Rush of interest in Northland gold
EMO, Ontario — Just 40 miles northwest of International Falls, amid hayfields and swampland and forest that look much like northern Minnesota, New Gold Inc. is digging an all-new gold mine.
Drill rigs are boring deep into rock. Giant shovels have already dug a hole nearly mile long and quarter-mile wide. Beefy 240-ton haul trucks are carrying thick clay and overburden away to expose veins of gold-bearing rock. A massive crushing and processing plant is under construction nearby.
The open pit operation, which will later include underground mining as well, is expected to start producing, by mid-2017, an estimated 325,000 ounces of gold and 480,000 ounces of silver each year.
For those keeping score at home, the so-called Rainy River mine would gross more than $430 million each year at current gold and silver prices. The mine is expected to produce for 15 years or more.
But Toronto-based New Gold isn’t the only one that has found gold in the region, and geologists note that the same Superior Province rock formation that supports successful gold mines across Quebec and Ontario runs right across the Minnesota border and into the northern counties of the state.
“Two-billion-year-old rock doesn’t care about 200-year-old political boundaries. It’s the same formation here,” said Don Elsenheimer, geologist for the Minnesota Department of Natural Resources.
Combine an historically solid price, with gold now above $1,300 per ounce, add some pent-up demand after several years of little or no prospecting when gold prices were down, then throw in increased evidence that more gold lies below Minnesota fields and forests — and the region is suddenly a hotbed of gold interest.
Gold prices launched from $400 per ounce in 2004 to $1,900 in 2011 before settling in the $1,300 range recently. New Gold says it can make money at the new Rainy River mine at less than half the current price.
“With prices where they are, there are good margins for gold right now for most companies. Couple that with some pretty substantial findings and that’s why you are seeing gold interest in northern Minnesota and that’s why they are building a mine just across the border,” said Rick Sandri, president of Minneapolis-based Vermillion Gold.
As long as gold remains above $1,200 per ounce, Sandri said, Minnesota will continue to draw interest and exploration.
In addition to New Gold’s Rainy River project:
- Two other Canadian companies are looking for gold in projects just outside Quetico Provincial Park — the Hammond Reef and Moss Lake projects — where old gold mines operated decades ago, not far from Atikokan.
- On Minnesota’s Iron Range, just outside Virginia, Vermillion Gold is prospecting in a promising area of called the Virginia Horn. “We’ve intercepted gold in multiple locations in the Horn,” Sandri said. The company also is looking hard in northwestern St. Louis County, north of Cook, with the Department of Natural Resources announcing earlier this month that Vermillion Gold will drill 10 new drill holes using sonic drills that essentially capture soil samples.
- AngloGold Ashanti is exploring in southeastern Koochiching County, not far from New Gold’s focus. AngloGold is based in Johannesburg, South Africa, and has a North American office in Centennial, Colo. It is the third-largest gold mining company in the world with 17 operating mines in nine countries. The company also has several exploration programs in both established and new gold-producing areas.
- Both PolyMet and Twin Metals have identified large amounts of gold mixed in with the copper and nickel they plan to mine — so much so that they are counting on gold (along with major deposits of silver, palladium and platinum) in their business plans.
- Over the past two years the Minnesota Department of Natural Resources Lands and Minerals Division has released reports of major discoveries of gold grains on the forest floor, including a hotspot near Tower. It’s the same type of prospecting used to encourage more exploration where the New Gold mine is going in now. “This new data set strongly points towards the presence of gold within the focus area’s underlying bedrock,” the DNR said in a January report on the Tower-area finding.
That there’s gold under the Northland’s forests and swamps isn’t geologically questioned. The questions until now have always been how much, and is it worth it to start digging?
The answer to the first question is, apparently, lots. New Gold is quickly answering the second with their $900 million project employing nearly 400 workers when open pit operations start next year and as many as 600 when underground operations begin a few years from now.
Exploration at the site started as early as 1967. And even though there is no gold-bearing rock formation sticking out of the ground in this area, Canadian government geologists in the 1990s found gold grains in the soil in the area with strong indication they were from nearby. Rough gold grains indicate they came from nearby underground deposits. Smooth grains indicate they were scraped by glaciers and could be from gold deposits that are hundreds of miles away.
