Mining Sector Report

Kirkland Lake is located in the heart of one of Canada’s richest gold belts; the Abitibi Greenstone Belt. Mining began here at the turn of the twentieth century. By the 1920’s, the region had established itself as one of the most prolific mining camps in the world. One hundred years later, mining is still the mainstay of the regional economy, with gold, silver, copper and molybdenum being produced. Gold is the primary commodity. In the period 1910-2017, total production was 40,701,800 ounces, valued in today’s dollars at CDN$97,610,649,742. The total assumed endowment in the Camp (historical, current proven inferred) was assumed in 2017 to total 59,536,408 ounces (CDN$976,104,742). Subsequent discoveries since 2018 have increased this estimation significantly. 

Kirkland Lake is home to Kirkland Lake Gold (KLG), one of the industry’s top performers. It operates the Macassa mine complex (located in Kirkland Lake) and Detour Mine (located north of Cochrane). KLG also owns the Holt and Taylor mines located an hour north of the community. Primary projects include the construction of Number 4 shaft at the Macassa mine, a $320 million project that is projected to increase production at Macassa to over 400,000 ounces per year over the next five to seven years. It is scheduled to become completely operational in 2023. The company subsequently stated that it is seeing "extremely high-grade intersections" from its exploration program to extend the to extend the South Mine Complex to the east and west, is identifying high-grade mineralization along the Amalgamated Break, and is identifying a new, high-grade corridor along Main Break near the location of its new No. 4 shaft. Other recent developments include:

  • Exploration efforts at Detour mine had identified high grade mineralization off the mine’s main pit.

  • Recently invested $1 million into Melkior Resources Carscallen project near Timmins.

  • Achieved greenhouse gas (“GHG”) emissions well below industry averages, with Macassa continuing to have among the lowest GHG intensity rates in the industry.

  • Macassa purchased five 50-tonne battery-powered underground haul trucks (first in industry), with the first delivered in Q1 2021.

  • Company’s financial and operating results for the fourth quarter (“Q4 2020”) and full-year 2020 (“FY 2020”) show the Company achieved record levels of production, revenue, net earnings and adjusted net earnings.

Kirkland Lake is the primary supply centre for Alamos Gold’s Young Davidson Mine, a large, low-cost, bulk tonnage underground mine located in nearby Matachewan.  located in Northern Ontario. The Young-Davidson property consists of contiguous mineral leases and claims totaling approximately 11,700 acres. With a large Mineral Reserve base, Young-Davidson is a long-life operation with significant Mineral Resources and exploration potential to support mine life extension. Recent developments include:

  • In July 2020, the company announced that it had completed a major expansion project with the successful commissioning of the Northgate shaft.  The highly automated shaft will increase daily tonnage from 6,000 tonnes per day (TPD) to 8,000 TPD, increasing production and lowering costs.

  • The company's Fourth Quarter 2020 showed that mineral reserves increased 3 per cent to 3.2 million ounces

  • A small underground exploration program was initiated in 2020 and was successful in intersecting gold mineralization below the existing mineral reserves and resources. With the deposit open at depth and improved underground access now available in the lower mine, exploration activities will be expanded in 2021 with a $7 million program planned.

Significant exploration activity is taking place throughout the Kirkland Lake district that portends for a continued expansion of the industry. 

  • The largest of these is Agnico-Eagle which is working on a 27,000-hectre land package located a half hour east of Kirkland Lake. The Upper Beaver property has a probable mineral reserve of 8.0 million tonnes grading 5.43 g/t gold and 0.25% copper (1.4 million ounces of gold and 20,000 tonnes of copper), as well as substantial indicated and inferred mineral resources. Agnico-Eagle’s Upper Beaver and Upper Canada operations will be perhaps the most interesting to watch as these are nearing the point where they can become the most significant new development in the district.

