Canada burning with gold fever, coast-to-coast

If all that glitters isn’t gold, Canadian mining companies in 1987 weren’t aware of it. From British Columbia’s Queen Charlotte Islands to unlikely places like Baie d’Espoir in Newfoundland, Canada was burning with gold fever. Those that weren’t out looking for the yellow metal restructured to take advantage of expected strong gold prices and healthy premiums paid by investors for gold stocks. And, somewhat lost in the rush for gold, production decisions were made for a copper mine, a nickel mine and two zinc mines.

The stock market crash of Oct 19 will be what many people remember about 1987, but there were a number of significant events that have taken place in the mining industry so far this year.

Some of the most significant developments took place among gold miners, however. Placer Development, Dome Mines and Campbell Red Lake Mines, joined forces under a new banner — Placer Dome Inc. — to form North America’s largest gold producer. And Inco Ltd., a name synonomous with nickel, joined the long list of mining companies that have spun off their gold assets into a new company to increase their exposure to gold. The offspring is named Inco Gold.

Revitalized base metals prices will give an added boost to mining industry profits in 1987. Nevertheless this year gold was king.

While there were many reasons to be optimistic about the mining industry during the past year, there were some disheartening events, too. Particularly discouraging for an industry that prides itself on safety improvements was the number of mine accidents that, in total, have killed more than 30 miners as of Oct 1.

The first occurred just six days into the new year when a worker at Pamour Inc.’s Ross mine, near Timmins, Ont., fell down a shaft while slinging a drill platform under a cage. An underground fire April 1 at Noranda’s Mine Gaspe gained national headlines when 12 miners were trapped underground; one died. Two weeks later the worst incident occurred when four miners were crushed by falling rock while inspecting a shaft at Inco’s Levack mine in Sudbury.

There was also a number of mine closings, events that are never announced with much fanfare. Cominco’s Pine Point lead-zinc mine, for instance, stopped mining operations in mid-year. Potash Corp. of America stopped production at its Patience Lake potash mine in Saskatchewan because of severe water inflow problems, and Lac Minerals closed operations at the Lake Shore gold mine in Kirkland Lake, Ont., having mined out the crown pillar.

Labor disputes were prominent, too. Noranda’s Horne smelter ran at about 25% capacity for three months because of a labor dispute. Iron Ore Co. of Canada suffered a strike for a month although stockpiles allowed shipments to continue while Wabush Mines was struck for two months, which did impede shipments. Cominco’s Trail smelting complex was also struck, a factor in the revival of zinc prices in mid-year.

Politics played a major part in industry developments this year, also, particularly as a result of the rising tide of protectionism in the U.S. The most harmful political move was probably the U.S. Department of Commerce’s decision to impose import duties of 85% on Canadian potash in response to charges of dumping made against Canadian producers by high-cost U.S. potash producers in New Mexico. The U.S. Court of Appeal also ruled to uphold a 1986 District Court decision that effectively bans the importation into the U.S. of all uranium for end use in the U.S., a market that recently accounted for sales by Canadian producers valued at about $300 million annually.

And, of course, the mining trial of the century between Lac Minerals and International Corona Resources regarding the Page-Williams gold mine at Hemlo was prominent in just about every discussion of the Canadian gold mining scene. An Ontario Court of Appeal decision on ownership of Canada’s biggest mgold mine upheld the trial judge’s decision to award the mine to Coron a, but Lac is seeking to appeal that decision.

In Ontario last year, precious metals displaced nickel as the most revenue-generating mineral product and they continue to dominate the province’s mining sector. According to the latest reports, nearly half the value of metal commodities produced in the country’s largest mineral producing province during the first half of 1987 was attributed equally to nickel and gold production. Nickel and gold production were up 15% and 4.4% respectively over the same period last year. Production increases over the first half of 1986 for other metals include: lead up 42.5%; zinc up 19.7%; silver up 15.1%; cobalt up 7%; magnesium up 4.6%; and copper up 1.7%.

