Nickel mine re-opening a strong possibility

Canadian Arrow Mines Ltd. currently is exploring nickel sulphide deposits just east of Sioux Narrows—and is looking to re-open a mine that’s been there since the 1950s.
The company held an information session at La Place Rendez-Vous in Fort Frances last Tuesday evening as part of a tour in the area to speak with the public about its Kenbridge nickel property.
“If we hid in the woods all this time and popped up years down the road and said, ‘Oh, we’re putting up a mine’—well, that’s just bad manners,” quipped company president and geologist Kim Tyler.
He said these presentations are being held with the intention of making area communities aware of their plans, as well as provide a forum to field any questions or concerns the public may have.
Tyler conceded there is no guarantee the project will be given the green light, nor that it will be successful if it is a go, but he did stress his company does believe strongly that it will be successful.
The actual figures on how successful the mine may be still are speculative, however, as the really indicative tests, like the bankable feasibility report and the ability to secure project financing, still loom ahead.
But the company’s predictions on the potential success of the mine do have some merit. Diamond-tipped drills have been used to match, model, and determine the geometry of the land, which will help deduce which metals are concentrated in the ground and to what degree.
These sections have been sent away for studies and tests of valuation.
The results of the Preliminary Economic Assessment (PEA) determined that the ground contains 97 million pounds of nickel, from which the company expects to be able to extract 71 million pounds.
With the nickel now valued at about $10 a pound, it doesn’t take a mathematician to see the numbers. But to make money, you have to spend money, and the estimated capital costs of the project are figured to be around $108 million.
The company is trying to lower this cost by purchasing second-hand equipment and finding deals. As well, an existing 2,000-foot shaft on the property, which was developed in the 1950s, is still ready-to-use.
This is considered to be an asset of almost $30 million in savings.
If the mine is successful, Tyler said the positive impacts include:
•the creation of 150 direct mining jobs;
•the creation of three indirect service-related jobs; and
•a 10-year mine life of extraction and making money, with the potential of an extension.
But Tyler admitted there are heavy risks involved in a project such as this, including:
•the inability to get financing and investor support;
•that nickel prices may fall (making it not economically reasonable to continue);
•increasing construction and operating costs;
•the occurrence of unforeseen technical and environmental issues;
•a change in regulatory restrictions;
•having a delay that ultimately will lead to an inactive mine; and
•not able to receive continued community support.
Of all the risks, Tyler said the ability to acquire investor financing is the most crucial.
Canadian Arrow Mines is a junior company, which means it does not spend its own money but rather relies on investor support. It sells company shares, then uses that money to finance its project.
It will be selling 64 million shares, and it also has 85.9 million fully dilated shares. Right now, the price is fluctuating around 30-36 cents per share.
Currently, even though a project may look impressive and may show great potential, sub-prime mortgage rates are dissuading investors from looking into junior projects.
However, the company still is hoping to pull through—aiming to acquire project financing by the end of the year.
Tyler stressed they want to get going with this project soon to take advantage of the good value of nickel, but also pledged a rush to get underground won’t mean cutting corners on environmental issues that are raised in a project like this.
“We are aware that in the world today, we need to exceed expectations in environmental care while operating mines,” said Tyler.
“Mining is different than it used to be 50 years ago,” he continued. “Concerns for the environment were never this high.
“We know that concerns are high in the community and I assure that they are high in the company, as well.
“Mining can be clean. It can be done with no effects during or after,” he stressed.
Tyler admitted the tailings that are left may contain some of harmful acids, which could contaminate the surrounding natural areas, but he assured they will try their best to eliminate the acids—and will contain leftover tailings in storehouses to ensure no water contamination.
He also noted they are required by law to get independent outsider reports every step of the way, and that permits also are required for every move they make.
Furthermore, they can not begin any project until they have an approved closure plan and the money to pay for it on reserve in the bank. No matter what happens, the land will be put back to its original state upon closure of the mine.
Even in the event of bankruptcy, the money on reserve in the bank will be put towards the closure plan.
A point that was stressed during last Tuesday night’s information session here was that miners mean business and don’t look to go through life constantly being known as the people who ruin the environment.
They aim to clean up after themselves, and to do their job as cleanly as possible to begin with.
“We are taking the best industry practices and applying them to a small community project,” Tyler remarked.
He also noted they practice “progressive reclamation,” which means they constantly are working to fix up the land as they work on it. Instead of waiting until the end and having one big clean-up project, it is more practical to do it as they go.
Not only is this the better way to do it practically, but it also means they get the money back which is held by the bank to do so. They want their money back as soon as they can get it instead of having it sitting on hold somewhere.
“It makes a lot of sense to be green nowadays for many reasons,” said Tyler. “It’s not just the conscionable thing to do, but it also saves you a lot of money.”
Many people who have travelled through the Sudbury area are aware of the devastation that’s taken a toll on trees because of nickel mines, but Tyler assured this was due to old industry standards and the use of a smelter.
He also said much time and money has been devoted to the reconciliation of the environmental errors that occurred there.
He stressed their mine will not be using a smelter so those kind of effects should not happen here, citing mines like Bucko Lake in Manitoba, just south of Thompson, which is of similar size and similar practice.
Tyler also named Myra Falls mine at the south end of Buttle Lake in a provincial park in British Columbia, claiming passers-by wouldn’t even know there was a mine there (though this is primarily a zinc mine, not nickel).
The company is saying environmental risks are low and that they assume the project will be successful, bringing in sufficient amount of nickel and a profit to boot.
“This isn’t a new deposit. A lot of work has been done on it,” Tyler remarked. “The company is newly-energized with a great new team.”