Production in Ontario

An overview of the sector

Canada produces about 60 minerals and metals in roughly 200 mines and 6,500 sand and gravel pits and stone quarries, accounting for nearly C$44 billion in mineral production. Ontario houses 40 of these mine sites in operation, and is the largest Canadian producer of gold, PGMs, nickel and the second largest copper producer. Québec had the largest mineral production value with C$11.6 billion in 2020, followed closely by Ontario at C$10.7 billion. Along with British Columbia, the trio of provinces made up 68% of the country’s total mineral production.

The Canadian mining sector managed to stay nimble throughout the pandemic and rising commodity prices have helped the industry to thrive. Rising gold prices brought renewed enthusiasm to producers, with the precious metal peaking at US$2,076/oz in August 2020. Although gold suffered compared to other commodities in 2021, a yearly average price around US$1,800/oz means the industry is generating record free cash flow.

Wesdome Gold Mines ranked 10th on the TSX30 Top Performance list for 2021, and is the only mining company to feature in all three editions of the annual list of the best performers on the exchange. Year to date production at the Eagle River complex in Ontario reached 76,773 oz by Q3 2021, and the company’s production profile is set to grow after the successful restart of its Kiena mine in Québec. On October 14th, 2021, the company announced that the first 5,511 oz Au had been mined at Kiena, with the project set to ramp up in 2022. "Wesdome Gold Mines is on a growth path to becoming an all-Canadian mid-tier producer. The potential for resource and reserve expansion at Kiena is tremendous," said Duncan Middlemiss, president and CEO, Wesdome Gold Mines.

After over thirty years in continuous operation, Barrick’s Hemlo has produced over 21 million oz Au. Located 350 km east of Thunder Bay, the project was severely impacted due to Covid-19 and the decision was made to close the pit. However, Barrick continues to drill to increase reserves and resources. “As we saw in Australia after the turn of the century, new waves of exploration can transform regions, but Canada has been lacking this. Canadian schools produce terrific engineers and geologists, but many of them leave, and Canada’s domestic mining industry is left to be run by promoters. However, I have no doubt that Canada has the potential to still deliver significant discoveries,” said Mark Bristow, president and CEO, Barrick Gold.

Newmont's Musselwhite also faced pandemic challenges, and the mine was put into care and maintenance until the health and safety of workers and communities could be guaranteed. Electric technology is being implemented at the company’s Borden mine, with the aim to replicate the technology elsewhere. Newmont’s Porcupine gold mines complex continues to be developed.

“Newmont will always remain a gold miner, but copper and gold produced together will go hand in hand as a very important metal for decarbonization, along with a very important metal in terms of a store of wealth that improves lives.”

Tom Palmer, President and CEO, Newmont

Tom Palmer, president and CEO of Newmont said: “Hollinger is nearing the end of its mine life, but we are just starting to bring on another nearby open pit and have committed to installing infrastructure to de-water the site and then do a layback which will extend the life of Porcupine well beyond this decade.”

Alamos Gold achieved its best hole drilled at Island Gold in June 2021. Combined with the development of the Lynn Lake project, Alamos is aiming to ramp up its Canadian production base to around 600,000 oz/y Au by 2025— making Alamos one of the largest gold producers in the country. “It would mean that 80% of our production would be coming out of Canada, as opposed to internationally,” said John McCluskey, president and CEO of Alamos Gold.

The company’s Young-Davidson project, located 60 km west of Kirkland Lake, is one of Canada’s largest underground mines and is projected to have strong free cash flow growth moving forward.

New Gold's gold-silver Rainy River mine in Ontario is transitioning from open-pit to underground and is focused on optimization, cash flow and profit. “We have invested a lot of time and resources in the last few years with a focus on waste stripping to optimize the mine plan and provide better access to the ore. Between 2022 and 2026, we expect better access to open-pit ore until depletion,” said Renaud Adams, president & CEO, New Gold Inc

With rising demands in environmental and social performance, relentless global demand, yet decreasing resource quality, the Ontario mining sector is ramping up the development for transition metals. Indispensable for the shift towards electrification and renewables, copper has been the show-stopper, with prices moving from an average of US$2.81/lb in 2020, to an average of US$4.24/lb in 2021. Ontario produced 123,630 mt of copper in 2020, but the vast majority of copper produced by Canadian companies is mined abroad. Canada’s First Quantum attained the highest global increase in copper production, with a reported 10.4% growth. A similar outlook for transition metals such as lithium, cobalt, graphite and nickel is expected given rising demand.

Ontario has attracted the attention of foreign majors and mid-tiers looking to expand in North America. Melbourne-based BHP, the world’s largest mining company by market capitalization, moved its nickel and copper HQ to Toronto in 2021. Another Australian mining producer, Evolution Mining, acquired Newmont Goldcorp’s Red Lake gold complex in November 2019. Since then, the company has focused on consolidating the district with the C$342 million acquisition of Battle North in Q2 2021. Evolution Mining has added milling capacity for Red Lake and is planning to mill around 2 million mt to produce about 350,000 oz/y Au, revealed Jake Klein, executive chairman of Evolution Mining.

“We aim to restore the asset to a premier Canadian gold mine,” said Klein, adding: “The future we are planning for Red Lake is a medium grade mine of around 7 g/mt, which is still a high grade by today’s standards.”

Vale’s Creighton mine continues breaking records, not only by retaining first place as the deepest nickel mine in Canada, but also by having hosted the deepest underground concert at 7,200 feet below surface for International Music Day.

Looking to replenish nickel reserves in Sudbury, majors continue investing in Ontario. Vale’s copper production reached 69,200 mt in Q3 21, which is 5.7% lower compared to Q2 21, predominantly due to challenges with about 2,450 miners going on strike in Sudbury last summer for several weeks. Vale continues to focus on the area, working with Glencore to develop the Nickel Rim South project to access ore at Vale's Victor mine. The Nickel Rim South mine is the largest operation in Sudbury, with nickel and copper as its main metals.

Following month-long discussions, Wyloo Metals came out the winning bidder against BHP in December 2021, for Noront at C$616.9 million. Wyloo will provide a C$29.4 million loan to cover the C$17.8 million termination fee Noront owes to BHP. The value of having enough resources to supply the increasing demand for battery metals and having a source of nickel in North America is being prioritized.

Ontario’s only diamond project, the high-value-per-carat Victor mine, officially closed in 2019, taking the province off the precious stone map, further solidifying the Northwest Territories as the leading diamond production province in Canada. Coal production has continued to trend down in all provinces, with about half of the country’s production being exported, predominantly to Asia.

The Canadian government aims to eliminate energy generated by coal by 2030, but will continue to allow for it to be used in metallurgical processes. Following a G7 agreement in May 2021, Ottawa has halted the mining of thermal coal by new projects because of the environmental impact. Ontario was recognized as the first major jurisdiction to enforce a coal phase-out strategy.

Image courtesy of New Gold