RIVERS WITHOUT BORDERS

The Proposed Red Chris Mine in the Iskut-Stikine Watershed

Rivers Without Borders has just released a new conservation briefing on the Red Chris Mine Proposal. Located18 km southeast of Iskut, B.C., the proposed Red Chris open pit copper-gold mine, owned by Imperial Metals, would destroy prime wildlife habitat for Stone’s sheep and grizzly bear on Todagin Mountain, and leave a tailings impoundment that would pose a long-term risk to fish habitat and water quality in the headwater lakes of the Iskut River.

Red Chris Mine Briefing. Click on image to access document.

The mine is currently in the initial phase of construction, but cannot go ahead without power from the Northwest Transmission Line (NTL). In March 2013, Imperial Metals and BC Hydro announced that Imperial Metals would build a 93 km extension of the NTL to Tatogga Lake and the proposed mine. BC Hydro agreed to buy the extension for $52 million. The line will not require a new environmental assessment, and has been exempted by the government from reviews that would normally be required to determine if it was necessary or if construction costs have been properly assessed.

Within the region, the NTL could be the catalyst for an unprecedented wave of industrial development in northwest B.C., including up to 11 new mines in the transboundary watersheds of the Unuk, Iskut and Stikine Rivers. These watersheds are some of the last remaining largely intact watersheds in North America, sustaining robust populations of wild salmon and wildlife such as Stone’s sheep, grizzly bears, wolverine, and migratory birds. If built, the new mines would bring open pits, industrial roads, greenhouse gas emissions, tailings ponds, and the risk of acid mine drainage throughout the watersheds. If it proceeds, Red Chris would be the first of these mines to be developed.

Will FDA Approve Frankenfish?

Today the US Food and Drug Administration (FDA) concludes a public comment period on a proposal from AquaBounty Technologies to produce a genetically modified salmon euphemistically named Frankenfish and marketed as AquAdvantage Salmon.

A genetically modified salmon, rear, and a non-genetically modified salmon, foreground. Photograph: AP

Why is the FDA the final decision maker on what many people see as a significant environmental and fisheries issue? Good question. The FDA is treating the AquaBounty application very narrowly, treating it like a drug application and focusing mostly on possible human health effects of eating the genetically modified salmon. We agree with the members of the Alaska congressional delegation that it is irresponsible to be preparing for the approval of AquaBounty’s application, as FDA apparently is, without properly consulting with experts on marine and freshwater fisheries, and without adequately considering the potential environmental impacts more broadly.

When the farming of Atlantic salmon began on the West Coast we were told that they won’t escape, then that they wouldn’t survive in the wild, then that they wouldn’t reproduce  – and all of these predictions turned out to be wrong. There is no guarantee that all AquAdvantage salmon will be sterile and that escapees will not reproduce or interbreed with wild salmon. Escaped genetically modified salmon would compete with wild salmon for food and rearing, resting, feeding and spawning areas of streams and rivers. There is no guarantee that young and/or adult genetically modified salmon will not escape from AquaBounty’s facilities. Furthermore, there is no guarantee that others who purchase or obtain AquAdvantage salmon will take proper precautions to ensure no escapes into the natural environment.

Wild salmon are facing major threats such as habitat loss from industrial development, fish farms and changing ocean conditions. Let’s not add to that list.

Chieftain Metals’ Tulsequah Chief Mine Proposal Extremely Risky According to Independent Analysis

Feasibility Study Underestimates Costs, is Based on Optimistic Predictions and Questionable Assumptions

FOR IMMEDIATE RELEASE
April 3, 2013

CONTACT
Chris Zimmer, Zimmer@riverswithoutborders.org, 907/586/2166

(JUNEAU) An independent analysis of Chieftain Metals’ recent Feasibility Study for the proposed Tulsequah Chief mine demonstrates the project is far from “robust” as claimed by Chieftain and suffers from a number of questionable assumptions, unreasonably optimistic predictions, and an overall “best case” type analysis. The Feasibility Study also excludes normal capital costs like sales taxes and financing expenses, and ignores key information such as the strong opposition to the project from the Taku River Tlingit First Nation (TRTFN), unacknowledged environmental liabilities, and Chieftain management’s history of bankruptcies.

Risk Report for the Tulsequah Chief Mine Proposal by Joan Kuyek March 2013
Click on image to download or view this report.

“When you read beyond Chieftain’s hype and vague promises to ‘optimize’ operations and costs, it is clear the Tulsequah Chief simply isn’t a viable mine.  It is strongly opposed by the Taku River Tlingit First Nation and poses major risks to investors, Southeast Alaska’s most productive salmon fishery and the local community,” said Chris Zimmer of Rivers Without Borders. “The Feasibility Study is based on optimistic assumptions about metals prices, the ore deposit, and development schedules. Chieftain admits it has no smelters lined up and that contaminants in the ore will make it difficult to market the copper concentrates. In addition, the mine may require expensive long-term water treatment that Chieftain has not prepared for.”

