North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Vancouver-based junior Cash Minerals received good and bad news from the completion of a feasibility study on its Division Mountain coal project in the Yukon, 56 miles northwest of Whitehorse. The good news: a mine is technically and economically feasible. The bad: exporting the coal would be uneconomic, so the product would have to be sold to a 50-megawatt mine-mouth power station - also still on the drawing board.

An open pit mine could produce 240,000 metric tons of unwashed coal per year for 20 years, according to the feasibility study, which was completed by Salt Lake City-based Norwest, a coal and energy engineering consultancy. A payback period of 4.4 years is estimated for the initial capital investment of $14.5 million.

In conjunction with the Division Mountain mine feasibility study, Cash Minerals also commissioned a preliminary pre-feasibility study on the potential mine-mouth power station. The study estimates an operating cost of 12.2 cents per kilowatt hour, which compares favorably with Yukon Energy's 2005 residential rate of 13.74 cents per kWh and general service rate of 15.39 cents per kWh.

Botha: Yukon needs power

"Unless there is sufficient power in the Yukon there will be no industrial development of any significant size," said Basil Botha, Cash Minerals' president and CEO. "It makes economic sense to utilize the Yukon's abundant coal resources to generate electricity, rather than continuing to generate electricity from imported diesel. A coal-fired power station at Division Mountain would utilize state-of-the-art technology to ensure that best environmental practices are followed. The power station would generate electricity at a reasonable cost to the consumer without the need for subsidies. This will ensure that the projections for future growth in the Yukon will in fact take place."

The preliminary power station pre-feasibility study was completed by SNC-Lavalin, a specialist in services for thermal power projects, including coal-fired generating plants. The study proposes that the Division Mountain power plant would utilize circulating fluidized bed combustion technology. These modern units use crushed limestone as the sulfur absorbent, which helps to reduce emissions.