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By Ralph Silberstein

The Idaho-Maryland Mine was recently acquired from Emgold Mining by RISE Gold Corp, a junior mining company from Canada. The prior Canadian owner, Emgold Mining, spent years trying to get the mine opened and failed. Due to immense environmental impacts, financial obstacles and public opposition, Emgold eventually abandoned the project.

Repeating the pattern of Emgold, RISE, the new owner, has recently completed some exploratory drilling and has been publishing enticing reports. In a Jan 3, 2018 press release, RISE CEO Ben Mossman stated “The presence of high-grade gold values in the walls of the quartz veins was not expected…” and “The possibility that there could be very substantial gold mineralization in the developed upper levels of the mine is astonishing…”

Except this isn’t astonishing news at all. RISE is excitedly reporting gold deposits in concentrations previously reported in multiple glowing reports by Emgold [e.g Emgold Publication March 2008].

It all sounds so promising, so easy, such a lucrative deal. Multiple alluring reports have been produced yet again. Following the pattern of Emgold, RISE has turned to funding methods that are not approved by the SEC, collecting more than $2 million via “private placements”.

Why didn’t Emgold open the mine? What is going on?

The reality is that the mine is flooded and deposits lie thousands of feet under polluted water.

The mine shut down in 1956 due to LOW PRODUCTION. In order to get to what gold is left, miles of tunnels have to be dewatered and continuously treated to meet the strict California standards. So a water purification system to handle large volume has to be designed and built. It will have to run forever.

Also, discharging this water means putting South Fork Wolf Creek at flood stage. This creek is a pristine little stream that runs down into the beautiful meadows along Bennett Street. The land is owned by Empire Mine State Park and has been undergoing habitat restoration. Extensive environmental studies will be required to assess the impacts on this habitat before anything can go forward.

There also will have to be studies and guarantees to protect local well owners. Costly water mains and service lines will have to be installed in advance throughout the area to provide a solution for the possibility that the mine would impact these wells.

Even without considering the dewatering issues, it is questionable whether it would be financially feasible to mine the ore that remains at such depths. In California, the Surface Mining and Reclamation Act (SMARA) requires that all mines have a reclamation plan in place before starting. Gone are the days in which a mining company could extract massive amounts of waste rock, leave tailings all over the place, pollute the area with mercury or cyanide or arsenic, and then leave it all when the gold runs out. In order for the mine to get SMARA approval, the area will need a reclamation plan and a huge guarantee bond.

This problem is even larger because the mine property already has vast areas of tailings left over from earlier days which are in need of testing and potential remediation. In a recent EPA study of California abandoned mines to determine their potentials of hazardous exposure, Idaho Maryland Mine is listed as number one! [“Prioritization of California Abandoned Mines Exposure-Based Algorithm” May 9, 2017, Hillenbrand]. RISE Gold now owns this legacy clean up problem.

And there will be other environmental impacts. The mine is situated at the City of Grass Valley. There will be noise impacts, air pollution impacts, traffic impacts, and energy consumption limitations due to California’s strict new climate change laws. The project will need to have an Environmental Impact Report which must be approved by multiple agencies. It is well known that the local environmental community will not stand for anything other than full and careful scrutiny.

The executives at RISE undoubtably know all this, but make little mention of these huge obstacles. CEO Ben Mossman recently spoke at a mining conference as if the permitting would be easy, with “only county approval needed”, failing to mention a reality that paints an entirely different picture. But, in one sense, Mossman is right. Idaho-Maryland Mine is still a very productive gold mine. Only instead of mining for gold, it is again being used to mine unwary investors: in the last year alone RISE has collected over $2 million in investment cash.


Ralph Silberstein is a member of Community Environmental Advocates

 

In a press release dated today (February 1, 2013) Canadian penny-stock mining company, Emgold Mining Corporation, uses language more explicitly suggestive of closing-up shop in Grass Valley than any they have used before. They suggest they may drop the Idaho-Maryland Mine project altogether to focus their resources on “other assets the Company has in its portfolio.”

Excerpt:

Further to the Company’s October 26, 2011 and September 7, 2012 press releases, permitting activities associated with the Idaho-Maryland Project (the “Project”) remain on hold pending the resurgence of the junior mining equity markets. Emgold reiterates what it stated in its past press releases that, despite the current price of gold, financing for projects in the junior mining sector is extremely difficult. In the event that insufficient funds can be raised to move the Project forward, Emgold will continue to delay the Project until market conditions improve or, as a worst case, drop it to focus on the other assets the Company currently has in its portfolio.

The current extension of the Lease and Option to Purchase Agreement (the “BET Agreement”) expires today. The BET Agreement, signed in 2002, originally had a five year term. It has been extended three times to date, in two year increments, with the last extension taking effect on February 1, 2011. Emgold is currently in negotiations with the BET Trust to extend the agreement, which covers the lease and option to purchase of approximately 2,750 acres of mineral rights and 91 acres of surface rights associated with the Project. If negotiations to extend the BET Agreement are unsuccessful, Emgold will terminate the Project and focus on the other assets the Company currently has in its portfolio.

