Gold miners brace for another tough year

The outlook for Yukon's mining industry is not great for 2015, says John McConnell, president of Victoria Gold Corp.

The outlook for Yukon’s mining industry is not great for 2015, says John McConnell, president of Victoria Gold Corp.

Victoria Gold owns the Eagle gold project north of Mayo, which is fully permitted for construction but has yet to find the financial backers to get the mine going.

It’s the largest mine ever permitted by the Yukon Environmental and Socio-Economic Assessment Board, and would require a capital injection of about $400 million for work to begin.

Because the mine is fully permitted, work could technically begin this spring, said McConnell.

But chances of finding the necessary financial backing will remain slim until there’s a major turn-around in the gold price and financing markets, he said.

No large-scale North American gold project has been financed in about three years, said McConnell.

“Certainly now that doesn’t look great, but things do turn around quickly in this business.”

Getting the project financed will basically come down to how investors feel about the long-term prospects of the gold price, he said.

“People are very unwilling to speculate on that these days. You see fluctuations of $50-100 on a weekly basis, up and down. So people are just nervous, and until we see a fairly long-term price, probably in the $1,300-1,500 range, I don’t think the confidence will come back to finance gold projects.”

The Conference Board of Canada predicted last month that Yukon’s gross domestic product would grow 6.6 per cent in 2015, and based that projection largely on the assumption that construction would begin at the Eagle mine this year.

That’s not terribly realistic, said McConnell.

“It was a bit of a naive comment. Obviously they themselves don’t pay attention to capital markets and gold price. I’m not sure what the basis was for their comments.”

In recent years the conference board has been making its economic projections based on the most optimistic timelines from mining companies, regardless of the actual likelihood of those events coming to pass. This has resulted in frequent over-estimation of GDP growth.

For example, in March of 2013 the conference board predicted 6.3 per cent GDP growth for the Yukon in 2013. As we now know, the Yukon’s GDP shrank by 0.9 per cent in 2013.

That report suggested that construction would begin on Copper North’s Carmacks Copper mine in 2014. Today that project is undergoing a new preliminary economic assessment to re-evaluate its financial feasibility, and has yet to even enter the environmental assessment process, which can take years.

The report also predicted increases in production at existing Yukon mines in a year where the Bellekeno mine announced a temporary (but ongoing) shutdown and the Wolverine mine laid off 100 workers.

The conference board could not be reached for comment by press time to answer questions about these discrepancies.

Modest work will continue at the Eagle project site this year, said McConnell.

The company plans to continue exploration work at satellite deposits and make some upgrades to the access road, he said.

“We will be continuing to be one of the few explorers in the Yukon this year.”

Contact Jacqueline Ronson at

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