WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 1
— CONTENTS — COVER: BUILD NEW, FIX OLD
Comstock begins portal, wins award for reclamation, restoration – Page 3
BARRICK
Bald Mountain staff continue work on expansion – Page 12
NEWMONT
Phoenix working to expand, improve – Page 20
COEUR
Rochester Mine moving toward expansion – Page 30
NEVADA COPPER
Pumpkin Hollow is within the borders of Yerington – Page 71
MARY KORPI RETIRES Colleagues reflect on longtime Newmont employee – Page 58 On the Cover
Left photo: Scott Jolcover, Comstock director of business development, stands in front of the historic Upper Yellow Jacket, which was restored by the Comstock Foundation for History and Culture. Right photo: Chris Corley, project superintendent with American Mining and Tunneling, talks on Sept. 11, 2015, about the new portal at the bottom of Comstock Mining’s Lucerne Pit. Photos by Marianne Kobak McKown
Gold, sage grouse & laws, oh my MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO – While approaching the end of 2015, I keep reflecting back on what has happened in and to the mining industry over the past year. Unfortunately the price of gold continued to drop in November. As of the writing of this column, the yellow metal closed at $1,086.20 per ounce on the New York Stock Exchange. It has been lower, when it dipped to $1,084.50 in August. Hopefully for the industry it will be above $1,100 by the time this publishes. The market isn’t the only thing causing uncertainty for mining. The federal government didn’t put the Greater Sage Grouse on the endangered species list; however, several government officials in the West and some mining companies think what the feds did instead was worse than a listing. Some of them, including Elko County Commissioners and Nevada Attorney General Adam Laxalt, went as far as filing a lawsuit seeking an injunction against the federal government’s Sept. 22 decision to restrict land use to protect sage grouse habitat. This was such a large issue for mining, we have several articles either talking about the restrictions or issues related to sage grouse. This spotted owl of the desert is causing quite the uproar throughout the region, and I don’t see this
issue ending any time soon. It even has Laxalt and Gov. Brian Sandoval sparring over how to handle the situation. Despite the uncertainty, several mines throughout Nevada are trying to expand. Our cover story is about Comstock Mining transitioning from surface mining to underground. This company also continues to promote Virginia City’s past by restoring historic buildings. Comstock even won an award for its reclamation and restoration efforts. Barrick Gold Corp. and Newmont Mining Corp. aren’t resting on their laurels either. Both companies have plans to expand mines. Barrick is working on Bald Mountain and Newmont wants to increase the size of Phoenix. Nevada Copper also had a big land transfer come in this year. Its Pumpkin Hollow underground is officially within the city borders of Yerington. Amazingly, Congress actually accomplished something when they passed an Act to convey the land from the federal government to the city. You can find the details on all these stories and more in this edition of the Mining Quarterly.
MARIANNE KOBAK McKOWN
Marianne Kobak McKown is editor of the Mining Quarterly and mining editor for the Elko Daily Free Press. She can be reached at mining@ elkodaily.com.
2 • MINING QUARTERLY, Elko, Nevada WINTER 2015
— CONTENTS —
FEATURES
Democrats propose mining royalty ...................................................................18 MSHA: Seven miners die in third quarter of 2015 ............................................38 Laxalt vs. Sandoval on sage grouse ..................................................................39 Local officials support AG joining lawsuit .........................................................39 Will new sage grouse plan kill mineral exploration? ........................................ 40 J.H. Fletcher breaks into the Nevada market .. .................................................. 51 Miners talk education, production costs ..........................................................56 Newmont employees, company pledge $2.44 million .....................................62 Barrick reports $264 million loss .....................................................................78 Newmont reports $202 million net income ..................................................... 80 General Moly reports $2.7 million loss .............................................................86 Probe finds EPA error caused mine spill it hoped to avoid ...............................88 Map of Nevada mines ........................................................................................96
COLUMNISTS
NVMA says the government needs to keep multiple use on public land ..........11 Dobra says politicians suffer from a 20 year itch to change mining law .........19 Boyce explains what we can learn about proactive safety ...............................66 Baker tells us what copper and gold signal for 2016 ........................................82
A FAMILY BUSINESS Myrna’s Hot Shot on call to the mines – Page 28
MINING, WILDLIFE COEXIST IN NEVADA Newmont has conservation program to benefit sage grouse habitat – Page 44
ONLINE EXTRAS
MINING BY THE NUMBERS
Look for videos and photo galleries at elkodaily.com
Nevada minerals are more than just gold – Page 52
MINING QUARTERLY Travis Quast: Publisher Marianne Kobak McKown: Editor To advertise, call 775-738-3118 Mining Quarterly is published in March, June, September and December by the Elko Daily Free Press (USPS No. 173-4320) at 3720 Idaho Street, Elko, Nevada 89801, by Lee Publications Inc., a subsidiary of Lee Enterprises. Periodical postage paid at the Elko Post Office. For change of address write 3720 Idaho St., Elko NV 89801.
TAKING THE PLEDGE Locals walk to raise awareness of violence against women – Page 68
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 3
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Scott Jolcover, Comstock director of business development, stands in front of the historic Upper Yellow Jacket, which was restored by the Comstock Foundation for History and Culture.
BUILD NEW, FIX OLD Comstock begins portal, wins awards for reclamation, restoration
of the Lucerne Pit and we have been removing some dump material in the relocation of the road for a combination of environmental and processing purposes,” said Scott JolVIRGINIA CITY – Comstock Mining has begun to move cover, director of business development. underground, but it isn’t entirely focused on extracting Comstock has contracted with American Mining and minerals from the ground. Tunneling to excavate an 800-foot development drift. Comstock began mining near Virginia City in 2011 in “During that development we will be drilling to confirm surface pits. It began constructing a portal in September. “We have completed the surface mining at the bottom See COMSTOCK, 4 MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
4 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Comstock safety director honored posthumously with award, portal name
MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
V IRGINIA CITY – Randy Harris, Comstock Mining Inc.’s health and safety director was honored twice for his career in mining. Harris had more than 35 years of experience in the industry, which included working for several mining companies in northern and central Nevada. He was a respected trainer and mentor to hundreds of professionals in the mining, fire and safety industries, according to Comstock. He was also a former district mine inspector for the State of Nevada. He died in June. Harris was posthumously awarded the 2015 Outstanding Career in Safety. His family accepted the award for him during the Nevada Mining Association Convention in September at South Lake Tahoe. The annual award honors mining safety professionals who demonstrate exemplary careers in the industry. Harris’ wife Marjorie Harris and his daughters, Melissa Welch, Sandy Schoenecker and Tammie Fodor, were recognized with a standing ovation from more than 400 attendees at the annual award luncheon. He was well-known
we miss him dearly, he is forever in our hearts.” Comstock also honored Harris in September by naming the new underground portal after the longtime miner. Harris was always concerned with taking care of his mining family and surrounding community, said Comstock representative Elaine Barkdull-Spencer. “He adopted health and safety as a passion,” said Barkdull-Spencer. “The guy was all about it.” He lived in Silver City and there is a speed notification in the town that tells drivers how fast they are moving – “that was Randy’s doing,” Barkdull-Spencer said. Harris purchased the sign with the help of Comstock Mining and others. “The reason that people slow down in Silver City now and it’s a safer place and a safer community is because of Randy COURTESY OF COMSTOCK MINING INC. Harris,” Barkdull-Spencer said. “You have to smile when you pass that sign Randy Harris’ family accepts his 2015 Outstanding Career in Safety and think ‘Yep, Randy’s still guarding Award posthumously. the community and taking care of all of and respected by all who knew him himself. He had the protective gene in us,’ because you will see cars slow down.” throughout his remarkable Nevada min- his DNA and was first among our team, ing career, said Comstock Mining CEO always ensuring our safety,” De Gasperis Corrado De Gasperis. said. “Randy was strong in his convic“Randy was inherently selfless, always tions and was fiercely proud of Nevada, putting others and the team ahead of Nevada mining and the team. Although
Comstock... Continued from 3
our mine model for the underground mining,” Jolcover said. Drilling commenced this fall and Comstock hopes to be in production in the first quarter of 2016. The company is changing to underground mining because the price of gold has dropped and because of “environmental sensitivity in the area, in the historic district,” Jolcover said. Underground mining is more cost effective and efficient at this point, he said. “We can do about, say, 10 to 20 percent of the volume with 10 to 20 times the grade,” he said. “And, we’re blessed with
the initial mine all being in oxide ore, so it will all leach as opposed to having to do the capital intensive cost of putting a mill in at this time.” Chris Peterson, Comstock director of mining and mine development, said the company oversees the work, but the contractor, American Mining and Tunneling, does the work on the portal. “I just oversee the day to day operations and make sure everything is going according to the plan as best we can,” Peterson said. Transitioning from open pit mining to underground mining means the company needs to do engineer work and
geologic modeling. “A lot of the technical aspects are different,” he said. “They’re the same, but they’re very different at the same time. They still have drills, they still have equipment. It just looks different. It may be shorter and skinnier, but it’s the same thing. We’re trying to set everything up for success when that moment comes” (to mine). A mine life will not be determined until after exploration drilling. Comstock began drilling when the portal reached 200 or 250 feet. Peterson in September said the company will do about 23,000 feet of drilling. “It’s a lot of drilling, and we’re going to try to do it as fast as we can to get the best
recovery that we can,” Peterson said. The first drill platform was constructed and underground drilling of dike-like masses of quartz porphyry began Sept. 24, Comstock stated. The drill data included 46 intercepts of at least 10 feet that grade, on average, over 0.23 ounces of gold per ton and over 1.71 ounces of silver per ton. “We are pleased with the pace of development, the partnership with American Mining and Tunneling and the timely commencement of drilling activities by American Drilling,” said Comstock President and See COMSTOCK, 5
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 5
Comstock... Continued from 4
CEO Corrado De Gasperis. “We will be updating and reporting on the status of the drilling, starting in October and frequently thereafter throughout year-end.” Comstock also has prospects in Lyon County with the Dayton Mine and Spring Valley area, Jolcover said. “To that end, we’ve acquired about 600 additional acres in the last year,” he said. “We have over 6,000 acres of unpatented claims and over 2,000 acres of private land.” Comstock has 45 employees and some of the company’s surface miners transitioned to American Mining, Jolcover said.
Miners get ready to operate a two boom jumbo drill in the portal at the bottom of Comstock Mining’s Lucerne Pit.
Road Construction
Comstock also has fixed problems this year caused by historic mining. The company, working with Storey County and Nevada Department of
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
See COMSTOCK, 6
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Comstock... Continued from 5
Transportation had to relocate State Route 342. In early February, NDOT closed an approximately twomile section of SR 342 south of Gold Hill as a safety precaution following roadway cracking and area-specific sinking during a weekend of heavy rains, according to Comstock. The Silver Hill Shaft, which was built in the early 1900s, was located in the northbound lane of SR 342. The 333-foot vertical shaft was sunk in the 1920s, Jolcover said. It also had a 1,100-foot decline extending from the shaft. The shaft was filled in with debris previously. “It’s continued to subside four times since 1965,” Jolcover said. State Route 342 relocation was scheduled to be completed Nov. 12. It was closed Sept. 29 through the completion of construction. See COMSTOCK, 7 MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Chris Corley, project superintendent with American Mining and Tunneling, talks on Sept. 11, 2015, about the new portal at the bottom of Comstock Mining’s Lucerne Pit.
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Comstock... cut that SRK believes CMI is worthy of “It’s gone well,” Jolcover said in Sep- both this nomination and the award.” tember. “It’s ahead of schedule and The Keystone Pit was located adjacent to State Route 342. Comstock began the under budget.” The project was expected to cost reclamation in 2014. $3.3 million. The company filled in the pit and sculpted it to look like the surrounding Reclamation and hills, said Larry Martin, Comstock director of exploration resource. After the dirt Restoration was shaped, boulders were placed for Comstock was recognized for two areas wildlife habitat and this year, the ground on its property – the Upper Yellow Jacket was seeded. Shaft restoration and the Keystone Pit “We had to cage some of the smaller reclamation. The company received the vegetation to protect them from deer,” Nevada Excellence in Mine Reclamation Martin said in September. “Earlier this Award on Sept. 12 for the full restoration spring we seeded. We did hydro seeding. of the Keystone Pit. It was also recognized, It was very fortuitous that we seeded it and along with the Comstock Foundation then had one of the wettest Julys.” for History and Culture, for Outstanding The awards committee consisted of Rehabilitation of the historic Upper Yellow representatives from the U.S. Forest SerJacket Hoist Works. vice, Bureau of Land Management, Nevada Comstock was nominated by SRK Con- Division of Minerals, Nevada Division of Environmental Protection and Nevada sulting for the award, Jolcover said. “From pro-actively engaging regulators Department of Wildlife. to developing the Comstock Foundation The Upper Yellow Jacket Hoist works for History and Culture. CMI continues to and ore chute was built in the 1930s. It demonstrate their desire to be a responsi- is located directly above the tracks of the ble member of the local and broader min- V&T Railroad in Gold Hill. The wooden ing communities,” SRK stated. “It is for hoist served to lift ore carts and miners this varied and multi-pronged approach from the famed Yellow Jacket Mine, which to community engagement and historic was one of the richest mines in the history preservation and the recent concurrent and creative reclamation of the Keystone See COMSTOCK, 9
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A portion of the Keystone Pit is in the process of being reclaimed in September 2014. The historic New York hoist is in the foreground.
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The reclaimed Keystone Pit is seen near the historic New York hoist on Sept. 11, 2015.
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Pam Abercrombie, the executive director of the Comstock Foundation for History and Culture, talks about the nonprofit.
Comstock... Continued from 7
of the Comstock, stated the company. The Upper Yellow Jacket was restored through the Comstock Foundation for History and Culture, which was conceived by Comstock Mining so the company could invest in preservation and restoration, said Pam Abercrombie, the Foundation’s executive director. Without the emergency restoration efforts in 2013, the historic structure was not expected to survive another Comstock winter, according to the company. “They conceived the idea out of the fact that a lot of our historic structures are crumbling and we’re losing a lot of them,” she said. “Our mission is to encourage the preservation and restoration of the Comstock and then also to promote the history of the Comstock as it is, both in its purest form and then community advocacy of that history.” Restoring the Yellow Jacket was the project that launched the Foundation, Abercrombie said. “The purpose of restoring the Yellow
Jacket is not only its significance to the history of the Comstock and the fact that it was getting so close to ultimate demise, if it wasn’t taken care of then we would probably have lost it,” she said. Abercrombie said she has been doing a lot of outreach in the community. She said the Foundation is trying to advocate for “the true history of the Comstock.” “We really want to highlight and become the organization that’s the go to for the knowledge of the Comstock,” Abercrombie said. “It’s also important to advocate for the history of the Comstock. The history of the Comstock had such an impact on the state and the nation. It built San Francisco. We had presidents of the United States visiting Virginia City back in the 1800s. – Ulysses S. Grant, Hayes. It was one of the wealthiest cities in the nation.” The next big project for the Foundation is the Donovan Mill, Abercrombie said. “The ultimate dream, slash, vision is to See COMSTOCK, 10
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Comstock...
American Mining and Tunneling Project Superintendent Chris Corley, left, talks with Comstock Mine Superintendent Troy Hawkins and Comstock Director of Mining and Mine Development Chris Peterson in front of the new portal at the bottom of the Lucerne Pit.
Continued from 9
have it open to the public,” she said. “We have 10 stamps that are from 1890.” The stamps were manufactured in Carson City. The Foundation is working on emergency stabilization of the mill right now. “The next step would be basic stabilization and repairs, and then restoration and preservation, which would be at least two phases in at least five years,” she said. “Then eventually open it up as a museum. Right now I do private tours.” She said the Foundation wants to “slowly weave” into tourism. Abercrombie works with the tourism commission. She also is working on diversifying the Foundation’s revenue stream. “I’m also establishing a grant system,” she said. People will soon be able to apply for funds to restore structures from the history of the Comstock. Unlike some grants, the Foundation will be able to fund projects owned by private individuals.
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Don’t withdraw multiple use DANA R. BENNETT Nevada Mining Association President
On September 30, the U.S. Fish and Wildlife Service made its long-awaited decision not to place the Greater Sagegrouse on the endangered species list. While the announcement not to list the grouse is a positive first step, additional measures that were taken to immediately segregate and even potentially withdraw huge swaths of Nevada land demonstrate that much work remains to be done. A land withdrawal would exclude millions of perhaps mineral-rich acres from commercial activity or even vehicular access – stopping any potential mining in its tracks. The challenge will be to define a workable solution that benefits both birds and people. The finding comes after unprecedented collaboration among citizens, local and state governments, industry, conservation groups, and federal agencies. One of the
leading partners throughout the sage-grouse conversation has been the Nevada mining industry. M i n i n g re p r e s e n t a t i ve s have actively participated in these ongoing d i sc u ss i o n s, and several of our member Dana Bennett companies have taken independent action to protect millions of acres of Nevada land critical to sagebrush habitat. Nevada’s mining companies have been industry leaders in land conservation and rehabilitation. Partnerships with conservation groups like The Nature Conservancy and Trout Unlimited have yielded
measurable and beneficial enhancements on both private and public lands throughout northern Nevada. The mining industry should be proud of the good work already done to develop collaborative projects and participate in productive discussions. But deep concerns remain. The implementation of the land use management plan, especially as it relates to withdrawal areas, disturbance caps, and travel restrictions, will require thoughtful and productive discussions. Nevada is a geologically special place that provides 15 percent of the minerals Americans need. Minerals found in Nevada that once had few uses now power our smart phones, hybrid cars, and military equipment. We must ensure we do not squelch future technological advances by eliminating vast areas of land from mineral exploration and development. So it is especially critical the implementation of this plan consider the effect on current
and future mining claims. It is vitally important to Nevada’s future and to the mining industry, which fuels twentyfirst century technology, that we protect the future of high-tech manufacturing by ensuring that any future management plans continue this country’s tradition of multiple uses on public lands. The Greater Sage-grouse is a vital member of the Western eco-system. Maintaining an environment that continues to re-stabilize its population is something everyone who depends on Western land, economically or recreationally, takes seriously. Nevada’s mining industry has been and will continue to be a leading figure in land conservation in the Silver State. It is the mining industry’s goal to find a solution where both wildlife and mining jobs can thrive.
12 • MINING QUARTERLY, Elko, Nevada WINTER 2015 BARRICK GROWTH
Bald Mountain Engineering Superintendent Richard Curnow talks about the mining being done in Top 2 Pit.
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Bald Mountain staff continue work on expansion MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
WHITE PINE – Despite being for sale, Barrick Gold Corp.’s Bald Mountain Mine continues to move forward with its expansion plans. The mine’s draft environmental impact statement for the expansion was reviewed this fall, with the comment period ending
Oct. 13. Bald Mountain has the biggest land package of any mine in the U.S. Its current footprint is about a 10-mile by 25-mile area. The expansion is proposed for the North and South Operations Areas, in White Pine County and about 65 miles northwest of Ely. The North and South Operations are separated by about 14 miles, said Josh Roderick, environmental
superintendent for Bald Mountain. The proposed expansion project would be located on BLM-administered lands and include expansion of the Bald Mountain Mine North and South Operations Areas for an additional 6,903 acres of disturbance. Combining and expanding the existing Bald Mountain Mine North Operations Area Plan of Operations boundary and
the existing Casino/Winrock Mine Plan boundary into a unified plan boundary called the proposed NOA Project would increase the total surface disturbance from 9,381 acres to 13,727 acres and add four new heap leach pads. In the South Operations Area, the existing Alligator Ridge Mine and Yankee Mine See EXPANSION, 14
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Josh Roderick, environmental superintendent, looks at Top 2 Pit at Barrick Gold Corp.’s Bald Mountain Mine. Top 1 Pit is in the background.
