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Archive for October, 2012

STATEMENT REGARDING NEVADA COUNTY APPROVAL OF EIR CONSULTANT FOR PROPOSED RE-OPENING OF SAN JUAN RIDGE MINE

Today, the Nevada County Board of Supervisors approved a contract for $179,811 with consultants PMC to prepare an Environmental Impact Report (EIR) for the proposed re-opening of the San Juan Ridge Mine. The San Juan Ridge Taxpayers Association (SJRTA) commends Nevada County’s decision to prepare a full EIR for the project in light of the possibility of significant negative impacts to the water supply, environment and local economy.

Because the applicant promised no impacts to water when the mine originally opened in 1993, the SJRTA was willing to accept the project with mitigations.  But the applicant was wrong, and the mine caused dewatering of 12 wells in the surrounding community, including the well for our local elementary school.  Some wells were contaminated with a variety of metals and minerals. To this day, the school’s water must be treated at the school district’s expense to meet drinking water quality standards.

The proposed San Juan Ridge Mine would operate in close proximity to our public elementary school, our only medical clinic, our community cultural center, and businesses that employ more than 200 people.  Says SJRTA president Gary Parsons, “The mine could devastate our water supply and our community, further poison the water that we provide for our school children, and damage our economy and our natural environment.”

While we commend the County for requiring an EIR for the project, the SJRTA has concerns that the EIR be fully funded.  Given the broad range of potential environmental impacts and magnitude of potential effects, and the difficulty of understanding underground water supplies, there is a need for special analytical tools that may be costly.  Costs for the recently proposed Idaho-Maryland Mine’s Environmental Impact Report were estimated to be $440,000.  Impacts at the San Juan Ridge Mine site would also include potential dumping into sensitive creeks and habitat for rare wildlife species, as well as a more complex hydrologic system, and thus EIR costs may be higher.

The San Juan Ridge Taxpayers Association will provide more information as to our concerns when a formal Notice of Preparation of an Environmental Impact Statement is made available by Nevada County in the coming weeks.


The San Juan Ridge Taxpayers Association (SJRTA) is a membership organization representing taxpayer interests on the San Juan Ridge of Nevada County, CA since 1974. The SJRTA membership includes taxpaying residents and non-resident landowners of the San Juan Ridge and other local concerned citizens.

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By Don Pelton

Jeff Pelline, in his Sierra Foothils Report a few days ago, wrote about  City Council candidate Howard Levine’s position on various local issues, including his support for re-opening the Idaho-Maryland Mine. I’ve spent enough years, in an effort with others, to research all aspects of this issue, including its inadequacy as a business proposition, that I’m inclined now to the view that anyone who supports re-opening the mine must not be acquainted with all the facts.

Here are the comments I appended to Jeff’s posting, encouraging current council members as well as candidate hopefuls to study the issue more fully:

I hope that if Howard Levine is elected to the council, he will reconsider his support for re-opening the Idaho Maryland Mine.

Now that Emgold’s application has fortunately expired, the council should critique its own role in allowing such a poorly-crafted business proposal to drag out for nearly a decade, not only wasting valuable community resources, but preventing a more viable project for that site to be considered in its stead.

We expect the council, at the very least, to recognize a viable business proposal when it sees one, but its handling of the Emgold fiasco suggests that it still has some important lessons to learn in this regard.

It’s tempting to say that the council should be able to evaluate a proposal on its business merits altogether aside from its environmental impacts. But in truth the environmental impacts of a proposal are integral to its economic viability. It’s not clear to me that this fundamental aspect of doing business in the Sierras is well-understood by the current council, much less by hopefuls like Howard Levine.(See the work of Steve Frisch’s Sierra Business Council for a good understanding of this issue).

Among the council’s biggest mistakes with Emgold was its failure to obtain a competent economic viability study of the project proposal contained in Emgold’s application. The 2005 study conducted by the SF Bay Area consulting group Bay Area Economics, an organization that had no experience with evaluating a mining project, was not adequate.

The council should immediately establish, with community feedback, some ground rules and guidelines for a minimally-acceptable application for mining within city limits, since the impacts of such a development will profoundly affect Grass Valley’s character and business climate.

There are good arguments for prohibiting mining altogether within city limits. The council should be willing to hear and consider these arguments.

After some years working with others to critique Emgold’s application, I have come to the conclusion that the biggest overlooked fact about the idea of re-opening the IMM is its monstrously huge scale. Few really grasp this.

The underground extent of the IMM is about the same as the city of Grass valley itself (~3200 acres). It runs under the Sierra Nevada Memorial Hospital, under the Basin, and out to the Y juncture of 174 and Brunswick.

