WEEKLY ONLINE NEWS STORY
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| June 05, 2014 --- Vol. 08, No. 23 | June 2014
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Alaska News Nuggets
ENVIRONMENT – Teck Resources Ltd. June 5 reported that its subsidiary Teck Alaska Inc., operator of the Red Dog Mine in Northwest Alaska, has made a filing with the U.S. District Court for Alaska outlining the findings of extensive study into a proposed 52-mile pipeline which would direct effluent from Red Dog Creek to the Chukchi Sea. Based on that study, Teck Alaska has informed the court it is exercising its option not to build the pipeline. The effluent pipeline study was conducted under a 2008 settlement agreement and consent decree, which resolved litigation under the Clean Water Act. Under the agreement, Teck Alaska agreed to review the feasibility of constructing a pipeline to carry effluent from the Red Dog Mine along the DeLong Mountain Transportation System to a marine discharge at or near the DMTS port site. Teck Alaska conducted engineering, geotechnical, environmental and other studies to look at various pipeline options at a cost of C$1.7 million. That work determined that an underground pipeline is not a technically feasible option because it would be vulnerable to breakage due to ground movement caused by seasonal ground freezing and thawing. Engineering and environmental studies determined that an above-ground pipeline is also not a viable option. While potentially technically feasible, there were no demonstrable environmental benefits, rather it was determined that there would be increased environmental risks and impacts associated with pipeline construction and operation, energy use and emissions, and potential effects on caribou migration. Further, the estimated US$261 million capital cost of an above-ground pipeline would be prohibitive. As stipulated in the consent decree, Teck will pay a civil penalty of $8 million in connection with the decision not to construct the pipeline. Red Dog currently releases water to Red Dog Creek that is treated at an on-site facility to meet the strict requirements of an Alaska Department of Environmental Conservation discharge permit and is fully protective of both human health and the environment. "Following extensive environmental and technical study, it is clear that a pipeline is not a viable option," said Henri Letient, general manager, Red Dog Operations. "More importantly, there is no clear environmental benefit to building a pipeline, as the treated water currently being released to Red Dog Creek meets stringent permit requirements and is fully protective of aquatic and human health. In fact, the creek is demonstrably healthier than it was before mining commenced, supporting a thriving fish population because of our water treatment program."
FINANCE – Millrock Resources Inc. June 5 closed a non-brokered private placement of 20 million units at C5 cents per unit, for proceeds of C$1 million. Each unit will consist of one common share of Millrock and one purchase warrant, with each warrant entitling the holder to purchase one additional common share at C10 cents for a period of five years. Millrock said the proceeds will be used to generate further projects in Alaska, Mexico and southwestern United States and for general corporate purposes. Finder’s fees of 8 percent cash and 10 percent finder’s warrants may become payable in connection with this private placement. The finder’s warrants will entitle the holder thereof to purchase units at an exercise price of C5 cents for a period of three years.
MERGER – Full Metal Minerals Ltd., Choice Gold Corp. and International Enexco Ltd. June 3 unveiled a tripartite definitive arrangement agreement that will result in the consolidation of the Contact and Pyramid copper projects in Nevada and Alaska, respectively. Under the arrangement, each Full Metal shareholder will receive two common shares of Choice and one purchase warrant of Choice in exchange for the acquisition of the Pyramid copper project, which will be transferred to a new Alaskan subsidiary. Concurrently, each International Enexco shareholder will receive 8.8 common shares and 4.4 warrants in exchange for the acquisition of Enexco International Inc., the wholly owned subsidiary of Enexco that holds the Contact copper project. Each Warrant will be exercisable into common shares for five years at a price of C10 cents per Common Share. Upon the completion of the arrangement, Choice will be renamed CopperBank Resources Corp. and complete a five for one share consolidation. Any outstanding warrants and options of International Enexco as of completion of the arrangement will be exchanged for options and warrants of CopperBank, adjusted by the exchange ratio of 8.8. Prior to the completion of the arrangement, Choice is to complete a private placement financing of no less than C$2 million for CopperBank. The Financing will be on a best efforts basis to consist of up to 100 million subscription receipts at C2 cents each. If all of the conditions to the closing of the arrangement are satisfied, each subscription receipt will entitle the holder to receive one unit of Choice. Each Unit will consist of one common share and purchase warrant of Choice. Each warrant will entitle the holder to purchase on Choice common share at C10 cents for a period of five years after completion of the arrangement. The proceeds of the financing will be used for working capital and general corporate purposes. Upon completion of the Arrangement, Choice will consolidate its share capital on the basis of one new share for five old shares and change its name to CopperBank Resources Corp. All securities issued pursuant to the financing will be subject to the 5:1 consolidation. It is anticipated that the board of directors of CopperBank will be comprised of Brad Armstrong, Dan Frederiksen and Todd Hilditch from International Enexco; Rob McLeod from Full Metal; and Gianni Kovacevic from Choice. It is expected that McLeod will be appointed CEO of CopperBank and Bill Willoughby will be president.
