Ontario’s northwest leads way in gold production

Northwestern Ontario residents often feel geographically isolated from the rest of the province. But they are in no way immune from the economic effects of provincial, national and international activities. Several global influences — concern for the natural environment, aboriginal land claims and other competition for land — have had a growing impact on northwestern Ontario and its mining industry over the last decade.

In 1989, northwestern Ontario’s mining industry was also affected by the actions of its provincial and federal governments, other provinces, other nations and by competition among powerful international mining companies.

Compared with the average for the last 20 years, mineral exploration activity in the northwestern region stayed at a reasonable high level in 1989.

After adding up losses and gains, however, the search for new mines in northwestern Ontario dropped by 40% in 1989. While major mining companies and prospectors maintained their level of activity, the number of junior mining companies declined as a result of recent difficulties in raising money for mineral exploration.

In response to this problem, the Ontario government initiated two new programs — the Ontario Mineral Incentive Program and the Ontario Prospectors Assistance Program — to stimulate activity by prospectors and junior mining companies.

Gold prices declined steadily throughout most of 1989, largely because of the attractiveness of the strong U.S. dollar to investors. At year’s end, however, a rapid rise in the price of gold coincided with the political destabilization of East European countries. Fear of possible impending currency devaluation in those countries may have caused this rise in gold prices.

The increased interest in gold perked investor interest in companies active in the search and production of the precious metal. For northwestern Ontario, this could result in spinoff benefits associated with increased exploration activity.

Events in other countries may also have an effect on exploration activity in northwestern Ontario. For example, the continued instability in South Africa, the world’s leading producer of gold and platinum, has seen investment dollars flow elsewhere.

In Australia, the federal government will reinstitute taxation of gold mining operations in 1991. This will make Australia less attractive to investors, who may invest elsewhere.

One new gold mine came into production in 1989. The Dona Lake mine, owned by Placer Dome (TSE), is 12 km southeast of Pickle Lake. The gold mining town, which had fallen on hard times, is also near the Golden Patricia mine, owned by Bond Gold Canada. This mine started operating late in 1988.

Important precedents and implications for mining in Ontario’s north were set by these operations. The Windigo Tribal Council negotiated development agreements with the mining companies, the province and Canada. These will guarantee employment and spinoff benefits for nearby native communities.

These pacts are evidence of a recognition by both governments and the mining companies that native people deserve economic benefits from mining developments. The understandings also protect the people from environmental degradation and loss of traditional activities on the land. Development agreements between native bands and mining companies are likely to become more common.

Nelson Granite operates a quarry and finishing plant in Vermilion Bay and has begun quarrying on a site east of Ignace. Granite Quarriers Inc. also has a quarry in Vermilion Bay. The development of a quarry on Red Deer Lake, north of Kenora, by Nelson Granite continues to face objections from nearby cottagers.

Development plans by Consolidated Professor Mines Ltd. at Shoal Lake, on the Ontario-Manitoba border, are also being slowed by public concerns.

Consolidated Professor Mines (TSE) has established that the Duport mine on Stevens Island contains geological reserves of two million tons containing an average of 0.35 oz. gold per ton. Consolidated Professor wants to bring this mine into production, but the city of Winnipeg has been trying to halt its development because of fear of contamination of Shoal Lake — Winnipeg’s water supply.

The Duport mine project has been designated for review under Ontario’s Environmental Assessment Act — the first private sector mining development to be so designated.

Northwestern Ontario has gained stature in the mining industry in the last few years by surpassing northeastern Ontario in gold production. The increasingly productive Hemlo gold mines generated an estimated 1.15 million oz. gold in 1989, representing 50% of Ontario’s gold production.

Together with production from Red Lake and Pickle Lake, northwestern Ontario produces two-thirds of Ontario’s gold and one-third of the nations’s gold. Northwestern Ontario is poised for continued increased gold production. No less than 10 ongoing projects have found substantial amounts of gold, including: the joint venture on Lingman Lake, 250 km north of Red Lake, operated by Twin Gold Mines (ASE), Agassiz Resources (TSE) and Massive Resources (VSE); the Cochenour Willans mine being explored by Inco Gold in Cochenour; the Musselwhite Grubstake north of Pickle Lake; the Duport mine on Shoal Lake; the Nuinsco Resources (TSE) project on Cameron Lake, southeast of Kenora; the Fern-Elizabeth mine, west of Atikokan; the Snodgrass project west of Thunder Bay; the Brookbank project, north of Beardmore; and the Magnet mine near Geraldton.

The high prices for nickel led to the reopening of Inco’s (TSE) Shebandowan nickel-copper mine, 75 km west of Thunder Bay. This operation can be expected to last at least three years at an employment level of 320.

Platinum and palladium mines are also being prepared for production. Madeleine Mines has nearly completed the construction of its mill 60 km north of Thunder Bay. Maurice Lavigne is resident geologist, Thunder Bay, Ont., area, for the Ministry of Northern Development and Mines.