Winnipeg Free Press - PRINT EDITION

Gold mine in the backyard

Nunavut sees prosperity just around the corner

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RANKIN INLET, Nunavut -- Mining has eclipsed government as the No. 1 contributor to Nunavut's GDP, a government official told me recently. That's good news across the 13-year-old territory, but it's an odd kind of good news in that no matter how quickly it travels, it arrives very slowly.

Such is the nature of mining.

That hurry-up, go-slow nature is particularly evident in Rankin Inlet, which has had a gold mine in its backyard for billions of years. No one knew it, however, until 1989, when it was "discovered," igniting dreams of good times just around the corner in this struggling community of 2,800 on the western shore of Hudson Bay, 1,500 kilometres north of Winnipeg.

Now, 23 years later, the good news is still just around the corner, although the corner finally is in sight -- the mine and the 750 jobs that will come with it is expected to open no later than 2017.

Rankin Inlet can't wait, even as it must.

A trades school has already opened, a good idea at any time but particularly so in a region where gold is not all that glitters. Rankin, in fact, was born as a nickel-mining operation in the mid-'50s, and there is, among others, a proven uranium deposit nearby that will be developed whenever France decides it needs the metal to fuel its nuclear reactors.

The school will train students -- young and old -- in occupations that increasingly should be in demand, from electricians to heavy-equipment operators and diesel mechanics.

Meanwhile, local contractors are gearing up. There is more heavy equipment in Rankin today than it could possibly use, all in readiness to help build a 24-kilometre, all-weather road to the mine and to take part in projects that will follow from it.

"We're very excited about the possibilities," Rankin Mayor Pujjeut Kusugak, 33, said in an interview. "It's exciting because of the opportunities in training and employment and spinoffs in construction and supply.

"We can't expect government to do everything for us."

Rankin has already seen the future at Baker Lake, where a gold mine has proven to be just that for scores of workers in the seven hamlets in the Kivalliq region, including 60 alone from Arviat, down the coast from Rankin.

Workers at entry-level jobs operating rock wagons can earn $100,000 a year -- big money anywhere but hard to even imagine in Rankin where the jobless outnumber the employed and where youth unemployment is exploding along with the birthrate.

The Meadowbank mine at Baker Lake is owned by Agnico-Eagle Mines Ltd., which also owns the Meliadine property in Rankin's backyard.

Meliadine is not the biggest mining development expected to open in Nunavut this decade -- the biggest would be the $4-billion Mary River iron mine on Baffin Island -- but its development explains a lot about mining in Nunavut, or anywhere, for that matter.

The 560-square-kilometre site was first staked in 1987; gold was found two years later at "Discovery," and a second deposit was confirmed at "Tiriganiaq" in 1993. (Four more have since been confirmed and the search confidently goes on for more.) Agnico-Eagle took an equity interest in 2008 and then bought out owner Comaplex Minerals for $650 million in 2010.

Think about that. Think about the amount of geological research and expertise that would be required before you would confidently put up $650 million to buy an ore body that won't produce a cent of revenue for seven years.

And don't forget, the $650 million is for acquisition. It doesn't include the $170 million that has since been spent further exploring the property and building a camp -- a small and growing indoor city -- that already feeds, houses and entertains 200 seasonal workers in one of the more forbidding climates on Earth.

The purchase price doesn't include the cost of building a fuel dump, nor the cost of delivering 50 million litres of fuel to fill it up.

A helicopter ride to the camp reveals a lunar landscape -- well, except that water has not been found on the moon but covers 80 per cent of the surface in these parts.

Black flags on flex-poles line roads in the camp, markers that will show the way when blizzards and whiteouts arrive with winter.

Unless you're a Prairie person accustomed to seeing much in very little, there is nothing to see but wide-open space in every direction.

There are, however, things to observe -- for example, the land formations, the rivers, the countless tiny lakes and the markings on exposed rock all point southeast, the direction in which an ice-age glacier moved, dragging and shaping the landscape with it in an otherwise unrecorded past.

The attention to environmental and heritage detail is impressive. Pure water from a nearby lake is filtered and chlorinated just in case some tiny impurity -- fecal matter from passing caribou? -- might find its way into the system.

A $2-million bridge, one of three, spans a tiny river to prevent the roadway from interfering with char that return to it to spawn.

Archeologists have scoured the entire site for signs of Inuit artifacts. Elders are brought in by helicopter to decide whether findings are significant and worth preserving.

If they say yes, the area is made off limits -- the route of the access road twists and turns to avoid such places.

In the modern era, mining companies understand environmental and heritage concerns must be addressed before all other concerns. It is simply the cost of doing business today. It's also good for business -- local goodwill is key to success, and a reputation for doing it right opens doors around the world.

The access road, the first two kilometres of which are completed, is a telling example of modern mine development.

The road was only approved on condition that it be removed when the mine is exhausted. It was built by removing the tundra overlay to permafrost. The roadbed is then lined and covered to a depth of about one metre with crushed rock and gravel taken only from specified pits. The design is such that it allows the road to breathe and so protect the permafrost below it.

Without the road, it is unlikely the mine could operate economically. Once completed, it will be used to move in 700,000 tonnes of equipment for startup, and 40,000 tonnes a year of resupply, much of which is now flown in by helicopter.

Of course, all of this is only possible if the gold mine is a bonanza, which it increasingly appears to be. Agnico-Eagle has proven three million ounces of gold on the property, and there is strong evidence of seven million more ounces to be mined.

The cost of operating in the North nearly doubles the cost of producing an ounce of gold -- $800 to $1,100 an ounce compared to $500 to $600 an ounce elsewhere. But with gold at $1,768 an ounce, times three (or 10 million) ounces... well, you do the arithmetic.

Which takes us back to Rankin. The mine, and the town, are largely supplied by sealift -- mostly container ships from Montreal -- that bring supplies within barging distance of shore. Agnico-Eagle estimates that it already has paid $32 million to Rankin-based suppliers.

Mayor Kusugak, a former Inuktitut-language instructor, hopes the needs of the mine, coupled with pressure from the community, lead to approval of a $20-million harbour, which could lead to the redevelopment of Rankin as a supply hub for the region and massively boost its fisheries potential.

The mine, too, might tempt Manitoba into becoming a partner in extending a hydro line from Churchill to Rankin, a move that could be partially financed through rates that reflect the savings to be achieved by weaning the district and its mines off diesel-generated electricity. (Transportation costs add about $1 to the cost of a litre of fuel in the region -- that's $50 million a year extra just to resupply the Meliadine mine.)

Who knows, Kusugak says, a road up from Churchill might follow.

Of course, none of this will happen tomorrow. That's not the nature of this beast.

Republished from the Winnipeg Free Press print edition September 29, 2012 A17

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