Juniors feel effects of suspensionJuniors feel effects of suspension
Grant Surridge
1 December 2007
National Post
(c) 2007 National Post . All Rights Reserved.
Executives at junior miners operating in northwestern B.C. downplayed this week the knockdown effect on their ventures from the suspension of the Galore Creek copper-gold project.
That development, along with a decision by the provincial government to delay a planned power grid extension into the area, led investors to shed positions in the juniors.
Haywood Securities analyst Kerry Smith said that although the other projects are only in feasibility study phases, the wildly inaccurate costs estimates for Galore change the game.
"Of those projects, the one that had the best economics was Galore, and now with it delayed, nobody else up there is going to go ahead," he said. These companies beg to differ:
COPPER FOX METALS INC.
Project: Schaft Creek Resources: 1.4-billion tonnes Copper, gold, molybdenum
The Schaft Creek project is located 35km from Galore Creek, and Copper Fox stock is down almost 37% since NovaGold and Teck Cominco Ltd. pulled the plug on Galore. But chief executive Guillermo Salazar is unbothered.
"Our plans are continuing forward full blast," he said, adding that Copper Fox would consider buying more power to save the grid extension in the wake of Galore's absence.
"We could certainly increase that capacity to take on some of the slack," he said.
TSX closing price yesterday: 55¢.
WESTERN KELTIC MINES INC.
Project: Kutcho Creek Resources: 17.6-million tonnes of copper, zinc
On the day Galore Creek was suspended, Western Keltic accepted a takeover offer of $37-million from Sherwood Copper, pushing its shares up about 34% since.
Haywood analyst Mr. Smith said Sherwood may scale down the Kutcho Creek project to make it more feasible.
But Western chief executive John McConnell said diesel power will fire Kutcho and that his company already has a road into the site, a different situation from Galore Creek.
"People read in the paper that all projects in northwestern B.C. are affected [the same way], and they're not," he said. TSX close yesterday: 42¢.
IMPERIAL METALS CORP.
Project: Red Chris Reserves: 276-million tonnes of copper, gold
Red Chris is in limbo, waiting for federal permit approval to proceed. But the company's leader said he believes Galore will get back on track, and ditto the power grid.
He said Red Chris is only 22km from the provincial highway and the site gets relatively little snow.
"I see this [grid suspension] as more of a delay, and if it lasts till next summer it doesn't affect our schedule much anyway," said president Brian Kynoch.
Imperial shares are down 8% since the Galore suspension, and closed at $13.25 yesterday on the TSX.
FORTUNE MINERALS LTD.
Project:Mount Klappan Resources: 230-million tonnes Anthracite coal
Fortune planned Mount Klappan to operate with diesel power and the site already has road access, said spokesman Greg Taylor. He said the two suspensions this week do not alter the company's plans.
He added it is much easier to estimate costs for coal mining than for other minerals.
"You're not talking about a process that is nearly as complex or expensive as copper or gold." he said.
TSX close yesterday: $1.78
gsurridge@nationalpost.com