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KUGLUKTUK/COPPERMINE - Due to the current world economic crisis and in an effort to save cash, OZ Minerals - formerly Zinifex Canada - is delaying the development of two of its eastern Nunavut base metal projects.

Pictured here is OZ Mineral's High Lake mine, located near Kugluktuk. In light of the current economic slowdown, OZ has opted to delay the feasibility study for High Lake and its sister mine Izok Lake for the next 12 months. - NNSL file photo

Just as OZ awaits the release of the pre-feasibility report on its Izok Lake zinc and nickel deposit 265 km southeast of Kugluktuk, the company has announced it is delaying the feasibility for both Izok and its sister High Lake project, located approximately 200 km from Izok.

Instead, the company will refocus its efforts on exploring Izok, which OZ has established as its priority project in Nunavut.

"The next step in the pre-feasibility study would have been to go immediately into a feasibility study," said Martin McFarlane, president of OZ Minerals. "But with lower commodity prices and lower cash flow as a result of lower revenues, we will be deferring the feasibility study for at least the next 12 months."

That means plans to develop a transportation system to take the Izok ore to market will also be delayed by 12 months, added McFarlane.

Earlier this year, OZ pulled out as the foremost supporter of the Bathurst Inlet Port and Road Project (BIPAR), opting to build its own road from Izok Lake to Grays Bay.

While OZ has previously stated a failure to attract more investors to the project accounted for the pull-out, McFarlane shed some additional light on the company's decision to leave BIPAR.

"If we went with the Grays Bay route instead of the Bathurst Inlet route, you ended up with a road that went pretty close to the High Lake project, which means that you don't have to build extra infrastructure in order to get the High Lake product to market," said McFarlane.

Next summer, OZ will focus on proving up the resource at Izok Lake, currently estimated at 14 million tonnes.

"That lends itself to a 10-year plus mine life," said McFarlane.

The company expects to hire workers from Kugluktuk and Cambridge Bay, as in past years, he added.

OZ Minerals is not the only worldwide mining company that has scaled back its capital expenditure plans for 2009 in the wake of current market conditions.

Rio Tinto, majority owner of the Diavik Diamond Mine, announced Thursday it will cut back on spending from $9 billion to $4 billion, meaning a small Diavik diamond-recovery project and some exploration at Diavik will have to be put on hold.

While development work, including feasibility studies, is not as costly as exploration, it will eventually be impacted by the economy, as well, said Bill Mercer, vice-president of Avalon Ventures.

"Eventually it will catch up with them as well if this continues like this," he said.