Independent Technical and Economic Analysis of the Chieftain Metals Inc. Tulsequah Chief Mine Feasibility Study by James R. Kuipers, P.E.
Click on image to download report.

On January 28, 2013 Chieftain released a Technical Report compiled by JDS Engineering, which summarizes the Feasibility Study recently completed for the Tulsequah Chief. The mine site is on the Tulsequah River, just upstream of its confluence with the Taku River and the Alaska/BC border. Today Rivers Without Borders (RWB) is releasing an assessment of the Tulsequah Chief project. This report, written by mining analyst Joan Kuyek, is based on reviews of publicly available documents, information not included in the JDS Technical Report, and an independent technical and economic analysis commissioned by RWB from James R. Kuipers, P.E., a registered professional mining engineer with over 30 years of experience.

“Chieftain’s Technical Report is based on a ‘best case’ analysis which simply isn’t a prudent way to analyze a complex project like the Tulsequah Chief,” said Zimmer. “The reliance upon ‘probable’ rather than more certain ‘proven’ mineral reserves suggests a lack of confidence in the ore reserves. This is a recipe for another bankruptcy and continued acid mine drainage pollution of the region’s most productive salmon river.”

Examples of significant problems with the mine proposal as announced in the JDS Technical Report include:

• The Technical Report does not disclose the November 18, 2012 Joint Clan Mandate (JCM) from the TRTFN which“opposes the currently proposed Tulsequah Chief Project” and “is directing the TRTFN Leadership to act on this JCM Mandate and take all necessary steps to ensure that the Tulsequah Chief project, as currently proposed, is not developed on Taku River Tlingit Territory.”
• It is not a robust project when the risks such as significantly decreased metals prices, decreases in projected reserves or recoveries, increased costs, and delays in revenue streams are more realistically portrayed.
• Independent sensitivity analyses show the relatively high risk that the Tulsequah Chief has of, at some point in its history, becoming uneconomic, resulting in premature project closure and bankruptcy of the owner.
• The Feasibility Study relies upon relatively optimistic metallurgical grades and recoveries. The reliance on “probable” rather than more certain “proven” mineral reserves indicates less than a high degree of confidence in the economic viability of the ore deposit.
• The estimated development and operating costs appear highly optimistic given the location, dependency on petroleum-based fuel, competition for labor and other factors. An increase in operating costs of as much as 25% over the life of this project would not be unreasonable were a more conservative case to be projected.
• The lack of an identifiable smelting facility and the Technical Report’s statement that the copper concentrates would be rejected by Chinese smelters suggests that marketing of this concentrate might be questionable and at the very least difficult.
• Potential environmental liabilities and reclamation costs are seriously underestimated. If the company’s reclamation measures fail, the long-term cost could be in excess of $100 million. The Technical Report notes that “If this [long-term] mitigation strategy is unsuccessful, there could be the need for the long‐term treatment of AMD [acid mine drainage] at this site.” However, no estimate of the costs of long-term treatment has been provided, although elsewhere Chieftain notes that annual operating costs for the Interim Water Treatment Plant (IWTP) were about $4 million. The company has not included costs in its economic analysis for operating the IWTP before the mine is in production.
• Schedule delays and additional associated costs, such as those caused by First Nation opposition, labour disputes, financing problems, weather conditions, barging challenges and other unexpected site conditions have not been accounted for. The Technical Report notes “The barging component of the logistics plan is critical to the project success,” but does not discuss the history of barging problems and delays experienced by both previous mine owner Redcorp in 2007 and 2008 and Chieftain in 2011.

Tulsequah Chief – a dumb idea that won’t go away

The Tulsequah Chief mine issue – the dumb idea that seemingly will not go away – continues to evolve. From a conservation perspective, there’s been recent bad news, and good. First the bad, which relates to financing for the mine …

A satellite image of mining tenures along the Tulsequah River tributary to the Taku River. Click on image to see a larger view.

The investor is China, which has been eyeing development projects across Canada and has seen fit to add Tulsequah Chief to its speculative portfolio. This has meant an infusion of $10 million for Chieftain Metals. That’s a far cry from the half billion dollars the company still must secure before it starts road building and mine development, but this was a shot in the arm for Chieftain.

On the other side of the ledger, some good news from a conservation perspective. On November 18, 2012, the Taku River Tlingit First Nation passed a Joint Clan Mandate calling on leadership to “take all necessary steps to ensure that the Tulsequah Chief project, as currently proposed, is not developed on Taku River Tlingit Territory.” The Mandate enumerates many environmental, economic, and cultural reasons why the project should be opposed. The Tlingit had been open to at least considering lower Taku mining, but that is no longer the case. Chieftain is not telling potential investors about this development, but Rivers Without Borders is. If prerequisite “social license” is more than talk in BC, the Tulsequah Chief mine proposal faces a major new hurdle.

