SOMBA K'E/YELLOWKNIFE - Jobs, business contracts and a financial foothold are among the key priorities for the Yellowknives Dene First Nation (YKDFN) as it begins discussing the future benefits of Avalon Rare Metals' Nechalacho mine, says Chief Ed Sangris of Dettah.

Chiefs Ted Tsetta and Ed Sangris of the Yellowknives Dene First Nation flank Don Bubar, president of Avalon Rare Metals, at the unveiling of the new name for the exploration's company's Thor Lake project, now called Nechalacho. - NNSL file photo

On Thursday, in a key step for the proposed mine, YKDFN started negotiating an impact and benefit agreement with Avalon, which is proposing to mine rare earths at a site located 100 km southeast of Yellowknife.

"Any negotiation takes time, but we want to be ahead of the game before Avalon submits its environmental impact study," said Sangris.

Impact and benefit agreements traditionally commit mine operators to providing jobs, business opportunities and the option of revenue sharing to First Nation groups.

YKDFN is no stranger to the process, having negotiated similar agreements with BHP Billiton, Diavik Diamond Mines Inc. and, more recently, De Beers Canada.

"We always asked companies for jobs for our members. But (with) this one, we wanted to enhance our company, so we're trying to get as many contracts (as we can)," said Sangris, speaking of Deton'Cho Corporation, the business arm of YKDFN.

The First Nation also wants a portion of the profits derived from the mine, said Sangris.

As Don Bubar, president and CEO of Avalon, put it, YKDFN has the opportunity not merely to collect royalties but to act as a financial partner in the mine, which, according to Avalon's June pre-feasibility study, is initially forecast to cost $589 million (including the hydrometallurgical facility that may be built near Hay River).

"A more active (form of financial participation) would be to be a true equity partner in it, sharing in the rewards as well as the risks," said Bubar.

Given the number of joint ventures Deton'Cho has formed in the last two years – most recently, a partnership with engineering giant Stantec – "we think the Yellowknives have the capacity now to look at an opportunity like this with that idea in mind," said Bubar.

The joint venture with Stantec, announced in September, was formed principally with Nechalacho in mind, said Sangris.

Other Deton'Cho companies and joint ventures have already done work for Avalon; last winter, Deton'Cho Logistics, in partnership with RTL Construction, built a 130-km ice road cutting across Great Slave Lake to the Nechalacho site.

"They've done some good work for us, so we're looking at opportunities that can help expand that business relationship in terms of additional services that can be provided as we move forward," said Bubar.

This past fall, Sangris criticized Diavik Diamond Mines Inc. for its decision to reinstate Edmonton as a paid-for pick-up point for southern workers. The mine cited increasing difficulty finding enough Northern Aboriginals to work skilled underground jobs at the mine.

Sangris said talks with the Mine Training Society and Avalon about training Yellowknives Dene members as underground workers are "in progress."

Bubar said he hopes negotiations will wrap up before the end of 2011.

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