Mining

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]

Doyon acquires stake in mining company with state prospects

Doyon Ltd. has taken a direct stake in a mining company exploring for gold on its land in an area of Alaska that has seen a resurgence in interest from prospectors. The Interior Alaska Native regional corporation invested $1.5 million in Tectonic Metals Inc., a Vancouver-based firm with claims to three Eastern Alaska gold prospects, according to a joint April 20 statement. The deal makes Doyon the largest single shareholder in the Tectonic with a 22 percent ownership stake. Tectonic is working two gold prospects, dubbed Seventymile and Northway, on Doyon lands near the Canadian border. Tectonic also holds the Tibbs prospect on state land about 20 miles east of the Pogo gold mine near Delta Junction. All of the prospects are in the Tintina Gold Belt, which runs across much of Interior Alaska and into the Yukon Territory. New technologies for conducting geophysical surveys and other analyses of prior drilling data have led a handful of companies exploring for large gold deposits to revisit the eastern Tintina region that historically has been an area worked by smaller placer mining operations. Tectonic co-founder and CEO Tony Reda said the investment is unique in that it amounts to an “endorsement” in the company as a whole, not just in the prospects Tectonic is working on Doyon’s land. While the Tibbs, Seventymile and Northway projects are each years from becoming an operating mine, Reda said in an interview that having a large backer like Doyon with the ability to potentially support development of a mine if one of the projects reaches that point is also a major selling point to other investors in the inherently high-risk junior mining industry. “Having Doyon as a shareholder gives us the ability to walk into a fund’s office in New York or Toronto — Wall Street, (Toronto’s) Bay Street, Vancouver’s Howe Street, pick your street — but we get to walk in their and say this is who we are and we’re actually aligned with our Native partner and there’s not too many companies that can do that,” Reda said. The $1.5 million investment netted Doyon approximately 10.4 million shares in Tectonic, according to the statement. Tectonic was formed by Reda and other former leaders of Kaminak Gold Corp., which discovered and advanced the 5 million-ounce Coffee gold prospect between Beaver Creek and Dawson City in the Western Yukon before selling the project to the mining giant that is now Newmont Goldcorp for $520 million Canadian in 2016. Doyon CEO Aaron Schutt said in an interview that the decision to invest in Tectonic started from internal conversations about how to encourage more economic development activity across the company’s vast land holdings. Doyon is the largest private landowner in Alaska with title to approximately 11.5 million acres. Alaska Native regional corporations such as Doyon also hold subsurface mineral rights lands owned by Native village corporations in their regions. Doyon leaders liked how Kaminak Gold approached its work in the Yukon — in terms of both geology and community engagement — and that continued into Tectonics first couple summer work seasons in Alaska, Schutt said. “It doesn’t show up in early in the economics of a mining project but it does later,” Schutt said of companies that are actively involved in the communities near their projects. He added that Doyon leaders anecdotally heard positive things from First Nations officials in the Yukon about Kaminak. Reda said Kaminak offered scholarships to area students and established a local hire program among other efforts to positively impact area residents while the company was working the Coffee project. “It’s not just about finding a mine; it’s about doing it properly in a way that benefits everyone,” he said. As for the prospects, Reda said the Seventymile property near Eagle is “drill ready” and the company had plans to do so this summer before the COVID-19 pandemic took over nearly every aspect of life. Those plans are on hold for now. “Right now we’re thinking outside the box on how to make that a reality but at the same time we have to be very much compliant with the rules and regulations and obviously the safety of our employees and service providers is of the utmost importance,” he said. Tectonic acquired the Seventymile property in 2018 did its own soil sampling and geophysical surveys along with analyzing historical drilling records from the area. The company drilled the Tibbs prospect last year with promising results. “We’re also champing at the bit to get out into the field there (at Tibbs) and flesh out the discovery and figure out just how big it is,” Reda said. He also noted that by taking a direct stake in Tectonic, Doyon would reap a portion of any benefits Tectonic realizes from the Tibbs prospect even though it’s on state lands. Alaska mining industry observers estimate companies spent roughly $150 million on exploration work in 2018 and 2019, up about $50 million from several years prior. The land-use agreements for the Northway and Seventymile prospects are typically structured and the direct investment does not change them or give Tectonic preferential rights to other Doyon lands, according to Schutt, who said the regional corporation is also looking to do some early-stage mineral exploration on its lands itself this year. “It’s not even drilling, just data review,” Schutt said, adding Doyon has gotten interest from other exploration companies of late, adding further to the revived interest in the Eastern Interior’s gold potential. Doyon has previously explored for oil and gas on its lands with mixed results. Elwood Brehmer can be reached at [email protected]

Doyon wants agreement with AIDEA before Ambler road work continues

As leaders of the state development bank work to advance a controversial road to access remote mining prospects in Interior Alaska, one of the primary landowners along the route contends they have not been adequately consulted and need much more information before they can approve of the project. Doyon Ltd. CEO Aaron Schutt wrote in an open letter to Alaska Industrial Development and Export Authority Executive Director Tom Boutin dated April 7 that while the authority has been deeply involved with the Bureau of Land Management on the environmental review for the road, “AIDEA has for years failed to engage with Doyon in any meaningful communication” regarding the project. Doyon is the Alaska Native regional corporation for most of Interior Alaska. Holding title to just more than 11.5 million acres, Doyon is also the largest private landowner in the state. Doyon owns land that the road would cross at its east end, near the village of Evansville and the Dalton Highway. As proposed, the Ambler Mining District Industrial Access Project, commonly known as the Ambler road, would run west from the Dalton Highway for approximately 211 miles along the southern flank of the Brooks Range to the Ambler mining district. The area in the upper Kobuk River drainage has long been prized by mining companies for its high-grade prospects of copper, gold and other metals. Several companies are in varying stages of exploring numerous claims in the roughly 75-mile long district, but road access has consistently been cited as a required precursor to developing mines in the isolated area. Under the authority’s plan — modeled after the access road and port built to the Red Dog zinc mine in Northwest Alaska — AIDEA would own the road and recoup development costs through tolls paid by the mining companies that use it. State officials backing the plan have long stressed the road would be closed to the public and access would be closely monitored, though many skeptics of the plan question the feasibility and legality of restricting access, as roughly $26 million of state general fund money has already been approved for the project. However, many residents of the area have long opposed the road and the mines. They contend the construction of the road could disrupt the Western Arctic caribou herd that migrates through the corridor and is a primary subsistence food source for the villages clustered at each end of the route. Some are also concerned about the practicality of keeping the road closed to the public, fearing that a new route into the remote area could bring more hunters. The proposed mines have also drawn scrutiny for potential impacts to salmon and whitefish runs in the Kobuk River drainage. AIDEA originally estimated construction of a basic gravel road would likely cost somewhere in the $300 million range, but projections in the Ambler road final environmental impact statement, or EIS, issued by BLM March 27 put the cost at more than $500 million. BLM Alaska officials have supported AIDEA’s plan. The agency led the EIS work because it is in charge of reviewing the authority’s application for a road right-of-way across portions of federal lands in the area. Also on March 27, the AIDEA board of directors approved a transfer of $35 million from the authority’s Revolving Fund to its Arctic Infrastructure Development Fund to eventually support development of the Ambler road. Board members said the money would likely fund engineering, right-of-way acquisitions, public outreach and other pre-construction activities this summer. Schutt emphasized in the letter that AIDEA does not have an access agreement with Doyon either for the road right-of-way or for additional field work. Though many opposed are Doyon shareholders, the company does not have a formal stance on the project; the company has filed comments through the EIS process outlining the concerns with the project it wants the authority to address, according to Schutt. “AIDEA has never even presented a written proposal to Doyon for such access, much less a written proposal or detailed information regarding the (right-of-way). As such, AIDEA and its contractors do not have permission to enter or cross Doyon lands to conduct any field work in the summer of 2020, or at any time,” he wrote, while also noting that AIDEA does not have eminent domain authority granted to some state agencies. AIDEA spokesman Karsten Rodvik wrote in an email that the board approved the transfer of the $35 million “in support of Gov. Dunleavy’s Open for Business initiative.” “AIDEA is committed to working with all stakeholders to move this project forward in a responsible manner, to utilize the state’s extensive mineral resource potential to provide much-needed long-term economic growth and development, and to create job opportunities,” Rodvik wrote further. According to Schutt, Doyon is open to discussing the project and he specifically requested AIDEA officials provide Doyon with technical information for the portion of the road that would cross the company’s lands; information regarding a financial proposal for a right-of-way across Doyon lands; a detailed financing plan for the overall project; and how AIDEA plans to address concerns raised by the Evansville Tribe and Evansville Inc., a Native village corporation. In 2014, the Evansville Inc. board of directors passed a resolution prohibiting the road from crossing the company’s land around the village and the Evansville Tribal Council also passed a resolution in 2017 opposing the road. Doyon spokeswoman Sarah Obed also said representatives for the Native corporation have met with AIDEA officials several times over the years to discuss the Ambler road and generally asked each time about the items outlined in the letter. Elwood Brehmer can be reached at [email protected]

