Accent: In a welcome turn of events for a town that has struggled economically since mining disappeared, prospectors flocking to Cobalt in droves
Gino Chitaroni keeps five different business cards arrayed at the front of his desk: He’s a geologist, prospector, land manager, salesman and, for many people, a go-to source of information for anything related to mining in Cobalt.
Until recently, as far as mining is concerned, there hasn’t been much happening around Cobalt. Located about 2 and 1/2 hours north of Sudbury, it experienced a historic and prolific silver rush at the turn of the last century that sustained decades of mining. By the late 1980s, things had petered out.
Then, last year, in a welcome turn of events for a town that has struggled economically since mining disappeared, prospectors started flocking to the area in droves. Now, properties are changing hands at a pace not seen in years, and executives from junior mining companies have been rooting around old mine sites and raising tens of millions of dollars on a novel sales pitch: They can build a world-class cobalt mine in Cobalt.
“This is a silver mining camp, it’s not a cobalt mining camp,” said Chitaroni, whose family has resided in the area for generations. “That’s what it is, it’s a world famous silver camp.”
Or at least it has been. The rebirth of electric vehicles has automakers scouring the earth in search of cobalt — a key component in lithium-ion batteries — and its price has risen four-fold to US$90,000 per ton from US$22,000 per ton in 2016. With that kind of price spike, it hasn’t taken long for explorers poring over maps of Canada to put their fingers on Cobalt.
The light metal, which blooms pink in reaction with oxygen, is clearly visible in the hills and rocks around town. But it can take years to discover a deposit, secure financing to build a mine and then actually start extracting ores. With exploration around Cobalt just beginning, the town has a narrow window of time to capitalize on high cobalt prices, which could crumble if the electric vehicle market tanks or for any number of other reasons.
“In 10 years time, we may not even be focusing on lithium ion anymore,” said Jack Bedder, an analyst at Roskill Information Services who studies the cobalt market. “But, certainly, cobalt is in the mix for the next decade or so according to our forecasts.”
For those in Cobalt who dream that mining will revive the town’s fortunes, there may be good reason for optimism. Mining companies are exploring old mining towns across Canada to see if modern geology and mining techniques can turn up deposits that previous generations missed or ignored. In Cobalt, some companies are targeting lower-grade deposits, where metals are present, but dispersed over a wide area.
The dream is to find an enormous deposit that could be quickly mined as an open pit — rather than a more expensive and complex underground mine — which would sustain years of activity. Chitaroni knows the odds, and how mining companies, which face higher safety and environmental standards today than they did 100 years ago, operate in a ruthlessly efficient manner.
“Mining is mining,” he said, “but it’s not the way it was. What you see here is the result of 100 years of practice you can’t do anymore, so when you go up to a mine today, they’re closing it down as fast as they’re opening it up.”
His family has lived the history: In 1909, his grandfather arrived in Cobalt from Italy, during the first great silver rush. At a time when most people still relied on horse and buggy for transit, Cobalt had a railway connecting it to Toronto, a streetcar and an elevated tramway crossing its eponymous lake. It also had a stock exchange, and theatres where one could catch an opera.
Silver sustained town
According to the Canadian Mining Hall of Fame, more than 460 million ounces of silver have been dug up and hauled out of the area — about US$7.6-billion worth at today’s prices.
The silver was so abundant that it sustained decades of mining. Even in the 1960s, Chitaroni’s father owned and operated a silver mine near town, just across the lake.
Chitaroni, 55, spent years working in the local silver mines, including for Agnico Eagle Ltd, which started in the silver camps and has since morphed into one of the world’s largest gold companies. But as the 1990s dawned and silver prices hit rock bottom, the company left town, closing the last remaining mine.
Afterwards, Chitaroni found plenty of ways to earn a living: arranging land sales for other mining companies that wanted to explore if not in Cobalt, then nearby, running an assay business to test drill samples for explorers in Northern Ontario and helping manage a campsite his family owns.
