Trilogy one step closer to developing Arctic prospect

A new proposed mining endeavor in the Northwest Arctic is one step closer to coming to fruition.

Trilogy Metals recently released its pre-feasibility study (PFS) for its so-called Arctic Project, which lies within the Ambler Mining District.

"The results of the PFS show that Arctic is a robust, high-quality project," said Trilogy President and CEO Rick Van Nieuwenhuyse in a release. "We are very pleased with the improvements in the economics in this Pre-Feasibility Study compared with the Preliminary Economic Assessment (PEA) performed on the Arctic Project in 2013."

Changes between the two studies include a shorter ramping-up time for the project, which is now estimated at two years rather than four. That would allow it to reach full potential sooner and begin collecting greater returns over a shorter period of time.

Additionally, the recent study shows the mine would be able to tap into liquefied natural gas, rather than relying solely on diesel, which could add up to about a 40 percent drop in power costs.

At this point, the Arctic Project is expected to have a lifespan of 12 years with a processing capacity of 10,000 tons per day through its mining and milling operation for copper, zinc and lead concentrates. There could also be significant gold and silver byproducts, project managers expect.

According to the study, Trilogy is projecting an annual production of about 199 million pounds of zinc, 159 million pounds of copper, 33 million pounds of lead, 3.3 million ounces of silver and 30,600 ounces of gold.

Total costs to start the project are estimated at about $780 million, which is just shy of 10 percent more than was first expected based on the 2013 assessment. However, operating costs are estimated to be much lower than initially projected, by about 60 percent. Mine closure and reclamation costs are also expected to be about 20 percent lower than previously thought.

Altogether, that brings the cost of operating the mine, start to finish, to about 5 percent less than the 2013 assessment indicated.

Those returns have lead the company to say "economic indicators justify moving forward with a permitting and feasibility study," according to the release.

One of the challenges the project faces, however, is the fact that as of right now, there is no way for industry to reliably access the project site.

Should the project come to pass, it would rely on access via the Ambler mining road, a controversial transportation corridor that would stretch about 200 miles from the Dalton Highway to the mining district.

The public scoping process recently wrapped up for the road project and saw residents split over potentials and drawbacks. Many locals spoke out about their concerns for subsistence areas and species. Some were worried a busy road could disrupt migration routes and put already vulnerable land and herds at risk, should there be any kind of spill or contamination.

Industrial developers have been vocal proponents of the road project, which would be permitted by the Alaska Industrial Development and Export Authority (AIDEA). The road would be for industrial vehicles only. Some local residents have called for special permits for community members to use the road, if it were built, but that option has not yet been formally addressed.

"The working assumption of this PFS study is that AIDEA would arrange financing in the form of a public-private partnership and arrange for the construction and maintenance of the access road," Trilogy's study noted. "AIDEA would charge a toll to multiple mining and industrial users (including the Arctic Project) in order to pay back the costs of financing the AMDIAP (Ambler Mining District Industrial Access Project)."

As with other mining prospects in the area, the land would be leased from NANA Regional Corp., which owns the surface rights.

"... NANA has the right, following a construction decision, to elect to purchase a 16 percent to 25 percent direct interest in the Arctic Project or, alternatively, to receive a 15 percent Net Proceeds Royalty," Trilogy noted. "This PFS was carried out on a 100 percent ownership basis and does not include the impact on Trilogy Metals if NANA elects to purchase an interest in the Arctic Project under the NANA Agreement or, alternatively, the impact on Trilogy Metals and the Project if the NPR becomes applicable."

Trilogy also estimated in its study that the project could potentially bring about 400 jobs to the Northwest Arctic, though it did not specify if those would be local or outside hire, or a combination of both. Another mine in the area, Red Dog, is a major employer for the region.

As this was just a pre-feasibility study, the project is still far off, should it even come to fruition. The company plans to do several million dollars worth of water management and geotechnical studies later this year, along with another $10 million in studies of its other proposed location, Bornite, which is south of the Arctic site.