There have been several recent and important mining industry developments in Wisconsin and Michigan on mining proposals we have been tracking. Changes in the proposals in Michigan’s Upper Peninsula are particularly troubling.
Canadian company Highland Copper which has completed its acquisition of the former White Pine copper mine just east of Porcupine Mountain Wilderness State Park on the shore of Lake Superior in Michigan. White Pine was owned and operated by Copper Range Co. from 1953-95 and has been idle since. Highland Copper also has most permits for the Copperwood mine on the west edge of the Park and both it and and a redeveloped White Pine mine threaten Lake Superior. White Pine has existing environmental remediation issues that the new owner has assumed as a part of the transaction. Highland Copper predicts a 25-year lifetime for the mine which could produce copper and silver. No permits have been applied for White Pine so far but Highland recently announced significant private investment designed to support the acquisition and future permitting.
We learned in early July this year that Aquila Resources was selling its interests in two Wisconsin mineral deposits (“Bend” in Taylor County and “Reef” in Marathon County) to a new Canadian company: Green Light Metals. We have known for some time that Aquila Resources was heavily in debt and struggling to raise funds to continue permitting the Back Forty proposal in the U.P. of Michigan and this transaction pumped $3 million in cash and $4 million in shares into Aquila. Green Light is not an actual mining company; instead it is owned by a group of private investors from Canada including several associated and/or invested in Aquila Resources. Green Light has announced that it will become a publicly traded company in Canada in the future. The Bend and Reef deposits seem unlikely to be developed in the short term but we will continue to monitor related developments.
The most recent development is the announcement earlier this month that US mining company Gold Resource Corp. is in the process of purchasing Aquila Resources and its’ sole asset the Back Forty proposal. Gold Resource operates a single gold mine in Mexico (“Don David”) and has stated its goal of becoming a larger mining company to increase shareholder value. The transaction will inject operating cash into the proposal with a goal of submitting revised permit applications by the end of the year or early 2020. The president of Gold Resource, Allen Palmiere, acknowledged that the financial markets had “progressively been less willing to finance [Aquila]” confirming that Aquila was all but bankrupt.
Palmiere made these remarks in a Sept. 8 conference call to shareholders and financial company representatives. He acknowledged in that Gold Resources will retain approximately 18% ownership in Green Light Metals that controls the Bend and Reef deposits in WI. He also minimized and dismissed concerns with gaining permits to open the Back Forty mine. Dr. Al Gedicks of the Wisconsin Resources Protection Council forcefully rebuts Palmiere’s remarks about the permitting issues at Back Forty below.
Gold Resource Corporation (GORO) has NOT conducted “due diligence” regarding Aquila’s false and misleading claims about the permitting of the Back Forty Project.
During a September 8 conference call about GORO’s acquisition of Aquila Resources, Inc., Mr. Allen Palmiere, the President and CEO of GORO stated: “The key takeaway on this particular project [referring to the Back Forty Project] is that it has, in fact, been fully permitted before. The issue that arose was a very technical—it’s really a very administrative matter, but it was the way with which the wetlands permit was worded and it was viewed as being a conditional permit rather than an unconditional permit. And that was really the way—the reason that that particular permit was pulled.”
Mr. Palmiere’s statement reveals GORO’s failure to perform “due diligence” regarding Aquila’s false and misleading claims about the Back Forty Project. In its March 31, 2020 quarterly financial report Aquila falsely claimed that it had received the four key permits required to begin construction and operation at the Back Forty Project. In fact, Aquila never received a Dam Safety Permit. According to Michigan’s Department of Environment, Great Lakes and Energy (EGLE), “Aquila is not authorized to begin construction of the mine and will not be able to proceed until all permits, including the Dam Safety Permit have been approved by EGLE. (EGLE Media Office, December 12, 2019).
At the time Aquila claimed to have received the four key permits for the Back Forty Project, only one of five required permits had been both “issued” and deemed “effective,” and that was the NPDES Permit (National Pollution Discharge Elimination System permit, involving water discharge to the Menominee River). An “issued” permit is not considered “effective” until all pre-mine construction conditions have been met. Furthermore, no permit exists until the entire process, including any contested cases have been decided. Even then, an Environmental Review Panel can review any contested case decision.
Mr. Palmiere promotes a false narrative of the Wetland Permit denial when he describes Judge Pulter’s ruling as “a very technical…very administrative matter” that was simply “the way with which the wetlands permit was worded.”
However, the evidence presented by scientists from the Water Resources Division (WRD) of EGLE make it perfectly clear that Aquila Resources failed to provide critical information requested by the agency regarding pit dewatering and its effect on wetlands. This is not simply an issue of how the wetlands permit was worded. The surface and subsurface drainage of wetlands is regulated under Part 303 [Wetlands Protection], and this activity is prohibited without a permit from EGLE.
During her testimony in the contested wetland permit case, Ms. Kristina Wilson, an environmental quality specialist for the WRD testified that the pit dewatering to keep the pit dry for mining excavation would drain groundwater from the wetlands but was not disclosed in the permit application as a potential impact.”Draining surface waters from a wetland under Part [303] is a direct impact, but those impacts are not addressed in this application.” (Final Decision and Order, January 4, 2021, p. 18).
Mr. Eric Chatterson, a geology specialist with the WRD, testified that Aquila not only withheld wetland impact data but also manipulated the computer model to minimize significant negative impacts to wetlands. He testified that the model “wasn’t really built to answer as far as I could tell any questions about the wetland.” He further testified that Aquila “predetermined what was going to happen and it just manipulated the mathematics to make that happen.” (p. 28 of Final Decision).
“Based on the evidence in this case,” said Judge Pulter, “I find as a Matter of Fact, that Aquila’s computer groundwater model does not provide a reliable identification of wetland impacts, particularly those related to groundwater drawdown due to pit dewatering…Therefore, based on the evidence in this case, I find, as a Matter of Fact, that the revised application for a permit filed by Aquila in the contested case is not administratively complete…Because it was not administratively complete, the Application must be denied, and this contested case must be dismissed.” (p. 32, Final Decision and Order).
Contrary to Mr. Palmiere’s false narrative, Aquila’s Wetland Permit cannot be dismissed as “an administrative manner” or “the wording of the permit.” Judge Pulter made a decision based on the facts and determined that Aquila failed to demonstrate the ability to protect the area and not harm the resources in and around the Menominee and Shakey River watersheds.
Dave Blouin is Sierra Club Wisconsin's Mining Chair.
Al Gedicks is the Executive Secretary of the Wisconsin Resources Protection Council.