Mining

Greens Creek owner files request to reroute road for tailings expansion

The operator of the largest silver mine in the country is asking the U.S. Forest Service to approve a tailings storage expansion plan that would allow the mine to produce into the 2030s. Hecla Mining Co., which owns the underground Greens Creek mine on Admiralty Island near Juneau, filed an amended plan of operations with the Forest Service Oct. 1 that calls for expanding the Greens Creek tailings disposal facility footprint by 14 acres, or about 20 percent, to store an additional 4 to 5 million cubic yards of tailings and waste rock produced at the mine. Hecla expects the current 66-acre facility will likely be filled by about 2031, at which point the mine would have to be closed, according to a company statement. The tailings facility expansion would not push the mine’s growing tailings stack further into Admiralty Island National Monument, but the plan does call for disturbing an additional two acres within the monument to relocate a portion of the road between the Greens Creek mill and tailings facilities. Greens Creek General Manager Brian Erickson said Hecla leaders believe the plan maximizes the area available for tailings storage while minimizing newly disturbed areas in a formal statement. “This amendment culminates years of careful planning to develop a plan that minimizes impacts on Admiralty Island National Monument and the fish-bearing sections of (nearby) Tributary Creek,” Erickson said. Mining within the monument was authorized by Congress in the 1980 Alaska National Interest Lands Conservation Act, which established or grew many of the federally protected areas in the state but also carved out exceptions for resource projects in several parts of Alaska that otherwise would be off-limits to development. Greens Creek facilities bisect the monument boundary between the Admiralty Island Monument and more open-access lands of the Tongass National Forest. The mine’s infrastructure, which includes a port and access road, is largely along the western coast in the northwest portion of the island. Hecla employs the dry-stack tailings process at Greens Creek, which eliminates the need for a tailings dam as well as this risk of a release of tailings water or slurry. The company’s plan for incremental expansion is the third such request by the Greens Creek operator in the past 20 years. Most recently Hecla proposed a 116-acre expansion to the mine’s tailings storage facilities in 2010; the Forest Service ultimately approved an 18-acre project in 2013. Hecla Greens Creek spokesman Mike Satre wrote via email that the Forest Service’s 2013 decision for a smaller expansion has helped support existing operations but prohibited the company from expanding the mine’s footprint within the monument. “After analyzing the record of decision and re-evaluating our design basis, we realized that there was an option to extend the facility to the north in non-monument Forest Service land that would give us sufficient space,” Satre wrote. Hecla has not disclosed a cost estimate for the proposal, according to Satre. The Forest Service opened a scoping comment period on Oct. 9 for the environmental impact statement — a supplement to the 2013 review — will likely be needed based on the size of the proposal. The 45-day comment period closes Nov. 23. The plan calls for decommissioning one of the existing water management ponds and subsequent modifications to other ponds or construction of a new pond in the first stage of the project, which would include storage for roughly 1.9 million cubic yards of tailings and waste rock. The second stage of the project entails re-routing a portion of the access road through the monument, a new transmission line and substation and a water collection system at Cannery Creek. The combined phases of development would add approximately 4.6 million cubic yards of storage capacity to the tailings facility, according to the plan documents. Idaho-based Hecla on Oct. 8 reported producing 2.6 million ounces of silver at Greens Creek in the third quarter; the mine has produced roughly 8.2 million ounces of silver so far this year and is expected to break the 10 million-ounce mark for annual production this year. Greens Creek also produced 38,000 ounces of gold in the first nine months of the year. Hecla acquired 100 percent of Greens Creek in 2008 and has since increased silver production from the 6 million ounces per year range to the upwards of 10 million ounces expected from the mine this year. The remote mine employs approximately 440 people and produces about 2,350 tons of ore per day, according to the amended plan. Elwood Brehmer can be reached at [email protected]

‘Pebble tapes’ send project leaders into damage control mode

The Pebble Limited Partnership is trying to patch its battered image after secretly recorded videos last month caught its two top executives boasting about their influence over Alaska politicians and regulators. The controversial Pebble mine proposal faces new challenges after Alaska’s U.S. senators, the governor and the U.S. Army Corps of Engineers denounced the statements as false. But despite the blowback from the videos’ Sept. 21 release, the developer of the copper and gold prospect in Southwest Alaska continues its effort to win a key construction permit from the Corps. “The idea that Pebble is dead, no matter whose opinion it is, is just not accurate,” said Mark Hamilton, vice president of public affairs at Pebble Limited Partnership. “(Pebble) can go forward and it is going forward as we speak.” Amid the fallout: • Pebble’s chief executive, Tom Collier, resigned after he and Ron Thiessen, president of Pebble parent company Northern Dynasty Minerals, were recorded talking freely on the tapes. Thiessen has not resigned, a Pebble official said Oct. 5. • Democratic members of Congress have raised the possibility of investigations into what they say are discrepancies between the executives’ statements in the tapes and comments that Collier made before a House subcommittee. • Alaska Republican U.S. Sen. Dan Sullivan came out solidly against the project. Sullivan’s challenger in this year’s election, Democratic-nominated independent Al Gross, is using the leaked tapes in campaign ads against Sullivan. • Alaska’s speaker of the House has asked Gov. Mike Dunleavy not to support a mitigation plan Pebble needs to win the Corps permit. • House Minority Leader Lance Pruitt, R-Anchorage, said he would donate the $500 he received from Collier to charity. The group opposing Ballot Measure 2 said it would return Collier’s $2,500 donation. It retained donations from some current Pebble employees. Pebble opposition groups remain wary Collier’s resignation does nothing to eliminate the questions raised in the videotaped conversations about the credibility of the permitting process, said Nelli Williams, Alaska director of Trout Unlimited. “A full investigation by Congress is absolutely necessary — Alaskans and Americans deserve to know the truth,” she said in a prepared statement. If built, Pebble would be located about 200 miles southwest of Anchorage, near headwaters of the Bristol Bay salmon fishery. Pebble would like to secure a Corps permit soon, before entering a three-year permitting phase with the state. John Shively, Pebble’s interim CEO replacing Collier, released a statement Oct. 1 trying to distance the company from the statements made on the tapes. He reminded readers that Northern Dynasty has given an unconditional apology to Alaskans, while he personally apologized to Alaskans and Pebble staff. “The people working on the project, from our site staff to our corporate staff, have the utmost integrity — and I know all of them felt betrayed by what they saw expressed on those tapes,” Shively said. “Much of the content was boastful, embellished, insensitive and stretched credulity to its breaking point.” In the videos, secretly organized by an environmental group, Collier and Thiessen spoke with people hired to pose as potential Pebble investors from Hong Kong. Collier and Thiessen said in the recordings Alaska Republican U.S. Sens. Lisa Murkowski and Sullivan were just being political when they said in August that Pebble has not met the high bar for environmentally safe development and should not be permitted. They described friendly relations with Corps officials. They said they could call up Dunleavy, and he’d reach the White House on their behalf, whenever they want. The leaked conversations add to the uncertainty the mine faces, said Bob Loeffler, previously the director of Alaska’s Division of Mining, Land and Water under former Alaska Govs. Tony Knowles and Frank Murkowski. “It can’t be good for a project when so many politicians are going against it,” he said. The mine has lost its major mining partners over the years, including Anglo American in 2013. Pebble and Northern Dynasty, a small mining company from Canada, need investors to help cover enormous development costs. Finding an investor could be even harder now, said Bruce Switzer, former director of environmental affairs for Cominco, now Teck, in the early 1990s when the mining company owned the Pebble deposit. Teck Cominco left the project in 2005 because it’s not economically viable, despite what Pebble claims about the mine’s enormous value, Switzer asserted. Switzer is also a former mining consultant who advised Pebble opponents after he left Cominco. The leaked conversations underscore that Pebble is a politically motivated project, rather than one that can stand on its own financial merits, Switzer said. If Pebble is the world-class deposit the company touts, “why would you have these two promoters essentially lying” about the project’s relationships with politicians, said Switzer. Federal lawmakers raise specter of investigations After the tapes were leaked, Alaska’s U.S. senators have taken pains to emphasize their opposition to the project receiving a permit. Sullivan, facing pressure from challenger Gross, came out forcefully against the mine on Twitter, saying “No Pebble Mine.” Lisa Murkowski, who described herself as “absolutely, spitting furious” in reaction to the tapes, retweeted Sullivan’s message with three heart emoji for support. Sullivan later said in an interview with Alaska Public Media that he would not support the project even if it presented a satisfactory mitigation plan. Hamilton, with Pebble, said officials with any project in Alaska would like to have the vocal support of the state’s U.S. senators. But it’s the Corps that will decide whether to award a permit or not. “Everyone who was insulted by that display (in the videos) appropriately does not hold us in the highest regard,” Hamilton said. “But these are professionals at the Corps ultimately, and the Corps will do what the regulations tell them to do.” Other federal lawmakers are raising the specter of possible probes into Collier’s written testimony to a subcommittee of the House Committee on Transportation and Infrastructure in 2019, when he said, “Pebble has no current plans, in this application or in any other way, for expansion.” But while Pebble has submitted a 20-year plan to the Corps, Thiessen said in the video that the mine could potentially produce minerals for 200 years. He said expansion beyond 20 years will be unstoppable once development begins. Collier said “we,” presumably Pebble, will at some point request a mine expansion. As he had before, he said that will require a new state and federal permitting process. Longtime Pebble opponent U.S. Sen. Maria Cantwell, D-Wash., called for a Department of Justice investigation into the comments. U.S. Rep. Peter DeFazio, R-Oregon, chair of the House transportation committee, said Collier may have misled Congress in 2019. His investigative staff are reviewing the comments, he said in a recent statement. Thiessen and Collier did not say in the videos that Pebble has a “defined” plan for expansion beyond the 20-year proposal, according to a statement from Northern Dynasty last month. “What we have said consistently, and is reinforced in the ‘Pebble tapes’ released this week,” is there is no current “formal” plan for expansion, Northern Dynasty said. Pebble still aims to win the permit — and change minds The U.S. Army, the Corps’ parent agency, said in August that the project can’t be permitted as currently proposed. The land-use protection plan that Pebble is pursuing, showing how Pebble will compensate for damage to wetlands, will satisfy regulators and many critics of the mine, Hamilton said. “I expect that compliance (for the project) will switch the opinion of many individuals who have been insulted,” Hamilton said. It appears that the so-called compensatory mitigation plan will need to use state land, requiring state support, according to a letter to the governor last week from Alaska House Speaker Bryce Edgmon, an independent from Dillingham, and Rep. Louise Stutes, a Republican from Kodiak. The lawmakers asked Dunleavy in the letter to not support Pebble’s mitigation plan. Edgmon, in an interview, said the leaked videos raise serious doubts about the objectivity of the permitting process at both the state and federal level. Both the Dunleavy administration and the Corps have said they are committed to a fair and vigorous review process. In a three-page reply letter on Oct. 6, Dunleavy defended the economic argument for Pebble construction, though he does not expressly state support for it. As he has before, the governor did not express support for the mine, but said he does support a fair review process. “No serious person would disagree that accessing the mineral deposits within the Bristol Bay Mining District, if done in a way that protects the watershed, would transform the lives of Alaskans living in the region,” he wrote. “My role is to ensure that each project is subject to a fair and rigorous review process, and that every opportunity to create thousands of jobs is fully explored.” In the videos, Collier said Pebble plans to set aside state land for a preserve. He said the state has supported Pebble “behind the scenes.” Collier also said he recently met with the governor “to get his commitment that they would be there” to support the project. The governor’s office rejected that statement on Oct. 2. “The governor has not committed to any proposal, including a draft mitigation plan,” said Jeff Turner, a spokesman for the governor, in a statement. “As far as Mr. Collier goes, both Pebble and Northern Dynasty have said he embellished his statements.” Hamilton said Pebble has survived other challenges, including a threat by the Environmental Protection Agency during the Obama administration that essentially halted the mine’s progress in 2014. Those earlier challenges were based on what Hamilton calls a false narrative that the mine would destroy the Bristol Bay salmon fishery. That message has been more harmful to the mine over the years than the tapes, he said. Hamilton said the Corps has determined that the mine and the fishery can safely coexist, though conservation and fishing groups counter that the Corps’ determination is flawed. The opponents add that the Corps found that damage from the mine would be extensive, including permanent destruction of more than 100 miles of streams. The debate over the mine’s potential impacts to the Bristol Bay salmon fishery remains Pebble’s toughest challenge, Hamilton said. “The idea that someone acted out and insulted people is not trivial,” Hamilton said of the videos. “But it’s not the heavily advertised narrative of fear that has had people concerned about the actual workings of this mine.” “It’s bad, but this is not like the constant screaming that a mine will kill all the salmon,” he said. “That has been a powerful message of our opponents, but they are wrong.”

