Eagle Update June 2004pub

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					EAGLE PROJECT UPDATE 4:
June 2004

Project Update
Highlights
• Eagle Project Officially Handed Over from KEX to Kennecott Minerals • Eagle Project Enters PreFeasibility Stage • Conceptual Site Layout and Design • Environmental Baseline Studies Update • Flambeau Mine Ground Water Recap • IJNR Tour Exploration: Further drilling is planned over the Eagle deposit during the 2004 work program. Drilling will better define the mineralization shape and ore grade boundaries. Approximately 10,000 feet of drilling in various holes is planned. All drilling will be conducted using the minimal impact environmental protective systems developed in conjunction with the drilling contractors and within the terms and conditions of environmental permits and oversight from MDEQ. All exploration drill sites from 2003 were reclaimed in accordance with applicable regulations and all sediment control measures put in place were upgraded to address the usual heavy snow cover spring runoff. Project Handoff: On April 1, 2004, the Eagle Project was officially transferred from Kennecott Exploration Company (KEX) to Kennecott Minerals Company. This transfer marks a milestone in the Eagle Project’s history. No longer is the Eagle Project an exploration activity. Based on a preliminary order of magnitude study, it was determined that the Eagle Project should be moved from an exploration project into a potential development project. Kennecott Minerals has developed and operated a number of successful mines in the United States that have been discussed in previous newsletters. With this experience behind it, Kennecott Minerals will now begin the process of more detailed engineering, economic and environmental studies for the Eagle Project. It should be made clear that the transfer of the project from KEX to Kennecott Minerals is just another step in a careful evaluation process that is ongoing. There is much work yet to be done, data to be collected, designs to complete and permits to obtain before any mine development would occur. However, it is a step forward to beginning possible mine development around late 2006. Environmental Baseline Studies: Work on the Environmental Baseline Studies continued through the winter. Twelve ground water monitoring wells were drilled on the property at six locations. A deep and shallow well were drilled at each site to gather information on aquifer water quality, flow rates, connectivity, water chemistry and water levels. In addition to the ground water monitoring wells, 23 additional monitoring sites were installed to gather information on surface water level fluctuations. This data will be used in part to define the location of the drainage divide between the Yellow Dog and the Salmon Trout tributaries. Drilling of the wells located a relatively thick impermeable clay layer in the alluvial aquifer at five of the six well locations. Engineering tests are being conducted on the sediment cores to determine
Topsoil, sand moss, small roots (0-0.5 ft.) Sand, dry, very well sorted (1-8 ft.) Sand, water saturated, medium fine with coarse intervals (8-70 ft.)

Saturated
Saturated sandy silt to very fine sand (70-83 ft.) Sandy silt (83-86 ft.)

Clay

Clay, plastic (86-99 ft.) Sand, medium fine, saturated (99-114 ft.)

Saturated

Sandy gravel to gravelly sand (114-128 ft.) Sand with gravel. Some clay & sandy silt (128-149 ft.) Clay till, compacted becoming sandy clay till (149-177 ft.) Siltstone and clay, weathered (177-185 ft.) Bedrock

Simplified Well Log Near Eagle Deposit
connectivity between an upper and lower aquifer identified in the program. Further work on the clay layer delineation will be undertaken using a combination of ground penetrating radar and electrical geophysics. This summer additional deeper wells are scheduled to be installed to define bedrock characteristics. Aquifer tests using these wells will be conducted to determine the relationship of the aquifer(s), bedrock, clay and sediments. The weather station is now fully functional. Data from the station should be available to the public via the Eagle Project website once an uplink is established later this summer. The data will be of particular interest to snowmobile enthusiasts who will be able to review weather conditions, including

Contents
Project Update Flambeau Mine, Ground Water Recap Contact Kennecott

Mailing Label Here

Eagle Project Weather Station
temperature, wind speed and direction, prior to planning recreational trips across the area in winter.

