One of the financial backers for the Canadian Tulsequah Chief mining project has pulled out of its arrangement to reopen the British Columbia mine. The site’s owner, Chieftain Metals Corporation, announced on Dec. 23 it would repay a $10 million advance to Royal Gold, a Colorado-based minerals investment company.
Since Jan. 2010, Chieftain has been trying to reopen Tulsequah Chief, an underground mine previously operated from 1951 to 1957. Along with the nearby Big Bull Deposit, Chieftain Metals is hoping to resume production on the site’s 59 mineral claims.
In addition to copper, lead, gold and silver, the Tulsequah Chief contains deposits of zinc, demand for which has recently seen a rise.
The $10 million advance from Royal Gold had been contingent on the results of a feasibility study filed by Chieftain last month. No reason was given for the agreement’s termination.
Had the deal proceeded, Royal Gold would have invested another $45 million for construction against the sale of 17.5 percent of the gold
produced, up to 65,000 ounces. The $10 million advance will be repaid using an $18.5
million bridge loan it secured last summer from West Face Capital.
Reopening the mine has raised concerns about potential effects on Alaskan salmon
fisheries, as have a number of open-pit mines planned for development near shared
transboundary water systems.
Since 1990, B.C. provincial inspectors have confirmed the mine has been leaking acid into the Tulsequah River, a tributary of one of Southeast Alaska’s largest salmon-producing river systems, the Taku.
In light of current and potential environmental impacts, groups Rivers Without Borders and the United Tribal Transboundary Mining Work Group have both expressed criticism of plans to reopen the Tulsequah mine.
Despite the departure of Royal Gold, Chieftain Metals reports it is still in discussions with several project financing parties to fund the project’s construction.
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