Production decreases over the corresponding period in 1986 include: iron ore down 11.5%; calcium down 10%; uranium down 7.9%; and cadmium down 3.4%.

The combination of flow- through share financing and high gold prices made it a busy year for exploration companies. By July, claim-staking increased 105% over the first six months of 1986. By September, 44,138 claims had been staked representing three-quarters of last year’s total.

The result of all that exploration, which has been at a high level for the past few years, is a number of new gold mines — so many that industry observers are wondering where the skilled manpower to staff these operations will come from. While Canamax Resources President John Hansuld says his company has had no trouble with its Bell Creek mine, in Timmins, his company’s Kremzar gold project, near Wawa, could be a different story. Since the latter operation offers neither the remoteness nor the large town lifestyle which miners often prefer, he thinks Kremzar could have staffing problems when it goes into production next year.

However, Canamax must go down as one of the year’s big success stories. Powered by higher gold prices and flow-through financing, the Toronto company is planning to open five new mines before 1992.

Although they are being more conservative about the prospects for their own operations, St Andrews Goldfields at Stock Twp. and hsk Minerals are also making the transition from exploration company to producer. Madeleine Mines of Toronto could bring into production Canada’s first primary platinum-palladium mine. Located at Lac Des Iles in northwestern Ontario, this open-pit operation could start operating in 1988. Quebec

Inco and Golden Knight Resources made a production decision on their jointly-owned Golden Pond gold property, in northwestern Quebec’s Casa Berardi area. The gold mine is expected to be turning out 880 tons of ore per day by August, 1988. The mill, however, will be able to handle 1,320 tons per day.

It was also a big year for reopening old properties in Quebec. In Chibougamau the Joe Mann gold mine, which has been drowned and dewatered a number of times, will be brought into production once again by partners Meston Lake Resources and Campbell Resources.

The former Lamaque gold mine at Bourlamaque in Val d’Or is another candidate for renewed production. Joint venture partners Teck Corp. and Vancouver-listed Tundra Gold Mines will spend $9 million in a 3-year bid to bring the property close to an operational mode.

Following a 5-year break, Rouyn- Noranda is also spawning some new producers. On Sept 1, underground production started at Audrey Resources’ Mobrun polymetallic mine It’s only the second mine to begin production there since Aiguebelle Resources’ Dest-Or gold mine poured its first gold in July, 1982. Augmitto Explorations at Beauchastel Twp., five miles southwest, and Nuinsco Resources/Seadrift International’s Aldermac prospect, west of Rouyn-Noranda, are both fighting to be number three.

Augmitto is aiming for a September, 1988, production target (57,000 oz annually with reserves of 1.9 million tons grading 0.17 oz proven and probable) while Nuinsco and partner Seadrift International Exploration need a couple of good intersections to justify a dewatering operation.

A 3-month labor dispute that trimmed output to 25% of capacity at Noranda’s Horne smelter in Rouyn was settled by the end of February. A month lat
er, Noranda and the two senior levels of government reached an agreement to build a $125-million acid plant at the smelter in order to cut by 50% sulphur dioxide emissions. Saskatchewan

Although the emphasis in Saskatchewan was on gold exploration, it was potash that made the headlines this year. In a bid to make its own potash producers more competitive, the U.S. Department of Commerce imposed duties of up to 85.2% on foreign potash. Since Saskatchewan’s share of global potash shipments is around 40%, this is considered a major blow to the industry.

In retaliation, the provincial government has imposed strict production limits and fines of up to $1 million on companies which break those limits. As a result, producers like Potash Corp. are now charging U.S. buyers $96 per ton.

Saskatchewan’s uranium producers could receive a similar body blow from the Kerrigan ruling, which forbids U.S. domestic utilities operators from using foreign enrichment material in their power reactors, a decision that essentially bans imports of uranium. Seen as yet another attempt to make low grade producers in the U.S. more competitive, the ruling could have a severe impact on the market potential for Saskatchewan’s uranium producers.

