More funding sought for Harper Creek mine

Yellowhead Mining Inc. is currently investigating additional sources of financing

Yellowhead Mining Inc. is currently investigating additional sources of financing, according to the company’s third quarter report.

The money would be used to move forward with the environmental assessment review for its proposed Harper Creek mine project in order to obtain an environmental assessment certificate for the project in 2016.

The company had announced on Oct. 1 that it would be deferring all expenditures on the project due to weakness in the commodity and capital markets.

Also on Oct. 1, Yellowhead announced the completion of its rights offering. The company issued a total of 24,751,431 shares under the rights offering at a price of $0.045 per share for gross proceeds of $1,113,814. A total of 14,035,706 common shares were issued under the basic subscription privilege and a total of 10,715,725 common shares were issued under the additional subscription privilege

Yellowhead had begun the year with the acceptance of its environmental assessment application for the Harper Creek project for review. The 180-day application review period commenced on Jan. 28.

Two days later, on Jan. 30, the Mount Polley tailings facility storage breach report was released.

As a result of the report, the Ministry of Energy and Mines and the British Columbia Environmental Assessment Office (BC EAO) requested the company provide additional information and undertake additional work on the environmental assessment application to address the results of and recommendations contained in the report

In order to allow time to provide the additional information and undertake the additional work required as a consequence of the report, on June 30 the company requested and received a timeline suspension from the BC EAO to the environmental assessment review.

On Aug. 4, Yellowhead announced that its board of directors, subject to regulatory and legal approvals, had approved a secured bridge loan of $500,000 and the undertaking of a rights offering to provide working capital for the company

On Aug. 21, the company announced it would be offering rights to holders of its common shares of record at the close of business, Sept. 1. As reported above, that rights offering raised about $1.1 million.

Yellowhead’s quarterly report notes that, notwithstanding the efforts to source additional financing, work on the environmental assessment application is currently on hold, and all environmental baseline monitoring activities have also been suspended until further notice.

Continuation of environmental monitoring was a condition to continuing with the environmental assessment review imposed by the BC EAO, and cessation of all such activities will increase the risk that the BC EAO will require the collection of fresh environmental baseline data to be analyzed and incorporated into an updated environmental assessment application prior to continuing with the environmental assessment review.

If a prolonged hiatus occurs during the environmental assessment review, then there is also an increased risk that the information in the environmental assessment application will become stale-dated, and as a result, the environmental assessment application will have to be re-done and the environmental assessment application process re-started.

Harper Creek is a proposed 70,000 tonnes-per-day open pit copper mine with a 28-year mine life, located about 10 km southwest of Vavenby. Harper Creek would have a four-year development period, with the initial two years focused on environmental and construction permitting, and the second two years dedicated to construction.

According to the company, when developed, Harper Creek would provide up to 600 jobs during construction and up to 450 permanent jobs during operations.