Silver, gold production steady in Southeast

The metal mines of Southeast Alaska had consistent and positive production in 2016, according to year-end results released by the operating companies. Hecla Mining Co. reported Jan. 10 that its Greens Creek underground, primarily silver mine on Admiralty Island west of Juneau produced 9.3 million ounces of silver during the year, the highest production level since the company took full ownership of the mine in 2008. One of the most productive silver mines in the world, Greens Creek accounted for more than half of silver production from all of Hecla’s four active mines in 2016, which was a record silver year for the company, according to CEO Phil Baker. The Idaho-based company operates three other silver-centric mines; one each in Canada, the Lower 48 and Mexico. “The 17.2 million ounces of silver produced and the 46 million silver equivalent ounces produced mark the third consecutive year we have broken our 125-year production record, a result of our strategy of investing in organic growth,” Baker said in a company release. Investments to increase production through a period of depressed commodity prices along with “ongoing strong performance of Greens Creek allowed Hecla to generate substantial cash flows this year and we expect well into the future,” Baker said further. Overall, Hecla ended the year with $198 million in cash and short-term investments, a $43 million increase versus 2015, according to the operational report. In 2015 Hecla began a three-year, $44 million project to expand its dry stack tailings facility at Greens Creek, which the company expects to support the mine until 2027 or 2028. The 9.3 million ounces of silver Greens Creek produced last year was about 10 percent more than the 8.4 million ounces extracted in 2015. Hecla attributes the increase to both better grade or and better resource recovery. Silver production at Greens Creek has increased each year since 2012, when the mine ore gave up nearly 6.4 million ounces. On the flipside, gold production at the mine fell by 11 percent year-over-year to 53,912 ounces, the result of lower grade ore, according to Hecla. Production of both precious metals in the fourth quarter was down more than 10 percent compared to 2015 as well. Greens Creek also produces lead and zinc. The Greens Creek mill processed an average of 2,229 tons of ore per day in 2016. The 2016 year-end numbers for gold production at the underground Kensington mine north of Juneau look a lot like the final 2015 figures. Kensington, a gold-only mine owned by Chicago-based Coeur Mining Inc., produced 124,331 ounces of gold in 2016, down slightly from 126,266 ounces in 2015, according to a company release. The average gold grade of 0.21 ounces per ore ton and 94.7 percent resource recovery rate were also in line with 2015. Overall milling was also down slightly from 660,400 tons in 2015 to 620,200 tons last year. Opened in 2010, Coeur said in a company statement that the 2016 production at Kensington was in-line with company expectations and that production this year should be similar. The company also said development of the nearby Jualin deposit is on schedule and about two-thirds complete. Couer said previously that it expects gold production at Kensington to approach 150,000 ounces per year when full-scale mining of Jualin commences in 2018. Elwood Brehmer can be reached at [email protected]

State, Doyon, miners opposed to Eastern Interior plan

The State of Alaska and mining proponents are once again at odds with Bureau of Land Management; this time the dispute is over the agency’s updated plan to manage 6.5 million acres of federal lands in Eastern Alaska. On Jan. 5 BLM released the decision documents to its Eastern Interior Resource Management Plan that would keep approximately 4.8 million federal acres off-limits to development, namely mining in the region known for gold production. Much of that land was previously set aside by prior actions, but Gov. Bill Walker’s administration contends the management plans for the four subunits — White Mountains, Steese, Draanjik and Fortymile — ignore historic legislation regarding lands in the state. The Eastern Interior Resource management plan pertains to BLM-managed lands across a massive triangle of Eastern Alaska from just north of Fairbanks; east to the Canadian border; north to the edge of the Arctic National Wildlife Refuge; and south to Wrangell-St. Elias National Park including the Alaska Highway corridor. The four subunit records of decision are the result of the environmental impact statement process that began way back in 2008. The previous land management plans for the Eastern Interior were enacted in 1986. “People rely on these public lands for their livelihood, for subsistence, for recreation, for access to state and private lands and many other reasons,” BLM Fairbanks District Office Manager Geoff Beyersdorf said in a formal statement. “Over eight years, we have listened and taken the public’s concerns into account. With approval of these plans, we can move forward with management of these public lands in a way that balances use, development and conservation.” In a 13-page Aug. 29 formal protest letter to BLM Director Neil Kornze that reads more like a court complaint, Senior Alaska Assistant Attorney General J. Anne Nelson wrote that BLM’s then-proposed Eastern Interior plan does not allow for conveyance of lands selected by Alaska Native Claims Settlement Act corporations without revising the areas targeted for conservation. James Mery, vice president of lands for Doyon Ltd., the Interior Alaska Native regional corporation, also protested the management plan on several fronts. Mery wrote that while BLM met with Doyon leaders to discuss the plan in 2015, the agency did not adequately address how changing large areas of critical environmental concerns, or ACECs, would impact the company’s use of its lands adjacent to or “effectively enveloped by the ACEC.” Mery specifically referenced ACECs designated for caribou and Dall sheep habitat within the Fortymile Eastern Interior subunit. The Fortymile River drainage is an area known for small placer gold mining operations. “Given the agency’s consultation obligations to (Alaska Native corporations) and the agency’s knowledge of the substantial economic, historic and cultural interest of Doyon and its shareholders in the area, BLM should have engaged in further consultation with Doyon regarding the specific proposed revisions to the ACEC boundaries in an effort to address Doyon’s access concerns,” he wrote. Doyon selected about 770,000 acres within the Eastern Interior area to be conveyed by the federal government, and 755,000 of those acres are within the Fortymile subunit. The agency’s response to possible Native consultation issues states that conservation withdrawals in the plan would not impact conveyance of Native-selected lands and that an access corridor through the Fortymile ACEC to existing Native corporation lands was proposed. According to BLM, land conveyances under either ANCSA or the Alaska Statehood Act are administrative procedures that trump land use guidelines established in the resource management plan. “The BLM also modified the boundary of the Fortymile ACEC to exclude the Fortymile (Wild and Scenic River) corridor, partially in response to Doyon Ltd.’s request,” the protest response document states. However, the agency also notes more generally that Native corporations are “over-selected and not all selected lands will be conveyed.” Assistant state attorney Nelson argued further that the plan “frustrates” the state’s ability to get title to the remaining federal lands it is owed and disregards the agency’s own conclusion in a 2006 report — in response to the 2004 Alaska Land Transfer Acceleration Act — that about 95 percent of historic federal land withdrawals have outlived their usefulness. Nearly 160 million federal acres in the state have been withdrawn, or removed, from possible conveyance to the State of Alaska or private interests primarily for conservation as parts of the numerous public land laws pertaining to Alaska. The Eastern Interior plan instead retains the withdrawals and “unnecessarily and unjustifiably complicates land management in the planning area,” Nelson wrote. She also insists the plan perpetuates a common theme among recent Interior Department agency decisions because it “expressly seeks to curtail mineral exploration and development in an area that has significant mineral potential and a rich mining history, including the oldest mining district in the state,” Nelson wrote. “The plan doubles down on this effort by failing to recommend lifting any existing withdrawals until new substitute withdrawals are in place.” Sen. Lisa Murkowski called the conservation withdrawals in the plan “intentionally excessive” in a release slamming the planning documents, a sentiment shared by Rep. Don Young in a statement from his office. Murkowski, chair of the Senate Energy and Natural Resources Committee, said the habitat protections should be more targeted to protect subsistence interests. Instead, “BLM has continued to disregard its multiple-use mission and the livelihoods of Alaskans as it seeks to impose unnecessary conservation designations,” she said. Alaska Department of Natural Resources Commissioner Andy Mack furthered that sentiment in a Sept. 28 letter to BLM Alaska Director Bud Cribley. According to Mack, not only does the plan hamper the title transfer of state-selected federal lands, it also challenges the state’s ability to build on its resource-based economy, as 40 percent of BLM lands in the Fortymile subunit are off limits to mineral leasing. “Further, the areas of the (Fortymile) subunit that are recommended as open to mining have low mineral potential; therefore, there is little likelihood that mining will occur in any areas recommended as open in the subunit,” Mack wrote. According Alaska BLM spokeswoman Lesli Ellis-Wouters, the entirety of the planning area is withdrawn from mineral development unless the Interior Secretary approves lifting from withdrawal status the 1.7 million acres recommended in the plan. Ellis-Wouters also wrote in an email that the Draanjik and Fortymile plans recommend new withdrawals of more than 5,000 acres, which triggers an Alaska National Interest Lands Conservation Act Requirement for the agency to seek approval from Congress. Alaska Miners Association Executive Director Deantha Crockett concurred with the state’s stance in a litany of points protesting the plan, most focused on how it limits future mining activity in the region. In its retort, BLM notes there are still 1.7 million federal acres in the vast region open to mineral leasing. Additionally, there are about 10,000 acres of federal mining claims in the Fortymile region that predate the withdrawals and thus have been grandfathered in along with active placer operations on state claims within the Fortymile Wild and Scenic River corridor, according to the agency. There are another 11,200 acres of federal mining claims in the Steese and White Mountains areas; and overall the Eastern Interior Planning Area held more than 15,100 active state claims in 2013, BLM states. Elwood Brehmer can be reached at [email protected]

British Columbia to clean up mine near Juneau

JUNEAU — Canadian officials say they will take action to prevent polluted water from a decades-old mine from entering the Taku River, a key source of salmon caught in southeast Alaska. British Columbia Ministry of Energy and Mines Minister Bill Bennett told CoastAlaska News experts will explore different options, including plugging leaking tunnels from the defunct Tulsequah Chief Mine. The acidic water has been carrying pollutants into the Tulsequah River, which is a tributary of the Taku near Juneau. The mine hasn’t operated since 1957, and the two companies that tried to reopen it in the last 20 years have been unsuccessful. Canadian officials had ordered the site’s most recent developer, Chieftain Meals, to clean up the site, but the company went bankrupt last fall. “They were not able before freeze-up to do anything about the settling pond that exists beside the river that captures the runoff from the hill that the old mine was built into,” Bennett said. A government contractor took care of improperly stored chemicals and petroleum products. “Even though the water that’s been tested by both Alaska and British Columbia has shown no negative impacts on aquatic organisms, it’s still against our rules for that water to be flowing into the Tulsequah River. So, one way or the other, we have to stop it,” Bennett said. Chris Zimmer, Alaska campaign director for the group Rivers Without Borders, has been calling for a cleanup of the site for years. “In the past, B.C. was simply saying we’re going to let the mining companies come in, develop the mine and clean it up. I think now Minister Bennett realizes that after two bankruptcies that this mine isn’t one that will be developed and B.C.’s now going to have to responsibility for the cleanup,” Zimmer said. But Bennett acknowledges that a new company could take over the Tulsequah mine, which is owned by a Canadian firm. Any new developer would have to adhere to higher standards for the site, Bennett said. “We would need an ironclad commitment from any new buyer that they were going to do what’s necessary immediately. And if we can’t get that, then the government would act on the closure and remediation plan and just simply close the site down,” Bennett said.  

