Mine Panel

The Organizers: Alliance for a Post-Petroleum Local Economy; Wolf Creek Community Alliance; Citizens Concerned About Traffic; Grass Valley Neighbors

The Panelists:
Mike Thornton - Sierra Fund, "Mining's Toxic Legacy"
Dr. Tom Myers - Hydrology and hydrogeology consultant, Reno NV
Greg Martin - environmental attorney
Dr. John Dobra - associate professor of economics, University of Nevada, Reno; director of Natural Resource Industry Institute
David Watkinson - President and Chief Operations Officer, Emgold, Inc.; Vice-President of Operations, Idaho-Maryland Mining Corporation

All of the questions from the event, and all of the answers from panelists, are transcribed below. The panelists have been invited to make additional responses to the questions here. If they do, prominent notice will appear here.

UPDATE July 7 2008: Responses from panelists submitted online after the event are shown below in RED and are prefixed with the word UPDATE. Use your web browser's Search function to search for the word UPDATE to see all of the panelists' contributions made after the event.

There are three separate blog entries below:
- Audience Questions (about 90 questions; 26 questions were read aloud and answered at the event)
- Media Questions (5 questions and responses)
- Closing Comments (3 minutes per panelist)

We were thinking of categorizing the questions, but so many of them span several different topics that we chose not to categorize. We suggest you use your web browser's 'Find' function (typically just hold down 'Ctrl' and press 'F') to search for keywords you may be interested in.

Remember that the panelists are under no obligation to post additional online responses.

Where does the water pumped out of the mine over each 24 hour day go to?

Planning Commissioner Kenitzer works for the mine. Will David Watkinson please respond to concerns about conflict of interest?

The debate so far has been "business as usual" - in other words, "people vs. profit". What about addressing the effects on Earth as a living being vs. profits?
[UPDATE July 7 2008 - Mike Thornton] The Sierra Fund's Mining Project is trying to do exactly that, while looking at the effects of mining toxins on human health and addressing the need for acknowledging the devastation of the Maidu and other native tribes as a result of legacy mining. I think that until we address what we've already done and that the past continues to effect the present it will be hard to get people to really discuss the how future mining may possibly effect the environment.

SMARA only covers surface reclamation. How can we be sure that below-surface resources will be protected (such as groundwater)?

I’ve seen our own country come into other countries and promise that what they want to do will benefit the community, only to see the reality that the local people and the environment are exploited. How do we know this won’t be done to us? I don’t believe you’re any different than us.

How long after the mine opens will the ceramics plant open?

What is the status of the ceramic tile project? What is the market for the tile?

Isn’t most of the world’s gold used in jewelry? If so, is there really a compelling case to accept the risks associated with gold mining?
[Mr. Watkinson] about 60-70% of gold is used in jewelry around the world, that’s a typical figure put out by a lot of websites; gold is also used for a number of other things - dental work, medical equipment, it’s used in the space shuttle, it’s used in your television, in your cell phone, in your computer, gold has a lot of uses. There’s been a movement to try to recycle gold as much as possible and I think that’s a good movement especially with jewelry to be able to recycle and reuse it to cut down on consumption and that’s a viable thing, but there’s minerals used in everything - if you weren’t buying gold jewelry, you’d be buying someone a walkman or some other type of present, they all have minerals in them. People like to talk about gold jewelry as an example but as consumers it’s probably a product that has the potential to be recycled 100% if as consumers we changed the way we view gold. It’s used for jewelry and some of the gold from our project would probably end up in jewelry.
[Dr. Dobra] Let me add to that - when I first got involved in the gold business, I was at a conference and I met a guy from Switzerland and he just looked at me and he shook his head and said ‘you Americans don’t understand gold.’ And I was a little offended by that but eventually after a few years I discovered it was true. About 70% of the world’s gold annual output gets put into jewelry and about 70-plus% of that disappears somewhere between Beiruit and Hong Kong. That’s because the people that live in these countries in that region - live in countries with inadequate banking systems - let’s just call it that - shaky governments, gold is a traditional way of storing and accumulating wealth in these countries. Another thing to recognize is that when we’re talking about the jewelry that gets made and goes to this part of the world, it’s not your 14 carat gold like a typical American wedding ring, it’s 22 carat bullion jewelry. It is very high quality, very heavy, and it’s simply a way that most of the world’s people store wealth. It’s a bit misleading to say it’s just jewelry to adorn somebody. It is jewelry, but they melt it down when they run out of money, and they buy more when they have money. They treat gold in that part of the world just like we do a savings account.

Air pollution; mining in serpentine; how to mitigate asbestos; epidemic in asthma in children.
[Mr. Watkinson] There is serpentine in parts of the mine, and we will be mining through serpentine zones, the gold country can have serpentine waste that we will have to handle, there will be plans in place to handle that. The main way of handling serpentine is to keep the material wet, we may try as much as we can to avoid bringing it to the surface by putting it back underground in underground storage so we have a management plan that is part of our waste discharge requirements that will address how serpentine will be handled. There are not plans to be trucking that material around site, there are not plans to truck tailings around site. It’s a popular misconception, I guess, that we were planning on, as part of building a tailings - a ceramics plant off-site, people here have assumed that material from this site will be trucked to that tailings or ceramics plant; that is not correct, we are interested in building a ceramics plant in another location because we are still a couple of years away from being able to build it on this site so we would like to build it somewhere else but it would have its own feedstock from the local area. It’s a misconception that tailings would be trucked to that site and I just wanted to clear that up for everybody.
[Mr. Thornton] just to briefly add that asbestos is one of the issues that we address in [the Sierra Fund’s] report, “Mining’s Toxic Legacy” that there has already been millions upon millions of tons of ore that has been brought up out of the earth and crushed to one degree or another, a fair amount of that containing asbestos, a lot of that material was crushed, shipped off used for building materials, used for road gravel, and there really hasn’t been the amount of study necessary to find out the level of exposure to asbestos, that people are already being exposed to as a result of legacy mining. It’s a naturally occurring substance. We’ve seen in El Dorado County where officials from EPA have gone out and played in a schoolyard baseball diamond and within an hour had already registered significant levels [of exposure] to asbestos. So, asbestos is already in our environment - not in every part of our environment - it’s certainly already in our environment as a result of the legacy mining - that’s one of the things that we would like to see addressed through research as well as exposure to arsenic and mercury and other chemicals and heavy metals as a result of the legacy mining that’s already taken place.
[Mr. Martin] A little further comment on the asbestos, certainly with what’s already existing you could put up a high-volume sampler on the side of the highway and you could collect a lot of asbestos samples - in my experience most of asbestosis in the cases that have arisen in the past have been in the shipyards of World War II and certain examples of mining when they were tunneling and I would question, and I don’t have all of the information on this, as Dave [Watkinson] has said there’s serpentine rock in the mine and that would contain asbestos and they’re underground and they’re blasting and then we’re crushing it and we’re bringing all this up in a very powdery form, how can we identify which rocks contain asbestos and once they’re up at the surface, that’s in the air. Are we going to have constant watering to keep it wet all the time? I just don’t see that happening.

[for Greg Martin] If Emgold does not mine gold here, it will be mined somewhere else, possibly in a third world country with no environmental standards. Isn’t it better to mine here where we can monitor the environmental aspects of the project and make changes?
[Mr. Martin] I don’t really think that’s a fair question, I can’t speak to the mining practices in another country. If we wanted to equate apples to apples and put mining in another well-developed country, it would be best to keep our jobs at home, I would say that. I’d like to also see if we could move Idaho-Maryland and Emgold about 30 miles off into the mountains where it would be a lot nicer thing, I might not have quite a strong opinion on it otherwise. Thank you.
[Dr. Dobra] Let me address that topic a bit. There’s a bit of a misconception which that question states about mining overseas. If a company is going to open a mine in - pick a place - Tanzania - it’s generally not going to lay out $100million of its own money to do that. It’s going to go to banks. And one of the conditions that a bank - say like the world bank, who are very interested in financing projects in poorer countries. One of the conditions that will be attached to that loan is going to be that they must meet or exceed in their mine plan US EPA requirements. The problem is, and they’re anxious to do that, because if they have an accident there, an environmental problem, they can say ‘hey look we followed US EPA rules’. The problem that we run into in places like that is not so much that they don’t have regulations, but that they don’t follow through on the regulations, meaning the host countries, and do the inspections that you would get in a legal and government environment like this - in many cases, these countries, these third world countries if you want to call them that, simply don’t have the technical capacity to do it. So, it’s not fair to say that they don’t have or they don’t use good environmental standards, what’s probably more accurate to say is that once they get these projects going, they have very little ability to regulate the activities that go on in their countries.

[for Dr. Dobra] “highest paying industrial wage” - [what is the] average? “Grunt Workers Wages?”

What about subsidence as water is withdrawn and with blasting and new tunnels?

