DOING SOME DIGGING About Not Digging Pits in California

The death knell has sounded for gold mining in California or if not the death knell, at least last call. On April...
The death knell has sounded for gold mining in California or if not the death knell, at least last call. On April 10, 2003, the California State Mining and Geology Board passed regulations requiring that any new open pit metal mines be refilled and the waste dumps recontoured to the natural landscape when the deposit is exhausted.

The cost of such extensive reclamation is prohibitive. Imagine how much money (and these are big U.S. dollars) it will take to move tens or hundreds of millions of tonnes of rock back into the pit when the site is no longer producing income. Imagine returning the landscape of Schefferville, Que., to its original profile after 70-plus years of mining. Imagine rebuilding the Rocky Mountains after the coal seams of southeastern British Columbia are exhausted.

California calls itself The Gold Rush State, but that moniker doesn't seem to raise the importance of mining in the public mind. The state known for its ecological, political and cultural sensitivity apparently has a blind spot for the contribution gold mining made to is history and could make to its future.

It's not that California is a big metal mining state. Preliminary figures for 2001 put the value of total mineral output at US$3.27 million. This includes asbestos, boron, cement, clay, gems, gypsum, sand, gravel, stone, and precious metals. That year the total gold production was 449,200 oz, and silver added up to little more than half that, 233,800 oz.

There are less than a dozen gold mines scattered around the central part of the state and another half dozen in the southern part. Two in the south, Rand and Picacho, belong to Glamis Gold. Both are winding down, and Glamis has proposed development of the Imperial pit near Picacho.

Glamis is a Canadian that trades on both the TSX and NYSE, but has its head office in Reno, Nev. It has interests in the three gold properties mentioned in California, two in Nevada, and four more in Latin America. At about 250,000 oz/year Au, Glamis qualifies as a mid-tier producer. And Glamis stands to lose a great deal if it cannot develop the Imperial gold mine.

The Imperial heap leach project is caught in the wringer of California's new, tough (impossible) development regulations. Glamis is hoping that because it lies on federal land, some compensation would be forthcoming from that direction. Hopefully, the government would buy out its interest or reimburse its expenditures. The company has spent a reported US$15 million at Imperial on exploration, planning and permitting to no avail over the past eight years.

Part of the problem is that the deposit lies on land belonging to the Quechan Indian Tribe, which has opposed development from the start. President Bill Clinton's Democrats blocked mine development at the Imperial site. That decision was reversed by the Department of the Interior when the Republican Bush administration came to power. Moreover, Democratic California Governor Gray Davis vetoed a bill that would have protected sacred Indian lands from mining and other activities. But it was Davis who signed the new regulations into effect last month.

So it looks like the 1.5 million oz of gold Glamis had identified at Imperial will remain in the ground and not add to the company's balance sheet.


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