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SOMBA K'E/YELLOWKNIFE
A "dramatically improved" feasibility study for Tyhee Gold Corp.'s Yellowknife Gold Project has the junior resource company upbeat about getting the project into development.

A schematic of the Ormsby surface mine, as included in Tyhee Gold Corp.'s recently-completed feasibility study for its Yellowknife Gold Project. - graphic courtesy Tyhee Gold Corp.

Tyhee aims to get the gold project -- comprised of a number of deposits including Ormsby, Bruce Lake, Clan Lake and Nicholas Lake -- located about 75 km northeast of the city, into production in 2015.

The feasibility study for the $193-million project, released by the Vancouver-based company last week, factors in a 4,000-tonne-per-day processing plant, annual gold production of 104,000 ounces per year, and a mine life of 15 years -- more than double the seven-year mine life determined by the project's prefeasibility study.

"I think the most exciting thing for me and really what makes you feel the best is when you can take a property that's just sitting out there in the middle of nowhere and extend the life," said Brian Briggs, president and CEO of Tyhee. "Nobody likes to start up a mine or an operation and have it shut down five to seven years later. We have to show people in the Yellowknife area, especially people that are going to be affected by this, that this is going to run a long time and it's going to have legs, and people are going to be employed."

Construction and operations of the proposed gold mine would employ between 200 to 300 people.

While the property's resource remained about the same from the prefeasibility study, the mine life was extended mainly because of a doubling of the project's reserves -- the resource that is economically feasible to mine, according to Briggs.

The study also used a higher base-case gold price of $1,400 per ounce, but at the current gold price of about $1,600 per ounce, the company estimates the Yellowknife Gold Project would have a payback period of 30 months.

While raising the $193 million in start-up costs for the project will not be an easy task in the current investment climate, the completion of the feasibility study is expected to help.

"We ended up with a good, solid project and one that makes sense for people to come in and say 'This is a good project, it's going to have a good return on investment and we're willing to fund this project,'" Briggs said. "Right now, we're talking to financial groups that invest in mines like this and I've been very pleased with the responses we've got."

Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, said the investment climate is more optimistic for advanced projects that are already in the environmental assessment process with feasibility studies complete because the risk of the project is reduced, as opposed to the more grassroots projects which have been struggling to raise funds.

"This is a pretty volatile world right now economically, and the reality in our business is we're so linked to the global economy," Hoefer said. "What's happening is the junior companies aren't able to raise the money that they need for exploration.

"My fear is that projects will either stop or be postponed, but what I'm hearing is that there will probably be some companies that won't survive this -- they will be bought out by somebody else. It's a period of transition that's going on here."

The Yellowknife Gold Project is one of six projects the chamber is hoping will be successful in development that have feasibilities done, in addition to the Gahcho Kue project, Nechalacho, Pine Point, Canadian Zinc, and Fortune Mineral's Inc.'s NICO project.

"Those are the ones that are next in line and we have higher optimism that things will go forward," Hoefer said.

The Yellowknife Gold Project is continuing to go through the environmental assessment process, with technical sessions to take place later this year.

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