It's a copper deposit, but the City of Kamloops may strike gold from municipal taxation at the proposed Ajax mine just south of Aberdeen.

The open pit copper mine being developed by Polish firm KGHM Ajax Mining Inc. recently entered provincial and federal environmental reviews. The project will entail relocating a section of Peterson Creek about 10 kilometres southwest of Kamloops and creating a disturbed area of 2,500 hectares, including a tailings pond and rock dump, for the mine beside Jacko Lake.

Part of the mine boundary is within the City of Kamloops and directly adjacent to Aberdeen and Pineview Valley. It is scheduled to begin production in 2013.

Sally Edwards, city finance director, said she's had preliminary discussions with the B.C. Assessment Authority about the mine's taxation. Based on those discussions she believes if the mine is developed, municipal boundaries will need adjustment so it's either wholly within the City's boundaries or in the Thompson-Nicola Regional District's unincorporated area.

If the mine goes ahead as proposed and the City extends its boundaries to include it, Edwards said the taxation benefit to Kamloops taxpayers "would be huge."

Currently major industrial taxpayers pay about eight per cent of the $80 million in City property taxes. The City could choose to either let the mine's assessment swell that percentage or cap it so that all other industrial taxpayers' rates would fall.

The mine would provide far more revenue to the City than it would to the regional district, due to the way B.C.'s property tax system is structured.

Highland Valley Copper, about twice the size of the proposed Ajax mine in terms of production, contributes $1.2 million a year to Logan Lake's budget. The mine also pays "several hundred thousand dollars a year" to the municipality in a special assessment on power it uses in lieu of taxes on rights of way and power lines, administrator Wayne Vollrath said Wednesday.

But, saying it's too early, Kamloops Mayor Peter Milobar would not speculate Wednesday on any taxation windfall or boundary adjustments if the proposed mine goes into production.

"We need to let the process run its course," he said of environmental reviews. "We don't want to see it through its potential tax dollars. Let the process run its full course. Either way, they'll pay property taxes."

Milobar did concede, however, he's made KGHM officials aware municipal boundaries will eventually need to be adjusted to bring the mine either completely inside or outside City limits.

A representative of KGHM was not available Wednesday for comment.

The company forecasts the mine will provide 400 jobs over its 23-year life. It met recently with a number of government agencies and a representative is expected to address Kamloops council this month.

The mine is also expected to host public forums this spring or summer. Some city residents have expressed concerns about potential noise from the mine as well as concerns about moving Peterson Creek and impact on Jacko Lake.