CONSTRUCTION work is well underway at the northwestern B.C. Brucejack gold mine owned by Pretium Resources.

Gold mine under construction in northwestern B.C.

Brucejack financing helped by low Canadian dollar, competitive contract bidding

  • Wed Feb 24th, 2016 10:00am
  • News

The company building a gold mine near Stewart now says it needs less money than first calculated to bring the project into production.

Bids by contractors wanting work are more competitive because there is less activity overall in the Canadian resource development sector, says Troy Shultz of Pretium Resources which is building the Brucejack gold mine.

Because the project is priced in American dollars, but with costs paid out in Canadian dollars, the recently-fallen Canadian dollar compared to the American dollar has worked to the company’s advantage.

“We’re getting a substantial savings from the exchange rate,” said Shultz of revised figures released last week which indicate the project now requires (US) $696.8 million compared to an earlier estimate of (US) $746.9 million.

That earlier estimate came from a feasibility study completed in 2014.

He says that companies are lowering their pricing to secure contracts because of the lack of work elsewhere.

“Definitely we’re getting bids now that are a lot more competitive,” he said.

“I believe we’re the only mining construction project now underway in B.C.”

In one specific area, development of the mine’s underground workings from where ore will be taken, Pretium at first calculated it would have to provide its own equipment, said Shultz.

But the company will now be using a third-party mining contractor’s equipment that became available because of lack of work elsewhere.

“That makes our costs there less expensive,” noted Shultz.

Pretium’s revised financial model includes working capital for the first three months of operation once the mine has been commissioned.

Pretium intensified its exploration and development work at the location in 2013, advancing through environmental reviews and agreements with First Nations culminating in approvals for construction being granted last year.

Construction work began last fall and has continued through the winter with work to accelerate this year leading to a late 2017 opening.

In addition to developing the underground works, construction is underway on the mine’s mill building, various shops and on a 330-bed camp for Pretium’s eventual workforce.

“Those buildings are being fabricated off-site,” said Shultz of accommodations buildings, adding that cement is being poured now for the foundations and supports upon which they’ll be placed.

Up to 500 people will be needed during peak construction and a mine life of 16 years has been projected.

The mine is geographically close to Stewart at 65 kilometres, but road access to the Brucejack property is off of Hwy37 north of the Meziadin Junction.

Two camps already in place along the access road will be kept open, said Shultz.

The mine will be powered by a 56 kilometre-long 138kV line connecting the minesite with the newly finished Long Lake hydro-electric facility which will then give it access to BC Hydro’s provincial grid.

Towers for the line have already been constructed and will be installed using helicopters, a practice that means new roads won’t need to be built.

With construction underway during 2016 and into 2017 with an opening planned for the third quarter of that year, the company will soon shift its focus to hiring its workforce, said Shultz.

Pretium first received a financing boost thanks to (C) $81 million from the Chinese Zijin Mining Group when it purchased nearly 10 per cent of the company’s shares in late 2014.

A major portion of its financing came last fall – (US) $540 million from two financing agencies.

With the overall reduction in costs, Pretium is working on raising (US) $100 million to complete its financing package.

“We’ve never had a problem before,” said Shultz of the company’s ability to raise money.

Though construction costs were reduced in some areas and the exchange rate has done its part, certain aspects of the project have also cost more than expected.

That list includes an increase in hours being worked for construction, higher costs owing to winter construction and additional environmental monitoring being required to meet construction approval conditions.