Final Ambler road review out; AIDEA adds $35M for project

Bureau of Land Management officials maintained their support for the most direct proposed road route to Interior mining prospects in their final environmental review of the plan published March 27, the same day leaders of the state-owned development bank moved $35 million for future work on the project amid sharp public criticism. The 211-mile industrial road concept preferred by BLM Alaska officials to reach the Ambler mining district is what the Alaska Industrial Development and Export Authority proposed in early 2017 when officials there submitted federal permit applications for the project. AIDEA is advancing the long-sought link to the remote Ambler mining district in an attempt to spur development of a suite of metal prospects in the area. 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 approximatley $520 million. BLM Alaska Director Chad Padgett said in a March 26 statement preceding the release of the final Ambler road EIS that the roughly 430-page document incorporates information gathered over three years of community and Tribal consultation meetings. “My staff traveled to more than 20 communities in the project area to solicit input and gather traditional knowledge,” Padgett said. “Those efforts contributed to this comprehensive analysis that will help pave the way for Alaska to responsibly develop its natural resources and create jobs.” BLM led the EIS because the agency is responsible for issuing road right-of-way permits to AIDEA if the project is ultimately approved. Agency officials cannot reach a record of decision on the project until at least 30 days after the final EIS is published and it’s unclear exactly when that will happen. The 211-mile industrial-use road would run west along the southern flank of the Brooks Range from the Dalton highway at milepost 161. It would pass near the villages of Bettles and Evansville near its eastern end and terminate among several mining prospects just north of the Kobuk River villages of Ambler, Shungnak and Kobuk. Agency officials dismissed an alternate route starting at mile 60 of the Dalton that would snake 332 miles northwest to the district because although it would avoid Gates of the Arctic National Park and Preserve; its added length would inherently mean more environmental impacts and costs compared to AIDEA’s proposal, the EIS states. Critics have pointed to the cost of the project, and the fact that there is no guaranteed repayment method, as reasons to scrap the plan. The Wilderness Society contends the current estimate for the road does not consider some of the costs inherent to building in remote northern Alaska, such as constructing a road over permafrost. The group suggests the road could end up costing $1 billion or more as a result. The proposed mines have also drawn scrutiny for potential impacts to salmon and whitefish runs in the Kobuk River drainage and many residents of the area villages are concerned about impacts to caribou in the region that are an important subsistence food source. Numerous village and Tribal governments in the area of the proposed road have issued formal statements of opposition to the project. AIDEA officials insist access to the road will be restricted to mining activity because it would ultimately be paid for through tolls under the plan; there would be no public access to currently isolated hunting areas, which has been another concern of area residents worried about increased activity. Currently, Vancouver-based Trilogy Metals Inc. is the only company with advanced prospects in the Ambler area. The company holds two main prospects, Arctic and Bornite, which contain high-grade copper along with cobalt, zinc, lead and precious metals. Trilogy leaders have said the Arctic prospect contains copper at grades up to 10 times greater than many other modern mines and the only thing holding back development is cost-effective access. Interim Trilogy CEO Jim Gowans said in a company statement that the final EIS marks a critical milestone for the road project that will “unlock the incredible mineral potential” of the region. “Trilogy, through its joint venture company, Ambler Metals LLC, is already discussing the next steps for the financing and development of the road with the Alaska Industrial Development and Export Authority,” Gowans said. AIDEA moves $35M for road Also on March 27 the AIDEA board of directors approved a transfer of $35 million from the authority’s Revolving Fund to its Arctic Infrastructure Development Fund to eventually support development of the Ambler road. The resolution directing the funding shift notes that further board action is required to spend the money, but a slew of public commenters made it known they were not happy that AIDEA officials took up the resolution at a short-notice emergency meeting that otherwise dealt with loan and regulatory issues related to the COVID-19 pandemic. Many commenters simply stated their strong overall objection to the road project and the mines it is intended to support, while others questioned whether the authority had violated open meetings laws with its second emergency meeting in as many days. Anchorage Democrat Rep. Andy Josephson testified that he shared in the concerns of others regarding the timing of the meetings and the funding transfer resolution. “I’m concerned that the optics of what you’re doing is so poor given what people are dealing with,” Josephson said to the AIDEA board members, adding that the Legislature’s decision to not capitalize the Arctic Infrastructure Development Fund exemplifies divisions among lawmakers over the Ambler road project. AIDEA’s Revolving Fund held approximately $1.3 billion at the end of the 2019 fiscal year last June 30, according to the authority’s annual financial report, but the vast majority of that money was committed to loans or other investments. The Revolving Fund held approximately $33.2 million in unrestricted cash at the time as well. Attorneys for the Anchorage-based environmental nonprofit law firm Trustees for Alaska also questioned the legality of the $35 million transfer in a memo sent to state lawmakers March 25. The memo asserts than an initial version of the resolution describes that the money would fund “expert engineering, attorney, advisor, and other professional fees to work on permitting, road and bridge design, acquisition of rights-of-way, public outreach, cultural resources evaluations, and other tasks necessary or convenient to reaching a decision point on whether to proceed with construction of the project.” Trustees attorney Bridget Psarianos said in an interview just prior to the March 27 meeting that much of the work outlined in the original resolution should have already been done so it could be included in the EIS for the road. That language was removed from a revised version of the resolution, which states that the authority has the ability to transfer the money so it can continue to advance Arctic infrastructure developments and “pursuing (the Ambler road) through the Arctic Infrastructure Development Fund is in furtherance of the authority’s mission to promote economic development and to create employment opportunities in Alaska.” Trustees argues the transfer is “directly contrary” to both the Alaska Constitution and the Executive Budget Act, which outline the appropriations process through the state Legislature and the governor. “The Ambler road project is a capital appropriation item, and AIDEA cannot increase funding for this project without approval, regardless of the source of that funding. Funds for the project are subject to appropriation by the Legislature, not AIDEA,” the Trustees memo states. “Because AIDEA has been unable to secure additional funding for the Ambler road through the Legislature and the capital budget process, it is now attempting to make an end-run around the authority of the Legislature by unilaterally appropriating money from its Revolving Fund to this project.” AIDEA spokesman Karsten Rodvik wrote via email that “When used for capital expense, money in AIDEA’s Revolving Fund is not subject to the Executive Budget Act. Also, the board has the authority to move money between funds.” The Legislature created the Arctic Infrastructure Fund in 2014 but it had not been capitalized until the $35 million was moved into it. Psarianos wrote in an email after the meeting that the firm has serious questions about the legality of the authority’s actions and “we are considering a variety of options to attempt to right this wrong.” Gov. Mike Dunleavy’s 2020 fiscal year budget plan originally proposed to transfer $84 million from the Revolving Fund to an oil and gas tax credit fund outside of the authority, but the move was not included in the Legislature’s final budget. (Editor's note: This story has been updated to reflect the latest available cost estimates for the road project.) Elwood Brehmer can be reached at [email protected]

NEPA revisions continue with senators’ support

They’re undeniably complex, dry, arcane and seemingly always published in painfully hard-to-read print, but the Council on Environmental Quality’s proposed changes to the implementing regulations for the National Environmental Policy Act are likely to have an outsized impact on Alaska. That’s because, from the smallest commercial fishing boat to the most remote eco-tourism trek to the largest oil project, Alaska’s economy is inextricably linked to its natural resources and federal jurisdiction on nearly every level. On Jan. 10 the Council on Environmental Quality, or CEQ, published 47 pages of changes to National Environmental Policy Act regulations in the Federal Register, an action that officially opened the proposed regulations for public comment. It officially marks the only major change to NEPA regulations since the council first approved them in 1978. A public comment period closed March 10. The CEQ is an arm of the White House tasked with implementing NEPA requirements. The sweeping regulatory changes precipitate from Executive Order 13807, which President Donald Trump signed in August 2017, directing agencies to complete reviews for major infrastructure projects within two years, among other things. NEPA, the landmark federal environmental policy signed into law by President Richard Nixon in 1970, was so transformative it is often referred to as the “Magna Carta” of environmental law. In conjunction with the Clean Water and Air acts, it forms the national basis for environmental protection, pollution control and land conservation. At the highest level, the regulatory reforms are aimed at shortening the length of environmental reviews in terms of both time and page count of the final documents. Proponents of the changes, which include Alaska’s congressional delegation, insist the current process for conducting environmental impact statements, or EIS — the most thorough reviews under NEPA — results in unnecessary permitting delays that routinely hamper economic and infrastructure development nationwide. Skeptics worry the proposed regulatory overhaul is a backdoor attempt by a very pro-development presidential administration to weaken fundamental environmental protections nationwide. Brian Litmans, a senior attorney for the Anchorage-based environmental nonprofit firm Trustees for Alaska, said he believes NEPA is important for all Americans simply because it requires federal regulators to examine all aspects of a proposed project or action holistically so they can make informed decisions when issuing major development permits or making long-term land-use decisions. “NEPA doesn’t require a particular outcome and that’s one of the great things about it,” Litmans said. “It simply tries to get all of the relevant information on the table so the agency can understand what’s at stake and make a decision and I think because of that NEPA has been a success and projects can be better because of it.” The basic EIS structure involves an agency issuing a notice of intent to start evaluating a project or plan deemed to a “major federal action,” followed by a public scoping period to solicit input as to what aspects of that action stakeholders feel should be studied in the EIS. A draft EIS is published following the scoping period, after which a final EIS is published and then a record of decision, or ROD, is issued. Public comment periods of varying lengths must also follow the publication of each version of the EIS. Few direct stakeholders dispute the value of its core goals, but a largely Republican group of lawmakers at the state and federal levels largely in Western states where federal land ownership is extensive has grown increasingly frustrated at the persistent growth of NEPA reviews, particularly environmental impact statements. Part of that is because the NEPA framework is so commonplace in federal agencies. The simple process is used to adjudicate mines and oil developments, public land-use plans and road construction projects. Legal hurdles Sen. Dan Sullivan, for one, said the rulings in NEPA-related lawsuits that have piled up over the decades have led to an unrealistic burden on EIS drafters, or NEPA practitioners, as they are often known. They must account for so much case law, often from seemingly unrelated issues or projects, that writing an EIS has become a practice in writing a “legally defensible” document as much as it is conducting a thorough environmental review, according to Sullivan and others. “This is something my Democrat colleagues agree is a problem; my Republican colleagues certainly agree it’s a problem: this big issue that under our federal permitting system and to some degree state and local, but a lot of it’s federal — that you have this super-long lead time that’s required for any major infrastructure project,” Sullivan said in an interview. “Of course, it costs money and it costs time. Money and time are usually enhanced by litigation and it makes it very difficult for us to build stuff.” Eric Fjelstad, an Anchorage-based partner with the national business law firm Perkins Coie, has spent roughly 20 years working on NEPA issues. He believes the current system benefits no one — except maybe attorneys. That’s because there is nearly always a contingent that opposes a large project or major federal planning decision for a myriad of reasons. Those groups then regularly sue the decision-making agencies to overturn a record of decision or delay the process based on perceived legal flaws in a given EIS. “It’s devolved into somewhat of, I’ll call it a ‘gotcha’ review process where the process is a series of hurdles with people playing different roles and ultimately the courts at the end exacting a gotcha sanction,” Fjelstad. “Is there any realistic world where it should take four, five, six years to study something at this level? And this isn’t the only study that occurs on big projects,” he added, referring to an EIS. According to CEQ figures, approximately half of the 1,161 EIS reviews conducted from 2010-17 took longer than three years and seven months to complete. Roughly one-quarter took more than six years and the average time from a notice of intent to a record of decision was 4.5 years. About one-quarter of those analyzed took less than two years and two months to complete. Ted Boling, an associate NEPA director for the CEQ, said during a February presentation at the Alaska Forum on the Environment conference that the council primarily wants to modernize the regulations to help produce more timely and effective NEPA reviews. The council also seeks to codify years of court rulings in the proposed regulations to clarify exactly what is required under the law, according to Boling. “Much of that guidance and case law is reflected in modern agency NEPA practice but it’s not reflected in the regulations,” he said. In addition, the proposed regulations meet the president’s orders by directing agencies to complete an EIS within two years and a less rigorous environmental assessment within one year. New guidelines The CEQ is also seeking to harden current guidelines for the length of an EIS. Current NEPA regulations recommend the text of a final EIS be less than 150 pages. An EIS of “unusual scope or complexity” should be limited to 300 pages, according to the regulations. It’s 75 pages for an environmental assessment. The new regulations would make those recommendations mandatory in most cases. However, the 2010-17 EIS review found that the average length of a final EIS from the time period was 669 pages, with about one-quarter each less than 300 pages or more than 730. Boling emphasized that the harder timeline and length directives are “not just a get out of jail free card” for agency officials looking to do less work. The proposed regulations allow for senior agency officials to exempt certain complex or highly scrutinized reviews from the limitations. “Ideally, the senior agency official says, ‘Yes, this is an important project so I will read more pages than usual,” Boling said. The new language also defines reasonable alternatives, which are a required part of an EIS, as alternatives that are “technically and economically reasonable” to be in line with longstanding Supreme Court decisions, according to Boling. He further added that the council is proposing to clarify that a project’s effects should not be considered significant — and therefore not be studied — “if they are remote in time, geographically remote or they result in a lengthy causal chain.” That also codifies a Supreme Court ruling, Boling said. He acknowledged that it’s a “great point of debate” as to whether or not the new regulations will ultimately change what projects necessitate an environmental assessment or EIS. “It really gets into the question of how will the case law work?” he said. Many of the high level reforms to the parameters of an EIS were in part pulled from Sullivan’s Red Tape and Rebuild America Now bills, according to the senator. He said one of the first conversations he had with President Trump was about the need for NEPA reform. While he would prefer to make the changes in statute, Sullivan said regulatory reform via an executive order “is really good.” “We have been kind of ground zero for this” in Alaska, Sullivan said, noting it took nearly 20 years to reach a record of decision on the Kensington gold mine near Juneau and other projects. That project only began after a Supreme Court decision. He dismissed concerns that the changes will weaken environmental protections. “We don’t want to cut corners in Alaska,” he said. “It’s about timely permitting — certainty in the permitting process — so people can make investment decisions to move forward on infrastructure projects.” ‘Morphed into its own entity’ Sen. Lisa Murkowski similarly said the EIS process has become overly burdensome over the years. “It has morphed into its own entity, the NEPA process, far beyond what the act initially required,” Murkowski said in an interview. The legislation itself is a relatively brief seven-page bill that outlines Congress’ desire for a national environmental policy, establishes the CEQ and describes very generally how that policy should be implemented. “The Congress recognizes that each person should enjoy a healthy environment and that each person has a responsibility to contribute to the preservation and enhancement of the environment,” NEPA states. Sullivan and Murkowski said the status quo of EIS timelines and particularly lengthy documents discourages public involvement, contrary to NEPA’s intent. “The whole point of NEPA was to bring the public into the permitting process. You do that by having an EIS that’s 100, 200 pages; something that the average citizen can sit down and read. That was the point. Public involvement, public engagement, public input,” Sullivan said. Boling went a step further and said the council wants to make an EIS more readable for the senior agency officials tasked with making major permitting decisions based on them. The page limits are designed to help get to the core detailed statement of an EIS, Boling said, adding that appendices to the main document are “free space” that do not count towards the limit. “We’d be concerned if people were trying to take really complicated projects and just reduce it all to 150 pages but we’re also equally concerned that decision-makers need to actually be able to use those documents,” he said. “Ultimately, it’s not a paperwork exercise; it’s designed to be something that decision-makers can actually read, digest and respond to.” Litmans, of Trustees for Alaska, said the EIS timeline and length statistics can be skewed by a few exceptional cases. He noted that a very small number of projects reviewed by federal agencies are actually subject to an EIS. The vast majority are given a finding of no significant impact, or FONSI. Litmans referred to a 2014 Government Accountability Office report that found less than 1 percent of projects subject to a NEPA analysis resulted in an EIS and less than 5 percent required an environmental assessment. The rest receive a categorical exclusion, meaning a formal environmental review isn’t needed. He said Boling is “far off the mark” in saying the CEQ is simply codifying case law in the regulations. “This rule completely guts or removes from the regulations the concepts of cumulative effects and indirect impacts. These are aspects of a project that have to be considered under NEPA,” Litmans said. A section of the regulations attempting to define “effects” and “impacts” states that a “but for” causal relationship does not constitute a particular effect under NEPA. “Analysis of cumulative effects is not required,” the regulations state further. Fjelstad said he believes an EIS should be narrowly focused on roughly five to 10 areas of study that are particularly germane to a project. “It’s the old maxim, pick a few things and bring real rigor to the table and do it right rather than trying to solve everyone’s issues,” he said. Litmans said there is a large body of case law defining the requirements of a cumulative effects analysis and simply cutting it out lends to a whole new round of lawsuits. “This rule just removes key aspects of what’s required in an agency review and adds new terms that will have to be defined by the courts,” he said. Litmans also said that permit applicants are regularly the cause of delays in the process because they were not armed with the requisite information an agency needs for an EIS when they start it. Such is the case with the Pebble mine EIS, he said. “You have a project that’s sorting things out as it goes along and as a result the reviews are going to take longer,” Litmans said of Pebble. “The shouldn’t, in the middle of the process, while the draft EIS is being written and completed say, ‘Well, we’re going to go get some more field data this summer,’ which is what they did.” Murkowski joined a series of state and federal resource agencies in roundly criticizing the U.S. Army Corps of Engineers’ draft EIS for Pebble published in February 2019, contending it lacks detailed information and minimizes the project’s potential impacts to the region’s salmon and other resources despite being approximately 1,400 pages. In response to a question about how she reconciles support for the regulatory reforms with the Pebble EIS Murkowski said, “When you say a project needs a review that’s fair and thorough, that fairness and thoroughness is not necessarily measured by pounds of paper or the length of time within a process.” Pebble spokesman Mike Heatwole wrote via email that the company has not had an unusual number of information requests from the Army Corps of Engineers for a project of its size. More people than normal are interested in Pebble and therefore the intricacies of the process have been made more transparent than normal by the Corps, according to Heatwole. He added that midstream changes to the project did not fundamentally change the layout of the project or the company’s approach to mining the resource. “The modifications were improvements upon the environmental impacts of the project and in many cases reduced the footprint of the project,” Heatwole wrote. Boling said agencies can better meet the new, firmer review timelines by making sure applicants have all of the information needed at the ready and Fjesltad acknowledged that “a lot of people start when they’re not ready.” The CEQ received 598,989 comments on the proposed regulations, according to the Federal Register. CEQ spokesman Dan Schneider wrote March 17 that modernizing the environmental review process for infrastructure projects is a priority for the administration and the council is currently reviewing the comments. ^ Elwood Brehmer can be reached at [email protected]

