1991 — A Look Back (January 06, 1992)

Low metal prices and a nation-wide recession shattered central Canada’s once vibrant mining sector in 1991. As mines closed, balance sheets bled and exploration geologists fled to more hospitable environments, moments of celebration were few and far between.

In northern Ontario, The Lightning gold zone near Matheson took one step closer to becoming a mine after a feasibility study indicated an 18% rate of return. The results were welcomed by Hemlo Gold Mines (TSE), Freewest Resources (TSE), Teddy Bear Valley Mines (CDN) and Newmont Mining (NYSE). They are currently negotiating to form a single mine property before heading underground.

Less fortunate was Central Crude (TSE), whose Eagle River gold project — despite a projected rate of return similar to the Lightning’s — was shelved on recommendations from partner Hemlo Gold. Lack of financing also forced Crude to put the brakes on Moss Lake, another promising gold project near Thunder Bay, Ont.

Proof that substantial base metal deposits can still be found beneath the province’s overburden emerged when Inco (TSE) announced a high-grade nickel-copper discovery on the northeastern rim of the Sudbury basin. Although deep, the Victor deposit is estimated to host reserves in the 20-40-million-ton range.

The chance that the same type of bonanza could lie beneath the nearby Wanapitei anomaly had rival Falconbridge probing the depths of Sheppard Twp. during the latter part of the year. Although unsuccessful in its first hole, the nickel producer will reactivate its program in 1992.

Christmas arrived early for shareholders of Fort Knox Gold Resources (TSE) when the company hit a wide nickel-copper zone at its property near Shining Tree, Ont. The 11 cents stock rose to more than $3 per share, before settling in the $1-1.50 range on the release of lukewarm results.

In neighboring northwestern Quebec, Aur Resources (TSE) completed a positive feasibility study on the Louvicourt copper-zinc deposit near Val d’Or, Que. Expected to enter production in late 1993, the mine would employ at least 522 people and yield more than $2 billion in revenues.

Further north, Falconbridge reached a milestone when a freighter broke through the winter ice at its Raglan nickel-copper project on the Ungava Peninsula. With this sudden extension in the shipping season, Falconbridge stepped up its efforts to establish minable reserves at Raglan. Later in the year, a deal between Audrey Resources (TSE) and Minnova (TSE) allowed Audrey to resume a $41 million underground exploration program on its Mobrun mine project near Rouyn-Noranda, Que. Further east, VSM Exploration (TSE) and Serem-Quebec launched a $2.1 million exploration drive to increase reserves at their high-grade Grevet zinc deposit.

Just up the road from Grevet, Freewest intersected a 53-ft. interval grading 0.18 oz. per ton in Benoit Twp., Que. But no sooner had Freewest started followup work when the project became mired in a claim dispute. After threatening to launch a lawsuit against Ressources Miniere Fobex (ME) for damages related to the dispute, Freewest and project partner Ressources Miniere Canaco (ME) announced plans to resume exploration on Benoit in the new year.

Junior exploration was also responsible for the discovery of a new zone at the Scott Lake copper-zinc property near Chibougamau, Que. Partners Greenstone Resources (TSE) and Thunderwood Resources (TSE) are financing a 2-3,000 ft. followup program at the find.