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Nanisivik Mine — A Profitability Comparison of Actual Mining to the Expectations of the Feasibility Study

Department of Geological Sciences and Geological Engineering, Queen’s University, Kingston, Ontario, Canada K7L 3N6

The Nanisivik mine offers a unique opportunity to examine the economics of a mining scenario from its original feasibility study through to closure. In the early 1970s, the Strathcona Sound project (exploration around the Nanisivik mine) had advanced to the point where a significant mineralized body had been defined and a feasibility study was initiated. The study supported development of the Nanisivik mine, with government investment in regional infrastructure, and the mine was constructed and operated for 26 years. Many elements of the feasibility study were difficult to estimate because the project was unique in its high Arctic setting. As a result, many differences were found when comparing the actual mining data to the feasibility study. The majority of these differences were the result of an actual mine life of 26 years instead of the planned 12.5 years. Most of the mining costs were higher than estimated and production occurred at a much higher extraction rate than planned. On a constant dollar basis, the metal prices were, on average, below the feasibility estimates. For the most part, these differences balanced out, with the actual mining being only slightly more profitable than anticipated in the feasibility study.