Regional
More Layoffs and Management Changes at Emgold's Proposed Idaho-Maryland Gold Mine in Grass Valley
Author: YubaNet
Published on Aug 2, 2007 - 9:35:00 AM

According to Dave Watkinson, CEO of Emgold and President and CEO of Idaho-Maryland Mining Corporation, a wholly-owned subsidiary of Emgold, the company handed out 6 pink slips this week to employees. That leaves a total of 8 people sharing Emgold's cavernous 45,000 square foot building in Grass Valley.

In a news release posted on Emgold's website (www.emgold.com) yesterday, the company announced changes in management in both Grass Valley and Vancouver. While no mention was made of the layoffs, the release did state that "Emgold has reduced its overhead and administrative expenses by eliminating costs not considered essential to its ongoing permitting and exploration activities."

The junior mining company, headquartered in Vancouver, B.C., wants to reopen the old Idaho-Maryland underground mine and explore for gold it believes previous miners overlooked before the mine closed in 1956. Emgold wants to excavate 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 the South Fork of Wolf Creek.

The layoffs this week follow cutbacks in staff last November, when Emgold announced it was reducing funding and operations for its Ceramext division, which operates under the name of Golden Bear Ceramics (GBC), also a wholly-owned subsidiary of Emgold. After last year's layoffs, 6 GBC employees were transferred to the Emgold side of the business. It was those 6 who lost their jobs this week, said Watkinson.

Watkinson said that Emgold in Grass Valley continues to employ a total 8 people, including him. He said the Emgold headquarters in Vancouver employs 3 people. The only person now working for Golden Bear Ceramics is Bill Witte, the president of GBC.

Emgold, a penny stock company that has been trading on the TSX Venture Exchange since 1989, has never operated a mine of any kind and, therefore, has no cash flow from the sale of minerals. Typically, junior mining companies seek the financial backing of senior mining companies to raise capital and provide expertise. Emgold has always said that it can go it alone.

Emgold's stock is currently trading at about 18 cents CAN.

Emgold and GBC Still Joined at the Hip

Watkinson said that the process to split-off GBC (www.goldenbearceramics.com) from Emgold, announced to investors last November and which was accompanied by the first round of layoffs, is still ongoing.

According to the news release, Bill Witte has resigned his position as president and CEO of both Emgold and GBC and now works as a director of Emgold and holds the title of president of GBC. It's his job, said Watkinson, to continue the process of finding investors for GBC so the two companies can eventually raise capital independently. In the meantime, Emgold isn't putting any more financial resources into Golden Bear Ceramics, said Watkinson.

Ironically, while Emgold can no longer fund GBC, the junior mining company is entirely dependent on Ceramext to dispose of the prodigious quantities of mine waste the company plans to create over the projected 20-year-life of the Idaho-Maryland mine, if it is approved.

In general, it takes the excavation and processing of 20 - 100 tons of rock to produce one ounce of gold. There is no place on the proposed mine site to store or reclaim tailings or waste rock. Trucking any gold-bearing ore to Nevada for ore processing and waste disposal would add considerable expense and eliminate 200 promised Ceramext factory jobs, in addition to 200 jobs in the proposed mine.

Ceramext (short for 'ceramic extrusion') is a proprietary invention of Grass Valley resident Ross Guenther, the former project director for the mine. Watkinson said Guenther is now retired and spends his time working on Ceramext (www.ceramext.com). While his invention has not yet been demonstrated to work on a commercial scale, it is hoped it will be able to do so by the time Emgold is mining.

While originally promising to recycle 100% of its mine waste into "green" building products, Emgold now plans to convert only half of its waste into products. The other half would be backfilled into the mine shafts, a controversial practice that could lead to the formation of acid mine drainage decades after the mine closes, according to scientists (see Special Report | Golden Gamble in Grass Valley, Part 5: A Legacy of Risk)

Watkinson said that some of the waste rock can be sold for road base and aggregate, because "the Idaho-Maryland doesn't have the kind of arsenic present at the Empire."

The Empire Mine, now a historic state park, is located practically next door.

However, according to information posted in the State of California Department of Toxic Substance Control Envirostor database, the Idaho-Maryland was identified in 1989 as an abandoned mine and in a Proposition 65 report was found to have "tailings highly contaminated with arsenic." The report also stated that "some of the tailings have been processed at the Home Stake Mine."

Watkinson said that Golden Bear Ceramics, in addition to looking for investors, is now looking for a city other than Grass Valley to build a small Ceramext plant, near a source of feedstock. The plant would process 65-200 tons of feed source per day. He said they are already talking to "interested parties" but he wouldn't share any names other than the City of Auburn.

When asked why a plant capable of handling that kind of tonnage couldn't be located here in Grass Valley, given the area's abundance of abandoned mines and tailings piles, Watkinson said that they need to locate in a city "where the zoning is already in place, with an existing building, where there is an adequate natural gas supply, a ready feed source, and no EIR process." He said their 45,000 square foot building isn't big enough, and Grass Valley doesn't have another building available.

When asked if Ceramext is now able to make product on a commercial scale, he said they are "ready to commercialize it. The next step is to scale it up." Then, after the mine is permitted, he said Emgold still plans to build a full-scale Ceramext factory at the mine site, in order to process 1200 tons of mine tailings and waste rock per day. The other 1200 tons of waste produced daily would go back into the ground, for a total of 2400 tons of waste produced daily.

The Ceramext facility alone will require up to 1,100 million cubic ft of natural gas. The Idaho-Maryland mine power requirement will be approximately 150 gigawatts (GW) hr/yr of additional electrical power.

In any case, if mining ever occurs at the old Idaho Maryland mine, it won't be until 2011 that Emgold would produce enough feedstock to turn into tiles, said Watkinson. On June 22, 2007 their revised applications were deemed complete, so that the city-hired consultant, Environmental Science Associates, could begin Phase 2 and 3 of the environmental review - the Initial Study/Notice of Preparation (IS/NOP) and the Environmental Impact Report (EIR). In June 2006, the Master Environmental Assessment (Phase 1) was completed by the consultant and can be viewed on the city's website, along with the revised application.

Community Development Director Joe Heckel told YubaNet that the IS/NOP can be completed in about 3-6 months from now. The EIR will take from 6 months to 1 year.

Watkinson said due to dewatering and construction, Emgold wouldn't be doing enough mining to create enough feedstock needed for Ceramext production until 24-36 months after the mine opens.

Environmental Study Reimbursement Agreement Between Emgold and Grass Valley

Heckel described the agreed-upon payment process for the environmental review process:

To date, the city has collected approximately $313,223 from Emgold to cover consultant and staff costs. The city has paid out $262,272 to various consultants and city accounts to compensate for city staff time, leaving a current account balance of $53,551. The City has retained a consultant team of four firms or individuals, three of which serve the city on as-needed basis: Ray Krauss, mining consultant; PMC Consultants, supplemental planning assistance, and Bill Abbott, legal consultant.

The fourth firm, Environmental Science Associates (ESA), is the main consultant team preparing the environmental documents (Master Environmental Assessment, Initial Study and Environmental Impact Report). The contract with ESA has a cost estimate of $750,094, which includes the cost of the MEA, IS, and EIR.

The city's reimbursement agreement with Emgold requires the applicant to front the costs of these services and always provide payments in advance of the invoicing by the consultants and the city.

For all related articles about the proposed Idaho-Maryland Mine, go to YubaNet's mine page.

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