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Plan to reopen mine clashes with Kitsault Resort

Coastal town Kitsault, B.C.

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The province has kicked off an environmental review process for a mothballed molybdenum mine just outside the town of Kitsault.

B.C.'s environmental assessment office in late November issued a procedural order that sets out the scope and methods of a provincial environmental assessment for the proposed Kitsault Mine, a $770-million project that would restart an open-pit operation that's been idle for nearly 30 years.

A molybdenum mine on the site – about 140 kilometres north of Prince Rupert near the head of Alice Arm – last operated in 1982, when production was suspended in the face of low prices for the metal, which is used in hardening steel.

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Since then, a townsite built for workers and mineral tenures have both been sold to owners that have markedly different visions for the future of Kitsault.

In 2005, Kitsault made international headlines when American health-care entrepreneur Krishnan Suthanthiran bought the townsite – consisting of about 100 houses and seven apartment buildings, along with a hospital, pub and theatre – for an undisclosed price after it was listed for sale at $7-million.

Indian-born Mr. Suthanthiran, who attended Carleton University in Ottawa before launching his medical business, said at the time of the purchase that the deal was too good to pass up. Buildings had been well-maintained and Kitsault is in a spectacularly scenic part of the province. Mr. Suthanthiran said the site had potential for uses ranging from arts festivals and education to ecotourism.

Then in 2008, Avanti Mining Corp. bought the dormant mine and surrounding mineral tenures, with the intent of putting the deposit back into production.

That deal included a right of way that allowed the mining company to access the mine site, but Avanti and Mr. Suthanthiran's Kitsault Resort Ltd. clashed over access, with the townsite's owners arguing the access had been granted only for remediation work, not restarting a mine. The dispute wound up in court and in August of 2010, a B.C. Supreme Court judge decided in Avanti's favour.

A website for Kitsault Resort describes the community as an "eco-village" that is "designed with people in mind who want a natural setting in which to explore new ideas and to promote biodiversity."

Avanti, meanwhile, has been raising money, negotiating with would-be partners and plugging through the regulatory and development process.

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Last month, Avanti announced a deal with SeAH Holdings Corp., a South Korean steel producer, that could result in SeAH taking up to a 30-per-cent stake in the Kitsault project.

A feasibility study for the project says reopening the mine is expected to create 650 jobs at the peak of construction and 350 jobs over a 16-year mine life.

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About the Author
National correspondent

Based in Vancouver, Wendy Stueck has covered technology and business and now reports on British Columbia issues including natural resources, aboriginal issues and urban affairs. More

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