Court rules on water license for Prairie Creek

Vancouver — After years of environmental challenges and legal wrangling, the federal court has ruled that Canadian Zinc (CZN-T) should be re-issued a water license that would allow the company to carry out metallurgical test-work and underground exploration and development at the Prairie Creek project in the eastern Mackenzie Mountains of the Northwest Territories.

Prairie Creek is a partially developed silver-lead-zinc mine that almost made it to production in the 1980s. Construction stopped when silver prices fell, but infrastructure valued at more than $100 million remains on site, including a mill with a daily capacity of 1,000 tonnes. Canadian Zinc has spent years and millions of dollars trying to revive the project, based on a resource of 11.8 million tonnes grading an average of 12.5% zinc, 10.1% lead, 0.4% copper and 161 grams silver per tonne.

Progress was made in the fall of 2003 when the Mackenzie Valley Land and Water Board (MVLWB) issued a ‘Type B’ water license to the company for its proposed metallurgical and underground work programs. A month later, the ruling was challenged by several local native groups, including ones that had initially supported mine development.

The native groups sought a judicial review of the decision, and the appeal against MVLWB and the company was heard at end of August, 2005. Lawyers representing the native groups argued that the Water Board “had exceeded its jurisdiction” in issuing the license without including certain conditions on water treatment as recommended by other agencies, among other matters.

In its judgment, the federal court accepted a submission made by the company, based on a pre-trial settlement agreement that included an amendment to the conditions of the license, and directed MVLWB to re-issue the water license. The court also awarded costs to Canadian Zinc.

Despite the court victory, the project still faces opposition from various environmental groups, particularly the Canadian Parks and Wilderness Society (CPAWS), which is seeking to expand the Nahanni National Park Reserve to protect the entire South Nahanni watershed.

The Prairie Creek mine is situated 16 km north of the present park boundary, and a mountain range serves as natural barrier between the park and the proposed mine. Parks Canada has not proposed to expand the park to include the entire watershed, but CPAWS and others believe the mine threatens the environmental integrity of the existing park and lands proposed for expansion. CPAWS’s efforts have been assisted by Justin Trudeau, son of a former Canadian Prime Minister, and a form-letter campaign encouraging federal politicians to block the project.

Canadian Zinc cautions that CPAWS has released information about the project that contains “numerous inaccuracies, exaggerations and alarmist statements,” and has refuted some of those claims in its own letters to federal politicians. The company maintains that a mine can be developed and operated successfully and in an environmentally responsible manner, while providing important economic benefits to a region suffering from high unemployment.