[for Greg Martin] What is, and can you please expand on, the environmental issue that concerns you most?
[Mr. Martin] I’d have to say I don’t have an overriding environmental concern. I mentioned before I’m not really anti-mine. For 8 or 9 years I worked at a division of BP making plastic chemicals and plastic resins and fiberglass panels. My solitary issue aside from ground water and water resource being consumed and wasted and air pollution is very simple. This mine is very large, and Grass Valley is too beautiful and nice of a little historic town to just put its arm around a mine that is just so big that it will take over the town.
You’ve heard we’re going to have sixty trucks just from the tile processing - there will be another hundred trucks hauling ore and rock waste all over the place at every hour of the day. But, no, I don’t have any individual concern, I’m very concerned about water and air impacts, and the other issue is just that it’s the wrong industry in the wrong place - too big a mine with too many impacts on the town that will be entirely disruptive. It’s not possible to mitigate a town when you’re going to have 150 tractor trailers every day - what are you going to do. You can’t run them all at night, you can’t run hazardous materials at night. That’s my main beef- too big a mine in a little town.

What is the likelihood of dewatering creating a condition that results in homes/structures in the vicinity of the mine - say within a one-mile radius - being undermined such as happened with a residence in Alta a year or so ago? [editor’s note: the writer probably refers to the April 24 2006 event in Alta, CA, of a schoolteacher being killed by a large ‘sinkhole’ opening suddenly in the middle of the house. A quick web search did not show any final determination of the cause, though mining was listed as the primary suspect. http://www.msnbc.msn.com/id/12457889 ]
[Mr. Watkinson] You wouldn’t see any subsidence related to our operations, mining in the rock types that we have here and the depths that we’d be mining at, you wouldn‘t see any subsidence. I think there was an issue here of a house that was built on top of an old mine shaft that caved into the mine shaft but that isn’t from a subsidence issue, it was built in a location where there was an existing working, right on top of it.
[Dr. Myers] I was just going to add that I think I would agree with him in that regard. You would have seen a subsidence in the past and perhaps someone should do a survey for any residual subsidence that occurred in the past just to verify that what Dave [Watkinson] says is correct, but in a bedrock system like this, not being a karstic system or a limestone system which is where you do get lots of subsidence, I don’t think that this is a problem in this particular case.

[To Mr. Watkinson or Dr. Dobra] Will cogeneration be used in the process to reduce the energy impact?
[Mr. Watkinson] We’re not looking right now at cogeneration, we’re looking at using electricity and natural gas that’s available there but we will be designing, especially with the ceramics plant, as much recycle of energy as we can, entirely within the plant. That’s the way ceramics plants are designed today. Certainly from a mining perspective we don’t want to pay for power any more than anybody else so we try to design things as efficiently as we can. We’ll have a combination of electric and diesel equipment underground, we’ll look at shifting, for instance maybe our pumping will be done in off-peak hours, when there isn’t a load on the day shift, so there’s a number of things that mining companies do to manage power and to minimize it and we would certainly be trying to look at ways to build an efficient operation as part of our final design.

Would you elaborate on the impact of the mine on tourism.
[Mr. Watkinson] I can definitely answer part of that. As part of our project we’ve designed in an education center and outdoor theme park. We see the potential for that to be a tourism attraction for the city. If you look at other mines, Sutter Creek is a good example, they have underground mine tours, we would have that, and mill tours, and potentially tours of the ceramics plant. You can liken this to Homestake mine and their visitor center, [garbled] Canyon mine and their visitor center, Big Nickle mine in Sudbury Ontario, some of these centers have generated tremendous tourism for these economies, people come into the community and spend a night in the hotel and spend their money in the restaurants, we’ve tried to build that into the project as an opportunity here for the city.
[Dr. Dobra] I’d like to just add quickly, the first time I came to Grass Valley was to take a tour of the Empire Mine, so, it does matter.

How many trucks will run per hour? To avoid impacts to road infrastructure, will you build a rail transport to Nevada and the central valley?
[Mr. Watkinson] Definitely the project couldn’t afford to build a rail system like that. We’re looking at about 1200 tons per day of ceramic tile being trucked off-site, at 20 tons per truck would be about 60 trucks per day, you can divide that roughly by your 24 hours, I would expect somewhere around a truck every ten minutes or so, something like that.

Mine cleanup costs are often grossly underestimated, and often aren’t done if the company is underfunded. Why will this mine be different?

What clean energy companies have proposed setting up business in this area which could provide 400 jobs?
We keep hearing about the environmental impacts caused by past mining practices, but please discuss the environmental improvements that have come about from modern mining methods.
[Dr. Dobra] I did mention it in my presentation, I’m an economist, not an environmental scientist. I know that a lot of money gets spent, they set up air monitoring stations, they set up water monitoring wells, they keep logs that they get inspected. The legacy sites that Tom mentioned, he’s going to Battle Mountain tomorrow, he’s going to a site that has been mined on and off since the 1880’s, and the company that is developing it - I know that Able [audio unclear] Empire is Newmont Mining, but they’re the ones - they are essentially applying for a whole new set of permits, they are going to clean up all the abandoned mine stuff at the sites that are out there, and when they walk away from it - I’m not sure when that will be - it’s a copper gold mine - it will just look like a hillside. There’s cleaning up toxics, there’s dealing with visual pollution issues which are significant in some cases - disturbance of the land and so forth - all the land gets recontoured and reseeded and becomes suitable as wildlife habitat to the extent that it ever was. This is probably really more of Tom’s [Dr. Myers] line of expertise than mine. I know that they do it and it costs a lot of money, but it’s built into their mining permit.
[Dr. Myers] Yes, I’ll say something, especially about this project that John [Dobra] just mentioned. It’s an old legacy site, it’s got huge contamination issues, but it’s not going to be… I’ll differ a little bit because it’s not going to be cleaned up and walked away from perfectly. This is the one I had in mind… it’s been predicted that it will leach acid mine drainage for thousands of years and they’re having to put up about a million dollar in-perpetuity bond - it’s not a bond that they will ever get back - it is designed for long-term treatment and monitoring. So the site may ultimately be better than it is today but it’s going to look like a mine site for geologic time into the future quite honestly. The magnitude of differences between a mine like that and what we’re talking about here - that one is 25 miles from the nearest residence and of course here we’re talking about residents practically in the middle of the … it’s hardly comparable … but it probably is [going to be] in slightly better condition in the future than it is today, or than before they started mining.
[Mr. Thornton] I really just want to be clear that we’re not comparing modern mining or modern mining regulations to what has taken place as a result of the legacy mining that has happened. These issues are here today, they will be here regardless of what happens with the Idaho-Maryland mine. In talking about “forever remediation”, I think [we should be] talking about Iron Mountain mine which is up by Shasta [which] has the world’s most corrosive water as a result of acid mine drainage. It’s been mostly remediated - some 85% - but it’s going to take millions of dollars forever to do that. And it’s documented with doing fish kills of the tens of thousands in the Sacramento River all the way back from 1900 up through the 1960’s. As a result, lots and lots of work, lots and lots of money, most of it - I believe - taxpayer money, which we’ll have to continue on into the future in order to remediate this mine that’s no longer in operation. The thing that was brought up about the number of mines, real quickly - this map, if you can see it [holds up map] is the abandoned mines in California. This year there’s fifty thousand abandoned mines in Callifornia alone, of which 11% according the the Abandoned Mine Lands Unit - that’s about five thousand - which will be in existence and are in existence regardless of what happens with this mine - so we’re not saying that modern mining and modern mining regulations are the same, we’re saying that this problem has been created over the last century and a half and will be here regardless of what Emgold does or not.

A few hundred jobs may be created (probably filled at least partially by workers from Yuba City or Sacramento). Most other residents of Grass Valley will be negatively impacted. Why is this a good idea?
[Mr. Watkinson] I’m not sure why they would be negatively impacted but we are looking at about 400 jobs between the ceramics plant and the mine. There’s different skill sets in the different jobs - we’ll hire mechanics, electricians, miners, we’ll have supervision, we’ll have security people, we’ll have janitors, there will be a wide range of jobs. We do have a labor shortage, we’ll be looking at training as many people as we can locally, we would expect as a minimum to have about 50% local hire here, certainly the ceramics plant can be virtually all local hire, assuming that there are people interested in working there. There will be a lot of opportunities here. We will use contractors especially at the start of the project when we’re constructing the mine, it will be a combination of local contractors and private contractors that we have to bring in from outside, there’s really not very many companies here in California that are capable of sinking a shaft for instance, so we’ll have to bring in somebody from outside with that type of skill set. That’s not something you can train people to do, you have to bring in contractors to do certain types of jobs. There will be a lot of opportunities for employment here, there will be a lot of opportunities for contractors, we’ll be buying all sorts of materials here locally, we’ll use fabrication shops and other things, there would be a lot of spin-off opportunities, we have said based I think on 2005 figures that the average salary in the ceramics plant would be about $45,000 and the average salary in the mine would be about $65,000 and over the last few years those salaries have definitely gone up because of the labor shortage.

$80,240 on average is consistent with a starting salary for an engineer with a master’s degree. What is the real salary that might be expected for a common laborer in the mine?
[Dr. Dobra] Well, I can’t really answer that, the truck drivers in Nevada mines are probably making $25 an hour, something like that; the people that work in the labs are probably making more than that, each mine will have a laboratory where it does assay analysis of the material - [to Mr. Watkinson] I don’t know if you’re going to have one of those - so, it’s a very good paying occupation. And they also have a labor shortage in Nevada. Our employment in the industry in the state, even with the price of gold going way up, has only gone up by a couple thousand, that’s because they can’t find the workers. So, it’s a great job opportunity.

