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From YubaNet.com Regional According to a news release distributed by Emgold Mining Corporation to Canadian news wires on Nov. 17, Emgold is reducing funding for Golden Bear Ceramics, a wholly-owned subsidiary of the junior mining company. "The Company has been working on permitting the Idaho-Maryland Mine in Grass Valley and developing the Ceramext technology, both of which are capital intensive projects. The Idaho-Maryland project is entering the final stages of the permitting process and will require a substantial amount of the Company's financial resources. As a result, Emgold has decided to reduce the Golden Bear Ceramics Company operations and defer its capital investment in Golden Bear Ceramics while it examines various alternatives for further development and commercialization of the Ceramext technology. One of the alternatives under consideration is a reorganization of the Company to permit the separate financing and development of the Ceramext technology. The company will continue to meet its obligations under and maintain its world licensing of the technology." The item about Golden Bear Ceramics (GBC) was attached to the bottom of a press release announcing the offering of a $5 million dollar brokered private placement to raise capital for the proposed Idaho-Maryland gold mine in Grass Valley, Calif. The stock offering is not available to U.S. investors. According to Bill Witte, president and chief executive of Emgold, the idea is to create an entirely new public company to raise funds for GBC. Golden Bear Ceramics will still be a wholly-owned subsidiary of Emgold, but it will raise funds independently, as a stand alone company trading under its own name. The junior mining company (www.emgold.com), headquartered in Vancouver, B.C., wants to explore for gold it believes previous miners overlooked before the mine closed in 1956. Emgold wants to mine 2,000 feet deeper than the original mine, or down to 5000 feet. 70 miles of flooded tunnels would have to be dewatered and treated mine water would be diverted to South Fork Wolf Creek. The reason for the restructuring of GBC into a separate entity, said Witte, is because "we live in 2-sided world, with investors in gold and investors in ceramics. The old time gold funds want their investment to go to gold only. Investors interested purely in gold are not too keen in paying for the development of a ceramics company. Analysts like to work with specific bonds for specific commodities." Witte said the restructuring could take anywhere from 4 to 6 weeks, the time it takes to spin out a new public company (GBC) that would trade on either the TSX Venture Exchange or the London AIM Exchange. Right now, GBC is a private company owned by a public company (Emgold, which in turn is owned by the Lang Mining Group). Witte hesitated to give a firm estimate of the time between restructuring and actual raising of capital for GBC but he said they have "quite a few investors who are interested already." In the meantime, said Witte, there could be some temporary layoffs but many of GBC's current employees could be transferred over to the Idaho-Maryland mine side of the proposed operation. He described the effect on GBC as a kind of "hibernation that would last a month or so." Should Emgold's two-pronged proposal for a mine and tile factory be approved, it would be the company's first mining operation. The company has no source of operating cash flow and has been raising capital through the sale of equity securities on the TSX Venture Exchange since 1989. The penny stock is currently trading at 30 cents Canadian. Given the location of the mine, just 2 miles from downtown Grass Valley, Emgold can't stockpile or reclaim tailings on the site. Hence, the need for another plan to dispose of mine waste - by converting it into ceramic tiles via a proprietary process the company calls Ceramext ("ceramic extrusion"). Emgold is counting on GBC to come up with a surefire method to convert tons of mine tailings created daily into feedstock for its Ceramext process. Originally, Emgold said it would produce 2400 tons of mine tailings a day. Now, Witte says they anticipate a "slow staged process that will convert from 200 to 2400 tons a day." Mine tailings are the powder-like substance left behind after beneficiation (ore processing). To maximize profits, Emgold plans to use a cyanide leach process to extract microscopic particles of gold from the ore. Ceramext patents are still pending but GBC is currently operating a pilot plant, according to information presented to the Grass Valley City Council last week. Plans include a ceramics factory that has