These strikes against Saskatchewan’s uranium and potash industries were eased somewhat by major successes in gold exploration. Expenditures on gold exploration in the province were up to an estimated $54.5 million this year from $42.7 million in 1986.

Production at the Star Lake gold mine, 70 miles north of La Ronge, is now under way. Considered a major success story, the $13-million project is shared by partners Saskatchewan Mining Development Corp., Starrex Mining and Uranerz Exploration of West Germany. Manitoba

What was considered bad news for the Saskatchewan potash industry could benefit neighboring Manitoba. The Manitoba Potash project, a joint-venture involving Toronto-based Canamax Resources and the provincial government, is awaiting a commitment from foreign buyers other than those in the U.S. If it gets one, it could have an assured market free of the vagaries of American protectionism.

As marketing operator, the province is now attempting to assemble a production consortium and it is hoping that higher potash prices could give a boost to the potential two-million-ton-per-year operation.

In other news, production should begin this winter at Pioneer Metals’ Puffy Lake gold property, which is expected to be a 1,000-ton-per-day operation.

And Canada could see another nickel mine open if the plans of Hudson Bay Mining & Smelting and partner Outokumpu (controlled by the Finland government) proceed. The two companies are involved in shaft sinking and lateral development at their Namew Lake copper/nickel deposit, south of Flin Flon.

Sherritt Gordon, a mainstay of the Manitoba mining industry, decided to get out of the mining business this year and has sold off all its mining assets except the McLellan gold mine in Manitoba. The Ruttan copper-nickel mine in Manitoba was sold to Hudson Bay Mining & Smelting. British Columbia

British Columbia has been typical of the current rush for gold. There is so much mineral exploration taking place west of the Rocky Mountains that prospectors and geologists can’t be found in Victoria for love nor money.

According to a Price Waterhouse report, claim-staking is up by between 20% and 25% over last year’s level of 75,000. Vic Preto, manager of district geology and coal resources for the province’s Ministry of Energy Mines and Petroleum Resources, says he expects exploration companies will spend an estimated $130 million looking for a variety of precious metals. That’s up from $91 million last year.

As an eventful year draws to a close, Mascot Gold’s Nickel Plate mine, near Hedley, is ticking along quite nicely with reserves in the area of 9.1 million tons grading 0.15 oz. With production costs of $125(US) per oz, this 2,700-ton- per-day operation is the lowest-cost gold mine in the country and the largest to open this year.

In the Toodoggone gold camp, in the north-central part of the province, a newly constructed road connects the camp to Prince George. This is good news for a host of companies already active in the area and has prompted Cheni Gold Mines to make a production decision at its Toodoggone River property where reserves stand at 1.2 million tons of 0.209 oz gold and 7.3 oz silver.

City Resources plans to have a producing gold mine on its Graham Island project, in the Queen Charlotte Islands, by early 1989. With an ore reserves estimated at 28 million tons grading 0.061 oz gold per ton, City is talking about producing more than 150,000 oz of gold a year. Alberta

In Alberta, coal production is expected to track last year’s levels. Since total production in July was 15.3 million tons slightly up from last year’s 15-ton level, coal industry sources say they don’t expect to see significant differences in production this year. However, the Genesee Electrical Power Generator, south west of Edmonton, is under construction. The 1,000- megawatt plant will be fired from Fording Coal’s Genesee mine, located close by. Still under development, reserves are sufficient to fuel the plant at a rate of 2-3 million tons for up to 30 years. Newfoundland

Although it won’t be declared officially open until September, 1988, much attention has been focused on the Hope Brook gold mine, 50 miles east of Newfoundland’s Port Aux Basques region. It is the only gold producer in Newfoundland (a province where iron ore accounts for more than 90% of the mining sector).

To generate some early cash flow, Hope Brook Gold, a subsidiary of bp Selco, actually entered production in August. One of the biggest heap leach projects in the country, it is expected to produce 126,000 oz per year via open pit, making it the sixth largest gold producer in Canada and the 11th largest in North America.

