By Brent Reaney In Yellowknife, you might have heard, the gold is paved with streets. And the Yukon was built on the stuff. Now Nunavut has its own gold mine (Meadowbank, pictured). As the North’s dominant metal continues its climb to over $1,100 per ounce, the excitement surrounding it is growing. If the good times continue to roll, every deserted shaft and forgotten drill hole will be worth a another look.

In the late 1890s, the discovery of gold brought 40,000 people up the Klondike River to a booming Dawson City, in search of riches. Twelve million ounces of gold were ultimately collected from river and stream beds, but try as those rugged souls might, nobody ever found the source of the valuable nuggets. Today, driven by an independent prospector’s recent find and a gold price of more than $1,100 per ounce, this geological mystery has brought a new gold rush to Dawson. About 30 companies are currently sampling and drilling land in the area.

“It’s the whole treasure hunt aspect that appeals to me,” says Rob McLeod, vice-president of exploration for Underworld Resources, the big winner in the Dawson revival (it was recently bought by Kinross Gold, one of Canada’s largest gold producers). “We know that the resources we’ve found to date are going to get bigger, but one of the more exciting aspects is what else are we going to find in the Dawson area?”

That optimism caused a stir at the Mineral Exploration Roundup in Vancouver in January, and can be found across the territories, from Newmont Mining’s Hope Bay project near Cambridge Bay, Nunavut to the rebirth of a couple of small, old projects – Tom and Ptarmigan – near Yellowknife. In a place where it’s more expensive to do everything from explore to construct, high prices have helped bring one mine – Meadowbank – into production and others to the verge. It’s also sustaining a handful of promising exploration plays. And if the price of gold remains anywhere near where it is, the party might just go on for a while.

From the Yukon’s Klondike to Yellowknife’s Giant and Con Mines, gold has a long Northern history. That makes sense, says Mike Vaydik, general manager of the NWT & Nunavut Chamber of Mines. “The big thing about gold is that you don’t have to ship a lot of product out,” he says. “Your challenge is to get your materials and your fuel into a property, but once you do that, it’s pretty easy to ship a gold brick out.” In a place largely lacking the infrastructure needed to move large quantities by boat or rail, this is a significant advantage over substances such as iron ore, lead or zinc.

The price of gold has been climbing steadily over the last five years, about 15 per cent annually. The $1,100-an-ounce gold was selling for in February is more than four times what it was fetching less than 10 years ago. Many cite the increased use of gold as a hedge against a foundering American dollar as part of the reason. But greater consumption of jewellery by swelling middle classes in developing nations such as India has also played a role.

For every analyst saying the price will continue on its way up, another seems to feel it has peaked. But one thing’s for sure: At today’s prices, mining gold is good business.

That wasn’t the case in January of 2001 when Tyhee Development Corp. bought the rights to the old Discovery mine, a 20-minute flight from Yellowknife. Back then, gold was within weeks of hitting $256 an ounce – its modern-day low. With well-placed faith, the Tyhee team saw an investment opportunity. “(At first) we couldn’t really do much but explain to our shareholders why we weren’t really raving lunatics,” says president and CEO David Webb. “We were very fortunate. The market worked to our advantage.”

Discovery mine was a rich operation that produced one million ounces of gold from one million tonnes of ore. But Tyhee is actually proposing to mine an area about 2.2 kilometres south of the old mine. In the 1960s, this deposit was left alone because of higher mining costs and a low, government-regulated gold price of $35 an ounce. Today, Webb says modern methods and machines will bring Tyhee’s cost down to $3 per tonne of ore. At roughly three grams of gold per tonne, “that’s a hundred-dollar rock and if you can mine it at $3 a tonne…,” says Webb. “There’s a lot of that in the Northwest Territories that has never been looked at. Tyhee is looking at a project that was yesterday’s waste but is today’s ore.”

Tyhee expects to file what should be its final regulatory documents this summer. If all goes well, the company could be in production by 2013. Webb says the $150-million mine would employ about 200 people and twice that many during construction.

As Tyhee prepares to navigate its final regulatory hoops, Nunavut’s Meadowbank mine poured its first brick in February. The North’s only operating gold mine, Meadowbank – owned by Toronto-based Agnico-Eagle Mines – sits just 70 kilometres North of Baker Lake. In a full-circle story, Agnico-Eagle actually owned the property in the early ’90s, but sold it because it didn’t fit the company’s priorities at the time.

