Cumberland tumbles on Meadowbank warning

Shares in Cumberland Resources (CLG-T, CLG-X) were of nearly 10% at $4.27 in late-afternoon trading in Toronto on Apr. 25, after the company said regulatory and logistical constraints could delay development of its Meadowbank gold project in Nunavut by up to a year.

The company says that the Nunavut Impact Review Board (NIRB) has asked for further information regarding the company’s planned road access to the project, certain socio-economic impacts, and questions that have arisen after consultation with residents in the nearby Chesterfield Inlet area.

Cumberland plans to address the board’s concerns in the next four to six weeks. It must do so before the review board can make its recommendation to the Minister of Indian and Northern Affairs Canada regarding development of the project.

“While we will respond to the NIRB’s request as soon as possible, the constraints of seasonal shipping could hinder this year’s proposed construction activities and potentially delay the development of the project by 6 to 12 months,” said Cumberland’s chief executive Kerry Curtis in a prepared statement.

Still, Cumberland is careful to note that in its request, the NIRB stated that it did not want to see a long delay, and that “at this point NIRB believes (its request) can be cured by collection and presentation of more information and data.” Cumberland also said that board NIRB emphasized that its request was by no means a decision against the project proceeding.

Meadowbank is home to proven and probable (diluted) reserves of 21.32 million tones grading 4.2 grams gold per tonne, or about 2.89 million oz. contained gold. Annual gold production is forecast at 330,000 oz. gold over 8.1 years, with total cash costs pegged at US$201 per oz.

Preproduction capital costs at Meadowbank are estimated at $313 million, or US$235 million. The project has a pretax internal rate of return of 17.6%, which slips to 12.8% after tax.

Plans call for production to crank up in the second half of 2008.