Global Business Reports is an international provider of industry specific reports to the global trade and investment community. This article is from a profile about Ontario mining for Engineering & Mining Journal.
Editorial researched and written by Ramona Tarta, Karim El Badrawy, Angela Harmantas, and Amanda Lapadat of Global Business Reports.
Ontario is Canada’s leading gold-producing province, comprising 53% of the country’s output
With low-grade gold deposits now feasible, many in the mining community have looked to Ontario’s established mining camps as guaranteed moneymakers throughout this opportunistic period. Red Lake, Kirkland Lake, and Timmins are undergoing revitalization and, in addition, mining companies have ventured off into less traditional territory, exploring for gold and creating new mining frontiers.
A Rich History
Ontario’s modern mining industry can be traced back to the summer of 1903 in what is presently the small town of Cobalt. Ironically, the mining industry in Northern Ontario, a region known for its gold camps, was spurred on by the discovery of the precious metal’s often underappreciated “little brother,” silver. By most accounts, the discovery of silver at Cobalt was a fluke; a railroad worker from the Temiskaming and Northern Ontario Railway serendipitously located a huge silver vein while expressing his annoyance with a local fox. While the authenticity of the story should certainly be questioned, the impact of this silver discovery should not. Within a few years’ Cobalt would emerge as one of the largest silver producing areas in the world. Using skills
acquired from the silver mines, men would laterbegin prospecting and exploring farther north in their effort to discover additional mineral wealth.
Exploration carried out by these men would prove instrumental in the gold discoveries at Kirkland Lake in 1906, Timmins in 1909 and Red Lake in 1926. These gold camps continue to shape the economy of Northern Ontario. Although the city of Cobalt is no longer producing silver — its mines were effectively depleted in the 1990s — it nonetheless continues to be referred to as the “cradle of Canada’s mining industry,” indicative of the special place the city holds in the country’s history.
The prolific mining camps of Kirkland Lake, Timmins and Red Lake continue to produce high-quality gold to this day. Over the decades, the camps have created an environment that is unique to Ontario. The gold rushes of the early 20th century resulted in the creation of cities alongside the mine camps. The close proximity of cities and towns to mine camps is a distinguishing feature of the industry in Ontario; allowing miners to go to site with a Tim Hortons’ coffee in-hand.
Benefiting from the high gold prices, Ontario’s gold camps have effectively entered a new era. While Ontario has historically been famous for its high-grade gold, the ever-increasing price of the commodity has transformed the province’s mining landscapes.
Low-grade projects, that in the past would have been unimaginable, have become attractive to investors from around the world.
Red Lake: High-Grade Gold in a Low-Grade World
The Red Lake mining camp has always been famous for its high-grade gold. Home to Goldcorp’s Red Lake mine, the richest mine in the world, initial gold production at Red Lake began with the Howey mine in the 1930s. Since then, numerous gold discoveries have taken place, frequently revealing mines with exceptionally high grades of gold.
Goldcorp’s Red Lake yields an average of 26 grams per metric ton (g/mt) and is expected to produce 650,000 oz in 2012, which, coupled with high gold prices and operating costs below C$300/oz, drives revenue close to the $1 billion mark. “Red Lake is one of the best gold mines in the world for a few reasons: the amount of capital investment, the number of ounces produced annually, our operating costs and the mine life,” said Chuck Jeannes, president and CEO of Goldcorp.
Such significant numbers also mean that Goldcorp must work hard to extend the life of the mine past the current 12-year estimate. With the Cochenour project nearing production in 2014, the company may have found the solution. Cochenour, which is
similarly located in the Red Lake district, is estimated to produce around 250,000 oz/y. “Goldcorp is spending C$400 million to develop the 5-million-oz Cochenour deposit, which is unique because we are driving a 5-km underground drift at 5,400 feet underground to access this deposit and bring the ore to the existing mill facilities already in place. This horizon of the stratigraphy has not been tested along most of the area, so we are very excited to find something over the next couple of years. Cochenour gives
Goldcorp the ability to enhance our overall footprint at Red Lake and sustain our business in the region,” said Jeannes.
