TORONTO (miningweekly.com) – The surge of mining and exploration activity rampant gold prices have brought to north-eastern Ontario have proved a double-edged sword for small explosives firm Nordex, which is listed on the TSX-V.

On the one hand, business has been brisk for suppliers in the sector, but the boom has also made it difficult to find and keep workers.

“You’ve got kids from 21 to 30 years old and they’re making six figures a year,” Nordex CEO Jim Taylor said this week.

“It is challenging to find qualified labourers at reasonable rates.”

Other companies that serve the mining industry in remote parts of the province, such as drill rig suppliers, have also been feeling the skills crunch, and are having to dangle large carrots in front of prospective employees.

“It’s incredible what we’re going through right now,” said Taylor.

His company, based in Kirkland Lake, sources around 75% of its revenue – forecast to grow to $15-million from 2011’s estimated $11.3-million – from the mining sector, mainly gold companies.

He quips that that it is not the gold mining industry that is booming, but rather the gold development industry – most of the activity around the Kirkland Lake is from companies such as Detour Gold are still building mines.

Either development or producing companies suit Nordex, as prestripping uses the same amount of explosives as actual mining does.

Taylor said in a presentation in Toronto that the company was seeking a bigger share of the C$500-million-a-year Canadian explosives markets, which is dominated by Orica Mining Services – an Australian firm.

Nordex late last year started manufacturing a new product called Johnex, a perimeter control explosive used in underground mines.

Diversified mining giant Vale will trial test the product later this month, and if successful could add up to $2.5-million a year in sales from that one potential customer, Taylor said.

Nordex already supplies explosives to companies that include Lake Shore Gold, AuRico Gold, Brigus Gold, Liberty Mines and St Andrew Goldfields.

To grow, the company is seeking to set up satellite facilities that will allow it to more efficiently serve prospective customers further away from its Kirkland Lake base.

Locations such as Rouyn Noranda, Huntsville and Ottowa are under consideration. The latter two geographies will also support Nordex’ plans to diversify more of its revenue into the construction industry.

Currently the split is 75-25 in favour of mining, and Taylor wants this to ultimately be a 50-50 split.

Nordex is seeking to raise C$1.5-million to fund its growth and bulk up its balance sheet (Taylor conceded the company is “well into our lines of credit”).

The company set out in November to sell shares and warrants to raise the cash, but had to postpone the deadline to January 23 after market jitters made raising equity financing for small firms difficult.

Last year saw the company make a projected C$156 892 loss, though it expects to swing to a C$663 040 profit this year.
 

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