‘MOUNT COBALT’ A LONG CLIMB FOR ONTARIO MINING TOWN
Former home of silver rush anxious to revive fortunes after rebirth of e-cars jolts interest
Gino Chitaroni displays COBALT, ONT. five different business cards 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 the town of Cobalt, Ont.
Until recently, as far as mining is concerned, there hasn’t been much happening around Cobalt. A town of about 1,200 that’s a fivehour drive north of Toronto, 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. 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 fourfold to US$90,000 per tonne from US$22,000 per tonne in 2016. With that kind of price spike, it hasn’t taken long for explorers pouring 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 the 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 is well aware of 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 that most people still relied on horse and buggy for transit, Cobalt had a railway connecting it to Toronto 500 kilometres away, a streetcar and an elevated tramway crossing its eponymous lake. It also had a stock exchange, and theatres where one could catch an opera.
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 areas — 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 of which Chitaroni was the former president — the nowdefunct 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 on the rise, 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 Torontobased First Cobalt Corp. Not long after, Brixton, which came to the area hoping to find silver, joined the hordes looking for cobalt. “We didn’t have the foresight that cobalt was going to go through the roof,” said Gary Thompson, Brixton’s chief executive.
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 he first considered 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 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 had been so heavily 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’s 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. “If you could find three or four of these of former mining operations that were mined just for the high grade veins, that’s kind of the vision we’re chasing in Cobalt Camp.”
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.
Indeed, 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.”
Others may be contemplating building within the town.
In April, Toronto-based 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, the company 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.
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.
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.
But the town now struggles. Tourism may be 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.
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, Chitaroni 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.”