republic of Finland once commercial operation begins, as defined in the agreement.

The agreement concerned 11 tenements covering an aggregate area of 913.8 ha and one claim reservation area covering an area of 8 km2. New claims were subsequently acquired through staking by Riddarhyttan and Agnico-Eagle up to the present configuration of the project tenements.

On February 14, 2005, the name of the title holder for the Kittila Mine tenements was transferred to another Riddarhyttan subsidiary; Suurikulta AB. Agnico-Eagle acquired Riddarhyttan through an exchange of share offers to Riddarhyttan shareholders that closed during November 2005. During 2006, the name of the title holder for the Kittila Mine tenements was changed to Agnico-Eagle AB. See Appendix A for more details. There are no other agreements and encumbrances that apply to the property.

The Kittila Mine (including the Suuri Extension Zone) has proven and probable reserves of 4.0 million ounces of contained gold in 26.0 million tonnes grading 4.82 grams per tonne. The Kittila deposit also hosts a significant indicated resource of 20.6 million tonnes grading 2.19 grams of gold per tonne and an inferred resource of 5.4 million tonnes grading 3.42 grams of gold per tonne.

The Kittila Mine and the Suurikuusikko property are hosted by Proterozoic rocks of the Svecofennian province. The geology and metallogeny of this area is very similar to that of the Canadian Shield or the Birimian Shield of West Africa.

The Kittila Mine is underlain by volcanic and sedimentary rocks metamorphosed to greenschist assemblages (chlorite-carbonate) and assigned to the Kittila Group. In the vicinity of the project area, the major rock units strike north to north-northeast and are near-vertical. The volcanic rocks have been further subdivided into iron-rich and magnesium-rich tholeiitic basalts. Iron-rich tholeiitic basalts ascribed to the Kautoselka Formation occur primarily in the western part of the property and represent the oldest rock unit. The eastern portion of the property is characterized by rocks of the Vesmajarvi Formation consisting of magnesium-rich tholeiitic basalt, coarse volcaniclastic units, graphitic schist and minor chemical sedimentary rocks.

Gold mineralization in the Kittila Mine and elsewhere on the Suurikuusikko property is associated with strong disseminated sulphide mineralization (principally arsenopyrite and lesser pyrite) and associated hydrothermal alteration, and is hosted in an extensive brittle/ductile shear zone possibly developed during the Late Proterozoic Age as a result of regional east-west compression. The characteristics of the gold mineralization are similar to a class of hydrothermal gold deposits referred to as “orogenic” gold deposits, which typically exhibit a strong relationship with regional arrays of major shear zones.