Western Copper and Gold Corporation’s proposed Casino copper mine would have far-reaching affects on the territory’s economy if it proceeds, says a new report prepared for the company.
If developed, the monstrous open-pit copper project could create more than 600 full-time jobs and generate $56 million in salaries during its 23-year life, says the report done by MNP LLP.
It says the mine would contribute a total of $6.5 billion to the territory’s economy, swelling gross domestic product by nearly 20 per cent.
And it would dump $1.3 billion into the territorial government’s coffers, through taxes and royalties, it says.
But all of that would not be without any cost, says the report. The mine may also exacerbate the territory’s existing shortage of housing and skilled labour, as well as put a new strain on infrastructure and government services.
Still, the project would amount to a big net gain to the territory, said CEO Paul West-Sells in an interview. “This project is a benefit to the Yukon and all Yukoners.”
But the Casino deposit, located about 300 kilometres northwest of Whitehorse, is too big for the Vancouver-based exploration junior company to develop on its own.
That means Western Copper will either have to find a partner with deep pockets or sell the property to a large producer if Casino is ever going to be put into production.
In the meantime, the company is firming up Casino’s worth with a bankable feasibility study, which ought to be complete by the end of 2012.
It’s also preparing its project proposal for the Yukon Environmental and Socio-economic Assessment Board. It hopes to submit that by late 2012 or early 2013. The MNP economic impact report will be part of that submission.
If the mine opens, the territorial government could expect to net an additional $42 million annually from taxes and royalties, the report estimates.
That’s a far cry from the lofty figure of $250 million in annual royalties which was bandied about at one point by industry boosters. But it’s still a lot of loot.
It could be even more if Yukon Premier Darrell Pasloski succeeds in negotiating a new devolution deal with Ottawa. As it stands now, the Yukon would forfeit an additional $18 million in annual royalties, which would be clawed back by the federal government.
Opposition leader Liz Hanson has been heavily critical of the territory’s royalty regime. She has suggested it has big holes, noting companies may write off royalty payments until the cost of building its mine is paid off.
Casino would cost a lot to build - more than $2 billion. Yet the company envisions paying that cost off in a little more than three years, if copper prices stay above $2.50 per pound and gold above $1,100 per ounce.
“At current commodity prices, you’re looking at payback in two years,” said West-Sells. “For a project with a 23-plus mine life, that’s a lot of years of paying a lot of taxes and royalties.”
The Yukon government has never collected hardrock royalties since it assumed responsibility for the territory’s natural resources in 2003. But it should soon.
Capstone’s Minto mine pays its royalties to the Selkirk First Nation, which owns the land that the mine sits on. Yukon Zinc’s Wolverine and Alexco Resources’ Bellekeno mines haven’t yet started to pay royalties, but they are expected to in the next year or two.
Casino’s construction would require 1,600 workers over four years, says its report. Total salaries would be worth $25 million and the territory would net $17 million in taxes.
Casino’s construction is expected to create $1.6 billion in gross domestic product over four years, the report says. That’s twice as much economic activity as the construction of the Canada Games Centre in half the time.
The mine may also become a big customer for the territory’s fledgling oil and gas industry. Western Copper plans to power its mine with liquified natural gas trucked up from a custom-built plant in Fort Nelson, B.C.
Northern Cross, backed by a big Chinese oil and gas producer, is poking around the Eagle Plain Basin in northern Yukon in the hope of exploiting gas in the area. First Nations are looking at how to get this gas to market.
The Yukon government is also considering opening up the Whitehorse Basin - an area that stretches from Carcross to Carmacks - to oil and gas exploration.
“I think those are two great, potentially longer-term options for Casino,” said West-Sells. “I hope they get developed.”
Contact John Thompson at