1947 Beaulieu Yellowknife Mine: The Bubble Bursts

It was near the beginning of December 1947 that Beaulieu Yellowknife Mine, located almost 400 kilometers north of Yellowknife (see map) a much touted ‘sure thing’ in the Northwest Territories, closed. The gold had run out only a month after the mine opened, ‘The Beaulieu Bubble’ had finally burst.

Prospecting and testing during the early 1940s appeared to show there was a large underground gold-bearing ore body east of the Beaulieu River. A Toronto-based business group bought the claims and formed a company called Beaulieu Yellowknife Mines Limited.

A mine manager was hired and he produced a report for the April 1946 Northern Miner magazine claiming, through a combination of inflated measurements and bogus math, that a mine on the property would be highly profitable for investors.

The company began an aggressive campaign selling shares through what’s called a ‘boiler room’, a room full telephones and slick salesmen who called potential investors and pushed company stock. Investors from all over Canada and the United States bought four million shares at prices up to $2.50 per share. However, by June 1946, it looked as if Beaulieu Yellowknife Mines Limited was on the verge of bankruptcy.

A mine was under construction near Hansen Lake but word on the street in Yellowknife was “don’t buy stock”.  Rumour had it the exploration on the site had been done improperly, and there was little or no gold.

In a clever marketing ploy Beaulieu Yellowknife Mines Limited revived interest in their stock by offering to buy nearby claims owned by Spud Arsenault. They paid him $100,000 in cash for the property, turning the money over during a highly publicized Hollywood-style media event which included armed guards escorting Arsenault to the bank so he could deposit his newly found fortune.

Throughout the winter of 1946-47 monthly reports from the company encouraged people to hold onto their stock. Yet confidential correspondence between the mine manager and company officials in Toronto told a different story. The still-under-construction mine was drastically underfunded and behind schedule, they couldn’t afford to buy key pieces of equipment and supplies needed to build the mine were left unpaid for and not being shipped.

The company, still pushing stock, planned a grand ceremony for the pouring of Beaulieu Yellowknife Mine’s first gold brick. Walter Winchell, famous American gossip columnist, was invited to be the master-of-ceremonies. Gene Tunney, heavyweight boxing champion, would box exhibition bouts with some of the local boys and the usual compliment of politicians, reporters, mining officials and the rich and famous would all be attending.

This ceremony was scheduled for December 7 th 1947 yet by mid-November, after the mill had been operating for more than a month, it was clear that there simply wouldn’t be enough gold from the mine to make even a single brick. Beaulieu Yellowknife Mines Limited had sold in excess of $8,000,000 in shares, had spent less than $800,000 building the mine and in its first month of operation had mined only 49 ounces of gold valued at about $1700.

On December 4th, 1947 the company cancelled the opening ceremony claiming airplanes couldn’t land on Hansen Lake, the ice was too thin. The mine was quietly closed and the people responsible left the north. There was an investigation yet no one was ever charged with a crime and shareholders were left holding stock that was worthless.