Year in Review: Mining

Alaskans worried about the potential impact of upstream Canadian mines on Southeast Alaska fisheries officially got their voices heard by the State Department after years of asking for federal intervention. An assistant secretary of state wrote in an October letter to the Alaska congressional delegation that the State Department is actively engaged with Canadian officials to protect the “transboundary” watersheds that bisect the U.S.-Canada border along Southeast Alaska. The October letter was in response to a September request from Sens. Lisa Murkowski and Dan Sullivan and Rep. Don Young to Secretary of State John Kerry requesting the State Department to establish a formal way for Canadian officials to consult with U.S. federal and state agencies and Alaska Native tribes during Canada’s mine permitting process, similar to the domestic environmental impact statement process. It was the second such letter the delegation had sent to Kerry since May. Numerous Southeast Alaska environmental, commercial fishing, and Alaska Native groups have called for IJC involvement in recent years, but the commission can only be spurred by a formal call from either the State Department or Canada’s Global Affairs Department. The delegation characterized the State Department response as a significant positive step, but far from a resolution to the issue. The massive 2014 Mount Polley mine tailings dam failure in the Upper Fraser River drainage validated concerns about gaps in Canada’s environmental protections, the Alaska Native, commercial fishing and conservation groups contend. Also in October, on the same day as the State Department letter, Alaska Lt. Gov. Byron Mallott signed a Statement of Cooperation with British Columbia to form a working group of relevant state departments and provincial ministries to improve stakeholder involvement in transboundary issues. The State Department was also pleased to learn Congress may provide funding for baseline water quality monitoring in Southeast watersheds such as the Stikine, Taku and Unuk rivers, which has been a priority of the Alaska lawmakers. — Elwood Brehmer 2. Icy Bay shows promise for Mental Health Trust The Alaska Mental Health Trust Land Office spent 2016 reviewing a unique mining opportunity with the potential to change the financial course of the quasi-state agency. Icy Cape, a long stretch of beach owned by the trust at the entrance of Icy Bay near Yakutat on the edge of the Gulf of Alaska, appears to hold world-class deposits of several sought-after heavy minerals, according to Trust Land Office officials. The minerals are literally grains in the beach sand on a parcel of coastline that stretches for more than 30 miles and totals roughly 48,000 acres. If preliminary resource indications are proved on a larger scale, the minerals and metal in a tonne of Icy Cape sand could be worth $190 at current market prices, the Trust Land Office estimates. The trust is conservatively projecting that a full-scale mining operation could process up to 250 tonnes per hour for 270 days each year; that adds up to more than $300 million in gross revenue per year for 100 years. It is likely to start on a much smaller scale, however, of about 50 tonnes per your, which would require about $50 million in investment. The Trust Land Office manages roughly 1 million acres of land across Alaska for resource development, the proceeds of which go to fund the Alaska Mental Health Trust Authority’s work to benefit Alaskans with mental health and addiction challenges. Trust leaders said they hope to further delineate the prime mineable zones of the beach and start down the process of funding and permitting the project, which would likely take several more years before first production. — Elwood Brehmer No. 3: Northwest Arctic Borough severance tax lawsuit The Northwest Arctic Borough has filed for summary judgment to dismiss a lawsuit brought against it by Teck Resources, the Canadian owner of Red Dog Mine 90 miles north of Kotzebue. Teck filed a lawsuit against the borough on Jan. 15, alleging the borough’s new severance tax is unconstitutional. The borough insists it has the taxing authority granted to any home rule government. The new severance tax would increase the amount Teck pays the borough from $12 million in 2015 to an estimated $30 million to $40 million in 2016. The mine, the world’s largest zinc source and a large lead producer, forms the backbone of the region’s economy. The state formed the borough in 1986, coinciding with the mine’s development and opening in 1987. Because the new borough would take time to decide its tax structure, it enacted a payment in lieu of taxes, or PILT, agreement with Teck in 1987. Under the PILT, Teck has paid approximately $140 million to the borough and the borough school district over the years. The borough relies on Red Dog for about 70 percent to 80 percent of its annual revenue, alongside its annual $12.5 million state general fund allotment. The borough levies no property or sales taxes on private citizens or any other taxes on businesses. — DJ Summers

Mining at Ambler district advances, as does road

After a brief timeout in 2015 for monetary considerations, progress is being made on both ends towards development of the metal-rich Ambler mining district. Trilogy Metals Inc., formerly NovaCopper Inc., is in the midst of evaluating the results from its $5.5 million 2016 summer drilling program at its Northwest Alaska prospect. While any drilling that contacts the metal veins helps further define the resource base, Trilogy Metals CEO Rick Van Nieuwenhuyse said in an interview that the recent work focused on gathering pre-permitting environmental and engineering data. “It’s all geotechnical (drilling) for pit slope stability, hydrology and metallurgy, and then the fourth component is what we call waste rock characterization,” Van Nieuwenhuyse said. “We spent many, many years now studying the ore and now we have to study the rest of the rock.” Vancouver-based Trilogy Metals changed its name in September from NovaCopper to more accurately reflect the multi-metal resource it is pursuing, according to a company statement. The recoverable value is mostly in copper, at about 65 percent, but about a quarter of the resource value is in zinc and another 15 percent is precious metals — silver and gold — with very small amount of lead, Van Nieuwenhuyse described. For more than a decade the company has focused its work on the Arctic deposit, one of several prospects in the broader Ambler mining district, which stretches for about 75 miles along the southern flank of the Brooks Range in the upper Kobuk River drainage. The well-defined Arctic deposit holds more than 1.7 billion pounds of indicated copper at an average resource grade of nearly 3.3 percent. It also has 2.3 billion pounds of zinc at 4.4 percent, 40.8 million ounces of silver and 550,000 ounces of gold, according to Trilogy Metals. If developed, it would be an open-pit mine with an initial 12-year life and a startup cost approaching $720 million based on preliminary estimates. Van Nieuwenhuyse said the company is pushing to develop Arctic first, but it also has another highly prospective deposit, known as Bornite, not far to the south. Trilogy Metals will “definitely be out in the field next year,” he added, but what exactly the work program will entail still needs to be hashed out by the company’s board of directors sometime in the first quarter of 2017. “We’ve only drilled three years there and in that three years we’ve outlined over 6 billion pounds of copper with not a lot of drill holes,” Van Nieuwenhuyse said of Bornite. The Arctic work is leading up to a multi-year pre-feasibility study and permitting process, the plans for which should also be clearer as spring approaches, he said. Ambler road Building any mine in the Ambler corridor is contingent upon also building a road to get to it in one of the most remote parts of the state, a task that has been left to the state’s Alaska Industrial Development and Export Authority. AIDEA’s current plan is to construct a 220-mile gravel industrial access road that would skirt the southern edge of the Brooks Range and connect to the Dalton Highway east of the Ambler area. Use of the road would mostly be restricted to mining activity, but it could also help provide lower-cost energy and other goods to villages clustered near both ends of the proposed route, proponents note. To date, the State of Alaska has spent $26.2 million studying the project, money approved in capital budgets since 2011. The “Ambler road” was a large part of former Gov. Sean Parnell’s statewide Roads to Resources initiative. Critics of the project contend the state shouldn’t be spending public money on what would ostensibly be a private road. Additionally, residents of the villages near the route have been vocal opponents — more so of the road than mines — arguing it would impact caribou herds that migrate through the area and are a vital subsistence food source. While state general funds have supported the project to this point, money for actual construction, which AIDEA estimates at between $305 million and $346 million, would be financed by the authority and recouped through tolls paid by Trilogy Metals or any other companies that develop resources in the area. The plan is very similar to the Red Dog mine-DeLong Mountain Transportation System operation that development proponents have touted should be a model for other isolated resource prospects in the road-scarce state. AIDEA anticipates it would net up to $150 million from an Ambler toll road even after accounting for another $270 million in maintenance costs over the 30-year life of the road — on the expectation Trilogy’s 12-year Arctic deposit would be one of several mines to spring up after the road was built. AIDEA spokesman Karsten Rodvik said the authority filed its EIS application with the Bureau of Land Management earlier this year. The application was deemed complete in September and the state and federal agencies are in the process of revising the scope of work for the broad permitting document, according to Rodvik. Concurrently, the National Park Service will be leading an environmental and economic analysis. The vast majority of the road corridor is on state and Alaska Native corporation land, but it would also have to cut through a small portion of Gates of the Arctic National Park and Preserve. Long eyed for its mineral potential, a right-of-way to the Ambler mining district through the federal park was included in the Alaska National Interest Lands Conservation Act, or ANILCA, passed by Congress in 1980. The actual Ambler mine prospects are on state and NANA Regional Corp. property. In October 2015 Gov. Bill Walker approved AIDEA to spend $3.6 million left from the prior capital appropriations to the Ambler road after “pausing” it and other large projects the state had undertaken to review their necessity and financial viability while the state is mired in $3 billion-plus annual budget deficits. AIDEA has said it would likely need another $6.8 million to finish the EIS, but given the state’s financials it’s hard to envision another capital appropriation to get the money. Those opposed to the state spending more on the project have said Trilogy Metals should pay for the rest of the work, but the company has declined to commit to the obligation. Van Nieuwenhuyse has said Trilogy Metals would contribute through the tolls, also noting the company doesn’t want to pay to permit the road that could be used by other companies in the future. The company is happy with the path AIDEA is on now, he said. A source close to the project said AIDEA is tentatively planning to self-finance the rest of the EIS with its own funding mechanisms. Rodvik said the $6.8 million figure “is relevant, but that can change pending the scoping outcome.” He added, “We will look at potential funding next steps once the scoping portion of the EIS process is completed.”

