The Ashdown Permit Process

July 27, 2005

Overview

The process of bringing a mine on-line in Nevada involves a number of agencies: local, state and federal.  Each agency is guided by regulations, statutes and legislated mandates designed to ensure that the public interest is considered when approving the start up of a mine.  The principal areas of control involve environmental preservation, human safety, impact to flora and fauna, disturbance of historic and archeological sites, water and air quality, noise abatement, and reclamation.  In addition, issues concerning industrial use of public roads, and questions of right-of-ways and easements for access of equipment, power and water must be addressed.  Years of legislation, driven by public opinion and special interest group lobbying, has resulted in a complex mix of regulatory authorities governing the mining industry.

Because this array of statues and regulations evolved over time and employ a number of public agencies serving different political jurisdictions, it falls to the mining company to assist the regulators in coordinating the effort of meeting the letter of the law. Each mine is unique, and therefore each process to permit that mine into compliance is unique.  On top of this fact, it is not uncommon for the regulators, specialists and department personnel within each governing agency to possess a degree of interpretive authority regarding the implementation of their particular set of statutes and regulations. 

As a result, the permitting process is subject to a number of permutations, which can change as the process evolves.  A general pathway can be mapped, but the actual implementation leading to definitive time schedules and date-of-receipt for permits, cannot.  This means that mining companies are not able to precisely forecast the milestones for a mine’s development, and therefore must allocate sufficient resources to provide a financial and time cushion.  In effect, the mining company is in a kind of partnership with those public agencies tasked with modulating their activities, and this partnership cannot be driven any faster than the slowest element in the chain of authority.

Two Key Permits for Ashdown

In the case of Ashdown, there are two principal permits involved in bringing its molybdenite mineralization into commercial production: A Plan of Operations for the mine operation, and a Water Pollution Control Permit for the mill facility. Because the mill facility is situated on private land and the mine is on public land, these two over-arching permits follow parallel, but separate, tracks.  They interact at certain points, but for the most part are self-contained, and governed by two completely different sets of regulations. 

Plan Of Operations

The controlling permit for the Ashdown Mine is the Plan of Operations (or POO), which falls under the jurisdiction of the Bureau of Land Management (BLM), a federal agency with a district office in Winnemucca, about 150 miles south of the Ashdown mine.  The POO is an all-encompassing document, which attempts to define the mine from inception to closure, including final reclamation.  Because of its broad scope, the POO comprises many individual steps and permits, and is read and reviewed by a number of agency specialists, including biologists, archeologists, geologists, and legal, regulatory and operational experts.  A POO will go through several iterations as it unfolds, and may occasionally take an unexpected detour as facts specific to each project are revealed.  Depending on the scope of the mine project, it is not uncommon for an Environmental Impact Statement (EIS) to be required, which is a multi-step process in and of itself.  In other instances, an Environmental Assessment (EA) may be deemed more appropriate for the scale of the proposed project.  An EA covers the same scope of concerns as a full EIS, but in a more streamlined document. 

The regulations require the BLM to provide some of the analytical work needed to prepare the POO. However, the reality is that all government agencies have limited resources, and it generally behooves the mining company to assist the BLM by having third-party consultants prepare certain key elements of the documentation, thereby expediting the process.

Golden Phoenix started preparing the POO for Ashdown in September of 2004.  It began as an open pit gold/moly mine with a mill facility on a private parcel of land requiring a full EIS and a minimum 24 months to be processed and approved.  In March of 2005 it was determined that the permitting process for the open pit be suspended in favor of a more surgical approach to the extraction of the Moly resources utilizing an underground mining method.  This change in strategy came as GPXM began its corporate restructuring and the Moly at Ashdown became the primary focus of the Company.  Private land was again identified as the best way to expedite the mill permitting process.  During the course of the Ashdown Mine design and permitting process, the location of the private land to be used for the mill site has changed twice as better opportunities were identified.  The current Morris Millsite has cut the haulage distance from 12 miles to 1.5, avoids sensitive surface waters, and is located on a very stable substrate that provides superior support for the operating millworks.

