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Hot market for gold

Guy Quenneville
Northern News Services
Published Wednesday, December 5, 2007

YELLOWKNIFE - High gold prices could make it easier for prospectors and miners to make a buck, say several Yellowknife prospectors.

The red-hot commodity has experienced some recent fluctuation, but as of Monday afternoon, it was sitting pretty on the market at $784.25 per ounce - more than twice what it was five years ago.

 NNSL Photo/Graphic

Carl Clouter, a gold prospector with Fortune Minerals, with his 1939 Stinson 105 in Old Town. Clouter says current gold prices make mining lower-grade ores more cost-effective. - NNSL file photo

In early November, the price soared to as high as $841.75, close to the commodity's all time peak of $850 in 1980.

Prices like these could spur prospectors to mine lower grade ore bodies that normally would never be considered for mining, said prospector Walt Humphries.

" You need so many ounces and a certain grade of ore to make it minable," said Humphries. " With the increased prices, that means you can look at (rock) of lower grade.

" It costs you so much money to mine and mill and get the gold out of the rock. If gold is worth twice as much, that means you can mine material of a lower grade and still make money on it."

Carl Clouter, a prospector for Fortune Minerals, said mining lower-grade ore is a measure that should be taken only after careful consideration.

" It's not economical at certain times, but at other times, it is," said Clouter.

This is certainly one of those times, he added.

" Most definitely. You can actually mill and mine lower grade ores right now for a reasonable return."

Most mines work with a cut-off grade index that allows them to determine what kind of material is worth salvaging and which material should just be chucked, said Humphries.

" When the mines in Yellowknife were in production, anything above 0.3 ounces per tonne was considered ore," Humphries said. " They could put that through the mill and extract the gold and make money doing it. Anything below 0.3 wasn't worth putting in the mill. You would break even or lose money if you did at that price.

" But if you double the price of gold, you might be able to take .15 and put it through the mill and make money."

Despite this incentive, however, neither Humphries nor Clouter predicts much expansion in the NWT among prospectors.

Statistics kept by the Department of Indian and Northern Affairs show that mining activity in the NWT has slowed down considerably in the last year.

In 2006, a total of 2,143 claims - covering all types of commodities - was recorded. By contrast, this year to date, only 1,295 claims have sprung up.

" In other parts of the country, the higher gold prices have certainly sparked more work and everything else," said Humphries. " In the Territories, it's just kept things plugging along."

One reason for that could be the regulatory system, he said.

" The regulations up here are very daunting to small companies, because in other parts of the country, if I wanted to go out and work on a property, I could get a permit quite quickly and go out and do some drilling or exploring," said Humphries.

" In the NWT, it often takes you a few years because you have to go through all sorts of hearings and public consultations and other things."