Pebble suits proceeding; DNR rebuts reclamation report

Pebble Limited Partnership is asking for legal fees to wrap up one lawsuit against the Environmental Protection Agency and hopes to settle another out of court. The company pursuing the embattled massive copper and gold mining project in the Bristol Bay area filed a motion in U.S. District Court of Alaska Nov. 22 to recover $227,056 in attorneys’ fees stemming from a suit filed in October 2014 in which Pebble claimed the EPA withheld documents after a Freedom of Information Act request. While the suit was ongoing the EPA released more than 320 documents to Pebble related to its FOIA filing, and additional documents were shared during a June 2016 private review of the materials ordered by Judge H. Russel Holland. Pebble filed the FOIA request in January 2014 — shortly after the EPA released its Bristol Bay Watershed Assessment that determined a large mine would cause irreparable harm to the region’s world-class salmon fisheries — to unearth the process the agency used in reaching the conclusions in the Bristol Bay Assessment. The mining company has claims the assessment is based on hypothetical scenarios and it was developed strictly as a means to substantiate the EPA’s predetermined effort to prohibit the Pebble project. Pebble ultimately contends the EPA should cover its attorneys fees “because it substantially prevailed in obtaining scores of improperly withheld documents that it would not have obtained” if not for the suit. The legal action caused the agency to produce “scores of previously “undiscovered’ documents” and Pebble successfully challenged about 75 percent of the documents the EPA had withheld under privilege claims, the motion states. In a related lawsuit also before Holland, Pebble and the EPA have agreed to go before a mediator and negotiate issues prior to a trial. Here, Pebble sued the EPA in September 2014 on the belief the agency was not objective in compiling the Bristol Bay Assessment and violated federal laws by improperly collaborating with mine opponents in the crafting of the Bristol Bay assessment. Pebble spokesman Mike Heatwole said the group is hopeful the whole suit can be resolved outside of court, but declined to offer any further detail on the issues being negotiated. A Justice Department spokeswoman said the attorneys representing the EPA could not comment on the ongoing litigation. The motion to enter mediation was filed Oct. 27, but Heatwole said he did not think the sides had convened yet. Pebble reclamation controversy After a preliminary review, the Alaska Department of Natural Resources is downplaying the conclusions drawn in a report published Nov. 3 that is highly critical of Pebble’s efforts to clean up after its extensive exploration program. Conducted by the Center for Science in Public Participation, or CSP2, and titled, “Investigation of Reclaimed Drill Sites, Pebble Prospect,” the report concluded that more than 40 percent of the 107 exploration drill sites the CSP2 team inspected had “environmental issues” including dead vegetation, water leaking from the boreholes and open drill casings. The report proves a need, at a minimum, for increased monitoring of Pebble’s exploration sites, according to a release by United Tribes of Bristol Bay, the group that commissioned the work and has fought hard against Pebble. “DNR needs to stop rubberstamping Pebble’s (miscellaneous land use) permits and instead require Pebble to clean up the mess it left behind before taxpayers are stuck with the cleanup bill,” UTBB Executive Director Alannah Hurley said in a statement when the report was released. Pebble has applied with DNR for a two-year MLUP permit to allow it to continue reclamation and maintenance work through 2018 on the more than 1,300 holes it drilled during exploration and its equipment that remains at the claims. Pebble’s activity occurred on state land. Pebble Partnership was not required to put up a reclamation bond to back its work because it did not cumulatively impact more than five acres of land. The group chose to conduct operations via helicopter, thus reducing its footprint, and all of its temporary facilities were placed on “tundra mats,” which limit impacts to vegetation that will grow back once the equipment is removed, according to DNR officials monitoring the project. A report following a DNR inspection of Pebble’s work this summer concluded that Pebble’s “operation is in good condition and is consistent with industry standards.” DNR spokeswoman Elizabeth Bluemink said agency staff requested a full copy of the report from CSP2 after the summary was released in early November and found the Montana-based research group “may have misunderstood or misstated” some requirements of the state’s reclamation statutes and land use permits. “For example, dead vegetation, as observed by both DNR and CSP2 in the field, does not constitute a violation of permit conditions,” Bluemink wrote in an email. Further, the exposed drill casings highlighted in the report are “allowed, and expected” in exploration projects, according to Bluemink. She noted that DNR and staff from other state agencies have performed 56 field inspections of Pebble since 2003, the most for any mineral exploration project in the state. At the same time, the state welcomes public input and uses pertinent information provided from any source in regulating state lands. “A number of the observations reported by CSP2 could be helpful to DNR as it continues to regulate (Pebble’s) activities,” Bluemink wrote. “DNR staff will be able to take the CSP2 observations into account when we visit those sites in the future.” Elwood Brehmer can be reached at [email protected]  

For Livengood project, smaller is better

A smaller, simpler plan for developing the Livengood gold prospect has greatly improved the project’s economic viability. Vancouver-based International Tower Hill Mines Ltd., or ITH, released an optimized pre-feasibility study for the Livengood project Oct. 24 that determined a mine about half the size of what the company originally planned could reduce development costs by about $950 million and operational expenses by 28 percent. As proposed, Livengood would be a conventional, open-pit mine near the Dalton Highway about 70 miles north of Fairbanks. First investigated as a 14-year mine processing 100,000 tons of ore per day with a $2.8 billion capital cost in a 2013 feasibility study, the latest report downsized the operation to a $1.8 billion development handling 52,600 tons of ore per day over 23 years. “Livengood’s fundamentals are compelling, with a substantial gold resource, favorable jurisdiction, proximity to infrastructure and great leverage to the gold price,” International Tower Hill's CEO Tom Irwin said in a release. “We are committed to advancing our basic engineering and metallurgical work to further de-risk the project and prepare for future permitting.” A smaller, longer-lived Livengood would produce slightly less gold, about 6.7 million ounces of the precious metal as opposed to the original estimate of nearly 7.9 million ounces. Annual production of 294,100 ounces from the smaller mine would be 52 percent of the initial plan, closely mirroring the reduction in ore processing, according to the study. The Livengood prospect holds more than 8.9 million ounces of proven and probable reserves at an average resource grade of 0.71 ounces of gold per ore ton. While running a smaller operation for longer seemingly butts against the traditional notion of achieving economies of scale, ITH spokesman Richard Solie said the junior mining company took a holistic look at its plan to ultimately reduce the ore processing cost from more than an esimated $10 per ton to $7.48 per ton. The corresponding cost of production dropped from $1,481 per ounce of gold to $1,247 per ounce under the scaled back scenario. Gold is currently selling for about $1,270 per ounce. For much of 2011 and 2012 it sold for between $1,600 and $1,800 per ounce but prices dropped to a recent bottom of about $1,050 late last year. For starters, Solie said the latest study led ITH to move to a coarser initial ore grind, which would require less power and save money. “Part of why you grind it up smaller is so you can get more gold out of it. But we didn’t lose much recovery when compared to how much we gained in cost (savings),” Solie said. Along that same vein, employing a secondary crushing of the ore before sending it to the mill to be ground would allow for a more efficient use of power, he added. Increasing the grade of the slopes in the mine pit and cutting the leach circuit time from 32 hours to 24 hours after gaining a better understanding of the ore in place reacts to the chemical processes were cost savers as well, according to Solie. ITH also discovered it could save about $100 million up front by forgoing the construction of water reservoirs that were initially thought to be needed for mine start-up. “As it turns out we have enough water in the actual aquifers to meet the need,” Solie said. Being within a two-hour drive of Fairbanks also persuaded ITH to move ahead without a significant cost of doing business that is common to other remote Alaska mines, an operations camp. The smaller Livengood mine is modeled as a commuter mine, in which employees would congregate each day at a muster point in Fairbanks and take “a nice cushy ride up to the site” via bus each day, Solie said. While it adds to the length of the workday, he noted ITH also prefers the ability of its future employees to stay more engaged in their community and spend additional time with their families. “It’s a different culture when your people are living in a town rather than living out at a camp and there’s elements of that we like,” Solie said. “We like the idea of people sleeping in their own beds. We think that’s positive.” Elwood Brehmer can be reached at [email protected]