Corps finds less risk of Pebble dam failure

A leaked summary of the Pebble mine project’s preliminary final environmental impact statement says U.S. Army Corps’ of Engineers officials declined to model a tailings dam failure at the mine because of the designs chosen by the company but mine opponents contend that’s simply unacceptable. The executive summary of Pebble’s preliminary final EIS — which was sent to some Bristol Bay-area Tribes as well as state and federal government organizations acting as “cooperating agencies” to provide input on the final document prior to its release — states that the modeling of an “extremely unlikely” tailings release was deemed inappropriate by the Corps due to Pebble’s use of a flow-through tailings dam design, which is fundamentally different than major tailings dams that have failed around the world in recent years. Pebble CEO Tom Collier said in a formal statement issued shortly after the typically confidential summary was released that criticism of the Corps’ review is rhetoric that ignores what happened during review of the draft EIS, which was published about a year ago. Pebble has interpreted the leaked summary as indicative of a favorable permitting conclusion for the project. “Just because some of the groups opposed to Pebble do not like the conclusions reached by the USACE (Corps) does not that the USACE’s work is not valid,” Collier said. “Rather, the USACE’s work on this issue is sound. It is defensible and it should be commended for its completeness.” Commercial fishing and conservation groups have criticized the entirety of the summary, and argue that the tailings dam issue is just another symptom of a rushed and incomplete EIS process. According to the summary, a not-yet-published appendix to the full, final EIS details the rationale behind the probability of a large-scale tailings dam release from the bulk tailings storage facility, or TSF. That appendix addresses several recent dam failures, such as those in Brazil and the 2014 Mount Polley dam failure in British Columbia, and discusses “the higher probability of failure of water-inundated tailings slurries behind upstream dams compared to drained, thickened tailings behind downstream/centerline dams.” Corps Alaska officials have said in prior interviews that a detailed analysis of the tailings facilities is outside the scope of their review, noting the State of Alaska is responsible for reviewing permitting for the specific tailings dams designs and construction through its Dam Safety Program administered by the Department of Natural Resources. Pebble has yet to apply for its state dam permits. The company plans to build a centerline-style dam for its bulk TSF that will allow water to pass through the dam and subsequently be collected below the embankment for storage and treatment before it is released back into the environment. Pebble Permitting Vice President James Fueg said the company specifically examined what has happened during TSF failures around the world while designing its facilities. “Everything we’ve done in our approach — not just to designing the tailings dams but into laying out the entire site and combining the tailings management systems and the water management system — was all done specifically to address things that led to the failures at Mount Polley and the failures in Brazil,” Fueg said. “It’s more than just saying, ‘This is how we’re going to design the tailings embankment;’ you’ve got to look at the whole project.” The January 2019 collapse of an iron ore mine tailings dam near the Brazil city of Brumadinho released a mass of tailings sludge and killed 270 people. It was preceded by another large-scale tailings dam failure in the country in 2015. Pebble leaders first point to the fact that they plan to build two, separate tailings facilities: one to store the benign waste rock that makes up the lion’s share of the finely ground mine waste, or tailings, and another that will hold the pyritic tailings, or those that can generate acid when exposed to air and water. The main bulk TSF dam will be 600 feet high and the pyritic tailings embankment will be approximately 250 feet high, according to Pebble’s permit application materials. Combined, the facilities will cover more than 3,800 acres. Fueg said the large, bulk TSF will hold 85 percent to 90 percent of the waste that is left over from the mining process and the focus there is simply building the most stable facility possible. Part of that is allowing water to flow through the dam itself, rather than allowing the water to build up behind the dam and become a static force that is constantly pushing on the upstream face of the dam, according to Fueg. Part of the problem at Mount Polley was that water breached the dam prior to its collapse; removing water helps stabilize the associated tailings. Separating the water and tailings reduces the already slim risk of a dam failure and also limits the impact if a failure does occur, he said. “If you take a glass that’s a mix of sand and water and pour it out over the table, what’s going to happen? That sand and water is going to run all over the table and drip over the edges. But if you take a glass of — whether it’s dry sand or damp sand — and you dump it on the table you’re going to end up with a pile of sand in the middle of the table and that’s what we’re trying to do with this concept,” Fueg described. Pebble’s pyritic, or potentially acid-generating waste rock will be stored in water behind a separate, downstream-style tailings dam in a lined-facility while the mine is active. The pyritic tailings will be moved from the storage facility and into the bottom of the roughly 1,500 feet deep mine pit at the end of the mine’s 20-year life. The pyritic tailings will again be covered with water as the pit naturally fills and will safely remain there after closure and reclamation, according to the company. Fueg said Pebble will be mining rock specifically for the tailings dams rather than utilizing tailings and waste rock to build the dams, as is often done at other mines. He added that the downstream slope of the bulk TSF will be very gradual, with a 2.6-to-1 slope. “Ours is a much flatter slope, which again increases stability and the factor of safety in the design,” Fueg said. Finally, Pebble will dig down to bedrock before building the dam to prevent a potential weak layer of soil from compromising the dam from below, as also happened at Mount Polley, Fueg said. The whole system hinges on the ability to treat lots of water in an already wet place, which Fueg acknowledged, but he said Pebble has designed its two large water treatment plants to handle the combination of a large storm during the peak of snow runoff in the midst of the wettest 20-year period in the 76 years of weather records available for the nearby Iliamna Airport. “Half of the overall (water management) capacity is simply there as a precaution to deal with flood events or a series of wet years. It’s a massive pond,” he said. Alaska Dam Safety Program Engineer Charlie Cobb declined to discuss the specifics of Pebble’s TSF designs because he could eventually be tasked with adjudicating them in the state’s permitting process. Cobb did note that Pebble’s tailings dams would be among the largest in the state. He said generally, though, that evaluating the failure risk of a given tailings dam against those that have failed is problematic because the design of each structure is extremely site and material specific. “The rates of failure in the tailings dam industry are based on a whole fruit basket of dams. When one goes bad now and then it’s like, ‘OK, what kind of fruit was that?’” Cobb said. More often, he said the failure risk is vetted through a Failure Modes and Effects Analysis by a group of engineers that search for weak spots in a design in a back-and-forth exercise until the design is sufficiently reinforced. However, Dave Chambers, an engineer and geophysicist who founded the Montana-based nonprofit Center for Science in Public Participation said Pebble’s tailings management plans were developed to save money and do not jive with the reality of the mine or the available mineral resource. Chambers counters the claim that the flow-through bulk TSF will reduce the risk of failure with the contention that allowing the dam to fill with water from the inside could actually add to the risk. “You don’t want the dam to ever become saturated. When you allow a dam to get saturated you can have static failures,” he said. According to Chambers, many modern tailings dams are built with a thick internal layer of clay or other impermeable material that prevents water flow. Instead, the water is directed to a drain at the toe of the dam and is subsequently routed to the water treatment pond. He said the flow-through design inherently allows some saturation of the dam material and while water is not supposed to build up behind the dam, it could and is a scenario that needs to be modeled. “To my mind, flow-through dams aren’t as safe as a more conventional flow-through dam with a barrier in it because that (barrier) gives you another check on controlling the saturation of the dam,” Chambers said. The company went with the flow-through design to avoid the added cost of designing and building the dam with the internal barrier, he argues. “A permeable dam is just adding basically a second drainage system that shouldn’t be required,” he said. Chambers is more concerned with the pyritic tailings plan, he said, despite the fact that the pyritic tailings dam will be built with a conventional downstream method that includes the impermeable internal layer he’s calling for in the bulk TSF. That’s because he doesn’t believe Pebble will ever end up dumping the pyritic tailings in the bottom of the pit. Doing so would preclude expansion of the mine beyond the current plan, which many observers believe is necessary to make the overall project economic. He called the proposal a “lawyer’s mine plan.” “The reason that won’t happen is that there’s 88 percent of that main resource sitting in the ground at the end of their 20-year mining life and if they backfill that (pyritic) material into the pit they sterilize that resource — that is, they can’t mine it until they take all that stuff out again, which is hugely expensive,” Chambers said. “I know that they’re not going to do it. They know they’re not going to do it. The investors know that they’re not going to do it, which is why they’re not complaining about the plan.” He expects Pebble to build a second, larger pyritic TSF once they move ahead with expanding the project. In response to the assertion that Pebble will expand the project, Pebble spokesman Mike Heatwole wrote that the current plan calls for putting the pyritic tailings back into the pit and the company believes that the proposal is a significant improvement to its closure plan. He noted that any further development plans would require a wholly new permitting process. Elwood Brehmer can be reached at [email protected]