In 2016, with silver prices still scraping the bottom, nearly everyone was caught off guard by the sudden interest in cobalt deposits — perhaps Chitaroni most of all.
“Three years ago, you could not have sold, you couldn’t give away, a silver or cobalt property,” he said.
That’s why, in November 2015, a company where Chitaroni was the former president — the now-defunct Canagco Mining Corp., which he said had lost funding and needed to unload its property — was involved in a land sale that in retrospect looks ill-timed: For $55,000 in cash, plus about 3.2 million shares in Vancouver-based Brixton Metal Corp., Canagco sold 2,500 hectares of land in the area, including a renowned former silver mine.
By June 2017, with the price of cobalt clearly rising, Brixton recouped all its costs. For $325,000, all in cash, it sold 848 hectares or about 33 per cent of the land it bought from Canagco to Toronto-based First Cobalt Corp. First Cobalt Corp. Not long after, Brixton, which came to the area hoping to find silver, joined the hordes looking for cobalt, too.
“We didn’t have the foresight that cobalt was going to go through the roof,” said Gary Thompson, Brixton’s chief executive.
But, he added, at least the company paid essentially zero for its land in the area, and has a head start on exploration.
Chitaroni said he wanted to hold the land, but investors in the company, and the costs associated with keeping the land, necessitated a sale.
Drilling out core samples, launching a helicopter to conduct airborne surveys and paying geologists to study rock formations all cost money. Trent Mell, chief executive of First Cobalt, said he’s budgeted $7 million to spend in the next 12 months on exploration around Cobalt, which wasn’t the first place he thought to look for cobalt.
Several years ago, when he first formed a cobalt exploration company, Mell said the first place he thought about exploring was the Democratic Republic of Congo, in Central Africa, where as much as three-quarters of the world’s cobalt may come from in the next year, according to analyst forecasts. But it’s also a country that has been riven by civil war and violence, a wave of proposed new taxes on mining and widespread knowledge that children are forced to work in some mines.
Instead, Mell decided to look around Cobalt, precisely because the area has been so heavily mined. Through decades in mining, he said he’s been involved in discovering two mines, both in areas that were formerly mined.
His theory is that previous miners in the Cobalt area mainly dug up the high-grade deposits — the pockets of earth that were dense with silver. Areas where metals are present in the soil, but at lower grades, and spread out over a much larger area, are more likely to have been ignored. After all, the original homesteaders would have had a hard time digging up such deposits.
Mell would love to find a high-grade deposit, but he’s not counting on it. Instead, his strategy is to look for the spots where cobalt and silver are present at low grades throughout a large area.
He wants to dig it all up in a giant, open pit mine.
“Once they’re built, you’re moving so much rock, and your operating costs are kind of low, and that means you can mine lower-grade material (better) than if you were running a smaller operation,” he said.
“If you could find three or four of these former mining operations that were mined just for the high grade veins, that’s kind of the vision we’re chasing in Cobalt Camp.”
Not everyone supportive
One hitch to Mell’s plan is that unlike an underground mine, which can be closed off and rendered nearly invisible, open pit mines leave huge gaping holes behind, which some members of the local community may not cotton to.
Chitaroni, for one, doesn’t have any problems with the idea. He would gladly see his hometown — the very one he helped register with the Historic Sites and Monuments Board of Canada — levelled and gutted with open pits in exchange for the return of mining, and a little economic prosperity.
“We lost a lot of population here because of several mine closures,” he said. ” We suffered exponentially, and the fact is we have not recovered since. Our population is older, and we have an out-migration of our youth that we cannot stem.”
To him, Cobalt is a mining town and always has been, not a museum to be preserved.
“If I was looking at open pitting here,” said Chitaroni, suddenly standing up from his office chair and stepping to a window to point, “from that area of hill, right on into the lake, would be all gone.”
Then pivoting and gesturing in the opposite direction, he continued, “Over here — that would be a pit. This area behind me, right behind the arena, that would be a pit. And that’s just around town.”