Kinross adds Tok-area gold deposit to portfolio for $93.7M

The operator of the Fort Knox gold mine north of Fairbanks paid $93.7 million for a majority stake in a gold deposit south of Tok, roughly 250 miles away. Kinross Gold Corp. announced Sept. 30 that it has acquired a 70 percent interest in the Peak Gold project from Royal Gold and Contago ORE Inc. Kinross intends to develop the Peak Gold deposit into a short-lived open pit mine and truck the ore north to the Fort Knox mill for processing. The trip would involve hauling the crushed ore up the Alaska and Richardson highways, through Fairbanks and up the Steese Highway to the mine site near Chatanika. Scheduled to open in 2024, the Peak Gold mine is expected to produce roughly 1 million ounces of gold equivalent from grades of about 6 grams per ton over 4.5 years. Kinross estimates the $110 million project will have an all-in sustaining cost of approximately $750 per ounce. Paul Rollinson, CEO of Toronto-based Kinross, said in a company statement that it is a high-margin project at current gold prices. “The relatively high-grade, low-cost Peak Gold project is an excellent addition to our portfolio, as it allows us to leverage our existing mill and infrastructure at Fort Knox and strengthens our medium-term production and cash flow profile,” Rollinson said. The project would add roughly 220,000 ounces of gold equivalent production to Fort Knox, more than double the mine’s production from 2019 of just more than 200,000 gold equivalent ounces, according to Kinross, which expects blending the ores will cut the mine’s all-in sustaining costs by about $70 per equivalent ounce. In the deal, Kinross sent $49.2 million to Royal Gold for its 40 percent stake in the project and $44.5 million in cash and Contago ORE shares purchased from Royal Gold to a Contago subsidiary. Contago, which previously held a 60 percent stake in the project, will retain a 30 percent interest in Peak Gold. Royal Gold CEO Bill Heissenbuttel said the deal allows the company to focus on its core royalty and streaming business. Kinross said it expects to conduct initial permitting and drilling for the open-pit mine concurrently and hopes to complete permitting and feasibility reviews by the end of 2022 before a year of construction. The company will charge Contago a management fee and mill toll to process its 30 percent of the ore mined from the project. Kinross plans to rename the project after consulting with leaders of the nearby Native Village of Tetlin, according to the statement. Tetlin Chief Michael Sam said in a statement issued by Kinross that he is pleased to see the company investing in the project. “We look forward to the safe and responsible development of the project and the positive benefits it is expected to generate for our community,” Sam said. The 675,000-acre Peak Gold property also holds other exploration targets that could extend the life of the project, according to Kinross. A 2018 preliminary economic assessment of the project estimated measured and indicated resources of about 1.2 million ounces of gold equivalent at a grade of 4.1 grams per ton and inferred resources of about 116,000 ounces of gold at an average grade of 2.7 grams per ton. Elwood Brehmer can be reached at [email protected]

Pebble CEO Collier resigns after release of tapes

Pebble Limited Partnership CEO Tom Collier resigned on Wednesday after an environmental group released secretly recorded videos of Collier and Ron Thiessen, president of Pebble parent company Northern Dynasty Minerals, discussing their connections and influence with Alaska politicians and regulators. Northern Dynasty also issued an apology to “all Alaskans," according to a statement released by the company. Northern Dynasty’s senior management and board of directors accepted Collier’s resignation, the statement said. “Collier’s comments embellished both his and the Pebble Partnership’s relationships with elected officials and federal representatives in Alaska," the statement from Northern Dynasty said. The embellishments involved Gov. Mike Dunleavy, Sens. Lisa Murkowski and Dan Sullivan and senior representatives of the U.S. Army Corps of Engineers, among others, Northern Dynasty said. “The comments were clearly offensive to these and other political, business and community leaders in the state and for this, Northern Dynasty unreservedly apologizes to all Alaskans,” the statement said. Reached Wednesday, Collier declined to comment and said he would no longer speak with news media. The Environmental Investigation Agency, an environmental group, hired individuals in August and September to pose as potential investors in the project, in online video meetings with the Pebble executives. The group released the videos on Monday. In response, Dunleavy, Murkowski and Sullivan strongly denounced the statements by Collier and Thiessen as false and embellished. The Army Corps also issued a statement on Tuesday, noting that the executives had presented inaccuracies and falsehoods, including about the permitting process. The actors for the environmental group posed as representatives of a Hong Kong-based investment firm with links to a state-owned entity in China, Northern Dynasty said. “The unethical manner in which these tapes were acquired does not excuse the comments that were made, or the crass way they were expressed,” Thiessen said in the statement. “On behalf of the company and our employees, I offer my unreserved apology to all those who were hurt or offended, and all Alaskans.” Among other statements, Collier described Murkowski and Sullivan as merely making political points when they said in August that the Corps can’t permit the mine, statements the senators denied. Collier also described his close access to the governor’s office, and said he counted Dunleavy as a friend, prompting the governor’s office to broadly reject the statements made in the videos. Former Pebble Partnership CEO John Shively will serve as Pebble’s interim CEO while the company seeks a new leader, the statement said. The proposed copper and gold project would be built about 200 miles southwest of Anchorage, near headwaters of the valuable Bristol Bay salmon fishery. Critics say it will hurt the commercial fishing industry and subsistence fishermen there. The Army Corps of Engineers is in the final stages of determining whether to issue a permit for the project that could lead to its construction. A final decision could be issued soon. President Donald Trump recently tweeted about the project, saying there would be “NO POLITICS” in the permitting decision. The Alaska Miners Association on Wednesday also condemned Collier’s comments. “Mr. Collier’s comments were clearly inappropriate and we appreciate Northern Dynasty for swiftly handling this issue," said Deantha Skibinski, the group’s executive director. "Our mining operations and projects have a superb track record of meeting the high standards set forth in the regulatory process, and we do so with a commitment to safety and environmental protection.” Shively, the state’s former Natural Resources commissioner under Democratic Gov. Tony Knowles, served as Pebble’s chief executive until 2014, when Collier took his place. Collier, a former chief of staff to Interior Secretary Bruce Babbitt, led the Pebble project through tumultuous years, including a move by the Obama administration that essentially halted the project in 2014, followed by progress under the Trump administration. Collier was scheduled to receive about $4 million from Pebble if the Corps issued a permit decision favoring the mine, and roughly another $8 million if the project survives litigation, he has said. It was unclear on Wednesday what would become of that possible bonus. “We don’t comment on personnel or contract matters related to current or former employees,” said Sean Magee, a spokesman with Northern Dynasty Minerals. Thiessen remained in job on Wednesday, the company said. Major questions loom for the project, including how Pebble will meet steep requirements set by the Corps to compensate for the environmental damage the project will cause. The United Tribes of Bristol Bay, representing 15 tribes opposed to the mine, said Collier should not be the “scapegoat” for the project, according to Alannah Hurley, the group’s director. “His resignation does nothing to address the deep-seated flaws and issues with the Pebble mine’s rigged permitting processes and political influence,” Hurley said. Thiessen, like Collier, also made statements in the videos that drew strong rebukes from Alaska leaders. Thiessen says in the videos that the company can get Dunleavy to call White House chief of staff of Mark Meadows about the project. That statement and others by the Pebble executives are not true, Dunleavy’s office said. Thiessen said Pebble is trying to work with Sullivan so the senator doesn’t say anything that could harm Pebble’s effort to receive the permit from the Corps. Sullivan’s office on Tuesday called that “yet another fabrication.” Sullivan and Murkowski have both said the mine does not meet environmental regulatory standards. They have said a record of decision supporting a permit, or a ROD, should not be issued. Robin Samuelsen, an adviser for Commercial Fishermen for Bristol Bay, representing fishermen opposed to the project, said in a statement on Wednesday he often got hit with a rod as a kid, on his behind. “And that’s what I’m asking Senator Sullivan and Senator Murkowski to do,” he said. “Take out the rod, it’s time to spank 'em. They’ve lied to you, they’ve lied to us out in Bristol Bay, they’ve lied to Alaska and they’ve lied to the world.” Shively, recently the board chair for Pebble Mines Corp., general partner for Pebble Partnership, said in the statement on Wednesday that the project is too important not to be built. “My priority is to advance our current plan through the regulatory process so we can prove to the state’s political leaders, regulatory officials and all Alaskans that we can meet the very high environmental standards expected of us,” he said.

Trilogy: Copper prospect still profitable at higher costs

Costs have grown but expectations remain high for what developers hope will be the first in a series of hard rock mines in Interior Alaska. The Arctic copper, zinc and precious metals prospect has a post-tax net present value, or NPV, of approximately $1.3 billion at current metal prices and a value of more than $1.1 billion based on longer-term price forecasts, according to a feasibility study conducted by Trilogy Metals Inc., which owns claims to the deposit. The study also concluded that the project would have a post-tax payback period of 2.6 years and a final investor return rate of about 27 percent. Those figures are despite the fact that the total expected capital cost for the remote mine has increased 34 percent to more than $1.2 billion largely due to findings that the project will likely have to treat a lot more water than was once thought. A 5 percent increase in dilution, or mined waste rock, also slightly lowered the grade of the copper, zinc, gold, silver and lead reserves in the project. However, with 2.1 billion pounds of probable copper reserves averaging more than 2.2 percent, Arctic is still one of the highest-grade copper prospects going, according to Trilogy leaders. A pre-feasibility study published in February 2018 pegged Arctic’s all-in capital cost at $910 million. “Overall, we’re very happy with the results of this feasibility study considering the capital increases that we’ve seen in the project and factoring in that there’s no new resources that have been included as part of this project,” CEO Tony Giardini said in a call with investors. Located in the middle of the Ambler mining district on the southern edge of the Brooks Range, the Arctic mine project is the most advanced prospect of more than a dozen in the roughly 75-mile long district. It also would likely be the first mine serviced by the state-sponsored Ambler access road, which has drawn the ire of many area residents and conservation groups. Giardini also said the company has identified opportunities to extend the open pit mine beyond its current 12-year life — as part of the current prospect and processing other deposits through the Arctic facilities — that need to be studied further. Bob Jacko, the operations director for Vancouver-based Trilogy said a roughly 30 percent increase in annual precipitation at the mine site in recent years will require larger sewage and water treatment systems than previously thought, adding to the capital and operating expenses of the project. The new water will also necessitate a more robust tailings dam; the initial tailings infrastructure cost has gone from $30.3 million in the 2018 study to $69 million currently. “It gets us in every area of the operation,” Jacko said of the additional water, noting the need to treat larger quantities adds to closure costs. Giardini said the increased capital costs are the primary driver in a reduction of cash flow — from $4.5 billion pre-tax in 2018 to $3.7 billion today. While Arctic was initially explored by Trilogy, a junior mining firm, Australian-based South32 bought into the project late last year and the company’s have since formed Ambler Metals LLC, the operating company for the advanced Arctic and nearby Bornite multi-metal prospects. Trilogy and South32 each hold 50 percent of Ambler Metals. Even with Arctic’s positive — if slightly tempered — financial indicators, a decision to ultimately build the mine will depend primarily on how quickly the Alaska Industrial Development and Export Authority can progress development of the Ambler access road, Giardini said. Trilogy leaders have long said the 211-mile industrial-use road is a prerequisite to constructing any mine in the remote mineral belt. The toll road concept is modeled after the DeLong Mountain Transportation System owned by AIDEA that feeds the Red Dog zinc mine in Northwest Alaska. Ambler Metals signed a memorandum of understanding with the state development bank in June in which the company agreed to fund half of the stakeholder outreach and pre-development engineering and study costs up to $35 million. Estimated in 2017 to cost between $280 million and $380 million for basic gravel construction, the road’s final environmental impact statement, or EIS, conducted by the Bureau for Land Management, now pegs the total construction cost at approximately $520 million. BLM issued a record of decision approving the project July 23. Trilogy Chief Financial Officer Elaine Sanders said there is no firm toll agreement with AIDEA for use of the road, but Trilogy factored a toll of $8.04 per metric ton of material hauled, up from $4.70 per ton in the pre-feasibility study, which reflects the change in the expected cost of the road. Overall, Trilogy expects the project would pay roughly $20 million per year in road tolls plus another $2.50 per ton in maintenance fees, according to Sanders. “We all know we’re going to be paying some type of toll,” she said. Local governments for villages near the road’s planned intersection with the Dalton Highway have formally opposed the road over concerns it will impact migrating caribou and could eventually be opened to the public — thus increasing hunting and recreational pressure — in areas relied upon for subsistence harvests. Critics have also questioned the economics of the toll road concept given the Arctic prospect is the only one in the region anywhere close to development-ready. AIDEA spokesman Karsten Rodvik wrote via email that authority and Ambler Metals officials are in continued discussions about funding the next phases of the road. “Based on preliminary estimates, and assuming a negotiated minimum annual assessment with Ambler Metals similar to the DeLong Mountain Transportation System, one mine could be sufficient to finance the toll road structure, Rodvik wrote. “Given the established access, AIDEA anticipates that over time, other mines within the district will be developed and opened, paying fees to use the road.” Giardini said a decision to break ground at Arctic would likely come shortly after what is expected to be a roughly three-year development period for the road, putting early work at the mine in the 2024-26 timeframe. Elwood Brehmer can be reached at [email protected]

