Business

Kitsault miners cut development costs

THE COMPANY that wants to open a molybdenum mine at Kitsault on the north coast has reduced the amount of money it needs.

The new figure of $977.7 million is $66 million or six per cent lower than Avanti first forecast.

Company president Mark Premo said choosing different construction materials and commissioning more detailed engineering designs to reduce financial risk when construction begins have helped project economics.

Avanti is also forecasting spending less on indirect costs and won’t need as much money in contingency accounts, he said.

“The indirect costs are reduced due to decreased camp costs and contingency is reduced due to overall cost reduction in other areas, and reducing the risk or unknowns in other cost areas,” he said.

Premo said a review of the project has also changed its ongoing financial projections once operations are underway.

Because the work plan now calls for more molybdenum ore to be mined in the early years of operation, more cash will be coming in during those early years, he said.

“The debt structure is determined by the project’s cash flows, and early increased cash flow will allow Avanti more flexibility in managing the debt,” said Premo.

It plans to finance construction by a combination of debt and also by selling equity in the project.

Just this fall, Avanti announced it was borrowing $40 million, a figure that was then increased to $50 million, on a new bridge leading to Kitsault and on other work so that it’s in a better position to start construction as soon as possible when it has received necessary permits.

The project received provincial environmental approval this spring and is anticipating federal approval by year’s end.

Premo said the company wants to get started as soon as it has all necessary approvals in place.

Planned work next spring includes roadwork and earthworks, he said.

Avanti first bought a closed-down molybdenum mine property at Kitsault in 2008 and has since developed an open pit plan that will operate for 14 years, employing 300 people directly and more indirectly.

It’ll move molybdenum concentrate by road from Kitsault south to the Nass Valley and then eastward over the Cranberry Connector to Hwy 37 North before connecting to the provincial highways network for Vancouver port facilities.

From there, concentrate will be shipped to processing facilities around the world.

 

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