mushroomed to 193,000 square feet. Emgold's controversial proposal is in the midst of an extensive environmental review which is estimated to last for at least another 11 months. The environmental studies being conducted began in January 2006 and are estimated to cost about $700,000 (see article below). A July 2005 economic viability study by a city-hired business consultant raised some red flags about Emgold's ceramics aspirations. While the consultant, Bay Area Economics (BAE), gave Emgold a "reasonable" chance of success as a stand-alone gold mine, BAE also said the city needs more information about Emgold's plans to produce tiles on a commercial scale and the company's ability to market them profitably. The report said much is unknown about the suitability of mine waste for making ceramic products. Witte said that since July 2005, a lot of progress has been made, such as the new pilot plant that currently produces about 300 ceramic tiles a day. According to Witte, the process is "scalable." GBC currently employs 10 to 15 full time people, said Witte. Emgold is getting ready to conduct its first demonstration installation of stone tile in a local, 3000 square-foot home, sometime this November. The feedstock used will be from quarry fines, not gold mine tailings. Witte declined to give the name of the quarry that is providing the raw materials. To date, Emgold has processed approximately 2 to 3 tons of material from "historic Idaho-Maryland mine tailings." That's the equivalent, said Witte, of approximately 1000 tiles. Currently, no mine in the U.S. or Canada turns its tailings into ceramic products. Normally, tailings are reclaimed by spreading them out, applying a layer of soil on top, and replanting the surface with vegetation. Even then, problems can arise - years later. "Given the scale of the ceramic tile operation that is proposed, the Ceramext process should be considered an unproven technology until it is successfully put into commercial scale production. As such, BAE recommends that the City of Grass Valley request that Emgold produce a contingency plan for the disposal of mine tailings in the event that the Ceramext process does not prove viable as a means of disposing of mine waste," the report says. So far, Emgold has not submitted a plan other than Ceramext. However, in August of last year, Witte told YubaNet that if Ceramext doesn't succeed, the mine might have to consider stockpiling materials on the surface for a couple of years. During that time, Witte said, the mine could sell some of the waste as aggregate for road projects. Tailings are usually highly concentrated in heavy metals and arsenic, Reno-based hydrologist Tom Myers told YubaNet last year. Myers, interviewed by Doug Mattson, had a hard time coming up with an example where tailings were used for a commercial product. He mentioned the case of a copper mine in Yerington, Nev., which used tailings as a base material for driveways. "But when you drive on it, it grinds," he told Mattson. "Now they know the dust has high levels of uranium and arsenic and other stuff you probably shouldn't be breathing." Witte also told Mattson one option would be to transport the Idaho-Maryland's gold-bearing ore to a toll mill - the nearest mills are in Nevada - and paying the mill to process the gold and deal with the waste. Emgold's tailings proposal will be discussed in detail in the ongoing environmental studies. In light of this week's news regarding the company's decision to cut back on GBC's funding and operations, more economic analysis may be needed to ensure that Emgold has a workable plan for waste disposal, one that will be able to deal with 20-year's worth of toxic tailings piles - a whole lot more than what it takes to outfit a 3000 square foot home. The latest financial statements about Emgold are available at www.sedar.com. According to its Interim Consolidated Financial Statement posted on the site on August 29, the company has an accumulated debt of over $30 million dollars and a working capital of $548,623. Expenditures for Ceramext research in 2006 for the six months ending June 30 were $719,000. According to Witte, Emgold has already invested between $8 and $9 million dollars in Ceramext technology. Related Articles: Grass Valley City Council Gets Update on Status of Idaho-Maryland Mine Environmental Review Grass Valley Planning Commission Tours Proposed Idaho-Maryland Mine Site Grass Valley Provides Online Information on Proposed Idaho-Maryland Mine Grass Valley Hosts Public Outreach Presentation on Emgold' s proposed mine YubaNet's 5-Part Special Report on the Idaho-Maryland Mine: Golden Gamble in Grass Valley © Copyright 2007 YubaNet.com |