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Posts tagged ‘morrison lake’

Defining a problem

October 15th, 2012

Canada continues to expand its interpretation of environmental issues

by Greg Klein

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Amnesty International has not only joined the campaign against a Canadian mining proposal. It’s been granted “interested party” status by a federal environmental review panel. So has a nationalist group, the Council of Canadians. The news suggests that Canada has expanded its definition of “environmental” issues even further than the cultural and spiritual matters, and native rights and potential rights, that it has previously considered.

Canada continues to expand its interpretation of environmental issues

That’s the result of legislation passed last June. At the time environmentalists were critical, saying the new law would weaken the review process for resource proposals. But this announcement from a Canadian Environmental Assessment Agency review panel seems to suggest otherwise.

The three-member panel was appointed by the CEAA to review the $1.1-billion New Prosperity Gold-Copper Project proposed by Taseko Mines TSX:TKO for south-central British Columbia. On October 12 the panel announced its selection of interested parties from the groups and individuals who applied for the distinction. Although the panel will also hear from the public, “only those persons with interested party status will be permitted to participate in all aspects of the review during the public hearing phase,” the announcement stated.

An international human rights organization and a Canadian nationalist group made the cut. According to the panel they’re directly affected by the project, or have relevant information or expertise. The panel’s announcement stated that “the explicit definition of ‘interested party’ and the requirement for the panel to determine whether a person qualifies as an interested party are new” under last June’s legislation. To define interested parties, “the panel has followed a liberal and generous approach.”

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Week in review

October 5th, 2012

A mining and exploration retrospect for September 29 to October 5, 2012

by Greg Klein

So much for the environmental review

Monday’s news from British Columbia indicates another level of uncertainty has hit the province’s mining sector. Two B.C. cabinet ministers refused an environmental assessment certificate for Pacific Booker Minerals TSXV:BKM, even though the company passed a provincial environmental review. As a result, the half-billion-dollar Morrison copper-gold-molybdenum proposal has been put on hold.

A new development at the provincial level, it does have similarities to a federal decision to reject Taseko Mines’ TSX:TKO Prosperity gold-copper mine proposal for B.C. A November 2010 report from the Canadian Environmental Assessment Authority convinced the federal government to reject the $800-million proposal. The three-member CEAA panel found few significant adverse environmental effects but emphasized significant adverse effects on established native rights, potential rights, potential title, tradition and culture.

Mining and exploration week in review

Now B.C. has taken a comparable approach, although the supposedly “environmental” arguments come from politicians, not the people who conducted the environmental review. In fact the provincial review repeatedly stated that, with successful implementation of mitigation measures and conditions, the Morrison mine is “not likely to have significant adverse effects.”

Nevertheless Derek Sturko, who’s both executive director of B.C.’s Environmental Assessment Office and an associate deputy minister of the environment, seemed to reject his own department’s 270-page report. He suggested instead that the government take a “risk/benefit approach.” Sturko also emphasized strong native opposition and a “moderate to strong prima facie case for aboriginal title.” On that basis, two cabinet ministers representing mining and the environment nixed the proposal.

The decision might be related to the pre-election BC Liberal government’s prevaricating but currently negative stance towards the proposed Northern Gateway pipeline. But the province’s decision, like the federal decision regarding Taseko, also raises the question of whether native rights are handled according to the principle of law or appeasement.

Taseko submitted a revised $1.1-billion New Prosperity proposal to the feds on September 20. On Tuesday Business in Vancouver cited analysts, for some reason speaking anonymously, who said Taseko’s $300-million revision remains viable despite a drop in copper prices. But “with a large question mark as to whether the federal government will approve the project on a second go-round, they’re currently ascribing no value to the project in their target stock prices for the company,” BIV reported.

On Tuesday Pacific Booker Director Erik Tornquist told ResourceClips his company is reviewing its options.

Confiscation without compensation

If miners haven’t given up on B.C., it might be a case of the devil they know. Wednesday’s announcement that the Bolivian government would not provide compensation for nationalizing the Malku Khota Project followed months of uncertainty for South American Silver TSX:SAC. Since 2007, the company had spent over $16 million building a resource of 158 million ounces silver and 1,184 tonnes indium with lead, zinc and copper credits.

The company claimed the support of 43 out of 46 land-owning indigenous groups. SAC blamed illegal artisanal miners and activists from outside the region for intense opposition from the three dissident communities.

But last May, the company said, Mining Minister Mario Virreira signed an agreement with the 43 supportive groups stating that the government will not reverse the mining concession and that the company should continue exploration.

Protests turned violent in June, with one death and several injuries. Later that month seven people were taken hostage, including three drill contractors, two SAC employees, a government prosecutor and a police officer. The final three hostages were released unharmed after 11 days, when the government decreed that it would nationalize Malku Khota.

