Kensington gold project heads for start-up

Idaho-based Coeur d'Alene Mines received its 12 state of Alaska permits for the proposed Kensington underground gold mine in May, and the company expects federal permits to be issued by the end of the second quarter of this year. The targeted construction startup date at the Juneau site is July 1, with production to begin in late 2006. Kensington is designed to produce 100,000 ounces of gold annually, with a mine life of approximately 10 years.

"We are confident this project will demonstrate Coeur's leading approach to sound environmental stewardship and resource development, one we will all be proud of for many years to come," said Harry Cougher, the company's senior vice president for North America operations. Coeur is the world's largest primary silver producer and a significant low-cost producer of gold, with mining interests in Alaska, Idaho, Nevada, Argentina, Chile, Bolivia and Australia.

The permits, authorizations and certifications for Kensington include leases for the mine worker ferry dock facilities, authorization for road construction and management, water rights permits for work in fish-bearing waters and state certifications for the U.S. Army Corps of Engineers wetlands fill permits. The state's action follows the U.S. Forest Service's release last December of the final environmental impact statement, which concluded that the project can be developed with minimal environmental impacts.

"Alaskans can have jobs and opportunity and a healthy environment," said Alaska Gov. Frank Murkowski. "I believe in that balanced approach. The results of the EIS and the fine work of our state permitters demonstrate that we can move forward, protecting our environment while providing jobs for our residents. This project means good-paying jobs for Alaskans and a stronger economy for Southeast Alaska."

Mine originally permitted in '97

Coeur Alaska had originally received permits to operate the Kensington mine in 1997, but subsequently changed its mine plans and reapplied in 2001. Coeur's current mine plan moves the mine's facilities closer to Berners Bay, allowing the daily transport of workers from Juneau by ferry across the bay. The mine would employ about 250 people during operations and 300-400 people for the 22 months of construction.

The EIS concluded that the three-to-five round trips by the ferries each day would not significantly impact recreational use of Berners Bay. It also concluded that impacts on marine mammals, herring and eulachon would not be significant, given appropriate mitigation measures such as fueling and operational restrictions during critical times. The state's leases for the dock facilities place timing and use restrictions on the docks during critical times.

DNR responded to public comments on a wide range of issues related to the Kensington permitting. For example, someone asked if there were less toxic alternatives to galvanized steel for the dock construction, expressing concern about the possible effects on eggs and larval fish. DNR replied: "Galvanized steel is one of the least toxic alternatives for pilings. Other options include concrete, plastic and treated and untreated wood. All have advantages and disadvantages. Because of relatively low toxicity and structural and construction considerations, galvanized steel is an appropriate choice."

Intertidal fill minimized

The marine terminal facilities have been redesigned to minimize the amount of fill placement in the intertidal and beach areas. The proposed lease area now covers only 3.8 acres or 165,500 square feet. The marine terminal construction will create a barge mooring facility and a small laydown yard for handling of cargo. The construction of the marine terminal facilities below the mean high tide will involve approximately 2,500 cubic yards of fill.

Coeur will have to control public access to the five-mile Jualin Mine Road, which also has to be upgraded by the company. According to the land use permit, the upgrade will involve resurfacing, re-grading, bridge deck installation and the creation of 17 turnouts. In some locations along the route development will involve grade reduction, cut and fill development of drainage ditches and removal of trees to increase vision for safe passage.

Another significant issue the state had to deal with was Coeur's proposal for the storage of mine tailings in Lower Slate Lake. The EIS concluded that the tailings are not toxic, and that there is a high likelihood that the lake can be reclaimed to be at least as productive as it was before the mining, and probably even more productive. The state's fish habitat permit for the use of Lower Slate Lake provides for the lake's reclamation after mining. The certification of the U.S. Army Corps of Engineers wetlands permit for the lake requires additional testing of the tailings to make sure they are non-toxic throughout the mine's life and after closure.

Dam will double Lower Slate Lake

Coeur will construct a dam that will raise the water level in Lower Slate Lake by about 85 feet, increasing the size of the lake from about 20 to 56 acres, and flooding the majority of Mid-Lake Creek, the main inflow to Lower Slate Lake. Mid-Lake Creek will be diverted around the tailings storage facility during operations. Downstream fish passage will be provided by either manual relocation of fish or through the diversion.

The Kensington project will cause "permanent loss of wetlands, estuarine and stream habitats and short-term loss of lake habitat," according to the state's Office of Habitat Management and Permitting. However, the agency determined that the project should go ahead because there is a significant public need for it. All fish habitat will be lost in Lower Slate Lake during the operation of the mine, as will 33 acres of upland habitat for Vancouver Canada geese. River otters will be impacted by construction and operations disturbances.

Historically, development and ore production occurred at the Kensington mine site from 1897 to 1938. The adjacent Jualin project was discovered in 1895 and operated from 1896 to 1928. All told, both mines produced 40,513 ounces of gold from 75,208 tons of ore. Coeur now controls both the Kensington and Jualin properties. Mineral reserves are located on the Kensington property and production infrastructure will be on the Jualin property.