“The word we like to use is gnarly,” Sandri said. “And we’ve been finding those gnarly grains. It’s not a guarantee. But it’s becoming more accepted as a very good indicator” that mineable gold lies below.
It wasn’t until June 2005, when Rainy River Resources acquired rights to the area, that exploration honed in on the current mine site. New Gold acquired the Rainy River project in the fall of 2013. According to company reports, some 1,435 holes totaling more than 2 million feet of rock sample have been punched into the property since prospecting started in the ’60s.
The Rainy River project received its environmental approval in early 2015 from the Canadian Environmental Assessment Agency and the Ontario Ministry of the Environment and Climate Change.
Construction started in earnest last year.
A mid-sized player in the global gold market, New Gold currently has four operating mines — the New Afton copper-gold mine in British Columbia, the Mesquite gold mine in California, the Peak gold-copper mine in Australia and the Cerro San Pedro gold-silver mine in Mexico.
At Rainy River, the main pit will be about a mile long and about that wide and will step down over 25 benches to more than 650 feet deep. The company will use 22 big haul trucks to move the ore out of the mine to the new processing plant a quarter-mile away.
The operations, now being scraped and dug and formed out of what had been undeveloped land, look like a smaller version of a Minnesota taconite iron ore operation. Drill rigs and explosives will rip the ore off the mine wall. Giant shovels will fill haul trucks which will take the raw product a to a primary crusher. A series of crushers will pulverize the ore.
From then on the process is different, with a chemical process — using hydrogen cyanide — used to pull the valuable gold and silver away from the waste rock. There’s no heating or pelletizing of the finished product.
The gold will leave the processing plant in bars, in armored cars, likely headed for a Canadian mint to be further refined for purity.
Waste rock will go to stockpiles or slurried to a huge tailings basin impoundment, much the way Iron Range operations work.
New jobs, new life
The Rainy River site was touted, much like northern Minnesota is marketed, as an easy-access, mining-friendly location free from political tumult and social unrest. The site also has easy access to electricity, highways and to nearby Fort Frances, a city of 10,000 people that has an available workforce that was hard hit by the downsizing of the region’s forest products industry.
The New Gold mine is offering jobs for many of the former paper mill workers, truckers and loggers who have lost their jobs over the past decade, local business owners said.
Emo, a half-hour west of Fort Frances, is the closest developed area to the mine, with 1,300 residents, grocery and hardware stores, gas stations, schools and homes for sale and rent.
“There were 1,000 people in the (Fort Frances) paper mill when I was in high school. They had 250 people in there when it closed” in 2012, said Dave Goodman, owner of an ATV and snowmobile shop in Emo. “A lot of those people had to go up to Alberta (oil fields) or Red Lake (Ontario gold mines) to get jobs. Now they have a chance to come and work at home again and still have a good job.”
There have been promises of a gold mine opening here for nearly 20 years, Goodman noted. More than 15 years ago developers built a new subdivision in Emo. Now, it’s starting to fill up. Another subdivision opened recently. Local construction companies are expanding, hired by New Gold to build roads and water diversions at the mine site. Stores are busy again with New Gold and its employees buying supplies. The city more than doubled the size of its sewage treatment plant to be ready for growth.
Housing is so tight that Goodman purchased a home in Emo so a new mechanic technician had a place to live.
“I wouldn’t say it’s a boom town. There’s isn’t a lot of new businesses going up. But you can tell there’s more business. There’s more optimism. People are expanding. People are buying,” Goodman said. “I think the fact we’ve seen this out there for 15, 20 years, has helped give people time.”
But Goodman also has a warning for any entrepreneurs anywhere a new mine is first proposed.
“Don’t go build a brand-new motel when they first start talking about it because you’ll be redecorating the rooms before the mine actually opens,” he said.
Indeed, it took more than 10 years for the Rainy River project to get through the planning and environmental review stages — much like the PolyMet copper mine proposed for northern Minnesota.
