Four of the five members of the Grass Valley City Council, in its meeting of November 8th, voted unanimously to approve the proposed contracts with ASCENT Environmental (for the revised Idaho-Maryland Mine EIR) and with Emgold (the reimbursement agreement). Dan Miller was absent.

Before the vote, Mayor Jan Arbuckle allowed public comments, within the following guidelines:

“I’m going to allow public comments on this, but before I do I want us to be clear that what we’re talking about is not the merits of the Idaho-Maryland Mine, whether it should happen or it shouldn’t. This is strictly to award the contract for the revised EIR. So, we’re not going to make a decision on whether the mine should go forward or should not go forward. It’s just to grant the contract for the revised EIR.”

Several of the nearly one dozen speakers specifically addressed contract issues, calling on the city to include some time constraints in the new contract with IMM, and to avoid the sort of unlimited, open-ended agreements that have allowed Emgold to drag-out the process with no action over the last several years.

Other speakers called for a new economic viability study to be provided in the contract for the revised EIR. And still others suggested refraining from entering into the ASCENT contract for the revised DEIR “until Emgold has bonded the money for the completion of the work up-front.”

Notice that these are all business considerations regarding the contracts, not environmental issues regarding the re-opening of the mine itself.

Why, then, did the council members — when all the public comments were complete — vote immediately to approve the contracts, with no discussion of the relevant business concerns raised by these speakers?

There is no way to know what thoughts were in the council members’ minds as they listened to the public comments, although they did appear to be awake.

Had they misunderstood what they were hearing as criticisms of the mine project itself, rather than — as was the case — criticisms of the structure of the proposed contracts with IMM and ASCENT?  Or, also possible, had they simply made up their minds in advance?

One of the speakers in favor of the project, Libertarian Gary Bryant, dismissed all the critics as environmentalists who, he said, he was “sure are doing God’s work, but … ”

David Watkinson, President of Emgold, who — as usual —  contrived to have the last word, also mis-stated these issues of the flawed contracts as environmental issues. He said, “the questions that most of the people brought up tonight will be addressed in the CEQA process.” That is clearly not true, since several speakers called for time-limited contracts.

Here are the videos of most of the dozen or so speakers in the order they occurred.

Note: David Watkinson was the only speaker of the night whom Mayor Arbuckle inexplicably allowed to exceed the 3-minute time limit during the public remarks. He spoke for nearly 6 minutes publicly before being invited by the council to sit down and answer some more questions. I’ve combined both of his opportunities to speak into one nearly 9-minute video below.

“I applaud the fact that the city is requiring initial deposits totaling $440,000, but given the past history of IMM, it may be many months or years before the deposit is made. So I am here tonight to ask the city to not create another open-ended contract with IMM. This is not fair to the consultants, and it is not fair to the community.

In summary, what I am asking is a simple common sense approach: put an expiration date in. Require that the contract should specify that the initial deposits are to be made within 30 days, or the contract is canceled. If they are not prepared to make the deposit now, after over 3 years since the project was submitted, then they have no business being here.”

“I wanted to bring the Council’s attention to a recent press release that is on the Emgold web site and to request that no contracts be approved at this time and that Emgold be given a deadline as to when they must fund the DEIR or withdraw their application.”

“As soon as the city signs the contract with Ascent for preparation of the revised draft EIR, Emgold intends to immediately ask for an indefinite deferral before the contract work actually begins – because they do not have the money to pay for it.

“Emgold also specifically spells out the possibility of terminating the application if they cannot get enough money to pay for Ascent’s work.”

“Since the tile factory is such an integral part of the project, I ask that an independent study be made of the economic aspects of the tile factory that I have outlined here. And that this study be prepared as part of the RDEIR so that it can be reviewed and commented upon by the community.”

“I called CAL-OSHA and asked, ‘Do you allow mining operations to have their employees work 12 hours, because it seems dangerous to me?’ And he said, ‘Whoa … yeah, they can come in with that proposal, but accidents start happening after 8 hours, and that’s when we step in.’”

“Please protect the people who elected you with a full disclosure statement. As you hire Ascent make sure they know the IMM has already asked for another 60 or 90 day extension and that this is their method of operation … Whenever you are doing business with someone who is deeply in debt, it makes sense to get the money up front and have a drop dead deadline.”

“I’m totally baffled … From a plain business aspect of this thing, it seems very strange to me why you are even considering this business prospect this evening, under the condition that the only person you are dealing with … is a semi-broke in-debt pennystock company from Canada and no one else is even knocking on the door that I’m aware of to try to start this mine … “

Excerpt:

“The questions that most of the people brought up tonight will be addressed in the CEQA process.”