Expansion... Continued from 12
plans would be expanded and combined into a unified plan called the proposed South Operations Area Project, which would increase the total surface disturbance from 939 acres to 3,496 acres. The South Operation Area Project Plan of Operations would also include an electrical transmission line and an access road between the North and South operations areas. The draft EIS describes four alternatives, but the plan that has the best chance of approval is the Western Redbird Modification Alternative. The alternative proposed additional surface disturbance for the NOA and SOA projects would be approximately
4,773 acres and approximately 2,220 acres of authorized disturbance would be withdrawn, which represents a 4,339-acre (63 percent) decrease in comparison to the proposed action, according to the Bureau of Land Management.
Environmental Challenges Roderick said the biggest challenges at the site are a mule deer corridor and sage grouse habitat. Several local outfitters had brought concerns about a deer migration corridor MARIANNE KOBAK MCKOWN, MINING QUARTERLY
See EXPANSION, 15
A 240-ton haul truck dumps material at Bald Mountain Mine.
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 15
Expansion... Continued from 14
Mountain has 450 employees and about 35 haul trucks in its fleet, said Richard Curnow, engineering superintendent. The fleet consists of 240-ton Komatsu trucks, 289 Caterpillars that are 190-ton and 785 Caterpillars that are 150-ton. The average grade at Bald Mountain is 0.022 ounce per ton and all of it is oxide ore. “As we get closer to finishing one pit and starting another, you start doing a little more exploration work around the area, trying to expand the pit,” Curnow said. “We just try and open up as many of these pits as we can, of course that all depends a lot on gold price and mining costs.” See EXPANSION, 16 MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Equipment operates in Barrick Gold Corp.’s Bald Mountain Mine Top 2 Pit.
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Expansion... Continued from 15
decision may be out by April, he said. Barrick began the permitting process for this expansion in 2011. Curnow said operations are moving smoothly, but challenges at the site continue. “Changing gold price, changes the overall look of Bald Mountain as far as mine planning,” Curnow said. “We also have challenges from the environmental group, all the mule deer corridor stuff that we have to make sure that our roads stay away from, those are our biggest challenges.”
If the expansion is approved, the life of mine is 2020. Without the expansion, the mine life is done by 2017. “Next year’s life of mine we’re looking at – through some incentives and some improvements and different processing, and different hauling places – we’re looking at 2022. So as time goes on it keeps expanding.” Bald Mountain has already reclaimed about 500 acres this year, Roderick said. Rock disposal areas, roads and exploration areas are being reclaimed. The pits are not being reclaimed, but none of them Safety have been dewatered so they won’t create The other challenge that never goes pit lakes. However, Top Pit 3 has a small away — at any site — is safety. amount of dewatering, Roderick said. “Overall we’ve been doing good” on The site hopes to see the final EIS for safety, Curnow said. comment by the first part of January, Roderick said. The BLM said a record of See EXPANSION, 17 MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Richard Curnow, engineering superintendent, talks about the fleet at Barrick Gold Corp.’s Bald Mountain Mine.
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WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 17
Expansion... Continued from 16
There’s a continued emphasis on safety. The site has been focusing on fatal risks and lifesaving controls and Courage to Care. Trying to identify risks before an incident occurs. “Those life-saving controls have to be in place otherwise the work doesn’t proceed,” Roderick said. “Courage to Care is about an emphasis on building relationships, caring about not only yourself, but the team and the site — ensuring that everyone goes home safely.” About 60 percent of the employees live in Elko and Spring Creek, about 25 percent live in Ely and the rest are from surrounding areas.
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18 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Democrats propose royalty on new mines MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO – Congressional Democrats from New Mexico and Colorado are proposing to charge hardrock mining companies royalties on gross income to update 1872 mining laws. Sens. Tom Udall, Martin Heinrich and Rep. Ben Ray Lujan, all from New Mexico, and Sen. Michael Bennet from Colorado introduced the Hardrock Mining and Reclamation Act of 2015 on Thursday. The Act would “ensure mining companies pay royalties for the privilege of extracting mineral resources from public lands,” according to a press release on Udall’s website. Mining law dates back to 1872 and allows companies to take minerals, such as gold, silver and copper, from public land without paying royalties. If passed, the Act would set a 2 to 5 percent royalty rate for new mining operations, based on gross income on production, according to Udall’s website. The Act also would use royalty revenue and a separate
fee of 0.6 to 2 percent to pay for abandoned mine cleanup. Lawmakers said the reclamation fees are expected to generate $100 million annually. “Hardrock mining companies have enjoyed a sweetheart deal for nearly 150 years, leaving taxpayers on the hook to clean up hundreds of thousands of abandoned mines leaking toxins and threatening communities across the West,” said Udall, who has pushed for mining reform since he was first elected to the U.S. House of Representatives in 1998. “The Gold King Mine blowout proves that the status quo just isn’t working, and New Mexico and Navajo Nation communities are suffering the consequences,” he added. “Gold and silver on public lands are a natural resource, just like oil and gas. Taxpayers deserve their fair share of the profit — and communities across the West need that money to clean up abandoned mines.” The Gold King Mine accident spilled 3 million gallons of toxic wastewater into the Animas and San Juan rivers. Udall said
“communities in New Mexico and Colorado are still struggling to recover from the impact to businesses and farms.” Nevada lawmakers aren’t as certain about the proposed legislation. Sen. Harry Reid, D-Nev., didn’t endorse the proposed legislation but didn’t oppose it either. “I’m willing to consider any proposal for mining reform that protects the mining industry, doesn’t kill jobs, helps clean up abandoned mines and shares revenues with the state,” Reid said. “I will carefully study each proposal that is introduced to determine whether it meets these criteria and ensures that one of the pillars of the state’s economy can continue to create jobs and strengthen the economy.” Republican Rep. Mark Amodei is opposed to the legislation. “Hardrock mining already requires vast amounts of time and capital to unleash its benefits, which already includes significant tax revenue, high-paying jobs and health care that the government doesn’t have to
pay for,” Amodei’s office stated. Republican Sen. Dean Heller also is against the Act. “Instead of adding more red tape to domestic mining, Senator Heller continues to advocate for policies like his Public Land Job Creation Act and the American Mineral Security Act. Both pieces of legislation expand responsible domestic mining and create needed-jobs,” said Heller spokeswoman Michawn Rich. Nevada Mining Association President Dana Bennett was still reviewing the proposed legislation. “Of course, we plan to work closely with Congress to protect this important sector of Nevada’s economy,” Bennett said. “With commodity prices dropping, however, we must be cautious about anything that might inhibit mining today or exploration for the minerals of the future.”
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WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 19
The 20 to 30 Year Itch
JOHN L. DOBRA, PH.D. In the late 1970’s I was a graduate student working for my Ph.D. in economics at Virginia Tech in Blacksburg, Virginia. One of the summers that I was there we had an infestation of locusts which, they said, happens every 17 years. The locusts are not like the Mormon crickets we get in the West that basically look like grasshoppers. I’m not John an entomologist so forgive Dobra my unscientific description, but these things basically look like your little finger (without the nail) with wings. Millions or billions of them live mostly in trees where they rapaciously devoured the leaves and make a cacophonous noise. Other than hurting their hosts, the trees, they were harmless but annoying. One redeeming quality is that they make pretty good fish bait. What brings the locusts to mind is the news that Congress or, at least, some members of Congress, want to reform the mining
laws. Specifically, they want a royalty on minerals produced from new mines on public lands. Like the locusts, this issue keeps coming back, although not on a regular 17 year schedule. In other words, Congress is less reliable. In Congress’ case, it’s every 20 to 30 years. There is a lot more uncertainty with Congress. Also like the locusts, Congress is rapacious and cacophonous, but I don’t know about the fish bait part. You decide. Proponents of mining law reform like to point out that it is a 140-plus-year-old law. But the General Mining Law (30 U.S.C. §§ 22-42) has been amended well over 100 times since it was initially passed in 1872. In fact, John Leshy’s book’s title – “The Mining Law: A Study in Perpetual Motion” – belies the claim that the law is antiquated and no longer useful. I bring up Mr. Leshy, now a professor of law at UC Davis, because he was involved in efforts to reform the mining law in the 1970s when his aforementioned book was published, and in the 1990s when he was
Solicitor for President Bill Clinton’s and Secretary of the Interior Bruce Babbitt’s Department of the Interior. His, and modern day reformers’ argument basically is that the United States should adopt a mineral leasing system like the rest of the world and that mineral producers should pay a royalty like they do in the rest of the world. Like the locusts, they’re coming back. The 1872 Mining Law created a unique system in which the discoverer of a mineral deposit can stake a claim to ownership of the mineral rights. After displaying the initiative to discover the mineral and diligently developing the prospect, the claimant owns the mineral without obligation to the state. The U.S. did acquire territories west of the Mississippi by conquest (the Mexican War, e.g.), purchase (Louisiana, e.g.), and treaty so it owns the mineral rights appurtenant to those lands. OK, so what is the federal government doing with these rights? In the case of locatable minerals like metals, it allows individuals that display the diligence to discover and develop mineral
deposits into mines rights to the minerals. What is the alternative? If the federal government were to lease the minerals, there would be less incentive for individuals to discover the minerals in the first place. In the case of leasable minerals like oil, natural gas, coal and other common variety minerals like gravel, the government leases mineral rights, but the rationale behind the leasing system in the U.S. is that these minerals are not difficult to discover. For me, the rationale for not messing with our system of mineral rights is similar to not calling for a new Constitutional convention. We gave a system that works well, and, as they say, if it ain’t broke, don’t fix it.
John L. Dobra, Ph.D. is Director, Natural Resource Industry Institute and Associate Professor of Economics at the University of Nevada and a Senior Fellow at Fraser Institute
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20 • MINING QUARTERLY, Elko, Nevada WINTER 2015 NEWMONT FULL POTENTIAL
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Phoenix Mine Manager Walt Holland talks about the proposed expansion at the site.
Phoenix working to expand, improve MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
BATTLE MOUNTAIN – While trying to expand the mine, employees at Newmont Mining Corp.’s Phoenix Mine are also continually improving. Under the Greater Phoenix Mine Project, Newmont is proposing to expand the mine, which produces gold, silver and copper. The mine is located on
public land about 12 miles south of Battle Mountain in Lander County. The land is administered by the Bureau of Land Management. The scoping period for the proposed expansion ended Oct. 29, said Briony Coleman, Phoenix environmental specialist for sustainability and external relations. “It’s essentially an expansion of everything we do at Phoenix Mine right now, so
both gold and copper. We’ll be expanding the pit area – that’ll be expanding east, west and also deeper and that’s both our gold and copper resource.” The site will also expand its copper leach facility, waste rock facilities, and tailings storage. The expansion won’t need an increase in employees, but it will “significantly” extend the mine’s life from 2040 to 2063, Coleman said. The throughput in the mill will be the same,
just for a longer period of time, said Walt Holland, mine manager. “We move about 45 million tons a year – that’s total tons,” Holland said. “The mill does about 13.5 million to 14 million tons a year. The average grade at Phoenix is 0.019 ounce of gold per ton. The expansion won’t increase the number of jobs at the site. Phoenix See PHOENIX, 22
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada â&#x20AC;˘ 21
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MARIANNE KOBAK MCKOWN, MINING QUARTERLY
This portion of land between the two pits will be mined if the expansion plan is approved for Newmont Mining Corp.’s Phoenix Mine.
Phoenix... Continued from 20
employs almost 500 people, Holland said. Mining is done at Phoenix with its 13 Caterpillar 793Ds, which are 250-ton haul trucks, one EX5500 Hitachi shovel and two EX3600 Hitachi hydraulic shovels and various support equipment. The 5500 has a 37-yard bucket and the 3600s have 32-yard buckets. The plan of operations boundary will increase from 8,500 acres to 18,500 acres if the expansion is approved, Coleman said. “It’s a lot of buffer area,” she said. “Essentially we’re combining our two main pits into one, and then we will be expanding the area as well of that pit area,” Coleman said. The two main pits are Fortitude and Bonanza. When they are combined, the larger pit will be called the Phoenix Pit.
Sage Grouse Issues
The site only has about eight acres of core sage grouse habitat being affected, Coleman said. The site does have the lesser categorized habitat being impacted as well. “Certainly the pit expansion is over what areas are already disturbed currently by operations,” she said. The south portion of the property – where most of the expansion is happening – does not have any sage grouse habitat. Coleman said Newmont won’t know until after the EIS is finalized if the site will have to do any mitigation work for sage grouse habitat. “The next step is that we develop a draft EIS,” Coleman said. “Then there will be See PHOENIX, 24
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Briony Coleman, Phoenix environmental specialist, poses for the camera.
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada â&#x20AC;˘ 23
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24 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Phoenix... Continued from 22
another opportunity for public comment after that. We are hoping to have the whole process completed by early 2017 — we hope to have permits in hand.” She said the permitting process had not seen any unexpected obstacles. “It’s going along really well actually,” Coleman said. “It is quite a large project, but it’s something that we hope to get for the life of our mine.”
Full Potential
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Phoenix General Manager Cecile Thaxter talks about Newmont Mining Corp.’s full potential program.
While employees work to expand the mine, it isn’t just business as usual on the site. Phoenix staff is focused on the company’s full potential program. This program has been called by many other names over the years, said Phoenix General Manager Cecile Thaxter. “We call it full potential but really what it is, is continuous improvement,” she said. The structured program is being driven across all of Newmont’s mine sites across the globe, said Phoenix Full Potential
Manager Pat Donovan. “Every mining company has continuous improvement programs in place, but it’s particularly critical now because we’re in a low metal price environment,” he said. “We’re at a higher cost in capital environment and that has eroded our profit margins, so there’s only a few things that we can control, and that is our cost. So we are looking at opportunities in every aspect of the mining cycle for savings or more ways to create more revenue in order to increase our profit margin.” Thaxter said the challenge of full potential is finding new opportunities. “We have a lot of fixed costs at our mine site,” she said. “So whether or not you have 10 people operating and you get throughput up 40,000 or 30,000, you still need those 10 people. So it’s more the per unit cost that’s going to come down. It’s not like we’re going to reduce overall cost, but we’ll be able to spread that fixed cost among a lot more ore going through See PHOENIX, 25
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Cells in the foreground are cleaners and the roughers are in the far bank of cells in the processing area of Phoenix Mine. The cylinder tank is part of full potential.
Phoenix... Continued from 24
the plant, so that unit cost comes down, which is very important.” She said the “nice thing” about the full potential program — diagnose, design, deliver — is that it is employee driven. “You actually go talk to people and you interview and you get ideas from the folks,” Thaxter said. “So all these ideas come up from our workforce and they can be from our salary guys or our hourly guys.
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It doesn’t really matter. Everybody has an idea, or everybody has different ways of thinking about things.” Donovan said the full potential program is structured the same way at every site and his job is to corral the employees together to work on continuous improvement. “The structure of it is, you diagnose the See PHOENIX, 26
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Phoenix... Continued from 25
issues, you design solutions and then you deliver the opportunity in the form of savings or increased efficiency,” he said. The program has a “threepronged approach,” Donovan said. At the site they look at floatation recovery, which recovers more metal, and throughput, which is getting more rock through the mill, he said. “The more rock you get through the mill, the more metal you recover and your costs come down. So you get a two-fold benefit from that, both from recovering more metal and lowering your cost,” Donovan said. The other approach is in cathode production from copper leach. The site produces copper plates in its SX-E facility and then the plates or cathodes are shipped to manufacturers. MARIANNE KOBAK MCKOWN, MINING QUARTERLY
See PHOENIX, 27
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Phoenix... Continued from 26
Donovan said the site has already solved all the technical issues around the solvent, extraction and electrowinning facility, and will be looking at “operational excdellence to get the plant running exactly as we would want it to.” Donovan said “the greatest thing” about the program is that Newmont “made it important for us to sit down and talk.” Thaxter agreed that “employee engagement” is key to the program. The company is driving employees to “take on ownership,” she said. “So they know that they can contribute to this and they can make a difference,” Thaxter said. “So at the end of the day, when we make a profit or we have cash left over, or we’re able to keep our people employed, then they’ve all contributed to it.” MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Phoenix Operations Supervisor Cory Mills, talks about how the copper leach facility is monitored in the process control room. Benjamin Montes, SX-EW operations, stands behind him.
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28 • MINING QUARTERLY, Elko, Nevada WINTER 2015
A FAMILY BUSINESS
Myrna’s Hot Shot on call to the mines MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO – When a mine needs a part immediately, Myrna’s Hot Shot & Air Freight Co. may be the solution. Myrna Combs founded the business almost 30 years ago. “We started in October of 1986,” she said. “It was her and her husband at the time and one truck,” Andrea McEneaney said. “It’s definitely grown since then.” It was the first hot shot business in Elko, said Combs. She said her ex-husband worked in Texas and when they moved to Elko they saw the need for a hot shot business. “At first we were just a Ma and Pa business,” she said. They began with just the two of them making deliveries and in 1989 she bought out her ex-husband. They had six employees at the time. “The business hasn’t changed much over the years, it’s just a lot busier,” Combs said. Through the years, Combs has kept the company a family business. For a time her eldest son was a driver, and for several years, her daughters, McEneaney and Shawna Hunter, have worked for the company. McEneaney has worked for the business since she was 18. However, she was helping Combs make deliveries before then. “She was my riding buddy,” Combs said about her daughter. Hunter began working for the business in 1996. Combs is now “semi retired.” McEneaney said they only call their mom, who is the owner and president, when they need to make a large order. McEneaney said people who aren’t familiar with her profession often think she is a firefighter that jumps out of planes when she tells them she works for a hot shot company. She said she has to explain the history of the term hot shot. “It originated in the oil fields and it was a way to get things out to the field as quickly
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
The daytime staff of Myrna’s Hot Shot pose next to the company’s sign. From left are office helper Denyell De La Paz, Corporate Treasurer Shawna Hunter, Corporate Secretary Andrea McEneaney and owner and President Myrna Combs. as possible, because when something breaks, it could just be a little tiny bolt or O-ring, but they need it now,” McEneaney said. “If they don’t have it in their warehouse, they’re going to lose money if they don’t get that machine or that equipment back up and running. It’s all about keeping everything going and making the money.” She said the business doesn’t keep any parts on hand. Myrna’s Hot Shot is purely a transport business. “We are the people who take it from point A to point B,” she said. It also is a 24-hour operation, Hunter said. “We don’t even shut down for Christmas dinner,” McEneaney said. The company’s staff has to be ready at
a moment’s notice, she said. Mines work 24 hours a day and seven days a week, so Myrna’s can be called for a job at any time. Their customers are mainly hardrock mining companies that range all over the West. Other than Nevada, the main places drivers are sent are Wyoming and Arizona, however, the business does reach farther, such as Canada and Buffalo, New York. Because they run a crew of eight to nine drivers, all of them have to have several types of training, including Mine, Safety and Health Administration training. All the women said there are different challenges every day because no day is the same. “There’s no regular routine,” Hunter said. “We’re on an on-call basis. There is
nothing typical about this business.” McEneany said they have been called to bring in small and large items. “We’ve been called in for just an O-ring or just one bolt,” she said. “They needed it as soon as that thing broke. We pick up air freight. (The mines) have chartered flights for little tiny boxes.” Combs said her company had jobs that cost the mines $15,000 to get a part that cost less than $100. “It’s why we drive to Wyoming and other states,” she said.
