by Jane and Don Pelton
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.