* Hope Bay mine expected to produce 400,000 ounces of

gold annually starting in 2030

* Agnico Eagle to spend $100 million on exploration over

the next three years

* Canadian defense ministry to apply mine construction

lessons to Arctic security, federal government says

* Hope Bay mine seen as economic boost for Nunavut, with

local leaders urging community benefits

By Divya Rajagopal

HOPE BAY, Nunavut, May 20 (Reuters) - The world's

second-largest gold miner, Agnico Eagle, is counting on barge

transport through the Northwest Passage to keep the cost of

producing gold in its Hope Bay Mine under $1,000 per ounce,

Agnico Eagle CEO Ammar Al-Joundi told Reuters, as it attempts to

lead a mining revival in Canada's remote Arctic.

Agnico Eagle announced on Tuesday that it will invest $2.4

billion to revive the Hope Bay mine in Nunavut, Canada's

northernmost region, which had been shuttered since 2022, after

the company acquired it from Toronto-based TMAC Resources. TMAC

had struggled to reconcile high costs with the amount of gold

the mine was producing.

Companies in the region have long used air transport or ice

roads to get goods in, as the Northwest Passage is frozen for

more than half the year.

However, Hope Bay's resurrection and a growing reliance on

barges are examples of how the Arctic is becoming more

accessible to mining companies due to melting sea ice. The

mine's development is being closely monitored by Prime Minister

Mark Carney's government as Canada looks to assert its autonomy

over the Arctic.

The underground gold mine is expected to come into

production in 2030, will produce 400,000 ounces of gold

annually, and will have a mine life of 11 years. However, the

company is betting on the potential for further exploration

around the 80-kilometer site to extend the mine's life for

multiple decades. Agnico plans to spend $100 million in the next

three years for exploration beyond the initial 10-kilometer

mine, Al-Joundi said.

"Our investors know this is going to be a good project; it

is going to be below $1,000 cash cost, which is exceptional in

this environment," Al-Joundi said, while touring the mine

construction site.

Building an underground mine in Canada's far North comes with

logistics and infrastructure challenges, as extreme and variable

weather conditions leave miners with a short window to bring in

construction materials required for mining operations.

Three diamond mines in the Northwest Territories are closed or

closing. While diamond mines need ice roads to bring in their

equipment, the Hope Bay gold mine will ship in heavy supplies

from the Becancour Port in Quebec towards the mine's private

port, Al-Joundi said.

SIX-WEEK WINDOW

Hope Bay mine has a six-week window in the summer when ice

has melted enough for barges to bring in explosives, diesel, and

other heavy materials required to begin work in the following

year.

But Al-Joundi and his team say their expertise in shipping

logistics will help keep costs under control.

"It is much less expensive to barge than to bring in goods via

air, and since we have an all-seasons road, we can manage the

logistics normally," Al-Joundi explained.

Once the gold is mined, it will be flown out from the

company's private airstrip.

For Canada's North, a revival of mining is seen as a

potential for job replacement due to mine shutdowns. In addition

to the closing diamond mines, Baffinland Iron Mines Corp. in

Nunavut filed for creditor protection last week, a potential

loss of jobs for northern communities.

"Far too many Nunavumutes do not have the means right now,

and our government wants them to have those opportunities that

would let them support their families..." said John Main,

premier of Nunavut, at an event with company and federal

government officials.

The territory is taking control of its resources, and the

people of the region should also take advantage of the benefits

that come from such mining projects, he said.

The lessons from the mine's construction will also be used

by Canada's defence ministry on ways to enhance the defence

systems in the region, according to a statement from the federal

government.

(Divya Rajagopal in Hope Bay, Nunavut; Editing by Caroline

Stauffer and Aurora Ellis)