Yukon Energy will need more renewable energy if it wants to supply a proposed gold mine without relying on diesel generation, says the corporation's president.

David Morrison told the Star last week the publicly owned utility is trying to identify more sources of green energy in time to support Victoria Gold Corp.'s Eagle Gold project north of Mayo at Dublin Gulch.

Yukon Energy and Victoria Gold Corp. signed a letter of intent earlier this month committing themselves to negotiating a power purchase agreement to supply the Eagle project by early 2014 or sooner.

Morrison said there may be enough surplus hydro in the system during the summer to keep the diesels quiet, but there's no question with Eagle's power requirements being twice those of the Minto Mine that there won't be enough hydro in the winter.

The company, he said, may want to be hooked up as early as the summer of 2013 during the late phases of construction. It definitely wants to be tied in by late 2013 or early 2014, when it plans to go into production.

Yukon Energy is currently juggling several research initiatives to see if it can introduce more renewable energy to the system, including a large wind project on Ferry Hill overlooking Stewart Crossing.

Morrison said they should have a good idea by early next year if they can move forward with wind generation on Ferry Hill.

"We are confident we can do something,” he said of the different research initiatives. "We are not exactly sure yet what that is.”

Also being investigated is the possibility of raising the levels of Atlin, Tagish and Marsh lakes to store more water for generation in the winter at the Whitehorse Rapids Dam, though a wall of opposition has gone up in Atlin.

There's also ongoing research into a couple of geothermal projects involving the use of underground water resources that may be hot enough to drive steam turbines.

Morrison explained that one way or the other, whether it's hydro, diesel generation or otherwise, Yukon Energy will supply the mine because the Public Utilities Act prohibits the utility from refusing customers who tie into the grid.

Victoria Gold will be responsible for building its own transmission line from the mine site to the power line running from Mayo to Elsa, but once it's complete, Yukon Energy is obligated to supply power, he said.

Morrison said it's difficult to estimate the cost of the spur line at this point, given the number of unknowns this early in the project proposal.

In its application to the Yukon Environmental Socio-economic Assessment Board, Victoria Gold indicates the distance from the mine site to the grid is 45 kilometres, running along the existing road into South McQuesten Road.

Like Morrison, Victoria Gold vice-president Mark Ayranto said last week the estimate for the spur line is pretty loose at this point.

As a rule of thumb, said Ayranto, transmission lines run anywhere from $125,000 to $250,000 per kilometre, putting the price tag at somewhere between $5.6 million and $11.2 million.

"We are working with Yukon Energy right now to make sure the design meets with what they would do if they were doing it.”

Ayranto said the life of the open pit operation is currently estimated at 8 1/2 years, but the company is continuing exploration work to expand the known gold resources.

The letter of intent between Yukon Energy and Victoria Gold does not speak to the possibility of Yukon Energy loaning the company the money for the transmission line, as it did with the Minto Mine.

The public utility lent the mine $18 million to cover its share of the main extension from Carmacks to Pelly Crossing, and the entire cost of the 28-kilometre spur line running into the mine off the North Klondike Highway.

Yukon Energy announced late last month that the Minto Mine had repaid the loan in full, four years ahead of time. Yukon Energy, the corporation indicated, generated $3.7 million in revenue from interest on the loan.

Ayranto said at this point, Victoria Gold does not anticipate any need for financial assistance from Yukon Energy to build the transmission line.

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