The City of Grass Valley cancelled Emgold’s IMM Project application after it failed to meet a city-imposed deadline of September 10, 2012 for submitting the necessary funds to the City of Grass Valley for independent consultants to begin preparation of a revised Draft Environmental Impact Report (DEIR) on the proposed mine and ceramics factory.

For more information, see CLAIM-GV.org.

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.

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?

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.

IMM @ Zero

By Mike Pasner

The City of Grass Valley has deemed the Idaho Maryland Mine’s proposal withdrawn!

Dave Watkinson (corporate president) writes, “Emgold’s goal has been to construct a project socially and environmentally responsible.”

Grass Valley City Council has sent this Canadian penny stock back to the start. After a failed Environmental Impact Report three years ago and three failed attempts now, the City has said enough.

The tile factory, planned to capture 16% of the nation’s tile needs, will never happen!

The job numbers are totally unrealistic!

Draining all the hundreds of miles of underground tunnels between Grass Valley and Nevada City, while not affecting our community’s water supply, is unrealistic!

Not being able to reach air quality standards is unrealistic!

Re-opening the Idaho Maryland mine inside the City of Grass Valley, accompanied by a huge tile factory, is a total ZERO!

Thank you City of Grass Valley,  for calling this foreign corporation’s plan unrealistic!

Dave Watkinson, your corporation isn’t “in the final stages of permitting,” as you have told your shareholders for years!

In fact you are again back to the start.

Your project is at ZERO, where it belongs.


Mike Pasner is a farmer in Penn Valley.

Emgold: Spinning Gold

By Ralph Silberstein

One must wonder at the audacity of Emgold Mining Co. For almost four years, Canadian-based Emgold has been struggling to get funding in order to move forward with the Idaho-Maryland Mine project, but now the City of Grass Valley has canceled their project application. The project was started in 2005. Emgold’s response is that “they are in a holding pattern until the markets recover” and that mining funding has gotten difficult over the last 18 months.

Is a difficult market the real problem or is this more Emgold spin?

Over three years ago Emgold announced that they were seriously seeking financing, and then, having “settled a term sheet with Dunn Capital Partners” for $6 million, the deal was suddenly and abruptly terminated by Dunn for ethical reasons. ( See the stockwatch.com article “Emgold financier Dunn says ethics behind withdrawal”. ) The reality is that Emgold has been continuously seeking funding, has no regular revenue, and has to date generated a $50 million deficit using investor’s money.

Emgold Mining has a long history of painting an overly optimistic picture of their prospects. In their reports, seemingly to attract investors, they have repeatedly made inaccurate statements, such as: the project has “strong community support”, the project is “sustainable”, or “the company is in the advanced stages of permitting…”. However, none of these stand up to examination.

Claims of community support are disingenuous. They are based on a survey which in 2006 asked the question: “Provided that appropriate environmental safeguards are in place, [would you support] allowing the Idaho Maryland gold mine to reopen?” This was before the project had been reviewed, before people knew about the massive tile factory, the traffic, the significant air pollution, the threat to wells, and many other hazards. Currently, environmental safeguards are not in place and there is strong community opposition, so the claim has no basis in fact. And when Emgold refers to this survey in news releases, they conveniently fail to mention the first part of the question about environmental safeguards being in place.

Secondly, the notion that this mining project and ceramics factory would be “sustainable” is an absurdity. This project would consume massive amounts of energy, extract whatever gold ore is left from the previous mining operations, and then shut down. This belies the definition of sustainable.

And on the third point, they could hardly be said to be in the advanced stages of permitting. It’s been known since mid 2009 that they have to do a new Draft Environmental Impact Report (DEIR), which then must be recirculated and reviewed, commented on in public hearings,  and voted on by the Planning Commission. Next a Final EIR must be drafted, submitted to the City for more public hearings, and approved by the City Council. Then there is the requirement for LAFCO, Office of Mining Reclamation, and other agencies to approve the project. Following that, of course, actual construction documents would need to be drawn up and submitted for approval before getting a permit and starting work. How can this possibly be considered the advanced stages of permitting?

This type of spin has persisted. A more recent example came in the Sept 7, 2012 news release, in which David Watkinson, CEO of Emgold, stated “Estimated cost of the City and its consultants to complete the EIR process is approximately US$500,000.” Yet according to City documents, the base cost of the DEIR consultant plus initial deposits to the city for other required work exceeds $565,000, and that doesn’t  include additional studies that are needed. Add to that the $100,000-150,000/month Emgold would need during the 12-18 month process, and the estimated cost exceeds $2 million.

At this point the Idaho-Maryland Mine project is back to square one. Like any new project, they haven’t  started the permitting process until they submit their project application to the City. It is not surprising, given their financial desperation, that Emgold is downplaying this fact. In their news release, Emgold states: “Management does not expect the change in status of the current Permit Applications to have any impact on completion of the EIR or on the CEQA process for the Idaho-Maryland Project (the “Project”) other than timing.”

In this one case they actually may have got it right. Even when they had an application they were going nowhere, and that remains true now that the City canceled their project.


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