Selwyn Chihong puts mine project on hold

Selwyn Chihong has delayed plans to develop a lead-zinc mine on the border of Yukon and the Northwest Territories by at least a year, citing low metal prices.

Selwyn Chihong has delayed plans to develop a lead-zinc mine on the border of Yukon and the Northwest Territories by at least a year, citing low metal prices.

The Chinese-owned company had hoped the mine would go into production in 2022 and operate for at least 11 years.

Maurice Albert, vice-president of external affairs for Selwyn Chihong, said the plan had been to open the mine in time to capture an expected increase in zinc prices around 2020.

“However, with the downturn in the metal prices and the downturn in the world economy, zinc prices are not as buoyant as we expected,” he explained.

He now expects that zinc prices will peak sometime after 2020.

Selwyn Chihong’s decision has been a long time in the making. Albert said the company started discussing the issue internally last summer, and informed the Kaska Nation of the possible delay last fall. The mine site is located in Kaska traditional territory.

The final decision to put the project on hold was made in December.

The issue has come to light now because the Ross River Dena Council and Liard First Nation were supposed to vote on a participation agreement with Selwyn Chihong on Monday this week. The agreement was announced in late October, less than two months before the company decided to shelve the project, and when it apparently already knew of the possible setback. That vote has since been cancelled, and the agreement has been removed from the company’s website.

But Albert said the agreement has just been postponed, not scrapped.

“It is the intent of Kaska and ourselves definitely to keep that agreement in place.”

Albert said the delay isn’t all bad news for the Selwyn project. In fact, he said, it will give Selwyn Chihong a chance “to make it a bigger and better project.”

The company has plans for another exploration program this summer that it hopes may define additional deposits that could extend the mine life by eight to 10 years.

Albert said the company still hasn’t decided how much it will invest in this year’s program, but he expects a decision by the end of the month.

In 2014, Selwyn Chihong spent $32 million on mineral exploration. Last year, the company was expected to spend about $40 million, but ended up investing just $7.4 million.

Albert said the company had been hoping to enter the permitting phase for the mine by October 2016. Now, he said, that won’t happen before 2017.

But he said Selwyn Chihong remains committed to the project.

“There’s a little bit of disappointment from our staff,” he said. “However, when you consider that we’re looking at adding another 10 years of mine life to the project… from that perspective, the staff are very excited about undertaking this additional development.”

Albert said he’s pleased that the Yukon government and the Kaska Nation have recently signed a framework agreement to guide negotiations on future resource agreements. He said that agreement, announced last month, has nothing to do with Selwyn Chihong’s decision to delay the Kaska vote.

“We feel that we do have a strong relationship with (the Kaska),” he said. “For us as a company, we’re pleased to see that agreement put in place.”

The delay is the latest in a string of bad news for Yukon’s mining industry. Last month, Capstone Mining announced that its Minto mine will likely go into temporary closure in 2017, which would leave the territory with no operating hard-rock mines.

Last November, the governments of Canada and the Northwest Territories acquired the Cantung mine and Mactung property on the Yukon/N.W.T. border. The decision was made after Cantung’s previous owner, North American Tungsten, failed to find a suitable buyer for the sites.

And Yukon Zinc’s Wolverine mine remains in care and maintenance over a year after it shuttered, citing low commodity prices.

But Samson Hartland, executive director of the Yukon Chamber of Mines, insists the outlook isn’t entirely bleak.

“We’re confident of many of the projects that exist in Yukon,” he said, listing Kaminak’s Coffee project and Victoria Gold’s Eagle Gold project as examples. “There’s a lot that we feel positive about.”

He said there’s a lot of work going on behind the scenes to make sure the Yukon is ready to bring new projects on-line when mineral prices rebound.

For instance, he said, Yukon government and mining representatives were recently in Ottawa to discuss a northern resource gateway project that would upgrade the Goldfield, Casino, Freegold and Nahanni Range roads to improve mining access in the Dawson and Nahanni Range areas.

The Yukon government has recently submitted a funding application to the federal government for the project, which would cost about $300 million.

Though the discussions in Ottawa didn’t produce any firm commitments, Hartland said it’s clear the Yukon government, First Nation development corporations and mining companies were all “speaking with one voice.”

And Hartland said he’s confident about the future of the Selwyn project.

“There’s no question that at some point it’s going to proceed,” he said. “It’s not a question of ‘if,’ it’s just a question of ‘when.’”

Contact Maura Forrest at

maura.forrest@yukon-news.com

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