A newly proposed wilderness area in eastern Canada is presenting a hurdle to ASX-listed St Barbara Ltd.'s plans to use it for water for its Cochrane Hill gold development project and potentially expand operations in the area, a Nova Scotia provincial government spokesperson confirmed to S&P Global Market Intelligence.
"Archibald Lake is identified as a possible site for sourcing raw water for mine operations and for discharging surface water runoff and seepage from the mine site," said Rachel Boomer, a spokesperson with the Nova Scotia Department of Environment. "Such use of Archibald Lake would not be permitted within a wilderness area."
The government has called for public comment on the proposed wilderness area, which it announced Jan. 10 as part of broader conservation plans. Market Intelligence understands St Barbara will participate in the consultation process, which is open until Mar. 9.
Cochrane Hill is one of three unpermitted deposits that are key to a 12-year mine plan for Moose River Consolidated operations, where production now comes from the Touquoy deposit and which St Barbara acquired in 2019 through a takeover of Atlantic Gold Corp. in a C$722 million deal. Archibald Lake is less than 10 kilometers south of the deposit.
"Water suitable for discharge from the [tailings management facility] will be released through an engineered discharge to Archibald Lake and its downstream receiving environment or a location within the McKeen Brook system," Atlantic Gold wrote in a 2018 outline of the Cochrane Hill project that is on Canada's environment permitting website.
The Cochrane Hill deposit is targeted to start production around 2023 as output from the Touquoy deposit dwindles, with the Beaver Dam and Fifteen Mile Stream deposits coming online in 2022, according to corporate presentation St Barbara released in September 2019. The permitting process and a federal review of the expanded mining operations are ongoing.
St Barbara expects to produce between 95,000 and 105,000 ounces of gold from Nova Scotian operations in its fiscal year ending June 30, it said in a recent update.
The Cochrane Hill project has generated controversy, with some conservation groups opposed to its development. They contend it would endanger habitat near a salmon-bearing river, while Atlantic Gold, since bought by St Barbara, has cast the project as being subject to rigorous environmental standards.
Scott Beaver, president of the St. Mary's River Association, a group opposed to the project, described the proposed wilderness area as a win. "This literally cuts off the water supply and discharge area from the gold project as it is in their project description. So for us this is fantastic news," Beaver said.
Beaver also said the announcement of the proposed wilderness area came as a surprise. The province recently outlined a list of areas it planned to protect, but Archibald Lake was not included.
Boomer told Market Intelligence that Archibald Lake was among sites the province had initially considered for protection, but it did not get into the final conservation plan announced in 2019.
"This has been reconsidered," Boomer said. "This site includes extensive old forest and quality aquatic habitat within the St. Mary's River watershed. Protecting Crown lands at Archibald Lake will complement other existing and proposed protected areas in the St. Mary's watershed."
Boomer declined a request for an interview with a senior department official to discuss the decision. Nova Scotian Minister of Environment Gordon Wilson has said St Barbara's mining plans were not part of the government's reasoning in reconsidering the area for protection, according to a CBC report.