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By Shane Lasley
Mining News 

Mines drive growth across Canada's North

Gold heats Nunavut, Yukon economies, offsetting NWT contraction

 

Last updated 11/30/2018 at 4:56am

Canada Territorial economic outlook, gold mines drive growth Nunavut

Agnico Eagle Mines Ltd.

Slated to go into production early in 2019, Agnico Eagle's Meliadine is one of three gold mines that is expected to spur strong economic growth in Nunavut over the coming years.

New gold mines are expected to drive strong economic growth in Nunavut and Yukon over the next several years, according to the latest Territorial Outlook published by The Conference Board of Canada. The non-profit think tank focused primarily on researching and analyzing economic trends, however, forecasts a shrinking economy for Northwest Territories as the diamond sector there matures.

Despite a tepid recovery for the mining sector as a whole, the new mines being developed in Nunavut and Yukon are expected to drive a 4.7 percent economic growth across Canada's three territories in 2019 and 4.5 percent in 2020 – easily outpacing the Canadian average, which is forecast to be less than 2 percent growth.

"While the mining sector has been more cautious in this upswing cycle than in the past, there are still several mining projects that are advancing through the approval process and will bolster economic growth and employment opportunities in the northern territories over the next few years," said Marie-Christine Bernard, director, provincial and territorial forecast, The Conference Board of Canada.

Agnico drives Nunavut growth

The Conference Board of Canada foresees Nunavut's economy growing at a blistering pace of 7.3 percent per year until 2020 and averaging 4.6 percent growth annually out to 2025.

Much of this economic expansion is driven by Meliadine and Amaruq, gold mines Agnico Eagle Mines Ltd. plans to ramp up to commercial production next year.

Located near Rankin Inlet, a village on the coast of Hudson Bay, the 111,757-hectare (276,157 acres) Meliadine project hosts Agnico Eagle's largest gold deposit in terms of mineral resources.

At the end of 2017, Meliadine hosted 16 million metric tons of proven and probable mineral reserves averaging 7.12 g/t (3.7 million ounces) gold; 25.3 million metric tons of indicated resources averaging 3.77 g/t (3.1 million oz) gold; and 13.8 million metric tons of inferred resources averaging 6.04 g/t (2.7 million oz) gold.

When Agnico's board of directors approved the development of Meliadine early in 2017, the mine was forecast to begin operations in the second half of 2019. However, given the progress of construction and development activities, the company now expects to begin commissioning early 2019 and commercial production is expected to be reached by mid-year.

Meliadine is expected to produce roughly 170,000 oz of gold in 2019 and about 385,000 oz in 2020.

Agnico also expects to reach commercial production at Amaruq next year. This expanding gold mine project is located about 50 kilometers (31 miles) south of Meadowbank, currently Agnico's only operating mine in Nunavut.

Meadowbank, which reached commercial production in 2010, is nearing the end of its gold reserves and is expected to wind down by the third quarter of next year.

The 11,000-metric-ton-per-day mill at Meadowbank, however, will continue to churn out gold for the next several years thanks to ore being trucked from Amaruq.

As crews mop up the last of the ore at Meadowbank, Agnico is developing Amaruq as a satellite that will ship its ore to Meadowbank for processing.

Amaruq is expected to produce 2.1 million oz of gold during the first five years of operation.

Sabina Gold & Silver Corp. is beginning development of yet another gold mine at its Back River project in Nunavut.

According to a 2015 feasibility study, the 3,000-metric-ton-per-day mine operation being considered for Goose, one of seven properties that make up the larger Back River project, is expected to average 198,100 oz of gold per year over an 11.8-year mine life at a cost of US$534 per oz.

Earlier this month, Sabina received the Type A Water License for Back River, the final major permit needed to begin developing a gold mine project in Nunavut.

With the new mines currently slated to come online, Nunavut's gold production is expected to peak in 2024, after which the territorial economy will grow at a more moderate pace.

Despite Nunavut's anticipated job growth, the territory's unemployment rate is expected to remain high, in part because people from outside of Nunavut are expected to fill many of the mine development and operations jobs.

Not many Yukon miners

On the flipside, unemployment in the Yukon is already the lowest of any province or territory in Canada and is expected to drop further.

According to the Yukon Bureau of Statistics, Yukon's unemployment rate is around 2.7 percent. With a workforce estimated at around 22,100, that leaves only 600 workers left in the territory.

While this is good news for the few Yukoners left looking for a job, this low availability of workers will make it tougher for the companies looking to develop and operate mines in the territory.

With Minto, Yukon's one current operating mine, slated to temporarily close, roughly 200 miners could be available to fill positions at the two new gold mines set to go into production over the next 33 years.

Victoria Gold Corp.'s Eagle Gold Mine is the first of these gold operations set to come online.

Located roughly 85 kilometers (53 miles) north of Mayo, Eagle Gold is expected to produce 190,000 oz of gold annually over a 10-year mine life.

Victoria broke ground on pre-development activities at Eagle in 2017 and ramped up development of the open-pit, heap-leach pad and recovery facilities at the gold mine project this year.

Expected to employ 350-400 people, the Eagle Gold Mine will be a significant economic contributor to Yukon and the Na-Cho Nyak Dunn First Nation.

"We look forward to building a high-quality, profitable, and environmentally safe project that will deliver significant economic benefit to all of our stakeholders," said McConnell.

