Miner MMG aims to have its zinc-copper project in Canada's northernmost territory up and running by 2018.
The overseas non-ferrous metals mining unit of China's largest metals trader, China Minmetals Non-Ferrous Metals, expects to complete a feasibility study on the project in the second half of this year, according to MMG chief executive Andrew Michelmore.
But the project, located in an ecologically sensitive area in the Izok Corridor in Nunavut must pass three years of environmental impact studies before it can go ahead. It is in the first year of such studies.
The area being explored and developed sits on the migration paths of caribou, an important food source for the local Inuit people. Drilling equipment has to be flown in and out of the tundra-covered operating area by helicopter.
The area also has unusually rich zinc ore, with the metal comprising about a quarter of each tonne extracted. Zinc mines are usually 5 to 15 per cent zinc, according to the International Zinc Association.
Nunavut, with just 32,000 people, is the only administrative region in Canada that is not connected to the rest of the nation by highway, making mining more costly and difficult.
"If this mine were located anywhere else, it would have been mined already," Michelmore said.
"It is very prospective, but the location means we need more tonnes [of resources] to justify development than other mines."
The Nunavut government was keen for the project to create jobs for the territory, where most of the employment was provided by the government, he said.
Michelmore estimated the Izok Corridor project would cost half as much again as MMG's A$1.49 billion (HK$12 billion) Dugald River zinc mine in northwest Queensland, Australia.
MMG has received a non-binding commitment fromChina Development Bank to provide a 13-year US$1 billion loan to the Dugald River project, which is expected to be commissioned in 2015 with an annual output of 200,000 to 220,000 tonnes of zinc, among other metals.
It will partly offset MMG's 480,000 tonne-a-year Century mine - also in Queensland - after it is decommissioned in 2016.
The Izok Corridor project's initial annual output is expected to be 180,000 tonnes of zinc and 50,000 tonnes of copper. MMG last week posted a 29 per cent fall in underlying net profit to US$217.5 million last year due to lower metal prices and higher costs, despite higher output.
Michelmore said it was looking to buy mining projects in South America and southern Africa, although it might avoid South Africa and Venezuela due to geopolitical and security risks.