“That’s just they way it goes with mining projects in this day and age. It’s a very complicated process. We underwent the most stringent environmental review of any mine in Canadian history,” said Grant Goddard, general manager in charge of opening the New Gold mine.
Goddard said the project has gone well, with the focus now on expanding from the current 200 employees to more than 400 by year’s end.
The company is holding job fairs across the Rainy River region this summer. So far, more than 75 percent of employees are local, and more than 35 percent of the new workforce are from local Ojibwe bands.
New Gold officials say they don’t necessarily need workers with mining experience. Instead, they are looking for people “with shared values” that the company espouses.
“We can teach people to operate machinery, if they have the right values,” said Goddard, who has 37 years in the mining industry in several countries. “That’s why I came on with New Gold. They do things differently. They take the long approach.”
Little opposition, smaller footprint
The New Gold mine is close to the Pinewood River, which drains into the Rainy River that runs along the Minnesota-Ontario border before running into Lake of the Woods, with the water continuing north to Hudson Bay.
The New Gold project saw little formal opposition, unlike proposed Minnesota copper mines. While some Ojibwe elders expressed concerns over mine runoff and potential water pollution, there’s been little public criticism. Far from any major Canadian population base, New Gold found open arms near Emo.
“Nobody around here would say no to these jobs,” Goodman said. “They (New Gold) have been a very good company to work with. They’ve become part of the community.”
New Gold is using electric-powered haul trucks to reduce noise. They are working to keep lighting minimized and pointed down to avoid illuminating the rural night sky. And they are holding regular meetings with neighbors to get input on issues such as construction trucks on local roads.
The project underwent years of environmental review by both Canadian and Ontario agencies, with permitting issues similar to Minnesota mines. Like Minnesota, much of the focus has been on water quality. New Gold has spent millions of dollars to dam water that previously flowed through the site and move it around the mine site so it doesn’t mingle with water used in the mining process.
Moreover, most of the gold is not locked inside high-sulfur rock, Goddard and geologists note, so there’s less concern about sulfide-tained runoff.
“If we run into acid-generating rock we set that aside, on a lined disposal area. But for the most part, that’s not an issue here,” Goddard said. “We have great neutralizing capacity” in the rock in the area of the mine that mitigates any acidity.
The DNR’s Elsenheimer agreed that extracting gold, in general, has less potential to spur water problems.
“Gold is a different animal,” he said. “It’s not that there aren’t concerns with gold mining. … But gold is a native element mineral. When you find a gold deposit it’s going to be in a rock that has far less sulfur content than a deposit of copper and nickel…. Copper and nickel are bound in sulfide minerals.”
Vermillion Gold’s Sandri said gold mines are generally smaller than iron ore or copper mines, handling less rock and producing less waste material.
“Gold mines have a much smaller footprint. You’re are going after a much smaller pocket” of valuable material, Sandri said. “In gold, we talk in terms of grams and ounces, not tons.”
At an iron ore mine, shovels have to dig up about 300 tons of rock to get 100 tons of good taconite. In a gold mining operation, you need to dig about a ton of rock just to find one gram of gold, Sandri said. There are 31 grams in each ounce.
“But you have to realize that, while we are talking very small volumes, it’s very valuable,” Sandri said. “One gram of gold right now is worth about the same as one ton of finished taconite, so it doesn’t take a lot to make it pay.”
“That,” he added, “is why we’re looking for it so hard right now.”
The American Museum of Natural History reports that gold is so rare, even though it’s been mined by people for 6,000 years, that all of the gold ever produced by humans, 152,000 tons, would fit in a cube measuring just 66 by 66 feet. In comparison, each year 907 million metric tons of iron are produced worldwide, or 6,000 times the total gold produced throughout history.
SUPPORTERS FIGHT FOR TWIN METALS
The rally at Whiteside Park in Ely Tuesday had the feel of a summer festival.
The U.S. Forest Service listening session about an hour later in the Ely High School auditorium was much more tense.
The issue of copper/nickel/precious metal mining will do that.
