Has the Sisson mine tanked?

A proposal to build an open-pit tungsten and molybdenum mine at Sisson Brook in the Upper Nashwaak Watershed has been on the table in New Brunswick since 2008. Even though the mine passed an Environmental Impact Assessment (EIA) in 2017, the proposal to build the mine has been on life support for the past five years. 

The proponents of the mine, Northcliff Resources of Vancouver and Todd Minerals of New Zealand, have been unable to fulfill their obligations under the Conditions of Approval attached to their EIA’s passage in 2017. 

Successive N.B. governments have granted extension after extension on obligations to drill additional cores to ensure proper engineering of an outdated and outmoded tailing dam design. The proposed tailing dam is the structure built to contain mine tailings, which constitute many times the volume of the ore that would actually be exported from New Brunswick. A collapse of a tailing dam at the Sisson Mine, such as the collapse of the Mount Polley mine tailing dam in B.C. eight years ago, would devastate the Nashwaak River watershed, with the wastewater flowing into the Wolastoq (Saint John River) at Fredericton.

The proponents of Sisson have failed to complete the required modeling of the consequences of such a tailing dam failure. In addition, the proponents have not submitted the required final reclamation and water treatment plan and requisite financial instruments to ensure compliance.

Almost fresh out of cash, Northcliff has been offered a financial lifeline¹ by their partner Todd Minerals to the tune of $5.2 million over several instalments. However the lifeline comes with considerable strings attached. One of the conditions includes a requirement that Northcliff request, and be guaranteed, another extension on the date by which construction of the mine must begin. The Higgs government already granted a two-year extension to Northcliff in 2020.

A special meeting of Northcliff shareholders has been called for August 25, 2022 to decide if Northcliff investors want to accept the conditions of Todd’s offer. The conditions of the loan agreement will potentially position Todd as the majority shareholder in the project. 

As part of the loan proposal, the accounting firm SLR was hired to perform an updated valuation of the Sisson property. Some facets of the valuation are revealing as costs have escalated over the nearly ten years since the last economic feasibility study was submitted to the province and security regulators. 

Ignoring for the moment some ridiculously low estimates of reclamation and water treatment costs in the SLR valuation, of particular note in the results are:

• Initial capital investment required has risen from $579 million to $709 million
• Total capital costs have risen from $768 million to $929 million
• Total operating costs per ton milled have escalated 38 percent from $13.84 to $19.07
• The Net Present Value (NPV) of the mine, used by interested investors to gauge economic potential, has plummeted 95 percent from $418 million to $20 million
• The Internal Rate of Return (IRR), also used as a benchmark by investors, has dropped 48 percent from 16.3 percent to 8.4 percent

The SLR valuation indicates that the Sisson Mine is a poor gamble because the investment payback period is too long and the return to investors too small. Given these observations, it is difficult to conceive that Northcliff could ever comply with Todd’s condition that Northcliff deliver a substantive capital raising plan as a prerequisite for continued support. 

Whatever transpires between Northcliff and Todd, it is disturbing that the SLR valuation continues to place total bonding for post-closure reclamation and water treatment at $9 million, a figure that is an insult to the intelligence of New Brunswickers. The province has previously hired engineering consultants AMEC Foster-Wheeler, who have shown that these kinds of estimates for reclamation and water treatment on Northcliff’s part are not realistic.

The evidence suggests that it is time for the province to abandon this economically doomed and ecologically destructive attempt to extract and exploit the low-grade mineral resources of the pristine Upper Nashwaak watershed, and to proceed to ally with the Indigenous title-holders of the land to develop a diversified economy based on the forest resources of the area in keeping with the Peace and Friendship Treaties of the 18th century.

¹ Northcliff Resources. 2022. Management Information Circular-English. SEDAR Filing. 3 August, 2022. Available at: sedar.com

Lawrence Wuest is an ecologist living in the Upper Nashwaak on unceded territory of the Wəlastəkwiyik, Mi’kmaq, and Peskotomuhkati.