The Red Lake mine may be the exception to the rule due to its size and profitability, but today’s gold prices, coupled with market demand for the commodity, means that companies are now looking to develop low-grade deposits in Red Lake for the first time.
One such company is Mega Precious Metals. As of March 2012, Mega Precious Metals flagship asset, the North Madsen mine, has estimated resource of 937,000 oz of gold, with a grade of 1.24 g/mt. Although this grade is unusually low for Red Lake, James
Rogers, president and CEO of Mega Precious Metals, does not believe that this low-grade deposit should deter investors from buying into his company. “A lot of investors, from their knowledge of previous explorers, believe that the Monument Bay gold camp is comprised of narrow veins in an isolated location and have not yet fully realized the potential of the entire property. The Preliminary Economic Assessment (PEA) completed in February 2009, before Mega Precious Metals acquired the project, showed potential for approximately 80,000 oz/y at an all-inclusive cost of C$750/oz.
A great start, but now it is our turn to make something much bigger out of this 100%-owned gold camp. By mining the data that previous explorers have compiled we know that there is a lot of low-grade mineralization between the veins in the known resource.
We have also outlined more than 30 targets highlighted by coincident geophysical and soil geochemical anomalies across the entire Monument Bay property. Red Lake is a high-grade district and the idea of mining bulk low-grade is a new concept to the district, but as we continue to outline more ounces, people will soon catch on that Red Lake has not even started to capitalize on bulk mining opportunities. We plan to market the property as the next economic wave,” said Rogers.
Over the next six months, Mega Precious Metals will continue to drill on the North Madsen property, with a goal of achieving a new resource surpassing 1.5 million oz of gold (measured and indicated). That being said, Rogers believes companies operating in the area must work together to achieve economies of scale. Doing so will decrease operational costs and increase the attractiveness of the low-grade gold found in the area. “The next objective for the North Madsen property is to consolidate the surrounding properties into a partnership where the parties will profit from success, although no agreements have been made. The logistics around the property are favorable. Claude Resources owns a permitted mill south of the property, and Goldcorp will eventually require a bigger mill. If, as I believe, we can expand our resource on the consolidated property to 3 million to 5 million oz, the project would support economics similar to Prodigy Gold of 15,000 to 20,000 mt/ day at 1.2 g/mt to 1.5 g/mt. We look not only at our ground but include adjacent properties when evaluating production targets within our internal strategic business planning, where we plan different scenarios to enable us to capitalize on the opportunities if and when they arise,” said Rogers.
Also making moves in Red Lake is Premier Gold. Led by their president and CEO Ewan Downie, Premier Gold entered into a joint venture with Red Lake stalwart Goldcorp. Under the current agreement, Premier Gold has 49% interest in the Rahill Bonanza project, with the remainder belonging to Goldcorp affiliate Red Lake Gold Mines. Currently Goldcorp is constructing an underground tram to link the Red Lake gold mine complex with the Bruce Channel deposit. A portion of the tram will pass
through the joint venture project, providing an excellent exploration platform for Premier Gold. “We hope that this tram will provide a platform for multiple discoveries across the camp in the near future,” said Downie.
Looking to take full advantage of this opportunity, Premier Gold has significantly increased its exploration budget for its Red Lake properties in 2012. In addition to the under-construction tram system, Premier Gold has experienced a number of other
benefits to working alongside Goldcorp. “The benefit of this JV is that Goldcorp possesses the infrastructure in Red Lake. One of the big hurdles facing any mining company is going through the permitting process to build a mill. Fortunately, Goldcorp already has two mills operating in the Red Lake district. The only thing we need to do is develop the ore and transport it to the mills. This decreases capital costs for us significantly. In contrast, other companies will require between C$300 million and C$800 million to get started. It is a very attractive situation,” said Downie.
