Tuesday, September 7, 2010

Water Table, EPA discharge permit and SAS

Throughout the Fire River Gold promotion it has been stated over and over again that the Nixon Fork mine is "fully permitted and bonded".

Like most propaganda from career promoters this is NOT entirely correct.

According to the St Andrews operating plan there are systemic water problems at the Nixon Fork mine.

The only possible way to deal with water below the water table if grouting fails is to continuously pump it out. In order to do that a permit to discharge waste water is required from the Environmental Protection Agency. Fire River Gold does not have this permit in place for Nixon Fork.

"Future operations below the water table (150 level) may require a National Pollutant Discharge Elimination System (NPDES) permit issued by the Environment Protection Agency (EPA). A study on the feasibility of grouting off the water inflow is currently underway by Golder Associates Inc. Preliminary results suggest that a combination of grouting and pumping may be successful. If the amount of water to be discharged is in excess of what can be applied to the land under the Solid Waste Management Plan, then it will be necessary to begin the NPDES permit process once it is decided to continue mining at depth. It is anticipated the NPDES process will take approximately 18 months to two years to complete."
"Groundwater was encountered on or below the P Level. A permanent sump is to be installed below the P Level. Some of the mine discharge water will be used as makeup water for the mill, but it may be necessary to irrigate with the excess water or obtain a water discharge (NPDS) permit for the facility to allow disposal of excess water. Golder Associates is investigating the possibility of grouting the groundwater being generated below the P Level and have expressed the preliminary opinion that the formations can be grouted and the water inflow stopped."

"NGI and MCRI’s exploration programs located ore bodies below the mine’s natural water table. MCRI had the ground water tested and it was found to meet drinking water standards. “Pump” tests were also performed to determine if the mine’s water table could be lowered sufficiently to permit the ore to be mined safely and economically. Based on an analysis of these tests it is currently not cost effective to pump the volume of water believed necessary to lower the water table for mining".

"MCRI continues to look for ways to mine the ore below the water table. MCRI also investigated ways to dispose of ground water if it were to be pumped to the surface. Injection wells were considered and two geotechnical test wells were drilled. These wells found permafrost extending all the way to bedrock prohibiting the use of shallow injection wells."

We have no way of knowing for certain what the final conclusions of the Golder study were, but, given the fact SAS walked away after the technical report and after an additional $ 4.5m investment, we must assume grouting completely failed. If it had succeeded the ore from C3300 would certainly have been mined.

There is a significant impact on Nixon Fork economics by removing this ore from the resource estimates and mine plan ...

"Sensitivity was also tested on the scenario in which zone C3300 would not be extracted due to insufficient grouting techniques. In the case where this zone is not mined, approximately 33,000 tonnes of probable reserves would be removed from the mine plan. The resulting reserve base would amount to 93,000 tonnes at a grade of 29.85 g/t Au. With this effect, the pre-tax NPV reduces from US$3.6 million in the base case to (US$1.2 million)."

It is relevant to review the material dished up for St Andrews' stakeholders as Nixon Fork was mothballed ...

"Mine development scheduled for completion in the second quarter of 2007 for the opening up of three additional mining areas and mining stopes and to progress mine operations at a sustainable levels fell behind schedule during the quarter due to equipment and mining personnel shortages and ore face availability issues encountered at the upper portion of the Crystal deposit. The Company believes it has rectified the issue by revising its mine plan to accelerate mine development of the lower portion of the deposit."

An observer would naturally pick ore face availability as the primary reason for stopping production and the importance of deep ore in restarting Nixon Fork is made very clear.

"Since the suspension of production activities at the Nixon Fork Gold Mine in the fourth quarter of 2007, a total of approximately 5,700 metres of definition drilling has been completed to better define the irregular geometry of the gold mineralization for improved future mining recovery and dilution. The definition drilling program was completed by the end of March 2008 and the Company is currently in the process of analyzing the data collected. The Company expects to complete an updated reserve and resource estimate in the second half of 2008 (see Advance Exploration Update)."

We know for certain another resource calculation never saw the light of day so whatever calculations were done didn't accomplish a thing in improving the economics at Nixon Fork.