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 29
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30 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Coeur moves toward expansion at the Rochester Mine Company helps support surrounding communities JANET HOOK Mining Quarterly Correspondent
LOVELOCK — Coeur Rochester hopes to complete the permitting process for a mine expansion by early next year. The proposed expansion would add five to seven years to the mine’s life, according the Coeur. The plans also include a final closure plan and reclamation. The draft environmental impact statement was published and public review of the document ended Oct. 5. The proposed amendment No. 10 to the federal mine plan of operations addresses all three aspects of Coeur’s statement of corporate responsibility: protect the environment and people associated with our operations, produce value for our stockholders, employees and surrounding
communities, and preserve biodiversity, economic prosperity and local cultures. The final EIS is anticipated in early 2016 with the record of decision a few months later. Coeur hopes to begin preparations for the expansion projects by late 2016 with production slated for 2017.
EIS process and public involvement The Bureau of Land Management hosted September public meetings in Winnemucca and in Lovelock. During a presentation at the meeting, Coeur Mining Permitting Manager Sara Thorne and BLM geologist Kathleen Rehberg described the remaining steps in the review process. See COEUR, 31
PHOTO BY OXANA SYLVESTER
Kathleen Rehberg, BLM geologist and project lead, begins the presentation to describe the proposed expansion and closure plan in amendment number 10 to the BLM plan of operations permit at the public meeting in Lovelock.
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Coeur... Continued from 30
“After the record of decision is issued, we bond for the new surface disturbance proposed and perform any type of mitigation for impacts that were analyzed in the EIS and after that, we are authorized to start constructing the project,” Thorne said.
Public meetings
Coeur employees from a wide variety of departments turned out to learn more about the permitting process and to understand any public concerns that may be voiced. Robison Engineering had employees at both public meetings in order to answer any questions about the consulting work the company has done for Coeur on the EIS. Ian McIntosh said that he wanted to see what issues people brought up because they are working on plan of operations amendment 10 if the EIS
is approved. “We do a lot of consulting and engineering work for Coeur so we thought we’d come out and represent Robison and answer any technical questions that may be asked throughout the presentation,” said Julianne Zotter of Robison Engineering. While the public-at-large did not make a strong appearance at either meeting, John Hadder, director of Great Basin Resource Watch, came to hear the presentation and to ask questions. Great Basin Resource Watch has been keeping track of extractive industries in Nevada since about 1995. “Our organization has been requesting that there be an EIS process around this mine for about 10 years now,” Hadder said. “There have been lots of additions and amendments. Ok, it’s time to put it all together. So we’re happy to see it happening.” See COEUR, 32
PHOTO BY OXANA SYLVESTER
At a public meeting, Sherrie Titus, Coeur supply chain manager, and Ambur Chambers, Coeur buyer, examine the map showing existing and proposed facilities discussed in plan amendment 10.
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Coeur... Continued from 31
PHOTO BY OXANA SYLVESTER
Director of Great Basin Resource Watch John Hadder, poses with the environmental impact statement for the Rochester Mine. “One thing that is really good about doing the larger NEPA process is that there is more information available to the public,” said Hadder.
Hadder added that his organization is particularly interested to learn about the closure plan. “We want to provide our comments in the process and hopefully move forward in the best way possible,” Hadder said. Sherrie Titus, Coeur Rochester, supply chain manager, said, “For me it’s supporting the company and making sure that everybody in the community has a job in the future.” Rich Wagner, safety manager, and Joel Dunkin, environmental coordinator, came to the meeting to show support for the growth and progress of the mine. “It’s exciting times for us to talk about expansion, especially in these times we’re in now with a little bit of price suppression. This is a good thing. For our community, it’s going to be a huge benefit to have this mine continue to bring new life,” he said. Greg Robinson, assistant general manager for the Rochester Mine, said,
• Construction of a new Stage V “We are extremely happy with the way this EIS process has been going.” heap leach pad, 123 acres • Relocation of portions of the main The project access road, the Stage IV haul road, and The existing permit boundary for the the American Canyon Road Coeur Rochester and Nevada Packard • Increase groundwater pumping mines encompasses approximately rate and replace two production wells 4,339 acres, and would be expanded by • Establish new growth medium an additional 499 acres, bringing the stockpiles and borrow areas total permit area to 4,838 acres of pubThe final permanent closure plan lic and private land, said Thorne. includes a temporary change in the Coeur is currently authorized up to location for storage of potentially acid 1,939 acres of surface disturbance. Of generating material from the Rochthat, approximately 187 acres is private ester Pit to the north and west rock land owned or controlled by CRI with disposal sites. This would allow for the remaining 1,752 acres of public land renewed mining within the Rochester managed by the BLM. The proposal Pit. After mining ceases, the material would increase the amount of autho- would be placed back in the pit and rized surface disturbance by 231 acres, covered according to the current percreating a new total of 2,170 acres. mit requirements. The expansion proposal includes Alternative 1 would make the change • Expansion of the Stage IV heap to the rock disposal sites permanent leach pad by 67 acres and increase rather than temporary. the height of the pad from 330 feet to 400 feet See COEUR, 33
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Coeur... Continued from 32
A combination of engineered covers would be placed on top of the heap leach pads. The covers would be designed to ensure that long term effluent will not exceed the capacity of evaporation ponds to store and manage the fluids. The soil cover that would be placed on southern slopes is designed to maximize evaporation. A “run-off cover,” constructed with an impermeable liner with an overlying soil layer, would be placed on portions of north-facing slopes to capture and divert snowmelt to minimize the amount of precipitation that can infiltrate into the heap leach pad. Evaporation ponds would be constructed and existing process and contingency ponds would be converted to evapo-transpiration cells for long term management of heap leach pad effluent. “Really, the driving force of the EIS is that our final permanent closure plan is being analyzed under NEPA. Every mine in Nevada is required to have a closure plan. We’re not planning on closing our doors any time soon but it is important that these things get analyzed under NEPA (National Environmental Policy Act) and the environmental impacts are considered,” said Thorne. “All of these facilities are designed to achieve zero discharge. We’ve done considerable modeling and used site-specific data to come up with the closure design for each heap leach pad,” she said. “Coeur is not setting a standard for closure of mines in Nevada. The closure plan is designed to fit Rochester’s unique situation and challenges,” said Dana Sue Kimbal, Coeur Rochester’s environmental manager.
Challenges to closure
Each heap leach pad will continue to drain fluids, water containing residual minerals and leach solution many years after the mine is closed. The quality of this fluid is expected to be poor and require isolation from the environment. A currently accepted concept is to contain the heap leach pad fluids in ponds designed to evaporate the fluids over the long term. There is limited space to build ponds to manage fluids. The mine plan permit boundary, including the Rochester and Packard mines, covers just over 7 square miles. Over this area, the elevation ranges from 4,960 feet to 7,300 feet above sea level. The proposal only addresses the Rochester Mine area where the elevation of
the valley floor rises to about 6,500 feet, entering a very different range of climatic conditions than those encountered at lower elevations. The valleys within the Rochester portion of the plan boundary are largely occupied by the heap leach pads, haul roads, the process facilities and, of course, the Rochester Pit. Because of the elevation, the mine site receives higher precipitation than the valley floors where most other mines are located. There is also a lower rate of evaporation due to cooler temperatures and mountain shadows.
Reverse engineering
“The closure plan had to be essentially reverse engineered, beginning with the acres available on which evaporation ponds could be built,” Kimbal said. The acreage that could be used for evaporation ponds dictated how much fluid can be managed from each heap leach pad over the long term. The cover would have to reduce the amount of fluid that would drain from each heap leach pad to no more than the amount that could be managed in the ponds. Considering the fluids that would drain from the heaps, the average annual precipitation, and the rate of evaporation, Coeur had to determine how much water it would have to deal with over time and how to reduce it to an amount that would fit into the site’s evaporation ponds. Then the cover design for each heap leach pad could be developed. This analysis resulted in a template for Rochester’s final permanent closure plan to reduce the long term volume of effluent from the heap to a quantity that can be managed on this mine site. The template design for the cover material to be placed on top of each heap leach pad consists of two types: the run-off cover and the evapo-transpiration cover. The closure plan estimates the acreage of northeastern slopes where evaporation is lowest and infiltration would be higher. This area would be constructed with the run-off cover. The remaining acreage of southwestern slopes where evaporation is highest and infiltration would be lower would be covered with the more traditional evapo-transpiration cover design. Long term effluent from the covered heaps would be captured in evapo-transpiration cells designed to contain and evaporate the fluids that drain from heaps many See COEUR, 34
34 • MINING QUARTERLY, Elko, Nevada WINTER 2015
PHOTO BY OXANA SYLVESTER
The proposed Stage V heap leach pad would encompass much of the valley between the Stage IV heap leach pad and the existing ancillary facilities.
Coeur... Continued from 33
years after mining operations cease and reclamation has been completed. Site-specific evaporation data is currently being gathered through the Test ET cell using Rochester heap solution and in the pregnant and barren solution ponds using plain water. This template is based on site specific climate data, where appropriate, and estimated data where specific information was not available. Additional site-specific data is being gathered to verify the template and will be periodically refined over the years leading up to closure. Rehberg explained that there were not any viable alternatives developed for the EIS regarding mine closure because of the unique position of the Rochester Mine. “A lot of it was because of limited space. They are almost in a bowl. That topography out there gives very little room to do anything,” said Rehberg.
Protect. Produce. Preserve.
COURTESY OF COEUR
Map of existing and proposed facilities at the Rochester Mine from the draft environmental impact statement.
Coeur Mining follows a corporate responsibility mandate that is intended to convey Coeur’s global commitment to operating in a socially and environmentally responsible manner. The corporate responsibility mandate is presented as: Protect: The environment and
people associated with our operations Produce: Value for our stockholders, employees and surrounding communities Preserve: Biodiversity, economic prosperity and local cultures “It’s really the foundation of our community relations sustainability and our thoughts going forward,” said Kimbal. The proposed expansion and closure plan fits right in with this philosophy. It protects the environment and people associated with the operations by implementing the best engineering and management practices available for operations, reclamation, and closure of the facilities. The Coeur Rochester Mine currently supports approximately 300 employees and 30 to 40 regular contractors with nearly half living in Lovelock located 28 miles southwest of the mine site. Coeur’s position on protecting their employees can be seen through their program called “Collecting Observations to Eliminate Unnecessary Risk (COEUR)” (Mining Quarterly, June, 2015), emphasizing that safety is key to company growth and empowers employees to protect each other. Seven Rochester employees received awards for excellence in safety from the Nevada Mining See COEUR, 36
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36 • MINING QUARTERLY, Elko, Nevada WINTER 2015
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Association in 2015. The proposed expansion and closure plan also provides value for stockholders, employees, and communities. The extended mine life provides extended production of silver and gold with stateof-the-art reclamation and closure that reduces future risk. It also extends the well-paying jobs for the employees and the businesses in the surrounding communities associated with the mine and the mine’s employees, said Rochester General Manager Robert Stepper. Since the first pour in September 1986, Coeur has continuously produced 142 million ounces of silver and almost 1.6 million ounces of gold from the Rochester and Nevada Packard open pit mines, Stepper said. The commitment to preserve the local culture and economic prosperity of the area surrounding the Rochester site has long been evident. Kimbal referred to the labor, equipment, and muscle provided by
Coeur Rochester and its employees for the “We’re hoping it will become an annual in Lovelock Cave Days, an annual event sponsored by BLM-Winnemucca District, communities nearby. event,” said Graham. working together with the Nevada Outdoor Lovelock Community School support School, Great Basin Institute, the CaliforRochester Mine employees also served nia Emigrant Trail Center, Native AmeriPride Day as crossing guards for the schools dur- cans, the Marzen House Museum, Ducks Frankie Graham, Rochester’s human ing the first weeks of the 2015 school year Unlimited, and various other volunteers. resources generalist and life-long resi- while the school administrators trained According to the BLM, in 2015, over dent of Lovelock, explained how, in 2014, the permanent school crossing guards for 300 fourth graders from Winnemucca, the Lovelock Chamber of Commerce the year. Lovelock, McDermitt, and Orovada toured coordinated the event called Community “We already had the safety vests but we the Marzen House Museum in Lovelock Pride Day—Revitalizing the Main Street had to practice with the flags,” Kimbal said. and the Lovelock Cave, located 22 miles Corridor. Several Pershing County busiCoeur Rochester has also participated south of Lovelock. nesses and community groups, along with with the “Read Across America” program “Coeur employees come every year for Lovelock schools, came together to revital- and teamed up with Barrick two years ago three to four days in May to help interize the downtown area, protecting existing to present the “Gold Fever” program to pret local mining history at the Rochester fourth grade students. Graham says they Exhibit in the Marzen House museum,” businesses by drawing visitors. Employees of Coeur Rochester turned hope to participate in the school programs said BLM archaeologist Peggy McGuckian, out to clean windows through the main again in future. coordinator of the event. “They do a really corridor of town to the Senior Citizen CenSpeaking of the students, Graham said, great job engaging the children and making ter and to paint the old windmill building. “They enjoy it. They still walk up and say, history come alive.” During the 2015 Lovelock Community ‘I remember when you did the rock thing.’” Coeur contributed the Rochester Pride Day, Coeur employees pitched in to Exhibit to the Marzen House museum. paint the courthouse, the Marzen House Lovelock Cave Days museum, and the library. Coeur Rochester is an essential partner See COEUR, 37
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Coeur... Continued from 36
The exhibit is enjoyed on a regular basis by local, national, and international visitors throughout the year.
Unionville Park Clean-Up Day In October, residents of the small desert town known as Unionville and Coeur Rochester employees, led by Frankie Graham, set out to clean the trash and debris from the town’s park. The project was needed in order to make room for a contractor to install a roof onto the Old Mud House, the first step to preserve one of the last remaining mud buildings that was home to the first miners in the area. Pershing County Commissioner, Pat Irwin, described the plans the community has for the park, sometimes referred to as either Mohea Park or the Boy Scout Camp, as well as Unionville Park. The official name is the Mohea Whitaker Memorial Youth Park of Unionville, made famous for Mohea Whitaker’s grand Easter-egg events.
Lover’s Aloft Balloon Festival Coeur is also a major sponsor for the Lover’s Aloft Balloon Festival. Unlike the balloon race in Reno, the balloons at Lover’s Aloft are tied together with surveyor’s tape. The balloons that stay tied together the longest win the race. “It is a great metaphor for marriage and for Lovelock,” said Irwin. In addition to sponsoring the event, Coeur also provides silver splats as prizes for the winning balloon pilots. Irwin noted that many Rochester PHOTO BY OXANA SYLVESTER employees also serve in the community with school football teams, the volunteer Frankie Graham, Coeur Rochester human resources generalist and fire department, and emergency medical native Lovelock resident, describes the various ways that Coeur Rochester and its employees work with the City of Lovelock to support the technicians. community. “It seems to be the character of the Coeur employees that they want to give “We need to protect the Old Mud House The goal is to create interpretive sites for back to the community,” Irwin said. to keep it from further decline. If we can get visitors to Unionville. a roof on it to seal it up, then next year we Irwin added, “The more visitors we can can replace windows and start to restore the attract to Pershing County, the better the inside,” said Irwin. economy is for the whole county.”
38 • MINING QUARTERLY, Elko, Nevada WINTER 2015
MSHA: Seven miners die in third quarter of 2015 ARLINGTON, Va. – In the first nine months of 2015, 25 miners died and seven of those fatalities occurred in the third quarter, according to the Mine Safety and Health Administration. These fatalities are eight fewer than in the same period in 2014. “ T h e s e deaths remind us why we must continue our v i g i l a n ce a n d ensure effective safety and health programs are at work throughout the industry,” said Joseph A. Main, assistant secretary of labor for mine safety and health. “The hardworking men and women of the mining industry deserve no less.” One of the deaths in the third quarter was Jason Potter, 26 of Lava Hot Springs, Idaho. He was killed Aug. 3 in the SSX
Mine in Elko County. A jumbo drill was traveling in the reverse direction of travel up a 10 percent slope and was carrying a 13½-foot long drill steel in a rack that had been installed on the machine, according to MSHA. “The forward end of the drill s te e l s t r u c k a rib causing it to be pushed back toward the operator,” MSHA stated. “The drill steel struck and killed the operator, and caused him to fall to the ground. No witnesses were present at the time of the accident.” On a fiscal year basis, preliminary data indicates that 14 miners died on the job at coal mines in FY 2015 (ended Sept. 30) – down from 18 deaths in FY 2014 – representing the fewest number of coal mining deaths in a fiscal year in coal mining
history. In metal and nonmetal mining, 23 miners died in FY 2015, six fewer than during the previous fiscal year. Of the seven miners who died in the third quarter, two were victims of coal mining accidents and five, including Potter, perished in metal and nonmetal mining accidents. • A 29-year-old electrician at a Kentucky coal mine died while replacing a load-locking valve on the cutter head jack of a continuous mining machine. The cutter head collapsed, fatally crushing the miner. • A 58-year-old bulldozer operator at Alabama coal mine was found lying unconscious next to a bulldozer. Mine personnel administered first aid immediately, continuing medical treatment until emergency personnel arrived. After an airlift to the hospital, the man died from his injuries nine days later. • A 50-year-old superintendent drowned at an Ohio sand and gravel dredging operation. The victim and one
other miner were attempting to dislodge a clam shell bucket from the bottom of the pond when the dredge capsized. The injured miner swam to shore and summoned assistance; his co-worker’s body was recovered eight days later. • An 18-year-old seasonal worker died at a Virginia granite mine when the silo he was standing under collapsed and buried him beneath falling material. • A 64-year-old miner operating a front-end loader died working on a 35-foot high stockpile at a North Dakota sand and gravel operation. When the miner exited the loader, the stockpile slope failed and engulfed him. • A 25-year-old contractor died at a Georgia kaolin processing plant after he entered a railcar alone to wash out residual product, and was found later unresponsive still inside the railcar.
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Laxalt vs. Sandoval on sage grouse MICHELLE RINDELS Associated Press
CARSON CITY — Nevada joined a lawsuit Oct. 22 challenging federal land-use restrictions aimed at protecting sage grouse — a legal move that was condemned by Gov. Brian Sandoval in a tense public exchange between his office and the state’s top prosecutor. State Attorney General Adam Laxalt made the deci- Laxalt sion to join the suit, which was first filed by Elko and Eureka counties and mining companies, a few weeks after federal officials announced the bird would not be listed as an endangered species because of aggressive measures underway to protect its habitat. However, some Republicans and rural interests have been critical of the conditions the state must accept under the arrangement.
“The federal government’s one-sizefits-all sage-grouse plan will greatly hinder Nevada’s growth and success,” said Laxalt, also a Republican. “While I appreciate and applaud all of the efforts that have been made to negotiate a favorable outcome for Nevada ... my office, after careful legal analysis, has concluded that this suit is necessary to fully protect the interest of the state.” A Laxalt spokeswoman Sandoval said the state needed to sign onto the lawsuit now so Nevada’s interests are represented during a court hearing that was previously set for Nov. 12. The legal action garnered swift condemnation from the office of Sandoval, who has been working on the sage grouse issue for more than a decade. The governor himself is currently on a trade mission to China. See GROUSE, 42
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Local officials support AG joining lawsuit MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO — Local officials applauded Attorney General Adam Laxalt’s decision on Oct. 22 to join a lawsuit seeking an injunction against the federal government’s Sept. 22 decision on land use restrictions in sage grouse habitat. Western Exploration LLC, Elko and Eureka counties and Quantum Minerals LLC filed the lawsuit Sept. 23 in U.S. District Court. The injunction was set for a hearing in Reno on Nov. 12. The plaintiffs are challenging the legality of the “draconian land use prohibitions and restrictions in the U.S. Bureau of Land Management’s and U.S. Forest Service’s Nevada Land Management Plans for Greater Sage Grouse.” Assistant County Manager Randy Brown said the county had been asking
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Gov. Brian Sandoval and others to join in the fight against the new land use rules. “It means a lot to us,” Brown said about Laxalt joining the lawsuit. “In my personal opinion it’s huge for us all. It gives us a lot more credibility, and having all the other counties sign on as well. It means it’s not just us taking on the federal government.” Brown wasn’t the only local official to applaud Laxalt. “Attorney General Adam Laxalt’s move to join Eureka and many other Northern Nevada counties in challenging the BLM and U.S. Forest Service Sagegrouse Management Plan sends a strong signal that this massive, federal land grab has devastating implications for Nevada,” State Sen. Pete Goicoechea said in a press release. “Governor Sandoval’s See SUPPORT, 42
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40 • MINING QUARTERLY, Elko, Nevada WINTER 2015
GROUSE vs. GOLD Will new sage grouse plan kill mineral exploration?
MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO – Exploration for minerals in most of Elko County may have been killed by the new land use rules concerning sage grouse, according to county officials and Division of Minerals Administrator Richard Perry. On Sept. 22, the U.S. Fish and Wildlife Service decided not to list the Greater Sage-Grouse on the Endangered Species List, but U.S. Forest Service and the Bureau of Land Management filed their Approved Resource Management Plan Amendments for the Great Basin Region concerning the bird’s habitat. Part of this new land use plan included the withdrawal of 10 million acres of land from future mining claims, prohibition of oil and gas drilling near the bird’s breeding grounds, and imposing new reviews on livestock grazing permits. However, according to Perry and the
county, the key factor in stopping the listing may be a detriment to rural economies. “I think it is something that could have a very significant negative impact on our industries here in the state,” Perry said during an Elko Rotary Club meeting. “We didn’t have the sage grouse listed, which is good. And NDOW is still responsible for managing the species, but the final environmental impact statement and the land use plan from the BLM and the Forest Service basically took 22 million acres of Nevada, which is a third of the state, and said you can’t do these things on this.” The Interior approved an application to MARIANNE KOBAK MCKOWN, ELKO DAILY FREE PRESS withdraw about 10 million acres of public and National Forest System lands identified Assistant County Manager for Community Development & Natural as Sagebrush Focal Areas in Idaho, Mon- Resources Randy Brown talks about the sage grouse priority habitat map tana, Nevada Oregon, Utah and Wyoming on Oct. 9 in his office. from location and entry under the U.S. mining laws, according to the BLM. These according to the Federal Register. Perry said the new rules won’t immeareas include almost 2.8 million acres in “That is very disturbing,” Perry said. “It diately impact producing mines, because they sustain valid and existing rights, but Elko, Humboldt and Washoe counties, is very disturbing at the state level.” He said Nevada put together a state plan they will impact exploration companies. with a conservation credit system to help “What’s concerning is how difficult is it manage sage grouse habitat, but the federal going to be to do exploration for minerals or plan ignored most of those measures. gas or geothermal?” Perry said. “Some of “Basically we were marching down these restrictions don’t allow surface occuthe path to let us manage this, you know pancy. In other words you can still own a locally here at the state level. We would claim but you can’t go visit it or build a road require mitigation where it’s necessary and to it. That just seems inconsistent. That’s MARKETS: despite (Gov. Brian Sandoval’s) letters and the red flag we all have in these industries comments and pleas from the state, they right now.” didn’t listen to it,” Perry said. Assistant County Manager for ComMinerals & Mining In a letter from Sandoval to BLM Director munity Development & Natural Resources Neil Kornze, the state claims the U.S. Fish Randy Brown agreed with Perry’s assessand Wildlife Service was unwilling to con- ment. He said the concern is the sagebrush sider science from the states and the BLM focal areas. gave “improper deference” to the Wildlife Dredging Service’s judgment on an unlisted species. See GOLD, 43
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Grouse... Continued from 39
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“Prematurely embroiling the state in costly litigation at this juncture threatens to compromise future collaborative efforts,” said his spokeswoman, Mari. St. Martin, pointing to years of work by state and local officials on the Sagebrush Ecosystem Council. Laxalt was acting in his personal capacity and does not represent the state, governor or any state agencies, she said. Laxalt’s office shot back, saying the statement was “troubling” and “wrong.” Sandoval had applauded the federal government’s decision not to list the sage grouse as an endangered species, even though he formally submitted concerns in writing about differences between the approaches of Nevada and federal officials in managing sage grouse habitat. Other Nevada Republicans were more critical of the development, saying it looked good on the surface but was actually a bad deal for ranching, mining and development interests. U.S. Sen. Dean Heller and Reps. Cresent Hardy, Mark
Amodei and Joe Heck said they supported suing the federal government. “The land use plans BLM and the Forest Service intend to implement have created a de facto listed designation by locking up millions of acres of land,” Heck said. Heck’s opponent in a highly competitive race for U.S. Senate, Democratic former Nevada Attorney General Catherine Masto, took an opposite tack, praising Sandoval for his negotiations on sage grouse issues and saying Laxalt’s lawsuit was premature. Rural Nevada counties that have signed onto the lawsuit include Churchill, Elko, Eureka, Humboldt, Lander, Lincoln, Pershing, Washoe and White Pine. Other supporters include the Nevada Petroleum Marketers Association, the Nevada Farm Bureau Federation and the Nevada Cattlemen’s Association.
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Consistency Review letter and formal appeal provide a strong platform for the attorney general to fight against the land use prohibitions and restrictions in the federal plan which substantially interfere with the state’s and Nevada counties’ Sage-grouse Conservation Plans. The state and county plans focus on habitat conservation, ensure long-term socioeconomic stability to preserve our way of life, and achieve the proper balance between the national interest and state and local interests. The federal plan upsets this balance, does not provide optimal sage-grouse conservation, and will cause widespread economic harm.” Assemblyman John Ellison also voiced his approval. “I appreciate the attorney general’s challenge to the federal conservation plan, which will have a tremendous effect on Nevada’s cultural landscape and economy,” Ellison stated. “Nevada’s plan strikes a balance between conservation efforts and economic considerations, and would offer
this state much-needed stability.” Elko County Commissioner Demar Dahl has been involved with the lawsuit since it was initially filed in September. He also was pleased the AG joined the fight. “Attorney General Laxalt’s involvement with this litigation makes a bold statement that the BLM and U.S. Forest Service Sagegrouse Management Plan is wrong for Nevada,” Dahl stated. “As ground zero for the Plan’s draconian land use restrictions and withdrawals, Elko County applauds Attorney General Laxalt’s decision to join this litigation and help us stop the agencies from placing over two million acres in Elko County off-limits to mining and other uses. The Plan has already cost Elko County $500 million from a wind energy project prohibited from being developed, and will cost at least $31 million annually in lost agricultural productivity.”
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MARIANNE KOBAK MCKOWN, ELKO DAILY FREE PRESSâ&#x20AC;&#x152;
Nevada Division of Minerals Administrator Richard Perry talks about his office in October during an Elko Rotary Club meeting.
â&#x20AC;&#x153;You can see how theyâ&#x20AC;&#x2122;ve actually changed configuration and grown larger. This is just from the first draft, back in March,â&#x20AC;? Brown said. The federal government lists three types of habitat on the maps: red is priority, yellow is general and green is other. Brown said about 80 percent of the county is covered by one of the three types of habitat, and most of it is in red. He also said the maps have checkerboard classifications, where private land is surrounded by priority habitat. â&#x20AC;&#x153;What that does is it squeezes those private properties, because they did not list (sage grouse), they canâ&#x20AC;&#x2122;t classify private properties,â&#x20AC;? Brown said. â&#x20AC;&#x153;If they had listed it, then they could classify them.â&#x20AC;? Brown said if mining companies had a plan of operations filed before Sept. 24, those permits are being honored by the federal government, however, if it is a new mining claim or something that was â&#x20AC;&#x153;in the worksâ&#x20AC;? those projects wonâ&#x20AC;&#x2122;t be approved in the priority habitat.
A BLM manager in Reno told Mexivada Mining Corp. that claim-staking in sage grouse focal areas wonâ&#x20AC;&#x2122;t be determined until after the two-year evaluation period that started Sept. 24, according to an email from the company. This two-year evaluation period may extend two decades. The temporary closure also initiated a 90-day comment period that will end with the Secretary of the Interior deciding whether to withdraw those areas from the location of new mining claims for up to 20 years. â&#x20AC;&#x153;Balancing the full range of resources, including the conservation of crucial wildlife habitat and resource uses, has driven the development of the agencyâ&#x20AC;&#x2122;s overall greater sage-grouse conservation strategy, and led to this proposal,â&#x20AC;? BLM Nevada State Director Amy Lueders stated in an Oct. 9 press release. â&#x20AC;&#x153;We look forward to hearing from the public during the comment period.â&#x20AC;? When asked if mineral exploration through the majority of Elko County is dead, Brown responded â&#x20AC;&#x153;You tell me,â&#x20AC;? and pointed at the map.
â&#x20AC;&#x153;Honestly, itâ&#x20AC;&#x2122;s something thatâ&#x20AC;&#x2122;s going to become very difficult to do because theyâ&#x20AC;&#x2122;ve got moratoriums on travel, thereâ&#x20AC;&#x2122;s certain specific times of the year where theyâ&#x20AC;&#x2122;re going to be implementing moratoriums on the creation of new roads,â&#x20AC;? (which are needed for drill rigs). Brown said the land will be managed in such a way that it wonâ&#x20AC;&#x2122;t be able to be used. He reiterated that the plan leaves a lot open to interpretation. â&#x20AC;&#x153;It doesnâ&#x20AC;&#x2122;t look good,â&#x20AC;? he said. The northeast quarter of the state is pretty much covered with some sort of habitat. He said 74 percent of Elko County is federal land. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s not just one component of our economy; itâ&#x20AC;&#x2122;s all three of them,â&#x20AC;? Brown said. â&#x20AC;&#x153;I mean mining, ranching and recreation are three very huge components. Everything works off of those three components, and the potential for shutdown on all of them is there.â&#x20AC;?
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44 • MINING QUARTERLY, Elko, Nevada WINTER 2015
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Deer look up while near Newmont Mining Corp. property on Nov. 4, 2015. The Phoenix Mine is in the background.
Mining, wildlife coexist in Nevada Newmont has conservation program to benefit sage grouse habitat MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO – How new regulations concerning sage grouse will affect business in the West is a hot topic, but the mines have been handling wildlife regulations for years. The two largest mining companies in Nevada, Newmont Mining Corp. and Barrick Gold Corp., both have a history of
setting up programs or systems on their sites to coexist with the wildlife. These programs include grazing cattle on their ranches to improve the habitat for sage grouse and other wildlife. All mines must adhere to the minimum requirements set up by the regulatory agencies, such as the Bureau of Land Management and the Nevada Department of Wildlife. However, many mines follow company regulations that exceed the ones set by government agencies, said Jeff White, Newmont director of renewable resources of North America. “We operate in both a regulatory environment and a company standards or self imposed requirements environment, we hold ourselves to a high standard in being
committed to a leadership position in environmental stewardship and community responsibility,” he said. Before any dirt is moved, staff and the government agencies – usually the BLM — do a survey of the land to set “an environmental baseline,” White said. This can include soil identification, species identification and monitoring and vegetation inventory. “We use that information in developing a plan of operations significantly around the reclamation plan,” he said. “… That reclamation plan is a key component of the plan of operations. It also serves as an independent application for our reclamation permit from Nevada Division of Environmental Protection.”
Once a plan is set in place and approved, the mines then implement the strategies devised. In some areas it can be as simple as putting in barriers to keep wildlife from chemicals, such as “bird balls” put on top of pregnant leach ponds.
Deer
Deer movements on and around mines are a concern for several Newmont and Barrick mines. Both companies have changed mine plans to accommodate deer herd migrations. On some sites, the berms set up on haul roads have cuts in them to allow animals, See PROGRAM, 46
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 45
46 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Program... Continued from 44
such as deer, to move through the site. White said the company’s most recent mine project, Long Canyon, had to monitor the deer moving through the property, which is about 30 miles east of Wells on the eastern side of the Pequop Mountain Range in Elko County and about five miles south of Interstate 80 at the Oasis exit. Long Canyon’s ground breaking was April 17. The principal corridor for deer movement goes through the property. “To help define that we worked with the Department of Wildlife and University of Nevada, Reno in designing and implementing a deer movement study,” White said. “So there were radio collars and GPS locators on the deer and that gave a very detailed picture of how the deer use that landscape.” That study helped Newmont to design where the mine site facilities, such as office space and truck shops, would be constructed. It also informed the company where to put the deer corridor and how
large to make it, he said. In the initial construction of the mine, Newmont had to clear the vegetation and top soil of some of the area that is where the deer migrate, on the west side of the waste-rock facility. However, once initial construction is completed, that area will be the first to be reclaimed so it minimizes impact on the herds. Newmont chipped the trees that were cut and the top soil was stored so it could be used in the reclamation, Gordon Mountford, project director for Long Canyon, previously told the Mining Quarterly. Long Canyon also will have cuts in its haul road berms to allow deer movement. “We’re trying to minimize the effect on the deer, that’s all part of our planning effort,” White said. “Associated with that, we’ll continue the monitoring, so this comes back to long term monitoring considerations. So, we’ll have collared animals for a period of time, I don’t recall how long, but that will help us collectively See PROGRAM, 47
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MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Jeff White, Newmont director of renewable resources of North America, talks about the IL Ranch and what it has done to improve sage grouse habitat.
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WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 47
COURTESY OF NEWMONT MINING CORP
A burrowing owl on the Long Canyon Mine Project area.
Program... Continued from 46
understand how the deer are moving through the mine site.” Mule deer are a recurring theme across all Newmont properties, White said. Barrick’s Bald Mountain is going through a similar process in its expansion plans. Josh Roderick, environmental superintendent for Bald Mountain, said one of the biggest challenges at the site is its mule deer migration corridor. Roderick said the company has worked with NDOW, BLM, the Nevada Coalition for Wildlife, and groups to design Bald Mountain’s expansion plan.
Migratory Birds
ROSS ANDRESON, MINING QUARTERLY, FILE
A deer stands at Barrick Gold Corp.’s Ruby Hill Mine site in July 2012.
Another recurring group of animals the mines have to deal with are birds. All the mines in Nevada have set plans in place for birds. During Long Canyon’s construction, the site had to set up a buffer zone around a group of migratory birds – burrowing owls — that were nesting on the site. While the birds were there, Newmont was not allowed to identify the species. “In an effort to protect species under the Migratory Bird Treaty Act of 1918, the species identification and location is generally withheld from the public,” Dan Anderson, Newmont regional environmental affairs manager, told the See PROGRAM, 48
48 • MINING QUARTERLY, Elko, Nevada WINTER 2015
COURTESY OF NEWMONT MINING CORP.
These culverts, built in 2005, are designed to maintain a natural channel inside the culvert. This design allows Lahontan Cutthroat Trout, and other species, to travel unimpeded throughout the Maggie Creek Basin during flow conditions.
Program... Many sites in Nevada have to monitor and possibly handle mitigation around sage grouse habitat. Bald Mountain Mine has priority and general sage grouse habitat around the site. The North Operations area doesn’t have any leks, but the site’s South Operations does have some leks in proximity to the site, Roderick said. The only mitigation the site has to do so far is noise monitoring, he said. If the noise reaches a particular threshold, the BLM will determine what other mitigation has to take place. Newmont also is “engaged with sage grouse,” White said. Sage Grouse, The company has been involved with sage grouse conservation efforts for at least Conservation 15 years, White said. “In partnership with The Nature Conand Cattle servancy and others, Newmont is develThe bird that is talked about most often oping a multi-species, landscape-level Sagebrush Ecosystem Conservation Plan recently is the Greater Sage Grouse.
Continued from 47
Mining Quarterly while the owls were still on the property. White said because of the inventory, Long Canyon employees knew burrowing owls were on the site, but they were “surprised by how long they stayed.” He said construction crews set up the buffer zones to avoid the nest areas. However, the owls seemed to keep an eye on the equipment. “That’s what’s kind of cool with the burrowing owls, they just hang out and watch, and do a truck count kind of thing,” he said.
and Conservation Bank Program, including approximately 400,000 acres of private lands and large aspects of about 1.4 million acres of federal grazing allotments,” Newmont stated in its Nevada Sagebrush Ecosystem Conservation Program. Several Newmont properties are within sage grouse country, and include Long Canyon, part of Carlin operations, Twin Creeks, and its ranches, White said. Newmont has four major ranches — The TS, Horseshoe, Big Springs and IL. They are managed by the Elko Land and Livestock Co., which is a subsidiary of Newmont. “As far as country that Newmont has influence over, either direct management or operational management, in the case of the allotments, is about 1.8 million acres,” White said. “So that’s a significant chunk of country from a sage grouse conservation standpoint. Especially if you look at the land position that Newmont has and
the land position that Barrick has, and our combined conservation efforts, we’re able to do significant good on the landscape for greater sage grouse.” Newmont is building a “large-scale conservation plan” to improve the habitat it controls to the benefit of sage grouse and other species. “In so doing we would also generate conservation credits, that could be used to offset impacts and effects for future mineral development and exploration activities,” White said. The main way the company is benefiting the sage grouse is improving habitat on its ranches, especially the IL Ranch. “This spring, we, through our monitoring work, identified what appears to be the largest active lek in the state of Nevada,” White said. “So we counted 173 males on See PROGRAM, 50
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 49
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50 • MINING QUARTERLY, Elko, Nevada WINTER 2015
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Jeff White, Newmont director of renewable resources of North America, explains how managing cattle on the IL Ranch has improved sage grouse habitat.
Program... Continued from 48
the first of May on one of our leks on the IL Ranch. That’s pretty exciting. Our current management is doing what it’s supposed to do.” The conservation effort also includes fighting invasive species, such as cheat grass. “The ranches that Newmont has are ecologically and economically sustainable ranchland livestock enterprises, in that we are maintaining the traditional land uses,” White said. “We’re producing food from those landscapes in the form of livestock. So we use the livestock to manage the habitat.” The landscape is managed through “prudent grazing management, proper utilization, proper distribution of utilization” through grazing systems, fuel breaks and development of water for livestock and wildlife. The development of water can include fixing waterways, such as around Maggie Creek, to allow proper water flow. Culverts near the confluence of Beaver Creek and Maggie Creek prevented the upstream movement of all fish under any flow conditions. In 2005, Newmont, in cooperation with the BLM and other partners, replaced the culverts. The new culverts are designed to maintain a natural channel inside the culvert, said Natacia Eldridge, external relations representative. This design allows Lahontan Cutthroat Trout, and other species, to travel unimpeded throughout the Maggie Creek Basin during flow conditions. In addition, the new culverts will withstand flooding much better than the old ones, resulting in fewer washouts. In some areas they do seeding to
establish wanted vegetation on the ranches, but the biggest impact to the habitat may be the cattle. “Most significantly the livestock are a tool to reduce the biomass of cheat grass,” White said. The cattle will eat the cheat grass, but he said it is “a matter of timing.” The ranchers who manage the cattle will put the animals on certain pieces of land to control what is eaten. For example, cheat grass will start growing before the native grasses, so the ranchers will put the cattle in certain areas in the spring to eat the young invasive grass to lessen its affect on the other vegetation. “One of the key tools in identifying our landscapes and designing our treatments is the use of ecological sites,” White said. “An ecological site is a particular piece of the landscape that has unique soil and vegetation characteristics and we can inventory around that and we can characterize different states and phases within that, but most significant is we have ecological models that are tied to those sites.” Those models are used to help Newmont determine what state the land is in and if that state is wanted. “If it is not, then we can consult with this model, determine recovery or restoration pathways to bring it to say our reference state if we wanted,” White said. “So that’s key in our management planning. It’s a recognized technique. It’s science based and it’s leading edge, it’s state of the art, and we’re really proud of what we’re doing.”
