Production halted at Bucko Lake nickel mine

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About 150 workers at Bucko Lake mine are expected to lose their jobs, at least temporarily.

FOR the second time in less than a year, production has been shut down at Crowflight Minerals' Bucko Lake nickel mine near Wabowden.

The Toronto-based mining company announced Friday it would end its relationship with the contract production company, Dumas Contracting Ltd., and start operating the $140-million mine itself.

The move is going to mean at least the temporary loss of jobs for 150 workers almost immediately.

Mark Trevisiol, Crowflight's CEO, said the company will update its marketing plan for 2011 and produce a new economic model and hopefully be in a position to start hiring and getting back into production early in the new year.

"We have been struggling for some time to get production rates to the level we need," Trevisiol said in an interview. "This was our last option. We have been stringing this along for a long time now. The board finally decided to look at Plan B."

But it will be an expensive option, perhaps costing as much as $20 million. The company has the backing of its largest shareholder, King Place Enterprises Ltd., a Chinese investment fund, that is helping arrange debt financing.

The problems stem from a disagreement between Crowflight and Dumas. Crowflight has disputed the amount Dumas has claimed to be owed and Dumas has placed a lien on the Bucko Lake property. Emma Wimberley, a spokeswoman for Timmins-based Dumas, declined to comment on the dispute.

Crowflight built Bucko Lake in 2007 when nickel prices had spiked to record highs of about $25 a pound. The mine opened in early 2009 after prices had come crashing down to about $4. They have since climbed back over the $10 level.

The company shut down production in November 2009 after admitting it had taken the wrong technical approach to the ore body and had to revise its strategy. It got back into production earlier this year, but Trevisiol said it was still not producing at levels Crowflight's board and management believed were adequate.

"We have a mining plan that can stretch for 10 years. We believe there are mineral resources that can keep it going for another 10 years," Trevisiol said. "We want to get it right."

But that is now going to mean sourcing and buying a whole range of expensive equipment as well as being responsible for finding a skilled workforce in an already tight labour market in northern Manitoba.

One mining industry official said the company will have its work cut out for it because there are other new mines coming on stream that are also seeking workers.

This week, Alexis Minerals announced it has financing in place to reopen the former New Brittannia gold mine, now called Snow Lake Gold Mine. HudBay Minerals is building its new Lalor mine near Snow Lake and Vale Inco in Thompson continues to look for workers.

Crowflight and Alexis share access to the resources of the Toronto firm Forbes & Manhattan, which is a significant investor in both companies. Forbes & Manhattan uses its technical and financial resources to finance and manage public and private companies in the junior resource sector.

Ed Huebert, executive vice-president of Mining Association of Manitoba Inc., said while this may be a setback for Crowflight, it is not something it will not be able to overcome. "This is just business," Huebert said. "These things happen. Companies have to change contractors from time to time."

martin.cash@freepress.mb.ca