Mine's redesign points to startup

Posted: Sunday, November 11, 2001

Coeur Alaska Inc. says it has restructured its plans for the Kensington mine, a hard rock gold mine 45 miles north of Juneau, to meet environmental objections and reduce costs.

Opening Kensington mine would create 325 jobs at the peak of construction, 225 jobs during operation and 180 support jobs, said Rick Richins, senior vice president of Coeur, at the Juneau Chamber of Commerce luncheon Friday at Guesthouse Inn and Suites.

Construction would cost about $155 million, and the company would pay an estimated $9 million in local taxes and $21 million in local purchases during the anticipated 10-year life of the mine, plus additional expenditures during two years of reclamation after it closed, Richins said.

Coeur has been working with Goldbelt Inc. and Sealaska Corp., possible subcontractors, to solve objections raised in the past to its Kensington project, Richins said. Goldbelt is Juneau's urban Native corporation and Sealaska is the Juneau-based Southeast regional Native corporation.

"We have also been talking to legislators and the fishing community and are about to talk to the environmental community" about adjustments made in Coeur's operating plans for the mine, Richins said.

"We have had no negative feedback so far," he said, and have made friends with commercial fishermen "who like this project better than the project currently permitted."

Sarah Keeney, mining specialist with the Southeast Alaska Conservation Council, did not attend the chamber meeting and said she did not know the specifics of Coeur's new plan.

"But this company has put forth so many plans, I am skeptical," Keeney said. "The devil's in the details."

The new plan would replace a previously proposed onsite work camp with bringing in workers daily by bus and boat. Without a work camp, the site would have reduced inventories of supplies and fuel and less possibilities of spills.

Transporting workers and supplies would mean two to three trips a day by water bus across Berners Bay and two to three shipments of ore concentrate a month, "so we are not talking about a huge amount of traffic," Richins said.

Instead of damming tailings, which are the crushed rock that results after ore is extracted, they would go into 180-foot piles near Comet Beach, sandwiched between layers of drain rock and capped. Some tailings would go to the bottom of a 40-acre muskeg called Slate Lakes and be capped when the mine closes.

The company wouldn't use cyanide at the site because it would take the gold ore concentrate elsewhere for processing, Coeur said.

A tunnel connection with the historic Jualin mine would keep all mining underground. The mine would disturb 120 acres compared with 250 acres under the previous plan, the company said.

Much of the work would be on patented land, which would minimize federal involvement, Coeur said.

In a deal made in 1987, Coeur shared ownership of Kensington with Echo Bay Mines. Coeur subsequently bought out Echo Bay and became primary developer, Richins said. Since 1997, Coeur has spent about $20 million on environmental impact studies and permitting for the project, he said.

In 1992, mining was permitted at the site with two elements that concerned environmentalists and fishermen: building a 280-foot-high dam across a creek bed to contain tailings and running a discharge into Lynn Canal.

Both were "controversial," Richins said, "so we decided to redesign the project." Use of cyanide at the site was "another hot button," he said.

Since 1989, the price of gold fell from $480 an ounce to $280, so Coeur would have to cut costs to make operating the mine profitable. In the past two years, Coeur has spent millions coming up with an alternate, cheaper plan, Richins said.

"We have good feedback from the (U.S.) Forest Service so far to carry out the permitting in 12 months," Richins said.

He said the U.S. Environmental Protection Agency has been "waffling" on the subject of tailings in lake waters, claiming such waters become "not waters of the nation but a waste treatment facility."

The Forest Service and the EPA could not be reached immediately for comment.

"It's going to really take your continued support to push this thing through," Richins told the chamber audience, "and we won't be bashful about coming to you and asking for it."

Mike Dalessi, vice president of investments and branch manager for Salomon Smith Barney Inc., was optimistic. "I think that anything that creates jobs for the city is a good thing," Dalessi said.

City manager Dave Palmer reacted favorably to Richins' presentation.

"Coeur eliminated the dam, tailings and the outflow," Palmer said. "They tried (in the past) to enter into an agreement with environmental groups in an effort to develop concessions and acknowledge their needs. I think this is a good approach. Coeur tried to resolve a lot of issues and it sounds like they are going to do that again."

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