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada â&#x20AC;˘ 51
J.H. Fletcher breaks into the Nevada Market FALLON GODWIN-BUTLER FGodwin-Butler@elkodaily.com â&#x20AC;&#x152;
â&#x20AC;&#x152;ELKO â&#x20AC;&#x201C; J.H. Fletcher & Co. collaborated on a project with Small Mine Development putting Fletcherâ&#x20AC;&#x2122;s first machine into the Nevada market. The roof bolter developed for SMD was custom built to suit the need for a smaller machine. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve always known about them, but we always viewed them as a coal supplier,â&#x20AC;? said SMD General Manager Keith Jones, discussing the collaboration with Fletcher as Small Mine Development works primarily in hard rock mining. Jones explained that he knew Fletcherâ&#x20AC;&#x2122;s Western District Sales Manager Steve Nye through other vendors. In an effort to expand into the area, Nye reached out to familiar companies and people. Jones said the company approached SMD explaining that one of its specialties is developing client-specific products.
SUBMITTEDâ&#x20AC;&#x152;
Delivery of the bolter to Small Mine Development. The bolter for this project is 10 feet wide by 10 feet high and is used to secure a 6-foot-long bolt. Jones explained that these machines are usually 13 feet wide by 13 feet high. This new product is designed to promote safety and reduce noise exposure â&#x20AC;&#x201D; these smaller jobs are typically accomplished with a handheld drill. â&#x20AC;&#x153;It remains untested at this point in time,â&#x20AC;? said Jones. When the bolter was ordered there were three jobs; at this
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point in time, SMD does not have a job for the product. Jones said the company is hoping to put it to work soon. According to its website, J.H. Fletcher showcased its first products at a 1938 Cincinnati coal show. It develops technology to improve mine productivity and reduce risk by mining personnel. The company uses rubber-tire, non-track-mounted vehicles in its underground applications.
Jones said Fletcher is a U.S., family owned company. Not only does the company have years of experience in mining, they also promote American manufacturing. SMD works in all facets of underground mining: whether that is for an entire project or a specific piece of it. According to the website, this includes exploration platforms, drilling, planning, development, extraction and closure. Additionally, Jones said SMD has worked on another project with Fletcher involving a mechanized fan handler. This is a â&#x20AC;&#x153;purpose built unitâ&#x20AC;? to hang fans in a safe manner and automate the process. It started in September. Jones said Fletcher is a â&#x20AC;&#x153;good, very responsive group.â&#x20AC;? He has enjoyed the relationship so far and canâ&#x20AC;&#x2122;t wait to get the product out there and test it.
52 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Mining by numbers Nevada minerals are more than just gold MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO – When it comes to mining, gold gets all the glamour, but there is more to the industry than just the yellow metal and its changing price. Nevada Division of Minerals Administrator Richard Perry is spreading that message. Perry spoke about the minerals, oils and geothermal areas that his office regulates in September at the Nevada Mining Association Convention and Oct. 7 at Elko Rotary Club. In 2014, the state produced “a little shy of $7 billion in gross revenue from all the commodities produced in the state,” Perry said. The biggest is gold at 85 percent. The second biggest commodity is copper. In 2014, Nevada produced 133 million pounds of copper, according to the division of minerals and the U.S. Geological Survey. The state has two main copper producers: Newmont Mining Corp.’s Phoenix Mine near Battle Mountain and KGHM’s Robinson Mine in Ely. “There really was not much production that many years back,” Perry said. “We’re seeing a bit of a resurgence in this, and I think that’s actually got some opportunity coming up.” Nevada Copper has a major copper project that is near Yerington. The underground project is called Pumpkin Hollow.
MARIANNE KOBAK MCKOWN, ELKO DAILY FREE PRESS
Nevada Division of Minerals Administrator Richard Perry speaks about the agency in September during the Nevada Mining Association Convention at Lake Tahoe. “It’s an interesting deposit that was actually found in the late ‘50s by US Steel,” Perry said. “It’s a blind deposit. They found it with aerial magnetics, because it has about 10 percent magnetite in it, so it’s very magnetic. It’s about couple hundred feet thick.” He said it is 2 percent grade copper, which is “pretty high grade.” One of Nevada’s nicknames is steeped in its mining history. It’s
called the Silver State because of the Comstock Lode in the 1800s. However, Perry said silver is normally a byproduct of gold. “There’s really only one mine that borders on being a silver mine here and that’s Coeur Rochester in Pershing County,” he said. “And even that — if you do the calculations — has more revenue in gold See MINERALS, 54
COURTESY OF THE NEVADA MINING ASSOCIATION
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 53
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54 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Minerals... Continued from 52
than it does silver, even though it produces a significant amount.” He said the other big silver producer in Nevada is Midas, which is owned by Klondex Mines Ltd. Other mining activity in the state includes barium, clays, diatomite, dolomite, geothermal energy, gypsum, lime, lithium, magnesium, molybdenum, opals, perlite, petroleum, rare earths, silica, turquoise and vanadium, according to the Nevada Mining Association. Many of these minerals are industrial minerals and there has been a “big resurgence” in mining them because they are mainly for construction, Perry said. Gypsum, for example, is mined in three deposits in Clark County and one deposit near Carson City. Clark County also has two drywall plants that supply gypsum drywall to Southern California and Arizona areas. The Division of Minerals is also the regulatory agency for oil, gas and geothermal. To be drilled out of the ground, oil and gas needs another mineral. Barite is used as a medium for drilling mud for oil and gas wells, Perry said. Most See MINERALS, 55
COURTESY OF THE NEVADA DIVISION OF MINERALS
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Minerals... Continued from 54
barite is mined in Lander County and some is found in Elko County. The division also runs an abandoned mines program. “Which is probably the biggest activity we have,” Perry said. “All those orphaned mines out in Nevada that are 100 years old or so, you often see fences around them and signs. That’s our people who have done that over the last 25 years.” Perry said the Division of Minerals is “a unique” agency. “It’s been around for about 35 years now,” he said. “… It operates much like an oil and gas commission in other states, structurally.” The agency is funded by fees. The division provides minerals education to the public and almost all of Perry’s employees are geologists, geological engineers and mining engineers by background. The office also supplies information when the industry or public makes a request.
COURTESY OF THE NEVADA MINING ASSOCIATION
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56 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Miners talk education, production costs MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
LAKE TAHOE — Production costs and educating the state’s populace were two of the main issues during the annual Nevada Mining Association Convention. The convention ended Sept. 12 with most of the morning filled with speakers including people from the industry and state and federal government agencies. The 37th annual association Safety Awards and state reclamation awards were handed out during a luncheon. Kris Sims, vice president and regional financial officer of the Americas for Kinross Gold Corp. and chairman of the board of the Nevada Mining Association told the audience the association has done its job well of fighting for the industry. “It’s important that all Nevadans understand just how important mining
is to the Silver State,” Sims said. In 2013, mining created about 26,000 jobs across the state and was responsible for 1 percent of jobs statewide. “Though that number may seem small, 1 percent received an annual salary of approximately $88,000 a year,” Sims said. “That’s more than double the average of other employees in the state. … Modern mining is a high-tech profession that offers rewarding and high-paying careers.” However, the industry has been struggling especially with the price of gold hovering around $1,100. Sims said the reason for struggle is also because the costs of production have increased. The effect of costs made the industry report its financials differently and start using all-in sustaining costs. Unlike reports before 2013, companies now include See MINERS, 57
MARIANNE KOBAK MCKOWN, ELKO DAILY FREE PRESS
Dale Erquiaga, chief strategy officer for Nevada, speaks Saturday about the state’s new focus on education during the Nevada Mining Association’s annual convention.
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Miners... Continued from 56
MARIANNE KOBAK MCKOWN, ELKO DAILY FREE PRESS
Kris Sims, vice president and regional financial officer of the Americas for Kinross Gold Corp. and chairman of the board of the Nevada Mining Association, speaks to attendees Saturday during the association’s annual convention in Lake Tahoe.
all costs, from exploration to closing, to show investors and the public what it takes financially to dig minerals from the earth. He said even with the new reporting, there are still a few costs left out, such as working capital, finance charges and growth capital. He told the audience members to pay particular attention the next time they read a quarterly report. “Look for that terminology, all-in sustaining costs,” he said. “You’re going to see that number very closely to the $1,100 per ounce, at least for the gold producers.” Dale Erquiaga, chief strategy officer for the state, talked about the state’s tax plan and its focus on improving education in Nevada. Erquiaga said Gov. Brian Sandoval focused on education because he was “tired of Nevada being at the top of all the bad lists and the
bottom of all the good lists.” He said the state is taking “a business like focus to education.” He said the school programs being funded by the state will be monitored, and if a program doesn’t work “we will turn the money off.” Erquiaga said he was glad the Nevada Mining Association board took a position for this new Nevada with its new focus on education. Many speakers throughout the day, including Erquiaga, said mining was the state’s original STEM industry. STEM stands for science, technology, engineering and math. Since the industry relies heavily on all four of these areas, students throughout Nevada need a good foundation in their education.
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58 • MINING QUARTERLY, Elko, Nevada WINTER 2015
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Mary Korpi talks about her almost 40 years as a Newmont Mining Corp. employee.
Mary Korpi to retire in January
Colleagues reflect on longtime Newmont employee MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO – After almost four decades, Mary Korpi has decided to hang up her hard hat. She officially retires from her position as director of community and external relations for Newmont Mining Corp. on Jan. 15. Korpi was going to retire earlier this year, but Newmont asked her to stay on when the company acquired Cripple Creek in Colorado. “Tom (Kerr) asked if I would stay through the transition of Cripple Creek into the Newmont family,” she said. “So, it sounded like a great opportunity and a new experience. In my own way, what I’m finding is, the transitioning there is also allowing me to make that transition towards retirement.” Korpi’s long career brought her many opportunities and it all started in an
area of the country that doesn’t have hardrock mines. She grew up in northern Michigan, and graduated from Michigan Tech with a degree in chemical engineering. “I always enjoyed math and science and chemistry, and when I got to college, it wasn’t what I started with but looked to be really an opportunity for a good career and different challenges,” she said. She was right. Korpi was hired by Newmont in 1976 — straight out of college. The industry uses all types of engineers and many of the processes are chemical processes, Korpi said. “So I was able to go to work and was in the metallurgical and analytical laboratories right off the bat,” she said. “So, it was a good fit, and provided a whole variety of experiences.” See KORPI, 59
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 59
Korpi... Continued from 58
The first mine she worked at was Magma Copper in Arizona. She came to Nevada in 1987. When she first moved to the Carlin site, she was still in the technical side of the industry. “It was during the major growth opportunities,” she said. “Mines were expanding and mines were coming on board, so there was a lot of need for additional people.” When she transferred to Nevada, Mill 5 was being built at Carlin. She also worked in Mill 3 and went to the North Area. “I was there when we closed Mill 1 down in ’93, which started in ’65 with a seven year life,” she said. “It’s a great example of how you continue to do exploration and we’re still mining in the Carlin Pit.” She moved to community relations about 20 years ago. The one thing that has definitely changed in the mining industry is communications, Korpi said. In the 1980s, the only people who were allowed to talk to the media were from corporate headquarters.
“Historically mining was not real active in telling their story, but mining was becoming more and more of a presence in northeast Nevada, because of that growth in the late ‘80s and early ‘90s,” she said. “The general manager at the time, I think he recognized we need to put more focus in this area, and his reason for approaching me was it was helpful to have somebody who knows the business.” She said she couldn’t turn down the challenge. “I’ve always had the philosophy that if something is offered to you, you might as well go for it,” Korpi said. “You never quite know where it’s going to take you.” She said she will miss the people and the experiences of working for Newmont. “I’m not going to miss checking emails at all hours of the night and day,” she said. Korpi also is looking forward to moving to Reno and relearning how to sleep-in, in the morning. “The hard part is leaving Elko, having been here a long time and the friends you establish and even the closeness to the
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mining portion of it,” she said. “But, four hours away from Elko is Reno and vice versa, so it’s not like leaving and moving across country. The other thing I like about Reno is, it has a mining connection. It’s in my blood and it’s never going to go away. I can be a staunch supporter of the industry in Reno, to maybe those that don’t recognize it.” The male-dominated industry of mining didn’t phase Korpi. When she was in college her class only had three women. However, her first department head was a woman and there were several other women working for Newmont as managers. “So I was exposed right off the bat to quite a variety of people,” she said. “I think one of the things that changed, especially if you look at engineering is if you look at the percentages now, in some engineering fields — not all of them — there are equal number of women versus men.” Her advice to young people entering the industry is to not be afraid of a challenge. “I would just say that you never say no
to a challenge, to a job, to a project, whatever it might be. You may not feel like you know that much about it, but typically if somebody asks they believe that you can do it. So go for it, but also don’t hesitate to ask for help, to ask questions.” Her advice to managers is to look to your employees before looking outside the company when there are new projects. “I think there’s a responsibility to mentor people, to look at who’s there,” she said. One of the projects that she helped Newmont establish and that she is the most proud of is the Legacy Fund. “How that all evolved, not really knowing how successful we would or we wouldn’t be and how it has just continued to grow both from the percentages of people giving to the total dollar amount, and I think that shows the goodness, the generosity of our employees,” she said. “I think that’s how employees have real ownership to this community.” See KORPI, 60
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60 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Korpi... Continued from 59
Reflections of Mary
Through her long career, Korpi has had a large impact on people in Newmont and the community. Tom Kerr Tom Kerr, senior vice president for North America Operation for Newmont, has known Korpi since 1991. “Mary and I were both superintendents of operations and then, over the years, we’ve work on the same team many times,” he said. “Throughout my current tenure as regional senior vice president for North American Operations, Mary’s role has been director of communications and external relations for the North American region. In this role, Mary has served as a member of our North American Leadership Team. “Mary is truly a genuine, caring, loyal, and steadfast person and leader. Mary was impactful in many facets of our operations. She will leave a positive, sustaining mark on our industry, Newmont and the communities throughout northern Nevada for
years to come. “Mary will be greatly missed, however, through her leadership and dedication, she has an amazing team in place to represent Newmont and support our future success.” Jeff White Newmont Director of Renewable Resources of North America Jeff White said he has known Korpi for almost 20 years. “Mary is a wonderful person,” he said. “She is very knowledgeable about the industry. She is very caring about the community. She is very caring and committed Jeff White to the long-term health of the company and the community. She is unique in her experience base and in coming from operations. “Mary is both a very dear friend of mine as well as a professional colleague, and I will miss working with her on a day in, day out basis, but she has that ability to reach out to folks, understand what concerns are, connect to people and make things happen.
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The foundation that Mary’s built positions Rhonda (Zuraff) and the team, and I think we’re all in an incredible position to drive into the future. I’ll miss Mary a lot.” Rhonda Zuraff Korpi’s successor as the director of communications and external relations is Rhonda Zuraff. She was hired by Newmont in 2004, but she has known Korpi longer than that because they were both on the Elko Area Chamber of Commerce board. “I worked closely with Rhonda Mary when I was in publishZuraff ing, really that was my first foray into mining – getting to know Mary, and getting to understand through her a little bit more about the mining industry from the outside in,” she said. “.. She has an incredible ability to balance the business side of the business with empathy for those that work for her, with her and internally and externally. It was just evident early on that the support she
garnered for Newmont from around the region was powerful.” Lou Schack Korpi also has had an impact on people who work for other mining companies. Barrick Director of Communications for North America Lou Schack began his career in the mining industry when Korpi hired him in 1997. He had been working as a journalist for the Sparks Daily Tribune. He worked for Lou Newmont until 2004. Schack “I remember in the early days she made me feel very welcome,” he said. “It was really a new function at Newmont. They never really had professional communications staff or media relations, so I saw it as an opportunity for me to bring my experience in the media to help them better manage their public affairs and communications.” See KORPI, 61
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WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 61
Korpi... Continued from 60
Adella Harding Another journalist Korpi had an impact on was Adella Harding, the first Mining Quarterly editor. Harding has known Korpi since 1996. “Before the first Mining Quarterly came out in March 1997, the Elko Daily Free Press published an annual mining edition. I got to know Mary Korpi when she became manager of communications for Newmont in Nevada in 1996. We soon discovered we are both Michigan natives,” Harding said. “Mary Korpi has been with Newmont many years, bringing her friendliness, availability and support to the company. ... She has been an excellent voice for Newmont in Nevada. She also has represented Newmont in professional organizations, the Women’s Mining Coalition, mining conferences and at community meetings. “Mary Korpi brought a gift back for me from a visit to Washington, D.C., that is a good example of her sense of humor. She went to the Newseum, an interactive museum about journalism, and she said
she couldn’t resist buying the gift. I still have the mug that says: Trust me. I am a reporter. “Korpi has been a voice for Newmont for many years, and she has always been helpful to the news media and to the communities where Newmont employees live. She has been a spokeswoman for Newmont through layoffs in 1998 when the gold price plunged as low as $250 an ounce to the good times when gold prices surged.” Yvette Waters Committee Against Domestic Violence Executive Director Yvette Waters said she has known Korpi for almost 25 years. “My initial contact with Mary was strictly personal as both Mary and my husband worked for Newmont,” Waters said. “I was involved with CADV but at the time Yvette was not an employee nor the Waters director. I did join the board right after we met. We saw each other at Newmont events such as
picnics and other company events. “As the chair of the fundraising committee for Harbor House, I began meeting with several individuals with the mines and Mary was one of them. Throughout my career as CADV’s executive director I have had many occasions to work with Mary, professionally and personally, not only when it involved her duties at Newmont but within our community, including her tenure at the Elko Chamber of Commerce. In addition Mary was and is a personal supporter of CADV and our fight to end violence against women and children. “Mary put a face on Newmont beyond the corporation. She cared about the employees, the community and the company. Her smile, consideration and respect for every person I saw her interact with was and is an example to every other Newmont employee, especially those in administration. “From the first time I met Mary she acknowledged me, the value of my experience and advice as an advocate and that of my husband as a Newmont employee.
Throughout our careers, I never saw that change regardless of what was happening within the company or community. “When things began to happen with United Way of the Great Basin, the person who reached out to CADV was Mary. She cared enough about the nonprofits and our continued existence to make a personal telephone call to each one to ensure we could keep our doors open. She explained the plans for the Legacy Fund and assured us Newmont would be there to be sure we continued to provide services and exist until the fund went into place. “When you and your family are part of mining, people come and go in your life. Mary is one we will always remember was part of our lives in Elko and we are lucky to have met her and to consider her a friend of our family. We want to wish her all the best and may all her retirement dreams come true.”
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62 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Legacy Fund sets record
Employees, company pledge $2.44 million MARIANNE KOBAK MCKOWN mkobak@elkodaily.com
ELKO – Newmont Mining Corp. and its employees set a new record of giving to local charities through the Legacy Fund: $2.44 million for 2016. Campaigns for the Legacy Fund have been going on since 2010 and this is the fourth year in a row that more than 70 percent of the employees have participated. The employees pledged more than $1.22 million and the company matches those donations, dollar for dollar, for the new all-time record, Newmont Legacy Fund Executive Director Nancy Ostler announced Oct. 19.
“It always amazes me how generous our Newmont employees are,” Ostler said. “When I first saw that number it actually brought a tear to my eye, because it was an overwhelmingly huge number. I just can’t say thank you enough to our Newmont employees for their support of this program.” The same number of employees pledged donations, but they are giving more money than last year, she said. Ostler said many employees saw how the money is used in the community and decided to give more this year, or they pledged to more than one charity. See LEGACY, 63
MARIANNE KOBAK MCKOWN, MINING QUARTERLY
Newmont Legacy Fund Executive Director Nancy Ostler, left, talks with Legacy Fund Board President Paul Pettit.