New Corps requirements may signal end for Pebble

The U.S. Army Corps of Engineers gave the Pebble Partnership a very steep final hill to climb to reach federal approval for its mine plan with a short letter establishing strict requirements to offset the project’s impacts to area watersheds. Corps Alaska District Regulatory Chief David Hobbie wrote in a two-page letter on Monday to Pebble Permitting Vice President James Fueg that district officials have determined the copper and gold project, as proposed, would “cause unavoidable adverse impacts to aquatic resources” resulting in significant degradation of those resources. “Therefore, the District has determined that in-kind compensatory mitigation within the Koktuli River Watershed will be required to compensate for all direct and indirect impacts caused by discharges into aquatic resources at the mine site,” Hobbie’s letter states. He wrote additionally that compensatory mitigation will also be required for direct and indirect impacts from the project’s transportation corridor that includes a port on West Cook Inlet. The stringent requirements laid out by Hobbie are in such sharp contrast to Pebble’s proposed mitigation plan and guidelines issued by the Trump administration in 2018 that both mine opponents and traditional resource development advocates reacted to as if the project is ostensibly dead. Under the requirements, Pebble must compensate for impacts to 2,825 acres of wetlands, 132 acres of open water and 129 miles of streams at the mine site, as well as 460 acres of wetlands, 231 acres of open water and 55 miles of streams impacted by the port and 82-mile access road. The company also must submit the new mitigation plan within 90 days. The Koktuli River drains approximately 290,000 acres and contains more than 36,000 acres of wetlands in its headwaters, according to the final environmental impact statement for the project. Sen. Dan Sullivan, an emphatic critic of the Obama administration’s attempt to preemptively “veto” the mine in 2014 via the Environmental Protection Agency’s Clean Water Act Section 404(c) authority, said in a prepared statement that he has always advocated for a “science-based review” of Pebble “that does not trade one resource for another,” and that is what has happened. The Army Corps of Engineers administers Clean Water Act Section 404 wetlands permits nationwide but the EPA has final say over whether a wetlands fill permit is issued. “I have been clear that given the important aquatic system and world-class fishery resource at stake, Pebble, like all resource development projects in Alaska, has to pass a high bar — a bar that the Trump administration has determined Pebble has not met,” Sullivan said. “I support this conclusion — based on the best available science and a rigorous, fair process — that a federal permit cannot be issued.” Sen. Lisa Murkowski said she supports the decision and agrees that “a permit should not be issued.” “After years of extensive process and scientific study, federal officials have determined the Pebble project, as proposed, does not meet the high bar for large-scale development in Bristol Bay,” she said. Sullivan’s challenger in the November election, independent Senate candidate Al Gross opposes the Pebble project. Corps officials released the final Pebble EIS July 24. A record of decision on the EIS and Pebble’s Clean Water Act wetlands fill permit could be issued 30 days after the EIS was published in the Federal Register. The voluminous final EIS generally maintained the conclusions in the draft EIS and states there would be “no measurable change” in the numbers of salmon returning to the Nushagak and Kvichak rivers or in the long-term health of the commercial fisheries in the region. The Koktuli River is in the upper reaches of the Nushugak watershed. Murkowski and Sullivan previously expressed concern that the Corps’ EIS did not sufficiently analyze the full range of potential impacts of the mine, particularly following highly critical comments from federal and state resource agencies about the scope of the review. Bristol Bay Native Corp. CEO Jason Metrokin said in an interview that while the mitigation requirements aren’t an official death knell for the project, he was happy to learn that, from his perspective, the Army Corps has finally concluded what the BBNC, and a majority of Alaskans have; that Pebble’s plan is insufficient. “They can’t produce a quality mitigation plan in three months if they haven’t been able to do so for years,” Metrokin said, noting Pebble has not backed up the claim that its smaller 20-year mine plan is economic. BBNC has long opposed the project and has refused to allow Pebble access to its land for development. Pebble CEO Tom Collier downplayed the significance of the requirements, saying the letter is a normal part of the permitting process and the company is well on its way to developing a mitigation plan to meet them in a prepared statement. The company has had teams totaling about 25 people in the field this summer and a large part of their work has been mapping wetlands in the region over about the past month, according to Collier. Pebble’s new mitigation plan will likely focus on preserving an area multiple times larger than the aquatic areas impacted by the project, which should meet the requirements based on discussions with Corps officials, Collier said. “Anyone suggesting a different opinion — i.e. that Pebble will not be able to comply with the letter or that such compliance will significantly delay issuing a (record of decision) — must be ignorant of the extensive preparation we have undertaken in order to meet the requirements of the letter,” he said. Pebble spokesman Mike Heatwole wrote in an email to follow-up questions that Collier’s statement provides the best information the company has on the work right now and more details will be made public when they are available. Shares in Pebble’s parent company, Vancouver-based Northern Dynasty Minerals Ltd., closed Monday trading on the New York Stock Exchange at 90 cents per share, down 38 percent on the day after the letter was made public. Pebble’s initial compensatory mitigation plan released in January relied on a collection of smaller — and likely less costly — mitigation efforts outside of the Koktuli watershed. The company first planned to replace culverts in the Dillingham area to restore salmon access to about nine miles of spawning and rearing habitat; improve water treatment facilities at villages near the mine site; and periodically clean debris from seven miles of beach around the Cook Inlet port site. All of that potential work is outside of the remote and undeveloped Koktuli watershed. Pebble’s permitting executive Fueg acknowledged when the draft mitigation plan was published that the lack of development in the region beyond the immediate communities made it difficult for the company to identify opportunities to restore damaged wetlands or preserve areas threatened by other development — the more traditional means of wetlands mitigation now being demanded by the Corps. A Corps Alaska District spokesman did not immediately respond to additional questions for this story. Former EPA Administrator Scott Pruitt and Assistant Army Civil Works Secretary R.D. James signed a joint memo in June 2018 that updated guidance from the early 1990s as to how the agencies would handle wetlands mitigation specifically in Alaska. The revised guidance states that Alaska’s situation — more than half of the state is classified as wetlands with relatively little development — means specific, focused compensatory mitigation requirements traditionally used in the Lower 48 often aren’t realistic in Alaska. When avoiding or compensating for development impacts to wetlands is not practicable, minimizing wetlands impacts will be the main means of complying with Clean Water Act requirements, according to the 2018 memo. It also explains that compensatory mitigation over larger watershed scales could be appropriate for Alaska given that options to offset wetlands losses on a more localized scale are often limited. The guidance does not lay out quantitative thresholds for determining major versus minor impacts — that is decided on a case-by-case basis — but it outlines what should be considered in making that determination, an EPA spokeswoman said at the time. Elwood Brehmer can be reached at [email protected]

Greens Creek silver output up; Constantine investigates gold

The owners of a Southeast silver mine again reported production growth last spring despite the pandemic and an explorer in the region believes it is honing in on the source of historic placer gold deposits. Hecla Mining Co. produced 381,000 more ounces of silver at the Greens Creek underground mine near Juneau in the second quarter from a year ago — a 17 percent increase to 2.7 million ounces. For the year, silver production at Greens Creek is up more than 920,000 ounces, or nearly 20 percent, from the first half of 2019 to 5.5 million ounces total, according to the company’s quarterly earnings and operational report. Gold production at Greens Creek was down 8 percent, however, to 25,300 ounces in the first half of the year. The improved production at Greens Creek helped Idaho-based Hecla increase its overall sales revenue by 24 percent to $166.4 million in the second quarter. Hecla’s Alaska mine accounted for 51 percent of the company’s revenue in the quarter. The company also has precious metal mines in the Lower 48, Canada and Mexico. While Hecla still absorbed a net loss of $14 million despite the production growth, CEO Phillips Baker emphasized that the company produces roughly a third of all the silver mined in the U.S. and the second quarter production totals were the best since 2016. “I am extremely proud of our workforce’s adaptability and commitment in this challenging time, which positions Hecla well to improve cash flow generation in this higher silver and gold price environment,” Baker said. Hecla generated $27 million in free cash flow during the quarter. The company has leased a hotel in Juneau where incoming workers are quarantined for seven days before traveling to the Admiralty Island mine for three weeks of work, according to a monthly investor presentation. With the long-term upward trajectory of production at Greens Creek — Hecla has increased annual ore throughput at the mine 15 percent since purchasing it in 2008 — the company also increased silver reserves by 22 percent at the property last year and expects to operate Greens Creek with strong production into the 2030s, according to the presentation. Constantine gold To the north of Greens Creek on the mainland, Constantine Metals reported Aug. 13 that the company had identified prospects with “high-grade gold sampling results” at its Porcupine Creek property north of Haines. The prospects, dubbed Golden Eagle and McKinley Creek Falls, are located up a valley from historical placer operations. Historical mineral sampling by the U.S. Bureau of Mines produced samples with mineralization of up to 531 grams per ton of gold, according to Constantine. Company President Garfield MacVeigh said the high-grade occurrences have received little investigation for their potential, particularly given geological similarities with other known gold deposits in the region. “We look forward to evaluating these previously untested areas of prospective high-grade mineralization,” MacVeigh said. Earlier this year Constantine scaled back the summer exploration program at its nearby Palmer copper prospect from initial plans to limit the risk of spreading COVID-19. The McKinley Creek area, which is 100 percent owned by Constantine, is about five miles east of the much more advanced Palmer deposit. The company spun off the rest of its gold-focused program into HighGold Mining Inc. last year. HighGold is conducting 15,000-meter drilling program at the Johnson Tract prospect within Lake Clark National Park and Preserve. Elwood Brehmer can be reached at [email protected]