About 100 miles north at Baie d’Espoir, Westfield Minerals and partners, Coniagas Mines and Anglo Dominion Gold Exploration, are exploring for gold. The stratabound nature of a newly discovered deposit has excited the partners and a drill program designed to establish a reserve estimate is under way. Nova Scotia

Out in Nova Scotia, mining officials are forecasting expenditures of $100 million in exploration and development in 1987. That compares with $6 million in New Brunswick and $20 million in Newfoundland.

Over the next three years, Nova Scotia will contribute 200,000 oz to the nation’s gold inventory. NovaGold Resources and Seabright Resources will constitute a substantial part of that. Seabright is close to production at its Beaver Dam property and has started producing gold at its Forest Hill property, both in the north of the province. NovaGold meanwhile is conducting underground exploration at its Fifteen Mile Stream property, north of Sheet Harbour.

This year Nova Scotia will export around 20% of the U.S.’s market requirements for gypsum. The province will also produce around six million tons of aggregate, most of which will be exported to the U.S. Atlantic ports and the Gulf Coast.A new coal mine opened in Cape Breton (Phalen mine). New Brunswick

In New Brunswick, Gordex Minerals scored a Canadian gold mining first by making a production announcement at its Cape Spencer claims, northeast of Saint John It is the first primary heap leach operation in Canada to reach the production stage. Gold production is estimated at 7,500 oz this year and 11,000 oz in 1988. Reserves stand at one million tons of 0.057 oz gold per ton. Since exploration has focused on only 3% of the claim group, the potential exists for additional discoveries. Northwest Territories

The acquisition of Giant Yellowknife Mines by Pamour Inc. which owned five Timmins area mining operations, was 1987’s major event in this northern region. According to analysts, this restructuring changes the outlook and stature of Giant Yellowknife considerably. Giant, which is 50.2%-owned by Pamour, now has a combined annual gold production in excess of 200,000 oz from combined operations at Timmins
and Yellowknife. Under a new 5-year plan costing $100 million, the company expects to boost to 300,000 oz per year its gold production.

About 130 miles northeast in the Courageous Lake area, Noranda Exploration and Getty Resources are expanding what may be Canada’s largest underdeveloped gold resource. Published reserves at the Courageous Lake deposit stand at 1.28 million tons grading 0.28 oz gold, but indications are that a 2-year underground program will likely add considerably to those reserves.

Meanwhile rare earth specialist Highwood Resources is planning to bring into production its Thor Lake beryllium deposit sometime during 1988. Located 65 miles southeast of Yellowknife, the property contains large amounts of beryllium, yttrium, niobium and gallium. Since economic deposits of these commodities (which are used in high-tech industries) are rare, Highwood’s progress is being monitored closely.

Heap leach specialists across Canada will also be watching the progress of Neptune Resources which is attempting to apply a modified form of the gold recovery method at its Colomac project, 137 miles north of Yellowknife. The method involves flood-leaching one in large, 150,000-ton vats. A decision to go to production depends on results of a $5-million vat leach test which will determine if the technology is compatible with the Arctic climate. Yukon Territory

Canamax Resources and partner Pacific Trans-Ocean Resources will add to the Yukon Territory’s inventory of gold mines by having the Ketza River gold project in production by June, 1988. A 350-ton-per- day mill is being constructed and the mine is expected to produce at the rate of 50,000 oz annually.

Despite fears for the future of the newly reopened Faro mine — rival zinc producers said the mine would be a drag on an already ailing industry — operator Curragh Resources is planning ahead into the next century. Open pit reserves in three deposits, 14 km from the Faro pit, now being mined, are sufficient to keep the mine alive well past 1999. But its future well-being depends very much on the price of zinc.

After encountering lower grade material at its Mt. Skukum gold mine, south of Whitehorse, Total Erickson Resources is also looking ahead with optimism. Summer exploration on the Brandy and Lake zones has increased reserves and the company is anticipating a production grade for 1987 of 0.4 oz gold per ton.