Please explain exactly how you blast in a mine. Also please explain where you use mercury in a mine.
[Mr Watkinson] We don’t use mercury - that was a past legacy practice, so we don’t use it. There are mines in Nevada that have mercury in the ore and that has been an issue, so we’ll bring that up - that’s an air emissions issue in particular, there was a mine that was shut down there, but we don’t use mercury in the process any more. As far as blasting, typically we have different types of machines that drill holes, they drill a certain pattern, and we load those holes with explosives and a blasting cap, the typical type of powder that we use or explosives that we use is ammonium nitrate which is essentially fertilizer and a fuel-oil base, that’s what that consists of. There’s a blasting cap that initiates that, each blasting cap is on a different delay so you actually get different holes going off at different times, so that would be a traditional blast. In a horizontal tunnel you might blast somewhere between 8 and 12 feet at a time, before you have to drill and blast the next round. There are other types of mining methods that use larger diameter holes and longer holes, so there’s a variety of ways. … there’s also boring machines that are used now in addition to drilling and blasting.

Being located just next door on Clydesdale Ct. (Peaceful Valley Farm Supply), what concrete day-to-day changes can we expect with regards to traffic, noise, etc, which would negatively impact our business neighborhood?

Will the Idaho-Maryland Mine keep the full bond amount for well mitigations in place for the life of the mining project?

You say, if re-opened, Emgold will be required to clean up the sites. Since we are still feeling the environmental impacts of mines closed decades ago, please outline what the cleanup will look like. How can you ensure we won’t feel the impact?

If Emgold does not clean up the site, who will?
[Mr. Watkinson] The Idaho-Maryland site I guess is owned by three local people here. They are in their mid-eighties so they wouldn’t have the financial wherewithal to clean up the site. It probably by definition would become an abandoned mine site here in California in order to clean it up. It could become a Superfund site here and it could be tasked to the city to actually clean it up in conjunction with other state and federal agencies. You can take a look at Banner-Lava Cap as an example of what happened. It became a superfund site and it’s being paid for by the taxpayer to clean it up.
[Mr. Thornton] I just wanted to say, and I think David just did say it, in the end, it will be us who could wind up paying to clean up this site and once again, it’s almost a broken record, we already are doing that. I’m looking at a couple of headlines just in the last couple of days from Amador county where the EPA wound up settling regarding a legacy gold mine there. That was almost $2 million that they had to pay, that’s our tax money. And in fact from yesterday’s paper, a legacy mining issue where the arsenic is keeping the mine from trying to do its scheduled reopening. They had CYA [California Youth Authority] wards out there working in this contaminated dirt and basically had to pull them off, so our young people are out working in some cases, and not just our young people, but many people are out working in these environments, being exposed to these things, once again, to what degree it’s affecting their health, we don’t really know because studies haven’t been done. But the fact of the matter is that, in the end, if no one else pays, we wind up paying, and we wind up paying in a lot of different ways. It’s really important I think for us all to think about that.
[Mr. Martin] Just a little comment. It’s not necessarily true that the taxpayer will foot the bill for cleaning up the site. It’s all in the chain-of-title, whoever owns the land possesses the land, that’s the way [garbled agency name] is, that’s the way the Hazardous Substances Account Act. I’m not clear on who owns every one of the parcels, but I understand Idaho-Maryland has some possessory interest in certain of the parcels. And basically whoever owns the land now, whoever owned the land in the past, can be forced by the state to clean it up. It doesn’t necessarily fall on the taxpayer although there is a fund for that. They go through the chain of title, if they are older mining companies, some of them still hold mineral rights or interests, they have private property, the state can force that owner to clean it up. I think it’s a little bit of a scare tactic to say all the cleanup will fall on the taxpayers, because that’s not necessarily true.

Emgold’s activities will create environmental issues. How do we know these will not be worse than what we have currently?
[Mr. Watkinson] I think the main reason is because since the 1970s we had tremendous regulation, not just the mining industry but all industries. Technology has also advanced significantly since the 1970s in relation to water treatment plants, things like acid rock generation, metal leeching has improved significantly. The projects that are designed and built today are far superior to what would have happened even as late as 1970. We could certainly go back and talk about the mining legacy from 150 years ago too, but the types of mining that were done in the past aren’t done today. We’re highly regulated, if there’s a problem with the mine, we can be shut down by regulators, we can be penalized, I can certainly go to jail, there’s a lot of different steps that can be taken if a mine isn’t meeting it’s obligations.
[editor’s note: end of first video tape. If there were any other panelist comments on this question, we were unable to record them.]

[for Mr. Watkinson] What percentage of the profit will be returned to the community where the resources are extracted?

[for Dr. Myers] Who is considered (in your opinion) as the foremost expert on ground water modeling?
[Dr. Myers] Who is considered by whom the foremost expert on ground water modeling? The best textbook I can think of was written by a person named Mary Anderson who I believe works for Geological Survey (presumably USGS) I can’t tell you who’s the best one for California. In Nevada, a lot of the best are at the Geological Survey in Nevada quite honestly because we have so many mining issues. I can’t recommend a modeler although I am available.

If the Idaho-Maryland Mine does reopen, should the County of Nevada negotiate a percentage of the profits?
[Mr. Martin] We’ve heard some about bonds for cleanup and reclamation and financial assurances. One of the things that if the project were to go forward I would hope the City of Grass Valley would have the negotiating strength to get from the mine is there should be no liability to Grass Valley. There should be no liability to Grass Valley for any lawsuits that would generate from surrounding areas once the mine opens from all the air and noise and dust problems, there should be no cost to Grass Valley for replacing water when all the peoples’ wells go dry and I would think that Grass Valley would heed a tremendous value of its actions to look at a company whose gross income will be on the order of $200 million a year, aside from paving roads and making parks, Grass Valley ought to be awfully sure that they get the money that before it goes back to Canada and the other investors that at least they get at least the share of the revenue that will somehow hope to maintain a level of service and infrastructure in the city and the area that otherwise is going to go right out with the gold dollar somewhere else. So it’s a very big issue, it’s certainly something that Grass Valley would need to be tremendously attuned to negotiate, this is exactly like builders’ fees and anything else. There will be a tremendous amount of money here if this mine reopens, that’s exactly why it’s going forward or why they’re trying so hard to make it go forward. So it certainly behooves Grass Valley to get on that gravy train if this mine is going to dominate the city like it will if it does become reality.
[Mr. Thornton] Once again I’m not necessarily talking about Grass Valley, but there’s an increasing call for reformation of the 1872 mining act and certainly a lot of talk about that is how mining companies will be assessed different fees for their ability to have rights to minerals. Dianne Feinstein is working with legislation to see about creating funding streams so that more money could be available for legacy cleanup. There’s a lot of interest both at the state and federal level. Mining is not going to go away. Once again, not talking about this mine, whether it should open in Grass Valley or not, mining is here to stay, the question is of course what happens to that, how do companies garner the rights to mine minerals, what should they have to contribute back to the communities and the states and the nation to be able to do that and to what degree can those funds, at least in part, be used to remediate the really really expensive and widespread problems that we already have as a result of in this state alone the some 50,000 abandoned mines that I have on this map here. So there’s a lot of talk about that, a lot of interest at the state and federal level and it’s a big question that people are going to have to ask and answer not just here but also as we move our way up the political food chain.
[Mr. Watkinson] One of the things I brought up at a couple of public meetings is here in California we pay a $5 per ounce tax into the Abandoned Mine Reclamation Fund. I’ve been involved in a number of projects around the world, and mines have often paid into these funds and then the funds go somewhere else than the community. I’ve brought this point out to the community a couple of times is, it would be nice if you could put pressure on the agencies to try to spend those funds here in Nevada County as a priority as opposed to spending them elsewhere in California, nobody has really taken up that challenge yet. I’d also like to talk about some of the benefits of the project. We certainly will be paying property tax, we’ll be paying development fees, sales tax from goods and services we buy here in the local community, sales tax from the money that our employees generate in the community. Typically for every job that a mine has on its site in generates about four other jobs. They won’t all necessarily be here in Grass Valley, but that’s a fairly good ratio for what a mine supports as alternative jobs from the income that’s generated by the employees spending their money in the community. There will be a lot of spin-off opportunities here for local businesses to buy directly from the mine or supply goods and services and also a lot of spin-off opportunities because of what’s generated by the economy from the mine and the employees that are here. This project has many benefits for and tax generation for the local community here at a time when certainly our revenue is decreasing here in Grass Valley.

[for Mr. Watkinson] Please address the concern that Emgold is ineligible under Security Exchange Commission regulations to trade in the U.S.. Why, in fact, does the S.E.C. caution U.S. investors about the risks of trading in Emgold stock?
[Mr. Watkinson] We actually trade in the United States on pink sheets over-the-counter, so we actually do trade in the U.S. and we file a 20F report that’s required to do that. In order to get on certain exchanges you have to have a certain share price or meet other criteria. We’re limited to trading on the pink sheets at this point in time. If we get our share price up to a certain level for a period of time we can qualify to trade on other exchanges. As part of our filing for 20F’s or any other reports we put out, like all industries now either from a regulatory point of view or an accounting point of view there is a whole list of disclaimers that come out on those reports and they’re standard for all the mining industry, if you read any mining industry report you will see the same disclaimer, it’s just part of doing business and we have to do that.

