Kuskokwim Corp. inks deal with Donlin Gold


Published:

A proposed $6 billion gold mine in the Kuskokwim region is progressing after an agreement between the company interested in developing the project and the village Native corporation that has surface rights in the area.

The Kuskokwim Corp. announced a surface agreement June 8 with Donlin Gold LLC, enabling the mine to use its land to access gold if the company decides to proceed with the project. Donlin Gold LLC is owned by NovaGold Resources and Barrick Gold. TKC is the Alaska Native village corporation for 10 Kuskokwim-area villages with about 3,400 shareholders.

“It’s a milestone for the project because we are on The Kuskokwim Corporation land,” said Donlin Gold spokesman Kurt Parkan.

Subsurface mineral rights in the proposed mine area are held by Alaska Native regional corporation Calista Corp. and Donlin has already signed an agreement with that company.

“Now we have agreements with Calista for subsurface and Kuskokwim for surface use. Without that agreement, there would be no project,” Parkan said.

The Donlin Gold project is a proposed open-pit mine in Western Alaska, near Donlin Creek in the Kuskokwim River region. Donlin has estimated that an average of 59,000 tons of ore would be processed daily, with an estimated 34 million ounces of gold estimated to be available at the site. If built, it would be the largest gold mine in the world.

TKC CEO Maver Carey said the two entities have been negotiating the agreement for several years.

“We wanted to make sure that we were also obtaining economic development for our village corporation,” she said.

The agreement included $50,000 for shareholder scholarships, a signing agreement payment that was used in part for an elder dividend and in part to prepare TKC for future work on the project, and plans for annual compensation.

The amount of the signing agreement and annual compensation are confidential.

The agreement also gives TKC the right to certain contracts including construction and operation of a necessary port, and site reclamation. TKC has 11 subsidiary companies that operate in a variety of industries, Carey said. Now TKC is preparing them for the work.

“We need to work on those companies or new companies,” she said. “We just need to decide which entity these contracts are going to fall into.”

Carey said the reclamation work will start immediately, not after the mine ceases operation.

“We just believed that it was best that the entity and the shareholders that own the surface reclaim their surface back to the standards,” Carey said.

Calista has rights to other parts of the projects, and Carey said the two Native corporations worked together to ensure that they weren’t competing with one another.

Under the surface agreement, TKC will also have a role in ensuring subsistence harvest opportunity in the region throughout the project.

“We’ve formed a technical subsistence oversight committee so that all the parties can get together and be on board with concerns and things that we hear from our shareholders, Calista, TKC and then even other residents that live in the region,” Carey said. “I think that’s another important piece, that we’re all going to work together.”

Representatives from TKC, Calista and Donlin will form an advisory technical review and oversight committee, Carey said.

That committee will produce a subsistence harvest plan, as well as work on the spill response plan and spill response training.

EIS, environmental work underway

The surface agreement was not the only remaining hurdle. Before Donlin Gold decides whether to build a mine, the environmental impact statement, or EIS, process must be completed and about 100 permits will be needed.

Parkan estimated that the EIS process will be completed in about 2017. Then, Donlin will decide whether or not to proceed with the project and apply for permits as needed.

Donlin has said the mine would be approximately two miles long and one-mile wide, with an initial operating life of 27 years. The mine proposal is for just a portion of the mineralized corridor, and it’s possible that further study will show additional mining opportunity in the area.

The U.S. Army Corps of Engineers is the lead agency on the EIS, and selected the alternatives for analysis during the second quarter, according to a Donlin release.

“Right now they’re doing the development of alternatives and the analysis of those alternatives,” Parkan said.

The alternatives consider Donlin’s proposed port site, a pipeline to bring gas from Cook Inlet to the project site, other options for those, and other components of the project.

The draft EIS is expected to be out in the middle of 2015, Parkan said. The final version will be used by various government entities to make permitting decisions.

If Donlin proceeds with the mine and acquires the necessary permits, construction will take about four years, Parkan said.

In the meantime, Donlin is also working on collecting baseline environmental data to support the EIS process.

Although the project has been in the works since the 1990s, and most of the data has already been collected, the Army Corps requested certain additional studies, which are underway now.

Parkan said that the current studies primarily look at fish, including juvenile anadromous fish locations on the Kuskokwim River, as well as geotechnical work along the pipeline route.

Most likely, more work will be done next summer, Parkan said.

The EIS process will also include the opportunity for public comment on the proposal and the potential impacts to the area watershed and other resources.

Carey said that being involved in the project has mitigated some of TKC’s concerns.

Partners plan regional training

Donlin, Calista and TKC are also working on developing a training program to prepare area residents for the jobs that will be created by the mine development and operation.

 “We’re working closely with Kuskpuk school district and Donlin and Calista on implementing a training program,” Carey said.

Parkan said the surface agreement includes both regional training and local hire provisions. According to a TKC press release, the project is expected to create up to 3,000 construction jobs and between 600 and 1,400 operational jobs throughout the life of the mine.

Carey said that TKC will use some of the signing agreement payment for a training facility, but many of those details must still be worked out. The training program will try to target recent graduates of Kuskokwim-area schools, as well as older members of the workforce who may already have some training, and the generation that will eventually join the workforce.

“We’re also trying to focus on the younger generation,” Carey said. “Those kindergarteners who, by the time they graduate, are excited and ready and stay in school and work and are trained for all of these different employment opportunities that are going to be provided in our region.”

Carey said that the focus on the youngest generation is what she sees as the most exciting part of the project.

“I just believe that this is economically going to change our region for the positive,” Carey said. “And in working together with all of the partners, it’s going to benefit all of our shareholders and residents who are in the region. To me, it’s a great legacy that we’re going to leave for our children and grandchildren. I’ll be proud to be retired knowing that our shareholders are going to benefit for several generations.”

Molly Dischner can be reached at molly.dischner@alaskajournal.com.

Add your comment: