If Yukon Energy Corp. can build it, Sherwood Copper Corp. will come.
Last week, the two corporations signed a letter of intent to build and use a hydroelectric power line from the Whitehorse grid.
If they come to an agreement, and if the Yukon Utilities Board approves, construction of the line could begin next year.
“Basically we’re saying that if (Yukon Energy) can build a transmission line, we’ll buy the power,” said Stephen Quin, president and CEO of Sherwood Copper, which owns the high-grade copper-gold deposit at Minto, across the Yukon River from the North Klondike Highway and roughly halfway between Carmacks and Stewart Crossing.
The Minto minesite is widely believed to be the Yukon’s next major mining project.
Heavy equipment was trucked across the river this winter, and stripping of the open pit mine should begin in July.
The mine will initially be powered by diesel fuel, like many communities in rural Yukon, including Pelly Crossing.
But if Yukon Energy can build a power line from Whitehorse to deliver the three megawatts that Minto needs, diesel consumption along the highway could drop to almost nil.
“Grid power, provided off Yukon Energy’s Whitehorse hydroelectric grid, could significantly reduce the power generation costs for the Minto project versus on-site diesel generation,” Quin said in a release.
“This would be a win-win situation for all stakeholders.
“The Minto project would benefit Sherwood’s shareholders with lower operating costs and therefore higher profits, thus paying higher taxes and royalties to the Yukon government and, through them, the Selkirk First Nation.
“Yukon Energy would gain infrastructure and a significant stream of revenue by utilizing surplus hydroelectric capacity that has no current customers.”
Currently, a hydroelectric transmission line from the Whitehorse dam only runs as far as Carmacks.
Yukon Energy has been considering extending a 138-kilovolt line — equal to the size of the 70-megawatt Whitehorse/Aishihik power grid — from Carmacks to Stewart Crossing, to tie the Whitehorse grid and the Mayo-Dawson transmission line together, said CEO David Morrison.
“If we built that, then we would build tap lines into both the Minto mine and, hopefully, one day, the Carmacks Copper mine owned by Western Silver,” Morrison said Friday.
“If we do that, it’s a $20-million or a $30-million project. If we built just a small line overland to Minto, it’s $6 or $7 million.
“It really depends, from a strategic point of view, on whether we’re trying to look at the future and build the big line and connect the grids and then tap the mines, or we’re just going to build lines that are sufficient to tap into the mines.
“Our preference would be the larger line, because it has a more long-term strategic benefit.”
And it could get rural communities like Pelly off diesel fuel.
Regardless of which project goes forward, a transmission line would cross land owned by at least one of the Northern Tutchone First Nations.
The larger project would affect the traditional territories of the Little Salmon/Carmacks First Nation, Selkirk and the First Nation of Na-Cho Nyak Dun.
“We have met with them,” said Morrison.
“We are working with them to get their support and, hopefully, come to some agreement with the three First Nations about the best way this project should proceed for their interests, from their point of view as well.”
Sherwood is hoping Yukon Energy will be able to deliver grid power by the end of 2008.
And the company is willing to pay the same rates as other major industrial clients in the Yukon.
“This is setting the stage for us to negotiate with them on coming to an agreement on when and how much power and at what rate, and so on,” said Morrison.
“We’ve agreed to sit down and negotiate a power purchase agreement, which would lay out the terms under which they would buy power from us, what rates and costs, all of which is subject to the approval of the public utility board.
“We are committing our resources to seek approvals to build the line, but we can’t commit to doing something we don’t have the regulatory and financial approval to do.”
Either project would have to be proven economic on paper, before the utilities board would give the green light to financing.
And there’s permitting and the Yukon Environmental and Socioeconomic Assessment Board to consider, said Morrison.
The larger project would allow Yukon Energy to move more power over longer distances, he said.
“There is enough surplus power now for Minto and the Carmacks Copper mine,” said Morrison.
“They may run a few days in the winter when we’re peaking with diesel, but that’s a pretty insignificant cost, and it’s only at peak.”
If approved, the project could offer a substantive benefit for electricity ratepayers across the territory, he added.
“Think about the additional revenue we would get. It’s a downward rate driver, from our perspective, so that’s a good thing for everybody else.
“From our perspective, it’s a good project.”