AIDEA gets green light for Ambler mining road

In approving a mining access road across the subarctic Interior, the Trump administration has signed off on another decades-long goal of Alaska development proponents. Bureau of Land Management Alaska officials signed a record of decision providing the State of Alaska right-of-way access across federal lands for the 211-mile Ambler mining district access road July 23. The road would open the roughly 75-mile-long mineral belt along the southwest portion of the Brooks Range for development of its copper, zinc, cobalt and precious metals. The area has been explored for decades but its remote location far from the road system has precluded additional work. Congress specifically contemplated the road in the 1980 Alaska National Interest Lands Conservation Act, or ANILCA, which directs the Interior Secretary to permit a right-of-way through Gates of the Arctic National Preserve to access the mining district, per other environmental regulations, when one is applied for. The state Department of Transportation began early reconnaissance work on the road under former Gov. Sean Parnell before the project was transferred to the Alaska Industrial Development and Export Authority, which applied for the right-of-way under Gov. Bill Walker’s administration. “This long-sought development of the road and mining district represents tremendous potential for economic growth, diversification, and job opportunities for Alaskans, along with revenue expected to the state and local governments for decades,” AIDEA board chair Dana Pruhs said in formal statement. Gov. Mike Dunleavy thanked President Donald Trump and Interior Secretary David Bernhardt for working to advance domestic mineral production in a prepared statement. “Nearly 40 years after Congress guaranteed access to the Ambler mining district, today’s decision allows AIDEA to move forward with the planning of a project that could create thousands of Alaskan jobs and a new source of revenue for the benefit of all Alaskans,” Dunleavy said. The members of Alaska’s congressional delegation largely echoed the governor’s sentiment in a joint statement. Trump also opened the Arctic National Wildlife Refuge to oil leasing and potential exploration — another ANILCA-designated opening for development — via a provision in the tax cut bill he signed in December 2017. Local opposition to the Ambler project from villages such as Evansville and Bettles, near where the road would connect to the Dalton Highway, has focused on the belief the road and eventual mine traffic would disrupt the migration of caribou needed for subsistence harvests. AIDEA officials are modeling their plan for an industrial toll road after the 52-mile haul road to the Red Dog zinc mine in Northwest Alaska that the authority financed in the late 1980s. And while AIDEA insists access to the road will be limited to mining activity, some also question whether the state will be able to effectively restrict access or if it will instead lead to increased sport hunting pressure. Numerous conservation groups and others have also questioned the economics of the road. Estimated in 2017 to cost between $280 million and $380 million for basic gravel construction, the final environmental impact statement, or EIS, for the road now pegs the total construction cost at approximately $520 million. They often note AIDEA has not publicly detailed its plan to coordinate road financing and construction with development of the mineral prospects needed to support the road beyond a conceptual plan. While there are more than a dozen early-stage prospects in the Ambler district, only two deposits held by Vancouver-based Trilogy Metals have been explored significantly and only Trilogy’s Arctic copper-zinc-precious metal prospect is close to be ready for permitting. Trilogy said “development of the road will unlock the world-class economic potential of the region by allowing greater access to the district and the potential development of the Arctic project,” in a company statement. Trilogy leaders previously said the company would likely start federal permitting for an open-pit mine at Arctic shortly after the road was approved. However, the junior mining company was forced to defer its 2020 summer field season because of the pandemic and it’s unclear at this point where the project stands. Elwood Brehmer can be reached at [email protected]

Final Pebble mine EIS maintains early Corps conclusions

U.S. Army Corps of Engineers officials describe the Pebble mine as one that would remove 99 miles of fish habitat at the mine site but poses little risk to the broader area in the project’s final environmental impact statement released July 23. The conclusion mirrors what was written in excerpts of the preliminary final EIS leaked to the public in February. Pebble Partnership CEO Tom Collier said both the preliminary and final documents support the company’s assertion that the mine could operate in harmony with the region’s famed salmon fisheries. “Alaskans have demanded that Pebble, and any Alaska resource development project, meet its high standards before the project could advance. Today, we have passed a critical milestone on that journey,” Collier said in a July 24 statement. He said the EIS process has been thorough and called criticism of the Corps’ work on the project “unfortunate,” insisting that the mine can be a source of year-round jobs in an area without many. The final EIS is the last step in the federal review of the project before Corps officials reach a conclusion on the key record of decision for the project: whether it is an acceptable development plan based on the issues studied in the EIS process. Pebble says it will work through state permitting over the next three years before commencing a four-year construction period for what is now planned as a 20-year mine. Project opponents contend the Corps limited its focus to environmental impacts at the mine site and ignored potential downstream effects, particularly to fisheries, in the draft EIS. They allege the process has been rushed to fit within the timeframe of President Donald Trump’s term in office following an attempt by the Obama administration to preemptively veto the project via Environmental Protection Agency authority. The EPA ultimately has the authority to reject the Corps’ decision on Pebble’s Clean Water Act Section 404 wetlands fill permit application, which triggered the EIS in 2018. Corps officials responded to concerns from the commercial fishing sector that the mine would damage the perceived quality of Bristol Bay salmon and ultimately lower its market value by noting that some of the state’s other fisheries are conducted alongside resource development. “Prices paid in Bristol Bay are nearly always lower than those paid in other Alaska salmon fisheries producing similar products, which reflects the higher transportation expense associated with Bristol Bay’s geographic location and the lack of a strong brand identity, which could boost prices,” the EIS states. “(T)he Cook Inlet salmon fisheries exist in an active oil and gas basin and have developed headwaters of Anchorage and the Matanuska-Susitna areas. The Copper River salmon fishery occurs in a watershed with the remains of the historic Kennecott copper mine and the Trans-Alaska Pipeline System in the headwaters of portions of the fishery. Both fisheries average higher prices per point than the Bristol Bay salmon fishery.” It concludes that there would be “no measurable change” in the numbers of salmon returning to the Nushagak and Kvichak rivers or in the long-term health of the commercial fisheries in the region. At the mine site, approximately 99 miles of fish habitat, part of roughly 2,200 acres of permanently impacted wetlands, would be destroyed in the combined North and South Fork Koktuli drainages, which feed the Nushagak River and support all five species of Pacific salmon. However, the expected losses of wetlands at the mine site represent just six percent of the mapped wetlands in the Koktuli, according to the document. Bristol Bay Native Corp. CEO Jason Metrokin noted the impacts of the current plan represent mining just a small portion of the copper-gold ore body and leaders of Pebble’s parent company, Vancouver-based Northern Dynasty Minerals Ltd., have long pitched additional development to investors. “Put simply, the EIS does nothing to alleviate our concerns about the myriad risks Pebble would pose to Bristol Bay’s watershed, salmon, way of life, and economy,” Metrokin said in a statement. Staff scientists for the Environmental Protection Agency, Interior Department and several state agencies were highly critical of apparent gaps related to wetlands, hydrology and fish habitat data in official comments on the draft EIS. Interior scientists went as far as to suggest the Corps should rewrite the voluminous document in light of the omissions. Corps officials said in response that the agencies’ comments would be considered alongside all others. The final EIS states that gaps in wetlands data identified by other agencies and stakeholders in the draft EIS published in February 2019 have been filled. Corps officials wrote in the EIS they do not believe it is necessary to analyze the likelihood that the mine’s proposed tailings dams could fail — a primary concern of mine opponents — because the Pebble Partnership is designing the dams differently than those that have failed at other mines in recent years and attracted global attention. “Modeling of a catastrophic, very low-probability tailings release was requested by commenters, but deemed inappropriate based on the applicant’s permeable flow-through design for the tailings storage facility (TSF) main embankment, compared with historical water-inundated TSFs that have been subject to large-scale failures,” the EIS states. Corps officials have also said in media briefings that a detailed review of the tailings dams would be done by the state under the Department of Natural Resources Dam Safety Program. DNR officials wrote in March comments on the preliminary final EIS that a full breach of a large and well-designed and operated tailings dam is very unlikely, but asserted that Pebble’s mine waste storage plan high-level and key aspects of it could be impractical. According to the comments, Dam Safety officials believe the Corps’ use of a subject risk analysis process in the preliminary final EIS to study tailings and water management pond dam failure scenarios was “based on a marginally developed, conceptual design, and the exclusion of other risks including the other relatively large, water management dams, does no represent a thorough assessment of risk from potential failure modes and potential impacts.” The pre-final EIS comments from DNR’s Dam Safety Unit also state that Pebble’s plan to move pyritic, or potentially acid-generating, mine tailings from a temporary storage facility into the pit at mine closure “does not appear to be reasonable, practicable or safe” because filling the pit would preclude accessing other parts of the deposit. Additionally, the tailings are likely to consolidate over years in a storage pond, making them more difficult and costly to extract, according to the Dam Safety Unit comments. The EIS highlights Pebble’s plan to drain and thicken the bulk tailings — which has caused critics and regulators to question whether the company can constantly treat the large volume of water — as a design element likely to limit the downstream flow of tailings in the event of a spill. However, Corps officials also acknowledge in the document that the ground waste rock may not settle as expected and it could only be confirmed if the tailings system was working as intended after about two years of operation. Additionally, the corridor identified as the least environmentally damaging route for a road to a port on west Cook Inlet needed to supply the mine remains viable despite the fact that some of the Alaska Native corporations that own land in the corridor are some of Pebble’s staunchest opponents, according to the EIS. In late May, Corps officials announced they had identified a road route along the north shore of Iliamna Lake to a port on the west side Cook Inlet as the least environmentally damaging practicable alternative, or LEDPA, for the expansive mining plan in its environmental impact statement review. Until that point, Pebble had long promoted its plan for a year-round, ice-breaking ferry across the lake to shuttle supplies and metal concentrates to and from the mine site to the north of the lake. Alaska Native village corporation Pedro Bay Corp. owns much of the land along Iliamna’s northeastern corner and along with regional Bristol Bay Native Corp. — which holds the subsurface rights to Pedro Bay Corp. property — has opposed to the project for years and insists Corps officials are discounting the fact that Pebble does not have access to the area. Army Corps Alaska District Regulatory Chief David Hobbie said in a July 20 call with reporters before the release that Pebble officials maintain they believe they can gain access to the area so the agency considers the route viable. The EIS states the Corps has determined that “even though some alternatives may not be available to the applicant at this time, the alternatives remain reasonable under (National Environmental Policy Act) guidelines and are retained in the EIS.” Economic review unlikely Opposition groups and some technical observers of Pebble’s complex plan question the economics of it, particularly given the scaled-back, 20-year mine, and have pointed to the lack of an independent economic assessment as justification for the skepticism, but Collier said in an interview that that one is unlikely to come at this point. That’s because Northern Dynasty Minerals is past the stage of seeking the retail or institutional investors that would find a public economic assessment of the project valuable, Collier said. At this point, the junior mining firm is focused on attracting a large partner to help fund development. “A major mining company isn’t going to give two wits about a PEA (preliminary economic assessment),” he said, adding any interested company would conduct its own evaluation and it would be costly for Pebble to hire the required independent analysts. Northern Dynasty ended the first quarter with $7.2 million Canadian in cash, according to its latest quarterly report. Canadian finance law prohibits the company from disclosing its internal projections, he said. Collier told the Journal in the spring of 2018 — shortly after Pebble filed its permit application — that Pebble would likely publish a PEA by the following winter. Opponents have urged the Corps to demand economic information from Pebble so it can be better known which of the development options are truly viable. Project managers for the Corps have said they would like to have the estimates but they are not required for the EIS. Editor's note: This story was updated for the Aug. 2 edition of the Journal that went to press July 29. Elwood Brehmer can be reached at [email protected]