Some town residents would be happy if a mining company approached them about buying their land so it could build a mine, Chitaroni said. But he also acknowledged that even though there’s a long history of mining in the area, some people will likely raise objections to open pit mining, particularly if it means giving up their homes.
He argues, however, that the environment would actually benefit from mining because modern regulations force companies operating in old sites to clean up hazards left behind by previous generations. The tailings and waste could all be placed in a discrete pile somewhere.
“You’ll have a new mountain, called Mount Cobalt,” Chitaroni said. “The good thing about it is it’s going to be done properly.”
Mell said a new mine can revive a struggling town’s fortunes. “I’ve seen old mines being revived and what it can mean to a community when all of a sudden you’ve got hundreds of millions of dollars coming in.”
He pointed to one of the best-known examples in the mining industry: the town of Malartic, Que., about a five-hour drive northwest of Montreal. Mining around the town began in the 1930s and lasted decades. Barrick Gold Corp. operated an underground gold mine in the area, but sold the property in 2003.
“The prime benefit in the deal for Barrick is that “¦ (the buyer) assumes environmental and closure liabilities for East Malartic,” the Northern Miner, a trade publication, reported at the time.
In 2004, the buyer, McWatters Mining Co., went bankrupt, at which point a Quebec government agency began managing the site, which had an estimated rehabilitation cost of $23 million.
In 2009, Osisko Mining Corp. returned and decided there was a lot of gold left close to the surface. It raised around $130 million to buy out and relocate more than 200 residents, who owned houses and lived in Malarctic, and then it built an open pit gold mine right in town.
Within the mining industry, the project was hailed as an instant success and, almost immediately, a bidding war erupted among the major Canadian mining companies, which all wanted to spend billions of dollars to buy it.
Now owned by Agnico Eagle Ltd., it is one of the largest gold mines in Canada, and produced 316,000 ounces of gold in 2017, which would be worth about US$410 million at today’s prices.
“That would obviously be a home run,” Mell said.
He noted the open pit his company wants to build will be several kilometres away from the actual town centre in Cobalt, with its old but well-preserved mine headframes and turn-of-the-century train station that no longer receives passenger rail.
But others may be contemplating building within the town.
In April, Agnico Eagle, which owns the mineral rights to most of the land beneath the town, as well as the surrounding area, announced a change in its plans: After spending recent years, fencing off its old properties and closing up old hazards, Agnico hired a consultant to help value and sell its considerable land holdings after multiple inquiries from cobalt prospectors.
“They probably should have done this three years ago,” Chitaroni said.
But not everyone is excited to think that after spending years fencing off hazards, a new miner could come in and reopen all of Agnico’s many mines.
Tina Sartoretto, the mayor of Cobalt, for one, thinks Agnico has been highly responsible in the way it departed the town. Indeed, it donated $1 million to a fund to preserve the town’s mining history, and the library is named after company founder Paul Penna.
She grew up in Cobalt, her mother too, so she holds an attachment to the history of the town that can’t be replaced.
Sitting in the town hall — a former indoor swimming pool that was converted into an office — Sartoretto reminisces about her childhood 60 years ago. Near the centre of town, there was an old mine shaft where parents would send their children to fetch ice. Even in summer, there was ice available at these town dances, and adults would fill rowboats full of it to keep their beers cold. Sometimes men would sit in the old mine and drink.
Nothing was fenced off, like it is today, and children used the old mines as their playgrounds. The old tailings formed their ball field.
“We called it the slime,” Sartoretto said. “It was mine waste, loaded with arsenic, but it was just like talc, it was so soft, you never got hurt. You could slide into home plate.”
Today, she said, much has changed in both the town and the mining industry. At the turn of the last century when Cobalt was being rushed, passenger trains stopped in the middle of town carrying hundreds of people, many of them immigrants, who were moving in.
The remains of small mines are everywhere, even in town where mine shafts were opened up on street corners. There were so many mines that some people even claimed that at night, in their living rooms and bedrooms, they could hear the muffled sound of miners talking to each other, as if they were just beneath the floorboards.