Reuters quoted a confident-sounding Vice-President Alvaro Garcia saying, “If we have to invest $500 million or $700 million or even $1 billion for a large-scale project at Malku Khota, which benefits Bolivia, the state is prepared and has the capacity to do that.”

At the time he added that government might pay compensation of $2 million or $3 million. Then came Wednesday’s decree. In an Agence France-Presse dispatch printed in the Globe and Mail, Virreira stated, “The nation has no financial obligation to South American Silver.”

By press time South American hadn’t responded. In an August 2 statement Greg Johnson, then the company’s president/CEO, said the company is prepared to go to international arbitration.

But, as Financial Times correspondent Andres Schipani pointed out, “Getting fair compensation, or any for that matter, from Bolivia has proved tricky since 2007. A year after [President Evo] Morales took office, the Andean country pulled out of the World Bank body that conducts arbitration between businesses and governments …”

Schipani noted other troubled nationalizations in Bolivia, including the Colquiri tin mine taken from Glencore in June. The government rationalized the move by saying it could then end disputes between independent and unionized miners. But the conflict flared up again with more violent clashes which shut down operations. On September 14 Reuters quoted Hector Cordova, president of the state-owned mining company, who said, “We’re losing more than $250,000 per day through lost production and this has been going on for two weeks. That means an accumulated loss of almost $4 million.”

Last Sunday the government said it solved the dispute by dividing the mine’s richest vein between the rival groups.

Friends and foes in the Kyrgyz Republic

On Friday three Kyrgyzstan MPs faced criminal charges while political unrest focused on Centerra Gold’s TSX:CG Kumtor Gold Mine. Prosecutors say the three attempted to overthrow the government by leading a mob that stormed the parliament building on Wednesday, Reuters reported. The incident grew out of a protest demanding that Kumtor be nationalized.

Violence has turfed previous Kyrgyzstan governments in 2005 and 2010. Last June a motion to nationalize Kumtor failed to pass parliament but MPs did pass a motion to consider increasing the country’s 33% stake in the Centerra subsidiary that owns the mine, as well as redefining the concession and boosting taxes.

But reassuring news came on Monday when Kyrgyzstan’s new president Zhantoro Satybaldiyev declared, “Kumtor will not be nationalized.” He told Reuters, “Problems will be resolved. I asked [the Kumtor venture] to keep up its output.” He added, “The way they extract gold, it’s really a state-of-the-art job. To be honest, I am jealous of their skills.”

The news agency pointed out, however, that the government had cancelled a televised auction of mining licences on August 28 after protesters stormed the TV studio.

Kumtor produced 583,156 gold ounces in 2011 at $482 an ounce. But in August the company blamed its $54.6-million Q2 loss largely on Kumtor’s “abnormal mining costs.”

Last September Kyrgyzstan ordered Stans Energy Corp TSXV:HRE to suspend drilling at its Kutessay II REE Deposit. According to the company, the government wanted “a firm proposal for the gratuitous transfer of a percentage of ownership” of a company subsidiary to the state. The stop-work order ended as the company met with Satybaldiyev and Economic Minister Temir Sariev.

In a statement issued Monday, Stans quoted Sariev saying, “Our state does not have the necessary financial and technical resources for the development of deposits and we have, so far, no such specialists. Development of the mining industry of our country at this stage is only possible by attracting investment. And the investors will come to our country when they will be confident in the safety of their financial investments.”

South Africa: A tragic outcome from a positive move?

Another striking miner was killed in South Africa Thursday night. On Friday Anglo-American Platinum fired 12,000 strikers. A Reuters dispatch in the Globe and Mail stated, “When rival Impala Platinum fired 17,000 workers in January to squash a union turf war, it led to a six-week stoppage in which three people were killed, the company lost 80,000 ounces in output and platinum prices jumped 21%.”

One disturbing aspect of the crisis is that a generous pay hike in a poor country can cause so much controversy. In last month’s “Lonmin settlement,” the platinum producer raised miners’ wages between 11% and 22%. Nic Borain, described as “an independent political analyst,” told Reuters, “Amplats had been giving signals that it was going to hold the line after Lonmin had folded—but it’s a huge gamble. Someone had to take it on the chin or this would have kept on unravelling and spread through the economy. It’s difficult to know whether this causes the unrest to spread or whether it takes some of the sting out of it. It could go either way.”

B.C. rejects mine

October 2nd, 2012

But was the government decision environmental or political?

by Greg Klein

Another British Columbia mine proposal has flunked its environmental review for reasons that might not be environmental. But the company, Pacific Booker Minerals TSXV:BKM, vows to continue with its Morrison copper-gold-molybdenum proposal for north-central B.C.

