MALARTIC - A small northwestern Quebec community can look forward to an enormous economic boost after the discovery of $4 billion worth of gold sitting beneath the town.

Malartic has suffered since the economic crisis forced the closure of a local plant, but town’s fortunes look set to change when it becomes home to the biggest open-air gold mine in Canada.

Osisko, the company behind the massive mining project, has already moved into this town in the Abitibi-Temiscamingue region, where its first major step was relocating 11% of residents from the south end of town.

The homes of those 400 residents were packed onto trucks and set up in a brand new neighbourhood. It just so happened that their houses stood on top of all of that gold, and, with the prices of gold hitting a record high of US $1,040 per ounce, the company had no time to waste.

Osisko’s plan for the project, dubbed “Canadian Malartic”, involves digging a 1.8 km by 800 metre pit that will be mined for the next decade. During those 10 years, the company plans to remove 6.3 million ounces of gold, with about 86% of that expected to be usable.

While there have been environmental concerns raised (see sidebar) and a variety of other worries expressed, Malartic mayor Andre Vezeau sees the glass as half full, and then some.

"It's a second life for the town," he said of his community, which had been deteriorating since the plant closure. "It was beginning to die."

With gold prices at their current levels, Osisko expects to make about $4 billion during the site’s operational life.

However, digging in a residential neighbourhood has meant solving the issue of the houses, school and other public buildings that were in the way before it sees any of that revenue.

The 138 relocated houses were put on brand new foundations ¬ giving some residents a finished basement for the first time ¬in a neighbourhood with freshly-paved roads as well as new sidewalks and lampposts. A brand new water system was also built.

The best part for the affected residents is that relocation didn't cost them a penny. In fact, they made money on the deal, being paid $42 per person, per day, as well as a lump sum of $5,000 per home. The process took several weeks and Osisko funded the entire operation itself.

As for those who didn't want to have their homes trucked to the new neighbourhood, Osisko purchased them ¬ about 80 in total ¬ for prices as high as 25% over market value.

Homes that would not have survived the move are slated for demolition and their owners moved into the 80 homes that Osisko purchased. The town's elementary school, adult education centre and other public buildings have been replaced with newly-built structures in the new neighbourhood.

Vezeau believes the gold mine could double the town's population of 3,500 (as of 2002).

"I think we could get to 7,000 (people), but I'm told that I'm too conservative. They tell me that it will be much bigger than I think. If that's true, great," he said.

There are already 100 people at work building the essential facilities and preparing the mine site itself, and another 465 are expected to join the operation when gold extraction begins early in 2011.

What Malartic residents are saying

Though the incentives for upping sticks to a new neighbourhood were good, there are still some concerns in Malartic over the upcoming gold rush.

Osisko spent $105 million on the neighbourhood relocation, and while most consider it a fresh start, some in the area see it as the company buying their approval.

Some residents noted out that Osisko was all too willing to open its chequebook, and even offered Christmas turkeys or children’s school fee payments.

But Osisko president Sean Roosen stressed that everything has been done by the book, saying that the company did everything with the best interest of the population in mind. That said, Roosen did admit the company is under the gun to mine the gold before the price drops.

But for most residents, the positives outweigh the negatives.

"The big difference is that there is a lot more space here," said Sharon Mingo, who grew up in the relocated Malartic neighbourhood, which now has the look of a ghost town. "I'm satisfied with the new neighbourhood. But at the same time, I was used to life (in the old location). I knew my neighbours. Now everyone is spread out in the town."

Rejanne Rodrigue and Ernest Rivest spent many years in the old neighbourhood before they were relocated across town. Rivest thinks the new spot is great. "We ended up with a nice finished basement," he said, although he still has his concerns. "When we see the clearing they’ve done, it scares you," he said. "We used to walk in the woods sometimes."

The environmental cost

It should come as no surprise that mining six million ounces of gold in an open-air pit has some environment impact, considering that no less than one ton of rock needs to be treated to extract a single gram of the metal.

The Malartic project will rely on materials like cyanide and lime to process the ore, and will likely produce a fair amount of dust, noise and vibrations as well.

Denis Cimon, the future mine’s director, acknowledged that cyanide is a dangerous substance, but said it is used in gold mines around the world and can be handled safely.

He said that the company will use more modern equipment that will help reduce noise, in addition to the large "green" wall that will be built around the site.

In addition, the mineral pile will be covered, which Cimon said will limit the amount of dust generated, and different equipment will be used for mining the area closest to the town to minimize vibrations.

The municipality asked ecologists to come up with a worst-case scenario - in this case having the two main municipal wells run dry, potentially leading to a water shortage and to offer a solution to ease those concerns.

Although Mayor Vezeau explained there’s "almost no chance of (that) happening", the municipality did reach an agreement with Osisko to find another source of water, just in case.