Nice work – and Yukon gets it, with major mine projects ahead, By James Brewer
Since the Klondike Gold Rush of 1898, minerals have buttressed the economy of the Canadian territory of Yukon. To this day, exciting discoveries on a giant scale are being made in this northern cornucopia of natural resources.
Member companies of the Yukon Gold Mining Alliance recently sent senior executives to London and other European financial capitals to set out to investors the latest news on their story. The alliance is a group of exploration, development and mining companies seeking to increase awareness in the capital markets of the individual companies, to promote Yukon, and by common initiatives to minimise marketing costs.
Territory officials say that there are 2, 700 known mineral occurrences and more than 80 mineral deposits with established reserves.
During the London presentation, Murray Arsenault, deputy minister for economic development, spoke of the competitive advantages of Yukon, including well maintained highways to the ports of Skagway and Haines in Alaska, and Prince Rupert in British Columbia. Skagway boasts of being the northernmost, ice-free, deep water port in North America.
These ports are the closest in North American to primary Asian consuming interests. For instance, the Alaskan ports are some 2, 000 miles closer than Los Angeles to target areas served by Tianjin, the third largest port in China. In fact Tianjin claims to be the fourth largest port globally in terms of total cargo throughput.
Although ranked as one of the top mining jurisdictions, Yukon remains largely under-explored, despite hosting the prominent geological trend known as the Tintina gold belt, which it shares with Alaska. The territory even has in its northeast one of North America’s largest iron ore deposits.
It is so mineral-oriented that the capital, Whitehorse, has a copper mine within its city boundaries. The rest of its 480, 000 sq km– an area the same size as England and Germany together – is blessed with 4, 800 km of all-weather roads, many airports and clean energy (the territory is already 95% hydro-electric driven), for a population of just 36, 000.
Victoria Gold Corp, listed on the TSX-Venture Exchange, says that it has the most advanced gold project in Yukon. Victoria Gold is moving the Eagle Gold deposit, which hosts 2.3m ounces of proven and probable gold reserves, towards production. In terms of the overall resource, the Indicated Resource is 4.8m ounces of gold and the Inferred Resource is 1.5 m ounces gold.
John McConnell, president and chief executive, said that the Eagle open-pit project is on track to be the largest gold mine in the history of Yukon. The company aims to secure project financing in 2014 (construction and working capital requires Can$430m), and immediately begin work to move into production in 2016. Independent engineers have delivered a first draft report to potential lenders who could be involved in providing senior secured project debt of between $210m and $250m.
The deposit, in an area known as Dublin Gulch, has year-round road access. Shares in Victoria Gold, which has a market capitalisation of around Can$44m, are 55% institutionally held, including 16% by Kinross Gold and 13% by Sun Valley Gold.
Victoria continues to explore the possibility of acquiring other projects in the Yukon to build on its mineral inventory.
Mr McConnell, who has had 35 years in the mining industry, said of Yukon: “It has been the best region I have worked in.” It had none of the geopolitical risk associated with most other regions, and an outstanding mineral endowment.
A separate TSX-Venture company, Prophecy Platinum, has what it says is one of the world’s largest undeveloped platinum group metals deposits, amenable to open-pit minig with bulk underground potential.
Named Wellgreen, the deposit has been described as the third largest undeveloped platinum group metals resource outside southern Africa and Russia. With a 15km all-season road to the paved Alaska Highway, it is located in the southwest corner of Yukon, 410km from the port of Haines, and 485km from Skagway. Full transport and logistics studies are in progress.
According to a preliminary economic assessment, estimated potential production is 7m ounces of platinum group metals and gold, 2bn lbs of nickel, and 2bn lbs of copper. Rob Bruggeman, vice-president for corporate development, says that there is a severe platinum metals supply risk globally as production is concentrated in politically unstable jurisdictions. Platinum production from South Africa and Russia has been declining since 2006.
Wellgreen’s timeline includes feasibility studies, final permitting and construction in 2015-16.
In the Sudbury district of Ontario, Prophecy Platinum has a production-ready open pit mine capable of average annual output of 25, 000 ounces of platinum group metals and gold, 8m lb of nickel, and 10m lb of copper. It is a brownfield project, with potential to ship the ore to regional Xstrata or vale facilities.
The third company presenting to London investors recently, Western Copper and Gold, listed on the same exchange as the two earlier businesses, says that it holds significant gold, copper and molybdenum resources and reserves in its Casino Project located in Yukon, and 560km away from the port of Skagway.
Paul West-Sells, president and chief operating officer, said: “This is a huge gold mine, that also is a copper mine.” Extending the pit could add significant years to mine life, he said, describing Casino as a world-class resource. Some 380km northwest of Whitehorse, it contains 8.9m ounces of gold, 4.5bn pounds of copper, 483m lbs of molybdenum and 65m ounces of silver in proven and probable reserves.
Its markets would include Japan and South Korea – Yukon was a lot closer to them than suppliers from South America. A feasibility study at the beginning of 2013 estimated capital cost including infrastructure at Can$2.5bn, for a 120, 000 tonnes per day open pit.
An economic impact report earlier in 2013 estimated that the Casino project would contribute $9.7bn to Canada’s gross domestic product. Dr West-Sells said that the plan is to begin construction in 2016, with gold heap leach production in 2017 and milling operation the following year.
The Yukon Gold Mining Alliance is a non-profit association founded in 2009, All member companies must have identified resources and significant project expenditures in Yukon, and adhere to a corporate sustainability policy including community relations, environmental responsibility and labour relations.
A representative of the Alliance said that the question had been asked, why are you even marketing in these economic times? The answer was: “From our perspective these markets will turn around, and we wanted to give you the most up to date information.”