The Yukon is home to some of the most important mineral deposits in the entire world. It is a land rich in resources overseen by a government that has developed a positive working relationship with industry and local and First Nations governments. The regulatory bodies in Yukon are the Minerals Resources Branch and the Oil and Gas Resources branch of the Department of Energy, Mines, and Resources. These two branches are working collaboratively to make mining investment more attractive in Yukon. The Devolution Transfer Agreement of 2003 granted the Yukon unique control over its natural resources, so the government of the Yukon can make legal changes and is responsible for managing its own natural resources without the involvement of the federal government. This sets the Yukon apart from the other two territories. We recently had the chance to sit down with three officials from this all-important area of government to learn more about the outlook for companies in the area.
Robert Holmes – Director of Mineral Resources
The Yukon has proved an increasingly popular place in the past few years, a fact that Holmes is quite proud of. With the vast amount of resources available in the Yukon, it is no surprise that the last two years recorded 200,000 new mineral claims. In previous years, the numbers were quite a bit lower, closer to just 80,000. Naturally, an increase in claims means an increase in spending throughout the area. Nearly $320 million has been spent in exploration this year alone, a huge increase over the normal spent in one year which is about $20 to $25 million.
The numbers game isn’t Holmes’ only focus, though. He also talked with us about another achievement for the Yukon. It is the only jurisdiction that managed to license three mines in the last four years. Another two are in environmental assessment and will be in the development stage within the year. Also, another five to six mines will be in the environmental assessment stage within the next two to three years. The growth is astronomical. Holmes is amazed by the growth, especially with only 36,000 people in the Yukon, but with the land the size of Spain.
Holmes said, “It’s seen as probably the place to be right now in North America.”
Holmes believes there is a lot of potential for new discoveries, but there are also some challenges. The first is where to get the needed labor. With a small population, it is difficult to find the needed workers. Another challenge is the need for roads. More infrastructure must be built. Finally, affordable housing and the need for more power are significant challenges that must be addressed. Although these are serious, Holmes knows that these are good challenges to have and that solutions are being created.
Holmes firmly believes that there are, “a lot of interesting and different projects in the Yukon,” and he shared information about several of them with us.
Currently, there are three operating mines. The first is the Minto Mine run by Capstone Mining Corporation. It is a copper-gold mine located near Pelly Crossing on First Nation Settlement Land. It is an open pit mine, soon to be adding underground production, and produces 50 million pounds of copper a year. Also, it mines a high grade copper ore, near 1 ½%.
Bellekeno mine, operated by Alexco, is located in the Old Keno Hill District, an over 100 year old silver district. It produces a large amount of silver at nearly 50 ounces per ton. Its developers recently won the EA Shultz Developer of the Year Award, which is awarded by the Association of Mineral Exploration British Columbia (AMEBC).
The final mine currently operating is the Wolverine Mine owned by JDC Molybdenum. It is the first and possibly only new mine development in Canada by a Chinese state owned company. It is an underground silver, copper, and gold mine. Right now it is at 60% production and hopes to be in full production by the end of the first quarter of next year.
According to Holmes, there are many more mines that are currently in development. The Eagle Gold Project owned by Victoria Gold hopes to be in production by 2013. It is a heap leach gold mine that is planned to be a 26,000 ton a day mine.
With all the new mines set to begin operations in the next year to three years, the Yukon is abuzz with activity. This also includes old mines reopening. Brewery Creek was a heap leach gold mine in the 90’s. It was closed and reclaimed and in monitoring for many years. However, a company called Golden Predator is finalizing an agreement with the current owners to reestablish the mine. It is often said that the best place for a new mine is at the site of an old mine.
One of the most important strategic and critical elements is tungsten which is used in mining, gas and oil drilling and machining of metals. China currently produces about 80% of the world’s production and it is in tight supply. Currently, there is only one producing tungsten mine in North America and it is owned by North American Tungsten. It is located adjacent to southeast Yukon just over the border in the NWT, but is running out of reserves and only has a few years left. Their Mactung deposit and Largo Resources ‘Northern Dancer tungsten Deposits are two of the largest undeveloped tungsten deposits in the world.