Timmins and Kirkland Lake:Reliving the Glory Days
The establishment of the city of Timmins by Noah Timmins in 1912 was the result of a gold discovery in the Porcupine Belt. Since then, Timmins has gone through a number of boom and bust periods, often corresponding directly to the price of gold, and has produced more than 70 million oz of gold. Fortunately, the high gold prices of our current time have breathed new life into the gold-mining city. Spurred on by suitable economic conditions, companies have once again gravitated towards the Timmins gold camp.
One company in particular that has adhered to this pattern is Lake Shore Gold, which currently has five advanced-stage multi-million ounce deposits in the Timmins Area. These include the Timmins West deposit, which is in production. Hoping to
increase their total resource of 6.3 million oz of gold, Lake Shore Gold plans to continue to explore aggressively throughout 2012. “Currently, we possess a combined resource of 6.3 million oz of gold. However, there is potential to expand the resource further.
In 2011, Lake Shore Gold spent C$28 million on exploration. We have a budget of C$31 million slated for 2012,” said Anthony Makuch, president and CEO of Lake Shore Gold.
In addition to its exploration efforts, Lake Shore Gold has successfully achieved its goal of pouring more than 85,000 oz of gold from its Timmins mine. Fundamental to its growth strategy in 2012 is the company’s Bell Creek deposit. The Bell Creek deposit sits
near Lake Shore Gold’s existing processing site, which is located 42 km away from the Timmins mine site. Commenting on the Bell Creek deposit, Makuch said, “Currently, Lake Shore Gold possesses a 1.8 million oz resource and has been carrying out an advanced underground exploration program, which includes surface drilling to advance the project. Lake Shore Gold will be undertaking the next level of revised resources at Bell Creek and adding to the resource base. Our goal is to advance Bell Creek with a scoping, pre-feasibility, and a feasibility study within the next year to enable us to come up with a capital development program.”
Discussing his vision for the future, Makuch likens Lake Shore Gold to another Ontario-based success story. “Lake Shore Gold shares a similar history to that of Goldcorp; having an anchor deposit that will galvanize the company’s growth. The company has a
long-term vision to grow from a mid-tier producer through its projects in the Timmins area. There are many opportunities for growth, both organic and acquisitive,” said Makuch.
Jeremy Wyeth, president and CEO of Excellon Resources is an ardent proponent of the mining potential in the Timmins area. In response to the company’s new gold project in one of the most prolific gold camps in the world, Wyeth said, “We believe the Timmins area still has a lot of potential and we see great opportunity in acquiring a couple of good properties and building our presence there.”
Excellon Resources acquired Lateegra Gold Corp. in an agreement dated May 2011, which brought six new assets into the company’s portfolio including the De Santis property in Timmins that has a 30-year mining history. The acquisition has allowed Excellon to become a precious metals company rather than strictly a silver producer.
Excellon is headquartered in Toronto and recently made the move to the region to diversify its properties and business risk. When asked if Excellon is looking to acquire any additional properties outside of Canada, Wyeth said, “Our focus remains Canada
and Mexico; we feel that is it not worth our while to diversify much further than this without diluting our priorities.” Excellon is currently consolidating an abundance of data that has been gathered on the De Santis property and has commenced its 2012 drill program at the Beschefer Project, in northwestern Québec in January 2012. As of February 6, 2012 Excellon completed 1,884 m of drilling at the property. Depending on results the company plans to spendprojected budget of $3.9 million on exploration activities, including approximately 12,000 m of drilling.
There are a number of benefits to being in an established mining camp like Timmins. Proximity to infrastructure and a well trained, knowledgeable labor pool are two of the most obvious. However, there is a drawback to being in a traditional mining town: Usually they are already fully staked and have been explored for decades. Nevertheless, there are exceptions to these rules. At times, a company may be able to acquire relatively under-explored prospects in an established mining camp. This appears to have happened with Gowest Gold and its Frankfield East property.
“Our property is located to the north, in an area that was very difficult to prospect back in the day because it is covered in till. In early 2000, the Ontarian government released a geophysics map of the area and with this information and knowledge of the area, Gowest Gold discovered the Frankfield East deposit which is located in a relatively unexplored area of the Timmins Camp,” said Greg Roman, president and CEO of Gowest Gold.
