What will be the outcome? :
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COMMENTS ON KEMESS NORTH Ken Stowe, President & CEO
Q3-2007 CONFERENCE CALL – November 5, 2007
We would now like to take a few minutes to address the recent recommendation of the joint review panel on the Kemess North project and the consequences for Northgate should the recommendation stand.
I wish to reiterate that Northgate strongly disagrees with the panel’s decision and believes that the project is engineered to world class standards and would provide a tremendous economic benefit to British Colombia.
Ironically, many of the findings and conclusions of the report itself do not adequately support the panel’s view.
Specifically, the panel report states firstly that:
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“The Panel is satisfied, taking into account the Northgate’s commitments and proposed mitigation and compensation measures, that the Project would not likely result in significant adverse environmental impacts.”
In reaching this critically important conclusion, the panel confirmed that the Kemess North development scenario presented by Northgate is environmentally sound and that our science and engineering of the project are of a very high order.
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Secondly, after significant review by external technical experts, the Panel agreed that the impoundment of waste rock and tailings in Duncan Lake “is the only waste disposal alternative which is environmentally effective, and technically and economically feasible.”
Again, this statement supports the scientifically sound conclusion Northgate reached three years ago when Duncan Lake was chosen as the best site for the impoundment of tailings and waste rock generated by the Kemess North project.
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The third significant Panel finding is that “the federal and provincial government agencies have advised the panel that, in most important respects, the Project could be implemented in a manner consistent with their respective programming and regulatory objectives.”
This finding is also, very significant. It says that the Federal and Provincial departments of the Environment, the Department of Fisheries and Oceans, Natural Resources Canada, Heath Canada, Transport Canada and the provincial agency responsible for Archeology all agreed that the Kemess North project was acceptable under the stringent laws and regulations that govern the activities of these departments.
So in light of all these positive scientific conclusions, why did the panel recommend against Kemess North?
Although many have offered opinions, the Panel itself offered the following reasons for its decision:
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“The panel believes that the creation of a long-term legacy of substantial mine site management and maintenance obligations lasting for thousands of years represents a major imposition on future generations.” Furthermore, the Panel has “doubts about how much assurance can be provided that the site management regime would remain effective over the very lengthy (post-closure) period.”
This is a bar, set so high, that virtually all resource projects and operating mines, including many that are currently operating or under consideration in BC, would find impossible to clear. Effectively, the panel is saying that the detailed engineering of tailings containment facilities, and water treatment plans to protect water quality using the best science and the most conservative modeling parameters, and the regulations and financial bonding requirements that have been set up by governments to ensure these environmental protection steps are carried out do not, in their opinion, adequately protect the environment. Such a conclusion does not appear to be shared by any of the federal and provincial departments who have reviewed this and many other similar projects and found the risks to be acceptable.
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The second reason that the Panel offered was that “the benefits that the project has to offer to First Nations are insufficient to outweigh the costs to First Nations” and that in any case, “the loss of the spiritual values of Duncan Lake is beyond price”.
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It is always difficult for a project proponent or supporter to deal with opposition based on religious or spiritual beliefs. These beliefs are inherently subjective and deeply personal. It is up to government to decide how to balance these beliefs against the economic and other benefits of development to determine what is in the best public interest. Northgate’s part in this decision making process is to put the best case forward for proceeding with Kemess North.
For the benefit of Northgate’s shareholders, and the public at large, I would like to briefly outline the lengths to which Northgate has gone over the past four years to try to engage and work with First Nations with land claims in the Kemess North area:
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We had 75 meetings with the First Nations representatives over the past four years to explain the Kemess North project and to discuss their participation in it.
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We have hosted three tours of the Kemess South mining complex which were attended by more than 300 First Nations members.
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We provided $450,000 in funding to various First Nations groups to finance their participation in consultation and accommodation discussions and in the Panel review process.
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In 2006, we signed an agreement to provide $1 million per year to the Tse Keh Nay community for every year that we operate the Kemess South mine.
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We signed a compensation agreement for Kemess North with First Nations Trapline holders who have clearly used the Kemess lands in the past and are the group most affected by the Kemess operation.
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Lastly, during discussions First Nations groups with land claims in the Kemess region, Northgate offered a Kemess North compensation package that included:
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Minimum annual payments of $1 million to the communities.
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A significant interest in the profits generated by the Kemess North mine.
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The opportunity for First Nations corporations to participate in the construction of Kemess North as well as provide services to the Kemess North mine during its 12 year operating life.
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Continuation of the very successful First Nations job training program at Kemess.
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An offer to target our fisheries compensation efforts to areas which are much closer to first Nations communities than Duncan Lake.
In addition to these activities there are also 70 First Nations people who are currently employed at Kemess South, representing 17% of our workforce, whose jobs would continue for another 12 years if the Kemess North project were allowed to proceed.
I leave it to each of you to sift through the panel report and the opinions provided by various stakeholders and form your own opinion on the panel recommendation and the decision facing the Provincial and Federal governments.
Now I will address Northgate’s future plans at Kemess. Given the negative recommendation of the Panel, and the tremendous uncertainty it has created Northgate can no longer treat Kemess North development as a
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core part of Northgate’s business plan and must move on. Our recently announced offer to purchase Perserverence is the first manifestation of this decision.
From a practical point of view “moving on” means the following for our Kemess South operation:
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We have ceased all exploration in the Kemess North region.
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Secondly, we have “downed tools” on the revised feasibility study and preliminary engineering on the Kemess North project.
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Lastly, from an accounting perspective we have written off the entire our $32 million carrying value of our investment in Kemess North.
While these steps are necessary, we will continue to keep an open mind on the project and maintain communications with the various stakeholders. In the future, should the federal and provincial governments grant approval for us to proceed with Kemess North, and if the First Nations groups involved reconsider their stance on the project, Northgate would quite clearly revisit the Kemess North project.
Absent this, we will continue to pursue targeted exploration around the Kemess South pit to attempt to extend the three year life of Kemess South for perhaps an additional one or two years and then reclaim the Kemess South site and look to generate value for our shareholders by transferring parts of its valuable infrastructure to other projects.
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I want to end my remarks by making a request to all who are involved in this process to return to productive dialogue. Very regrettably, some of the comments that we have seen in the media and elsewhere have included intemperate remarks and personal attacks on groups and individuals. While it is reasonable and acceptable for groups or individuals to disagree with the positions and opinions of others based on reasonable arguments, attacks that directly target groups or individuals are abhorrent and should not be tolerated.
For our part, at Northgate, we certainly disagree with the panel’s recommendation but, we also recognize that there are groups and individuals who have presented alternative views and priorities to the panel and we respect their right to do so.
Now it is up to the ultimate decision makers at both levels of government to render a final decision on the Kemess North project. |