Early release of Pebble report draws strong reactions

A new version of a federal environmental review for the proposed Pebble mine has angered the mine’s opponents and encouraged its developer. The Army Corps of Engineers will use the final review to decide whether to give the controversial mine a key permit it needs before it can be built. The Corps had provided the report to several cooperating agencies involved in the review process, such as state and federal agencies and tribal governments. The Anchorage Daily News obtained an executive summary of the Corps’ preliminary final environmental review that was leaked to reporters. The report could foreshadow what’s to come. Tom Collier, chief executive of developer Pebble Limited Partnership, is pleased. He said the report’s release, and its major conclusions, indicate the company will see a decision in its favor by mid-2020. Pebble opponents that have seen it are not happy. They say the proposed copper and gold mine in Southwest Alaska will threaten the Bristol Bay region’s valuable salmon fishery, and they will go court to stop it. On Feb. 11, groups from the Bristol Bay region issued statements saying the document does not address local concerns raised in Congress about shortcomings in the review process. U.S. Sen. Lisa Murkowski in particular criticized the process, previously saying the mine shouldn’t be permitted unless the Corps addresses data “gaps” raised by the Environmental Protection Agency and other entities. Very little has changed between the draft environmental review issued last year and the preliminary final review, said Alannah Hurley with the United Tribes of Bristol Bay, representing 15 tribes from the region. The Corps still has not analyzed a tailings dam failure, she said. “That’s outrageous,” she said. “That’s one of our biggest concerns, when you store toxic waste at the headwaters of the last great wild sockeye salmon fisheries on earth.” She said groups will sue to stop the mine. The United Tribes of Bristol Bay and other anti-Pebble groups have already sued the EPA to try to reestablish one roadblock against the mine. John Budnik, a Corps spokesman, said there have been several revisions to the draft report. He said it addresses three spill scenarios. But the report says the Corps did not model the effect of an “extremely unlikely” catastrophic failure of a tailings dam, like what occurred at the Mount Polley mine in Canada in 2014. Public commenters had requested such a review. Tailings are a mine’s finely ground waste material. The report says the Corps determined that modeling for such an event was “inappropriate.“ Pebble has proposed a design with “water-reduction measures” for the tailings, such as drainage and air flow. The facility would have less chance of failure compared to a breach of “water-inundated tailings,” such as at the Mount Polley mine, the report says. “The bulk (tailings storage facility) would remain in place in perpetuity in ‘dry’ closure, further reducing the long-term spill risk,” the report says. Commercial Fishermen for Bristol Bay also said the preliminary final report is insufficient. “The preliminary final EIS is more of the same; this administration’s priority is a purely political process that completely ignores well-documented science and the voices of Alaskans,” said Katherine Carscallen, director of the fishermen’s group, in a statement. She said the report severely underestimates the risks of the mine to salmon and other resources. Collier with Pebble said Tuesday it’s “absolutely false” to say there have been only small changes to the preliminary final document. The Corps has held numerous meetings and delayed a final decision to address concerns with the draft report, he said. Also, Pebble has changed the design of the proposed port facility and roads and bridges to reduce impacts to waters and wetlands, as spelled out a compensatory mitigation plan it has submitted to the Corps, he said. It has proposed plans to help protect waters in the region, including improving wastewater management in three communities and taking steps to improve salmon passage in 8.5 miles of streams. The Corps’ major conclusions remain the same, Collier said. The report shows the mine would not hurt the Bristol Bay salmon fishery, he said. He pointed to a section on commercial fishing. It says that under normal operations, development alternatives would “not be expected to have a measurable effect on fish numbers and result in long-term changes to the health of the commercial fisheries in Bristol Bay.” Collier pointed out a section on subsistence that says, “Overall, impacts to fish and wildlife would not be expected to impact harvest levels, because no population-level decrease in resources would be anticipated.” Carscallen, with the fishing group, said Collier is wrong to say there won’t be harm to the fishery, The report says the development’s footprint will harm 100 miles of salmon stream, she said. The report indicates the final decision will be in Pebble’s favor, Collier said. “That’s the only conclusion you can reach,” he said.

Pebble releases draft mitigation plan

The Pebble Partnership’s federally-mandated plan to offset its mine project’s impacts to wetlands and salmon-bearing streams includes cleaning beach debris, improving fish passage in compromised waters and upgrading the water treatment systems in area villages, but Tribal leaders in the community closest to the proposed mine site don’t feel it’s adequate. The U.S. Army Corps of Engineers on Jan. 27 published Pebble’s compensatory wetlands mitigation plan to counter the impacts the open-pit mine and its associated infrastructure, which includes 72 miles of roads, ports, and a 192-mile gas pipeline from the Kenai Peninsula to help power the mining operation. The Clean Water Act mandates the wetlands mitigation and the Army Corps of Engineers oversees wetlands fill permitting under the law. Pebble expects to disrupt 3,083 acres of wetlands and water bodies under federal jurisdiction across the broad scope of the project and of that, 2,227 acres will be permanently impacted, according to the plan. More than 70 percent of the permanently impacted areas would be at the mine site. The 856 acres of temporary impacts would be in areas of the transportation and pipeline corridors where some fill material would be used temporarily during construction and eventually removed, the plan states. Upgrading the water treatment facilities in the villages of Newhalen, Nondalton and Kokhanok is Pebble’s first mitigation initiative. According to the documents filed with the Corps of Engineers, demand on the wastewater treatment systems exceeds their designed handling capacity in all of the communities. Newhalen and Kokhanok are on the north and south shores of Iliamna Lake, respectively, and Nondalton is north of the lake on the Newhalen River system near the southern boundary of Lake Clark National Park. The company also plans to restore access for salmon to up to 8.5 miles of habitat — commensurate with the miles of streams the mine facilities would remove from the headwaters of the Koktuli River, which supports five species of salmon — mostly around Dillingham, the largest community in the Bristol Bay region. The mitigation plan states that the portions of the Koktuli watershed that would be permanently removed generally have lower salmon spawning and rearing values, but Pebble acknowledges that indirect impacts from altered water flows and elevated nutrient levels could affect larger salmon spawning and rearing areas downstream. Finally, Pebble is proposing to clean up marine debris from 7.4 miles of coastline around the proposed Amakdedori port site on the west side of Cook Inlet, from which the company hopes to export its ore concentrates. Pebble CEO Tom Collier said in a formal statement that the company “took a holistic approach” to offsetting the impacts from its development and tried to remedy existing issues related to salmon and water quality. “Each initiative we are proposing tackles lingering environmental issues that might not otherwise be addressed due to local financial constraints and competing priorities in the area,” Collier said. Pebble Vice President of Permitting James Fueg said in an interview that the company first did its best to minimize wetlands impacts by scaling back the size of the mine and redesigning facilities in its overall project plan. However, he said 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; those are the mitigation options traditionally preferred by the Corps. Fueg stressed that the coastline rehabilitation is not “just a visual thing,” but that it addresses direct problems for wildlife. He noted it’s a remote area that otherwise likely wouldn’t be cleaned of lost fishing gear and other debris. “We’ve seen cases out there of birds and other things that have gotten entangled in the ropes and nets lying around there so it’s easy to demonstrate that’s a real threat,” Fueg said. The company would continue to monitor and clear the section of shoreline through the life of the project, which is currently pegged at about 20 years, he added. The Corps of Engineers has the final say over what Pebble must do to mitigate its impacts to wetlands and could amend the company’s proposal when it issues its record of decision on the overall project plan, which is tentatively set for this coming summer. Fueg said whatever mitigation work ultimately needs to be done will be finished before any work is done on the mine itself. The fish access projects would focus on replacing damaged or poorly installed culverts that prevent salmon from moving freely to their desired habitat for a given life stage. Culverts and similar potential barriers can impede adult fish passage, but more often they prevent juvenile salmon or resident species from moving back upstream to prime rearing areas during their seasonal migrations, according to Department of Fish and Game biologists. “Frankly, there are hundreds of culverts in the state database (that need fixing) and the reality is that while there may be a quote-unquote ‘responsible party’ associated with that — in other words, who’s the owner of the road; who’s the owner of the right-of-way — the fiscal situation being what it is the majority of those are not going to be fixed anytime soon,” Fueg said. “So there’s an opportunity to do good there and a lot of opportunities for further mitigation if we need to go down that road.” Each of the water treatment projects will likely cost multiple millions of dollars, according to Fueg, who also acknowledged they will require complete access to the facilities but said the Tribes in the communities were supportive of the concept. Nondalton Tribal Council President George Alexie said his council has opposed Pebble “from day one” and discussed the prospect of the company working on the community’s water infrastructure. Pebble’s mitigation plans simply don’t do enough to offset the damage the project will do to large areas of spawning and rearing habitat at the mine site, Alexie contends. “The council opposed the idea of Pebble trying to weasel their way in and throwing all their money around. They tried that a few times but the council didn’t want anything to do with it,” he said. Nondalton’s water treatment plant is controlled by the city council, according to Alexie, but he said the group shares the Tribal council’s beliefs about the controversial mine plan in-part because several individuals serve on both panels. Nondalton City Council officials could not be reached in time for this story. When asked whether he believed Pebble would be granted access to do the proposed work, he said, “I have my doubts.” Tribal leaders in Newhalen have not explicitly supported the project in formal comments, but have expressed desires for more economic opportunities in the region on multiple occasions. Many Newhalen and Kokhanok residents are also shareholders of Alaska Peninsula Corp., a Native village corporation that supports the project and has an agreement with Pebble to allow the company to use its land around Iliamna Lake for its transportation corridor. Lake and Peninsula Borough Manager Nathan Hill said it’s not his role to evaluate the plan but borough officials sought to ensure that mitigation work benefitted the region and connected Pebble with local individuals who could help make that happen. He said he heard that early on the company was considering doing culvert work in the Mat-Su area — where fish passage impediments are a bigger problem — and thought mitigation closer to the project footprint made sense. Hill emphasized that the borough has not taken a stance on Pebble because it has its own local development permits the company must secure, but he also noted that the village leaders will have the final say as to whether or not they want Pebble to do the work in their communities. Elwood Brehmer can be reached at [email protected]

