THE ALASKA MINER MAGAZINE: Our magazine is published quarterly and delivered to both the members of the Alaska Miners Association and to key decision-makers and leaders in Alaska and beyond. Our goal is to educate, advocate, and lead our industry as one of the strongest, oldest, and most productive corporate citizens in Alaska. AMA’s mission is to promote responsible mineral development in Alaska. We provide key communication between our members, the industry, and policymakers in and out of Alaska. Each issue includes news and information important to our industry and our constituents.
The official magazine of the Alaska Miners Association and the mining industry in Alaska
AlaskaMiners.org
January 2019 Volume 47, Number 1
“Alaska Is Open For Business” INSIDE THIS ISSUE u Gov. Dunleavy on Alaska Mining u Preview of 2019 Legislature u Faces of Mining: Haynes Tormey u Projects Moving Forward
EXPECTATIONS. LIFTS WHAT OTHERS CAN’T.
Wade Gies Manager Fairbanks Branch
Clayton Dunn Sales and PSSR Fairbanks Branch
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When it comes to Donlin Gold, we agree with our neighbors in the Yukon-Kuskokwim region. That the project should be developed not only safely and responsibly, but also in a way that provides tangible benefits to everyone – both now and well into the future. And we’re working together to do just that.
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Executive Director’s Report
environmental, economic and geologic realties of mining in Alaska. This helps immensely to educate on the technical aspects associated with our industry, and we remain grateful to Bob for his time and his expertise speaking to this key audience. As AMA Lobbyist Paul Richards and I meet with leg- islators and distribute our positions, we’ll remind them of the reception we jointly sponsor with the Associated General Contractors and Alaska Trucking Association. This event, held at 5 p.m. Feb. 5 at the Baranof Hotel, draws a large crowd of lawmakers who appreciate the organizations’ teamwork. It is open to all members, so if you find yourself in Juneau, please join us. Outside of Juneau, and Alaska for that matter, we’ve got another top priority in putting together the Alaska Night Reception at the Association of Miner- al Exploration — British Columbia Roundup. We’ll host Alaska Night at 7 p.m. Jan. 30 at the Vancouver Convention Center. This is our opportunity to mar- ket Alaska’s mineral potential to global investors and parties interested in evaluating our state. Typically, we have hundreds of attendees, and I anticipate this year to be one of the most popular events yet. A huge thank you in advance to the many AMA members who sponsor this event and make it possible. At the home office, we’re starting on the retention and recruitment of AMA’s 2019 membership. Many of you choose to renew in the first half of the year, so you have received your membership renewal notices. Remember to renew by Jan. 31 to be included in the 2019 Alaska Miners Handbook and Service Directory. Don’t forget our Alaska Airlines Membership Re- cruitment Challenge — refer new members to AMA, ensure they or you notify us that you are the referral source, and Jennifer will account for who will ulti- mately win two round-trip tickets anywhere Alaska Airlines flies. I’d like to again thank and congratulate our 2018 winner, Jason Morrison, who brought in many of his company employees and also a number of contractors to AMA. In total, he signed up 12 new members in 2018, bringing in almost $7,000 in new membership revenue. We’re so grateful! Finally, I’m pleased to announce we’ve filled the AMA Staff with the hiring of a Projects Manager who will begin Jan. 21. I look forward to introducing this new team member to all of you soon. We have a lot to do. But we’re off to a great start together, and I’m looking forward to what lies ahead.
H appy New Year!
I hope all of you had a very Mer- ry Christmas and enjoyed the wonderful
holidays with your loved ones. Here we are, in 2019. I believe we are in store for a great year, in which we see big things happening in our industry. But, we have a lot to do to ensure victories and successes. Let’s reflect on some important happenings that brought us to what is sure to be a busy year. On Nov. 9, newly elected Governor of Alaska Mike Dunleavy stood before the Alaska Miners Association for his very first post-election news conference, and em- phatically declared that Alaska is open for business. Part of that, he noted, is supporting a healthy mining industry in Alaska. Immediately after the Convention and before the early January inauguration of the Governor, AMA’s State Oversight Committee compiled a document outlining priority issues for the mining industry. The document, composed of issues ranging from mineral tenure to maintaining a stable permitting process, was forwarded to the Dunleavy-Meyer transition team to ensure these issues were available for review as the administration was assembled and the legislative session approached. In preparation for the 31st Legislature to gavel in this month, our State Oversight Committee also rolled up its sleeves and significantly revised our annual Is- sues of Concern document. As a reminder, we use this document each year to communicate our major issues and positions to the Legislature and administration officials. The committee finalized this document just before Christmas, and we’ve begun to distribute it as the Legislators make their way to Juneau. (Note: A copy of this may be found on pages 30-31 of this issue) . The AMA staff came back from the holiday break ready to work on some big initiatives. First, we are working with the Council of Alaska Producers to hold “Mining 101” for new and returning legislators and their staff. In this primer, Bob Loeffler previews the
Deantha Crockett
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TABLE OF CONTENTS
2 Executive Director’s Report 4 Letter from President Mike Satre 8 Preview of Alaska Legislative Session 12 Ambler Funds Released 16 Faces of Mining: Haynes Tormey 30 2019 Issues of Concern 36 In Memoriam 44 Mining Business and Service Directory 60 Coming Events
The official magazine of the Alaska Miners Association and the mining industry in Alaska
ON THE COVER: Governor Michael J. Dunleavy takes the oath of office after being elected Alaska’s newest governor in November. Starting with his first press conference in November at the AMA annual convention, Gov. Dunleavy has been a strong supporter of resource development in general and Alaska mining in particular. See our exclusive interview with him on pages 21-23.
