Territorial woes

June 03, 2013

On paper it’s onwards and upwards for mining in the three territories. But challenges remain, and each territory has experienced setbacks as metal markets soften.

All three territories have seen exploration expenditures slump this year. Nunavut has dropped from $443 M to an estimated $312 M. NWT has fallen sharply from $114 M to likely less than $50M. In Yukon exploration expenditures have been halved to $111M from 226M in 2012.

Each territory has more recent events to add to their woes:

• Nunavut’s giant Mary River iron ore mine was scaled back from $6B, to now only $775M, a massive cut in planned CAPEX. Cash-starved ArcelorMittal had to curtail its aggressive mining plan on Baffin Island.
• In NWT, the promising Nechalacho rare earths mine has been cast into doubt as the Yellowknives First Nation withdrew support unexpectedly. Personalities at the bargaining table could not get along, but one account.
• In Yukon, tiny silver producer Alexco Resource Corp. announced 30 positions would be eliminated in a move to cut costs at its Bellekeno mine. Victoria Gold has put off construction of its Eagle gold mine near Mayo, after failing to raise the capital (approx. costs of $400 M) required to fund the mine construction.

Commentary

The metal markets have tanked and are affecting the north. Silver peaked in Sep-11 at around $43/oz. and has declined to $22.72/oz. today. Hence the move by Alexco to cut costs. The Hecla Greens Creek mine (Alaska) is more protected by a richer deposit.

Capital markets for small mining companies are very challenging. Small Victoria Gold was unable to proceed with the Eagle mine due to tough market conditions.

The economies of all three territories are weaker than a year ago due to weaker markets and a faltering world economy.

Sources

• a)"Head and shoulders above the rest", Up Here Business, Apr-2013, p.7.



• b)Chuck Tobin, "Lay-offs cover a wide spectrum of professions", Whitehorse Star, 3-Jun-2013, p.3



• c)http://silverprice.org/silver-price-history.html