2016 is a milestone year for miners

Alaska’s miners will have an opportunity to look back at the progress of three of the state’s flagship mines at the annual Alaska Miners Association convention that kicks off Nov. 6 in Anchorage. This year is a milestone year for the mining industry in Alaska; it marks the 10th anniversary of operations at the Pogo underground mine and the 20th year of production at the Fort Knox surface mine. Both located near Fairbanks, they are the state’s premier gold mines. In addition, Hecla Mining Co., which owns the underground Greens Creek silver mine near Juneau, just celebrated its 125th birthday. At 26 years old, Greens Creek is not a young mine, but with record production of 8.5 million ounces of silver in 2015, it remains the largest active silver mine in the country and one of the most productive in the world under Hecla’s guidance. Alaska Miners Association Executive Director Deantha Crockett said she is particularly looking forward to Nov. 11, a day of the convention that will be devoted to highlighting the achievements of the trio and reminiscing about stories and events that have led to the anniversaries. “On the day that we talk Pogo, Fort Knox and Hecla we’re actually only having one (discussion) track because we know that the vast majority of our attendees are all going to want to go to that,” Crockett said. A few days prior, new Alaska Attorney General Jahna Lindemuth will headline the convention’s speakers on Nov. 8 with an hour-long dialogue likely on a host of topics. Crockett said the Alaska Miners Association was “incredibly excited” to hear of Lindemuth’s appointment as Alaska’s top attorney by Gov. Bill Walker in late June because she came to the position from the private sector and has significant experience handling resource development matters. Lindemuth’s talk will undoubtedly include the state’s decision to establish a framework for transferring land owned by Alaska Native tribes into federal trust status. Walker has directed her to lead the state’s involvement in the complicated and sensitive issue that could have far-reaching implications for resource work in the state. “How resource development projects are impacted by decisions that come out of the Native lands into trust issue and the status of those lands — it’s a major issue to watch for us and so finding out how the state plans to navigate that will be useful for pretty much all Alaskans,” Crockett said. She added, “The attorney general is so instrumental in the litigation that comes against resource development permits and the consistent federal overreach that we’re dealing with that I don’t expect to have any shortage of topics for her to address.” Following Lindemuth by a day will be Murray Hitzman, head of the Energy and Minerals division of the U.S. Geological Survey, discussing the future of the agency in the state. Crockett noted that anyone interested in resource development should want the USGS to be active in Alaska — continuing to map the vast state and delineate its resources — fundamental activities that the State of Alaska cannot afford to support as it deals with multi-billion dollar budget deficits. Finally, miners cannot gather without talking about their prospects. While exploration for large projects in the state has dipped in recent years for several reasons, one of the bright spots for the industry is Constantine Metal Resources’ Palmer project in Southeast Alaska near Haines, a high-grade copper, zinc, silver and gold deposit that would be an underground operation if developed. Constantine announced in September that it began construction of a 2.5-mile road to the project as it wrapped up its 2016 exploration drilling program that included seven drill sites. “(Constantine’s) healthy drilling season should provide a lot more results and we should get an update as to what we can expect out of that project, so that’s very exciting,” Crockett said. Elwood Brehmer can be reached at [email protected]

U.S. State Dept has interest in upstream Canadian mining projects

The U.S. State Department has taken a positive step to recognize the concerns some Alaskans have with upstream Canadian mining projects, but the issue is far from resolved, according to the members of Alaska’s congressional delegation. Assistant Secretary of State for Legislative Affairs Julia Frifield wrote in an Oct. 6 letter to the delegation that the State Department is actively engaged with Canadian officials to protect the watersheds that bisect the U.S.-Canada border along Southeast Alaska. “The Department of State intends to continue to work, in coordination with other U.S. government agencies, to ascertain what the Canadian federal government is doing to meet U.S. concerns about protecting this sensitive shared ecosystem from potential transboundary pollution during mine development, operation, impoundment design, and post-closure, and through bonding practices,” Frifield wrote. The Oct. 6 correspondence was in response to a Sept. 8 joint letter from Sens. Lisa Murkowski and Dan Sullivan and Rep. Don Young to Secretary of State John Kerry requesting the State Department to establish a formal way for Canadian officials to consult with U.S. federal and state agencies and Alaska Native tribes during Canada’s mine permitting process, similar to the domestic environmental impact statement process. It was the second such letter the delegation has sent to Kerry since May. Numerous Southeast Alaska environmental, commercial fishing, and Alaska Native groups have called for IJC involvement in recent years, but the commission can only be spurred by a formal call from either the State Department or Canada’s Global Affairs Department. They’re worried about the potential impacts of large metal mines in British Columbia at the heads of large rivers that support commercial and subsistence salmon harvests and flow through the province and Alaska’s panhandle. The massive 2014 Mount Polley mine tailings dam failure in the Upper Fraser River drainage validated the concerns, the groups contend. IJC intervention was originally intended only when both governments submit a “letter of referral” asking for the commission to resolve a dispute. Over time that procedure has morphed and both countries have at times singularly requested IJC involvement, which has often been granted. The commission’s recommendations are nonbinding but generally adhered to in an effort to maintain a cooperative relationship between the countries. Alaska’s delegation also asked for, among other things, the State Department to determine whether an International Joint Commission is the appropriate avenue to find out if Canadian mines are using best practices for treating wastewater and mine tailings, “especially in light of the scientific reviews of the causes of the Mt. Polley tailing disposal dam failure,” the delegation wrote. Frifield noted Canada examining its entirety of its environmental review process; results are expected early next year. Murkowski said in an Oct. 14 joint delegation release accompanying the letter that she is encouraged that the Obama Administration is taking an elevated interest in the transboundary watershed issue — including an August meeting in Alaska between the Central Council of Tlingit and Haida Indian Tribes of Alaska and a State Department-Environmental Protection Agency contingent. “That being said, I remain disappointed that the State Department refuses to address our questions and suggestions, such as to consider appointing a special representative for U.S.-Canada transboundary issues,” Murkowski said. “And it is unacceptable that Secretary Kerry has yet to meet directly with Alaskans on such a hugely important issue. The State Department’s response is a step in the right direction, but we still have a long way to go until Alaskans’ concerns are adequately addressed.” The State Department was also pleased to learn Congress may provide funding for baseline water quality monitoring in Southeast watersheds such as the Stikine, Taku and Unuk rivers, which has been a priority of the Alaska lawmakers. Young said the state and country share an interest in developing their natural resources, but open lines of communication when development in one could impact the other. “Ongoing and proposed mining activities in Canada have brought tremendous concerns to the people of Southeast Alaska -- specifically with the Tlingit and Haida people – which is why I have always engaged with the delegation to prioritize and facilitate outreach between all parties involved. Although I am pleased to hear about certain progress being made to implement portions of the memorandum of understanding and to address the concerns of Alaskans, I still believe there’s much work to be done.” Sen. Sullivan concurred, saying, “I am glad the Department of State and other Administration officials have finally initiated steps to engage key stakeholders as well as the governments of Canada and British Columbia on these pressing transboundary water issues. Yet, further progress is necessary to address the questions the delegation and Alaskan stakeholders have raised.” Also on Oct. 6, the date on the State Department letter, Alaska Lt. Gov. Byron Mallott signed a Statement of Cooperation with British Columbia to form a working group of relevant state departments and provincial ministries to improve stakeholder involvement in transboundary issues, an agreement the State Department was anticipating, according to Frifield. Elwood Brehmer can be reached at [email protected]

Agreement reached with Canada over B.C. mining projects

Alaska Lt. Gov. Byron Mallott signed an agreement with Canadian officials Thursday, marking a step toward cooperation in protecting Southeast Alaska’s border-straddling rivers from proposed mining projects in British Columbia. The Statement of Cooperation establishes a working group of commissioners from three Alaska State Departments and deputies from two Canadian ministries to facilitate ongoing discussions on transboundary mines between the Alaska, B.C. and stakeholders from tribal and environmental groups. “I am pleased that we were able to move forward with this measure,” Mallott stated in a Thursday press release. “It is another step in Alaska’s commitment to open and transparent collaboration with our Canadian neighbors on the vital issue of safeguarding our precious transboundary watersheds that feed our people and nourish our cultures.” Mallott signed the SOC in Anchorage, conferencing via video with B.C. Minister of Energy and Mines Bill Bennett and Minister of Environment Mary Polak, who also signed the SOC. Mallott has worked with Canadian officials and tribal and environmental organizations to draft the statement since late 2015. “British Columbia and Alaska have a long history of working together and supporting each other, as good neighbors do,” Bennett said in a prepared statement. “This Statement of Cooperation between British Columbia and Alaska ensures we are working together effectively on trans-boundary water quality, environmental assessments and permitting for mine projects, and reporting on mine discharges, operations and closure.” The statement is legally non-binding, but does not preclude Alaska from seeking federal intervention in the issue, something environmental, tribal and fishing industry groups say is crucial to protecting Alaska’s salmon interests. “It’s not legally binding, so overall things don’t change,” Frederick Otilius Olsen Jr, Chair of the Tribal Transboundary Mining Working Group said by phone. “This is an international issue and we need international solutions. This being nice across the border is nice, but that’s all it is, it’s just nice talk.” Olsen was referring to intervention from the International Joint Commission, a U.S.-Canadian federal group tasked with settling disputes over shared waters. Olsen and officials from 11 other Southeast tribal, environmental and fishing industry groups have previously signed letters asking for IJC intervention. Alaska’s Congressional delegation has also requested federal intervention through the IJC, petitioning Secretary of State John Kerry to explore the issue in two letters, the most recent sent Sept. 8. Olsen cited a May report from British Columbia’s Auditor General which found “major gaps in resources, planning and tools,” in B.C.’s mining regulation. The report also found B.C.’s mines underinsured for watershed cleanup by $1.2 billion, money that would be needed for a cleanup in the event Canadian mines pollute Alaskan waters. “The SOC is just one step,” Heather Hardcastle, campaign director for Salmon Beyond Borders said in a phone interview Thursday. “Alaskans have been seeking for a while now binding agreements that can only come from intervention from the federal government.” Olsen and Southeast Alaska Conservation Council’s Guy Archibald also expressed concern over some of the statement’s language, which they say is too vague. Archibald stressed that the phrase “significant degradation,” as it’s defined in the SOC, could leave the door open for mine pollution. “No lowering of Alaska’s water quality by BC mines should be allowed,” Archibald wrote in an email to the Empire. “In Alaska, any lowering of water quality requires the polluter to go through a public process. … Even under a permit, the lowering of water quality cannot be to the point where the designated uses, such as maintaining aquatic life, are lost. Is this giving BC the right to lower our water quality to that point without it being considered significant?” Kevin Gullufsen can be reached at [email protected]

