With the price of gold currently hovering around US$1,300 an ounce—up 45 per cent since early 2009—Ontario’s mining towns are exhibiting the classic symptoms of a boom: inflated house prices, overbooked hotels, frantic construction, labour shortages and a collective sense of optimism after decades in a slump. Across the province’s northern gold belt, defunct mines are being revived and exploration activity has taken an almost frenzied pace, the product of gold being an investment safe haven amid global economic uncertainty and a weak U.S. dollar. “I’ve been here a long time,” says Brock Greenwell, statistical analyst for Ontario’s Ministry of Northern Development, Mines and Forestry. “And 2010 is looking like a record year for gold exploration. It’s unprecedented.”
There are 12 gold mines operating in Ontario, with four more slated to start production by 2012. And, with exploration expenditures for precious metals—mostly gold—expected to exceed $620 million this year in the province (compared with $389 million in 2009), it’s a safe bet that more mines will follow. “It’s an absolute boom,” says Bill Greenway, economic development officer for the municipality of Red Lake. “There are 40-plus exploration companies here at any given time.”
The Red Lake greenstone belt, some 500 km northwest of Thunder Bay, is one of the most abundant high-grade gold regions in the world. Goldcorp Inc.’s Red Lake mine complex and its exploration projects in the vicinity employ some 1,200 people. Nearby, Rubicon Minerals is pouring $60 million into a major drilling program at its Phoenix gold zone. The story is the same in Thunder Bay, Geraldton and further east in Cochrane, Timmins and Kirkland Lake, also historic gold towns that over the last two years have roared back to life Fort McMurray-style. “We’re scrambling, we don’t have the housing or the infrastructure,” says Kirkland Lake Mayor Bill Enouy. While the population in Kirkland Lake dipped to about 8,000 in 2006, it’s climbed to about 11,500, including all transient and temporary workers. A recent housing study determined the municipality will need up to 1,000 homes in the next five years to handle the influx. “We can’t keep up,” he says, “And we don’t have the tax base to fund all this ourselves.” Enouy is hoping to secure some government funding for sewer and water services, as Red Lake did last year when both the feds and the province kicked in some infrastructure money.
Despite municipal growing pains, gold production and exploration continue full-throttle. In addition to the eight operating mines in and around Timmins, Wawa and Kirkland Lake, exploration in the area has yielded even more promising finds, as improved drilling technology unearths deeper ore bodies on old properties.
All the activity is a great boost for those who stuck it out during the lean years. When Jim Taylor, CEO of Nordex Explosives Ltd., moved to Kirkland Lake in 2003, the town was “run down” and many businesses were shuttered. Nordex had three employees and was on the verge of bankruptcy. Today, Taylor’s primary concern is keeping growth at a reasonable pace. The company has a staff of 40, an extensive manufacturing capacity, and a fleet of specialized vehicles. “Timing is everything,” says Taylor. He hopes to expand into Quebec’s Val-d’Or region, another hotbed of renewed exploration.
These days, anywhere there’s gold, there’s digging. In the Yukon’s White Gold district around Dawson City, a dozen or so exploration companies are in operation. In B.C., at least two gold-copper mines are set to open in the next couple of years. “Half of all exploration expenditures in the world are targeted toward gold right now,” says Peter McBride, president of the Ontario Mining Association. “Gold has been the star since the financial crisis of 2008.” And while analysts are bullish on gold for the short to medium term, the long-range picture is anyone’s guess. But Enouy remains buoyant. “As long as there’s financial trouble in the world and the U.S. keeps printing money,” he says, “these mines are good for 25 years.”