THIS PAGE: Tim Martin, Senior Corporate Metallurgist for Hecla, photographed in the mill at Greens Creek Mine when he was Chief Metallurgist at Greens Creek. Photo courtesy Hecla
The Alaska Miner is dedicated to those who work in and support the mining industry in Alaska, its commitment to the people, and resources of our state. Our magazine is published quarterly and delivered to both the members of the Alaska Miners Association and to key decision makers and leaders in Alaska and beyond. Our goal is to educate, advocate and lead our industry as one of the strongest, oldest and most productive corporate citizens in Alaska. AMA’s mission is to promote responsible mineral development in Alaska.
EDITORIAL CALENDAR
ALASKA MINERS ASSOCIATION STAFF
April 2019 Project Updates July 2019 Supporting Alaska Mining
Executive Director
Deantha Crockett Jennifer Luiten Darlene Strickland
Membership and Fundraising Director
October 2019 Anchorage Convention 2019 January 2019 Legislative and Season Preview
Bookkeeping and Membership
EXECUTIVE BOARD
BRANCH CHAIRMEN
Mike Satre President, Hecla Greens Creek Mining Co., Juneau Bill Jeffress First Vice President, SRK Consulting, Anchorage Bartly Kleven Second Vice President, Kinross–Fort Knox, Fairbanks Kim Aasand Treasurer, Aasand & Glore LLC., Anchorage
Ted Hawley Anchorage Roger Speer Denali Anna Atchison Fairbanks James Sage Haines Frank Bergstrom Juneau
Jim Duffield Kenai Blake Bogart Nome Andrew Spokely Ketchikan/
Prince of Wales
The Alaska Miner is published in partnership with the Alaska Miners Association by Fireweed Strategies LLC, 4849 Potter Crest Circle, Anchorage, AK 99516. We actively seek contributions from our members and the mining industry. For advertising information or news tips, call or email publisher Lee Leschper at 907-957-6025 or Lee.Leschper@FireweedStrategies.com.
January 2019
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President’s Message
Your support helped save Alaska’s future
“With both our state and federal governments standing ready to encourage responsible development of our mineral resources, we know that Alaska is primed for a Renaissance in the mining industry.”
BY MIKE SATRE Thank you!
we know that Alaska is primed for a Renaissance in the mining industry. But once again, that will not happen without your help. (We can’t just wait for the government to do it for us, right?) So, what must we do? Well, we all know there are many in Alaska who still believe the anti-mining rhetoric spewed by those opposed to our industry. These same people may be the ones who sign the next petition to place another expensive, unnecessary, and harmful initiative on the statewide ballot in 2020. To defend against this and make sure Alaska stays open for business, we must: Accept nothing less than the highest caliber of safety and environmental performance. We know that our mines, large and small, are some of the best in the world, and that Alaskans have a generally favorable opinion of them. Making sure that we operate them to the highest safety and environmental performance standards deprives our detractors of ammunition and provides our supporters with great examples of how we “do it right in Alaska.” Alaskan miners should have no qualms in making sure their colleagues meet this high bar and this is a case where peer pressure is good. If someone in our industry isn’t holding up their end of the bargain, we shouldn’t hesitate to point it out and help them improve.
A big, heartfelt thanks to all 171,111 Alaskans who voted no on Ballot Measure 1 in November. Without question, if that initiative had passed, our economy would be in shatters and our Alaskan way of life would have been destroyed. But it didn’t. With your dedicated efforts to educate your family, friends and neighbors; with your help in proudly displaying campaign signs, bumper stickers and pins; and our collective refusal to believe the anti-development and anti-mining rhetoric funded by outside interests, we won this battle. It took every one of you to make that happen, and the Alaska Miners Association will be forever grateful for your hard work. Thank you. With the efforts that the mining community put into fighting the ballot measure and saving our economy, it is no wonder that newly elected Governor Dunleavy made his first post-election public appearance in front of our convention and declared that “Alaska is open for business.” We couldn’t agree more! With both our state and federal governments standing ready to encourage responsible development of our mineral resources,
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by the mines or supported by their employees. Maintaining our position as a valued community partner and employer of choice is something we should all strive for, and is ultimately our best long term defense against our critics. * * * The Alaska Miners Association is primed and ready to work on all three of these items in 2019. Our wonderful and dedicated staff works tirelessly on your behalf, and as we enter this New Year, please consider what you can do to help our industry thrive and keep our Alaska open for business. Thank you and have a safe and prosperous New Year!