The pro-Twin Metals rally at Whiteside Park attracted about 350 supporters who then walked in unity to the high school a few blocks away.
The listening session drew a crowd of 800-850, with overwhelming support for federal leases to be renewed for continued Twin Metals exploration near Ely and Babbitt.
The 5 to 7:30 p.m. hearing in the Ely High School auditorium drew a spirited group of supporters and opponents, who offered sharply contrasting views on a possible nonferrous mine.
Testimony at the Forest Service gathering only layered on top of already strong conflicting views that have been presented repeatedly at meetings, including a session a week ago in Duluth.
But Tuesday’s session in Ely was much more feisty than the Duluth event. The applause from both sides, but especially by Twin Metals backers, was sharp and with passion.
Those supporting renewal of the leases did not shy from voicing their disagreement when opponents were trying to make points ranging from this is a national, not local issue, to everything is just fine with Ely’s economy, despite the shuttered storefronts on the city’s main drag.
And when persistent mining critic Bob Tammen of Soudan took the microphone for a second three-minute stint — he first spoke when another person was picked by random drawing and then ceded the time to Tammen — a Twin Metals supporter stood up across the room and yelled, “Sit down.”
In response, a Forest Service official called for civility. That was not met well. “Follow the process,” yelled Twin Metals supporters, referring to a rule calling for speakers only getting one chance at the microphone.
But the Forest Service lost control of the session from the outset with a process that had all names put into a single drawing rather than being separated by pro-and-con on the issue and then alternately called upon. The result was the first six or so speakers representing anti-Twin Metals views and only one in support of renewing the leases.
Supporters argue the process needs to move ahead, with science and regulatory scrutiny to decide whether a copper/nickel project can coexist with the environment.
They say jobs, which are projected by Twin Metals to be substantial and in the thousands, should be an important part of the process.
But opponents say the water quality and Boundary Waters Canoe Area Wilderness experience will be forever damaged.
The mineral exploration and a future mining project would be done outside the protected Boundary Waters Canoe Area Wilderness in territory that was agreed to by all parties previously to allow mining, logging and tourism activities.
However, opponents, including DFL Gov. Mark Dayton, say a Twin Metals project in that watershed area poses the same threat as if it was in the BWCAW.
The Forest Service has mimicked that view of opponents in advance of the hearings, indicating a penchant to not approve the extension of the federal leases. The Forest Service said it was “deeply concerned” about what a Twin Metals project might do to the BWCAW.
Forest Service official Kathleen Ackinson was asked repeatedly by the Mesabi Daily News prior to the hearing why the agency decided to use the language of Twin Metals opponents regarding the project before a decision was made on a renewal of the federal leases. She repeatedly said, “We wanted to be transparent on our concerns.”
She was then asked why the Forest Service didn’t say it was also concerned about the economy of the region and how Twin Metals would provide thousands of jobs. She said again, “We wanted to be transparent in our concerns,” she said.
Ackinson was then asked if the Forest Service had considered that a lot of people would view that as a pre-determined decision on the issue.
“We wanted to be transparent on our concerns,” was the robotic answer.
However, Democratic 8th District U.S. Rep. Rick Nolan has strongly endorsed a renewal of the leases.
“Having met with all the involved agencies and parties, and spoken with Department of Agriculture Under Secretary Robert Bonnie, I know renewing these leases is the sensible and correct thing to do,” Nolan said in a letter Monday to the Forest Service. “We should never be afraid of exploration and discovery, or using science and facts to dictate important decisions. That is what these initial stages of the proposed Twin Metals initiative are all about.”
A Forest Service official last week said it has no timeline for its recommendation on the leases.
Twin Metals view: Copper-nickel mining offers promising economic future
By Bob McFarlin on Jul 16, 2016 at 11:00 p.m (Duluth News Tribune)
Twin Metals Minnesota is proud to be pursuing the development and operation of a future environmentally responsible underground copper-nickel mining project in Northeastern Minnesota. The Twin Metals project, and similar projects in the region, offer generations of Minnesotans the promise of thousands of good-paying jobs, billions of dollars in local investment, and billions more in revenue to Minnesota schools through the state School Trust Fund. Minnesota’s vast copper and nickel resources are also critical to the nation’s economy and security, supporting the infrastructure, manufacturing, technology and green-energy sectors.
