By IAN ROSS
White-hot gold prices have put the shine back on the Red Lake mining camp.
With the precious metal surging to a seven-year high, dozens of aggressive junior mining companies are jockeying for better land position in this corner of northwestern Ontario, conducting geophysics and drilling programs in the shadows of Goldcorp’s and Placer Dome’s headframes, considered the most exciting gold plays in Canada.
“We call it the exploration capital of the world,” says Carmen Storey, Red Lake District geologist for the Ontario Geological Survey.
The signs of confidence that this latest gold rush has longevity are everywhere.
Goldcorp, the largest producer in Canada, producing over 500,000 ounces annually, is sinking a new shaft at its 50-year-old Red Lake mine, down to a depth of 7,150 feet. The contract for the $82-million shaft, with the potential to hoist 4,000 tons a day of ore, was awarded to Cementation Skanska.
With the construction of the buildings and headframe nearly completed, the three-year shaft sinking and mine development starts in early 2004.
The shaft, which will lead to 16 years of production, will access the existing mine and reach deeper parts of the ore body, sunk to a depth of 7,150 feet.
Goldcorp has also embarked upon an extensive exploration program for Red Lake, budgeting more than $13.2 million this year to support more than 430,000 feet of drilling and 8,300 feet of underground development.
Their neighbour, Placer Dome is digging a new shaft known as the Deep Campbell (DC) Zone to bring into production by late 2004 as part of their underground Campbell Mine, which has produced more than 10 million ounces since 1949.
In 1999, the new Reid shaft boosted production efficiencies and opened up exploration potential at deeper levels, where $10 million (US) of development work in the DC zone is ongoing. Crews have completed development work to the bottom of the raise and the ore pass dump area, while other work continues in the maintenance area excavation and in upgrading the production hoist.
Among the junior exploration companies, the Ontario Geological Survey reported 147 projects ongoing in 2002, including staking, drilling and sampling programs, on properties in the district, a three-fold increase over the 49 projects recorded in 2001.
Storey expects Red Lake should surpass that total for this year as many junior exploration companies work simultaneously on three or four properties.
“It’s certainly been very, very busy over the last two years,” says Storey. Though the number of personal consults through his office has slowed to a trickle as winter geophysics and drilling programs take over with freeze-up, “there are still lots of phone calls.”
Among the juniors, Rubicon Minerals Corp., one of the more progressive companies in the belt, began building its land position in Red Lake six years ago and has amassed about 260 square kilometres of properties, most of it wholly owned.
While other exploration companies were heading up to Indonesia and Peru,
Bill Cavalluzzo, vice-president, investor relations, says it is was easy for Rubicon to head to Red Lake.
“Four million ounces with an average grade of two ounces a ton in Goldcorp, the most profitable gold mine in the world,” Cavalluzzo says.
Their flagship property is McFinley, a previous working mine in the 1980s. The operation went bankrupt and stood idle for about a dozen years until 2002 when the title was cleared up and Rubicon swooped in and acquired it.
Cavalluzzo says there is a known resource of about 60,000 to 70,000 ounces with an average grade of .2 down to about 400 feet, but the company made a couple of new discoveries that are away from the current mine works.
Skyharbour Resources Ltd., another leading junior, has amassed 35,000 acres on eight promising properties and has been working year-round over the past three years. President Don Huston, a Red Lake native, estimates about $1 million has been invested in all their Red Lake properties over three years.
Their Baird property, which sits just north of ex-producer Madsen Mine, has already seen $600,000 in exploration, and Placer Dome has agreed to spend $800,000 over two years as part of an option agreement on the property.
In mid-November, Huston was formulating plans and arranging a quarter of a million dollars in financing for their winter drill and geophysics programs on their McKenzie Island, Heysen and Sidace Lake properties near the site of the promising Planet Resources-Goldcorp joint venture.
The Howey discovery was one of the most successful low-grade mine properties to come into production in the 1930s in the area, he says. It boosted gold prices from $22 an ounce to $35 an ounce, and resulted in many mines springing up. The second gold rush followed with the Campbell and Dickenson Mine discoveries in the mid-1940s.
Favourable geology and the area’s reputation for high-grade gold discoveries with large tonnage have helped, but a great deal of credit for Red Lake’s resurgence, besides spiking gold prices, is given to Perry English, a prospector known in exploration circles in northwestern Ontario for having the “Midas” touch.
“The joke is if a property comes open, Perry’s got it staked by that afternoon,” adds Storey. “He’s staked a lot of ground up there, and his name comes up frequently in our mining claim records.”
A former 16-year Goldcorp employee, English recently sold his field office and moved to a farm in southwestern Manitoba to raise quarter horses. But his exploration focus remains Red Lake.
Described as a dogged prospector, English understood the quality of the camp and began staking ground in the early 1990s as it came open, maintaining a large property portfolio prior to the Goldcorp take-off.
In tapping the brains of some old prospectors over the years, he has been able to position himself well enough to option many of his properties off while networking at major Canadian mining shows.
“He’s very good at monitoring the availability of land and also in his own right, forecasting what people are going to want,” says Garry Clark, executive director of the Ontario Prospectors Association. “He’s a good researcher and good person to keep track of.
“He’s actually been one of the people that have kept Red Lake on the map by his dogged determination to option property. For a while he didn’t have a lot of competition in Red Lake because there wasn’t a lot of prospectors in the mid-1990s. There were other prospectors there, but he was aggressive enough and put up enough money to pay for staking. He’s pretty driven.”
“If you look at all the juniors in Red Lake,” says English, “save two or three, at least a portion of their property came from me. I am fairly aggressive and I think nowadays, in this business, you have to be. I feel some of these bigger companies are not quite as straight up and forthcoming as they should be so if we see something coming open I get in there.
Merchants in Red Lake are not complaining. One well-established Red Lake mining and industrial supply company has been riding the economic wave for the last two or three years.
“It’s been phenomenal, we can hardly keep up,” says Douglas Van Dusen, manager of R. C. Moffat Supply, who estimates about 75 per cent of their business is mine-related.
“We’ve had to hire extra people.”
A steady stream of contractors erecting the Goldcorp headframe and sinking the new shaft or working on Placer Dome’s DC Zone project are buying nuts, bolts, steel, ground support accessories, screens and safety supplies.
He estimates sales are up 30 per cent over last year.
“I suspect it’s going to be busy for the next three or four years.”