The Yukon benefits greatly from a close working relationship between the government and the mining industry. This primarily came about through the Devolution Agreement of 2003. Devolution is the transfer of authority from one government to another. The federal government and the Yukon government spent several years working out the agreement, but was finally completed and instituted in 2003 with the amendments to the Yukon Act. This gives the Yukon government responsibility for managing its own natural resources. The Yukon government now makes its own decisions about public lands and resource management over land, water, forestry and mineral resources. This is not the case in other territories. Mineral Resources in both the Northwest Territories (NWT) and Nunavut are administered by the federal government.
There are three other important factors that Holmes believes puts the Yukon in a special position. The first is the completion of most land claim treaties (or Final Agreements) with the Yukon’s First Nations. Currently, eleven of the fourteen First Nations in the Yukon have finalized their land claims and have Final and Self-Government Agreements in effect. Next, the Yukon has a single environmental assessment process. In many parts of Canada there is a federal and a Provincial process. This streamlines the process and makes it easier to navigate for proponents. The final factor is that the Yukon controls the permitting process. This also helps to speed up the process and ensure an open process that is reflective of local values.
Mining is the heart of the Yukon. With such a vast expanse of land, but so few people, it does pose challenges at times. Infrastructure is the key. It is the main challenge today, but one that can be overcome. Yukon has a reliable and consistent power source, but expansion of this is also needed to meet future development demands.
As a result there’s renewed interest in natural gas energy in Yukon as well. With the planned exploration for natural gas, it could only be a few years before many of the mines coming on line will be run using this resource. With a cost much less than diesel, it could have a huge economic impact on the industry and on commercial and residential sectors as well.
Bernie Adilman – Marketing and Events Coordinator
Bernie Adilman is the Market and Events Coordinator for the Oil and Gas Resources branch. He discussed many aspects of the current interest in natural gas, the most prominent being the development of a local natural gas delivery system. This could be via either small-diameter pipe or Liquid Natural Gas (LNG). Northern Cross, a Yukon company, has partnered with a Chinese firm, CNOOC, to drill five wells in north Yukon this summer. This partnership hopes to tap into some of Yukon’s natural gas deposits in north Yukon that could not only power mines, but could also present opportunities for commercial and residential consumers as well. A successful drilling season could make natural gas eventually available to new mines hopefully coming online in the next three to 10 years. Unfortunately, there are some barriers to this plan. The most significant is the lack of infrastructure.
Adilman stated, “Our biggest issue at this point is lack of infrastructure. We have no pipelines to get the gas out.” So exploring Yukon’s LNG options is now high on the Yukon government’s priority list, he said. “LNG is extremely safe, less expensive than diesel and can be processed and transported via truck relatively cheaply, so government, the Yukon Energy Corporation and industry are all investigating LNG possibilities.”
Currently the electrical grid is almost maxed out. Any new mine coming online could not hook up to the grid. Establishing a supply of natural gas, either via small-diameter pipe or LNG, could change all that. Although the process is still in its infancy, there are high hopes for its success.
Ron Sumanik – A/Director of Oil and Gas Resources branch
Ron Sumanik, A/Director of Oil and Gas Resources branch, also discussed the prospect of natural gas to power the industrial needs of the mines, a concept that has been under careful scrutiny for the past five years. Natural gas is significantly cheaper than diesel at a third to half its price. That would only be about 9-16 cents per kilowatt hour, compared to 30+ cents for diesel. The money savings that natural gas could bring is considerable, and that’s a big part of the industry’s continued fascination with it.
While discussing his work with mine producers and introducing them to the idea of natural gas, Sumanik remarked, “When you understand the market better, and what the needs of the clients are, you are on the right pathway.”
This holds true for Sumanik especially in relation to the research being done into natural gas power and its alternatives. Wind power is often suggested, but it is an interruptible power and cannot always be relied on. Likewise, hydroelectric power is also heavily discussed, but it often takes in excess of 10 years to get through the regulatory process. Sumanik believes that the timeframe for the regulatory process for natural gas could be as quick as two years. This is yet another reason for the push to natural gas.
A Sunny Outlook
The Yukon’s unique governmental rights have given it the ability to manage its own resources and create streamlined processes that can ensure more mines are able to come on line in a timely manner. According to all three department officials, the next few years for the Yukon could be an exciting time with a great deal of expansion and growth.
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