Rainy River Resources says area has great promise

By Ken Johnston
Editor

Rainy River Resources held an open house last Wednesday in Rainy River to begin its Environmental Assessment process to open a mine northeast of Rainy River at Blackhawk, Ontario.
RR Res. Vice President and Chief Operating Officer, Mike Mutchler was on hand and said, “This is the beginning of a one to two year process. We have the draft terms of reference here today.”
Optimistic that the Env. Assess. process will go well, the next stage will then be permitting and Mutchler hopes that in 2014 they can begin construction of a mine at Blackhawk.
Until last week Mutchler said they were looking at a 13 year life span for a gold mine at the site. “However, we had a really positive update last week. We had a press release announcing another million ounces to the mine. That adds another two years to the mine’s life.”
Mutchler did note that as the mining occurs more minerals may be discovered, extending the life of it even further.
The Blackhawk site is not new to the news. In the 1990s Nuinsco held several press conferences announcing positive drilling results and plans to build a mine. They had a viable find at Cameron Lake, but at the time were hoping to find a big gold vein near Blackhawk before constructing processing facilities, but no mine ever materialized.
Mutchler said last week, “Nuinsco was busy constructing a decline (a tunnel on an angle into the earth) when they got distracted. They found nickel and zinc and refocused on that. Little did they know, had they gone another 100 metres they would have hit the gold vein we found!”
Like Nuinsco, Rainy River Resources had to contend with a very thick over burden. In the 1990s drilling through many metres of overburden just to look for minerals was slow and expensive. At that time a aerial magnetic survey of the site was conducted. “That is actually what attracted us to the project,” said Mutchler.
Their interest triggered what he calls a “High tech version of prospecting.”
“In the early gold rush days prospectors would pan for gold at the mouth of a stream and then work their way back upstream in hopes of finding the big ore body. We have been doing much the same with the magnetic data from the aerial study.”
They started at one point and drilled their way “upstream” but the upstream is basically following the path of the glaciers during the ice age that moved and deposited minerals.
Construction of the mine will require removing vast amounts of the deep overburden. However, Mutchler said that the high clay content is excellent for them to use in constructing tailings ponds and pads for heavy trucks.
He said that at this time they are anticipating 8 million ounces of gold will be mined. Of that 7 million will be open pit and 1 million underground.
Rainy River Resources anticipates hiring approx. 600 people to construct the mine and then 600 to work the mine itself. “We are hoping to see about 1/3 of that workforce come from locals,” said Mutchler. They also hope that people that have moved away from the area to work will return to take jobs.
A new three phase power line will be brought in 18 km from the main line. “That is about $12 million, relatively a small amount of the $700 million project,” said Mutchler. “Having infrastructure close by makes this project even more attractive.”
The price of gold on the world market also is a factor. Like the oil tar sands projects out west, the price needs to be high for this gold to be viable to mine. Mutchler said that they have been using a long term average price of about $1,200.00 per ounce when planning ahead. Even though that price is much higher currently (over $1,600 per ounce US on Monday).
So what if the price drops dramatically? Mutchler said that, “If the price were below $1,000 per ounce people would not be looking at projects like this. However, at $800-900 per ounce we would struggle to be profitable. The cost to produce an ounce is about $600. If it goes below that we would be in trouble, but so would many others.” If it went that low, then many mines would shut down which should then drive the prices back up as supply drops. Mutchler said that the Rainy River Project is in about the middle of the pack when it comes to costs of production. That means it could stay on line longer than mines with higher production costs.
Mutchler said that the job force here is also another attractive factor for the company. “Loggers have many of the same skill sets we are looking for.”
Contrary to rumors flying around Rainy River last week that Rainy River Resources had purchased the former Globeco building for a mining training school and the former CNR bunkhouse to house the students, Mutchler said, “I am not aware of any such purchases.” And until the Env. Assessment process is complete they won’t begin hiring construction workers. “We need that approval and our permits before we can begin construction.”
Mutchler said that he feels the project is a “World Class Deposit” and last year the company had as many as 13 drills going making it one of “the most active gold exploration projects in Canada.”
An open house was also held in Barwick last week to share the same information.
The Env. Assessment includes:
•A description of the proposed project
•A description of the existing environment conditions (baseline studies)
•Plans to involve and seek feedback from Aboriginal, community, neighbour and other interested stakeholders
•Consideration of project alternatives, including an evaluation of their advantages and disadvantages
•Identification of environmental effects (positive or negative)
•Proposed measures to mitigate and manage identified environmental effects
•Recommendations for follow-up monitoring