KIRKLAND LAKE, Ontario (Reuters) - With a gleam in his eyes, Sidney Hamden recalls the glory days of Kirkland Lake, the little Canadian mining town in northern Ontario that was long ago dubbed “The Mile of Gold”.
Hamden, a spry 82-year-old, remembers his first big break in 1947 at the Lake Shore mine, then one of the deepest gold mines in the world, producing 8.5 million ounces between 1918 and 1965.
“We had seven mines. I personally don’t know of any other place that had seven major mines within a radius of two miles,” said Hamden. “If I‘m not mistaken, in 1948 there were approximately 50 different places to buy groceries around town. We had 17 different hotels in the Kirkland Lake area alone.”
But Kirkland Lake’s fortunes waned through the 1950s and 1960s, as costs rose and the price of gold stagnated.
One by one, the mines shut down, and by 2000 the town’s population had shrunk to 8,500 from over 20,000. Mining jobs vanished, shops and hotels closed and housing prices crumbled, prompting fears that Kirkland Lake - an eight-hour drive north of Toronto - could turn into a ghost town.
With gold now soaring to $1,700 an ounce and higher, the town has begun to regain some of its lost luster. Companies are reopening mines that were mothballed for decades, offering many new jobs and sparking an economic recovery in the area.
As geologists hunt for the next big gold prospect among the lakes and forests of Canada’s mineral-rich Abitibi-Greenstone belt that runs through Ontario and Quebec, housing prices are soaring and skilled mine workers are in short supply.
“I became mayor when there was not much going on, but fortunately things have perked up.” said Bill Enouy, a former schoolteacher who took office about a decade ago.
“The biggest difference I’ve noticed in Kirkland Lake now, besides the obvious positive attitude that we have now that we never had for a while, is the price of housing. It’s gone crazy.”
The gold rush here is partly driven by Canada’s political and social stability, even as problems like high crime rates, big tax grabs and political instability plague many gold mining hot-beds in Africa and South America.
“Costs of production here, on a world scale, are a little bit higher. However, geopolitically, a lot of Canadian miners have found out what all can go wrong in the world,” said Duncan Middlemiss, who manages some of St Andrew Goldfields’ mines located 65 km (40 miles) northwest of Kirkland Lake.
“Miners are certainly quite happy to be in Quebec or Ontario because they are known entities and they are mining friendly and that’s why you are seeing reinvestment.”
Metals Economics Group, which tracks data on exploration spending, notes that Canada’s share of global gold exploration spending has doubled in the last 10 years.
In 2001 projects in Canada accounted for some 10 percent of the roughly $900 million spent on gold exploration, while in 2010 they accounted for 20 percent of the $5.4 billion spent, according to analysts at the consultancy group.
“I still think the best place to find a gold mine is beside one,” said Rochelle Collins, a geologist at the Young-Davidson project 60 km west of Kirkland Lake that was recently bought by AuRico Gold. “Here in Timmins and Kirkland Lake, most definitely there is more gold to find.” [ID:nN1E77S0BQ]
She added: “We are able to go deeper now than back then, when these camps were at their absolute peaks. And there are definitely improvements in technology.”
There was clearly less focus on getting all of the gold out of the ground in the previous boom, because potential profits were smaller in an era when gold prices were low and stable.
“Back in the old days, when the price of gold was $35 an ounce for a long time, they started high-grading the mines and just taking out the high grade ore and leaving a lot of other ore there, because they couldn’t really afford to bring it out at that price,” said Enouy.
“There’s lots of gold left in all the mines in the area, and with the price of gold being what it is today, it’s economic to get that gold out of the ground. The best part is ... they’ve realized they can find new discoveries as well.”
Long-time prospector Michael Leahy and others believe the area around Kirkland Lake may even host iron oxide copper-gold deposits on a scale similar to BHP Billiton’s massive Olympic Dam mine in Australia.
“There is still some good grass-roots potential here,” said Leahy, who has prospected around Kirkland Lake for years. “The subterranean realm is a huge thing, just like the oceans, unexplored. All kinds of things can be hiding right under your nose.”
