Conservationists dismissed Chieftain Metals Inc.‘s recently-released feasibility study for its proposed underground mine near Atlin, B.C.
It shows just how unviable the Tulsequah Chief project is, said Chris Zimmer of Rivers Without Borders this week.
The project has “robust economics,” Victor Wyprysky, company president, said in a press release last month.
The study proves the opposite, said Zimmer.
The company estimates its mine would process 2,000 tonnes of zinc, copper, lead, gold and silver ore a day. It plans to ship the ore to Skagway, Alaska. But the amount of reserves, estimated at 64.5 million tonnes, is listed as “probable.”
“That’s not a ringing endorsement for the mine here,” said Zimmer. Most mines at this stage list their reserves as proven, he said.
It would cost nearly $440 million to get the mine to production. An estimated $64 million would be needed to keep it running over its nine-year mine life. At its peak, the mine would have 267 workers, including contract staff. Chieftain hopes to have enough money to start building this spring, and to start production near the end of 2015.
With a post-tax return on investment listed at just under 15 per cent, investors don’t stand to gain a lot from the project, said Zimmer. This is based on current metal prices.
“Even their own numbers show it is barely economic and is incredibly sensitive to changes,” he said, adding that any change to the company’s “rosy assumptions” could send them into the negative.
But what the report omits is more troubling, he said.
Its section about the company’s relationship with the Taku River Tlingit First Nation, whose traditional territory the mine sits on, is “appalling,” said Zimmer.
Right now, there is a Letter of Understanding between the company and the First Nation. The company will continue to “work meaningfully” to complete a future agreement with the First Nation, the report says.
But striking such an agreement seems unlikely. In November, the First Nation formally opposed the project as currently proposed.
The First Nation says the benefits agreement offered by the company isn’t on par with similar deals across the country. The First Nation says it intends to “take all necessary steps to ensure that the Tulsequah Chief project, as currently proposed, is not developed on Taku River Tlingit Territory.”
“I think the fact that the Tlingit oppose the damn thing is a clear indicator that they’re not anywhere close to signing an impacts and benefits agreement, and that is something that could really, really hold up the project,” said Zimmer. “And I think with the growing Idle No More movement and other issues that the First Nations are bringing up, for Chieftain just to ignore the Taku River Tlingit here, I think it’s insulting. It’s arrogant, it’s a real flaw here. I can’t see how they can ignore this opposition and simply conclude that the TRT are all of sudden going to come around and sign an agreement.”
The First Nation also has concerns about how acid run-off from old mine sites would impact the salmon living in the nearby Taku River. Commercial and subsistence fisheries operate from May to October.
In June, the company shut down the water treatment plant it opened in late 2011. Costs were four times higher than originally estimated. It has not said when the plant will re-open.
Since then, the company has been in a state of non-compliance with its permit under the Environmental Management Act. The company is submitting water quality reports to the government, the B.C. Ministry of Environment confirmed this week.
The water treatment plant is only clearly mentioned once in the report, said Zimmer.
The First Nation did not respond to interview requests before deadline. And Chieftain has yet to issue a statement about the First Nation’s opposition to its project.
The company still needs to build a 128-kilometre road from the end of Warm Bay Road, south of Atlin, B.C., to the mine site. The company has all the permits it needs to build the road, the B.C. Ministry of Forests, Lands and Natural Resource Operations, said this week.
Wyprysky declined to answer any questions when reached for comment this week.
The First Nation has also expressed concerns about how the road would impact caribou in its traditional territory, and that the road would not be decommissioned.
Chieftain plans to decommission the road as part of its cleanup work, the report says. It also plans to conduct regular water testing for 10 years after the mine closes.
But even if Chieftain had local support, finding customers may be hard. There’s too much arsenic in the copper at the site to sell it to China, so the company will have to look to ship the product to India, Europe or the Far East, the study says.
“If you don’t have buyers for your product, I don’t know how you can say your mine is feasible. It just doesn’t make any sense,” said Zimmer.
Rivers Without Borders is working on a more detailed report about the feasibility study, he said.
Contact Meagan Gillmore at
mgillmore@yukon-news.com