Thursday 5th December 2019

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Posts tagged ‘Fortune Minerals Ltd (FT)’

Northern challenge

November 8th, 2019

NWT prosperity depends on rebuilding investor confidence, miners warn

by Greg Klein

NWT prosperity depends on rebuilding investor confidence, miners warn

 

What happens when a mining-based economy runs out of mines? The Northwest Territories risks finding out the hard way but the reason won’t be a lack of mineral resources. For too long, investors have been discouraged from backing territorial exploration. That’s the message the NWT and Nunavut Chamber of Mines delivered to the legislative assembly in Yellowknife last month. Now the industry group awaits a response, one backed with action, as the newly elected government prepares for its four-year term.

The territory’s three mines, all diamond operations, have passed peak production, facing closures over the coming decade. The NWT hosts only a few advanced projects, none comparing in potential economic clout with the big three. The problem contrasts with the NWT’s two northern neighbours, where the industry continues to thrive.

Projections released in July by the Conference Board of Canada call for Nunavut to lead the country in annual economic expansion, with an average 4.6% up to 2025. “Mining will be the main driver of growth, as Agnico Eagle prepares to bring its Meliadine mine and Amaruq satellite deposit into operation, and Sabina works on its Back River project.”

More tepid growth in mining will have repercussions on other areas of the economy, with growth in services-based industries remaining flat for much of the forecast. In all, economic growth in the Northwest Territories is forecast to contract by an average annual pace of 1.6% between now and 2025.—Conference Board of Canada

Yukon “will also experience a boom, with growth of 4.6% this year and 6.2% in 2019,” again thanks to mining. But the NWT faces decline:

“Two new metal mines should help offset some of the losses for the mining sector, but not until after 2020,” the Board stated. “More tepid growth in mining will have repercussions on other areas of the economy, with growth in services-based industries remaining flat for much of the forecast. In all, economic growth in the Northwest Territories is forecast to contract by an average annual pace of 1.6% between now and 2025.”

A lack of exploration spending explains the lack of projects in the pipeline, according to the Chamber of Mines. “The NWT has basically been flat-lining for the last 12 years,” says executive director Tom Hoefer. “That’s a problem because that’s the very investment you need to come up with new mines.”

But it’s a problem industry can’t solve without government help, he emphasizes.

“The government goes to Roundup and other conferences with really good marketing tools and they’re putting out all the right messages, such as: ‘Come unlock our potential.’ But if it’s that easy, why hasn’t the industry picked up?” Hoefer asks.

“Well, it’s because these other things happen.”

His group outlined a number of causes in its presentation to the assembly: high cost of living, relative lack of infrastructure, regulatory uncertainty, unsettled land claims and additional expanses of land (over 30% of the territory) deemed off limits for exploration and development.

NWT prosperity depends on rebuilding investor confidence, miners warn

Benefiting from previously built infrastructure,
NorZinc hopes to begin zinc-lead-silver mining
at Prairie Creek by 2022. (Photo: NorZinc)

Hoefer also mentions “contortions” imposed on companies. As examples he cites some early-stage exploration projects that were sent to environmental assessment, “something that would never happen in southern Canada,” and two companies being required to collect data about lakes from which they might or might not draw water in small amounts for diamond drilling, “a totally new requirement, totally out of step with what happens in the rest of the country.

“What that says to investors is, ‘You’d better be careful when you come up to the NWT because there are these surprises coming out of the woodwork.’”

Convincing the territorial government calls for a different approach than in most of Canada. With no political parties, the Chamber deals with 19 individual MLAs tasked with working on consensus. They put together collective priorities, Hoefer explains, then create a mandate for their four-year term. His group looks forward to seeing the current mandate, expected to be released soon.

“Candidates don’t run on a platform but on a community-by-community basis, saying ‘this is what I would do for our community.’ So the challenge is pulling them all together to serve the entire NWT and try to keep them on that path over the next four years.”

Should problems remain unresolved, however, the territory risks an unfortunate repeat of late 1990s history.

NWT prosperity depends on rebuilding investor confidence, miners warn

Considerable infrastructure remains at the former
Pine Point operation, where Osisko Metals upgrades
Canada’s “largest pit-constrained zinc deposit.”
(Photo: Osisko Metals)

“We were in a similar situation before the first diamond mine opened because the gold mines were winding down. At the same time Nunavut was created, and the new territory pulled a lot of funding away to create a parallel government. The Yellowknife economy really took a dive and housing prices went way down. At the time the government was actually offering $10,000 grants to encourage people to buy homes. We went through a lot of pain then, but I think a lot of people have forgotten that.”