The deposit shows that there was a major geological event that took place at about the same time as the event that took place along the Porcupine Destor fault. “Potentially we are looking at a resource of a couple million ounces within the Frankfield East deposit alone which is still open at depth below 1,000 m and has a strike length approaching 900 m,” said Roman.
However, even with an exceptional property, investor recognition, particular nowadays, can be hard to come by. Fortunately, Gowest Gold has been able to address this through sound planning and setting realistic goals. “To attract investment, we developed a plan that was clear to the investors and one on which we could deliver. So far, all of our capital has been raised through private placements.
We have attracted some well-known funds that believe in our plan to develop the Frankfield East deposit,” said Roman. Located close in proximity to the Timmins mining camp is the historic gold-mining district of Kirkland Lake. Second only to Timmins, Kirkland Lake has produced more than 40 million oz of gold throughout its history. Much like Timmins, Kirkland Lake has experienced a renaissance in recent history due to the increase in the commodity’s price. In 1979, Charles Page purchased one mineral claim in the Kirkland Lake area from a prospector. Since then, his company, Queenston Mining, has continued to acquire and consolidate land, emerging as the second-largest landholder in the proven mining camp.
Benefiting from the increase in gold price, Queenston Mining has been able to raise extra capital, and, in turn, undertake additional exploration. Other benefits from the increase in the commodity’s price include extensive infrastructure development in the area, resulting in significantly improved power and rail lines, as well as easy access to labor from communities and towns in the area. “The Upper Beaver is Queenston’s flagship property. We have been drilling the Upper Beaver property now for three years and have outlined a mineral resource totaling 1.5 million oz of gold (800,000 oz and 700,000 oz at 7.0 g/mt gold in the inferred category) that includes an important copper credit. Drilling continues here, as we believe the deposit has the potential to grow to 3 million oz. We have commissioned a Preliminary Economic Assessment for the project that will be completed in February 2012. This document will assist in determining the economic viability of building our first, standalone mine at the site and also lead the project towards the advanced exploration stage and the sinking of a new shaf t,” said Page.
With regards to Upper Beaver, Queenston’s new shaft development program is expected to commence later in 2012 with a goal of completing a feasibility study by mid-2014. “In 2012, the company plans to continue the elevated level of exploration
experienced in 2011 with a C$25 million budget focused on resource expansion of the known deposits and the start of new deposit definition along the unexplored gold trends that exist on our vast land holdings. We currently have 12 drill rigs operating and plan to keep them busy with an 180,000 m program. We are targeting to grow our resource base in the camp to 8 million oz over the next three to four years.”
Queenston Mining is aiming to commence commercial production from Upper Beaver at more than 100,000 oz of gold per year combined with 6 million lb of copper per year beginning in 2016 with the ability to expand production to more than 200,000 oz per year with feed from other 100% owned satellite deposits. “Our success in the camp has been through the drill bit and we plan to continue this strategy going forward. Over the past four years we have experienced a steady increase in NI 43-101 mineral resources, which has grown at a clip of 2,600% from 100,000 oz in 2007 to 3.4 million oz in 2011, at a discovery cost of approximately C$15/ oz. What contributes to the low discovery cost is the continuous nature of the gold deposits in the Kirkland Lake camp, the ease at which our geologists can follow these deposits with drilling and the amazing infrastructure in the area which keeps exploration costs some of the lowest on the
planet,” said Page.
Page and Queenston Mining have been at Kirkland Lake for quite some time. It is only appropriate that they begin to experience some benefits from their undying loyalty to the area and Page believes that they are beginning to see those benefits. “In this business you have got to have perseverance because you are dealing with nature. We have a good shareholder base who believe in what we are doing and who believe in the district. We are committed to the Kirkland Lake area. Even though, in the past we diversified into other areas and other metals, we always knew we would return to Kirkland Lake at the right gold price,” Page said. Also exploring for gold near Kirkland Lake is Transition Metals. The company’s flagship property, the Haultain project, is located near Gowganda, a mining camp famous for its silver production. Nevertheless, Scott Mclean, the company’s CEO and Director, believes that the area possesses all the necessary features for future gold production.