Hardrock exploration resumes after pandemic pause

Hardrock exploration activity continues to build at some mining camps across the state as companies get back to work delayed for months by the pandemic. Tectonic Metals started drilling its Tibbs gold prospect not far to the east of the producing underground Pogo mine in the Interior July 20, company CEO Tony Reda wrote via email. The rotary air blast drilling program is first looking to expand on a discovery last year of a 29-meter seam containing more than 6 grams of gold per metric ton of ore. Reda said Tectonic has a thorough COVID-19 mitigation plan in place at its camps and company leaders are excited to learn more about their prospects. “Given our strong treasury in conjunction with the compelling targets and the untapped potential at our Tibbs and Seventymile projects, the Tectonic team has unanimously concluded that we must move forward with two drill programs this summer,” Reda said. “The truth machine is currently hard at work at our Tibbs project following up on last year’s intercept of roughly six grams per tonne over 29 meters.” Reda said in April that it was unclear at that point whether or not the drilling could be done this year. He added that two other targets will be drilled at Tibbs before work moves east to the Vancouver-based company’s Seventymile prospect near the Canadian border. Drilling at each of the near-surface prospects will cumulatively cover roughly 2,500 meters, with an average bore length of about 100 meters, according to Tectonic. The drilling will be company’s first at Seventymile, a 149,000-acre property owned by Doyon Ltd., the Interior regional Alaska Native corporation. Doyon announced in late April that it had invested $1.5 million in Tectonic, which has rights to four early-stage exploration properties in the Interior. The investment made Doyon the largest single shareholder in Tectonic with a 22 percent stake in the company. As of July 10 there were 69 active applications for hardrock exploration across the state, according to Department of Natural Resources officials, who noted that not all of the applications indicate active field work this summer. Placer miners also held 837 active operations permits and another 90 suction dredge operations have active mining permits as well. Hardrock exploration had been on the upswing prior to 2020 with estimates of about $150 million annually spent by companies searching for metals across Alaska in recent years. Department officials reported anecdotally through field inspections that higher gold prices have encouraged more placer and suction dredge activity though some operations have been idled because of travel restrictions and funding challenges, according to an email from DNR spokesman Dan Saddler. Gold prices have risen steadily over the past year to more than $1,800 per ounce. Donlin Gold temporarily suspended work and sent approximately 120 workers home from its remote upper Kuskowkim valley camp in early April as the company formulated a plan to address health and safety risks stemming from COVID-19. Workers began returning to the camp May 22 following implementation of COVID-19 mitigation strategies. Constantine Metal Resources is conducting a scaled-back $2.1 million field program at its multi-metal Palmer prospect north of Haines this summer as travel restrictions and health concerns limited exploration activity early in the year, according to a company statement. Constantine is focusing on gathering environmental data and other information to aid in permitting future underground exploration. Dowa Metals and Mining, Constantine’s partner in Palmer through Constantine Mining LLC Joint Venture, will be funding this summer’s work and take a slightly larger stake in the project as a result, according to Constantine. President Garfield MacVeigh said in a statement about the work program that despite the shorter-than-anticipated work schedule and other challenges from the pandemic the joint venture continues to make progress towards underground exploration and feasibility studies. “We also continue to be excited about the exploration potential on both the (Palmer) property as well as the immediately surrounding district controlled 100 percent by Constantine,” MacVeigh said. The state Department of Environmental Conservation last fall remanded a water discharge permit key to Constantine’s plan to excavate a roughly 1.2-mile tunnel from which the company could conduct exploration activities for review by the Division of Water following appeals from local environmental groups and others. They claim the waste management permit for groundwater discharges is insufficient because the wastewater will quickly resurface in nearby Glacier Creek, which feeds the salmon-producing Klehini and Chilkat rivers. The development includes a large water treatment facility with two settling ponds in addition to the exploration tunnel. DEC officials have yet to make a decision on Constantine’s waste management permit and while staff are working on it there is no timetable for a resolution, according to DEC spokeswoman Laura Achee. The permit decision is also in flux partly due to a U.S. Supreme Court case over wastewater treatment in Hawai’i between the County of Maui and the Hawai’i Wildlife Fund. In April the court issued a middle-ground opinion remanding that case back to the Ninth Circuit Court of Appeals for further consideration. There will be less activity in the western Brooks Range this summer as Trilogy Metals announced earlier this month that it would be deferring its summer exploration program at its Upper Kobuk mineral projects in the Ambler mining district. The company said in a July 8 statement that the combination of ongoing safety concerns regarding the possible spread of the coronavirus at its remote camps and the fact that the field work had already been significantly delayed its entire 2020 field season had been called off. Trilogy and its partner, Australian-based South32 Ltd. fund the exploration projects through their joint venture Ambler Metals LLC. Trilogy holds the Arctic copper-zinc and precious metals deposit, which is the most advanced prospect in the region as well as the nearby Bornite copper-cobalt prospect and other early-stage properties in the area. The company expects to complete a feasibility study on the Arctic prospect later this summer. A record of decision on the Ambler Mining Industrial Access Project, most commonly known as the Ambler road, is expected from the Bureau of Land Management this summer as well. The road is being pursued by the Alaska Industrial Development and Export Authority and has been met with strong opposition from many locals and others who are skeptical of the private industrial toll road concept. However, state officials insist the plan will provide access to one of the state’s premier mineral belts while also allowing the state to recover development costs through tolls. Elwood Brehmer can be reached at [email protected]rnal.com.

New front forms in Pebble battle over land route

A new front is forming in the ongoing battle over the Pebble mine concerning lands up to 50 miles from the proposed project site. Many opposed to the world-scale copper and gold mine insist the U.S. Army Corps of Engineers is affording the Pebble Partnership special treatment under the Trump administration, which they claim is now manifesting itself in a new transportation plan that Pebble currently doesn’t have access to develop. On May 22, Army Corps Alaska District Regulatory Chief David Hobbie announced the agency had identified a road route along the north shore of Iliamna Lake to a port on the west side Cook Inlet as the least environmentally damaging practicable alternative, or LEDPA, for the expansive mining plan in its environmental impact statement review. Until that point, Pebble had long promoted its plan for a year-round, ice-breaking ferry across the lake to shuttle supplies and metal concentrates to and from the mine site to the north of the lake. The re-route was made to alleviate some of the concerns of area residents who feared the ferry could impact Iliamna’s unique population of freshwater seals and complicate winter travel across the lake ice among other concerns, Hobbie said at the time. Pebble amended its plans to align with the Corps’ LEDPA decision and Tom Collier, CEO of the Vancouver-based junior mining firm noted the northern road route for years was the company’s preferred option — when it was officially advancing a much larger, 78-year mining plan — and the company only selected the ferry route because it was thought regulators would prefer the smaller wetlands footprint it offers. The south ferry route allowed Pebble to utilize lands owned by Alaska Peninsula Corp., which the company has an access agreement with, for the roads and ferry terminals on the north and south sides of the lake to access a port at Amakdedori on Cook Inlet. Pebble and Alaska Peninsula Corp. announced July 6 they have signed a memorandum of understanding to make APC the lead organizer of a consortium of other area village corporations to provide transportation and logistics support for the project. The companies estimate the MOU could be worth more than $20 million per year to APC during mine operations. APC leaders said the agreement would help provide locals with more opportunities to participate in the project. However, some of Pebble’s staunchest opponents hold title to the land Pebble would need access to in order to develop the northern road and port corridor. Alaska Native village corporation Pedro Bay Corp. owns much of the land along Iliamna’s northeastern corner and Iliaska Environmental LLC is a majority owner of a rock quarry at Diamond Point, the new location for the Cook Inlet port. Iliaska Environmental is owned by the Igiugig Village Council and regional corporation Bristol Bay Native Corp. owns the subsurface rights to those lands. All three have been opposed to the project for years and stress Corps officials are ignoring the fact that Pebble does not have access to the area as well as their own precedent in similar, prior instances. Pedro Bay Corp. CEO Matt McDaniel could not be reached for comment in time for this story but he wrote to Corps of Engineers Pebble project manager Shane McCoy last July to reiterate that the company “has not, and will not, consent to the Pebble Limited Partnership’s use of its lands for the Pebble project.” As such, the north route should not be considered practicable in the final EIS, McDaniel wrote. Eliminating the northern corridor option at this point would be a major problem for Pebble, as the Corps is scheduled to release the final EIS July 24. McDaniel’s 2019 letter quickly spurred a memo from the Corps to Pebble requesting an analysis of feasible northern corridor options around Pedro Bay Corp. lands, but a consultant to Pebble determined there isn’t one through the mountainous terrain. In October 2017, Hobbie signed a record of decision for an oil spill response facility proposed near Cordova and being pursued by the Native Village of Eyak that eliminated three alternative development sites because the landowners either would not sell the parcels or otherwise provide access to them for development. As such, the Corps did not consider the alternatives “practicable,” according to the decision document. As for Pebble, however, the Corps continues to advance the LEDPA despite the objections from the landowners. Hobbie said during a July 20 media teleconference that Corps officials are relying on Pebble’s assertion that the company can gain access to the northern corridor. “Since Pebble has stated it’s a practicable alternative, we’ve still considered it,” Hobbie said. Corps Alaska District spokesman John Budnik additionally wrote via email that the Native Village of Eyak did not contend it could gain access to the lands needed for the alternatives discarded in its project. Pebble spokesman Mike Heatwole wrote in an email that observers of the situation are likely confusing “preferred” with “practicable,” a legal term. “Our preferred alternative has always been the ferry route; it remains the ferry route. One of the reasons that is so is that the land owners (Alaska Peninsula Corp.) had already agreed to our access,” Heatwole wrote. “We continue to believe that the land owners will ultimately agree to the land access needed to construct the (northern) route.” Elwood Brehmer can be reached at [email protected]

NOVAGold files lawsuit against authors of short sale report

A co-owner of the massive Donlin gold project is back on the offensive, this time with a lawsuit against a New York firm that issued a report claiming the mine is not viable and encouraging investors to dump shares in the company. NOVAGold Resources filed the complaint against J Capital Research in New York Federal District Court June 29, which alleges J Capital’s 22-page May 28 short-sale report lied to investors on multiple fronts and led to NOVAGold losing a significant share of its market capitalization in the weeks that followed. Shares in Vancouver-based NOVAGold lost 22 percent of their value in the two weeks following the release of the J Capital report. NOVAGold stock traded at $8.42 per share on the New York Stock Exchange at the close of trading July 14, down from a pre-report price of $10.65 per share at closing May 27. The company had a market capitalization of nearly $2.8 billion as of July 14. J Capital Research founder Tim Murray authored the report and acknowledged in it that the company held a short position in NOVAGold, meaning J Capital stood to profit if NOVAGold lost value. NOVAGold claims in the complaint that J Capital’s first mistake was to step outside its lane. J Capital has previously focused its research on Chinese technology companies, according to the complaint, an assertion supported by information on the financial firm’s website, which also advertised the firm as “Making short work of over-valued companies.” “Neither its inexperience nor the ready availability of actual facts deterred JCAP. It did not care. Truth was not the goal,” the complaint states. According to the complaint, the report falsely insisted that NOVAGold management has mislead the company’s investors by claiming the $6.7 billion-plus project is economically feasible; Murray and J Capital flatly contend it isn’t. The complaint also accuses J Capital of mischaracterizing Donlin as a project “that is not feasible to put into production at any gold price” largely because of its technically challenging size and remote Western Alaska location. NOVAGold is a 50 percent owner of Donlin Gold LLC, the joint venture project company, along with mining industry giant Barrick Gold Corp. As proposed, the open-pit Donlin mine in the upper Kuskokwim River drainage would be one of the world’s largest, producing more than 33 million ounces of gold over an initial 27-year life. A 315-mile natural gas pipeline from the west side of Cook Inlet would fuel a power plant at the mine and fuel storage tanks would be built at Dutch Harbor, in addition to the very large-scale operation at the mine site. Attorneys for NOVAGold pointed to Barrick’s status as a 50 percent partner in Donlin Gold and its generally well-regarded status in the industry as evidence to the viability of the project. J Capital stressed in its report that NOVAGold continues to rely on a $6.7 billion cost estimate for the project from the last feasibility study done in early 2012. The short sellers contend the cost should be $8 billion or more, but NOVAGold notes the $8 billion figure cited in the 2012 study included the project’s all-in operating costs to comply with U.S. general accepted accounting principles, commonly known as GAAP. “These statements are false, misleading, defamatory, and they are designed to create panic,” the complaint states about J Capital’s referenced to Donlin’s cost. “NOVAGold has clearly and consistently communicated to investors that the estimated initial capital required for the project is $6.7 billion.” NOVAGold executives said shortly before the short-sale report that they are working to update the feasibility study. Attorneys for NOVAGold also highlighted several inaccurate characterizations of the planned power plant at the mine site as being illustrative of the overall nature of the J Capital report. The report asserts that the planned Donlin power plant would be the largest in Alaska, would increase power generation in the state by 40 percent and would produce enough electricity to power a city of 500,000 residents. However, the Beluga power plant owned by Chugach Electric Association is 332 megawatts and average generation in Alaska is about 800 megawatts, meaning the 227-megawatt plant run full bore would instead increase statewide power generation by about 28 percent. “In moving rapidly from one falsehood to the next, JCAP’s strategy is death by a thousand cuts. The report lobs lie after lie — both big and small — attacking the feasibility of the Donlin gold project in an effort to chip away, bit by bit, at investors’ confidence in the Donlin gold project,” the complaint states. “The resulting damage to NOVAGold’s reputation occasioned by JCAP’s false statements was inevitable and is substantial.” J Capital co-founder Anne Stevenson-Yang wrote via email that she learned of the allegations on Twitter and she doesn’t believe the complaint warrants a comment in response. “As to what (NOVAGold Chairman) Thomas Kaplan says about me/us on the company website, even I do not have the patience to read it all, so it’s hard to imagine that normal investors read this stuff,” Stevenson-Yang wrote. Kaplan issued his own 17-page response to J Capital’s report in early June, in addition to NOVAGold’s lengthy official corporate rebuttal, which included a line-by-line analysis of J Capital’s assertions. NOVAGold did not specify in the complaint what it is seeking other than requesting damages that “compensate NOVAGold for the harm incurred.” J Capital has until July 21 to submit a formal answer, according to a court summons issued June 30. ^ Elwood Brehmer can be reached at [email protected]

