North

Pine Point could live again, says Darnley Bay after early assessment

The historical Pine Point mine 42 kilometres outside Hay River, N.W.T., is still viable and 'looks like it will make money,' according to the company hoping to revive it.

Company pitches positive economic outlook for defunct mine

Core samples – left behind from previous operations in Pine Point – litter the ground near the former mine site. New cores may be taken in 2017. (Jimmy Thomson/CBC)

The historical Pine Point mine outside Hay River, N.W.T., is still viable and "looks like it will make money," according to the company hoping to revive it.

'It’s a good time to finance a project like this,' said Kerry Knoll, executive chairman for Darnley Bay Resources Ltd. (submitted by Darnley Bay Resources)
Last week, Darnley Bay Resources Ltd. announced a positive preliminary economic assessment for the proposed zinc-lead mine.

The company says the project's net value is about $341 million before taxes over a 13-year, initial mine life; and it will cost $154 million to construct the mine with a payback period of 1.4 years.

"It's a good time to finance a project like this," said Kerry Knoll, executive chairman for Darnley Bay Resources.

"The main reason, of course, is being that zinc prices have been a little bit stronger this year and last year than they have been in the several years previous."

On Monday, the price of zinc was about $1.18 US per pound — much higher than the expected cost to produce zinc at the mine.

"This project looks like it will make money all the way down to 60-cent zinc," Knoll said.

Nearby infrastructure means lower costs

Knoll is also encouraged by the low cost to construct the project compared to other projects in the territory.

"The main reason it is lower than other projects in the Northwest Territories — and actually than most places — is because where it happens to be located it has infrastructure," Knoll said.

"We got the highway, you are not far from the town of Hay River; you have got power — electricity coming from the Taltson hydroelectric plant… and you also got the railroad in Hay River."

A map showing zinc deposits at the Pine Point zinc-lead project over a strike length of approximately 62 kilometres. (submitted by Darnley Bay Resources)

The Pine Point project was an operating mine up until the late 1980s.

In the 2000s, Tamerlane Ventures Inc. attempted to restart mining on the property, but ended up falling into debt and lost the claim in bankruptcy.

Last December, Darnley Bay Resources purchased the project for $8 million in cash and shares.

Knoll is confident Darnley Bay will fare better than its predecessors. 

"They kind of cornered themselves. They didn't get into trouble building a mine. They got in trouble getting into debt," Knoll said, referring to Tamerlane Ventures.

Feasibility work continues

Darnley Bay raised about $10 million in late 2016 to fund the purchase of the property and fund a drilling and exploration campaign.

If constructed, the mine will employ about 321 full-time workers, including staff and contractors.

Knoll says the company is talking with local Indigenous groups regarding hiring opportunities.

He says the company will work through the permitting process for the project while it develops a feasibility study.

now