  • McEwen Mining Inc. plans to grow annual gold production from its Black Fox, Froome and Gray Fox complexes near Matheson to an annual production of 100,000 to 150,000 ounces of gold over a 10-year life.

  • Northstar Gold will conduct a 2,200 metre Phase IIA diamond drill program on the Company’s 100 per cent-owned flagship Miller Gold Property, situated 18 km southeast of Kirkland Gold’s Macassa SMC gold mine. 

  • Spartan Resources announced a diamond core drilling program to confirm and extend the Oakes Zone, located near Alamos mine in Matachewan.

  • Gatling Exploration continues to work its Larder Lake gold project. This comprises 3 high-grade gold deposits. Gatling commenced drilling in 2019 with a 10,000 m program that was expanded twice, due to the high level of success, to a total of 35,000 m. Drilling connected all 3 deposits for a continuous 4.5 km trend, and demonstrated new discoveries at all three deposits. Gatling also acquired the 1,274 ha Kir Vit claim package. 13 of 16 completed holes intersected mineralization >1.0 g/t Au.

  • Orefinders Resources continues to explore the potential of its McGarry Project, located approximately 50 km east of Kirkland Lake. McGarry is located east of and immediately adjacent to the Kerr-Addison Mine, one of Canada's largest gold mines producing over 12,000,000 ounces gold over 58 years ending in 1996 (Figure 1) (see MNDM OFR5831).  Adjacent to the west of McGarry is Bonterra Resources' Cheminis Mine and Bear Lake deposit, which host a historic estimate* (2011, P+E Mining) of 3,750,000 tonnes at 5.7 g/t (683,000 oz) (inferred) and the Cheminis Deposit contains a historic estimate (2011, P+E Mining) of indicated of 335,000 tonnes at 4.1 g/t (43,800 oz) and inferred of 1,391,000 tonnes at 5.2 g/t (233,400 oz).

  • Mistango River Resources owns Kirkland West, a high-grade gold project located Kirkland Lake, adjacent to Kirkland Lake Gold’s Macassa Mine.  The property has the potential to host a similar underground, high-grade deposit.  There has been little historical drilling at depth, and the company is currently underway a 10,000m drilling campaign in the hope of finding another world-class deposit in the area.  Mistango River also owns the Omega project, which hosts 580koz of gold and is located under 40km east of Kirkland West.  Together, these two properties have the potential to transform into another world-class mining camp in the Kirkland Lake District.  Orefinders Resources has an 18% ownership stake in the company. .

What lies ahead? The COVID-19 pandemic has thrown the global economy into disarray. But historically, bad news in the world means good news for gold mining towns like KL. Continuing concerns over the pandemic's impact on the global economy, a fear of rising inflation and growing government debt are all factors that may contribute to keeping the price of gold high.

What does that mean?

An increase in exploration activity, greater capital investments in established operations, greater focus on long term efficiency measures such as the move to electrical vehicles underground, and more money and effort going towards dealing with legacy issues such as infrastructure expansion and environmental management. 

The corollary impacts will also be significant. The mining industry is already struggling with an aging workforce and projected retirements. A labour study by the Far Northeast Training Board projects a 14% expansion in workforce requirements and a workforce retirement forecast of 30% within between 2017 and 2027, creating a combined workforce shortfall of 44%. There is also an acute shortage of skilled labour, especially within the trades. As a result, there is ample opportunity for people willing to relocate to assume high paying employment; and for public and private sector organizations providing enhanced skills and trades training. Similarly, the demand for contracted services is projected to rise as the industry looks to independent service providers to provide personnel, equipment and skillsets to complement or replace in-house capabilities. Professional and specialized services (environment, engineering, geotechnical etc.) will also increase. Areas of particular interest include environmental protection/remediation, automation, Artificial Intelligence (AI) integration, energy efficiency, etc. This creates opportunity for companies that that can provide specialized services on a contract basis; can assist in terms of technology selection, integration and acceleration; as well as offer training and human resource development. 

 

 

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