February 21, 2013 | Volume 43, No. 7

Wellgreen: Ore facility needed

A transportation study by Prophecy Platinum completed in December points to Skagway as the shipping port for ore from the Wellgreen deposit at Burwash Landing, Y.T., project manager Neil Froc said this week.

Haines Borough officials last fall identified Wellgreen as a potential customer of a port facility here.

The absence of an ore terminal in Haines – and presence of one in Skagway – is a major factor in Prophecy’s direction, despite Wellgreen being closer to Haines, Froc said. He said his company hasn’t officially “closed off” the option of using Haines as a transshipment port.

“We’re definitely still interested, but Haines has to do something to move forward to make it more attractive for us,” Froc said. “Prophecy has not made any decision, but if a decision had to be made today, everything favors Skagway.”

The transportation study, conducted by engineer Ron Monk, reviewed shipping options for the Wellgreen deposit, with the two best options being Skagway and Haines, Froc said. However, the study can only take into account present circumstances and realities, not what-ifs and maybes, he said.

“That’s all they can go on. They can’t go on promises and wishes. Because if there’s no port, there’s no port,” Froc said. The transportation study is internal and not available to the public.

Financing the construction of an ore terminal in Haines is “not on the table” for Prophecy, Froc said, because capital costs and permitting costs would be “too intensive” to justify when Skagway already has an ore terminal up and running.

Darsie Culbeck, assistant to the Haines Borough manager, said multiple mining companies would probably have to come together in some kind of joint investment to justify the costs associated with construction of an ore terminal.  

“(Prophecy’s) expressed very strongly that they would like Haines to be the transshipment port, but it doesn’t pencil out at this point for them to be the one to invest all the money by themselves. Can they handle the whole development of a port? No,” Culbeck said.

Jesse Duke, president of Ibex Valley Environmental Consulting, said he understands the logic behind Prophecy’s decision not to finance construction of an ore terminal. Prophecy’s stepping out leaves room for private entities or governmental organizations, like the Alaska Industrial Development and Export Authority (AIDEA), to step in.

“What they’re doing makes perfect sense to me and I think any company would come to the same conclusion. That being said, there’s plenty of opportunity for someone to come and say, ‘This is how we can help,’” Duke said.  

AIDEA owns and operates Skagway’s ore terminal.

Froc said the reason Haines hasn’t been completely shut out of consideration is ongoing “encouraging” discussions with the state government and other organizations. Chilkat Bridge upgrades to increase load capacity and “an appetite to extend the Alaska railway to Haines” are two examples Froc gave.

“That’s why we haven’t closed the door, because we’ve been encouraged with what we’ve heard. But until these things become concrete or come to fruition, we can’t count on them,” he said.

Rumors of private investment in an ore terminal have circulated, Froc said, but nothing terribly promising has emerged. He added the only negative public sentiment he has heard concerning the project “is sort of a pushback from people that Haines is not necessarily interested in financing our port development.”

“We really haven’t seen anything that says, ‘Yes, there’s going to be a facility there,’” Froc said.

Culbeck, who recently attended the Mineral Exploration Roundup conference in Vancouver, B.C., said he spoke with representatives from Prophecy at the conference and learned the company is interested in shipping project materials up into the Yukon, even if it uses Skagway as its port.

“They told us right now their plan is to use Skagway for transshipment of ore, because we don’t have an ore terminal for them. But the positive is they’re hopefully going to use Haines for the importing of all their stuff to build their project,” Culbeck said.

Froc said Haines could “possibly” work for importing, as “there’s always an opportunity during the construction phase to haul materials and supplies through Haines. It’s a shorter hauling distance so you can use it for other mine-related activities.”

However, Froc said he would have to investigate the real potential for that option.

Commercial production of the Wellgreen deposit is targeted for 2017.