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In Search of Silver (or gold or copper) Linings

B.C.’s mining industry looks to rebuild in 2015, after three tough years

by Brenda Bouw

British Columbia’s mining industry is still smarting from a steep drop in prices of some of its key commodities such as coal, copper and gold. The latest downturn, now well into its third year, has forced many companies to slash spending across the board on everything from staff to capital costs, stall development of new projects and put some existing ones on hold. Examples include the delayed restart of Teck Resources Ltd.’s Quintette coal mine, which operated for nearly 18 years up until 2000, and the suspension of operations at Anglo American plc’s Peace River Coal mine, both due to slumping coal prices.

That’s in sharp contrast to early 2011, when commodity prices bounced back from the global recession, hitting record or near-record highs. Back then, miners were musing about ramping up operations and readying to hit the start button on a handful of new mines, including Copper Mountain in 2011, New Gold Inc.’s New Afton gold in 2012 and Thompson Creek Metals Co.’s Mt. Milligan copper/gold mine in 2013.

Association for Mineral Exploration BC president and CEO Gavin Dirom sees the next year or two as a “rebuilding” phase for miners in B.C. Companies will be re-evaluating the economics of new projects if metal prices stay depressed, while trying to find financing from tight-fisted investors. Meantime, the opening of the Northwest Transmission Line last fall is expected to help advance a handful of projects in northern B.C. “I think we’ll see a number of projects progress but not necessarily get into production or operation,” says Dirom.

While the market may be down, don’t count B.C. miners out. Many continue to plot their comeback, including the ongoing development of new projects on the horizon. In the pages that follow, we explore some of the more advanced projects in the province.

Red Chris (Copper/Gold)

Owner: Imperial Metals

LocatioN: 80 km south of Dease Lake in northwest B.C.

Status: Red Chris is expected to begin commercial production in early 2015, following some delays. The company has also been dealing with the breach of its Mount Polley tailings dam (see “The Spillover Effect,” p.68) in August 2014. A third-party review of the Red Chris tailings dam has been conducted. 

Imperial says the cost of constructing Red Chris mine is estimated at $643 million as of the third quarter of 2014.

Blackwater (Gold/Silver)

Owner: New Gold Inc.

Location: 160 km southwest of Prince George and 110 km southwest of Vanderhoof

Status: Citing the lower price of its key commodity, New Gold said in late 2013 that Blackwater would be delayed and that it would focus instead on its lower-cost Rainy River project in Ontario. Blackwater is expected to cost about $1.8 billion to build, based on a 2013 feasibility study. The company continues to advance the Blackwater project through the permitting phase and filed the project’s final environmental assessment report with regulators in October 2014.

Kitsault (molybdenum)

Owner: Alloycorp Mining Inc.

Location: 140 km northeast of Prince Rupert

Status: The project received its environmental assessment certificate from the B.C. government in 2013 and an amended mines act permit in 2014.  Construction started in the summer of 2014, and production is expected to begin in 2017. Total investment into the project is estimated at $1 billion. Once developed, Kitsault is expected to become one of the world’s largest primary producers of molybdenum, a metal used to strengthen steel.

brucejack (Gold/Silver)

Owner: Pretium Resources Inc.

Location: About 65 km north of Stewart

Status: Permitting is underway for the underground mine, and the project is in the midst of an environmental assessment by both the provincial and federal governments. The company is now seeking financing to help build the mine, which is estimated to cost about $747 million (U.S), based on a 2014 feasibility study. Production is estimated to start in 2017.

Tulsequah (Copper/Zinc/Lead/Silver/Gold)

Owner: Chieftain Metals Inc.

Location: Northwestern B.C. on the Tulsequah River near its junction with the Taku River, about 100 km south of Atlin

Status: Construction is expected to start this spring, subject to financing. Production is scheduled for the fourth quarter of 2016. The project will cost about $198 million, which is lower than previous estimates.