VANCOUVER — Finding a solution to an outstanding dispute with the Tahltan First Nation in northwestern B.C. isn’t a new task for Ontario-based Fortune Minerals (TSE: FT), but it is proving to be a serious barrier as the company develops its Arctos anthracitic coal deposit.
The project is 330 km northeast of Prince Rupert and consists of 160 sq. km in a remote valley near Mt. Klappan — an area that continues to be a highly contentious one for resource development due to its historic importance to the Tahltan.
The Tahltan have been in talks with the B.C. government over the area surrounding Mt. Klappan, referred to as the “Sacred Headwaters,” where the Stikine, Skeena and Nass rivers originate. Last year Premier Christy Clark inked a deal with Shell Canada that included a four-year moratorium on oil and gas activity in the area. The Tahltan maintain the site is a traditional hunting and fishing territory that requires government protection.
It should be noted that the Tahltan are not strictly against development, as they are in negotiations with Vancouver-based Imperial Metals (TSX: III) regarding an impact and benefit agreement (IBA) pertaining to the company’s in-development Red Chris mine near Dease Lake. Imperial has fully permitted its stage-one Red Chris operation, and maintains a memorandum of understanding (MOU) with the Tahltan.
But Fortune has been grappling with various protests and disruptions at Arctos since 2005, and the situation has escalated, as the company has advanced the project towards its environmental assessment (EA) stages.
Back in early July, Fortune kick-started EA activities at Arctos for an open-pit coal mine, wash plant and railway extension. The company opened a 30-person camp at the site and initiated a drill program to support its geochemical, hydrogeological and geotechnical studies. Fortune estimated its EA review would start next year.
Meanwhile, the Canadian Environmental Assessment office granted substitution of Artcos’ EA review to the B.C. authorities under the federal government’s “one project, one assessment” initiative, streamlining the process under a single review panel.
But Fortune’s intention to construct a large open-pit coal mine near Mt. Klappan appears to be a non-starter for the First Nations band. Members of an opposition group known as the “Klabona Keepers” — led by Tahltan Elders — began protesting near Fortune’s drill rigs in early August.
That led to a visit from Mines Minister Bill Bennett, who met with Tahltan representatives. On Sept. 24 Fortune opted to shut down its drill program in a bid to give government officials time to work out a solution, though the Tahltan maintain that they will not allow development at the Arctos site.
Fortune’s decision follows an announcement by the government on Sept. 17, wherein it appointed a mediator to resolve the dispute, namely Geoff Freer, a member of Geoscience B.C.’s board of directors.
“Government has immediately appointed an intermediary to facilitate dialogue between the Tahltan First Nations and Fortune Minerals in an effort to allow the Arctos project to proceed,” read an official statement. “Our government is committed to ensure there is no risk to water and other important environmental values.”
Fortune holds an 80% stake in Arctos alongside South Korean joint-venture partner Posco Canada. The project has measured and indicated resources of 231 million tonnes of anthracite coal, with an additional 359 million tonnes in the inferred category, plus plenty of upside for resource expansion.
Over US$100 million has been spent at Arctos to date, including test mining of 200,000 tonnes of run-of-mine coal from two deposits and pilot-plant processing to produce 100,000 tonnes of clean coal products for trial cargos.
Anthracite is a high-quality metallurgical coal, measured by carbon and energy content, and represents just 1% of world coal reserves. It is also versatile, suitable for use in a range of metallurgical, thermal, water-purification and composite-material products.
Fortune has traded within a 52-week window of 26¢ and 64¢, and closed at 33¢ per share at press time. The company reported US$13 million in cash and equivalents at the end of June, and has 150 million shares outstanding for a $48-million market capitalization.
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