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 S A M P L E    R E S E A R C H    A R T I C L E

Tiny town said to hold Canada’s largest gold deposits – and the rush is on to get a share

BY GEOFF KIRBYSON

It’s not often that you can be sitting on a gold mine both figuratively and literally but that’s the case with Garry Zamzow.

The mayor of Snow Lake, Manitoba, is “optimistic and excited” that the flurry of mining activity in the northern Manitoba town is set to at least double its population to more than 2,000. The town hasn’t had that many people calling it home since the late 1970s.

“I would say this is the strongest potential I’ve ever seen in the community of Snow Lake,” said Zamzow, a resident of 44 years.

“Originally when we discovered it, it was thought to be just a zinc mine, but last January we discovered significant gold zones and in September we discovered separate and distinct copper-gold zones,” said John Vincic, HudBay’s vice-president of investor relations and corporate communications.

“It has the potential to be the second-largest mine we’ve ever discovered in the Flin Flon Greenstone Belt in our more than 80-year history.”

Vincic said about $500 million will be required to get the mine up and running. Last year, the HudBay board approved Phase 1 of its development, an $85 million investment, much of which will be spent on building an underground ramp from Lalor to its Chisel North mine.

Vincic said the company anticipates the Lalor mine will have a 15-year lifespan, but it could be even longer with some extra exploration.

“For the town of Snow Lake, that’s a pretty significant development. You’re looking at hundre

ds of workers through the construction and development stage and probably north of 200 jobs when the mine is in production full time,” he said.

Rising metal prices convinced HudBay to dust off the Chisel North mine, which it had shut down two years ago after metal prices plunged.

“Chisel North is now back in full production. It’s only got about two years of production left. By the time it’s depleted, our expectation is we’ll start getting production from Lalor to replace it,” he said.

The company spent about $7 million to reopen the mine, which employs about 100 people.

Vincic says that while the decision to reopen Chisel North was based on zinc prices recovering from about 50 cents per pound to more than 85 cents per pound, prices weren’t part of the equation at Lalor.

“It has significant gold. We made the decision based on the zinc deposits alone. When you factor in the gold, it’s a very attractive project. The copper-gold zones make it that much more attractive,” he said. Gold bullion is now selling for more than US$1,200 per ounce.

The fever is spreading. Alexis Minerals Corp. plans to reopen the former New Britannia gold mine in Snow Lake early next year. It has been closed since 2005 but the Toronto-based company has reason to believe boom times are around the corner. Last month, Alexis announced the discovery of two new high-grade gold zones at what it now calls Snow Lake Mine. From 1995 to 2005, the mine produced about 100,000 ounces of gold annually. Prior to that, it was a producing gold mine from the mid-’40s to the late ’50s.

Junior mining companies have heard the buzz and have arrived on the scene, too. VMS Ventures Inc. has been drilling about 40 minutes outside of town but it’s far from the only one.

“If you were to draw a 50-mile circle around Snow Lake, you’d be totally amazed at the number of exploration companies that are in the area,” Zamzow said.