Still Gilded

The Golden Highway is still gilded. Plenty of mines are produ along this dual stretch of asphalt that runs from Timmins and Kirkland Lake, Ont., to Val d’Or, Que. Two major faults — Porcupine-Destor and Cadillac-Larder — are structurally associated with the gold orebodies. They haven’t given up all their treasure yet, though to drive along the highway looking for exploration activity is a futile exercise.

On my journey by car in late August, I saw only two drill crew pickup trucks, red units deployed by Bradley Bros. I also spotted a drill rig just off Highway 101 a few kilometres east of the Holt-McDermott mine, where Forage Dominik had been contracted by Noranda Minerals to test ground optioned from Canamax Resources.

Judging by comments of people in the industry, the lack of visible evidence along the highway reflects the absence of activity in the bush. I spoke with Les Tihor, a senior contract geologist with Noranda. He didn’t paint a bright picture. “It’s a pretty desperate situation for geologists,” he said. “The good times are definitely not here.” He knew of several practitioners who had quit the business altogether. Wallace Bradley, president of Bradley Bros., described the situation this way: “It’s dead.” He continued: “In Timmins, one project (the Noranda/Free West exploration play) is the only job we have. Here in Noranda we have nothing. We do have a little bit of work in Chibougamau. It’s tough.”

Several things have conspired to kill exploration along the highway — the price of gold for one; flat equity markets for another. And the biggest blow of all: the loss of flow-through funding, which enticed investors by offering a tax break on junior mining shares. Flow-through does not look as if it is coming back, in spite of the efforts of people, northerners mostly, trying to convince the government that some such tax inducement is necessary.

Nevertheless, the industry should continue to pester the government. Maybe, just maybe, the government will relent. But what we really need is evidence that the price of gold has switched into a long-term uptrend. More than a kick in the price of gold, such as the move occasioned by Saddam Hussein’s Kuwaiti adventure, is needed. The downtrend must be reversed. So what would trigger that? Inflation? Another Russian excursion into an Afghanistan? Serious Middle East strife? All these things would, but they likely won’t. Not with the Soviet Union and the U.S. practically kissing cousins, with high interest rates as an inflation-fighting tool, and a truly united and vigorous United Nations.

It may be that the diamond drillers and the stakers and the geologists along the Golden Highway might have to practice more patience (or move to British Columbia, where gold and base metal projects are hot). In the meanwhile, get on the phone to your member of parliament. No new flow-through, no vote.