With soaring stock price, Ambler mine promoters should help pay for the $1 billion road
The stockholders of Trilogy Metals, including some billionaire investors, should help pay for the cost of the 211-mile private road off the Dalton Highway that would give an immense boost to the value of their mining claims.
Just the announcement by President Trump that he approved the road and is using public money to buy 10 percent of the company sent the stock price of Trilogy soaring. Some Trilogy insiders locked in hundreds of thousands of profits by immediately selling some of their holdings.
The Alaska Industrial Development & Export Authority wants to spend $50 million more of public funds planning for a road that would never be open to the public, only to those who stand to profit from its construction.
The resolution doesn’t say anything about inviting the mining promoters to chip in more dough.
Here is the agenda for the AIDEA meeting Wednesday.
The mining promoters will want to pay as little as possible, of course, arguing the state should carry the road-building burden because it will create jobs, generate taxes, new mines and lead to economic development, etc. The mining promoters will say their claims will never be developed if the road is not built. What won’t be dealt with in public is the question of benefits to the mining promoters.
In this 2020 agreement, AIDEA said it was working on a cost-sharing road planning agreement with the mining promoters, but it said the companies would be able to recoup their planning expenses with reimbursement on future toll payments.
In 2021, AIDEA and the mining promoters agreed to each put up $35 million to plan for the road, but the mine promoters would get all of their money back in toll reductions in the future.
“For their contribution of that $35 million, what they’ve requested is that they get a credit against what would be toll or use volume charges for activity on the road,” AIDEA Executive Director Alan Weitzner said. “And we have agreed to that.”
This doesn’t sound like AIDEA believes in sharing the cost. The agency functions like a mine promoter and its refusal to disclose financial agreements make it impossible to know whether a deal is balanced or an unwarranted industry subsidy.
AIDEA and Trilogy have said that negotiations are needed about tolls to help pay for maintenance and the cost of building the road, but there is no public document that spells out the details and financial assumptions.
There has been no independent economic analysis, just robotic assurances that future mining jobs and future taxes will benefit the state—ignoring the key question of why the mine promoters aren’t being asked to help pay for the road because they stand to gain the most.
Trilogy has told the Securities and Exchange Commission that “the working assumption is that AIDEA would arrange financing in the form of a public-private partnership to construct and arrange for the construction and maintenance of the access road.”
“AIDEA would charge a toll to multiple mining and industrial users (including the Arctic Project) in order to pay back the costs of financing the AAP. (Ambler road) The amount paid in tolls by any user would be affected by the cost of the road, its financing structure, and the number of mines and other users of the road which could also include commercial transportation of materials and consumer items that would use the AAP to ship concentrates to the Port of Anchorage in Alaska and possibly provide goods and commercial materials to villages in the region,” Trilogy said.
The economic assessment assumed the road toll would be about $8 a ton, but it could be higher.
While all of those details are vague or secret, AIDEA and the mining promoters have made it clear that the publicly funded road would never be a public highway.
“What neither AIDEA, nor ourselves, nor the community wants is that this becomes a road where you could have people go in either for recreation or for hunting and fishing. And that’s not what the intent is—this is really for industrial purposes only,” Trilogy CEO Tony Giardini said in a 2020 interview.
In 2020, the mining companies guessed the road would cost $300 million to $400 million.
A 2024 guess put the cost of the road at $750 million, but count on that number going higher. It could easily surpass $1 billion. In this column, engineer Lois Epstein said it could be up to $2 billion.
Trump’s subsidy of the mining venture comes with many unknowns, including where the construction money is to come from.
“No federal transportation funds would be used for the mining road’s construction, and tolls for industrial road use would only be enough to cover operations and maintenance. Private bond funding is highly unlikely,” Epstein wrote.
Trilogy Metals said the government purchase of 10 percent of the venture creates a partnership that “may also include federal support mechanisms such as permitting assistance and potential loan guarantees to accelerate project development.”
Giardini said in that 2020 interview that “the focus with AIDEA is really on, ‘How do we get this road constructed into the Ambler Mining District and do it in a way that the cost of that road can be effectively amortized over a reasonable time period?’”
By reasonable time period, he said he was talking about 50 years. After 50 years, AIDEA would remove the road. The 2024 guess said removal would cost $78 million. The assumption by AIDEA is that other mines in the region would be developed during those 50 years.
Spreading the cost to be recovered from tolls over 50 years could mean that AIDEA would recover pennies on the dollar because of inflation. It all depends on how the toll agreement is structured.
Meanwhile, Giardini reported that he exercised stock options to buy 1.1 million shares of the Canadian company for $1.79 each Friday.
On paper, the 1.1 million shares are now worth about $4 million more than they would have been before Trump’s action.
Ambler Metals is a joint venture between Trilogy of Vancouver and South32 of Australia. Ambler Metals calls itself a “team of Alaskans,” but it is owned by a company from Canada and a company from Australia.
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