A new purchase agreement with Yukon Energy is illustrating the scale of Victoria Gold's proposed Eagle Gold mine, north of Mayo, Yukon.
The newly-signed deal describes Victoria Gold's plans to purchase about $100 million worth of energy over ten years. It still needs to be approved by the Yukon Utilities Board.
The Eagle Gold mine itself could cost $400 million to build and dwarf any other mine in Yukon's history. Victoria Gold says it could employ up to 400 people.
Yukon Energy CEO Andrew Hall says connecting the mine would be a "significant deal" for the utility, and might result in millions' worth of upgrades to the power grid.
'Benefit to ratepayers' says CEO
Hall says the deal could allow Yukon Energy to reduce rates for all customers by about one or two per cent.
"It's a benefit to the ratepayers," he said.
The overall trend for power rates in Yukon has been upward. Last June, Yukon Energy applied to the Yukon Utilities Board to approve a nine percent increase over two years.
The utilities board approved an interim rate increase of 5.5 percent which took effect in September.
Hall says rates could be reduced after 2019 when the mine is projected to be up and running.
Hall says the new mine alone would account for about a 20 per cent increase in Yukon's total electricity use.
Yukon Energy has provided power to Capstone Mining Corp's Minto Mine, as well as the Faro mine and Alexco Resource Corp.'s Bellekeno silver mine at Keno Hill. However, the Faro and Bellekeno mines are no longer operating.
Project would require LNG
More than 90 per cent of Yukon's electricity is now provided by the Whitehorse hydroelectric dam.
However, to meet the mine's demand, Hall says Yukon Energy would need to rely more on liquefied natural gas (LNG).
Environmentalists in Yukon have raised concerns about fossil fuel use and the expansion of LNG in the territory, but Yukon Energy says the Victoria Gold deal is still far greener than if the mine were to use diesel on site.
Yukon Energy says the mine would cover the full costs of being connected to the grid, for a total investment of about $11 million. That would include a new transmission line, a new substation at McQuesten, north of Mayo, and other upgrades to Yukon energy's infrastructure.
Correction : A previous version of this story said Capstone's Minto Mine had been partially shut down in recent years. In fact, the mine has been in production for a decade.(Nov 17, 2017 1:45 PM)