Pac Booker hammered by BC gov’t denial

VANCOUVER — In a rare move, the B.C. Liberal government has opted to deny developer Pacific Booker Minerals (BKM-T, PBM-X) an environmental assessment (EA) certificate for its wholly-owned Morrison copper-gold project 65 km northeast of Smithers, B.C.

The decision marks only the second time in the province’s history that a government rejected a proposed mining project — the first involved Northgate Minerals and its Kemess North gold-copper expansion 430 km northwest of Prince George in late 2007.

The two projects share some similarities, with the most-pertinent being the health of nearby lakes and the hereditary rights of First Nations groups — the Gitxsan Nation remains a consistent regional opponent. But where Northgate’s proposal involved the use of a lake as tailings facility, Pacific Booker’s mine plan focused on preserving Morrison Lake and surrounding waterways.

Based on a 0.25% copper equivalent cut-off grade, Morrison Lake holds 238 million measured and indicated tonnes grading 0.37% copper, and 0.18 gram gold per tonne. The 30,000-tonnes-per-day open-pit mine would utilize a conventional flotation circuit and produce between 135,000 and 160,000 tonnes of copper-gold-molybdenum concentrate annually over a 21-year mine life.

Capital costs are estimated at US$520 million, which would result in a pre-tax internal rate of return (IRR) of 20% with a net present value (NPV) of US$492 million at an 8% discount rate. Economic estimates were based on four-year trailing average metal prices, including: US$2.75 per lb. copper, US$658 per oz. gold, and US$29.23 per lb. moly.

Pacific Booker had been wrapped up in a civil court case involving Rescan Environmental Services since August 2010, though a settlement was reached in late May resulting in Rescan’s lien claim being lifted.

On Sept. 28 B.C. Minister of the Environment Terry Lake forwarded a letter to Pacific Booker outlining the reasons behind the denial of an EA permit. The decision cites an Aug. 21 EAO report, as well as a Sept. 20 recommendation letter sent by Associate Deputy Minister Derek Sturko.

Lake outlined a series of concerns surrounding Morrison, including: a “genetically unique population of sockeye salmon population” in the Skeena River, a long-term decline in Morrison Lake’s water supply, and the “in-perpetuity” nature of the environmental liabilities associated with the project. The decision was also impacted by First Nations issues with the Lake Babine and Gitxsan Nations mentioned in the report, though Pacific Booker had signed a memorandum of understanding (MOU) with the Lake Babine Nation in late July.

Reading through the conclusions in the EAO report on Morrison, however, leaves a different impression of the project — the environmental agency’s comments on mitigation and conservation measures at the project seem mostly positive.

The EAO review involves an assessment on conventional environmental effects, including: surface and groundwater analysis, aquatic resource models, fish and fish habitat, ecosystems and wetlands, wildlife and wildlife habitat, and terrain hazards and soils.

Though Pacific Booker reached acceptable standards in all categories, it was the salmon population and First Nations issues that are overtly cited in the province’s rejection letter. Referring to the EAO findings, the concerns appear purely speculative.

“Considering the significance of the Morrison Lake sockeye to the Skeena River system, magnitude, geographic extent and probability of effects were heavily weighted in the significance analysis,” writes the EAO in its report. “Based on the above analysis and having regard to [Pacific Booker’s] commitments, [we] conclude that [the project] does not have the potential for significant adverse effects to fish and fish habitat with the successful implementation of mitigation measures and conditions.”

The EAO reports that the affected catchment area represents roughly 2% of the Morrison Lake watershed, with changes in water flow falling within the range of natural variations.  In fact, the agency appears “satisfied” on all counts, ranging from First Nations consultation to impacts on wildlife.

According to MInister Lake, however, the province opted to reject Pacific Booker’s application based on a “risk-reward model” that focused heavily on the probability of the project’s mitigation and conservation measures failing. Lake invited the company to submit a second proposal based on a new mine plan.

The result had a predictable effect on Pacific Booker’s market valuation, with share prices plummeting 70% or $10.40 since the review concluded on Oct. 1. The single-asset company is held extremely tightly with roughly 12 million shares outstanding, and a $56 million presstime market capitalization.