Quebec Gold Mines

This article was originally published on Gold Investing News on August 16, 2010.

By Dave Brown —Exclusive to Gold Investing News

Many geologists and mining experts consider the Canadian province of Québec to be an exceptional region from the standpoint of the potential wealth of its tremendous area of yet unexplored land.  In excess of 90 percent of the province’s substratum is made up of Precambrian rock, a geological formation well known for its deposits of gold, iron, copper and nickel.  Quebec hosts approximately 30 mines, 158 exploration projects and 15 primary processing industries, spanning a broad range of over 30 minerals of which the leading ones are gold, iron, titanium, asbestos, copper, zinc and silver. Since the Québec mining industry took off in the 1920′s, it has maintained steady growth and scarcely 40 percent of Québec’s mineral potential is now known.  Regional mining booms were first experienced in the Abitibi-Témiscamingue area, with exploration subsequently carried out in the Matagami, Chibougamau, Saguenay Lac-Saint-Jean, Grand-Nord and Côte-Nord regions.

Overall Investment Climate

In the most recent Fraser Institute’s Survey of Mining Companies: 2010 Mid-Year Update, Quebec has shown a slight decline from the leading position it has enjoyed for three years in a row to third best place in the world for mining investment. The survey is based on the opinions of mining executives representing 429 mineral exploration and development companies on the investment climate of 51 jurisdictions around the world and was conducted following the global recovery in commodity prices and the introduction of new regulatory hurdles and taxation in many jurisdictions.   Miners’ confidence in the province has been marginally shaken by increases in mining taxes that were announced without consultation in Quebec’s spring budget and appears to reflect some concerns about Bill 79, a review of the province’s mining law, and could be seen as a blow to its reputation for offering stable government policies.

Gold Mining and Development

Agnico-Eagle (TSX:AEM) operates three mines in Quebec, as well as one mine in the Northwest Territories, Finland and Mexico. The company expects to produce between 1.0 million and 1.1 million ounces of gold in 2010.  Its operations in Quebec include the flagship Laronde mine in northwestern Quebec producing more than 4 million ounces of gold since 1988; the nearby Goldex mine thought to be one of the lowest cost underground operations in the gold industry on a per tonne basis; and the small Lapa underground operation with gold grades twice as rich as the company’s average.  Agnico-Eagle has developed five new mines in three years, effectively tripling gold production, and aims to continue growing output primarily through internal expansion projects and ongoing exploration activities.

IAMGOLD (TSX:IMG), the Canadian mid-tier mining and exploration company, operates the Doyon Division consisting of the Doyon and Mouska underground gold mines, located in northwestern Québec. The Doyon Division covers an area of 2,258 hectares and is situated within the prolific Cadillac-Bousquet gold belt in the Abitibi region.  The Doyon mining site is adjacent to the company’s Westwood exploration project covering 1,925 hectares. The company also owns the Niobec underground niobium mine located twenty five kilometres northwest of Chicoutimi.  This property is currently North America’s only source of pyrochlore, the primary niobium ore and one of only three major producers of niobium in the world, producing approximately 7 percent of global supply.  This metal is used by steel and specialty metals manufacturers as an alloy to enhance the physical, mechanical, chemical and thermal properties of products used in the pipeline, construction, aeronautical and automotive industries.  The unique exposure might be of interest to some investors, particularly in light of an interview with the Financial Post earlier this month when the founder of Barrick Gold Corp. (TSX: BAR), the world’s biggest gold miner said, “the future of gold mining likely lies in mixed-metal mines.”

Osisko Mining Corporation (TSX:OSK) is a development-stage gold mining company based in Montreal. Since August 19, 2009, Osisko has been building a gold mine in the Abitibi mining district of Quebec.  Commercial production for this Canadian Malartic mine is scheduled for the second quarter 2011.

Richmont Mines Inc. (TSX:RIC) operates the Beaufor Mine, as well as a mine in Ontario and multiple joint venture and exploration projects at different stages of exploration, including Quebec properties Wasamac and Francoeur Project and the Newfoundland project at Valentine Lake.  On Thursday, the company’s joint venture Leprechaun project in Ontario reported reaching an important milestone, with results from initial metallurgical test work on mineralized core samples demonstrating recoveries exceeding 90 percent. This is of significance as a considerable unknown risk factor facing an early mining development project is the recovery rate.

Century Mining Corporation (TSXV:CMC) is a junior gold producer holding strategic land positions in Canada, United States and Peru.  The company has eight properties consisting of 89 claims and seven mining leases covering an area of 2,151 hectares coincident with the Sigma-Lamaque Limited Partnership asset acquisition in the Val-d’Or area.  The Lamaque mining operation has 1.14 million ounces of proven gold reserves and the company has estimated the average cash cost from between $450 to $500 per ounce with the expectation of eleven years of production from the near-production mine.

Aurizon Mines Ltd. (TSX:ARZ)is a gold producer with operations and development activities in the Abitibi region with the Casa Berardi gold mine, the Joanna gold project and the Kipawa early stage gold and rare earth exploration project.  The company forecasts gold production for this year to be approximately 145,000 – 155,000 gold ounces a slight decrease in gold production attributable to lower average gold grades.  Last month, the company agreed to sign an option and joint venture agreement with Niogold Mining Corporation (TSXV:NOX)on the Marban Block property, located in the Malartic gold camp.

NioGold Mining Corporation is a gold exploration company with land holdings in Northern Quebec’s most prominent gold mining region adjacent to 8 producing gold mines.  The company plans continued aggressive drilling on its land holdings to expand the current resources defined as 600,000 ounces of Indicated gold resources in addition to Inferred resources of 360,000 ounces gold.

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