MINTO LANDING Plans to open the copper and gold mine near Minto Landing and another mine north of Carmacks has kick-started discussions around another mega powerline project.

Yukon Energy president David Morrison said Tuesday the Crown corporation has had numerous meetings with Sherwood Copper Corp. about its Minto project and with Western Silver about its proposal for a copper mine, northwest of Carmacks.

In each case, he maintained, the companies and Yukon ratepayers would benefit by supplying the projects with a permanent connection to what is now vast amounts of surplus hydroelectric power simply spilling over the dams at Whitehorse and Aishihik.

Morrison said bringing the customers on-line with long-term supply contracts would help cover the cost of an estimated $20-million grid extension north from Carmacks, and perhaps to the 400 Pelly Crossing residents or beyond.

The Minto project, for instance, would likely consume somewhere in the neighbourhood of $2 million per year in energy that's currently available but unused, he pointed out.

'They are potentially a good customer for us because they are going to buy surplus hydro, which means the system benefits,' Morrison said. 'It is a couple of million bucks a year in revenue with very little cost.'

Having purchased for $8.4 million the copper-gold property 28 kilometres by mining road from Minto Landing, on the opposite side of the Yukon River, Sherwood Copper is moving ahead with a plan to start production by the middle of next year.

The mine was already permitted by the previous owner, Minto Explorations when the bottom fell out for the mining industry in the late 1990s.

Discussions about another mega extension to the territory's hydroelectric grid comes as Yukon Energy is still in legal proceedings to settle the boondoogle that was the Mayo-Dawson City transmission line.

That work was originally budgeted at $27.2 million under the previous Liberal government. The project ballooned to $36.4 million, prompting a call by the succeeding Yukon Party regime for an investigation by the Office of the Auditor General of Canada.

The Auditor General's report said Yukon Energy mismanaged the project from the start. It said the publicly-owned corporation was over its head from the beginning but chose to disregard sound advice from the more experienced B.C. Hydro on how to proceed with the project.

Morrison was brought on as chair of Yukon Energy mid-way through a dispute between the corporation and Chant Construction, which prompted a work stoppage. The parties agreed to complete the project and settle their differences later. Those differences have not been settled.

Morrison said Yukon Energy not only learned from what was contained in the auditor general's report, but also from how the project was handled internally.

The corporation has since adopted a policy that any project over $3 million will be subject to an application and review by the Public Utility Board, which was not done for the Dawson-Mayo line.

'So we think we can put in a system that is going to give a lot more surety and certainty in securing new mining customers,' he said.

At a dinner in Whitehorse Monday evening attended by mining analysts and investment advisors brought to the Yukon for a tour of the site, Morrison noted neither the Minto project nor Western Silver are very far from the main grid.

A new line from Carmacks could either go directly overland, the shorter of the routes, or along the North Klondike Highway. That would create access for future customers, he told the dinner guests from across Canada.

'But we are very close to making a decision on how we get there,' he said, adding the corporation is hopeful its route selection will dovetail with Sherwood's decision 'to go mining.'

The provision of power and its cost, Sherwood president Stephen Quinn told the guests, is among the four key items that need to be considered in the updated feasibility study the company hopes to have complete by the end of March 2006.

Both he and Morrison assured the audience that discussions are ongoing and sincere.

In an interview Tuesday during a tour of the mine site, Quinn noted those discussions included the provision of temporary power by Yukon Energy with one of its portable diesel plants until the corporation can deliver the permanent hook-up.

He said no other issue involving discussions with government has taken up more focus than the issue of power.

Morrison admits that if Sherwood Copper decided to go forward after the completion of its updated feasibility study, and stayed within its plan to be in production by next summer with $30 million in financing yet to be secured, there is no way Yukon Energy could deliver a permanent source by then.

At best, it would take two years or so from the time project approval was received to delivery of a powerline to the property, Yukon Energy staff have estimated.

To begin with, Morrison explained, Yukon Energy and Sherwood would have to enter into serious negotiations about the long-term supply cost, and the short-term temporary supply costs, if that is to be a factor.

They would need to address the requirement that all industrial customers pay 100 per cent of the cost to bring power to their property.

There would also be the need to flush out how the addition of a Western Silver customer at a future date would impact Sherwood's inital capital cost, and how it might be affected if the powerline was extended to Pelly Crossing, to remove that community from diesel generation, he explained.

Morrison said there would need to be an evironmental screening of the project, likely through the Yukon's new screening process, as well as the applicaton to the utility board. Both would likely move in tandem.

Tenders for final design and construction would have to go out, and the actual work would have to be done.

Morrison pointed out Tuesday, however, that aside from internal work that's being done to prepare the corporation should Sherwood move ahead, there can't be much of any expenditures devoted to planning.

The company needs to flash the green light and enter into a purchase agreement with Yukon Energy before the corporation can begin spending a nickel of the large sums of money required to plan and implement the project, he said.

That being said, Morrison noted, there is already a solid base of work on the proposal to extend the Carmacks powerline north, so it would not be a case of starting from scratch.

Extending the Whitehorse-Aishihik-Faro grid north from Carmacks was a campaign promise under the former 1992-96 Yukon Party government led by John Ostashek.