Richard Gleeson
Northern News Services

Yellowknife (Jan 18/02) - Federal officials will decide within a few weeks whether or not to accept a rare form of security for the clean up of the Con mine.

Miramar is offering a $3-million interest in a 60-year-old hydro plant as security. The Vancouver-based mining company made the unusual offer in a July 31 letter to Indian Affairs and Northern Development that was released earlier this week.

David Milburn, water resources manager for DIAND, said that while the offer is not unprecedented, 95 to 99 per cent of security deposits come in the form of a letter of credit.

"We don't like taking assets because we're not in the business of salvage," said Milburn. "With a letter of credit, you can go straight to the bank. They give you the amount of the letter of credit, no questions asked."

Con's water licence was renewed July 30, 2000. Complying with the security terms of the licence, Miramar provided a $1.5-million bond within 30 days of the renewal. The company is to provide $1.5 million each anniversary of the licence renewal until $9 million is accumulated.

Milburn would not reveal the result of an estimate the department has received on the plant.

Located at the north end of Prosperous Lake, the 3.5-megawatt plant provides hydro power to Con mine.

Milburn said he did not know how such a form of security would be accessed if it had to be. "It's never been done."

Canadian Arctic Resources Committee research director Kevin O'Reilly urged the department to demand a more conventional form of security.

"I would hope, based on the past track record of mining companies up here, the DIAND minister is going to require some more certain form of security," O'Reilly said.

The federal government insists on security to protect taxpayers against paying for mine clean-ups.

Giant mine is an example of what can happen when adequate security is not in place. When mine owner Royal Oak went into receivership, taxpayers were left on the hook for a clean-up bill that may run into the hundreds of millions of dollars.

Miramar is proposing to cancel the initial $1.5-million bond it put up if DIAND accepts the encumbrance on the Bluefish hydro facility as security.

In an interim abandonment and restoration plan it developed, Miramar estimated it will cost $7.7 million to clean up Con.

Submitted to the Mackenzie Valley Land and Water Board Jan. 31, 2001, the plan has yet to be accepted by the board.

In a Dec. 3 letter to the board, mine manager John Stard asked the board, which has rejected the plan five times, to accept it as presented.

"Interim is defined as a temporary phase between two endpoints," Stard wrote. "Thus the rationale for accepting the plan as an interim document is, in our opinion counterproductive."

Calls to Miramar and the NWT Power Corporation were not returned by deadline.