Ensure regulatory reform eliminates bureaucratic hurdles but not environmental standards. There is no question that our state regulatory system needs reform and efficiencies. One need only look at the problems with mineral tenure that the AMA is working diligently on. However, we must be careful that our efforts to introduce efficiencies do not lower the standards that Alaskans depend on to protect our environment. Meeting rigorous, science-based standards in our permits is something that we all can agree on and we should be proud that these standards are some of the toughest in the world. That being said, the AMA will push our state and federal agencies to meet that commitment with efficient and timely issuance of these permits to foster investment and development. Invest in education, workforce development and community partnerships. Alaskan mines, large and small, are important community members and make immense economic and social contributions. We must continue to build on this so that our community members know how and why we mine, have the skills to work in our operations, and benefit from the programs funded
Mike Satre AMA President
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January 2019
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State, DNR remain committed to safety in Donlin project
A s Commissioner of the Alas- ka Department of Natural Re- sources (DNR), I take very se- riously my department’s responsibility to “develop, conserve and maximize the use of Alaska’s natural resources con- sistent with the public interest.”
grayling in local waters, reclamation ef- forts achieved their goal of seeing 800- 1,400 grayling over 8 inches long at Fort Knox’s Water Supply Reservoir in just a few years. Eagles, moose, mink, otters, loons and many other types of wildlife share the ecology of this area.
Alaskans often ask how we can pro- tect the environment throughout a mine’s life cycle, and especially about long-term, post-closure water man- agement. Our understanding of and commitment to addressing these requirements has grown significantly in recent decades. We fully recognize the State must be able to mitigate risks and guarantee mines like Donlin will be taken care of, regardless of any ownership changes. We take this responsibility very seriously. The Reclamation and Clo- sure Plan (Plan) prepared by Donlin Gold (dnr.alaska. gov/mlw/mining/largemine/donlin/archive) describes long-term water management and treatment. In coordination with the Alaska Department of En- vironmental Conservation, DNR conducted a thorough review to ensure the proposal meets Alaska’s strin- gent water quality standards to protect fish and human health. A major part of the plan includes Donlin Gold’s fi- nancial assurance plan, required before operations can begin, describing specific components underlying the estimate of hundreds of millions of dollars in financial assurance needs. It relies on conservative estimates of the costs for reclamation, closure, care and mainte- nance. As the mine progressed through development and operations the plan would be subject to continuous state review and updates by Donlin Gold when warranted, with substantial changes subject to public review and comment, including concurrence from both TKC and Calista. Overall, I’ve been very impressed by the rigor of the baseline data collection and analyses conducted for this project. From tailings management to mer- cury and cyanide risks, to potential impacts on fish and subsistence resources, the project has undergone a high level of scrutiny. Donlin Gold has never shied away from tackling difficult questions, often going beyond legal and reg- ulatory requirements. I’ve also seen the extensive and
Calista Corporation and The Kuskok- wim Corporation (TKC) have similar re- sponsibilities to their shareholders to develop their land responsibly. We share the same goal of reviewing project plans to ensure the Donlin Gold project meets the state’s strict regulations and can operate safely. DNR coordinates the State of Alaska’s environ- mental and engineering oversight as Donlin Gold, one of the world’s largest known gold deposits, finishes permitting and moves toward mine construction, op- eration, and ultimately reclamation and closure. Through the Large Mine Permitting Process, ex- perienced state agency staff work together and with local and federal counterparts on the key issues, con- ducting a thorough environmental review. The State actively contributed to development of the Donlin Gold Environmental Impact Statement led by the U.S. Army Corps of Engineers, and commented on subsistence, water quality, tailings and fisheries issues. State regulators brought significant expertise, permitting responsibilities and accountability to that federal review process. Does this approach work for Alaska? We have five major metal mining projects that have operated safe- ly and in an environmentally-sound manner for de- cades. Certainly, much of this is due to responsible ownership—backed by the experience, knowledge and dedication of our mining program staff, who pro- vide thorough and independent oversight. Residents of the Yukon-Kuskokwim region won- dering how well the state program works can con- sider Northwest Alaska’s experience with Red Dog, Interior’s experience with Fort Knox and Pogo, and Southeast’s experience with Kensington and Greens Creek. These mines have benefited their regions’ eco- nomic and environmental well-being alike. Fort Knox, at the headwaters of Yukon River tributaries, has received awards for its reclamation efforts. While pre-mine studies documented the absence of Arctic
CORRI A. FEIGE
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January 2019
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Photos Courtesy Alaska Journal of Commerce and Donlin Gold
meaningful public outreach throughout the Y-K region by Donlin Gold and the agen- cies. The permitting process creates a solid foundation that can reassure the public, Calista and TKC the project will be con- structed, operated, and closed as promised. DNR is committed to fulfilling its re- sponsibility to develop Alaska’s natural re- sources with integrity for the good of Alas- ka, and we have high expectations of Donlin Gold. The State will fulfill its regulatory re- sponsibilities to review and evaluate permit applications and enforce the terms and con- ditions of issued authorizations. With continued input from the local communities, TKC, Calista and others— and continued oversight by DNR and other agencies—I believe Donlin Gold can develop this world-class resource safely and for the benefit of the people of the region for years to come. Corri A. Feige is a geophysicist and engineer, and serves as Commissioner of the Alaska Department of Natural Resources
ith the release of the ROD and receipt of major federal permits, Donlin Gold took a big step forard. But there’s still a lot of ork to do before the project becomes a mine. Our goal is to be a leading example of responsible, safe resource development that benefits our Native corporation partners and their shareholders. BIG STEP FOR RD
