Road to new Yukon mine to go through NWT

Road to new Yukon mine to go through NWT
Exploratory drilling continues at North American Tungsten Corp.’s Cantung mine located on the NWT side of the Selwyn Mountains. Mactung, the company’s second tungsten project (this time on the Yukon side), recently received its permits from the Yukon government, but awaits a decision by the Sahtu Land and Water Board regarding its access road through the NWT.Photo: Trevor MacInnis.

A second tungsten mine in the Selwyn Mountains will need to use an access road through the NWT despite the deposit resting on the Yukon side of the border.

North American Tungsten Corp. (NATC), which recently received permitting from the Yukon review board for its Mactung project, now has to apply to the Sahtu Land and Water Board (SLWB) to upgrade an existing 11-km stretch of road accessible from the Canol Trail to reach its deposit.

Though the company originally proposed constructing a new 31-km access road entirely on the Yukon side of the border, hoping to avoid two separate regulatory review processes, concerns from First Nations and outfitters prompted the Yukon assessment board to demand an alternative that posed fewer adverse impacts.

“They did everything in their power to try to keep it on the Yukon side of the border, but there was opposition to building a new road there,” said Michael Miltenberger, NWT’s minister of Environment and Natural Resources.

The board decided that upgrading the spur from the Canol Trail built in the 1970s would result in fewer adverse environmental and socio-economic effects, and allowed the project to proceed to permitting without an environmental assessment but subject to 86 terms and conditions.

NATC will now need to apply to the SLWB for a land use permit and possibly a water licence before being able to proceed.

According to Miltenberger, the GNWT has met with NATC to discuss their project planning.

Mactung, NATC’s second tungsten mine near the NWT-Yukon border, is expected to mill ore at a rate of 2,000 tonnes per day for 11 years and lies to the north of its existing Cantung project.

Cantung, which is accessible by a 300-km all-weather road from the Yukon, sits on the NWT side of the border. NATC received a five-year land use permit from the Mackenzie Valley Land and Water Board earlier this month to do exploratory drilling on the Cantung property in order to extend its mine life, which is estimated to expire around March 2015.

Over the five-year term, 18-km of road to the various drill sites is to be constructed or upgraded, if already existing. Three drills are currently underway.

‘Yukon serviced mine’

Though an NWT resource, the majority of earnings from Cantung flow west into the Yukon. Miltenberger said local, NWT employment is effectively zero at the mine, which uses Yukon labour.

“It’s basically a mine serviced out of the Yukon,” Miltenberger said. “In terms of the wage dollars, the wage economy stuff, that flows into the Yukon because it’s serviced from that side.”

NATC will be filing a royalty return for Cantung with the GNWT for the first time in January 2015. Prior to devolution, that was done with the federal government. The GNWT also collects various taxes from the mine, including payroll, fuel and property taxes.

No royalties or taxes will be collected by the GNWT from the Mactung project.

Mining royalties ‘unpredictable’

Miltenberger was unable to say how much earnings the GNWT expects to make from NATC’s corporate taxes or royalties at the end of this fiscal year, as those numbers vary and are often unpredictable.

Under the NWT regime, royalties from mining projects are subtracted from a company’s net profit, which after the accounting is done, can be small or non-existent.

“There are a number of accounting opportunities when it comes to how (companies) can file,” Miltenberger said. “They can reach back and adjust filings over a three-year period or so, and they of course have the ability to write off all of their capital investments before they pay royalties.”

He said it’s always a “wait and see” situation as to how much the GNWT is going to collect. Last year, both corporate and income taxes in the NWT were lower than the government had anticipated.

Miltenberger said the territorial government is looking into possible changes to the royalty and taxation regime, but is not “rushing madly” to overhaul the system.

“We have to make sure we get our fair share for Northerners, but not drive business away, keeping in mind that we have the highest operating costs in the country,” he said. “We don’t want to kill the goose that lays the golden eggs, but we also want to ensure the eggs we’re getting are golden.”

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