I am concerned that the I.M. Mine, if permitted, will be sold to a large multinational corporation, specifically Newmont Mining. Is this a valid concern that Emgold would sell to Newmont? Is it true that Newmont owns the subsurface mineral rights to the adjacent Empire Mine?
[Mr. Watkinson] That’s correct, Newmont still owns the mineral rights, to my understanding, for the Empire Mine. I don’t believe they have any surface rights at this time. We have had no discussions with Newmont about our project other than an interest in what they’re doing from an environmental point of view on their site and they’re interested in what we’re doing on our site. Is there potential for Newmont to take a look at us once we get the permit? Sure, that could happen, it’s possible they could invest, it’s possible they could make an offer to buy us out, I can’t predict the future for that so it’s a possibility and if we had an offer like that I would have to take it to our shareholders to evaluate and that’s the reality of doing business. Right now we certainly don’t have anybody knocking on our door.

The additional energy required to run the mine is enormous; PG&E assurances aside, where is the additional energy expected to come from?
[Mr. Watkinson] There’s been a lot of comments, especially on APPLE’s website, about impacts and amount of energy that will be used in comparison to Nevada County. I’d like to point out especially in the issue of natural gas that only about 28% of the residences here are hooked up to natural gas and it’s used mostly for cooking and heating a few months of the year, we don’t have any industrial uses here in Nevada County any more since the 1950s when the mine shut down. If you look at the energy consumption in California you’ll see that we have essentially no impact on the energy use in California. We have a very small impact or increase on the state energy use. We have talked to PG&E for the electric and natural gas and we have ’will-serve’ letters that indicate that they are able to supply us. You have to look at energy not just in Nevada County but on a state basis and you also have to look on a global basis. The ceramics that we produce actually will use less energy than a conventional ceramics plant. We expect that we’ll be sort of in the range of 10-15% less energy than a conventional ceramics plant. We also don’t have to transport our material from overseas to our site so there’s a number of energy savings that are involved in putting a plant within 500 miles of its market which we plan to do with the process we have. So we have potential to actually decrease energy use in the ceramic side of the on a global basis from what’s being used there because we’re a disruptive technology that will be coming in and replacing conventional ceramic technology will use a lot less energy. So you have to look at all these things, you can’t just look at it in relation to Nevada County.

Besides the party line about more tourists (I.e. increased restaurant and hotel business), how will the city and the people of Grass Valley economically benefit from reopening the mine?

[to Dr. Dobra] Please explain the economic benefits to Nevada communities that have come from modern gold mines in Nevada.
[Dr. Dobra] Basically, one that I mentioned on the slide [during opening comments] is that you have the highest paying industrial wage in the state of Nevada in the mining industry. The industry also pays taxes, considerably more than most traditional property owners - our tax is set up as a property tax, they call it a net proceeds tax that looks like an income tax, but it’s a unique tax to the mining industry. In the rural communities where mining exists, they get this revenue as a property tax and it mitigates the impacts of the growth that occurs in those communities. The industry also - actually the largest tax it pays is the sales tax on supplies and equipment and so forth and that to some degree stays locally in the communities although the state gets it. I realize that California’s tax system is quite different than ours [Nevada’s] but we’d see definite economic benefits both in terms of private wages and secondary jobs created and tax revenues for state and local governments.

[to Mr. Watkinson] A few years ago, eleven property owners lost their wells due to de-watering for a gold mine. Since Nevada County hydrology is so unpredictable, what guarantee can you offer Grass Valley [that this will not happen]?
[Mr. Watkinson] I believe that was the Siskon mine, and there was actually a mitigation plan in place as part of that operation. The geology is quite a bit different than the Idaho-Maryland mine, it was talked about at one of the public meetings that the city had put on. The mitigation plan actually worked in that case. The mine responded very quickly, and brought temporary water to people’s wells that were impacted, then they actually drilled a number of new wells for those people over time and if you actually go and talk to the people that were involved, they were pretty satisfied with what the mine did. The mitigation plan actually worked very well and I think you need to actually go and talk to the people that were involved, because I think they will tell a different story.

It is my understanding that backfilling with an ore slurry in this area is a sure way to make acid mine waste, over time. Your opinion?
[Mr. Watkinson] The geology of every mine is different so when you look at acid rock generation you have to look at each particular mine and the characteristics of that mine, including the geology, other factors, what the material is used for. We’ve done test work on our project to look at acid mine generation, we’ve done what are called static tests which calculate a ‘neutralization to acid generation potential‘. The testing we’ve done to date all shows a ‘neutralization to acid generation potential’ greater than three which indicates the material is non-acid-generating. You also have to be concerned about metal leeching in mines; acid generation is one issue, again we don’t see it, the pH of the water coming from the mine is neutral, the tailings sitting there for fifty years haven’t generated acid. The other concern is metal leeching, we can monitor the water from the mine, that’s one way of looking at it, but we’re also looking at doing humidity cell test work which are called kinetic tests which will look at the potential to generate metals over time as material is exposed. In our case, putting tailings underground is actually one of the preferred ways to minimize acid rock generation, because at the end of the project you can actually flood the mine and those tailings will be underwater, which takes away the oxygen which is required for reaction that would generate acid so putting tailings underground is one of the preferred methods to minimize acid rock generation.
[Dr. Myers] I was going to mention that from what Dave [Watkinson] has said, this is not a highly acid-producing rock, that’s not to say that it won’t produce any acid, and it’s not to say that the existing water quality in the mine reflects what may be going through it in the future once you’ve lowered the water table and allowed oxygen to access some of the rock in the mine. My opinion is that putting a slurry of tailings into the mine is only a good idea if it is done in a - for lack of a better word, concrete form. Barrick Gold Strike is doing this at a mine called Mikol out in northeast Nevada and they have to come get special dispensation from the state Division of Environmental Protection to put this stuff in. It’s going to set up like concrete and effectively it’s going to be a means of supporting the mine in addition to disposing of their tailings so in that regard it’s not a bad idea but it has to set up and not allow any water at all to leech through it. Tailings are the processed ore, and it’s had … I presume they’re going to destroy the cyanide that might have gone through it before they backfill this, at least I’m sure that they’ll want to, but I would like to see some tests of the tailings before I see them put back into the mine.

How will you mitigate the impact of the increased truck traffic on our roads?
[Mr. Watkinson] Our operation will run 24 hours a day, 7 days a week so you also have to look at our traffic being over a three-shift period so we don’t necessarily have our 400 employees showing up on a day shift, they’re spread out over a number of shifts over a period of time. What we’re doing and working with the city in doing as part of the EIR is looking at setting up our shifts at non-traditional times, so we won’t work necessarily an 8 to 5 shift, we might start at five in the morning and go until one in the afternoon or whatever the eight-hour period would be, and have a shift change that’s non-traditional so when you look at our project we can adjust our shifts to mitigate traffic. We’ll also be looking at things like using busses and van-pools and things to get our employees to work as part of the project and we’ll have a traffic management plan to try to minimize employee traffic coming to site. Certainly when we’re using contractors initially to start up the project and construct it we may be able to require busses and van-pooling from those contractors to mitigate impacts. We certainly will have impacts from trucks that will be hauling aggregate and ceramic tile off-site, so again we’re trying to set up times that they would remove material from the site at non-peak times. There’s a morning peak, an afternoon peak, and there’s also a school peak so will try to manage our traffic to avoid those peaks as much as we can. We’ve put a number of traffic improvements into our project including a road that would connect Idaho-Maryland road and East Bennet road which is something that the city has been looking for in their long-term plans and also we’ve realigned Centennial to Springhill Drive and put lights there, that’s a dangerous intersection, we’d put a three-way stop over on East Bennett Road where this new bypass road would connect to improve the traffic. So we’ve tried to build a number of traffic improvements into our project.

Have you determined at what price-per-gallon of gas operating the mine is no longer viable? And what is that price?
[Mr. Watkinson] I can’t say what price it would be. Certainly we have both electric and diesel equipment in the mine, we will be using natural gas for the ceramics plant. The project is certainly impacted by energy prices just like all other industries are impacted. What will be interesting to see, I guess, given what’s happening with the oil industry and the repercussions is as our economy changes and we start to look at other types of energy and energy efficiency, we will probably see a slow-down in the economy, we will probably see inflation, we will probably see the price of gold rise also dramatically during this period too so there’s a number of factors that will be in play. We’re certainly affected by the price of fuel, just like everyone else.