And concern is growing in the Tlingit community. An Atlin and Whitehorse based grassroots group called Children Of The Taku Society has been speaking out and gaining visibility this winter. Quoting an editorial by the group: “We are not opposed to all development on our lands for all time; we are opposed to this development, in this location, at this time, with this proponent … The Tulsequah Chief simply is not worth the risk.”

BC’s mining sector needs more than slaps on the back and market hype

FOR IMMEDIATE RELEASE

Thursday, January 31, 2013

NGOs release Mining Reform Top 40

Link: Top 40 Recommendations for Mining Reform in BC

(Ottawa, Vancouver, Victoria). As the BC mining industry’s Roundup 2013 conference winds down national and regional NGOs are emphatically calling for substantial reforms to the rules the industry operates under. While communications from the industry have focused on the growth in exploration activity and spun the industry’s potential in a positive light, the reality is there is a growing level of frustration and tension around many projects in the province. Changes are urgently needed to resolve these existing and emerging environmental and social conflicts. In order to stimulate a more sober analysis of the situation, MiningWatch Canada, David Suzuki Foundation, Rivers Without Borders and Friends of Clayoquot Sound are releasing a Top 40 list of mining reforms needed in BC.

An important example of the industry’s failings and the need for reform is Taseko Mines’ New Prosperity project. This project, which does not have the free prior and informed consent of First Nations and which has been unable to obtain environmental approvals for decades, continues to take up time and resources in a second round of environmental assessments. The company’s latest submissions to the Canadian Environmental Assessment Agency have been harshly criticized by federal and provincial agencies, First Nations and NGOs.

Top 40 Recommendations for Mining Reform in BC. Click image to download this list.

The recent Ross River Dena decision adds to a growing body of law that clearly indicates that BC’s “free entry” mineral claim system is illegal and does not adequately protect Indigenous rights. Establishing third party interests and allowing exploration without a legally enshrined process for obtaining free prior and informed consent of First Nations is a recipe for future conflicts and legal challenges.

Other tenure and land-use issues that need to be addressed include: protection of areas of cultural and environmental sensitivity, renewed land use planning that respects Indigenous rights and the protection of municipalities’ ability to plan and zone within their boundaries.

The precursor to the New Prosperity Project pointed out some of the flaws in BC’s environmental assessment process as it was approved by the province before being rejected by a scathing review by the federal government. Necessary reforms to the environmental assessment process include recognition of First Nations as decision makers, preliminary reviews to flag major issues ahead of significant investments, and the assessment of project sustainability and cumulative effects.

Another example that points to the need for reform is the controversial Tulsequah Chief Mine with its legacy of 50 years of acid mine drainage into the Taku River. Chieftan Metals is pushing to re-open the mine against the opposition of the Taku River Tlingit and conservation groups on both sides of the BC-Alaska border. In addition to problems with the environmental assessment process, Tulsequah Chief highlights the need for changes to the province’s approach to abandoned mine rehabilitation and the importance of careful scrutiny over mine closure.

The list of 40 reforms includes recommendations on Aboriginal rights, mineral tenure, land-use planning, environmental assessment, mine closure, environmental oversight, taxation, jobs and local benefits and abandoned mines.

Quotes:

“Of the three principal mining provinces in Canada, BC is the only one that has not acknowledged the need for substantive reform to the legal framework for mining. Responsible political leadership in BC will mean taking a hard look at the Mineral Tenure Act and environmental assessment process to bring them into the 21^st century so that they comply with existing Aborignal law and citizens’ expectations.” Ramsey Hart, MiningWatch Canada

“BC’s mining framework is built on a foundation that is showing more and more structural cracks. One of the things that the mining sector seeks is to reduce uncertainty, but unless fundamental issues are addressed more environmental and social conflicts are one of the few things we can be sure of.”
John Werring, David Suzuki Foundation

“With the aggressive expansion of mining in BC, concerns about damage to wild salmon, water quality and traditional uses of the land are growing across the province and in spilling over into Southeast Alaska. The industry and government needs to respond with changes that ensure mining development does not threaten these important resources.”  Will Patric, Rivers Without Borders

Contacts:

Ramsey Hart, Canada Program Coordinator, MiningWatch Canada
(613) 569-3439, (613) 298-4745 (cell), ramsey@miningwatch.ca

John Werring, David Suzuki Foundation
(604) 732-4228 ext. 1245, (604) 306-0517 (cell), jwerring@davidsuzuki.org

Will Patric, Executive Director, Rivers Without Borders
(360) 379-2811, will@riverswithoutborders.org

Chieftain Metals’ Tulsequah Chief Mine Proposal Continues to Face Major Risks and Uncertainties, Despite New Feasibility Study

FOR IMMEDIATE RELEASE
January 29, 2013

CONTACT
Chris Zimmer, Rivers Without Borders, 907/586-2166, Zimmer@riverswithoutborders.org

Uncertain ore deposit, low rate of return, high metals price predictions, project very sensitive to changes, lack of markets for the metals, First Nation opposed

(JUNEAU) Despite Chieftain Metals’ claims of “robust” results from a new feasibility study, the Tulsequah Chief mine proposal continues to face significant risks, uncertainties, delays and opposition. A Technical Report summarizing the results of the feasibility study, released on January 25, notes a number of major uncertainties, risks and assumptions.

