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By Rose Ragsdale
For Mining News 

New gold mine offers taste of prosperity

Government, industry officials urge territory to prepare for future jobs, business opportunities with more training, discussions


Last updated 4/25/2010 at Noon

IQALUIT, Nunavut - Now that Agnico-Eagle Mines Ltd. is producing three or four 8-kilogram bars of gold every week at the newly opened Meadowbank Mine in the central region, government, business and mining industry officials here are beginning to look ahead toward the territory's next big challenge.

"Meadowbank's startup is a small step for us in Nunavut," said Paul Kaludjak, president of Nunavut Tunngavik Inc., the Inuit organization that co-administers the Nunavut Land Claims Agreement with the Government of Canada. "We hope to maintain the pace. We want to see balance going forward where we protect both the mining sector and the environment."

Kaludjak told delegates attending the 13th annual Nunavut Mining Symposium April 13, that the people of Nunavut want to look at future opportunities with mining companies.

"For many years, we in Nunavut were on the side, (watching the mining industry.) We want to be looking at development," he said. "We want to take it to the next step and become developers, partners and producers, and more, we want to be full party to how things happen in Nunavut.

"Work with us! There is a protocol now for (mining) production on the lands," Kaludjak continued. "We want to do this jointly, all of us to protect the land, not just governments, but also the private sector. Let us help you. Never forget, we're here to help our people and not ourselves."

Nunavut Tunngavik has joined two other Inuit-owned groups, Kitikmeot Inuit Association and Kivalliq Inuit Association to form Nunavut Resources Corp. in order to invest directly in Arctic resource development. The groups have reportedly raised just over C$1 million and are seeking another C$2 million in one-time funding from the Canadian government to use as working capital and seed money to enter private capital markets and raise funds for individual projects.

Public deserves mining's benefits

Minister Peter Taptuna, head of Government of Nunavut Department of Economic Development & Transportation, told the gathering April 13 that the territory's priorities derive from believing that all "Nunavutmuit" (Nunavut people) deserve to have their basic needs met.

This point was driven home later in the symposium during a forum in which mayors and representatives of six Nunavut communities observed that many of the children in their hamlets routinely go hungry.

Baker Lake Mayor David Aksawnee said the Meadowbank Mine, where 35 percent of the current work force comes from the local community, has brought unprecedented prosperity to the region. The mine is projected to pay out more than C$500 million in payroll over its life span.

"The mining company hired many local people, even people who have never worked before, but we need more training for our people," Aksawnee told the delegates. "Their kids are not hungry any more, and they have more capital items like Ski-doos™, boats and motors. Families are happier, and the children have better clothes."

Still, the community should have been better prepared for the changes in that the developer has been working on a mine for six years, he said. "People are moving into our community, and we've seen quite a few opportunities since 2005. But we are having a housing shortage. I've heard of 14 people living in one house."

The greater number of jobs for local residents also has created new challenges for Agnico-Eagle. Mine officials have expressed disappointment that none of their local employees have sought to purchase a home in the five years since mine development activities got under way, and they report some local employees have experienced difficulty being away from their families during two weeks their schedule requires them to work at the mine before getting a nearly equal amount of time off.

Mining activity rebounds

Still, government and mine officials say mining exploration and development in recent years have brought more positives than negatives to Nunavut.

"In this industry, it seems that all of the best and worst of times were compressed into less than two years (between 2008 and 2010)," Taptuna told the symposium delegates.

He said about C$250 million in exploration spending is planned for Nunavut in 2010, up substantially from the C$175 million spent in 2009, but still down from the record C$330 million the industry spent in 2008.

Still, the territory ranked fifth in Canada among jurisdictions for mining activity in 2009, with significant employment and business spinoffs, said Bernie MacIsaac, acting regional director for Indian and North Affairs Canada in Nunavut.

This year, Nunavut will see 120 active mining projects that will employ about 2,000 workers in total, MacIsaac said.

"Following up on a 2008 report, INAC and its partners will be working to streamline the regulatory process in Nunavut, while providing greater environmental protection," he said.

John Kearney, president of the NWT & Nunavut Chamber of Mines, said his organization takes its mission to be the leading advocate in the North for sustainable mining seriously.

"Aboriginal employees account for 8-10 percent of the mining work force in the North, and the mining industry is the largest employer of aboriginal people in Canada, about three times the national average," he said. The industry employs more than 4,800 aboriginal workers, he added.

Kearney said mining development and exploration spending is especially impressive in Nunavut, which reported a total of C$1.3 billion invested in such activity in 2008 and 2009. Comparable spending in the Northwest Territories totaled C$642 million and C$500 million in Yukon Territory.

He said the future success of mining in Nunavut is dependent on land access and the efficiency of the territory's regulatory framework. The industry also needs new roads, bridges and power plants, and the chamber supports current pro-development legislation being sponsored by INAC.

Gold takes center stage

Donald James, chief geologist for the Canada-Nunavut Geoscience Office, told Mining News that he believes Nunavut is well on its way to becoming the new gold mining center for North America.

