Legislature(2005 - 2006)CAPITOL 124

04/27/2005 01:00 PM House RESOURCES

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* first hearing in first committee of referral
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Moved CSHCR 10(RES) Out of Committee
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
HCR 10-SUPPORTING KENSINGTON GOLD MINE                                                                                        
1:10:23 PM                                                                                                                    
CO-CHAIR RAMRAS announced  that the first order  of business would                                                              
be   HOUSE   CONCURRENT   RESOLUTION  NO.   10,   Supporting   the                                                              
development of the Kensington Gold Mine.                                                                                        
1:10:30 PM                                                                                                                    
CO-CHAIR SAMUELS  moved to adopt the committee  substitute for HCR
10,  labeled   24-LS0925\F,  Bullock,  4/21/05,  as   the  working                                                              
document.   There being  no objection,  Version  F was before  the                                                              
JIM  POUND,  Staff  to Representative  Jay  Ramras,  Alaska  State                                                              
Legislature,  presented HCR 10  on behalf  of the House  Resources                                                              
Standing  Committee, sponsor  by request,  which is co-chaired  by                                                              
Representative Ramras.  Mr. Pound explained:                                                                                    
     [House   Concurrent   Resolution]   10  is   a   support                                                                   
     resolution  for  the  Kensington  Gold  Mine,  which  is                                                                   
     located north  of Juneau.   They're in the  final stages                                                                   
     right  now   in  their  permitting  process,   and  this                                                                   
     resolution   will  help  with   that  final   permitting                                                                   
     process.    Once the  permitting  process  is  complete,                                                                   
     Kensington  will  hire  approximately  300  construction                                                                   
     workers  in  order  to  build the  mine.    After  that,                                                                   
     approximately   225   people   will  be   in   long-term                                                                   
     employment  within the Juneau  area.  The company  Coeur                                                                   
     Alaska  does  have  a  reputation  for  local  hire  and                                                                   
     working  within  the  local  regions of  where  they  do                                                                   
     build their  mines.   So far they  have spent over  $150                                                                   
     million  just  on  development,  permitting,  and  going                                                                   
     through the  legal process of preparing  Kensington Gold                                                                   
     Mine  for what  they hope  to be  a groundbreaking  some                                                                   
     time  in the  month of  July.   Again,  this passage  of                                                                   
     this resolution  will show  that the legislature,  along                                                                   
     with  the  other  supporters   that  you  have  in  your                                                                   
     packets  supports the improvement  and increased  mining                                                                   
     operations throughout the state.                                                                                           
1:11:57 PM                                                                                                                    
REPRESENTATIVE  GATTO  asked if  the  $150 million  also  included                                                              
equipment purchases.                                                                                                            
MR.   POUND   deferred   that   question   to   a   Coeur   Alaska                                                              
REPRESENTATIVE GATTO asked if any gold has been removed yet.                                                                    
MR. POUND replied no.                                                                                                           
1:12:51 PM                                                                                                                    
RANDY  MCGILVERY,  Environmental  Manager, Coeur  Alaska,  thanked                                                              
the committee  for introducing the  resolution.  He said  that the                                                              
company  has been  in  support of  this bill  for  over 15  years,                                                              
during  which  they   have  "done  an  extensive   job  of  public                                                              
communication  and  consultation  involving  all  of  the  special                                                              
interest groups  and stakeholders  in the  region."  He  commented                                                              
that the company  is looking forward to starting  the project this                                                              
1:14:15 PM                                                                                                                    
REPRESENTATIVE GATTO  asked if there are 1 million  ounces of gold                                                              
in the mine.                                                                                                                    
MR. MCGILVERY  answered, "Yes....   Our annual production  will be                                                              
100,000  ounces  per  year.   So  we're  projecting  10  years  of                                                              
operation at this time."                                                                                                        
REPRESENTATIVE GATTO asked if the mine would close in 10 years.                                                                 
MR.  MCGILVERY  answered that  the  mine  would close  unless  the                                                              