“Sponsored and hosted by a myriad of local environmental and activist organizations, the forum will be held July 27 (Wednesday) at 6 p.m. at the Nevada Theatre (401 Broad St.), Nevada City.

[...]

“Community groups have said the plan to reopen the mine is questionable, and would increase Nevada County’s electricity usage by 50 percent and gas consumption by 100 percent, and that it would bring significant air pollution, truck traffic, risks to local wells, and the potential of toxic cyanide accidents. ”

Tickets on sale starting Thursday July 14th at Briar Patch and Booksellers in Grass Valley. $5 advance $7 at the door.

The Grass Valley City Council has the authority to invest the life of our community in a proposal by a junior Canadian mining company to re-open the Idaho-Maryland Mine (IMM).  But no prudent investor would proceed with re-opening a massive hard rock gold mine in a populated area without first requiring a current and thorough economic analysis from a qualified and credible third party.

Such an analysis would have to include a current assessment of Emgold’s ability to honor the promises made by its CEO, David Watkinson, given Emgold’s declining stock prices, debt, no cash flow from mineral sales, and the glaring reality that Emgold, having never actually operated a mine, has no track record.

The fine print in every Emgold press release is illuminating.  Mineral resource estimates are based on a number of hefty assumptions, and “such statements are not guarantees of future performance, and actual results or developments may differ materially from those in the forward-looking statements”.  Caveat emptor.

Much has changed since the Bay Area Economics (BAE) 2005 economic viability study. For one thing, Emgold stocks are now trading on Canada’s TSX Venture Exchange at around 14 cents (or 1.4 cents if they had not done a rollback in 2009), down from a high of 60 cents pre-rollback in 2005.  For another, the Price Waterhouse Cooper independent audit of Emgold’s financial statements posted on Emgold’s own website points to “material uncertainties” concerning Emgold’s ability to continue as a going concern, specifically lack of adequate operating funds, no proof of economically recoverable reserves, and low stock price.

A thorough economic viability report must include an analysis of the economic impacts that a return to the extractive model of economic development would have on Grass Valley’s existing and future development plans. These factors could significantly impact Grass Valley’s economic future, and must be objectively quantified and measured by a disinterested third party against “expected” (not guaranteed) jobs.

For example, what would the long-term economic impacts be if:

* Residential property values decline within a mile, 2 miles, and 5 miles of the mine, and within  miles of downtown;

* We are unable to attract sustainable industries and entrepreneurs, who will take their businesses and families elsewhere;

* Retirees divest their property and flee the County, and we are unable to attract new residents to buy real estate;

* Tourism and recreation revenues decline due to the presence of an industrial hard rock gold mine and tile factory within city limits;

* Diminished air quality further impacts health costs;

* The City is sued in the event of subsidence and chemical accidents;

* The City is burdened with the costs of infrastructure for the huge energy and water resources required to operate the mine, and the costs for repairing roads and bridges due to heavy truck traffic 24/7, when Emgold defaults;

* Taxpayers get the bill for cleaning up contaminated soils and polluted water in perpetuity;

* The mine operates for only a few years rather than the projected 20 years if the so-far unproven reserves do not “pan” out and/or the remaining gold is not “economically recoverable” due to higher than anticipated operating costs or a drop in gold prices, or both;

* The experimental Ceremext process cannot be scaled up to dispose of 1200-2400 tons of mine tailings daily, and there is no market for tiles made of melted mine waste (note that the tile factory accounts for half of the jobs estimate);

* The tile factory fails to provide a sound method for disposing of mine waste, and Emgold turns to stockpiling waste on the surface for years;

* Emgold defaults, declares bankruptcy, and blows town.

The Grass Valley Planning Commission and members of the City Council cannot afford to be lulled by the best-case scenarios put forth by Mr.Watkinson, who asserts that the IMM would be an environmentally and socially responsible project.  Of course he would say that, wouldn’t he?  However, recent history shows us that although mining companies talk about environmental and social responsibility, most don’t actually walk the talk.  A recent report obtained by Mining Watch Canada reveals that “Canadian mining companies are implicated in four times as many violations of corporate responsibility standards as mining companies from other countries” including Australia and India.   Further, a Toronto newspaper reported in 2009 that Canadian miners are “so reviled in some places that travelling Canadians mask their citizenship by wearing American flags on their caps and backpacks.”

