May 10 to 16, 2004 is National Mining Week in Canada and this year?s theme is ?Mining ? An Important Industry Contributing to All Regions of Canada?. From our long-standing coal industry to our booming diamond industry, mining is a regular contributor to our country?s economic well-being and is the backbone of many of our remote communities.
In northeast BC, where coal mining played a very significant role in this region?s economy and communities up until a few years ago, recent new developments by coal mining companies promise a resurgence of new coal mines opening in the area. Developments include the Pine Valley Mining Corporation?s plans to open its Willow Creek coal mine in the summer of 2004, Western Canadian Coal Corporation?s plans to open its Perry Creek coal mine in the fall of 2004, and Northern Energy & Mining Inc.?s plans to open its Trend coal mine in the next few years.
The Willow Creek Coal Mine
Leading the way is Pine Valley with its Willow Creek Coal Project, located approximately 45km west of Chetwynd. The Willow Creek property contains 15 million tonnes of known coal reserves and has an expected mine life of 14 years. The total capital cost for Willow Creek is estimated at $20.5 million, with $12.5 million required to start construction on Phases I and II in 2004 and an additional $8.0 million for Phase III in 2005. The majority of production will be targeted to the low volatile pulverized coal injection market.
The company plans to develop its Willow Creek property in three phases. Phases I and II will include the construction of a raw coal operation which, after initial completion, will include a major extension to the existing rail siding to enable loading of unit trains, construction of raw and clean coal stockpiling and crushing facilities, haul road upgrades, pit development work, and land acquisitions. Phase III will include the installation of a coal preparation plant next to the rail siding and construction of additional ancillary infrastructure. These additions will allow the mine to produce 2 million tonnes of coal per year by the end of 2005.
During Phases I and II, approximately 50 employees will be required, and by the end of Phase III, approximately 100 employees will be required to fully operate the mine. Commercial production is scheduled to start in June of this year and an annualized production rate of 1 million tonnes per year is expected to be achieved by October 2004.
Pine Valley recently shipped an 84,400 tonne trial shipment of coal to a major Japanese steel manufacturer. This shipment is the beginning of the final steps for Pine Valley to become the first new mine in BC in 20 years to produce and ship coal.
The Perry Creek Coal Mine
Currently in the regulatory approval stage, WCC plans to develop the first of its three properties, the Wolverine, in late 2004. Within the Wolverine property there are three main coal deposits: Perry Creek, Mt. Spieker/EB, and Hermann. WCC plans to develop the Perry Creek deposit first and defer development of the Mt. Spieker/EB deposit until the seventh year of its mine plan. Perry Creek will be an eight year open pit operation and the Mt. Spieker/EB will be a three year underground mine operation, making the total life of the Wolverine mine approximately 11 years. Based on an expected production rate of 1.6 million tonnes of hard coking coal per year and a mine life of eight years, the Perry Creek deposit is expected to yield approximately 17.1 million tonnes coal.
The initial capital cost for the Perry Creek Pit is expected to be $116 million with an additional $6 million required for the EB Pit in the fifth and sixth years of the life of the mine. WCC plans to market its coal to the Japanese steel industry with projected gross revenues from sales expected to be $100 million per year.
Located between the old Quintette and Bullmoose coal mines in the Wolverine and Perry Creek watersheds, approximately 25 km west of Tumbler Ridge, the Wolverine Coal Project will include the Perry Creek and EB open pits with related dumps and access roads, a coal processing plant and related coal handling facilities, equipment maintenance and administration facilities, and an explosives storage facility. A contract operator will be hired to operate the mine and a skilled workforce of approximately 200 is expected to be hired.
The company expects to receive its Environmental Assessment Certificate from the EAO and its Mine and Reclamation Permit from the Ministry of Energy and Mines by November 2004, leading to commercial production in the second quarter of 2006.
WCC recently announced it entered into an agreement with Talisman Energy Inc. where WCC will explore and evaluate the mine development potential on Talisman?s Sukunka coal licenses.
The Trend Coal Mine
Still in the development stage, Northern Energy & Mining Inc. is currently working on developing two coal projects. The first project is on the Trend property which is comprised of five mining blocks; the South, Extension, Roman, Hambler, and Q West, and is located 25 km south of Tumbler Ridge. The second project is on the Saxon property which is comprised of four major mining blocks; the East, South, North, and Omega, and is located about 120 km southeast of Tumbler Ridge. NEMI has decided to make the Trend property is first priority.
NEMI started new geological work on its Trend property in early 2002. Work plans for 2004 include: conducting updated geological reports for the South and Extension blocks in the first quarter; starting a feasibility study in the third quarter with completion of the study expected by the end of the first quarter in 2005; and commencement of environmental baseline programs and impact assessment studies in the third quarter of 2004.
The total classified resources for the Trend property is 57 million tonnes of coal within the South and Roman blocks. Resources for the Extension block should be developed by the end of April 2004. Based on total classified resources, annual production is expected to be 1.5 million tonnes of hard coking coal from the South and Extension blocks but development of the other three blocks could raise the production total to 3 million tonnes of coal per year. Production from the Trend mine is expected some time between the fourth quarter of 2005 and the third quarter of 2006. At a production rate of 1.5 million tonnes per year, the initial Trend mine is expected to have a life span of 12 to 15 years.
Depending on which development NEMI opts for, the capital cost for the Trend project could range anywhere from $25 million to $60 million for initial mine development. With estimated production levels of 1.5 million tonnes per year, annual gross revenue is expected to be $100 million. The Trend mine is expected to employ between 180 and 200 employees.
NEMI expects the assessment and application process to get started in the second quarter of 2004 with a target date of submitting an application in the second quarter of 2005. If the application process goes according to the recommended timeline, the company expects to have its approvals in place in the fourth quarter of 2005.
Large-scale mines add to the economic health of our country and provide immeasurable benefits to remote communities where typically a mine is the main employer. Benefits to communities include revenues to municipal and provincial governments that provide financial support to local communities for infrastructure and services such as medical, educational, fire, and police; residential and industrial taxes paid by mining employees and businesses that support a mining industry; and the income from mining employees creates substantial buying power and demand for local services.