Dewatering the mine will severely impact Wolf Creek - through huge volumes that will scour the creekbed, and toxics that have seeped into the water. How will the mine managers monitor both volume and toxics, before the water is released into Wolf Creek?
[Mr. Watkinson] We don’t believe that we’re going to impact Wolf Creek. We actually have been monitoring Wolf Creek and the south fork of Wolf Creek, the water flows there for a number of years and as part of our discharge permit we would be required to monitor upstream of our discharge point, our discharge point, and below our discharge point for both water quality and also for flows in those creeks. We would certainly be able to measure any impacts. I’d like to point out that Wolf Creek is also used as an NID [Nevada Irrigation District] conveyance for a good part of the year. Flows range in Wolf Creek around the mine site somewhere in the dry season when it’s not being used by NID around 10 cfs [cubic feet per second] to 30 cfs and when NID uses it goes up in the neighborhood of 50 to 60 cfs. It’s used as a conveyance for agricultural water downstream on a regular basis. The flows in the south fork of Wolf Creek are much less than that they are in the range of one to two cfs and we would be discharging in there during dewatering. Our discharge rate should be about six cfs and when we hit [garbled] dewatering we would expect our discharge rates to go down to about one to three cfs. All the dewatering will be highly monitored and subject to the national pollution system discharge elimination system permit and that will be under the California Regional Water Quality Control Board regulation and they will be the ones that will designate what parameters have to be monitored and what criteria we have to meet. We expect to meet California toxic rule standards which are far below drinking water standards, they are some of the strictest standards in the United States. We’ll have two water treatment plants on-site, one at the New Brunswick property and one at the Idaho-Maryland project to treat the water.
[Mike Thornton] I just wanted to add something too, because it’s a conversation that David [Watkinson] and I had last week. Certainly large amounts of water going into the creek can mobilize the sediments and mobilize the contaminants that are included in those sediments whatever that may be, including mercury which could then possibly begin a process of methylizing. It’s important to remember that large amounts of water coming from any type of source can do this same thing, including natural large amounts of water in large rain and flood events, and to remember that Wolf Creek is but one creek in the area and throughout the region that contains contaminated sediments, various types of contamination to one degree or another, so these types of events where large amounts of water going into waterways mobilizing sediments and mobilizing contaminants is not something that’s simply limited to whether or not Idaho-Maryland mine puts a lot of water into this one particular creek. This is something that’s happening to one degree or another in many areas simply as a result of natural flood and large storm events.

What kind of baseline data do we have for understanding the impacts of short-term and long-term increased flow on the south fork of Wolf Creek? How can we be assured that dewatering will not adversely impact the creek and the state park through which the south fork runs?

Can you name a currently operating mine, similar in size and planned operation to the Idaho-Maryland, that one could visit to get a feel for the project?

Will there be a written contract to not allow mine tailing accumulation, regardless of the market for ceramic tiles?

Please explain metal loading from deep rock mining and the effects at the local, state, and total “eco” level.

[for Mr. Watkinson] Should you receive approval to go ahead with the mine, do you plan to operate it or sell it to a well-capitalized mining company with mining experience?

The managed growth initiative, if passed, will provide voters a chance to vote on the IM mine re-opening. Will the newly proposed Urban Growth Boundary initiative also force the mine to a vote?

If the mine was forced to close due to violations of some sort, how would NAFTA regulations be applied? Would the community, the state, the nation be liable for the cost of lost production?

What analyses are currently being done to predict acid generation at the IM mine?

[for Mr. Watkinson] Will you really be able to mitigate for the loss of the wetlands that have been identified on-site?

The Idaho-Maryland Mining Corporation has been and will continue to be cleaning up an historic mine site. If they do not get their permir, will the taxpayer have to fork out the money?
[UPDATE July 7 2008 - Mike Thornton]I don’t believe that IMM Corp. has been cleaning up the legacy toxins/tailings that already exist on the site of which there are something like ¼ million cubic yards. I believe that if they ever begin to mine they will then be responsible for cleaning those up, but not until that time. The fact of the matter is that in looking at the thousands of abandoned mine sites that need cleanup there appears to be an incredibly difficult time in finding a “responsible” party to bill for the cleanup. In many cases the companies and individuals that were responsible are long gone. In other cases where there is a responsible party the costs of cleanup far exceeds their ability to pay for it and in other cases long drawn out court battles eventually wind up in settlements where the taxpayers pick up a good portion of the bill. In just looking at a few "priority" cleanup sites in California taxpayers have already shelled out millions upon millions of dollars and that is likely to continue into the forseeable future. Many sites simply sit with no work being done because there are no funds, public or private to do the work.

How much energy and natural resources are utilized from shipping industrial materials from other countries?

David raised the argument that Emgold would mitigate traffic by bussing and carpooling - and that the site is slated for some form of development - will bussing and carpooling still happen?

How can you assure you won’t dewater all of Banner mountain? If wells further away from the mine are affected, what will you do to resolve problems?

The mining laws are so much stricter than 100 years ago and will be enforced by federal and state, so why are you so opposed to opening the mines?
[UPDATE July 7 2008 - Mike Thornton]The Sierra Fund neither opposes nor endorses the opening of mines.

What do you plan on doing with the mine waste? Any thoughts on backfilling it?

Presuming Emgold proceeds with their plans to re-open the mine, what happens when the gold runs out and you suspend operations? What about cleanup of the site? Can it be used for any other use?

Regarding tile-making - in the process of using mining tailings, how will the toxins and hazardous materials be removed to assure the new tiles are safe?

[for Mr. Watkinson] How will this affect medium/high density housing adjacent to the mine?

I have read that there is no market for tiles made from hazardous mine tailings and that the market analysis has not been made public. Any comments?

One only needs to step outside today to see the severity of fire danger and its potential on our Sierra foothill community [editor’s note: when this question was written, many wildfires in the region were causing record smoke levels]. What about the threat of catastrophic fire as a result of an explosion at this proposed mine?

Regarding jobs: “400 high-paying jobs”?? Is that non-union? 200 Mine plus 200 Tile Works - what happened to tile works?

Is it true that 85% of gold will go to body adornment?
[UPDATE July 7 2008 - Mike Thornton]I believe it’s something like 75%.

I’ve heard many times about all the precautions the mine is going to take, but I have also hears that these precautions will be costly. How would this mine be profitable if it does all it claims it will?

How specifically will you ensure that in our heavy rain events the holding ponds do not spill into the creek?

What can we do to make this a county issue rather than a decision for the City of Grass Valley?

Will the mining operation utilize old tunnels? Where are these tunnels? Is there an overlay map?

Will Eleanor Kenitzer be allowed to vote on any issues pertaining to the mine project?

Why do you consider the Ceramext tile manufacturing process a “scam” when I could then the automated process on tomorrow and make high quality stone tile?

If you are against gold mining so much, why are you wearing jewelry, using computers, cell phones, vehicles and electronic devices daily? It would seem to me you are double-talking. Take a look around and see how much good mining does for the world.
[UPDATE July 7 2008 - Mike Thornton]The Sierra Fund neither opposes nor endorses the opening of mines.

Other panel members have disclosed their professional and scholastic backgrounds. What is Mr. Watkinson’s resume’?

So you will help to connect folks to NID water if their well goes dry - what after - who pays for that treated water to those residences?

Not withstanding this dialogue, should we wait to see what the environmental document says before taking a position?
[UPDATE July 7 2008 - Mike Thornton]That would seem like a reasonable position to take.

Our well is 500 feet deep. When new in 1995, it provided 12 gallons per minute. It is on Pasquale Rd. What protection, if any, do we have if the well is dewatered?

How many people here want to work down in the mine?

Specify jobs to be available and pay scale (approximate); labor jobs vs. white-collar?

How many real jobs do you actually envision for the mine that would be available from locals - and in a “boom or bust” business, what of those jobs then [editor‘s note: presumably the question asks what happens to those former mine employees when the mine downsizes or closes]?

[for Mr. Watkinson] Will you release a list of the number of jobs and pay [rates] expected for IMM?

Since we are currently in drought with 800+ [wildland] fires, worsened by climate change, how do you propose the re-opening of the mine will affect our environment, climate change, and air quality?

How would mining impact the water table and cleanliness of wolf creek?

Since Emgold has never operated a gold mine, is there any chance this project would be turned over to a larger company or one with experience? Can you give a percentage of the chance?

What is the funding source for the visiting panelists from out of town, to cover their expenses? [response from editor: Various individuals and nonprofit groups who wanted to see this event happen covered expenses. Donations at the event helped to offset about a quarter of the night’s costs.]

Is the “dollar” donation to WCCA, FoDC, and SYRCL automatically added to bills at certain restaurants a source of such funding?
[UPDATE July 7 2008 - response from editor]The question refers to the optional dollar donation that local restaurant-goers can add to their bill, which becomes a donation directly to the nonprofit groups watershed advocacy listed above [WCCA = Wolf Creek Community Alliance; FoDC = Friends of Deer Creek; SYRCL = South Yuba River Citizens' League]. Of those groups, only WCCA was involved in the organizing of this event. If any of the optional restaurant bill addition donations were used for this event, that is an internal decision of WCCA and is not known to the organizers of the event.

Which panelists reside in Grass Valley / Nevada City? [response from editor: Greg Martin and Mike Thornton live locally. We presume David Watkinison lives locally, at least part-time. Tom Myers and John Dobra both live in or near Reno.]

How long have the panel members in Grass Valley / Nevada County lived here?
[UPDATE July 7 2008 - Mike Thornton]I’ve lived here for nearly 20 years.

[for Mr. Watkinson] Property owners with wells that are affected by pumping down water levels - any way to make restitution possible?

[for Dr. Myers] How do you feel about paste backfill? Is it true that you support the use of paste backfill at Barrick Goldstrike?

How will the Idaho-Maryland mine protect Wolf Creek and improve the water quality of the stream water?

My question is, why can’t everyone wait for the EIR? [response from editor: The ideal timing for this event would have been in the middle of the comment period after the release of the Draft Environmental Impact Report. The organizers did not feel there would be enough lead time to organize panelists and venue if we had waited until the DEIR release date was known. It is always possible to have another event like this one during the comment period.]

[for Mr. Watkinson] Please describe the CEQA process as it pertains to the IMMC project.

How many miles of tunnel? How many more increase of people?

If wells begin to fail after dewatering of the mine, what procedure would a well owner follow to assure he’s not left high and dry? Who bares the cost?