January 2019
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Water rights, regulation of mining in spotlight Legislative Preview
Important priority: Ensure regulatory agencies staffed
adequate staffing in the agencies to achieve Gover- nor Dunleavy’s goals of increasing economic growth partly through mining. One particularly important function of the DNR is the dam safety review that is done in the Division of Min- ing, Land and Water. The division has two staff people assigned to this with the program lead, Charlie Cobb, P.E., a 20-year veteran in the field. If any part of a mine proposal attracts public scrutiny, it is the impoundment dams that hold mine tailings and water. These must have sound design and engineering to prevent seepage or even a failure, and it’s the responsibility of the DNR to make sure the design and engineering are up to par. All state agencies will be under intense budget scrutiny this year but it is at least fortunate that the parts of DNR and DEC important to mining are less dependent on state general fund revenue. They are more self-supporting through program receipts like fees, and in the case of DNR, income from sales of materials like gravel. DNR’s Division of Mining, Land and Water , for example, generated nearly $27.3 mil- lion in revenues last year, much of it through mining claim rentals, royalties and sales of gravel. Although Alaska’s constitution bans dedicated rev- enues the income from certain activities, like mining rentals and material sales, can still be “designated” by statute to support certain functions, including regulatory work. Although this is no guarantee (the Legislature has the final say in appropriations), law- makers generally respect the revenue designations. Meanwhile, it’s still early to know what mining-re- lated bills will have priority in the Resources commit- tees of the state House and Senate. One proposal on the table is a bill by Sen. Chris Birch, new chair of the Senate Resources, that would curtail the ability of the courts to in effect rewrite a ballot proposition created through a citizen initiative. Just this happened in the case of Ballot Measure 1, the so-called salmon initia- tive, that appeared in altered form on the November, 2018 general election ballot. The ballot measure had been challenged by the state administration as an unconstitutional appropri- ation of state resources and the Supreme Court struck
BY TIM BRADNER
For The Alaska Miner Alaska’s reputation as a mining-friendly state took a step up when Mike Dunleavy was elected governor and took office in early December, and in mid-Janu- ary when a new, fairly business-friendly Legislature took office in Juneau, the state capital. Dunleavy makes no bones about this support for mining. He grew up in Pennsylvania coal country and, in Alaska, three of his daughters work at the Red Dog Mine near Kotzebue, a region where the new governor worked in education. The timing is fortunate. Alaska may now be on the cusp of a burst of new minerals development with the big Donlin Gold project having received its feder- al permits and Pebble, another potential large mine, moving through the federal regulatory process. The state’s pro-mining stance is important be- cause both projects, which could employ thousands of people in high-paying jobs, also need state regulatory approvals. Alaska has stringent mine approval pro- cedures, particularly for its mine dam safety permit, and state agency staffs need support from the gover- nor and Legislature. An important priority for the industry is ensuring state regulatory agencies are adequately staffed to work on permits and authorizations, not only in an efficient manner but also to be thorough so the au- thorization is not found to be defective in litigation by a third party group. Although the state overall is facing continuing budget deficits the agencies important to mining, like the Departments of Natural Resources, Fish & Game, and Environmental Conservation, are already lean after several years of budget cuts. This should be apparent, but it is still important that legislators and the governor be reminded of the importance of
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down parts of the proposition but also allowed other parts to move forward, and to appear on the ballot. Luckily BM 1 was defeated but Birch was disturbed by the precedent of the court in effect writing law by ap- proving language that was different than what sign- ers of petitions for the measure had approved. “No matter what your position was on Ballot Mea- sure 1, pro or con, it is not good for the court to be able to do this,” Birch said. His bill would require that the Lieutenant Governor to disqualify a ballot measure that has been changed, even in part, by the courts. Meanwhile, one important issue affecting mining that needs to be dealt with in legislation is to place sideboards on the ability of third party groups to file applications for in-stream flow reservations near po- tential mining projects to complicate the ability of a project to secure water for processing. Under current state law government agencies, but also any individual or group, can file for an in-stream flow reservation, in essence a right to maintain a cer- tain amount of flow of water in a stream. This would be important, for example, to ensure there is enough water sufficient for salmon or other species of fish , and that it would not be diverted to some other use, such as for an industrial process.
Former state Natural Resources commissioner Andy Mack, an attorney, was keenly interested in this. “The important word in the law is that water rights can go to a ‘person,’ which can mean a state or feder- al agency, an individual or a non-resident nonprofit,” Mack said. The concern is that assignment of water is a form of property right, and the state needs to tighten up its procedures for awarding these, whether in-stream flow water reservations or water allocations, under a different permit, for a water use such as in mining. Mack was particularly concerned with in-stream flow reservations obtained by federal agencies, which means the federal government could obtain property rights to water that should be under state management. Alaska law also awards these rights on a “first in time, first in right” basis, which opens the potential, in theory, that nongovernmental organizations could file for water rights as a strategy to impede a develop- ment project. The issue has wider implications than just mining, of course. Development of hydroelectric facilities, oil and gas development, and other projects could be affected. But mines being planned are typi- cally a target for nongovernmental organizations. “Water use is very important. It’s nearly impos- sible to do a large project in Alaska without touching
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January 2019
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Alaska has some of the world’s most stringent standards to protect the state’s waterways and fish like this Kenai river silver salmon.
