Hopes of opening new gold mines near Yellowknife rest on costly projects to give the North cheaper, cleaner power, according to an industry advisor.
David Connelly, who works with junior mining company TerraX, urged the territorial and federal governments to spend more than a billion dollars solving the territory's power problems as the firm announced its staking of a substantial new area of land around Yellowknife.
TerraX believes the gold still to be mined near the city is capable of sustaining several mines over multiple generations. Its ultimate goal is acquiring a big enough parcel of gold-containing land to attract the attention of an international mining giant – one with enough cashflow to invest in the building of a new mine.
However, Connelly told Cabin Radio that investment will never happen unless two barriers are removed: the cost of power in the Northwest Territories, and the amount of carbon used to generate it.
"That’s a dealbreaker in the Northwest Territories," said Connelly. "We’re fortunate in Yellowknife that we have infrastructure – that’s why TerraX has been able to attract financing to this point – but the cost of power here is three to six times more expensive than other areas where there’s gold that the internationals are looking at.
"The major companies look at their global social licence – they have signed up to the principles of the Paris climate accord, and they want to have a smaller carbon footprint. The costs for using carbon are going to go up and we need to come up with a source of power that is competitive with world rates - six or seven cents, not 35 cents.
"There are two ways to have clean hydro power here. One is a dam at Taltson (the territory's major source of power for the South Slave) and a transmission line. The second is connecting to the southern grid and provinces likes Manitoba and Saskatchewan with surplus power available to buy.
"I believe it will take the federal and territorial governments to take the gamble that if they put the power in, mines will come and buy that power for the next hundred years."
TerraX thinks it will need roughly as much power as the entire city of Yellowknife currently consumes if a mine goes ahead. Connelly estimates one or more gold mines in Yellowknife, alongside potential projects to be developed in the Slave Geological Corridor north of the city, could increase power demand in the NWT by 200 megawatts.
According to the National Energy Board, the NWT can only generate 187 megawatts in total at present.
In 2013, the territorial government announced it would pursue linking the NWT with the southern grid. However, the projected cost of $1.2 billion led the government to abandon that plan the following year.
In October 2014, then finance minister Michael Miltenberger said "while an interconnecting transmission grid, both within the territory and to the southern grid, is still a long-term goal, it is not attainable in the short or medium term."
Earlier this week, Yellowknife North MLA Cory Vanthuyne returned to the subject in a question for Miltenberger's successor, Robert C McLeod.
Asked if the NWT still had an appetite for such 'transformational' projects as connecting to the southern grid, McLeod replied: "The government is always looking at transformational projects and ways we can lower the high cost of doing business and living in the Northwest Territories. We continue to do that. I think the federal government has made it a priority of theirs, too."
Connelly says unless those projects happen soon, there will be no return of gold mining to the territory.
"The diamond mines were highly unique in that they are very, very viable mines that are double world class. You can afford to pay 35 cents for power and carbon wasn’t an issue when those decisions were made, and there was no carbon tax," he said.
"Even if we have a great deposit, a moderate deposit with seven cents per kilowatt hour will be more competitive. This is a strategic requirement for the North to be competitive. It needs large sources of clean, reliable, affordable, sustainable power.
"The diamond mines have a finite end, they are tightening their belts and reducing employment and spending. It’s hard to imagine, with the type of results we’re seeing now, that [gold near Yellowknife] won’t have a significant impact on the future of the Northwest Territories, and the North Slave, including Ndilo, Dettah, and Yellowknife."