Victoria is targeting the first gold pour from Eagle by the end of 2019.

Goldcorp Inc. is on pace to have its Coffee Mine into production about two years later.

Since acquiring Coffee from Kaminak Gold Corp. in 2016, Goldcorp has been advancing the gold project through the permitting process.

A feasibility study completed just before Goldcorp's purchase details an open-pit, heap-leach mine capable of producing 184,000 oz of gold annually over an initial 10-year mine life.

The mine currently has 2.16 million oz of gold in reserves, plus another 780,000 oz in indicated resources and 1.15 million oz in inferred resources.

Earlier this year, Goldcorp announced a collaboration agreement with the Tr'ondëk Hwëch'in First Nation that represents a landmark in the development of a mine at Coffee.

A significant milestone towards building a long-term relationship between Goldcorp and Tr'ondëk Hwëch'in, the collaboration agreement is considered a critical step towards delivering economic opportunities for the central Yukon First Nations band, including business development opportunities and future financial contributions.

The pact also outlines environmental protection commitments that combine traditional knowledge and modern technologies for the Coffee gold project.

With this agreement in place and permitting well on its way, Goldcorp plans to begin development of the Coffee Mine and access road next year and expects to begin commercial production by 2021.

Looking further into Yukon's future, an even larger mine could be coming at Western Copper and Gold Corp.'s Casino property, which hosts 4.5 billion pounds of copper and 8.9 million oz of gold in 1.1 billion metric tons of proven and probable reserves.

Once in production, a mine at this large copper-gold deposit is expected to employ some 600 workers and, according to a 2013 report, this operation would contribute C$9.6 billion to the Canadian economy and pay C$3.2 billion in taxes and royalties to federal, territorial, and First Nation governments over its initial 22-year mine-life.

Western Copper said it expects to have Casino fully permitted in about three years.

In the meantime, Yukon's economy will grow faster than that of almost any other territory or province in Canada over the next few years, with gains of 4.6 percent forecast for this year and 6.2 percent in 2019.

Shrinking NWT

Yukon's neighbor to the east, however, is forecast to have the one of the weakest economic performances in Canada in the coming years.

The Conference Board of Canada predicts that Northwest Territories' economy will shrink by an average 1.6 per year from now until 2025.

The think tank attributes this expected contraction to an aging diamonds sector in the territory.

With Gahcho Kué – a diamond mine owned by De Beers Canada (51 percent) and Mountain Province (49 percent) – in commercial production, The Conference Board of Canada said diamond production in Northwest Territories has reached its peak and will decline over the next six years.

This forecast, however, does not seem to account for reinvigorated investment in and around Northwest Territories three operating diamond mines.

This includes Washington Companies' US$1.2 billion acquisition of Dominion Diamond Mines, a purchase that gave the United States-based private company controlling interest in the Ekati Mine and a 40 percent stake in Diavik Mine.

Washington Companies said it plans to invest heavily in the future of its two iconic diamond mines in Northwest Territories.

"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 Dominion Diamond Mines CEO Patrick Evans.

The territory also has a couple of metals mines on its horizon.

NorZinc Ltd., formerly Canadian Zinc Corp., is working toward developing a mine at its Prairie Creek zinc-lead-silver project in the Mackenzie Mountains of western Northwest Territories.

Prairie Creek Mine was initially developed in the 1980s but never made it to production. NorZinc plans to rectify that.

A feasibility study completed in 2017 details a mine that is expected to produce an average of 95 million lb of zinc, 105 million lb of lead and 2.1 million oz of silver per year over an initial 10-year mine life.

All permits are in place to finish developing a mine at Prairie Creek and NorZinc forecasts that after securing development financing it would take about 2.5 years to take the mine to commercial production.

Fortune Minerals Ltd. is also working toward developing a mine at its Nico cobalt-gold-bismuth-copper project about 160 kilometers (100 miles) northwest of Yellowknife.

Over the past two decades, Fortune has invested more than C$115 million advancing Nico from an in-house discovery to a development stage project that includes a planned mine and concentrator in the Northwest Territories and refinery in Saskatchewan.

Canada Territorial economic outlook, gold mines drive growth NWT

Dominion Diamond Mines

The Washington Companies, which recently gained controlling interest in the Ekati Mine through the acquisition of Dominion Diamonds, is investing heavily in exploration and development aimed at extending the life of this iconic diamond mine in Northwest Territories.

According to a feasibility study published in 2014, mineral reserves at Nico will support a 21-year mine that would average 1,615 metric tons of battery-grade cobalt; 41,300 ounces of gold; 1,750 metric tons of bismuth; and 265 metric tons of copper per year.

Fortune has already received its environmental assessment approval and the major permits needed to build the mine and refinery.

Provided Fortune receives the requisite financing to develop Nico, the company said construction of the mine facilities could begin in 2019 and is expected to take roughly two years.

Fortune said it has more than 35 confidentiality agreements with companies interested in strategic partnerships to build and operate the Nico project.

The Conference Board of Canada, however, points out that any economic boost from Prairie Creek and Nico won't come until after 2020.

"More tepid growth in mining will have repercussions on other areas of the economy, with growth in services-based industries remaining flat for much of the forecast," the economic think tank inked in its summary on Northwest Territories.

 

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