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Background on CanTung Water Licence

Jamie Kneen Communications and Outreach Coordinator responsible for: strategic research, social media, and public engagement; our Africa program, environmental assessment, and uranium mining.

Mine Location and History

The CanTung mine is located in the southwestern NWT, just inside the boundary with the Yukon. Road access is through the Yukon and the closest community is Watson Lake. The tungsten deposit was first staked in 1954 and went into production in 1962. The mine closed in 1986. After changes in ownership, it re-opened in 2001 under the management of North American Tungsten Corporation Limited. The company just announced closure of the mine after its sales agreements for concentrate were cancelled and loans were called in. The employees have all been laid off and four Directors have just resigned, including the Chief Executive Officer.

Reclamation

A variety of independent consultant reports from 2002 and 2003 estimated the total liability between $9.4 to $49.3 million for a full and final clean-up at the CanTung mine. The Mackenzie Valley Land and Water Board commissioned an independent evaluation of reclamation costs that concluded that the clean-up will cost somewhere between $10-12 million. Part of the difficulty in estimating costs is that there are no legally-binding standards that clearly state what the final conditions should be at a mine site once it is reclaimed.

At the public hearing for the mine's water licence in July 2003, the company asked for the security deposit to be raised to a total of $2 million from the existing $900,000, based on the company's plan that was not signed off by a professional engineer. The federal Department of Indian Affairs and Northern Development (DIAND) requested the security deposit to be raised to $2.9 million, based on 15% of DIAND's estimated total liability of $34 million.

The lack of security is contrary to the NWT Mine Site Reclamation Policy (released by the Minister of Indian Affairs and Northern Development in 2003) that states, "For existing operations, the financial security provided to the Minister for reclamation should be increased in increments to 100 per cent coverage as soon as possible, but no later than the life of the mine." The proponents of the CanTung mine have estimated that the life of the mine is between 2-7 years with known ore reserves at 2 years. An earlier independent report prepared for the federal government noted that the company has "little or no assets or capacity to cover...the potential liability".

The reclamation liability as calculated in a number of reports is shown in the following table:

Abandonment and Restoration Reports and Cost Estimates 1996-2003

Year Author/ Consultant Details
Independent?
Total Liability (independent estimates are in BOLD)
1996 SRK Consultants Proponent-commissioned independent plan submitted to NWT Water Board Yes $4.6 million
1997 Aur Resources Inc./Watermark Consultants Proponent written A&R Plan, independent cost sheet prepared by consultant submitted to NWT Water Board Partially1 $2.3 million
2001 EBA Engineering Consultants Ltd. Proponent-commissioned independent plan submitted to MVLWB Yes N/A (liability not calculated; referenced 1997 A&R estimate)
2002 Brodie Consulting DIAND-commissioned independent engineering study for post-closure water management and monitoring Yes $34.5 million
2003 Gartner Lee Ltd. DIAND-commissioned independent surface remediation study for complete restoration including reclamation and on-going monitoring Yes

$49.3 million2
$10.3 million3
$9.4 million4

2003 AMEC MVLWB-commissioned independent evaluation of A&R plans/info. on public registry Yes $10-12 million
2003 INAC intervention Total Estimated liability to Crown No $35 million5
Recommended security deposit No $2.9 million6
2003 NATCL Company plan submitted to the MVLWB and requested security deposit No $1.9 million

Liability and Security Deposit Payments

The Land and Water Board issued a water licence with an attached security deposit of $7.9 million over the 5-year term. The first payment of $1.5 million is due within 30 days of the licence issuance. The full licence and schedule of payment is available on the Mackenzie Valley Land and Water Board web site at http://www.mvlwb.com/2002html/MV2002L2-0019/MV2002L2-0019license.pdf


1 Aur Resources Inc. was the proponent at the time (not independent). Watermark Consultants is assumed to have been independent.
2 Complete site restoration includes management, engineering, contingency and 25 years of monitoring costs.
3 Long-term environmental protection includes management, engineering, contingency and 25 years of monitoring costs.
4 Environmental safety and security includes management, engineering, contingency and 25 years of monitoring costs.
5 Although this is not an independent estimate ($35 million), it is likely based on the Brodie Consulting (2002) report.
6 An additional $2 million to the existing $900,000 security deposit is to be provided over a 2-year period.