company could develop future reserves.                                                                                          
REPRESENTATIVE  GATTO asked  if  the company  would mine  anything                                                              
other than gold, such as silver or platinum.                                                                                    
MR. MCGILVERY  responded  that it  is a pretty  unique deposit  of                                                              
only gold.                                                                                                                      
REPRESENTATIVE GATTO  asked, "How much it would cost  to produce a                                                              
single ounce: a couple hundred dollars?"                                                                                        
1:15:10 PM                                                                                                                    
MR.  MCGILVERY replied  that  this was  correct,  and the  current                                                              
price for gold is over $400 per ounce.                                                                                          
REPRESENTATIVE GATTO  calculated that Coeur would  expect a profit                                                              
of about  $1 million.   He asked  if the ore  would be moved  by a                                                              
MR. MCGILVERY  answered,  "We'll be producing  a concentrate.  ...                                                              
So 100  percent of the  ore goes to the  mill: 95 percent  of that                                                              
material  goes to  the  tailings impoundment,  5  percent of  that                                                              
material is produced  as a concentrate, and that goes  off site to                                                              
a smelter."                                                                                                                     
REPRESENTATIVE  GATTO asked  if  the tailings  will be  considered                                                              
environmental waste.                                                                                                            
MR. MCGILVERY responded:                                                                                                        
     One  of the things  that's extremely  important to  know                                                                   
     about  the project  is that  in  the flotation  process,                                                                   
     all  of the metals,  including the  gold, are  extracted                                                                   
     from  the ore.    So all  that's left,  essentially,  is                                                                   
     beach  sand.   It has  a lower  concentration of  metals                                                                   
     than  the  natural  surrounding environment.    It's  so                                                                   
     important  for  us to  nail  the flotation  process  and                                                                   
     extract all the metals out.                                                                                                
REPRESENTATIVE  GATTO   asked  if  a  chemical  is   used  in  the                                                              
flotation process.                                                                                                              
MR. MCGILVERY answered  that the chemical used is  made of organic                                                              
polymers that degrade naturally in the impoundment.                                                                             
REPRESENTATIVE  GATTO asked  [how long  it takes  for the  organic                                                              
polymers to degrade].                                                                                                           
1:16:33 PM                                                                                                                    
MR. MCGILVERY  answered that the  process water is  liberated from                                                              
the tailings through  consolidation.  As the  tailings consolidate                                                              
over time,  more and more  of the process  water comes out  of the                                                              
tailings.   He said  that 90 percent  of the consolidation  occurs                                                              
in  five years,  and  total consolidation  is  complete within  20                                                              
REPRESENTATIVE  GATTO   asked  if  there  are  any   other  mining                                                              
activities within 10 miles of the proposed mine.                                                                                
MR.  MCGILVERY replied  that  the closest  mine  is the  Kennicott                                                              
Greens Creek mine on Admiralty Island.                                                                                          
1:17:33 PM                                                                                                                    
REPRESENTATIVE RAMRAS  asked, "Can  you speak, briefly  please, to                                                              
the  philosophy  that Coeur  Alaska  has  toward paying  its  fair                                                              
share in taxes to the State of Alaska?"                                                                                         
MR. MCGILVERY  replied that  he is  the environmental  manager and                                                              
cannot answer that question.                                                                                                    
1:18:03 PM                                                                                                                    
CO-CHAIR RAMRAS closed public testimony.                                                                                        
1:18:16 PM                                                                                                                    
REPRESENTATIVE  ELKINS moved  to report  the committee  substitute                                                              
for   HCR  10,   labeled  24-LS0925\F,   Bullock,  4/21/05,   with                                                              
individual  recommendations  and  the accompanying  fiscal  notes.                                                              
There  being no  objection, CSHCR  10(RES) was  reported from  the                                                              
House Resources Standing Committee.                                                                                             

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