Consider this: on average, for just one gold wedding band, 20 or more tons of rock must be unearthed, crushed, and processed with toxic chemicals in order to separate the trace amounts of gold from enormous amounts of rock waste.

Emgold plans to mine for 20 years, but we have only their word for the accuracy of their resource estimates (read the fine print).  Emgold’s unproven plan to turn half of the mine waste into tiles for homes and bury the rest is extremely risky, at best.  Where are the market studies to back up their assumptions? The gold mining industry has already left its mark on Nevada County – abandoned mines (300 in the Wolf Creek watershed alone), remnant piles of mine waste, contaminated soil, and polluted water.

The City Council must separate fact from fiction and represent the long-term interests of home owners, businesses, and all residents of Grass Valley.  But relying on the self-interested promotion and best-case scenarios from the mine company’s CEO is not going to help that cause.

Due diligence requires that the City obtain a current and complete economic viability report for the Idaho Maryland Mine project and its projected economic impact on the City of Grass Valley and (since this massive project will impact the entire region) Nevada County.

We want to see Grass Valley thrive, and we are very concerned about the long-term economic climate for business here, as long as the cloud of the IMMC project hangs over our heads.

“Yesterday, Grass Valley Planning Director Tom Last stated that the CD that was released to the public and the copies that were posted online contain a number of errors and will have to be revised by IMM and re-submitted. It is not clear whether the errors that are in the CD version also appear in the printed versions.

“The full scope of the problems with the electronic versions and the printed versions of the plans that IMM submitted is yet to be determined.

“It is recommended that persons reviewing the current version of the Revised Project Description wait until a corrected version has been submitted by IMM and validated by Planning Department staff.”

As I reported on April 8th, this appears to be in partial fulfillment of the City of Grass Valley’s April 8th deadline.

The press release also promises that Emgold’s revised project description deals more extensively with air quality problems, deemed “unmitigable” in the first draft Environmental Impact Report.

Watkinson also claims that the revised project description addresses local residents’ concerns about damage to wells:

Residents in the vicinity of the mine have expressed concerns that their domestic wells may be impacted by mine dewatering. The mining corporation has included in the project provision of an Nevada Irrigation District trunk line along East Bennett Road and feeder lines on roads proximate to East Bennett Road, to have an alternative supply of potable water available to hook up to residences should they be impacted.

It will be interesting to find out if Emgold has something specific worked out with NID, including pipeline easements on private property.

According to the press release issued on April 8th by the City of Grass Valley Community Development Department, the City is currently reviewing the ”completeness” of the material submitted by IMMC:

The City will be reviewing the completeness of the April 8, 2011 submittal by IMMC. The City will then determine if the proposed project revisions are adequately described and all sections of the application appropriately amended to incorporate these changes. The intent of this review is to verify the completeness of the information. Once the application materials are viewed as complete, the City will request a proposal from a consultant team to update the previously prepared Draft EIR. Prior to preparing a revised Draft EIR, the City would need to execute an updated reimbursement agreement with IMMC to ensure all consultant and EIR processing costs are borne by IMMC. It is the intent of City staff to present an update of the IMMC application and the potential processing steps to the City Council at one of their regular meetings in May 2011.

There’s little more we can say about the new documents until we get a first-hand look at them, which we expect to be able to do soon.

Today’s op-ed by Watkinson is a word-for-word duplicate of Emgold’s most recent press-release, with paragraphs reformatted in The Union’s usual minimalist eye-pleasing style.

Notice also that this particular op-ed, at over 1400 words in both the online and print editions, exceeds the normal 750-word limit imposed on most guest op-eds.

Curiously also, the commenting function on all Union articles is disabled today. Since the maximum comment period on all articles is two days, we can hope that the comment function is restored before the comment period elapses on this particular op-ed.

According to a new press release sent today to Yubanet from the Grass Valley Community Development Department, the City has now received “updated components” of IMMC’s application, including a Draft Executive Summary and Project Description.

The central and most important document remaining for us to see is the updated Project Description itself.

Stay tuned for our analysis of that in coming days.

The most important sentence in Joe Heckel’s press release today is this:

“The April 2011 application submittal by IMMC will require the previously prepared Draft EIR to be revised, updated and re-released for a public review period.”

The best, most comprehensive background on this subject is available in the Yubanet series of articles (2005-present), “Golden Gamble in Grass Valley.”

For my complete series of articles on this subject (2009-present), click here.

Mr. Watkinson says in his letter that IMM Corp. plans to submit by April 8th (among other things) the “working draft” of a Revised Project Description.