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Eagle Project Update 4: June 2004

Project Update (cont.)
more permanent fix is desired. Using this input, Kennecott Minerals is currently working with a local contractor to design and provide cost estimates for a handful of improved crossing options for the AAA Road. Once these options are prepared, they will be reviewed with those who attended the initial site meeting, and other interested parties, to discuss a path forward. Pre-Feasibility Study: Handoff of the Eagle Project from KEX to Kennecott Minerals begins the Pre-Feasibility Study (PFS) component of the project. The PFS process develops detailed design concepts that can be tested and estimated from an environmental, engineering and economic basis. Combined with data generated from the environmental baseline studies, a conceptual design for an underground mine can be developed and evaluated (see figure below). The final product of the PFS is a preliminary design with cost estimates of plus or minus 25 percent. The PFS study will include an evaluation of options and alternatives for: · · · · · On-site versus off-site processing Transportation routes to and from the mine site Railhead locations for truck to rail transfer of product Geohydrology, Water Management and Water Treatment Geotechnical parameters regarding rock integrity, strength and rock mechanics · Impacts and/or mitigation of impacts to environmental baseline conditions · Preliminary engineering and mine design Shown here is a figure depicting a cross section of what an underground mine might look like at Eagle.

Salmon Trout River

Sediment Loading

Salmon Trout River/AAA Road Crossing
Sedimentation Control Project: Preliminary environmental baseline studies have indicated that sediment loading into the Salmon Trout River from the existing AAA Road crossing is an issue that should be addressed. Based on this preliminary information, Kennecott Minerals invited multiple conservation organizations and permitting agencies to meet at the crossing to discuss potential designs to improve the situation. Previous work completed by the Central Lake Superior Watershed Partnership has proven effective, however, a

Conceptual Underground Mine Cross Section
600 SALMON TROUT RIVER

500

SURFACE

MINE PORTAL VERTICAL CONVEYOR RAISE

LOAD OUT FACILITY

Elevation (Meters)

400 VENT RAISE

VENT RAISE

DECLINE

ORE BIN BACKFILL RAISE

300

200

INTERNAL VENT RAISE

HOST ROCK

100

0 0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400

Distance (Meters)

Eagle Project Update 4: June 2004

Page 3

Flambeau Mine—Ground Water Recap
There have been erroneous claims made by groups opposed to Kennecott Minerals’ Eagle Project in the Upper Peninsula of Michigan and sulfide mining in general, that the Flambeau Mine is “leaking acid” into the Flambeau River caused by Kennecott Minerals’ mining activities. These claims are simply not true. One of the organizations that has spread this misinformation has already agreed in writing not to repeat such false statements. What is Acid?: Whether water is acidic or not typically is determined by measuring its pH, a chemical measurement represented on a scale of 0 to 14. On the pH scale, 7 is neutral. A pH of less than 7 is called acidic and greater that 7 is termed basic, or alkaline. For reference, rainwater typically has a pH of 5.5 to 6.5, unless there are industrial sources of “acid rain” which can lower the pH even further. Tomatoes have a pH of about 4.5 and oranges have a pH of about 3.5. A can of cola soda pop has a pH of approximately 2.5. Untreated acid rock drainage typically has a pH around 4.0 and pure sulfuric acid has a pH of about 0.2. Blueberry bushes require an ideal soil pH of 4.5 to 5.5 for optimum growth. A chart of relative pH comparisons is shown below.
Alkaline
14 13 12 11 10 9

