Archive for October, 2011

By Bob Bogart

In an Oct 26 news release, Emgold has finally admitted what the “invisible hand of the market” and many other community members are saying about the reopening of the Idaho Maryland Mine project.  Emgold is asking the City of Grass Valley to put the project on hold for 60 – 90 days and possibly drop the project altogether because Emgold cannot raise any more money to fund the revised DEIR process now pending before the City of Grass Valley.

A severely underfunded company, Emgold cannot afford to spend money on all the promises it has been making to lure Grass Valley into agreeing to this project.  The risks of Grass Valley taxpayers being stuck with clean-up costs left by a bankrupt mining company are all too great and all too familiar.

Concerned community members have been pointing out that even if Emgold can scrape together the money for the DEIR, how will they then raise $200M – $300M to build the mine and the ceramics plant and the aggregate factory?  If Emgold cannot raise $1M how will they raise 200x – 300x that amount?  And will gold mine investors want to invest extra money on items that have nothing to do with the gold (ceramics plant, aggregate factory, mitigation measures)?

Having no income, Emgold must sell stock in order to finance its operations.  Why is it so hard to get investors to see the “gold at the end of the tunnel?” you might ask.  Emgold surely sees it, but no other investors or companies can see it.  Clearly these potential investors have no faith in Emgold, which, based on the evidence (its stock has lost > 97% of its value while gold has risen by 260% since 2006 ), is an accurate assessment.  Further, no experienced gold mining companies have tried to purchase control of Emgold in order to get at the Idaho Maryland gold, which would be cheap at present valuations of Emgold.  Another sign of lack of faith in mining at the Idaho Maryland mine.

In case you missed the Oct 26 release from Emgold, here are two key points.

First, Emgold is proposing another stock sale at 10 cents per share, proceeds of which “… will be primarily used for exploration activity on the Company’s Buckskin Rawhide Property in Nevada, property acquisition in Nevada, exploration of its Stewart Property in British Columbia, and general working capital.”  Note that none of this money is targeted at reopening the Idaho Maryland Mine.

Second, “IMMC will request that the City of Grass Valley put the Idaho-Maryland Project temporarily on hold… In the event that insufficient funds can be raised to move the Idaho-Maryland Project forward …  Emgold may have to delay the project until market conditions improve or, as a worst case, drop the Project entirely to focus on the other quality assets the Company currently has in its portfolio….” (Reference:  Go to www.emgold.com and click News Releases).

“The market’s” judgment is that despite the bubble-like fervor surrounding gold, reopening the Idaho Maryland mine surrounded by homes, businesses, and medical facilities is not worth pursuing.  Grass Valley must wake up and stop wasting time and energy on a project that has already been judged a loser.  Emgold has no money.  Investors are saying no to Emgold.  Emgold has never run a mine.  No other mines anywhere in the world melt their waste into tiles.  No senior mining companies seem interested in Emgold or IMM.  Lots of No’s.  Grass Valley: face the reality that Emgold is not capable of opening or operating the Idaho Maryland Mine.  Let’s join “the market” and just say NO to Emgold ourselves.  Let’s move on to more promising projects that will provide a 21st century economy for Grass Valley.

Bob Bogart lives in Nevada City.

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By Mark Frye, Nevada City

There’s an old adage that “the best defense is a good offense.”

Emgold, the Canadian company that proposes reopening the Idaho Maryland Mine near downtown Grass Valley has employed this Machiavellian principle in attacking local residents raising legitimate questions about Emgold’s speculative and high-risk scheme.

In recent weeks, Emgold and its supporters have dismissed hundreds of residents’ concerns as “fear mongering,” “scare tactics” and “distortions.” By going on the attack, however, Emgold feeds speculation that it has something to hide.

Emgold’s decision to attack local residents is predictable, but disappointing. Given the many serious questions about the mine and whether Emgold can deliver on its promises, Emgold should be addressing the legitimate concerns of local taxpayers and property and business owners – not dismissing them with overheated rhetoric and name-calling.

For starters, Emgold (which has never operated a gold mine anywhere in the world) could reassure locals that it can achieve financial stability. Currently, the signs aren’t good: despite record high prices for gold, Emgold’s stock has sunk 98% in the last four years, and it currently trades for less than 10 cents per share.

Worse still, Emgold has admitted that it is out of money, deep in debt and its executives are working without pay. In its latest financial report Emgold stated that as of June 30, 2011 it was almost $250,000 in debt, faced $820,000 in outstanding bills, wasn’t paying its executives and didn’t have sufficient cash on hand to conduct the basic economic and environmental studies required to reopen the mine. Readers can see Emgold’s financial reports for themselves. [Emgold Mining Corporation Quarterly Report, June 30, 2011; http://www.sedar.com ]

Emgold could try reassuring homeowners whose wells may go dry when it starts draining mine tunnels, which stretch for miles and go down more than 5,000 feet. Studies show that dozens of wells near the mine could be dewatered.

By any measure, the mine would vastly impact Grass Valley. Projections show steam plumes could reach hundreds of feet over downtown Grass Valley, and hauling mine waste will require 220 20-ton trucks through Grass Valley every day. That’s one truck every 6 minutes, if you’re wondering, with increased noise, traffic, air pollution and public safety concerns. Many wonder how tourists will react to industrial operations in the heart of scenic Grass Valley, and whether they’ll take their money elsewhere.

Finally, Emgold could substantiate its biggest but shakiest promise of hundreds of long-term jobs and millions in tax revenue. Emgold admits that at least half of the promised jobs aren’t even in the mine – they’re in a proposed new ceramics factory that Emgold says will convert half of the mined waste rock into ceramic tiles.

There are many obvious problems with the ceramics plant, however. First of all, Emgold’s process isn’t used commercially anywhere in the world. Does Grass Valley want to gamble on being their guinea pig?

Furthermore, the Union reported in June 2009 that Emgold lost its license for an experimental rock-to-tile process after it defaulted on license payments. With that kind of track record, can Emgold be trusted to keep its word in the future?

And according to Emgold’s and tile industry figures, the factory’s production would exceed 30% of the total US tile production – an ambitious, if unrealistic goal, to say the least. Emgold promises that Grass Valley will get millions of dollars in sales taxes collected on those tiles, but if the tiles aren’t made or don’t sell, Grass Valley won’t see the promised revenue or jobs.

Finally, Emgold’s latest proposal includes what it euphemistically calls “Operational Variability,” which is a fancy way of saying that Emgold ceramics factory may not even make as much tile as promised! No tile production means no tile factory jobs and no sales tax revenue for Grass Valley to offset the millions of dollars in anticipated infrastructure and public safety costs.

The simple fact is that reopening the Idaho Maryland Mine will impact local businesses and residents enormously, but Emgold has dismissed concerns about those impacts as “fear mongering” and “scare tactics.”

Emgold does itself and the community a disservice when it resorts to such name-calling. After all, insulting the locals doesn’t address the legitimate concerns about reopening the Idaho Maryland Mine. And it’s just not a smart defense – or offense, for that matter.

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