“I can’t see how Chieftain can conclude this project is viable given the low internal rate of return, the lack of proven mineral reserves, uncertainties about how much metal can be recovered from the ore, a lack of smelters that can process concentrates containing significant impurities, and the project’s sensitivity to changes in prices and costs,” said Chris Zimmer of Rivers Without Borders. “Most mine proposals at this stage have at least some proven reserves and higher return rates. Given the optimistic nature of the feasibility study in general, this is a recipe for another bankruptcy.”

The Technical Report is based on several optimistic predictions, including high long-term prices for metals and a timely agreement with the Taku River Tlingit First Nation. It also leaves out some key information.

“Given the importance of community support and social license in B.C., it is odd that the Technical Report makes no mention of the formal opposition to the project the Taku River Tlingit First Nation announced in November,” said Zimmer.

There has not been a feasibility study for the mine proposal with road access since 1995 that indicated the Tulsequah Chief project is economically viable. Two studies started since then were stopped when they did not show favorable results. The latest partial feasibility study, in 2008, indicated capital costs of over $500 million. Previous attempts to re-open the Tulsequah Chief by Redcorp ended in bankruptcy in 2009, resulting in losses to secured creditors of approximately $100 million and to investors of nearly $190 million.

In February 2012, Rivers Without Borders released a report documenting the flaws, uncertainties and risks in Chieftain’s June 2011 Preliminary Economic Analysis for the project. Rivers Without Borders will soon release a detailed analysis of the new Technical Report. An initial review reveals the following risks, uncertainties and missing information:

• Mineral resources are only “inferred” or “indicated,” not the more certain “measured.” The mineral reserve is designated as “probable,” not the more certain status of “proven;”
• The probable mineral reserves have been calculated based on high sustained metal prices;
• The low internal rate of return means the project is extremely sensitive to increased costs or lower metals prices;
• There is no mention of the implications of the recent announcement that the Taku River Tlingit First Nation opposes the proposed project;
• There is no mention that Chieftain is in violation of the Letter of Understanding it signed with the Taku River Tlingit or that the Impacts, Mitigations and Mutual Benefits Agreement talks between Chieftain and the Taku River Tlingit have failed to reach any agreement and have apparently broken down;
• Tests have yet to be completed to establish the best way to extract metals from the ore;
• There are no contracts with smelters yet. Arsenic in the ore makes it unmarketable in China;
• Potential liabilities from earthquakes and avalanches are underestimated; and
• Reclamation and closure costs do not include any costs for long-term water treatment, if needed.

“There is little margin for error here; if metal prices don’t go up enough or costs go up or smelters won’t take the concentrates, for example, then the project could be in real jeopardy,” said Zimmer. “Chieftain thought that the Interim Water Treatment Plant operating costs would be about $1 million per year, but actual costs were four times that, which calls into question the credibility of other estimates.”

The controversial proposed Tulsequah Chief mine is located on a major tributary of the Taku River in northwest British Columbia, near the Alaska border. The Taku is the region’s number one salmon river. Alaskans continue to raise numerous concerns about the Tulsequah Chief project related to impacts on salmon and salmon habitat.

BC Ignores Salmon, First Nation and Chieftain Metals’ Violations

FOR IMMEDIATE RELEASE 
October 22, 2012

CONTACT
Chris Zimmer, Zimmer@riverswithoutborders.org

 BC IGNORES SALMON, FIRST NATION AND CHIEFTAIN METALS’ VIOLATIONS BY ISSUING AMENDED ROAD APPROVAL FOR TULSEQUAH CHIEF MINE PROPOSAL

By issuing an amended environmental approval to Chieftain Metals for a revised access road route to the proposed Tulsequah Chief mine, British Columbia has rejected concerns and requests from the Taku River Tlingit First Nation and other Atlin residents, ignored violations of agreements and at least one major permit by Chieftain Metals, and set a low standard for reviewing the road route that provides little guarantee the road and associated industrial development will not harm salmon, wildlife and water quality.

“It is shocking that the BC government has issued this approval to Chieftain Metals despite the company’s violations of agreements, environmental laws and at least one major permit, objections from the Taku River Tlingit First Nation and other Atlin residents, and the clear potential for significant harm to salmon and wildlife,” said Chris Zimmer of Rivers Without Borders. “Given Chieftain’s lack of a feasibility study and long-term financing and its failure to halt acid mine pollution amidst strong concerns from both sides of the border, there is no reason to rush to approve the road route.”

