Redfern Resources Ltd. has suspended construction on the Tulsequah Chief mine indefinitely, but says it will continue its permit process with state agencies to use a hoverbarge on the Taku River.
The Tulsequah Chief mine is going to take longer and cost more to build than last year's estimates, according to Redfern's new project managers.
Add to that declining metal prices and Redfern's trouble finding funding, and the company has "serious concerns" about whether it can proceed without "strategic partners," a company statement said Tuesday.
Site construction has been halted since December.
A forward sale of the mine's gold may provide Redfern about $90 million up front, but that deal with Gold Wheaton Corp. is contingent on the company receiving its permits by March 1. Redfern also has a forward sale of the entire zinc, copper and lead production from the mine that includes a $25 million credit line.
"We are continuing with permitting and construction of the air cushion barge, as are discussions with Gold Wheaton," spokeswoman Salina Landstad wrote in an email.
Redfern is owned by Vancouver-based Redcorp Ventures Ltd. The proposed Tulsequah Chief mine is 45 miles northeast of Juneau, on the Tulsequah River just north of where it flows into the Taku River.
Last June, Wardrop Engineering Inc. estimated the project would start in 2009 and cost about $297 million.
The new project managers, Global Project Management Corp., say the Tulsequah Chief will cost more than $500 million to develop, or $430 million if "certain efficiencies" are made.
The project was estimated in mid-2007 to cost $202 million.
The mine is now scheduled to start up in August 2010, nearly a year later than the last estimate.
This isn't the first hint of financial trouble for the company, which invested $91 million in derivatives that were frozen by Canadian securities regulators last year.
The mine's development also has been plagued by delays in Alaska permits for its transportation plan.
Redfern wants to move supplies and ore between the mine and Juneau using an air cushion barge, also called a hoverbarge. The company applied to state agencies in late 2007 to haul the barge with amphibious tow vehicles on the icy Taku River in winter.
The plan has been controversial. River users worry the Taku's salmon and other species will be harmed.
Alaska's 30-day permit process can be suspended if permitters don't feel they have all the information they need. Redfern's process was halted several times, most recently in December. State agencies are now awaiting the company's response.
The barge is still being built. Redfern in January estimated it would reach Juneau in mid-March. State permitters have said they will require testing on the road system before allowing the barge and its associated vehicles on the Taku.
Chris Zimmer of Rivers Without Borders, one of the most vocal opponents of the mine's hoverbarge proposal, released an analysis in December saying Redfern's construction and cost estimates then were unrealistic.
"They have two troubles: money and the barge. And both, I think, are going to delay this project if not eventually kill it," he said.
It's uncertain how the current delay in development will affect the mine's cleanup plan for the old Tulsequah Chief mine. The 1950s-era mine was halted when metals prices dropped, and has been leaking acid into the Tulsequah River ever since. Redfern is obliged to contain that acid drainage and has planned to do so as it develops the new mine.
Contact reporter Kate Golden at 523-2276 or e-mail email@example.com.
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