They may soon see those big-spending mining days return, if the backers of the $800 million open-pit Ajax Mine have their way.
While capital costs are 50 per cent higher than forecast two years ago, a newly released feasibility study demonstrates the economic viability of the proposed Ajax Mine, promoters say.
Abacus Mining and Exploration Corp. said it hopes to start construction of the open-pit copper-gold mine in Kamloops late in 2013, following an environmental approval from Ottawa and Victoria forecast for spring of that year.
The Vancouver-based firm, junior partner with Polish-based KGHM in a joint venture, said its study presents a solid business case and lays out the engineering basis for the proposed 60,000-tonne-per-day operation at the site of a historic pit.
Abacus president and CEO Jim Excell said the study - comprising 18 months of effort by consulting experts in mining, finance and engineering - proves the proposed mine is viable.
Executives said they are targeting May 2013 to receive environmental approvals from Ottawa and Victoria. Construction would start later that year, with mine production set for the middle of 2015.
With copper and gold prices only slightly higher than today's levels, the study predicts the mine would pay back the nearly $800 million development cost in as little as two years. It is forecast to produce ore for 23 years, employing about 400 people.
Excell said the next 90 days are a key period for the project, which has run into controversy in Kamloops because of its proximity to residential areas. The mine would be operating within about 1.5 kilometres of Kamloops neighbourhoods.
Under the joint-venture agreement, KGHM, one of the world's largest mining companies, has 90 days to determine whether it will continue the partnership by purchasing another 29 per cent of the joint-venture company, requiring it to come up with $640 million to finance the project.
Ajax is also in the midst of a harmonized comprehensive environmental assessment overseen by the provincial and federal governments.
A 60-day public comment period that will help focus environmental studies began in mid-January and includes a two-day information meeting this month (February).
"Now we can be focused on talking to people and hearing the issues," Excell said.
That should be a lively discussion. There is stiff opposition to the mine in Kamloops, led by the Kamloops Area Preservation Association (KAPA). Its website, www.stopajax.com, calls the mine "a huge, dusty open-pit operation ... a large part of which would be within the Kamloops City limits." KAPA, which has support, judging from letters to the Kamloops News, also claims the mine would pollute nearby rivers and lakes.
But the mine would mean secure jobs. The unemployment rate in the Thompson-Okanagan area is down to 7.2 per cent, compared with 8.6 per cent a year ago, according to Statistics Canada, but remains above what is considered healthy for a city of 85,000. Some of the lost jobs were in residential construction, which had been a job generator. Last year, Kamloops housing starts plunged 20 per cent, with single-family starts down nearly a third from a year earlier, according to Canada Mortgage and Housing Corp. (CMHC). This year starts are expected to remain at 500 units.
Resorts reboot
When residential assessments began arriving in Kamloops mailboxes last month, they showed that the average home value had fallen 1.4 per cent from a year earlier, not a lot but the first time in 10 years that prices had dropped. The assessment authority values homes at July 1 the preceding year, but Graham Held, deputy assessor for the BC Assessment Authority, said little market shift occurred in the past six months. "It still looks pretty flat."
Brian Ledoux, president of the Kamloops District Real Estate Association (KDREA) said the slightly declining prices come as no surprise. The association calculated the median price for a single-family home here was down about 1 per cent, to $327,000, at the end of last year.
According to the BC Real Estate Association, the residential sales in Kamloops were down about 5 per cent in 2011, compared with a year earlier. The KDREA is forecasting home sales will increase 4 per cent this year, with the average home price dropping 1 per cent to $299,000. More encouraging is a16 per cent increase in commercial real estate sales through MLS, in December 2011, compared with year earlier.
However, while commercial sales were up, the total dollar volume for the 22 properties sold that month was down more than a third from a year earlier. The suggestion: lower prices across the board.
The developer who has taken over the troubled Mission Hills condo project is fervently hoping for a market upturn this year. With the restarted project nearing completion, the city's director of planning speculated units in the first phase will hit the market by this spring.
Edmonton-based Harbour Mortgage foreclosed on the project in December, taking original developer New Future Group and all creditors off the title.
The project will restart with a clean title, one 60-unit building nearly completed, a second that is partially completed and a third with a foundation in place.
"They wanted to know what's needed and steps to get the building finished," said Dave Trawin, the city's development and engineering services director.
The first building was presold over a weekend four years ago. But when developer Mike Rink didn't meet requirements for completions, buyers were able to cancel the deals and receive back deposits. Two-bedroom units sold for $350,000 in 2007.
Kamloops realtor Vince Cavaliere said units will have to be priced under $300,000, where there is market activity. "The price point they're going after appeals to the majority of buyers. The challenge as an investor is what will they rent for? What's your return on investment?"
The question of investor rentals is an astute one. The residential vacancy rate in Kamloops is now 2.9 per cent, up from 2.6 per cent a year ago, reports CMHC. The average rent for a two-bedroom apartment rose to $747, up from $742 in 2010, however.
Meanwhile, the Tobiano golf resort is seeking a buyer for the 1,100-acre property on Kamloops Lake.
A recent report by the court-ordered receiver noted Pagebrook, the developer, "has been in discussions with potential Asian investors who claim to be interested in the project." But receiver Doug Chivers, with Vancouver-based Bowra Group, said no offers have been forthcoming for the resort despite efforts to sell the project. Tobiano was forced into receivership by the Bank of Montreal in June last year. An appraiser valued the development last year at $49 million, "but stated that if the property was marketed en bloc the value could be less than that amount." The project could be made more attractive to purchasers by focusing on smaller, less-expensive units and changing its master plan, according to to Bowra.
It has contracted with Ecosign Mountain Resort Planners Ltd. to look at changing that plan.
from Western Investor February 2012