This geographical extent, as huge as it is, is exceeded by its potential sphere of harm (including hydrologic uncertainty about well failures, etc). This is all copiously documented in the work of CLAIM-GV (Citizens Looking At Impacts of Mining in Grass Valley).

A common misunderstanding is that the mine — if reopened in the heart of downtown Grass Valley — would have limited impact, potentially affecting only those who live in close proximity to it.

Because of its scale, every resident in Western Nevada County effectively lives in close proximity to IMM.

My suggestion to Howard Levine and all other council hopefuls, as well as to the current council members, is to start this self-critique by reading Tom Grundy’s excellent and widely published article on the weaknesses of Emgold’s application. It was published in the Union, in Yubanet and in my own Sierra Voices, which I shamelessly plug here:

Will Grass Valley Learn From Its Mistakes With Emgold?

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By Tom Grundy

Now that Emgold’s application to re-open the Idaho-Maryland mine has been withdrawn due to lack of funds, our community has a new set of questions to face. Will we learn from our mistakes? Will we do it right next time?

The thing is, Emgold was never serious about being a ‘good community partner’. They never were completely honest with the city and its residents. If the company had put the concerns of the community first — or second, or third — the numbers would have never been rosy enough to lure the few investors that it actually did.

Shell Game

Emgold used us. Our community was nearly sold a bill of goods, and that should concern us all. Emgold never had anything remotely resembling a solid business plan. Emgold hoped that our community — blinded by a down economy and a desperate search for ‘jobs at any cost’– would be too distracted to actually give the economic and environmental reviews any critical thought. Emgold was way too close to being right.

Some selected examples of Emgold’s tactics:

There was never any profit sharing, royalty payment, or other payment-per-ounce-extracted in the plan for Grass Valley.

The only direct income to the city would have been from property taxes and sales tax from locally-sold finished ceramics products; there is no such thing as a gold tax.

The most recent project description would allow Emgold to scale ceramics production all the way down to zero if the ceramics did not sell. Yet, half of the project’s total jobs, all of the direct sales tax, and much of the property tax were from the ceramics plant.

Emgold made the claim that they could sell enough finished ceramics products from inside city limits to tile nearly five thousand large houses per year, every year, for the life of the project. The other 90% of the ceramics would be sold in other areas.

These figures, provided by Emgold, were used as ‘assumptions’ in the economic analysis. That analysis was never given a critical look by the city. No underperformance scenarios were investigated. The city failed its duty to determine if this project ever actually presented a ‘reasonable economic use’ of the land and of our resources.

Emgold’s press releases and investor updates for the past several years have been full of blatant inaccuracies, including persistent mention of the Idaho-Maryland project as being in the ‘advanced stages of permitting’ when, in fact, the permitting process does not begin until after the environmental review is finished. The project was never able to get past the first part of the environmental review.

Emgold has repeatedly insisted that they voluntarily elected to redo the project description, triggering a second Draft Environmental Impact Review, when, in fact, it was the city council that mandated the rework. Mayor Lisa Swarthout, August 25, 2009: “It’s not up to Dave [Watkinson; Emgold CEO], it’s up to us.” Watch the video for yourself.

Emgold continues to cite a 2006 survey of Grass Valley residents, noting that 72% were in favor of the project. The full question with the 72% response (out of only 338 total respondents) was:

“Provided that appropriate environmental safeguards are in place, would you support allowing the Idaho Maryland gold mine to reopen?”

That survey, of questionable validity from the start, took place more than two years before Emgold failed the first stage of environmental review.

Golden Shell Game

In an Emgold promotional video from 2009, their CFO stated that Emgold “passed the DEIR with flying colors” — another attempt to lure investors that had not done their homework. The video was taken offline in 2010.

So, what happens next? Emgold, or any other company, could file a new application at any time. Will Grass Valley be ready?

Will we demand a real economic analysis that looks at underperformance scenarios and doesn’t rely on ‘assumptions’? Or, will we blindly go down the same path of spending another decade of time and energy on a joke of a project with no real business plan?

If we’re really still sitting on top of a ‘world-class gold asset’ as Emgold says, shouldn’t we keep our standards high and insist on a better deal – economically, socially, and environmentally?

Corporations like Emgold are legally obligated to be motivated only by profit. That will not change any time soon. Why would we think that the next applicant would be any more serious about being a “good community partner” than Emgold was this time around?


Tom Grundy lives in Nevada City and has been active in educating the community about the dangers of Emgold’s application to re-open the Idaho-Maryland Mine.

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