Cons. Professor’s Dupont project has serious implications for the

The uncertainty clouding Consolidated Professor’s (TSE) designation under Ontario’s Environmental Assessment Act (EAA) could have a dramatic impact on the approval process for Canadian mines, says Roger Cotton, a partner for Baker and McKenzie. Cotton says Consolidated, which owns the Duport gold project on Shoal Lake, northwestern Ontario, is faced with several unknowns concerning the assessment of the proposed gold mine.

For instance, it remains unclear whether the federal government will become entangled in the approval process. Because it lies near the Ontario-Manitoba border, the project may touch on areas of federal jurisdiction. And although Duport is likely to be subject to a lengthy public hearing, the rules and structure of the hearing have yet to be established.

“It would be an unfortunate message to investors in the mining sector to create such uncertainties in the approval process,” Cotton said. “The industry should be commenting on and opposing this legislation.

In the summer of 1989, Duport became the first mining project to be designated under the EAA of Ontario after environmental groups in Manitoba successfully lobbied for government intervention.

Without consultation or warning, Consolidated suddenly found itself facing an uncertain, but inevitably expensive and lengthy, review process.

“There is a political component involved,” Cotton told industry representatives at the recent gathering of Prospectors and Developers in Toronto.

The junior mining company is currently preparing an assessment of the potential environmental impacts of the project for the Ontario Ministry of the Environment. Following the government review, a public hearing is likely.

Until recently, only public sector projects were subject to assessment under the provincial act. Private projects were evaluated under the Environmental Protection Act, but rarely subject to public scrutiny.

“There are two approval processes,” said Cotton. “One we know about and can live with and another one that comes down like a bolt out of the blue.”

Under the EAA, Consolidated will almost certainly be held responsible for the legal bills of its opponents. As an example of these “intervener funding” costs, Ontario Hydro is expecting to shell out $27 million for the first phase of opposition to its 25-year energy supply plan. The money is available to just about anyone who wants to fight the proposal – from aboriginal groups to anti-nuclear advocates.

In the Duport case, the opponents are environmental groups concerned about the impact of a producing gold mine on the quality of Winnipeg’s drinking water. The city’s intake pipe is about 13 kilometres from the proposed mine site.

Consolidated does not argue with the necessity of environmental legislation to regulate developing gold projects, only that the legislation be more clearly defined. In fact, the Duport mine has been designed to ensure that chemical processing is carried out on the mainland, away from the Shoal Lake watershed. No hazardous waste would be produced on Cameron and Stevens islands where the orebody is situated.

“On a technical basis we’ll get it through”, said Richard Dunlop, president of Consolidated Professor. “Its just a political problem.”

Meanwhile development at Duport has come to a complete standstill while Dunlop steers his company through the approval process. But Dunlop told The Northern Miner that a current gold prices, it is unlikely that he would be able to raise the $53 million required to put the property into production anyway. The project would need a gold price of at least US$400, he said.

Duport contains proven and probable reserves of 944,000 tons grading 0.39 oz. per ton. At a annual recovery of 50,000 oz., cash operating costs are estimated at $283 per oz.

Dunlop said he recently met with Ontario premier Bob Rae, who was impressed by the support the project has from native bands in the Shoal Lake area. The nearby First Nations bands, which have a 50% unemployment rate, have expressed interest in an accord that would target 25% of the mine’s 175 skilled jobs for band members.