Avalon, Fortune Minerals shift focus to the south
Construction of Nechalacho mine postponed; Nico project still without funding
Exploration companies with some of the most advanced projects in the Northwest Territories are shifting their focus to the south.
Avalon Rare Metals had planned to start building its rare earth mine early next year, but that's now been postponed.
The company says it took too long to develop and review and now metal prices are too low to support the current timeline.
Avalon had been in the process of speeding-up its permitting, but in a letter last week to the Mackenzie Valley Land and Water Board, said that was no longer needed.
It is still hoping to start construction later in the summer if it can secure financing.
Don Bubar, president and CEO of Avalon, says the company will now focus on projects in the south, including a lithium deposit in Ontario.
"It has the advantage to be a much smaller scale project," he said. "We are talking capital expenditures of less than $100 million instead of the billion and a half for Nechalacho."
Avalon is not alone. Fortune Minerals is still attempting to secure financing for its $600 million Nico project. In the meantime, the company has bought a producing silver mine in Colorado for just $25 million.
"To be a company that only has a development asset is very difficult in today's capital market," said Fortune CEO Robin Goad. "The cash flow generated from this project will help finance other projects."
Both companies say if they can develop a successful mine in the south, then financing should come more easily to their northern projects.
- This story has been changed to add more information about the timeline for Avalon's rare earth mine.Oct 10, 2014 3:08 PM CT
- An earlier version of this story incorrectly suggested Fortune Minerals has delayed construction of its Nico project.Oct 09, 2014 12:23 PM CT