Ontario to fuel Canadian mining’s post-pandemic recovery – report

The PureGold mine (Credit: Pure Gold)

At last year’s PDAC convention in Toronto that ran from March 1st to 4th, the mood was buoyant as rising precious metals prices was spurring a wave of M&A activity, but less than two weeks later, the Canadian federal government would declare a state of emergency as covid-19 began to rip through Europe and the Americas.

In the latest edition of its Mining in Ontario and Toronto’s Global Reach 2021, Global Business Reports maps the landscape in Canada’s largest mineral-producing province as it begins to recover from the pandemic-induced disruptions.

“A number of mines in Ontario moved to a hot-idle status at the end of March, and the question was how long could we afford them to shut down for, particularly as the commodity markets went from zero to 60 quickly,” Greg Rickford, Minister of Energy, Mines, Northern Development and Indigenous Affairs, Government of Ontario told Global Business Reports.

The reopening of mines came at an opportune time, as August saw the gold price reach an all-time high of $2,076/oz, then silver reached its highest mark since 2013 before base metals such as copper and nickel took over the charge in Q4.

Ontario is the largest producer of gold, platinum-group metals and nickel in Canada, as well as the second-largest producer of copper.

“Embedded in every crisis is a fantastic opportunity,” said Barrick chief Mark Bristow at PDAC 2020, paraphrasing Winston Churchill, a sentiment surely shared by Ontario’s mining producers in 2020.

“The opening of new mines in Ontario is not a coincidence”

Greg Rickford, Ontario’s Minister of Energy, Mines

“The long-suffering junior exploration community rebounded with vigor, illustrated by new listings on the TSXV increasing by 71% in 2020, with the amount of capital raised increasing by 89%,” said Global Business Reports director Alfonso Tejerina.

“The pandemic has also accelerated the adoption of new technology at mine sites, and Ontario’s mature service sector is well placed to take advantage by offering solutions that create a safer, more sustainable mining environment,” said Tejerina.

In 2020, the mining sector dominated the TSX30 – which lists the top 30 performers over a 3-year period across all sectors on the Toronto Stock Exchange – increasing to 14 companies, representing an average 3-year return of 223% for the sector, according to Global Business Reports.

“Investors have clearly returned their interest to the mining sector; not just specialist investors, long waving the flag for hidden value with the sector, but the generalist investors who are searching for growth and value investment opportunities,” said Dean McPherson, head of Global Mining, Toronto Stock Exchange in an interview with Global Business Reports.

From crisis to opportunity

“The high metals prices leading into 2021 position the province’s mining industry to fuel the economic rebound necessary in a post-covid landscape,” McPherson added.

“Ontario’s mining industry is an instrumental component of the economic strength of Canada and the pandemic has highlighted the essential nature of the industry,” Samantha Espley, president of the Canadian Institute of Mining, Metallurgy & Petroleum (CIM), said in the report.

Since Doug Ford’s Progressive Conservative government was elected in June 2018, Ontario has seen a new wave of gold production come online, starting with Harte Gold’s Sugar Zone in October 2018, Newmont’s Borden mine in October 2019, and most recently, Pure Gold Mining’s Red Lake operation (the former Madsen mine), which poured its first gold on December 29, 2020, says Global Business Reports.

Image courtesy of Ontario Mining Association

“The opening of new mines in Ontario is not a coincidence,” said Greg Rickford, Ontario’s Minister of Energy, Mines, Northern Development and Indigenous Affairs.

“We moved quickly as a government to signal to mining companies we would cut red tape, not just in a macro sense, but by sending swat teams into projects that are ready to move to a major milestone,” Rickford said.

This trend is set to continue in the coming years, with a number of projects given the green light to start construction in 2020, and others progressing through development on the path to near-term production.

The most significant project in Ontario’s development pipeline is IAMGOLD’s Côté Gold project located between Sudbury and Timmins, which received approval in July 2020 to commence construction in Q4, with production expected to start in the second half of 2023, according to president and CEO, Gordon Stothart.

Argonaut Gold also received approval from its board of directors in October for the construction of the Magino mine.

“Magino will be an open-pit milling operation with about 20% to 40% of the gold coming through gravity, requiring low cyanide consumption as the ore body is clean,” said Peter Dougherty, Argonaut’s president and CEO, noting that the feasibility study done at the end of 2017 showed that during the first five years of the project around 150,000 oz/y can be produced at an all in sustaining costs (AISC) of $711.

Recently, Ontario Power Generation announced that three companies (GE, Terrestrial and X-energy) have qualified to develop small modular reactors on a brownfield site in Ontario, which could lead to SMR technologies at mine sites as early as 2025.

“There has been an enhanced recognition that we need to urgently ensure our supply chain of critical minerals and metals, an issue that was highlighted by the pandemic with China shutting down,” said Rickford.

“Ontario has some of the largest and most exquisite reserves of these critical minerals, and we need to enter into discussions and agreements for their supply to the North American market.”

EV revolution

While many parts of the world are just beginning to embrace battery electric vehicles in mines, companies in Canada are all familiar with the technology.

“Northern Ontario was the first to have a company develop a battery electric vehicle for underground; we were the first region with a mine to adopt it, and we are home to the first all-electric mine worldwide,” Paul Bradette, executive director of MineConnect said in an interview with Global Business Reports.

“This technology is a real step changer for the industry. It should enable us to get greener and go deeper into deposits, while also protecting the health and safety of employees working in the mines,”

Northeastern Ontario is a hotbed for electrical equipment, with Kirkland Lake Gold’s Macassa, Newmont’s Borden and Glencore and Vale in the Sudbury basin all investing heavily in the technology.

Contributing to this push toward electrification is the fact that heavy pressure is being put on mining companies to be greener and improve on their ESG performance. As a result, many companies now have aggressive decarbonization targets.

(Read the full report here)