Gold prices rising as Donlin mine keeps plugging on EIS

With gold prices on the rebound, it’s full steam ahead for the Donlin Gold mine in Western Alaska. Donlin Gold spokesman Kurt Parkan said in an interview that “things are moving along pretty steadily” as the company continues through the federal environmental impact statement, or EIS, process. A variety of other state and federal permits are being sought in concert with the multi-year EIS process, according to Parkan. As far as the EIS goes, the ball is the U.S. Army Corps of Engineers’ court for now. The Corps is the lead permitting agency for the project. “We’re still waiting to hear back from the Corps of Engineers on follow-up that might be necessary after they had a chance to review the (public) comments that they’ve received,” Parkan said. The Corps, which received about 540 written comments during an extended public comment period, is expected to come back to Donlin with any unresolved issues that arose from public comments or that it discovered by the end of September, he added. Release last November of the draft EIS marked, to that point, the culmination of 20 years of work on Donlin. Early resource definition of the gold prospect began in 1995. Donlin Gold is a 50-50 joint venture of Canadian mining companies Barrick Gold Corp. and NovaGold Resources. A $6.7 billion endeavor with a footprint from Cook Inlet to the Aleutian Islands, the Donlin Gold mine is the definition of a megaproject. At the heart of the project is a prospective conventional open-pit gold mine 1.5 miles across and up to 1,200 feet deep located about 10 miles north of the village of Crooked Creek in the Upper Kuskokwim River drainage. At that size, Donlin is projected to be the largest open-pit gold mine on Earth. As initially planned, Donlin Gold would produce about 1.1 million ounces of gold per year over a 27-year mine life for a total of about 33 million ounces of the precious metal. The mine site, on lands owned by The Kuskokwim Corp. and Calista Corp., the area village and regional Native corporations, respectively, would also include a fully lined, 2,300-acre tailings facility to store the processed ore. Support infrastructure would include a 315-mile, 14-inch diameter natural gas pipeline originating on the west side of Cook Inlet need to supply fuel to the 227-megawatt capacity power plant at the mine site. The pipeline has also been viewed as a first, indirect step to getting lower cost natural gas to numerous villages in Western Alaska that currently rely on fuel oil their primary heat and electricity sources. A 30-mile road would connect the mine to a new barge port on the Kuskokwim. Further down the Kuskokwim, port cargo facilities would be expanded in Bethel, and new diesel storage tanks would be needed Dutch Harbor to supply fuel for equipment at the mine. The EIS includes an alternative that calls for LNG-powered equipment, which would reduce the risk of a barged fuel spill on the Kuskokwim, but also require construction of an on-site natural gas liquefaction plant. Once Donlin has heard back from the Corps, Parkan said it would likely take the company until late 2017 to release the final EIS, pushing back the overall timeline slightly. The Corps of Engineers’ project EIS website estimates a final EIS early next year. “It always takes a little longer than you hope it would,” Parkan said. The public comments on the project were mostly in line with what was expected, he said. However, a stance opposing the project emerged from the Yukon-Kuskokwim Health Corp. because jobs at the mine could provide a means for people in the region to move elsewhere while making a long range commute to the mine on a rotating work schedule. Parkan said simply that Donlin Gold feels the up to 1,400 jobs the mine would support would ultimately be a significant benefit to the Yukon-Kuskokwim region that is one of the poorest in the country. “People are already moving out of the region because they don’t have jobs,” he said. “If you bring jobs into the region you might stop that flow of outmigration. People could stay home and take care of their families; they could afford to hunt and fish, which is part of the problem that exists now.” Donlin estimates up to 3,000 workers will be needed during construction if the mine is built. The company has often touted its record of about 90 percent local hire during the exploration and study phases of the project. The concerns over outmigration were one of several points raised by the Yukon-Kuskokwim Health Corp. in opposition to Donlin, which included potential damage to the salmon and wildlife resources people in the region rely on for subsistence harvest. When the draft EIS was released last year, Donlin General Manager Stan Foo said the project would not be built at gold prices at the time of less than $1,100 per ounce; and while the long-term viability of the project is not completely at the mercy of metal prices any one day, gold is currently trading at about $1,350 per ounce. Parkan said there is no definitive price at which the mine is a go. Donlin’s owners are committed to getting through permitting and then will evaluate how gold prices could impact the project, he said. “The more above $1,200 (per ounce of gold) the happier we are,” Parkan added. Elwood Brehmer can be reached at [email protected]  

Wishbone Hill permit awaits federal call after court order

Usibelli Coal Mine Inc.’s operating permits for its Wishbone Hill coal development are “in limbo” after a July 7 federal court order, according to officials in the state Department of Natural Resources. Alaska Coal Program Manager Russell Kirkham said the state is waiting on a decision from the federal Office of Surface Mining, Reclamation and Enforcement before it acts on the coal permits. “We have not taken the step to terminate the permits,” Kirkham said. “Right now the permits are there but they’re pretty much in limbo until the final order comes out.” Usibelli’s Wishbone Hill is a longstanding proposed surface coal project on state land northeast of Palmer along the Glenn Highway. U.S. District Court of Alaska Judge Sharon Gleason’s July 7 ruling ordered the Office of Surface Mining to reevaluate its November 2014 decision that indirectly validated Usibelli’s permits for the mostly idle project. A group of environmental organizations, including Cook Inletkeeper, Alaska Center for the Environment, the Sierra Club, and the Chickaloon Village Traditional Council, sued the Office of Surface Mining in March 2015, claiming the Interior Department agency did not enforce its own requirement to pull permits if mine work does not start within the permit period. Gleason largely agreed, and determined that the federal regulators failed to follow the law by allowing DNR to implicitly renew and extend the permits without the commencement of mining activities. The permits to operate can be renewed for up to five years or extended for three. The State of Alaska holds primacy over federal coal mining regulations. Thus, DNR handles all permitting and the Office of Surface Mining intervenes only if required to do so. Specifically, language in the federal Surface Mining Control and Reclamation Act stating operating permits “shall terminate” if mining activity has not occurred within the permit period. Gleason wrote, it “is unambiguous, in that a surface mining permit terminates by operation of law if mining operations have not timely commenced under that statute, unless an extension has been granted pursuant to the statute’s terms.” Kirkham said the federal mining regulators are working on a new decision that jives with Gleason’s ruling and the state is waiting for that decision, which is expected soon, before taking further action. “In this case the district court, reversing the federal Office of Surface Mining, held that the termination provision of a federal surface coal mining statute is self-executing. The decision was not, in itself, a ruling on the validity of the Wishbone Hill permits. Instead the court has remanded the matter to the federal agency for further proceedings where that question and others may be resolved.  We are continuing to review the decision and appropriate next steps,” according to a statement from the Alaska Department of Law. Office of Surface Mining Western Region officials, located in Denver, could not be reached for comment. Usibelli acquired the Wishbone Hill project in 1997 from North Pacific Mining Corp., a Cook Inlet Region Inc. subsidiary. The mining company then applied for and received several five-year permit renewals from DNR through 2014. The first state permits to operate the mine were issued to Idemitsu Alaska Inc. in 1991. Idemitsu was granted one extension before it sold the project to North Pacific Mining in 1995. Early coal mining operations started in 2010 when Usibelli began work on a road to the mine site. About that same time, Usibelli started a feasibility study on the project, according to company spokeswoman Lorali Simon. Office of Surface Mining Western Region Division Manager Robert Postle wrote in the November 2014 notice to state coal regulators that DNR was correct in not taking action against Usibelli for operating at Wishbone Hill without permits because the company’s permits had not been terminated. However, that was only because DNR didn’t follow the appropriate procedure when it implicitly granted extensions to the companies that owned Wishbone Hill before Usibelli by not actively pulling the permits, according to Postle. “To terminate a permit, the regulatory authority must take affirmative action based on the record,” Postle wrote in 2014. “In this case, DNR failed to do so, and consequently, Usibelli was not operating without a permit. I find that DNR, consequently, had ‘good cause’ for not taking action against Usibelli for operating without a permit. I also find, however, DNR had a responsibility to issue prompt determinations on the failure of Usibelli’s predecessors to initiate mining and that it failed to do so. This situation cannot be allowed to happen again.” The 2014 notice to the state was spurred by a citizen’s complaint filed with the Office of Surface Mining by several of the same groups that filed the lawsuit against the federal agency. The complaint requested federal action to stop coal mining operations at Wishbone Hill until Usibelli obtained valid permits. Usibelli, which operates the state’s lone active coal mine near Healy in the Interior, has invested millions of dollars in Wishbone Hill and still has plans to bring the mine, Simon said, but a myriad of factors have always prevented that. She said DNR has been continuously apprised of Usibelli’s plans and consequently kept approving the permits and that Gleason “erred because she did not recognize the state’s primacy” over coal mining operations. “Because the ball is in (the Office of Surface Mining’s) court, we’re waiting to see what OSM says to DNR,” Simon said. Elwood Brehmer can be reached at [email protected]  