Exploration resumes at gold prospect within national park

Drilling is back to a remote gold prospect inside Lake Clark National Park after it largely sat dormant for more than two decades. Vancouver-based HighGold Mining commenced its summer drill program at the Johnson Tract prospect on the west side of Cook Inlet June 30, according to a company statement. HighGold CEO Darwin Green said a small amount of drilling done late last summer combined with historical records formed the basis for this year’s work. The company announced in late April that it had formed a preliminary resource estimate of 2.1 million metric tons of ore with an average grade of 10.9 grams of gold equivalent per metric tonne for a resource of approximately 750,000 ounces of gold equivalent. The Johnson Tract prospect sits on Cook Inlet Region Inc., or CIRI, in-holdings within the boundaries of Lake Clark National Park and Preserve. Last year CIRI leased 20,900 acres of the property to Vancouver-based Constantine Metal Resources Ltd. for 10 years. Several Southcentral Alaska Native village corporations also own surface rights to land there, while CIRI holds the subsurface mineral rights to those areas. The multi-metal deposit is about 10 miles from tidewater near Tuxedni Bay, about 125 miles southwest of Anchorage. HighGold is also estimating the primary targets on the Johnson Tract property hold another 134,000 ounces of inferred gold equivalent resources, according to the NI43-101 Canadian regulatory mineral resource estimate report published April 29. HighGold’s work in 2019 generated numerous quality drill targets within an 800-meter radius of the high-grade (Johnson Tract) deposit mineral resource, several of which will be drilled for the first time this year,” Green said. “Focus is on expanding the mineral resource base and discovering new zones of mineralization, with early emphasis given to the northeast offset target where limited drilling by previous operators identified what is believed to be the fault-displaced continuation of the deposit. Crews are on-site, COVID-19 mitigation plans are in place, and drills are in position and ready to commence coring.” While primarily a gold deposit, Johnson Tract also contains significant amounts of silver and zinc along with smaller concentrations of copper and lead, according to the NI43-101 resource estimate. HighGold also announced July 6 that it would issue more than 6.9 million shares for a total offering of approximately $12 million Canadian to help fund its work. Anaconda mining company drilled 88 holes at Johnson totaling more than 26,800 meters between 1982 and 1995. The prior drilling revealed gold resources in excess of 10 grams per metric ton in many areas, as well as high-grade zinc and copper ore, according to HighGold. The first phase of drilling this year will utilize two diamond drill rigs on five targets around the primary Johnson deposit for cumulative drilling of 7,000 to 10,000 meters, according to HighGold. The preliminary results of that work will inform subsequent drilling later in the season. HighGold is a spin-out of Constantine, which is also exploring the Palmer copper prospect in the Chilkat River valley north of Haines. If the decision is made in subsequent years to ultimately build a mine — currently envisioned as an underground operation — CIRI could obtain a 25 percent interest in the project at that time, according to HighGold. The Alaska Native regional corporation would also receive net smelter royalties of 2 percent to 4 percent if a mine is developed. The mine would require an access road to a port, both of which would need to be built. The CIRI leases also come with access easement rights and the site has an airstrip built for the earlier exploration work, according to the company. Elwood Brehmer can be reached at [email protected]

Donlin co-owner NOVAGold issues rebuttal to short-sale report

Investors will now decide who’s right and who’s wrong. NOVAGold Resources Inc. responded sharply on June 8 to a short-sale report calling the company’s massive Donlin gold project “fool’s gold” and a “pipe dream,” in reference to the lengthy natural gas pipeline that is planned to help power what would be one of the largest open-pit gold mines on Earth. Executives for NOVAGold said the May 28 short-sale report compiled by J Capital Research USA LLC is “error-ridden” and a “sucker punch” aimed at artificially degrading NOVAGold’s stock value. “When I first read JCAP’s report, my first reaction was to chuckle because the piece was clearly so fallacious that I initially assumed it had been written by a child — cooped up kids have far too much time on their hands these days — or, more likely, a disgruntled short-seller,” Thomas Kaplan, chairman of Vancouver-based NOVAGold wrote in a 17-page personal rebuttal. NOVAGold CEO Greg Lang said in a formal statement that the company has thoroughly reviewed the report and is evaluating its legal options against JCAP. Leaders of JCAP acknowledge on the firm’s website that they hold a “short” position in NOVAGold stock, meaning they stand to profit if the mining company’s stock loses value, but insist their report is fact-based and lays out a compelling argument as to why Donlin is “the deposit that will never be mined.” NOVAGold stock sold for $10.65 per share on the New York Stock Exchange at the close of trading May 27 before the short-sale report was released. It has since traded between $8 and $9 per share and closed trading June 23 at $8.77 per share. The JCAP report largely hinges on a common and often accurate refrain for Alaska resource projects: that despite its size, the 33 million-ounce Donlin gold deposit is simply too remote and technically challenging to be economically viable. “(NOVAGold) management’s game is clear: keep investors interested in the stock while they rake in huge salaries,” the JCAP report alleges. “Construction of the Donlin mine was originally expected to start in 2008. Now, 12 years later, management’s best guess is that construction may start in 2022 and production in 2028.” Donlin Gold, the joint-venture project company owned 50-50 by NOVAGold and mining giant Barrick Gold Corp., received a record of decision approving the project’s environmental impact statement from the Army Corps of Engineers in August 2018. Barrick Gold Corp. has not commented on the JCAP report. Donlin officials for years have acknowledged the project will require strong gold prices to be profitable but have declined to specify what the market conditions must be to sanction the mine even as gold prices have risen steadily from about $1,400 per ounce to more than $1,700 per ounce over the past year. Gold peaked at nearly $1,900 per ounce in mid-2011. According to the report, NOVAGold leaders “might have the cushiest job in mining” because CEO Lang has been paid approximately $8.3 million in cash and taken over 1.8 million shares in the company over the past five years despite leading a junior mining firm with no operating income. NOVAGold executives and directors have cumulatively netted about $35 million from share sales over that time as well. About 70 percent of NOVAGold insider share sales have occurred in the past year while the company’s stock has increased in value by roughly 300 percent, according to JCAP figures. Over that time, Chief Financial Officer David Ottewell sold more than half his shares in NOVAGold and Lang reduced his position by 26 percent. “Clearly, the insiders have voted with their feet,” the report concludes of the stock sales. NOVAGold responded that management’s compensation is established by a committee of the company’s board of directors and is regularly measured against a group of peer companies. NOVAGold held $59.7 million in cash and $108 million in total liabilities at the end of February, according to the company’s filings with the Securities and Exchange Commission. JCAP fundamentally contends the 2011 capital cost estimate of $6.7 billion for Donlin was far too low at the time and only grown with inflation since. NOVAGold leaders said in April that the company is working to update its feasibility study this year. The report focuses on the 315-mile, 14-inch natural gas pipeline Donlin plans to build from the west side of Cook Inlet to the mine site near Crooked Creek in the upper Kuskowkim River drainage, which JCAP calls a “project killer.” It references a prior $1 billion cost estimate for the pipeline and asserts a more accurate cost considering inflation would be more than $3.8 billion. According to the report, JCAP consulted with a pipeline expert who confirmed the traders’ rough calculations that the Donlin pipeline would cost 200 to 400 percent more than NOVAGold has stated. “The proposed natural gas pipeline central to powering the project is dead on arrival. The terrain around the Donlin deposit is among the most inhospitable on the planet,” the report states of the pipeline that would cross the Alaska Range. JCAP also discounts the option of barging diesel nearly 200 miles up the Kuskokwim as an alternative fuel source to the pipeline given the sheer volume of fuel that would be needed to power the mine facilities as also being a “bust.” At its planned size to produce 1.1 million ounces of gold per year, Donlin would need more than 1 million liters, or about 264,000 gallons of diesel per day, but the project only has permits to barge a little more than half of that for mine vehicle fuel, according to the report. “Under the most optimistic scenario, cutting production to half of what is now planned, the diesel barged in would be sufficient for at most seven months of operations per year, essentially reducing output to a quarter of what is now planned,” the report sates. However, NOVAGold’s 40-page line-by-line rebuttal to JCAP calls the report’s conclusions on the pipeline simply “inaccurate,” noting references to anonymous engineers and pipeline experts also lack the individuals’ credentials. NOVAGold stresses that the capital costs specified in the 2011 Donlin feasibility study were compiled in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, and the pipeline design and development costs were put together in 2013 by the international engineering firm CH2M Hill (now Jacobs Engineering). NOVAGold management also discounted a comparison of the Donlin pipeline to the 750-mile, 30-inch Mackenzie River pipeline project in Canada that was stopped in 2017 with an estimated cost of $16 billion Canadian. Similar to several Alaska North Slope gasline proposals, the Mackenzie River pipeline was planned to move large quantities of gas from the river delta and near shore Beaufort Sea south to infrastructure and markets in Alberta. “The Mackenzie pipeline project uses different materials in a different location with a different climate and environmental concerns. It is not an appropriate comparison,” states the NOVAGold rebuttal. NOVAGold also insists the amount of diesel needed to run the entire operation could be supplied via the Kuskowkim if needed just by increasing the number of fuel barge tows beyond what is planned for the mine vehicles; but the company does not address the logistical and storage issues that would come with using solely diesel fuel during the months when the river is frozen. Finally, NOVAGold leaders picked apart several inaccuracies in statements about Donlin’s 227-megawatt power plant. The JCAP report asserts that the planned Donlin power plant would be the largest in Alaska, would increase power generation in the state by 40 percent and would produce enough electricity to power a city of 500,000 residents. However, the NOVAGold response notes that the Beluga power plant owned by Chugach Electric Association is 332 megawatts and average generation in Alaska is about 800 megawatts, meaning the 227-megawatt plant run full bore would instead increase statewide power generation by about 28 percent. NOVAGold called the city comparison “exaggerated and irrelevant.” Donlin officials have said the plant would average 153 megawatts of output, which would be about 20 percent of the power currently produced in the state. Elwood Brehmer can be reached at [email protected]

