The Memramcook Fiasco
“The Memramcook Fiasco” sounds like the title of a spy novel but it’s actually how a New Brunswick gold mine mainly owned by Nova Scotians was described.
According to an article in the August 1894 edition of the Canadian Mining Review entitled The Memramcook Fiasco, a gold deposit was discovered in Memramcook in 1892 as a result of quarrying done by the Intercolonial Railway for ballast.
The Memramcook deposit was said to be geologically similar to the gold deposit in Gays River, Halifax County, where gold was discovered in 1862. Mining took place intermittently in Gays River for about two decades. Activity came to a halt in the 1880s but was briefly revived again in the early 1890s when the Coldstream Mining Company built a 50-stamp mill for processing ore. (A stamp mill was a large machine that crushed gold-bearing rock by stamping it over and over. Each stamp weighed about 800 to 1,000 pounds and repeatedly struck the ore, crushing it down to sand-sized particles so it could then be processed.)
Gold at both the Memramcook and Gays River sites was hosted in conglomerates (rock comprised of broken pieces of older rock that were cemented together as a result of extreme heat and pressure.)
The geological similarities and Gays River’s history of gold mining helped generate interest in the Memramcook deposit.
Tests of ore from Memramcook produced a yield of several dollars worth of gold per ton. J. B. Neily, a Halifax merchant who was also involved in a number of mining companies, arranged to do more tests. In January 1893, Neilly shipped a railcar-load of ore, supposed to have come from the railway cutting, to a stamp mill in Oldham, Halifax County, run by well-known miner, John Hardeman, manager of the Oldham Gold Company. This test produced a yield of $1.50 per ton. Hardeman (also spelled Hardman in some records) expressed doubts to Neily that the deposit was viable at that rate.
Despite Hardeman’s caution, Neilly issued a prospectus seeking investors in the Memramcook Gold Mining Company.
The prospectus, according to the Canadian Mining Review, “contained most ridiculous estimates of the cost of working the deposit, and of the margin of profit sure to be obtained. This prospectus was signed by the provisional directors of the company, (which had been incorporated in New Brunswick), some of whom were men of standing in finance and in politics, particularly so in Nova Scotia. By the use of these names as directors tone was given to the enterprise, and many people were influenced to buy shares in the company, in the faith that these prominent men would not have endorsed the prospectus unless the scheme had been investigated by them and approved.”
As the Memramcook Gold Mining Company was raising funds to install a 10-stamp mill to do additional testing, things were not going well back in Gays River. The Coldstream Mining Company failed in 1893 and sold its 50-stamp mill to the Memramcook Gold Mining Company.
A 50-stamp mill was a large one – many mines in that era had mills of 10 to 20 stamps or even fewer. The Memramcook Gold Mining Company bought the mill for about $5000, a significant expense to buy a much larger mill than the unproven Memramcook deposit needed at that point.
Ten stamps were immediately shipped to Memramcook and in July 1893, a 50-ton lot was milled which produced no gold. A new mill operator (an amalgamator) was hired, and a 43-ton lot was milled. Again, no gold was produced.
The Canadian Mining Review reported that “A third and skilful amalgamator was employed, who crushed four (4) lots of 25 tons each, obtaining, as the average of the 100 tons milled, a yield of $1.94 per ton. The gold obtained from this test was, like that of the carload shipped to the Oldham mill, coarse enough to be easily saved by stamp mill work.”
Ore was also sent to A. B. Browne, of Boston, for laboratory testing. His results showed values ranging from $3.72 to $4.18, but the gold obtained in these tests was, according to Mr. Browne, very fine – quite different than the coarse gold produced in previous tests.
The Canadian Mining Review pointed out, “Here were discrepancies. Stamp mill tests on 100 tons showed coarse gold, stamp mill tests on 93 tons showed absolutely no recognizable gold, assay and laboratory tests on one ton showed very fine gold.”
These odd results ought to have made the company’s directors cautious, but they voted on September 15 to proceed with installing the remaining 40 stamps bought from the Gays River mine.
The Review was scathing: “This was the beginning of the end. No competent expert, on such conflicting testimony as the company possessed, would have advised such action, yet this company with a paper capital of $400,000 proceeded to equip the property with a large plant, while yet utterly ignorant of the extent or real average value of the deposit they imagined they possessed. No portion of the 370 acres of territory owned was opened or tested beyond the old face of the ballast pit, and the yields from that were discordant, so that absolutely no calculations as to quality, or uniformity, or continuity were possible.
“The mill erected was built in a slip-shod and cheap manner ; no provisions for heating were made, and the power arrangements were so imperfect that the 50 heads were never able to run continuously for any length of time. Yet for this mill Mr. Neilly is said to have received from his company the sum of $25,000—a larger sum than was paid by the Coldstream Company for the same mill when new, and for which, when they sold to Mr. Neilly, they received only the sum of about $5,000. The profit to this gentleman is variously named at from $10,000 to $15,000.”
The 50-stamp mill, when eventually completed, did not work in winter weather.
In October, Neily agreed to ship several railcar loads of ore to a man who described himself as "a cutter of ladies' coats and jackets" but who claimed to be able to mill ore using a “patent electric process" and "mercurial hydrate of sodium.” The man, not identified by the Canadian Mining Review, claimed to produce a higher yield than the stamp mill tests had. Neily ordered a second mill that used this process.
Over 1000 tons of ore were then milled using both the 50-stamp mill and the mysterious mercurial hydrate of sodium mill. A mere three cents worth of gold was produced.
The Government of New Brunswick’s web site says, “It is reported that this was a case of ‘salting,’” meaning someone at the Memramcook Gold Mining Company may have put gold from another source into the samples sent out for testing in order to generate positive test results. The fact that some test results produced very fine gold and others produced coarse gold may support that theory.
Referring to the company’s activities, the Review wrote, “It is surmised that Mr. J. B. Neilly is the only individual who has profited by the deal.”
Neily had stepped down as president of the company by the time of its September 1894 board meeting.
While fraud can occur in any industry, and the historical mining industry certainly had its share, modern regulation makes fraud in the mineral sector very rare. For example, regulators require that companies adhere to “National Instrument 43-101 Standards of Disclosure for Mineral Projects” rules that govern disclosure of scientific and technical information.
The intended audience of NI 43-101 reports is the investing public and their advisors who, in most cases, are not mining experts. The NI 43-101 system was adopted in 2001. It would have helped protect investors in the Memramcook Gold Mining Company who were taken in by extravagant claims and the apparent endorsement of high-profile Nova Scotian business and political figures on the company’s board.
It seems at least some gold was produced by a mill at the Memramcook mine. The Government of New Brunswick’s web site also says, “an old resident remembered wagons of gold ore being brought in from NS.” That ore likely came from the Gays River mine, sent by the Coldstream Mining Company after it shipped its mill to Memramcook. It was not uncommon historically for ore from one mine to be milled at another, but it is hard to imagine that any company other than Coldstream would have shipped ore as far as Memramcook when it could have sent it to any number of other, closer mines for processing.
See the story of the Gays River gold district at https://notyourgrandfathersmining.ca/gays-river
George Stuart, a successful Nova Scotian prospector and miner, criticized J. B. Neily’s free-spending ways at another mine in 1894. See the story at https://notyourgrandfathersmining.ca/george-w-stuart