It was back in 1998 that the company began drilling the property, which is directly east of Morrison Lake, home to a genetically distinct type of sockeye salmon. The environmental assessment process began in 2003 and in 2009 the company applied for an environmental assessment certificate. On October 1 Pacific Booker announced that two B.C. government ministries refused to grant the certificate. They based their decision largely on the possible failure of environmental mitigation and opposition from local natives.

But was the government decision environmental or political?

“We plan to move forward,” company Director Erik Tornquist tells ResourceClips. “We were required by law to do an effects assessment to determine whether there were any significant adverse environmental, social, heritage, economic and health effects, which we did. Our findings were supported by three third-party reviews. The environmental assessment concluded there were no significant adverse effects. The report that went to the minister from the EAO [Environmental Assessment Office] and dealt with the various components, like water, fish, wildlife, etc., determined that there were no significant adverse effects. Well [the government says], ‘What about the risk?’ But it’s not a risk assessment, it’s an effects assessment.”

Indeed the EAO’s August 21 207-page report addressed some 16 concerns, mostly related to the environment but also issues such as heritage, economic effects, social effects, cultural foods and native land title. The conclusions repeatedly stated that, with successful implementation of mitigation measures and conditions, the mine is “not likely to have significant adverse effects.”

A September 20 report by EAO Executive Director Derek Sturko reiterated those conclusions. But he recommended the government take a “risk/benefit approach” that considers what might happen if mitigation measures, especially those affecting Morrison Lake, prove unsuccessful. Sturko also emphasized strong native opposition and a “moderate to strong prima facie case for aboriginal title.” He recommended the government reject the proposal. Environment Minister Terry Lake and Energy, Mines and Natural Gas Minister Rich Coleman did just that in a September 28 letter which was publicly released October 1.

We’re at a loss on how you can have a project with no significant environmental effects yet a certificate is denied.—Pacific Booker Minerals Director Erik Tornquist

An October 2 statement from the Lake Babine Nation said that two former copper-gold mines “continue to leach toxic acid and metals into the lake. Concern that the Morrison Mine would add to the cumulative discharges from the two closed mines was a recurring theme raised during the assessment process.”

The government decision was only the second time a mine has been rejected in the history of B.C. environmental reviews. In 2008 Northgate Minerals (now AuRico Gold TSX:AUQ) failed at both the federal and provincial level to get approval for a $200-million open-pit expansion to the now-closed Kemess South Gold-Copper Mine. In 2010 the Canadian Environmental Assessment Authority rejected Taseko Mines’ TSX:TKO Prosperity Gold-Copper Project, even though it passed B.C.’s environmental review. The federal agency expressed concerns about Prosperity’s potential effects on established native rights, potential rights, potential title and culture. In September Taseko re-applied with a $300-million revision for what is now the $1.1-billion New Prosperity proposal.

But currently the most controversial proposal in the always controversial subject of B.C. resources is the Enbridge Northern Gateway pipeline.

In an October 2 column, Vancouver Province writer Michael Smyth suggested the provincial government’s opposition to Enbridge is purely political: “With the pipeline so unpopular in B.C. right now, it seems [Premier Christy Clark] was determined to pick a fight, and hope that earns her points with B.C. voters.”

Clark’s BC Liberal party is trailing far behind the opposition New Democratic Party, which is generally expected to win the provincial election next May. The NDP’s 1991 to 2001 period in office, however, was rated a disaster by the mining industry.

B.C.’s environment minister denied any connection between the government’s Enbridge stance and his Pacific Booker decision. Lake told Canadian Press (in a story published by CBC), “It would send a very negative message to the investor community if we were to pick things to say ‘No’ to just to make a point.”

Speaking to ResourceClips, Pacific Booker’s Tornquist says, “We’re at a loss on how you can have a project with no significant environmental effects yet a certificate is denied. We have to look at our options here. It’s a bit early. The phone’s been ringing off the hook. On the federal side, I talked to the federal government yesterday [October 1] and they’re continuing with their process and their decisions are made independently.”

Stuart Bertrand, a Public Affairs Officer with B.C.’s Ministry of Environment, informs ResourceClips that the decision can’t be appealed. A judicial review may be possible if there are perceived violations of the environmental assessment act. Otherwise the company can submit a new application “with a new project design, as a decision has now been made that the current design is not acceptable.”

The Morrison proposal had proven and probable reserves of 1.37 billion pounds copper, 658,090 ounces gold and 10.05 million pounds molybdenum. A February 2009 feasibility study projected a conventional open pit with a 30,000-tonne-per-day mill for a capex of $516.68 million, with a pre-tax IRR of 20.05%, an NPV of $495.9 million at an 8% discount rate and payback in 4.2 years.

Pacific Booker shares opened and closed October 1 at $14.95, just five cents short of its 52-week high. But on October 2 they opened at $5.11 and closed at $4.95, a 52-week low.