Transboundary Watershed Alliance

Transboundary Watershed Alliance

March 08, 2007 05:00 ET

Transboundary Watershed Alliance: Will Hoverbarge Technology Save Tulsequah Chief Project?

Road Option Too Expensive--Barging Brings New Uncertainties

JUNEAU, ALASKA--(CCNMatthews - March 8, 2007) - Transboundary Watershed Alliance -

Redcorp (TSX:RDV) on January 29th released an interim report for the Tulsequah Chief mine project detailing a new access plan and feasibility study. A previous study by AMEC was halted in May 2005 due to "marginal" economics. The main difference between the 2005 study and the recent one is a plan to put road access on hold in favor of a proposal to access the mine via hoverbarge. While this does improve the project's economics, it is unclear if it will make the project attractive to investors. To date Redcorp's new plan has generated little excitement and Redcorp's share price has dropped by almost 50% since January 29.

Analysis by the Transboundary Watershed Alliance (TWA) suggests that road access is economically and politically unworkable. The 2005 AMEC study including the road concluded "the project economics were found to be marginal" and the feasibility study was stopped in May. Redcorp now proposes to use a hoverbarge towed by an amphitrac to access the mine. They say their new proposal would reduce capital costs by 25% and operating costs by 10%, but investors have reacted coolly. The lack of significant new investment suggests that the project remains marginal, even with dramatically reduced costs.

On top of that, the new hoverbarge proposal brings a whole new set of uncertainties. No project has ever navigated a hoverbarge system on a dynamic river like the Taku, avoiding obstacles such as fishing fleets. Hovertrans, the company supplying the hoverbarge and amphitrac, approached Redcorp a mere 6 months ago. The amphitrac, while based on a prior design, is essentially a new and untested tow vehicle. The sudden shift from road to hoverbarge will trigger new regulatory hurdles on the Canadian and Alaskan sides. This is in addition to the extensive Canadian permitting process for the mine itself that has scarcely begun. These hurdles create serious doubts for the schedule Redcorp proposed on January 29.

"We think the barge plan is a recognition that the road access option makes the project too expensive and generates significant international opposition. Redcorp are saying they can revert back to the road proposal, but they haven't included it in their new feasibility study, so it looks like the project will sink or swim, so to speak, on this barge proposal. The untested nature of the technology, the new requirement for Alaskan permits, and need for extensive new assessment on the Canadian side mean delays that will likely push Redcorp off of its schedule and could scuttle this project altogether," notes Chris Zimmer of the TWA. TWA calls on Redcorp to give investors more transparent information on how risky hoverbarges are for river navigation and what regulatory hurdles this change of plans is likely to trigger.

Transboundary Watershed Alliance - Balancing economic growth with healthy ecosystems in the transboundary watersheds.

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