A modern-day gold rush in northern Manitoba is bringing renewed hope to a town that was in decline just a year ago.

HudBay Minerals Inc. is starting construction on what is anticipated to become the biggest gold and zinc mine in Canada. The site is about 700 kilometres north of Winnipeg, near the small town of Snow Lake.

HudBay officials say the Lalor Lake mine site could operate for up to 20 years and create jobs for hundreds of people.

The company plans to spend $500 million on the project. Phase one of the project will consist of building a production ramp linking its Chisel North mine in Snow Lake with the Lalor deposit nearby.

'We're talking about a tremendous amount of money and we're also talking about substantial capital investment.'— Tom Goodman, HudBay Minerals Inc.

Test drilling at the deposit has already produced about three million ounces of gold just as prices of the mineral hit a record high this week at $1,085 an ounce.

"The Lalor deposit, even without the gold as a base metal deposit, is being touted as the largest new zinc deposit in Canada. When you add the gold to it, comparing it to other gold finds in recent years, it's right up there," said Tom Goodman, HudBay's senior vice president of operations.

"And at $1,000 and ounce, that's a lot of money we're talking about. We're talking about a tremendous amount of money and we're also talking about substantial capital investment in order to build a mine of this size and obviously a lot of operating costs to get that ore out."

New life for Snow Lake

All this activity means new life to the town of Snow Lake, a community of about 860 people. About 100 miners who have been commuting to another HudBay mine two hours away in Flin Flon are starting to come back.

Bob Libbey was one of the first miners to return to Snow Lake this week. He said mining is important for his entire family and for the community as a whole.

'There's an amazing future for the town right now — housing, businesses.'— Miner Bob Libbey

"I've been underground since 1976. I've got my daughter's husband — he actually works in the mine here for me, too, [and] my young boy is a diamond driller working in and around the Snow Lake area," he said.

"There's an amazing future for the town right now — housing, businesses."

Randy Cockle, who has worked for HudBay for almost 34 years, said the benefits to Snow Lake are already beginning to show.

"It's the first time in my life that my house has been worth more — worth enough to make a down payment somewhere else if I got to leave," he said.

People in the community were sombre about the future just a year ago, said Snow Lake Mayor Garry Zamzow.

"These recent announcements have taken us from gloom and doom to bust to boom. The entire town is ecstatic and very excited," he said.