There are two monitoring wells located within the mine backfill area. These wells are MW-1013, A, B and C and MW-1014, A, B, and C (the ABC suffixes denote relative depth of monitoring points in each well, two locations with multiple depths). The ground water elevation has recovered sufficiently to allow MW-1013B, C and MW-1014A, B, C to be sampled. The 2003 pH data collected in October for these wells showed values of 6.3, 6.4, 6.4, 6.6, and 6.4 respectively. These measurements are lower than a neutral pH of 7, but are of a similar pH to rain water and well above typical acid rock drainage. Chemical analyses of waters from these wells show that the slightly low pH derives from the presence of dissolved carbon dioxide in the waters, the same chemical process that makes carbonated drinks acidic. These wells, too, have carbonate alkalinity which can neutralize excess acid just like an antacid tablet neutralizes stomach acid. The October 2003 data from three wells located between the mine and the river (MW-1000P-R and MW-1015A and B, and MW-1010P) had pH measurements of 6.2, 7.1, 7.8 and 7.3, respectively. Although a pH measurement of 6.2 is less than a neutral pH of 7, it is still well within the range of natural rainwater and well above the range of typical acid rock drainage. If this water were tested in a chemical laboratory, one would see that although the pH is less than 7, the water has carbonate alkalinity and is still capable of neutralizing strong acids. To summarize then, monitoring data shows that ground water in the backfilled mine itself and down-gradient of the mine near the river is slightly on the acidic side of the scale, but much nearer neutral than naturally occurring upgradient ground water, or rainwater and far above the acidity associated with acid mine drainage. The data also show that the water has the long-term capacity to neutralize strong acids. The lowest levels of pH in ground water have been measured in an area upgradient of the mine that have not been impacted by mining operations. Details regarding Kennecott Minerals’ record of 100 percent compliance with ground water quality permit requirements should also be noted. Kennecott Minerals operated the Flambeau Mine from 1993 to 1997 without exceeding a single environmental permit condition. Furthermore, since termination of mining operations in 1997, Kennecott Minerals continues to meet all permit terms and conditions and has not received a single noncompliance citation from WDNR. Prior to beginning mining operations at Flambeau, numerous tests and studies regarding the hydrology and geochemistry of the mine were performed. Special emphasis was placed on the post-mine ground water quality and chemistry. Geochemical modeling of water quality within the backfilled mine was studied intensively and was reviewed with WDNR in detail. These studies were the basis for determining permit conditions for the mine site. Based on general geochemical principles and the modeling, Kennecott Minerals and WDNR were aware that when the pore space of the backfilled mine filled with water after closure, the water quality within the backfill would initially be elevated in some constituents compared to background conditions. This approach to background conditions has already happened for most of the analytes monitored in the backfilled mine area. The
(Continued on page 4)

pH Level

8

Neutral

7.0
7

6.0
6 5 4 3 2

6.0

Flambeau Mine Range 6.2 - 7.8

4.5
< 4.0

3.5

3.5 2.5

Acidic

1 0 Rainwater Tomatoes Wine Farmland Dove Soap Oranges Cola Acid Rock Drainage

0.2
Pure Sulfuric Acid

Proven Technology Prevents Acid Rock Drainage
Measuring Acidity in Real Terms

Kennecott Minerals began monitoring ground water at the Flambeau location in the early 1990s and continues to monitor several ground water monitoring wells at the reclaimed mine site on a quarterly basis. The collected data is submitted to the Wisconsin Department of Natural Resources (WDNR). There are monitoring wells located hydrologically upgradient from the mine site, side-gradient to the mine site, within the backfilled mine, and between the mine and the Flambeau River. Ground water flows from the area of the mine toward the river. Data available in a recent WDNR report is from monitoring done in October 2003 and is summarized below. A monitoring well (MW-1005), located hydrologically upgradient from the mine, historically has had pH values less than 6. In October 2003 monitoring well MW-1005 had a pH of 5.6. Hydrology measurements at the site demonstrate that water from this location flows toward the mine and discharges into the Flambeau River. Low pH ground water occurs in the area up-gradient of the mine with no influence from mining activities. The lowest pH measured in ground water at the Flambeau Mine site is located hydrologically upgradient from all mine disturbances and is naturally occurring.

