Drilling has come to a temporary halt at Pine Point, where work had been underway to gather information on possibly restarting mining at the lead/zinc property about 70 kilometres east of Hay River.
NNSL file photo
In comments to The Hub, Jeff Hussey, CEO and president of Osisko Metals, stressed that it's just a "pause" to the drilling program.
"We just temporarily shut down the drill rigs," he said.
"We were up to eight drill rigs in 2018 and we ramped down toward the end of the year," he explained. "In January, we had two drill rigs turning and that is what we shut down (in early February)."
Hussey has been reaching out to communities to explain what is happening and spoke by telephone to the Feb. 18 meeting of Hay River Town Council.
That communication effort is partly to counter rumours.
"There's a lot of interest in the project and I understand that in a small community – I'm from a small community myself – and so that's why I'm doing my best to reach out and just let everyone know that this is a temporary thing," he said. "It should not be considered a change in the path of the project."
Hussey said the logical time for drilling to resume would be after spring breakup.
"So it will be shut down for a few months at least," he said.
Hussey noted that Osisko Metals has been doing definition drilling – to determine the extent of the historical resources left by Cominco when the Pine Point Mine closed in 1988 – and has not yet started exploration drilling.
"We're getting ready to do that this year and we will continue to do more definition drilling later this year," he said.
Hussey said the decision to stop drilling was influenced by the markets.
"This is normal exploration," he said. "The fact that you temporarily shut down a drilling program doesn't change the project in any way. We're not a mining operation. It's not a mine that's running day-to-day creating cash flow. The money that we use for exploration and development we have to raise that on the market."
Hussey explained that right now there is uncertainty in the market due to the ongoing trade dispute between the United States and China.
"And so, until that uncertainty is settled, we're going to take a little pause and work with the data," he said, referring to the information gathered by the 60,000 metres of drilling done since last year by Osisko Metals to define the resources at Pine Point.
Hussey noted the international trade disputes have impacted the price of zinc.
"As soon as the U.S. announced trade tariffs with China and Canada, the price of zinc dropped from $1.50 to $1 in June and it's back to about $1.20," he said. "So when I say the uncertainty created, that's pretty good evidence of that."
However, he said that, until the discussions between the U.S. and China come to some kind of closure on a trade deal, there is elevated uncertainty in the base metal market.
Hussey is optimistic that the U.S. and China will come to an agreement, since it is not in the interest of either country to let the situation persist and impact their economies.
"In the first half of this year there should be some closure on this trade dispute," he predicted.
Hussey remains confident in the potential of the Pine Point project.
"The fundamentals of supply and demand for zinc are still exceptional," he said. "It's very low levels of zinc inventory, which will lead to higher zinc prices. So the days of having zinc priced at below $1 I think are behind us."
Plus, he noted there was an oversupply of zinc between 2010 and 2015, but that has fallen significantly.
"And now I think there's good days ahead for zinc and that's why we're in Pine Point looking at the project," he said. "It is a unique project because it is open pit zinc that is considered to be high grade relative to other projects. So I think the future is bright for Pine Point. It's just a matter of getting the work done and doing it in a cost-effective manner."
At the Feb. 18 council meeting, deputy Mayor Robert Bouchard told Hussey that there is a little bit of concern in the community, noting people are excited about the Pine Point project and the municipality is making plans for land development.
Mayor Kandis Jameson thanked Hussey for the update and said it was timely "as the rumours are flying."