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Financial and Other ConsiderationsMt. Nansen Mine Case Study
Hugh Copland, DIAND Mining Land Use and Reclamation
Orphan Mines WorkshopWinnipeg, MB June 26/27, 2001
Outline
-Yukon Abandoned Mines
-Challenges
-Mt. Nansen Example-History-Operational Trouble-Abandonment-Financial-Post-abandonment-Next Steps-Lessons Learned
CLINTON CREEK
UNITED KENO HILL
FARO
KETZA RIVERMT. NANSEN
YUKON ABANDONED MINES
Challenges
• Administrative• Maintaining
environmental integrity• Inadequate financial
security• Funding• Legal• Maintain or reclaim• Lack of policy and
reclamation standards
Mt. Nansen Mine - History• Original Discovery 1943• First production: Sept.68 to Apr.69, 16,360 t• Second production: 1975-1976, 5 months 5800 tonnes• Latest production: Nov. 96 to Nov. 97, March 98 to Feb. 99:
269,000 tonnes
Mt. Nansen - Operations
• Complex metallurgy• Increased sulphides
with depth• High clay content• Dam seepage and
stability• Ineffective water
diversions• Old equipment
Mt. Nansen - Recoveries
0102030405060708090
100
Time
Rec
over
ies
(%)GOLD
Nov. 96 Feb. 99
SILVER
Mt. Nansen - Troubles
• Frequent non-compliancewith water licence
• Environmental studies notcompleted
• Incredible staff turnover• Water treatment no good• Charges laid under Yukon
Waters Act• Security payment missed,
Dec. 98
DIAND Challenges - Operations
• Allow to continue to operate in face of frequent waterlicence violations.
• How to maintain balance between socio-economicissues and environmental concerns.
• Increasing environmental liabilities beyond financialsecurity held.
• Early February 1999, company directed to pay byFeb.18 outstanding security and reduce cyanide levelsin tailings pond water to licence limits.
Mt. Nansen - Abandonment
• February 17, 1999 operations ceased• March 23, 1999: Company appointed a receiver /
manager• May 1999: Company convicted under YWA
charges, fines total $300,000• July 28, 1999: Receiver informs DIAND it is
abandoning the property
DIAND Challenges-Abandonment• Continuation of water treatment• Retaining experienced mine
personnel• Access to security deposit of
$445,000• Water treatment equipment,
generators, pumps, vehicles,worn out
• Who takes the lead?• Permitting• Disposal of hazardous
chemicals
DIAND – Financial Considerations
• $445,000 security used by November 1999• Estimated $4-8 million closure costs depending on
options• Amount of money spent by DIAND:
– 1999: $1,200,000 (includes $445,000 security)– 2000: $2,431,000– 2001: $1,800,000
TOTAL ESTIMATED TO END 2001:$5,431,000
Why not reclaim immediately?• First instance of
abandonment like this• Legal• No reclamation plan• Engineering studies
required• Environmental assessment
required (CEAA)• Permitting time• Funds
YEAR 2000 Cost BreakdownLABOUR including camp costs and administration: $898,000CONSTRUCTION $604,000 tailings and seepage collection dam $569, 400 water treatment plant upgrades $34,600FUEL (diesel, propane, lubricants) $416,900CONSULTANTS $241,900 dam (geotechnical review, design) $192,500 water treatment plant $49,400EQUIPMENT RENTALS (genset, earthmoving equip) $76,800PARTS AND REPAIRS (pumps, electrical, treatment) $65,300WATER TREATMENT (chemicals) $63,600SAMPLE ANALYSIS $31,400MISCELLANEOUS $33,100LEGAL ???????
TOTAL: $2,431,000
Post Abandonment - Challenges
• Economic viability of mine• Locating and retaining mine
site records• Legal obligations concerning
ownership• Creditor’s claims, Miners
liens• Environmental / Engineering
studies• Lack of closure plan or
abandonment policy
Other Considerations
• Third party access toproperty or portions
• Good samaritan clean-up• First Nation involvement• Devolution to Yukon
Government• Federal accounting system
changes• DIAND as operator and
regulator
Mt. Nansen – Next Steps
• Continue water treatment• Examine reclamation
options• Gain clear title to property• Deal with creditors• Obtain funding – Treasury
Board submission• EA and permitting• Reclaim site
Lessons
• Closer scrutiny of financialability of company prior topermitting
• Abandonment predictable?• Frequent reviews of security• Security required for
emergency operating period• Criteria for shutting down
operation possible?• Develop decision framework
for handling future abandonedsites.