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, British Columbia, 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 process in early March when it was referred to the Ministers of Environment and Mines, and Energy and Natural Gas, but on March 13 the Nisga’a commenced dispute resolution intended to halt Avanti’s proposed development.

Avanti purchased the past-producing Kitsault property — which was shut-down in 1982 due to low moly prices — from an Alcoa (AA-N) subsidiary for $20 million in 2008, and the company has 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 environmental impacts resulting from the discharge of heavy metals into the freshwater and marine environments, specifically waterways near the east side of Observatory Inlet at the mouth of the Kitsault River.

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

“We are open for business and working well with project proponents in a variety of sectors in northwestern British Columbia. 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, meaning a dispute resolution will initially 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 mines 16-year life. Avanti also stated that nothing in the Nisga’a Treaty or provincial legislation should prevent Kitsault from receiving its environmental assessment certificate within the specified 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,” commented president and CEO Craig Nelsen. “We firmly believe that BC 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 lbs. of moly and 14.4 million oz. of silver over its life at cash costs of $5.73 per lbs. moly assuming a by-product silver credit.

Kitsault would be an open-pit operation running at roughly 40,000 tonnes per day and utilizing a conventional flotation circuit, including five stages of cleaning to produce molybdenum concentrate to be dried and packaged for shipment. At US$14.50 per lbs. 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 stated it remains open to exploring a benefits agreement with the Nisga’a, though it notes that any discussions would not be relevant to the ongoing 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 has 434 million shares outstanding at the time of writing for a $30.4 million press-time market capitalization.