The Twin Metals project is located in an area of the Superior National Forest where mining is both allowed and encouraged under state and federal law. Twin Metals is in the early stages of project development, with a target of 2018 for proposing project details to state and federal agencies for environmental review. Twin Metals has invested approximately $350 million to date, supporting hundreds of local jobs in the construction, drilling, engineering, geology, environmental and mineral-sciences fields.
Unfortunately, the economic promise of the Twin Metals project and the future of mining in the region are now threatened by arbitrary actions of the U.S. Forest Service. With all that is at stake for the region, the state and the nation, Minnesotans should expect — and demand — better of our federal government.
Twin Metals is seeking approval from the U.S. Bureau of Land Management for renewal of two federal mineral leases that are significant components of the future Twin Metals project. However, last month, the Forest Service publicly announced its intention to block the lease renewals — and to block all future mining opportunities in the Rainy River Basin.
The Forest Service justified its position by citing hypothetical fears about mining in the region rather than relying on science, the regulatory process or its own history of mining support. The Forest Service’s action would be devastating to the region’s economic future.
Twin Metals’ federal leases were first issued by the Bureau of Land Management in 1966. The leases have been twice renewed (1989 and 2004), both times without controversy and with the endorsement of the Forest Service. In both renewals, the Forest Service found that the leases posed no environmental threats. In 2004, for example, the Forest Service stated, “The Forest Service has no objection to the renewal. … It has been determined that (the leases) are sufficient to protect the resources of the United States.”
Further, the leases are supported by the Forest Service’s own 2004 Superior National Forest Land Management Plan, which identified mining within the forest as a “desired condition.” The plan states, “Exploration and development of mineral and mineral resources is allowed on National Forest System land, except for (federally) owned minerals in designated wilderness (the Boundary Waters Canoe Area Wilderness) and the Mining Protection Area.” The Twin Metals leases fall outside of the Boundary Waters and the Mining Protection Area, and thus are allowed. Mining activity is encouraged.
The hypothetical environmental issues raised by the Forest Service should be studied as directed by federal law through a multi-agency, science-based Environmental Impact Statement, or EIS, after Twin Metals’ project has been proposed. The federal mineral leasing process is neither the appropriate nor most effective process to assess the potential environmental impacts of a yet-to-be-proposed project.
Twin Metals is fully committed to protecting Minnesota’s wilderness, natural environment and recreational resources. When Twin Metals submits a project to state and federal agencies, the rigorous formal environmental review process will begin. Multiple government agencies, local communities and interested citizens will be integral parts of that process. The U.S. Forest Service should not pre-empt the opportunity for expert agencies and affected citizens to participate in the review process by attempting to unilaterally block the Twin Metals project before it is proposed.
Twin Metals is grateful for the support it has received from citizens, elected officials, businesses, labor and communities across Minnesota. We urge all supporters of mining in Northeastern Minnesota to contact the Forest Service and express opposition to the agency’s unwarranted proposed actions.
Bob McFarlin is government affairs adviser for Twin Metals Minnesota (twin-metals.com), working from the company’s corporate headquarters in St. Paul.
Mining Industry Advocate’s View: Actually, yes: Minerals needed; unwarranted opposition to process stifles growth, jobs
At a time when politicians and business leaders are advocating to “make America great again,” certain federal agencies are missing the simplest ways to do so. Agencies like the U.S. Forest Service are hampering domestic investment by ignoring their own established regulatory processes in an effort to shut down access to some of our most valuable domestic resources: minerals.
Citing potential environmental concerns, the Forest Service recently announced its intention to block the renewal of federal mineral leases held by Twin Metals Minnesota within the Duluth Complex of Northeastern Minnesota, one of the largest undeveloped mineral deposits in the world. Even worse, the agency also would halt exploration and development of all potential future mining opportunities in the region’s Rainy River Watershed.
