NORTHWEST TERRITORIES
Setbacks have befallen four mining and exploration companies over the past few weeks, with the NWT & Nunavut Chamber of Mines attributing the cause to falling commodities prices and a lack of foreign investment.

Fortune Minerals Director of Regulatory and Environmental Affairs, Rick Schryer, collecting cattails at NICO for the development of a demonstration wetland for water treatment in Summer 2013. The company was recently served notice of default by its lender and had to give up its Revenue Silver Mine in Colorado. - photo courtesy of Fortune Minerals

North American Tungsten has permanently laid off 50 underground mine employees from its Cantung Mine near the Yukon border.

Fortune Minerals was served a notice of default and had to give up its silver mine in Colorado to hold onto its NICO project 50 kilometres north of Whati.

Avalon Rare Earths isn't doing any physical activity at its Nechalacho project at Thor Lake after demand for rare earths sank. Shares of Tyhee Gold stopped trading on the Toronto Stock Exchange after the company ran out of funds to complete the filing of its annual audited statements.

Chamber executive director Tom Hoefer said the situation is because much of the mining industry saw growth coming from demand in China leading to long-term prospects.

"We thought we would see a lot of new mines for many years," he said.

But after China's economy slowed down and took the mining industry by surprise, many large corporations saw funds dry up and told junior companies not to expect any more funding.

While the situation among those four NWT projects is also deeply affected by commodity prices, Hoefer said that there are things the government can do to make the situation easier for junior mining companies to handle.

He said easing regulatory processes, including environmental assessments as well as building more infrastructure to lowers the cost of doing business in the North, would both help attract additional investment.

Increasing the number of trained individuals through organizations like the Mine Training Society would also help, he said.

Hoefer warned there could be serious consequences to inaction. Even with the current level of construction on the Gacho Kue diamond project, he said if demand for the precious stones continues to decline, companies will have to turn to layoffs.

"The investment in exploration projection for this year is the lowest in 15 years," he said.

And while Hoefer considered the GNWT's $400,000 mineral investment program into prospectors and development companies a good step, he said the government needs to be doing more to prevent layoffs of its own.

"With 700 people leaving in the last 15 months, that's going to affect transfer payments," Hoefer said. "When do they announce government layoffs or cuts to programs?"

Infrastructure, Tourism and Investment Minister David Ramsay, acknowledged it was a challenging time for the mining sector, but pointed out it was a problem worldwide, not just in the territory.

"We expect companies to honour all commitments and we remain open for business," he said.

Ramsay said the GNWT's Mineral Development Strategy was key and it was looking into an extension of the Ingrham Trail as an all-weather road.

"They're already spending $20 million every year on a temporary road," he said.

In his interview with News/North, Ramsay emphasized the positive activities in the territory: Gahcho Kue's 400 new jobs; Dominion Diamond permitting a pipe-like formation of rock that sometimes contains diamonds, the Jay; as well as Kennady Diamond's exploration project near Gacho Kue.

"We will find more diamonds," he said.

But Ramsay said the future of the territory couldn't depend just on the production of one kind of precious stone.

"It's important to diversity the mining industry," he said.

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