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Print[Ferro-Alloys.com] Crews at Thompson Creek Metals’ Mount Milligan project have started crushing rocks and are mere days away from turning on the milling machinery that will grind down the ore and start extracting copper and gold from the first new mine to open in British Columbia in more than a decade.
That development will turn the $1.57-billion construction project into an operating mine with the goal of commencing commercial production of ore sometime in the fall, churning out an estimate 40,369 tonnes (89 million pounds) of copper concentrate and 262,000 ounces of gold per year.
However, the mine’s opening coincides with an uncertain time for the mining sector with falling metals prices and companies such as Teck Resources scaling back capital projects.
“It’s a bit of a mixed environment” for copper miners, according to Patricia Mohr, vice-president of industry and commodity research for Scotia Economics.
Copper prices remain relatively high now, Mohr said, but she is forecasting that prices will fall as new mines open up while the economy remains stagnant.
“They’re not necessarily going to move down to recession levels, but what we are going to see is new mine expansion around the world after many years of very limited new mine activity coming on stream.”
Copper prices, which hit record highs over $4.50 US per pound in 2011, have dipped into the low $3 US per pound range.
Mohr noted that the price rose Thursday, closing at $3.27 US, due to more favourable economic news out of China, but she is forecasting that the price will fall below $3 US in the coming months as new mines — such as Mount Milligan — open.
While it is not a high point of the commodities cycle, Thompson Creek spokeswoman Jocelyn Fraser said the Mount Milligan mine, located in B.C.’s remote central interior between the towns of Fort St. James and Mackenzie, is still in a good position.
The feasibility study that was conducted for the project, which estimates the economic potential for a mine, was done assuming a $1.60/pound price for copper and a $690/ounce price for gold.
“The project has been on the books for 20 years,” she said. “People have been looking at this for a long time, and because it is a cyclical market, we feel getting it into production is the key thing.”
Fraser added that Mount Milligan is a “game changer” for Thompson Creek, turning it into a diversified metals-mining company from one that was primarily focused on mining molybdenum — an additive in making steel alloys.
Royalty company Royal Gold is entitled to purchase 52.5 per cent of gold produced at Mount Milligan for $435 an ounce under the terms of a streaming deal that Thompson Creek signed earlier to obtain financing.
Thompson Creek reported Wednesday its second-quarter financial results, which showed an increase in revenue and improved performance at its mines, but a $19.2 million US net loss. The company also announced the appointment of Jacques Perron as the new chief executive officer.
In the communities closest to the Mount Milligan site, the mine’s impact is already being felt.
Emily Colombo, economic development officer for the District of Fort St. James, said the town was B.C.’s second-fastest growing community between the 2006 and 2011 census, and the mine development played a role in that — along with a resurgence in the forest industry.
“Right now, and for the last few years, anyone who wants to work in Fort St. James is working,” she said. “There is no shortage of jobs, which is great, it’s what every community hopes for in terms of employment.”
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