"We have some very big projects coming on line in the next few years," he said. James cited Agnico-Eagle's recent acquisition of the Meliadine Project in Nunavut and Newmont Mining Corp.'s Hope Bay Project has examples of the gold mining ventures moving toward startup in the territory in the near future.

Gordon Davidson, general manager, projects for Commander Resources Ltd., echoed that view.

"Nunavut is 'elephant country.' You can find huge mineral deposits at surface and there are few other places in the world like that," Davidson told Mining News.

Commander and partner AngloGold Ashanti Ltd. are exploring the Baffin Gold Project on Baffin Island in northern Nunavut. "This is the first exposure in North America for "AngloGold and their investment in the project is a validation of our program and our management team," Davidson said. "We also hope AngloGold will bring world exposure to our company and to other Canadian explorers."

Davidson said Commander is excited about a new discovery at the Baffin Gold Project. "We're looking at a juicy system here that could be quite significant. The gold extends outside the quartz veins and into the wall rock. We know it's at least 3 1/2 kilometers long and 400 meters wide, and we haven't drilled the first well yet."

Agnico-Eagle seeks more gold

Agnico-Eagle and Comaplex Minerals Corp. April 1 said they have reached an agreement in principle in which Agnico-Eagle will acquire all shares of Comaplex that it does not already own. Comaplex owns the advanced stage Meliadine gold project located in Nunavut about 300 kilometers from the Meadowbank Mine. First discovered in 1990, Meliadine currently boasts 3.29 million ounces from measured and indicated resources of nearly 13 million metric tons, grading 7.9 grams per metric ton gold, and an inferred gold resource of 1.73 million ounces from 8,385,600 metric tons grading 6.4 g/t gold.

"Upon completion of the proposed transaction, the addition of the large, high-grade Meliadine property is consistent with our steady, focused approach to per-share growth. In addition, on the back of a successful startup of our Meadowbank gold mine this quarter, the Meliadine property is a perfect fit with our Arctic skill set and the transaction solidifies our commitment to Nunavut and our foundation in Canada," Agnico-Eagle Vice-Chairman and CEO Sean Boyd said in a statement April 1.

"Our operating focus remains on the optimization of our newly built gold mines and on completing several internal expansion studies that are currently under way. At Meliadine, our plan would be to accelerate an underground exploration program focused on expanding the resource and converting the large resource into reserves over the next two years. We hope to initiate a feasibility study prior to the end of 2011."

Though it is difficult to relinquish the interest in the Meliadine property after all these years, Comaplex President and CEO George Fink, said Meliadine fits well with Agnico-Eagle's portfolio of properties, and Comaplex's shareholders will continue to benefit from it through their holding of Agnico-Eagle shares.

"We will miss the close relationship we have had with the people of Nunavut and wish to thank them for the tremendous support they have given us over the years. New Comaplex will be a very well-financed exploration company with cash flow that will be run by experienced staff and proven management," Fink said.

Comaplex will transfer to New Comaplex all assets and related liabilities other than those relating to the Meliadine properties and related assets. These assets include all of Comaplex's net working capital, all the non-Meliadine mineral properties, all oil and gas properties, and various investments. The transaction, which is subject to Comaplex shareholder, court and regulatory approvals, is expected to close in June.

Big opportunities await Nunavut

Denis Gourde, general manager of the Meadowbank Mine, said Meadowbank and Meliadine, together, will employ 1,000 people in permanent jobs, spend C$350 million a year on operating expenses and C$120 million annually on wages.

"That's why it's a very big and very nice opportunity for everybody," he told the delegates April 13. "But more qualified labor is wanted. We need trades. We need to make sure everyone will put their focus on training the right people for the trades we are missing.

"The business community needs to prepare for construction, too," Gourde said. "We rushed when it was time to start Meadowbank Mine. We need to get the ball rolling now. We know what is needed for construction and we know what is required in specialized supplies."

Gourde said Nunavut businesses also need to be competitive and set the pace for new contractors and new suppliers. "We have years of permitting and feasibility studies ahead and lots of discussions with businesses, communities and regulators to maximize opportunities not only for the operating mode but also for the construction mode," he added.

Greenland offers training advice

Hans Hinrichsen, manager of the Greenland Mine and Contracting School, said the need for training is urgent in Nunavut just as it is in his country. Hinrichsen, who was invited to speak at the Nunavut Mining Symposium, said his government has given him four to five years to train 1,000 Greenlanders in mining and construction trade skills. A prerequisite for admission to the training school is the ability to speak English, and so far, about 60 students have received the training, he said.

Greenland has three mines and will open another four mines within the next four to five years. Mine companies have identified a large deposit of rare earth elements and commercial deposits of lead, zinc, diamonds, gold, nickel and rubies, he said.

"We've started from scratch developing a mining industry in Greenland. The school will be finished in August and we have a training area the size of a soccer field, as well as buildings, equipment and dormitories."

Hinrichsen also said he was not authorized to disclose the amount of money that Greenland will spend to develop the training school.


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