The Union, YubaNet, KVMR, KNCO, and NCTV were invited to have representatives sit on the media panel. Of those, all but The Union were represented at the event. Dixie Redfearn was present for KNCO but was not the recipient of the media panel invitation and therefore remained in the audience.
The media panel was given two 15-minute segments to ask questions.

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[from Alan Stahler, KVMR] It’s been pointed out that if you add the costs of environmental cleanup for past mines, those mines might not pencil out as profitable if you have to include the costs of the later cleanup obviously that was taken as profit at some time in the past. Given what we’ve seen of how mining industry worked in the past, given that there have been changes made, to what extent should modern projects be judged on the basis of historical mining?
[Mike Thornton] I don’t think that you really can effectively judge modern mining on what’s happened in the past, it’s a very different ballgame. But once again when it comes to the issue of legacy mining, the problems that have been left, those problems are still here. We need, I believe, as a community and as a region and throughout the state begin to have a discussion about how those legacy problems are affecting us today. One example is a small development right around the corner from here on West Berryhill. People wanted to build some housing; it was discovered that the ground was contaminated with lead and arsenic, and DTSC, the Department of Toxic Substances Control, had to have them remove that soil in order to go forward with their project. That came from a sulfur and gold works that operated here in the 1870s, according to historic maps, only 20% of that sulfur was on the property that was being assessed, that means that the other 80% is somewhere else. That is just one small example of a problem, that as we refer to our area as being ‘ground zero’ of, but stretches throughout the Sierra. So while we can’t judge necessarily Idaho-Maryland by those standards, there are problems independent that we have to work on and that’s what we’re trying to do with our report on Mining Toxics.
[Dr. Dobra] Looking around the west, these are not unique problems for here. We’ve got these kinds of sites in Idaho and Colorado and Utah and Nevada, they’re all over the place. One of the most effective ways of dealing with these sites is to re-mine them. That way they get paid for it by the companies. Abandoned mines that can’t be re-mined become wards of the state or the Superfund project. So clearly the best way is to use re-mining as a means of dealing with these toxic sites.
[Dr. Myers] I actually agree with that idea, in part what I was going to say is that the Bureau of Land Management [BLM] currently has a regulation that came into effect in 1981 that provides for a long-term bond if there is any issue at all about water quality after the mining company leaves the site, they can be required and should be required to put up a bond for both monitoring and long-term mitigation and that may required possibly here.
[Mr. Watkinson] The Surface Mining and Reclamation Act [SMARA] in California came into existence in 1975; prior to that there really weren’t requirements to clean up sites. Today, these sites are highly regulated and we have to put up bonds before we can mine to assure that if the mining company goes under for some reason that there is money there to reclaim the site so a third party can do that. So that would be a condition of this project. I’d also like to also point out that in California they have an Abandoned Mine Reclamation Fund and gold mining companies will pay $5 per ounce of production into that fund which will go to cleaning up other abandoned mine sites. That’s not very common in very many jurisdictions here in the United States so our company will be paying into that fund and that money will be going to cleaning up legacy sites in the area.
[Greg Martin] I agree that a new mining project has to stand or fall on its own merits. As far as cleaning up the site, that’s good; if Emgold were to receive approval to go forward they would be required by the California EPA to clean up the site before they could continue with their own operations, and mindful that their new operation would dwarf the magnitude of the legacy contaminants that they’ll be cleaning up, and the fact that Emgold already owns or leases several of the properties involved in their complex plan, they would be required by the [garbled] whether under [garbled] or the Hazardous Substances Account Act, if they own the property they still have a possessory interest in the property they can be required to clean it up notwithstanding that the contamination was placed there before they bought or possessed the property. That’s a nice thing for Dave [Watkinson] to volunteer to do, but he’d be required to do that by the EPA as a condition of opening the mine, and he might be required to do that anyway even if the mine doesn’t go forward because he’s the possessor of the land.

[from Susan Levitz, YubaNet] [for David Watkinson] I have a question on the economics of mining today. The price of gold this morning was something like $882 which is a 27-year high. However the price of gold production meaning the price from mine to market, has been increasing since you submitted your application in 2005 and of course you’re keenly aware of that fact. In 2005, production costs, this is according to Greg Wilkins who is the CEO of Baerck Gold, the world‘s top producer of gold; in 2005, production costs were about $339 per ounce, in 2006 they went up to $401, today the cost of production is over $500 and rising at $60 per ounce annually and that’s because of the soaring costs of fuel - we all know about that one, labor, and equipment, so my question is this: since the price of resources used in gold mining have gone up almost as strongly as gold itself, according to what Wilkins told Bloomberg [financial reporting service], if we return to a $500 per ounce gold price, many mines would start to close again and the industry would be in serious trouble. Since Canadian banks don’t loan money to Junior miners [editor’s note: Junior Miner is a specific industry term basically meaning a company that only executes the exploration and/or development stage of the project; Emgold is a Junior mining company] and since no short-term financing is available, and you have to rely on partnership with Senior mining companies for the capital to build and operate. The question I have is four-part: has Emgold been offered by any senior mining firm to partner-up; given the amount of gold that you say is in the mine and are you actively courting a senior mining firm, and if not, why not; and without a senior backer how would Emgold be able to afford to mine by selling equity securities worth 15 cents per share on the Toronto venture exchange today. The last question is, if the mine is as valuable as we think it is, why is the stock price so low today when we’re two-thirds of the way through the approval process?
[Mr. Watkinson] I’ll try to remember all those. Has Emgold courted any senior mining partners? We are not currently courting any senior mining partners, there are certainly different mining companies that are interested in this deposit, it’s a world-class deposit so there is interest from those but we haven’t had any discussions with anybody of any detail. A potential avenue to finance a project would be to have a senior partner. As far as the case of banks financing junior companies, banks actually do finance junior companies. There are certain types of junior companies that focus on exploration, some junior companies focus on development, like our company, and eventually become producers. A good example here in California would be Western Goldfields which was a junior company that has a mine in southern California. Their stock was a penny stock essentially and they got their permit and their stock went up to about four dollars and they financed their project through a combination of equity and debt and we’d probably be looking at a similar approach. Part of our project initially would be to focus on equity financing and once we get to a certain point we’d be able to do the rest of the financing with debt from the bank. We can also look at forward-selling our gold. There are avenues where you can actually forward-sell your production to get capital in order to develop a mine so there’s a lot of different avenues available to us. A royalty option would be another type of financing where you had a royalty operation which would capitalize your construction and other activities and you would pay that royalty back over time. So we expect our share price will go up once the permit comes into play, it’s definitely a negative aspect of permitting a project in California and that’s reflected in our stock price - a lot of investors don’t believe you can get a permit in California, and they’re all waiting to see what happens, same as the major companies are waiting to see if we can get a permit here in California, so it’s certainly an issue.
[Susan Levitz] So just one quick follow-up. So what you are saying then is as a junior mining company you would be able to go to any major bank in Canada for financing for the project?
[Mr. Watkinson] Once you’ve got the permits in place, and that’s one of the major hurdles you have to cross, you should be able to go to any bank - I’m not saying any bank would necessarily guarantee they would finance you, we certainly have had interest. We would probably go to the markets for initial capital as in equity financing and then later on maybe go to the banks for debt financing for the remainder of the project. So probably the debt would come after the de-watering would be completed and we would have access underground and we would be drilling reserves because banks require reserves to be in the ‘proven and probable’ mining category and to get the reserves into that state to meet Toronto stock exchange venture exchange standards we would have to go underground and drill so we would have core and other detailed information that’s required by the stock exchange to qualify the reserves as proven and probable.

[Lew Sitzer, NCTV, defers on round one of media questions]

[from Alan Stahler, KVMR] The mine will be going down eventually below sea level. Looking just at the first thousand feet or so: You’re looking right now as I understand it at wells that could be endangered by dewatering that go down by maybe 300-something feet. But is it possible that there are water-bearing fractures below there, that are feeding water into wells beyond the study area?
[Mr. Watkinson] That’s definitely a possibility. That’s one of the reasons we have a mitigation plan proposed with our project where if we do impact someone’s well we would immediately get them a temporary water supply and then we would have to bring them a permanent water supply which would probably be Nevada Irrigation District water supply. We don’t believe that we’re going to encounter fractures at that depth while we’re dewatering the mine. There are some people here that worked in the mines as to water flows that occurred historically here. We have something like 350 miles of tunnels under the Empire mine, we have 72 miles of tunnels under the Idaho-Maryland mine, plus all the other mines that were in the area here. We don’t have historic instances of wells that have been dewatered. There have been two hydrogeologic reports that have been completed, they use different techniques, the first one was done as part of the 1995 EIR, we have completed a report internally ourselves on hydrology, the city will also be evaluating this as part of the EIR, and I can’t comment on what the EIR findings are until the draft comes out, I don’t know what they are, and the city would be evaluating the potential dewatering mitigations and ongoing monitoring for the project once we’re in operation.
[Dr. Myers] One of aspects of one of the reports that I read were that the highest density of fractures is in the top one thousand feet. A great deal of the dewatering will be in the upper thousand feet, which is far deep enough to create a drawdown that is far beyond the 700 feet that is predicted in the study. I think that the potential for mitigation will be needed for wells that are far more than 700 feet from the mine, just based on a very simple look at the geology in the system. The report itself calls for mitigation at the Weimar Fault which as a fault system definitely has the potential for transmitting dewatering effects much farther away from the mine, so there is definitely the potential for a lot more wells to be affected than has been talked about to date, in my opinion.
[Greg Martin] Most of the residential wells in the area are 300 to 400 feet deep, the closest residential well is 200 feet from the mine, as you’ve heard there are fractures at least down to a thousand feet and more below, I doubt that many of the miners that worked there 40 years ago could really give us a good geological appreciation of what’s underground. But the fact is, many wells are going to go dry and I understand here that they are making provisions to provide alternative water sources but I don’t know if people would be satisfied with a water truck in their backyard for 2 years until they can get NID to pipe it in for you or how that would work, but it’s really a very serious issue.

