-- It is not a robust project when the risks such as significantly decreased metals prices, decreases in projected reserves or recoveries, increased costs, and delays in revenue streams are more realistically portrayed.
-- Independent sensitivity analyses show the relatively high risk that the Tulsequah Chief has of, at some point in its history, becoming uneconomic, resulting in premature project closure and bankruptcy of the owner.
-- The Feasibility Study relies upon relatively optimistic metallurgical grades and recoveries. The reliance on "probable" rather than more certain "proven" mineral reserves indicates less than a high degree of confidence in the economic viability of the ore deposit.
-- The estimated development and operating costs appear highly optimistic given the location, dependency on petroleum-based fuel, competition for labor and other factors. An increase in operating costs of as much as 25% over the life of this project would not be unreasonable were a more conservative case to be projected.
-- The lack of an identifiable smelting facility and the Technical Report's statement that the copper concentrates would be rejected by Chinese smelters suggests that marketing of this concentrate might be questionable and at the very least difficult.
-- Potential environmental liabilities and reclamation costs are seriously underestimated. If the company's reclamation measures fail, the long-term cost could be in excess of $100 million. The Technical Report notes that, "If this (long-term) mitigation strategy is unsuccessful, there could be the need for the long-term treatment of AMD (acid mine drainage) at this site." However, no estimate of the costs of long-term treatment has been provided, although elsewhere Chieftain notes that annual operating costs for the Interim Water Treatment Plant (IWTP) were about $4 million. The company has not included costs in its economic analysis for operating the IWTP before the mine is in production.
-- Schedule delays and additional associated costs, such as those caused by First Nation opposition, labour disputes, financing problems, weather conditions, barging challenges and other unexpected site conditions have not been accounted for. The Technical Report notes, "The barging component of the logistics plan is critical to the project success," but does not discuss the history of barging problems and delays experienced by both previous mine owner Redcorp in 2007 and 2008 and Chieftain in 2011.
For a copy of the Kuyek and Kuipers reports, see http://riverswithoutborders.org/blog/2013/04/tulsequah-chief-mine-proposal-extremely-risky
Rivers Without Borders is a project of Tides Canada Initiatives Society in Canada and Tides Center in the U.S.
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