He continues:

“Subsequent to your review and comment on these draft documents, we will submit the final project application package, inclusive of the Revised Project Description, with the target date of April 29th.”

Did the City (in private conversations?) indicate to Mr. Watkinson that it would accept drafts in satisfaction of the April 8th deadline? Has the definition of the word, “deadline,” changed? According to this latest letter, meetings between IMMC and the City have been taking place “over the past several weeks,” so possibly something was said to that effect? Do transcripts of these meetings exist? If the public has the right to see written communications related to the project, shouldn’t it also have the right to see transcripts of verbal communications on the same subject?

Or, possibly these conversations were nothing more than routine chats with Planning Department staff?

Later in the letter, Mr. Watkinson implies that the City has not already decided whether to require a Revised Draft EIR:

The City has indicated that it would make a formal decision on the requirement for a Revised Draft EIR for the Project upon submittal of the 2011 Revised Project Description.”

But the City has already made that decision. Here’s what Joe Heckel said on that subject in an interview with Paul Emery on KVMR last November:

JOE: “Yes, what would occur is — let’s just walk through he steps — is the applicant would be filing those new changes with the city — and those changes could deal with a number of points of their operations — then we would commission a draft EIR to be prepared. We would utilize a lot of the information already collected and compiled in the previous EIR but we would focus a lot of our critique and analysis on the new changes. But we would have a new draft EIR — called a “new” — but an updated draft EIR prepared and released for a public review period in which the public would be provided an opportunity to fully look at the document and walk through what the issues and concerns would be with the project.”

We may hear more from Mr. Watkinson in a few days, if he lives up to his promise to meet the April 8th “deadline.”

February 6,, 2011 was the 100th anniversary of Ronald Reagan’s birth, and when Grass Valley evaluates the controversial proposal to reopen the historic Idaho-Maryland Mine the late president’s signature phrase holds a timely piece of advice: Trust, but Verify.

When President Reagan uttered those words he was referring to an arms control treaty with the Soviet Union. At first glance, a nuke treaty with the Evil Empire seems a world away from reopening a historic gold mine in rural Grass Valley, California.

But the proposal by Emgold – a Canada-based mining company that has never actually operated a gold mine – to resume mining at Idaho Maryland carries both big promises and huge risks for our community, and it deserves equally serious scrutiny.

First, some history: in 2006, Emgold proposed a scheme to reopen the mine and build a ceramics plant to manufacture tile from excavated rock. That proposal quickly ran into trouble. State regulators and mine experts found serious problems with Emgold’s Draft Environmental Impact Report and by 2009 the project appeared to have quietly died.

But like a bad penny, Emgold’s scheme has returned.

Emgold is expected to submit a revised proposal by April 8th, and ultimately the Grass Valley City Council will vote it up or down. Before approving the proposal, however, the Council must verify its many golden promises:

Jobs: Under its initial plan, Emgold promised to create four hundred jobs over the next 20 years – 200 in the mine and another 200 in the ceramics factory. Sounds pretty good, especially in these tough economic times, right? But hold on – not only are these jobs figures speculative, but the Grass Valley General Plan has slated the mine site for a business park with the potential for 800 new jobs – 400 more than the mine promises. A potential loss of 400 jobs is a bad deal for Grass Valley.

Impact on Existing and Future Businesses: Not only could the mine cost Grass Valley long-term jobs, but it’s common sense that a mine might dissuade other high-paying employers from locating in the area. High-tech manufacturers have cautioned Grass Valley that vibrations from mining and increased truck traffic could upset sensitive operations and force them to leave town. And visitors might decide to spend their tourism dollars elsewhere if, rather than a church bell, they wake to the sound of 20-ton trucks rumbling through town. Grass Valley is already burdened with the tragic closure of Weaver Auto. Imagine the repercussions from a failed mine operation in downtown Grass Valley.

Public Safety and Pollution: Emgold’s own project proposal envisions a huge burden on Grass Valley’s streets, totaling 220 20-ton truck trips per day, seven days a week (that’s one every 7 minutes!). Then there’s the need to drain and clean 72 miles of mine tunnels of toxics-laden water and the risk of dewatering local resident’s wells. The price tag for ensuring public safety and environmental health grows quickly.

Cleanup and Long-Term Costs: Emgold promises the mine will operate for 20 years, but this promise is based on both the speculative value of gold and assumed (but not proven) gold reserves left in the mine. If gold prices crash or the reserves are smaller than anticipated the mine could close and leave Grass Valley with an unusable industrial mine site and long-term cleanup costs. The uncomfortable fact is that there is a failed mine behind every ghost town in the American West. Grass Valley has recent experience with closed mines: the discovery that the Newmont Mining site was contaminating local waters, the city was forced to spend more than three years and $2 million in legal fees just to force the mine operators to clean up their mess.

