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Meadowbank muscles its way to the front of the line

Race is on to fast-track Nunavut's first working gold mine

JIM BELL

It's fear, the most primal human emotion, that gives gold its value.

A Baker Lake man at work in Cumberland Resources' exploration camp at Meadowbank, about 70 km north of Baker. Cumberland is now drilling holes every 25 metres to bring up rock samples proving that the site contains gold. This man is preparing and bagging samples for shipment to a laboratory. (PHOTO COURTESY OF CUMBERLAND RESOURCES)

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And for the past two years, the world has been full of fear: fear of war, fear of global terrorism, fear for the future of the slumping global economy.

All that fear has been good for companies that either sell gold or want to sell gold.

One of them is Cumberland Resources Ltd., a small Vancouver-based firm that owns the right to develop the immense storehouse of gold — nearly four million ounces worth — held within the Meadowbank site, about 70 km north of Baker Lake.

Though the people of Baker Lake live a long way from New York, London, Tokyo, Frankfurt and other financial centres, it's decisions made there that will lead directly to the digging of three huge open pits at Meadowbank.

Along with that will come jobs, money, contracts — and a long list of complicated environmental issues that federal and territorial regulators will decide in less than one year.

Fearful investors around the world have been converting their wealth into gold recently, creating new demand for the yellow metal and pushing prices to ever-higher levels. On world markets this week, gold sold for slightly more than $364 an ounce.

Cumberland believes it can produce gold at Meadowbank for only $160 an ounce.

That $200 price difference means that, for Cumberland, now is the time to drive forward with a plan for Meadowbank, to extract, crush and process huge amounts of rock to produce gold bars for sale in world markets.

So after 14 years and $30 million worth spent looking for minerals, Cumberland is ready.

But it is only a small junior company, with only about $20 million in cash on hand. To find the $200 million it will need to pay for construction of a mine, mill and smelter at the Meadowbank site, it will have to go to global financial markets to find investors.

"Right now, this is the time to strike," says Craig Goodings, a Vancouver consultant working with Cumberland on the Meadowbank project.

"With the price of gold right now, and our operations costing us about 160 bucks an ounce, and gold going for about 360, you're talking about a margin of $200 an ounce. The investor's love those kinds of numbers."

Now that they smell big profits for their shareholders looming just around the corner, Cumberland has muscled its way to the front of the line formed by a number of small companies hoping to develop Nunavut's first new working mine.

Under the plan, filed recently with regulators, Cumberland would get all required permits and licences by March 2004, start laying out a full airstrip and tank farm next summer, begin mine construction in 2005, and see its first gold bars shipped out of Meadowbank on Boeing 737 jets by the end of 2006.

Suddenly, it's gold production that may lead Nunavut's government-dependent economy into an industrial future. For the people of Baker Lake, a mine is a promise of jobs and training for the unemployed, a new future for children, and a host of spin-off business opportunities.

Some Baker Lake residents are already making money by selling their labour or services to Cumberland's exploration camp, where the company has been test-drilling for gold since 1995. Of the 45 people working at the Meadowbank exploration camp this summer, 21 are from Baker Lake and other Kivalliq communities.

Peter Tapatai, a Baker Lake businessman, has a contract to transport supplies to Meadowbank using vehicles equipped with special low-pressure "tundra tires," eliminating the need to put in an expensive winter road.

But for other residents, the mine raises numerous environmental and public health issues, despite its economic benefits.

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"I think the mine can be very good for Baker Lake, but we also have to look at the problems it will bring, and if we don't look at those problems right now, we're going to get caught with a lot of problems on our hands," says Boris Kotelewetz, a hamlet councillor in Baker Lake.

The Baker Lake hamlet council is already feeling the pressure, Kotelewetz says. In June they gave Cumberland conditional permission to use a large lot near the lake. Eventually, Cumberland will use the lot to store quantities of ammonium nitrate, cyanide, and other materials.

Ammonium nitrate is a potentially dangerous explosive, often favoured by terrorists for use in cheap, homemade car bombs. It's the stuff that Timothy McVey used to blow up the Oklahoma City federal building in 1995. Mining companies use ammonium nitrate, combined with other substances, as an explosive in open-pit mines.

The cyanide will be used in a chemical process at the mill to leach gold out of powdered, pulverized rock. It's also a deadly poison. One teaspoonful of a two-per-cent cyanide solution can kill an adult human.

"When the boat comes in they're planning on storing ammonium nitrate, cyanide and other goods that will sit here until it can be moved from Baker Lake to the mine site," Kotelewetz says.

"But, you know, when people see dollar signs in front of their eyes, the majority don't understand. There is quite a number of people here who are working for Cumberland and so they see any criticism as a threat to the security of their jobs. The don't see that as someone acting in the best interests of their community."

Cumberland will haul its goods through a residential area of Baker Lake, another idea that Kotelewetz doesn't feel comfortable with.

Craig Goodings, on the other hand, says Cumberland has handled the entire project "by the book."

"It's a great community. We've been working long and hard and we're in a partnership with Baker Lake," Goodings says. "There isn't a lot of issues here. The community wants it and there isn't a lot of environmental red flags."

Goodings says, for example that both traditional knowledge and standard scientific research show that the Kivalliq's big caribou herds bypass the area on annual migrations to calving grounds further north.

He points to numerous meetings and consultations that Cumberland has conducted in Baker Lake with elders and other groups, and the extensive environmental and social research it has already done.

"We've got everybody happy before we've even started," Goodings says.

For that reason, Cumberland has set an aggressive schedule that would see it get all required licences and permits by May 2004.

That may be the toughest part of the plan. At least 18 organizations, management boards, and government departments will get to grab a piece of the Meadowbank proposal.

And in Baker Lake, there are people who are more skeptical than happy. Kotelewetz says he represents a minority of Baker Lake residents who, although they're not against the mine, still have a lot of questions about how public health and the environment will be protected.

"I know there are a great number of people who do understand what the consequences can be like and they are concerned about this, and justifiably so," Kotelewetz says.

"But they're just overwhelmed by the numbers that don't. The people who are now working for Cumberland, it's like a small army that go around saying don't listen to those guys, they're just trying to prevent development."

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