Dunleavy to pitch Alaska mining at B.C. conference

Gov. Mike Dunleavy will be spending part of the first week of the legislative session in Canada to tout Alaska’s mining potential and hear from investors what the state can do to help grow the legacy industry. The governor will be attending the Association for Mineral Exploration Roundup conference in Vancouver Jan. 22-23, according to his spokesman Jeff Turner. Dunleavy’s commissioners of Natural Resources, Environmental Conservation and Fish and Game will accompany him on the trip as well. Turner said the governor would be in Juneau for the first day of the legislative session Jan. 21. In an interview Friday Dunleavy characterized the trip as a continuation of what he has been doing periodically through the first year-plus of his administration — meeting with key players in a host of industries to discuss investing in Alaska. “We want to highlight Alaska and be able to answer any questions investors may have about our regulatory regime and just make a pitch that Alaska’s got some tremendous opportunities because we’re trying to capitalize on our resource wealth and have it developed responsibly so we can create jobs for Alaskans and wealth and potentially revenue for local communities as well,” Dunleavy said. The conference will also give the governor and his cabinet officials a chance to clear up any misconceptions investors might have about Alaska’s mining industry and learn what under-the-radar impediments there might be to pursuing exploration projects in the state, he emphasized. “This visit for me and my team will show us what the perception (of Alaska) is for investors,” Dunleavy said. He compared it to going to the large CERAWeek oil and gas conference last March in Houston, where he and other administration officials were able to learn directly from industry players about their perception of Alaska. In recent years the state had sent geologists and economic development staff to the AME Roundup, but having the governor and three of his cabinet members attend the conference sends an important message about the state’s view of the mining industry, Alaska Miners Association Executive Director Deantha Crockett said. Former Gov. Sean Parnell was the last Alaska governor to attend the conference, she said. AME Roundup aims to pitch exploration projects in western provinces and states to regional mining investors. According to the conference website, it is attended by more than 6,500 people each year. According to industry analysts, there has been a resurgence in mining exploration in Alaska, with roughly $150 million spent on prospecting projects in the state the past two years. That is a sharp increase from the several years prior when just more than $50 million per year was spent searching for metals and minerals across Alaska. “There are lots of different mining conferences around the world but this is the one where companies are looking at where they are going to spend significant dollars exploring projects, which for us means new mining companies in the state of Alaska, new mining opportunities,” Crockett said. Dunleavy made his first public appearance the morning after his November 2018 election at the Alaska Miners Association trade show in Anchorage, which was also where he first proclaimed Alaska as being “open for business” under his leadership. Crockett described Dunleavy’s presence at the mining conference as a “huge deal” for an industry that regularly requires upwards of a billion dollars of investment to see a project through development. “To have the leader of our state say, ‘We want to make sure that you are comfortable making an investment decision in our state’ is a really big deal,” Crockett said. “Next week it’s a big deal, but it’s going to be a big deal for a long time after that.” The Alaska Miners Association is hosting an “Alaska Night” reception Jan. 22 in Vancouver to highlight exploration projects in the state to prospective investors that Dunleavy will be attending as well, according to Turner. Dunleavy added that the information he gathers in Vancouver should be helpful in policy discussions with federal officials. Dunleavy said he will be going back to Washington, D.C., in early February and he will taking what he learns at the conference back to the nation’s capital where he will continue to promote Alaska’s resources. He noted that a large graphite prospect near Nome and rare earth element prospects across the state could greatly help the U.S. reduce its dependence on other countries, namely China, for minerals critical to defense and clean energy technologies, among other uses. “We want to market ourselves as — this may sound strange — but as clean zinc and clean gold and clean rare earth (minerals); what that means is we want to produce these elements, these minerals, these metals in the safest way possible for the environment,” Dunleavy said. In addition to attending the mining conference, the governor will be meeting with British Columbia Premier John Horgan and Northwest Territories Premier Caroline Cochrane, he said, to hear their views in resource-related issues and discuss possible economic partnerships. Fish and Game Commissioner Doug Vincent-Lang is traveling to Vancouver specifically to discuss the concerns many Southeast Alaska commercial fishing and conservation groups have with British Columbia mining operations with the watersheds of large, “transboundary” rivers that flow from the province through Alaska, according to Dunleavy. The downstream impacts some Canadian mines could have on Alaska salmon fisheries has been one Alaska’s congressional delegation and former Gov. Bill Walker’s administration highlighted for years with British Columbia officials. Elwood Brehmer can be reached at [email protected]

Gold claims contested amid Pogo sale

A lawsuit over who has rights to thousands of acres of promising Interior Alaska gold claims has ensnared the new and former owners of the Pogo gold mine. Nevada-based Great American Minerals Exploration Inc. sued former Pogo owner Sumitomo Metal Mining America Inc., RCI Capital Group Inc., a Canadian finance firm and the new Pogo owners, on Nov. 6 in Alaska Superior Court claiming Sumitomo and RCI Capital conspired to sell gold claims near Pogo out from under Great American Minerals as part of a $260 million sale of the mine in 2018. Sumitomo announced in late August 2018 that it had agreed to sell the underground Pogo mine to Australian-based Northern Star Resources Ltd. in a deal that, unbeknownst to Great American Minerals at the time, included the roughly 36,000 acres of state mining claims known as the Monte Cristo property. According to the complaint, Great American Minerals Exploration, or GAME, signed an option agreement with Sumitomo and its subsidiaries in late August 2016 that gave GAME exclusive rights to eventually purchase the Monte Cristo claims provided it made good on a series of work and payment requirements before the end of 2019. On Dec. 30, a day before the option agreement between GAME and Sumitomo was set to expire, Judge Jennifer Henderson issued a preliminary injunction in the suit that essentially freezes the agreement until Henderson lifts the injunction or the case is resolved. GAME paid Sumitomo $700,000 in installments over two years and additionally made good on commitments to perform at least $8.5 million of exploration work at Monte Cristo from 2017 to 2019, according to the complaint. Sumitomo, in its response, denied the vast majority of GAME’s allegations, but acknowledged that the exploration company fulfilled its work commitments in 2017 and 2018 and also made its final option fee payment of $250,000 on Aug. 29, 2018, a day before the sale of Pogo was announced. Matt Singer, an attorney for GAME, said in an interview that the company also conducted more than the $5 million of work in 2019 at Monte Cristo that it was required to under the option agreement. The company believes the property is a very promising prospect as it sits between the Pogo and Fort Knox gold mines near Fairbanks and holds similar geology, Singer added. “(GAME) had one of the largest drill programs in the state in the last year,” he said. “Those are real jobs and it’s real activity.” According to Singer, the company simply wants to clarify its right to Monte Cristo and move ahead with acquiring and further exploring the property. Under the option agreement, GAME was to pay Sumitomo $15 million, or $10 million plus a 1.5 percent royalty on future gold production, no later than 45 days after the end of the option agreement to fully purchase Monte Cristo. As an alternative, GAME could extend the option by a year with a $2 million payment, according to the option agreement. Information published in 2018 by Northern Star and Sumitomo on their websites regarding the Pogo sale references exploration opportunities as part of the transaction but the Monte Cristo property is not specifically named. A statement following the injunction order by Holland and Knight, the law firm representing GAME, estimated the value of the Monte Cristo property at approximately $40 million. The complaint alleges Sumitomo did not believe GAME would fulfill its requirements under the option agreement and therefore began searching for another potential buyer for Monte Cristo. It additionally asserts that Sumitomo, Northern Star and RCI Capital disparaged GAME to potential investors to prevent the explorer from raising the funds needed to meet its end of the deal. “Investors don’t want to get involved in a mining claim if there’s any question about ownership and clear title,” Singer said. “The conduct of Sumitomo and RCI put hair on this deal and scared the investment community off,” Singer said. Attorneys for Sumitomo, Northern Star and RCI Capital either could did not respond to requests for comment or declined to comment on the lawsuit. Northern Star, in its answer to GAME, also denied nearly all of the allegations in the complaint. According to Northern Star, it did not purchase the assets of Stone Boy Inc., the former subsidiary of Sumitomo that holds Monte Cristo, partly because Stone Boy is just a holding company that has not day-to-day operations, according to Northern Star. Rather, Northern Star purchased 100 percent of Stone Boy’s stock in an equity sale. Singer said when GAME didn’t default as Sumitomo and RCI Capital expected, “Sumitomo was less-than-candid with my client — essentially concealed the transaction for a period of time.” Northern Star wanted to tell GAME about the Pogo deal possibly including the Monte Cristo claims and wanted the company’s consent for the transaction, but “Sumitomo was scrambling, trying to figure out what to do and kept the deal quiet,” Singer said. Northern Star’s 2019 annual report dated Aug. 27, states in a footnote that GAME holds an option to purchase Monte Cristo. The report also lists Northern Star as a “joint holder” of the claims. “No sale of the Monte Cristo property occurred because at that time (of the Pogo sale) the plaintiff had not been asked for, nor had it given its consent for the assignment of the option agreement,” Northern Star attorneys wrote in response to GAME. ^ Elwood Brehmer can be reached at [email protected]

