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The site of the Detour Gold mine project near Cochrane, Ont. (Moe Doiron/Moe Doiron/The Globe and Mail)
The site of the Detour Gold mine project near Cochrane, Ont. (Moe Doiron/Moe Doiron/The Globe and Mail)

Precious metals

The new Canadian gold rush Add to ...

Scott Ulvstal had pretty much given up on the idea of settling down in his hometown in northeastern Ontario. He left with his girlfriend, Rosanna, a decade ago, hitting the road in a rented U-Haul truck after finishing his studies in graphic design.

There were few job prospects to keep them in Cochrane, a small blue-collar town surrounded by rugged wilderness, the last stop on a 755-kilometre rail line from Toronto. And the young couple were looking for adventure somewhere west.

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Visits home over the years offered Mr. Ulvstal little hope of moving back. Shutdowns and layoffs at the sawmill and plywood plants had become routine. Grocery stores, restaurants and clothing shops closed as the community’s population dwindled. The town's once-grand winter carnival had faded to a small gathering of residents.

“It was like a ghost town down there,” Mr. Ulvstal recalls of Cochrane's main street. “I didn't think there would be any work for us here.”

But now there’s a reason to come back home. Deep in the boreal forest about 180 kilometres northeast of Cochrane lies the biggest undeveloped pure gold deposit in Canada. Toronto-based Detour Gold Corp. is spending $1.45-billion to build the Detour Lake gold mine and tap a motherlode of 15.6 million ounces of gold. The mine is expected to produce 650,000 ounces of gold annually for more than 20 years.

The large-scale project has set off a buzz of activity and optimism in the region, including a hiring spree of 1,200 labourers who work at the mine site. Clad in hard hats, fluorescent yellow vests and steel-toe boots, the workers have been pounding, welding and digging for more than a year, leading up to the mine’s expected startup of gold production in early 2013.

This is not the first attempt to make Detour Lake a successful long-term gold mine, or even the second. The resource-rich property fell idle 14 years ago, after the price of gold tumbled below $300 (U.S.) an ounce and the old gold mine was abandoned by Placer Dome, which had also given up a previous plan in the 1980s.

But Detour Lake has a new lease on life thanks to gold’s remarkable upswing in recent years, climbing to a record $1,921 last year and holding above $1700 in recent weeks. Gold’s strength, owing to strong demand in emerging global markets and from investors wary of currencies, has sparked a resurgence of shuttered mines and properties as companies take a second look at deposits once deemed uneconomic or too remote. From Northern Ontario and Quebec to Africa and Australia, old gold properties are coming back on stream.

“There were a lot of operations that shut down when gold prices went down below $400 and those are now either operating again or being evaluated to reopen,” says Brad Humphrey, a mining analyst with Raymond James. High gold prices and technological advancements are the primary drivers, he notes.

For many Canadian communities, from Malartic and Val-d'Or in northwestern Quebec to Red Lake and Cochrane in Northern Ontario, the surge in mining activity has provided an economic lifeline as mines restart or are expanded. Open pits are replacing underground operations. Mines such as Osisko Mining Corp.'s Canadian Malartic in northwestern Quebec, San Gold Corp.’s Rice Lake mine in Manitoba and Detour Lake are being transformed to maximize production.

And for people like Mr. Ulvstal, gold's resurgence is giving them hope and bringing them back. He and Rosanna, now his wife, have returned to Cochrane with their infant, Sarah.

“There’s a lot of growth going on and a lot of talk, a lot of excitement in the air,” Ms. Ulvstal says as she stands in her new pink work boots in a dusty pit on the outskirts of town. Ms. Ulvstal and a handful of men are learning to drive bulldozers and rock haulers, with the goal of securing well-paying jobs at the new Detour gold mine.

The reawakening of a mine

From a helicopter high in the sky, the sea of green trees between Cochrane and Detour Lake appears endless. Small farms cut into the woods here and there. The railway's completion in the early 1900s drew farmers to the northern clay belt's rich soils, but the growing season proved too short to support significant crop production.

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