water,” said Brent Goodrum, Deputy Commissioner for the Department of Natural Resources and previous Director of the Division of Mining, Land and Water. Typically agencies like the Department of Fish & Game and U.S. Fish & Wildlife Service use in-stream flow reservations as part of their management re- sponsibility to protect wildlife, but these are actions grounded in science, not politics. The wake-up call for the state in how the water rights allocations could be used to block development came when the Nature Conservancy, an environmen- tal organization, filed for in-stream flow reservations in waters downstream from the proposed Pebble project near Iliamna, southwest of Anchorage. DNR was obligated to grant the in-stream flow rights and they are still held by the Nature Conservancy. Similarly, the U.S. Fish & Wildlife Service has filed several applications for in-stream flow reservations in the coastal plain of the Arctic National Wildlife Refuge, where oil exploration is now planned. Those applica- tions have not been granted but they are on file, Good- rum said, but they put the USF&W first in line for any appropriation of water rights in the refuge. It’s unknown whether the Nature Conservancy will try use its water rights near Pebble to impede that project or the USF&W to use any rights it may obtain to complicate oil and gas development in the coast- al plain. In ANWR, water is needed for ice and snow roads, among other things. Just the potential for abuse and problems, however, were enough to motivate DNR to attempt legislation
several years ago to establish some guidelines. The proposal was rolled into a DNR permitting “omnibus” bill, House Bill 77, that included legislative fixes for a wide range of land and permitting problems, most of them technical. While the water rights allocations were the most controversial of these there were enough concerns raised over even the simple technical-fix proposals that the bill bogged down and the state administra- tion abandoned the original proposal at the conclu- sion of the two year legislative session. Given the pro-mining stance of Gov. Mike Dun- leavy and a Legislature that is pro-business there may be an effort this year to revisit the still appropri- ate and necessary statutory changes to resolve these significant problems, including the more stringent guidelines for in-stream flow reservations. In-stream flow rights shouldn’t be confused with DNR’s long-standing grants of temporary and perma- nent water rights, temporary rights being traditionally granted by permit for placer mines, as an example, and permanent rights to property owners. Temporary water use authorizations can be granted for up to five years. To date there has been no claim that water has been diverted or withheld in a way that would impede water volumes in downstream, but the claim will probably be made. Procedurally, the holder of an in- stream flow right would notify the DNR that a flow of water has been adversely affected. It’s unclear just how conflicts will be resolved. Water rights and uses are a touchy issue in many
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states, and in many western continental U.S. states because of the scarcity of water. In Alaska water is not scarce but there are complications and costs in treating water after it is used so that it can be returned to the natural environment. In many other states this is less a problem because used wa- ter can be recycled or used for other purposes, like agriculture, while Alaska’s strict water quality standards typically require extensive treatment so that water returned to the environment is pure. To accomplish this DNR works closely with other state agencies including the Department of Environmental Conser- vation, which has primary authority over water quality, and the Department of Fish and Game, which must protect aquatic and terrestrial wildlife. During his tenure, Mack argued the time to clarify issues around water rights is before conflicts develop. Other states have well-developed and staffed regulatory agencies focused on wa- ter rights allocation and conflict resolution, and while this may be premature for Alaska the current system of having this work done within by the Division of Mining, Land and Water may need some attention to ensure there are adequate resources, Mack said. Fundamentally, Mack believed water rights should be held by a state agency, either the Department of Fish and Game or Natural Resources. A state agency is better equipped, Mack said, to ensure there is sufficient water flow to support fish than an out-of-state nonprofit, he said.
Contributed Photos Charlie Cobb leads the Alaska DNR’s Dam Safety program.
Tim Bradner is an Anchorage-based natural resources writer and is copublisher of the Alaska Legislative Digest
For over a decade, our goal has been to responsibly design a project with minimal impact, in partnership with the people of the Bristol Bay region, and which meets Alaska’s highest environmental standards. We have a new plan — a better plan — to share with you. A new path forward.
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January 2019
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First Ambler prospect set for permitting process
Trilogy Metals’ Arctic site holds untapped potential
BY ELWOOD BREHMER
For The Alaska Miner More than 60 years after it was initially prospected, Trilogy Metals is almost ready to apply for the major environmental permits it will need for the first project in one of Alaska’s premier areas with mining potential. Trilogy Metals Inc. CEO Rick Van Nieuwenhuyse said that the company has started pre-permitting work with the U.S. Army Corps of Engineers for its Arctic copper, zinc and precious metals prospect in advance of an environmental impact statement that should be initiated in the first half of 2019. The Clean Water Act Section 404 wetlands fill per- mit from the Corps — large enough to trigger an EIS — is likely the only federal permit the mine will need, Van Nieuwenhuyse said, noting the Environmental Protection Agency has oversight of the water and air quality permits issued by the State of Alaska. The Arctic prospect is roughly in the middle of the extensive Ambler mining district. Stretching for about 75 miles along the southern flank of the Brooks Range, there are more than 30 known metal deposits in the district, but its remoteness has precluded significant development. The Alaska Industrial Development and Export Authority is leading development of the Ambler Ac- cess project, a 211-mile industrial road to spanning the length of the large the mining district. The Bureau of Land Management is writing a sep- arate EIS for the road. BLM initially set a March 2019 target to release the Ambler road draft EIS, but AIDEA spokesman Karsten Rodvik said the new goal is to have the draft out for public review in about August. Rodvik said the consulting firm HDR Inc. is work- ing with BLM on the Ambler EIS and is under contract with AIDEA, so as of this writing there was work for the company do to despite the partial government shutdown. The National Park Service is also preparing an envi- ronmental and economic analysis that is expected to be out this spring.