“You’re in awe that something so huge could have been built in the middle of the bush 110 years ago,” Sartoretto said. “It just kind of blows your mind. You just kind of go, ‘Wow, look at this.'”
But the town now struggles. The mayor can talk on end about the folly of provincial regulations, including how a mandate to install a $30,000 speaker system on public buses nearly busted the town’s coffers.
In her mind, tourism is one answer, telecommuting is another. She’s less certain about mining, which she said would have to bring actual jobs to the area and be conducted in an environmentally friendly way.
“There are some people who think that you should just move the town, buy everybody out and just open pit,” she said, “and that would sadden me a bit because it’s a great town. Let’s say it would be a heartbreaking possibility.”
Sartoretto added, “I think it’s possible to have an environmentally friendly method of exploration and extraction, I think that can happen. I don’t think we’ll ever see the pillage that we saw in the last century.”
Drilling work continues
On a quiet, sunny afternoon in April, with snow still covering large patches of the ground around Cobalt and just starting to thaw, three men laboured on a platform in a muddy field outside town, where a diamond drill rig was bringing up core samples of the rock lying deep below.
About 10 metres away from the drill rig, several dozen sparrows were hopping around in the muck, eating something.
For hours on end, the same thing happened: The sparrows hunted while the men brought long pipes back and forth from a trailer to the drill rig and placed the core samples in a rack at the edge of the field.
Exploration is monotonous work conducted to the soundtrack of a drill’s overpoweringly loud hum. Brixton has been drilling 24 hours a day, seven days a week, with two different shifts per day.
On that April day, one of the workers brought a core sample — a dark marbled stone cylinder, each a little more than 30 centimetres long — over to Martin Ethier, a geologist working for Brixton, who inspected the rock and silently turned away.
Though there was nothing to excite Ethier this time, the company in May hit what it called a “spectacular” silver-cobalt vein and a zone of mineralization up to 70 metres thick. Investors will need many more drill samples to tell if Brixton’s core samples hold enough metal to justify spending hundreds of millions of dollars to build a mine.
Thompson, Brixton’s chief exec, said it’ll be years before that happens. “We’re getting calls from purchasers that want to buy cobalt and we’re like, ‘Well I can’t sell you any today, but maybe in the future.'”
In point of fact, for all the property that has changed hands around Cobalt, only Brixton and First Cobalt actually did any drilling as of this winter.
“You’re not going to find a lot of ore, unless you have a half-dozen to a dozen rigs running,” Chitaroni said. “My fear is that if we don’t move fast enough on this, we’re going to lose our window.”
It can take as many as 15 years from the time a deposit is found until a mine is constructed and the first ore is extracted, he said. By that time, he wonders if cobalt prices will still be high, or if automakers will have discovered a cheaper, more abundant substitute.
“The thing I fear the most here is a crash in the overall markets,” Chitaroni said. “That would just put a kibosh on everything. That would be my biggest fear, or a crash in cobalt prices. It keeps me awake at night just thinking about it.”
Lately, he’s been focused on an old refinery that First Cobalt purchased, which he said he hopes could serve as a processing centre for cobalt — which needs to be cleansed of arsenic — mined anywhere on the continent.
Jack Bedder, Roskill’s cobalt analyst, said the refinery may end up as the area’s best shot for cashing in on the current rush.
“Ores in North America are often quite high in arsenic,” he said, “You need to find someone who can process this high arsenic.”
The arsenic needs to be removed in order to export cobalt to China, which has strict arsenic limits. China, being the most advanced in terms of building its fleets of electric vehicles, is a likely buyer of any cobalt, he said.
Chitaroni, who spent 18 years on Cobalt’s town council, said the town has lost about 1,000 residents since 1970 and is down to 1,200.
He rhetorically asks: How do you sustain a small municipality when your population is shrinking? The only way to change the economics of the area in a dramatic way is to build a mine or a refinery.
“If we don’t do this soon we’re going to miss this window of time,” Chitaroni said. “Once that pendulum swings to some other metal and matter, this goes by wayside.”