Exploration boom revives Kirkland Lake.

Grenville Whyte harkens back to the 1960s to draw comparison to today's level of exploration activity in the Kirkland Lake gold camp.

The manager of Heath & Sherwood, a Kirkland Lake diamond drilling company, has 50 employees and 12 diamond drill rigs, roughly about one-third of their equipment, committed to the Kirkland Lake Gold project, the area's flagship mining operation.

"That's the biggest concentration of drills we've had with one company for a long time," says Whyte, remembering when his company operated 45 drills for Inco in the Sudbury basin four decades ago.

While the international driller has other projects on the go in Kirkland Lake, Attawapiskat, Timmins and overseas in Greenland, Liberia and Cuba, Whyte says they could easily put more equipment locally into the field if not for a shortage of skilled drill operators.

Exploration has rejuvenated the once-dormant northeastern Ontario mining town, known to be the second-most productive and highest-grade gold camp in Canada after Red Lake.

The leap in gold prices from $280 (US) per ounce to $400 within a year has been a driving factor in its resurgence. The arrival of Kirkland Lake Gold two years ago (formerly known as Foxpoint Resources), headed by some savvy operators with a track record of success in Latin America, has restored faith in the mining district.

Company geologists' reinterpretation of the Kirkland Lake Main and '04 Breaks with the subsequent discovery of the D Zone has helped put the town of 8,600 back on the map.

"There's a whole new different outlook in town," says Whyte, in mentioning the economic spinoffs for local mining suppliers, contractors, hardware stores, realtors, accommodations and new retailers.

It has many in town wondering if the new discoveries could match the area's historical output of 22 million ounces of gold, and may rival a similar story in the Red Lake gold camp in northwestern Ontario.

"We know deep down below 7,000 feet there's mineralization down there and we're only at 4,500," says Whyte.

Since the company purchased five old gold mines, Macassa, Lakeshore, Wright Hargreaves, Teck Hughes and the Kirkland Lake Gold Property, from Kinross Gold in late 2001, they have embarked on an aggressive exploration program.

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Last October, the company pumped a fresh infusion of cash into the community when they launched the largest exploration program the Kirkland Lake camp had ever seen--a three-year, $21-million program of both underground and surface drilling.

They made huge strides in better understanding the area's geology, which has resulted in the discovery of new zones of previously unmapped north-south arms sprouting off the main structure. It included finding new gold in the upper reaches of the Macassa Mine.

Better geophysical and exploration technology has helped, but building a huge data base of material, with all five mines being consolidated to analyse structural trends, has been a huge undertaking, he says.

Prior to Foxpoint's arrival, the mine and mill had remained shuttered since former owners Kinross shut down the facility in 1999 after being plagued by high production costs, labour strife and nose-diving gold prices. About 200 people were issued pink slips.

When Kinross placed the Macassa mine, mill, and several adjoining gold-producing properties on the selling block in 2001, a group led by former New York investment advisor Brian Hinchcliffe jumped at the opportunity, purchasing the whole package for $5 million, at a time when gold prices were hovering between $270 (US) and $280 (US) an ounce.

Today, about 400 employees and contractors are working on various developments and drilling programs. And they are desperately looking for more.

In the past, individual mine managers never shared information, a practice that stymied exploration.

"Mines never used to talk to one another; everyone was waiting for the other to go out of business," says Duncan Middlemiss, a company mining engineer.

Today, all the camps are under one plan.

"This is unbelievable what we're accomplishing here," says Middlemiss. "Just the shear magnitude of computerizing all the plans and sections."

Mike Sutton, Kirkland Lake Gold's chief geologist, expects to add up to 17 drills by summer's end, ranging from grassroots exploration of selected targets to deep drilling 3,000 feet from surface, creating arguably the largest exploration drilling program in Canada.

The former Kinross employee knew the area held enormous reserve potential before Kinross padlocked the gates in 1999. One of their last drill holes off to the south of the main structure graded high at .76 over 13 feet.

"In the old days, most of their exploration work was to go deeper and deeper. They just had blinders on."

Kirkland Lake Gold remains only in partial production, recording 21,000 ounces last year, due to an ongoing de-watering program and below-ground development work. However, district provincial geologist Gary Grabowski believes the area's "upside is really good," and is capable of producing between 50,000 to 80,000 ounces a year, with another 12 years worth of reserve.

Grabowski says the whole mining district stretching from Shining Tree and Matachewan to Kirkland Lake along Highway 66 to the Quebec border is "quite active again."

Last year, there were 85 active exploration projects in the district on more than 28,000 mining claims, with work assessment reports filed of almost $4.9 million in exploration expenditures. Juniors like Mustang Minerals and Wallbridge Mining both have base metal exploration projects west and east of Kirkland Lake, while diamond hunters such as Sudbury Contact Mines, Dianor Resources and Tres-Or Resources are finding kimberlites in the Timiskaming-Hailey-bury-Cobalt areas.

www.klgold.com

By IAN ROSS

Northern Ontario Business