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Consultant questions Constantine's preliminary assessment in presentation

 

November 24, 2021



Montana-based consultant Jim Kuipers, a longtime mining industry employee turned consultant, discussed the economic prospects and possible environmental and social impacts of a mine at Constantine’s Palmer Project at a Nov. 17 virtual presentation hosted by four conservation groups.

During the event, which was briefly interrupted after about 25 minutes by an unknown Zoom-bomber who wrote vulgarities in the chat and drew depictions of male genitalia on a shared screen, Kuipers touched on metals prices, the uncertainty of barite production, the possibility that Constantine would need a long-term wastewater treatment plan and comparisons between the Palmer Project and other mines. The talk was hosted by Rivers Without Borders, Lynn Canal Conservation (LCC), Takshanuk Watershed Council and Southeast Alaska Conservation Council (SEACC).

Kuipers’ analysis centered on Constantine’s 2019 preliminary economic assessment (PEA), the first of three technical reports toward determining whether development is viable. A PEA, Kuipers acknowledged, is preliminary in nature and is used to consider options for future exploration and development, not to demonstrate a mine’s economic viability.

Kuipers raised several concerns about the PEA. Most notably, he questioned Constantine’s decision not to plan for long-term wastewater treatment and its expectation to market barite, a mineral used in oil and gas production that Kuipers said usually is mined on its own, not as a byproduct of other ore extraction, as would be the case at the Palmer deposit.

In an emailed response, Constantine CEO and president Garfield MacVeigh emphasized that the PEA is preliminary and there is “potential for improvement in the findings of the PEA reporting.” He said future technical reports “will be more definitive about how to best develop the deposit and the economics of doing so.”

Kuipers devoted a significant portion of his presentation to mine reclamation—the waste management and restoration work required after a mine stops operating. Referring to the Palmer Project, he said, “We don’t really have a reclamation plan. There’s been no cost estimate for reclamation calculated.” Kuiper said Greens Creek mine on Admiralty Island was originally permitted on the premise that there would be no long-term wastewater treatment, but today it’s recognized that treatment will be needed for decades after the mine’s closure. Scaling down Greens Creek’s 2019 reclamation cost estimate of $102 million, Constantine, in its PEA, estimates reclamation at a Palmer mine would cost $30 million, Kuipers said.

“What the (Constantine) PEA has done is take the Greens Creek mine reclamation excluding water treatment and assume that even though this mine sure looks and smells a lot like Greens Creek, it won’t require water treatment.”

In an email correspondence with the CVN MacVeigh said that, “As described in the PEA, Palmer intends to include a pyrite flotation circuit in its mill; Greens Creek does not. The effect of this is that the Palmer tailings will be very low in sulfide content which will result in decreased impact to water quality in the tailings facility and affect the need for long-term water treatment.”

Kuipers suggested that without Constantine’s financial assurance of reclamation including long-term waste management, taxpayers could be burdened with the high cost of post-mine clean-up. He pointed to a Pegasus Gold Corporation mine in Montana, where the federal government has been managing waste since the 1990s, when the mining company went bankrupt. Kuipers said reclamation at that mine has cost U.S. taxpayers about $100 million.

“It is premature to assume that Palmer will require perpetual water treatment,” MacVeigh told the CVN, adding that “prior to developing a new mine, Constantine will address its routine and long-term water treatment needs through a comprehensive water balance model that will be reviewed by the regulatory agencies responsible for permitting a new mine. If it is determined that long-term water treatment is required, then the reclamation bonding will include sufficient funding for this treatment.”

Kuipers also noted several site-specific risks at Palmer, including avalanches, seismicity, and geotechnical and geochemical conditions. “Each one of these things by themselves could add additionally to the costs and also...have various other impacts on the project. But at the same time, together they are the kind of thing that really can make a project not viable,” Kuipers said.

“PEAs always assume the risks can be mitigated. (They don’t) assume any additional caveats or contingencies. And therefore (they don’t) assume any additional costs.” Going forward, Kuipers said, Constantine needs to show that it can deal with, and cover the costs associated with, these risks.

Kuipers grew up in a Montana mining family and spent over 30 years in the mining industry. He has a bachelor’s degree in mineral processing from the Montana School of Mines and has worked as a senior engineer, chief metallurgist, mill superintendent, mine manager, project manager and consulting engineer at various mining projects in Nevada and Alaska. In 1996, he formed his consulting company, Kuipers and Associates, which advises government agencies and NGOs on engineering and environmental issues related to mining.

Rivers Without Borders commissioned Kuipers in 2020 to do an analysis of Constantine’s PEA. That report, which was echoed in Kuipers’ presentation, described the Palmer Project as having a “high level of inherent project risk” and called the PEA “highly optimistic in terms of potential environmental impacts and potential costs.”

After his presentation, Kuipers fielded more than a dozen questions on a range of topics, from demand for metals to the strength of state regulations to DOWA, the Japanese company that owns 56% of the Palmer Project but has let Constantine lead the project’s operations and public relations.

Kuipers said it’s rare for the majority partner in a mining venture to task the minority partner with operations and communications. “That may be perhaps the most unusual thing about this project,” he said.

In his message to the CVN, MacVeigh explained, “In most joint ventures, one entity is selected as the ‘operator’ and since Constantine is more familiar with operating in Southeast Alaska it makes sense that we operate. If the project was in Japan, DOWA would be the obvious project operator, even if they were very much the minority partner. We work together as partners and any major financial decisions require unanimous approval of both partners.”

When asked by an attendee if it’s typical for a company, at this point in a project, not to know how it will get ore to market, Kuipers said it’s not uncommon but that one would expect Constantine to nail down the details of its ore shipment plan before applying for a permit.

 
 

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