May 2009

MOU signed for Warren Township calcium feldspar project

Company awaits provincial operation permit before moving forward

By M. Eisner

Avalon Rare Metals Inc. and the Chapleau Cree First Nation (CCFN) signed a Memorandum of Under-standing (MOU) on March 3 regarding the co-operative development of the Warren Township Calcium Feldspar project near Foleyet, Ontario, 125 kilometres west of the city of Timmins.

The project consists of three claims totalling 727 hectares located in the traditional territory of CCFN and other local First Nations and Aboriginal groups that are represented by CCFN. Under the terms of the MOU, CCFN has agreed to support the development of the project if two conditions are met: CCFN and other First Nations and Aboriginal groups with an interest in the land benefit equitably from the operation; and environmental risks associated with the project’s development, operation and closure are deemed acceptable.

"We are pleased to have the support of CCFN and other local Aboriginal groups, as well as the community of Foleyet, in advancing the project and look forward to developing mutually beneficial partnerships," commented Avalon's president, Don Bubar, in a February press release.

However, in a recent telephone conversation, Bubar said that the project has been stalled because the province’s Department of Natural Resources has said that it will only issue an operation permit for one- third of the 727 hectares. “This particular mineral is regulated under the Aggregate Resources Act and administered by the Ministry of Natural Resources,” explained Bubar. “They are only giving us a permit to cover a portion of the total resources and that creates a big problem.”

Previous work on the project demonstrated the presence of a significant resource of high-purity calcium feldspar amenable to a low-cost, small-scale quarrying operation, which would include the development of a processing plant near a major railway line at Foleyet. This would facilitate shipping the product to potential markets in southern Ontario and the northeastern United States. Capital costs are estimated to be approximately $10 million.

Aside from providing jobs to the community of Foleyet, the project will have far-reaching environmental benefits for the province. According to Bubar, calcium feldspar is used in fiberglass manufacturing where it has been demonstrated to reduce energy consumption and CO2 emissions, which is a primary goal of the province's proposed new Green Energy legislation. As well, the fiberglass products are used in manufacturing energy-efficient composite construction materials for wind turbines, which is another major green energy initiative being promoted by Ontario.

The company has an anchor customer in a glass company and is currently looking at other applications for the mineral in ceramics and as a potential mineral filler in certain types of industrial papers.

Tests on the site have shown no negative environmental factors and although the company has applied for a license to cover the entire 727 hectares where the mineral lies, the ministry has said they will only issue a permit for one-third of the area. Bubar said the company needs to have access to the whole calcium feldspar site to attract and keep its customers.

“In order to enter into a supply contract, customers want to know that if they commit to this product, then we will be able to supply the mineral in the long term,” he explained. “By only giving us a permit for part of the resource, we can’t demonstrate that, which compromises the opportunity for us to move forward with the project. The customer and the financial institution want 100 per cent certainty that they [the government] will extend the coverage.”

As a compromise, Avalon said it requested that a permit be granted for the entire site, but with provisions that would require the company to reclaim as they move along in development. “So far they haven’t agreed with it,” commented Bubar.

Contacted by telephone, Chapleau Cree First Nation Chief Keith Corston said he “champions Avalon” for their co-operative nature in the Warren Township project.

“Don actually came to us and asked us if we had a concern,” said Chief Corston. “Warren Township is in our core territory, and we said we are interested in a MOU, but that it has to be culturally positive, have more in it than just jobs, include a revenue-sharing component, and be environmentally sound.” Chief Corston continued by saying that when he sat down with Avalon, the government’s concerns were discussed, and it was decided that an equitable solution would be for the company to work on no more than 60 hectares at a time and reclaim that area before proceeding to work on the next 60 hectares. “I can tell you that I was satisfied then that the integrity of Mother Earth was being looked after,” he added.

With the Chapleau Cree First Nation’s and Avalon’s will to work together to see this project come through, the major sticking point right now is the operation permit. “When you look at what the mineral is being used for, it’s kind of ironic that there are barriers of development by the government that are being advocated by the new Green Energy Act,” noted Bubar. “Hopefully, at the end of the day, that sort of irony will register at some higher form of government, but in the meantime, I don’t think we’d be able to go ahead with the project. Right now, there’s also the economic recession in terms of access to capital, and our customer’s market has seen some decline, but that will turn around. Sooner or later the government will want to see the province’s footprint reduced.”

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