Province mining bright future
Many projects could start up in next few years
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Hey there, time traveller!
This article was published 19/11/2011 (4094 days ago), so information in it may no longer be current.
In the next five years the mining industry in Manitoba could find itself in a challenging position — trying to find people to fill 2,000 additional jobs that might be created.
That’s because a number of development projects that have been percolating for years may be coming to fruition.
With employment up almost 25 per cent over the past five years to 6,100 and capital spending up 25 per cent in the past year, the industry is booming.
Base metal prices continue to hold their own and gold prices continue to rise as global economic uncertainty persists.
It means that a number of projects — some that could be among the largest ever developed in the province — continue to progress, creating the potential for several new mine openings over the next few years.
It will take billions of dollars to make that a reality, which means it’s far from a foregone conclusion.
But the current optimism — manifested by registration numbers at this week’s annual Manitoba Mining and Minerals Convention hitting 1,000 for the first time ever — does not come out of the blue.
Typically, new mines take up to 10 years to develop.
Leading off the development bonanza in Manitoba is one of the fastest discovery-to-development projects in the country — HudBay Minerals’ Lalor project.
The major new copper/zinc/gold mine in Snow Lake is being fast-tracked into production.
After the discovery of the deposit in 2007, initial production from a three-kilometre ramp built from its existing Chisel North mine in Snow Lake is expected by the middle of next year.
Lalor’s rapid progression from a prospector’s discovery to an operating mine is not the norm.
More typical is the process Mega Precious Metals Inc. is going through with its Monument Bay gold project.
Located 340 kilometres southeast of Thompson and 60 kilometres northeast of Red Sucker Lake, Monument Bay could turn into a sizable gold mine one day.
Company management was on the verge of completing its regulatory documentation earlier this year detailing a modest-sized underground gold mine.
But company CEO Jim Rogers said less-than-enthusiastic market reception and ongoing positive exploration results made the company change its approach.
Now something on a much grander scale is being conceived.
“We are approaching it differently,” Rogers said after a long day of meetings with Manitoba officials, including Premier Greg Selinger, who gave the keynote address at the mining conference on Friday.
Rogers said Mega Precious Metals is already employing about 50 people from the Red Sucker Lake region, rotating them in and out of the property. By the end of the year, he figures, the company will have spent about $12 million on exploration.
In the process, the company is building up the prospects for a much larger gold deposit.
As it stands, the Monument Bay project has measured and indicated reserves of 600,000 ounces and another 1.2 million ounces of inferred gold reserves.
Over the course of the next 11/2 to two years, Rogers said, the plan is to keep spending money on exploration.
He said the thinking is to develop a plan to build both an underground mine and open-pit mines, with the potential ultimately to come up with a project that will cost about $300 million to build and could produce 200,000 ounces of gold per year.
“It’s all about scale and we can make it happen,” he said.
“Some of this is just getting out there and marketing, getting the message out that it is real.”
There is a lot that has to fall into place. Not the least of which is the need to overcome the remoteness of the location and the attendant extra costs such isolation will add to the project. That’s why a much larger mine makes more sense.
Industry officials in the province are impressed with project’s potential.
Ed Huebert, executive vice-president of the Mining Association of Manitoba, said he believes it is an exciting project with the potential to significantly add to the mining base in the province.
“This is not just an economic resource,” Huebert said. “They have actually found something.”
The company closed a $9-million offering this month and Rogers said there is plenty of interest from institutional investors. He just wishes there was more retail support to boost the stock price.
There is no doubt there is plenty of risks inherent in every mining venture and no guarantee even the best deposits will ever get developed.
For instance, San Gold will spend close to $30 million exploring its gold properties around Bissett this year and finally turned a profit for the first time ever this past quarter.
CaNickel Mining Ltd. (formerly Crowflight Minerals) just reported a net loss of $7.6 million for the third quarter — only half as much as what the company lost the previous year on its nickel mining operation in Wabowden.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
Updated on Saturday, November 19, 2011 11:44 AM CST: Adds colour photo, formats text, adds fact box, adds cutlines