Even Ekati seemed insufficient to buoy the economy. “But when Diavik got its approval the change was palpable. There was this big sigh of relief, money started to flow and the economy turned around.”

Now the challenge is to overturn 12 years of neglect that have made investors “gun shy about the NWT,” he says. “We have to rebuild that trust by showing that things are different now. It’s going to take all of us working together to help make it better.”

With no other industries ready to take mining’s place, “we have to encourage companies to come up here and bring their expertise to do what government can’t do, and that’s turn rock into opportunity.”

 

Current and potential mines: Comparing job numbers and durations

 

NWT prosperity depends on rebuilding investor confidence, miners warn

While updating indicated and inferred resources,
Vital Metals sees near-term potential for a short-lived
operation at its Nechalacho rare earths deposits.
(Photo: Avalon Advanced Materials)

Employment numbers reported by the Chamber for the NWT’s existing diamond mines in 2018 show 1,625 workers at Dominion Diamond Mines’ majority-held Ekati, 1,113 at Rio Tinto’s (NYSE:RIO)/Dominion’s Diavik and 527 at De Beers’/Mountain Province Diamonds’ (TSX:MPVD) Gahcho Kué.

Projections for the territory’s four likeliest potential mines show estimated average annual employment of 363 workers at Prairie Creek (for 15 years), 300 at Pine Point (13 years), 225 at NICO (21 years) and 30 at Nechalacho (four years).

The NWT’s next mine will be Prairie Creek, according to NorZinc TSX:NZC. Built to near-completion by 1982 but never operated, the zinc-lead-silver project reached feasibility in 2017. The company hopes to receive its final permit, for an all-season road, this month. Should financing fall in place, NorZinc plans to begin production in 2022.

Having operated from 1964 to 1987, the Pine Point zinc-lead camp retains infrastructure including an electrical substation and an all-season 96-kilometre link to Hay River, the head of Canada’s only industrial railway north of 60. A previous operator reached PEA in 2017 but current owner Osisko Metals TSX:OM has been drilling the property to upgrade a 2018 inferred resource of 38.4 million tonnes averaging 4.58% zinc and 1.85% lead, for 6.58% zinc-equivalent, Canada’s “largest pit-constrained zinc deposit.”

Fortune Minerals’ (TSX:FT) NICO cobalt-gold-bismuth-copper project reached feasibility in 2014 based on a mill production rate of 4,650 tpd for a combined open pit and underground operation. A further study considered but rejected a rate of 6,000 tpd. Fortune now has several other proposals under consideration to improve the project’s economics and “align the development schedule with the expected deficit in cobalt supply in 2022-23.”

The project sits about 50 kilometres north of Whati, which will have an all-season connection to Yellowknife via the Tlicho road now under construction.

Avalon Advanced Materials TSX:AVL brought its Nechalacho rare earths project to feasibility in 2013 but this year divided the property with another company, privately owned Cheetah Resources which was taken over by ASX-listed Vital Metals in October. Under a $5-million property acquisition that closed soon after the takeover, Vital gets two near-surface deposits while Avalon retains the ground below that. Now working on an update to the indicated and inferred resources, Vital says its deposits show near-term “potential for a start-up operation.”

See the Chamber’s PowerPoint presentation to the NWT government.

Related:

Paved with promises

October 7th, 2019

The North’s infrastructure needs get some attention from campaigning politicians

by Greg Klein

This is the first of a two-part series. See Part 2.

Could this be the time when decision-makers finally get serious about Northern infrastructure? With one territorial election just concluded and a deficit-budget-friendly incumbent federal party campaigning for re-election, Yukon, Northwest Territories and Nunavut might have reason to expect definitive action demonstrated by men, women and machinery at work. But while some projects show real progress, much of Canada’s Northern potential remains bogged down in talk and studies.

The North’s infrastructure deficit gets some attention from campaigning politicians

That’s despite some $700 million allocated to the North in Ottawa’s pre-election budget and months of Liberal spending promises since then. Not all that money was intended for infrastructure, however, and even some of the projects labelled that way turn out to be social or cultural programs. Not necessarily new money either, much of it comes out of Ottawa’s $2-billion National Trade Corridors Fund, now two years into an 11-year program that promised up to $400 million for transportation infrastructure in the three territories by 2028.