“This project is in the middle of nowhere and this road has been studied, discussed, many, many, many times,” Van Nieuwenhuyse said in an October presen- tation. AIDEA estimates constructing the most basic grav- el road would cost between $305 and $346 million. It would be financed by the authority with bonds that would be paid back through tolls paid by Trilogy Met- als and any other companies that would develop one of the other prospects in the Ambler mining district. The plan is very similar to the Red Dog mine-De- Long Mountain Transportation System — also an AIDEA-owned and financed mine access road — in far Northwest Alaska that development proponents have cited as a model for other isolated resource prospects in the road-scarce state. At its core, the Arctic prospect is about as good as undeveloped metal deposits come these days, accord- ing to Van Nieuwenhuyse. With just more than 43 million metric tons of probable reserves averaging 2.3 percent copper, 3.2 percent zinc and smaller amounts of lead, gold and silver, it’s “about 10 times the aver- Photos courtesy Trilogy Metals Inc. Norm Tickett, at the Trilogy project, one of several shareholders that will benefit from the Ambler Road.
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corporation, which owns land at Bornite. NANA can re- ceive up to a 2.5 percent royalty on the ore concentrates produced from Trilogy’s mines under the partnership, according to a company presentation. Another open-pit prospect, Bornite holds about 125 million metric tons of reserves with about 1 percent cop- per, but there is potential for an underground mine with 58 million tons of 3 percent copper, he noted. Bornite was also discovered in the 1950s by a pros- pector well known in mining circles named Riney Berg, according to Van Nieuwenhuyse, who offered a brief anecdote about his work. “He was out there looking for uranium; he had worked at the Kennecott mine so he knew what copper minerals looked like, found some on the surface, did some trenching and got the Kennecott guys all excited. They eventually wrote him a check for $6 million,” he said, noting the value of that much money roughly 60 years ago. “Riney, being a good prospector, spent it all on prospecting. There’s probably a dozen different pros- pects in Northern Alaska that have his name on it.” Trilogy is also finishing a study to see if ore sorting systems used by recycling companies can be applied in mining Arctic. The process uses sensors similar to mag- netic resonance technology that “recognize what rocks have copper, silver, lead and what rocks don’t,” Van Nieuwenhuyse said. “If we could just mine the stuff we want we could get 3 percent copper, not 2 percent,” he said.
age grade being mined in open pit copper mines today,” he said. “It’s not a huge mine, but it produces metal above its weight class because of the grade — 160 million pounds of copper annually, 200 million pounds of zinc, 33 mil- lion pounds of lead, over 3 million ounces of silver and 30,000 ounces of gold.” Those numbers are based on a short, 12-year mine life. According a pre-feasibility study released in Febru- ary, Arctic would generate costs of $911 million to build and operate over that time but with roughly $450 mil- lion in annual free cash flow would have just a two-year payback. “We don’t need higher metal prices to make this thing work,” Van Nieuwenhuyse said. “We just need a road.” The mill and other facilities at Arctic could also be used for Trilogy’s other, larger but less explored Bor- nite copper and cobalt prospect about 20 miles to the southwest or other undeveloped prospects in the area, he added. The company currently estimates Bornite contains upwards of 6 billion pounds of copper, a figure that could grow this coming winter when the results from this year’s drilling campaign. Trilogy has spent $122 million exploring its Alaska prospects overall. The company also has a partnership with NANA Regional Corp., the Northwest Alaska Native regional
January 2019
The Alaska Miner
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Donlin receives approval of key permits for project Contributed Photo
assurance to ensure adequate funds are available to cover all costs in the highly unlikely event the State of Alaska would have to assume responsibili- ty for closure and long-term care of the site. Prior to the start of construction, Donlin Gold will provide a $322 million bond to cover both site reclamation costs and establish an interest-bear- ing trust fund to pay for water management and treatment. The bond total is based on a very de- tailed engineering analysis that has been reviewed by ADNR and ADEC mining team staff as well as Calista and TKC. ADNR, with concurrence from ADEC’s Division of Water approved the Plan and cost estimate, following January 2018 hearings in Aniak, Bethel and Anchorage, an additional August 2018 public hearing in Bethel and an extended public comment period. As required by State law, Donlin Gold proposes to remove all buildings and equipment, aside from the water management and treatment facilities,
Waste management, reclamation plan get OK SPECIAL TO THE ALASKA MINER Donlin Gold has received two important permit decisions. On Jan. 18, the project was issued its Waste Management permit from the Alaska Department of Environmental Conservation (ADEC), which de- tails how solid, liquid and hazardous waste will be handled, and the Reclamation Plan (Plan) approv- al, including Financial Assurance requirements, from the Alaska Department of Natural Resources (ADNR), which approves how the company plans to close the mine and establishes a financial guar- antee for reclamation, mitigation and long-term care and maintenance of the site including water management and treatment. An integral part of the Plan is the financial
