The presence or absence of infrastructure is a make or break issue in opening a new mine and the decision to invest in a potential mine or not. Here is a current example of two mines that may never open if the power infrastructure is not built. Conversely if the powerline is built their stock price will soar the day the announcement is made that the powerline will be built.
I refer to Imperial Metals’ Red Chris property and Hard Creek Nickel’s Tornagain property, both in northern British Columbia. To judge by numbers presented to us today at the CIM Conference in Edmonton, both these properties have good ore bodies with high grades relative to other prospective mines in the province and even worldwide.
But neither has a power source to make the mine work. More than ten years ago the British Columbia government started to look at building a powerline up Highway 37. It has been on-again and off-again ever since.
The powerline was a definite on-again when the Galore Creek mine was a promising prospect. But they located their tailings impoundment at the end of a big watershed and the costs of diverting the water around the tailings impoundment finally flooded and sank the project. I am told they are reevaluating everything at present so do not write this ore body off as just another mining share that plunged because they forgot to consult the hydraulic engineers.
Back to Red Chris and Tornagain. They cannot generate power with diesel – too expensive; natural gas—not currently available; wind—it just does not blow hard enough at the mine sites. So they sit waiting a powerline.
The point is that you as an investor, may conclude that the ore body is good, the management superb, the permits in place, the commodity price increasing, and a profitable mine is in the making. In that case the gamble you take purchasing is: when will the politicians get around to announcing a powerline construction project?
You can get more information about this non-existent powerline at www.highway37.com. It is worth taking a look; but be careful of the enthusiasm and optimism that pervades the site. It may well be another decade before BC gets around to it, and that is a long time to site on a good, but non-performing asset.