Yukon mine would require $100M worth of electricity

A new purchase agreement with Yukon Energy is illustrating the scale ofVictoria Gold's proposed Eagle Gold mine, north of Mayo, Yukon.

Thenewly-signed deal describesVictoria Gold's plansto purchase about $100 million worth of energy over ten years.It still needs to be approved by the Yukon Utilities Board.

• Victoria Gold to mark start of mine construction with ceremony today

• Yukoners check out job opportunities at Eagle Gold mining project

The Eagle Gold mineitself 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 interimrate 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.

YukonEnergy has provided power to Capstone Mining Corp'sMintoMine, as well as the Faro mine and Alexco Resource Corp.'sBellekenosilver mine at Keno Hill. However, the Faro and Bellekenomines 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).

Environmentalistsin 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 usediesel on site.

Yukon Energy says the mine would cover thefull costs of being connected to the grid,for a total investment of about $11 million. Thatwould include a new transmission line, a new substation at McQuesten, north of Mayo, and other upgrades to Yukon energy's infrastructure.