Avanti encounters Nisga’a opposition at Kitsault

VANCOUVER — Just two weeks after announcing a permit milestone at its Kitsault molybdenum project, 140 km northeast of Prince Rupert, B.C., Vancouver-based junior Avanti Mining (AVT-V) has run into opposition from the Nisga’a Nation.

Kitsault reached the final stage of its environmental review in early March when it was referred to the Ministry of Energy, Mines and Natural Gas, but on March 13 the Nisga’a began a dispute resolution in an effort to halt Avanti’s proposed development.

Avanti bought the past-producing Kitsault property — which was shut down in 1982 due to low moly prices — from an Alcoa (AA-N, AA-X) subsidiary for $20 million in 2008, and the company has since invested $13 million over the past four years in a bid to revive the operation by 2015.

According to a press release, the Nisga’a believe that the review process has not adequately assessed the environmental impacts of discharging heavy metals into freshwater and marine environments, including waterways near the east side of the North Coast’s Observatory Inlet, at the mouth of the Kitsault River.

“Despite the Nisga’a Nation’s best efforts to ensure that B.C. and Canada properly assessed the potential impacts of the mine on the environment, the health of the Nisga’a people and the social and economic effects on the Nisga’a Nation, this has not yet been done,” Nisga’a president Mitchell Stevens said, adding that pending provincial elections in B.C. had heightened uncertainty.

“We are open for business and working well with project proponents in a variety of sectors in northwestern B.C. We look forward to participating in the many opportunities for economic growth. However, the Nisga’a Nation will not allow the health and welfare [its] people to be put at risk for this project,” he concluded.

The Nisga’a are amongst the First Nation groups that have come to treaty settlements with the provincial government, which means that a dispute resolution will first be sought outside of the court system.

Avanti remains confident that its proposed mine plan is environmentally sound and fulfills all obligations with the Nisga’a under the provincial treaty. The company reiterated that Kitsault would provide 700 jobs during a 25-month construction period and roughly 300 long-term jobs over the mine’s 16-year life. Avanti also said that the Nisga’a Treaty and provincial legislation shouldn’t prevent Kitsault from receiving its environmental assessment certificate within the 45-day review period.

“We are confident the science is sound and the record is robust. The amount of work that we have done to ensure the [treaty] requirements have been met has been extraordinary and unprecedented, and the government has already gone well past the statutory timeframes,” president and CEO Craig Nelsen says. “We firmly believe that B.C. and Canada have fulfilled their obligations, and fully expect the ministers to approve this project at this time.”

Avanti released an updated feasibility study on Kitsault in early February, which focuses on proven-and-probable reserves totalling 228 million tonnes grading 0.083% moly and 5 grams silver per tonne. The project would carry $938 million in capital expenditures and produce 374 million lb. moly and 14.4 million oz. silver over its life, at cash costs of $5.73 per lb. moly, assuming a by-product silver credit.

Kitsault would be an open-pit operation running at 40,000 tonnes per day and using a conventional flotation circuit, including five stages of cleaning to produce moly concentrate to be dried and packaged for shipment. At US$14.50 per lb. moly, Kitsault carries a $433-million after-tax net present value and a 16.6% internal rate of return at an 8% discount rate.

Avanti says it remains open to exploring a benefits agreement with the Nisga’a, though it notes that any discussions would not be relevant to the environmental review process. The company has traded within a 52-week range of 6¢ and 16¢, and closed at 7¢ per share on March 15. Avanti had 434 million shares outstanding for a $30.4-million press-time market capitalization.