Yukon, once again home to active mining, has $157 million planned to upgrade the North Klondike Highway from Carmacks up to the mineral-rich White Gold region, where the Dempster Highway branches off towards Inuvik.

The Klondike section slated for upgrades has connections to a new mine and a soon-to-be revived operation. Highway #11 turns east from the Klondike, meeting with a 90-kilometre year-round service road to Victoria Gold’s (TSXV:VIT) recently opened Eagle operation.

The Minto copper-silver-gold mine that Pembridge Resources plans to restart in Q4 has a 20-kilometre access road with seasonal barge service or ice bridge crossing the Yukon River to the Klondike Highway at Minto Landing. From there, the company will ship concentrate to the Alaska Panhandle deep water port of Skagway.

The North’s infrastructure deficit gets some attention from campaigning politicians

With no deep water facilities of its own, Yukon connects
with the Alaskan port of Skagway and, pictured above,
the B.C. port of Stewart. (Photo: Stewart Bulk Terminals)

Intended to increase safety and capacity while addressing permafrost thaw, the North Klondike Highway project gets $118 million from Ottawa and $29 million from the territory. The money will be spent over seven years beginning in 2020.

A July feasibility report for BMC Minerals’ Kudz Ze Kayah polymetallic copper mine foresees concentrate shipment along a 24-kilometre access road to southern Yukon’s Highway #4, part of a 905-kilometre journey to Stewart, British Columbia, the continent’s most northerly ice-free port.

Another project approaching development but more distant from highways, Newmont Goldcorp’s (TSX:NGT) proposed Coffee gold mine calls for a 214-kilometre all-season road north to Dawson City. But with upgrades to an existing service road, the route would require only 37 kilometres of new construction.

In the NWT, work began last month on the Tlicho all-season road to connect the hamlet of Whati with Yellowknife, 97 kilometres southeast. Expected to finish by fall 2022, the $200-million P3 project would replace an existing ice road, giving communities year-round access to the highway system and encouraging resource exploration and development.

[The Tlicho road], which includes Indigenous participation from the Tlicho Government, is great news for our industry and a positive step forward in addressing the infrastructure deficit in the Northwest Territories.—Gary Vivian, NWT and Nunavut
Chamber of Mines president

About 50 kilometres north of Whati, Fortune Minerals’ (TSX:FT) NICO cobalt-gold-bismuth-copper project undergoes studies for a scaled-down feasibility update in light of lower cobalt and bismuth prices. Fortune has already received environmental approval for a spur road to Whati, part of a plan to truck NICO material to Hay River where the territories’ only rail line (other than short tourist excursions in southern Yukon) connects with southern Canada.

A much more ambitious priority of the NWT’s last legislative assembly was supposed to have been the Mackenzie Valley Highway, a Diefenbaker-era dream that would link the territory’s south with the hamlet of Tuktoyaktuk on the Arctic Ocean. The subject of numerous studies, proposals and piecemeal construction for about 60 years, the proposal has received more than $145 million in taxpayers’ money since 2000.

A 149-kilometre stretch from Inuvik to Tuk opened in 2017, linking the ocean with the Dempster route to the Yukon. Now underway are studies for a 321-kilometre route between Wrigley and Norman Wells, where further driving would depend on an ice road. Assuming receipt of environmental approvals, native agreements and an estimated $700 million, the NWT’s last assembly hoped construction on the Wrigley-to-Wells portion would begin in September 2024.

Far more ambitious proposals for the NWT and Nunavut took initial steps forward with funding announcements made just prior to the federal election campaign’s official start. Part 2 of this series discusses the Slave Geological Province Corridor and Grays Bay Road and Port projects.

B.C. buys coal licences to resolve aboriginal dispute

May 5th, 2015

by Greg Klein | May 5, 2015

In an effort to placate a native band, Fortune Minerals TSX:FT and POSCO Canada have sold their British Columbia coal licences to BC Rail, a provincially owned railway company without a railway. Announced May 5, the $18.3-million sale of 61 claims totalling 16,411 hectares in northwestern B.C. contains a 10-year buy-back option should the Tahltan First Nation agree to development of the Arctos anthracite project.

