Not Your Grandfathers Mining Industry, Nova Scotia, Canada

Banook Mining Company

The Banook Mining Company had some high-powered people involved in it, including the Oland family, but things did not work out well.

Gold was discovered in Molega in June 1886, by two men from nearby Brookfield, Robie Hunt and Hubert Spidel.

There was a rush of prospectors into the area, which is in Queen’s County between the Molega and Ponhook lakes. Molega quickly grew from a population of a dozen to over a thousand, and four general stores, a school and three hotels were built within a few years. In 1889, the district was spoken of as the most important in the province when nearly 4,000 ounces of gold were recovered (https://notyourgrandfathersmining.ca/molega-gold-district).

In 1934, S. A. Hiseler and C. A. Norton had claims staked that showed signs of being very valuable, so the Banook Mining Company was formed to option the claims from Hiseler and Norton and develop the mine.

A series of letters and memos found in old Department of Mines files tell the company’s story.

Banook’s president was Sydney C. Oland, grandson of the brewery’s founder and its president for many years. He also later ran Queens Mines Limited, which operated two mines in Molega and also worked in other gold districts. While we associate the Oland name with the brewery, Sydney Oland had a range of business interests, including an attempted acting career in Hollywood. He also built the Bluenose II and helped found Neptune Theatre.

Other shareholders in the company also had impressive credentials. G. Vibert Douglas was a professor at Dalhousie University and served as technical advisor to the company. C. J. Burchell was a past Canadian Commissioner in Australia and Canadian High Commissioner in Newfoundland. Harold J. Egan was a professor at Dalhousie and past Nova Scotia Securities Commissioner. R. A. MacKay was a professor at Dalhousie and chief Canadian delegate to the United Nations. He was the brother of Ian MacKay, the company’s mine manager. J. B. Hayes was Manager of Nova Scotia Light and Power. Several other university professors also invested in the company on Professor Douglas’ recommendation. Joseph Lenihan, who operated another mine in Molega, was also a shareholder.

Before leaving in spring 1934 for a geological expedition in Newfoundland, Professor Douglas, as Banook’s technical advisor, left detailed instructions for Ian MacKay, the mine manager, about how to develop and operate the mine. However, when he got back from Newfoundland that summer, Douglas felt that MacKay had ignored his instructions.

In a July 16, 1934, letter to Oland, Douglas acknowledged that “surface work seems to have been pushed forward vigorously. The shaft house, mill, bunkhouse and cookhouse are nearing completion.” However, “Nothing has been done underground.” In other words, considerable money had been spent on buildings, but no actual mining work was done.

Douglas argued that Ian MacKay, as the mine manager, ought to either comply with the instructions Douglas had sent or explain why he disagreed with the instructions and propose alternatives. Douglas wrote, “Neither of these courses have been followed and the result is that headquarters is uninformed as to the true state of operations and the course which is being taken at the prospect is not that which the Technical Committee desires. I fear that the manager at the prospect will have to be told very explicitly what the nature of his duties is.”

Douglas then listed a series of deficiencies in how he felt the mine was being run. For example, he said an air compressor had been bought that was too small and had to be replaced (“The haphazard purchase of equipment without any knowledge of its performance, its trial, failure and replacement are all matters of inefficiency and wastage of money.”) The mine’s new headframe, the structure bult over the mine shaft that supports equipment like the cage/elevator, “has been placed a few feet too far to the north so that the bucket guides have still got a kink in them.” The headframe was also not tall enough to facilitate moving ore to the mill by gravity.

Most importantly, Douglas wanted MacKay to “Concentrate on underground development” to get the mine ready for actual mining.

Douglas told Oland, “I should much prefer to resign from the executive committee than remain on it and see the operations muddled and the instructions ignored.”

Department of Mines files do not contain a response from Oland but Professor R. A. MacKay, brother of mine manager Ian MacKay, wrote to Douglas four days later to defend his brother.

