Tying taxes to gold
Tax relief on Giant a good move for city, says Miramar boss
NNSL (Oct 08/99) - Combining Giant mine and Con mine will strengthen the gold mining industry here and the city's economy, Brian Labadie told city council Tuesday.
Miramar's senior vice-president of operations, Labadie is asking the city to grant the company, which is hoping to conclude a deal to take over Giant by Oct. 28, a two-year tax holiday for the mine.
"Clearly, it is not a world-class asset," responded Labadie. "It has a difficult time maintaining cash (flow) ... What we're looking at is a little satellite project."
Labadie said the small size of the project combined with the cost of living up to existing licences and the fact that a portion of profits is to be put toward clean-up of existing environmental problems, makes Giant a marginal investment.
In a brief preliminary proposal Miramar presented to council, it suggests that following the two-year tax holiday, property taxes be paid only if the price of gold averages above $300 US an ounce over the year.
If gold averages above $320 US beyond the first two years, Miramar is proposing that it would repay some of the taxes missed during the tax holiday based on the number of ounces Giant produces.
"Our goal is to make a stronger mining entity out of the Con," Labadie said. "And if we're successful with doing that it will be to the benefit of the city."
He later added, "If all this is about is us taking Giant and flushing out money to everybody and their mothers its just not worth it."
Though it is not assuming liability for existing environmental problems at Giant, with its much cleaner gold-processing technology, Miramar would at least not be contributing to it, Labadie said.
Tax reduction likely
Because it is not going to be using the mill and most of the other buildings at Giant -- and they would theoretically be removed as part of the surface clean-up -- taxes on the property would be going down regardless of what reductions council may grant.
"Once there is a deal signed and there is an operation, our assessors will go out there and take a look at the property," said city finance director Robert Charpentier.
Miramar is planning to truck 300-400 tonnes of ore daily -- roughly 15-20 truck loads -- from Giant to its mill at Con. Labadie said underground transport is impractical because there is a 450 metre difference in elevation where the stopes of the two mines are closest.
Labadie said known economic reserves at Giant would last another two to three years, but added, "If it only gets two years that's an abysmal failure on our part ... clearly, we're going to have to invest some exploration funding."
Responding to a question from Coun. Kevin O'Reilly, Labadie said Miramar intends to honour the existing collective agreement with CAW Local 2304 for the estimated 50 workers it plans to retain.
Lovell said at the very least he would be looking for Miramar to cover the estimated $25,000-$30,000 a year Giant costs the city in services.
The mayor told Labadie the earliest he could expect a response from council is late next week.