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Now that Emgold’s application to re-open the Idaho-Maryland mine has been withdrawn due to lack of funds, our community has a new set of questions to face.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.

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.

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?

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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.