Professor MacKay wrote that he was concerned that if his brother saw Douglas’ letter, “Ian would probably resign at once and tell everyone to go to hell, a step which be rather fatal to the whole project….He is frightfully fed up on the lack of co-operation by the executive and I feared your letter would be the last straw.”

Ian MacKay, according to his brother, had a long list of complaints about the company’s shareholders and executive committee. He felt that interference from the executive was causing delays; and that Professor Harold Egan’s insistence on keeping the books in Halifax left Ian uninformed about whether he could spend money on mine work (“Ian has come into town not knowing whether there was one dollar or a thousand in the account.”) Ian also felt that Egan had antagonized the local bank manager and Joseph Lenihan, who had not yet delivered his promised $750 in investment to the company. Oland apparently made his investment only after nearly everyone else had made theirs. The executive committee had failed to come up with more money and this, Professor MacKay argued, was why underground work had stalled. Ian was forced to use the limited funds to meet payroll, and he delayed incurring other expenses.

Professor MacKay wrote that his brother had submitted regular reports but Egan had failed to circulate them to the executive committee, and that Ian had spoken to Oland and Burchell several times, keeping them in the loop.

Professor MacKay went on to dispute a number of Douglas’ specific complaints before writing, “I do hope you will not mind my writing in this way. I know this is an ex parte statement on Ian’s behalf, but I hope not unfairly so. I felt it might come better from me than from Ian. He is liable to ‘go haywire’ when he gets to the end of his tether and he is damned near there now.”

Professor MacKay ended his letter on a personal note: “I trust the Douglas family is having a decent holiday. With the aid of Beatty’s car ours is tolerable, The small fry is getting over the whoops [whooping cough] nicely.”

If Professor MacKay hoped his letter would mollify Douglas, he must have been disappointed.

Two days later, Douglas wrote to Oland saying, “There seems to have been some misunderstanding about my letter. The purpose behind it was to bring operations at Molega into line with the programme which I thought had been passed by the executive. Apparently Mr. MacKay had never been advised that the programme outlined in the memorandum had passed the executive and was to be put in force.”

This was a key problem: there was disagreement over whether Douglas’s instructions had been formally approved and therefore whether Ian was obligated to follow them. The committee meeting at which Douglas’ instructions were approved did not have a quorum (enough members present) because Douglas himself was in Newfoundland at the time. Douglas obviously approved of the instructions he wrote, but he was not present at the meeting to cast a vote for them. This led to a disagreement about whether Douglas’ instructions had actually been approved.

After Douglas’ second letter to Oland, there is a gap in the correspondence in Department of Mines files. The next letter was written in November, four months later, by Douglas to Ian MacKay. It makes clear that tempers were still running hot. Douglas wrote, “you have no excuse to plead either lack of knowledge nor claim that there was no authorization of the scheme…I assumed that you were a man who knew enough to obey orders and therefore I placed my trust in you as manager.”

With all these disagreements among its shareholders, and insufficient funding, the Banook Mining Company never got the mine into production. Instead, the mine was taken over in 1935 by Banook Gold Mines Ltd., which was led by a Mr. Dyment of Toronto.

However, Banook Gold Mines also failed to put the mine into production because Dyment ran into trouble with the Ontario Securities Commission. As a result, the mine reverted back to Norton and Hiseler.

Norton then decided to invest part of his personal fortune in developing and operating the mine. However, he passed away in June 1937 before significantly advancing his plan. Norton’s heirs and Mr. Hiseler then sold all of the mine’s equipment. Only buildings remained at the site, and it was abandoned for many years.

Nova Scotia’s historical gold mines often did not close because the resource was depleted. Other factors were often the cause of mines shutting down, including bad business decisions, inefficient historical mining and milling techniques, lack of capital, lack of access to inexpensive electricity, challenges associated with transporting equipment and supplies through the wilderness, and lack of labour.

That is why many historical gold districts have potential to be returned to production in the modern era since all of the above challenges are now easily addressed. In fact, almost all the activity in Nova Scotia’s gold sector is at historical mines where deposits were proven during our early gold rushes, but modern science and technology make it possible to mine profitably while, of course, taking proper care of the environment.