As a result of the greatly reduced surface disturbance, the BLM has determined that an EA will address the various public concerns adequately.  Golden Phoenix has retained a private consulting firm, RTR Resource Management, to complete the EA document for the BLM.  After a review and comment period, the BLM will submit the EA to the Environmental Protection Agency as required by the National Environmental Protection Act (NEPA).  Once accepted by the EPA, the way is cleared for the POO to receive final approval and a Decision Record to be filed that allows full-scale operations to begin.

Concurrently with the POO process, Golden Phoenix has been working with the State and Federal agencies to advance certain aspects of the project, as the regulations will allow.  The concept here is that various aspects of the development work can be accommodated under regulations that are separate from the POO process.  Because the Company has been actively engaged in reclamation of the property since entering into the JV agreement with Win-Eldrich in the spring of 2004, we have successfully reduced the total disturbance at the minesite to 4.6 acres.  Ongoing efforts may further reduce this figure. 

This extremely small footprint qualifies parts of our work at the site as permittable under a Notice of Intent (NOI).  While NOI activities do not allow for full-scale mining, they do allow for bulk metallurgical samples of mineralized materials to be obtained for testing.  Golden Phoenix is currently rehabbing the portal area under an NOI.  We have submitted a second amendment to the original NOI that will allow 1000 tons of mineralized material to be removed and tested.  During the course of this work, we will be stockpiling materials that are earmarked for the final reclamation at closure, and developing underground access to the high-grade Sylvia Chute.

Water Pollution Control Permit

The controlling permit for the Ashdown Mill (aka the Morris Mill) is the Water Pollution Control Permit (WPCP), under the jurisdiction of the Nevada Division of Environmental Protection (NDEP), a State agency with offices in Carson City.   Like the POO, the WPCP is comprised of many parts involving a number of different specialties.  NDEP is charged with safeguarding the waters of the State of Nevada on both Federal and private lands.  The WPCP is centrally concerned with the question of how a proposed operation may affect water quality.  Stringent parameters are established by statute within which Golden Phoenix must operate.  This insures that the shared water resource, including surface and ground waters, is protected from contamination, diversion or waste.  

In the case of Ashdown, the Company had completed the WPCP for a 6-acre pilot mill site in March of 2005.  However, the restricted size of the property along with other extenuating circumstances compelled the Company to seek an alternate mill site, one large enough to allow for long-term operations.  A 20-acre site was located and secured in April of 2005.  It was closer to the mine, larger, flatter, and generally well suited to an on-going milling operation. It’s greater size allowed for a larger tailings impoundment, which in turn helped to qualify it for small–scale status.  This enabled Golden Phoenix to apply for a 120,000 ton milling permit, to replace the original 10,000-ton pilot permit.  In short, relocation of the mill site opened the door for a full-scale operation to be designed and built, and has trimmed both time and money from the original two-phased plan by combining them into one.  The price for this strategic modification is the resetting of the clock for approval of the WPCP.  Since the POO is also still the “rate limiting step” in the overall process, there has been no loss of time with respect to the commencement of full-scale mining as a result of these actions, and the Company finds itself in a superior position moving forward. 

Golden Phoenix is arranging to break ground and pour the slab and footings for the building that will house the millworks in the near term.  Under the regulations, it can do this work prior to receipt of the WPCP from NDEP.  The Company is also seeking confirmation to allow the digging of the tailings impoundment.  Since the new application is essentially identical to the one approved in March, Company staff are working closely with NDEP to expedite the processing of the new WPCP application.  It is hoped to further trim the timeline for full construction to commence, while preparing for permission to extract and process a 1000-ton bulk metallurgical sample.  Depending on the flow of approvals, various scenarios can result.  One possibility is that the Company will have final approval of the WPCP and will have completed construction of the mill prior to the POO being approved by BLM, leading to full-scale mining.

Additional Permits and Approvals

In addition to the POO and the WPCP, there are a number of other regulatory hurdles to surmount.  Please click on the link below for a list of requirements involved in completing the Ashdown Mine.  This list is presented for general informational purposes, and should not be considered definitive or final.  A red check mark appears before those permits that have been issued to Golden Phoenix as of the date on the Table.

(Ashdown Permit Table PDF )