Pebble Partnership pitches payments to area population

Pebble Partnership leaders announced a plan June 16 to pay Bristol Bay residents if the controversial mine project that has sharply divided many communities in the area reaches construction and eventually production. Pebble CEO Tom Collier said in a prepared statement that the revenue sharing program dubbed the “Pebble Performance Dividend” makes good commitment he offered in late 2017 when its new plan for a smaller, 20-year copper and gold mining operation was unveiled. The U.S. Army Corps of Engineers is currently evaluating Pebble’s Clean Water Act Section 404 wetlands fill permit application for the 20-year mine and drafting the corresponding environmental impact statement, or EIS. A final EIS should be released sometime this summer, according Corps Alaska officials. “While not everyone will want to work at the mine, this (dividend) ensures a direct way for everyone to participate. Whether a resident supports the project, opposes it, or is neutral, anyone who is a year-round resident can participate,” Collier said. Collier and other Pebble leaders have long touted the mine as a way to improve the economics of the region that currently relies on commercial fishing and tourism as its primary industries. The mine is expected to support up to 2,000 jobs during construction and between 750 and 1,000 jobs once it is developed, according to Pebble. The company says it will allocate $3 million per year for the dividend during the multi-year construction phase of the project. Once the mine is operating and profitable Pebble will distribute 3 percent of the net profits from the mine to Bristol Bay-area residents that have signed up for the dividend. As of last year the 31 communities in the area Pebble has made eligible for the dividends — in the Dillingham Census Area and the Bristol Bay and Lake and Peninsula boroughs — had a combined population of 7,378 residents, according to the state Labor Department. The mine site would be in the Lake and Peninsula Borough. Bristol Bay residents must have lived in the region for 12 months prior to enrolling in the dividend program. An online portal through which residents can enroll in the dividend program will be open through Aug. 31, according to Pebble. Opponents of the mine have characterized the dividend proposal as an attempt to buy support for a project that has widespread opposition in the region, primarily due to the concern that the mine would pose major, multifaceted risks to the salmon fisheries in the large Nushagak and Kvichak river systems. Jason Metrokin, CEO of Bristol Bay Native Corp., which has led the opposition to Pebble, said in a formal statement that the dividend proposal is another tactic “to try to sway public opinion on this vastly unpopular project.” He also questioned why Pebble would open a two-and-a-half-month enrollment period now when construction of the mine is at least three or four years away. While Pebble is nearing the end of the EIS process, it still must receive numerous other state and federal permits before construction can start and several of those permit applications typically take multiple years for officials to review and approve. “BBNC’s opposition to the proposed Pebble mine is rooted in our shareholders’ culture and subsistence way of life and is strengthened by the good science that concludes that the proposed mine would cause unacceptable and irreparable adverse impacts to the Bristol Bay region. We will not trade salmon for gold, and we will not be swayed by promises of cash payments from a proposed mine that cannot and should not be built,” Metrokin said. A 2019 poll commissioned by BBNC found that 76 percent of its shareholders were against the mine and 83 percent living in the Bristol Bay region opposed it at the time. In early May Pebble offered to have BBNC administer its Performance Dividend program through the Native regional corporation’s own shareholder dividend distribution program; the offer was unanimously rejected by the BBNC Board of Directors. Metrokin wrote to Collier May 22 in response to the offer that it lacked the detail that would be needed to support it. He continued to write that Pebble has not provided sufficient information about the economics of the company’s plan, regardless of the dividend proposal. “Consequently, your offer to share a portion of revenue from Pebble is too speculative to consider and highly unlikely,” Metrokin wrote to Collier. BBNC and other Bristol Bay stakeholders have asked (Pebble) to produce an economic feasibility study for its mine proposal for years and (Pebble) has repeatedly failed to do so. We do not believe that your 20-year mine plan is economically viable at all.” Collier has said Canadian finance laws prevent Pebble’s parent company, Vancouver-based Northern Dynasty Minerals Ltd. from releasing an economic analysis of the 20-year plan at this point. When asked about the allegation that Pebble is trying to buy support, spokesman Mike Heatwole wrote in an email that the company simply wanted to provide an additional way for residents who won’t end up working at the mine to share in its benefits. Elwood Brehmer can be reached at [email protected]

Niblack parent company settles debt, gets new CEO

The owners of a multi-metal prospect in Southeast Alaska have new leadership and potentially new life through an agreement to settle $3.4 million of debt. Vancouver-based Heatherdale Resources Ltd. announced June 3 that it had reached the settlement with fellow Canadian mining firm Hunter Dickinson Services Inc. that clears the vast majority of the debt Heatherdale had compiled with Hunter Dickinson through normal business. Heatherdale Resources is the sole owner of the Niblack underground copper, gold, silver and zinc prospect on a remote portion of southern Prince of Wales Island. According to a statement from Heatherdale, the company had accrued more than $4 million (Canadian) in debt to Hunter Dickinson as of late last year. The settlement grants Hunter Dickinson more than 35 million shares in Heatherdale at a price of 9.75 cents per share. Robert McLeod, one of the purchasers of the stock, will take over as a director and CEO of Heatherdale as part of the deal as well. Heatherdale Chairman and CEO David J. Copeland agreed to step down from the leadership position and make way for McLeod, according to the company. McLeod is a professional geoscientist with more than 25 years of experience in mineral exploration, having worked primarily in Alaska, Northwest Canada and Nevada, according to Heatherdale. Hunter Dickinson is an owner in Northern Dynasty Minerals, which is the sole owner of the large and contentious Pebble deposit in Southwest Alaska. Ron Thiessen is a director and CEO of both mining firms. Heatherdale leaders said issuing the settlement shares will help the company preserve cash for future work. “The company’s board of directors believes that the debt restructuring is necessary to provide the company with a clean balance sheet in order to attract new capital and position the company to unlock value from its current project and acquire new interests,” the June 3 statement reads. Heatherdale has held the Niblack prospect since 2009 but work had slowed of late as the company dealt with its financial issues. The Niblack deposits hold 5.6 million metric tons of indicated resources with an average copper grade of 0.95 percent; 1.73 percent zinc; 1.75 grams per ton of gold, and 29.5 grams per ton of silver. Niblack also holds another 3.4 million tons of inferred resources at slightly lower metal grades, according to Heatherdale. The underground Niblack mine would mill between 1,000 and 1,500 metric tons of ore per day for 10-plus years if it is developed. Heatherdale has proposed a plant for processing metal concentrates on Gravina Island near Ketchikan — an operating model similar to that being advanced by Ucore Rare Metals Inc., which is working on the Bokan rare earth element prospect near Niblack on Prince of Wales. Ucore is planning a processing facility in Ketchikan, the company has said. Both projects received a boost from the state back in 2014 when the Legislature approved a bill signed by former Gov. Sean Parnell allowing the Alaska Industrial Development and Export Authority to assist in financing their development. At the time, Heatherdale was seeking a partner in the project, which was then estimated to cost between $175 million and $250 million to develop. The legislation authorized AIDEA to put up to $125 million into Niblack. Elwood Brehmer can be reached at [email protected]

Pipeline right-of-way permit under review for Donlin mine

Rising gold prices are fueling excitement among the owners of the Donlin gold mine but groups opposed to the project are raising questions about the thoroughness of its permitting process. Alaska Department of Natural Resources Commissioner Corri Feige on April 30 granted a request to reconsider her Jan. 17 approval of a right-of-way lease for Donlin’s natural gas pipeline following a Superior Court appeal of her decision to approve the lease and initially deny a request for consideration filed Feb. 6. Homer-based conservation advocacy group Cook Inletkeeper filed the permit appeal on behalf of several Kuskokwim-area Tribes. Feige initially denied the reconsideration request but reversed that decision in an April 30 letter to Cook Inletkeeper Advocacy Director Bob Shavelson. However, the two-page letter does not explain what motivated her to reverse course. Cook Inletkeeper and the Orutsararmiut, Chevak and Chuloonawick Native council and villages appealed Feige’s decisions to Superior Court March 19. The appeal was dropped following the April 30 ruling. The 14-inch pipeline would run 315 miles from near Beluga on the west shore of Cook Inlet to the mine site in the Crooked Creek drainage in the Upper Kuskokwim Valley. It would supply feedstock gas to the mine’s large power plant. Cook Inletkeeper’s request to reconsider the permit contends it is premature to issue the right-of-way for a pipeline that has yet to receive state fish habitat and other permits. The groups also argue it is DNR’s responsibility to consider the cumulative impacts of the $7 billion-plus project in granting the right-of-way lease. “The pipeline is proposed as part of a massive gold mine with substantial environmental impacts, including habitat loss and degradation, water and air quality impacts, and risk of tailings dam failure, to name a few,” the request states. “If the benefits of the entire Donlin project can be used to bolster DNR’s analysis of the public interest, the detriments of the entire project should also be used in its analysis to ensure the agency is truly acting consistent with the public interest.” Feige wrote in her decision that state law does not require a cumulative effects analysis and emphasized DNR’s role as a cooperating agency in the project’s environmental impact statement that was approved in 2018, “which stringently considered cumulative and reasonably foreseeable impacts.” “Nonetheless,” she wrote, “the Department of Natural Resources will conduct a further analysis of the cumulative and reasonably foreseeable impacts of the right-of-way lease for the Donlin pipeline. Once this analysis is complete, a new decision will be issued, and notice will be provided of a new comment period consistent with Alaska law.” She also wrote that granting the reconsideration “does not imply that the issues raised in the request have merit.” DNR spokesman Dan Saddler wrote in response to questions that the he could not provide more detail behind the reasoning for reversing the decision than is in the letter because it is an ongoing matter. According to Saddler, the department does not believe the additional look will set a precendent for when the state must review the cumulative impacts of a project for various permitting decisions. "By virtue of the state's participation in the (National Environmental Policy Act) process as a cooperating agency, DNR performed a cumulative impacts analysis leading up to its issuance of the right-of-way at issue here, but it is nonetheless undertaking addtional analysis thorugh the Commissioner's reconsideration," Saddler wrote. Feige and Gov. Mike Dunleavy have both expressed strong support for the Donlin project, stressing the roughly 1,400 jobs its estimated the mine would support are badly needed in the remote region of the state. The Tribes oppose the project that would be located on land owned by The Kuskowkim Corp., a Native village corporation largely because they fear the impacts it will have on subsistence resources, primarily salmon and whitefish in the Kuskowkim River. Donlin Gold LLC spokeswoman Kristina Woolston wrote via email that the reconsideration will not impact the project’s timeline and the company is awaiting the state’s updated decision. Donlin suspended its 2020 work program in early April in response to the COVID-19 pandemic but work resumed last month. The company is employing four drilling rigs and has 120 workers at the deposit that include Calista Corp. shareholders and Yukon-Kuskokwim residents, according to Woolston. Gold prices have increased nearly 30 percent in the past year to a recent plateau of approximately $1,700 per ounce. Tom Kaplan, chairman of Vancouver-based NOVAGold, which owns a 50 percent stake in the Donlin project, said during the company’s annual shareholder call in May that he is confident gold will soon exceed $3,000 per ounce. Donlin’s size as one of the largest gold mines in the world — with planned production of 1.1 million ounces per year — and its remote location mean the project will require a very strong gold market to develop. Company leaders have not said what price or market condition would trigger development if the project reaches that stage. The Tribes on June 5 also appealed a May 7 Department of Environmental Conservation decision to maintain a Certificate of Reasonable Assurance to Donlin that the project will meet Clean Water Act Section 401 discharge standards. The Tribes argue the EIS conducted by the Army Corps of Engineers concluded the project would result in elevated mercury levels, loss of salmon habitat and could increase stream temperatures. The appeal states that the area already has naturally-elevated mercury levels and the mine could add to that and exceed allowable levels. DEC Commissioner Jason Brune has 10 days to approve or rule on the request, per state regulations. DEC officials wrote in response to comments about the certification decision that they believe mitigation measures taken at the mine will be sufficient to limit stream mercury levels. Elwood Brehmer can be reached at [email protected]

