Despite what its local CEO says, the Emgold Mining Corporation’s website states that plans to reopen the Idaho-Maryland Mine could collapse if a new lease agreement for the site cannot be reached.
The news comes following a Feb. 1 conclusion of the deadline to lease or buy the mine site. Yet David Watkinson, the Grass Valley-based president and CEO of Emgold Mining Corporation, said that does not indicate the project’s cessation. Instead, Watkinson said, the passage of the lease deadline is symptomatic of a market that makes it difficult to find investors for the junior mining sector.
“(D)espite the current price of gold, financing for projects in the junior mining sector is extremely difficult,” Emgold noted in its online statement at http://Emgold.com. “In the event that insufficient funds can be raised to move the project forward, Emgold will continue to delay the project until market conditions improve or, as a worst case, drop it to focus on the other assets the Company currently has in its portfolio.”
Nonetheless, Watkinson said Monday the lease or buy agreement is being renegotiated and the project is still in the pipeline.
“We’re in the process of negotiating the terms of our new lease,” Watkinson said. “Until the market changes we’ll keep the project in a holding pattern.”
Emgold has been trying to revive the mine east of Grass Valley to take advantage of an estimated 472,000 ounces of gold for more than seven years. Watkinson estimates that reopening the mine would generate about 600 jobs, half of which he said would be filled by local residents.
The project was first sent to the city of Grass Valley in 2005.
In 2009, a draft environmental report drew criticism and the city declared the report insufficient and required Emgold to revise its project. That now-scrapped report estimated the net revenue to the city’s general fund created by the mine would be about $750,000 per year, once it reaches full production.
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. Last March, the City Council gave Emgold a deadline of Sept. 13, 2012, to come up with the funds needed to restart the environmental review, or their application would be deemed withdrawn.
“We’ve considered their application dead here,” said Dan Holler, Grass Valley city manager. “They would have to resubmit stuff here if they wanted to initiate the process.”
The current extension of the Lease and Option to Purchase Agreement expired Feb. 1.
The BET Agreement, signed in 2002, originally had a five-year term. It has been extended three times to date in two-year increments.
Emgold is currently in negotiations with the BET Trust to extend the agreement, it said in a statement. That agreement would cover the lease and option to purchase approximately 2,750 acres of mineral rights and 91 acres of surface rights associated with the project.
“It is just a function of the market being difficult to raise funds,” Watkinson said.
However, if negotiations to extend the BET Agreement are unsuccessful, Emgold will terminate the project and focus on the other assets the company currently has in its portfolio, according to the company’s website. For the time being, the Idaho-Maryland project will remain on hold pending the resurgence of the junior mining equity markets.
To contact Staff Writer Christopher Rosacker, email firstname.lastname@example.org or call 530-477-4236.