As with many old Canadian mining towns, Kirkland Lake’s history dates back to the early 1910s. The town grew haphazardly around the mines and its streets are a maze that appear to be ripped out of a jig-saw puzzle.
The north end of the town is dominated by a large dry hollow, which was once the lake that gave the town its name. Filled in with mine tailings years ago, the lake has since been dredged, but it is kept mostly dry now to avoid flooding the mine workings that extend deep below the surface.
Although many houses in the area date back to the 1920s and 1930s, housing prices have soared as the area booms.
“I follow the prices of house sales very closely to see how we’re doing and a C$30,000 ($29,600) house from five years ago is selling at C$90,000 to C$120,000 now,” Enouy said.
The housing market is so tight that St Andrew Goldfields took a drastic step and bought two motels in the nearby town of Matheson to use as worker accommodation.
While the boom helps eateries and hotels, not all ventures are enjoying similar success. Many miners are transient, with families in nearby hubs like Rouyn-Noranda, Timmins, North Bay and Sudbury, so much of the money earned in and around Kirkland Lake, ends up outside the area. Nonetheless locals are upbeat.
“It’s been a really nice turnaround for our community, for Kirkland Lake and the whole area,” said Middlemiss.
Kirkland Lake Gold was among of the first to spot the opportunity beneath the former mining camp, buying five of the seven old mines along the town’s main strip at rock bottom prices in 2001 and restarting production in 2005.
Its Chief Executive Brian Hinchcliffe believes old mining towns are a sensible place to operate, because of the strong mining culture that still exists in many of them.
“One of the themes we’re constantly stressing, not just on our behalf, but on behalf of all the mining companies in the area - is that the next 20 or 30 years are probably going to be even more exciting for these communities than even the ‘30s and the ‘40s were,” he said. “We’ve got a bright future ahead.”
The current boom comes at a time when industrial hubs in southern Ontario and other parts of North America are still struggling with high post-recession unemployment levels.
“It’s a pity we can’t employ all of the unemployed workers from down south, but with the money that’s being paid here - it would be a good idea for some of them to wake up and smell the roses and try mining as a profession,” said Leahy. “Miners here are making between C$100,000 and C$150,000 a year - pretty good for someone with a high school education.”
Kirkland Lake Gold is offering a big relocation allowance to those willing to move to the area and seven-day work week rotations to attract and retain people.
“Now we are into hiring people right off the street,” said Ray Belecque, who manages Kirkland’s operations in the area.
Clifford Lafreniere, who owns the local Ford dealership, is seeing huge demand for trucks, “Not just run-of-the-mill work trucks, but luxury trucks.”
But even he concedes the boom cuts both ways, as small businesses lose good employees to cash-rich mining companies.
The boom here reflects similar revivals in former gold mining camps, like Canada’s Yukon territory - home of the famed Klondike rush of the 1890s - or the Carolinas, where the first U.S. gold rush took place in the 1800s. Mines dating back to the Egyptian, Incan and Roman Empires are also being revived.
In the Yukon, Kinross’s $139 million takeover of the high-grade White Gold project last year has triggered renewed interest in the region. Some C$260 million is being spent on exploration in the Yukon this year, two-thirds of it on gold projects, said Patrick Sack of the Yukon Geological Survey.
This surge in the number of gold projects has made it hard for mining companies to find talent, said Charles Page, the head of exploration company Queenston Mining, which controls one of the largest land-packages in the Kirkland Lake area.
With many experienced miners set to retire, the labor crunch may worsen, as the sector, for the most part has suffered years of negligible investments and numerous job cuts. Some local colleges are now developing training courses to fill the void.
Northern College, home to the Haileybury School of Mines, has started short-term courses in drilling and hard rock mining that are attracting a lot of interest, especially given the many jobs and lucrative salaries on offer, said Rose-Lyne D‘Aoust-Messier, a training consultant at the college.
“When I went to high school there were 1,300 kids in our high school and I just watched one after another just flee, because there was nothing to do. ... Now that we are in growth mode, a lot of the young locals are finding work here and are happy to stay,” said Leahy. “We may have a cold winter, but overall Kirkland Lake is heaven.”
Additional reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Janet Guttsman and Rob Wilson