“The project is easily accessible, located approximately one hour southwest of Kirkland Lake, and is surrounded by a number of active gold operations and development projects, including Aurico Gold’s Young Davidson operation in Matachewan located 20
km to the north. The geology of the Haultain project is similar to that observed in the Kirkland Lake camp,” said McLean. In terms of exploration, the company has been trenching to open up large areas of outcrop to reveal rock types and the mineralization.
“The most interesting trench was Trench 3 where we opened an area of 100 m by 20 m and on average had returns of 3.5 g/mt and over 20 g/mt in grab samples.
We drilled several holes to investigate this showing and intersected visible gold in drill core and got returns of 4.7 g/mt more than 3.5 m and close to 2 g/mt,” said McLean. Inspired by the positive results of their initial trenching, Transition Metals has continued
to implement the technique throughout 2011. “Mineralization in places has returned some bonanza grades, including up to 95 g/mt, and provided us with some spectacular samples of visible gold. We have also observed wider more continuous zones at surface including 6 g/mt over 7 m. We have now opened up other trenches to the north and the south of the initial discovery trend that have exposed additional syenite intrusions hosting elevated gold values. The regional framework that we are in is similar to other known producers in the area such as Kirkland Lake. To date we have put in 15 drill holes and are continuing to drill towards the end of the year,” said McLean.
When asked what he believes Transition Metals’ competitive advantage is, McLean promptly referred to his skilled management team. “Our team draws its strengths from a number of areas. Company COO Greg Collins brings to the company a track record of discovery and development in Ontario, Québec, Manitoba and Vietnam with a broad range of skills that have taken him through resource evaluation to the commission of mines. Tom Hart, VP Exploration brings to the company a strong background in gold and other commodities and is well known by everyone in the mineral exploration industry. Anna Ladd, our CFO, has experience working for successful mining companies including Grand Cache Coal and Kinross. She brings a tremendous amount of experience on how to set up junior exploration companies within the regulatory and reporting framework. The board is well recognized and has individuals who are senior technical, legal and financing practitioners in the industry.
Overall the team has a significant track record of ore discovery which includes two PDAC ‘Prospector of the Year’ awards and an ‘Ontario Discovery of the Year’ recipient. Collectively, we have the ability and experience to recognize a good opportunity and know how to add value for our shareholders.” Over the next couple of years, Transition Metals have plans to get involved in a number of additional projects. “It will have ownership of several projects and one key project that it will be driving forward on its own using cash flow streams ranging from option payments to royalties. It is our objective to be a key player in the discovery and development of the next big gold discovery in Canada,” said McLean.
Detour Lake: Low-grade, High Returns
If there is one project that is telling about the age in which we live, it is the Detour Lake gold project. Currently Canada’s largest pure gold play with a resource of 15.6 million oz, the 376 km2 Detour Lake property is located on the northernmost, relatively under-explored region of the Abitibi greenstone belt in northeastern Ontario, 8 km west of the Ontario-Québec border. Detour Lake is already in production, pouring approximately 649,000 oz/y of gold, at cash operating costs of C$437/oz. Indicative of the current trend, Detour Lake is a low-grade (1.02 g/mt) open-pit mineral reserve. However, with economics on their side, Detour Gold and its rambunctious president and CEO, Gerald Panneton, are emerging as a low-grade success story. With the intelligence of a Harvard professor and the swagger of a hip-hop mogul, Panneton cannot deny his love for all things gold.
“Detour Gold was founded in 2006 when the Detour Lake project was acquired from Pelangio Mines Inc. I evaluated the project and quickly realized the significant eological potential of Detour Lake to be a large, bulk tonnage, low-grade deposit. We presented
Pelangio with an offer to purchase 100% of the project following our due diligence work which indicated a near-surface resource of 3.4 million oz. The agreed price was C$75 million. The most important factor in the company’s success was obtaining 100% of the project,” said Panneton.