Trilogy announces successful drilling at third Ambler prospect

The company with two copper prospects in a remote, mineral-rich region of Alaska is adding another. Trilogy Metals Inc. announced on Nov. 7 that it hit copper, zinc, silver and small amounts of gold and lead during summer drilling at its Sunshine prospect in the Ambler mining district northwest of Fairbanks. The Vancouver-based junior mining firm hit zones of at least 0.87 percent copper in each of the six boreholes tested; all but one of the holes contained copper zones with mineralization excess of 2.08 percent, according to the exploration report. For comparison, a 2016 research article published in the scientific journal Resources concluded that the average ore grade at currently producing copper mines worldwide is approximately 0.62 percent. However, the high costs associated with developing isolated prospects in Alaska often require much better-than-average resources to justify turning a prospect in the state into a producing mine. Zinc occurrences in the same zones were largely in excess of 2 percent, with silver densities reaching 74 grams per metric ton of ore. The results are from 1,356 meters of drilling over the six boreholes. Trilogy targeted the specific drilling sites following a $2 million electromagnetic geophysical survey the company conducted last spring over much of the Ambler prospect belt. Interim Trilogy CEO James Gowans said in a formal statement that Sunshine is just one in a host of prospects across the large Ambler mining region, “which has the potential to be one of the most prolific mining districts in the world.” “The grades and widths of mineralization found at the Sunshine prospect are very similar to what we see at the Arctic project and I expect that with more drilling we can delineate more mineralization at Sunshine,” Gowans said. Other companies are exploring other prospects in the Ambler region, which stretches for roughly 75 miles along the southern flank of the western Brooks Range in the upper reaches of the Kobuk River drainage. Trilogy is also working in other parts of the area, including its aforementioned and advanced Arctic prospect, about eight miles east of Sunshine. Former CEO Rick Van Nieuwenhuyse said last spring that Trilogy leaders hope to complete a feasibility study of Arctic early next year. Environmental permitting for Arctic should start once the environmental impact statement for the controversial, state-sponsored 211-mile Ambler Mining District Industrial Access Project is closer to complete as well, he said. The high-grade Arctic prospect covers approximately 36 million metric tons of ore with 3.07 percent copper, 4.23 percent zinc, 0.73 percent lead and 47 grams per ton of silver. Generally referred to as the Ambler road, the up to $350 million access project is a state-led plan for an unimproved industrial road off of the Dalton Highway to reach the large Ambler mining district. Under the plan, the Alaska Industrial Development and Export Authority would build the road via revenue bonds once it secures commitments from mining companies that would ultimately fund the project through tolls and use agreements. The road project has drawn opposition from local Alaska Native organizations, residents of the area and environmental groups who are worried the project will disrupt caribou migrations important for subsistence harvests. The proposed mines have also drawn scrutiny for potential impacts to salmon and whitefish runs in the Kobuk River drainage. In addition to the young Sunshine and mature Arctic prospects, Trilogy is also working on the mid-stage, copper-based multi-metal Bornite prospect to the south of the other two. The company completed more than 7,600 meters of drilling this year from 10 boreholes in and around the known resource. The $9.2 million drilling program at Bornite was funded by Australia-based South 32 through an agreement the companies signed in 2017. According to a company report issued prior to this year’s drilling, Bornite contains indicated resources of more than 40 million metric tons of ore holding an average of 1.02 percent copper for 913 million pounds of the metal. ^ Elwood Brehmer can be reached at [email protected]

Mineral exploration spending strong for second year; Icy Cape grows

Mineral exploration is on the rebound in Alaska and a unique state-owned prospect is showing promise. Nearly $150 million was spent prospecting mostly for large mine opportunities in the state last year and likely in 2019, according to Curt Freeman, president of Fairbanks-based Avalon Development Corp. That is up from just more than $50 million three and four years ago, but off from a peak of roughly $350 million per year in the late 2000s, when substantial work was being done at the Pebble deposit. The figures were compiled with data from the Alaska Department of Natural Resources. Freeman tallied 18 large exploration projects across the state for “every metal under the sun,” he said. “It was a pretty good year for exploration all the way around.” However, he noted Alaska’s six metal mines are all large operations and the state does not have a single mid-sized producing mine. As is the challenge for many industries in the state, the high cost of operating in very remote places often requires very large and inherently complex projects to be economic. The Alaska Mental Health Trust Land Office is exploring a growing heavy mineral prospect it owns at Icy Cape on the exposed Gulf of Alaska coast between Cordova and Yakutat. Trust Land Office minerals and energy manager Karsten Eden said simply the prospect of industrial-use minerals is commercially viable and contains significant quantities of in-demand minerals such as garnet and epidote — as well as gold. “Every sample has gold in it,” Eden said of the drilling work that’s been done there. He spoke Nov. 5 at the Alaska Miners Association convention in Anchorage. When it started in 2017, the focus of the exploration was on the beach sands that underlie the spruce forests along the coast at Icy Cape. Now the resource delineation work has shifted to the deeper sediments, Eden said. Since 2017 the Trust Land Office has had 13,000 feet of core samples drilled from boreholes down to 300 feet, he said. The Trust Land Office manages roughly 1 million acres of land across Alaska for real estate and resource development purposes, the proceeds of which go to fund the Alaska Mental Health Trust Authority’s work to benefit Alaskans with mental health and addiction challenges. Specifically, the multi-heavy mineral prospect consists of abrasives garne and epidote, and zircon, magnetite and gold. They are present across most of the 48,000-acre property, which is closed to public access, but the exploration team is interested in 23,000 acres of it, according to Eden. The magnetite allowed the Trust Land Office to fly a magnetic survey of the area to better hone in on prospective areas to drill, he said. Different layers of the area’s marine sediments are largely comprised of similar minerals, just in consistently different sizes, he said. That can be beneficial when marketing the processed minerals as certain grain sizes are used for certain applications. “Where you have the highest concentration of heavy minerals you definitely have the highest concentrations of gold,” Eden said. Tests of the minerals’ characteristics by industrial users and labs indicate Icy Cape has “elements of prime quality,” he added, also noting that industrial manufacturers want large prospects that they can count on to produce for 15 years or more. Garnet, a fairly hard, multi-use mineral is in high demand, according to Eden. “The main producer India doesn’t export anymore so people are looking for garnets,” he said. Further resource evaluation will be coordinated with the ongoing logging of various portions of the property to take advantage of increased access to portions of it, according to the Trust Land Office. Eden said the next steps are to compile a formal resource evaluation while looking for a private partner to lead development of the prospect. That work would likely include building a port facility to handle supply shipments and mineral exports. “Gold you can always fly out,” he said. Elwood Brehmer can be reached at [email protected]

RDC conference features positives, challenges, plus BP and Hilcorp

Conference season is in full swing in Alaska and the annual gathering of the players in the state’s biggest industries is right around the corner. The Alaska Resources Conference hosted by the Resource Development Council for Alaska is slightly later than normal this year. It will be held Nov. 20-21 at the Dena’ina Center in Anchorage. The conference will focus on Alaska’s oil and gas, mining and timber industries and the energy in those sectors is positive these days noted RDC Executive Director Marleanna Hall. Alaska Gov. Michael J. Dunleavy has committed his administration to removing impediments to development across the state and at the federal level the Trump administration has largely done the same. Under Trump, the Army Corps of Engineers in September finalized revisions to the scope of the hotly debated Waters of the U.S. Rule, changes which scale back the jurisdiction of the corps and the Environmental Protection Agency to require Clean Water Act permits for some development projects. In mid-October, U.S. Department of Agriculture Secretary Sonny Perdue announced the administration’s preference to fully exempt the Tongass National Forest from the Roadless Rule, a change long sought by timber and mining advocates in the state. Additionally, an oil and gas lease sale for the Arctic National Wildlife Refuge coastal plain is expected late this year or early next, marking the culmination of decades of effort to access the billions of barrels of oil estimated to reside there. While those are all positive developments for those sectors, Hall said she expects to hear plenty from oil industry speakers talk about their biggest upcoming challenge. “I think we’ll have a lot of messaging on why the oil tax initiative should be rejected again,” she said. The sponsors of the Fair Share Act voter-driven initiative are currently gathering the signatures and support they need to get the measure — which aims to raise the state’s collective oil production tax revenue by approximately $1 billion per year — on the ballot in 2020. Rex Rock, CEO of Arctic Slope Regional Corp., long an advocate for opening ANWR to oil exploration, will provide the keynote address Nov. 20. Hall said she is particularly intrigued to hear from National Energy Laboratory Director Brian Anderson, who is scheduled to discuss ways to burn fossil fuels cleaner in an era of climate change later that day. The last speakers of the first day, BP Alaska President Janet Weiss and Hilcorp’s Alaska head Dave Wilkins, will cover recent big news in Alaska circles, that being “the passing of the torch,” as Hall described it, of Prudhoe Bay from BP to Hilcorp next year. The second day of the conference will start with talks about two potential megaprojects in the state, the $13 billion Alberta to Alaska railway and Qilak LNG’s recently proposed $5 billion North Slope offshore LNG export terminal. It will conclude with a discussion about the Alaska Roadless Rule revision process by Forest Service officials and Southeast Conference Executive Director Robert Venables. While the conference is largely attended by industry employers, Hall said RDC always encourages students to attend as well so they can gain insight into the industries they could join after graduation. RDC offers free admission to full-time students for its public events. The student registration deadline for this year’s annual conference is Nov. 13. The agenda is at akrdc.org/conference. Elwood Brehmer can be reached at [email protected]

Alaska Miners Association celebrates 80 years

Mining is one of Alaska’s oldest industries and the Alaska Miners Association exemplifies that. The trade group was founded before World War II and is celebrating its 80th anniversary during its annual convention in Anchorage at the Dena’ina Convention Center Nov. 3-9. Mining continues to be a major industry in Alaska; it employs roughly 13,000 people at small placer and prospecting camps to world-scale mines across the state, according to the Alaska Department of Labor. But even the enduring association doesn’t match the history of mining in Alaska. Commercial mining and Alaska’s “gold rush” years started more than a century before when Russian engineers discovered gold near the Kuskokwim River in 1832, according to the group. The Kuskokwim River valley long supported placer gold operations and today is home to the Donlin Creek gold prospect. With a resource of approximately 33 million ounces, the Donlin mine will be one of the largest open-pit gold operations in the world when it is developed. As for the convention, state Department of Environmental Conservation Commissioner Jason Brune, a former Anglo American representative, will be the keynote speaker Nov. 6, and he will give an update on the mining-related issues the department has dealt with in the first year of Gov. Michael J. Dunleavy’s administration. Dunleavy’s first public appearance after being elected last year was at the Miners convention, where he emphatically declared Alaska would be “open for business” with him as governor. Department of Natural Resources Commissioner Corri Feige will provide the keynote address Nov. 7, sharing her vision for mining in the state and BLM Alaska officials will discuss new priorities regarding mining on federal lands in the state on Nov. 8, according to materials provided by the association. As is customary, the convention will also feature numerous discussions regarding mining policy in Alaska as well as updates on the plethora of large prospects — from copper and gold to graphite and rare earth elements — across the state. Representatives from several of Alaska’s large producing mines will also discuss what their companies have learned in developing metal prospects in the state’s sensitive environment and harsh climate in presentations Nov. 7. Evening activities will start with a history night and inductions into the Alaska Mining Hall of Fame and the convention will conclude with the Alaska Miners Association’s annual awards banquet.

