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Tiny Quebec town is sitting on a gold mine Add to ...

The streets of Malartic in northwestern Quebec may not be paved with gold, but the ground underneath them is.

Some time next year, Osisko Mining Corp. plans to start ripping up those streets and digging what will become Canada's biggest open-pit gold mine.

Never mind the 200 houses, the daycare centre, church, schools and eldercare facility that now line the streets - they're being picked up and relocated or rebuilt in a new subdivision two kilometres to the north.

Some of the town's residents oppose the mine on environmental grounds and because the company started working on the project more than a year before it received approval from the Quebec Environmental Assessment Board last week. Government approval could come as early as Wednesday.

But many are happy about the economic benefits it will bring to their economically depressed region, including 465 permanent jobs and close to 800 construction jobs.

"This has given us a second lease on life," said Mayor André Vézeau. "We've been in decline since 1997. The mines closed, Domtar [sawmill]closed and we went from a population of about 8,000 to 3,800 in a blink of the eye."

Until a few years ago, residents in the southern end of Malartic had no idea their homes were built on one of the largest gold deposits in Canada. Osisko began drilling hundreds of holes in the streets in 2005 on a hunch there was gold fairly close to the surface. It discovered one of the largest gold deposits in North America - an estimated 6.28-million ounces and another 3.65-million ounces on adjacent properties.

With gold prices rising after years of stagnation to more than $900 (U.S.) an ounce, investors are anxious to cash in on the potential profits as quickly as possible. However, the only feasible way to undertake the project is as an open-pit mine, the company says, and that will require displacing several hundred residents.

"Open-pit mines have an economy of scale," Osisko president Sean Roosen said in an interview. "An easy comparison is that underground mining costs between $65 and $150 a ton. … In open-pit mining it would be about $1.80 a ton. This deposit would not be economical as an underground mine."

One of the residents whose home has been expropriated is Robert Rousson, who has lived most of his 65 years in Malartic.

"We don't have a choice. Quebec mining law forces us to be expropriated. I was born in this house in 1944. I wanted so badly for it to stay in the family. It breaks my heart to have to leave," Mr. Rousson said during an interview in his modestly decorated living room, where he proudly displays photographs of his son Boris, who briefly played goaltender for the New York Rangers.

"I have social concerns that are far greater than my personal feelings. What is scary about this project is how huge it is. Right where you're sitting, an open-pit mine will be operating in the heart of the town. Every day for the next 10 years they will dynamite 120 tons of mineral, use 11 tons of cyanide as part of the daily gold-milling process. … The impact will be enormous."

The mine will eventually be two kilometres long, 800 meters wide and 380 metres deep - deep enough to bury the Eiffel Tower. The only thing separating the pit from the community will be a "green wall" 80 metres wide and 15 metres high.

Malartic was built in the 1930s during the gold-mining boom in the Abitibi region and once boasted six gold mines. But the last mine ceased production in the 1980s, the mill closed in 1997 and the Domtar forestry operation in 2006. Before Osisko arrived, close to half the town's residents were retired, unemployed or on welfare.

Osisko was well aware of the stakes involved in proposing an open-pit mine. Open-pit operations are to the mining sector what clear-cut logging has become to the forest industry: a public-relations nightmare.

The company held public meetings to inform residents about the project. It handed out free turkeys at Christmas and bought school supplies for the town's children. It paid for part of the Christmas advertising campaign to encourage people to buy at local stores rather than in nearby Val d'Or or Rouyn-Noranda.

It hired a lobbying firm headed by Patrice Ryan, the son of former Quebec Liberal leader Claude Ryan, and Isabelle Fontaine, president of the Parti Québécois youth wing.

For the past year, Osisko has been buying homes for an average of $81,000 plus 20 per cent of the appraised value and a $5,000 signing bonus. The company has also promised to rebuild all the public buildings slated for demolition. A state-of-the-art elementary school, using local materials and geothermal heating, will be completed this summer. A community centre, an adult education centre, daycare facility and low-income housing project are also under construction. A new golf course will be built nearby.

"At the end of the day, what we have always said is that we will give the community what they had and more," said Osisko vice-president and chief financial officer Bryan Coates. "It's not an easy thing, because you are relocating some homes that were built many years ago. People have attachments.… We are not just moving houses, we are moving memories."

The company estimates it will spend more than $100-million on the relocation plan, and acknowledged taking a "calculated risk" in executing it without knowing whether the $1-billion project would receive government approval.

In its report last week recommending approval, the environmental panel strongly criticized the way in which Osisko has proceeded and said the provincial government should have intervened to make sure the process is fair and residents are being properly informed.

"In the absence of any proper supervision by the authorities, an irreversible movement was undertaken even before the project received proper authorization, which raises questions from an ethical and human standpoint," the panel said. "This gave the impression to citizens that the promoter could do whatever he wanted before receiving the authorization."

Some Malartic residents formed a committee that expressed concerns about the use of cyanide in the gold-mining process, air and water pollution and the impact of daily blasting. The environmental panel's report lay to rest most of their concerns, but underscored the lack of government support in helping citizens cope with such a major disruption in their lives.

The committee has also raised questions about what will happen to the pit once the life of the mine ends in 10 years. The company says the pit will fill with water and become a lake.

"We aren't against the Osisko company. We are against the way that things are conducted even though there is nothing illegal about it," said Jacques Saucier, head of the residents committee. "We aren't against a company wanting to generate wealth. But why can't we be a model for building a partnership with the communities?"

Through a documentary being prepared by songwriter and filmmaker Richard Desjardins, social activists and environmentalists in Quebec will be taking aim at the close ties that have always existed between the provincial government and mining companies. Groups are also planning a major drive to demand a public debate on open-pit mining and whether other projects like the one proposed by Osisko should be given the green light.

At least four new open-pit mining projects are in the process of being evaluated, including an ore deposit near Amos, some 50 kilometres north of Malartic, that could be as much as three times the size of the Osisko mine.

Yves Sylvain remains one of the last holdouts on the Osisko project site, having refused to negotiate the sale of his home to the company.

"As a family, my wife and two children sat down with me and together we decided we wouldn't move until the company has received the official authorization to proceed. We are acting legally and no judge could question our actions," Mr. Sylvain said.

But he knows that it is only a matter of time before Premier Jean Charest's government issues the permit that will finalize the project, allowing Osisko to remain on schedule and pour its first gold bar in April of 2011. Mr. Sylvain, who as a child lived through a similar relocation at another open-pit mine in Thetford Mines, said he will fight to make sure it doesn't happen again any time soon.

"This battle is not finished," he said. "This project creates a precedent. There will be open-pit mines all along Highway 117 if we don't act now. I'm not going to stop fighting this."

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