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MMG halts review process for huge Nunavut mining corridor project

As commodity prices tumble, zinc-copper project design to be changed


This map from the 2012 Izok Corridor project proposal shows where the all-weather road would have run to the coast, not far from Kugluktuk.

This map from the 2012 Izok Corridor project proposal shows where the all-weather road would have run to the coast, not far from Kugluktuk.

MMG Resources Inc. has put the brakes on its Izok Corridor zinc-copper mine and port project in western Nunavut, which was recently accepted for an environmental review by the Nunavut Impact Review Board.

“As there is a strong likelihood that the project design will be adjusted or additional alternatives included, MMG respectfully requests that the NIRB not initiate the scoping process nor issue a scope of project until MMG submits an update to the project description,” Sabha Safavi, MMG’s project manager for Canada, said in an April 16 letter to the NIRB.

The NIRB process begins with a scoping of the project that’s up for review, followed by the development of environmental impact statement guidelines.

But now, the scope of the project detailed in the 412-page Izok Corridor project proposal submitted to the NIRB in August 2012 will change.

MMG’s letter offers no date for submission of a new proposal.

But MMG said it’s “recently identified some additional project design options with potential to improve the economic viability of the project.”

These include changes to the mining schedule and production rates, improvements to the execution plan, and the possible addition of a new property to the mining resources.

“MMG is currently initiating a process to further develop and evaluate these options so that they can be considered for incorporation in the feasibility design,” the company’s letter to the NIRB said.

The changes associated with an updated Izok Corridor project design, including the potential addition of another property, will be located within Nunavut, MMG said.

After completing the engineering work “necessary to develop and evaluate these options”, MMG said it plans to consult with stakeholders on these potential changes “prior to submitting the project description update to the NIRB.”

This scuttles the mining giant’s former timeline, which could have seen construction jobs start flowing to people in Nunavut’s Kitikmeot region by 2015, with production starting in 2018.

Minmetals Resources, MMG’s parent, a global resources company that explores, develops and mines base metal deposits around the world, is owned 75 per cent by the Chinese government, although MMG is headquartered in Melbourne, Australia.

It’s one of the world’s largest producers of zinc and also produces significant amounts of copper, lead, gold and silver.

The initial proposal for the Izok mine, with an open pit and underground mine under Izok Lake, called for a two-million-tonne per year concentrator, which would also process the ore from the High Lake mine.

As for the proposed transportation route, it was to have been a 350-kilometre all-weather road to connect the Izok Lake mine to High Lake, a second zinc-copper mine, with two open pit mines and one underground mine.

MMG also proposed building new airstrips at Izok Lake, High Lake and Grays Bay, along with a new port at Grays Bay with the capacity to ship 650,000 tonnes of concentrate per year.

During the Izok two-year construction period, 1,140 people were expected to find work, and then 710 would have jobs during the mines’ 12-year lifespan, working on fly-in, fly-out rotations.

An indication of MMG’s waning interest in the project surfaced during the Nunavut Mining Symposium in Iqaluit, where MMG revealed it is planning to spend only $6 million on minimal exploration on its Kitikmeot properties in 2013.

In her keynote address to the symposium, Patricia Mohr, an economics and commodity market specialist with Scotiabank, also said mining companies are now examining project development more critically with some reconfiguring to cut costs.

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