Estelle gold prospect grows with additional acrage

Another large-scale gold prospect is gaining momentum in Southcentral Alaska. Australia-based Nova Minerals Ltd. announced Oct. 8 that it has secured exploration rights to approximately 25,100 additional acres of state mining claims at its Estelle prospect that sits deep in the western portion of the Alaska Range. The acreage adds to the nearly 29,300 acres the company acquired in November 2017. Located about 110 miles northwest of Anchorage near the divide that separates the Western Alaska Kuskokwim drainage and the Susitna drainage of Southcentral, the Estelle gold prospect was drilled by Anchorage-based Millrock Resources early this decade. Millrock and Canadian Teck Resources ended a joint venture and quit the project in 2016. Nova Minerals drilled 18 boreholes at the Estelle property and re-entered historic drill sites over the summer, according to a late September investor presentation. Company leaders currently estimate the prospect holds 2.5 million ounces of inferred gold resources with smaller accumulations of copper and silver also present. Specifically, Nova Minerals estimates the explored areas of the property hold 181 million metric tonnes of ore averaging 0.43 grams per tonne of gold given a cut-off of 0.18 grams per tonne. However, Nova Minerals Managing Director Avi Kimelman said Oct. 8 that the area drilled last summer — on the northern end of the prospect acreage — accounts for just about 1 percent of the overall Estelle property. For comparison, the producing Pogo underground gold mine near Fairbanks has produced approximately 3.9 million ounces of gold since mining started there in 2006, according to operator North Star Resources Ltd. Nova Minerals is currently contemplating an open-pit mine at Estelle if the project is fully developed, according to company documents. The additional acreage Nova Minerals acquired surrounds the northern portion of the original property that was drilled this year. “The expansion of the Estelle project area reinforces Nova’s commitment to expand our resource ounces and fast-track development across the project area,” Kimelman said in a formal statement. “This will allow us to enact much broader exploration and a discovery vision via the exploration of what we believe to be a regionally significant land package in the world-class Tintina gold belt.” Nova Minerals publications regularly note the Estelle prospect’s location on the southwest edge of the massive Tintina gold belt, which cuts across Interior Alaska generally between the Alaska and Brooks mountain ranges and extends into the Yukon Territory. Estelle is also adjacent to other advanced gold exploration ventures, most notably GoldMining Inc.’s Whistler project, which holds significant indicated copper, gold and silver resources. According to a September investor presentation, Nova Minerals leaders plan to continue drilling in 2020 and eventually combine upwards of 25,000 meters of drill core results with additional resource evaluation data. They also note the Estelle prospect is accessible for drilling year-round — a rarity among remote Alaska mineral projects — via winter trails in the area. The company expects to publish a full resource evaluation of the Estelle prospect late next year, according to the Oct. 8 release. ^ Elwood Brehmer can be reached at [email protected]

Coal as power source hits 40-year low

The volume of coal burned in the U.S. to generate electricity hasn’t been this low in almost 40 years — and it’s getting lower. After decades with coal at No. 1, natural gas took away the nation’s top spot for power generation in 2016 and hasn’t looked back. Coal-fueled power generation was at 48 percent of the U.S. electricity supply in 2008, down slightly from 50 percent in 1968, but it’s been in a steep downhill run the past decade. Coal’s share of the power mix plunged to 28 percent in 2018, according to the U.S. Energy Information Administration. The EIA projects coal’s share of electricity generation to fall to 25 percent in 2019 and 22 percent in 2020. And it’s not just low-cost natural gas that’s eating away at coal. It’s renewable energy. Electricity from renewables passed coal-fired power in April for the first time ever, the EIA reported. Renewable sources — which the EIA defines as hydroelectric, wind, solar, geothermal and biomass — provided 23 percent of total electricity generation to coal’s 20 percent for the month. It was a little bit of a seasonal anomaly, the agency explained, as overall U.S. power consumption is the lowest in the spring, with coal- and gas-fired power plants often undergoing maintenance during the slow period. Record generation from wind and near-record generation from solar contributed to the overall rise in renewables this spring, the EIA reported. Regardless of the asterisk on renewables passing up coal for one month, the EIA expects coal to remain ahead of renewables on an annual basis in 2019 and 2020. Renewables, however, will be the nation’s fastest-growing power source for at least the next two years, the agency said in January, on their way toward someday passing coal for an entire year. The cost for wind and solar power is dropping, making renewables more attractive as utilities, industries and states strive to reach emission-reduction targets. Northern Indiana Public Service Co. wants to be coal-free in 2028. Working toward that goal last year, it accepted bids from energy developers and learned that a mix of wind, solar and batteries would be cheaper than building a new gas plant to replace its retiring coal units, The New York Times reported. “Renewables in our particular situation were far more competitive than we realized,” said Joe Hamrock, chief executive of the company that owns the utility. “It’s hard to see any scenario where coal rebounds,” Joe Aldina, manager of coal research at S&P Global Platts Analytics, was quoted by CNN Business in September. Just since the January 2017 inauguration of President Donald Trump, who pledged during his winning campaign to bring back coal-mining jobs, approximately 15 percent of U.S. coal-fired power plants have retired, according to Platts. The energy reporting and analytics firm expects an additional 10 percent of the nation’s coal fleet will close down in 2019-20. “Coal is going to get phased out over the long term,” Aldina told CNN. Duke Energy, one of America’s largest utilities, announced in September its goal to achieve net-zero carbon emissions by 2050. “Retiring coal plants is an important part of achieving this objective,” said Lynn Good, Duke Energy’s CEO. Duke Energy plans to retire seven coal-fired units by 2024. That’s on top of the 49 coal units that have been shuttered since 2010, CNN reported. Besides losing power plants and coal-mining jobs, the industry is losing money and finding itself in bankruptcy court a lot more. More than half a dozen large U.S. coal companies have filed for bankruptcy in the past year, The Wall Street Journal reported Oct. 13, predicting that more companies are headed that way. The bankruptcies follow an even higher number of filings in 2015 and 2016, with the increasingly bad news hitting miners in Appalachia and the Powder River Basin of Wyoming and Montana. “Even if you have a totally clean balance sheet, if you can’t get the coal out of the ground at a price that works you’re going to have a problem,” Fredrick Vescio, a director at investment bank Houlihan Lokey, told the Journal. It’s not just small companies going under as demand for coal heads lower. Murray Energy, the nation’s largest private coal company, reported Oct. 2 it has entered into forbearance agreements on interest payments due on its debt. The move buys time to look at restructuring options. The closed power plants, closed mines and bankruptcies come as the coal market continues to get smaller, regardless of President Trump’s decisions to roll back environmental restrictions on coal-fired plants. The president cannot change the economics of cheap natural gas to generate electricity. Gas prices hit 20-year lows for the electricity-heavy air conditioning months of June and July this summer, averaging $2.40 and $2.37 per million Btu, respectively, according to EIA numbers. Next year could be even lower. Global energy consultancy IHS Markit reported Sept. 12 that the oversupply of gas in the United States could drive average prices in real terms at the Henry Hub benchmark to a level not seen since the 1970s. The analysts are predicting U.S. prices will average $1.92 per million Btu in 2020. At that price, it’s becoming increasingly difficult for power generators to pass up cleaner-burning gas. “I think that a lot of the management and boards of the coal-mining companies were unwilling to admit that this was really going to happen,” Karla Kimrey, a former vice president at Cloud Peak, which had roughly 1,235 employees when it filed for bankruptcy in May, told The Wall Street Journal. “Clearly, President Trump is an advocate for coal, but the ones who really matter are the senior utility executives who are deciding where electricity generation will come from in the future,” the Journal quoted Mark Levin, a managing director and senior analyst at Seaport Global Securities. Generating companies have plans to add more than 150 new gas-fired power plants across the country, the U.S. Environmental Protection Agency reported earlier this year. Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He is the Atwood Chair of Journalism at the University of Alaska Anchorage School of Journalism and Public Communication.

Palmer mine exploration permit on hold pending result of Hawaii water case

The tentacles of a legal battle over wastewater discharges in Maui have reached Alaska. Department of Environmental Conservation officials issued letters on Sept. 9 informing stakeholders that a wastewater discharge permit key to future exploration at the Constantine Metals Resources’ Palmer copper and zinc project near Haines mine would be remanded to Division of Water staff for review. Acting Division of Water Director Amber LeBlanc wrote to Southeast Alaska Conservation Council scientist Guy Archibald that the potential impact to Alaska wastewater discharge permits would be evaluated over approximately 90 days pending the outcome of a case now before the U.S. Supreme Court that originated in Hawaii. After that time, the division could uphold, revise or revoke Constantine’s Waste Management Permit for its Palmer exploration plan, according to LeBlanc. The Southeast Alaska Conservation Council, or SEACC, is one of several groups and individuals who requested an informal review of the project. Archibald said in an interview that DEC issued the wrong permit to Constantine altogether. He and Gershon Cohen, a project director for the group Alaska Clean Water Advocacy, argue the state agency should’ve examined the Palmer exploration plan under a more stringent Alaska Pollutant Discharge Elimination System Permit. 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 Waste Management Permit they issued basically allowed water degradation for Glacier Creek,” Archibald said, and does not analyze different options for managing wastewater at the site. Over the past year, Vancouver-based Constantine has been pursuing state approvals for its underground exploration plan. The company hopes to excavate a 2,000-meter tunnel that would serve as a space to conduct exploration drilling and collect geotechnical and hydrologic data, according to the plan submitted to the Alaska Mental Heath Trust Land Office. The Palmer project is located on Alaska Mental Health Trust property. Hawaiian connection The link between the State of Alaska wastewater permits and a Ninth Circuit Court of Appeals ruling in the case of Hawai’i Wildlife Fund v. County of Maui comes via the Clean Water Act. In many states, the Environmental Protection Agency administers the National Pollution Discharge Elimination System Program as required by the Clean Water Act. In Alaska, the state took primacy of the program starting in 2008, which allows the Department of Environmental Conservation to oversee the federal pollution discharge elimination system requirements, so long as the state standards are at least as stringent as the EPA’s. In the Maui case, the Hawai’i Wildlife Fund and attorneys for the national environmental law firm Earthjustice contend the County of Maui for decades has been polluting near shore ocean waters by injecting millions of gallons of treated sewage water into the groundwater. The contaminated water — pumped into four injection wells that are about 200 feet deep and roughly a half-mile from the ocean — then resurfaces through the shallow ocean floor near a local beach. The wastewater effluent has damaged coral and other marine life in the area, according to Earthjustice. The groups brought a lawsuit against the County of Maui and in 2014 a federal District Court of Hawaii judge found the wastewater injection well operation violates the Clean Water Act because the wastewater seeping up through the ocean floor can be traced back to the injection wells. The county’s appeal to the Ninth Circuit Court of Appeals was rejected as well. A three-judge panel of the federal appeals court ruled in February 2018 that the water injection wells are indeed “point sources” that discharged polluted water into a federally regulated navigable water. That makes the wells subject to National Pollution Discharge Elimination System Program regulation, the 2018 ruling states. “Agreeing with other circuits, the panel held that the Clean Water Act does not require that the point source itself convey the pollutants directly into the navigable water,” Ninth Circuit Court Judge D.W. Nelson wrote. “The panel held that the County was liable under the Act because it discharged pollutants from a point source, the pollutants were fairly traceable from the point source to a navigable water such that the discharge was the functional equivalent of a discharge into the navigable water, and the pollutant levels reaching navigable water were more than de minimis.” Had the courts ruled that wastewater is a non-point source pollutant, it would be outside the purview of the Clean Water and instead be subject to state regulations. Maui County further appealed the case to the U.S. Supreme Court and oral arguments are scheduled for Nov. 6. Palmer plan Constantine’s water management plan for Palmer states that groundwater expected to seep into the tunnel would be collected and run through a water management facilities and ponds at the floor of the Glacier Creek valley before being discharged back into the ground via diffusers about six feet below the surface. The two settling ponds are designed to handle 500 gallons per minute and hold up to 358,500 gallons each for 12 hours to allow solid materials to settle out of the water before it is sent back underground. The ponds would have surface spillways to release excess water if they are inundated due to melt water, rain runoff or unexpectedly high levels of seepage into the tunnel, according to the water management plan. Alaska Clean Water’s Cohen wrote in a July 25 request for an informal review by DEC that Constantine’s water management plan does not account for treating the water for residue from explosives used in the metal exploration work or hydrocarbons released from vehicles working in the tunnel or drilling compounds, “which will quickly make their way to fish-bearing segments of Glacier Creek and the Klehini River due to the connectivity of the groundwater to nearby surface waters.” Cohen said in an interview that the wastewater will quickly percolate through the loose glacial till soil that makes up the bottom of the valley and end up in the streams still carrying the contaminants. He wrote further in the review request that analysis of the area’s groundwater has been “wholly inadequate.” “We have no confidence that the operator [or the Department] has any credible knowledge of the eventual fate of the discharges, which will affect nearby salmon habitat and possibly the drinking water wells of nearby residents,” Cohen wrote. DEC staff wrote in a July 17 response to comments on the Waste Management Permit that the permit establishes surface water quality triggers at three sites and includes water quality monitoring at four sites “to assure and document the absence of a surface water discharge.” As it stands, Constantine’s Waste Management Permit is good through mid-July 2024. Constantine Vice President of External Affairs Liz Cornejo said in an interview that the permit delay has not impacted the company’s operations, as it was not planning to start work on the tunnel and other facilities until next year. Cornejo also wrote via email that the company agrees with DEC’s decision to not move forward with the permit, and subsequent construction, until the Maui case is resolved. “Construction of the underground ramp [tunnel] will not begin and no water discharge will occur until we have DEC support and approval,” she wrote. Alaska weighs in Alaska Attorney General Kevin Clarkson joined 19 other state attorneys general in supporting Maui County through an amicus brief filed with the Supreme Court. The states argue the Ninth Circuit’s decision drastically expands the Clean Water Act and would place a huge burden on states, such as Alaska, that have taken on pollution discharge elimination programs. “All told, the ‘fairly traceable’ standard threatens to drown state environmental protection agencies under a wave of newfound responsibility, requiring them to process and issue a swell of technologically challenging and complex NPDES permits to sources that have never before been subject to that process. Handling this flood of new permits will leech already scarce resources from other programs better equipped to address groundwater pollution,” the Supreme Court brief supporting Maui states. DEC spokeswoman Laura Achee said department officials aren’t sure about the implications of the Maui case because it’s still unresolved and therefore they aren’t commenting on issues relating to Constantine’s permit. Further complicating matters is a tentative settlement in the case approved by the Maui County Council on Sept. 20. Earthjustice spokeswoman Liz Trotter said the settlement would have county officials find another way to dispose of the wastewater, pay reclamation fees and most importantly, it would mean the Ninth Circuit’s ruling stands. However, Maui County Mayor Michael Victorino has yet to sign off on the agreement, which is required for it to be valid per the county’s procedures. Victorino’s spokesman Brian Perry said the mayor is weighing his options and has not yet decided whether or not to approve the settlement. “He’s doing his due diligence and giving the case the attention it warrants,” Perry said in a brief interview. He said the wastewater injected into the wells is “a step below drinking water” and the half of it not put into the ground is used by area farmers and property owners for irrigation. County officials view the issue as one over home-rule, not a debate over environmental laws with national implications. “Our concern is our own wastewater system, period,” Perry said. He added that the county would like to reuse all of the water as Earthjustice wants, but developing such a system could be prohibitively expensive. “The water has to go somewhere because people aren’t going to stop using the bathroom,” Perry said. Elwood Brehmer can be reached at [email protected]