On October 19^th, the British Columbia Environmental Assessment Office issued an amended Environmental Assessment Certificate to Chieftain Metals for revisions to part of the access road route to the proposed Tulsequah Chief mine. An amendment to Chieftain’s Special Use Permit is also required and is expected any day. Both Chieftain and the British Columbia government claim these revisions satisfy all major road concerns, including those of the Taku River Tlingit First Nation and other Atlin residents. BC rejected a formal request from the Taku River Tlingit that the review of the revised road route be halted until Chieftain re-starts the water treatment plant and demonstrates the mine is viable.

“Claims that the revised road route satisfies all major concerns are contradicted by statements from the Taku River Tlingit First Nation, their lack of approval for the mine and road, and comments submitted by other Atlin residents,” said Zimmer. “BC’s approval is based on the belief that the revised road is better than the previous route developed by now bankrupt Redfern Resources, which sets an extremely low standard and provides no guarantee that the road won’t hurt salmon, degrade water quality or lead to additional industrial development in the heart of the Taku.”

The Taku is the region’s most productive salmon river. The proposed mine is on the main tributary to the Taku River, the Tulsequah River, just upstream of the international border and vital salmon habitat. BC’s approval of the amended road route comes after major weakening of Canadian environmental laws, and in the midst of efforts to give China unprecedented legal rights and access to Canadian resources. Chieftain recently announced a $9.9 million investment by Procon Holdings Inc. which is a majority owned subsidiary of China CAMC Engineering Co.

“Anyone in Alaska who depends on the resources of the Taku should be deeply worried about Chieftain’s broken promises and BC’s weak oversight,” said Zimmer. “With the growing involvement of China in the transboundary region, a country with abysmal human rights and environmental standards, the potential for unsustainable industrial development is accelerating.”

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British Columbia’s Lack of Transparency over Controversial Northwest Transmission Project Denounced: FOI Appeal Filed

FOR IMMEDIATE RELEASE

October 10, 2012

British Columbia’s Lack of Transparency over Controversial Northwest Transmission Project Denounced: FOI Appeal Filed

The B.C. government is refusing to disclose basic background information with respect to a controversial power project proposed for northwest British Columbia. Rivers Without Borders, the conservation organization that filed the freedom of information (FOI) request, today called on the Information Commissioner to intervene.

The FOI request concerns one of the most significant rural electrification projects in the province’s history. After several months of delay, the B.C. government responded to Rivers Without Borders’ request by releasing 76 blank pages. “We think this is a blatant disregard of a request for information that the public has a right to know,” says Tadzio Richards, Conservation Campaigner with Rivers Without Borders. “We have lodged a complaint with B.C.’s Information and Privacy Commissioner.”

Green Infrastructure Fund agreement with BC dated June 30, 2010. Click on image to see agreement.

Construction of phase one of the mammoth $561 million Northwest Transmission Line (NTL) from Terrace to Bob Quinn Lake began this spring. However, whether, how and when a controversial extension of the line 100 km further north will be built remains uncertain. If built, the extension will dramatically escalate resource development in the region.

The federal government kicked in $130 million from the Green Infrastructure Fund for phase one of the NTL project on the condition that the B.C. government take responsibility for building the extension. The stated rationale for this arrangement was that the extension would provide clean (non-diesel) electricity to two small First Nations communities. However, according to the Pembina Institute, if mining and development activity facilitated by the extension is factored in, the net effect of the extension would dramatically increase the amount of greenhouse gas emissions attributable to the project.

British Columbia was required to submit its plans for the extension project by June 30, 2012 under the federal-provincial funding agreement. Six weeks before this deadline, the Environmental Law Centre (ELC) filed an FOI on behalf of Rivers Without Borders to confirm whether these plans exist, and if the province intends to do an environmental assessment of the extension project. Over a hundred days later, the B.C. government responded by providing a document consisting of 76 blank pages, along with five emails that were almost completely redacted.

“In building the transmission line, B.C. has promised to connect northern communities to the grid in exchange for millions in federal funding,” says Richards. “So far, the B.C. government has provided no evidence that they will fulfill their green obligations. This power line looks like it is being built for mines rather than communities.”

Letter of Commitment from B.C. to Canada dated June 22, 2010. Click on image to see letter.

The government’s response in this case is consistent with what FOI advocates have complained is a broader trend toward secrecy and non-disclosure, particularly where Cabinet documents or politically sensitive information or deliberations are involved.

“British Columbians need to be reassured that their provincial government respects its obligations under B.C.’s freedom of information laws, and that it is committed to a transparent process for the evaluation of the very significant environmental impacts associated with the NTL extension in terms of greenhouse gas emissions and cumulative effects” says Chris Tollefson, ELC Executive Director. “To date, the government’s record on this file provides little confidence on either front”.

