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Mine project continues to move ahead |
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Written by GORDON HOEKSTRA
Citizen staff
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Monday, 27 October 2008 |
Terrane Metals continues to award contracts on its proposed $916-million Mount Milligan gold and copper mine in the Northern Interior, the latest one to Wardrop Engineering Inc. to produce detailed engineering design work.
The Mount Milligan mine -- for which the company is holding open houses next week as part of its environmental assessment -- is the closest mine to Prince George among several proposed in northern B.C. The mine is 155 kilometres northwest of Prince George and is expected to create 400 direct jobs and operate for more than 15 years.
The company has awarded two additional contracts, with ABB Switzerland Ltd. to supply motors for the mills and to Siemen AG for transformers for mine-site substations. Earlier this year, Terrane awarded a contract to Metso Minerals Industries to supply various mills, including the primary crusher mill.
Terrane Metals president and CEO Rob Pease said Monday the company does not want to lose momentum on the project, even in the face of fears of a global economic slowdown.
Terrane is moving ahead on its permitting of the project and setting in motion the long lead times needed to buy major pieces of equipment, Pease said, noting the down payments on the orders of equipment are not large. "We are kind of proceeding along cautiously, moving forward, but we are not overextending ourselves financially," he said.
A financial crisis on Wall Street, fueled by bad housing loans, has spread worldwide, causing fears of a worldwide recession. Gold prices have slipped but remain volatile. Copper prices have dropped steeply, hitting three-year lows recently in the $1.60 US per pound range. As recently as September, copper was trading above $3.
The crisis has also caused credit to tighten, an important factor in a major capital project like a mine. The stock price of Terrane has also fallen to the 10-cent level from a high earlier in the year of 62 cents.
"Should we get to the third quarter of 2009 and these markets are still terrible, and you can't (borrow) a nickel from a bank, obviously we are not going to be starting construction even if we get permits in place," said Pease.
However, the company has options if the financial picture doesn't improve, including delaying of the first-year's construction which might be able to be caught up at a later date.
Pease also noted that the project is still "pretty robust" at metal prices today, particularly because the project gets a boost from a falling Canadian dollar.
Copper, in Canadian dollar terms, remains above $2, the low-end price contemplated in a mine's feasibility study. But gold, despite its volatility, was $950 in Canadian terms on Monday, the upper price end contemplated in the mine's feasibility study.
Wardrop Engineering Inc., awarded the contract for the detailed engineering design, was the company that carried out the feasibility study. "In our report, we were able to design a development and operations plan for Mount Milligan that successfully combined commercial viability and environmental stewardship," said Wardrop CEO Shayne Smith. "With the award of the contract we are pleased to have the opportunity to carry out the next steps in that plan," said Smith.
Pease said the company still believes the fundamentals of demand in emerging economies like China, India and Brazil, which fueled a boost in demand for metals, remains strong.
That plays into the company's longer term view.
"You can't help but notice what is happening in the spot market today, but in the case of the Mount Milligan project, the two products produced, copper and gold, those are both good, long-term fundamental commodities that are going to have good value in the future and the mine economics are going to work out over 20 years or longer," stressed Pease.
Goldcorp., one of the world's largest gold producers, owns shares in Terrane. Goldcorp recently provided a $40-million loan guarantee to help push the project forward.
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Last Updated ( Monday, 27 October 2008 )
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