Emgold sells portion of stalled mine project site | TheUnion.com

Emgold sells portion of stalled mine project site

Christopher Rosacker
Staff Writer

The former Idaho Maryland Mine's concrete silo located off of Milsite Road, near the intersection of East Bennett and Brunswick roads. The silo is part of an overal area of the former mine that Engold Mining Corporation has been trying to develop and remine for more than seven years. The company recently sold 18 acres on the far west portion of that overall property, that did not include this silo.

Details are scarce on who bought 18 acres from Emgold Mining Corporation that the company had previously included in its plans to revive the Idaho Maryland Mine in Nevada County.

When Emgold announced Thursday it has raised $450,000 by selling the land to "an adjacent property owner," the company's Grass Valley-based president, David Watkinson, declined to specify the purchasing party when asked by The Union.

The 18 acres, located north of East Bennet Road and southeast of DeMartini RV Sales' lot off Idaho Maryland Road, decreases Emgold's land package related to the mine from about 52 acres to 34 acres, according to the company's website.

"It's not critical to the operation," Watkinson told The Union Friday about the sold land.

"It doesn't affect any facilities that couldn't be shifted around to change the potential for the mine in the future," he said. "We have sufficient lands." Emgold has been trying to revive the mine east of Grass Valley for more than seven years to take advantage of an estimated 472,000 ounces of gold in the mine. In addition to Emgold's estimation that the mine could generate as many as 600 jobs, the company's previous analysis indicated that it could also add about $750,000 per year to the City of Grass Valley's general fund.

The project was first sent to the city of Grass Valley in 2005. However, municipal leaders declared Emgold's draft environmental report insufficient in 2009 and required the company to revise the project.

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In April 2010, Watkinson updated the project plan, substantially changing projections for traffic patterns, air quality, mine water, impact on nearby wells, the crushing of waste rock and noise.

The city subsequently gave Emgold a deadline to come up with the funds needed to restart the environmental review, or their application would be deemed withdrawn. When Emgold did not resubmit paperwork prior to the Feb. 1 deadline to lease or buy the mine site, city officials said they considered the project more or less dead.

Additionally, Emgold officials said on their website in February that they would terminate the project if negotiations failed to extend a BET Trust agreement that would cover the lease of and option to purchase approximately 2,750 acres of mineral rights and 91 acres of surface rights.

"The current lease agreement with the trust is retired," said Watkinson Friday. "We still haven't signed a new lease agreement with them, so the project essentially remains in a holding pattern … The lease agreement will need to be restructured before we can move ahead."

The $450,000 proceeds from the 18-acre sale won't help move the project forward either, Watkinson said, and will instead be used for general working capital to finance the company in a tough equity market and is non-dilutive to Emgold's shareholders, according to Watkinson and the company's website.

"We're like all the junior mining companies," Watkinson said. "We're all sort of hunkered down in the current economy. We're still having trouble raising capital."

The company has also had a leadership change in late August.

On Aug. 21, Emgold announced the appointment of Allen Leschert as its director, following the resignation of Sargent Berner for personal reasons, according to its website.

"He essentially retired," Watkinson said.

According to Emgold, Allen is a senior member of the securities bar in Vancouver, B.C., with more than 25 years of experience with public mining and exploration companies. He has pioneered a number of unique public company financing and transaction structures and has handled numerous public mining transactions, listings, joint ventures, financings, corporate takeovers, mergers and acquisitions in Canada and internationally.

"(Allen) is president of Armex Mining Corp. (a private B.C.-based company) and is CEO and chairman of the board of Northaven Resources Corp. (a public B.C.-based company). He holds an LLB from the University of Victoria and a B.Com (with distinction) from the University of Alberta," the website states.

— The Union's Editor Brian Hamilton contributed to this article. To contact Staff Writer Christopher Rosacker, email crosacker@theunion.com or call (530) 477-4236.

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