NWT agrees sale of Mactung property for up to $15M
The NWT has agreed to sell Mactung, a tungsten deposit in the Mackenzie Mountains, to a private company for a fee that could rise to $15 million.
According to the territorial government’s figures, that fee would represent a $10-million profit after seven years trying to sell Mactung, which it acquired when the former owner filed for creditor protection.
However, key milestones have to be hit for the full $15 million to be received. The initial fee is $1.5 million.
Mactung is one of the largest untapped tungsten resources in Canada. Opening a mine there has in the past been projected to cost half a billion dollars or more.
In a Tuesday news release, the territorial government said Fireweed Zinc had signed a letter of intent acquiring 100 percent of the property.
Fireweed, confirming the agreement, said Mactung was only 13 km from its existing Macmillan Pass zinc property, allowing the company to share infrastructure between the two.
In a statement, chief executive Brandon Macdonald said the acquisition turned Fireweed “into one of the leading critical mineral exploration companies.”
The company, acknowledging Mactung’s location in the territories of the Kaska Dena, First Nation of Na-Cho Nyäk Dun, and Sahtú Settlement Area, said it would “conduct mineral development activities in a sustainable manner by working collaboratively with Indigenous groups and local communities, establishing a respectful and safe working environment, achieving a high standard of environmental stewardship, and undertaking studies and implementing measures to address local interests and issues.”
An agreement to sell Mactung comes just weeks after a years-long project to sell the deposit as part of a bundle, alongside the federally owned former Cantung mine, fell apart. The two governments, which had worked together to sell the properties, rejected two bids for the pair.
At the time, the NWT government said selling Mactung alone may prove easier than selling the two in one deal, adding it was no longer starting from square one.
However, the full structure of the deal with Fireweed is not as simple as a territorial government news release on Tuesday suggested.
While the deal does rise to an eventual fee of $15 million, Fireweed says it is paying $1.5 million up front followed by $3.5 million within 18 months of the agreement being finalized, which has yet to take place.
A further $5 million will be due only if Fireweed subsequently announces “its intention to construct a mine” at either Mactung or Macmillan Pass, the company said.
The final $5 million arrives only if Fireweed announces its intention to build a mine specifically at Mactung.
Fireweed said it expects to sign the final agreement by the end of 2022, meaning the NWT government is likely to recover at least $5 million from the deal by 2024, even if a mine never emerges.
The territory says that is roughly what it has paid so far. According to the GNWT on Tuesday, the territory has paid just under $500,000 in maintenance and marketing costs since acquiring Mactung for $4.5 million in 2015, when former owner North American Tungsten went under.
(The $4.5 million figure is around $2 million higher than the sum previously understood to have been paid. While the NWT government said at the time its maximum outlay on Mactung would be $4.5 million, the territory also expected the bill to come in lower.)
The GNWT took ownership of Mactung “to protect the economic value of the property’s tungsten deposit for future development,” the territory said on Tuesday.
“The GNWT’s goal has always been to return the property to the private sector once its commodity value recovered. Tungsten prices have improved significantly since 2015 and Mactung hosts one of the world’s highest-grade deposits.”
The territorial government said no subsidies or incentives had been given to Fireweed.
“I am pleased to welcome Fireweed to the NWT’s mining community and look forward to them advancing this exciting critical minerals project,” industry minister Caroline Wawzonek said in a statement.
The deal leaves Cantung, a former mine which remains under federal ownership, without a buyer.
Cantung has been far more expensive to maintain since North American Tungsten folded. Earlier this year, costs to Ottawa since 2015 were estimated at $44 million.