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Government Spending Supports Canadian Mine Development
Posted by David
Background
At the 2009 PDAC convention this month, CEO and President Matt Manson of Stornoway Diamond Corp. commented that this current economic environment and resultant government plans to increase spending is good for companies trying to develop mines in the sense of available infrastructure. Mr. Manson was in particular referring to Stornoway’s Renard diamond project in the Otish Mountains of central Quebec. The pre-feasibility study released last fall made the assumption that the current winter road access available to the potential mine site would be upgraded to an all-season paved road by the time construction would commence. This was discussed to in the earlier KIM Report article covering the findings of this study.
The News
Good news came last Monday, when announced in Quebec’s 2009-2010 budget was $698 million for the development of roads in northern Quebec. Included in this allotment is money for the Route des Monts Otish (Route 167 Extension) that will extend from Chibougamau to the Renard site intersecting several other (metals) projects along the way (Eastmain, Strateco, and Western Troy). Details of the road project (in French) can be found on the government of Quebec website.
The Ramifications
This boon comes at a time when investors are showing little of the patience necessary to see out a diamond project develop into a mine. Although not as large as Ekati or Diavik, Renard is still of significant size, especially when the nearby Lynx and Hibou dykes (bulk sampling near completion) are considered. The main advantage Renard has is that it is not an Arctic diamond mine, but that it is located in central Quebec, within close proximity to infrastructure (closer now with this announcement). It will have much lower mining costs as compared to isolated projects.
Further Infrastructure Spending?
There still remains the potential for electric power to be brought in to the region, as power lines run only tens of kilometres away from the site, but no announcement has been made regarding this as of yet. However, the pre-feasibility study assumed that the mine would operate using electricity generated on site and with oil above US$100. At this point, considering the assumptions made by AMEC in conducting the study, any other additional infrastructure forthcoming is just gravy.
Disclaimer: The author holds 4000 shares of SWY. This article is based on the personal opinions and experience of the author. Please conduct due diligence when investing.
One Response to “Government Spending Supports Canadian Mine Development”
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April 1st, 2009 at 8:53 am
Extending the roads further north should cut down on the bottom line for these companies. But isn’t it a drop in the bucket as far as costs go, if the economy stays as it is?