Conference Board cuts 2 N.W.T. mining projects from economic forecast
Two other advanced-stage projects look uncertain, says think tank
The Conference Board of Canada has dropped two N.W.T. mining projects from its latest Northern economic outlook and says two other projects probably won't be included in its next forecast unless the conditions for raising money improve.
Tyhee N.W.T. Corp.'s Yellowknife gold project and Fortune Minerals' NICO base metals project didn't make the cut in the think tank's latest forecast of future GDP growth in the territory, which will be released next week, says Marie-Christine Bernard, a forecaster with the conference board.
Avalon Rare Metals' Nechalacho rare earth development project and North American Tungsten's Mactung tungsten project likely won't be included in the conference board's next forecast either, added Bernard.
"When a project is just too far from obtaining financing, we take a second look [to see] if we postpone the project or pull it from the outlook altogether," she said.
"Metal and mineral prices remain quite low. The financing environment globally is not very good. We look at all of these factors."
With diamond production at the Ekati and Diavik diamond mines expected to decrease this year, the overall economic outlook for the territory is "a lot less positive than we were thinking just a few months ago," said Bernard.
Vacated camp, bankruptcy, financing issues
The companies behind three of the four projects dropped by the conference board have recently shown signs of difficulty.
On May 28, Tyhee told regulators it shut down the Yellowknife gold camp and wouldn't draw any further water samples from the site — a condition of its water licence.
On June 9, North American Tungsten announced it was going under bankruptcy protection and that it would have to temporarily lay off 80 workers at its producing Cantung mine.
And last week Fortune Minerals said it had defaulted on a loan from a company that had given it money to buy a silver mine in Colorado. Fortune had purchased the silver mine to give itself producer status, which Fortune thought would make it easier to raise financing for NICO, which has its key permits in hand.
But the silver mine has not started producing, and the terms of an agreement-in-principle with the lender — which may be finalized within the next week — would see Fortune lose ownership of that silver mine.
Only one new advanced-stage mining project not currently under construction, the lead-zinc Prairie Creek property owned by Canadian Zinc, made it in the conference board's outlook, joining De Beers' Gahcho Kue diamond project (currently under construction) and planned expansions of the Diavik and Ekati mines.
"Gahcho Kue is a real lifeline for us," said Dave Ramsay, the minister of industry, tourism and investment. "It's going to put five million carats on the market every year."
The construction of De Beers' second N.W.T. mine, estimated to cost between $600 million and $650 million, is contributing to what Statistics Canada expects will be a 26 per cent increase in capital spending in the N.W.T. this year.
Bernard said that estimate of capital spending wasn't released in time for the conference board's outlook, but said it will likely temper the decrease in the N.W.T.'s GDP caused by lower diamond production.
The conference board is currently predicting the territory's GDP will contract by two per cent this year.