Federal court vacates oft-renewed Wishbone Hill permit

Usibelli Coal Mine Inc. is reviewing its options for the proposed Wishbone Hill mine after a July 7 ruling in the U.S. District Court of Alaska that vacated permits for the project. District Court Judge Sharon Gleason ordered the state and federal permits for the planned surface coal mine north of Palmer vacated because Usibelli failed to develop the mine within the time allowed by the permitting process, according to her 35-page order. A group of environmental organizations, including Cook Inletkeeper, Alaska Center for the Environment, the Sierra Club, and the Chickaloon Village Traditional Council sued the federal Office of Surface Mining Reclamation and Enforcement in March 2015, claiming the Interior Department agency did not enforce its own requirement to pull permits if a mine is not operational within three years of permits being issued. The mine site is between Palmer and Sutton on state land near the Glenn Highway. The State of Alaska, which has assumed primacy, or management, of the federal permits, was an intervenor defendant in the suit, along with Usibelli. Lisa Wade, a member of the Chickaloon Traditional Council, called it “shameful” that the state Department of Natural Resources and the Office of Surface Mining allowed Usibelli to hold the permits for so long. “Usibelli is trying to start up a toxic coal strip mine on lands that are sacred to us, using a permit that was issued 25 years ago. This mine threatens our children’s health, our salmon, our water and air quality, our traditions and our way of life,” Wade said. Usibelli operates its namesake coal mine near Healy, about 120 miles south of Fairbanks along the Parks Highway. It is the only active coal mine in Alaska and is the oldest continuously operating mine in the state. Usibelli has said the Wishbone Hill would produce about 500,000 tons of coal per year and employ between 75 and 125 workers. The majority of the company’s current production is sold in state. Coal exports to Asia and Chile have slipped in recent years as a strong U.S. dollar has made exports expensive. The company made a single export sale in 2016, sending a load of 75,000 tons to Japan this summer. The first two Wishbone Hill permits were issued to Idemitsu Alaska Inc. in 1991. After DNR issued one extension, Idemitsu sold the project to North Pacific Mining Corp., a subsidiary of Cook Inlet Region Inc. in 1995. Usibelli acquired the project in 1997 and requested several five-year permit extensions through 2011 that were granted by DNR. “Neither Usibelli’s 2001 permit renewal request nor its 2006 permit renewal request contained a request for an extension of the time to commence mining operations; likewise, each permit renewal by DNR was silent in that regard,” Gleason wrote. Early coal mining operations started in 2010 when Usibelli began work on a road to the mine site. About that same time, Usibelli started a feasibility study on the project, company spokeswoman Lorali Simon said. Usibelli, which Simon said found the ruling “surprising,” is analyzing its path forward, but still sees significant value in Wishbone Hill. She said the company has invested millions of dollars in the project based on the assumption that it was properly permitted, but “the planets never aligned” to bring it into production. “(Wishbone Hill) remains important to us. It is something that we are very determined to further develop,” Simon said in an interview. She noted that DNR and the Office of Surface Mining were always well informed about Usibelli’s plans and thus kept approving the permits. Despite that, Gleason concluded that the letter of the law, which states, “(A coal mining) permit shall terminate if the permittee has not commenced the surface mining operations within three years of issuance of the permit,” according to her ruling, trumps any extenuating circumstances in regards to Wishbone Hill. Simon said lawsuits such as this one just brings “further divisiveness” between companies like Usibelli and anti-development groups. “This is another indicator of how this country’s regulatory system is based on process versus purpose,” she said.  

Alaska delegation asks Kerry to review transboundary mining

Alaska’s congressional delegation responded to continued concerns from Southeast Alaskans about Canadian mine plans by asking Secretary of State John Kerry to look into whether environmental practices across the border are worthy of scrutiny under a bilateral treaty. Rep. Don Young and Sens. Lisa Murkowski and Dan Sullivan sent a letter to Kerry May 12 requesting the State Department to question Canadian officials about the impact active and proposed hard rock mines in British Columbia and the Yukon could have on salmon in several large “transboundary” rivers. “Like most Alaskans, we strongly support responsible mining, including mines in Southeast Alaska, but Alaskans need to have every confidence that mining activity in Canada is carried out just as safely as it is in our state,” the delegation wrote. “Yet, today, that confidence does not exist. “Proposed mining development in the Stikine, Taku River, and Unuk watersheds has raised concerns among commercial and recreational fishermen, tourism interests, and Alaska Native communities regarding water quality maintenance of the transboundary rivers that flow by their homes and onto their fishing grounds.” The letter references seven active or planned mines just on the British Columbia side of the border from Southeast Alaska. It specifically notes that the long-closed underground Tulsequah Chief metal mine in the Taku drainage northeast of Juneau has been leaking acidic wastewater into the river for many years. Late last year, Canadian government officials finalized efforts to reduce the leakage but did not require the mine’s water treatment facility be restarted. There have also been proposals to reopen the Tulsequah Chief project. Also last November, Gov. Bill Walker and British Columbia Premier Christy Clark signed a non-binding memorandum of understanding, or MOU, to establish a Bilateral Working Group on the Protection of Transboundary Waters. The Alaska side of the group, tasked with facilitating an exchange of best practices, marine safety and joint visitor industry promotion among other things, is led by Lt. Gov. Byron Mallott. The delegation did not go as far as to ask for action by the International Joint Commission, or IJC, which was established in 1909 to resolve disputes over how actions in one country could impact watersheds shared by both. It did, however, urge Kerry to “utilize all measures at your disposal to address this issue at the international level” and decide if the “IJC is a suitable venue to determine whether Canadian mines are following ‘best practices’” for wastewater and mine tailings treatment. Also highlighted in the delegation’s letter is a British Columbia Auditor General report released earlier this month that is highly critical of the province’s oversight of mining activity. Additionally, it asked for a more formal consultation process with state agencies, Tribes, and Alaska Native corporations during Canadian mine permit reviews. While numerous Alaska environmental, commercial fishing, and Alaska Native groups have called for IJC involvement, the commission can only be spurred by a formal call from either the State Department or Canada’s Global Affairs Department. Those groups lauded the delegation in formal statements reacting to the letter. “This powerful statement underscores that Alaskans, regardless of political party, want Secretary Kerry to address (British Columbia) mining with Canadian officials so that clean water and healthy salmon runs will support our economy for generations to come,” Salmon Beyond Borders director Heather Hardcastle said. Originally, IJC intervention was intended only when both governments submit a “letter of referral” asking for the commission to resolve a dispute. Over time that procedure has morphed and both countries have at times singularly requested IJC involvement, which has often been granted. The commission’s recommendations are nonbinding but generally adhered to in an effort to maintain a cooperative relationship between the countries. Throughout its history the IJC has been intensely involved in water and air quality issues related to development along Canada’s border with the Lower 48. However, it has never ruled on or heard a water-related contention regarding the Alaska-Canada border, according to a statement on its website. British Columbia Minister of Energy and Mines Bill Bennett has said in interviews with the Journal and the Juneau Empire that the issues are not with the province’s environmental regulations and enforcement, but rather with better communicating with Alaskans how thoroughly British Columbia monitors its mines. The province has taken significant heat for the Mount Polley mine tailings dam failure in 2014, which a government investigation concluded was caused by design flaws. B.C. regulatory report British Columbia Auditor General Carol Bellringer pulled no punches in a lengthy report released May 3 calling for an overhaul of the province’s environmental regulation enforcement practices. “We found almost every one of our expectations for a robust compliance and enforcement program within the (Ministry of Energy and Mines) and the (Ministry of Environment) were not met,” Bellringer wrote in comments on the report. “We found major gaps in resources, planning and tools. As a result, monitoring and inspections of mines were inadequate to ensure mine operators complied with requirements. The ministries have not publicly disclosed the limitations with their compliance and enforcement programs, increasing environmental risks, and government’s ability to protect the environment.” The 109-page report plainly entitled, “An Audit of Compliance and Enforcement of the Mining Sector,” recommends the responsibility to enforce environmental regulations be pulled from the Ministry of Energy and Mines. The ministry is also tasked with promoting resource development, which Bellringer described as being “diametrically opposed” to its regulatory enforcement mandate. As a result, the report recommends British Columbia establish an independent compliance and enforcement unit for mining activities to ensure environmental protection. The report also contends Energy and Mines relies too heavily on individuals referred to as “qualified professionals” — industry’s technical experts that are trusted to monitor the mine construction and operation. “It is not (the Ministry of Energy and Mines’) practice to carry out its own technical review [or to oversee an independent technical review] to confirm that tailings dams are built in accordance with the design and technical standards,” the report states. Provincial government officials retorted in a response included in the report that the audit team failed to clarify what regulatory compliance and enforcement programs should be measured against. Government’s response also pushed back against the charge that Energy and Mines officials cannot handle the responsibility of both promoting and regulating the mining industry. “We do not accept that mere appearances are sufficient to warrant the act of removing compliance and enforcement from (Energy and Mines),” government officials wrote. “No one is more aware of the need to find the appropriate balance between promotion and regulation of mining in ministry decision-making than those who are asked to do so on a daily basis.”

