They may be the new kids on the block in the Timmins mining community, but Lake Shore Gold foresees an extremely prosperous future in the city.
“We see ourselves as being able to grow to be much larger,” Tony Makuch, CEO of Lake Shore Gold, said in an interview on Friday, “and to go from a junior producer to an intermediate to maybe a more senior producer” that is still producing gold in Timmins “and still being profitable even beyond the next five years.”
At a luncheon at the Dante Club on Friday afternoon, Makuch provided an update on the Lake Shore Gold operations at the Timmins West mining complex by Highway 101 west, and the Bell Creek mine in Porcupine.
As one of the newest gold mining operation in Timmins, Lake Shore Gold has produced almost 650,000 ounces of gold since going into full operation back in 2011. They hit a record last year, producing 185,000 ounces in 2014 alone.
Despite concern about the global price of gold, Makuch is confident that the company's operation will continue to be financially viable.
With cash costs last year below $600 an ounce, the company sits in the lower one-third of gold producers in the world.
“Right now I would say that we have a lot of opportunity,” he explained. “There's a lot of talk about the price of gold being down, but in Canadian dollar terms, the price of gold is actually pretty strong. There's a great opportunity right now with where the price of gold is and what it does in terms of advancing our projects.”
The economic viability of the company is also good news for workforce in the city. Currently, the company employs 525 employees in Timmins and approximately 230 additional contractors with its operations.
Fred Gibbons, the chairman of the Timmins Economic Development Corporation, said the company's impact on the sustainability of the workforce in Timmins cannot be overstated.
“For every job in the mining sector, three-and-a-half to four other jobs are created in the periphery, whether that be mining supply and service companies or people employed in the school system to educate those next mining professionals,” he said. “It has a tremendous impact on our community. The last set of stats I saw indicated there are approximately 8,000 people directly employed in the mining industry here in Timmins, so in a population of 45,000 that's significant.”
Gibbons also said that the company adds a layer of diversification to the mining sector in Timmins and helps create job security. As the newest member on the mining scene, and operating at a lower level of production than Glencore and Goldcorp, the company is able to offer different employment options and has created new jobs that will be viable for at least the next five years.
“We know that the day the mines open there's going to be a day they close, as well, so if all of our mines were top-tier producers, as those mines begin to close, it has an immediately huge impact on the employment situation in the community,” he explained. “So the fact that we have mid-tier and juniors in the community,it offers for sustainability long-term.”
While Lake Shore Gold ran into problems in 2013 that forced the company to cut 60 jobs, it has since been able to repay the $70-million loan required to complete its expansion and construction program at the Bell Creek Mill and growing development at the Bell Creek Mine.
That mill is now generating 3,500 tonnes of ore per day and Makuch believes that further expansion to 5,500 tonnes per day is possible within the next few years. They have also been able to hire back the jobs that were lost.
“We have the ability to grow our production at our mill plant by another 40 % and we're going to work toward achieving that,” he said. “Plus, we see ourselves having the ability to grow even further from the deposits we talked about now into a much larger company.”
Lake Shore Gold is also working to explore new mineral deposits previously untapped by the other mining companies in the city.
The 144 Gap Zone, for example, was a major discovery made by the company last October.
Located at the Timmins West mine complex, the site is an massive 400 metres long and 400 metres down, and will be ready for mining by 2017, Makuch estimates.
While the company is perhaps most praised for its exploration into uncharted territories, they have also been able to reevaluate projects undertaken by other companies, as well.
For example, Lake Shore Gold has been able to expand local operations through their recent acquisiton of Temex Resources, a junior mining company that has been working historic mining properties in the East End of Timmins.
Gibbons explained that their ability to expand in this way has contributed greatly to the economy in Timmins.
“Working a new resource, that's good, but Lakeshore is currently mining a grade of ore that is lower than what former producers, in relation to the Temex property, left in the ground because at that time it didn't seem to be economical — but it is economical to go back and mine that today,” he said.
While they have plans for further expansion in the future, Lake Shore Gold is currently working to ensure they have the capital required to fund these new ventures.
“What we have to do is be able to discover new deposits and then we have to be a low-cost and efficient producer in order to turn those deposits into ore that can be mined and profitable,” Makuch said. “We want to really focus on maintaining a strong balance sheet and eliminating our debt before we can reinvest in a lot of other projects.”
He also looks forward to the future role that the company can play in the youth employment sector in the city. With new projects on the horizon, and a strong desire on behalf of the city of Timmins to retain their youth, Makuch is positive that there will be possibilities for growth in their workforce for several years to come.
“The reality is we're a growing company, we want to grow but we also want to bring new people into the business,” he said. “The next people to train and develop to continue to run the mines are a crucial part of what we're trying to do and there's a lot of opportunity for people in our industry.”