[from Lew Sitzer, NCTV] This question may be premature in that the EIR has not yet been issued but I would like to talk a little bit about our community and the fact of how polarized traditionally it has been and this is one very contentious issue that will probably continue to polarize the community. The opening of the Idaho-Maryland mine would be one of the biggest projects in our area perhaps in our lifetime. It has many benefits and liabilities, pro’s and con’s. It is a heated controversy, one of many, but perhaps the biggest that we have yet to consider. There will be winners and losers. Is there a way to construct a ‘win-win’ for our community? In other words, when the EIR comes out, anticipating the criticisms voiced here in this room, and we’ll hear more of them I’m sure, is there a way to move that would both protect the environment, provide the community with needed jobs and revenue, as well as support the quality of life we all want to preserve? This is to any and all of the panelists.
[Mr. Martin] I would say that’s going to be very difficult just because of the size and the magnitude of the mine. It isn’t the 1860s, it isn’t the 1930s, it isn’t the 1950s, it’s 2008. I’m not anti-mine ladies and gentlemen, I’m just anti- huge industrial complex in the middle of a city for the reasons I stated previously. It will take over the town. It will be the hugest operation in this town in a long time. That’s why I don’t think it can be compatible with Grass Valley. The three comments by the media gentleman, I just don’t think you can meld them in a sufficient way to have a mine of this size operate in Grass Valley.
[Mr. Thornton] I think I’d like to try to answer this, but I don’t think I can do it in the context of the EIR of this mine. I’ve been working in this community and living in this community for quite some time and as a former newsperson I’ve covered a lot of the major controversies. I remember the NH2020’s [‘Natural Heritage 2020’; research is left for the reader] and I remember the logging wars; and the peace movement versus the support-the-troops movement. But one of the things in the work that we’re trying to do in our community organizing around the legacy mining issue is to reach out to as many interested, concerned, involved, or perhaps need-to-be-involved stakeholders as possible. I’m traveling around the Sierra now speaking to environmental health officers, meeting with mining people talking with public health people, I’m going to speak to the land trust tomorrow, as well as land trusts and watershed groups and industry people around the entire 22 counties of the Sierra Nevada Conservancy. We’re not going to agree on things, and sometimes we may vehemently disagree, once again not speaking about this but the one thing I know is that unless we begin to talk, and really talk, and that means also being able to listen, and to listen to things that we don’t necessarily want to hear, we‘ll get nowhere. We’re looking at scientifically documented problems that have been existing, regarding mining, for a century and a half. They are costing us as taxpayers now millions and millions and millions of dollars, possibly affecting, seriously affecting human health, not to mention the health of the environment, not to mention the cultural devastation that was rained down upon the heads of the people who lived here before most of us arrived. Those are questions that we need to deal with; the only way we’ll be able to deal with them is if we start talking, and I think if that discussion happens, that can lead to discussions about things that are more hot, right at the moment, including this proposal.
[Mr. Watkinson] I’d also like to point out, if our project doesn’t get developed, the ‘no’ alternative is not that the site is going to remain idle; the site will be developed based on the zoning that’s there in the city. Part of the Idaho-Maryland site itself is zoned as business park, part of it is zoned as urban-medium-density, the New Brunswick site is zoned as an industrial site. So if our project doesn’t go, there’s going to be somebody else that comes to try to develop these projects. The EIR itself will actually not necessarily address the ‘no project’ in the sense that it says “well, there’s no mine, there’s no impact;” it’s going to also look at what would the impact be if the project is developed as it’s zoned today. So if you want to look for instance at traffic, if that site was built up the way it’s zoned today as business park and urban-medium-density, the traffic, especially during peak traffic times, would far exceed what our project is. You can’t look at this as project or no-project, you have to look at if we don’t develop it, someone else is going to come there. It‘s zoned for development, it’s in the sphere of influence for the city, you have to look at that situation as being something that someone else is going to go in there and develop it if we don’t.
[Dr. Myers] I’m just going to add one little thing here. I believe I heard there are going to be 400 employees, it’s going to be become the largest industrial employer in the area, and a mine, by its nature, will eventually close. And you do end up with the possibility - while it’s not certainly like it used to happen all over the state of Nevada and California with a boom-bust, you end up with the potential possibility I think in the future of there being a lot of employment and a lot of economic development that comes to an end. You need to plan for that, as a part of the DEIR process. What is the post-mining use of this property, and what is the post-mining use of all the employees who are going to be without a job some day in the future. I’m not sure how long this project is supposed to last, but if it’s 20 years, at the end of 20 years you’ve got 400 employees looking for a job and they all have houses in town. I’ve seen what happens to towns in Nevada that are far more dependent on mining than this will be, but this is a thought for the DEIR.
[Mr. Martin] Dave was correct in saying the area generally is now zoned as business park. If the mine were to go forward, the city council would also have to approve a zoning change to heavy industrial. We’re making the case that, yes, if we don’t have the mine, we’ll have something else in there - but the something else in there would be more on the order of a high-tech industry, green building, or new industry, not one of the historically what has been the most polluting industry in the whole country. There are other alternatives to a mine, they’re a lot cleaner, they don’t involve hundreds of truck traffic going daily to work, residents and people with jobs and cars in commuting are preferable to a smokestack industry with a hundred tractor trailers going in and out every day.
[Dr. Dobra] I’d like to add very quickly, one of the things about this project, I have no connection with it, one of the things about it that was very interesting and intrigued me, why I was willing to learn something about it, is that one of the complaints about mining, which Tom [Myers] has brought up, and it is a valid criticism, and what we’ve seen in Nevada, is that it doesn’t promote sustainable development. One of the attractive parts about this project is that with the ceramics side of it, it is a sustainable part of the business and if that mine closes because the price of gold goes to $300, I don’t know what the cost is going to be at this mine, you may not be aware, what was it about $250 in 1999, so these things happen, you’ve still got a ceramics business. There are a lot of mine tailings around that can feed that business, and there are a lot of other sources of raw material that can feed that business, so there is an element of sustainable development here that’s unique; we certainly don’t see that very often in Nevada mining.

[from Susan Levitz, YubaNet] I have a question regarding Golden Bear Ceramics. Back in November of 2006 was when Emgold put out a news release saying that they were scaling back funding for Golden Bear Ceramics [garbled] and that sort of thing. I think the reason at the time.. I think [garbled name] was then president and Chief Executive Officer of Emgold said the reason was that people who invest in gold don’t want to invest in ceramics. I think that’s what he said at the time but then in August 2 2007, Dave [Watkinson], you and I had a conversation and you said that the process to split off Golden Bear Ceramics and to find investors was still going on from November 2006. So my question to you is this: who now owns Golden Bear Ceramics? Is it still a wholly owned subsidiary of Emgold? Has it been split off? If it has been split off, who are the new owners? Are the new owners a public company? Is it a private entity? Or are you still looking for investors for Golden Bear Ceramics?
[Mr. Watkinson] Emgold still owns 100% of Golden Bear Ceramics. We are looking to separate out the ceramics side of the business so it’s separately funded. One of the reasons we’re doing that is because the ceramics opportunity can be a global opportunity. We can go and treat a variety of different mineral wastes on a global basis around the world and we’re looking at trying to go out and find an investment partner in order for us to go out and do that. We’re still in the process of doing that, we’re certainly affected by what’s happening in the building market right now and that has certainly slowed down the process of getting financing. We’ve had the housing crisis. Building product market has decreased by 20 or 30% right now, so that has affected people’s ability to want to invest at this particular time. But there is tremendous interest and we have a number of parties that we’re talking to as far as financing that. When you look at the two different business types, we have investors that invested in Emgold because we’re a gold exploration company and we have investors that invested in us because of the ceramics. We have a diverse investor base. The reality of it is, we need to split those two business types so they can develop opportunities on their own. They’re two diverse types of business. They need to have their own investor bases in order to move forward and realize the opportunities for both businesses. That financing process is still going on, and in the meantime, it’s not that we’re sitting idle, we’re in the process of getting international patents for the project. In order for us to get a financial partner, it’s also important for us to have the patents in place for the technology, to protect the technology, so we filed here in the US and also in a number of international companies and we’re also still involved in getting the permit here for the project which is important. That’s another piece of the pie as far as commercializing ceramics so really until this permit gets in here, again an investor is going to look at things like the patents, things like whether the permit is in place for this project, so all those things will affect the timing when an investor comes in here. We have a number of hurdles that we’re going to have to cross as far as [time called] getting financed and we’re working on that.