B.C. buys coal licences to resolve aboriginal dispute

A 2013 company photo shows environmental field work underway.
As project operator, Fortune continues with land reclamation at Arctos.

Calling the deal a good outcome in the current market, Fortune president/CEO Robin Goad said the joint venture “invested significant funds” to try to resolve the band’s concerns. “Mining is a cyclical industry and, considering the weak metallurgical coal prices at the present time, it was considered prudent to step back from Arctos and focus our efforts on our near-term production assets.”

A PwC report on B.C. mining, also released May 5, noted that steelmaking coal now trades around $100 per tonne, “a considerable drop from its record price around $330 in 2011.” The report quotes Don Lindsay of Teck Resources TSX:TCK.A and TCK.B saying prices can’t recover without further production cuts around the world.

Fortune and the South Korean steel producer subsidiary will divide the proceeds evenly, with Fortune allocating its share to working capital and debt repayment. The company operates the Revenue silver mine in Colorado and holds the proposed NICO gold-cobalt-bismuth-copper mine in the Northwest Territories, along with exploration projects in the NWT.

CN TSX:CNR took over BC Rail’s railway system in 2004 in a highly controversial $1-billion deal that the province insisted was a lease, not a sale. Once the deal was complete, the BC Liberal government acknowledged the lease would run for 990 years. Corruption allegations and a police raid on B.C.’s legislature followed. In 2010 the province paid $6 million in legal bills for two government aides who pleaded guilty to corruption-related charges.

Although BC Rail no longer has a railway to run, the government kept the Crown corporation intact with management, board of directors and staff responsible for maintenance of a 40-kilometre spur line and property sales.

“It’s a new NWT”

October 7th, 2014

Miners welcome the Northwest Territories’ plans to encourage investment

by Greg Klein

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His tone sounded taunting, if only slightly so. While attending a meeting of resource politicos in Sudbury last August, Northwest Territories minister of Industry, Tourism and Investment David Ramsay told the Globe and Mail that the NWT’s “Ring of Ice” has resources to rival Ontario’s Ring of Fire. The huge difference, of course, is that the Ring of Fire remains all but inaccessible while the NWT’s riches have already been opened up. Now the territory has taken specific measures to emphasize it’s open for business.

That came through in the first annual implementation plan of the NWT’s Mineral Development Strategy. And the plan drew praise in an October 6 announcement from the NWT and Nunavut Chamber of Mines. The organization sees last April’s devolution of federal responsibilities for land, water and resources to the territory as a turning point for the industry. “The legislature has said mining development has big consequences for our government now,” chamber executive director Tom Hoefer tells ResourceClips.com. “So it’s saying we’re going to be more nimble on our feet, we’re going to encourage economic development.”

Miners welcome the Northwest Territories’ plans to encourage investment

The NWT has done so by setting ambitious goals, some with established budgets and target dates, on a number of fronts including energy, transportation and a “new leading edge Mineral Resources Act.” That marks a major departure from past practice, according to Hoefer.

“We’ve suffered a loss of reputation over probably the last seven years. If you look at our exploration figures during that period you can see our investment just flatlined. We saw Yukon, Nunavut and the rest of the world getting huge investment. We languished.”

Indeed, last year’s Fraser Institute Policy Perception Index placed the NWT nearly halfway down a list of 112 jurisdictions globally and sixth on a list of 12 Canadian jurisdictions.

“A big piece of this was the regulatory front,” Hoefer explains. “It was getting very complex, in part because we had a number of different land claim groups and that created a number of different regulatory boards. So the federal government launched a northern regulatory improvement initiative in 2009 and that culminated in amendments to the Mackenzie Valley Resource Management Act.” That was completed shortly before last April’s devolution milestone.

The NWT considers those amendments a starting point for a new regulatory environment. But the government’s not promising rapid reform. Calling this a “time of transition and learning,” the territory has come up with the slogan “devolve then evolve.” Still, it’s stated intentions to provide clear, concise documentation and to guide companies through regulatory processes and aboriginal engagement.

The territory already leads Canada in at least one respect, Hoefer maintains. “I’d say we’re probably a leader in the country for settling land claims. That helps provide more certainty.”

Devolution also brings the territory 50% of the royalties that once went solely to the feds. Aboriginal groups that signed onto the devolution agreement get 25% of the territory’s share, Hoefer says.

