Emgold: Spinning gold
November 15, 2012
One must wonder at the audacity of Emgold Mining Co. For almost four years, Canadian-based Emgold has been struggling to get funding in order to move forward with the Idaho-Maryland Mine project, but now the city of Grass Valley has canceled its project application.
The project was started in 2005. Emgold's response is that "they are in a holding pattern until the markets recover" and that mining funding has gotten difficult over the last 18 months.
Is a difficult market the real problem, or is this more Emgold spin?
Over three years ago, Emgold announced that it was seriously seeking financing, and then, having "settled a term sheet with Dunn Capital Partners" for $6 million, the deal was suddenly and abruptly terminated by Dunn for ethical reasons (see the stockwatch.com article "Emgold financier Dunn says ethics behind withdrawal"). The reality is that Emgold has been continuously seeking funding, has no regular revenue and has to date generated a $50 million deficit using investors' money.
The notion that this mining project and ceramics factory would be “sustainable” is an absurdity.
Emgold Mining has a long history of painting an overly optimistic picture of its prospects. In its reports, seemingly to attract investors, it has repeatedly made inaccurate statements, such as: the project has "strong community support," the project is "sustainable" or "the company is in the advanced stages of permitting." However, none of these stand up to examination.
Claims of community support are disingenuous. They are based on a survey, which in 2006 asked the question: "Provided that appropriate environmental safeguards are in place, (would you support) allowing the Idaho-Maryland gold mine to reopen?" This was before the project had been reviewed and before people knew about the massive tile factory, the traffic, the significant air pollution, the threat to wells and many other hazards. Currently, environmental safeguards are not in place, and there is strong community opposition, so the claim has no basis in fact. And when Emgold refers to this survey in news releases, it conveniently fails to mention the first part of the question about environmental safeguards being in place.
Second, the notion that this mining project and ceramics factory would be "sustainable" is an absurdity. This project would consume massive amounts of energy, extract whatever gold ore is left from the previous mining operations, then shut down. This belies the definition of sustainable.
And on the third point, it could hardly be said to be in the advanced stages of permitting. It's been known since mid-2009 that it has to do a new Draft Environmental Impact Report (DEIR), which then must be recirculated and reviewed, commented on in public hearings and voted on by the Planning Commission. Next a Final EIR must be drafted, submitted to the city for more public hearings and approved by the City Council. Then there is the requirement for LAFCO, Office of Mining Reclamation and other agencies to approve the project. Following that, of course, actual construction documents would need to be drawn up and submitted for approval before getting a permit and starting work. How can this possibly be considered the advanced stages of permitting?
This type of spin has persisted. A more recent example came in the Sept. 7 news release in which David Watkinson, CEO of Emgold, stated, "Estimated cost of the City and its consultants to complete the EIR process is approximately US$500,000."
Yet according to city documents, the base cost of the DEIR consultant plus initial deposits to the city for other required work exceeds $565,000, and that doesn't include additional studies that are needed. Add to that the $100,000-150,000 per month Emgold would need during the 12- to 18-month process, and the estimated cost exceeds $2 million.
At this point, the Idaho-Maryland Mine project is back to square one. Like any new project, it hasn't started the permitting process until it submits its project application to the city. It is not surprising, given its financial desperation, that Emgold is down playing this fact. In its news release, Emgold states: "Management does not expect the change in status of the current Permit Applications to have any impact on completion of the EIR or on the CEQA process for the Idaho-Maryland Project (the 'Project') other than timing."
In this one case, it actually may have got it right. Even when it had an application it was going nowhere, and that remains true now that the city canceled its project.
Ralph Silberstein lives in Grass Valley.
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