N.W.T. gov't agreed to sell its tungsten mining project and could make $15M from it

The Northwest Territories government has agreed to sell Mactungto Fireweed Zinc Ltd, a private company, and it could make$15 million on the sale.That's over $10 million more than what the territory bought it for seven years ago.

In a news release Tuesday, the government said it has accepted a letter of offer from Fireweed to take on 100 per cent ofMactung a tungsten mineral exploration project straddling the N.W.T.-Yukon border.

It is oneof the largest-known tungsten deposits outside of China the main player in the market.

The property was once owned byVancouver-based North American Tungsten. In 2015 it was grantedcreditor protection andthe territorial government stepped up to buy Mactung for $4.5 million.

When the N.W.T. cabinet approved the purchase, the rationale given at the time was all other offers to buythe tungsten-rich property were too low.

The N.W.T. governmenthas spent $346,521 to maintain it and its assets since 2015,as well as to "conduct Indigenous engagement" and do geological research. It also spentanother $129,388 to jointly market bothCantung(a nearby mine) and Mactung with the federal government.

The Tuesday release from the government saidthe territory has always aimed to return the property to the private sector once its commodity value recovered.

"Our priority has been to find an established and experienced operator whose vision and business model will maximize benefits to Northwest Territories residents and businesses in the region and our territory overall," said the N.W.T's Minister of Finance Caroline Wawzonek in a statement.

"I am pleased to welcome Fireweed to the N.W.T.'s mining community and look forward to them advancing this exciting critical minerals project."

The sale price breakdown

The terms of the sale of the Mactung property to Fireweed, according to a news release from the company, shows that the N.W.T. government could be paid up to $15 million.

The first step of the sale, Fireweed's release said, includes the company paying the territory $1.5 million now, then $3.5 million within 18 months of finalizing of the definitive agreement.

If and when Fireweed announces intentions to build a mine on the Mactung Project or any portion of the mineral property interests controlled by Fireweed in the Yukon known as the Macmillan Pass Projectthe private company will pay the government another $5 million.

Finally, another $5 million will be paid if Fireweed announces an intention to build a mine just on the Mactung Project.

Fireweed CEO Brandon Macdonald said in a statement that Macmillan Pass will remain its flagship project, however, its "recent staking of Gayna River and the addition of Mactung turns Fireweed into one of the leading critical mineral exploration companies."

Company pledges to work with Indigenous communities

Mactung is positionedwithin the traditional territories of the Kaska Dena and First Nation of Na-Cho Nyk Dun, and the Saht Settlement Area.

The company said its plans to"create increased opportunities for local Indigenous groups and the people of both Yukon and Northwest Territories."

It also says it will "conduct mineral development activities in a sustainable manner by working collaboratively with Indigenous groups and local communities, establishing a respectful and safe working environment, achieving a high standard of environmental stewardship, and undertaking studies and implementing measures to address local interests and issues."

The Mactung deposit is about 13 kilometres north of Fireweed's Tom deposit, the company's release said, and is also accessible by the North Canol Highway "providing potential for future synergies."

Cantung not part of sale

The Mactung property was set to be sold in tandem with another mining property the former Cantung mine, which the Canadian government has responsibility for. (Both of these properties were held by North American Tungsten before it went into bankruptcy protection in 2015.)

However, the territory said that approach ended on March 30 "without receipt of an acceptable bid."

The territory said no concessions, subsidies or incentives were negotiated with Fireweed as part of the Mactung transaction.