While the possibility of a disastrous tailing dam failure at the proposed Sisson Mine presents a serious environmental and economic risk, the mine poses serious environmental and economic risks purely by the nature of fluctuating metal markets.
Even a cursory look at the last economic feasibility study for Sisson conducted in March 2013 by Samuel Engr., shows the precarious nature of this venture. In the two short years since the Samuel study, the price of tungsten has fallen from $350/MTU to $250/MTU and Molybdenum has fallen from $15/lb. to $12/lb.
The sensitivity analysis conducted by Samuel Engr. (see Tables 22.5.3 and 22.5.4 below) showed that under these price falls, the Rate of Return of Sisson has fallen from 16.3% to 6%, and the payback period has grown from 4.5 years to 12 years. Even more striking, the Net Present Value of the mine has shrunk from $418 Million to a net negative liability of -$84 Million. Under these metal prices, there can be no mineral taxes or royalties generated by this mine ever. It is also unlikely that the required $560 Million investment will happen for the foreseeable future.
More importantly, metal prices will fluctuate up and down, but the reality is that there will be long periods when this mine will be completely unprofitable to operate and maintain. This would be the case today had the previous owner GEODEX successfully opened this mine in 2008. Unfortunately for those of us in the Nashwaak Valley, rain will continue to fall, and the tailing pond will not be able to safely absorb any net precipitation while the mine is dormant. Water treatment costs of $12 Million per year will be required to prevent a dangerous buildup of water in the tailing impoundment, or the release of highly contaminated water into the watershed. The $22 million set aside for a $12 Million water treatment plant AND $10 Million for water treatment in perpetuity will be quickly gone. Where will the proponent or the province get the money to stay up with these costs?
The Mount Polley disaster has raised serious questions about what constitutes acceptable environmental and economic risk at the proposed Sisson Mine. However, the bad economics, and questionable reclamation and water treatment bonding, present even more probable everyday risks to the NB taxpayer and the environment. Should this mine find investors to get underway, the most likely scenario is the NB Government will, at some future date, be forced to allow contaminated mine water to be released into the Napadogan Brook and the Nashwaak Stream, or be sucked dry by this grand investment scheme.
Source: Samuel Engineering. 2013. Canadian National Instrument 43-101 Technical Report on the Sisson Project New Brunswick, Canada Effective Date: January 22, 2013.