Grass Valley cannot afford – and should not pay for – another costly mine cleanup.

Emgold has made a lot of promises to Grass Valley. But reopening the mine carries huge risks: loss of long-term jobs and businesses, increased traffic, air and water pollution, threats to public health and quality of life and a huge cleanup bill if those promises aren’t kept.

Before the Grass Valley City Council approves reopening the Idaho Maryland Mine it must prove to the community that the benefits greatly outweigh the risks.

The Gipper was right: when it comes to our long-term safety, security and prosperity we should Trust, but Verify.

Ralph Silberstein – President,
Mike Pasner -Vice-President,
Citizens Looking At the Impacts of Mining
CLAIM-GV

The Idaho-Maryland project is much further from being shovel-ready than the Lincoln Mine: pumping out more than 50 years of water will take time, after all, as does completing a variety of environmental impact reports and permitting processes. And the prospect of a newly opened mine has also been met with opposition from some local activists, whose worries are rooted in both the legacy of the first Gold Rush — including contaminated and sediment-filled rivers and hillsides denuded by hydraulic drills — and by more modern quality-of-life concerns like traffic, noise and water rights.

“We’d be looking at reopening a mine in the middle of a city,” said Ralph Silberstein, the president of a grass-roots group called Citizens Looking At the Impacts of Mining in Grass Valley (or CLAIM-GV). “Which is not a good idea.”

Indeed, like many of the other towns in the Mother Lode, Grass Valley has long since moved its economy away from mining toward things like software and tourism.

Read the full story here.

In Grass Valley, for instance, a thriving high-tech industry has sprouted in a community where the high school sports teams are called the Miners. Emotions are mixed on the proposal by Emgold Mining of Vancouver, British Columbia, to reopen the old Idaho-Maryland Mine, which hasn’t operated since 1956.

“The landscape of the community has changed,” said Mayor Lisa Swarthout. “When it was an operating mine . . . it was pretty much in the middle of nowhere. The community has grown around it.”

“The community has grown around it.”

There, in a nutshell, is the most fundamental damning fact that should doom the idea of re-opening the old Idaho-Maryland mine in the heart of Grass Valley.

Kassler, despite later quoting a local research group, CLAIM-GV (Citizens Looking at the Impact of Mining in Grass Valley), here trivializes the community’s strong objection to the mine, by framing it in terms of the quirky preference for “boutiques” and B&Bs:

Old mining towns still embrace their Gold Rush roots but have become havens for tourists and retirees. Some residents aren’t convinced that blasting through rock is compatible with boutiques and bed-and-breakfast spots.

The Washington Post article quotes Emgold CEO David Watkinson, who is still repeating his largely discredited promise of 400 jobs and repeating his ludicrous claim that junior mining companies are generally having trouble raising money in these recessionary times.

In fact, other juniors with proven reserves are having no such problems raising funds, especially in this time of exceptionally high gold prices.

Emgold, with no proven reserves, is a uniquely weak prospect for success of any kind.

Watkinson, in his trademark spin, also continues to misrepresent a 2006 telephone survey by claiming that “72 percent of Grass Valley residents” support the mine. In fact, the survey of only 338 residents was conducted before all the negative environmental impacts were documented in the environmental impact report. Those 243 favorable responses were conditional on environmental safeguards being in place.

We do not know how many of those 243 respondents live or own property near the mine site. But we do know now that this proposed industrial hardrock mine near the heart of Grass Valley poses a significant threat to air and water quality, and that it will greatly increase traffic congestion and noise.

“We’ve been hit with the recession, just like everybody else,” said Chief Executive David Watkinson. “Even with the high price of gold, you’ll find junior mining companies are struggling to find money.”

Watkinson said mining would create 400 jobs in Grass Valley. He said he’s encouraged that the project won support of 72 percent of Grass Valley residents in a survey conducted four years ago by the city.

But there is opposition. Critics say the project would create environmental hazards and hurt the quirky character of Grass Valley.

“We feel the real gold is the wonderful environment,” said Ralph Silberstein, a software consultant and president of CLAIM, or Citizens Looking at Impacts of Mining.

Read the full Washington Post article: “Despite price rise, there’s no 21st-century Gold Rush in Calif.”

See Dale Kasler’s original November 2010 Sacramento Bee article, from which today’s Washington Post article was excerpted.