BC’s mining industry may be booming, but as of March the province had one less major metal mine.
Northgate Minerals’ (TSX:NGX) closed the doors at its Kemess South mine in northern B.C. earlier this spring, following 10 years of successful production.
Earlier this month, president and CEO Ken Stowe announced his retirement, closing the book on 12 years of hard work that transformed the company from a two-man operation into one of the largest mining companies on the West Coast.
The move is somewhat symbolic for the 60-year-old executive, a final bookend to close a chapter on one of B.C.’s finest corporate turnaround stories.
It’s a story that often gets overlooked, said Stowe.
“It’s always been a struggle for us to be noticed in the market because our history has been taking on assets that others considered either to be worthless or not of great value,” Stowe said in an interview from his office in Toronto.
Northgate bought Kemess from Royal Oak Mines in 2000.
The mine had been in production a year when Royal Oak ran into financial problems and declared bankruptcy.
“This is the kiss of death in the mining industry; [they] didn’t have enough money to finish building it,” Stowe explained.
At the time, Northgate was little more than a holding company, but it used bridge financing from Brookfield Financial to buy the project from Royal Oak.
Stowe then spent a year at Kemess turning the project around, correcting operating deficiencies and improving relationships with local workers and suppliers.
“We worked through three years of tough times because gold wasn’t $1,500 an ounce; when I started it was $250 an ounce and copper was $0.67 a pound.”
The hard worked paid off.
Since then, the mine has produced some 2.7 million ounces of gold and 700 million pounds of copper. At its peak, Kemess employed 350 full-time workers.
Stowe said the mine quickly became the company’s backbone, generating enough cash flow to allow it to acquire other assets.
“That was the one that basically allowed us not to have to do equity or dilute shareholders for seven years,” he said.
In 2005, the company expanded beyond B.C. to Ontario, where it bought the Young-Davidson gold project for $18 million.
Like Kemess, Young-Davidson was an asset that had been largely ignored by other industry players, but Stowe said Northgate had a “vision” for it.
“You have to sift through a lot of things to find the diamonds in the rough, and that’s how we got Young-Davidson.”
The story is the same in Australia, where the company bought its Fosterville and Stawell gold mines in 2008.
Now that Kemess is closed, Northgate will transition away from B.C. to focus on Young-Davidson, its next workhorse.
The company has so far invested $130 million building the mine, with production expected to begin early next year.
Although the mine will become Northgate’s flagship asset, the company isn’t abandoning B.C. Northgate is assessing its Kemess Underground site, located five kilometres north of Kemess South, for future mining activities. Stowe said the assessment, which will be completed later this year, could mean that another mine will be built at Kemess soon.
Meantime, 150 workers are cleaning up the old Kemess South site.
The province and the Mining Association of BC awarded the site a mining and sustainability award earlier this month, which recognizes responsible mining activities.
“B.C.’s mining industry is recognized as a world leader in environmental protection and the winners of this award are strong examples of our excellence,” said Energy Minister Rich Coleman.
Northgate chairman Terry Lyons said Stowe built Kemess into “one of the most efficient and prolific gold and copper mines in the world.”
Stowe, however, is just happy that workers are proud to say they worked at Kemess South.
“There were people who were ashamed to say they worked at Kemess when I first went there … that’s how bad the reputation was,” Stowe said. “There’s nobody that works there now that wouldn’t be proud to say where they worked.”
Northgate has said a search will be conducted to select a new president and CEO by the end of 2011.
At press time, the company’s shares were valued at $2.76.