Coeur D'Alene Mines Corp., owner and operator of the Kensington Gold Project near Juneau, has agreed to work with Southeast Alaska environmental groups on a new plan to dispose of the proposed mine's tailings.

Coeur D'Alene CEO Dennis Wheeler told the Juneau Chamber of Commerce Aug. 30 that the company will accept an invitation from the Southeast Alaska Conservation Council, Sierra Club Alaska Chapter, and Lynn Canal Conservation to work together to allow Kensington to begin production by developing temporary and permanent "treated" tailings storage fro the project.

SEACC offered earlier in August to work with Coeur toward a mutually acceptable dry stack tailings plan if the company agreed to forego its plan to dispose of tailings in Lower Slate Lake. The 23-acre lake is located in the Tongass National Forest and drains into Berners Bay.

Buck Lindekugel, conservation director of SEACC, told the Juneau City Assembly Aug. 20 that the organization was willing to work with Coeur and permitting agencies on a location and design for a mutually acceptable dry stack tailings facility and on the development of temporary storage options for the tailings until the permanent facility is permitted. The temporary storage options would allow the mine to begin production while the details of the permanent facility are being worked out.

"Working with SEACC and the other plaintiffs on this approach is the best way to move the project forward without needless delay," SEACC and the Sierra Club said in a joint statement Aug. 30.

Coeur to proceed with caution

Wheeler said Coeur plans to proceed with caution because SEACC, the Sierra Club and Lynn Canal Conservation have not demonstrated that they will act in good faith in resolving the dispute. He said the environmentalists have opposed a dry stack tailings plan in the past and have recently made very inaccurate statements in the media.

Among key facts about the Kensington project:

It was fully permitted by June 2005, with more than 50 permits issued to operating subsidiary Coeur Alaska Inc. by the U.S. Forest Service, Army Corps of Engineers, Environmental Protection Agency, National Marine Fisheries, Alaska departments of Environmental Conservation and Natural Resources as well as the City and Borough of Juneau.

It took six years to obtain permits for the Lower Slate Lake tailings disposal option with the help of highly qualified engineers, biologists and water quality specialists.

The project was 50 percent constructed when the environmental groups filed their legal challenge, which was subsequently thrown out by the Alaska District Court. Coeur continued to build and when the project was 80 percent complete, the 9th Circuit Appeals Court made its adverse ruling.

SEACC, Sierra Club and Lynn Canal Conservation have said no mine has been granted approval to place tailings in waters of the United States since the passage of Clean Water Act. In fact, Greens Creek, Pogo and Fort Knox, only to mention a few, have been approved by the Corps of Engineers, EPA and Alaska Dept. of Environmental Conservation to place treated tailings into U.S. waters., after exhaustive studies and a permitting process not unlike the one Kensington underwent.

"It is almost inconceivable that anything material can wrong with this mine because of the world-class experts that have been found to look at every aspect of this project," Wheeler said.

Development progresses at Kensington project

So far, Coeur Alaska has completed surface facilities at Kensington, spending nearly $250 million to reach this point. The mine is expected to produce 150,000 ounces of gold per year initially at a cash cost of $310 per ounce and have a 10-15 year mine life on current mineral inventory. Kensington has 1.35 million ounces of proven and probable gold mineral reserves.

On July 9, construction workers finished a 14,500-foot horizontal tunnel that now allows for clear access between the Kensington Mine and the Jualin property, where a mill and processing facility were completed in August. Contractors from the Redpath/Kake Native corporation joint venture, along with Coeur Alaska, completed the final 4,800 feet of tunneling during the past year.

"Our Comet Beach water treatment plant is state of the art and fully operational and the camp facilities are completed," Wheeler said. "We remain poised to commission the power facilities and begin production once the tailings plan is finalized."

Wheeler also outlined more than 20 years of development efforts by Coeur Alaska at Kensington, saying the road to production has resulted in more than 900 environmental studies costing in excess of $30 million in order to clearly demonstrate the company's commitment to clean water and environmental excellence.

He said the company also has worked hard to involve the local community and hire both Alaska Natives and other Alaska residents for jobs on the mine project. A recent survey showed some 76 percent of Juneau-area residents favor the mine's development, he observed.

Coeur: SEACC, others appear disingenuous

Though SEACC said it supported Coeur Alaska's previous dry tailings facility option, or DTF, in 1998, that is simply not true, Wheeler said.

In comments to regulators in 1997, SEACC's consultant David Chambers specifically criticized the dry tailings facility proposal, he said.

SEACC said more water treatment should be required; questioned the ability to keep tailings dry in such a high precipitation region; and raised issues with visual impacts and the feasibility of paste backfill, among other negative comments, Wheeler said.

"Most importantly, after two years of discussions, SEACC did not sign the 'litigation avoidance agreement' involving nine environmental organizations, he said. "Despite what the plaintiffs have told you, they did not support Kensington even with a Dry Stack option."

Moreover, permits for the earlier dry tailings plan are not available to Coeur Alaska today because the project at that time was for a much larger 4,000-tons-per day mine design. Since then, the design has been optimized to have a 2000-tons-per-day mine with a smaller environmental footprint, dramatically less fuel consumption and storage needs, and overall lower impacts, Wheeler said.

"The previously approved dry tailings plan which SEACC claims to have supported would result in a net loss of over 160 acres. In contrast the new Lower Slate Lake option would eliminate only 3.4 acres of wetlands," he said.

Groups focus on dry tailings option

SEACC and the Sierra Club said their cooperation with Coeur Alaska on a dry stack tailings plan is contingent on moving away from the Lower Slate Lake. During the Aug.20 presentation, Mark Rorick of the Sierra Club said he thinks the mine is going to move forward and eventually begin production, but he said it must do so in a legal and environmentally sound way.

"The Sierra Club will oppose any attempt to use Lower Slate Lake as a tailings disposal site," Rorick said.

SEACC's Lindekugel said the group appreciated Wheeler's commitment to work together on a mutually acceptable dry stack tailings plan.

"We remain hopeful that we can reach such an agreement. It is important to remember that the lawsuit is done. The court ruled Coeur's tailings facility at Lower Slate Lake is illegal. It's time to move forward on a dry stack tailings plan," he added.