In March, Full Metal Minerals re-acquired Antofagasta Minerals S.A.’s 51 percent interest in Pyramid, which returns sole ownership of the copper-gold-molybdenum porphyry project in Southwest Alaska to the company. To regain 100 percent interest in Pyramid, Full Metal agreed to pay Antofagasta US$5.5 million – an initial US$3 million payment is due by the fifth anniversary of the assignment date; and a US$2.5 million is payable upon the completion of a positive, bankable feasibility study. “Consolidating a 100 percent interest in Pyramid will allow Full Metal to step-out from near-surface higher grade copper mineralization identified to date at Pyramid, test new targets, as well as explore the large, adjacent 60-square-kilomter (23 square miles) San Diego Bay zone of alteration and anomalous polymetallic mineralization,” said Full Metal CEO Rob McLeod. “Antofagasta, through its affiliate company Antofagasta Investment Company Limited, a wholly-owned subsidiary of Antofagasta Plc., will be exposed to exploration upside on the Property through their 15 percent shareholding in the company.” At a 0.21 percent copper equivalent cut-off, the Pyramid deposit hosts an inferred resource of 173 million metric tons averaging 0.35 percent (1.34 billion pounds) copper, 0.02 percent (74 million pounds) molybdenum and 0.088 grams per metric ton (488,000 ounces) gold. This deposit, situated less than eight kilometers (five miles) from deep tidewater, is located on lands under option from The Aleut Corporation, an Alaska Native regional corporation.
PEBBLE – The state of Alaska May 30 filed to intervene in a lawsuit against the Environmental Protection Agency to prevent the federal agency from taking state land by prematurely limiting development before the permitting processes have a chance to work. The Pebble Limited Partnership brought the original lawsuit against the EPA on May 21. Alaska believes the case has far reaching implications for all state and federal lands. “Perhaps the most troubling aspect of the EPA seeking to veto a hypothetical project before any permit application has been filed, is that it sets precedent for the EPA to take land anywhere in the United States and prematurely limit development of a valuable resource,” Attorney General Michael Geraghty said. “The EPA’s action undermines Alaska’s ability to utilize its mineral resources to grow the economy and create jobs if, after detailed and lengthy environmental review, permitting is warranted.” In the motion, Alaska asserts that the EPA has overstepped its limited statutory authority under Section 404(c) of the Clean Water Act by attempting to veto any development before a permit application has been submitted. The state believes the EPA’s overreach infringes on the state’s role in regulating land and water uses within its borders. Normally, several state agencies and the U.S. Army Corps of Engineers would review a proposed mineral resource project, requiring over 50 different permits, including appropriate conditioning and mitigation to minimize environmental impacts while allowing the productive management of State mineral resources. Alaska asserts that EPA’s overreach infringes on the state’s primary role. The other parties will have an opportunity to respond to the state’s request to intervene, and then the Alaska federal district court will decide whether to grant the request.
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