With grants announced just last week, a new mining incentive program has awarded a total of $396,000 to two prospectors and six exploration companies.

“A new and easier-to-use web portal for discovery and dissemination of geoscience information” will get $1.3 million over two years.

But that’s small change compared to price tags for infrastructure. Although money hasn’t been allocated yet, the NWT’s talking about a three-year, $31-million energy program and a 10-year, $200-million transportation plan.

None of the territory’s four existing mines connect to the grid. Only North American Tungsten’s (TSXV:NTC) CanTung operation has year-round road access—and that links to the Yukon.

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Territorial ambitions

July 31st, 2013

Four Northwest Territories projects reach regulatory milestones

by Greg Klein

It might be called a blip, a surge, a spike or a spurt but it more likely resulted from long periods of painstaking work. Just recently four Northwest Territories projects moved closer to development thanks to regulatory advancements. Fortune Minerals TSX:FT, De Beers Canada/Mountain Province Diamonds TSX:MPV, Avalon Rare Metals TSX:AVL and Canadian Zinc Corp TSX:CZN all reported significant progress over a three-week period.

On July 19 Fortune announced its proposed NICO gold-cobalt-bismuth-copper mine and mill received federal, territorial and native approval. By accepting the positive environmental assessment released by the Mackenzie Valley Review Board in January, three levels of government have allowed NICO to move towards water licensing, as well as land use and construction permitting. Given further approvals, not to mention financing, Fortune hopes to start construction next year on an open pit/underground operation 160 kilometres north of Yellowknife that could last nearly 20 years.

Four Northwest Territories projects reach regulatory milestones

Although surrounded by a wildlife reserve, Canadian Zinc’s development
has progressed through the NWT’s regulatory regimen.

Also recommended for approval by the Mackenzie Valley Environmental Impact Review Board was Gahcho Kué, described by its proponents as “the world’s largest and richest new diamond mine development.” Located 280 kilometres northeast of Yellowknife, it’s a 51%/49% joint venture of De Beers Canada and Mountain Province. The board’s recommendation, however, comes with conditions to prevent potentially adverse environmental effects. The federal minister of Aboriginal Affairs and Northern Development makes the final decision. In a statement accompanying the JV’s July 22 news release, De Beers COO Glen Koropchuk said his company’s reviewing the measures and follow-up programs recommended by the board. “We look forward to proceeding to the next stages in the regulatory approval process,” he added.

One week later Avalon announced it too received the MVEIRB’s recommendation, again subject to certain conditions “to mitigate the predicted impacts so that they are no longer significant.” In April the company’s Nechalacho rare earth elements project, about 100 kilometres southeast of Yellowknife, achieved the “first feasibility-level study to be completed on a major heavy rare earth project outside of China,” the company stated. Avalon maintained its resources might support 90 years of production “if the mining rate is unchanged and mineral resources are converted to mineral reserves at the same conversion rate experienced” in the feasibility. Applications for a water licence and land use permits continue, as do “efforts to finalize its aboriginal agreements, secure product off-take agreements, identify strategic partners and secure project financing.”

On July 8 Canadian Zinc announced the Mackenzie Valley Land and Water Board had recommended approval of a Type A water licence, “the key regulatory permit needed for the construction, development and operation” of its Prairie Creek zinc-lead-silver mine. Located about 500 kilometres west of Yellowknife, the project has been surrounded by the Nahanni National Park Reserve since the park’s six-fold expansion in 2009. Prairie Creek received environmental approval in June 2012. Already in place are a 1,000-tonne-per-day mill, five kilometres of underground workings, a surface fleet and an airstrip.

The four announcements were welcomed by the NWT & Nunavut Chamber of Mines. In a July 27 statement chamber president and De Beers director of external and corporate affairs Cathie Bolstad said, “While the minerals industry is currently facing significant financial and commodity price challenges globally, the continued advancement of these and other significant northern projects helps invite investment to the Northwest Territories and Nunavut. This will help sustain and grow our industry, which is a significant provider of economic opportunities and benefits to northern residents and Canada.”

Effective April 2014, responsibility for NWT onshore resource development will shift from the federal to the territorial government. Public land ownership will also be transferred, while resource royalties will be shared. At last count the territory’s population stood at 43,407.