With new investment prospectors arriving regularly, Kirkland Lake Gold stakes out an early lead in reviving the local gold mining industry
Written and produced by David Weldon & Jason Wright
Kirkland Lake, Ontario, is the quintessential small Canadian town.
Located in mid-northeastern Ontario, on the border of neighboring Quebec Province, Kirkland Lake features a population of 8,248, a classic small town downtown, lots of winter sports (of course), and a quality of life that locals swear by.
The town is home to a rich hockey history, and as a result, the Hockey Hall of Fame was built there. The hometown of actor and songwriter Alan Thicke (best known to American audiences for Growing Pains, and a number of game shows), the town of Kirkland Lake is also one of the best spots around if your heart’s desire is gold. In fact, the town takes its name from Winnifred Kirkland, a former secretary of the Ontario Department of Mines in Toronto.
Kirkland Lake also hosts Kirkland Lake Gold — one of the only full production gold mine operations in the area, following the price decline in the global gold market in the late 1990s, which in turn forced the shutdown of virtually the entire region’s gold mining.
The mining operations which later became Kirkland Lake Gold (previously Fox Point Resources) had suffered that fate, when the prior owners allowed the mine to halt operations in 1999. A year later the water pumps in the mine were turned off. And nature then took its toll, flooding much of the mine with water.
The mine didn’t stay that way for long, however. Eventual partners Brian Hinchcliffe and Harry Dobson were approached about the mine as a possible investment that could be had on the cheap. They liked what they heard, and decided to buy the property.
“They picked it up for a song,” says current Kirkland Lake Gold Mine Manager Duncan Middlemiss. And Kirkland Lake Gold was born in 2001.
While purchasing any business that is on the down and outs is always risky, buying one that has actually closed can be outright terrifying.
Still, the new owners had high hopes for the property, figured it was only a brief matter of time before gold ruled again, and they had a scheme to quickly hit pay dirt before competition could take root in the area again.
The strategy was to quickly make substantial mining operation and technology improvements, create a more lean company than what had existed before, and invest heavily in the training and compensation of local workers that wanted to remain in the area, if given the right incentives. If the company could succeed in these three areas, and do so quickly, they could open operations at Kirkland Lake far ahead of any other investment prospectors that might come poking around.
“Gold had pretty much bottomed out at that time,” Middlemiss says. “But they knew that gold prices fluctuate in cycles. They were looking for properties that had large potential, with a little bit of investment.”
That little investment actually turned out to be major investment, as the company purchased new mining equipment, modernized its operations, automated many of its processes, and — of course — pumped out the mine.
Just pumping out the mine took two years, Middlemiss says. Water had filled the main shaft to a level of 3,400 feet below the surface. The company pumped that water level down to 5,750, to be able to re-access the main loading pocket and the existing working levels, thereby allowing for mining and exploration activities to commence in earnest.
“I think we’ve only tapped a very small percentage of what is there,” Middlemiss says.
According to Middlemiss, for the mine’s entire history, which dates back to soon after the turn of the last century, one major break has been responsible for the gold and has supplied nearly the entire output of the mine’s production — what miners refer to as the “main break.”
Still, that one system yielded a combined output of 22 million ounces of gold before the 1999 shutdown. According to annual mine production reports, the mine was generally yielding between 40,000 ounces to 90,000 ounces per year.
Once mining operations resumed under Kirkland Lake Gold, production has risen sharply in just four years, Middlemiss says.
“The first year (ending Fiscal Year 2004) we produced 18,694 ounces of gold. In Fiscal Year 2005 (ending April 30, 2006), we produced 45,865 ounces. In Fiscal Year 2006 (ending April 30, 2007), we produced 58,315 ounces.”
The mine is experiencing “a very good trend,” as Middlemiss calls it. It is also on track to reach record production levels in just a year or two, if the trend holds.
The new gold rush
Even though other gold mining operations haven’t reopened in the area, that picture could change very soon.
A number of investment firms are eyeing the area again, and active exploration efforts are underway at a few former mines.
Exploration efforts are simply that, Middlemiss says — the further exploration of existing known gold veins to determine possible future yield, or the exploration of branch veins off previously mined veins, and for new veins.
That has been a driving force at Kirkland Lake Gold as well. Middlemiss says the exploration of branch and newly-discovered veins never before mined is showing some great promise. In fact, the mine recently received the Ontario Prospector of the Year award. That, in turn, has convinced the company to make further investments in its own equipment and technologies to begin work in those areas.
“We are using the best practices in technology as much as we can,” Middlemiss says. “We are investing a lot in the mechanization of the mining operations, so that we can explore more areas.”
Heavy equipment investments have included the purchase of 19 scoop trams, or what Middlemiss describes as low profile front end loaders, specially designed for digging out broken rock.
Lest anyone think that Kirkland Lake is putting its money into fool’s gold, Middlemiss points out that the gold market itself has rebounded considerably in the past four years, which is generating more interest in gold mining and gold refining as investment opportunities. Those who are the forefront of the rush stand to make out the best. And that growing interest has a lot of eyes turned toward Canada, Middlemiss says.
“Canada is a great investment for gold,” Middlemiss says. “If you are a company looking to invest in gold, your dollars are safer in Canada than just about anywhere else.”
While gold mining is done in many countries throughout the world, Middlemiss notes that “many countries have a habit of going in and expropriating your gold or assets, once you establish them after huge capital outlays.”
A homegrown workforce
Besides the major investment in equipment and technology, and the laborious process of pumping out the mine shaft, Middlemiss says the greatest challenge the company has faced is staffing.
“Because of the decline in gold mining, and the years that we suffered shut-downs, we lost an entire generation of mine workers,” Middlemiss says.
To solve that problem, the company made an early decision to recruit local workers that truly wanted to remain in the Kirkland Lake area, and could be lured to the mining operations with generous benefits and potentially large profits — the opportunity to strike gold, as it were.
“Employees tend to be very well compensated in the mining sector,” Middlemiss says. “This can be a pretty lucrative business if you have your wits about you.”
The company has invested a lot of time in reaching out to young workers in the area, promoting the benefits of working at the mine.
“We are training our own people from the ground up, targeting locals who are committed to stay in the area,” Middlemiss says. “It has been a benefit to both the company, and to the community.”
Those efforts have paid off quickly. The company now employs 215 workers, all at the one location. Of that staff, 115 are what Middlemiss calls “underground people” — the supervisors and miners that work below ground. The remaining labor force are mill workers that process the raw ore into raw gold bars (about 85 percent pure gold), technical staff, administrative staff and management.
Looking ahead, Middlemiss says the company is extremely optimistic about the next two years’ prospects.
“We’ve gotten some exploration results from the Southern part of the main branch that shows great promise. And we haven’t even begun to explore the Eastern side,” Middlemiss says. “And the potential of what we’ve tapped right now is just starting to blossom.”