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Mining fuels economic growth in the North

Territorial Outlook sees Yukon, Nunavut booming, NWT down North of 60 Mining News – May 4, 2018

Mining is expected to fuel strong economic growth in Nunavut and Yukon in the coming years, according to The Conference Board of Canada's latest Territorial Outlook.

"With many new mining projects on the horizon in Nunavut and Yukon, growth is expected to take off over the next five years," said Marie-Christine Bernard, director, provincial and territorial forecasting, The Conference Board of Canada.

The conference board's outlook for Northwest Territories, however, is not quite so bright.

"The territories' mining sector has wind in its sails, but economic growth is uneven across the regions," said Bernard. "In the Northwest Territories, fewer developments in mining and declining diamond production are expected to weigh on economic prospects."

As a result, the economy of Canada's three territories is expected to expand by 1.9 percent in 2018 and 3.1 percent in 2019.

New mines bolster Yukon GDP

Weak metals prices and lack of exploration investment has discouraged any major mining developments and led to mines shutting down in the Yukon in recent years, which has weighed heavily on the territory's economy.

"Economic prospects in the territory should begin to improve this year, as the life of its only remaining mine has been extended and three new mines are scheduled to open over the next 10 years," The Conference Board of Canada penned in its report.

Minto, the Yukon's sole large-scale operating mine, was scheduled to be shut down last year but Capstone Mining Company, the mine's current owner, extended the life of the operation to mid-2021.

In 2017, Minto produced 16,332 metric tons of copper, along with 170,809 ounces of silver and 25,205 oz of gold. Capstone anticipates the mine to produce roughly 19,000 metric tons of copper this year.

Pembridge Resources is currently in the process of purchasing the Minto Mine and management of the Great Britain-based mining company has identified a number of potential operating efficiencies that it believes could significantly lower operating costs.

"Minto fits perfectly with the company's stated goal to acquire a producing and profitable mining operation to which our team can add further value," said Pembridge CEO David Linsley. "This acquisition will represent a core asset to Pembridge and will be used as a platform for future growth."

With new mines being built, construction will also be an important contributor to Yukon's economy over the next few years.

In April, Victoria Gold Corp. received an initial C$174 million installment of a C$505 million financing package the company put together for the development of the Eagle Gold Mine project on its Dublin Gulch property in the Yukon.

This financing provides Victoria Gold with all the funds needed to develop an open-pit, heap-leach operation at Eagle Gold that is designed to produce around 190,000 oz of gold annually over an initial 10-year mine life.

This opening stage for Eagle Gold is based on 123 million metric tons of reserves averaging 0.67 grams per metric ton (2.66 million oz) gold.

At the same time, Goldcorp is making headway on developing a mine at its Coffee gold project in Yukon's White Gold District.

This mine is expected to produce 184,000 oz of gold annually over an initial 10-year mine life, according to a 2015 feasibility study.

With permitting for Coffee currently underway, Goldcorp is targeting commercial production at its Yukon gold property by 2021.

Due to some opposition by local First Nations, however, many questioned whether the company would meet this target.

A May 1 agreement with the Tr'ondëk Hwëch'in First Nations resolves much of this uncertainty and keeps the mine project on schedule.

While The Conference Board of Canada expects construction in the Yukon to shrink this year, it forecasts this sector of the territory's economy to expand by nearly 40 percent per annum in 2020-21.

All told, Yukon's real gross domestic product growth is forecast to reach 8.1 percent in 2018

Growth spurt for Nunavut

Driven largely by two new gold mines being developed by Agnico Eagle Mines Ltd., Nunavut's economy is on the cusp of an unprecedented growth spurt, according to the conference board.

Agnico anticipates production starts at both its Meliadine and Amaruq gold mine projects next year.

Located near Rankin Inlet, Meliadine is slated to be the first of these operations to come online.

Scheduled to reach commercial production by mid-2019, Meliadine is expected to produce approximately 170,000 oz of gold next year and roughly 385,000 oz in 2020.

Amaruq, a satellite to Agnico's aging Meadowbank gold mine, is expected to follow behind Meliadine, with production slated to begin in the second half of next year.

Agnico forecasts that Amaruq will produce around 162,050 oz of gold in 2019 and around 265,000 oz in 2020.

Overall, this mine is expected to produce 2.1 million oz of gold during the first five years of operation and the company has already identified enough gold to more than double this life expectancy.

A third new Nunavut gold mine, Back River, is expected to go into production in 2021, according to mine developer Sabina Gold & Silver Corp.

The 3,000-metric-ton-per-day mine operation being considered for Back River is expected to average 198,100 oz of gold per year over an 11.8-year mine life.

With three active mine developments, it is a busy year for Nunavut's construction sector. The Conference Board of Canada should make up for a decline in government investment spending in the territory.

Nunavut's construction sector is forecast to grow 8.8 percent this year and 4 percent in 2019.

Rising mining production will also help create 2,000 new jobs in the next five years. However, less than half of those will be filled by workers from the territory as a good proportion of mining and construction jobs are staffed with outside workers.

Thanks to the new gold mines, Nunavut's real GDP is expected to grow by 4.4 percent this year and 9.1 percent in 2019.

NWT loses its glimmer

The Conference Board of Canada foresees falling diamond production taking the glimmer from Northwest Territories' economy over the coming years.

In a dire prediction, the board anticipates nearly 1,300 workers who live in the Northwest Territories are expected to lose their jobs by 2035 as the territory's three diamonds mines – Diavik, Ekati and Gahcho Kué – reach the ends of their currently anticipated lives.

There are some signs, however, that these mines could be extended.

In April, Mountain Province Diamonds Inc. acquired Kennady Diamonds Inc., a company that has outlined a large diamond resource immediately northeast of Gahcho Kué – a mine owned by Mountain Province (49 percent) and De Beers Canada (51 percent).

Kelvin, the most advanced kimberlite on the Kennady North property, hosts an indicated resource of 13.62 million carats of diamonds contained in 8.5 million metric tons of kimberlite averaging 1.6 carats per metric ton, according to a resource calculated at the end of 2016.

About 2,000 meters northeast of Kelvin, the Faraday kimberlites host another 5.02 million carats of diamonds in 3.27 million metric tons of kimberlite averaging 1.54 carats per metric ton.

Being in such close proximity to Gahcho Kué, the diamond-rich kimberlites could easily extend the life of Northwest Territories' newest diamond mine.

There also seems to be a renewed focus on finding new sources of ore for NWT's most famous diamond mines – Ekati and Diavik.

In a deal worth roughly US$1.2 billion, The Washington Companies acquired Dominion Diamond, which operates the Ekati Mine and owns a 40 percent stake in Diavik.

"I am excited to join forces with Dominion as well as with our respected partner at the Diavik mine - Rio Tinto. We look forward to owning and operating Dominion for decades to come, with a focus on maintaining safe and prosperous business operations in the Northwest Territories," said Dennis Washington, founder of The Washington Companies.

Patrick Evans, who recently served as chief executive officer of Kennady Diamonds and Mountain Province Diamonds, is the new CEO for Dominion.

"I will work relentlessly with management and our talented employees to help realize the long-term potential of Dominion's world-class assets, specifically by extending the life of the Ekati Mine, investing to develop the Jay project and reinvigorating our exploration program," said Evans.

Despite the future potential, The Conference Board of Canada expects real GDP in the Northwest Territories to fall 2.9 percent this year.

Author Bio

Shane Lasley, Publisher

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Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.


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