Exploration resumes for gold west of Cook Inlet

A new company is restarting exploration at a long-dormant gold prospect on the west side of Cook Inlet. Newly formed HighGold Mining Inc. started drilling at the Johnson Tract prospect in late August. The Vancouver-based mining junior also announced Sept. 23 that it had started trading on the Canadian TSX Venture Exchange. HighGold CEO Darwin Green said in a formal statement that the company is starting with approximately 2,000 meters of total drilling in eight to 10 boreholes. The data derived from that work, combined with historic drilling results, will inform the first official resources estimate of the prospect, according to Green. That document is expected to be completed early next year. 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. “CIRI prides itself on projects that deliver economic benefits to our shareholders while respecting and preserving the land,” CIRI CEO Sophie Minich said when the Constantine lease agreement was announced in July 2018. “With Constantine’s excellent reputation for responsible mineral exploration and development activities, we know we have chosen an ideal partner.” CIRI spokesman Ethan Tyler wrote via email that the Southcentral region Alaska Native corporation prioritizes striking a balance between developing its resources and protecting land for future generations. He added that the Johnson Tract prospect is one of CIRI's numerous land selections with known mineral potential and it has been the company's intent to develop those prospects when the economics make sense. "HighGold's management team and board of directors are a proven technical team and have a track record as trusted operators with a reputation for safety and quality work," Tyler wrote. "This, combined with CIRI's reputation of excellence and land stewardship, demonstrates CIRI's mindfulness to any public concerns regarding resource development." HighGold's Green has also been part of Constantine's executive leadership, with a focus on exploration. The multi-metal Johnson Tract deposit sits about 10 miles from tidewater near Tuxedni Bay, about 125 miles southwest of Anchorage. HighGold is a spin-out of Constantine, which is also exploring the Palmer copper prospect in the Chilkat River valley north of Haines. HighGold also took over Constantine’s Munro-Croesus gold project in eastern Ontario. According to the mining company, the lease with CIRI calls for annual payments of $75,000 for the first five years, doubling to $150,000 per year for the second half of the term. HighGold is also required to invest $10 million into the Johnson Tract prospect over the 10 years, with $7.5 million of that coming in the first six years. If the decision is made 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 exploration company acknowledges Johnson is a relatively small prospect, but one that has the potential for very high grades of ore based on the prior drilling work. Anaconda mining company drilled 88 holes at Johnson totaling more than 26,800 meters between 1982 and 1995 and a September HighGold investor presentation calls the area a regional opportunity “with multiple underexplored satellite prospects.” 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. If 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]

Letters fly in latest scrap over potential Pebble investor

One third of the Alaska Legislature sent a letter to a Canadian mining company on Sept. 9 in an attempt to dissuade a potential investment in the Pebble mine project. The correspondence from the bipartisan and bicameral group of 20 lawmakers is the latest in a series of letters to Vancouver-based Wheaton Precious Metals Corp. CEO Randy Smallwood over the past seven weeks from conservation and Bristol Bay-area Alaska Native organizations opposed to the project and Gov. Michael J. Dunleavy, who sought to counter the negative messaging regarding Pebble with a July 30 letter. The legislators — mostly Democrats, two Republicans and House Speaker Bryce Edgmon of Dillingham, who changed his affiliation from Democrat to independent this past session — specifically responded to Dunleavy’s letter in which the governor stressed his slogan that “Alaska is open for business” and he did not want a potential investor in a major resource development project to be discouraged by those opposed to it. “A fair, efficient and thorough permitting process, without interference and threats from project opponents, is essential to the future economic growth of Alaska,” Dunleavy wrote to Smallwood July 30. “I am committed to making that happen, and once appropriate permits are granted, I am equally committed to removing obstacles that would hinder immediate construction.” The Pebble Partnership is in the midst of the multi-year federal environmental impact statement process to get a key construction authorization from the U.S. Army Corps of Engineers, but the company would still need to obtain numerous other state and federal agency approvals before construction could commence. According to Dunleavy’s letter, the investment Wheaton is purported to be considering would help Pebble get through the expensive permitting process. Pebble leaders have openly acknowledged they need to secure a financially strong partner to move the project from concept to reality, as Pebble’s parent company and junior mining firm Northern Dynasty Ltd. simply doesn’t have the financial wherewithal to raise the several billion dollars that would be needed to construct the large mine and major support infrastructure. The 20 lawmakers responded by retorting that “Alaska is — and always has been — open for business” in their letter to Smallwood, noting that the Alaska Constitution reserves resource ownership in the state to its citizens with a mandate that they be developed for the maximum benefit of all Alaskans. However, they emphasized that “fish are by far the single most important resource” in the Bristol Bay region.” “In his letter, Gov. Dunleavy assures you that the State will actively defend your company’s investment from ‘interference’ and ‘frivolous and scurrilous attacks.’ Opposition to this project is both local and statewide, and is not frivolous, slanderous or interference,” they wrote. “As individual Alaskans our opposition to this project arises from the potentially severe social, economic, and cultural risks that Pebble Mine represents. As elected officials, our opposition to this project aligns with the interests of our constituents.” The lawmakers continued to cite the late Sen. Ted Stevens’ oft-quoted remark that Pebble “is the wrong mine for the wrong place” and highlighted the fact that several large mining firms have already walked away from the project over the years after spending hundreds of millions of dollars to advance it. They also cited figures from a survey commissioned by Bristol Bay Native Corp., which also opposes Pebble, that found approximately 35 percent of Alaskans support Pebble’s development. Pebble Partnership released its unscientific own survey early this year with figures showing the majority of Alaskans support its efforts. The back-and-forth started July 24 when Bristol Bay-area commercial fishing and Native organizations along with several national conservation groups, including the Natural Resources Defense Council, sent a letter to Smallwood to discourage a potential investment in Pebble. Next came Dunleavy’s letter, followed by an Aug. 29 letter from BBNC CEO Jason Metrokin, which had much the same tone as the legislators’ letter, and finally the Sept. 9 letter. A spokeswoman for Wheaton did not return calls or emails regarding the correspondence to the company. BBNC Lands and Resources Vice President Dan Cheyette in a brief interview called it “entirely inappropriate” for the governor, who oversees the agencies that would be regulating Pebble, to send a letter “that is essentially cheerleading a potential investment in a project that has not yet been permitted.” Resource development advocates similarly criticized former Gov. Bill Walker for taking a formal stance against Pebble, alleging state agencies under his watch would not give the project a fair shake. Dunleavy has consistently taken a neutral stance on Pebble, while he has backed most all other resource development efforts in the state. “While some in the Legislature may disagree, Governor Dunleavy and a large number of Alaskans believe projects should be allowed to follow a fair and transparent permitting process; one that is rigorous, merit-based and prescribed by law,” Dunleavy’s spokesman Matt Shuckerow wrote in response to the legislators’ letter. Pebble spokesman Mike Heatwole wrote via email that the company has had conversations with several potential investors but he could not comment on specific prospective partners. “We continue to have productive discussions with a range of companies about the project and when we have something formal to announce we will do so,” he wrote. The lawmakers did not reference a 2014 ballot initiative that requires any large mining project in the Bristol Bay region to be formally approved by a vote of the Legislature. Voters approved the measure with 65 percent support. Pebble leaders have repeatedly said they believe it is unconstitutional and the company will challenge it when it is necessary to do so. Heatwole said the measure illegally gives “one branch of government (the Legislature) two bites at the apple” in regards to approving Pebble, as it is the Legislature that sets the permitting standards carried out by state agencies. He added that even if it stands a legal test, he doesn’t believe legislators would want to “go on the record (with a vote) killing a job-creating, economically stimulating project” that had already met state permitting requirements. ^ Elwood Brehmer can be reached at [email protected]

Pages

Subscribe to RSS - Mining