MARIANNE KOBAK MCKOWN, ELKO DAILY FREE PRESS
Newmont employees from Carlin South Area, mine maintenance and mine operation departments gathered in October to celebrate the Legacy Fund announcement in a non-working area of Gold Quarry’s truck shop.
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 63
Legacy... Continued from 62
MARIANNE KOBAK MCKOWN, ELKO DAILY FREE PRESS
Newmont Mining Corp. employee Dede Chase talks about why she became a Legacy Fund coordinator Monday, Oct. 19, 2015, at the Carlin site.
“About 20 percent of our employees give to more than one nonprofit, so that’s kind of cool,” Ostler said. “The other neat thing is it’s about a $50 average increase for employee donations, so we’re a little over $500 average donation per employee.” The Phoenix Mine set its own record this year, with the most participation of its employees ever, Ostler said.. “I am very pleased with our employees’ generosity and passion towards giving back to the communities,” said Phoenix General manager Cecile Thaxter. “This year, we saw more participation and pride all round. It is truly a blessing to positively impact the lives of others and in so doing, enrich our experiences.” Legacy Fund Board President Paul Pettit said he has been involved with the nonprofit from the start because he sees the benefits of the program. “I have been interested in social services and Newmont’s involvement for quite some time,” he said. “We all have relatives that are in need of social services.”
The Legacy Fund helps 230 charities that stretch from West Wendover to Winnemucca. “Remember the employees get to pick, which is a huge deal because then they can donate to where their passion is,” Ostler said. When asked why employee donations have continued to go up, Ostler said the employees want to help more once they see what their money is used for in the community “I think they see that it’s doing so much good in the community. I think they see that Newmont’s behind them with the match and they get to pick the nonprofit,” she said. “… I think that option to donate wherever they want to is a big deal for that as well.” Pettit agreed. “There’s a really clear-cut criteria on whether the money is matched or not,” he said. “... People know that and I think it grows. Early on, the growth was about increased percentage of participation — the first year we had 57 percent and within three years we were up to 70 percent. So now our percent hasn’t really changed but our average
annual contribution has increased. I think that is because people see the value. They see where their money is going.” Despite the official campaign being over, employees can continue to give throughout the year. Ostler said new hires also can give to the fund even if they are hired in the coming year. Ostler also thanked all the employee volunteers at each of the sites that help get donations for the fund. “I want to put a big shout out to our campaign coordinators,” she said. “I have a team of about 40 Newmont employees who volunteer their time to the campaign. They present it to the crews and give them an opportunity to be a part of this. … Without them, I could not have even begun to do this.” One of those coordinators is Dede Chase, business assistant at Newmont’s Carlin site. She has worked for Newmont for nine years and has been involved with the Legacy Fund “since day one,” she said. Chase became involved with the program See LEGACY, 64
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64 • MINING QUARTERLY, Elko, Nevada WINTER 2015
COURTESY OF NEWMONT MINING
Newmont employees from North American Regional Office gathered to celebrate the Legacy Fund announcement outside the Elko building.
Legacy... Continued from 63
COURTESY OF NEWMONT MINING
Newmont employees from TS Power Plant gathered to celebrate the Legacy Fund announcement.
because she said she believes “in taking care of our own.” She said she was “amazed” by the continual increase and “proud of her guys.” “We thought it was going to be a hard sell,” Chase said. “And maybe the first year was, but after that, we just blew it out of the water.” She said sharing stories on how local nonprofits have helped people in the area also helps the program be successful. “They trust the Legacy Fund,” she said. “And we’ve given them the opportunity to do some research on some of the nonprofit organizations. They see where the money’s going and how it affects the community.” Ostler said Newmont’s Endowment Fund,
which is separate from the Legacy Fund, continues to grow. It is at about $1.1 million. The Endowment Fund is set up to help charities when Newmont is no longer in the area. “It continues to be invested and with the market going up and down, we’ve seen those fluctuations,” she said. “… So far this year, we’ve put almost $100,000 into it; that’s just through halfway. So the third quarter and fourth quarter dollars still need to go in there. Our average gain is still about $225,000 a year... with donations, investments and Newmont actually pledges $100,000 every year to that fund as well.”
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 65
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THOMAS E. BOYCE, PH.D. While not a direct quote, “The system will produce exactly what it should produce” was the basic mantra of Total Quality Management guru, W. Edwards Deming. He also proposed that if we want to change the output of a system, we need to change the system itself. And, he’s right. For those that don’t know, Deming was credited with turning around the Japanese auto industry in the 1980s. He encouraged business leaders to look at their organizations as complex systems that impact everything employees do. And, when we do this, we find that behavior becomes pretty predictable. In its simplest form we will see performance that either falls within a range of “normal” or that falls outside a range of normal in either a good way or bad way. It is these exceptions or outliers that usually grab our attention. Most often we respond to the negative outliers, reacting to events that we would have preferred not to occur. To our credit, we often try to learn from these incidents so they don’t happen again. A typical response is to perform a “root cause” analysis which, while well-intended, often results in fingerpointing and blame. (For this reason, I still prefer an assessment of contributing factors such as 5-WHY). In contrast, if we embark on such assessments to make the proper changes to the system, we will in effect raise the standard and tighten the range of normal, thus eliminating some potential for outliers. The result should be a systemic process change. Let’s call this a “leading indicator” that if performed regularly will prevent the outliers we want to prevent. As business leaders we are responsible
for the parameters of the work system that impact behavior. In fact, Deming often claimed that management’s job is to optimize the system. He stressed [If you] “improve quality, you improve Ted Boyce p ro d u c t i o n and safety” (emphasis added). And, this is exactly what the Japanese auto industry experienced when implementing systemic “statistical process control” strategies (a method of Total Quality Management) to improve their businesses. I had the pleasure of witnessing this firsthand when I toured the GM/Toyota Joint Venture in Fremont, CA called “NUMMI” before the Tesla Auto company took over the plant. And, it was a well-oiled sight to see. What’s more, employees enjoyed working there. Huge protests occurred when NUMMI was shut-down, despite the fact that most employees were being offered employment services and better paying jobs with the incoming Tesla operation. So, what is the relevance of this to the Nevada mining industry? We can learn from systems that have been optimized both within and from outside our industry. In particular, I want to draw your attention to the commercial construction industry with whom I’ve been working while also continuing to consult to the mining industry. Quality in construction is paramount to See SAFETY, 67
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 67
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being profitable (it prevents re-work that might not get reimbursed) and is positively correlated with fewer safety incidents. Indeed, there are some data demonstrating that construction workers are much more likely to get hurt on the job if they are “re-doing” something that has already been completed. (I won’t go into the reasons for this right now, but it would make an ideal topic for a future article.) What I want to focus on is a little of what the top-rated construction companies do that has been correlated with both fewer construction defects (less rework) and fewer injuries. These are both outliers in the construction system. While there is a whole range of “leading indicators” that companies use, I don’t have space to mention them all. Suffice it to say that our challenge is to embrace the essence of this idea and to find parallels in the mining industry. That is, we need to identify processes we can regularly perform that will significantly impact our safety system in a positive, yet productive way.
Below is a table of variables correlated with the need to do rework on a commercial construction project. They are organized by those that are most predictive of the rate of rework per 200,000 man hours worked to those that are least predictive. What’s striking to me is that those with the strongest relationship have little to do with the employees who have their “boots on the ground” after the ground has been broken. In fact, many are most relevant during pre-construction, the phase of a construction project that occurs before the first shovel full of dirt is ever moved. Think of this as planning. If we extend this to what the best construction companies do on a daily basis to prevent injuries, I can point to some data from a current client with whom we’ve demonstrated a strong positive correlation between doing both daily pre-task job analyses and maintaining a proactive housekeeping program and lower injury rates. Put differently, those construction sites with a higher rate of pre-task job analyses completion and better housekeeping
scores experience few injuries throughout the course of the construction project. These two leading indicators have appeared to raise and tighten the standard of the system as it relates to safety. We are in the process of defining similar leading indicators to preventing rework. And, our prediction is that they will be similar. So, stay tuned. In the early 2000s when the Center for Behavioral Safety pioneered BehaviorBased Safety in the mining industry, we were able to demonstrate a strong relationship between voluntary observation and feedback and lower injury rates. Many of you reading this article likely experienced that benefit in some way. Together we raised and tightened the safety standard at your respective mine sites. Even if not being practiced formally, those BBS systems are likely still producing some of the same benefits today because, among other reasons, many of you with your “boots on the ground” a decade ago brought the philosophy of that systemic change to the Supervisory or Management positions you hold today. However, in the spirit of continuous
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improvement, a question still remains: what more can we do to positively impact the mining system? I’ll give you a hint: it starts well before the mine site ever opens its doors.
About the Author: Thomas E. (Ted) Boyce, Ph.D. is a professional speaker, educator, author, and business coach. He is currently President and Senior Consultant with the Center for Behavioral Safety, LLC. Dr. Boyce has been providing cost-effective safety and culture change training to the U.S. mining and manufacturing industries for over 20 years. His on-line short course, Motivating Safety at Work, is available at: www.tinyurl.com/motivatingsafetyonline. Learn more at www.thomaseboyce.com and www.cbsafety.com or contact Dr. Boyce directly at ted. boyce@cbsafety.com.
68 • MINING QUARTERLY, Elko, Nevada WINTER 2015
TAKING THE PLEDGE
HEATHER KENNISON, ELKO DAILY FREE PRESS
Lidia Cortes speaks prior to the Walk a Mile in Her Shoes event Sept. 18.
HEATHER KENNISON, ELKO DAILY FREE PRESS
From right: Mark Miller, George Fennemore and Trevor Mayoh lead a group of walkers in the “Walk a Mile in Her Shoes” event Sept. 18.
Locals walk to raise awareness of violence against women HEATHER KENNISON hkennison@elkodaily.com
HEATHER KENNISON, ELKO DAILY FREE PRESS
Alfredo Jaimes, co-chair of PACE Coalition’s Hispanic Working Group, walks in red high heels Sept. 18 for the “Walk a Mile in Her Shoes.”
ELKO — Elko area men and women put on their heels and walked over a mile Sept. 18 to raise awareness of domestic violence against women. The White Ribbon Campaign’s “Walk a Mile in Her Shoes” event was coordinated locally by PACE Coalition’s Hispanic
Working Group and sponsored by Barrick Gold Corp. “We’re here to show support for the folks that are trying to live without violence in their communities,” said Barrick’s Cortez Hills Operations Support Manager George Fennemore. Several Barrick employees, as well as PACE volunteers and community members, took the White Ribbon pledge to
never commit, condone or remain silent about violence against women. “The shoes are a visual show of people taking the pledge,” White Ribbon Project Manager Trevor Mayoh said. White Ribbon is the largest network of men and boys in the world, he said. The walk kicked off the Stephanie’s Last See WALK, 69
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Walk... Continued from 68
at Bat Adult & Coed Softball Tournament, which honors Stephanie Gonzalez, who was killed in 2011. Her estranged husband, Eduardo EstradaPuentes, is in jail facing a charge of open murder. Lidia Cortes, the victim’s mother, said she was grateful for the support and hoped to make the “Walk a Mile in Her Shoes” the first of many. “Hopefully next year we’ll get even more women involved and men and young kids,” she said. Maria Anderson with Barrick’s community relations said her company has also sponsored two walks in Winnemucca and one in Battle Mountain. This is the first “Walk a Mile” event in Elko, and Barrick hopes to “create that awareness and prevention of gender-based violence,” she said.
Barrick also took the event out to its Turquoise Ridge Joint Venture, Goldstrike and Cortez Hills mines. “There’s been a great response and wonderful support,” Anderson said. “Sometimes it just takes one person to put on the heels and others join in.” Mark Miller, environmental manager for Cortez, brought out his pink heels that he found online. “I’ve done it in Winnemucca and Battle Mountain and it doesn’t feel any better,” Miller said, laughing. “It hurts.” Still, Miller agreed it was for a great cause, and said he hoped the event comes back to Elko. “Anything we can do to raise awareness is a plus,” Miller said. Deacon Franklin Martinez with St. Joseph’s Catholic See WALK, 70
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Mary Ann and Franklin Martinez carry the banner and lead walkers for the the “Walk a Mile in Her Shoes” event Sept. 18.
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70 • MINING QUARTERLY, Elko, Nevada WINTER 2015
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Participants gather for a photo after the Walk a Mile in Her Shoes event Sept. 18.
Walk... Continued from 69
HEATHER KENNISON, ELKO DAILY FREE PRESS
Committee Against Domestic Violence Executive Director Yvette Waters addresses the crowd prior to the Sept. 18 “Walk a Mile in Her Shoes.”
Church attended the event, carrying the White Ribbon sign alongside his wife, Mary Ann, who is with PACE Coalition. “You have to pay attention with every step,” Martinez said while sporting a pair of striped heeled shoes. “... Now I know what she’s walking through.” Prior to the walk, which began at the Herrera Adult Softball Complex, a few speakers were invited to address the group. “All men have a role to play in preventing violence against women,” Mayoh said. While not all men are perpetrators, they still have a responsibility and a duty as a role model, he said. Mayor Chris Johnson said that the event was a good example of educating about domestic violence. “We have to be careful in this society because we have a real tendency to not
socialize as we should,” Johnson said. “... We need to be aware of our responsibility in order to be a successful community.” Committee Against Domestic Violence Executive Director Yvette Waters began by telling those gathered a story about a girl who wondered if she could do anything she wanted to. This girl fell in love with someone who didn’t love her back, and that man eventually tried to kill her. “That’s my story,” Waters said. It’s become her mission to combat domestic violence and make a difference in others’ lives. “Together we’re gonna make a difference and we’re gonna end violence against women,” she said.
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 71
An Act of Congress
Pumpkin Hollow is within the borders of Yerington JANET HOOK Mining Quarterly Correspondent
YERINGTON — After four and a half years, and an Act of Congress, the Pumpkin Hollow Mine is within the boundaries of Yerington. The long journey was a combination of work between Nevada Copper Inc., the city and Congressional subcommittees, said Yerington Mayor George Dini. More than 10,000 acres were conveyed in August from the federal government to Yerington. On Oct. 12, the city deeded 9,145 acres of that land to Nevada Copper, which is developing the Pumpkin Hollow copper mine on the site. The city retained about 914 acres in the northwestern portion of the conveyed lands for the creation of a community event center, Dini said. After the land was annexed into the city limits, Yerington went from 8 square miles to almost 28 square miles.
The city has zoned the area to allow for proposed mine development. Previously, Nevada Copper owned or controlled 1,538 acres of private land upon which they have been working to establish the underground mine. With this conveyance, Nevada Copper’s land package now consists of 10,683 acres, placing 100 percent of the proposed project within private land on which the company controls all surface and mineral rights. The Pumpkin Hollow copper project consists of proposed development of both surface and underground operations, anticipated to produce 70,000 tons of ore per day. PHOTO BY OXANA SYLVESTER In addition, Nevada Copper has unpat- Mayor George Dini signs documents to reconvey land from the City of ented mining claims on 6,830 acres of federal Yerington to Nevada Copper. land adjacent to the newly acquired parcel. said Greg French, Nevada Copper’s vice Authorization Act for Fiscal Year 2015. The Act of Congress president of exploration and project devel- Under a subtitle within the Act, Congress directed the sale of approximately 10,150 “You’ve heard the saying, ‘It takes an act opment. of Congress to get something done’? Well, On Dec. 19, 2014, President Barack guess what—it took an Act of Congress,” Obama signed into law the National Defense See YERINGTON, 72
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Yerington... and External Relations Tim Dyhr spearheaded the proposal to transfer ownership of the land. City Councilwoman Rita Evasovic said the council has been working on the idea for five or six years, hoping the copper mine would bring jobs to the community along with the associated industrial companies. “The usual method is through a land exchange with BLM, but you need to have the private land to exchange for the federal land you are interested in and there is very little private land in Nevada,” Dyhr said. Since the studies had shown there were so few environmental issues with the Pumpkin Hollow site, Bob Abbey, the BLM state director at that time, suggested they look into a Congressional land conveyance, Dyhr said. “Most people didn’t think we could get it done,” Dini said. “Our idea was to transfer this into our city limits. Our motive was The Work to be part of the tax base. The other big With strong support from city residents, motive at the start was how do we create Dini, City Manager Dan Newell, and Nevada Copper’s Vice President of Environmental See YERINGTON, 73
Continued from 71
acres of land from the federal government to the city of Yerington. The Bureau of Land Management is charged with administration of the federal lands identified in the Act. In order to execute the conveyance as directed, BLM needed to complete a number of administrative steps including an environmental assessment, cultural resource study, land boundary survey, identification of any valid and existing rights, a land appraisal and preparation of the final patent documents. The reported acreage figures seemed to change at the various stages because each of the steps further refined the boundary of the parcel. BLM completed all of the required documents to issue a patent for 10,059.47 acres of federal land to the city of Yerington on Aug. 20.
Map prepared by BLM to show existing land ownership with the boundary of the lands to be conveyed from federal ownership to the City of Yerington, Nevada.
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Yerington... Continued from 72
PHOTO BY OXANA SYLVESTER
Tim Dyhr, vice president of environmental and external affairs, explains how this land that was retained by the City of Yerington may be used.
new economy in Mason Valley and the city of Yerington? We had to identify what could be our best potential and that was this copper mine. We looked forward to creating 800 new jobs, and families moving here and making this a viable place to live and prosper.” The idea had strong support from Nevada’s entire Congressional delegation and each member worked diligently to keep the proposal moving through two Congresses and many subcommittees. “Congress is a unique game to play,” Dini said. “You have to have all the right horses in the race, and we did. Once there were eight other bills tied into this, and we were kind of the anchor to it. Senator (Harry) Reid was agreeable to our idea. Of course he had a little stipulation too with the wilderness part of it. And that was our first hurdle.” Designation of the Wovoka Wilderness Area in Lyon County was also included in the Act. Speaking of some of the hurdles they faced Dini said, “We went through that
cycle four years in a row and pretty soon we understood what was coming next: government shutdown, holiday vacations, ‘we’re going be gone for six weeks so you can’t do this.’ We went through two election cycles.” Dini said Congressman Mark Amodei, R-Nev., and Senator Dean Heller, R-Nev., did a lot of work to help with the process. “I can’t thank the Congressional team in Nevada enough for doing what they did to try to help us out. They really worked hard for us,” Dini said. “You know, Harry Reid, he is a wizard. He really is a wizard about how he got this, with all the stoppage in Washington of any kind of bills like this, how he got the idea to put it into the National Defense Act, I don’t care. I thank him for what he did.” Once the Act was signed, Dini, Dyhr and Newell had to stay in contact with BLM specialists and managers in order to complete the steps needed to transfer the land from federal to city ownership. “Carson City District of BLM did a great See YERINGTON, 74
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PHOTO BY OXANA SYLVESTER
From the City’s event site, you can barely make out the headframe of the shaft to the underground mine. The reddish hills that will become the open pits are visible but, the waste rock facility will eventually block the view and the noise of the mine.
Yerington... Continued from 73
job in implementing the Congressional directive to transfer the lands,” said Dyhr. “The NEPA Coordinator there, Brian Buttazoni, was what I call the lead dog on the sled. He was very disciplined and very good at what he did. He drove the process. We got support from Sierra Front Field Office Manager Leon Thomas and District Manager Ralph Thomas and right up the line to State Director Amy Lueders initially and then Interim State Director John Ruhs was fully engaged in the whole process.” Dini wanted to share credit with his father. “I think I used all the political capital my family had ever gained,” he said. “We put it all into this. My dad, Joe Dini, was with me the whole step of the way until a couple of years ago. He did everything he could to help
me get this thing done.”
