Revitalizing the Mining Industry in Northeast BC ? Part I of III:

A rash of mine closures in the past few years have caused substantial economic upheaval to more than a few communities. The closure of the Quintette and Bullmoose mines all but closed the town of Tumbler Ridge in northeast BC. It was these mine closures and others throughout the province that prompted the government of BC to include progressive changes to the mining industry under its BC Heartlands Economic Strategy. These changes are expected to help revitalize the mining industry and bring back much needed jobs to communities and provide a huge economic boost to the province?s second largest industry.

In northeast BC, three mining companies have started the long, arduous process to open new mines. The Pine Valley Mining Corporation expects to start construction on its Willow Creek coal mine in July 2004, Western Canadian Coal Corporation expects to start construction on its Perry Creek coal mine in the fall of 2004, and Northern Energy & Mining Inc. is in the early development stages of plans to open its Trend coal mine in the next few years.

Fast Facts

Incorporated as GlobalTex Industries Inc. in 1993, Pine Valley?s Willow Creek property is located approximately 45km west of Chetwynd. There are 15 million tonnes of known coal reserves in the Willow Creek property and the life of the mine is expected to be 14 years. In September 2002, Norwest Corp. prepared a Feasibility Study for the Willow Creek property, and based on the results of that study, the majority of production will be targeted to the low volatile pulverized coal injection (PCI) market. PCI coal is a more environmentally-friendly coal and less expensive to produce than coke.

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. By the second half of 2004, the mine is expected to produce 1 million tonnes of coal per year. 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.

Status Update

As of January 7, 2004, Pine Valley now owns 100% of the Willow Creek project, having purchased Mitsui Matsushima Canada Ltd.?s one third interest in the Willow Creek Joint Venture for $6.0 million. The total capital cost for the Willow Creek mine 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. ?We are currently in negotiations with other parties that should see the $12.5 million financing in place by the end of March 2004,? said Graham Mackenzie, President and CEO of Pine Valley Mining Corporation.

Pine Valley received its Project Approval Certificate from the Environmental Assessment Office in 1998 for an open-pit coal mine. This permit allows Pine Valley to produce 900,000 tonnes of coal per year but the company will seek an amendment to its permit prior to committing to increasing the output of the mine.

Pine Valley has negotiated a contract with BC Rail to transport its coal to the Neptune Terminal in Vancouver. Although Pine Valley hasn?t signed any contracts yet, it has received an enormous amount of enquiries from potential customers. Pine Valley plans to target the Japanese, Chinese, South American, and European markets and sign contracts with steel industry companies. As soon as financing is in place, Pine Valley expects the signing of contracts will naturally follow.

Although Pine Valley hasn?t decided whether to operate the Willow Creek mine, it has completed the tender process for a contract operator and expects to make a decision in this regard by the end of February 2004.

The Willow Creek mine will not be a camp job. 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. ?Employees will be hired from Chetwynd and from communities that are located in close proximity to the mine site. We are very keen on hiring individuals who are enthusiastic and conscientious,? said Mackenzie.

Benefits to Tumbler Ridge

Tumbler Ridge will not see any economic benefits from the Willow Creek mine. The physical location of Tumbler Ridge to the mine site makes it impossible for Pine Valley to hire employees from the town as it is unrealistic to expect employees to commute three hours a day on top of an eight to ten hour day. Utilizing the town?s businesses and services is also a problem. ?We are located on BC Rail?s main line, not the Tumbler Ridge spur line, and we feel it will be very difficult to contract out any work to Tumbler Ridge businesses because most of the companies that supported the previous mining industry have now closed,? said Mackenzie.

** Part II of this series will take a look at Western Canadian Coal Corp.?s Fast Facts, Status Update, and Benefits to Tumbler Ridge.