Borough files to dismiss suit by Red Dog over severance tax

The Northwest Arctic Borough has filed for summary judgment to dismiss a lawsuit brought against it by Teck Resources, the Canadian owner of Red Dog Mine 90 miles north of Kotzebue. Teck filed a lawsuit against the borough on Jan. 15, alleging the borough’s new severance tax is unconstitutional. The borough insists it has the taxing authority granted to any home rule government. The new severance tax would increase the amount Teck pays the borough from $12 million in 2015 to an estimated $30 million to $40 million in 2016.  The mine, the world’s largest zinc source and a large lead producer, forms the backbone of the region’s economy. The state formed the borough in 1986, coinciding with the mine’s development and opening in 1987. Because the new borough would take time to decide its tax structure, it enacted a payment in lieu of taxes, or PILT, agreement with Teck in 1987. Under the PILT, Teck has paid approximately $140 million to the borough and the borough school district over the years. The borough relies on Red Dog for about 70 percent to 80 percent of its annual revenue, alongside its annual $12.5 million state general fund allotment. The borough levies no property or sales taxes on private citizens or any other taxes on businesses. According to Teck, Red Dog supports 715 mine-related jobs with $75 million in annual payroll, and the company spends $160 million on supplies within Alaska each year. More than 600 of the jobs are held by shareholders of NANA Regional Corp., the Alaska Native regional corporation for the area. PILT vs. severance Teck makes several key arguments against the severance tax. Most pointedly, Teck argues that the tax unfairly singles out the mine, which uses virtually no borough services. “Rather than distributing the tax burden among different classes of taxpayers or different economic activities, this Borough imposed its entire tax burden on one taxpayer,” reads the most recent filing from Teck, dated April 29. “There is evidence that the Borough has taken this approach for illegitimate reasons, deliberately targeting only one captive taxpayer and doing so with the stated purpose of confiscating what the Borough considers its ‘equitable share’ of Teck’s profits, while declining to take any share of the profits earned by any other person or entity in the Borough.” Teck also argues the borough failed to live up to its terms of agreement. The borough created the severance tax by ordinance, rather than through negotiations with Teck.  In 2009, the borough created a severance tax effective Jan. 1, 2012. In 2011, the borough renegotiated a PILT agreement with Teck that exempted it from the 2009 severance tax. Under this agreement, Teck paid the borough and its school district more than $57 million between 2011 and 2015. The 2011 PILT expired at the end of 2015, but gave Teck the option to renegotiate another PILT. Instead, Teck argues the borough passed two ordinances that terminated the ability of mining operations to negotiate another PILT, and another that raised the severance tax rate by 50 percent. “The combined effect of these ordinances was to dramatically increase the tax, prohibit the Borough from entering into a PILT that would provide for reduced payments, and prevent the Borough from renegotiating the 2011 PILT Agreement in good faith, as provided in paragraph 5 of the 2011 PILT Agreement,” the complaint argues. The borough says the it has every right to implement constitutionally sound excise taxes how it sees fit, and that it never intended the current PILT system to stick around forever. When the mine first broke ground, the borough said, its prospects were uncertain. Now the time has come to properly tax a profitable organization. “The Northwest Arctic Borough has an obligation to raise revenue to fund greatly-needed public services,” reads the motion to dismiss filed March 1. “The PILT structure was intended to support an uncertain prospect and an unprofitable mine; it was never intended to continue indefinitely to the benefit of Teck shareholders and to the detriment of Borough residents.” The borough cites several correspondences between the two entities as proof it negotiated with Teck; the fact the two parties were unable to reach an agreement Teck liked, attorneys said, does not mean there were no negotiations. As a home rule government, the borough says, it can implement excise taxes as it pleases, which includes severance taxes. “In Liberati v. Bristol Bay Borough, the Alaska Supreme Court stated, ‘[a] severance tax is a tax upon the taking or extracting of a resource,’” reads the motion to dismiss. The borough cites similar taxes in Montana enacted on coal industry as proof they meet constitutional muster. In the April 29 response, Teck wrote the Montana tax is dissimilar; it wasn’t literally the only tax in the area, as it is for Teck. “The Borough has arbitrarily singled out Teck as the sole ‘person’ that must pay virtually 100 percent of the Borough’s tax burden, and it has arbitrarily singled out Teck’s mining activity and NANA’s mineral resources to bear virtually 100 percent of the Borough’s tax burden,” the filing reads. NANA’s stake NANA Regional Corp., the Alaska Native regional corporation for the area, owns the land on which Red Dog Mine operates. As both a direct beneficiary of Teck’s operations and the representative organization for the Alaska Natives in the borough, NANA has a vested interest for both parties to remain happy. Shelly Wozniak, senior communications director for NANA, said the corporation wants to find a balanced way to provide the borough with revenue without cutting too far into Teck’s bottom line. “Finding a solution that’s a win-win is in the best interest of the region,” said Wozniak. The borough mentions the “detriment of borough residents” as a possible outcome of failure to implement a severance tax, but Teck’s royalties to NANA, at least, have been substantial. NANA underlines the mine’s importance to the region’s residents as both an employment source and a mainstay for the corporation’s revenue. “We are concerned about jobs,” according to an official NANA statement on its website. “A reduced operating budget for the mine will mean fewer jobs for NANA shareholders. Since 1989, NANA shareholders have received more than $469 million in wages by working at Red Dog. In 2015, approximately 603 NANA shareholders worked at the mine earning $39.3 million in wages.” Aside from the employment, Teck’s presence fills Alaska Native corporation coffers. Since 1989, Teck ‘s operations at Red Dog Mine have paid $1.3 billion to NANA. Not only NANA has befitted directly from the mine. The other 11 Alaska Native regional corporations have collected between $12 million and $172 million apiece from Teck since the mine began operations. As part of the Alaska Native Claims Settlement Act, which established regional Native corporations in 1971, Native corporations distribute royalty income from their lands in what’s called 7(i) sharing. Named for the section of ANCSA, it requires all regional Native corporations to give 70 percent of all timber and subsurface mineral resource revenues to the other regional Native corporations, relative to how many shareholders each has. ANCSA then requires half of the 7(i) funds from the regional Native corporations to be distributed to the Native village corporations within that respective region. Under 7(i) sharing, NANA has paid $820 million since 1989 as a direct result of Red Dog Mine’s revenue. NANA has retained $480 million from Red Dog Mine. In the mine’s lifetime, NANA paid a total $221 million to its shareholders from the mine’s proceeds. The borough’s argument to raise severance taxes in some ways mirrors the debate over raising state oil taxes. NANA has concerns that the severance tax will stymie mining exploration projects. NovaCopper, Inc. is currently exploring mineral projects in the Upper Kobuk region. If the borough’s severance tax cuts too deeply into Teck’s pockets, other mining operations could be scared off. “We believe the tax endangers NANA and non‐NANA funded exploration projects by changing the economics,” according to the statement on NANA’s website. “Future responsible development in the region is a key business strategy so NANA can continue to deliver cash benefits to shareholders.” DJ Summers can be reached at [email protected]  

Usibelli resumes exports with sale to Japan

After halting exports last September, the Usibelli Coal Mine at Healy is currently fulfilling an order for 75,000 tons for shipment to Japan. Railroad cars full of coal are now making the trek to Seward to be loaded once the ship arrives in mid-summer between June and July, according to a Usibelli Vice President for External Affairs Lorili Simon. Simon said the current order is for the single shipload. Japan was the only export customer for Usibelli in 2015, taking 150,000 tons. Usibelli supplies coal to six power plants in Interior Alaska including three plants serving military installations, one serving the University of Alaska campus in Fairbanks, one that is owned by Usibelli subsidiary Aurora that services local Fairbanks community with power and steam heat, and Healy 1, a 25-megawatt coal power plant at Healy that is adjacent to Healy 2, the plant that was began producing power last year. The Healy 2 owned by Golden Valley Electric Association will purchase about 200,000 tons per year. The mine produced about 1.2 million tons in 2015. In 2011, the mine exported a record 1.1 million tons.

Mental Health Trust exploring Icy Cape prospect

The Alaska Mental Health Trust Land Office is evaluating a heavy mineral prospect near Yakutat that could change the course of the agency for generations. Icy Cape is a long stretch of beach owned by the trust at the entrance of Icy Bay that appears to hold world-class deposits of several heavy minerals, according to Trust Land Office Executive Director John Morrison. “It’s difficult to quantify the value of (Icy Cape) in terms of heavy minerals; it’s just mind boggling,” Morrison said in an interview. “There’s enough heavy minerals there to run a really large mine operation for over 100 years and we’re talking about hundreds of millions of dollars every year.” The minerals are literally grains in the beach sand on a parcel of coastline that stretches for more than 30 miles and totals roughly 48,000 acres, Morrison described. Trust officials stressed that the resource evaluations are preliminary, but early drilling samples of the “ore” — sand, really — indicate up to 40 percent of the ore is heavy minerals in the broadest delta area near the point of the cape. Specifically, the samples are roughly comprised of 20 percent epidote, 19 percent garnet and 0.5 percent zircon. Epidote and zircon are semiprecious gemstones. Garnet has also been used as a gemstone for hundreds of years, but more recently the hard mineral has been put to use as an industrial abrasive on sandpapers and in sandblasting applications. It is also used in water filtration; garnet’s small pores allow for the passage of liquid while catching some contaminants. “We would be the only source for garnets on the West Coast,” Morrison said. “Specifically, there’s all sorts of metrics and parameters that the buyers of those types of materials would want and our garnets are the best you could have in terms of the size of the crystals and the way they’re fractured.” The Icy Cape sands also contain gold concentrates of about 1.4 grams per metric ton, according to the early exploratory results. The sands are comprised of two sediment patterns coming from opposite directions, those materials that have eroded and washed down from the steep mountain faces above and sediments that tidal and wave action have pushed up to the shoreline. If the preliminary resource indications are proved on a larger scale, the minerals and metal in a tonne of Icy Cape sand could be worth $190 at current market prices, the Trust Land Office estimates. The Trust Land Office manages roughly 1 million acres of land across Alaska for resource development, the proceeds of which go to fund the Alaska Mental Health Trust Authority’s work to benefit Alaskans with mental health and addiction challenges. Morrison said the trust is conservatively projecting that a full-scale mining operation could process up to 250 tonnes per hour for 270 days each year; that adds up to more than $300 million in gross revenue per year for 100 years, he said. The operation would likely start on a much smaller scale, however, of about 50 tonnes per hour, Morrison said, which would require about a $50 million investment. As a passive landowner the trust could expect to see about 20 percent of the gross revenue from any mine, but Morrison said he would hope to retain control as a more active investor and take “substantially more” risk and subsequent reward from the project. Trust Land Office revenues have varied greatly over its 20-year existence, as money from timber and land sales and other resource projects has come and gone. Since 2011, its annual revenue has been between about $10 million and $16 million; even a minority share of a $300 million per year mine would dwarf that. The City and Borough of Yakutat would also see a bump in its tax revenue from an Icy Bay mine operation, he noted. The processing, or relative lack thereof, required of the sand adds to the positivity of the prospect. Extracting the gold and heavy minerals doesn’t necessitate the intensive milling or chemical leaching common in large metal operations, meaning Icy Cape should theoretically be relatively simple to permit, according to Morrison. “It’s the sand. It’s placer mining. You literally just take a backhoe and scoop the sand into your separator as fast as you can and you get these various compounds,” he described. The Trust Land Office has held the Icy Cape property for almost all of its 20-year existence and held a timber sale there last year. Morrison said it has received interest from individuals wanting to placer mine gold at Icy Cape, but the plans were too small to entertain them. It was only recently when Icy Cape drilling samples from the 1990s were unearthed at the Alaska Geologic Materials Center in Anchorage that the Trust Land Office was spurred to do its own drilling last summer. This year the trust plans to conduct a low-altitude airborne magnetic survey and collect bulk ore samples to further delineate the resources. Then in 2017 the plan is to drill the magnetic anomalies to prove the high-grade, mineable zones, Morrison said. He added that the trust has already gotten interest from international mining companies that are supporting some of the exploration work and want to be a part of the larger development project. “I would say by the end of next summer we should be really headed down the path, depending on the results we get, of forming a joint-venture (partnership) to start the process of permitting a mine,” Morrison said. In the end, he forecasts small-scale production to start in five to eight years if all goes well. Elwood Brehmer can be reached at [email protected]