Change of course for Pebble reignites access issues

The U.S. Army Corps of Engineers has changed the course of the Pebble project but what it means for the fate of the highly contentious development remains to be seen as area landowners vow to prohibit access. David Hobbie, Army Corps of Engineers Alaska District regulatory chief, confirmed during a May 22 conference call with reporters that the lead permitting agency had changed the project’s transportation corridor from a southerly route across Iliamna Lake to one along the lake’s northern shore that also ends at a new site for a west Cook Inlet port. The total re-route is part of the least environmentally damaging practicable alternative, or LEDPA, identified by Army Corps Alaska officials, and combines aspects of other development alternatives evaluated in the draft environmental impact statement released in February 2019, according to Hobbie. Other details of the LEDPA will be discussed in the Corps’ record of decision that will follow the final EIS, which is currently scheduled to be published later this summer. Numerous groups opposing the project allege the north road route is a late-stage move to appeal to the Pebble Partnership’s ultimate desire to build a much larger 78-year mine instead of the 20-year mine plan the company is advancing because the Iliamna Lake ferry that is part of the south alternative could not support the larger operation. That’s in part because an April 24 memo from representatives of AECOM — the global engineering firm hired to write the EIS — indicates Pebble changed its preferred alternative from the southern ferry route to the northern road-only transportation corridor from the mine site to the port. However, Hobbie said Pebble changed its plans to conform to what the Corps had already determined: that the north road-only corridor was ultimately the best option for the environment. The Corps’ decision was based on widespread public concerns that the year-round ferry across the massive lake could disrupt winter travel across lake ice for residents of lake villages and impact Iliamna’s unique population of freshwater seals, among other issues, according to Hobbie. “We did exactly what the public asked us to,” he said of the Corps amending the plan for the project. Pebble leaders routinely stress that the company has applied for permits for its 20-year mine plan and any subsequent plans expand the project would require a whole new round of permitting while Pebble’s parent company, Vancouver-based Northern Dynasty Minerals Ltd., has advertised the project as a multi-generational opportunity and cites the metal resources in the total Pebble deposit — not just those that would be extracted via the 20-year mine — in its investor pitches. Pebble CEO Tom Collier noted in a prepared statement that the north route was Pebble’s preferred option for most of the project’s history and said the company initially selected the ferry route because it was thought regulators would prefer the smaller wetlands footprint it offers. “The choice between the two transportation alternatives for Pebble has always been a close call,” Collier said. “Now that the (Army Corps of Engineers), working closely with the Environmental Protection Agency, the U.S. Fish and Wildlife Service and other cooperating agencies, has indicated that the northern corridor is the preferred approach we look forward to seeing the final EIS for the project.” He added that the company also supports using a pipeline instead of trucks to haul concentrate from the mine site to tidewater. According to Northern Dynasty, the pipeline would cut truck traffic on the mine access road by roughly half. However, the Corps’ change of plans does not account for one potentially significant complicating factor for Pebble; the landowners along the north route, at least for now, want nothing to do with the project. Alaska Native village corporation Pedro Bay Corp. owns much of the land along Iliamna’s northeastern corner and Iliaska Environmental LLC is a majority owner of a rock quarry at Diamond Point, the new location for the Cook Inlet port needed to supply materials to the mine and export its metals. Iliaska Environmental is owned by the Igiugig Village Council and along with Pedro Bay Corp. and Bristol Bay Native Corp., which controls subsurface rights to the village corporation lands, strongly opposes the project. The Igiugig Village Council issued a statement May 25 contending the Diamond Point quarry is a “critical component” of the north route that Pebble will not have access to. “(Pebble’s) plan for Diamond point presented in the EIS does not fit with our plans for Diamond Point, and should not be considered an acceptable alternative,” the statement reads. In contrast, the south ferry route allowed Pebble to utilize lands owned by Alaska Peninsula Corp., which the junior mining company has an access agreement with, for the roads and ferry terminals on the north and south sides of the lake to access a port at Amakdedori on Cook Inlet. Pebble spokesman Mike Heatwole wrote via email that the company intends to work with each of the landowners along the north route and believes “we will be able to gain the right-of-way needed to build the transportation corridor.” Pedro Bay Corp. CEO Matt McDaniel wrote to Corps of Engineers Pebble project manager Shane McCoy last July to reiterate that the company “has not, and will not, consent to the Pebble Limited Partnership’s use of its lands for the Pebble project.” As such, the north route should not be considered practicable in the final EIS, McDaniel wrote. McDaniel’s letter quickly spurred a memo from the Corps to Pebble requesting an analysis of feasible northern corridor options around Pedro Bay Corp. lands, but a consultant to Pebble determined there isn’t one. While Pedro Bay Corp. owns most of the land along the northeast portion of Iliamna Lake; there is a mountainous strip of state lands to the north that is bordered by Lake Clark National Park and Preserve. The brief alternative route report concluded that a route around Pedro Bay lands would require up to 15 miles of tunneling or “extreme mountain road construction” and would be much longer than the proposed route across Pedro Bay lands. “Given the adverse nature of the terrain that exists north of PBC land, and the constraints imposed by design criteria for a road to serve the proposed Pebble mine; it has been determined that construction and operation of a road that would pass north (of) PBC lands is not practical or reasonable,” the July 2019 consultant report states. Several other Cook Inlet-area Native corporations including CIRI also own parcels around Diamond Point. BBNC leaders have also criticized Corps officials for advancing the north route as viable despite the landowners’ consistent opposition to the project. BBNC Lands and Natural Resources Vice President Dan Cheyette wrote in a May 21 letter to Corps of Engineers Alaska officials that the LEDPA must be the least environmentally damaging development alternative but must also be practicable, and a route across lands owned by entities that don’t support Pebble is not. “In defining the LEDPA for the Pebble project, BBNC demands that the Corps remove from consideration all alternatives that would require use of its subsurface or surface estate, as our lands are unavailable to (Pebble),” Cheyette wrote. “This includes the eastern terminus of the northern transportation corridor at Diamond Point,” which is also partly owned by a BBNC subsidiary. Cheyette and other opponents to Pebble argue that Corps officials should draft another EIS that would focus the public’s attention on the updated plan for the project. The Corps’ Hobbie said there are no plans for a new or supplemental Pebble EIS because the LEDPA doesn’t contain anything that wasn’t in the first draft. “There’s nothing in the current LEDPA that has not been evaluated in the EIS,” Hobbie said. Elwood Brehmer can be reached at [email protected]

Donlin owners hope to resume drilling soon

Update: Donlin Gold workers will begin returning to the project site May 22, accoridng to spokeswoman Kristina Woolston. Donlin with have "an aggressive and measured approach" to prevent the spread of COVID-19 that will include testing for the virus. About 120 people were working there before the camp was shut down in early April. The owners of the Donlin gold project hope to soon resume drilling work paused in response to the COVID-19 pandemic at the remote mine site and are starting to prepare an updated assessment of the project’s viability. NOVAGold Resources Inc. CEO Gregory Lang said Donlin Gold started its 2020 drilling campaign in February and worked through March before closing down the camp in early April to comply with state health recommendations and travel restrictions. Crews used three drilling rigs to complete six boreholes prior to April, according to Lang. NOVAGold is a 50 percent owner of Donlin Gold in Western Alaska along with mining industry giant Barrick Gold Corp. He said he believes Donlin’s ambitious drilling program — with 80 holes totaling approximately 22,000 meters — can still be completed this year but when it will resume is unclear. Company leaders are currently evaluating when workers can pick up where they left off, Lang said during NOVAGold’s annual shareholder meeting call on May 14 . “They will not return to site until it is safe to do so,” he stressed. Lang noted that Donlin donated its food supplies to food banks and shelters in area villages when the camp was closed. Donlin Gold secured several state permits and land-use approvals for an access road, fiber optic cable and other facilities in January. The company is also continuing a multi-year program started last year for the project’s key dam safety permit from the Department of Natural Resources, which is one of the last major approvals on Donlin’s list. The drilling work, along with engineering and geologic refinements in the project will be added to an updated feasibility study, according to Lang. “A lot of inputs have gone down since the last study, not very many have gone up,” NOVAGold chairman Tom Kaplan said. Kaplan said he does not believe the COVID-19 pandemic has pushed gold to more than $1,700 per ounce in recent days, noting it was at roughly $1,600 before the global crisis began. “It’s accelerating trends which were already in place,” he said. The price of gold is likely to double or triple from where it is currently, Kaplan contends. He said there is no defined price that will trigger development of Donlin. “When Barrick’s ready to move forward, we’ll be ready to move forward,” Kaplan said. Donlin Gold last performed a comprehensive analysis of its massive project in 2011 when it was concluded the complex undertaking would cost $6.7 billion to complete. As proposed, the open-pit mine in the upper Kuskokwim River drainage would be one of the world’s largest, producing more than 33 million ounces of gold over an initial 27-year life. A 315-mile natural gas pipeline from the west side of Cook Inlet would fuel a power plant at the mine and fuel storage tanks would be built at Dutch Harbor, in addition to the very large-scale operation at the mine site. Lang said with 39 million ounces of measured and indicated resources Donlin is roughly five times larger than the average large-scale development-stage gold mines worldwide. The deposit’s average grade of 2.25 grams per ton is also more than double the industry average, which continues to decline, he added. Additionally, the 39 million-ounce resource is contained to roughly three kilometers of an eight-kilometer mineralized trend, NOVAGold leaders highlighted. “It’s clear how hard it is to find a resource comparable to what we have at Donlin,” Lang said. The deposit is on a parcel owned by The Kuskowkim Corp., a Native village corporation and the mineral rights are held by the regional Native corporation Calista Corp, both of which have been strong supporters of the project, although some local village organizations and Tribal governments have become more vocal in their opposition to the mine in recent years. Opponents contend a mine the size of Donlin adjacent to the Kuskokwim poses an unacceptable risk to the river’s fishery, particularly the salmon runs that are widely depended upon for subsistence harvests. A group of 13 village and Tribal leaders from the area sent a letter to NOVAGold and Barrick executives May 13 noting the Association of Village Council Presidents formally opposed the project last year and they did not reach the decision lightly. “We are of course open to responsible resource development in our region when applicants can demonstrate through science that our waters and lands will not be threatened, the Donlin project has failed to meet this bar and thus it is our responsibility to future generations to say no to this risky project,” the letter states. Donlin and NOVAGold leaders often tout the support they have from The Kuskokwim Corp. and Calista for developing the project. The mining companies have partnered with the Native corporations on workforce development and scholarship programs among other things. Elwood Brehmer can be reached at [email protected]

New analysis of Livengood underway with improving markets

The Livengood gold project has renewed life amid rock-bottom oil prices and vastly improved expectations for gold. Marcelo Kim, chairman of Vancouver-based International Tower Hill Mines Ltd., which owns the Interior Alaska prospect, stressed that company leaders and many outside analysts believe the economic stimulus efforts being employed by governments worldwide to mitigate the impact of the COVID-19 pandemic will bring about a resurgence in gold markets. The Federal Reserve’s recent moves to cut interest rates in combination with widespread credit backstops and the loosening of banking requirements all add up to a very favorable outlook for gold producers and sellers, according to Kim. Kim said in a May 12 conference call that expectations for rising inflation following the federal stimulus package of the Great Recession in 2009 largely didn’t materialize because banks didn’t expand their credit offerings following the financial crisis. This time, however, much of the $2.2 trillion Congress approved under the CARES Act is intended to be quickly spent on businesses and individuals instead of keeping banks afloat. “We believe that these are signs that we are in the early innings of a new market for gold,” Kim said. He cited a late April report from Bank of America analysts that forecasts gold prices will rise to upwards of $3,000 per ounce over the next 18 months. Gold is currently trading for about $1,700 per ounce following a steady climb in price that started last year and hasn’t stopped. Gold prices peaked in late 2011 at nearly $1,900 per ounce but spent much of the intervening years fluctuating between $1,100 and $1,300 per ounce before starting to climb again last year. International Tower Hill Mines is sanctioning an updated pre-feasibility study that will build off of a similar study published in late 2016 and incorporate the metallurgical and optimized engineering work done since then, according to Kim. The junior mining firm, which holds 100 percent of Livengood, downsized its operational plans by nearly half following the 2016 study. That work concluded that a mine capable of milling 52,000 tons of ore per day over a 23-year life would cost approximately $1.8 billion to develop and have significantly reduced operating costs versus the company’s original plan from 2013 for a $2.8 billion, 14-year mine processing about 100,000 tons per day. The current mine plan calls for producing 6.8 million ounces over the 23-year mine life with an all-in cost of $1,247 per ounce. The Livengood prospect holds nearly 9 million ounces of proven and probable gold reserves at a market price of $1,250 per ounce and approximately 11.5 million ounces of measured and indicated resources, according to International Tower Hill. Kim said he expects much of the gold resources to become reserves as prices rise. As proposed, Livengood would be a conventional, open-pit mine near the Dalton Highway about 70 miles north of Fairbanks. International Tower Hill expects the mine will generate about 1,000 jobs during construction and 350 long-term jobs during operation if it is developed as currently planned. CEO Karl Hanneman said drilling has shown significant resource potential immediately beneath the pit deposit as well as elsewhere on the property. Historical placer deposits to the northeast of the pit resource reflect the need for additional drilling as well, Hanneman said. “Over the last several years, we have quietly remained laser-focused on improving our geological and metallurgical understanding of the Livengood gold deposit,” he said. That work will be incorporated into the new pre-feasibility study and a timeline for that work should be available in the coming weeks, according to Hanneman. ITH director Stephen Lang said during the call that Livengood is a deposit requiring an average of 140 tons of ore to recover an ounce of gold, which is a good “strip ratio” for a mine of its size. “The mine and the mill are both large enough to give a considerable economy of scale but not in the very, very large range, which adds quite a bit of complexity in the operations and scheduling,” Lang said. The relatively low mining requirement helps relieve cost pressures on the project and is “particularly helpful in offsetting any long-term oil price increases,” Lang added. While being on the road system limits some of the development and logistics costs incurred by more remote mines in Alaska, Livengood and other mines in the state are susceptible to changes in oil prices because diesel is used to power mine operations. Elwood Brehmer can be reached at [email protected]

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