Since then, the company has gone from success to success, completing a pre-feasibility study in September 2009. At the time of its completion, the pre-feasibility study revealed an excellent-quality reserve of approximately 9 million oz. By the time the feasibility study was completed in May 2010, the resource reached 11.4 million oz. According to Panneton, “the success of the company is being able to deliver on time, to finance at the right time and to form the company at a time where the gold price is high.”
Another key piece in Detour’s success has been strict focus on its single asset. “Detour Gold has one asset and does not want to be distracted by multiple projects. Our Detour Lake project is world-class and we remain focused on successfully developing the mine to deliver 55,000 mt/day. The open pit mine is projected to deliver an average gold production of 650,000 oz of gold, which will make it Canada’s largest gold-mining operation. We are in the best gold-mining camp in Canada; there are no other places in the country comparable to Ontario and Québec. The development of Detour Lake is facilitated by the presence of an experienced workforce in the area and access to infrastructure and relatively cheap electricity. We can drive to the project (180 km from Cochrane that has rail access) and are now connected to the Ontario power grid,” said Panneton.
Under the leadership of Panneton, Detour Gold has made impressive progress in a very short period of time. Nevertheless, the company’s president and CEO continues to set high goals and expectations for the future. “In five years, Detour Gold will be making money for our shareholders. In 2016, we will be producing 650,000 oz/y if there is no expansion — and if there is expansion, we could be producing anything up to 800,000 oz/y. The recent acquisition of Tradewind in Q4 2011 will open the door to a near surface deposit (1.9 million oz of resource) where most of our effort will be concentrated in 2012. We have made another discovery of between 1 million to 2 million oz at a vertical depth of 500 to 800 m, but we are looking nearer the surface as it will be cheaper to develop. We are close to a discovery in the southern belt with a shear zone of 80 m wide, with intersection of 53 g/mt over 3 m which will be our focus for the immediate future,” said Panneton.
Success in the Abitibi belt has also come to Kirkland Lake Gold, a TSX- and AIM-listed company exploring for gold. The company is on target to produce 1,300 mt/d of ore, and aim to increase production from 100,000 oz/y to 230,000 oz/y by November 2012.
“Kirkland Lake Gold’s goal is to decrease our cost per ounce from C$800/oz to C$550/oz by increasing tonnage. In addition, we also plan to mine higher-grade gold from the South Mine Complex. In Q1 2011 we produced gold with a grade of 0.45 oz/
mt, significantly lower than the 0.61 oz/ mt from the South Mine Complex. In short, increased tonnage and higher-grade gold will enable us to decrease our cost/ounce,” said Brian Hinchcliffe, president and CEO of Kirkland Lake Gold.
New Frontiers
While the established mining camps of Ontario are certainly experiencing a renaissance, other less traditional mining regions have also been benefiting from the recent surge in exploration. Two companies that are currently exploring in some of the less traditional mining districts of Ontario are Rainy River Resources and Northern Superior Resources. “Our properties are located in two districts: the Stull-Wunnimun Gold District in northwestern Ontario and the Chibougamau Gold District in Québec; both areas have long histories of mining and exploration in gold and other commodities.
However, the areas are not heavily staked and explored. Consequently, we have an opportunity to make a big discovery,” said Thomas Morris, CEO of Northern Superior. Consisting of 85 claims covering an area of 18,189 hectares, the Ti-pa-haa-kaaning
gold property in northwestern Ontario is Northern Superior’s flagship property. Northern Superior is a company that was initially intended to explore for diamonds, but after appointing Morris as CEO in 2007, the company shifted its focus to gold. “I expressed to the board of directors that the focus of the company had to shift from diamonds to gold. Diamonds were falling out of favor with the markets and we had an extensive portfolio of gold projects in our database,” Morris said.
Due to the massive size of the property, it took the company four years to gain a comprehensive understanding of the geology. “It has a potential fertile strike length more than 6 km long with gold grain values consistently around 100 grains per sample
with the highest being 1,200 grains per sample. Most of these grains are pristine, meaning they have not travelled far from source. The dispersal of these gold grains forms an apron, which is the third largest in North America,” said Morris.
