Doug Ashbury
Northern News Services

NNSL (Jun 10/98) - By buying into a plan to subsidize the city's two gold mines, Yellowknife would buy time, Mayor Dave Lovell said Monday.

The longer the two mines continue to be a part of the city's economic landscape, the more opportunity the city has to reduce its dependence on them, he said.

"I realize if the mines close it (subsidies) might never be paid back," he said.

But the cost of spending money now is a much better alternative to the cost of one or both mines closing, he said.

Last week, it emerged that the City of Yellowknife, as well as territorial and federal governments, are looking at subsidizing Royal Oak's Giant and Miramar Mining's Con mine to extend the lives of the two operations -- at least until one or more diamond mines begin production.

The city's share could be about $250,000. Territorial and federal money would be about $1.5 million each annually over two years.

But the strike at Con has put a hold on any further discussions about a subsidy there. And a Royal Oak subsidy would have to be structured in such a way that the company's existing debt arrangements are not jeopardized.

If Giant and Con were to close, it would drain $76 million a year from the city's economy. By 2003, city property and school taxes would fall by 1.7 million.

In total, the city collected $11.4 in municipal taxes last year.

Giving the city's two gold mines money would be a "contract, not one-sided," he added.

That contract would involve conditions -- any money given to the mines would have to be used to extend the life of the mines, he said.

The companies would be required to pay the money back if the price of gold recovers.

Miramar spokesperson Brian Labadie said the company has had talks with the GNWT and the federal government on mine exploration investment.

"With gold's price, it's hard to justify investing in ongoing (exploration) programs," he said.

NWT Chamber of Mines general manager Mike Vaydik said although the organization is not involved with the proposed subsidy plan, it is playing a role on the exploration side.

The chamber has been involved administratively with the EXTECH project.

EXTECH, which stands for Exploration Science and Technology, is a Department of Indian Affairs and Northern Development geoscience project being developed for the Yellowknife mining district.

The goal of the project is to help replenish the Yellowknife area's gold reserves.

It is hoped, said Vaydik, this geoscience program will stimulate exploration activity.