$4M drilling program near Yellowknife won't happen this winter

A $4-milliondrilling program planned for this winter near Yellowknife will not happen. Neither will the construction of winter access roads that have become popular for recreationalists and cabin owners in the area.

TerraX Minerals Inc. has been running drills on its Yellowknife City Gold project just north of Yellowknife for the past four years. It's the kind of drilling companies do to extract core samples to help determine the potential value of an underground mineral resource. The company is exploring a deposit that could some day be a gold mine in a territory hard up for new development.

According to TerraX community engagement consultant David Connelly, an"anomalous" regulatorydelay at the Mackenzie Valley Land and Water Board in obtaining a new type-B water licence has taken plans for this winter's work off the books.

TerraXexecutive chairmanJoe Campbell stated in an emailthat he would not comment while the review board process is underway.

The public record

According to public records found on the Mackenzie Valley Land and Water Board website, TerraX applied on Nov. 30 to have two separate land-use permits collapsed into an expanded new one. The new one includes not only the area covered in the initial two permits, but additional property acquired more recently.

The company applied for a Type-B water licence to expand its drilling program beyond what is allowed under the land-use permit alone.

The company has since received its land-use permit, but the fate of its water-licence application remains to be determined.

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The reviewer comment period for the company's water licence application was initially set to close on Dec. 27 with a board decision to be handed down thereafter. But on the last day of the comment period the federal Department of Fisheries and Oceans (DFO) requested information about which lakes might be used as sources of water, and how much water would be used.

In response to the DFO request, the board asked TerraX to "submit additional information including the identification of potential water source[s] (including their available capacity) and projected volume(s) of water for all water use (including drilling and camp operations)."

The board also extended the period for public comment on the Type-B water licence until Feb. 18.

More than 900 possible lakes

According to a Jan. 25 document submitted by TerraX, and signed by Campbell,there are more than 900 lakes large enough to serve as a water source within or bordering the area of the applied-for land use permit.

The company stated that not only would it be impractical to document the volumes of all those lakes that data does not exist it would be impossible to say exactly which lakes would be tapped as exploration drilling is not something that can be precisely predicted beforehand.

The company also pointedto water use in past seasons to show that even in a worst-case scenario the company would never approach the water use ("drawdown") limits imposed by the Department of Fisheries and Oceans.

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In that letter to the board, the company lists all lakes identified by TerraX as "suitable for water usage" and suggests the board leave it to the company to work with a water inspector to ensure compliance.

Based on the information provided by TerraX, the DFO stated in a Jan. 24 letter filed with the Mackenzie Valley Land and Water Board that TerraX's proposal "has been identified as a project where a Fisheries Act authorization is not required given that serious harm to fish can be avoided by following standard measures."

Delays based on non-issue

The DFO did not immediately respond to a request for comment, but Tom Hoefer, executive director of the NWTand Nunavut Chamber of Mines, said he understood the fisheries department to have withdrawn its concerns when it filed its Jan. 24 letter.

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What's surprising for Hoefer is that the board continued with a new public comment period based on what appears to be a retraction letter from the fisheries department.

"Taking a no-concern issue [out] for public consultation doesn't make any sense," he said.

The period for reviewer comment remains open until Feb. 22.

Shelagh Montgomery, executive director of the Mackenzie Valley Land and Water Board, stated she could not comment on a file under review by the board, but did say a decision could come within weeks.

"If there are no outstanding issues at the end of the current public review, the application package is expected to come before the Board for decision at a March 7 meeting," she stated in an email.

Clock ticking

Hoefer says the clock is ticking, not only on TerraX's drilling program, but on the image of the Northwest Territories as a place to invest.

"The concern with it is that it's a process delay," hesaid.

"It's not related to the drilling program itself. And that's the kind of messaging that's really kind of frightening for us because investment certainty is what we need, and when there are surprises in a regulatory process like this that aren't related really to the proponent, then it sends the wrong message."