Conservation Easement Dyhr described a conservation easement that Nevada Copper is working to establish with the city of Yerington in order to protect residents living in the Panavista subdivision just west of the lands conveyed to the mine. The subdivision is about three miles from any proposed mine facility but the parcel of land between the subdivision and the proposed operations was all within the conveyance. “They had concerns about a mine development right next to them and so we created a 240-acre conservation easement and buffer so their homes aren’t affected by heavy industrial mining,” said Dyhr. “It gives them half a mile of buffer. Even
though we don’t have any plans for anything down here, it gives them assurance that we wouldn’t put a crusher or something in their backyard — which we are fine with. We don’t want to put a crusher in their backyard.” Erin Singley, a resident of the Panavista subdivision, attended the city council meeting and described the concerns of the residents. “My biggest concern at the time, not understanding what the priorities of the mine were, was that the initial maps indicated much of this was going to be retained by the city of Yerington. So my assumption was it was public use land that we would be able to continue to use in the manner that I had enjoyed since I moved in there about 20 years ago,” she said. The Panavista subdivision consists of
approximately 20 to 40 households. When the land conveyance proposal first came to the planning commission, the residents realized that all of it was going to be conveyed to the mine. Then Singley and her neighbors became concerned that their use of the land would be limited. “We use it for ATV quad-riding and horseback riding and hiking,” Singley said. “The mine was real gracious and had us come out and had actually mapped out what they felt was a really good option that we could agree with and feel comfortable with.” The residents and Nevada Copper developed an agreement that expanded the transitional zoning so that mining activity wouldn’t be allowed in that area and then See YERINGTON, 76
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Yerington... Continued from 74
also a conservation easement that allows the residents to continue to use the area.
What’s in it for Yerington? “We’ve always been able to co-exist with agriculture and mining for decades,” Dini said. “The old Anaconda facility had 650 people working. We thought we could re-create ourselves and move forward with Nevada Copper. After all, there’s not too many people knocking down the door here in Yerington with $80,000-a-year jobs. So we’re looking forward to it.” “Nevada Copper will become a taxpayer for all the acreage they got,” Evasovic said. Under the terms of the sale, Nevada Copper will be paying property tax immediately and they will also pay a net proceeds tax when they start producing copper. Yerington Chief of Police Darren Wagner has added a new position for the police department into this year’s budget in anticipation of this action. “This is a win-win because the reality of it is that, as this mine grows and develops jobs, we increase residents,” he said. “We’re going to have to provide services to them, and we wouldn’t have the tax base and funding had they not come in the way they did. So for us, this is a win-win.” Dyhr talked about the plans for the 914 acres retained by the city. The area is rimmed with ridges that form a topographic bowl that is shielded from the view of town, making it especially suitable for holding a variety of events. They have opportunities here for concerts, races, bike races, any kind of big group gathering where you need a few hundred camp sites. The Boys and Girls Club plans to use the area as well. Over the last 14 years, the summer concert called, Night in the Country, has been held on the last weekend in July. Last year had 12,000 people attending each night. Now they’ve outgrown what they have on the old county fairgrounds and want to find a site where they can build permanent facilities – campsites, parking, permanent restrooms, services, trails, arenas and other amenities, Dini said.
PHOTO BY OXANA SYLVESTER
Police Chief Darren Wagner explained, “I have just over 3,000 residents in the city paying taxes but I’m providing services to probably 7,000 on a daily basis and that’s, you know, it can be an issue. So for this to happen the way it is, is excellent.”
to mining on private land versus federal land. Private land enables greater flexibility to adapt to changing conditions. “We’re on private land now. When the prices go up, our expansion would be to go back to the state and say we need a bigger waste rock storage facility. It’s a lot easier when you’ve got the private land because now we’ve got some flexibility on the sizing. It’s just making sure that your air quality and water permits and all of those are in order,” he said. If the price of copper goes up from $2.40 to $4, Nevada Copper won’t have to go back to the BLM and all of the other associated agencies for a new EIS in order to expand the pit. “We go to the state and say this is our land and this is what we want to do. We still have the normal permitting process but it’s through the state which is typically just quicker,” Arnold said. Describing conditions unique to the Pumpkin Hollow mine site, Dyhr said, “It takes about 18 minutes to get from What’s in it for downtown Yerington to the mine site. What other mine can boast an 18-minNevada Copper? ute commute?” Nevada Copper Vice President of OperArnold talked about how welcoming ations Tim Arnold described the advantage Yerington residents are about this project.
PHOTO BY OXANA SYLVESTER
Tim Arnold, vice president of operations for Nevada Copper, tells of the benefits of the land conveyance to the Pumpkin Hollow project and the city of Yerington. “They look back to the Anaconda days fondly. You know, the town was booming. It’s like every other town I’ve lived in in Nevada. Kids grow up and go away. That doesn’t have to happen here if you’ve got a nice economy.” The old Anaconda mine is located just on the other side of the town from the Nevada Copper facility. According to the US Environmental Protection Agency, the Anaconda mine was first opened in 1918 as the Empire Nevada mine. Anaconda operated the mine and mill from 1952 to 1978. Atlantic Richfield bought Anaconda and its assets in 1977, but ceased operations at the mine in 1982 due to low copper prices, selling the property to Don Tibbals. Under Tibbals’ ownership, attempts were made to process the tailings and waste rock material and salvage metals. In 1988, Arimetco purchased the mine and constructed heap leach pads but entered bankruptcy in 1997, abandoning the site in 2000. Groundwater contamination has been detected and the site is currently under management by the EPA’s superfund program, however, it is not currently on the national list of priority sites.
Arnold referred to the previous operators of the Anaconda mine, “Yerington residents remember Anaconda fondly because everybody’s dad worked there. It was the income and the downtown was thriving and things like that. And quite honestly, they didn’t do anything wrong. When they left they shut it down according to the laws that were in existence.” “We have new laws, and these guys, they respect and trust that we will be able to reclaim it,” Arnold said. “There’s some really beautiful stuff being done here in the state of Nevada. They know that this won’t quite look the same but will bring the same benefits so, why not?”
What’s next?
“The way I like looking at it is there’s so many risks that you have to get over to build a mine and, virtually every one that we have control over, we’ve been able to solve that problem,” Arnold said about the progress of the mine. “The permitting is done. The engineering work is at a good feasibility level,” he said. “We’ve got good plans. We’ve got the See YERINGTON, 77
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 77
Yerington... Continued from 76
PHOTO BY OXANA SYLVESTER
Greg French, Nevada Copper’s vice president for exploration and project development, shows a sample of drill core taken from the Pumpkin Hollow deposit.
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team to get started on it tomorrow. Most of the risks are out.” Looking to the future, Arnold said he hopes the price of copper increases. “That’s what it really boils down to,” he said. “This is not a great time to be out looking for money. When the prices go down, I think everyone gets nervous. That’s just natural. That’s our biggest issue is the price.” Nevada Copper just finished phase 1 of the open pit and underground drill program, French said. “Now we’re going to evaluate the results which were very encouraging,” he said. The shaft right is at 1,900 feet, which is the first major haulage level, Arnold said. “We only have to go down about another 250 feet to get to the bottom of the shaft,” he said “We are in a very good spot to just take a break and get the results of the drilling back and see what happens with the financing. If we
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get financing to do the whole open pit and underground mines, some of the more urgent tasks will be infrastructure, pre-stripping the open pit and getting power and things like that.” Arnold said they plan to build a simple mill with crush, grind, and float circuits. “The only thing that we’re going to be doing a little different than anyone else is that we’re going to dewater the tails and make them into a dry stack. Everything else we’re doing is very, very off-the-shelf technology. Copper, gold, and silver will be in the concentrate but a lot of the iron will be in the tails,” Arnold said. French said they are “optimizing and refining the development plans so that we are ready to go when the financing is complete.”
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78 • MINING QUARTERLY, Elko, Nevada WINTER 2015
Barrick reports $264M loss for 3rd quarter T ORONTO – Barrick Gold Corp. reduced its debt, but reported a $264 million net loss for its third quarter. Barrick in October reported adjusted net earnings of $131 million ($0.11 per share) for the third quarter and the net loss ($0.23 per share). Third quarter adjusted EBITDA (earnings before i n te r e s t , t a x e s , depreciation, and amortization) was $942 million and EBITDA was $490 million. Free cash flow was $866 million, or $256 million excluding the impact of $610 million in proceeds from the Pueblo Viejo streaming transaction. Production in the third quarter was in line with expectations at 1.66 million ounces of gold. All-in sustaining costs were $771 per ounce and cash costs were $570 per ounce. Full-year 2015 gold production is expected to be 6.1-6.3 million ounces at lower all-in sustaining costs of $830-$870 per ounce.
Barrick said it is “strengthening” its balance sheet with “positive free cash flow, improved costs and reduced debt.” The company said it is on track to reduce its debt by $3 billion. “In support of this objective, we have returned to a leaner, decentralized operating model designed to maximize free cash flow and improve execution,” Barrick stated. “Clear capital allocation criteria, including a 15 percent hurdle rate for all investments, are driving greater financial rigor and stronger returns. The divestment of non-core assets has refocused our portfolio and we have formed vital new strategic partnerships that will drive new opportunities in the future.”
Strengthening the balance sheet Earlier this year, Barrick set a $3 billion debt reduction target for 2015. “We said we would achieve this through the disciplined sale of noncore assets, the formation of new joint
ventures and partnerships, and by maximizing free cash flow from our operations,” the company stated. Thus far, Barrick has completed or announced asset sales, joint ventures and partnerships valued at $2.46 billion. It has also generated $282 million in positive free cash flow in the last two quarters despite a lower gold price, reflecting the impact of its efforts to maximize free cash flow across the company. Both asset sales and cash flow improvements have been credit positive, and have resulted in improvements to the company’s debtto-EBITDA ratio. Achieving the $3 billion debt reduction target will also reduce annual pre-tax interest payments by approximately $140 million. So far this year, total debt has been reduced by 15 percent, from $13.1 billion to $11.2 billion. “We currently have less than $250 million in debt due before 2018 and approximately $5 billion of our $11.2 billion in outstanding debt matures after 2032,” Barrick stated. “Building on $1.9 billion in
repayments already completed this year, we intend to use approximately $1 billion in proceeds from the sale of 50 percent of Zaldívar to reduce debt. The sale is expected to close in the fourth quarter. This would bring total debt repayments to approximately $2.9 billion.” Assuming the completion of $3 billion in repayments, total debt will have been reduced by 23 percent, from $13.1 billion to $10.1 billion.
Operating highlights
Barrick’s operations continued to perform in line with expectations for the year, meeting cost and production targets for the third quarter while generating stronger free cash flow. The company tightened its gold production guidance range for 2015, from 6.1-6.4 million ounces to 6.1-6.3 million ounces, reflecting lower anticipated gold production from Acacia Mining. All-in sustaining cost guidance for the See BARRICK, 79
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year has been reduced to $830-$870 per ounce from the previous range of $840$880 per ounce. Average all-in sustaining costs for our five core mines are now expected to be $700-$725 per ounce in 2015, down from $725-$775 per ounce at the start of this year. These mines are expected to account for about 75 percent of free cash flow from operations and 60-65 percent of production in 2015. Fourth quarter all-in sustaining costs are now expected to be similar to the third quarter while production is expected to be slightly higher, primarily driven by the impact of higher sustaining capital expenditures offset by higher production at Cortez, Pueblo Viejo, Lagunas Norte and Veladero.
Cortez
The Cortez mine produced 321,000 ounces at all-in sustaining costs of $501 per ounce in the third quarter. Production benefited from higher open pit tonage and improved underground productivity through the implementation of short interval controls, an initiative identified as part of our Value Realization review for Cortez. Higher production, lower operating costs and lower sustaining capital drove improved all-in sustaining costs. Production in 2015 is now forecast to be 900,000-950,000 ounces at all-in sustaining costs of $675-$725 per ounce. Fourth quarter production at Cortez is expected to be slightly higher than the third quarter, at higher costs. A prefeasibility study for expanded underground mining in an area known as Deep South below currently permitted levels will be completed in late 2015 and results are expected to be disclosed with the company’s fourth quarter results. Our Value Realization review at Cortez also identified long-hole stoping as the preferred mining method for the deposit, as compared to the cut-and-fill method previously contemplated for the underground expansion, which could improve the economics of the project. Mineralization in this zone is primarily oxide and higher grade compared to the current underground mine, which is sulfide in nature. The limits of the Lower Zone have not yet been defined, and drilling has indicated the potential for new targets at depth. With a 382-square-mile land package,
Cortez remains a highly prospective district for Barrick.
Goldstrike
The Goldstrike mine contributed 328,000 ounces in the third quarter in line with plan, while all-in sustaining costs of $558 per ounce were better than expected due to lower operating costs and lower sustaining capital. Our innovative thiosulfate (TCM) circuit achieved commercial production in the third quarter, coming in at a capital cost of $610 million. We expect to complete the ramp up of the TCM circuit in the first half of 2016. Goldstrike’s production for 2015 is forecast to be 1.00-1.10 million ounces at improved all-in sustaining costs of $650$700 per ounce. Fourth quarter production is expected to be similar to the third quarter, at slightly higher costs. Exploration at Goldstrike is focused on the underground mine where good potential exists at depth, and we plan to accelerate near-mine development in 2016. During the quarter, we began development of new areas below existing workings at Meikle and Rodeo in order to access deeper reserves which are expected to come into production at the end of 2016. This work will also open up new drilling platforms to better define future potential in these areas.
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Turquoise Ridge (75 percent) The Turquoise Ridge Joint Venture Mine contributed 55,000 ounces in the third quarter at all-in sustaining costs of $738 per ounce, in line with expectations. The mine is forecast to produce 175,000200,000 ounces in 2015 at improved all-in sustaining costs of$750-$800 per ounce. Detailed engineering and feasibility work on developing an additional shaft GöÇ which could bring forward more than one million ounces of production and roughly double output to an average of 500,000 ounces per year (100 percent basis) at all-in sustaining costs of about $625-$675 per ounce is on track to be completed by the end of the year. Work to install additional ventilation capacity has also been initiated.
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Newmont reports $202M net income for its third quarter DENVER – Despite lower gold prices, Newmont Mining Corp. reported a $202 million net income after reducing costs and increasing production during its third quarter. “We delivered a 16 percent reduction in all-in sustaining costs and generated $758 million in adjusted EBITDA (earnings before i n te re s t , ta x e s , depreciation, and amortization) and $478 million in free cash flow — despite lower metal prices — through a sustained focus on improving costs and efficiency,” said Newmont President and CEO Gary Goldberg. “The Cripple Creek & Victor integration process is underway, and we are moving forward with our Tanami Expansion project in Australia, which is expected to generate an IRR of more than 35 percent in the current metal price environment. The project involves building a
second decline in the underground mine and incremental capacity in the plant to increase profitable production and extend mine life.” The company achieved GAAP (generally accepted accounting principles) net income attributable to shareholders from continuing operations of $202 million, or $0.38 per share, compared to $210 million or $0.42 per share in the prior year quarter; adjusted net income was $126 million, or $0.23 per share, compared to $249 million or $0.50 per share in the prior year quarter Newmont said it delivered adjusted EBITDA of $758 million in the third quarter, compared to $455 million in the prior year quarter. The company’s all-in sustaining costs improved to $835 per ounce of gold compared to $955 per ounce in the prior year
quarter and copper AISC to $1.54 per pound compared to $6.61 per pound in the prior year quarter. Newmont also improved its costs applicable to sales from $705 per ounce of gold in the 2014 third quarter to $608 per ounce. The CAS for copper for this quarter was $1.15 per pound compared with $5.73 per pound in the prior year quarter. Production for gold and copper was also increased. Newmont delivered 1.34 million ounces and 48,000 tons of attributable gold and copper production, respectively, compared to 1.15 million ounces and 13,000 tons, respectively, in the prior year quarter.
2015 outlook
Newmont’s revised 2015 CAS and AISC outlook are down 2 percent and 4 percent, respectively, driven by a reduction in Asia Pacific and Africa region costs compared to previous guidance as well as lower than expected inventory costs at CC&V. Asia Pacific costs are lower than previous estimates primarily due to cost and efficiency
improvements and some delayed spending, as well as lower oil prices and Australian dollar exchange rates. Africa cost outlook for 2015 is improved mostly due to better than expected power and diesel prices and full potential savings. Newmont also has lowered its debt. It paid $200 million toward its existing term loan and $130 million toward project debt in Ghana and Indonesia. Newmont could potentially repay up to a total of $750 million dollars by year end from cash flow and existing cash balances.
North America projects The Turf Vent Shaft is expected to achieve commercial production in the fourth quarter of 2015, adding approximately 100,000 to 150,000 ounces of annual production to Carlin’s Leeville underground mine. The shaft provides ventilation required to increase production and decrease mine costs over See NEWMONT, 81
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the 11-year mine life at Leeville. Total development costs for the project are estimated between $300 million and $350 million with approximately $60 million to $70 million spent in 2015. Long Canyon Phase 1 is expected to achieve commercial production in the first half of 2017. This first phase of development consists of an open pit mine and heap leach operation with production of between 100,000 and 150,000 ounces per year over an eight- year mine life. Estimated average costs applicable to sales are expected to be between $400 and $500 per ounce and all-in sustaining costs of between $500 and $600 per ounce over the life of the mine, in the first quartile for gold production. Total capital costs for the project are estimated at between $250 and $300 million allocated roughly evenly in 2015 and 2016 with minimal spending in 2017. The Cripple Creek & Victor (CC&V) acquisition closed on August 3, 2015 and successful integration is underway. CC&V
Production for gold and copper was also increased. Newmont delivered 1.34 million ounces and 48,000 tons of attributable gold and copper production. is expected to lower Newmont’s overall cost profile with expected cost applicable to sales and all-in sustaining cost to be updated for purchase price allocation later this year. Gold production is expected to average between 350,000 and 400,000 ounces in 2016 and 2017. Total development capital costs to complete the expansion are approximately $200 million, with between $50 million and $60 million to be spent in 2015.
Other projects
Merian is progressing on schedule and below budget. Merian will give Newmont a foothold in a prospective new South American district. Gold production is expected to average between 400,000 and 500,000 ounces on a 100 percent basis during the first five years at a cost applicable to sales
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of $575 to $675 per ounce, and all-in sustaining cost of between $650 and $750 per ounce. Capital costs for the project are estimated at between $600 and $650 million for Newmont’s 75 percent share. Newmont’s capital expenditure is expected to be between $290 million and $330 million in 2015 and between $170 million and $210 million in 2016. The project is scheduled for start-up in the second half of 2016. Tanami Expansion includes constructing a second decline in the mine and building incremental capacity in the plant to increase profitable production and serve as a platform for exploration drilling to support future expansion. The expansion improves Tanami gold production to between 425,000 and 475,000 ounces per year at all-in sustaining costs of between $700 and $750 per ounce (for the first
five years of the expansion) and increases mine life by three years. Capital costs for the project are estimated at between $100 million and $120 million with about half of the capital spent in 2016 with the remaining allocated between 2015 and 2017. Additional production is expected to come on line in 2017. The Ahafo Mill Expansion represents additional upside not currently included in 2015 outlook. The Ahafo Mill Expansion would increase profitable production by 100,000 to 125,000 ounces (first five year average) while lowering costs and offsetting the impacts of lower grades and harder ore. Capital costs are expected to be between $140 million and $160 million. The Ahafo Mill Expansion is expected to be reviewed with Subika Underground in mid to late 2016. If approved in 2016, additional production would be expected in 2018.