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tees money is available to the State if the reclama- tion work is not completed to the satisfaction of the Department of Natural Resources. The State can use the bond funds to hire contrac- tors to complete the work at no cost to the State or land owners. The amount needed is reviewed on a regular basis and updated to reflect current condi- tions and costs. When mine closure is complete, the pit will be allowed to fill with water and become a lake over time (approximately 52 years). The water will be monitored on an ongoing basis and treated to meet water-quality standards before it can be discharged. Donlin Gold and the State of Alaska estimate the cost to monitor and treat the water to be just under $4 million annually. To cover the cost, Donlin Gold proposes to establish a trust fund and deposit $109 million during mine operations, which is in addition to the $240 million that will cover the first phase of reclamation. Just like Alaska’s Permanent Fund, the original $109 million deposit will remain intact to provide annual earnings that will pay for water monitoring, treatment and facility maintenance. Donlin Gold’s investments will be evaluated every five years to en- sure that there are sufficient funds to cover all costs. Regulators will be able to adjust the amount invested to account for project changes and conditions. Responsible environmental stewardship is a pri- ority for the mining industry. Donlin Gold’s plan for reclamation goes beyond permitting requirements to ensure the region’s ecosystem remains healthy long after the mine closes. cial assurance through the establishment of a trust fund that will exceed $100 million. The Donlin Gold project is in Western Alaska in the Yukon Kuskokwim region, 280 miles from An- chorage, 150 miles from Bethel and 60 miles from Aniak. Donlin Gold is a high-grade gold deposit with approximately 39 million ounces of gold in the measured and indicated category at an aver- age grade of 2.24 grams per tonne. The proposed open pit mine is estimated to have a life of 27-plus years. Donlin Gold is equally owned by NOVAGOLD Resources Alaska, Inc. and Barrick Gold US, Inc. They are wholly-owned subsidiaries of NOVAGOLD RESOURCES Inc. and Barrick Gold Corporation, respectively. For more information about Donlin Gold, visit the website at donlingold.com
The reclamation process When mining ends, the law requires operators to remove all structures, restore the land to its approx- imate original contour as well as monitor and treat water for as long as necessary. Donlin Gold has submitted a plan to the State of Alaska for review and approval that details how it will close the mine. Under the State requirements, Donlin Gold has estimated the total costs of all the proposed activities, including long-term water management and treatment. This estimate provides the basis for the financial assurance that Donlin Gold must provide to the State prior to starting operations. Donlin Gold is committed to the safety of water in the YK region. The financial assurance will provide more than sufficient funding for a water-treatment program at the mine site for many generations after the mine has closed. The reclamation process is split into two phases: 1. Closure and reclamation (0-6 years after opera- tions end) 2. Long-term care and maintenance, in- cluding water management and monitoring (6 years on) and, ultimately, water treatment (when needed after an estimated 52 years). Donlin Gold and the State estimate the cost of the closure phase to be approximately $240 million. This includes removal of all buildings and equipment, de- commissioning the pipeline and re-contouring and seeding the land. Prior to construction, Donlin Gold will provide a bond, which is a financial instrument that guaran- when the mine closes. Water from the tailings storage facility will be transferred into the pit, which will eventually become a lake. The tailings storage facility, along with the waste rock facili- ty and other disturbed areas, will be reclaimed by being re-contoured, covered with soil as needed and vegetated. It will take an estimated six years to close the mine and complete reclamation. After reclamation and closure, water in the pit lake will be monitored on an ongoing basis and treated to water-quality standards before any releases, which Donlin Gold estimates will begin approximately 52 years after mine operations cease. Donlin Gold and the State estimate that it will cost just under $4 million a year to monitor and treat the water and maintain the treatment plant. All of these costs are accounted for in the finan-
January 2019
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In each issue of The Alaska Miner, we profile an active miner and member of AMA. In this issue, Haynes Tormey discusses his unique perspective on mining. Faces of Mining
BY LEE LESCHPER Haynes Tormey defies stereotypes. Haynes Tormey Haines Sportsman’s Association
Local forums are a way to engage the local population on mining technologies and the different types of mining. And to share what is in place to help protect our local interests. “I joined AMA be-
And in Southeast Alaska, he might just be creating the vision of how Alaska miners and other industries can begin to work together for a better future. “I grew up in mining. I was raised in Haines and Juneau, and when my father moved away, I finished high school there solo and working at Les Schwab (a Juneau tire store). “I was struggling in school, so I applied to Greens Creek at 17 and started work there two weeks past graduation. I started working underground and was soon making more than my teachers. It saved me and set me on a career that I never knew where it would go. I ended up leaving Greens Creek, joining the operating engineers, specializing in crushing. So, I was still under MSHA (mine safety training).” He laughed and paused in the interview. “As we’re talking right now, I’m working on top of a rock crusher!” Haynes, 37, has dedicated himself to bridging the sometimes-vast gap between Alaska industries. He is passionate about the importance of indus- tries like mining providing essential careers and op- portunities in small town Alaska. “I moved back home to Haines, and there were no living wage jobs here. I was picking up with the State to make ends meet. And I worked as a gillnet- ter for three years.” Working with commercial fishermen was an eye-opening experience for him. “It blew me away the amount of misinformation being spewed around the docks. I found myself be- coming a champion for both industries. Industry in general all need to support teach other. “We have the Constantine development here right now, in the far stages of exploration. There’s some lo- cal opposition and I found myself in a unique position. “Half my family is Tlingit, and half is white. Half are fishermen and the other half are miners. I have lived in both worlds and figured out that with local effort my voice is best raised to let people know that I’ve walked on both sides and that mining is import- ant to both the state and our local economy. And the scare tactics used continuously to blame mining for the slow demise of commercial fish stocks is asinine. “I joined the mining steering committee as a rep- resentative for the Haines Sportsman’s Association.