Due to the difficult economic conditions of 2008, particularly for many junior exploration companies, Northern Superior entered into an option agreement with Rainy River Resources. “Rainy River offered C$11 million on Ti-pa-haa-kaa-ning over a three-year period. Fortunately, Rainy River Resources is a company with a high level of expertise and a lot of success dealing with First Nations, so it made a lot of sense for us to accept their proposal. The deal is only for the eastern of the property (TPK), which means
that Northern Superior still controls the remaining two thirds, the New Growth,” said Morris.
Now in a much stronger financial position than in 2008, Northern Superior plans to continue to explore aggressively throughout New Growth, developing a resource in the very near future. Explaining his vision for the next five years, Morris said, “We
hope to take on more projects. In addition, we will have developed gold resources on all of our key properties, particularly in TPK, New Growth, Croteau Est and Thorne Lake. We have very extensive geo-scientific databases, which contain heavy mineral
and geochemical data, structural information, bedrock and overburden maps, and geophysics data. We are currently looking to acquire somebody who can mine our database for exceptional mineral properties. We are monitoring the growth of emerging
countries such as India, China and Brazil, as we know that these developing markets will require resources. We are always looking for opportunities.”
Also exploring for gold in one of the less traditional mining camps is the previously mentioned Rainy River Resources. Aside from the exploration work it is currently undertaking at Ti-pa-haa-kaa-ning, the company’s flagship asset, the Rainy River gold project has successfully defined a new mining district in Ontario. Located in the northwestern Ontario, the Rainy River gold project currently hosts 4.4 million oz measured and indicated resource, with approximately 2.3 million oz in the inferred resource category. The discovery costs for the property have been remarkable, at just C$17/oz gold.
Throughout 2011, the company was heavily focused on drilling and exploration at Rainy River, spending approximately $40 million on the property. The budget for 2012 is estimated to be the same. “Our potential budget will be the same amount as 2011 but with little infill drilling. Feasibility studies are usually costly because they include the cost of infill drilling whereas our costs will focus more on basic engineering and detailed engineering. Our recovery rate currently looks like 88.5% but our aim is to increase this, and we think that the in-pit resources will increase and that we can lower the stripping ratio. The focus in 2012 will be condemnation drilling for a facility as well as drilling deep into the ore body to make the underground more attractive,” said Raymond Threlkeld, president and CEO of Rainy River Resources.
Production is estimated to begin in Q3 2015, and with a capital expenditure of less than C$700 million. “Our operating costs will be less than C$550 and average production will be greater than 300,000 oz/y with roughly a 14-year mine life,” said Threlkeld.
By establishing a new mining district in Ontario, Rainy River Resources is effectively transforming the province’s mining landscape. Nevertheless, being pioneers in the industry does come with a unique set of challenges. “Permitting is going to be the biggest challenge for Rainy River Resources, although the process is straightforward,”Threlkeld said. “Our site is the first greenfield site in Ontario to be permitted since 1994. We believe the local people should be able to define what they want and need in terms of protecting the environment. The company takes pride in helping communities by generating jobs, building hospitals and schools and granting scholarships.”
In addition to the aforementioned areas, Hammond Reef is another up-and-coming mining district within Ontario’s borders. Currently the home of mid-tier gold producer Osisko, Hammond Reef continues to attract junior exploration companies from around the province. “Sparton Resources decided to embark on our northern Ontario project for two reasons. Firstly, I realized that the deposit was undervalued due to the fact that it was poorly understood. The geology of the Hammond Reef deposit is quite unique. Prior to acquiring the property, one of my colleagues had been working on the deposit.
The high price of gold was also a significant factor; the recent increase in the price of gold has allowed for low-grade deposits, like Hammond Reef, to become much more attractive for mining companies. Furthermore, I have extensive experience working on low-grade gold deposits. Having worked on a low-grade mine in Nevada, I was not unfamiliar with them,” said Lee Barker, president and CEO of Sparton Resources. After examining the property, Barker proceeded to auction the area from a number of prospectors. Although not an easy process, the company was eventually able to obtain the property.