On behalf of Rivers Without Borders, the ELC is requesting the Information Commissioner review the response, arguing the government has misinterpreted its obligations under B.C.’s FOI legislation and, as a result, has withheld information it is legally required to disclose.

The B.C. government’s response to the FOI request can be seen here:

http://www.openinfo.gov.bc.ca/ibc/search/browse_results.page?recorduid=3731277&title=FOI%20Request%20-%20EGM-2012-00065

Chieftain Metals’ Tulsequah Chief Mine Proposal Faces Major Obstacles Despite New Chinese Partner

No Feasibility Study; No Long-Term Financing; No First Nation Approval; Permit and Agreements Violations; Water Treatment Plant Shutdown; Alaska Concerns Growing

Despite Chieftain Metals’ recent non-binding Memorandum of Understanding (MOU) with a Chinese company, the Tulsequah Chief project still faces considerable financial, technical and political obstacles, including unresolved acid mine pollution, violations of agreements and at least one permit, no feasibility study, no major commitments from investors, no First Nation approval and increasing concerns in Alaska. The controversial mine project would be located near the confluence of the Tulsequah and Taku Rivers just upstream of the Alaska/British Columbia border. The Taku is the region’s premier salmon river.

“A few million dollars is a weak commitment from the Chinese and a long way from the half a billion needed to develop this mine. The project suffers from numerous technical and financial risks and the company doesn’t even have a feasibility study,” said Chris Zimmer of Rivers Without Borders. “This seems a desperate attempt to keep the project on life support.”

Notice of Non-Compliance and Warning from BC to Chieftain dated July 25, 2012
Click on image to see document.

On September 24 Chieftain announced the MOU with China CAMC Engineering Co., Ltd. and its majority-owned subsidiary Procon Holdings Inc. Procon will provide about $10 million to Chieftain in exchange for stock shares, and will own 19.7% of Chieftain.

“This MOU doesn’t change the facts that Chieftain has no long-term financing, and the Tulsequah Chief proposal faces numerous challenges including no feasibility study, no First Nation approval, and ongoing acid mine pollution in violation of several agreements and at least one key permit,” said Chris Zimmer of Rivers Without Borders.

Chieftain’s June 30 financial disclosures state extreme market volatility is “a significant risk for the Corporation…Companies like Chieftain are considered risk assets and …highly speculative. The volatility in the markets and investor sentiment may make it difficult for Chieftain to access the capital markets.” Without a positive, credible feasibility study Chieftain will not be able to attract investors. A risk analysis done for Rivers Without Borders in February 2012 found numerous financial risks that will have to be addressed in any feasibility study and noted, “There has not been a feasibility study for the mine with road access since 1995 that indicated the Tulsequah Chief project is economically viable.”

A major problem continues to be the acid mine pollution draining into the Tulsequah and Taku Rivers. An important condition of Chieftain’s acquisition of the Tulsequah Chief mine from Redfern, the former bankrupt owner, was the assumption of these environmental liabilities. Chieftain began operating a water treatment plant in March 2012, but shut it down in June due to high operational costs and sludge production that outstripped the company’s capacity to manage it. The Taku is the region’s number one wild salmon producer, and the ongoing pollution has raised concerns from leaders such as Juneau’s mayor and legislators, U.S. State and Interior Departments, the Alaska congressional delegation, commercial fishing groups and Governor Sarah Palin for over a decade.

“The closure of the water treatment plant demonstrates Chieftain doesn’t have the competency to operate and clean up this mine properly. The company is in violation of the Environmental Management Act, agency cleanup orders, an agreement with the Taku River Tlingit, the mine acquisition agreement and possibly its mine approval Certificate, and may be subject to prosecution or other enforcement action. If they were serious about doing the job right they would use the new funds to immediately halt the acid mine pollution into the Tulsequah River,” said Zimmer.

Social licenses are important for mining projects in BC. Statements on the website of the Taku River Tlingit First Nation (TRTFN) and in media releases demonstrate there is no TRTFN approval of the proposed mine or access road. Chieftain previously stated they would not proceed without approval of the TRTFN.

References:

Subscription Agreement between Chieftain Metals and Procon Holdings

–No Feasibility Study: 

• www.chieftainmetals.com/presentations/chieftain-metals-corporate-presentation-June-13-2012.pdf p. 12.
• www.chieftainmetals.com/press-releases/2012-sept-27-Chieftain-Adds-to-Management-Team.pdf

–No Long Term Financing:

• http://www.chieftainmetals.com/presentations/chieftain-metals-corporate-presentation-June-13-2012.pdf, pp. 14-16.
• www.chieftainmetals.com/press-releases/2012-sept-24-Chieftain-Announces-MOU-for-Collaboration-on-Tulsequah-Chief-Mine-Project-and-Private-Placement.pdf.