Then in 2007, Agnico-Eagle re-acquired Meadowbank by buying Cumberland Resources. This time, the thinking was to leverage the labour and expertise Agnico-Eagle had in the Abitibi region of Northwest Quebec, where it operates three gold mines, including its flagship LaRonde operation. That strategy has paid off, with roughly 60 per cent of Meadowbank’s staff, including much-needed technical expertise, coming from the area.

But the plan now is to increase the number of local workers as things progress. About a third of the mine’s 470 full-time employees are Nunavut hires. These jobs have had a huge impact in Baker Lake, where unemployment has gone from 40 per cent to around 4.5 per cent. Though most of the Nunavut employees are on the lower end of the pay scale and have to be trained, “the long-term future is to get them into management, electrical, mechanical,” says Eberhard Scherkus, Agnico-Eagle’s president and CEO. “Those are portable skills that can move from one industry to the next.”

Not that Agnico-Eagle is thinking of going anywhere. The company is running seven drills and spending about $11-million on exploration this season hoping to lengthen the mine’s 10-year life. The company is also a shareholder in Comaplex Minerals and would like to buy that company’s promising Meliadine project just outside of Rankin Inlet.

“We view the Canadian Arctic as very prospective hunting grounds and it fits our strategy that whenever we go into a region, we stay there for a very long time,” says Scherkus. “We sort of think the early bird gets the worm and we now have Arctic construction expertise and we now have infrastructure there and we think that bodes well for the future for us and for Nunavut in general.”

And Agnico-Eagle isn’t the only big player moving into the Nunavut neighbourhood. Newmont Mining – a giant in the field – bought Miramar Mining’s Hope Bay assets in Nunavut in 2008. Assuming the price of gold remains high, a handful of other smaller companies are also expected to continue quietly moving along the exploration-production continuum. One of them is Committee Bay Resources. With the south end of Committee Bay’s greenstone belt just 100 kilometres northeast of Agnico-Eagle’s Meadowbank, the two companies are practically neighbours.

Back in 1992, Committee Bay’s president and CEO, John Williamson, was in a helicopter as part of the first reconnaissance flight over what would eventually become the company’s project. Today, Williamson has watched Agnico-Eagle invest more than $700-million to construct Meadowbank. “That gave me encouragement that this was a worthwhile place to be exploring,” he says. “With another Canadian major company working in our area, it gives us a natural end selling point – to a Canadian company that’s interested in the North.”

Williamson wants to keep exploring in hopes of turning the 750,000 indicated ounces of gold at Committee Bay’s Three Bluffs project into a more saleable two million.

And last fall, Anglo-Gold Ashanti entered into a deal with Commander Resources that could see the African mining giant own 70 per cent of Commander’s Baffin Island Gold Project when the time comes to write a feasibility study.

Aside from new mines opening as investment flows North, at a certain price even the least-likely things could happen. “There are even scenarios where at some point, somebody may re-look at Con, which ran for 65 years and closed,” says the NWT and Nunavut Chamber of Mines’ Vaydik. “They’ve basically disabled the mining potential there, but who knows? At some point in the future, if gold is $2,000 an ounce... They know there’s gold there, but you’ve got to get a handle on the cost.”

At least one junior is getting into the mine-reopening game, previous experience be darned. The company is Trivello Energy Corporation. In February, the previously oil-and-gas focused outfit purchased the old Tom Gold Project a few minutes’ drive from Yellowknife. “Our reasoning for going into gold is that we believe the list going forward is on the gold-and-silver side as opposed to on the oil-and-gas side,” says Arndt Roehlig, Trivello’s president, adding the company is in the early stages of deciding how best to expand its newly purchased resource. “I just don’t see oil going to $300 a barrel any time soon because as the price goes up, people buy less of it.”

So is the North about to see a return to the days when gold ruled all, and towns like Yellowknife and Dawson City were built around it? The short answer is, not likely. Mining town sites are a thing of the past, and, thanks largely to the path beaten and infrastructure built by early gold-seekers, the North has diversified into diamonds and copper, with iron ore and rare earths on the horizon. And any new mines are more likely to use the two-weeks in, two-weeks out rotation that has been perfected by the diamond mines.

Even with fond memories of growing up playing pool and sipping milkshakes at Yellowknife’s gold mines, that’s fine with Vaydik. “My hope is that we won’t ever be a single-commodity place again,” he says. “And that we’ll have a variety of mining products to offer to the world. That will tend to flatten out the cyclical nature of the business.”