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What do copper & gold signal for 2016? RICHARD BAKER “It ain’t over till it’s over.” 2015 will be remembered for the passing of Yogi Berra, a baseball legend and master of paradoxical quotes. This year will also be remembered for falling metal prices and shares of mining giants plunging to sub-2008 lows. The featured Yogi-ism is sage advice when looking for a bottom in metals and mining—copper price is a good example. I’m writing this column on Halloween weekend. Comex copper closed October at $2.32 per pound, nearly 30% below July prices of last year but showing daylight from the August $2.20 low and a lot of sky above 2008 prices. Unless there is a trick or treat surprise before New Year’s, the red metal bottoming process may be underway. In late-October I asked Wells Fargo metals analyst Randy North for his opinion. The London Metal Exchange (LME) annual gala had just concluded and there were lots of fresh views forthcoming from leading metal experts and traders. North informed me, “… the market is still running generally short of copper. Spreads are bid, well bid, every time the roll periods come through as the specs [speculators] move shorts forward. It seems a fairly crowded trade if you ask me and we still have not been able to break down through support just below $5000 per metric ton [$2.27 per pound].” He mentioned the $4850 [$2.20] low with a sobering reminder that, “…if one metal could fall further towards its cost of production, it would certainly be copper.” North continued on a brighter note, “I can easily see the market retesting the August
lows before year end, but I think that should be viewed as a buying opportunity. The forward spreads are starting to see good borrowing from smart money players and that Richard Baker tells me all the talk about deficits that surfaced during LME week is being heard by the marcro community….”
Red Metal Blues
To understand copper’s macro picture for 2016, it is helpful to review the red metal’s journey for the past several years – an odyssey influenced by China demand and U.S. monetary policy. The first chart shows Comex copper prices from mid2006 through October 2015 with key events. There have been seven major corrections (i.e. more than 20% decline peakto-trough) in nine-plus years. China, which comprises roughly 40% of global demand, helped pull prices from the depths during the Great Recession. However, a decline in copper prices starting in 2011 mirrors a fall in China gross domestic product from double-digits to less than their current 7% target. China slows as the world’s second largest economy transitions from heavy industry, infrastructure and exports to a lower growth economy focused on services and consumer consumption. “Heavy Metal China” had a voracious appetite for raw materials; since 2011 demand has fallen and so have the fortunes of metals and mining. Prior to the Great Recession there was a See BAKER, 83
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substantial pullback but prices recovered to $4 by the spring of 2007. The recession included two corrections; the second and most important was a “mega-crash” that brought prices from $4.3 per pound in July 2008 to a $1.5-level by Christmas Eve – a nearly 65% drop. The Lehman Brothers bankruptcy in September significantly accelerated the downside. The rapid recovery by December 2009 to pre-Lehman prices ($3.4) is impressive. China still fired on all cylinders supercharged by copper and other raw materials. In addition to China demand, the first phase of the U.S. Federal Reserve quantitative easing (known as QE-1, the printing of money to buy bonds) helped reflate dollarized commodities. With few exceptions, QE-fueled liquidity maintained a $3-floor (green dashed line) under copper prices until the end of QE-3 in October 2014. Copper corrections have followed each of three U.S. quantitative easing programs. The first occurred several weeks after QE-1 came to a close in March 2010. Copper prices dropped from the $3.7-level to a very brief visit below the $3-floor by June. Beginning November 2010, QE-2 served to inflate copper prices, this time scoring record $4.5-plus heights by early-2011. The end of QE-2 in June 2011 followed by the U.S. debt downgrade in August triggered the second biggest post-Lehman correction. It pulled red metal prices from $4.5 per pound back to the $3-floor by early-October. Finally, the end of QE-3 coincided with the beginning of oil price decline in October 2014. Copper fell lower still with back-to-back corrections, accelerated by Chinese yuan devaluation in August 2015 that pushed prices to a
COURTESY OF RICHARD BAKER
Copper corrections since Lehman Brothers track China demand and US monetary policy $2.20 low.
A Flashing Light Grows Dim The gold-to-copper ratio (GCR) is a reliable indicator of market stress. The GCR is the price of gold in U.S. dollars divided by the price of copper and answers
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84 • MINING QUARTERLY, Elko, Nevada WINTER 2015
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the question, “how many pounds of copper can I buy with an ounce of gold?” During periods of market stress, gold price typically rises as copper prices decline. In turn, the GCR increases—spiking when things get really scary. The second chart shows the gold-tocopper ratio over the same time period as the first. The value of gold relative to copper has trended higher (purple dashed line) and every copper price correction (shaded boxes) has included one or more GCR spikes. It’s noteworthy that an ounce of gold in mid-2006 fetched only 200 pounds of copper. As October 2015 comes to a close, an ounce of the yellow metal buys 490 pounds of the red. A July 2016 projection shows an increase to 510. The trend line represents a relative “fair value” for the two metals – gold and copper at price equilibrium. If the GCR rises above fair value, gold trades at a premium to copper; if the GCR falls, gold trades at a discount. Gold priced a discount prior to Lehman Brothers and correction spikes tended to only reach fair value. Post-Lehman, gold rallied not only in U.S. dollar price but in premium relative to copper. During the megacrash, the GCR peaked at 578 pounds per ounce. This was followed by a larger spike of 621 as copper recovered from its bottom and gold popped above $1,025 in February 2009. Since spikes occur during market stress, the difference between peak and fair value can be viewed as a “fear premium.” Importantly, the fear premium has been in decline for the four corrections following the big crash of 2008. During the last correction in August, the GCR peaked at 517, Gold gains value on copper but the “fear premium” is in decline. only 30 pounds per ounce above fair value. In the 2008 mega-crash, the fear premium challenge of rising interest rates in a low a probable discount, my first-half of the at 270 was a whopping nine-times larger. inflation environment. year gold range is $1,060 to $1,160. A rise The GCR chart suggests that much in inflation expectations or geopolitical 2016 Outlook of the post-Lehman angst has left the shock could move the top number notaA slowing China in combination with metal markets on a comparative basis. bly higher. the end of U.S. quantitative easing pushed In the summer edition of Mining QuarThere is building consensus that copper copper below the $3-floor – what was terly, I predicted 2015 gold would trade demand will revive by 2017. In the meanonce support now becomes resistance. in a range of $1,100 to 1,200 for the sec- time, mining giants such as Glencore and As the Federal Reserve contemplates ond half of 2015 with rising commod- Freeport-McMoRan are cutting productightening with rate increases on the near ity prices slowly closing the value gap. tion to stabilize prices. Given these factors, horizon; Japan, Europe and China are Comex gold ends October at $1,141 per the August low may indeed be shouting, loosening their monetary policy to stimu- ounce trading very near fair value with “It’s over!” My 2016 copper price outlook late growth. This central bank divergence the red metal—the value gap for copper is for stable trading ranges above $2.20 has ushered in a strong U.S. dollar plac- has closed. A rising GCR fair value in 2016 per pound but below $3-resistance. The ing downward pressure on dollarized may cause gold to trade at a discount, not coming year will be a transition period commodities. Gold faces the additional premium, to the red metal. Adjusting for that likely avoids the 2008 $1.5-copper
COURTESY OF RICHARD BAKER
lows and a second famous Yogi-ism, “… déjà vu all over again.”
Richard P. Baker is the author and editor of The Eureka Miner’s Market Report at eurekaminer.blogspot.com. He owns shares of the SPDR Gold Trust ETF (GLD), PowerShares DB US Dollar Bullish ETF (UUP) and copper miner Freeport McMoRan (FCX). Please do your own research; markets can turn on you faster than a feral cat.
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 85
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General Moly reports $2.7M loss LAKEWOOD, Colo. — General Moly Inc. reported Wednesday a $2.7 million net loss for its third quarter, which ended Sept. 30. This loss compares with a $3.2 million net loss for the same period a year ago. General Moly is a U.S.based molybdenum mineral development, exploration, and mining company. It owns the Mt. Hope Project near Eureka. Excluding restricted cash, the company’s cash balance at Sept. 30, 2015 was approximately $15 million compared to $13 million on Dec. 31, 2014 and $18 million on June 30, 2015. During the third quarter, cash use of $3 million was the result of $1 million spent on Mt. Hope Project development costs and $2 million in general and administrative expenses. In January 2015, the company and POS-Minerals, as the members of Eureka Moly, LLC, announced an agreement that provided access to the $36 million reserve account for Mt. Hope. The Eureka Moly members agreed in January that the budget will be entirely funded by the reserve account through 2020. Thus, the reserve account should cover anticipated operating expenses, and committed equipment purchase obligations while the company seeks full financing for the Mt. Hope Project construction. The company also announces a further 30 percent reduction of ongoing future expenses. On Nov. 3, General Moly announced an amendment to the previously announced Investment and Securities Purchase Agreement with AMER International Group, a private, Chinese-based multinational. With the amended Investment Agreement, the parties agreed upon a three tranche investment strategy that will create a strategic partnership and equity investment to assist with General Moly’s ability to secure full project financing for the Mt. Hope Project. “The closing of this partnership with AMER, one of the world’s largest advanced materials, downstream metals refining, and fabrication companies, is an important milestone for the company and a critical component of our future success,” General Moly CEO Bruce Hansen said.
“As market conditions improve, this agreement will greatly strengthen our potential to access global financial institutions, particularly Chinese banks, to finance a significant portion of the remaining capital necessary for the development of the Mt. Hope Project. However, given the current molybdenum price and the recent Nevada Supreme Court water rights decision, we believe it does not make sense to aggressively pursue project financing at this time. In the near-term, we expect to evaluate acquisition opportunities that we can collectively pursue with our partner AMER. In time, we believe molybdenum prices will return to the low-to-mid teens, a level sufficient for Mt. Hope construction and development.” Mr. Hansen concluded, “As we look forward, the Company has taken decisive actions that will better position it to advance when market conditions improve. Our recently implemented management restructuring and cost reduction programs are focused on maintaining liquidity and sustainability through cost reductions in engineering, administrative and consulting expenses and trimming our ongoing Corporate and Liberty Project care and maintenance expenditures from approximately $2.5 million per quarter to approximately $1.7 million per quarter.”
Mt. Hope Project Water Rights And Permit Update On Sept. 18, the Nevada Supreme Court issued an Order that reversed and remanded the Nevada State District Court’s Orders regarding the Monitoring, Mitigation and Management Plan and the water permits, which had affirmed the State Engineer’s Orders approving the water rights and 3M Plan for the Mt. Hope Project. On Oct. 29, the Supreme Court issued the order as a published Opinion. The Opinion requires that the State Engineer identify specific See MOLY, 87
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mitigation measures to avoid conflicts with existing rights when granting water permits. As a condition of the water permits, the company was also required to develop, in cooperation with the County of Eureka, a separate 3M Plan. The company prepared the 3M Plan, which was approved by the State Engineer and while the appeals were pending the 3M Plan had been implemented to collect information on background conditions and aquifer response to project pumping, as well as to address mitigation measures for impacted third-party water rights. The company is evaluating the Opinion to fully understand the process and timing associated with addressing issues raised by the Supreme Court, and will move forward as expeditiously as possible, following the remand to the State Engineer. The company expects to comply with the Nevada Supreme Court Opinion and provide additional evidence of its ability to mitigate any potential impacts to water rights in Kobeh Valley that could result from the Mt. Hope
Project’s water use. In February 2013, two parties filed a complaint challenging the issuance by the U.S. Bureau of Land Management of the ROD for the Mt. Hope Project. The U.S. District Court in Nevada approved Eureka Moly’s request to intervene in the matter. Following briefing by the parties the District Court denied the plaintiffs’ motion for summary judgment, and on Aug. 1, 2014 entered judgment against the plaintiffs regarding all claims raised in the complaint. As anticipated, on Sept. 22, 2014, the plaintiffs filed their notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. While the appeal is pending, the ROD remains in effect.
further cost reduction programs that are expected to lower operating expenses by more than 30 percent annually, once fully implemented in early 2016. The management restructuring and cost reduction actions are focused on maintaining liquidity and sustainability through cost reductions in engineering, administrative and consulting expenses and trimming ongoing corporate and Liberty Project care and maintenance expenditures from approximately $2.5 million per quarter to approximately $1.7 million per quarter. Specific provisions of the management restructuring and cost reduction programs include: • A 25 percent reduction in workforce Management and the closing of the company’s engineering office in Tucson, Arizona, and Restructuring local office in Eureka. • A 15 to 25 percent reduction in base And Further Cost cash compensation for senior executives. Reduction Programs • The retirement of David Chaput as In October 2015, the company imple- chief financial officer and promotion of mented management restructuring and Lee Shumway, formerly the company’s
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controller and treasurer, to CFO. Further executive level changes include Scott Roswell, formerly General Moly’s corporate counsel and vice president of human resources, assuming the title of chief legal officer. • Prudent focus on reducing all other expenditures including engineering, administrative, and consulting expenses. • Ensuring the sustainability of Eureka Moly LLC funding through the year 2020, via the reserve account held at EMLLC. Lee Shumway joined General Moly in 2007, and previously served as the company’s controller and treasurer. Prior to joining the organization, he spent 10 years in various roles at Newmont Mining including director of supply chain—Nevada Operations, and controller—Nevada Operations, and before that had 10 years of experience with Santa Fe Pacific Gold and Price Waterhouse.
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Probe finds EPA error caused mine spill it hoped to avoid MATTHEW BROWN Associated Press
B ILLINGS, Mont. — Government investigators squarely blamed the U.S. Environmental Protection Agency for a 3 million-gallon wastewater spill from a Colorado gold mine, saying an EPA cleanup crew rushed its work and failed to consider the complex engineering involved, triggering the very blowout it hoped to avoid. The spill that fouled rivers in three states would have been avoided had the EPA team checked on water levels inside the Gold King Mine before digging into a collapsed and leaking mine entrance, Interior Department investigators concluded. The technical report on the causes of the Aug. 5 spill has implications across the United States, where similar disasters could lurk among an estimated hundreds of thousands of abandoned mines that have yet to be cleaned up. The total cost of containing this mining industry mess could top $50 billion, according to government estimates. The root causes of the Colorado accident began decades ago, when mining companies altered the flow of water through a series of interconnected tunnels in the extensively mined Upper Animas River watershed, the report says. EPA documents show its officials knew of the potential for a major blowout from the Gold King Mine near Silverton as early as June 2014. After the spill, EPA officials described the blowout as “likely inevitable” because millions of gallons of pressurized water had been bottling up inside the mine. See SPILL, 89
JERRY MCBRIDE/THE DURANGO HERALD VIA AP, FILE
In this Thursday, Aug. 6, 2015, file photo, people kayak in the Animas River near Durango, Colo., in water colored yellow from a mine waste spill. A crew supervised by the U.S. Environmental Protection Agency has been blamed for causing the spill while attempting to clean up the area near the abandoned Gold King Mine. Tribal officials with the Navajo Nation declared an emergency on Monday, Aug. 10, as the massive plume of contaminated wastewater flowed down the San Juan River toward Lake Powell in Utah, which supplies much of the water to the Southwest. AP, BRENNAN LINSLEY, FILE
Water flows through a series of retention ponds built to contain and filter out heavy metals and chemicals from the Gold King mine chemical accident, in the spillway about a quartermile downstream from the mine, Aug. 14, 2015, outside Silverton, Colo.
WINTER 2015 ELKO DAILY FREE PRESS, Elko, Nevada • 89
Spill... Continued from 88
AP, BRENNAN LINSLEY, FILE
Environmental Protection Agency contractors use heavy machinery Aug. 12, 2015, to repair damage at the site of the blowout at the Gold King mine which triggered a major spill of toxic wastewater, outside Silverton, Colo.
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The Interior report directly refutes that assertion. It says the cleanup team could have used a drill rig to bore into the mine tunnel from above, safely gauging the danger of a blowout and planning the excavation accordingly. Instead, the EPA crew, with the agreement of Colorado mining officials, assumed the mine was only partially inundated. “This error resulted in development of a plan to open the mine in a manner that appeared to guard against blowout, but instead led directly to the failure,” according to engineers from Interior’s Bureau of Reclamation, who spent two months evaluating the accident. The blowout tainted rivers in Colorado, Utah, New Mexico, and on the Navajo Nation with dangerous heavy metals including arsenic and lead, temporarily shutting down drinking water supplies and cropland irrigation. The report stops short of assigning fault to any individuals, despite prior claims from EPA Administrator Gina McCarthy
that it would determine fault and any negligence. A U.S. Army Corps of Engineers official whose review of the conclusions was included in the report expressed “serious reservations” over the EPA’s failure to explain exactly how its communications broke down and why its officials were so insistent on starting work without more information about the complexities involved. Richard Olsen, a senior geotechnical engineer with the Corps, also questioned why a change in the EPA coordinator for Gold King led to an “urgency to start digging” even though another EPA official had expressed some uncertainty. The second EPA official in July asked for an outside review of the agency’s plans by one of the Bureau of Reclamation engineers involved in Thursday’s report. A meeting between the EPA, state officials and the engineer was scheduled for Aug. 14 — nine days after the blowout. See SPILL, 90
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GEOFF LIESIK,THE DESERET NEWS VIA AP, FILE
Waste water continues to stream out of the Gold King Mine on Aug. 11, 2015, near Silverton, Colo.
Spill... Continued from 89
EPA officials pointed out that the mine plug already was leaking and could have eventually blown out anyway, and the Interior report acknowledged that was possible. EPA spokeswoman Nancy Grantham said the report “will help inform EPA’s ongoing efforts to work safely and effectively at mine sites as we carry out our
mission to protect human health and the environment.” A separate investigation is pending from the EPA Inspector General’s Office. Members of Congress seized on the report to slam the government’s handling of the spill. But whereas Republicans such as U.S. Sen. Cory Gardner of Colorado focused their ire on the EPA, U.S. Sen. Michael Bennet, also of Colorado and a
Democrat, repeated his call for industry reforms to speed mine cleanups. Guidelines for cleaning up abandoned mines focus on details such as water sampling and treatment. Yet they have “little appreciation for the engineering complexity,” and require but don’t receive significant expertise, the Interior Department’s 132-page report concluded. Plugging abandoned or inactive mines
has been common industry practice for more than a century. The report lists 31 mines across the U.S. where so-called bulkheads were installed since the 1950s to stem the flow of water into or out of a mine. With coal mines, monitoring and cleanups are funded in part by a fee companies See SPILL, 92
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STEVE LEWIS/DURANGO HERALD VIA AP
Steve Way, on-scene coordinator for the EPA, stands in front of the new facility on Thursday, Oct. 15, 2015, north of Silverton, Colo., that will treat water coming out of the Gold King Mine by adding lime to raise the pH before separating solids from liquids. Way said the treated water will be released into Cement Creek.
Spill... Continued from 90
pay. No such arrangements exist for inoperative hard-rock mines, and that’s a national problem, the report noted. Given industry opposition to efforts to hold mine owners accountable, the cleanup has been left to a scattering of federal and state agencies, without common standards or even lists of the most problematic mines.
In the wake of the Gold King spill, EPA temporarily halted some work at 10 polluted mining complexes in Montana, California, Colorado and Missouri because of similar conditions. Abandoned hard-rock underground mines are not subject to the same federal and state safety requirements other mining operations must follow, and “experience indicates that they should be,” the
report concluded. “A collapsed flooded mine is in effect a dam, and failure must be prevented by routine monitoring, maintenance, and in some cases remediation. However, there appears to be a general absence of knowledge of the risks associated with these facilities. A comprehensive identification of sites, evaluation of the potential to fail, and estimation of the likely downstream
consequences should failure occur, are good first steps in such an endeavor.” Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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