Loki Gold facing permitting delays

Red tape is tying up Loki Gold (TSE) as it endeavors to begin construction at the Brewery Creek open-pit project in the Yukon.

The deposit hosts a diluted minable reserve of 16.7 million tonnes grading 1.48 grams gold per tonne, with an overall stripping ratio of 1.2-to-1. Plans call for a heap-leach operation producing 80,000 oz. annually at an average cash cost of US$173 per oz.

Ronald Netolitzky, president, says the environmental assessment review process, which started 16 months ago, is being poorly managed by the federal Department of Indian Affairs and Northern Development.

“We have been subjected to a continually evolving process that is without precedent, due notice or specific guidelines,” Netolitzky says. Final regulatory hearings with the Yukon Water Board have been delayed to May 10-11 to allow Loki time to meet requests for additional information. Despite the delays, Loki remains optimistic that construction will start this summer.

The key factor in deciding whether to proceed with construction or delay the work until 1996 is seasonal. Specifically, Loki will require a summer of sufficient duration to complete pad and pond construction before the onset of winter.

Loki, which has just under $1 million in working capital, plans to fund the estimated $41-million capital cost through a combination of debt and equity. It has appointed the Rothschild group of companies to assist in the funding, the debt portion of which will likely take the form of a gold-based loan. The group has agreed to complete a $2-million convertible debenture financing to fund engineering and preproduction costs while permitting and project financing are completed. The debenture is convertible at $1.65 per share. Loki has 27.5 million shares outstanding.