–No First Nations Approval:

• http://trtfn.yikesite.com/tulsequah-chief-project/trt-news-releases

–Permit Violation: 

• Letter from BC Ministry of the Environment to Chieftain Metals, July 25, 2012.

–Violation of Inspector’s Direction to stop acid mine drainage pollution

• Inspector’s Direction, Wade Comin, Inspector, Environment Canada, February 22, 2011.

–Violation of Agreements:

• http://trtfn.yikesite.com/tulsequah-chief-project/trt-news-releases
• http://trtfn.yikesite.com/tulsequah-chief-project/recent-activities
• CHIEFTAIN METALS INC., TULSEQUAH CHIEF PROJECT INTERIM WATER TREATMENT PLANT MITIGATION AND RE-­‐START REPORT, JULY 2012, p. 3.

–Water Treatment Plant Shutdown:

• CHIEFTAIN METALS INC., TULSEQUAH CHIEF PROJECT INTERIM WATER TREATMENT PLANT MITIGATION AND RE-­‐START REPORT, JULY 2012.
• Letter from BC Ministry of the Environment to Chieftain Metals, July 25, 2012.

–Alaska Concerns Growing:

• www.ktoo.org/2012/08/22/juneau-mayor-requests-long-term-plan-for-tulsequah-chief-mine-water-treatment/
• http://juneauempire.com/local/2012-07-20/state-chieftain-keep-us-loop

Additional Resources:

Rivers Without Borders Press Release – Growing Concern About Tulsequah Mine Pollution

Rivers Without Borders Press Release – Closure of Water Treatment Plant

Risk Analysis of the Chieftain Metals Tulsequah Chief Mine Proposal

BC Environmental Assessment Office  – Tulsequah Chief Project

Chieftain Metals SEDAR file for financial information

Concern Growing About Tulsequah Chief Acid Mine Pollution

FOR IMMEDIATE RELEASE:
August 22, 2012

CONTACT: Chris Zimmer, Rivers Without Borders,
907/586-2166, Zimmer@riverwithoutborders.org

Frustrations with Chieftain and Canadian Agencies Lead to Calls for New Cleanup Plan

(See letters and additional links in More Information below.)

(JUNEAU) Concerns and frustration are growing on both sides of the border in response to Chieftain Metals’ closure in June of the water treatment plant at the Tulsequah Chief site. Some stakeholders are now urging Canadian agencies to investigate solutions to the acid mine drainage problem that are not dependent on the mining company or a developed mine project.

“The mine suffers from enormous technical, political and financial challenges,” said Chris Zimmer of Rivers Without Borders. “Relying on mining companies and a developed mine for cleanup has failed, and calls for a better cleanup plan are increasing. Now is the time to end this threat to clean water and salmon in the Taku River and find a permanent solution that is not dependent on a mine or mining company.

Stopping the legacy acid mine pollution of the Tulsequah and Taku Rivers was an important condition of Chieftain’s acquisition of the Tulsequah Chief mine from Redfern. The old mine is right on the Tulsequah River, just upstream of its confluence with the Taku River and the Alaska/BC border. The project was originally owned by Cominco which abandoned the operation in the 1950’s without conducting any site remediation. Redfern, and now Chieftain, have proposed to re-develop the mine. The Taku is Southeast Alaska’s number one wild salmon producer, and Alaskans have been raising concerns about the acid mine pollution for over a decade.

In a June 6, 2012 letter to Environment Canada, Chieftain reported its intent to close the Interim Water Treatment Plan (IWTP) due to financial and technical problems. Now that the company has closed the IWTP indefinitely, concerns have been raised about impacts on salmon and water quality by the Mayor of Juneau, the Alaska Trollers Association, Alaska Department of Natural Resources, Juneau Senator Dennis Egan and the Taku River Tlingit First Nation (TRTFN).

In a June 13 letter to Environment Canada, Juneau Mayor Bruce Botelho wrote: “While Chieftain’s June 6, 2012 letter to Environment Canada references a number of options, it is unclear if these options are workable, when they would be implemented, and if Chieftain can raise funds sufficient to re-start the water treatment plant. In any event, it would seem prudent to explore what alternatives exist, not only to treat the acid mine drainage in the immediate term, but also to provide a permanent remedy that does not depend on Chieftain or a developed mine.”

“The state of Alaska wants to see it [the IWTP] come back on line as soon as possible. We are urging the company to work quickly.…The state isn’t happy until the mine is properly closed and reclaimed,” said Kyle Moselle of Alaska Department of Natural Resources to the Juneau Empire on July 20, 2012.

“We were led to believe the financing was secure…We spent a whole day, the task force, talking to the folks at Chieftain. We had assurance that their main focus was the treatment plant, that everything is hunky dory, but everything is not hunky dory,” said Senator Dennis Egan to the Juneau Empire on August 1, 2012.