Eagle Project Update 4: June 2004

Page 4

Flambeau Mine—Groundwater Recap (cont.)
(Continued from page 3)

IJNR Tour
On May 17th, Kennecott Minerals hosted the Institutes for Journalism & Natural Recourses (IJNR) at the Eagle Project site. IJNR is a tax-exempt, nonprofit educational foundation and an independent public charity. IJNR pursues higher standards of news coverage of natural resources and the environment – standards of accuracy, fairness, balance, depth and context. IJNR awards expensespaid fellowships to working reporters, photojournalists, writers, editors and producers interested in reporting about natural resource issues. IJNR asked if Kennecott Minerals would be willing to host such an event at Eagle because of the high profile nature of the project. Kennecott Minerals accepted and on May 17th, 14 journalists, including one from the New York Times, met on site to learn about the project. The tour looked at seven different areas of the project including the weather station, drill sites, Salmon Trout River, bedrock outcroppings and reclamation sites. The tour was followed by 20 to 30 minute presentations from Jon Cherry (Kennecott), Michelle Halley (National Wildlife Federation), Joe Maki (Michigan Department of Environmental Quality) and Lynn Boyd (Michigan Department of Natural Resources). Following the presentations, a panel discussion was held between the presenters and the journalists. This was an enjoyable and productive tour that should produce multiple articles about the Eagle Project over the next several months.

exceptions are sulfate, iron and manganese. Please note that the elevated sulfate, iron and manganese concentrations are in waters that have pH characteristic of natural waters and are the components of what is more commonly referred to as “hard water”. It was also determined that the elevated levels would not affect water quality in the Flambeau River or cause an exceedance ground water quality standards at designated compliance points. The post-mining monitoring results support that determination. As the backfill becomes fully saturated and the hydrology returns to stable conditions, water quality within the backfill will reach equilibrium and has not and will not impact the water quality in the Flambeau River. This was the premise of the WDNR’s approval of the permit for the mine. Post-closure monitoring data supports this premise. The continued monitoring of ground water for the agreed 40-year period will confirm that equilibrium has been achieved over the long-term to protect the water quality of the Flambeau River.

Kennecott Minerals Company
Jon Cherry 224 North 2200 West Salt Lake City, UT 84116 Phone: (801) 238-2495 Fax: (801) 238-2488 Andrew Ware 200 Echelon Drive Suites A and B Negaunee, MI 49866 Phone: (906) 475-9732 Fax: (906) 475-9736

In summary, there is no acid leaching into the Flambeau River as a result of the Flambeau Mine. Furthermore, Kennecott Minerals has demonstrated its ability to prevent and/or mitigate water quality issues associated with sulfide mining by meeting ground water quality standards at the permitted points of compliance. Finally, the water quality of the Flambeau River has not been adversely affected by Kennecott Minerals’ mining activities. As supported by continuing monitoring data, water quality in the Flambeau River, upstream from the mine site, is no different than the water quality downstream from the mine site.

Kennecott Minerals’ logo is the octahedron. The octahedron is the geometric shape of many of the mineral crystals that are found in the minerals mined by Kennecott. A crystal is simply the normal form assumed by a chemical compound when it passes to the solid state.

Kennecott Minerals has gone beyond the existing So what does this have to do with the mines of permit requirements and continues to monitor water Kennecott Minerals? Cortez, Rawhide and quality in the Flambeau River. Ridgeway mine gold ore. Native gold crystallizes in the isometric system, and while individual gold crystals are rare, the most common is the octahedron. Some of the copper ore produced by Flambeau contained the mineral bornite, also isometric. At Greens Creek, the dominant ore Kennecott Minerals and Kennecott minerals are auriferous pyrite, galena, sphalerite, Exploration are members of the tetrahedrite, electrum and native gold — all of Rio Tinto Group. which crystallize in the isometric form. The nickel and copper minerals of pentlandite and www.kennecottexploration.com chalcopyrite at the Eagle deposit also are formed www.kennecottminerals.com with this crystal structure. www.riotinto.com

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