North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Coeur Alaska Inc., operator of the Kensington Gold Project near Juneau, has joined Southeast Alaska Conservation Council, Lynn Canal Conservation and Juneau's Sierra Club in drafting a new plan for disposing of tailings from the mine project.

Juneau Mayor Bruce Botelho announced the agreement Nov. 15, saying Coeur Alaska and the groups "will ask the U.S. Forest Service to examine the use of a site near Comet Beach for disposal of the Kensington mine tailings."

Two weeks earlier, a three-judge panel of the 9th Circuit Court of Appeals refused to reconsider an earlier decision that deemed disposal of the tailings in a nearby lake illegal.

The appeals judges denied requests for rehearing from Coeur Alaska, the State of Alaska and Goldbelt Inc. as well a limited petition for rehearing filed by the U.S. Department of Justice, representing the U.S. Forest Service and the U.S. Army Corps of Engineers.

The same 9th Circuit panel had ruled May 22 in favor of an appeal by SEACC, the Sierra Club and Lynn Canal Conservation challenging the Kensington Section 404 Permit issued by the corps.

Though the wet tailings disposal plan had survived federal and state regulatory scrutiny, the groups filed suit to block it on the grounds that it violated the federal Clean Water Act.

In August, Coeur Alaska, a subsidiary of Idaho-based Coeur d'Alene Mines Corp. asked the 9th Circuit to allow the case to be reviewed by all 15 appeals judges. The request was denied Oct. 30.

'Paste' tailings bring parties together

Coeur now proposes to convert tailings from mine waste generated in processing gold ore at Kensington into a dense paste similar to wet concrete and store them on dry land near Juneau. The move would eliminate the need to use the 20-acre Lower Slate Lake for wet tailings disposal.

Coeur Alaska met with the environmental groups in October and early November in hopes of crafting a mutually agreeable dry tailings plan for the mine. The City and Borough of Juneau had offered to sponsor a third-party facilitator to meet with the parties to work toward a desirable outcome.

The Comet Beach site is essentially the same as the previously approved dry tailings facility site, but Coeur is now proposing to store the tailings using "paste technology" instead of dry stacking, Botelho said.

Based on the 1997 supplemental environmental impact statement for this site and the work of environmental consultant Dr. David Chambers, the conservation groups believe that the potential adverse environmental impacts of the Comet Beach site, which is about 45 miles northwest of Juneau, are less than the impacts of other alternatives that have been identified. If the Comet Beach site is approved, Lower Slate Lake would not be used in any way for tailings storage or disposal, he said.

"Any revised operations plan is subject to federal, state and local regulatory approval and permitting.

The next step is for the parties to meet with the Forest Service to discuss the regulatory process that would be followed to evaluate the Comet Beach site.

Development of a final plan of operations is expected to be an iterative process because both Coeur and the conservation groups expect that the regulatory process will help define further details of the disposal plan.

All of the parties have pledged to cooperate and work with the regulators to complete evaluation of the proposed site in as timely a manner as possible.

The parties have preserved all of their legal rights, pending final permitting of the mine," Botelho added.

Coeur, which has spent $250 million developing the Kensington project, cannot start production without a permit for tailings disposal. The company can come up with an approved method for disposing tailings or appeal the case to the U.S. Supreme Court.

Coeur Alaska spokesman Tony Ebersole said an appeal to the high court has not been ruled out.

Parent company's third-quarter profits dip

Coeur d'Alene Mines Corp., parent of Coeur Alaska, meanwhile, reported a decline in third-quarter profits to $3.6 million, or 1 cent per diluted share, on revenue of $52.9 million. That compared with $18.4 million, or 6 cents per diluted share, on $50.6 million during the same period in 2006.

Included in the 2007 third-quarter results were expenses of $2.5 million associated with the halt of mining activities at the Rochester mine during the third quarter.

Profits for the first nine months of 2007 also lagged performance a year earlier, totaling $29.6 million, or 10 cents a diluted share on revenue of $155.4 million. That reflects a 56 percent drop from $65.3 million, or 23 cents a share, on revenue of $149.5 million a year ago. Results for the first nine months of 2006 included a gain of $11.1 million from the sale of Coeur Silver Valley as well as $2 million of income from Coeur Silver Valley's operations.

Coeur said it produced 2.7 million ounces of silver and 20,500 ounces of gold during the third quarter and 8.3 million ounces of silver and 70,500 ounces of gold through the first nine months of the year, respectively. That compared with production of 3.3 million ounces of silver and 30,000 ounces of gold and 9.4 million ounces of silver and 84,500 ounces of gold during the same periods in 2006.

Coeur reported that the mill and related surface facilities at the Kensington Gold Project are now 100 percent complete, as is the nearly 2.5-mile underground tunnel connecting the Kensington and the Jualin properties, where the mill and processing facilities are located. Contractors from Kake Tribal/Redpath Native Corp. joint venture, along with Coeur Alaska, completed the final 6,800 feet of tunneling during the past year.

The Kensington Mine is expected to produce 150,000 ounces of gold per year in its initial years at an estimated cash cost of $310 per ounce of gold, with an expected 10-15 year mine life based on current mineral inventory. The mine has 1.35 million ounces of proven and probable gold mineral reserves.