TORONTO (miningweekly.com) – The Alaska State Legislature has unanimously passed Senate Bill 99 (SB 99), which includes provisions authorising the Alaska Industrial Development and Export Authority (AIDEA) to make up to $270-million available for infrastructure and construction costs at two south-east Alaska mining projects.

The passing of the Bill provides TSX-V-listed Prince of Wales Island project developers Ucore Rare Metals and Heatherdale Resources with the state-backed financial boost needed to develop the deposits into mines amid an otherwise tight financial market.

Introduced by Senator Lesil McGuire in 2013, SB 99 also aims to clarify ambiguous language associated with the Sustainable Energy Transmission and Supply Development Fund within the AIDEA.

The AIDEA is a public corporation created by Alaska lawmakers to promote economic development across the state, and has been active in the financing of multiple capital project initiatives in the Alaska mining sector since 1985.

The Delong Mountain Transportation System, a road and port facility connecting the isolated Red Dog mine to world markets, and the Skagway Ore Terminal, a south-east Alaska facility that ships about 37-million pounds of copper concentrates from Capstone Mining’s Minto mine, in Canada’s Yukon Territory, are examples of mining-related projects the authority has funded.

SB 99 made provision for the AIDEA to issue bonds to finance the infrastructure and construction costs of the Bokan-Dotson Ridge rare-earth element project up to a principal amount of $145-million.

“Alaska has a very long history of advancing and supporting key resource projects, both financially and otherwise, and Bokan is no exception. Alaska legislators have recognised that the area has the potential to be America’s leading heavy rare earth production hub, with an array of ancillary industries, such as rare-earth element separation and metal manufacture,” Ucore president and CEO Jim McKenzie said.

The bond financing would be subject to AIDEA’s internal due diligence and board approval, to be completed after the Bokan-Dotson Ridge feasibility study had been published. The feasibility study would build on the preliminary economic assessment (PEA) released by Ucore last year.

The PEA had estimated the project’s pre-tax net present value at $577-million when using a 10% discount rate, and the internal rate of return at 43%. Once operational, the Bokan project is expected to average 2 250 t/y during the first five years, including high-value elements such as 95 t of dysprosium oxide, 14 t of terbium oxide and 515 t of yttrium oxide.

“I have long seen the need for a US source of these important materials and the potential benefit for south-east Alaska and our state economy. SB 99 offers Ucore the chance to partner with AIDEA and make this tremendous project a reality,” McGuire said.

Regarding Heatherdale, SB 99 authorised the AIDEA to issue bonds to finance up to $125-million of the construction of key infrastructure for the Niblack copper/gold/zinc/silver underground project. The funds would be used to build a mineral processing mill and dock, loading and associated infrastructure facilities at the Gravina Island industrial complex and other facilities at the project site.

Since 2009, Heatherdale has spent about $37-million on exploration drilling. It has established a National Instrument 43-101-compliant indicated resource of 5.6-million tonnes grading 0.95% copper, 1.75 g/t gold, 1.73% zinc and 29.52 g/t silver; and an inferred resource of 3.4-million tonnes grading 0.81% copper, 1.32 g/t gold, 1.29% zinc and 20.10 g/t silver. The resources were calculated using a $50 net smelter return cutoff.

“This mining project is a step forward in revitalising the economy in south-east Alaska by providing significant employment opportunities. The renovation of the old lumber mill site will create value-added exports, and partnering the developers with AIDEA ensures fiscal responsibility with benefits to the entire state. This is exactly the kind of win-win situation I was looking for,” McGuire said.

SB 99 next goes to the Alaska Governor's office for formal signing. The passage of the Bill does not commit the AIDEA or the state to any action.

Following the announcement, Ucore’s TSX-V-listed stock fell 2.63% to C$0.37 a share, and Heatherdale’s stock rose 33% to C$0.08 apiece.