State development authority in talks with mining companies on sharing costs for proposed Ambler minerals road, but prospects for project still uncertain

The state’s development finance corporation says it is in talks with mining companies on a cost-share agreement for further development work on the proposed 211-mile Ambler Mining District access road.

The U.S. Bureau of Land Management issued a Final Environmental Impact Statement March 27 for the 211-mile industrial road. BLM said a Record of Decision, which would approve federal permits for the road, is expected in 30 days. The Ambler Mining District is in the western Brooks Range in northwest Alaska.

Meanwhile, the Board of the Alaska Industrial Development and Export Authority, AIDEA, which proposes to build and own the road, approved a $35 million transfer of funds from its Revolving Fund to AIDEA’s Arctic Infrastructure Development Fund for further work on the project at its March 27 meeting.

However, the expenditure of AIDEA funds now being discussed is contingent on cost sharing by potential public and private partners including Ambler Metals, said Karsten Rodvik, spokesman for AIDEA. Sources familiar with the project also said that AIDEA is asking for a 50 percent match from industry on any funds the authority will make available.

Ambler Metals is a joint-venture development company formed in January by Vancouver, B.C.-based Trilogy Metals and Australia-based South 32. The two companies are engaged in advanced exploration in the Ambler Mining District and have already announced a $22.8 million budget for 2020 to do more exploration and studies. Whether the companies are willing to pony up more to match AIDEA is uncertain, given the early stage of mine planning.

Meanwhile, the proposed road faces opposition from Alaska Native villages in the area who are worried about opening up access to lands that are important for subsistence. Even though the road will be for industrial use only there are concerns that political pressures from sports hunting and fishing groups will result in the road eventually becoming a public highway.

This happened with the Dalton Highway to the North Slope in the early 1980s, which was initially for industrial use under an agreement between the state and the North Slope Borough. It was subsequently opened to the public after Fairbanks sports groups filed lawsuits.

Approval of the $35 million expenditure by AIDEA’s board prompted a stern letter from Doyon, Ltd., an influential Alaska Native regional corporation based in Fairbanks. Aaron Schutt, Doyon’s CEO, protested that despite the advanced stage of the project the authority has never discussed a right-of-way across portions of the route owned by Doyon, or consulted with the corporation in other ways.

“We have noted in every public filing and comment and several public meetings that Doyon neither supports nor opposes the Ambler Road. But we have been equally clear that Doyon has many concerns regarding the proposed project and that we have not agreed to provide the necessary right-of-way for AIDEA’s preferred route,” Schutt said in the letter.

“We also note that despite continuing to raise many of the same issues for several years, AIDEA has largely failed to address any concern we have raised,” the letter said.

An important aspect of BLM’s decision on the FEIS is that the route approved crosses a few miles of the Gates of the Arctic National Park, a conservation land unit that would otherwise be closed to an industrial road.

However, a provision of the Alaska National Lands and Conservation Act, passed by Congress in 1980, guarantees access corridors across federal land units to reach state or privately-owned lands that would otherwise be isolated. The Ambler road decision will be a test case of this provision, however, as it has not been used before.

Trilogy and South 32 completed their joint venture agreement Feb. 11 to forming Ambler Metals LLC, with South 32 contributing $145 million for further exploration to gain a 50 percent share of Trilogy’s block of prospects across a 70-mile area of mineralization which include Arctic and Bornite. On Feb. 26 the two companies announced a $22.8 million 2020 exploration and development program.

Arctic is a high-grade deposit originally discovered and explored by Kennecott Minerals and subsequently acquired by NovaCopper, the predecessor to Trilogy Metals. Bornite is a large medium-grade copper discovery about 20 miles southwest of Arctic that was discovered by Kennecott in the 1960s. Trilogy took over Bornite from Kennecott.

Other companies exploring in the region have made 13 other discoveries with the four largest holding 243 million metric tons of resources, three of these with ore grades averaging between 4.13 percent to 6.22 percent Copper Equivalent.

However, despite promising prospects the remoteness of the region, which is hundreds of miles from existing infrastructure, has stymied development for years. To open the area the state of Alaska began studies of an industrial road in 2009, turning the project over to AIDEA, its development finance agency.

If Trilogy and South 32 decide to proceed with Arctic, which is well along in exploration and development planning, AIDEA could build the road at an estimated cost of about $500 million. Financing of the project would be with bonds to repaid under agreements with the companies to use the road.

Other companies will be able to use the road under agreements with AIDEA.

Initially the road would be single lane with pullouts for oncoming traffic, but it could be widened if more mines are developed and traffic increases.

In its past briefings Trilogy has said its plan is to ship ore concentrates east over the new road to a connection with the Dalton Highway, a north-south industrial road connecting North Slope oil fields to the Interior Alaska Highway system.

From the Dalton Highway intersect the ore concentrates would be trucked to Fairbanks, in Interior Alaska, and then shipped by rail to a port in southcentral Alaska for ocean shipment to customers.

AIDEA has a long track record in developing infrastructure for minerals projects. In 1989 the authority worked with Cominco, now Teck Resources, to build a 60-mile access road to the Red Dog lead and zinc mine from the Chukchi Sea coast in northwest Alaska, which was also built by the authority.

AIDEA invested $265 million in that project and has since earned $370 million through tolls paid by Teck. AIDEA’s target for earnings was 6.5 percent annually, which is also hopes to achieve with the Ambler resource road. The authority also owns an ore shipping terminal in Southeast Alaska, at Skagway, which serves mines in Canada’s Yukon Territory, which are connected by road to Skagway.

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