Trilogy, South32 partner with Alaska to fund critical mine road

Ambler Metals plans to develop an initial pioneer gravel road, approved by AIDEA. (Image courtesy of Trilogy Metals.)

Ambler Metals, a joint venture between Canada’s Trilogy Metals (TSX, NYSE: TMQ) and Australia’s South32 (ASX, LSE, JSE: S32), has inked a development funding agreement with the Alaska Industrial Development and Export Authority (AIDEA) aimed at building a critical road for a copper-zinc-gold project in the state’s northwest.

The partnership, formed in 2019, seeks to eventually develop the Upper Kobuk Mineral Projects (UKMP) in Alaska’s Ambler mining district. Building an access road to the deposit is one of the first steps to achieving that goal.

The agreement defines how AIDEA and Ambler Metals will work together on pre-development work for the access project, funding and oversight of the project’s feasibility and permitting.

The parties have agreed to contribute up to $35 million each for the road’s pre-development costs. The deal runs until they have reached a decision on the road project construction, which is expected before the end of 2024.

“We see the signed agreement as another positive step forward towards the eventual construction of the Ambler access road,” BMO metals and mining analyst, Rene Cartier, said in a note to investors.

Bumps in the road

The approved northern route would run by a section of the Arctic National Park and Preserve, though it would be outside of both the park itself and the designated wilderness areas.

Courtesy of Ambler Access.

The 211-mile (340km) gravel road, with construction costs estimated at between $280 million and $380 million, still faces legal challenges.

While it received the backing of the US Bureau of Land Management in July last year, environmental groups and local communities have filed two separate lawsuits in an attempt to halt the road development.

The outcome of those suits may push first production out until at least 2027, according to analysts.

Last month, AIDEA signed agreements for right of way for the Ambler access project with the United States Bureau of Land Management and the National Park Service, securing a 50-year right-of-way on federally owned and managed land.

The UKMP projects have a combined resource of 8 billion pounds of copper, 3 billion pounds of zinc and 1 million ounces of gold equivalent.

The proposed mine is expected to produce more than 159 million pounds of copper, 199 million pounds of zinc, 33 million pounds of lead, 30,600 ounces of gold and 3.3 million ounces of silver over a 12-year mine life.