Whati/Lac La Martre - Fortune Minerals plans to use a diesel generator to power and provide heat to its future NICO gold-cobalt-bismuth-copper mine near Whati.

Robin Goad, president of Fortune, said the decision was made after the Northwest Territories Power Corporation (NTPC) sent a letter to the company saying the power corp. would not be able to supply NICO with hydroelectric power from the Snare River hydroelectric plant, located 22 kilometres west of NICO.

"...the excess power from Snare reportedly was dwindling and dwindling, so it looked like there was no power availability from the current grid in order to service our mine," said Goad.

The other option - the main option presented to Fortune by NTPC since the beginning of talks, according to NTPC president Leon Courneya - was to hook up NICO to the existing Snare-Yellowknife system.

That option was rejected by Fortune for several reasons, chief among them being the cost, which Cournyea estimated to be between $10 to $15 million.

That scenario would require the miner to pay for a 65 km transmission line to the Snare Forks dam, the last of a series of four dams on Snare River. As an added cost, Fortune would have to generate its own heat using boilers at NICO.

"They could turn on the generators in Yellowknife, in which case we'd be paying for diesel power but not getting the heat from the power plant," said Goad. "So we're basically paying high prices for power but without the benefit of getting the heat and we have to build a power line to do all that.

"...if we have to build a diesel generator and a power plant and a diesel plant, there (is) a much greater capital cost."

Goad said the power corp. provided Fortune with a hydro power quote of 11 cents a kilowatt hour; according to engineering studies conducted by Fortune, the cost to use a diesel generator lies somewhere between 25 to 30 cents a kilowatt hour.

In a previous issue of News/North, Goad expressed his disappointment over the lack of progress on new hydro development in the NWT.

"We've been trying to work for quite some time to get things moving and get a power plant built and nothing happened," he said.

But Courneya maintains the power corp. responded to Fortune's request for power in a responsible manner.

"We never offered to build a new hydro site to power the mine...." said Courneya. "We never would want to go out and build the hydro site for the mine; it was more prudent to connect them to the system, then go out and develop the hydro.

"I wish Mr. Goad all the best in getting his mine developed, but until it's an existing customer ... it wouldn't be prudent to go out and build a hydro site for a mine that's not there and may never come.

"Also, it's very difficult to finance big capital projects when you don't have a customer for them."

Developing new hydro projects takes time, added Courneya.

"It takes eight to 10 years to develop a new hydro site," he said. Complicating matters is that fact that NTPC requires a franchise - the right to sell power generated from the land - from the GNWT. Custom requires that the GNWT consult the affected area.

So far, the Tlicho government has not indicated it would support the sale of power from Snare River, though discussions remains ongoing, said Courneya.

Courneya said despite Fortune's decision, he's not writing off future business between the two companies.

"There's a possibility that we may get the franchise approval and convince (Fortune) to hook up to the system before they build their full-blown diesel plant," said Courneya.

He added that low demand for heat during summer could create the possibility of supplying hydroelectric power to NICO on a seasonal basis.