Bad enough that the Forest Service would foreclose economic benefits both to the region and the nation. More troublesome, however, is that the agency is prejudging a project that has yet to be proposed. Instead of waiting for mine plans to be submitted for review under the long-established National Environmental Policy Act, the Forest Service is foreclosing that process by prematurely and arbitrarily refusing to renew the mineral leases.
Any future mineral development of the leases could not occur without the separate and thorough environmental review under the National Environmental Policy Act and the Minnesota Environmental Policy Act.
Twin Metals, much like all modern mining operations, is committed to a rigorous environmental review process that takes into consideration both the concerns of state and federal agencies and the members of the community in which the mine operates.
Twin Metals has the legal right to submit its mine plan for consideration and to have its project fully considered without the U.S. Forest Service shortchanging the National Environmental Policy Act process. By ignoring these legal obligations under current law, the Forest Service is potentially setting a chilling precedent for future mining projects — projects such as Twin Metals that could bring economic vitality to a long-stagnant economy.
Minerals mining offers the state a unique economic opportunity. Minnesota is home to world-class mineral reserves, including deposits of copper, nickel, platinum, palladium, gold and silver, the very minerals needed to manufacture personal electronics, automobiles, life-saving medical equipment and national security technologies. According to studies conducted by the University of Minnesota Duluth, the Twin Metals project and similar future potential projects will generate thousands of construction and permanent mining jobs, thousands of direct spin-off jobs and billions of dollars in investment in the region. The U.S. Bureau of Labor Statistics reports that the average annual wage for a Minnesota mining job is $83,359, or more than $30,000 above the all-industries average. Plus, the project will generate significant tax and royalty revenue for state and local governments as well as local school districts.
In the long term, the responsible development of domestic mineral and metals reserves will be a boon for both the state economy and the national economy. It will strengthen and secure supply chains and ensure steady growth in the manufacturing industry while providing high-wage jobs to hardworking Minnesotans.
But that coveted opportunity could be thwarted by the U.S. Forest Service decision to deny the renewal of valid and legitimate leases that have demonstrated valuable discovery, that have generated substantial royalties for the U.S. government, and that have been in existence for nearly five decades.
Before the Forest Service denies these mineral leases, it should think twice about pursuing policies that negatively affect both Minnesota and the U.S.
Actions like this explain why the U.S. is no longer creating high-wage jobs and why, as recently as the 1990s, our nation attracted 20 percent of worldwide mineral exploration dollars but now only attracts about 7 percent. It is past time to end this decline and instead encourage the responsible use of our mineral wealth on the Iron Range for the benefit of all Americans.
Range Leaders Push Forest Service to Move Twin Metals Hearing
They stood together, representing business, the trades, cities, counties, and legislative districts. And the leaders on the Range want the U.S. Forest Service to know, they are not happy about the agency’s stance on the Twin Metals project.
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“They’ve changed the rules, and to add insult to injury, they’re holding a public hearing in Duluth. Which is not convenient and not accessible to the majority of Iron Range residents who live here, and will be directly impacted if the mine comes to fruition,” said Steve Giorgi, executive director of RAMS.
The U.S. Forest Service sent a statement out earlier this month, saying the agency “is deeply concerned by the location of the leases within the same watershed as the BWCAW…”
That’s why they are holding a public hearing to get input on the renewal of the leases.
Former lawmaker and current St. Louis County Commissioner Tom Rukavina said, “I’m deeply concerned that these bureaucrats, with no election certificates, can put out such a biased press release.”
Congressman Rick Nolan has been outspoken and critical of the Forest Service since the statement was issued. He and Senators Al Franken and Amy Klobuchar have sent a letter to the agency, requesting a public listening session on the Iron Range.
“This isn’t about the mine. It’s about exploration. And we should never be afraid of science and discovery,” Nolan said.
Ely’s mayor Chuck Novak said he lives and breathes this mining vs. environmental group each day. They have a large stake in the future of Twin Metals, since that’s near where the project is proposed.
The public hearing is Wednesday, July 13th, at 4:30pm at the DECC in Duluth.