Since 1915, the Northern Miner weekly newspaper has chronicled Canada’s globally significant mining sector.
As a rookie scuba diver and recent explorer of Australia’s Great Barrier Reef, James Gill, 40, is already dreaming of looking for hidden treasures in shipwrecks deep beneath the Caribbean.
But even if the president of Aur Resources (TSE) fulfills that ambition, it is unlikely he will find anything to rival the gem of a massive sulphide deposit his company uncovered on a group of waterlogged mining claims east of Val d’Or, Que., earlier this year.
The Louvicourt Twp. discovery is already regarded as the largest of its kind since the Texas Gulf find near Timmins, Ont., in 1964 and its impact will probably be felt well into the 21st century. 0000,1000 It has made Gill a household name in mining circles and The Northern Miner’s choice as Mining Man of the Year.
The significance of the Louvicourt Twp. discovery on claims owned by Aur and Societe Miniere Louvem (TSE) was immediately indicated by the trading activity that followed its announcement and the decision by three of North America’s biggest resource companies to invest in the Val d’Or partners. Teck Corp. (TSE) and Cominco Ltd. (TSE) now have 21% of Aur. Noranda Inc. (TSE), with an option to take control, has a 14% stake in Louvem.
Before the drill results were announced on June 12, Aur shares were trading in the $2.70 range while Louvem shares were languishing at 52 cents . As more results have been released from Louvicourt Twp., shares of Aur and Louvem have risen to $14 and $10 respectively. Louvem’s parent company St. Genevieve Resources (TSE) also shot up to $3.25 from 90 cents.
Potential reserves at Louvicourt now stand at 36 million tons of grade 3.11% copper, 1.34% zinc, 0.55 oz silver per ton and 0.025 oz gold, and many experts believe it will get much bigger.
As a rule, most geologists don’t receive the kind of attention that has been showered on Gill since the initial intersections were announced. How many people know, for example, that it was Dr Ralph Roberts who laid the groundwork that led to the huge gold finds along Nevada’s Carlin trend?
Few geologists, it seems, are equipped with both the mine finding expertise and the financial know-how to make an important discovery while running a successful resource company. As indicated by the $50 million in Aur’s treasury, Gill is as comfortable in the company of bankers as he is in an assaying office.
Even if potential reserves do not increase, analysts agree that the Louvicourt deposit would still be regarded as the Canadian base metals discovery of the decade. Many, however, are predicting that surface drilling may eventually outline another 40 million tons.
The Louvicourt deposit has offered a much-needed shot in the arm to an industry which is threatened with fast-diminishing copper reserves. It was found in a mining camp that is already benefitting from renewed exploration and the jobs created by such discoveries. While lawsuits brought about by Aur, Louvem and St. Genevieve against one another have cast a shadow of doubt on who will eventually own the Louvicourt massive sulphide deposit, there is no dispute about who found it.
Guided by existing geological models and a methodical exploration strategy, Gill and an exploration team consisting of Howard Stockford, Don Bubar and George Mannard managed to turn up a massive sulphide deposit in a region where base metal exploration had gone out of fashion. Almost everyone else in Val d’Or was looking for gold.
But the fact that it was a team led by Gill which made the discovery should come as no surprise to those who have followed his career in both academic and mining circles.
A native of West Montreal, Gill already had geology in his blood before he elected to study the science at McGill University. His grandfather, James Edward Gill, is renowned for defining the structural provinces of the Canadian Shield. The younger Gill used his grandfather’s office at McGill while studying for a degree in economic geology. He went on to complete a doctorate at Carleton University in Ottawa in 1977.
In hindsight, it is interesting to note that he wrote his doctoral thesis on Texas Gulf’s Hood River massive sulphide deposit in the Northwest Territories. Gill managed to complete the thesis despite going through a divorce. He has since remarried, to Derryn, a Carleton graduate with a doctorate in reproductive physiology. The couple have two children.
Colleagues in the industry speculate that his academic background and discipline may have made Gill more rigorous in his approach to exploration than some of his colleagues in the industry. They say it may also have left him unwilling to play a subordinate roll in the exploration departments of some of North America’s larger mining companies.
After brief spells in the late 1970s with Getty Mines and Denison Mines (he was chief geologist for Denison’s Eastern Canada exploration division), he decided to strike out on his own.
“Why waste your time looking for mines on behalf of a big corporation when you could be doing it for yourself,” Gill once told The Northern Miner Magazine.
Backed by Leo Thibodeau, the former owner of a Windsor trucking firm, Gill founded Aur in 1981. Impressed by Gill’s honesty and ability to put together deals, Thibodeau made him a generous offer over lunch at Toronto’s Royal York Hotel. While Gill put up only 10% of the initial $500,000 in working capital, he was offered 50% of the company’s common stock. Halifax resource magnate John Jodrey was the other contributor to Aur’s initial financing.
Seated at an old poker table in an office in Toronto’s High Park district, Gill almost immediately started to look for cash-rich mining companies that didn’t seem to be doing very much.
After offering his services as a consultant to a number of companies with land positions in the Val d’Or area of Quebec, Gill eventually struck a deal with Brominco Inc. President Leo Broussard, then 72 years old.
At that time, Brominco was Quebec’s second-largest exploration company, with more than 30,000 acres of gold prospects in the Val d’Or area. They included the 3-claim Norlartic property at Vassan Twp. which produced 1.1 million tons of grade 0.13 oz gold in the 1960s plus a $5-ton royalty on any production from Louvem’s Louvicourt mine.
The two struck a deal, in which Gill agreed to pay Broussard $25,000 for an option to buy the control block of shares for $1.8 million.
Nearly six years later, in 1987, Aur agreed to drop the royalty on Louvicourt Twp. in return for the right to earn a 50% stake in the prop erty. But that was after Aur had developed its Norlartic gold property to the point where it was once regarded as the company’s key project. With reserves standing at about 1.1 million tons of grade 0.14 oz, Norlartic’s Kierens zone mine is expected to produce about 30,000 oz gold in 1990, according to Gill.
Pending an increase in the price of gold, Aur’s 144,000-ton (grading 0.18 oz) Hewfran gold deposit at Desmaraisville, Que., may have some production potential. Also, a number of encouraging intersections including 29 ft of 15.3% zinc have been reported from the Lougold project, east of Louvicourt Twp.
But all the projects in the company’s portfolio pale in significance to the massive sulphide discovery which is now the subject of a controversial lawsuit involving Aur and Louvem.
Gill says he will spend much of 1990 attempting to educate his lawyers and Quebec judges about mining and joint venture practices which he says were followed to the letter by his company.
In Aur’s statement of claim, the company alleges that a $40,000 payment default by Louvem gives Aur the right to increase its interest in the project to 100% from 50% (subject to a 25% net profits interest to Louvem). Aur is also suing for the 65% Louvem control block which it agreed but failed to purchase from St. Genevieve last spring.
In its own countersuit, Louvem accuses Aur of withholding information about the discovery that would have allowed Louvem to get the money needed to solve its financial difficulties. Louvem is seeking to have the entire joint venture deal deleted from the records.
Normally reserved, Gill becomes noticeably animated when discussing the case. He staunchly maintains that no information was withheld from Louvem and that Aur will win the right to remain as operator when the inevitable decision is taken to go underground. Under the original agreement, project management was to be transferred to Louvem from Aur once the two companies had agreed to go underground.
But even in the unlikely event that he was to sell his Aur shares before the dispute is heard in court, Gill’s reputation, thanks to Louvicourt, is such that financiers across the country would be competing with each other to bankroll his next project.
“After all,” he says, “we were the ones that found the deposit.”