Chamber of Mines is optimistic

by Dave Martin
Northern News Services

NNSL (Jan 26/98) - It's safe to say that 1997 was, and 1998 will continue to be, a double-edged sword for mining in the North.

The industry seems to be going in two directions at once: layoffs and closings one week countered by new finds and increased estimates of yields the next.

Where does the future lie for exploration and mining firms that do business north of 60? For the casual observer it's almost impossible to tell, which is why NWT's Chamber of Mines general manager Mike Vaydik was asked for his views on this ever-so-important issue.

To begin, says Vaydik, it's no secret that gold mining in the North has suffered a body blow in recent months. At the same time, it's not all doom and gloom.

"Gold has been the backbone of the mining industry in the North, so anything that happens to it is of concern to the whole industry. I think the low price for gold is a major concern. But we're hoping that it'll turn around in a reasonable amount of time. Lately the focus has been on diamonds, and in terms of dollars spent, diamonds, by a considerable margin. have been what people are looking for."

As far as the diamond play is concerned, Vaydik believes things are heating up. And not a moment too soon as far as the North is concerned.

"We're glad that the diamond discovery was made, because otherwise we'd be in a real serious downturn ... in terms of the economy of the western Arctic."

Vaydik continues: "We'll see production from BHP this year -- that's pretty exciting. They are, apparently, ahead of schedule in terms of opening the pit. They'll be hiring production staff any time to start getting the plant ready for when they start diamond production. So that's pretty exciting.

"There's still a lot of activity going on right now, particularly with diamonds. It's hard now for gold exploration companies to raise money on the stock market, and that's a problem. They've had a double hit, first from the Bre-X scandal, and then from the gold prices."

Like everyone involved in the industry, Vaydik is sympathetic to those who have suffered from the collapse of prices.

"At Lupin, their cut-off was such that they just looked at it and they couldn't make money at the price they were getting for their gold. They just shut it down until the price improves. It's a major blow to Kugluktuk and Cambridge Bay particularly. Some of those guys haven't missed a fly-in, fly-out cycle since the mine opened, they've been there that long. These guys have had very steady, high paying jobs for a generation.

That's not to say that gold exploration has been put on hold. Even with the closures and layoffs, there is still a bright spot to be seen in the exploration end, says Vaydik.

"It's still going on. In fact, Cumberland Resources and Comaplex are going ahead with their pre-feasibility studies on their stuff in the Keewatin, and that's all gold. It's gold that looks like it will be profitable even at the low prices, and that's the key -- if you've got the right kind of deposit.

"Who gets hit the hardest are these older producers with deep-mine, high-cost milling situations, with sulphide ore, etc. And it's very difficult for them to react to the change in price - they've got what they've got and there's not a lot they can do. But if you can find a new deposit, close to the surface, close to transportation routes, that's what the Meliadine looks like close to Rankin. "They've got an all-weather airport, a seaport, they've got all the infrastructure close by, which makes a big difference."

Besides gold, says Vaydik, exploration for other metals and minerals is also going ahead.

"The gold thing around Rankin Inlet looks good. The Boston project around Bathurst is progressing. They're doing their definition drilling now, trying to outline the ore body. We've got various smaller diamond things all over the Slave province still. "We've got the lead/zinc thing at Prairie Creek with San Andreas Resources. There are lots of things going on. At Thor Lake the rare metals thing is happening. It's a very interesting project with all sorts of rare minerals. It's a site that was originally discovered about ten years ago. They did a bulk sample, but it was just a case of the market not being right. Highwood Resources is proposing to build a pilot plant to do a test of the process at Hay River." says Vaydik.

Still, mining in the North is a tough row to hoe. It's a problem that presents its own unique set of challenges. And it's a problem that requires unique solutions.

"This is a very high-cost area to operate in because of geography, lack of infrastructure. If you look at the distances to haul fuel, and the amount of fuel hauled because of the climate, it all adds up," says Vaydik.

"Foreign competition is a reality, and it always is. There are lots of prospects around the world and some of them are lower cost than here. The leadership needs to promote a climate that encourages investment in the North, and that's been a problem of late. There's been a lot of regulatory inefficiency that causes a lot of uncertainty for the mining industry.

"And there's been a lot of uncertainty over land claims by southern-based companies. I think that once companies get in to the North, and understand them, it's less of a problem. And the Chamber of Mines support the speedy settlement of land claims so that we know what the rules are -- once everybody's involved and talking about the industry, we can get on with it.

"In the minds of some southern-based companies, who don't really understand it, it can be a negative thing. I see it as part of my job to keep those people aware and to keep discussions open with aboriginal groups and aboriginal business communities to make sure that we're all talking to each other about the future."

Vaydik also feels that many people in Yellowknife are unaware of the importance of mining to the North.

"I suspect that the business community understands it really quickly, but the man on the street has forgotten that mining is important to the economy. But if you talk to, for instance, a guy from Air Tindi, he'd be able to tell you within one or two percent how much of his business comes from the mining industry. The business community that services the industry is quite aware, but the man on the street doesn't see it."

As for alternatives to mining, Vaydik says that, realistically, resource-based industry is, and will remain, the frame on which the North is built.

"The aboriginal community generally knows that there isn't a lot else to do in the territories. The fur industry is up and down and very small. The fur lobby has had a major effect on the saleability of that product. The commercial fishery is very small.

Vaydik adds optimistically, "Tourism is viable, and it's growing, and I think it should be encouraged. But I think we have to look realistically at what it can do. Most of the tourism jobs are seasonal, service-sector jobs, which means lower paid. Resource industry jobs tend to be long-term and well paid.

"You have to keep encouraging exploration so that when your old mines wear out you have new ore bodies close by and you know where they are. You also have to provide the cost/tax incentive structure that encourages people to come here instead of Bolivia or Chile."

So, a final word on the future of that yellow metal that has proven so integral to the Northwest Territories?

"The price will rise again, eventually, but nobody will say when. I wish they would," he says with a laugh. "Because I'd buy stock."