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Archive for May, 2012

By Ralph Silberstein

If Emgold Mining Co. fails to pay the City of Grass Valley the required deposit of about $440,000 by September of 2012, the City will consider the Idaho-Maryland Mine project application withdrawn.

The deposit is for independent consultants to begin preparation of a revised Draft Environmental Impact Report (DEIR) on the proposed mine and ceramics factory. A total of $3-4 million and about   two years will be needed to finance and execute the DEIR, additional studies, another round of public hearings, and a Final EIR before obtaining a permit.

Emgold may be unable to rise to the occasion. The annual financial report for 2011 shows a loss of $2,338,060, or $0.06 per share, pushing the accumulated deficit to over $50 million. Emgold has no sources of regular revenue and is predictably out of operating capital again. This has been going on for years.

Penny stock junior mining companies such as Emgold are notoriously risky investments in general, but the Idaho-Maryland Mine project is increasingly unlikely to succeed. Working against the efforts to raise funds is the huge added risk of the ceramics factory, which should scare off investors. Fusing tailings into tiles to dispose of mine waste may seem like a good idea, but it has never been done on a commercial scale, and the tile market for this product is not promising. Furthermore, Emgold has no expertise in ceramics and the plan calls for selling 480,000 sq. ft. of tile per day; unbelievable, especially in today’s market. Add to that the obstacles of getting the Grass Valley General Plan modified, annexation approval, significant air pollution in the face of new strict carbon emissions regulations for California, and a variety of local issues such as threats to local wells and property values.

Note that, if a permit is obtained, the costs to de-water the old mine and build the mining and ceramics factory facilities will likely exceed $200 million. This will easily consume all the profits from the “measured gold reserves”.  (As per NI 43-101 report, 212,000 oz.)

To date, in an effort to promote the project, Emgold has made a number of questionable statements:

  • The revised project documents, as submitted to the City of Grass Valley, estimate the maximum number of long term jobs at 500, but in public statements Emgold is now claiming 600 jobs. It was 400  last year.
  • Promotional pieces about the Idaho-Maryland Mine repeatedly claim the project is in the “advanced stage of permitting”, when in fact they have not even submitted deposits needed to restart the DEIR process.
  • A constant claim of “community support” from a 2006 poll fails to mention that the support was conditioned upon addressing all environmental concerns, upon which it fails. Now that the project description has been made public, there is strong opposition to the mine.

In an effort to raise yet more funds, Emgold has now employed Vanguard Shareholder Solutions Inc. to disseminate news and public information to investors, at a cost of $8500/month and stock options.

As the marketing of the Idaho-Maryland Mine project becomes more expert, it becomes even more important to do one’s own research and carefully scrutinize the merits of any investment before committing funds. Buyer beware!


Ralph Silberstein: President of CLAIM-GV (Citizens Looking at Impacts of Mining), Grass Valley City resident, software engineer, served 2 years on the Grass Valley Planning Commission, former Building Contractor.

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We attended a workshop at the Miner’s Foundry last weekend that included an interesting presentation by local realtor (and longtime citizen activist) Chauncey Poston, on the subject of “disclosure law.”

During the question period, I asked him whether, in his view, the current application by Emgold Corporation to re-open the Idaho-Maryland Mine would be considered an important fact to disclose to potential buyers of property in Nevada County.

He replied that he has been disclosing that fact to prospective buyers for at least the last six years.

A day or so later, in response to a follow-up question I sent him via email (asking whether he believed his local colleagues in the real estate business are following the same practice) he sent me this clarification:

Don:

The answer to your question is “I would hope so.” The subject of the mine re-opening is common knowledge to any person with a heart beat living in western Nevada county. Using the excuse “I didn’t know” would be indefensible. You simply can not get around that conclusion. Any Realtor listing or selling property in the area around the mine would be foolish not to discuss the mine with sellers, convincing them to disclose, and informing buyers (disclose) of the possibility of the mine re-opening. In a perfect world, the mine would be a topic of discussion between the buyer and his agent upon first visiting the property. In the end, disclosure of the mine would come from three entities: the seller, the listing agent, and the buyers agent.

The big problem, as I see it, is to determine just how wide a swath from the mine location should disclosure be important. Impacts from the mine could be far reaching. An example, wells up on Banner Mountain have the potential of going dry if the water table in corrupted. Traffic and noise have the potential of causing disturbance far away from the mine site. Just how far do we need to go with disclosure? That is the million dollar question.

Only a full and brutally honest EIR will come close to answering those questions as well as the hundred more questions uncovered by an adequate EIR.

Sincerely,

Chauncey.”

My reply to Chauncey included these remarks:

I see your point about the million dollar question. Even hydrologists who’ve studied the first DEIR admit that they can’t predict with any certainty how widespread the impact of dewatering on wells might be.

I believe that local citizens generally don’t fully appreciate how massive this project would be: the underground extent of IMM goes from directly under the Sierra Nevada Memorial Hospital, under Brunswick Basin and all the way out to the Y intersection of Brusnwick and 174. It encompasses almost as many square acres underground as does the entire incorporated city limits of Grass Valley.

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