KINNGUAK/BATHURST INLET - The Bathurst Inlet Port and Road Project (BIPAR) may have some life yet.

OZ Minerals announced last year that it was pulling out as a financial backer and user of the $270-million port and road system, which would be used to export ore and import supplies from the company's Izok zinc and nickel deposit located 265 km southeast of Kugluktuk.

Charlie Lyall, president of Kitikmeot Corporation, said the $270-million BIPAR project is the best option for OZ Minerals given its lower cost compared to other alternatives, like a road to Grays Bay, which OZ has estimated would cost $450 million plus $265 million for a port. - Guy Quenneville/NNSL photo

But now the company, though still not formally committed to BIPAR, is definitely rethinking the project, said Andrew Mitchell, development manager of Canadian operations for OZ.

A pre-feasibility study for the future Izok mine - which included an alternate $450-million supply road that would go up to Grays Bay on the Coronation Gulf plus a $265-million port - effectively came out as a break-even proposition.

This, said Mitchell, "means that we have to go back and if we want to improve that situation we've got to look at several aspects of the project - see if there's room to make improvements."

Using BIPAR - for which Mitchell could not provide a revised cost estimate - instead of the Grays Bay route might be an option.

"We haven't completely swung our emphasis to BIPAR, but we are looking at it in much more detail and seeing if there are operational changes to that system that would make it less expensive."

Mitchell would not specify exactly what changes to the current BIPAR plan might be necessary, partly because OZ is currently not in a position to invest much money into research.

A slump in base metal prices prompted OZ to delay Izok's feasibility study, in which OZ will make the financial case for the mine, by 12 months.

"We've had to cut back across the company on discretionary expenditures and that includes exploration ... and it also includes development studies," said Mitchell.

BIPAR is the work of the Bathurst Inlet Port and Road Joint Venture Ltd., co-owned by Kitikmeot Corporation and Nuna Logistics Limited.

In the May 2009 newsletter for Kitikmeot Corporation, President Charlie Lyall provided an update on the project, saying OZ "announced their support for BIPAR, since without it the Izok project makes little financial sense.

This puts BIPAR back on the table, and looking ahead to a bright future."

But Mitchell said it's too early to say what option OZ will choose, adding that a third option - a route going to the Coronation Gulf 18 km east of Kugluktuk - is also under consideration.

"It's in (Lyall's) interest to be perhaps overstating things a little, but he's not incorrect in his statements," said Mitchell.

"But we haven't reached the point where we'll make a decision to financially get behind BIPAR ... and push it forward."

Lyall defended his characterization of the project's status, stating "If you were trying to do something, and you were trying to pitch it to somebody, and they say that they're going to use something and later on they change their mind - what conclusions would you draw?

"The sense that I'm getting is that the cost (for the Grays Bay option determined in) their original study was too expensive and I just assumed that our project is the one that they're looking up."

According to the draft environmental impact statement, BIPAR will create 260 construction jobs, with possibly 30 per cent of positions held by Inuit.

Payroll over the three-year construction is pegged at $40 million.

Operations will employ 57 full-time workers, with a yearly payroll of $3.5 million.When OZ initially pulled away from BIPAR last summer, the joint venture engaged in talks with Sabina Silver Corporation, which is currently developing its Hackett River silver-zinc project 75 km southwest of Bathurst Inlet, about possibly using BIPAR.

A spokesperson for Sabina could not be reached as of press time.

However, Mitchell said OZ would welcome the financial participation of another company.

"With another project that would benefit from this development significantly, it's just not a good business decision to go alone," he said.