In terms of its labor force, the company has made a point of hiring members of the nearby Métis community. “We currently have a joint venture agreement with a member of the Métis on one of our drilling projects. This action has added to the local support for our project. It has been a very positive experience,” said Barker.
Located between two of the most famous mining camps in the world, Sudbury and Timmins, Trelawney Mining has also decided to break from the pack and search for gold in less traditional territory. Nevertheless, the company’s Côté Lake property is located in an ideal location only 6 km off the main artery between two of the largest mining centers in Canada, Timmins and Sudbury. In addition, the property is 34 km from main transmission lines and 30 km from a rail line.
Currently possessing a resource of 4.2 million oz, Trelawney Mining is looking to expand Côté Lake over the coming months. “We aim to have an updated NI 43-101 — compliant resource estimate in Q1-2012. After this, however, we will continue to
explore; the exploration budget for 2012 is C$25 million. We are drilling the property as fast as possible, focusing both on infill drilling and expanding the resource. Our goal is to take the mystery out of this deposit; to figure out how big it truly is,” said Greg Gibson, president and CEO of Trelawney Mining.
When asked what the distinguishing features of Trelawney were, Gibson said, “One distinguishing characteristic of Trelawney Mining is that we are not driven by pure exploration. Trelawney has a team that is technically sound; we have put together a group of individuals that are builders. As we expand the property we will be building the necessary infrastructure. We have brought engineering teams from AMEC to advance the building process and help us through to the scoping studies. In anticipation to building a mine, we have built large roads and bridges. We are also in talks with Ontario Hydro about building transmission lines.”
With everything going to plan, Trelawney had set out an ambitious plan to commence commercial production at Côté Lake in 2016. Since the time of our interview however, Trelawney Mining has been acquired by IAMGOLD at a 36.6% premium based on Trelawney’s 20-day volume weighted average share price; a testament to the promise held by their Côté Lake project. Development of the project will no doubt continue under its new owners.
Copper mining in Canada is also being given a second life, with the revival of a flooded copper mine in Pickle Lake, northwest of Thunder Bay. Cadillac Ventures is an exploration company led by president and CEO, Norman Brewster. It bought the
Thierry property in 2010 with plans to restore the mine that once produced copper and nickel from 1976 to 1981, before it was flooded and closed in 1989. Brewster saw potential in this abandoned property and began two drilling programs on-site, with one located at the old Thierry mine which has around 23 million mt of 1.7% copper, 0.18% nickel and the other located 3 km away at the K1-1 deposit that consists of an estimated 20 million mt of material with a grade of 0.4% copper and 0.1% nickel in a whittle wireframe pit. Brewster detailed the exploration program saying, “We have just finished drilling another 40 holes that will hopefully allow us to increase tonnage, improve grade and raise the category of mineral resource found at Thierry.”
Cadillac has already reached its target point of 20 million mt at 2% copper for making a production decision and Brewster said, “We foresee Thierry going into production in 2014 if everything goes according to plan.” Cadillac is currently working with a number of dealers in Toronto to secure the next round of financing which will bring the required capital to support the move into production for the Thierry project.
The next steps for Cadillac are to dewater the Thierry mine that is still flooded and begin the construction of underground drilling platforms. The strategy for K1-1 is to develop a surface open-cut operation, as a large portion of the potential unit cost would be substantially less in this type of development. Cadillac foresees the project going into production in 2012 and, “if the ores of Thierry and K1-1 are metalurgically compatible, as we believe they are, then we will blend the two ores and process them together to reduce unit cost production and lower the cut-off grade at Thierry to increase tonnages,” said Brewster.
The importance of copper in infrastructure development around the world is unequivocal and with little construction occurring in the United States and Canada over the last 30 years and new demand for basic building block metals from countries such as China and India, Brewster is a believer in the price of copper and confident that infrastructure development will grow once the global macroeconomic situation is clarified.