Northwest Mining Investor Report

Northwest Mining Investor Report

August 08, 2008 08:00 ET

Northwest Mining Investor Report: The Tulsequah Chief Mine Project-Redcorp Ventures' Hoverbarge Plan Suffers Setbacks as Alaska Terminates Permitting Process

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 8, 2008) -

Latest Northwest Mining Investor Report now available. For full version see www.nwmininginvestor.com or contact info@nwmininginvestor.com.

In our December 2007 report we noted Redcorp's record of overly optimistic statements, missed commitments and assumptions about the hoverbarge plan that contradict political realities in Juneau and show the company has underestimated the difficulties of operating on the Taku River. This latest edition provides an update on the hoverbarge plan and the hurdles it continues to face. These challenges come as the company continues to face some financial issues, including a June announcement that mine development costs have gone up by almost 50%, from $201 million to $297 million (see NWMIR vol. 1, ed. 3 from June 30 for more on these issues).

No Smooth Sailing for Initial Hoverbarge Proposal

The initial hoverbarge/amphitrac proposal from August 2007 ran into public opposition in Alaska and substantial concerns from permitting agencies. The Alaska permitting process formally started in December 2007, but was suspended in February 2008. At a Feb. 4, 2008 Juneau public meeting attended by about 200 people, the hoverbarge proposal was met with overwhelming criticism.

New Hoverbarge Plan Requires New Alaska Permitting Process

In May Redcorp said it was looking at alternatives to the amphitrac due to cost and feasibility problems. In June Redcorp submitted an "Air Cushion Barge Transportation System Update" to BC. The major change in the new proposal is the replacement of the amphitrac with several wheeled vehicles and tracked vehicles.

In June Redcorp submitted the "System Update" to Alaska permitting agencies. Instead of re-starting the permitting process that was suspended in February, the agencies said Redcorp's "Update" was a substantially new plan that would require a completely new permitting process. Alaska also terminated the process that was suspended in February 2008. This clearly shows that Redcorp's May 15 statement that "we expect this change in vehicles to have a minimal impact, if any, on the Alaskan permitting process" was overly optimistic once again.

Conventional Barging Program Behind Schedule

In May Redcorp announced plans to ship 20,000 tons of mine supplies from Juneau to the Tulsequah Chief site in 200 conventional barge loads pulled by shallow draft tugs. Experienced Taku river boaters told NWMIR that this plan was unrealistic. Redcorp has gotten about 30 barge loads upriver so far and has had trouble with groundings. Given that this is halfway through the high water season when the conventional barges can operate, it seems quite unlikely that Redcorp will achieve the scheduled 200 loads. Since the new "System Update" relies on conventional barging in the May-October period, the experience to date raises questions about the feasibility of that plan.

Reality Check

In a June 17 Whitehorse Star article Redcorp spokesperson Salina Landstad said the company will likely have its permits by late summer. But, in fact, it is extremely unlikely that the Alaska permitting process will even start before September and the Canadian and BC processes won't be finished before this fall at earliest. Redcorp is simply not providing a realistic picture of the hoverbarge proposal.

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