cause of meetings here, just a great bunch of well-rounded people.” He says AMA provides a critical role in the state, beyond just mining. “I think it is the close organization and relation- ships with people that appreciate the industry. The chance to get together for weekly barbecues and cof- fee, to discuss not just mining topics. AMA has been pretty charitable toward local organizations and the community. It has a good reputation here. “I’m on this personal quest to try and help indus- try grown in this town which has been stagnant for 25 years. It led me to start my own business, Haines Industrial Supply. We have a rock crusher inside the shop on one side and the other side is commercial fishing boat storage.” “Talk about some interesting conversations in- side the store around coffee! “We are all trying to do the same things—live the American dream, raise our kids. It’s been an inter- esting ride. He is infectiously optimistic. “We have got some good opportunities statewide. We have a great new governor in place who knows the importance of mining. Haines has historically been very divided and has tipped more liberal left recently. “The volume of the rhetoric has turned up and longtime beliefs are being challenged. I truly believe that the current regulations in place are sufficient to protect the local environment. That doesn’t mean we can’t constantly refine and change to protect them, but we don’t want to go too far overboard either. “One thing I’ve constantly said is we have a really good opportunity here to build a 21st Century mine, with strategies and technologies that probably not been done elsewhere, all in one package deal. That challenge alone is worth the risk, but it is a strong situation. “Of the local fishermen, 50 percent support the project. Even though salmon are constantly used as a
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he added. “Safety is the biggest thing. I was led down a road toward civil contracting, highway work and rock quarries. We have a huge influx of baby boomers leaving, so I took a line of work that is dirty and loud, that gave me opportunities at a young age. I soon had crews twice my age because I was there, took an interest and had boots on the ground.” Learning a diverse set of skills is also invaluable, he added. “Working on a crew with contractors, you have to be a little of everything—electric, diesel, aggregate. Hydrology—as well as everything the federal gov- ernment throws at you. MSHA regulations, written in blood, emissions. “But it’s an excellent way to a very hands-on ca- reer. It’s very rewarding.” It’s not always easy, he added, admitting that he’s had to learn some lessons the hard way. “I enjoy fluid power, hydrology, the nuts and bolts of engineering; everything required for mining is engineering, systems working in tandem to produce results. I’ve always liked working with equipment— understanding equipment and its capabilities, and what makes it tick. “I think I’m here to stay, to help the community. I started my business here to support industry.” Haines was lacking a good option for equipment and tool, so he decided to provide one. “What we’re trying to do here is enable the com- munity to have the resources, equipment rental, a shop for repairs that can support industries that bring in a living wage. That’s a big part of raising a family.” He has an optimistic vision for Alaska mining. “It all depends on the growth of the population of our planet. Humans consume and modern technolo- gy that tries to reduce the footprint of human beings requires precious metals. I see that as long as we have populations increasing, we will have mining.” He reflects that the future will require innovative thinking and taking some risks. “I took a huge risk,” he reflects. “I invested my life savings based on how I want to support a com- munity. I could lose everything. This is a small town of 2,300 people. It takes industry to support it. “Constantine is one of those projects that is a fairy tale project.” Large deposits of precious metals would give the mine a unique opportunity, he added. “The other thing that is great is 30 percent of the ore body, that’s 30 percent that’s directly out of the tailing pile immediately. The footprint of this project has the potential to be the smallest footprint of any mine in Alaska.”
weapon against mining, we also have a 14,000-acre timber sale pending this spring. If you log, you may kill salmon. If you build roads, you may kill salmon. Those are just broad scare tactics. “It’s forgotten that we have the Chilkat Eagle Preserve here, which was created by a cooperative agreement to create a local conservancy between the Haines Sportsman’s Association and the Village of Klukwan. We had this bill introduced and passed, to create an operating agreement for this resource to protect the natural beauty and also have the right to extract resources. “It shows a good example of how locals can get together and plan their future out collectively.” The agreement establishing the preserve provides in detail what can and can’t be done, he said. “It also clearly states that the surrounding area will continue in historic use. Here, that’s mining, going back to the Porcupine Mine in the 1800s. That’s what drove population here. Fort Seward was built here to protect the border over mining disputes with Canada. “It all ties in together.” Mining has been in his family for generations. “I was literally raised off mining dollars. My fa - ther has been at Greens Creek 22 years and once worked at Fort Knox and did the mill at Red Dog. My sister, before becoming a model, worked at Greens Creek. My wife’s family all worked at Greens Creek. And my cousin works underground, as well as an- other uncle.” His experience is a good lesson for future miners, Haynes Tormey in his Haines Industrial shop. He is an outspoken advocate for the potential colloboration of mining and fishing interests in Southeast Alaska. Contributed Photos
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