April 8, 2008
HALIFAX, NS — Labrador's Inuit government is imposing a moratorium on uranium mining and production on their land for the next three years, in a decision that drove down the shares of Aurora Energy Resources (TSX:AXU) and several other mining companies.
The 8-7 vote in favour of the moratorium doesn't apply to exploration for the radioactive metal, but prohibits mining or milling until the Nunsiavut government develops its own environmental laws by 2011.
The decision had mining analysts wondering whether the schedule will change for Aurora's proposed mine, which is located in Inuit territory about 40 kilometres from Postville on Labrador's northern shore.
Aurora lost one-third of its value Tuesday in the heaviest trading since it went public two years ago. Its stock fell $1.77 to $3.50, with more than 3.3 million exchanged at the Toronto Stock Exchange, erasing nearly $130 million in market value.
"It hurts their shares, it hurts their ability to raise money," said Patrick Donnelly, an analyst with Salman Partners. "We don't know if it will affect their startup date of 2013."
Donnelly also noted that a number of other small companies, such as Bayswater Uranium Mining (TSXV:BAY) and Silver Spruce (TSXV:SSE), saw small drops in their stock prices after the decision.
He said another proposed project by Crosshair Exploration and Mining (TSXV:CXX) isn't on Inuit land, but nonetheless its stock fell 11 cents to 75 cents on Tuesday.
Mark O'Dea, the chief executive of Aurora, said it's too early to conclude if schedules will be impacted, but he predicted that there will be some job losses and some decline in exploration activity in Labrador.
"There's going to be some economic repercussions based on the unfortunate choice ... of the word moratorium," he said in an interview. "I think it's going to have an impact on how people perceive Nunsiavut and whether it's open for business or not."
He said his company will finish up some engineering studies on its proposed open pit and underground mines in Michelin and Jacques Lakes deposits.
However, he predicts 20 to 25 job losses in exploration as the company scales back over the next few years.
O'Dea said his company has $120 million in cash, adding, "we have enough capital to get us through this bump in the road."
William Barbour, the Nunasiavut lands and resources minister, said the decision was taken to ensure Inuit have a say in the long-term protection of the environment on their ancient lands.
He said many members of the Inuit community expressed concerns about the negative environmental and public health effects associated with uranium mining.
"It gives the Nunatsiavut government the badly needed time to work at things that our government is required to do, including a land-use plan and preparing an environmental assessment act," Barbour said.
The company had argued that the Inuit could have developed this legislation and expertise while a federal-provincial environmental review was carried out.
However, Barbour said that the Inuit government - created in 2005 - needs to have a direct say.
He said he envisions having a process where the three governments participate together, with the Inuit having a direct say in the process.
"We want to have our own Act to deal with our own land," he said.
The government news release notes that the Inuit remain concerned about the environmental impact of uranium mining, which produces tailings with low-level emissions of radiation.
"Inuit are concerned about the negative environmental and public health effects associated with uranium mining," says a news release .
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