Canadian Royalties plans workforce of 400, ore processing plant
Second nickel mine in Nunavik seen by 2010
It's 2010, and Nunavik's second nickel mine boasts a workforce of 400 mainly Inuit employees, four open pit mines and an ore processing plant.
That's the vision driving Canadian Royalties as it plows through the process of lining up money, environmental permits and community support for its Raglan South mine project, located in a mineral-rich belt 100 kilometres south of Kangiqsujuaq.
The company's environmental and social impact study is already in the hands of the Kativik Environmental Quality Commission and Quebec's environment department, while its bankable feasibility study should be ready by the middle of May.
"These key documents are within 30 days of each other, and that's when things crystallize quickly," said Canadian Royalties' chairman Glenn Mullan, who sees 2010 as a reasonable goal for the start-up of operations at Raglan South.
Negotiations are also underway with Makivik Corporation to strike an Inuit impact and benefits agreement by next November. This IIBA would be similar to the 1995 agreement for the Raglan Mine, which recently produced a $16.7 million revenue-sharing cheque for Makivik.
The bankable feasibility study by SNC-Lavalin is expected to give Canadian Royalties enough confidence with investors to raise the $400 million needed to develop Raglan South. This study will look at issues such as cash flow, job training and employment.
But this much is already known. Nickel prices are expected to remain high, ensuring the mine will be a money-maker. And Nunavik can expect the spin-offs of its success because Inuit have priority for the estimated $14 million worth of jobs every year and another annual chunk of $50 million in spin-offs.
About 250 jobs will be created during the development phase, offering many job possibilities to Inuit skilled in heavy equipment operation.
Canadian Royalties has hired three community representatives – Aliva Tulugak in Puvirnituq, Michael Cameron in Salluit and Qalingo Saviadjuk in Kangiqsujuaq – to provide information now about the mine, and later on to help recruit Inuit to work at the mine.
This summer, Canadian Royalties plans to sink $10 million into more exploration and drilling of four deposits located south of Xstrata's Raglan mine. There will be about 60 workers at their exploration base camp and another camp for road construction teams building 35 more km of road around the property.
To date, the company has sunk $40 million into the exploration and development of the property which has 16-tonnes of valuable minerals, including one per cent nickel, 1.1 per cent copper as well as platinum, cobalt and palladium.
In production, the Raglan South mine will produce 3,500 tonnes a day for 12 years. By contrast, the nearby Raglan mine produces 15,000 tonnes a day of a higher-grade ore.
"We're smaller for sure, but we're all much younger," Mullan said.
Canadian Royalties is looking at new ways to make its mine even cleaner, such as a new tailings system. This would use waterproof liners to store the tailings away from any contact with the environment, even if rising temperatures start to melt the permafrost.
"Although the disposal method to be used increases the cost of the project by a substantial amount, we believe it is the best and most secure over the long term," Canadian Royalties' CEO Richard Faucher said.
Global warming is a theme that runs throughout the company's $1 million environmental and social study prepared by Genivar, which looks at the mine's potential impacts on archeological sites, waterways, soil, people, birds, fish and air.
The study says the mine's impacts should fall well within acceptable limits – mainly because the future mine is located in a cold and isolated place, even by Nunavik standards. This means the fish are puny, vegetation is scarce, few caribou come around and Inuit have not heavily relied on this tough terrain for hunting.
But Pingaluit's crater lake, which lies within the provincial park, is only 34 km from the mine. The study says the lake would not be affected by any emissions and none of the mine's facilities would be visible.
The mine's environmental impacts will, of course, be subject to close scrutiny and recommendations from the KEQC and Quebec.
Meanwhile, Canadian Royalties is working out touchy subjects with respect to the use of infrastructure owned by Xstrata, which took over the Raglan Mine from Falconbridge last year.
Canadian Royalties has permission to use Xstrata's Donaldson Airport this summer, but there is no guarantee this arrangement will continue.
But Canadian Royalties has been informed to expect only limited access to Xstrata's Deception Bay port facility. Because the mine is considering a major expansion in the future, Canadian Royalties has been told to plan on building a second dock.
When the bankable feasibility study is finished, Xstrata may be among the mining companies eyeing Canadian Royalties' mine for an easy takeover.
Mullan said Canadian Royalties's shareholders would have the final say in this.
"Within months of the bankable feasibility study something happens. It becomes the catalyst itself for a transaction," he said.