In an August 6, 2012 letter to the Juneau legislative delegation, the Alaska Trollers Association wrote: “Chieftain Metals’ recent shut down of the water treatment plant at the Tulsequah Chief Mine is of great concern to fishermen, due to the increased potential for harm to salmon, critical habitat, and water quality.…it seems unlikely that Chieftain will reinitiate mine operations any time soon. Thus, it seems prudent to develop options to prevent mine drainage pollution, and to do so in a way that does not rely on the presence of a working mine.”

The TRTFN announced in July that it is pulling out of the provincial permitting process, noting concern about Chieftain’s breach of the Letter of Understanding with the TRTFN, its ability to marshal either the technical or financial resources to complete the project, and significant delays in release of the crucial feasibility study.

“Due to the serious concerns that have been raised with Chieftain’s recent conduct with respect to this project…TRTFN is pulling its technical teams from the provincial environmental review and permitting process,” wrote TRTFN Spokesperson John Ward in a July 16, 2012 letter to the B.C. government. “The evidence is mounting that the company simply does not have the financial wherewithal to bring this project into operation in a technically sound and reliable way.”

Redfern, and now Chieftain, adopted a position that water treatment was only a temporary measure and a permanent cleanup required the mine to be developed. As noted by mine reclamation expert Dr. Dave Chambers in an August 20 opinion piece in the Juneau Empire, an operating mine is not needed to halt the pollution.

“An operating mine trades one problem for new problems that are potentially far worse than the current acid mine drainage and is simply not necessary for site cleanup,” said Zimmer.

The closing of the Tulsequah Chief IWTP is part of a long track record of failure to stop acid mine drainage into the Taku River. The Mayor of Juneau, U.S. State and Interior departments, the Alaska congressional delegation, commercial fishing groups and then-Governor Sarah Palin raised concerns about ongoing acid mine drainage in 2009 and 2010 after Redfern entered bankruptcy receivership.

“Chieftain’s new plan is little more than a vague promise to re-start the IWTP once the company obtains full project financing. Given the history of the mine’s economic troubles, it seems unlikely that Chieftain will be able to convince investors the project is viable, so unless a solution is developed that doesn’t rely on Chieftain and the mine, the pollution will continue,” said Zimmer.

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MORE INFORMATION:

Letter from EcoJustice on Behalf of RWB to BC Ministry of Justice
August 15, 2012
http://riverswithoutborders.org/wp-content/uploads/2012/08/Ecojustice-RWB-Tulsequah-2012-08-15.pdf

Letter from Mayor of Juneau to BC Minister of the Environment
August 13, 2012
http://riverswithoutborders.org/wp-content/uploads/2012/08/JuneauMayor-TulsequahIWTPLtr-2012-08-13.pdf

Letter from Alaska Trollers Association to Alaska Delegation
August 6, 2012
http://riverswithoutborders.org/wp-content/uploads/2012/08/ATA-Ltr-AKDelegation-TulsequahIWTP-2012-08-06.pdf

Letter from AK Department of Natural Resources to Chieftain
July 9, 2012
http://riverswithoutborders.org/wp-content/uploads/2012/08/AKDNR-TulsequahIWTP-2012-07-09.pdf

Rivers Without Borders Press Release Re: Tulsequah IWTP Closure
June 27, 2012
http://riverswithoutborders.org/blog/2012/06/closure-of-water-treatment-plant-latest-setback-for-tulsequah-chief-mine-proposal

Letter from Alaska Delegation to BC Premier
October 6, 2010
http://riverswithoutborders.org/wp-content/uploads/2012/08/AK-Delegation-LtrCampbellTulsequah-2010-10-06.pdf

Letter from US State Department to BC Minister of the Environment
June 3, 2010
http://riverswithoutborders.org/wp-content/uploads/2012/08/StateDept-LtrMinOfEnv-Tulsequah-2010-06-03.pdf

Letter from US State Department to Canadian Ambassador
June 3, 2010
http://riverswithoutborders.org/wp-content/uploads/2012/08/StateDept-LtrCanAmbassador-Tulsequah-2010-06-03.pdf

Letter from AK Department of Natural Resources to BC EAO
April 26, 2010
http://riverswithoutborders.org/wp-content/uploads/2012/08/AKDNR-TulsequahTransfer-2010-04-26.pdf

Letter from US Department of Interior to BC EAO
April 25, 2010
http://riverswithoutborders.org/wp-content/uploads/2012/08/USDOI-TulsequahTransfer-2010-04-25.pdf

Letter from Gillnetters to Representative Beth Kerttula
April 14, 2010
http://riverswithoutborders.org/wp-content/uploads/2012/08/GillNetters-TulsequahMine-2010-04.pdf

Letter from Governor Palin to BC Premier
July 1, 2009
http://riverswithoutborders.org/wp-content/uploads/2012/08/Palin-Irwin-Ltr-Tulsequah-2009-07-01.pdf