Gold mining returns to Arctic as Miramar prepares Doris North site

Gold mining returns to Arctic as Miramar prepares Doris North site

Gold is returning to the North as Miramar Mining (TSX:MAE) readies a site along Canada’s Arctic coast for the first new gold mine development in a generation.

“It’s a great opportunity to see it coming back,” said Larry Connell, Miramar’s environmental manager.

Crews are now quarrying rock near the Vancouver-based company’s Doris North deposit in Nunavut and at the midpoint of Canada’s northern coastline south of the community of Cambridge Bay.

The rock will be used to build loading pads and a jetty for 12 barges loaded with equipment and supplies and now being marshalled in a yard at Hay River, N.W.T. The barges will eventually be towed up the Mackenzie River and through the Northwest Passage to the future mine site.

“It’s all the materials you need to build the earthworks and major buildings,” said Connell. “It is a long trip.”

If all goes well – and a final necessary permit is issued – construction on the $40-million mine will begin this winter with startup set for late 2008. That will make it the first new gold mine in the Canadian Arctic since the 1981 opening of the Lupin mine which produced until 2005.

It will also – for a while, anyway – be the only gold mine in the northern regions once famous for them.

Yellowknife was built over the underground tunnels of mines such as the Giant and the Con. The Discovery mine north of Yellowknife and the Lupin site in Nunavut kept a steady flow of the yellow metal heading south for generations.

But when Lupin closed in 2005 – the last of the North’s gold mines to do so – it was the end of an era.

Doris North could signal a rebirth, said Mike Vaydick, head of the N.W.T. and Nunavut Chamber of Mines.

“We’ve seen a big resurgence in exploration for gold, partly based on price,” he said.

Gold, now worth over $600 an ounce, is nearly twice as valuable as it was when some of those first-generation mines shut down.

Doris North, on its own, is a modest project with an ore body forecast to last only two years. However, Miramar plans to use profits from the high-grade mine to develop several deposits along a 60-kilometre stretch of rock.

“The intent is go much beyond,” said Connell.

There could be enough gold to keep Miramar busy for at least 15 years, and perhaps more, he said. One of the deposits, the Madrid, is estimated to contain 7.4 million ounces of gold, indicated and inferred.

Doris North is also the first gold mine to build on Inuit-owned land.

All royalties will be paid to Nunavut Tunngavik Inc., the corporation that oversees the Nunavut land claim. The federal government will receive only taxes.

Impact and benefits agreements have been signed with the local Kitikmeot Inuit Association. The mine is expected to offer between 125 and 150 jobs when it’s complete.

Doris North is unlikely to remain the only northern gold mine for long.

Agnico-Eagle’s (TSX:AEM) Meadowbank development, also in Nunavut near the central Arctic community of Baker Lake, is to begin production in 2010. Meadowbank offers 2.9 million ounces of proven and probable gold reserves. That mine is expected to cost $375 million to bring into production.

Gold prices are also strong enough to bring new interest to old mines. Vancouver-based Tyhee Resources is bulk sampling at the old Discovery mine north of Yellowknife to see if it would be economic to reopen that deposit.

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