Closing comments - 3 minutes per panelist, same sequence as opening comments

[Mike Thornton] Thank you and I really do appreciate the ability to be able to be here and talk about our “Mining’s Toxic legacy” project. I’ve been sitting up here thinking and I realize that it’s really pretty easy to focus on what’s happening now and what you’re concerned about right at this moment which is about whether or not this mine project is going to open or not. And that’s completely understandable. I guess what I’m hoping to do by being here is that we are very much interested in trying to create a dialog. As I said earlier amongst all of the people who are being affected and may be being affected regarding the 150 years of mining that’s already taken place - Like I said this thing here [pointing to abandoned mines map] and these things exist the 13 million pounds of mercury that was lost in the environment in the legacy mining days, that exists. The people I talked to in environmental health, people like USGS [United States Geological Survey] - people at Department of Toxic Substances Control Abandoned Mine Lands Unit - private contractors - they are aware that you have these areas, in some cases, really hotspot areas of major toxics related to mining. You have issues and arguments going on between scientists now. Should we leave the mercury in the rivers? Should we try to clean it up? Sacramento wants to come up here and clean up mercury out of our river because it’s the biggest load of mercury going into the Sacramento river, down to the [San Francisco] bay. Millions upon millions of your dollars are being spent dealing with these problems in one way or another, and/or not dealing with them. One of the things I’ve learned about this, and one of the things that we’re saying, we don’t pretend to have all the answers. This is a huge issue. What we’re saying is that communities, advised by science - this has been vetted by people who know what they’re talking about - that individual communities have different issues and that the communities that have these issues should lead those discussions advised by good science. One of the things is that there are groups, national environmental groups, who are in Washington, who are in San Francisco, who at some point are going to turn their eyes, and already are turning their eyes, to these issues. They are willing to create solutions for us that we may not want. We believe that it’s the people of the Sierras who need to be at the forefront of talking about what we’re going to do about these issues - how we’re going to deal with them in ways that work for us. The website is www.sierrafund.org you can see the report, we’re traveling all over the region, we’re giving presentations, we’re doing that, [time called] we would like to talk to anybody and everybody about this issue so we can hear [time called again] what you have to say about it, get your thoughts and ideas as well. Thank you.

[Dr. Myers] I made notes of about four things that I’d like to bring up. First of all on dewatering and discharges to the creek. One of the questions that came out about discharge to the creek - it will be about 6 cfs [cubic feet per second; editor’s note: speed of the moving water is not solely determined by cfs; the size and shape of the creek also determine water speed] during initial dewatering, about 1-3 cfs in the long-term dewatering. 6 cfs is actually a fairly small flow rate compared to the normal winter-time and springtime flows in the system so I’m not real concerned about scouring of sediments and stuff like that, I’m more concerned about long-term impacts on base-flow conditions in the stream above the point of discharge. The stream could be sucked dry or close to dry during base-flow conditions because at present time it’s groundwater that supports the base flow in that stream - base flow is what occurs after snowmelt, August through October. Second point, regarding dewatering, I think that for the DEIR there’s a lot of data that could be collected and analyzed to minimize and get a better handle on the risks to the wells. There could be pump tests done for all the wells for which homeowners would allow pump tests to be done for, they could do what’s called fracture tracing to determine which of these wells are actually connected to fractures that the mine is going to dewater. They should also do geochemical testing of the water in each of the wells. I think I read that they’ve got some of that data but I’ve not seen any analysis of it. This could include what’s called isotope testing, you could compare it to the mine water to have a better feeling for which wells would be affected, which wells won’t be. We mentioned blasting a while ago and one of the effects of blasting is nitrate in the groundwater. That didn’t come up but people need to be concerned about the potential for nitrates in the groundwater. I have direct experience on two mines that have caused nitrates as high as 7 to 8 parts per million in groundwater immediately down-gradient [editor’s note: down-gradient basically means downstream] so it’s not just an irrelevant issue. And finally, whether it’s backfilled or not, they need to put several monitoring wells, I’d say at least half a dozen, down-gradient of the mine that will be monitored for at least several years after the mine closes to show if leeching is occurring through the material that is backfilled into the mine then - in addition to this monitoring there’s going to have to be a plan - hopefully the company is still involved in the site and would be able to handle the problem if indeed a problem occurred that is found in the monitor wells. And these wells have to be not just three hundred feet deep, I’m talking a thousand to two thousand feet down cause that’s where some of the flow through the system will be coming and we have to be concerned about what happens below Grass Valley. Thanks.

[Greg Martin] A couple of concluding remarks. Emgold as it stands here has no hard-rock mining experience. They’ve mentioned, if the mine were to re-open, once they’ve received their permit, that it’s a whole new ballgame. They’ve wagered with this penny stock the equivalent of 8 million dollars, that’s their wager money, ladies and gentlemen, that’s what they are betting in will take them to get to the permit stage. Once they get that permit issues, if that permit is issued, it’s the lottery, it’s a whole new ball game, you might get Newmont in here, you might get somebody else, you’ll at least get Dave [Watkinson] running around to the banks to see if he can get a couple of hundred million dollars to see if he can make it go a little farther. There’s a great probability that once that permit is in hand you will be dealing with someone else in Grass Valley running the mine. Secondly I guess in thinking a little bit about environmental impacts far away in my experience in Los Angeles and still up here, is for water quality, because water is a precious resource and it’s limited in quantity and until desalinization becomes more economically feasible, we’ve got to watch our water, folks. A lot of water is going to be wasted here. The other problem with the water is that once it’s contaminated, it’s very difficult to clean up, especially downstream. As opposed to an air or a nuissance or a dust exposure, that’s reasonably transient, unless they are going to continue the same operations on a daily basis. So far and away my primary concern is water quality, air and dust are secondary because they are a little more transient but 7 days a week 24 hours operation doesn’t give me much confidence in keeping things clean. I would also like to know and I’d like to get back what Dave [Watkinson] was thinking when he hired a standing [Grass Valley] planning commissioner as community relations manager for the mine. Notwithstanding what Eleanor [Kenitzer]’s position is, I think that’s not only gaining the system, I think that’s cheating the system. I think that’s unfair, and I renew my request for her resignation, and I hope that many of you would see that the same way and join with me in writing to your city council, tell them that this is crappy government folks, this lady should not be sitting on the planning commission and weighing in, whether she is or she isn’t, one what is one of the most major projects to come before the city. Thank you.

[Dr. Dobra] Once again let me just open by saying it’s been a pleasure to come up here and meet people. One of the things that’s been said today that’s a bit strange is that… I’ve been to a lot of superfund sites and a mine that employs 200 people is not a particularly big mine. Produciton levels have yet to be determined because we don’t know yet what the grades are, but estimates are maybe a couple hundred thousand ounces of gold per year, and that’s not a particularly big mine, either. Yes there will be impacts, but a lot of towns smaller than this have a lot bigger mines and they seem to be able to live with it. Yes there are impacts, environmental impacts, social impacts, traffic, all this kind of stuff that’s brought up that’s important stuff, once this EIR comes out there’s going to be a public comment period, write down your comments and submit them to the state and they’ll look at them and they’ll be duly noted. Some mines’ plans have been significantly modified by these public comments, some mines have actually been stopped - I don’t care what they tell you about the 1872 mining law, yes it does give you a right to mine, but mines can be stopped through this public comment period. We had one in Nevada it wasn’t a gold mine, it was a clay mine or something like that. The last point is one of the things I made in my opening. We need basic materials. You can’t grow this stuff in gardens. You’ve gotta dig mines. And we’ve got to learn how to do it safely, in an environmentally friendly way that doesn’t mess up people’s lives, but we still need them. That’s not going to change. Thank you.

[Mr. Watkinson] I’d certainly like to thank everybody for coming out tonight, I hope everybody’s benefited from the discussion and points of view that have been expressed on all sides. Our attempt here is to build a project that this community can be proud of. We’d like to work with all of the various special interest groups here in the community to build a project that benefits everybody. The mine will be a significant force here in the community if it does get built. We will have 400 employees that will come here, and they will bring their families, and will have an economic influence here in the community and they will also do a lot of good things, they will get involved in many of the groups that are here tonight too, including APPLE, they will have the same types of concerns. People that are in the mining business also don’t want to destroy the environment. We have children, we live here in these communities, we want to build projects that everyone can be proud of and are environmentally sound. That’s what we try to do. This project has been designed in particular without a tailings dam or any permanent waste stockpiles on surface which is something that is very unique, there are no other projects that I know of that are similar to this, having a beneficial use of the ceramics process to take material that’s going into landfills not only on this site but on a global basis to reduce waste that’s going into landfills and also reduce the amount of clay mining that goes on for traditional ceramics plants. This project has not only a lot of benefits locally, but it also has benefits potentially on a global basis with the development of the ceramics technology. We know that there are environmental issues. The city is in the process of analyzing the potential impacts from the project, they have had a number of public meetings through the process and they will have additional ones as they go through the process and I urge everybody to attend and learn about the project and express your concerns; we expect the draft EIR to come out in August that will address a lot of the questions. One of the biggest frustrations for everyone is that we’ve been in the process for almost three years now. You don’t get answers to all of your questions because one of the main answers is “well, we’re waiting for the draft EIR to come out”. I can’t tell you all the answers because they’re being generated by the city and their consultants, not by us. It’s an independent process, they have their consultants, they run the meetings, that’s the way that the public has designed the EIR process and the CEQA process. You have to participate, you have to express your concerns, and we will endeavor to build a project that the community can be proud of. Thank you.