Package of tax hikes on fishing, mining and fuel stalls

A bill to raise taxes on fisheries, fuel and mining remains unscheduled for a House Finance Committee hearing after public objections. Gov. Bill Walker introduced a suite of proposals at the beginning of the session designed to hitch up taxes on state industries and individuals to help close the $4.1 billion budget gap. Fisheries, fuel, and mining tax increases had varied levels of support. Each remained on the committee backburners after being recommended to it weeks or even months ago. Senate Bill 132 and its mirror House Bill 249 were passed to their chambers’ finance committees on Feb. 29 and Feb. 24, respectively. The fisheries tax moved out of a lengthy House Fisheries Committee holding pattern on April 5. Mining taxes moved to the committee on April 1. To keep legislators from having to muster individual votes, the House Finance Committee folded the three industry tax increases into a three-part minibus on April 14. The adjusted tax minibus did not provide new estimates for the state’s likely revenue. Previous estimates for the three taxes indicated $80 million for the state. The bills’ complexities brought mixed receptions. Industry leaders acknowledged the need to pay for state services, but contested portions of the package they found inequitable.   At an April 16 hearing, the House Finance Committee responded to concerns by postponing a discussion scheduled for the next day. “After hearing public testimony last night,” said committee co-chair Rep. Steve Thompson, R-Fairbanks, “We’ve realized there are a lot of problems with the tax bill HB 249, and we’re going to set it aside for the time being.” In an April 15 committee hearing, the Alaska Chamber testified against the newly bundled tax increases. Chamber President and Chief Executive Officer Curtis Thayer said the state needs to look to its own finances before raiding the private sector.  “The public won’t support a host of new taxes,” Thayer said. “Not while the state is handing out double-digit raises. How can they when their friends and family members are losing their jobs?” Thayer said public employee contracts promise too much. He said that pay raises between 3.25 percent and 10.5 percent over three years are still being considered.  “They’re trying to fill a $4 billion dollar budget gap by hammering fishing and mining with $49 million in new taxes,” Thayer said. “Meanwhile, another $70 million in pay raises just widens the gap.” Fisheries tax increases in the omnibus received much of the same treatment as the standalone bill. Industry representatives repeated many of the same concerns they had voiced in the House Fisheries Committee. Objections were widespread concerning the various fishing sectors that would each be impacted by tax increases differently: canned salmon simply cannot handle a tax increase, floating processors and inshore processors need different treatment, developing fisheries cannot handle a tax increase, the state’s reputed fiscal loss on fisheries management is a red herring, and tax increases will make it harder for young fishermen to enter the industry. Fishermen previously wanted to make sure they would not be alone in tax increases. Committee chair Rep. Louise Stutes, R-Kodiak, held the bill earlier in session, saying she needed assurances that other industries would be taxed as well and that the existing fisheries taxes would be reexamined to maximize revenue to the state. With a modified bill and promises from the Department of Revenue to maximize existing fisheries taxes, the bill moved on to the House Finance Committee without opposition. Though the inclusion of the fisheries bill into an omnibus is a “step in the right direction,” said United Fishermen of Alaska, the states largest fishing industry group, they still do not support the package. Walker’s original bill would impose a 1 percent increase on both landings taxes and fisheries taxes on each fishery sector. The amended bill keeps the 1 percent increase for every fishery sector except the shore-based salmon cannery sector and the developing fisheries sector. A negative market outlook for Alaska fisheries caused many fishermen to reject the bill outright, saying they have little room to have more revenue scraped from their decks. Certain bill changes address two of the larger concerns for salmon canneries and developing fisheries. In previous testimony, representatives from the Pacific Seafood Processors Association spoke of the tax’s tone-deafness regarding the 2016 salmon market and how a tax increase could cripple canneries. Back-to-back years of large sockeye runs in the state’s largest salmon fishery, Bristol Bay, left salmon processors with a price-lowering glut of product. The U.S. dollar’s strength against key export market currencies added to the overstock to create a tough market outlook for salmon in 2016. Walker’s bill to increase state fuel taxes had support from some industry groups it would directly impact. The Senate Transportation Committee passed the bill onto the Finance Committee with lukewarm support on a 3-2 vote. Senate Bill 132, and its mirror House Bill 249, would raise the per gallon state fuel taxes as follows: highway fuel tax from 8 cents to 16 cents; marine fuel tax from 5 cents to 10 cents; aviation gasoline from 4.7 cents to 10 cents; and jet fuel from 3.2 cents to 10 cents. The legislation would correspondingly increase the per gallon highway fuel tax rebate for off-road use from 6 cents to 12 cents. In all, the tax hikes are projected to raise $49 million per year, according to the Revenue Department. The mining tax increase, originally HB 253, was badly received when introduced. It would raise the tax rate for mines with a net income of $100,000 or greater from 7 percent to 9 percent. This includes 14 mines statewide. The bill would eliminate a 3½-year tax exemption for new mines and implement a fee for mining licenses. Mining taxes collected $38.6 million in 2015 according to state records. The increase would collect another $6 million per year. DJ Summers can be reached at [email protected]

Bokan mine development slowed as rare earth prices dip

Development of the Bokan Mountain rare earth mine is on hold as the company leading the project focuses on a new processing technology and waits for rare earth metal prices to rebound. Nova Scotia-based Ucore Rare Metals Inc. finished infill drilling and drilled groundwater monitoring wells in 2014, leaving it at a natural stopping point before moving towards the next steps of development. Ucore Vice President Randy MacGillivray said in an interview the company has delineated a resource of approximately 5 million tons that is 0.65 percent total rare earth metals. Bokan, located on the southern part of Prince of Wales Island in Southeast, would be an underground mine. Rare earth metals are used in small amounts in countless technology applications. Their prices have softened in recent years along with other, more well known metals and commodities. MacGillivray said because the mine would harvest up to 15 rare earth metals it is hard to set a definitive price point at which Ucore would initiate a full-fledged feasibility study or jump into the environmental impact statement process. “Certainly a movement towards increased metal values in the rare earth metal sector and or us being able to tie up an end user agreement with defined prices would encourage development,” he said. However, there is no timeline for starting permitting. Instead, Ucore has invested in molecular recognition separation technology that has been used for other metals but not with rare earths, according to MacGillivray. Generating a revenue stream from that investment could also help the junior mining company fund Bokan, he said. Based on Ucore’s preliminary economic assessment, the mine would cost $220 million to construct over two years and employ up to 300 people during that period. Ucore has “drilled off” a resource base to support operation for 10 years, which would require about 190 jobs, he said. MacGillivray said Ucore continues to strengthen its baseline environmental work for the project. In 2014, former Gov. Sean Parnell signed legislation authorizing the Alaska Industrial Development and Export Authority to finance up to $145 million for Bokan’s construction. Elwood Brehmer can be reached at [email protected]  

Greens Creek mine reports record silver production in 2015

Hecla Mining Co. announced annual results that included record silver production at its Greens Creek mine near Juneau. Greens Creek had production of 2.6 million and 8.5 million ounces of silver in the fourth quarter and full year of 2015, respectively, an increase of 4 percent and 8 percent over the same periods of 2014. It was the highest annual silver production since Hecla acquired 100 percent of the mine in 2008. According to the company, silver production increased over 2014 levels due to higher silver ore grades, particularly during the fourth quarter of 2015, as well as higher metallurgical recoveries. Overall, Hecla announced 2015 sales of $443.6 million and gross profit of $38.5 million, with net loss applicable to common stockholders of $87.5 million, and an adjusted net loss applicable to common stockholders of $34 million. Hecla President and CEO Phillips S. Baker Jr. said he was pleased with the results. “We believe we are one of few precious metals companies growing right now, not just in reserves but in production as well,” Baker said in a release. “Because our balance sheet allowed us to continue investing during the price decline of the last few years, we expect more than a 15 percent increase in silver production and about a 10 percent increase in gold production this year, positioning us to take advantage of the rally in prices we have seen in 2016.” At Greens Creek, capital spending was $46 million, including $20.7 million for a tailings pond expansion. Capital spending for Greens Creek in 2016 is estimated to be $48 million, of which approximately $14 million is for the tailings expansion project. Cash cost, after by-product credits, per silver ounce at Greens Creek was $4.18 and $3.91 for the fourth quarter and full year, respectively, compared to $2.74 and $2.89 for the same periods in 2014. The increase in cash costs, after by-product credits, per silver ounce for 2015 compared to 2014 is the result of lower by-product credits due to decreasing metal prices, partially offset by increased silver production.


Subscribe to RSS - Mining