B.C. mine awaits power line decision

As the mining industry booms and companies rush to develop new properties, there is often one major snag in remote northern regions: inadequate infrastructure. This is the case with the Red Chris property in British Columbia, which completed the province's environmental assessment process last August. Vancouver-based bcMetals is champing at the bit to obtain permits and start construction of its proposed copper-gold mine, but everything hinges on whether or not the British Columbia government will build a 37.5-megawatt power line into the area.

A decision on the power line could come at any time, but neither bcMetals nor the government can or will say when that might be. The mining company has been one of the leaders of a coalition of interested firms, associations and individuals called Highway 37 to campaign for the power line, which would be an extension of the existing line from Meziadin Junction to Iskut or Dease Lake. The extension could be up to 208 miles long and cost between C$185 million and C$368 million, according to studies done for B.C. Transmission.

Power for region

"This is not a power line for Red Chris, it's for an undeveloped region - we just happen to be the first ones who will use it," Ian Smith, president and CEO of bcMetals, told Mining News. "We've brought together the coalition to get broader-based awareness of the benefits that would accrue," he added. A spokesman for the British Columbia government's Ministry of Energy, Mines and Petroleum Resources, Jake Jacobs, told Mining News that he had no information about whether a decision on the power line would soon be forthcoming.

In the meantime, bcMetals is proceeding on the basis that the power line will be built, according to Smith. The company has arranged US$110 million of debt financing with the UK subsidiary of South African bank Investec. Repayment would take place over seven years, commencing in year three following a two-year construction period. The bank has been performing due diligence on the company and lawyers are fine-tuning the details of the agreement, Smith said. The extension of the power line is a condition of the financing.

BcMetals also announced in December that it had issued letters of intent to enter into contracts with AMEC Americas and Merit Consultants International to provide engineering and construction services for the Red Chris project. Located 280 miles north of Smithers and 11 miles southeast of the village of Iskut, Red Chris would be an open pit mine that would employ approximately 250 people full-time during operations. The capital cost of building the mine is estimated at C$200 million and annual operating expenditures would be approximately C$70 million.

Company intends to develop mine

Unlike many projects, where junior mining companies enter into partnerships or sell their properties to larger companies, bcMetals intends to develop the Red Chris mine and put it into operation by itself, Smith told Mining News. Smith brought his expertise as a mining engineer to the company in 2003. He graduated from the University of Queensland, Australia in 1966 and has worked in Papua New Guinea, New Mexico, South America and China.

"The difference here obviously is the climate," Smith said. "But Red Chris is in the rain shadow, we don't get a lot of snow like Eskay Creek or Galore Creek. It's a run-of-the-mill porphyry copper-gold project, smaller than others I've worked in. Red Chris will be one of the easiest mines to develop - it's close to a main road, pre-production stripping will be minimal and we don't have to get into any major clearing of trees."

The company was co-founded by another two mining heavyweights, Carl Zuber and Bob Buchan, both formerly from Kinross Gold - the owner of Alaska's Fort Knox mine.

Buchan was president and CEO of Kinross until last year.

"BcMetals was formed to be another Kinross with the focus on the base metals side," Smith said.

"Bob and Carl are obviously two people who have immense experience and standing within the mining community.

They're a huge plus." Initially Buchan and Zuber formed an Alberta-based company that was exploring for oil in Guatemala, but when they saw the political climate changing in British Columbia with the election of the right-of-center Liberal Party in 2001, they decided to move into the province and look for minerals.

Also has properties in Alaska

BcMetals was exploring for molybdenum at the Fire Mountain property east of Atlin until recently, but has now dropped that project. It has picked up some additional properties in the Alaska Range area, 93 miles southeast of Fairbanks, and did limited drilling there in 2005. "Unfortunately we had exceptional snowfall and couldn't get to the more prospective locations," Smith said. "Our main focus is on getting Red Chris up and running."

AMEC compiled the now approved application for an environmental assessment certificate for the Red Chris project. The mine plan envisages processing 27,500 metric tons of ore per day through the mill over a projected mine life of 18 years, according to the application. The project will require cooperation with the First Nations in the region, the Tahltan and the Iskut, with whom bcMetals signed a Memorandum of Understanding in January 2004.

Metal mines operating in British Columbia have fallen from a peak of 120 to the current level of five, according to the Red Chris application. No new metals mines have opened in the province since 1997. "The current B.C. government has indicated that it wishes to send a clear message to the mining industry and the international finance community that B.C. is open for business and that mining in B.C. is a sunrise, not a sunset industry," the application says.