Val d’Or booming again

Miners, geologists and mining engineers are well acquainted with the benefits of life in the small, remote towns that dot rural Canada and the U.S.: the close-knit communities; low housing and land costs; plenty of fresh air (if you’re not beside a smelter or pulp mill); the lack of traffic jams; quick access to the great outdoors; and the deep satisfaction gained from achieving a degree of self-reliance not possible in the city.

But those in this boom-and-bust mining business know the dark side of frontier towns, too.

In the city, a working person can usually make a good living by working hard, being honest and developing a skills set. But those virtues on their own are not always enough to get by in remote mining and lumber towns, where downturns in fickle, distant commodity markets can grind local businesses into dust and unleash shockwaves of unemployment that leave no one in town untouched.

The feisty mining and lumber town of Val d’Or in northwestern Quebec’s Abitibi-Temiscamingue region was hit as hard as any by gold’s steep decline during the 1997-2001 period.

Val d’Or is a bit of an icon in the gold industry: gold was discovered in the area in 1925, and the town of Val d’Or was founded in 1934. Combined historical production from the Val d’Or and nearby Malartic camps exceeds 25 million oz. gold so far.

It’s also a town that’s made a strong effort to honour its mining past, going so far as to open an elaborate mining theme park, and preserve the original mining camp at Bourlamaque and declare it a historic site. Ordinary folks live in the refurbished 1930s-era houses, which must be maintained to strict historical standards.

Heck, even the local major junior hockey team is called Les Foreurs (The Drillers).

At last count, the population of Val d’Or was 32,400, including a workforce of about 14,000 people in some 1,300 businesses. Another 10,000 people live in nearby municipalities.

As recently as 1996, at the height of the last gold boom, Val d’Or ranked first in Quebec in terms of per capita private-sector investment.

But falling gold prices in the late 1990s caused both of Canada’s gold majors, Placer Dome and Barrick Gold, to pull up stakes and leave the camp. Several smaller gold mines run by juniors closed.

Unlike the rival mining town of Rouyn-Noranda to the west, which was somewhat buffered during the downturn by an operating smelter and a larger government presence, Val d’Or’s greater dependence of privately run mines meant its decline was steeper.

Some raw statistics give a glimpse of the painful contraction: Between 1996 and 2001, the population of greater Val d’Or shrunk 4% even as the province’s population grew 2%. Demographically, Val d’Or saw its young adults leaving town and its population skew towards forty-somethings. The town’s average income levels, which stagnated in the new millennium, actually reversed dramatically in 2003, dropping $5,600 to $18,100 per habitant.

But gold’s dramatic rise above US$600 per oz. in the past year has utterly reinvigorated the town, with a flurry of gold projects brought back to life, or in the works. And this time, it’s junior companies, not seniors, leading the way.

In mid-August, Murray Pollitt’s Wesdome Gold Mines officially reopened the Kiena underground gold mine, just west of Val d’Or. The company hopes to produce 20,000 oz. gold this year from Kiena as it gradually ramps up mining and milling rates. Moreover, Kiena’s existing shaft is allowing Wesdome to excavate two long exploration drifts beneath the wide but shallow Lac de Montigny. Wesdome picked up Kiena on the cheap in 2003 from the bankrupted Montreal-based junior McWatters Mining, another casualty of low gold prices.

McWatters’ other major asset, the venerable Sigma-Lamaque gold mines on the eastern edge of town, fell into the hands of U.S.-based Century Mining, led by the controversial Margaret Kent. While it drills deep into both Sigma and Lamaque looking for more ore, Century has already restarted open-pit mining at Sigma and turned in a $3-million operating profit on 18,000 oz. of gold production in the second quarter.

Another new feature on Val d’Or skyline is a headframe at Agnico-Eagle Mines’ Goldex property, on the west end of town, just south of highway 117. The US$135-million mine is now under construction, with shaft-sinking due to begin before year’s end. Gold production is set to begin in 2008, and will average 170,000 oz. annually for at least a decade.

Richmont Mines brought its East Amphi gold mine in nearby Malarctic into commercial production in February 2006, and hopes to produce 25,000 oz. gold from it this year, though cash costs have been very high so far.

Smaller juniors are making an impact in Val d’Or, as well: Alexis Minerals has picked up the Aurbel mill and property on the east end of town from Aur Resources, and is in the final stages of an encouraging $13-million underground exploration program at its Lac Herbin project; and Montreal-based Osisko Exploration is working wonders putting together a multimillion-ounce, low-grade gold deposit at its Canadian Malartic property west of Val d’Or.

Val d’Or should also indirectly benefit from Falconbridge’s . . . oops, Xstrata’s . . . recent announcement that it will go ahead with development of the Perseverance zinc mine near Matagami, up the road from Val d’Or.

Val d’Or continues to be involved in mining-technology innovation: the federal government has had a presence in Val d’Or’s mining scene through its establishment in 1991 of a mine laboratory at the old Beacon mine, under the auspices of Natural Resources Canada’s Canmet division.

The latest economic stats aren’t in yet, but anyone visiting Val d’Or these days can see the town is starting to get its swagger back, and living up to its reputation as Canada’s “Valley of Gold.”